UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
For the fiscal quarter ended
or
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area
code:
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| $0.0001 par value per share |
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | Smaller Reporting Company | |
| Emerging Growth Company |
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act). Yes ☐
As of November 20, 2023, there were shares of the registrant’s common stock outstanding.
Explanatory Note
Background
As previously disclosed in the Company’s Current Report on Form 8-K furnished to the SEC on January 18, 2024, the Company had recently discovered that its independent accountants, Mercurius & Associates (“Mercurius”), had not completed its review and approved the filing of the Original Form 10-Q. The Company requested that Mercurius perform a full review of the financial statements contained in the Original Form 10-Q, which now has been completed.
The review by Mercurius did not find that any errors in the balance sheets, financial statements as of and for the three and nine month periods ended September 30, 2023 and 2022, statements of stockholders’ equity for the nine month periods ended September 30, 2023 and 2022, or statements of cash flow for the nine month periods ended September 30, 2023 and 2022 that were included in the Original Form 10-Q. However, references in such financial information to “condensed” was changed to “consolidated” and changes were made to the Notes to Financial Statements as follows: Note 4 was expanded to describe certain other related party transactions and certain corrections were made in Note 6 to the descriptions of the agreements contained therein.
In light of the failure of the Company to properly confirm that Mercurius had completed its review of the Original Form 10-Q, management reassessed the effectiveness of the Company’s internal control over this matter and implemented a new internal procedure to verify in writing from Mercurius for future filings of Form 10-Q that Mercurius has completed its review and approved the filing of such Form 10-Q. Further, the Company concluded that its disclosure controls and procedures were ineffective as of September 30, 2023. As a result, the Company is amended and restating Part I, Item 4 (Controls and Procedures) in this Form 10-Q/A to update its conclusions regarding the effectiveness of its disclosure controls and procedures and its internal control over financial reporting as of September 30, 2023 as a result of the material weakness.
In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is also including with this Form 10-Q/A certifications of the Company’s principal executive officer and principal financial officer (included in Part II, Item 6. “Exhibits” and attached as Exhibits 31.1, 31.2, 32.1, and 32.2).
Except as described above, no other changes have been made to the Original Form 10-Q, and this Form 10-Q/A does not modify, amend or update in any way any of the financial or other information contained in the Original Form 10-Q. This Form 10-Q/A does not reflect events that may have occurred subsequent to the filing date of the Original Form 10-Q.
GAMER PAKISTAN INC.
Table of Contents
- i -
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “seek,” “continue,” or other similar words.
Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, our management and involve uncertainties that could significantly affect our financial results. Such statements include, but are not limited to: (i) statements about our plans, strategies, initiatives, and prospects; and (ii) statements about our future results of operations, capital expenditures, and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation:
| ● | Failure of future market acceptance of our mobile esports products and services; | |
| ● | Increased levels of competition; | |
| ● | Changes in political, economic or regulatory conditions generally and in the markets in which we operate; | |
| ● | Our ability to retain and attract senior management and other key employees; | |
| ● | Our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; and | |
| ● | Other risks. |
These forward-looking statements speak only as of the date of this Quarterly Report. While we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
GAMER PAKISTAN INC.
Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Other current assets | ||||||||
| Total current assets | $ | $ | ||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Related party payable | ||||||||
| Accrued interest | ||||||||
| Note payable | ||||||||
| Total current liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit) | ||||||||
| Preferred stock; $ par value; shares authorized; shares issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Accumulated other comprehensive income (loss) | ( |
) | ||||||
| Total stockholders' equity (deficit) - Gamer Pakistan Inc. | ( |
) | ||||||
| Non-controlling interest | ( |
) | ||||||
| Total stockholders’ equity (deficit) | ( |
) | ||||||
| Total liabilities and stockholders' equity (deficit) | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
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GAMER PAKISTAN INC.
Consolidated Statements of Operations (Unaudited)
For the three and nine months ended September 30, 2023 and 2022
| Nine Months | Nine Months | Three Months | Three Months | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Interest expense | ( |
) | ( |
) | ||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss - non-controlling interest | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Net loss attributable to Gamer Pakistan Inc. | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average common shares outstanding, basic and diluted | ||||||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Unrealized loss on foreign currency translation | ( |
) | ( |
) | ||||||||||||
| Total comprehensive loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Comprehensive loss attributable to non-controlling interest | ( |
) | ( |
) | ||||||||||||
| Comprehensive loss - Gamer Pakistan Inc. | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
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GAMER PAKISTAN INC.
Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)
For the nine months ended September 30, 2023 and 2022
| Accumulated | Total | |||||||||||||||||||||||||||
| Additional | Other | Non- | Stockholders’ | |||||||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Comprehensive | controlling | Equity | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Interest | (Deficit) | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, March 31, 2023 (unaudited) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, June 30, 2023 (unaudited) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Balance, September 30, 2023 (unaudited) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, March 31, 2022 (unaudited) | ( |
) | ||||||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, June 30, 2022 (unaudited) | ( |
) | ||||||||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, September 30, 2022 (unaudited) | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
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GAMER PAKISTAN INC.
Consolidated Statements of Cash Flows (Unaudited)
For the nine months ended September 30, 2023 and 2022
| Nine months ended | ||||||||
| September 30, 2023 | September 30, 2022 | |||||||
| unaudited | unaudited | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( |
) | ||||||
| Other current assets | ||||||||
| Accounts payable and accrued expenses | ( |
) | ||||||
| Accrued interest | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from financing activities | ||||||||
| Issuance of common stock | ||||||||
| Payment of deferred offering costs | ( |
) | ( |
) | ||||
| Advances from related party | ||||||||
| Proceeds from stock subscription receivable | ||||||||
| Issuance of notes payable, short term | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and restricted cash | ( |
) | ||||||
| Net increase (decrease) in cash and restricted cash | ( |
) | ||||||
| Cash and restricted cash as of beginning of period | ||||||||
| Cash and restricted cash as of end of period | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
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GAMER PAKISTAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2023 and 2022 (unaudited)
Note 1 – Organization and Basis of Presentation
Organization
Gamer Pakistan Inc. (the “Gamer Pakistan”) was incorporated on November 23, 2021 under the laws of the State of Delaware. Gamer Pakistan is an interactive esports event promotion and product marketing company.
We conduct our operations in Pakistan through K2 Gamer
(PVT) Ltd. (“K2 Gamer”), and Elite Sports Pakistan Pvt. Ltd. (“ESP”), each a company duly incorporated under the
laws of Pakistan. Pursuant to agreements with the three owners of K2 Gamer, we acquired 90% ownership of K2 Gamer in November 2022 subject
to required approval by the Securities and Exchange Commission of Pakistan (“SECP”), which approval was granted in July 2023.
We acquired
Basis of Presentation
The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Gamer Pakistan and K2 Gamer (collectively, the “Company”). Gamer Pakistan owns a 90% controlling interest in K2 Gamer. The value of the non-controlling interest in K2 Gamer is immaterial.
The functional currency of K2 Gamer is the Pakistan Rupee (“PKR”). The assets and liabilities of K2 Gamer are translated to United States Dollars (“USD”) at period end exchange rates, while statements of operations accounts are translated at the average exchange rate during the period. The effects of foreign currency translation adjustments are included in other comprehensive loss, which is a component of accumulated other comprehensive income (loss) in stockholders’ equity. All significant intercompany accounts and transactions have been eliminated in consolidation.
Interim financial statements
The unaudited consolidated financial statements are prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America were omitted pursuant to such rules and regulations. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results expected for the year ending December 31, 2023.
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GAMER PAKISTAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2023 and 2022 (unaudited)
Note 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying financial statements include valuation allowance on deferred tax assets.
Cash Equivalents
For the purpose of the statement of cash flows, cash
equivalents include time deposits, certificate of deposits, and all highly-liquid debt instruments with original maturities of three months
or less. As of September 30, 2023 and December 31, 2022 the Company had approximately $
Stock Subscription Receivable
The Company records stock issuances at the effective date. If the subscription is not funded upon issuance, the Company records a stock subscription receivable as an asset on a balance sheet. When stock subscription receivables are not received prior to the issuance of financial statements, the stock subscription receivable is reclassified as a contra account to stockholders’ equity on the balance sheet.
Deferred Offering Costs
Deferred offering costs are amounts incurred that
are directly related to the offering of the Company’s common stock. These costs will be offset against the proceeds from the
Company’s equity offering. The Company had approximately $
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GAMER PAKISTAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2023 and 2022 (unaudited)
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and accounts payable, the carrying amounts approximate their fair values due to their short maturities.
FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
| • | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. | |
| • | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
| • | Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement. |
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
As of September 30, 2023 and December 31, 2022, the Company did not identify any assets or liabilities required to be presented on the balance sheet at fair value.
Concentration of Credit Risk
Financial instruments, which potentially subject the
Company to concentrations of credit risk, consist of cash and restricted cash. The Company places its cash with high quality financial
institutions and at times may exceed the Federal Deposit Insurance Corporation $
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GAMER PAKISTAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2023 and 2022 (unaudited)
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.
Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
There were no potentially dilutive instruments outstanding at September 30, 2023 and December 31, 2022.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluation the impact this ASU will have on its financial statements.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
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GAMER PAKISTAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2023 and 2022 (unaudited)
Note 3 – Going Concern Uncertainty
The Company has an accumulated deficit of approximately
$ as of September 30, 2023. The Company had no revenue-generating operations from which we generated revenues through September
30, 2023. The Company expects that it will operate at a loss for the foreseeable future. During October 2023, the Company
raised gross proceeds of approximately $
Management believes the net proceeds from the IPO
will be sufficient to meet its cash, operational and liquidity requirements for at least
While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Note 4 – Related Party Transactions
Note Payable Due to Related Party
In February of 2023, the Company borrowed $
Due to Related Party
Due to related party represents amounts due to certain stockholders. These amounts are unsecured, payable upon demand and non-interest bearing.
Other Related Party Transactions
The Company’s Chief Executive Officer (“CEO”)
is also the CEO of Pin Stripe Entertainment, Inc. (“Pin Stripe”). The Company made payments to the CEO and Pin Stripe totaling
approximately $
The Company has an agreement for Alexander Alexandrov
to serve as the Chief Technology Officer of the Company. Mr. Alexandrov owns Pixel Colony, LLC (see Note 6). Pixel Colony, LLC and Mr.
Alexandrov provided services to the Company during the three and nine month periods ended September 30, 2023 and received payment from
the Company totaling approximately $
The Company also paid certain shareholders of
the Company for consulting and other services performed during the three and nine month periods ended September 30, 2023 totaling approximately
$
The CEO of K2 Gamer owns approximately
- 9 -
GAMER PAKISTAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2023 and 2022 (unaudited)
Note 5 – Stockholders’ Equity
Preferred Stock
The Company has authorized the issuance of shares of $ par value preferred stock. At September 30, 2023, there were shares issued and outstanding.
Common Stock
The Company has authorized the issuance of shares of $ par value common stock. At September 30, 2023, there were shares issued and outstanding.
Note 6 – Commitments and Contingencies
Assignment and Consulting Agreement Between ESP and K2 Gamer
Pursuant to an Assignment and Consulting Agreement effective as of January 1, 2022, ESP has assigned its esports rights under a certain Memorandum of Understanding (“MOU”) to K2 Gamer, but remains a holder of the rights. Each of ESP and K2 Gamer is entitled to the esports rights and responsible for the obligations of ESP pursuant to the MOU, but any exercise of the rights or obligations by ESP is subject to the approval of K2 Gamer. K2 Gamer has agreed to provide or cause to be provided funding necessary for the exploitation of rights and the engagement of employees and third parties authorized by K2 Gamer, as well as such compensation as is reasonably determined from time to time. The agreement shall continue until the termination of the MOU.
Spivak Management Inc. Consulting Agreement
Pursuant to an agreement dated December 1, 2022,
the Company has agreed to pay to Spivak Management Inc. (“SMI”) $
Agreement with Face Rebel, LLC
On December 29, 2022, the Company entered into a consulting
agreement with Face Rebel, LLC., to provide various services and support, including creating marketing materials to promote the Company
and educate potential business partners about the Company, research, copywriting, design & layout, photo color correction & manipulation,
illustrations, revisions, and computer back-up of files. In addition, Face Rebel will assist the Company’s IP attorney with the
necessary materials to file US registrations and will assist outside vendors with artistic direction and files needed to complete their
tasks. Face Rebel will receive $
Kurt Warner Consulting Agreement
In February 2023, the Company entered into an agreement
with Kurt Warner for his assistance, as an officer, director or other position with the Company, as shall be mutually agreed, commencing
on the first of the month after completion of the IPO and continuing for two years for his services. Mr. Warner will receive $
- 10 -
GAMER PAKISTAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2023 and 2022 (unaudited)
Letter of Intent with Nick Venezia
In February 2023, the Company entered into a Letter
of Intent with Nick Venezia and Social Outlier (collectively “Social Outlier”) pursuant to which, subject to the negotiation
and execution of a definitive agreement, the Company and Social Outlier would form a new company (“Newco”) to design and implement
data collection and evaluation, engine and platform focused on the Pakistan population.
Agreement with Pixel Colony, LLC
In February 2023, the Company entered into a binding
MOU with Pixel Colony, LLC (“Pixel”) pursuant to which Pixel will develop and maintain the GAMER Core Platform. The “GAMER
Core Platform” is a web platform that will allow the Company to create customized profiles for schools and universities with whom
the Company partners. The Company plans to also use the platform to conduct championships/tournaments; host / stream online events, record/display
game scores and player statistics and sell tickets and merchandise through the platform and leverage the audience and features into social
interactions between the users as well and expand the platform. Pixel may utilize third party developers and hardware. Pixel will provide
development services for the GAMER Core Platform, including without limitation ideation, architecture and development services and integration
of third-party software. The parties will develop a mutually agreed upon set of features, budget and timeline. Pixel also will be available
to provide ongoing development and maintenance to the Company under terms to be negotiated in good faith. The Company is obligated to
set aside approximately $
Legal
From time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business. There is currently no litigation that management believes will have a material impact on the financial position of the Company.
Note 7 – Subsequent Events
During October 2023, the Company raised gross proceeds
of approximately $
Management has evaluated events that occurred subsequent to the end of the reporting period and there are no other subsequent events to report.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing in this Quarterly Report on Form 10-Q. This discussion and other parts of this Quarterly Report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. As a result of many factors, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
Overview
We are a development-stage interactive esports event promotion and product marketing company, founded in November 2021. Our initial focus is on creating college, inter- college, inter-university and professional esports events for men’s and women’s teams, particularly esports opportunities involving colleges and universities in Pakistan. Though creating sports opportunities involving colleges and universities in Pakistan likely will remain our primary focus for at least 12 months, thereafter, over time, we intend to expand the range of our esports offerings, expand to other markets and eventually consider live sports. We will endeavor to integrate competitive events that include our teams and leagues with regional and global teams and leagues sponsored by others, including companies formed by certain of our stockholders to promote sports, including esports, in other countries. We have not conducted any operations ourselves, but conduct our operations in Pakistan through K2 Gamer, our 90% owned subsidiary (such acquisition was entered into in November 2022 but was not approved by the SECP until July 2023), and ESP, the affiliate of K2 Gamer with whom K2 Gamer has an assignment and consulting agreement. We acquired 90% of K2 Gamer so that it could be our operating subsidiary in Pakistan. Mr. Muhammed Jamal Qureshi is an owner of K2 Gamer and ESP as well as CEO and a director of K2 Gamer and ESP.
From inception in November 2021 through the present date, we have focused on having K2 Gamer and/or ESP enter into agreements with universities to undertake esports tournaments endorsed by the universities in which their students will participate, and for which the universities will provide marketing support, building the necessary infrastructure for our business, and conducting initial tournaments. The purpose of our initial tournaments was to refine our logistics and technology, demonstrate competence to universities, and provide a showcase to potential marketing partners, advertisers and other sponsors. We have not yet generated any income, nor has K2 Gamer or ESP.
During 2023, we anticipate that we will organize or co-organize approximately 12 or more tournaments. During the balance of 2023, we intend to commence solicitation of marketing partners, advertisers and other sponsors, with the goal of beginning to generate revenue thereafter. There is no assurance that we will succeed in this endeavor, achieve revenues, achieve revenues that exceed the cost of the tournaments, or generate a profit, based on our selling, general and administrative expenses.
Recent Events
Issuance of Common Stock in IPO
During October 2023, we raised gross proceeds of approximately $6,800,000 through our initial public offering (“IPO”), with net proceeds of approximately $5,435,000 after deducting underwriting discounts and commissions. In addition, the Company issued warrants to the underwriters to purchase up to 170,000 shares of the Company’s common stock at an exercise price of $5.20 per share. The warrants have a term of five years.
Components of Statements of Operations
Revenue and Cost of Revenue
We have not generated any revenue or cost of revenue to date.
General and Administrative Expenses
General and administrative expenses consist principally of public filing fees, general operating expenses, and other professional fees for consulting, legal, auditing and tax services.
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Critical Accounting Estimates
We discussed our accounting policies and significant assumptions used in our estimates in Note 2 of our audited financial statements included in the financial statements in our registration statement on Form S-1 (“Form S-1”), effective as of September 28, 2023, and that disclosure should be read in conjunction with the Quarterly Report on Form 10-Q. There have been no material changes during the three and nine months ended September 30, 2023 to our critical accounting policies, significant judgments and estimates disclosed in our Form S-1.
Results of Operations
Three and Nine months Ended September 30, 2023 compared with the Three and Nine months Ended September 30, 2022
The following table summarizes the results of our operations for each of the three month and nine month periods ended September 30, 2023 and 2022, together with the changes in those items in dollars and as a percentage:
| Three Months Ended | Nine months Ended | |||||||||||||||||||||||||||||
| September 30, | $ | % | September 30, | $ | % | |||||||||||||||||||||||||
| 2023 | 2022 | Change | Change | 2023 | 2022 | Change | Change | |||||||||||||||||||||||
| Revenue | $ | — | $ | — | $ | — | * | $ | — | $ | — | $ | — | * | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||||||
| Cost of revenue | — | — | — | * | — | — | — | * | ||||||||||||||||||||||
| General and administrative | 165,822 | 145,763 | 20,059 | 14% | 297,405 | 145,838 | 151,567 | 104% | ||||||||||||||||||||||
| Total costs and expenses | 165,822 | 145,763 | 20,059 | 14% | 297,405 | 145,838 | 151,567 | 104% | ||||||||||||||||||||||
| Loss from operations | (165,822 | ) | (145,763 | ) | (20,059 | ) | 14% | (297,405 | ) | (145,838 | ) | (151,567 | ) | 104% | ||||||||||||||||
| Interest income/(expense) | (5,244 | ) | — | (5,244 | ) | * | (13,794 | ) | — | (13,794 | ) | * | ||||||||||||||||||
| Net loss | $ | (171,066 | ) | $ | (145,763 | ) | $ | (25,303 | ) | 17% | $ | (311,199 | ) | $ | (145,838 | ) | $ | (165,361 | ) | 113% | ||||||||||
| * | Not meaningful |
General and Administrative Expenses
General and administrative expenses were approximately $166,000 for the three months ended September 30, 2023, compared with $146,000 for the three months ended September 30, 2022. The increase in general and administrative expenses was primarily driven by an increase of approximately $70,000 in public filing fees, offset by a decrease of approximately $42,000 in accounting fees.
General and administrative expenses were approximately $297,000 for the nine months ended September 30, 2023, compared with $146,000 for the nine months ended September 30, 2022. The increase in general and administrative expenses was primarily driven by an increase of approximately $70,000 in public filing fees, $29,000 in general operating expenses, and $82,000 in consulting and legal fees, offset by a decrease of approximately $32,000 in accounting fees.
Liquidity and Capital Resources
As of September 30, 2023 and December 31, 2022, we had cash and cash equivalents of approximately $72,000 and $90,000, respectively.
We have financed our operations through the issuance of common stock. In October 2023, we issued 1,700,000 shares of common stock for total gross proceeds of $6,800,000 through an initial public offering (“IPO”). We received net proceeds after commissions and fees of approximately $5,435,000.
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Funding Requirements
We believe the net proceeds of the IPO will be sufficient to meet our cash, operational and liquidity requirements for at least 24 months after the date of this quarterly report.
We cannot specify with certainty all of the particular uses for the net proceeds to us from the IPO. Accordingly, our management will have broad discretion in the application of these proceeds.
We intend to use the net proceeds from the IPO for operating expenses, marketing, event expenses, technology development, retention of additional staff in the United States and Pakistan, working capital and general corporate purposes, including perhaps acquisitions of game licenses, technology platform agreements, data development and strategic partnerships. Investors are cautioned, however, that expenditures may vary substantially from these uses. Investors will be relying on the judgment of our management, who will have broad discretion regarding the application of the proceeds of the IPO. The amounts and timing of our actual expenditures will depend upon numerous factors, including the amount of cash generated by our operations and the amount of competition we face and other operational factors. We may find it necessary or advisable to use portions of the proceeds from the IPO for other purposes.
Because of the numerous risks and uncertainties associated with establishing a new business in India, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on many factors, including:
| ● | Failure of future market acceptance of our mobile esports products and services; | |
| ● | Increased levels of competition; | |
| ● | Changes in political, economic or regulatory conditions generally and in the markets in which we operate; | |
| ● | Our ability to retain and attract senior management and other key employees; | |
| ● | Our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; and | |
| ● | Other risks. |
Cash Flows
The following table summarizes our sources and uses of cash and cash equivalents:
| Nine months Ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | (307,613 | ) | $ | (145,838 | ) | ||
| Investing activities | — | — | ||||||
| Financing activities | 292,766 | 604,471 | ||||||
| Effect of exchange rate changes on cash and restricted cash | (2,135 | ) | — | |||||
| Net increase (decrease) in cash and restricted cash | $ | (16,982 | ) | $ | 458,633 | |||
Operating Activities
Net cash used in operating activities increased by approximately $162,000 for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022. The increase was primarily due to an increase in general and administrative expenses of approximately $152,000 and a decrease in accounts payable and accrued expenses of $15,000 offset by changes in other current assets of $5,000.
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Investing Activities
We had no cash investing activities for the nine months ended September 30, 2023 and September 30, 2022.
Financing activities
Net cash used in financing activities changed by approximately $312,000 for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022. The change was primarily due to approximately $412,000 of net proceeds received in the nine months ended September 30, 2022 for the issuance of common stock and collection of stock subscription receivables compared to nil proceeds in the nine months ended September 30, 2023. The additional change of approximately $100,000 was from a net increase of $29,000 in proceeds from notes payable and advances from related party offset by a decrease of $71,000 in payments of deferred offering costs.
JOBS Act
As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act, we can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies.
Subject to certain conditions, as an emerging growth company, we rely on certain of these exemptions, including without limitation:
| ● | reduced disclosure about our executive compensation arrangements; | |
| ● | no advisory votes on executive compensation or golden parachute arrangements; and | |
| ● | exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. |
We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; (ii) the last day of 2027; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. We may choose to take advantage of some but not all of these exemptions. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock.
Smaller Reporting Company
As a “smaller reporting company,” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, in addition to providing reduced disclosure about our executive compensation arrangements and business developments, among other reduced disclosure requirements available to smaller reporting companies, we present only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Management, with the participation of the Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2023 due to the fact that a written confirmation from our independent auditors was not required to confirm that they had completed their review of our Form 10-Q and approved its filing. Management subsequently implemented a policy requiring written confirmation from our independent auditors before filing a Form 10-Q.
Changes in Internal Control over Financial Reporting
With the exception of the policy implemented as described above, there were no changes in our internal control over financial reporting during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION.
Item 1. Legal Proceedings.
We are not currently subject to any legal proceedings or claims, however, we may become subject to legal proceedings and claims arising in connection with the normal course of our business.
Item 6. Exhibits.
The exhibits listed on the Exhibit Index hereto are filed or furnished (as stated therein) as part of this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
| Exhibit No. | Document | |
| 31.1* | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. | |
| 31.2* | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. | |
| 32.1** | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. | |
| 32.2** | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. | |
| 101* | The following materials from Gamer Pakistan Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Extensible Business Reporting Language (iXBRL): (i) Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022, (ii) Statements of Operations (unaudited) for the nine months ended September 30, 2023 and 2022 (iii) Statement of Stockholders’ Equity (unaudited) for the nine months ended September 30, 2023 and 2022, (iv) Statements of Cash Flows (unaudited) for the nine months ended September 30, 2023 and 2022 and (v) Notes to Financial Statements (unaudited). | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
| ** | In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GAMER PAKISTAN INC. | ||
| DATE: March 15, 2024 | By: | /s/ James Knopf |
| James Knopf | ||
| Chief Executive Officer | ||
| GAMER PAKISTAN INC. | ||
| DATE: March 15, 2024 | By: | /s/ Jerry J. Goldstein |
| Jerry J. Goldstein | ||
| Interim Chief Financial Officer | ||
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