NFT Gaming Company (NFTG) Launches $7 Million Micro IPO

What is NFT Gaming Company?

Roseland, New Jersey-based The NFT Gaming Company (NFTG) was founded to develop proprietary games and related Non-Fungible Token (NFT) technologies to provide unique experiences to players worldwide.

The management is led by the chairman of the board and CEO, Vadim Mats, who has been with the firm since 2022 and was previously CFO of DatChat (DATS) and before that CFO at Grand Private Equity, a fintech-centric family office.

The company’s primary offering under development is Gaxos, which will seek to bring together players, publishers and developers on a platform with the ability to earn rewards and “participate in other opportunities.”

The platform will initially be built on the Polygon Network (MATIC).

As of June 30, 2022, NFT Gaming has ordered an investment of $2.1 million in market capitalization as of June 30, 2022 from investors.

The firm has yet to book or receive any revenue, but is likely to promote its platform via digital media and online and offline events.

NFT Gaming’s market and competition

According to a 2022 market research report by SkyQuest Technology, the global market for NFTs was estimated at $15.7 billion in 2021 and is projected to reach $122 billion by 2028.

This represents an expected CAGR of 34.1% from 2022 to 2028.

The main drivers of this expected growth are an increasing demand for digital artworks, both visual and audio, increasing awareness of the technology among a wider group of consumers and easier access to information and purchasing options.

However, growth in the market has been particularly volatile, with strong growth in the summer of 2021 followed by a sharp drop in interest in the summer of 2022.

Major competing or other industry participants include:

• Coin base

• Open sea

• Larva Labs

• Cloudflare

• Dapper Labs

• Binance

• Skills laboratories

• Second

NFT Gaming’s IPO date and details

The date of the initial public offering, or IPO, of The NFT Gaming Company has not yet been announced by the company or its underwriter.

(Warning: Compared to stocks with more history, IPOs typically have less information for investors to consider and analyze. For this reason, investors should exercise caution when considering investing in an IPO, or immediately after an IPO. Investors should also stay within Remember that many IPOs are heavily marketed, past company performance is no guarantee of future performance and potential risks may be underestimated.)

NFT Gaming intends to raise $7 million in gross proceeds from an initial public offering of its common stock, offering approximately 1.7 million shares at a proposed price of $4.15.

No existing shareholders have shown an interest in buying shares at the IPO price.

Assuming a successful IPO, the company’s enterprise value at IPO will be approximately $43.1 million, excluding the effect of over-allotment options.

The ratio between floating and outstanding shares (excluding over-allotments from the insurer) will be approx. 13.93%. A figure below 10% is generally considered a “low-float” stock, which can be subject to significant price volatility.

Management says it will use the net proceeds from the IPO as follows:

We intend to use the net proceeds from this offering for product development, marketing, working capital and general corporate purposes.

(Source – SEC)

The management’s presentation of the company’s roadshow is not available.

Regarding pending litigation, management says the firm is not currently involved in any legal proceedings that would have a material adverse effect on its operations or financial condition.

The only listed bookrunner of the IPO is EF Hutton.

How to invest in company shares: 7 steps

Investors can buy shares in the same way as they can buy shares in other listed companies, or as part of the pre-IPO allocation.

Note: This report is not a recommendation to buy shares or other securities. For investors who are interested in pursuing a potential investment after the IPO is completed, the following steps to purchase shares will be helpful.

Step 1: Understand the company’s financial history

Although there is not much public financial information available about the company, investors can look at the company’s financial history on Form S-1 or F-1 SEC filings ( source ).

Step 2: Review the company’s financial reports

The primary financial statements available to publicly traded companies include the income statement, balance sheet and cash flow statement. These financial statements can help investors learn about a company’s capitalization structure, cash flow trends and financial position.

My summary of the firm’s recent financial results is below:

The company’s finances have shown no income since inception and significant R&D and G&A costs related to the platform development work.

Free cash flow for the six months ended June 30, 2022 was negative ($587,536).

The firm currently plans to pay no dividends on its common stock and retain any future earnings for reinvestment back into the company’s growth initiatives.

Step 3: Evaluate the company’s potential against your investment horizon

When investors consider potential stocks to buy, it is important to consider their time horizon and risk tolerance before buying stocks. For example, a swing trader may be interested in short-term growth potential, while a long-term investor may prioritize strong financials over short-term price movements.

Step 4: Choose a brokerage house

Investors who do not already have a trading account will start with the selection of a brokerage firm. The types of accounts commonly used for trading stocks include a standard brokerage account or a retirement account such as an IRA.

Investors who prefer advice for a fee can open a trading account with a full-service broker or an independent investment advisor, and those who want to manage their portfolio at a reduced cost can choose a discount brokerage firm.

Step 5: Choose an investment size and strategy

Investors who have decided to buy shares in the company should consider how many shares they will buy and which investment strategy they will use for their new position. The investment strategy will guide an investor’s holding period and exit strategy.

Many investors choose to buy and hold shares for longer periods. Examples of basic investment strategies include swing trading, short-term trading or investing over a long-term holding period.

For investors who wish to receive an allotment of shares prior to the IPO at the IPO price, they will “indicate interest” with their broker in advance of the IPO. Indicating an interest is not a guarantee that the investor will receive an allotment of shares prior to the IPO.

Step 6: Choose an order type

Investors have many choices for placing orders to buy stocks, including market orders, limit orders, and stop orders.

• Market order: This is the most common type of order made by retail traders. A market order executes a trade immediately at the best available transaction price.

• Limit Order: When an investor places a buy limit order, they specify a maximum price to be paid for the shares.

• Stop order: A buy stop order is an order to buy at a specified price, known as the stop price, which will be higher than the current market price. In the case of a buy stop, the stop price will be lower than the current market price.

Step 7: Submit the trade

After investors fund their account with cash, they can decide on an investment size and order type, then submit the trade to place an order. If the trade is a market order, it is filled immediately at the best available market price.

However, if investors submit a limit order or stop order, the investor may have to wait until the stock reaches the target price or stop-loss price for the trade to complete.

The bottom line

NFTG is seeking public capital market funding to advance its NFT Gaming platform and related technologies.

The market opportunity for NFT products and services is large and is expected to grow at a very high growth rate in the coming years, so the company enjoys strong industry growth dynamics in its favour.

EF Hutton is the sole underwriter and IPOs led by the firm over the past 12 months have generated an average return of negative (68%) since IPO. This is a performance at the bottom for all major underwriters in the period.

The primary risk to the company’s prospects is the lack of revenue history and major competitors in the form of major exchanges and existing platforms.

In terms of valuation, management is asking investors to pay an enterprise value of around $43 million upon IPO, despite no revenue and an incomplete platform.

While the NFT space has shown remarkable growth recently, it has also produced extremely high volatility, with the NFT market now generating a fraction of the user volume compared to summer 2021.

The low nominal price of the stock combined with the company’s focus on the crypto space may attract day traders seeking volatility.

However, given the company’s lack of revenue, the IPO is purely speculative at this stage, so my opinion on it is on hold.