We plan to initially launch our own proprietary games that are simple and fun to play, and that offer gamers the ability to mint their own affordable NFTs within the Platform, with unique and exclusive features, that can be utilized across the network of games and Platform that we plan to build.

Non-Fungible Tokens

A non-fungible token, or NFT, is a digital, cryptographic token on the blockchain that certifies a unique asset. When someone “mints” an NFT, they create a file that lives on a blockchain that cannot be edited or deleted. Because the file exists on a blockchain, it can be viewed publicly, meaning the item’s provenance is public and verifiable. While NFTs have been generally built on the Ethereum blockchain, recently other blockchains, such as Polygon, have also emerged as a building block for NFTs, some of which offer lower-cost network fees and faster transaction processing speeds. Our NFTs will be launched on the Polygon network, which is an Ethereum compatible blockchain building platform (i.e. Polygon’s parent chain is Ethereum) that provides a secure and lower-cost alternative to Ethereum’s escalating gas fees and wait times without sacrificing the security granted by the Ethereum blockchain.

NFTs are digital assets that can represent a unique real-world asset, such as art, music, in-game items, or videos. NFTs are most-commonly powered by smart contracts on the Ethereum blockchain. Ethereum is a decentralized blockchain platform that establishes a peer-to-peer network that securely executes and verifies application code, called smart contracts. “Smart contracts” is a term used to describe computer code that automatically executes all or parts of an agreement and is stored on a blockchain-based platform. In the case of in-game NFTs, these NFTs generally can be images, skins, virtual real estate, pets, or other items that can be owned and held in a digital wallet. A digital wallet (or e-wallet) is a software-based system that securely stores users’ payment information and passwords for numerous payment methods and websites. Currently, NFTs are being used to sell a wide range of virtual collectibles, including:

•        virtual sports trading cards and video clips;

•        music and album cover art;

•        art, memes, or other digital images;

•        in-game assets; and

•        virtual real estate, fashion, and other real-world representations in the metaverse, a virtual-reality space in which users can interact with a computer-generated environment and other users.

Our goal is to develop a robust digital gaming platform, to be named “Gaxos,” that brings together gamers, developers, and publishers, and which incorporates and offers them the ability to augment their games and gaming experiences with unique and exclusive features, as well as the opportunity to earn rewards and participate in other opportunities. The Platform is intended to include a wide variety of games that span various genres, including role-playing (RPG/ARPG), sports, simulation, puzzles, action-adventures, shooters (FPS/TPS), battle arena-fighting, and other skill-based games.

We believe that the ability to mint and use NFTs in-game that are distinguishable and tamper-proof offers gamers more power over their asset and the ability to have an augmented and exciting gaming experiences.

Polygon Network (MATIC)

Similar to Ethereum, Polygon is a decentralized blockchain with smart contract functionality. Ethereum is a “Layer 1” blockchain that has higher gas fees that are used to power transactions. These fees tend to be significantly higher than Polygon. Polygon is a “Layer 2” scaling solution to Ethereum built on top of Ethereum that uses a proof-of-stake sidechain to process transactions and therefore reduces purchase and transfer transaction gas fees.

The Polygon network uses MATIC tokens for governance and security. Validators or operators that ensure security and validate blocks on the Polygon network receive network fees in the form of MATIC tokens. MATIC tokens allow developers to connect their Ethereum compatible smart contracts in Polygon. Polygon is often chosen by developers for its speed and lower transaction costs while maintaining full compatibility with Ethereum, enabling developers to move their code freely between the two blockchains.

The current median gas price on the Polygon network as of April 29, 2022, is less than $0.01 as compared to $2.03 on the Ethereum network. We do not currently anticipate any material changes in gas prices on the Polygon network that would affect our business model. In general, if gas prices become too high, demand for transaction processing on the network will decrease and thereby reduce the demand for our NFTs. Reduced demand resulting from fees that are too high will have a material adverse effect on our business. However, if we had chosen to work primarily off of Ethereum instead of Polygon, the adverse impact would be significantly higher due to Ethereum’s higher transaction fees.

(Note: The NFT Gaming Co. Inc. priced its IPO on Feb. 14, 2023, in sync with the terms in its prospectus – 1.69 million shares at $4.15 per share to raise $7.0 million. The stock started trading Wednesday, Feb. 15, 2023, on the NASDAQ. Background: The NFT Gaming Co. Inc. filed an S-1/A dated Jan. 3, 2023, in which it changed the sole book-runner on its IPO to Laidlaw & Co. (UK) from EF Hutton. The NFT Gaming Co. filed its S-1 on Oct. 14, 2022, for an IPO of 1.69 million shares (1,686,747 shares) at $4.15 per share. **From the prospectus: “We plan to effect a 1-for-1.33 reverse split of our outstanding shares of common stock prior to effectiveness of the registration statement of which this prospectus forms a part (the “Reverse Stock Split”).”