Item
1. Financial Statements
Good
Gaming, Inc.
Consolidated
Balance Sheets
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
June 30, 2020
|
|
|
December 31, 2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
2,142
|
|
|
$
|
2,022
|
|
Prepaid expenses- related party
|
|
|
24,375
|
|
|
|
8,750
|
|
Total Current Assets
|
|
|
26,517
|
|
|
|
10,772
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment, Net
|
|
|
6,955
|
|
|
|
5,180
|
|
Gaming Software, Net
|
|
|
-
|
|
|
|
-
|
|
TOTAL ASSETS
|
|
$
|
33,472
|
|
|
$
|
15,952
|
|
LIABILITIES & STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Expenses
|
|
$
|
149,123
|
|
|
$
|
133,260
|
|
Derivative Liability
|
|
|
1,190,730
|
|
|
|
777,118
|
|
Notes Payable
|
|
|
13,440
|
|
|
|
13,440
|
|
Convertible Debentures, current
|
|
|
100,260
|
|
|
|
100,260
|
|
Notes Payable - ViaOne Services
|
|
|
1,964,419
|
|
|
|
1,738,295
|
|
Total Current Liabilities
|
|
|
3,417,972
|
|
|
|
2,762,373
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
3,417,972
|
|
|
|
2,762,373
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
Series A Preferred Stock
|
|
|
|
|
|
|
|
|
Authorized: 2,000,000 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 7,500 Shares
|
|
|
8
|
|
|
|
8
|
|
Series B Preferred Stock
|
|
|
|
|
|
|
|
|
Authorized: 249,999 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 68,997 Shares
|
|
|
69
|
|
|
|
69
|
|
Series C Preferred Stock
|
|
|
|
|
|
|
|
|
Authorized: 1 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 1 Shares
|
|
|
1
|
|
|
|
1
|
|
Series D Preferred Stock
|
|
|
|
|
|
|
|
|
Authorized: Authorized: 350 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 0 Shares,
|
|
|
-
|
|
|
|
-
|
|
Common Stock
|
|
|
|
|
|
|
|
|
Authorized: 100,000,000 Common Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 53,988,755 Shares
|
|
|
53,988
|
|
|
|
53,988
|
|
Additional Paid-In Capital
|
|
|
4,210,995
|
|
|
|
4,210,995
|
|
Accumulated Deficit
|
|
|
(7,649,561
|
)
|
|
|
(7,011,482
|
)
|
Total Stockholders’ Deficit
|
|
|
(3,384,500
|
)
|
|
|
(2,746,421
|
)
|
TOTAL LIABILITIES & STOCKHOLDERS DEFICIT
|
|
$
|
33,472
|
|
|
$
|
15,952
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Good
Gaming, Inc
Consolidated
Statement of Operations
(Expressed
in U.S Dollars)
(Unaudited)
|
|
For the three months ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Revenues
|
|
$
|
4,544
|
|
|
$
|
7,047
|
|
Cost of Revenues
|
|
|
3,262
|
|
|
|
2,800
|
|
Gross Profit
|
|
|
1,282
|
|
|
|
4,247
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
General & Administrative
|
|
|
9,476
|
|
|
|
12,934
|
|
Contract Labor
|
|
|
4,500
|
|
|
|
4,500
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization Expense
|
|
|
2,787
|
|
|
|
121,013
|
|
Professional Fees
|
|
|
88,533
|
|
|
|
90,036
|
|
Total Operating Expenses
|
|
|
105,296
|
|
|
|
228,483
|
|
Operating Loss
|
|
|
(104,014
|
)
|
|
|
(224,236
|
)
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
Interest Income
|
|
|
-
|
|
|
|
-
|
|
Interest Expense
|
|
|
(7,931
|
)
|
|
|
(7,932
|
)
|
Loss on disposal of fixed assets
|
|
|
-
|
|
|
|
-
|
|
Gain (Loss) on Change in Fair Value of Derivative Liability
|
|
|
(442,066
|
)
|
|
|
(18,975
|
)
|
Total Other Income (Loss)
|
|
|
(449,997
|
)
|
|
|
(26,907
|
)
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(554,011
|
)
|
|
$
|
(251,143
|
)
|
|
|
|
|
|
|
|
|
|
Net Loss Per Share, Basic and Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding
|
|
|
53,988,755
|
|
|
|
53,853,338
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Good
Gaming, Inc
Consolidated
Statement of Operations
(Expressed
in U.S Dollars)
(Unaudited)
|
|
For the Six months ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Revenues
|
|
$
|
5,326
|
|
|
$
|
27,848
|
|
Cost of Revenues
|
|
|
6,522
|
|
|
|
9,362
|
|
Gross Profit
|
|
|
(1,196
|
)
|
|
|
18,466
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
General & Administrative
|
|
|
18,747
|
|
|
|
24,655
|
|
Contract Labor
|
|
|
9,000
|
|
|
|
27,328
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization Expense
|
|
|
3,560
|
|
|
|
243,127
|
|
Professional Fees
|
|
|
176,101
|
|
|
|
183,073
|
|
Total Operating Expenses
|
|
|
207,408
|
|
|
|
478,183
|
|
Operating Loss
|
|
|
(208,604
|
)
|
|
|
(459,717
|
)
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
Interest Income
|
|
|
-
|
|
|
|
-
|
|
Interest Expense
|
|
|
(15,863
|
)
|
|
|
(15,863
|
)
|
Loss on disposal of fixed assets
|
|
|
-
|
|
|
|
(17,233
|
)
|
Gain (Loss) on Change in Fair Value of Derivative Liability
|
|
|
(413,612
|
)
|
|
|
46,461
|
|
Total Other Income (Loss)
|
|
|
(429,475
|
)
|
|
|
13,365
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(638,079
|
)
|
|
$
|
(446,352
|
)
|
|
|
|
|
|
|
|
|
|
Net Loss Per Share, Basic and Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding
|
|
|
53,921,421
|
|
|
|
53,853,338
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Good
Gaming, Inc
Consolidated
Statements of Cash Flows
(Expressed
in U.S Dollars)
(Unaudited)
|
|
For
the Six Months Ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(638,079
|
)
|
|
$
|
(446,352
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments To Reconcile Net Loss to Net Cash Used In Operating Activities
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
3,560
|
|
|
|
243,127
|
|
Loss on disposal of fixed assets
|
|
|
-
|
|
|
|
17,233
|
|
Change In Fair Value Of Derivative Liability
|
|
|
413,612
|
|
|
|
(46,461
|
)
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Due from Affiliate
|
|
|
-
|
|
|
|
-
|
|
Prepaid expenses
|
|
|
(15,625
|
)
|
|
|
(16,250
|
)
|
Accounts Payable and Accrued Liabilities
|
|
|
15,863
|
|
|
|
5,583
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided By (Used in) Operating Activities
|
|
|
(220,669
|
)
|
|
|
(243,120
|
)
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of Property and Equipment
|
|
|
(5,335
|
)
|
|
|
(2,022
|
)
|
|
|
|
|
|
|
|
|
|
Net Cash Provided By (Used in) Investing Activities
|
|
|
(5,335
|
)
|
|
|
(2,022
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due To ViaOne Services
|
|
|
226,124
|
|
|
|
234,737
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided By (Used In) Financing Activities
|
|
|
226,124
|
|
|
|
234,737
|
|
|
|
|
|
|
|
|
|
|
Change in Cash and Cash Equivalents
|
|
|
120
|
|
|
|
(10,405
|
)
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, Beginning Of Period
|
|
|
2,022
|
|
|
|
12,449
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End Of Period
|
|
$
|
2,142
|
|
|
$
|
2,044
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Investing And Financing Activities
|
|
|
|
|
|
|
|
|
Common Shares Issued for Conversion Of Debt
|
|
$
|
-
|
|
|
$
|
290,134
|
|
Shares Issued For Acquisition Of Software
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Good
Gaming, Inc.
Statements
of Stockholders’ Equity (Deficit)
(Expressed
in U. S. Dollars)
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Series
A
|
|
|
Series
B
|
|
|
Series
C
|
|
|
Series
D
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
Balance, December 31, 2019
|
|
|
7,500
|
|
|
$
|
8
|
|
|
|
68,197
|
|
|
$
|
69
|
|
|
|
1
|
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
53,988,755
|
|
|
$
|
53,988
|
|
|
$
|
4,210,995
|
|
|
$
|
(7,011,482
|
)
|
|
$
|
(2,746,421
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(84,068
|
)
|
|
|
(84,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020
|
|
|
7,500
|
|
|
|
8
|
|
|
|
68,197
|
|
|
|
69
|
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,988,755
|
|
|
|
53,988
|
|
|
|
4,210,995
|
|
|
|
(7,095,550
|
)
|
|
|
(2,830,489
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(554,011
|
)
|
|
|
(554,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
|
|
7,500
|
|
|
$
|
8
|
|
|
|
68,197
|
|
|
$
|
69
|
|
|
|
1
|
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
53,988,755
|
|
|
$
|
53,988
|
|
|
$
|
4,210,995
|
|
|
$
|
(7,649,561
|
)
|
|
$
|
(3,384,500
|
)
|
The
accompanying notes are an integral part of these financial statements
Good
Gaming, Inc.
Statements
of Stockholders’ Equity (Deficit)
(Expressed
in U. S. Dollars)
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Series A
|
|
|
Series B
|
|
|
Series C
|
|
|
Series D
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
Balance, December 31, 2018
|
|
|
7,500
|
|
|
$
|
8
|
|
|
|
69,197
|
|
|
$
|
69
|
|
|
|
1
|
|
|
$
|
1
|
|
|
|
6
|
|
|
$
|
1
|
|
|
|
49,717,922
|
|
|
$
|
49,718
|
|
|
$
|
4,215,264
|
|
|
$
|
(5,880,713
|
)
|
|
$
|
(1,615,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred series B shares to common shares
|
|
|
-
|
|
|
|
-
|
|
|
|
(200
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,750,000
|
|
|
|
3,750
|
|
|
|
(3,750
|
)
|
|
|
-
|
|
|
|
-
|
|
Conversion of preferred series D shares to Common Shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
(1
|
)
|
|
|
520,833
|
|
|
|
520
|
|
|
|
(519
|
)
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(195,210
|
)
|
|
|
(195,210
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2019
|
|
|
7,500
|
|
|
|
8
|
|
|
|
68,997
|
|
|
|
69
|
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,988,755
|
|
|
|
53,988
|
|
|
|
4,210,995
|
|
|
|
(6,075,923
|
)
|
|
|
(1,810,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(251,143
|
)
|
|
|
(251,143
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2019
|
|
|
7,500
|
|
|
$
|
8
|
|
|
|
68,997
|
|
|
$
|
69
|
|
|
|
1
|
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
53,988,755
|
|
|
$
|
53,988
|
|
|
$
|
4,210,995
|
|
|
$
|
(6,327,066
|
)
|
|
$
|
(2,062,005
|
)
|
The
accompanying notes are an integral part of these financial statements
Good
Gaming, Inc.
Notes
to the Consolidated Financial Statements
(expressed
in U.S. dollars)
(Unaudited)
1.
|
Nature
of Operations and Continuance of Business
|
Good
Gaming, Inc. (Formerly HDS International Corp.) (the “Company”) was incorporated on November 3, 2008 under the laws
of the State of Nevada. The Company is a leading tournament gaming platform and online destination targeting over 250 million
e-sports players and participants worldwide that want to compete at the high school or college level. A substantial portion of
the Company’s activities has involved in developing a business plan and establishing contacts and visibility in the marketplace
and the Company has not generated any substantial revenue to date. Beginning in 2018, the Company began deriving revenue by providing
transaction verification services within the digital currency networks of cryptocurrencies. However, on December 12, 2018, the
Company discontinued such transaction verification services by dissolving Crypto Strategies Group, Inc., its wholly-owned subsidiary.
Going
Concern
These
financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its
assets and discharge its liabilities in the normal course of business. The Company has generated minimal revenues to date and
has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable
future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders,
the ability to raise equity or debt financing, and the attainment of profitable operations from the Company’s future business.
These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one
year from the issuance of these financial statements. These financial statements do not include any adjustments to the recoverability
and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable
to continue as a going concern.
2.
|
Summary
of Significant Accounting Policies
|
Basis
of Presentation
The
accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting
principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles in the United States 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 related to the fair values of convertible debentures, derivative
liability, stock-based compensation, and deferred income tax asset valuation allowances. 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.
Certain
reclassifications have been made to prior-year amounts to conform to the current period presentation.
Cash
Equivalents
The
Company considers all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents.
Amounts receivable from credit card processors are also considered cash equivalents because they are both short-term and highly
liquid in nature.
Intangible
Assets
Intangible
assets are carried at the purchased cost less accumulated amortization. Amortization is computed over the estimated useful lives
of the respective assets, generally five years.
Impairment
of Long-Lived Assets
Long-lived
assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based
on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement
of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use
is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported
at the lower of carrying amount or fair value less costs to sell.
Beneficial
Conversion Features
From
time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial
conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which
the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation
of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value
of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital.
The debt discount is amortized to interest expense over the life of the note using the effective interest method.
Derivative
Liability
From
time to time, the Company may issue equity instruments that may contain an embedded derivative instrument which may result in
a derivative liability. A derivative liability exists on the date the equity instrument is issued when there is a contingent exercise
provision. The derivative liability is recorded at its fair value calculated by using an option pricing model. The fair value
of the derivative liability is then calculated on each balance sheet date with the corresponding gains and losses recorded in
the statement of operations.
Basic
and Diluted Net Loss Per Share
The
Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic
and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available
to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive. At June 30, 2020 and December 31, 2019, the Company had 10,000,000 and 10,000,000
potentially dilutive shares from outstanding convertible debentures, respectively.
Income
Taxes
Potential
benefits of income tax losses are not recognized in the accounts until realization is more likely than not. Pursuant to ASC 740,
the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net
operating losses have not been recognized in these consolidated financial statements because the Company cannot be assured it
is more likely than not it will utilize the net operating losses carried forward in future years. Unrecognized tax positions,
if ever recognized in the consolidated financial statements, are recorded in the statement of operations as part of the income
tax provision. Our policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of the income
tax provision. The Company has no liability for uncertain tax positions. Unrecognized tax positions, if ever recognized in the
consolidated financial statements, are recorded in the statement of operations as part of the income tax provision. The Company’s
policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of the income tax provision.
The Company has no liability for uncertain tax positions.
Financial
Instruments
ASC
820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument categorized
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It
prioritizes the inputs into three levels that may be used to measure fair value:
Level
1
Level
1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level
2
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability
such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in
markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant
inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level
3
Level
3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to
the measurement of the fair value of the assets or liabilities.
Assets
and liabilities measured at fair value on a recurring basis were presented on the Company’s consolidated balance sheet as
at June 30, 2020 and 2019 as follows:
|
|
Fair Value Measurements at June 30, 2020 Using Fair Value Hierarchy
|
|
Description
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Derivative liability
|
|
$
|
1,190,730
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,190,730
|
|
Total
|
|
$
|
1,190,730
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,190,730
|
|
|
|
Fair Value Measurements at June 30, 2019 Using Fair Value Hierarchy
|
|
Description
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Derivative liability
|
|
$
|
528,337
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
528,337
|
|
Total
|
|
$
|
528,337
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
528,337
|
|
The
carrying values of all of our other financial instruments, which include accounts payable and accrued liabilities, and amounts
due to related parties approximate their current fair values because of their nature and respective maturity dates or durations.
Advertising
Expenses
Advertising
expenses are included in general and administrative expenses in the consolidated Statements of Operations and are expensed as
incurred. The Company incurred $958 and $1,050 in advertising and promotion expenses in the three months ended June 30, 2020 and
2019, respectively.
Revenue
Recognition
Revenue
is recognized in accordance with ASC 606. The Company performs the following five steps: (i) identify the contract(s) with a customer,
(ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction
price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance
obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under Topic 606, including
when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it
transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company
evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised
good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective
performance obligation when (or as) the performance obligation is satisfied. Revenues primarily include revenues from microtransactions.
Microtransaction revenues are derived from the sale of virtual goods to the Company’s players. Proceeds from the sales of
virtual goods directly are recognized as revenues when a player uses the virtual goods.
Recent
Accounting Pronouncements
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees
to record a right-of-use (“ROU”) asset and a corresponding lease liability on the balance sheet (with the exception
of short-term leases). This new standard is effective for annual reporting periods beginning after December 15, 2018, and interim
reporting periods within those annual reporting periods, with early adoption permitted. We adopted this new standard effective
January 1, 2019. Adoption did not have any effect on the Company as it does not have any leases.
The
Company has implemented all other new accounting pronouncements that are in effect. These pronouncements did not have any material
impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any
other new accounting pronouncements that have been issued that might have a material impact on its financial position or results
of operations.
3.
Other Assets
Property
and Equipment consisted of the following:
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Computers and servers
|
|
$
|
18,781
|
|
|
$
|
19,248
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation
|
|
|
(11,826
|
)
|
|
|
(8,733
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,955
|
|
|
$
|
10,515
|
|
Depreciation
expense for the six months ended June 30, 2020 and 2019 was $3,560 and $3,127, respectively.
In
March of 2019, the Company discontinued Minecade and Olimpo servers and decided to focus on Minecraft servers. The Company recognized
a loss of $17,233 on the disposal of these servers.
On
February 17, 2016, the Company acquired Good Gaming’s assets including intellectual property, trademarks, software code,
equipment and other from CMG Holdings Group, Inc. The Company valued the software purchased at $1,200,000. The software has a
useful life of 5 years. During the three months ended March 31, 2018, the Company acquired two additional software servers for
$26,250. During the 4th Quarter of 2018, the Company assessed the useful life of the software and determined that the remaining
useful life was 1.25 years. On December 31, 2019, the Company fully amortized the software. Amortization for the six months ended
June 30, 2020 and 2019 was $0 and $240,000, respectively.
The
software consisted of the following:
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Software
|
|
$
|
1,200,000
|
|
|
$
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
Accumulated Amortization
|
|
|
(1,200,000
|
)
|
|
|
(990,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
|
$
|
210,000
|
|
4.
Debt
Convertible
Debentures
On
April 15, 2015, the Company issued a convertible debenture with the principal amount of $100,000 to HGT Capital, LLC (“HGT”),
a non-related party. During the quarter ended June 30, 2015, the Company received the first $50,000 in payment. The remaining
$50,000 payment would be made at the request of the borrower. No additional payments have been made as of September 30, 2018.
Under the terms of the debentures, the amount was unsecured and was due on October 16, 2016. The note is currently in default
and bears an interest of 22% per annum. It was convertible into shares of common stock any time after the maturity date at a conversion
rate of 50% of the average of the five lowest closing bid prices of the Company’s common stock for the thirty trading days
ending one trading day prior to the date the conversion notice was sent by the holder to the Company. On September 21, 2018, the
Company entered into a modification agreement with HGT with respect to the convertible promissory note which has a balance of
$107,238. Pursuant to such modification agreement, all defaults were waived and it was agreed that such note will convert at a
25% discount to the market rather than the default rate. HGT also agreed to certain sale restrictions which limit the amount of
shares that they can sell in any month for the next three months. HGT also agreed to dismiss, with prejudice, the lawsuit that
it had filed against the Company. On November 29, 2018, HGT converted $6,978 of a convertible note into 1,655,594 shares of the
Company’s common stock.
The
Company entered into a line of credit agreement (“Line Of Credit”) with ViaOne on September 27, 2018 (the “Effective
Date”). This Line of Credit dated as of, was entered into by and between the Company and ViaOne. The Company had an immediate
need for additional capital and asked ViaOne to make a new loan(s) in an initial amount of $25,000 on the Effective Date (the
“New Loan”). The Company may need additional capital and ViaOne has agreed pursuant to this Line of Credit to provide
for additional advances, although ViaOne shall have no obligation to make any additional loans. Any further New Loans shall be
memorialized in a promissory note with substantially the same terms as the New Loan and shall be secured by all of the assets
of the Company. On or before the Effective Date, the Company may request in writing to ViaOne that it loan the Company additional
sums of up to $250,000 and within five days of such request(s), ViaOne shall have the right, but not an obligation, to make additional
loans to the Company and the Company shall in turn immediately issue a note in the amount of such loan. In consideration for making
the New Loan, the Company entered into a security agreement whereby ViaOne received a senior security interest in all of the assets
of the Company.
5.
|
Derivative
Liabilities
|
The
following inputs and assumptions were used to value the convertible debentures outstanding during the years ended June 30, 2020
and June 30, 2019:
The
projected annual volatility for each valuation period was based on the historic volatility of the Company of 256.8% and 231.1%
at June 30, 2020 and 2019, respectively. The risk free rate was 0.13% and 2.18% at June 30, 2020 and 2019, respectively. The expected
life was one year and the dividend yield was 0% for each year.
A
summary of the activity of the derivative liability is shown below:
Balance, June 30, 2018
|
|
$
|
268,031
|
|
Change in value
|
|
|
260,306
|
|
Balance, June 30, 2019
|
|
|
528,337
|
|
Change in value
|
|
|
662,393
|
|
Balance, June 30, 2020
|
|
|
1,190,730
|
|
Share
Transactions for the Quarter Ended June 30, 2019:
On
January 02, 2019, Lincoln Acquisition converted 200 shares of Series B Preferred Stock into 3,750,000 shares of the Company’s
common stock
On
January 10, 2019, RedDiamond converted 6 shares of Series D Preferred Stock into 520,833 shares of the Company’s common
stock.
Share
Transactions for the Quarter Ended June 30, 2020:
None.
Our
Articles of Incorporation authorize us to issue up to 2,250,350 shares of preferred stock, $0.001 par value. Of the 2,250,350
authorized shares of preferred stock, the total number of shares of Series A Preferred Stock the Corporation shall have the authority
to issue is 2,000,000, with a stated par value of $0.001 per share, the total number of shares of Series B Preferred Stock the
Corporation shall have the authority to issue is 249,999, with a stated par value of $0.001 per share, the total number of shares
of Series C Preferred Stock the Corporation shall have the authority to issue is 1, with a stated par value of $0.001 per share,
and the total number of shares of Series D Preferred Stock the Corporation shall have the authority to issue is 350, with a stated
par value of $0.001 per share. Our Board of Directors is authorized, without further action by the shareholders, to issue shares
of preferred stock and to fix the designations, number, rights, preferences, privileges and restrictions thereof, including dividend
rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking fund terms. We believe that
the Board of Directors’ power to set the terms of, and our ability to issue preferred stock, will provide flexibility in
connection with possible financing or acquisition transactions in the future. The issuance of preferred stock, however, could
adversely affect the voting power of holders of common stock and decrease the amount of any liquidation distribution to such holders.
The presence of outstanding preferred stock could also have the effect of delaying, deterring or preventing a change in control
of our company.
As
of June 30, 2020, we had 7,500 shares of our Series A preferred stock, 68,997 shares of Series B preferred stock, 1 shares of
Series C preferred stock, and 0 share of Series D preferred stock issued and outstanding.
The
7,500 issued and outstanding shares of Series A Preferred Stock are convertible into shares of common stock at a rate of 20 common
shares for each Series A Preferred Share. The 68,997 issued and outstanding shares of Series B Preferred Stock are convertible
into shares of common stock at a rate of 200 common shares for each Series B Preferred Share. If all of our Series A Preferred
Stock and Series B Preferred Stock are converted into shares of common stock, the number of issued and outstanding shares of our
common stock will increase by 13,949,400 shares.
The
one issued and outstanding shares of Series C Preferred Stock has voting rights equivalent to 51% of all shares entitled to vote
and is held by ViaOne Services LLC, a Company controlled by our CEO.
The
Series D Preferred Stock can be convertible into shares of common stock at the lower of the Fixed Conversion Price ($.06 per share)
or at the VWAP which shall be defined as the average of the five (5) lowest closing prices during the 20 days prior to conversion.
We did not have any share of Series D preferred stock issued and outstanding as of June 30, 2020.
The
holders of Series A, Series B, Series C and Series D have a liquidation preference to the common shareholders.
In
connection with the $100,000 convertible debenture issued to HGT Capital, LLC (“HGT”), the Company issued HGT a warrant
to purchase 100,000 shares of the Company’s common stock at $1.00 per share. This warrant was not exercised and expired
on April 15, 2020.
9.
|
Related
Party Transactions
|
On
or around April 7, 2016, Silver Linings Management, LLC funded the Company $13,440 in the form of convertible debentures secured
by certain high-powered gaming machines purchased from XIDAX. Such note bore interest at a rate of 10% per annum, payable in cash
or kind at the option of the Company, matured on April 1, 2018, and was convertible into Series B Preferred shares at the option
of the holder at any time. On January 08, 2019, Silver Linings Management, LLC converted its Series B Preferred shares into shares
of the Company’s Common Stock.
On
November 30, 2016, ViaOne purchased a Secured Promissory Note equal to a maximum initial principal amount of $150,000 issued by
the Company to ViaOne. As additional advances were made by ViaOne to the Company, the principal amount of the Note was increased
to $225,000 and $363,000 by amendments dated January 31, 2017 and March 1, 2017, respectively.
On
May 5, 2017, ViaOne delivered a default notice to the Company pursuant to Section 6 of the Note Purchase Agreement but has subsequently
extended the due date and has increased the funding up to One Million ($1,000,000) dollars. After giving the Company a fifteen
(15) day notice period to cure the default under the Stock Pledge Agreement, dated November 30, 2016, entered by and among the
Company, CMG and ViaOne (“Pledge Agreement”), ViaOne took possession of the Series C Stock, which was subject of the
Pledge Agreement.
The
Secured Promissory Note as amended increased from time to time due to additional advances provided to the Company by ViaOne.
On
September 1, 2017, the Company executed an amended Employee Services Agreement with ViaOne which stipulated that ViaOne would
continue providing to the Company services relating to the Company’s human resources, marketing, advertising, accounting
and financing for a monthly management fee of $25,000. This agreement was amended on January 1, 2018. The accrued monthly management
fees, $100,000 at December 31, 2017, are convertible by ViaOne into the Company’s common stock at a rate of 125% of the
accrued fees at a conversion price of (i) $0.05 per share; or (ii) the volume weighted adjusted price (“VWAP”) of
the common stock on the 14th day of each month if the 14th of that month is a trading day. In the event the 14th day of a month
falls on a Saturday, Sunday, or a trading holiday, the VWAP of the Common Stock will be valued on the last trading day before
the 14th day of the month.
On
September 27, 2018, the Company and ViaOne, entered into a Line of Credit Agreement (the “LOC Agreement”), pursuant
to which the Company issued a secured promissory note with the initial principal amount of $25,000 to ViaOne in exchange for a
loan of $25,000 (the “Initial Loan Amount”). In accordance with this Agreement, the Company may request ViaOne to
provide loans of up to $250,000, including the Initial Loan Amount, and ViaOne has the right to decide whether it will honor such
request. The Initial Loan Amount became due on September 30, 2019 (the “Maturity Date”) and bore an interest rate
of 8.0% per annum. The unpaid principal and interest of the Promissory Note after the Maturity Date accrued interest at a rate
of 18.0% per annum. The principal amount of the Promissory Note may increase from time to time up to $250,000 in accordance with
the terms and conditions of the Agreement. In connection with the Agreement and Promissory Note, the Company and ViaOne executed
a security agreement dated September 27, 2018 whereby the Company granted ViaOne a security interest in all of its assets, including
without limitation, cash, inventory, account receivables, real property and intellectual properties, to secure the repayment of
the loans made pursuant to the LOC Agreement and Promissory Note.
As
of June 30, 2020, the total amount the Company owed to ViaOne Services was $1,964,419.
The
Company’s Chairman and Chief Executive Officer is the Chairman of ViaOne.
The
Company has a net operating loss carried forward of $3,894,866 available to offset taxable income in future years.
The
significant components of deferred income tax assets and liabilities at June 30, 2020 and 2019 are as follows:
|
|
2020
|
|
|
2019
|
|
Net Operating Loss Carryforward
|
|
$
|
817,922
|
|
|
$
|
607,178
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(817,922
|
)
|
|
$
|
(607,178
|
)
|
|
|
|
|
|
|
|
|
|
Net Deferred Tax Asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The
income tax benefit has been computed by applying the weighted average income tax rates of the United States (federal and state
rates) of 21% to a net loss before income taxes calculated for each jurisdiction. The tax effects of significant temporary differences,
which comprise future tax assets and liabilities, are as follows:
|
|
2020
|
|
|
2019
|
|
Income tax recovery at statutory rate
|
|
$
|
(133,997
|
)
|
|
$
|
(93,734
|
)
|
|
|
|
|
|
|
|
|
|
Valuation allowance change
|
|
|
133,997
|
|
|
$
|
(73,734
|
)
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
11.
Commitments and Contingencies
None.
12.
Subsequent Events
None
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Cautionary
Statements
This
Quarterly Report on Form 10-Q (“Form 10-Q”) may contain “forward-looking statements,” as that term is
used in federal securities laws, about Good Gaming, Inc. (“GMER,” “we,” “our,” “us,”
the “Company,” “management”) and its financial condition, results of operations and business. These statements
include, among others:
●
|
statements
concerning the potential benefits that we may experience from our business activities and certain transactions we contemplate
or have completed; and
|
|
|
●
|
statements
of GMER’s expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not
historical facts. These statements may be made expressly in this Form 10-Q. You can find many of these statements by looking
for words such as “believes,” “expects,” “anticipates,” “estimates,” “opines,”
or similar expressions used in this Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks
and uncertainties that may cause GMER’s actual results to be materially different from any future results expressed
or implied by GMER in those statements. The most important facts that could prevent GMER from achieving its stated goals include,
but are not limited to, the following:
|
(a)
|
volatility
or decline of our stock price;
|
|
|
(b)
|
potential
fluctuation of quarterly results;
|
|
|
(c)
|
failure
of GMER to achieve revenues or profits;
|
|
|
(d)
|
inadequate
capital to continue or expand our business, and inability to raise additional capital or financing to implement our business
plans;
|
(e)
|
decline
in demand for GMER’s products and services;
|
|
|
(f)
|
rapid
adverse changes in markets;
|
|
|
(g)
|
litigation
with or legal claims and allegations by outside parties against us, including but not limited to challenges to our intellectual
property rights; and
|
|
|
(h)
|
insufficient
revenues to cover operating costs.
|
There
is no assurance that GMER will be profitable, able to successfully develop, manage or market its products and services, be able
to attract or retain qualified executives and personnel, able to obtain customers for its products or services, additional dilution
in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, the exercise of
outstanding warrants and stock options, or the conversion of convertible promissory notes, and other risks inherent in GMER’s
businesses.
Because
the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by
the forward-looking statements. GMER cautions you not to place undue reliance on the statements, which speak only as of the date
of this Form 10-Q. The cautionary statements contained or referred to in this section should be considered in connection with
any subsequent written or oral forward-looking statements that GMER or persons acting on its behalf may issue. GMER does not undertake
any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking
statements to reflect events or circumstances after the date of this Form 10-Q, or to reflect the occurrence of unanticipated
events.
Overview
The
Company was incorporated on November 3, 2008 under the laws of the State of Nevada, to engage in certain business services. Our
goal is to become a leading tournament gaming provider as well as an online destination, targeting over 250 million esports players
and participants worldwide that want to compete at the high school or college level. We are a developmental stage business, have
generated limited revenues to date and have a history of operating losses.
The
Good Gaming platform was established in early 2014 by its founding members who recognized the need that millions of gamers worldwide
desired to play games at competitive levels. The founders recognized that there was no structure or organization on a large scale
for amateur gamers while professional esports was quickly establishing itself.
Good
Gaming is effectively building the business infrastructure for the rapidly growing esports industry, similar to the high school
and college athletic industry. Good Gaming is designed to be the gateway for amateur esports athletes to compete at the semi-professional
level, improve their gaming skills, and interact with veteran gamers globally in a destination site and social networking framework.
Good
Gaming differs from the professional level of the esports industry by focusing on more than approximately 250 million gamers that
fall below the professional level but are above the casual level, classified as “amateurs.” Good Gaming distinguishes
itself from its direct and indirect competitors by being the first company to offer multi-game, multi-console services at the
amateur esports level. The Company is not exclusive to any particular hardware or software vendor.
On
May 4, 2016, the Company announced that it had completed its first closed public beta testing of their 2.0 tournament platform
to determine the functionality, speed, ease of use, and accuracy of the system and are preparing to enter into full-blown production.
On
February 18, 2016, the Company, formerly HDS International Corp., acquired the assets of Good Gaming, Inc. from CMG Holdings Group,
Inc. (OTCQB: CMGO). On that date, the Company’s former CEO, Paul Rauner, resigned. The Company appointed Vikram Grover to
the positions of CEO and Director of the board of directors (the “Board”). Vikram Grover is a former Wall Street analyst
and investment banker with more than 20 years of experience in telecommunications, media and technology. In addition, David Dorwart
was elected by the majority shareholders to the Company’s Board. Mr. Dorwart is the Co-Founder and Chairman of Assist Wireless,
Inc., a provider of lifeline wireless services to tens of thousands of subscribers primarily in the Midwest.
On
June 27, 2017 the Board of Directors of the Company appointed David B. Dorwart as the Company’s Chief Executive Officer.
On June 21, 2017, Mr. Dorwart was appointed to serve as the Chairman of the Board of Directors. David B. Dorwart, Chairman and
CEO of Good Gaming, Inc., brings over 31 years of start-up entrepreneurism and executive level management to the Company. Mr.
Dorwart was a CoFounder and CEO of dPi Teleconnect, a prepaid wireless provider, for 10 years. During his tenure, he grew the
company from a start-up to $75 million in revenues before selling the company. Over the last 9 years, he has been involved with
several other successful projects including Assist Wireless, Brooklet Energy Distribution, PayGo Distributors and Britton &
Associates. He is currently the Chairman and CoFounder of ViaOne Services, a company which specializes in wireless communications
and provides intricate multi-faceted services for start-up companies utilizing industry experts. By virtue of their ownership
of this Series C Preferred Stock, ViaOne is the Company’s principal stockholder.
On
June 27, 2017, the Company also bolstered its Board of Directors with executive level professionals by adding two seasoned individuals
who specialize in organization and finance as well as the branding and marketing of established and emerging organizations which
are poised to show significant growth.
Domenic
Fontana is currently the Sr. Vice President of ViaOne Services and a board member. He is an experienced CPA and financial executive
who has worked in progressively more advanced executive roles throughout his career. Having worked at Verizon, Ebay and now ViaOne
Services over the last 14 years, he has developed intimate and extensive knowledge of executive level management and the telecommunications
industry. He has worked in all aspects of Finance, Accounting, Treasury, and Operations.
Jordan
Majkszak Axt, a board member, is a results-producing marketing professional with over 15 years of experience successfully developing
marketing and branding strategies. He has been consistently noted by executives, colleagues, and journalists for his specific
expertise in bringing products and services online with a comprehensive digital go-to-market strategy. He has previously held
executive level positions as Director of Marketing for ProfitPoint Inc. and Clutch Holdings LLC. He is currently Sr. Director
of Marketing of ViaOne Services where he develops all marketing and customer acquisition strategies for 14 consumer facing brands.
On
July 10, 2017, the Company’s Board of Directors elected David Dorwart its CEO. Additionally, the Board of Directors approved
to elect Domenic Fontana and Jordan Axt to the Company’s Board of Directors.
On
August 8, 2017, the board of directors of the Company accepted Vikram Grover’s resignation as the Treasurer of the Company
and as a member of the Board, effective immediately.
On
August 8, 2017, the Board of the Company accepted Barbara Laken’s resignation as the Secretary of the Company and as a member
on the Board, effective immediately.
On
August 9, 2017, the Company announced a strategic review of its business, which prompted improvements to its business model and
a reduction in expenses designed to accelerate its move to free cash flow generation.
On
August 29, 2017, Eric Brown became the Chief Operating Officer.
In
September of 2017, the Company began focusing on its Minecraft server by enhancing the development staff and launched an offering
of microtransactions after it saw the opportunity to generate revenue without adding a great deal of overhead. The initial offering
of microtransactions exceeded revenue expectations and the Company has continued to expand the Minecraft server offerings. The
Company also began pursuing the acquisition of additional Minecraft servers that were already established to begin scaling this
effort.
In
March of 2017, the Company began exploring potential partnerships with various franchise opportunities related to both LAN centers
and Virtual Reality centers. Financial analysis and research on these opportunities is ongoing.
On
March 21, 2018, the Company acquired Crypto Strategies Group, Inc. for consideration of $500.
On
December 12, 2018, the Company dissolved Crypto Strategies Group, Inc.
In
March of 2019, the Company discontinued Minecade and Olimpo servers and decided to focus on Minecraft servers.
On
March 11, 2019, Eric Brown resigned from the Chief Operating Officer’s position.
Technology
In
2016, the Company completed its 2.0 tournament platform, thereafter ran dozens of robotic internal test tournaments and held numerous
free-to-play tournaments on large scales with its partner The Syndicate, the owner of the world’s longest running online
gaming guild that had 1,200 members worldwide. Good Gaming conducted two closed public beta tournaments of hundreds of participants
in May 2016 in order to fully vet the system. After making roughly 100 fixes and changes to the system, it now runs smoothly.
The system is designed to scale to 512,000 concurrent competitors. The Company has updated the system to handle team tournaments,
which will further expand its opportunity to popular titles that have tens of millions of active players and has recently launched
titles that have the potential for cross-platform play among Gaming PC, Microsoft Xbox and Sony PlayStation.
In
2017, the Company ran hundreds of tournaments on a regular basis with a dedicated customer base of over 30,000 members. Additionally,
the Company expanded its website by offering content relevant to the member base with information relating to game play strategy
and game news. This generated nearly 100,000 unique visits per month. In an effort to monetize that traffic, the Company employed
the use of Google display advertising and tested a subscription model. After careful evaluation of the Company’s strategy,
management decided to move away from free tournaments and custom content and focus on growing and monetizing our Minecraft server,
which has grown substantially in popularity. This decision was a result of comprehensive competitive analysis and evaluations
made in how the esports industry was shifting in its space. Tournaments and custom content are currently suspended while the Company
grows revenue and focuses on expanding its efforts with Minecraft. The Company is also aggressively evaluating several business
models and acquisition opportunities to resume its previous success as it is related to tournaments.
In
2018, the Company acquired the Minecade and Olimpo Minecraft servers in order to deliver on expansion efforts. This move, coupled
with continued advancement of the core Good Gaming Minecraft server substantially increased revenues and traffic. By the end of
the year, the Company struck a deal with a prominent Minecraft influencer, which resulted in the single highest monthly earnings
achieved within the Minecraft division, to date.
In
2019, following a severe downturn of business in the Minecraft sector as a whole, the Company decided to temporarily suspend the
Minecade and Olimpo networks and refocus its efforts back on the core Good Gaming server. Much of the year was spent upgrading
and overhauling the server’s existing infrastructure, which had grown stale over prior years. The Company adapted its strategy
to target long term success and consistency through major innovations in the SkyBlock and Prison game modes, and began working
towards an ambitious full recode of the Minecade server.
As
of March 31, 2020, the Company finalized its infrastructure overhaul for use in upcoming releases. A new, experimental version
of Prison, Prison MMO, was launched as an early access game mode in February. Prison MMO is designed to be a self-sustaining Minecraft
game mode which incorporates elements of the Massively Multiplayer Online video game genre. The Company expects steady growth
from this mode as it continues to be developed. On April 1st the company released its first iteration of a new SkyBlock gamemode,
SkyBlock Spring, to some strong success.
Business
Strategy
In
the past, our management team’s strategy was to be a full-service company providing best in class tournaments, the best
platform on which they are played, and content that is all about the esports world. We have looked at this strategy and have changed
the way we view our business.
It
was our ambition and strategy to be great at providing a place for amateurs to play esports. By focusing on what the gaming universe
is lacking, it allowed us to focus on the promotion of teams, leagues and competition. We intended to begin with local servers
and expand organically from there. We recognized there are millions of players who desire to compete within the gaming community.
However,
as tournaments and investment in servers were not profitable to the Company, we have decided to focus on Minecraft. We have a
well-established server and will continue to devote resources to developing and modifying Minecraft assets by introducing new
SkyBlock Seasons and Minecraft Prison game modes within our server. We feel that we have learned how to monetize this and will
be able to continue to grow and have it as a meaningful part of our business strategy.
Offices
Our
executive offices are located at 415 McFarlan Rd, Suite 108, Kennett Square, PA 19501. Our telephone number is (888) 295-7279.
Recently
Issued Accounting Pronouncements
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees
to record a right-of-use (“ROU”) asset and a corresponding lease liability on the balance sheet (with the exception
of short-term leases). This new standard is effective for annual reporting periods beginning after December 15, 2018, and interim
reporting periods within those annual reporting periods, with early adoption permitted. We adopted this new standard effective
January 1, 2019. Adoption did not have any effect on the Company as it does not have any leases.
The
Company has implemented all other new accounting pronouncements that are in effect. These pronouncements did not have any material
impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any
other new accounting pronouncements that have been issued that might have a material impact on its financial position or results
of operations.
RESULTS
OF OPERATIONS
Our
auditors have issued a going concern opinion on the financial statements for the year ended December 31, 2019. This means that
our auditors believed there was substantial doubt that we could continue as an ongoing business for the next twelve months from
the date of issuance of this going concern opinion unless we obtained additional capital. We generated little revenue in the past.
We have completed the development of our website, sourced out suppliers for products to sell and sourced out customers to buy
our products. Accordingly, we need to raise cash from sources other than operations. Our other source for cash at this time is
investments by others in our company and the revenue we generate from the sales of our products. We need to raise cash to continue
our project and build our operations.
Plan
of Operation – Milestones
We
are at an early stage of our new business operations. Over the next twelve months, our primary target milestones include:
1
|
Continue
to achieve substantial growth within our Minecraft division. This is a profitable center for us and we expect the continued
growth of our existing server, good-gaming.com as well.
|
|
|
2
|
Continue
to evaluate opportunities which have synergies to our existing business line.
|
|
|
3
|
Anticipate
sustainable financial profitability in 2021.
|
Limited
operating history and need for additional capital
There
is limited historical financial information about us upon which to base an evaluation of our performance relating to our new business
direction. We have generated little revenue. We cannot guarantee we will be successful in our business operations. Our business
is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible
cost overruns due to price and cost increases in services and products.
Results
of Operations
The
three months ended June 30, 2020 as compared to June 30, 2019
●
Operating Revenues
We
have generated $4,544 in revenue in the three months ended June 30, 2019 and $7,047 in revenue in the three months ended June
30, 2019, which reflects a decrease of $2,503 or 35.5%. The decrease in revenue was attributed to the issues the Company had with
the servers when they launched the new version of the game modes.
●
Operating Expenses and Net Loss
Operating
expenses for the three months ended June 30, 2020 were $105,296 compared with $228,484 for the three months ended June 30, 2019.
The decrease in operating expenses in the amount of $123,187 or 53.9% was attributable to decrease in professional fees for day
to day operations and the complete amortization of the assets purchased during the acquisition of Good Gaming, Inc. in 2019.
During
the three months ended June 30, 2020, the Company recorded a net loss of $554,012 compared with a net loss of $251,143 for the
three months ended June 30, 2019. The increase in net loss in the amount of $302,869 or 121% was attributed to the decrease in
revenues and the change in value of the Company’s derivative liabilities.
The
six months ended June 30, 2020 as compared to June 30, 2019
●
Working Capital
|
|
June 30, 2020
|
|
|
June 30, 2019
|
|
Current Assets
|
|
$
|
26,517
|
|
|
$
|
48,755
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
3,417,972
|
|
|
|
1,555,425
|
|
|
|
|
|
|
|
|
|
|
Working Capital (Deficit)
|
|
$
|
(3,391,455
|
)
|
|
$
|
(1,506,670
|
)
|
●
Operating Revenues
We
have generated $5,236 in revenue in the six months ended June 30, 2020 and $27,828 in revenue in the six months ended June 30,
2019, which reflects a decrease of $22,502 or 80.86%. The decrease in revenue was attributed to the issues the Company had with
the servers when they launched the new version of the game modes.
●
Operating Expenses and Net Loss
Operating
expenses for the six months ended June 30, 2020 were $207,408 compared with $478,183 for the six months ended June 30, 2019, which
reflects a decrease of $270,775 or 56.62% attributed to decrease in professional fees for day to day operations and the complete
amortization of the assets purchased during the acquisition of Good Gaming, Inc. in 2019.
During
the six months ended June 30, 2020, the Company recorded a net loss of $638,079 compared with a net loss of $446,352 for the six
months ended June 30, 2019, which reflects a decrease of $191,727 or 42.95%. The decrease in net loss was attributed to the decrease
in revenues and the change in value of the Company’s derivative liabilities.
●
Liquidity and Capital Resources
As
of June 30, 2020, the Company’s cash balance consisted of $2,124 compared to cash balance of $2,044 as of June 30, 2019.
The increase in the cash balance was attributed to the increase in financing that we received for day-to-day activities. As of
June 30, 2020, the Company had $33,472 in total assets compared to total assets of $248,809 on June 30, 2019. The decrease in
total assets was attributable to the complete amortization of the assets purchased during the acquisition of Good Gaming, Inc.
in 2019.
As
of June 30, 2020, the Company had total liabilities of $3,417,973 compared with total liabilities of $2,310,814 as of June 30,
2019. The increase in liabilities was attributable to increase in financing and in derivative liabilities.
As
of June 30, 2020, the Company has a working capital deficit of $3,391,546 compared with a working capital deficit of $2,282,520
as of June 30, 2019. The increase was attributed to an increase in financing the Company received for general working capital
purposes and change in derivative liability.
Cash
flow from Operating Activities
During
the six months ended June 30, 2020, the Company used $220,669 in operating activities compared to $243,120 for the six month ended
June 30, 2019, which reflects a decrease of $22,451 or 9.23%. The decrease in the use of cash for operating activities was attributed
to the change in derivative liabilities.
Cash
flow from Investing Activities
During
the quarter ended June 30, 2020, the Company had $5,335 in cash used in investing activities compared to $2,022 for the quarter
ended June 30, 2019. The increase in cash used in investing activities was attributed to the new fixed assets the Company bought
for day to day activities.
Cash
flow from Financing Activities
During
the month ended June 30, 2020, the Company received $226,124 of proceeds from financing activities compared to $234,737 during
the month ended June 30, 2019, which reflects a decrease of $8,613 or 3.67%. The decrease in proceeds from financing activities
was due to the decrease in financing that we received for day-to-day activities.
Going
Concern
We
have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities.
For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that
we will be able to continue as a going concern for a period of one year from the issuance of these financial statements without
further financing.
Off-Balance
Sheet Arrangements
As
of June 30, 2020, we had no significant off-balance sheet arrangements that have or are reasonably likely to have a current or
future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to stockholders.
Future
Financings
We
will continue to rely on equity sales of our preferred shares in order to continue to fund our business operations. Issuances
of additional shares will result in dilution to existing stockholders.
There
is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund
our operations and other activities.