Our common stock commenced trading on the over-the-counter Bulletin Board on October 7, 2009. It currently trades under the symbol "HDSI". Following is a table of the high bid price and the low bid price for each quarter during the last two years.
2015
|
High Bid
|
|
Low Bid
|
|
First Quarter, Ending March 31
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
Second Quarter, Ending June 30
|
|
$
|
0.0002
|
|
|
$
|
0.0001
|
|
Third Quarter, Ending September 30
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
Fourth Quarter, Ending December 31
|
|
$
|
0.0003
|
|
|
$
|
0.0002
|
|
|
|
|
|
|
|
|
|
|
2014
|
High Bid
|
|
Low Bid
|
|
First Quarter, Ending March 31
|
|
$
|
0.0039
|
|
|
$
|
0.0012
|
|
Second Quarter, Ending June 30
|
|
$
|
0.0035
|
|
|
$
|
0.001
|
|
Third Quarter, Ending September 30
|
|
$
|
0.0014
|
|
|
$
|
0.0005
|
|
Fourth Quarter, Ending December 31
|
|
$
|
0.0008
|
|
|
$
|
0.0001
|
|
|
|
|
|
|
|
|
|
|
Holders
As of December 31, 2015, we had
1,995,290,000
shares of our common stock issued and outstanding held by 46 stockholders of record.
Currently we have 7,500,000 shares of our Class A Preferred Stock issued and outstanding, and 13,624,300 shares of our Class B Preferred Stock issued and outstanding.
Dividends
We have never declared or paid cash dividends. We currently intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on the common stock in the foreseeable future. Any payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by our directors.
Securities Authorized for Issuance Under Equity Compensation Plans
On July 18, 2012 a Registration Statement on Form S-8 (the "Registration Statement") was filed by us together with our 2012 Non-Qualified Stock Option Plan (the "Plan") relating to 30,000,000 shares of our common stock, par value $0.001 per share, to be offered and sold to accounts of eligible persons.
Equity Compensation Plan
Plan category
|
|
Number of securities issued upon
exercise of outstanding options,
warrants and rights
|
|
|
Weighted-average exercise
price of outstanding options,
warrants and rights
|
|
|
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans
approved by security holders
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not
approved by security holders
|
|
|
0
|
|
|
|
0
|
|
|
|
30,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
0
|
|
|
|
30,000,000
|
|
Penny Stock Regulations and Restrictions on Marketability
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws, (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price, (d) contains a toll-free telephone number for inquiries on disciplinary actions, (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks, and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock, (b) the compensation of the broker-dealer and its salesperson in the transaction, (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock, and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling their shares of our common stock.
Common Stock
Our Articles of Incorporation authorize us to issue up to 2,000,000,000 shares of common stock, $0.001 par value. Each holder of our common stock is entitled to one (1) vote for each share held of record on all voting matters we present for a vote of stockholders, including the election of directors. Holders of common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities, and there are no conversion rights or redemption or sinking fund provisions with respect to our common stock. All shares of our common stock are entitled to share equally in dividends from sources legally available when, and if, declared by our Board of Directors.
Our Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by the Articles of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action.
In the event of our liquidation or dissolution, all shares of our common stock are entitled to share equally in our assets available for distribution to stockholders. However, the rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of preferred stock that have been issued or shares of preferred stock that our Board of Directors may decide to issue in the future.
As of December 31, 2015, we had 1,995,290,000 shares of common stock issued and outstanding.
Preferred Stock
Our Articles of Incorporation authorize us to issue up to 50,000,000 shares of preferred stock, $0.001 par value. Of the 50,000,000 authorized shares of preferred stock, the total number of shares of Class A Preferred Shares the Corporation shall have the authority to issue is Twenty Five Million (25,000,000), with a stated par value of $0.001 per share, and the total number of shares of Class B Preferred Shares the Corporation shall have the authority to issue is Twenty Five Million (25,000,000), 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 December 31, 2015, we had 7,500,000 shares of our Class A preferred stock issued and outstanding. As of December 31, 2015, we had 15,839,300 shares of Class B preferred stock issued and outstanding.
The 7,500,000 issued and outstanding shares of Class A Preferred Stock are convertible into shares of common stock at a rate of 20 common shares for each one Class A Preferred Share. The 15,839,800 issued and outstanding shares of Class B Preferred Stock are convertible into shares of common stock at a rate of 200 common shares for each one Class B Preferred Share. 14,400,000 of the issued and outstanding shares of Class B Preferred Stock is owned by CMG Holdings Group, Inc. If all of our Class A Preferred Stock and Class B Preferred Stock was converted into shares of common stock, the number of issued and outstanding shares of our common stock will increase by 3,317,960,000 shares.
Options
We have not issued and do not have outstanding any options to purchase shares of our stock. HGT Capital
has 100 million warrants with an exercise price of .001 (common stock).
Registration Rights
As of December 31, 2015, there are no other outstanding registration rights or similar agreements.
Convertible Securities
On April 8, 2015, we consented to the assignment of the February 18, 2014 and the October 4, 2013 Asher Notes, which were previously assigned to JABRO. The April 8, 2015 assignment assigned the notes to the Purchaser. According to the terms of the April 8, 2015 assignment agreement, the February 18, 2014 note was sold to the Purchaser and simultaneously exchanged for a new note (the "New February Note"). In accordance with the exchange, The New February Note was deemed to have been issued February 18, 2014, and carried substantially the same terms as the original note, with the following exceptions: the New February bears 0% interest, and the overall ownership of the Purchaser at any one moment shall be limited to 9.99% of the issued and outstanding shares of our common stock. The Purchaser also entered into an agreement with JABRO, granting the Purchaser the exclusive right to purchase the October 4, 2013 note, on or before May 7, 2015.
On April 6, 2015, the Company executed a Common Stock Purchase Warrant with the Purchaser, providing the Purchaser the right to purchase shares of common stock of the company by investing up to $50,000 into new shares of common stock at a price of $0.001 per share. The Warrant expires in five years. This Warrant was negotiated as part of the Note. The Company has an agreement to purchase the Purchaser debt for face value.
Shares Eligible for Future Sale
As of December 31, 2015, we had 1,995,290,000 shares of our common stock issued and outstanding, a breakdown of which follows:
●
|
1,468,871,393 are freely tradable without restrictions (commonly referred to as the "public float")
|
●
|
479,885,496 are currently subject to the restrictions and sale limitations imposed by Rule 144.
|
From time to time, certain of our stockholders may be eligible to sell some or all of their restricted shares of our common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain volume restrictions and restrictions on the manner of sale. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to the Rule 144 volume, manner of sale, current public information and notice requirements.
The eventual availability for sale of substantial amounts of our common stock under Rule 144 could adversely affect prevailing market prices for our securities and cause you to lose most, if not all, of your investment in our business.
Transfer Agent
Action Stock Transfer Corp.
2469 East Fort Union Boulevard, Suite 214 Salt Lake City, Utah 84121
( 801) 274-1088 Phone
(801) 274-1099 Fax
info@actionstocktransfer.com Email
Recent Sales of Unregistered Securities
The issuance and sales of securities without registration since March 28, 2014 through December 31, 2015 comprise the transactions relating to the Asher Notes, as well as those transactions described below.
a)
|
On April 9, 2014, we issued 8,571,429 common shares for the conversion of $12,000 of principal of the June 7, 2013 convertible debenture.
|
b)
|
On October 21, 2014, we issued 38,520,000 common shares for the conversion of $9,630 of principal of the June 7, 2013 convertible debenture.
|
c)
|
On October 28, 2014, we issued 38,520,000 common shares for the conversion of $9,630 of principal of the June 7, 2013 convertible debenture.
|
d)
|
On November 21, 2014, we issued 15,500,000 common shares for the conversion of $1,240 of principal of the June 7, 2013 convertible debenture.
|
e)
|
On November 26, 2014, we issued 19,000,000 common shares for the conversion of $1,520 of principal of the July 15, 2013 convertible debenture.
|
f)
|
On December 2, 2014, we issued 24,750,000 common shares for the conversion of $1,980 of principal of the July 15, 2013 convertible debenture.
|
g)
|
On December 4, 2014, we issued 24,750,000 common shares for the conversion of $1,980 of principal of the July 15, 2013 convertible debenture.
|
h)
|
On December 9, 2014, we issued 24,750,000 common shares for the conversion of $1,980 of principal of the July 15, 2013 convertible debenture.
|
i)
|
On February 6, 2015, we issued 28,000,000 common shares upon the issuance of $1,400 of principal of the July 15, 2013 convertible debenture.
|
j)
|
On February 10, 2015, we issued 28,000,000 common shares upon the conversion of $1,400 of principal of the July 15, 2013 convertible debenture.
|
k)
|
On February 13, 2015, we issued 31,000,000 common shares upon the issuance of $1,550 of principal of the July 15, 2013 convertible debenture.
|
l)
|
On February 18, 2015, we issued 31,000,000 common shares upon the conversion of $1,550 of principal of the July 15, 2013 convertible debenture.
|
m)
|
On February 23, 2015, we issued 31,000,000 common shares upon the issuance of $1,550 of principal of the July 15, 2013 convertible debenture.
|
n)
|
On March 2, 2015, we issued 35,000,000 common shares upon the conversion of $1,750 of principal of the July 15, 2013 convertible debenture.
|
o)
|
On March 3, 2015, we issued 37,000,000 common shares upon the issuance of $1,850 of principal of the July 15, 2013 convertible debenture.
|
p)
|
On March 5, 2015, we entered into settlement and general mutual release agreements with our former president and director and two of our consultants. Pursuant to the settlement and release agreements, we agreed to issue 180,285,000 shares of common stock for the settlement of all amounts owing to these parties.
|
q)
|
On March 9, 2015, we issued 13,350,000 newly-issued shares of Class B preferred stock and 200,000,000 newly-issued share of restricted shares of common stock under the Strategic Expansion Agreement to SirenGPS. Additionally, under the Strategic Expansion Agreement, we issued to HOEL 342,150,496 newly-issued restricted shares of common stock. Also under the Expansion Agreement, we issued 274,300 newly-issued shares of Class B preferred stock to a designee of the Licensor.
|
r)
|
On March 13, 2015, we issued 75,000,000 common shares upon the issuance of $3,750 of principal of the July 15, 2013 convertible debenture.
|
s)
|
On March 17, 2015, we issued 75,000,000 common shares upon the issuance of $3,750 of principal of the July 15, 2013 convertible debenture.
|
t)
|
On March 18, 2015, we issued 83,000,000 common shares upon the issuance of $1,490 of principal of the July 15, 2013 convertible debenture and $2,660 of accrued and unpaid interest. Refer to Note 3(b).
|
u)
|
On March 24, 2015, we issued 87,000,000 common shares upon the issuance of $4,350 of principal of the October 4, 2013 convertible debenture.
|
v)
|
On March 25, 2015, we issued 87,000,000 common shares upon the issuance of $4,350 of principal of the October 4, 2013 convertible debenture.
|
w)
|
On April 1, 2015, we consented to the further assignment of the February 18, 2014 and the October 4, 2013 Asher Notes, which were previously assigned to JABRO. The April 8, 2015 assignment assigned the notes to the Purchaser. According to the terms of the April 8, 2015 assignment agreement, the February 18, 2014 note was sold to the Purchaser and simultaneously exchanged for a new note (the "New February Note"). In accordance with the exchange, the New February Note was deemed to have been issued February 18, 2014, and carried substantially the same terms as the original note, with the following exceptions: the New February bears 0% interest, and the overall ownership of the Purchaser at any one moment shall be limited to 9.99% of the issued and outstanding shares of our common stock. The Purchaser also entered into an agreement with JABRO, granting the Purchaser the exclusive right to purchase the October 4, 2013 note, on or before May 7, 2015.
|
x)
|
On April 1, 2015, we issued a draw-down convertible promissory note to a non-related party in the principal amount of up to $600,000. Under the terms of the promissory note, the amount is unsecured, bears interest at 10% per annum, and is due on April 1, 2016. The note is convertible into shares of common stock at a conversion rate of 50% of the average of the three lowest end of day closing prices of our common stock for the twenty-five trading days prior to the date the holder elects to convert all or part of the promissory note. This agreement was terminated subsequent to year-end.
|
y)
|
On April 3, 2015, SirenGPS, Inc., and Hillwinds Ocean Energy, LLC, agreed to convert 200,000,000 shares of common stock, and 222,000,000 shares of common stock, respectively, into 1,050,000 shares and 1,165,000 shares of Class B Preferred Stock, respectively. This agreement was terminated subsequent to year-end.
|
z)
|
On April 6, 2015, we executed a Common Stock Purchase Warrant with Iconic Holdings, LLC, a west coast-based institutional investor (the "Purchaser"), providing the Purchaser the right to purchase our shares of common stock by investing up to $50,000 into new shares of common stock at a price of $0.001 per share. On April 2, 2015, we entered into an equity line of credit (ELOC) agreement that permits us to "put" shares to the Purchaser at a 20% discount to the lowest trading price over the five consecutive trading days immediately succeeding the applicable Put Notice Date. The ELOC requires the filing of a registration statement prior to the funds becoming available to us Once the registration is filed, funding under the ELOC occurs at our discretion. This agreement was terminated through a settlement and restructuring agreement with the Purchaser in February 2016.
|
|
aa)
On April 10, 2015, the Company issued 149,844,444 common shares upon the issuance of $6,743 of principal of the February 18, 2014 convertible debenture.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchases
During each month within the fourth quarter of the fiscal year ended December 31, 2015, neither we nor any "affiliated purchaser", as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
|
Forward Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
We are considered a start-up corporation. Our auditors have issued a going concern opinion on the consolidated financial statements for the year ended December 31, 2015.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we complete the development of our website, source out suppliers for products to sell and source out customers to buy our products. We believe the technical aspects of our websites will be sufficiently developed to use for our operations 60 days from the completion of our offering. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our project and begin our operations.
Plan of Operation – Milestones
We are in the early stages of our new business operations. Over the next twelve months, our primary target milestones include:
1.
|
Complete the 2.0 destination site
www.good-gaming.com
and launch the world’s premiere online destination site for social networking and tournaments for cash and prizes to 205 million eSports amateur players.
|
2.
|
Enhance the platform with 3.0 features to integrate with mobile networks and offer other value-added features.
|
3.
|
File provisional patent application to protect the 2.0 Mercenary System, which offers a marketplace for the purchase and/or exchange of virtual goods and gaming labor.
|
4.
|
Add a suite of online games that subscribers can play for free or for fees depending on their status on the system..
|
5.
|
The Company will need to raise additional capital to move from the relaunch phase this spring-summer and fully fund its plan into 2017.
|
6.
|
Obtain the backing of corporate sponsors for cash and prizes and to provide advertising during tournaments and to its subscribers on the systems. To this end, Good Gaming already has verbal indications of interest for such sponsorships and advertising, but buyers of ad inventory are waiting to inspect the Company’s 2.0 platform.
|
7.
|
The Company intends to continue to expand its Advisory Board with industry professionals that can further help refine the site, facilitate introductions to sponsors and strategic partners, and add credibility to the business.
|
Limited operating history; need for additional capital
There is no historical financial information about us upon which to base an evaluation of our performance relating to our new business direction. We have not generated any revenues. 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 – December 31, 2015 as compared to December 31, 2014
Working Capital
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
Current Assets
|
|
$
|
-
|
|
|
$
|
1,093
|
|
Current Liabilities
|
|
|
639,852
|
|
|
|
1,435,785
|
|
Working Capital (Deficit)
|
|
|
(639,852
|
)
|
|
|
(1,434,692
|
)
|
Cash Flows
|
|
For the year ended
December 31, 2015
$
|
|
|
For the year ended
December 31, 2014
$
|
|
Cash Flows from (used in) Operating Activities
|
|
|
(73
|
)
|
|
|
(20,016
|
)
|
Cash Flows from (used in) Investing Activities
|
|
|
–
|
|
|
|
–
|
|
Cash Flows from (used in) Financing Activities
|
|
|
-
|
|
|
|
26,718
|
|
Net Increase (decrease) in Cash During Period
|
|
|
(73
|
)
|
|
|
(3,298
|
)
|
Operating Revenues
We have not generated any revenues since inception.
Operating Expenses and Net Loss
Operating expenses for the year ended December 31, 2015 were $240,419 compared with $420,593 for the year ended December 31, 2014. The decrease in operating expenses was attributed to a decrease in transfer agent fees of $185 and consulting fees of $285,305 offset by an increase professional fees of $10,337 and in general and administrative expense of $94,980 for day-to-day operating costs.
During the year ended December 31, 2015, the Company recorded a net loss of $707,532 compared with a net loss of $607,819 for the year ended December 31, 2014. In addition to the above, the Company incurred a decrease of $71,387 of interest expense relating to debt balances and $429,954 of loss on change in fair value of derivative liability.
Liquidity and Capital Resources
As at December 31, 2015, the Company's cash balance consisted of $0 compared to cash balance of $73 as at December 31, 2014. The decrease in the cash balance was attributed the use of cash during the year for day-to-day activities. As at December 31, 2015, the Company had no assets compared to total assets of $1,093 as at December 31, 2014. The decrease in total assets was attributed to the decrease in cash, as noted above, and decrease in deferred financing costs related to the issuance of convertible debt which was expensed during the year ended December 31, 2015.
As at December 31, 2015, the Company had total liabilities of $689,852 compared with total liabilities of $1,435,785 as at December 31, 2014. The decrease in total liabilities is attributed to a $632,440 decrease in accounts payable and accrued liabilities, $298,292 decrease in accounts payable and accrued liabilities – related parties, as well as a $51,348 increase in convertible debentures and a $383,451 increase in derivative liability and $300,000 decrease in Note Payable – related party.
As at December 31, 2015, the Company has a working capital deficit of $639,852 compared with a working capital deficit $1,434,692 at December 31, 2014 with the increase in the working capital attributed to decrease in cash used to fund day-to-day activities and an increase in accounts payable due to the low cash balance held at year end as well as due to the convertible debentures and derivative liability issued and recorded during the year.
Cashflow from Operating Activities
During the year ended December 31, 2015, the Company used $133,373 of cash for operating activities compared to the use of $30,016 of cash for operating activities during the year ended December 31, 2014. The decrease in the use of cash for operating activities was attributed to the fact that the Company had more outstanding and current obligations at year end to conserve cash.
Cashflow from Investing Activities
During the years ended December 31, 2015 and 2014, we did not conduct any investing activities.
Cashflow from Financing Activities
During the year ended December 31, 2015, the Company received $133,300 of proceeds from financing activities compared to $26,718 during the year ended December 31, 2014. The increase in proceeds from financing activities was due to receipt of $15,000 in debt financing received during the prior year, as well as $11,718 from the proceeds of advances from related parties, compared to the receipt of $133,300 from issuance of convertible debt and $0 from related parties in current year.
Developments after December 31, 2015
a)
|
On or around February 18, 2016, a special meeting of the shareholders of the Company was called to change the name of the Company to “Good Gaming, Inc.” The Company subsequently effected the name change with the Secretary of State of Nevada and has submitted an application to FINRA for a name change and ticker change, both of which are pending with a requirement that the Company bring its SEC filings current.
|
b)
|
On or around February 18, 2016, a minimum funding threshold had been achieved by CMG on behalf of the Good Gaming transaction. Therefore, CMG sold Good Gaming’s assets including intellectual property, software code, computer equipment, brand name and trademarks to the Company.
|
c)
|
On or around February 18, 2016, the Company executed a settlement agreement with a lender which lowered their amounts due from approximately $100,000 to $25,000 and fixed its conversion price. Additionally, as part of the agreement, the lender funded $100,000 new monies to the Company. Separately, management has negotiated the purchase of a second lender’s debt for $50,000 and aims to consummate that transaction as soon as possible.
|
d)
|
On or around February 18, 2016, management terminated plans to effectuate a share increase to 10 billion, a reverse split of 1-30, and approve 50 billion share stock option plan.
|
e)
|
On or around February 18, 2016, Paul Rauner resigned his positions of CEO and Director. Additionally, a special meeting of the shareholders of the Company was called, at which time they appointed Vikram Grover to the same positions.
|
f)
|
On or around February 22, 2016, a special meeting of the shareholders of the Company was called to appoint Barbara Laken and David Dorwart to the Board of Directors and to appoint Barbara Laken as the Company’s Corporate Secretary.
|
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 consolidated financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We have 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 common 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.
Critical Accounting Policies
Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. A complete summary of these policies is included in the notes to our consolidated financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
We have implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and we do 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.
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ITEM 9A.
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CONTROLS AND PROCEDURES.
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Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2015. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2015 using the criteria established in "
Internal Control - Integrated Framework
" issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2015, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
1.
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We do not have an Audit Committee
– While not being legally obligated to have an audit committee, it is the management's view that such a committee, including a financial expert member, is an utmost important entity level control over the Company's financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management's activities.
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2.
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We did not maintain appropriate cash controls
– As of December 31, 2015, we do not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on our bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that we have limited transactions in our bank accounts.
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3.
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We did not implement appropriate information technology controls
– As at December 31, 2015, we retain copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of our data or off-site storage of the data in the event of theft, misplacement, or loss due to unmitigated factors.
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Accordingly, we have concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company's internal controls.
As a result of the material weaknesses described above, did not maintain effective internal control over financial reporting as of December 31, 2015 based on criteria established in Internal Control—Integrated Framework issued by COSO.
Continuing Remediation Efforts to address deficiencies in Company's Internal Control over Financial Reporting
Once the Company is engaged in a business of merit and has sufficient personnel available, then our Board of Directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:
1.
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Our Board of Directors will nominate an audit committee or a financial expert on our Board of Directors.
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2.
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We will appoint additional personnel to assist with the preparation of our monthly financial reporting, including preparation of the monthly bank reconciliations.
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Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2014, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the our internal control over financial reporting.