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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
Form
10-Q
☒ QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended
March 31,
2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ______ to ______
Commission
File Number:
000-53949
Good Gaming, Inc.
(Exact
name of registrant as specified in its charter)
Nevada |
|
46-3917807 |
(State
or other jurisdiction
of
incorporation)
|
|
(IRS
Employer
Identification
Number)
|
415 McFarlan Road,
Suite 108
Kennett Square,
PA
19348
(Address
of principal executive offices and Zip Code)
(888)
295-7279
Registrant’s
telephone number, including area code
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the last 90 days.
YES ☒ NO
☐
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (SS 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was
required to submit and post such files).
YES ☒ NO
☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one):
Large
Accelerated Filer |
☐ |
Accelerated
Filer |
☐ |
|
|
|
|
Non-accelerated Filer |
☒ |
Smaller
Reporting Company |
☒ |
|
|
|
|
(Do
not check if smaller reporting company) |
|
Emerging
Growth Company |
☐ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). YES ☐
NO ☒
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
None |
|
None |
|
None |
Indicate
the number of shares outstanding of each of the issuer’s classes of
common stock as of the latest practicable date. As of April 30,
2022, there were
103,526,044 issued
and outstanding shares of common stock of the registrant, par value
$0.001.
TABLE
OF CONTENTS
FORWARD
LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking
statements,” within the meaning of the Private Securities
Litigation Reform Act of 1995, all of which are subject to risks
and uncertainties. Forward-looking statements can be identified by
the use of words such as “expects,” “plans,” “will,” “forecasts,”
“projects,” “intends,” “estimates,” and other words of similar
meaning. One can identify them by the fact that they do not relate
strictly to historical or current facts. These statements are
likely to address our growth strategy, financial results and
product and development programs. One must carefully consider any
such statement and should understand that many factors could cause
actual results to differ from our forward looking statements. These
factors may include inaccurate assumptions and a broad variety of
other risks and uncertainties, including some that are known and
some that are not. No forward looking statement can be guaranteed
and actual future results may vary materially.
These
risks and uncertainties, many of which are beyond our control,
include, and are not limited to:
● |
our
growth strategies; |
|
|
● |
our
anticipated future operations and profitability; |
|
|
● |
our
future financing capabilities and anticipated need for working
capital; |
|
|
● |
the
anticipated trends in our industry; |
|
|
● |
acquisitions
of other companies or assets that we might undertake in the future;
and |
|
|
● |
current
and future competition. |
In addition, factors that could cause or contribute to such
differences include, but are not limited to, those discussed in
this Quarterly Report on Form 10-Q, and in particular, the risks
discussed under the caption “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” as well as those
discussed in other documents we file with the SEC. We undertake no
obligation to revise or publicly release the results of any
revision to these forward-looking statements, except as required by
law. Given these risks and uncertainties, readers are cautioned not
to place undue reliance on such forward-looking
statements.
PART 1
Item 1. Financial Statements
Good
Gaming, Inc.
Consolidated
Balance Sheets
(Expressed
in U.S. Dollars)
(Unaudited)
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)
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)
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)
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 |
|
|
|
|
|
|
|
|
Common
Stock |
|
|
Warrants |
|
|
Additional |
|
|
|
|
|
|
|
|
|
Class A |
|
|
Class B |
|
|
Class C |
|
|
Class D |
|
|
Class E |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in |
|
|
Accumulated |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021 |
|
|
7,500 |
|
|
|
8 |
|
|
|
20,296 |
|
|
|
20 |
|
|
|
1 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
57,663 |
|
|
|
58 |
|
|
|
103,526,044 |
|
|
|
103,526 |
|
|
|
3,333,333 |
|
|
|
333 |
|
|
|
9,956,765 |
|
|
|
(7,638,959 |
) |
|
|
2,421,752 |
|
Beginning balance, value |
|
|
7,500 |
|
|
$ |
8 |
|
|
|
20,296 |
|
|
$ |
20 |
|
|
|
1 |
|
|
$ |
1 |
|
|
|
- |
|
|
$ |
- |
|
|
|
57,663 |
|
|
$ |
58 |
|
|
$ |
103,526,044 |
|
|
$ |
103,526 |
|
|
$ |
3,333,333 |
|
|
$ |
333 |
|
|
|
9956765 |
|
|
|
(7,638,959 |
) |
|
|
2,421,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Based Compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(Loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(467,105 |
) |
|
|
(467,105 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
|
|
7,500 |
|
|
|
8 |
|
|
|
20,296 |
|
|
|
20 |
|
|
|
1 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
57,663 |
|
|
|
58 |
|
|
|
103,526,044 |
|
|
|
103,526 |
|
|
|
3,333,333 |
|
|
|
333 |
|
|
|
9,956,765 |
|
|
|
(8,106,064 |
) |
|
|
1,954,647 |
|
Ending balance, value |
|
|
7500 |
|
|
|
8 |
|
|
|
20,296 |
|
|
|
20 |
|
|
|
1 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
57,663 |
|
|
|
58 |
|
|
|
103,526,044 |
|
|
|
103,526 |
|
|
|
3,333,333 |
|
|
|
333 |
|
|
|
9,956,765 |
|
|
|
(8,106,064 |
) |
|
|
1,954,647 |
|
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 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. In 2021, the Company
formulated a new plan to create a new game called “MicroBuddies™”
that combines Ethereum ERC721 NFTs (Non-fungible tokens),
non-standard ERC20 tokens (GOO™), and strategic gameplay to
replicate and create unique and rare NFTs. The game is played
online via the MicroBuddies website and blockchain transactions
take place on the Polygon Network. The game was launched after beta
testing in December of 2021.
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.
As of March
31, 2022, the Company had a working capital of $1,670,401, which reduces the
accumulated deficit to $8,106,064. 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 March 31,
2022 and December 31, 2021, 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.
On March 22, 2017, tax reform legislation known as the Tax Cuts and
Jobs Act (the “U.S. Tax Reform Act”) was enacted in the United
States. The U.S. Tax Reform Act, among other things, reduced the
U.S. corporate income tax rate from 35% to 21% beginning in 2018. On March 22,
2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB
118”), which provides guidance on how to account for the effects of
the U.S. Tax Reform Act under ASC 740.
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 March
31, 2022 and 2021 as follows:
Schedule of Assets and Liabilities Measured
at Fair Value on Recurring Basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description |
|
Fair
Value Measurements at March 31, 2022 Using Fair Value
Hierarchy |
|
|
|
Total |
|
|
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
Derivative
liability |
|
$ |
0- |
|
|
$ |
0- |
|
|
$ |
0- |
|
|
$ |
0- |
|
Total |
|
$ |
0- |
|
|
$ |
0- |
|
|
$ |
0- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description |
|
Fair Value
Measurements at March 31, 2021 Using Fair Value Hierarchy |
|
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Derivative liability |
|
$ |
1,065,760 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,065,760 |
|
Total |
|
$ |
1,065,760 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,065,760 |
|
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
$113,226 and
$1,041 in
advertising and promotion expenses in the three months ended March
31, 2022 and 2021, 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 are directly 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:
Schedule of Property and
Equipment
|
|
|
|
|
|
|
|
|
|
|
March
31, |
|
|
|
2022 |
|
|
2021 |
|
Computers and servers |
|
$ |
21,217 |
|
|
$ |
20,333 |
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation |
|
|
(16,576 |
) |
|
|
(14,997 |
) |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
4,641 |
|
|
$ |
5,335 |
|
Depreciation
expense for the three months ended March 31, 2022 and 2021 was
$1,028 and $540, respectively.
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. On August 17, 2020, HGT
converted $5,833
of notes into 2,645,449
shares of the Company’s common stock. On September 9, 2020, HGT
converted $11,822
of notes into 2,775,076
shares of the Company’s common stock. On November 11, 2020, HGT
converted $25,239
of notes into 2,911,055
shares of the Company’s common stock. On December 18, 2020, HGT
converted $40,126
of notes into 3,053,696
shares of the Company’s common stock. As of December 31, 2020, the
remaining note balance was $17,240. On
June 25, 2021, HGT converted the remaining note balance of
$17,240
into 1,257,476
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.
On
September 30, 2021, the Company and ViaOne Services, LLC entered
into a revolving convertible promissory note (the “Revolving
Note”). The Company agrees to pay ViaOne the principal sum of
$1,000,000 or such a
smaller amount as ViaOne may advance to the Company from time to
time under the Revolving Note, which is subject to a simple
interest rate of 8% per annum and will
expire earlier on demand or the third anniversary of the Original
Issue Date. The Revolving Note (and any unpaid interest or
liquidated damages amount) may be converted into shares of Common
Stock at a conversion price of eighty-five percent (85%)
of the VWAP for the five (5) trading days immediately prior to the
date of the notice of conversion. On December 31, 2021, the Company
amended the note to allow for the conversion of the Note into
shares of the Company’s Series E Preferred Stocks. Effective
December 31, 2021, ViaOne Services, LLC converted the Revolving
Note into 6,730
shares of the Company’s Series E Convertible Preferred Stock,
terminating the Revolving Note.
On
September 30, 2021, the Company entered into a new Employee
Services Agreement with ViaOne effective as of September 1, 2021
(the “Effective Date”). For a monthly management fee of $42,000
(the
“Monthly Management Fee”), ViaOne shall provide to the Company
services related to Company’s human resources, payroll, marketing,
advertising, accounting, and financial services for a period of one
year beginning on the Effective Date and automatically renewing for
successive terms of one year each unless either party provides 90
days’ notice. ViaOne has the right to convert part or all of the
Monthly Management Fee into shares of the Company’s common stock,
par value $0.001
per
share at a Conversion Rate equal to
125% of
the Conversion Amount, divided by the Conversion Price. The
Conversion Price means, with respect to Management Fee,
85% of
the volume weighted average price (“VWAP”) for the 5 trading days
immediately prior to the date of the notice of conversion. On
December 31, 2021, the Company amended the note to allow for the
conversion of the Note into shares of the Company’s Series E
Preferred Stocks. Effective December 31, 2021, ViaOne Services, LLC
converted the new Employee Services Agreement Note into
1,557 shares
of the Company’s Series E Convertible Preferred Stock. On Jan
1, 2022, the monthly management fee increased to $72,000
to include the addition of a full time COO and other support
employees.
5.
Derivative Liabilities
The
following inputs and assumptions were used to value the convertible
debentures outstanding during the years ended March 31, 2022 and
March 31, 2021:
The projected annual volatility for each valuation period was based
on the historic volatility of the Company of 0% and
251.4% at March
31, 2022 and 2021, respectively. The risk free rate was 0% and 0.01% at March
31, 2022 and 2021, respectively.
A
summary of the activity of the derivative liability is shown
below:
Schedule of Derivative
Liability
Balance, March 31, 2020 |
|
$ |
748,664 |
|
Change in value |
|
|
317,096 |
|
Balance, March 31, 2021 |
|
|
1,065,760 |
|
Change in value |
|
|
1,065,760 |
|
Balance, March 31, 2022 |
|
|
0 |
|
6.
Common Stock
Share
Transactions for the Quarter Ended March 31, 2021:
On
March 8, 2021, Lincoln Acquisition converted 18,000
shares of Preferred B Stock into 3,600,000
of the Company’s common stock.
On
May 18, 2021, Lincoln Acquisition converted 29,881
shares of Preferred B Stock into 5,976,200
of the Company’s common stock.
On
June 25, 2021, HGT converted $17,240
of a convertible note into 1,257,476
shares of the Company’s common stock.
On
July 21, 2021, William Schultz converted 2,500
shares of Preferred B Stock into 500,000
of the Company’s common stock.
On
August 24, 2021, the Company issued 1,000,000
Company’s common stock to David B. Dorwart for accrued
compensation.
On
August 24, 2021, the Company issued 1,000,000
Company’s common stock to Eric Brown for accrued
compensation.
On
August 24, 2021, the Company issued 500,000
Company’s common stock to Jordan Axt for accrued
compensation.
On
August 24, 2021, the Company issued 500,000
Company’s common stock to Domenic Edward Fontana for accrued
compensation.
On
August 24, 2021, the Company issued 500,000
Company’s common stock to John D Hilzendager for accrued
compensation.
On
August 24, 2021, the Company issued 300,000
Company’s common stock to Alexandra M Dorwart for accrued
compensation.
On
August 24, 2021, the Company issued 200,000
Company’s common stock to Marjorie Greenhalgh for accrued
compensation.
On
August 24, 2021, the Company issued 150,000
Company’s common stock to Frances Lynn Martin for accrued
compensation.
On
August 24, 2021, the Company issued 50,000
Company’s common stock to Kaitlyn Kazanjian as accrued
compensation.
On
August 24, 2021, the Company issued 50,000
Company’s common stock to Elizabeth Van Fossen as accrued
compensation.
On
August 24, 2021, the Company issued 400,000
Company’s common stock to Douglas Wathen as accrued
compensation.
On
August 24, 2021, the Company issued 100,000
Company’s common stock to Tim Bergman as accrued
compensation.
On
August 24, 2021, the Company issued 25,000
Company’s common stock to Samuel Joseph Schwieters as accrued
compensation.
On
August 24, 2021, the Company issued 50,000
Company’s common stock to Robert Welch as accrued
compensation.
On
August 24, 2021, the Company issued 10,000
Company’s common stock to Nuno Neto as accrued
compensation.
On
August 24, 2021, the Company issued 10,000
Company’s common stock to Maria Iriarte Uriarte accrued
compensation.
On
August 24, 2021, the Company issued 100,000
Company’s common stock to Infinity Global Consulting Group, Inc. as
stock based compensation.
On
September 03, 2021, the Company issued 8,000
Company’s common stock to Netleon Technologies Private Limited as
stock based compensation.
On
September 03, 2021, the Company issued 105,000
Company’s common stock to Whole Plant Systems, LLC as stock based
compensation.
On
September 03, 2021, the Company issued 10,000
Company’s common stock to J Ramsdell Consulting as stock based
compensation.
On
November 16, 2021, the Company issued 9,188,820
Company’s common stock to Armistice Capital LLC as part of closing
the Private Placement funding.
On
November 16, 2021, the Company issued 2,166,668
Company’s common stock to Iroquois Capital Investment Group LLC as
part of closing the Private Placement funding.
On
November 16, 2021, the Company issued 1,166,668
Company’s common stock to Iroquois Master Fund LTD as part of
closing the Private Placement funding.
On
November 16, 2021, the Company issued 1,700,000
Company’s common stock to Bigger Capital Fund LP as part of closing
the Private Placement funding.
On
November 16, 2021, the Company issued 1,700,000
Company’s common stock to District 2 Capital Fund LP as part of
closing the Private Placement funding.
On
December 27, 2021, Armistice Capital LLC converted 1,477,848
warrants into the Company’s common stock.
Share
Transactions for the Quarter Ended March 31, 2022:
None.
7.
Preferred Stock
Our
Articles of Incorporation authorize us to issue up to 5,000,350 shares of
preferred stock, $0.001 par value. Of the
5,000,000
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,
and the total number of
shares of Series E Preferred Stock the Corporation shall have the
authority to issue is 2,750,000, 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
March 31, 2022, we had
7,500 shares
of our Series A preferred stock,
20,296 shares
of Series B preferred stock, 1 shares of Series C Preferred Stock,
and
0 shares
of Series D Preferred Stock, and
57,663
shares of Series E 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 20,296 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. The 57,663 issued
and outstanding shares of Series E Preferred Stock are convertible
into shares of common stock at a rate of 1,000
common shares for each Series E Preferred Share. If all of our
Series A, B and E Preferred Stock are converted into shares of
common stock, the number of issued and outstanding shares of our
common stock will increase by 61,872,201
shares.
The1 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 March 31, 2022.
The
holders of Series A, Series B, Series C and Series D have a
liquidation preference to the common shareholders.
8.
Warrant
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.
As
part of the Private Placement funding, the Company issued two new
warrants to Armistice Capital, LLC and Sabby Management to purchase
1,477,848
and 3,333,333
shares of the Company’s common stock at $0.20 per share,
respectively. If the warrant is not exercised, it will expire on
May 17, 2027.
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 and was convertible into
Series B Preferred shares at the option of the holder at any time.
Effective December 31, 2021, the Note was converted into 1,680 shares of Series B preferred
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. The agreement was
terminated on August 31, 2021.
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.
On September 30, 2021, the Company entered into a new Employee
Services Agreement with ViaOne effective as of September 1, 2021
(the “Effective Date”). For a monthly management fee of $42,000 (the “Monthly Management
Fee”), ViaOne shall provide to the Company services related to
Company’s human resources, payroll, marketing, advertising,
accounting, and financial services for a period of one year
beginning on the Effective Date and automatically renewing for
successive terms of one year each unless either party provides 90
days’ notice. ViaOne has the right to convert part or all of the
Monthly Management Fee into shares of the Company’s common stock,
par value $0.001 per share at a Conversion
Rate equal to 125% of the Conversion Amount,
divided by the Conversion Price. The Conversion Price means, with
respect to Management Fee, 85%
of the volume weighted average price (“VWAP”) for the 5 trading
days immediately prior to the date of the notice of
conversion.On
Jan 1, 2022the monthly management fee increased to $72,000
to include the addition of a full time COO and other support
employees. As of May 1, 2022, the fee has been revised to
$38,640
to reflect current support provided to the company.
On
September 30, 2021, the Company and ViaOne entered into a revolving
convertible promissory note (the “Revolving Note”). The Company
agrees to pay ViaOne the principal sum of $1,000,000 or such a
smaller amount as ViaOne may advance to the Company from time to
time under the Revolving Note, which is subject to a simple
interest rate of 8% per annum and will
expire earlier on demand or the third anniversary of the Original
Issue Date. The Company granted ViaOne warrants to purchase the
1,000,000
shares of Common Stocks at an exercise price of $0.42, a premium of 20% to
the closing bid price of the Common Stock the trading day prior to
the execution of the Revolving Note. Payment of all obligations
under the Revolving Note is secured by a security interest granted
to ViaOne by the Company in all of the right, title and interest of
the Company in all of the assets of the Company currently owned or
acquired hereafter. The Revolving Note (and any unpaid interest or
liquidated damages amount) may be converted into shares of Common
Stock at a conversion price of eighty-five percent (85%)
of the VWAP for the five (5) trading days immediately prior to the
date of the notice of conversion. The Revolving Note contains
customary events of default, including, among others, the failure
by the Company to make a payment of principal or interest when due.
Following an event of default, ViaOne is entitled to accelerate the
entire indebtedness under the Revolving Note. The restrictions are
also subject to certain additional qualifications and carve outs,
as set forth in the Revolving Note.
On
December 31, 2021, the Company amended the both original and new
Employee Service Agreements, Secured Promissory Note, and Revolving
Convertible Promissory Note to allow for the conversion of Notes
into shares of the Company’s Series E Preferred Stocks. Effective
December 31, 2021, the original Employee Service Agreement was
converted into 24,540
shares of the Company’s Series E Preferred Stocks and the new
Employee Service Agreement was converted into 1,557
shares of the Company’s Series E Preferred Stocks. Additionally,
Secured Promissory Note and Revolving Convertible Note were
converted into 24,836
and 6,730
shares of the Company’s Series E Preferred Stocks,
respectively.
As of
March 31, 2022, the Company owed nothing to ViaOne
Services.
The
Company’s Chairman and Chief Executive Officer is the Chairman of
ViaOne.
10.
Income Taxes
The Company has a net operating loss carried forward of
$3,664,049
available
to offset taxable income in future years until the end of the
fiscal year of 2030.
The
significant components of deferred income tax assets and
liabilities at March 31, 2022 and 2021 are as follows:
Schedule of Deferred Tax Assets and
Liabilities
|
|
2022 |
|
|
2021 |
|
Net Operating Loss
Carryforward |
|
$ |
769,450 |
|
|
$ |
859,285 |
|
|
|
|
|
|
|
|
|
|
Valuation
allowance |
|
|
(769,450 |
) |
|
$ |
(859,285 |
) |
|
|
|
|
|
|
|
|
|
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:
Schedule of Components of Income Tax
Expense
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
Income tax recovery at
statutory rate |
|
$ |
98,092 |
|
|
$ |
27,545 |
|
|
|
|
|
|
|
|
|
|
Valuation
allowance change |
|
|
(98,092 |
) |
|
$ |
(27,545 |
) |
|
|
|
|
|
|
|
|
|
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. Mr. Axt has
previously held executive level positions as Director of Marketing
for ProfitPoint Inc. and Clutch Holdings LLC. Mr. Axt is currently
Vice President 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
December 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 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.
On
March 19, 2021, the Company formulated a new plan to create a new
game called “MicroBuddies™” that combines Ethereum ERC721 NFTs
(Non-fungible tokens), non-standard ERC20 tokens (GOO™), and
strategic gameplay to replicate and create unique and rare NFTs.
The game will be played online via the MicroBuddies website and
blockchain transactions take place on the Polygon
Network.
On
May 25th, 2021, Good Gaming, Inc. filed for a trademark on
MicroBuddies™ and other related game terms.
On May 28th, 2021, the initial launch of MicroBuddies™ began with
the “Genesis Event”, which was the sale of Nano Factory Tokens at a
discounted rate of 0.05 Ethereum. We raised the prices of Nano
Factory Token to 0.15 Ethereum prior to the full game launch in Q4
2021. Nano Factory Tokens obtained during the Genesis Event were
used to synthesize a Generation 0 Microbuddy™ at the
game launch in the 4th Quarter of 2021. Nano Factory Tokens
were limited to 3 purchases per wallet. Unsold Nano Factory Tokens
were destroyed and no Nano Factory Tokens will be made available
ever again.
On
September 14, 2021, Good Gaming, Inc. met all qualifications and
have been accepted by OTC Markets to uplist from Pink Sheet Current
to the OTCQB tier for trading.
On
September 23, 2021, the Company announced that MicroBuddies™ will
be launched on the mainnet using Polygon, which is an Ethereum
compatible blockchain building platform that provides a secure and
lower-cost alternative to Ethereum’s escalating gas fees and wait
times. The Company also announced October 5, 2021, as it’s the
official launch date for beta testing to begin.
On
November 11, 2021, the Company entered into a securities purchase
agreement with a several institutional and accredited investors
pursuant to which the Company will sell to the Investors in a
private placement an aggregate of (i) 15,922,156 shares of common
stock, (ii) pre-funded warrants to purchase up to an aggregate of
4,811,181 shares of common stock and (iii) warrants to purchase up
to an aggregate of 20,733,337 shares of common stock for gross
proceeds to the Company of approximately $3,100,000. The combined
purchase price for one share of common stock and a warrant to
purchase one share of common stock is $0.15 and the combined
purchase price for one pre-funded warrant to purchase one share of
common stock and a warrant to purchase one share of common stock is
0.1499.
On
December 13, 2021, the Company announced that the mainnet launch of
the “MicroBuddies™” NFT game will be on Friday, December 17, 2021
at 7:00 PM EST. This announcement comes after more than 95% of
players involved in Beta I and Beta II testing programs voted to
launch the game at this time, based on gameplay and user
experience.
On
December 21, 2021, the Company filed Amended and Restated Articles
of Incorporation with the Secretary of State of the State of Nevada
in order to increase the total number of authorized shares of the
Company from two hundred two million two hundred fifty thousand
(202,250,000) authorized shares to two hundred five million
(205,000,000) authorized shares. Addition to that, the Company
filed a Certificate of Designation with the Secretary of State of
the State of Nevada, which established two million seven hundred
fifty thousand (2,750,000) shares of the Company’s Series E
Convertible Preferred Stock. Each of the Series E Shares are
convertible at the option of the holder at any time into 1,000
shares of the Company’s common stock. The holders of the Series E
Shares will vote together with the common stock on an as-converted
basis. The Series E Shares are not entitled to any dividend except
that in the event that the Board of Directors of the Company
declares a dividend to any other class of stock, Series E Shares
are entitled to a dividend equal to what they would receive on an
as converted to common stock basis.
On March 7, 2022, the holder of one (1) share of Series C Preferred
Stock of the Company that entitles such holder to vote a majority
of the issued and outstanding voting securities of the Company’s
approved by written consent that the Company adopt 2022 Stock
Incentive Plan (the “2022 Plan”), which replaced the 2018 Stock
Incentive Plan. There are 30,000,000 shares authorized under the
2022 Plan, which is an increase from 10,000,000 authorized under
the 2018 Plan. Under the 2022 Plan, the board of directors of the
Company (the “Board”) may decide at its sole discretion to grant
equity awards to certain employees and consultants, including
employees and consultants of ViaOne Services, Inc., who are also
deemed consultants of the Company. In addition, on March 7, 2022,
Advisors, including David Dorwart, Kevin LaPierre, Brian Young,
Brandon Young, Byron Young, and Suleman Bhmani were each granted
762,395 shares under the 2022 Plan. Mr. Dorwart was also granted
885,600 shares as the principal executive officer of the Company
and David Sterling was granted 264,553 shares under the 2022
Plan.
On March 10, 2022, the Company issued a press release announcing
enhancements to its MicroBuddies NFT Game and the adoption of the
2022 Plan.
Technology
In
2016, the Company completed its 2.0 tournament platform and
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 has 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, 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 has
also aggressively evaluated 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 work towards an ambitious
full recode of the Minecade server.
In
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 2020.
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 developing Prison MMO. On April 1, 2020, the
company released its first iteration of a new SkyBlock gamemode,
SkyBlock Spring, to some strong success. During the third quarter
of 2020, the Company implemented a new workflow management style
and released its summer edition of SkyBlock. The release of the
summer edition signified a renewed focus on consistent growth
through regular, player focused updates. The Company’s fall release
of Prison in October 2020 resulted in its single highest revenue
producing month of the year, to date.
In 2021, the Company kicked off the first quarter with major
upgrades to its Winter edition of SkyBlock along with the release
of its Winter edition of Prison. The Company used this period to
experiment with new release schedules and game mechanics with the
goal of identifying how to further strengthen future releases.
Additionally, the Company formulated a new plan to create a new
game called “MicroBuddies™” that combines Ethereum ERC721 NFTs
(Non-fungible tokens), non-standard ERC20 tokens (GOO™), and
strategic gameplay to replicate and create unique and rare NFTs.
The game will be played online via the MicroBuddies website and
blockchain transactions take place on the Polygon Network.The game
was launched on December 17, 2021 after more than 95% of players
involved in Beta 1 and 2 testing programs voted to launch the game
based on gameplay and user experience.
Business
Strategy
In
the past, our management team’s business strategy was to be a
full-service company providing best in class Esports gaming
tournaments and Minecraft experiences. With the onset of the
pandemic, the Esports industry has suffered a considerable amount
of lost business opportunities. We were not immune to the effects
of the pandemic on our Esports business. In addition, the size of
the PC-based Minecraft gaming community has shrunk considerably. We
have taken a hard look at both the Esports and Minecraft business
verticals and determined that both strategies are no longer in the
best interest of the company and our shareholders. We feel that
both the Esports and Minecraft verticals do not have significant
upside in the future. As so, the Esports and Minecraft business
verticals will not comprise a meaningful segment of our ongoing
business strategy. We will not designate any future investment in
either of these verticals for the foreseeable future.
With the rise in the popularity of the crypto-currency and
blockchain technologies, the Company has decided to invest in the
creation of its new game, “MicroBuddies™” which combines Ethereum
ERC721 NFTs (Non-fungible tokens), non-standard ERC20 tokens
(GOO™), and strategic, long-tail web browser gameplay to replicate
and create unique and collectible NFTs. ERC20 “GOO™” tokens are
limited to use as an in-game currency only. This strategy will
allow us to enter the emerging NFT and blockchain gaming space.
Initial revenues from “MicroBuddies™” will come from the sale of
Nano Factory Tokens that will be used to synthesize generation 0 of
“MicroBuddies™”. Ongoing “MicroBuddies™” revenues will be generated
from a 5% royalty on all of the sales of “MicroBuddy™” NFTs in
third-party marketplaces and a .01 MATIC per “MicroBuddy™”
replication. In 2022, we will introduce additional initiatives
around the “MicroBuddies™ intellectual property. We expect the
ancillary ”MicroBuddies™” initiatives to create consistent,
recurring revenue over the life of the property.
Moving
forward, we are going to expand the “MicroBuddies™” intellectual
property to metaverse/virtual world social gaming experiences.
There are many current and emerging metaverse/virtual world
platforms. Some existing platforms already have greater than one
hundred million users while other platforms are slated to launch
later in 2022 or in 2023. We see building “MicroBuddies™” themed
gaming experiences in these types of metaverses/virtual worlds as a
solid strategy to create long tail revenue engines while exposing
the “MicroBuddies™” franchise to large, diverse
audiences.
Employees
We
have three full-time consultants, and three part-time contractors
working on various Good Gaming initiatives. The full-time
consultants consist of one Chief Operating Officer, one Software
Engineer and one Operations Manager. The part-time consultant team
consists of two graphic designers and one community manager.
Pursuant to our Management Services Agreement with ViaOne Services
LLC, certain employees of ViaOne are deemed to be consultants of
the Company.
Offices
Our
executive offices are located at 415 McFarlan Rd, Suite 108,
Kennett Square, PA 19501. Our telephone number is (844)
419-7445.
Recently
Issued Accounting Pronouncements
None.
RESULTS
OF OPERATIONS
Our
auditors have issued a going concern opinion on the financial
statements for the year ended December 31, 2021. 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 growth within our MicroBuddies™ vertical via
ancillary gaming initiatives across a variety of interactive
platforms. |
|
|
2 |
Continue to promote and increase players of the Digital
Collectibles game MicroBuddies™ to expand revenue generated by the
various aspects of game play. |
|
|
3 |
Launch the metaverse/virtual world gaming initiative within a
well-established third party experience that has a large, already
established, global reach. Continue to evaluate opportunities that
have synergies to our existing business line and create continuing
revenue streams. |
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 March 31, 2022 as compared to March 31,
2021
●
Working Capital
|
|
March 31,
2022 |
|
|
March 31,
2021 |
|
Current Assets |
|
$ |
1,943,715 |
|
|
$ |
1,622 |
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
273,314 |
|
|
|
3,505,076 |
|
|
|
|
|
|
|
|
|
|
Working Capital (Deficit) |
|
$ |
1,670,401 |
|
|
$ |
(3,503,454 |
) |
●
Operating Revenues
We
have generated $1,266 in revenue in the three months ended March
31, 2022 and $6,692 in revenue in the three months ended March 31,
2021, which reflects a decrease of $5,426 or -81.01%. The decrease
in revenue was attributed to the decrease in usage of the
Microbuddies game.
●
Operating Expenses and Net Loss
Operating
expenses for the three months ended March 31, 2022 were $472,042
compared with $101,372 for the three months ended March 31, 2021,
which reflects an increase of $370,670 or 365.7%. The increase in
expenses was attributable to a change in professional fees for
advertising and promotion and general administrative fees, deriving
from Viaone monthly management fee.
During
the three months ended March 31, 2022, the Company recorded net
loss of ($467,105) compared with a net income of $131,167 for the
three months ended March 31, 2021, which reflects an decrease of
$598,272 or -456%. The decrease in net income was attributed to an
increase of professional fees for advertising and promotions and
administrative fees, and a slight decrease of revenue.
●
Liquidity and Capital Resources
As of
March 31, 2022, the Company’s cash balance consisted of $1,916,915
compared to cash balance of $1,622 as of March 31, 2021. The
increase in the cash balance was attributed to the increase in
additional paid in capital for common stock. As of March 31, 2022,
the Company had $2,227,961 in total assets compared to total assets
of $6,957 at March 31, 2021. The increase in total assets was
attributed to additional investment capital payments
received.
As of
March 31, 2022, the Company had total liabilities of $273,314
compared with total liabilities of $3,505,076 as of March 31, 2021.
The decrease in liabilities was attributable to Viaone Note
conversion to shares of stock and decrease in derivative
liabilities.
As of
March 31, 2022, the Company has a working capital of $1,670,401
compared with a working capital deficit of $3,503,454 as of March
31, 2021. The positive working capital is due to additional
investor capital payments, used for general working capital
purposes.
Cash
flow from Operating Activities
During
the three months ended March 31, 2022, the Company used $519,920 of
cash for operating activities compared to the use of cash in an
amount of $89,925 for operating activities during the three months
ended March 31, 2021, which reflects an increase of $429,984 or
4.78%. The increase in the use of cash for operating activities was
attributed to the company’s increase in advertising and promotions
and management fees.
Cash
flow from Investing Activities
The
Company had $34,767 in cash used in investing activities during the
quarter ended March 31, 2022 and $0 during March 31, 2021.
The increase of $34,767 in cash used
in investing activities was attributed to the purchase of digital
assets related to the creation of NFTs for
MicroBuddies.
Cash
flow from Financing Activities
During
the year ended March 31, 2022, the Company received $0 of proceeds
from financing activities compared to $89,242 during the year ended
March 31, 2021, which reflects a decrease of $89,242. 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
March 31, 2022, 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.
Not
required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based
on the evaluation of our disclosure controls and procedures (as
defined in Rule 13a-15e under the Securities Exchange Act of 1934
the “Exchange Act”), our principal executive officer and principal
financial officer have concluded that as of the end of the
three-month period ended March 31, 2022 covered by this quarterly
report on Form 10-Q, such disclosure controls and procedures were
not effective due to the lack of segregation of duties and lack of
a formal review process that includes multiple levels of review to
ensure that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms
because of the identification of a material weakness in our
internal control over financial reporting which we view as an
integral part of our disclosure controls and procedures. The
material weakness relates to the lack of segregation of duties in
financial reporting, as our financial reporting and accounting
functions were performed by an external consultant with no
oversight by a professional with accounting expertise. Our Chief
Executive Officer and Chief Financial Officer did not possess
accounting expertise and our company does not have an audit
committee. This weakness was due to the Company’s lack of working
capital to hire additional staff. Subsequently, with the completion
of transition in the management and Board, the financial management
will be led by a certified public accountant with extensive
accounting experience who follows the standards of U.S. generally
accepted accounting principles and internal controls procedures to
ensure the faithful representation of the financial statements,
including the results of operations, financial position, and cash
flows of the reporting entity.
Changes in Internal Control over Financial
Reporting
Except
as noted above, there have been no changes in our internal control
over financial reporting identified in connection with the
evaluation required by paragraph (d) of Exchange Act Rules 13a-15
or 15d-15 that occurred during our first quarter of 2022 that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal proceedings
To
our best knowledge, we are not currently a party to any legal
proceedings that, individually or in the aggregate, are deemed to
be material to our financial condition or results of
operations.
Item 1–A. Risk factors
We
are a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
Item 2. Unregistered sales of equity securities and use of
proceeds
There
were no issuance of unregistered sales of equity securities during
the three months ended March 31, 2022.
Item 3. Defaults upon senior securities
None.
Item 4. Mine safety disclosures
Not
Applicable.
Item 5. Other information
None.
Item 6. Exhibits
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
|
Good
Gaming, Inc. |
|
(the
“Registrant”) |
May
16, 2022 |
|
|
|
BY: |
/s/
David B. Dorwart |
|
|
David
B. Dorwart |
|
|
Principal
Executive Officer |
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