GMER 10-Q
Good Gaming, Inc. (GMER)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For
the quarterly period ended | |
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(IRS Employer Identification Number) |
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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 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.
☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically 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 such files).
☒ 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.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
| ☒ | 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 ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date. As of November 01, 2023, there were issued and outstanding shares of common stock of the registrant, par value $0.001.
TABLE OF CONTENTS
| Page | ||
| Part I FINANCIAL INFORMATION | ||
| Item 1 | Financial Statements | F-1 |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 12 |
| Item 4 | Controls and Procedures | 12 |
| Part II OTHER INFORMATION | ||
| Item 1 | Legal Proceedings | 12 |
| Item 1A | Risk Factors | 12 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
| Item 3 | Defaults Upon Senior Securities | 13 |
| Item 4 | Mine Safety Disclosures | 13 |
| Item 5 | Other Information | 13 |
| Item 6 | Exhibits | 13 |
| Signatures | 14 | |
| 2 |
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, or the “Securities Act,” and Section 21E of the Securities Exchange Act of 1934 or the “Exchange Act,” and 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.
| 3 |
PART 1
Item 1. Financial Statements
Good Gaming, Inc.
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
(Unaudited)
| September 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Accounts Receivable | $ | |||||||
| Prepaid expenses | $ | |||||||
| Total Current Assets | $ | |||||||
| Digital Assets | $ | |||||||
| Property and Equipment, Net | $ | |||||||
| Due from Tebex | $ | |||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable and Accrued Expenses | $ | $ | ||||||
| Derivative Liability | $ | |||||||
| Notes Payable | $ | |||||||
| Convertible Debentures, current | $ | |||||||
| Notes Payable Related Party- ViaOne Services | $ | |||||||
| Total Current Liabilities | $ | |||||||
| Total Liabilities | $ | |||||||
| Stockholders’ Deficit | ||||||||
| Class A Preferred Stock | ||||||||
| Authorized: Preferred Shares, With a Par Value of $ Per Share Issued and Outstanding: Shares | ||||||||
| Class B Preferred Stock | ||||||||
| Authorized: Preferred Shares, With a Par Value of $ Per Share Issued and Outstanding: Shares | ||||||||
| Class C Preferred Stock | ||||||||
| Authorized: Preferred Shares, With a Par Value of $ Per Share Issued and Outstanding: Share | ||||||||
| Class D Preferred Stock | ||||||||
| Authorized: Authorized: Preferred Shares, With a Par Value of $ Per Share Issued and Outstanding: Shares | ||||||||
| Class E Preferred Stock | ||||||||
| Authorized: Authorized: Preferred Shares, With a Par Value of $ Per Share Issued and Outstanding: | ||||||||
| Common Stock | ||||||||
| Authorized: Common Shares, With a Par Value of $ Per Share Issued and Outstanding: | ||||||||
| Warrant | ||||||||
| Additional Paid-In Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ||||||
| TOTAL LIABILITIES & STOCKHOLDER’S DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-1 |
Good Gaming, Inc
Consolidated Statement of Operations
(Expressed in U.S Dollars)
(Unaudited)
For three months ended September 30 | ||||||||
| 2023 | 2022 | |||||||
| Revenues | $ | |||||||
| Cost of Revenues | ||||||||
| Gross Profit | ( | ) | ( | ) | ||||
| Operating Expenses | ||||||||
| General & Administrative | ||||||||
| Contract Labor | ||||||||
| Depreciation and Amortization Expense | ||||||||
| Professional Fees | ||||||||
| Total Operating Expenses | ||||||||
| Operating Loss | ( | ) | ( | ) | ||||
| Other Income (Expense) | ||||||||
| Gain on Digital Assets | ||||||||
| Impairment Cost | ( | ) | ( | ) | ||||
| Other Income | ||||||||
| Gain on Debt Settlement | ||||||||
| Loss on disposal of fixed assets | ||||||||
| Interest Income | ||||||||
| Interest Expense | ||||||||
| Gain (Loss) on Change in Fair Value of Derivative Liability | ||||||||
| Total Other Income (Loss) | ( | ) | ||||||
| Net Income (Loss) | ( | ) | $ | ( | ) | |||
| Net Income (Loss) Per Share, Basic and Diluted | $ | |||||||
| Weighted Average Shares Outstanding | ||||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-2 |
Good Gaming, Inc
Consolidated Statement of Operations
(Expressed in U.S Dollars)
(Unaudited)
For the nine months ended September 30 | ||||||||
| 2023 | 2022 | |||||||
| Revenues | $ | $ | ||||||
| Cost of Revenues | $ | |||||||
| Gross Profit | $ | ( | ) | ( | ) | |||
| Operating Expenses | ||||||||
| General & Administrative | $ | |||||||
| Contract Labor | $ | |||||||
| Depreciation and Amortization Expense | $ | |||||||
| Professional Fees | $ | |||||||
| Total Operating Expenses | $ | |||||||
| Operating Loss | $ | ( | ) | ( | ) | |||
| Other Income (Expense) | ||||||||
| Gain on Digital Assets | $ | |||||||
| Impairment Cost | $ | ( | ) | ( | ) | |||
| Other Income | $ | |||||||
| Gain on Debt Settlement | $ | |||||||
| Loss on disposal of fixed assets | $ | |||||||
| Interest Income | $ | |||||||
| Interest Expense | $ | |||||||
| Gain (Loss) on Change in Fair Value of Derivative Liability | $ | |||||||
| Total Other Income (Loss) | $ | ( | ) | |||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | ||
| Net Income (Loss) Per Share, Basic and Diluted | $ | $ | ||||||
| Weighted Average Shares Outstanding | ||||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-3 |
Good Gaming, Inc
Consolidated Statements of Cash Flows
(Expressed in U.S Dollars)
(Unaudited)
For nine months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating Activities | ||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustment To Reconcile Net Loss to Net Cash Used In Operating Activities | ||||||||
| Accounts Receivable | ||||||||
| Due from Tebex | ( | ) | ||||||
| Digital Assets | ||||||||
| Depreciation and Amortization | ||||||||
| Loss on disposal of fixed assets | ||||||||
| Change In Fair Value Of Derivative Liability | ||||||||
| Stock based compensation | ||||||||
| Gain on debt settlement | ||||||||
| Gain on Digital Assets | ( | ) | ||||||
| Impairment Cost | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Accounts Payable | ||||||||
| Net Cash Provided By (Used in) Operating Activities | ( | ) | ( | ) | ||||
| Investing Activities | ||||||||
| Purchase of Digital Assets | ( | ) | ( | ) | ||||
| Selling Digital Assets | ||||||||
| Reclass Digital Assets | ( | ) | ||||||
| Selling Property and Equipment | ||||||||
| Purchase of Property and Equipment | ||||||||
| Net Cash Provided By (Used in) Investing Activities | ( | ) | ||||||
| Financing Activities | ||||||||
| Class B Stock: Preferred Stock converted to common | ( | ) | ||||||
| Common Stock: Conversion | ||||||||
| Proceeds From Sale Of Preferred Stock CL D | ||||||||
| Payment on Note Interest | ( | ) | ||||||
| Due To ViaOne Services | ||||||||
| Net Cash Provided By (Used In) Financing Activities | ( | ) | ||||||
| Change in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
| Cash and Cash Equivalents, Beginning Of Period | ||||||||
| Cash and Cash Equivalents, End Of Period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Non-Cash Investing And Financing Activities | ||||||||
| Unpaid Property and Equipment Acquired | $ | $ | ||||||
| Common Shares Issued for Conversion Of Debt | $ | $ | ||||||
| Shares Issued For Acquisition Of Software | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-4 |
Good Gaming, Inc.
Statements of Stockholders’ Equity (Deficit)
(Expressed in U. S. Dollars)
(Unaudited)
| Preferred Stock | Additional | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Class C | Class D | Class E | Common Stock | Warrants | Paid-in | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | | | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Based Compensation converted to common stock | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Based Compensation converted to common stock | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Based Compensation converted to common stock | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements
| F-5 |
Good Gaming, Inc.
Statements of Stockholders’ Equity (Deficit)
(Expressed in U. S. Dollars)
(Unaudited)
| Preferred Stock | Additional | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Class C | Class D | Class E | Common Stock | Warrants | Paid-in | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | | | | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Based Compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (Loss) | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares B to common shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (Loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Based Compensation converted to common stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares B to common shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements
| F-6 |
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 Esports 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. 2022 was a year of growth for our Company. In response to the crypto winter that began in early 2022 and continues today, the Company launched a series of new business development strategies. In mid-2022, the Company launched beta versions of its Minecraft Super Craft Brothers Brawl (“SCBB”) franchise on the Roblox platform. In 2023, the Company plans to launch the full game version of SCBB on Roblox after a great deal of feedback from the community. In late 2022, the Company also launched a beta version of “Treasure Island”; a Microbuddies themed Simulator game on Roblox. To date, the Company has launched beta versions of its SCBB franchise on both the Minecraft™ PC platform and Roblox, our Prison variant for Minecraft™ PC, and multiple Microbuddies themed games on the Roblox platform. Over the course of the development schedule, the Company experienced significant developer related challenges which resulted in missed updates to already released games, development creep on games in production, and delayed product launches. After reviewing our third-party developer and internal efforts, the Company has decided to paused Roblox and Minecraft development until the Company completes platform, developer and marketing effort reviews. These reviews will result in outputs hope to point out the pain points in our processes, and illustrate a plausible forward course of action that is realistic in its expectations, and can create gaming experiences that can generate results that are up to the Company’s and customer’s expectations, and generate significant additive results to our financial performance and shareholder value.
In response to the production difficulties with the Minecraft and Roblox developers, the Company undertook a significant business development research project to determine what possible opportunities exist within the mobile gaming industry. After a lengthy review, the Company has entered into a multi-year strategic partnership with ViaOne Services Inc. to distribute Good Gaming mobile games to the Assist Wireless® and enTouch Wireless® customer bases. Assist Wireless and enTouch Wireless are operated and managed by ViaOne Services. The Company will also make its new mobile gaming experiences available through the Apple App Store® and Google Play™ Store. The Company has announced a development partnership with Arcadia Studios a division of partnership with Coeus Group of Companies. Coeus Solutions is Coeus Group of companies is a preeminent German software development group with a vision to deliver excellence in AI, Game, Web & Mobile Applications, and Digital Marketing solutions. In partnership with Codeus, the Company announced their first mobile game titled “Galactic Acres” slated to be released in early 2024. The Company has created a significant development schedule that will span multiple games over the next several years. In addition to a traditional mobile game experience, the Company has plans to create integrated Web3 gaming components powered by blockchain technology. The main mobile game will stand on its own as a dynamic entertainment experience while the Web3 integration will exist as an optional experience for the mobile players. Players can decide to participate in the Web3 experiences or play the traditional mobile game without taking part in the Web3 segments of the game. Along with the traditional mobile gaming experience these integrated Web3 gaming components will feature an expansive rewards tree to keep players engaged for many years. The Company will announce additional content for the mobile games roadmap when appropriate.
Going Concern
As
of September 30, 2023, the Company had a working capital deficit of $
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. The condensed consolidated statements are unaudited and should be read in conjunction with the consolidated financial statements and related notes included in our 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 7, 2023.
The results for the nine months ended September 30, 2023 are not necessarily indicative of the operating results expected for the year ending December 31, 2023 or any other future period.
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
| F-7 |
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.
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 September 30, 2023 and December 31, 2022, the Company had and 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
| F-8 |
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 of September 30, 2023 and 2022 as follows:
| Description | Fair Value Measurements at September 30, 2023 Using Fair Value Hierarchy | |||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Description | Fair Value Measurements at September 30, 2022 Using Fair Value Hierarchy | |||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The carrying values of all 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.
| F-9 |
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 $
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 (except for 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.
| F-10 |
3. Other Assets
Property and Equipment consisted of the following:
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| Computers and servers | $ | $ | ||||||
| Accumulated Depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation
expense for the three months ended September 30, 2023, and 2022 was $
4. Digital Assets
In 2021, the Company started working on creating a new game called MicroBuddies™ that will be played online and will use blockchain technology. Digital Asset prices have been volatile in the past and may continue to be so in the future, owing to a variety of risks and uncertainties. Under current accounting rules, digital assets are considered indefinite-lived intangible assets. The Company needs to recognize impairment charges if there is any decrease in their fair value, whereas the Company may not make any upward revisions for market price increases until a sale. Thus, the carrying value represents the lowest fair value of the digital assets.
As
of September 30, 2023, the carrying value of the Company’s digital assets was $
5. Debt
Convertible Debentures
On
April 15, 2015, the Company issued a convertible debenture with the principal amount of $
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 $
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 $
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 $
| F-11 |
6. Derivative Liabilities
The following inputs and assumptions were used to value the convertible debentures outstanding during the years ended September 30, 2023 and September 30, 2022:
The
projected annual volatility for each valuation period was based on the historic volatility of the Company of
A summary of the activity of the derivative liability is shown below:
| Balance, September 30, 2021 | $ | |||
| Change in value | ( | ) | ||
| Balance, September 30, 2022 | ||||
| Change in value | ||||
| Balance, September 30, 2023 |
7. Common Stock
Share Transactions for the Quarter Ended September 30, 2022:
On July 26, 2022, William Crusoe converted Class B shares into common stock.
On August 17, 2022, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On August 23, 2022, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On September 13, 2022, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
Share Transactions for the Quarter Ended September 30, 2023:
On January 30, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On February 15, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On March 15, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On April 14, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On May 18, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On June 15, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On July 21, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On August 10, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
On September 19, 2023, the Company issued Company’s common stock to ViaOne employees as stock based compensation.
| F-12 |
8. Preferred Stock
Our Articles of Incorporation authorize us to issue up to shares of preferred stock, $ par value. Of the authorized shares of preferred stock, the total number of shares of Series A Preferred Stock the Corporation shall have the authority to issue is , with a stated par value of $ per share, the total number of shares of Series B Preferred Stock the Corporation shall have the authority to issue is , with a stated par value of $ per share, the total number of shares of Series C Preferred Stock the Corporation shall have the authority to issue is , with a stated par value of $ per share, and the total number of shares of Series D Preferred Stock the Corporation shall have the authority to issue is , with a stated par value of $ per share, and the total number of shares of Series E Preferred Stock the Corporation shall have the authority to issue is , with a stated par value of $ 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 September 30, 2023, we had shares of our Series A preferred stock, shares of Series B preferred stock, shares of Series C Preferred Stock, and shares of Series D Preferred Stock, and shares of Series E preferred stock issued and outstanding.
The
issued and outstanding shares of Series A Preferred Stock are convertible into shares of common stock at a rate of common shares
for each Series A Preferred Share. The issued and outstanding shares of Series B Preferred Stock are convertible into shares of
common stock at a rate of common shares for each Series B Preferred Share. The issued and outstanding shares of Series E Preferred
Stock are convertible into shares of common stock at a rate of common shares for each Series E Preferred Share.
The holders of Series A, Series B, Series C and Series D have a liquidation preference to the common shareholders.
9. Warrant
In
connection with the $
As
part of the Private Placement funding, the Company issued two new warrants to Armistice Capital, LLC and Sabby Management to purchase
| F-13 |
10. Related Party Transactions
On
or around April 7, 2016, Silver Linings Management, LLC funded the Company $
On
November 30, 2016, ViaOne purchased a Secured Promissory Note equal to a maximum initial principal amount of $
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 ($
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 $
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 $
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 $
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 $
| F-14 |
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 shares of the Company’s Series E Preferred Stock and the new Employee Service Agreement was converted into shares of the Company’s Series E Preferred Stock. Additionally, the Secured Promissory Note and Revolving Convertible Note were converted into and shares of the Company’s Series E Preferred Stocks, respectively.
As of September 30, 2023, the Company doesn’t owe anything to ViaOne Services.
The Company’s Chairman and Chief Executive Officer is also the Chairman of ViaOne.
11. Income Taxes
The
Company has a net operating loss carried forward of $
The significant components of deferred income tax assets and liabilities at September 30, 2023 and 2022 are as follows:
| 2023 | 2022 | |||||||
| Net Operating Loss Carryforward | $ | $ | ||||||
| Valuation allowance | ( | ) | $ | ( | ) | |||
| 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
| 2023 | 2022 | |||||||
| Income tax recovery at statutory rate | $ | $ | ||||||
| Valuation allowance change | ( | ) | $ | ( | ) | |||
| Provision for income taxes | $ | $ | ||||||
12. Commitments and Contingencies
None.
13. Subsequent Events
None.
| F-15 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Cautionary Note regarding Forward-Looking 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.
The following discussion and analysis should be read in conjunction with the Condensed Financial Statements (unaudited) and Notes to Condensed Financial Statements (unaudited) filed herewith.
| 4 |
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.
| 5 |
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.
| 6 |
On September 14, 2021, Good Gaming, Inc. met all qualifications and was 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.
On July 23, 2023, the Company issued a press release announcing the partnership with ViaOne Services. Through this cooperation, ViaOne Services’ Assist Wireless® and enTouch Wireless® customer bases will receive state-of-the-art mobile gaming experiences. Additionally, the Company will release its new mobile games on the Google PlayTM Store and Apple App Store®. By combining Web3 technology with extremely engaging mobile gaming experiences, this creative partnership seeks to completely transform the gaming industry and bring in a new era of gaming pleasure.
| 7 |
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, the Company ran hundreds of tournaments on a regular basis with a dedicated customer base of over 30,000 members. Additionally, the Company expanded its website by offering content relevant to the member base with information relating to game play strategy and game news. This generated nearly 100,000 unique visits per month. In an effort to monetize that traffic, the Company employed the use of Google display advertising and tested a subscription model. After careful evaluation of the Company’s strategy, management decided to move away from free tournaments and custom content and focus on growing and monetizing our Minecraft server, which has grown substantially in popularity. This decision was a result of comprehensive competitive analysis and evaluations made in how the esports industry was shifting in its space. Tournaments and custom content are currently suspended while the Company grows revenue and focuses on expanding its efforts with Minecraft. The Company 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.
In 2022, the Company expanded its development portfolio to include the Roblox gaming platform. Towards the end of 2022, the Company released a Roblox™” version of the popular Minecraft™” title “Super Craft Brothers Brawl™” and “Treasure Island” featuring the “MicroBuddies™”. The Company was able to gather important player feedback to help continue development to include player feedback regarding the titles’ feature set and functionality. In 2023, the Company plans to continue development of both of these titles and release final versions on the Roblox™” platform. In addition to the Super Craft Brothers Brawl™” and “Treasure Island” titles, the Company signed the first game publishing deal with a well known Roblox™” creator Joshua Mckittrick to bring his horror themed creations to the Roblox™” platform. Joshua has created Roblox™” titles which have garnered over 100 million visits and tens of thousands of views on YouTube from creators making fan videos and reviews of his titles. The Company also announced the establishment of a themed brand of games for the Roblox™” platform focusing on the “All Ages” segment. These games will center around challenging gameplay that does not include violent messaging or gameplay of any kind so parents can feel relieved to allow their kids to play without worry.
In July 2023, the Company entered into a multi-year strategic partnership with ViaOne Service Inc. to develop and distribute mobile games across ViaOne’s group of companies. These mobile games will be integrated as pre-installed software into the UI of the mobile phones. The Company plans to develop distribution and engagement strategies to create added value for ViaOne-managed companies. The first mobile game is set to be released in late 2023. The Company will announce its expanded mobile game release schedule when appropriate. The ViaOne Services partnership promises to potentially result in our games being pre-installed on millions of devices distributed nationwide. We are confident our shared vision will create transformative opportunities in the mobile gaming space, further advancing us toward our goal as a recognized leader in the space.
| 8 |
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.0.01 MATIC per “MicroBuddy™” replication Microbuddies 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 project.
As mentioned previously, a strategic partnership with ViaOne Services, enables us to extend our mobile gaming market reach past traditional app stores to include the vast customer bases of Assist Wireless and enTouch Wireless. The customer bases of Assist Wireless and enTouch Wireless represent the pre-installation of Good Gaming mobile games on more than 100,000 mobile phones a month. This installation collaboration creates unique revenue-sharing opportunities for both Good Gaming and the ViaOne-managed companies through various types of embedded advertising initiatives and dynamic in-app purchases as well as engaging community building experiences. Pre-installation of our gaming experiences allow us to quickly deploy and update our games and continually incentivize players to engage with our products without the cumbersome step of asking players to manually continually update a game. As part of our strategic partnership with ViaOne Service, the Company has developed a multi-year content strategy within our gaming experiences which will continue our efforts to bring the Company’s intellectual properties to mobile and Web3. The Company plans to release multiple interconnected mobile games and Web3 experiences featuring our “MicroBuddies™”, and “Super Craft Brothers Brawl™” intellectual properties. The Company plans to introduce new intellectual properties featuring exciting characters and storylines as part of our upcoming mobile game releases.
Employees
We have three full-time consultants, and four part-time contractors working on various Good Gaming initiatives. The full-time consultants consist of one Chief Operating Officer, one Gaming Director and one Operations Manager. The part-time consultant team consists of two QA staff, one Video Engineer and a Marketing Coordinator. 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.
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Critical Accounting Estimates
None.
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 for our intellectual properties via our recently announced mobile gaming initiative. |
| 2 | Continue to promote and increase players of the NFT Breeding game MicroBuddies™ to expand revenue generated by the various aspects of game play. In 2023, the Company has plans to expand the engagement of the game to add value to the current player base and bring new players to the experience. |
| 3 | Continue to evaluate opportunities that have synergies to our existing business lines and create new revenue streams. In the future, the Company is planning to tie all business lines together with cross-functional products to increase engagement for our players and cross-promote our intellectual properties to a vast demographic as possible. |
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.
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Results of Operations
The three months ended September 30, 2023, as compared to September 30, 2022
● Operating Revenues
We have generated $25 in revenue in the three months ended September 30, 2023, and $3,244 in revenue in the three months ended September 30, 2022, which reflects a decrease of $3,219 or 99.22%. The decrease in revenue was due to the Company’s focus shifted to developing new mobile games for Assist Wireless and enTouch Wireless customers.
● Operating Expenses and Net Loss
Operating expenses for the three months ended September 30, 2023, were $231,628 compared with $389,997 for the three months ended September 30, 2022, which reflects a decrease of $158,369 or 40.6%. The decrease in expenses was due to changes in advertising and promotion, general administrative fees and contract labor costs.
During the three months ended September 30, 2023, the Company recorded a net loss of $275,547 compared with a net loss of $482,995 for the three months ended September 30, 2022, which reflects a decrease in net loss of $207,448 or 43%. The decrease in net loss was due to a decrease in professional fees, advertising and promotion and administrative expenses.
The nine months ended September 30, 2023 as compared to September 30, 2022
● Working Capital
| September 30, 2023 | September 30, 2022 | |||||||
| Current Assets | $ | 237,027 | $ | 1,226,730 | ||||
| Current Liabilities | 530,844 | 388,347 | ||||||
| Working Capital (Deficit) | $ | (293,818 | ) | $ | 838,384 | |||
● Operating Revenues
We have generated $3,442 in revenue in the nine months ended September 30, 2023 and $4,988 in the nine months ended September 30, 2022, which reflects a decrease of $1,546 or 31%. The decrease in revenue was attributed to the Company’s focus shifted towards the development of new mobile games for Assist Wireless and enTouch Wireless customers.
● Operating Expenses and Net Loss
Operating expenses for the nine months ended September 30, 2023 were $736,936 compared with $1,314,579 for the nine months ended September 30, 2022, which reflects a decrease of $577,643 or 43.9%. The decrease in expenses was attributable to a change in advertising and promotion, general administrative fees, and contract labor costs.
During the nine months ended September 30, 2023, the Company recorded net loss of $982,741 compared with a net loss of $1,660,729 for the nine months ended September 30, 2022, which reflects a decrease of $677,988 or 41%. The decrease in net loss was attributed to a decrease in professional fees, advertising and promotions, and administrative fees.
● Liquidity and Capital Resources
As of September 30, 2023, the Company’s cash balance consisted of $223,277 compared to cash balance of $1,205,502 as of September 30, 2022. The decrease in the cash balance was attributed to the expenses paid for day-to-day activities. As of September 30, 2023, the Company had $351,607 in total assets compared to total assets of $1,342,856 at September 30, 2022. The decrease in total assets was attributed to cash paid for daily operations and the impairment cost associated with the digital assets.
As of September 30, 2023, the Company had total liabilities of $530,844 compared with total liabilities of $388,349 as of September 30, 2022. The increase in liabilities was attributable to the operating expenses to be paid in coming months.
As of September 30, 2023, the Company has a working capital deficit of $293,818 compared with a working capital of $838,384 as of September 30, 2022. The decrease in working capital is due to a decline in cash expended for day to day activity as well as the impairment cost associated with the digital assets.
Cash flow from Operating Activities
During the nine months ended September 30, 2023, the Company used $714,068 of cash for operating activities compared to the use of cash in an amount of $1,237,451 for operating activities during the nine months ended September 30, 2022, which reflects a decrease of $523,383 or 42%. The decrease in the use of cash for operating activities was attributed to the company’s decrease in advertising and promotions and management fees.
Cash flow from Investing Activities
The Company used $1180 in cash in investing activities during the nine months ended September 30, 2023 and $36,437 cash generated during September 30, 2022. The decrease of $37,617 in cash used in investing activities was attributed to the Company’s decision on not purchasing any new digital assets and focus on the development of new mobile games.
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Cash flow from Financing Activities
During the nine months ended September 30, 2023, the Company generated $6,657 in financing activities compared to $1,449 cash used during the nine months ended September 30, 2022, which reflects an increase of $8,106. The increase in proceeds from financing activities was due to the employee stock issuance in 2023.
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 September 30, 2023, 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 nine-month period ended September 30, 2023 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 third quarter of 2023 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.
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Item 2. Unregistered sales of equity securities and use of proceeds
There were no issuance of unregistered sales of equity securities during the nine months ended September 30, 2023.
Item 3. Defaults upon senior securities
None.
Item 4. Mine safety disclosures
Not Applicable.
Item 5. Other information
None.
Item 6. Exhibits
| 31.1 | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 | |
| 31.2 | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 | |
| 32.1 | Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 | |
| 32.2 | Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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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”) | ||
| Nov 14, 2023 | ||
| BY: | /s/ David B. Dorwart | |
| David B. Dorwart | ||
Chief Executive Officer | ||
| (Principal Executive Officer) | ||
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