10-K
1
form10-k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
Form
10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2020
Commission
File Number: 000-53949
Good
Gaming, Inc.
(Exact
name of registrant as specified in its charter)
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)
NONE COMMON STOCK
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [ ]
NO [X]
Indicate
by check mark if the registrant is required to file reports pursuant to Section 13 or Section 15(d) of the Act: YES [X] NO
[ ]
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 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 past 90 days. YES [X] 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 (§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 [X] NO
[ ]
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
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 [ ]
Non-accelerated Filer [X] Smaller Reporting Company [X]
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 has filed a report on and attestation to its management’s assessment of
the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. [ ]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES [ ] NO [X]
State
the aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was sold, or the average bid and asked price of such common equity, as of June 30, 2020: $346,485.
State
the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 68,974,031
as of April 2, 2021.
FORWARD
LOOKING STATEMENTS
This
Annual Report on Form 10-K 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;
● 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
Annual Report on Form 10-K, 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 revisions 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
I
ITEM
1. BUSINESS
General
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 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 that
company from a start-up to $75 million in revenues before selling it. 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 the 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 Sr. Vice President of ViaOne Services and a new 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 13 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 new board member is a results-producing marketing professional with over 14 years of experience successfully developing
marketing and branding strategies. He has been consistently noted by executives, colleagues, and journalists for his specific
expertise in bringing products and services online with a comprehensive digital go-to-market strategy. He has previously held
executive level positions as Director of Marketing for ProfitPoint Inc. and Clutch Holdings LLC. He is currently Sr. Director
of Marketing of ViaOne Services where he develops all marketing and customer acquisition strategies for 14 consumer facing brands.
On
July 10, 2017, the Company’s Board of Directors elected David Dorwart its CEO. Additionally, the Board of Directors approved
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. The Company intends to diversify
its business and enter into the cryptocurrency market through such acquisition.
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 the core Good Gaming servers.
On
March 11, 2019, Eric Brown resigned from the Chief Operating Officer’s position.
Technology
In
2016, the Company completed its 2.0 tournament platform 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 1st, 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.
Business
Strategy
In
the past, our management team’s strategy was to be a full-service company providing best in class tournaments, the best
platform on which they are played, and content that is all about the esports world. We have looked at this strategy and have changed
the way we view our business.
It
was our ambition and strategy to be great at providing a place for amateurs to play esports. By focusing on what the gaming universe
is lacking, it allowed us to focus on the promotion of teams, leagues and competition. We intended to begin with local servers
and expand organically from there. We recognized there are millions of players who desire to compete within the gaming community.
However,
as tournaments and investment in servers were not profitable to the Company, we have decided to focus on Minecraft. We have a
well-established server and will continue to devote resources to developing and modifying Minecraft assets by introducing new
SkyBlock Seasons and Minecraft Prison game modes within our servers. We feel that we have learned how to monetize this and will
be able to continue to grow and have it as a meaningful part of our business strategy.
Insurance
Policies
We
have an insurance policy through ARGO Group with the insurance coverage of up to $1,000,000.
Employees
We
have one contractor working on the Good Gaming project. He is our programmer, tournament administrator, and social media expert.
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 (888) 295-7279.
ITEM
1A. RISK FACTORS
We
are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under
this item.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
applicable.
ITEM
2. PROPERTIES
We
do not currently rent or lease any real property.
ITEM
3. LEGAL PROCEEDINGS
We
are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business,
financial condition or operating results. From time to time, we may become involved in various lawsuits and legal proceedings,
which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business.
ITEM
4. MINE SAFETY DISCLOSURES
Not
Applicable.
PART
II
ITEM
5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our
common stock commenced trading on the over-the-counter Bulletin Board on October 7, 2009. It currently trades under the symbol
“GMER”. Following is a table of the high bid price and the low bid price for each quarter during the last two years.
2019 High Bid Low Bid
2020 High Bid Low Bid
Holders
As
of April 2, 2021, we have 68,974,031 shares of our common stock issued and outstanding held by 53 stockholders of record.
As
of April 2, 2021, we had 7,500 shares of Series A Preferred Stock issued and outstanding, 50,997 shares of Series B Preferred
Stock issued and outstanding, 1 share of Series C Preferred Stock issued and outstanding, and 0 share of Series D Preferred Stock
issued and outstanding.
Dividends
We
have never declared or paid cash dividends. We currently intend to retain all future earnings for the operation and expansion
of our business and do not anticipate paying cash dividends on the common stock in the foreseeable future. Any payment of cash
dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings,
capital requirements, contractual restrictions and other factors deemed relevant by our directors. In addition, our Series D shares
have cumulative dividend preference.
Securities
Authorized for Issuance Under Equity Compensation Plans
On
July 18, 2012, a Registration Statement on Form S-8 (the “Registration Statement”) was filed by us together with our
2012 Non-Qualified Stock Option Plan (the “Plan”) relating to 30,000,000 shares of our common stock, par value $0.001
per share, to be offered and sold to accounts of eligible persons. The original plan filed on July 18, 2012 is still valid but
the Company will not issue any more securities under the Plan as we have adopted a new plan.
On
April 30, 2018, 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 adopts the
2018 Stock Incentive Plan (the “2018 Plan”) under which the Board may decide at its sole discretion to grant equity
awards to certain employees and consultants as set forth in the 2018 Plan. The description of the 2018 Plan does not purport to
be complete and is incorporated herein by reference to a current report on form 8-k filed with the Securities and Exchange Commission
on May 4, 2018.
Penny
Stock Regulations and Restrictions on Marketability
The
SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a market price of less than $5. Securities are registered on certain national securities exchanges
or quoted on the NASDAQ system which provides the current price and volume information. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains
a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b)
contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available
to the customer with respect to a violation of such duties or other requirements of the securities laws, (c) contains a brief,
clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread
between the bid and ask price, (d) contains a toll-free telephone number for inquiries on disciplinary actions, (e) defines significant
terms in the disclosure document or in the conduct of trading in penny stocks, and (f) contains such other information and is
in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The
broker-dealer must also provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations
for the penny stock, (b) the compensation of the broker-dealer and its salesperson in the transaction, (c) the number of shares
to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for
such stock, and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.
In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive
the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions
involving penny stocks, and a signed and dated copy of a written suitability statement.
These
disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may
have difficulty selling their shares of our common stock.
Common
Stock
Our
Articles of Incorporation authorize us to issue up to 100,000,000 shares of common stock, $0.001 par value. Each holder of our
common stock is entitled to one (1) vote for each share held of record on all voting matters we present for a vote of stockholders,
including the election of directors. Holders of common stock have no cumulative voting rights or preemptive rights to purchase
or subscribe for any stock or other securities, and there are no conversion rights or redemption or sinking fund provisions with
respect to our common stock. All shares of our common stock are entitled to share equally in dividends from sources legally available
when, and if, declared by our Board of Directors.
Our
Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by the Articles
of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder
action.
In
the event of our liquidation or dissolution, all shares of our common stock are entitled to share equally in our assets available
for distribution to stockholders. However, the rights, preferences and privileges of the holders of our common stock are subject
to, and may be adversely affected by, the rights of the holders of shares of preferred stock that have been issued or shares of
preferred stock that our Board of Directors may decide to issue in the future.
Preferred
Stock
Our
Articles of Incorporation authorize us to issue up to 2,250,350 shares of preferred stock, $0.001 par value. Of the 2,250,350
authorized shares of preferred stock, the total number of shares of Series A Preferred Stock the Corporation shall have the authority
to issue is 2,000,000, with a stated par value of $0.001 per share, the total number of shares of Series B Preferred Stock the
Corporation shall have the authority to issue is 249,999, with a stated par value of $0.001 per share, the total number of shares
of Series C Preferred Stock the Corporation shall have the authority to issue is 1, with a stated par value of $0.001 per share,
and the total number of shares of Series D Preferred Stock the Corporation shall have the authority to issue is 350, with a stated
par value of $0.001 per share. Our Board of Directors is authorized, without further action by the shareholders, to issue shares
of preferred stock and to fix the designations, number, rights, preferences, privileges and restrictions thereof, including dividend
rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking fund terms. We believe that
the Board of Directors’ power to set the terms of, and our ability to issue preferred stock, will provide flexibility in
connection with possible financing or acquisition transactions in the future. The issuance of preferred stock, however, could
adversely affect the voting power of holders of common stock and decrease the amount of any liquidation distribution to such holders.
The presence of outstanding preferred stock could also have the effect of delaying, deterring or preventing a change in control
of our company.
As
of April 2, 2021, we had 7,500 shares of our Series A preferred stock, 50,997 shares of Series B preferred stock, 1 share of Series
C preferred stock, and 0 share of Series D preferred stock issued and outstanding.
The
7,500 issued and outstanding shares of Series A Preferred Stock are convertible into shares of common stock at a rate of 20 common
shares for each Series A Preferred Share. The 50,997 issued and outstanding shares of Series B Preferred Stock are convertible
into shares of common stock at a rate of 200 common shares for each Series B Preferred Share. If all of our Series A Preferred
Stock and Series B Preferred Stock are converted into shares of common stock, the number of issued and outstanding shares of our
common stock will increase by 10,349,401 shares.
The
one issued and outstanding shares of Series C Preferred Stock has voting rights equivalent to 51% of all shares entitled to vote
and is held by ViaOne Services LLC, a Company controlled by our CEO.
The
Series D Preferred Stock can be convertible into shares of common stock at the lower of the Fixed Conversion Price ($.06 per share)
or at the VWAP which shall be defined as the average of the five (5) lowest closing prices during the 20 days prior to conversion.
We did not have any share of Series D preferred stock issued and outstanding as of April 2, 2021.
The
holders of Series A, Series B, Series C and Series D have a liquidation preference to the common shareholders.
Options
We
have not issued and do not have any outstanding options to purchase shares of our common stock.
Registration
Rights
As
of December 31, 2020, there are no other outstanding registration rights or similar agreements.
Convertible
Securities
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. As of September 30, 2020, the note is worth $82,605. HGT converted $5,833 of notes into 2,645,449
shares and $11,822 of notes into 2,775,076 shares of the Company’s common stock on August 17, 2020 and September 9, 2020,
respectively.
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.
Related
Party Transactions
On
or around April 7, 2016, Silver Linings Management, LLC funded the Company $13,440 in the form of convertible debentures secured
by certain high-powered gaming machines purchased from XIDAX. Such note bore interest at a rate of 10% per annum, payable in cash
or kind at the option of the Company, matured on April 1, 2018, and was convertible into Series B Preferred shares at the option
of the holder at any time. On January 08, 2019, Silver Linings Management, LLC converted its Series B Preferred shares into shares
of the Company’s Common Stock.
On
November 30, 2016, ViaOne purchased a Secured Promissory Note equal to a maximum initial principal amount of $150,000 issued by
the Company to ViaOne. As additional advances were made by ViaOne to the Company, the principal amount of the Note was increased
to $225,000 and $363,000 by amendments dated January 31, 2017 and March 1, 2017, respectively.
On
May 5, 2017, ViaOne delivered a default notice to the Company pursuant to Section 6 of the Note Purchase Agreement but has subsequently
extended the due date and has increased the funding up to One Million ($1,000,000) dollars. After giving the Company a fifteen
(15) day notice period to cure the default under the Stock Pledge Agreement, dated November 30, 2016, entered by and among the
Company, CMG and ViaOne (“Pledge Agreement”), ViaOne took possession of the Series C Stock, which was subject of the
Pledge Agreement.
The
Secured Promissory Note as amended increased from time to time due to additional advances provided to the Company by ViaOne.
On
September 1, 2017, the Company executed an amended Employee Services Agreement with ViaOne which stipulated that ViaOne would
continue providing to the Company services relating to the Company’s human resources, marketing, advertising, accounting
and financing for a monthly management fee of $25,000. This agreement was amended on January 1, 2018. The accrued monthly management
fees, $100,000 at December 31, 2017, are convertible by ViaOne into the Company’s common stock at a rate of 125% of the
accrued fees at a conversion price of (i) $0.05 per share; or (ii) the volume weighted adjusted price (“VWAP”) of
the common stock on the 14th day of each month if the 14th of that month is a trading day. In the event the 14th day of a month
falls on a Saturday, Sunday, or a trading holiday, the VWAP of the Common Stock will be valued on the last trading day before
the 14th day of the month.
On
September 27, 2018, the Company and ViaOne, entered into a Line of Credit Agreement (the “LOC Agreement”), pursuant
to which the Company issued a secured promissory note with the initial principal amount of $25,000 to ViaOne in exchange for a
loan of $25,000 (the “Initial Loan Amount”). In accordance with this Agreement, the Company may request ViaOne to
provide loans of up to $250,000, including the Initial Loan Amount, and ViaOne has the right to decide whether it will honor such
request. The Initial Loan Amount became due on September 30, 2019 (the “Maturity Date”) and bore an interest rate
of 8.0% per annum. The unpaid principal and interest of the Promissory Note after the Maturity Date accrued interest at a rate
of 18.0% per annum. The principal amount of the Promissory Note may increase from time to time up to $250,000 in accordance with
the terms and conditions of the Agreement. In connection with the Agreement and Promissory Note, the Company and ViaOne executed
a security agreement dated September 27, 2018 whereby the Company granted ViaOne a security interest in all of its assets, including
without limitation, cash, inventory, account receivables, real property and intellectual properties, to secure the repayment of
the loans made pursuant to the LOC Agreement and Promissory Note.
As
of December 31, 2020, the total amount owed to ViaOne Services was $2,146,467.
The
Company’s Chairman and Chief Executive Officer is the Chairman of ViaOne.
Shares
Eligible for Future Sale
As
of April 2, 2021, we had 68,974,031 shares of our common stock issued and outstanding, a breakdown of which follows:
From
time to time, certain of our stockholders may be eligible to sell some or all of their restricted shares of our common stock by
means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject
to certain volume restrictions and restrictions on the manner of sale. In general, pursuant to Rule 144, non-affiliate stockholders
may sell freely after six months subject only to the current public information requirement. Affiliates may sell after six months
subject to the Rule 144 volume, manner of sale, current public information and notice requirements.
The
eventual availability for sale of substantial amounts of our common stock under Rule 144 could adversely affect prevailing market
prices for our securities and cause you to lose most, if not all, of your investment in our business.
Transfer
Agent
Our
transfer agent is Action Stock Transfer Corp. with its principal address at 2469 East Fort Union Boulevard, Suite 214, Salt Lake
City, Utah 84121. Its telephone number is (801) 274-1088. Its fax number is (801) 274-1099. Investors may reach our transfer agent
at info@actionstocktransfer.com.
Recent
Sales of Unregistered Securities
On
January 2, 2019, Lincoln Acquisition converted 200 shares of Preferred B Stock into 3,750,000 of the Company’s common stock.
On
January 10, 2019, RedDiamond converted 6 shares of Series D Preferred Stock into 520,833 of the Company’s common stock.
On
August 17, 2020, HGT converted $5,833 of a convertible note into 2,645,449 shares of the Company’s common stock.
On
September 09, 2020, HGT converted $11,822 of a convertible note into 2,775,076 shares of the Company’s common stock.
On
November 11, 2020, HGT converted $25,239 of a convertible note into 2,911,055 shares of the Company’s common stock.
On
December 18, 2020, HGT converted $40,126 of a convertible note into 3,053,696 shares of the Company’s common stock.
Purchases
of Equity Securities by the Issuer and Affiliated Purchases
During
each month within the fourth quarter of the fiscal year ended December 31, 2020, neither we nor any “affiliated purchaser”,
as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.
ITEM
6. Selected Financial Data
We
are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under
this item.
ITEM
7. Management’s Discussion and Analysis
Our
auditors have issued a going concern opinion on the financial statements for the year ended December 31, 2020. This means that
our auditors believe there is substantial doubt that we can continue as an ongoing business for the next twelve months from the
date of issuance of these financial statements unless we obtain additional capital to pay our bills. This is because we have generated
little revenue although revenue is anticipated to grow as 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 must raise cash from sources other than operations.
Our only 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 must 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:
3 Anticipate sustainable financial profitability in 2021.
Limited
operating history and need for additional capital
There
is limited historical financial information about us upon which to base an evaluation of our performance relating to our new business
direction. We have generated little revenue. We cannot guarantee we will be successful in our business operations. Our business
is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible
cost overruns due to price and cost increases in services and products.
Results
of Operations
December
31, 2020 as compared to December 31, 2019
● Working Capital
● Operating Revenues
We
have generated $26,215 in revenue in 2020 and $49,519 in revenue in the fiscal year of 2019, which reflects a decrease of $23,304
or 47%. The decrease in revenue was attributed to the issues the Company had with the servers when they launched the new version
of the game modes.
● Operating Expenses and Net Loss
Operating
expenses for the year ended December 31, 2020 were $417,704 compared with $905,442 for the year ended December 31, 2019. The decrease
in operating expenses in the amount of $487,738 or 53.8% was attributable to decrease in professional fees for day to day operations
and the complete amortization of the assets purchased during the acquisition of Good Gaming, Inc. in 2020.
During
the year ended December 31, 2020, the Company recorded a net loss of $965,885 compared with a net loss of $1,130,769 for the year
ended December 31, 2019. The decrease in net loss in the amount of $164,884 or 14.6% was attributed to the decrease in revenues
and the change in value of the Company’s derivative liabilities.
● Liquidity and Capital Resources
As
of December 31, 2020, the Company’s cash balance consisted of $2,305 compared to cash balance of $2,022 as of December 31,
2019. The increase in the cash balance was attributed to the financing that we received for day-to-day activities. As of December
31, 2020, the Company had $16,305 in assets compared to total assets of $15,952 as at December 31, 2019. The increase in assets
was attributable to the purchase of a new asset offset by the complete amortization of assets acquired during the acquisition
of Good Gaming, Inc.
As
of December 31, 2020, the Company had total liabilities of $3,645,590 compared with total liabilities of $2,762,373 as of December
31, 2019. The increase in liabilities was attributable to increase in financing and in derivative liabilities.
As
of December 31, 2020, the Company has a working capital deficit of $3,635,160 compared with a working capital deficit of $2,751,601
as of December 31, 2019 with the increase in the working capital deficit attributed to an increase in financing the Company received
for general working capital purposes.
Cash
flow from Operating Activities
During
the year ended December 31, 2020, the Company used $402,556 of cash for operating activities compared to the use of cash in an
amount of $432,716 for operating activities during the year ended December 31, 2019. The decrease of $30,160 or 6.9% was attributed
to the net decrease in derivative liabilities.
Cash
flow from Investing Activities
During
the years ended December 31, 2020, the Company had $5,335 in cash used in investing activities compared to $478 in cash provided
for the year ended December 31, 2019. The increase of $5,813 or 12% in cash used in investing activities was attributed to the
new fixed assets the Company bought for day to day activities.
Cash
flow from Financing Activities
During
the year ended December 31, 2020, the Company received $408,174 of proceeds from financing activities compared to $421,811 during
the year ended December 31, 2019. The decrease of $13,637 or 3.2% in proceeds from financing activities was due to the decrease
in financing that we received for day-to-day activities.
Going
Concern
We