UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K/A
(Amendment No. 3)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-53949
Good Gaming, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | | 37-1902603 |
(State or other jurisdiction of incorporation) | | (IRS Employer Identification Number) |
415 McFarlan Road, Suite 108
Kennett Square, PA 19348
(Address of principal executive offices and Zip Code)
(844) 419-7445
Registrant’s telephone number, including area code
(Former name, former address and former fiscal year, if changed since last report)
| Securities registered pursuant to Section 12(b) of the Act: | | Securities registered pursuant to section 12(g) of the Act: |
| 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 ☒
Indicate by check mark if the registrant is required to file reports pursuant to Section 13 or Section 15(d) of the Act: YES ☒ 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 ☒ 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 ☒ 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 | | ☒ | | 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 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. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statement of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒
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, 2022: $4,536,775.
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 113,142,559 as of April 7, 2023.
Explanatory Note
Good Gaming, Inc. (together with its subsidiary, the “Company” sometimes referred to as “we”, “us” or “our”) is filing this Amendment No. 3 (“Amendment No. 3” or “Form 10K/A”) to its Annual Report on Form 10-K for the period ended December 31, 2022, originally filed on April 7, 2023 (the “Original Form 10-K”), solely to include exhibit 23.1, Consent of Independent Registered Public Accounting Firm, detailing the consent for all applicable Form S-8
Except as described above, no attempt has been made in this Amendment No. 3 to modify or update the other disclosures in the Original Form 10-K. Amendment No. 3 continues to speak as of the date of the Original Form 10-K, and the Company has not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Form 10-K. Accordingly, Amendment No. 3 should be read in conjunction with the Original Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Good Gaming, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Good Gaming, Inc. (the “Company”) as of December 31, 2022 and December 31, 2021, the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years ended December 31, 2022 and December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and December 31, 2021, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
As discussed in Note 1 to the financial statements, the Company’s continuing operating losses, working capital deficiency and accumulated deficit raise substantial doubt about its ability to continue as a going concern for a period of one year from the issuance of the financial statements. Management’s plans are also described in Note 1. The financial statements do not include adjustments that might result from the outcome of this uncertainty.
Basis of Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Victor Mokuolu, CPA PLLC
We have served as the Company’s auditor since 2022.
Houston, Texas
April 7, 2023
PCAOB Firm ID: 6771
Good Gaming, Inc.
Balance Sheets
(Expressed in U.S. Dollars)
| | | December 31, 2022 | | | December 31, 2021 | |
| ASSETS | | | | | | | | |
| Current Assets | | | | | | | | |
| Cash and Cash Equivalents | | $ | 931,868 | | | $ | 2,407,966 | |
| Prepaid expenses- related party | | | 9,480 | | | | 9,334 | |
| Total Current Assets | | | 941,348 | | | | 2,417,300 | |
| Digital Assets | | | 113,091 | | | | 304,427 | |
| Property and Equipment, Net | | | 1,557 | | | | 5,669 | |
| Gaming Software, Net | | | - | | | | - | |
| TOTAL ASSETS | | $ | 1,055,996 | | | $ | 2,727,396 | |
| LIABILITIES & STOCKHOLDERS’ DEFICIT | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts Payable and Accrued Expenses | | $ | 426,385 | | | $ | 299,017 | |
| Derivative Liability | | | - | | | | - | |
| Notes Payable | | | - | | | | 6,628 | |
| Convertible Debentures, current | | | - | | | | - | |
| Notes Payable - ViaOne Services | | | - | | | | - | |
| Total Current Liabilities | | | 426,385 | | | | 305,645 | |
| | | | | | | | | |
| Total Liabilities | | | 426,385 | | | | 305,645 | |
| | | | | | | | | |
| Stockholders’ Deficit | | | | | | | | |
| Class A Preferred Stock | | | | | | | | |
| Authorized: 2,000,000 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 7,500 Shares | | | 8 | | | | 8 | |
| | | | | | | | | |
| Class B Preferred Stock | | | | | | | | |
| Authorized: 249,999 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 19,296 and 20,296 Shares, respectively | | | 19 | | | | 20 | |
| | | | | | | | | |
| Class C Preferred Stock | | | | | | | | |
| Authorized: 1 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 1 Shares | | | 1 | | | | 1 | |
| | | | | | | | | |
| Class D Preferred Stock | | | | | | | | |
| Authorized: Authorized: 350 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 0 Shares | | | - | | | | - | |
| Class E Preferred Stock | | | | | | | | |
| Authorized: Authorized: 2,750,000 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 57,663 Shares | | | 58 | | | | 58 | |
| Preferred Stock, value | | | | | | | | |
| Common Stock Authorized: 200,000,000 Common Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 110,923,594 and 103,526,044 Shares, respectively | | | 110,924 | | | | 103,526 | |
| | | | | | | | | |
| Warrant | | | 333 | | | | 333 | |
| Additional Paid-In Capital | | | 10,265,127 | | | | 9,956,764 | |
| Accumulated Deficit | | | (9,746,860 | ) | | | (7,638,959 | ) |
| Total Stockholders’ Deficit | | | 629,610 | | | | 2,421,751 | |
| TOTAL LIABILITIES & DEFICIT | | $ | 1,055,996 | | | $ | 2,727,396 | |
The accompanying notes are an integral part of these financial statements
Good Gaming, Inc.
Statement of Operations
(Expressed in U.S Dollars)
| | | 2022 | | | 2021 | |
| | | For the Years Ended December 31, | |
| | | 2022 | | | 2021 | |
| Revenues | | $ | 9,609 | | | $ | 374,881 | |
| Cost of Revenues | | | 305,574 | | | | 37,687 | |
| Gross Profit | | | (295,965 | ) | | | 337,194 | |
| Operating Expenses | | | | | | | | |
| General & Administrative | | | 588,469 | | | | 571,894 | |
| Contract Labor | | | 51,800 | | | | 63,050 | |
| Depreciation and Amortization Expense | | | 4,111 | | | | 2,159 | |
| Professional Fees | | | 1,013,027 | | | | 673,338 | |
| Total Operating Expenses | | | 1,657,407 | | | | 1,310,441 | |
| Operating Loss | | | (1,953,372 | ) | | | (973,247 | ) |
| Other Income (Expense) | | | | | | | | |
| Gain on Digital Assets | | | 13,498 | | | | 57,381 | |
| Loss on Stock Conversion | | | - | | | | - | |
| Impairment Cost | | | (168,027 | ) | | | - | |
| Gain in Debt Settlement | | | - | | | | - | |
| Loss on disposal of Fixed Assets | | | - | | | | - | |
| Interest Income | | | - | | | | - | |
| Interest Expense | | | - | | | | (49,183 | ) |
| Gain (Loss) on Change in Fair Value of Derivative Liability | | | - | | | | 1,303,456 | |
| Total Other Income (Loss) | | | (154,529 | ) | | | 1,311,655 | |
| Net Income (Loss) | | | (2,107,901 | ) | | | 338,408 | |
| Net Income (Loss) Per Share, Basic and Diluted | | $ | 0.02 | | | $ | - | |
| Weighted Average Shares Outstanding | | | 110,923,594 | | | | 103,526,044 | |
The accompanying notes are an integral part of these financial statements
Good Gaming, Inc.
Statements of Cash Flows
(Expressed in U.S Dollars)
| | | 2022 | | | 2021 | |
| | | For the Years Ended December 31, | |
| | | 2022 | | | 2021 | |
| Operating Activities | | | | | | | | |
| | | | | | | | | |
| Net Income (Loss) | | $ | (2,107,901 | ) | | $ | 338,408 | |
| | | | | | | | | |
| Adjustments To Reconcile Net Loss to | | | | | | | | |
| Net Cash Used In Operating Activities | | | | | | | | |
| Adjustments To Reconcile Net Loss to Net Cash Used In Operating Activities | | | | | | | | |
| Depreciation and Amortization | | | 4,111 | | | | 2,159 | |
| Change In Fair Value Of Derivative Liability | | | - | | | | (1,303,456 | ) |
| Stock based compensation | | | 308,364 | | | | 132,250 | |
| Gain on debt settlement | | | - | | | | - | |
| Gain on Digital Assets | | | (13,498 | ) | | | (57,381 | ) |
| Impairment Cost | | | 168,027 | | | | - | |
| Changes in operating assets and liabilities | | | | | | | | |
| Prepaid Expenses | | | (147 | ) | | | (1,209 | ) |
| Accounts Payable | | | 127,369 | | | | 134,029 | |
| | | | | | | | | |
| Net Cash Provided By (Used in) Operating Activities | | | (1,513,675 | ) | | | (755,200 | ) |
| | | | | | | | | |
| Investing Activities | | | | | | | | |
| Purchase of Digital Assets | | | (5,004 | ) | | | (378,436 | ) |
| Selling Digital Assets | | | 39,400 | | | | 131,390 | |
| Reclass Digital Assets | | | 2,411 | | | | - | |
| Selling Property and Equipment | | | - | | | | - | |
| Purchase Property and Equipment | | | - | | | | (1,953 | ) |
| | | | | | | | |
| Net Cash Provided By (Used in) Investing Activities | | | 36,807 | | | | (248,999 | ) |
| | | | | | | | | |
| Financing Activities | | | | | | | | |
| Conversion of Preferred Stock CL B to Common | | | (1 | ) | | | - | |
| Conversion of Debt to Common Shares | | | 7,398 | | | | - | |
| Proceeds from issuance of warrants | | | - | | | | 721,825 | |
| Proceeds from investments | | | - | | | | 1,912,125 | |
| Payment on Note Interest | | | (6,628 | ) | | | - | |
| Due To ViaOne Services | | | - | | | | 775,910 | |
| Net Cash Provided By (Used In) Financing Activities | | | 769 | | | | 3,409,860 | |
| | | | | | | | | |
| Change in Cash and Cash Equivalents | | | (1,476,098 | ) | | | 2,405,661 | |
| | | | | | | | | |
| Cash and Cash Equivalents, Beginning Of Period | | | 2,407,966 | | | | 2,305 | |
| | | | | | | | | |
| Cash and Cash Equivalents, End Of Period | | $ | 931,868 | | | $ | 2,407,966 | |
| | | | | | | | | |
| Supplemental disclosure of cash flow information: | | | | | | | | |
| Cash paid for interest | | $ | - | | | $ | - | |
| Cash paid for taxes | | $ | - | | | $ | - | |
| | | | | | | | | |
| Non-Cash Investing And Financing Activities | | | | | | | | |
| Conversion of Preferred Stock CL B to Common | | $ | - | | | $ | (10,076 | ) |
| Conversion of Debt to Common Shares | | $ | - | | | $ | (17,240 | ) |
| Conversion of Debt to Preferred Stock CL E shares | | $ | - | | | $ | 2,915,749 | |
| Conversion of Debt to Preferred Stock CL B shares | | $ | - | | | $ | 13,440 | |
The accompanying notes are an integral part of these financial statements
Good Gaming, Inc.
Statements of Stockholders’ Equity (Deficit)
(Expressed in U. S. Dollars)
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Total | |
| | | Preferred Stock | | | Common Stock | | | Warrants | | | Additional | | | | | | | |
| | | Class A | | | Class B | | | Class C | | | Class D | | | Class E | | | | | | | | | | | | | | | Paid-in | | | Accumulated | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Total | |
| Balance, December 31, 2020 | | | 7,500 | | | | 8 | | | | 68,997 | | | | 69 | | | | 1 | | | | 1 | | | | - | | | | - | | | | - | | | | - | | | | 65,374,031 | | | | 65,374 | | | | - | | | | - | | | | 4,282,629 | | | | (7,977,367 | ) | | | (3,629,286 | ) |
| Conversion of preferred shares B to common shares | | | - | | | | - | | | | (50,381 | ) | | | (51 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 10,076,200 | | | | 10,076 | | | | - | | | | - | | | | (10,025 | ) | | | - | | | | - | |
| Stock Based Compensation | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,085,000 | | | | 5,085 | | | | - | | | | - | | | | 127,165 | | | | - | | | | 132,250 | |
| Conversion of Debt to Preferred Stock CL E shares | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 57,663 | | | | 58 | | | | - | | | | - | | | | - | | | | - | | | | 2,915,691 | | | | - | | | | 2,915,749 | |
| Conversion of Debt to Preferred Stock CL B shares | | | - | | | | - | | | | 1,680 | | | | 2 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 13,438 | | | | - | | | | 13,440 | |
| Conversion of Debt to Common shares | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,257,476 | | | | 1,258 | | | | - | | | | - | | | | 15,982 | | | | - | | | | 17,240 | |
| Proceeds from issuance of warrants | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,811,181 | | | | 481 | | | | 721,344 | | | | - | | | | 721,825 | |
| Proceeds issuance of common stock | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 15,922,156 | | | | 15,922 | | | | - | | | | - | | | | 2,372,401 | | | | - | | | | 2,388,323 | |
| Conversion of warrants to common stock | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,811,181 | | | | 5,811 | | | | (1,477,848 | ) | | | (148 | ) | | | (5,663 | ) | | | | | | | - | |
| Equity issuance costs | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (476,198 | ) | | | - | | | | (476,198 | ) |
| Net income | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 338,408 | | | | 338,408 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2021 | | | 7,500 | | | | 8 | | | | 20,296 | | | | 20 | | | | 1 | | | | 1 | | | | - | | | | - | | | | 57,663 | | | | 58 | | | | 103,526,044 | | | | 103,526 | | | | 3,333,333 | | | | 333 | | | | 9,956,764 | | | | (7,638,959 | ) | | | 2,421,751 | |
| Beginning balance | | | 7,500 | | | | 8 | | | | 20,296 | | | | 20 | | | | 1 | | | | 1 | | | | - | | | | - | | | | 57,663 | | | | 58 | | | | 103,526,044 | | | | 103,526 | | | | 3,333,333 | | | | 333 | | | | 9,956,764 | | | | (7,638,959 | ) | | | 2,421,751 | |
| Stock Based Compensation converted to common stock | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,396,549 | | | | 7,396 | | | | - | | | | - | | | | 308,364 | | | | - | | | | 315,760 | |
| Conversion of preferred shares B to common shares | | | - | | | | - | | | | (1,000 | ) | | | (1 | ) | | | - | | | | | | | | | | | | | | | | | | | | | | | | 1,000 | | | | 1 | | | | | | | | | | | | | | | | | | | | - | |
| Net Income (Loss) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,107,901 | ) | | | (2,107,901 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2022 | | | - | | | | - | | | | (1,000 | ) | | | (1 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,397,549 | | | | 7,397 | | | | - | | | | - | | | | 10,265,128 | | | | (2,107,901 | ) | | | 629,610 | |
| Ending balance | | | - | | | | - | | | | (1,000 | ) | | | (1 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,397,549 | | | | 7,397 | | | | - | | | | - | | | | 10,265,128 | | | | (2,107,901 | ) | | | 629,610 | |
The accompanying notes are an integral part of these financial statements
Good Gaming, Inc.
Notes to the Financial Statements
(expressed in U.S. dollars)
1. Nature of Operations and Continuance of Business
Good Gaming, Inc. (Formerly HDS International Corp.) (the “Company”) was incorporated on November 3, 2008, under the laws of the State of Nevada. The Company is a leading tournament gaming platform and online destination targeting over 250 million E-sports players and participants worldwide that want to compete at the high school or college level. A substantial portion of the Company’s activities has involved developing a business plan and establishing contacts and visibility in the marketplace and the Company has not generated any substantial revenue to date. Beginning in 2018, the Company began deriving revenue by providing transaction verification services within the digital currency networks of cryptocurrencies. However, on December 12, 2018, the Company discontinued such transaction verification services by dissolving Crypto Strategies Group, Inc., its wholly-owned subsidiary. In 2021, the Company formulated a new plan to create a new game called “MicroBuddies™” that combines Ethereum ERC721 NFTs (Non-fungible tokens), non-standard ERC20 tokens (GOO™), and strategic gameplay to replicate and create unique and rare NFTs. The game is played online via the MicroBuddies website and blockchain transactions take place on the Polygon Network. The game was launched after beta testing in December of 2021. 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 the beta version of “Treasure Island”; a Microbuddies themed Simulator game on Roblox. In 2023, the Company will also launch a full game version of Treasure Island after receiving a substantial amount of community feedback from the beta version launch. The company has announced two initiatives for the Roblox™ platform for 2023. The “Family Games by Good Gaming” will focus on publishing games for the “All Ages” segment on Roblox. The Company also announced the “Extreme” themed game segment. These titles will focus on offering a great deal of challenge to more advanced Roblox™ players. In 2023, the Company will return to its roots by hosting on-platform gaming tournaments on the Roblox™ platforms. Our gaming tournaments will usher in the beginning of our advertising and sponsorship efforts on the platform. More to come on this initiative in the near future.
For the Minecraft™ vertical, the Company has all new and updated versions of their SCBB titles and Prison games in production with our development partnership with Meraki Studios.. Meraki Studios is considered one of the top Minecraft™ design studios in the world. Our new releases will feature the most up to date versions of the Minecraft™ software (v1.19) which will enable new and exciting gameplay and revenue generating opportunities.
As mentioned above, 2023 will be a year of multi-faceted business development for the Company. In 2023, the Company signed its first publishing agreement with a popular Roblox™ creator to develop and publish Roblox™ titles based on their intellectual properties. The Company plans to continue signing agreements with well established creators to bring their properties to Roblox™ and other platforms as part of the publishing effort. In addition to Roblox™, Minecraft™ and WEB3, the Company is researching other platforms for our gaming products. The Company plans to announce new initiatives throughout 2023.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated minimal revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As of December 31, 2022, the Company had a working capital of $514,963 compared to $2,111,655 during the year ended December 31, 2021. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company’s future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the fair values of convertible debentures, derivative liability, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Certain reclassifications have been made to prior-year amounts to conform to the current period presentation.
Cash Equivalents
The Company considers all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents. Amounts receivable from credit card processors are also considered cash equivalents because they are both short-term and highly liquid in nature.
Intangible Assets
Intangible assets are carried at the purchased cost less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally five years.
Impairment of Long-Lived Assets
Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Beneficial Conversion Features
From time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
Derivative Liability
From time to time, the Company may issue equity instruments that may contain an embedded derivative instrument which may result in a derivative liability. A derivative liability exists on the date the equity instrument is issued when there is a contingent exercise provision. The derivative liability is recorded at its fair value calculated by using an option pricing model. The fair value of the derivative liability is then calculated on each balance sheet date with the corresponding gains and losses recorded in the statement of operations.
Basic and Diluted Net Loss Per Share
The Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. On December 31, 2022 and December 31, 2021, the Company had 10,000,000 and 10,000,000 potentially dilutive shares from outstanding convertible debentures, respectively.
Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these consolidated financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. Unrecognized tax positions, if ever recognized in the consolidated financial statements, are recorded in the statement of operations as part of the income tax provision. Our policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of the income tax provision. The Company has no liability for uncertain tax positions. Unrecognized tax positions, if ever recognized in the consolidated financial statements, are recorded in the statement of operations as part of the income tax provision. The Company’s policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of the income tax provision. The Company has no liability for uncertain tax positions.
On March 22, 2017, tax reform legislation known as the Tax Cuts and Jobs Act (the “U.S. Tax Reform Act”) was enacted in the United States. The U.S. Tax Reform Act, among other things, reduced the U.S. corporate income tax rate from 35% to 21% beginning in 2018. On March 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on how to account for the effects of the U.S. Tax Reform Act under ASC 740.
Financial Instruments
ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument categorized within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at December 31, 2022 and 2021 as follows:
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis
| | | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | |
| Description | | | Fair Value Measurements at December 31, 2022 Using Fair Value Hierarchy | |
| | | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | |
| Derivative liability | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Total | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | |
| Description | | | Fair Value Measurements at December 31, 2021 Using Fair Value Hierarchy | |
| | | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | |
| Derivative liability | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Total | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
The carrying values of all of our other financial instruments, which include accounts payable and accrued liabilities, and amounts due to related parties approximate their current fair values because of their nature and respective maturity dates or durations.
Advertising Expenses
Advertising expenses are included in general and administrative expenses in the Statements of Operations and are expensed as incurred. The Company incurred $362,390 and $452,365 in advertising and promotion expenses in the years ended December 31, 2022 and 2021, respectively.
Revenue Recognition
Revenue is recognized in accordance with ASC 606. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.. Revenues primarily include revenues from microtransactions. Microtransaction revenues are derived from the sale of virtual goods to the Company’s players. Proceeds from the sales of virtual goods directly are recognized as revenues when a player uses the virtual goods.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use (“ROU”) asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). This new standard is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those annual reporting periods, with early adoption permitted. We adopted this new standard effective January 1, 2019. Adoption did not have any effect on the Company as it does not have any leases.
The Company has implemented all other new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. Other Assets
Furniture and fixtures consisted of the following:
Schedule of Property and Equipment
| | | 2022 | | | 2021 | |
| | | December 31, | |
| | | 2022 | | | 2021 | |
| Computers | | $ | 22,285 | | | $ | 22,285 | |
| Accumulated Depreciation | | | (20,727 | ) | | | (16,616 | ) |
| Property and equipment, net | | $ | 1,557 | | | $ | 5,669 | |
Depreciation expense for the years ended December 31, 2022 and 2021 was $4,111 and $2,159, respectively.
4. Digital Assets
In 2021, the Company has been working to create 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 any decrease in their fair values, 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 December 31, 2022, the carrying value of the Company’s digital assets was $113,091, which reflected $168,027 impairment charges compared to the carrying value of $304,427 as of December 31, 2021, which reflected $0 impairment charges.
5. Debt
Convertible Debentures
On April 15, 2015, the Company issued a convertible debenture with the principal amount of $100,000 to HGT Capital, LLC (“HGT”), a non-related party. During the quarter ended June 30, 2015, the Company received the first $50,000 in payment. The remaining $50,000 payment would be made at the request of the borrower. No additional payments have been made as of September 30, 2018. Under the terms of the debentures, the amount was unsecured and was due on October 16, 2016. The note is currently in default and bears 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 number of shares that they can sell in any month for the next three months. HGT also agreed to dismiss, with prejudice, the lawsuit that it had filed against the Company. On November 29, 2018, HGT converted $6,978 of a convertible note into 1,655,594 shares of the Company’s common stock. On August 17, 2020, HGT converted $5,833 of notes into 2,645,449 shares of the Company’s common stock. On September 9, 2020, HGT converted $11,822 of notes into 2,775,076 shares of the Company’s common stock. On November 11, 2020, HGT converted $25,239 of notes into 2,911,055 shares of the Company’s common stock. On December 18, 2020, HGT converted $40,126 of notes into 3,053,696 shares of the Company’s common stock. On June 25, 2021, HGT converted the remaining note balance of $17,240 into 1,257,476 shares of the Company’s common stock.
On September 30, 2021, the Company and ViaOne Services, LLC entered into a revolving convertible promissory note (the “Revolving Note”). The Company agrees to pay ViaOne the principal sum of $1,000,000 or such a smaller amount as ViaOne may advance to the Company from time to time under the Revolving Note, which is subject to a simple interest rate of 8% per annum and will expire earlier on demand or the third anniversary of the Original Issue Date. The Revolving Note (and any unpaid interest or liquidated damages amount) may be converted into shares of Common Stock at a conversion price of eighty-five percent (85%) of the VWAP for the five (5) trading days immediately prior to the date of the notice of conversion. On December 31, 2021, the Company amended the note to allow for the conversion of the Note into shares of the Company’s Series E Preferred Stocks. Effective December 31, 2021, ViaOne Services, LLC converted the Revolving Note into 6,730 shares of the Company’s Series E Convertible Preferred Stock, terminating the Revolving Note.
On September 30, 2021, the Company entered into a new Employee Services Agreement with ViaOne effective as of September 1, 2021 (the “Effective Date”). For a monthly management fee of $42,000 (the “Monthly Management Fee”), ViaOne shall provide to the Company services related to Company’s human resources, payroll, marketing, advertising, accounting, and financial services for a period of one year beginning on the Effective Date and automatically renewing for successive terms of one year each unless either party provides 90 days’ notice. ViaOne has the right to convert part or all of the Monthly Management Fee into shares of the Company’s common stock, par value $0.001 per share at a Conversion Rate equal to 125% of the Conversion Amount, divided by the Conversion Price. The Conversion Price means, with respect to Management Fee, 85% of the volume weighted average price (“VWAP”) for the 5 trading days immediately prior to the date of the notice of conversion. On December 31, 2021, the Company amended the note to allow for the conversion of the Note into shares of the Company’s Series E Preferred Stocks. Effective December 31, 2021, ViaOne Services, LLC converted the new Employee Services Agreement Note into 1,557 shares of the Company’s Series E Convertible Preferred Stock.
6. Derivative Liabilities
As of December 31, 2022, the Company does not have any outstanding convertible promissory notes.
A summary of the activity of the derivative liability is shown below:
Schedule of Derivative Liability
| Balance, December 31, 2020 | | $ | 1,303,456 | |
| Change in value | | | (1,303,456 | ) |
| Balance, December 31, 2021 | | | - | |
| Change in value | | | - | |
| Balance, December 31, 2022 | | $ | - | |
7. Common Stock
Equity Transactions for the Year Ended December 31, 2021:
On March 8, 2021, Lincoln Acquisition converted 18,000 shares of Preferred B Stock into 3,600,000 of the Company’s common stock.
On May 18, 2021, Lincoln Acquisition converted 29,881 shares of Preferred B Stock into 5,976,200 of the Company’s common stock.
On June 25, 2021, HGT converted $17,240 of a convertible note into 1,257,476 shares of the Company’s common stock.
On July 21, 2021, William Schultz converted 2,500 shares of Preferred B Stock into 500,000 of the Company’s common stock.
On August 24, 2021, the Company issued 1,000,000 Company’s common stock to David B. Dorwart for accrued compensation.
On August 24, 2021, the Company issued 1,000,000 Company’s common stock to Eric Brown for accrued compensation.
On August 24, 2021, the Company issued 500,000 Company’s common stock to Jordan Axt for accrued compensation.
On August 24, 2021, the Company issued 500,000 Company’s common stock to Domenic Edward Fontana for accrued compensation.
On August 24, 2021, the Company issued 500,000 Company’s common stock to John D Hilzendager for accrued compensation.
On August 24, 2021, the Company issued 300,000 Company’s common stock to Alexandra M Dorwart for accrued compensation.
On August 24, 2021, the Company issued 200,000 Company’s common stock to Marjorie Greenhalgh for accrued compensation.
On August 24, 2021, the Company issued 150,000 Company’s common stock to Frances Lynn Martin for accrued compensation.
On August 24, 2021, the Company issued 50,000 Company’s common stock to Kaitlyn Kazanjian as accrued compensation.
On August 24, 2021, the Company issued 50,000 Company’s common stock to Elizabeth Van Fossen as accrued compensation.
On August 24, 2021, the Company issued 400,000 Company’s common stock to Douglas Wathen as accrued compensation.
On August 24, 2021, the Company issued 100,000 Company’s common stock to Tim Bergman as accrued compensation.
On August 24, 2021, the Company issued 25,000 Company’s common stock to Samuel Joseph Schwieters as accrued compensation.
On August 24, 2021, the Company issued 50,000 Company’s common stock to Robert Welch as accrued compensation.
On August 24, 2021, the Company issued 10,000 Company’s common stock to Nuno Neto as accrued compensation.
On August 24, 2021, the Company issued 10,000 Company’s common stock to Maria Iriarte Uriarte accrued compensation.
On August 24, 2021, the Company issued 100,000 Company’s common stock to Infinity Global Consulting Group, Inc. as stock based compensation.
On September 03, 2021, the Company issued 8,000 Company’s common stock to Netleon Technologies Private Limited as stock based compensation.
On September 03, 2021, the Company issued 105,000 Company’s common stock to Whole Plant Systems, LLC as stock based compensation.
On September 03, 2021, the Company issued 10,000 Company’s common stock to J Ramsdell Consulting as stock based compensation.
On November 16, 2021, the Company issued 9,188,820 Company’s common stock to Armistice Capital LLC as part of closing the Private Placement funding.
On November 16, 2021, the Company issued 2,166,668 Company’s common stock to Iroquois Capital Investment Group LLC as part of closing the Private Placement funding.
On November 16, 2021, the Company issued 1,166,668 Company’s common stock to Iroquois Master Fund LTD as part of closing the Private Placement funding.
On November 16, 2021, the Company issued 1,700,000 Company’s common stock to Bigger Capital Fund LP as part of closing the Private Placement funding.
On November 16, 2021, the Company issued 1,700,000 Company’s common stock to District 2 Capital Fund LP as part of closing the Private Placement funding.
On December 27, 2021, Armistice Capital LLC converted 1,477,848 warrants into the Company’s common stock.
Equity Transactions for the Year Ended December 31, 2022:
On August 17, 2022, the Company issued 3,698,274 Company’s common stock to ViaOne employees as stock based compensation.
On August 23, 2022, the Company issued 739,655 Company’s common stock to ViaOne employees as stock based compensation.
On September 13, 2022, the Company issued 739,655 Company’s common stock to ViaOne employees as stock based compensation.
On October 5, 2022, the Company issued 739,655 Company’s common stock to ViaOne employees as stock based compensation.
On November 8, 2022, the Company issued 739,655 Company’s common stock to ViaOne employees as stock based compensation.
On December 21, 2022, the Company issued 739,655 Company’s common stock to ViaOne employees as stock based compensation.
8. Preferred Stock
Our Articles of Incorporation authorize us to issue up to 5,000,350 shares of preferred stock, $0.001 par value. Of the 5,000,000 authorized shares of preferred stock, the total number of shares of Series A Preferred Stock the Corporation shall have the authority to issue is 2,000,000, with a stated par value of $0.001 per share, the total number of shares of Series B Preferred Stock the Corporation shall have the authority to issue is 249,999, with a stated par value of $0.001 per share, the total number of shares of Series C Preferred Stock the Corporation shall have the authority to issue is 1, with a stated par value of $0.001 per share, the total number of shares of Series D Preferred Stock the Corporation shall have the authority to issue is 350, with a stated par value of $0.001 per share, and the total number of shares of Series E Preferred Stock the Corporation shall have the authority to issue is 2,750,000, with a stated par value of $0.001 per share. Our Board of Directors is authorized, without further action by the shareholders, to issue shares of preferred stock and to fix the designations, number, rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking fund terms. We believe that the Board of Directors’ power to set the terms of, and our ability to issue preferred stock, will provide flexibility in connection with possible financing or acquisition transactions in the future. The issuance of preferred stock, however, could adversely affect the voting power of holders of common stock and decrease the amount of any liquidation distribution to such holders. The presence of outstanding preferred stock could also have the effect of delaying, deterring or preventing a change in control of our company.
As of December 31, 2022, we had 7,500 shares of our Series A preferred stock, 19,296 shares of Series B preferred stock, 1 share of Series C preferred stock, 0 share of Series D preferred stock, and 57,663 shares of Series E preferred stock issued and outstanding.
The 7,500 issued and outstanding shares of Series A Preferred Stock are convertible into shares of common stock at a rate of 20 common shares for each Series A Preferred Share. The 19,296 issued and outstanding shares of Series B Preferred Stock are convertible into shares of common stock at a rate of 200 common shares for each Series B Preferred Share. The 57,663 issued and outstanding shares of Series E Preferred Stock are convertible into shares of common stock at a rate of 1,000 common shares for each Series E Preferred Share. If all of our Series A, B and E Preferred Stock are converted into shares of common stock, the number of issued and outstanding shares of our common stock will increase by 61,672,201 shares.
The 1 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 December 31, 2022.
The Series A, Series B, Series C and Series D have a liquidation preference to the common shareholders.
9. Warrant
In connection with the $100,000 convertible debenture issued to HGT Capital, LLC (“HGT”), the Company issued HGT a warrant to purchase 100,000 shares of the Company’s common stock at $1.00 per share. This warrant was not exercised and expired on April 15, 2020.
As part of the Private Placement funding, the Company issued two new warrants to Armistice Capital, LLC and Sabby Management to purchase 1,477,848 and 3,333,333 shares of the Company’s common stock at $0.20 per share, respectively. If the warrant is not exercised, it will expire on May 17, 2027.
10. 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. Effective December 31, 2021, the Note was converted into 1,680 shares of Series B preferred stock.
On November 30, 2016, ViaOne purchased a Secured Promissory Note equal to a maximum initial principal amount of $150,000 issued by the Company to ViaOne. As additional advances were made by ViaOne to the Company, the principal amount of the Note was increased to $225,000 and $363,000 by amendments dated January 31, 2017, and March 1, 2017, respectively.
On May 5, 2017, ViaOne delivered a default notice to the Company pursuant to Section 6 of the Note Purchase Agreement but has subsequently extended the due date and has increased the funding up to One Million ($1,000,000) dollars. After giving the Company a fifteen (15) day notice period to cure the default under the Stock Pledge Agreement, dated November 30, 2016, entered by and among the Company, CMG, and ViaOne (“Pledge Agreement”), ViaOne took possession of the Series C Stock, which was subject of the Pledge Agreement.
The Secured Promissory Note as amended increased from time to time due to additional advances provided to the Company by ViaOne.
On September 1, 2017, the Company executed an amended Employee Services Agreement with ViaOne which stipulated that ViaOne would continue providing to the Company services relating to the Company’s human resources, marketing, advertising, accounting, and financing for a monthly management fee of $25,000. This agreement was amended on January 1, 2018. The accrued monthly management fees, $100,000 at December 31, 2017, are convertible by ViaOne into the Company’s common stock at a rate of 125% of the accrued fees at a conversion price of (i) $0.05 per share; or (ii) the volume-weighted adjusted price (“VWAP”) of the common stock on the 14th day of each month if the 14th of that month is a trading day. In the event the 14th day of a month falls on a Saturday, Sunday, or a trading holiday, the VWAP of the Common Stock will be valued on the last trading day before the 14th day of the month. The agreement was terminated on August 31, 2021.
On September 27, 2018, the Company and ViaOne entered into a Line of Credit Agreement (the “LOC Agreement”), pursuant to which the Company issued a secured promissory note with the initial principal amount of $25,000 to ViaOne in exchange for a loan of $25,000 (the “Initial Loan Amount”). In accordance with this Agreement, the Company may request ViaOne to provide loans of up to $250,000, including the Initial Loan Amount, and ViaOne has the right to decide whether it will honor such request. The Initial Loan Amount became due on September 30, 2019 (the “Maturity Date”) and bore an interest rate of 8.0% per annum. The unpaid principal and interest of the Promissory Note after the Maturity Date accrued interest at a rate of 18.0% per annum. The principal amount of the Promissory Note may increase from time to time up to $250,000 in accordance with the terms and conditions of the Agreement. In connection with the Agreement and Promissory Note, the Company and ViaOne executed a security agreement dated September 27, 2018, whereby the Company granted ViaOne a security interest in all of its assets, including without limitation, cash, inventory, account receivables, real property, and intellectual properties, to secure the repayment of the loans made pursuant to the LOC Agreement and Promissory Note.
On September 30, 2021, the Company entered into a new Employee Services Agreement with ViaOne effective as of September 1, 2021 (the “Effective Date”). For a monthly management fee of $42,000 (the “Monthly Management Fee”), ViaOne shall provide to the Company services related to Company’s human resources, payroll, marketing, advertising, accounting, and financial services for a period of one year beginning on the Effective Date and automatically renewing for successive terms of one year each unless either party provides 90 days’ notice. ViaOne has the right to convert part or all of the Monthly Management Fee into shares of the Company’s common stock, par value $0.001 per share at a Conversion Rate equal to 125% of the Conversion Amount, divided by the Conversion Price. The Conversion Price means, with respect to Management Fee, 85% of the volume weighted average price (“VWAP”) for the 5 trading days immediately prior to the date of the notice of conversion.
On September 30, 2021, the Company and ViaOne entered into a revolving convertible promissory note (the “Revolving Note”). The Company agrees to pay ViaOne the principal sum of $1,000,000 or such a smaller amount as ViaOne may advance to the Company from time to time under the Revolving Note, which is subject to a simple interest rate of 8% per annum and will expire earlier on demand or the third anniversary of the Original Issue Date. The Company granted ViaOne warrants to purchase the 1,000,000 shares of Common Stocks at an exercise price of $0.42, a premium of 20% to the closing bid price of the Common Stock the trading day prior to the execution of the Revolving Note. Payment of all obligations under the Revolving Note is secured by a security interest granted to ViaOne by the Company in all of the right, title and interest of the Company in all of the assets of the Company currently owned or acquired hereafter. The Revolving Note (and any unpaid interest or liquidated damages amount) may be converted into shares of Common Stock at a conversion price of eighty-five percent (85%) of the VWAP for the five (5) trading days immediately prior to the date of the notice of conversion. The Revolving Note contains customary events of default, including, among others, the failure by the Company to make a payment of principal or interest when due. Following an event of default, ViaOne is entitled to accelerate the entire indebtedness under the Revolving Note. The restrictions are also subject to certain additional qualifications and carve outs, as set forth in the Revolving Note.
On December 31, 2021, the Company amended the both original and new Employee Service Agreements, Secured Promissory Note, and Revolving Convertible Promissory Note to allow for the conversion of Notes into shares of the Company’s Series E Preferred Stocks. Effective December 31, 2021, the original Employee Service Agreement was converted into 24,540 shares of the Company’s Series E Preferred Stocks and the new Employee Service Agreement was converted into 1,557 shares of the Company’s Series E Preferred Stocks. Additionally, Secured Promissory Note and Revolving Convertible Note was converted into 24,836 and 6,730 shares of the Company’s Series E Preferred Stocks, respectively.
As of December 31, 2022, the Company doesn’t owe anything to ViaOne Services.
The Company’s Chairman and Chief Executive Officer is the Chairman of ViaOne.
11. Income Taxes
The Company has a net operating loss carried forward of approximately $2,155,751 available to offset taxable income in future years which commence expiring in fiscal 2030.
The U.S. Tax Reform Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and business. For businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21% rate. The rate reduction is effective on January 1, 2018. As a result of the rate reduction, the Company has reduced the deferred tax asset balance as of December 31, 2017 by $80,329. As a result of the full valuation allowance on the net deferred tax assets, there was a corresponding adjustment to the valuation allowance for this same amount. Therefore, there is no impact on the Company’s 2017 earnings for the law change.
The significant components of deferred income tax assets and liabilities at December 31, 2022 and 2021 are as follows:
Schedule of Deferred Tax Assets and Liabilities
| | | 2022 | | | 2021 | |
| Net Operating Loss Carryforward | | $ | 452,708 | | | $ | 672,173 | |
| Valuation allowance | | | (452,708 | ) | | $ | (672,173 | ) |
| Net Deferred Tax Asset | | $ | - | | | $ | - | |
The income tax benefit has been computed by applying the weighted average income tax rates of Canada (federal and provincial statutory rates) and of the United States (federal and state rates) of 21% to a net loss before income taxes calculated for each jurisdiction. The tax effects of significant temporary differences, which comprise future tax assets and liabilities, are as follows:
Schedule of Components of Income Tax Expense
| | | 2022 | | | 2021 | |
| Income tax recovery at statutory rate | | $ | 442,659 | | | $ | 202,836 | |
| Valuation allowance change | | | (442,659 | ) | | $ | (202,836 | ) |
| Provision for income taxes | | $ | - | | | $ | - | |
12. Commitments and Contingencies
None.
13. Acquisition and Discontinued Operations
None.
14. Subsequent Events
None.
Part IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(1) List of Financial statements included in Part II hereof:
Balance Sheets, as of December 31, 2022 and 2021
Statements of Operations for the years ended December 31, 2022 and 2021
Statements of Cash Flows for the years ended December 31, 2022 and 2021
Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021
Notes to the Financial Statements
(2) List of Financial Statement schedules included in Part IV hereof: None.
(3) Exhibits
The following exhibits are included herewith:
| (1) | Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on May 4, 2018. |
| (2) | Incorporated by reference to Exhibit 3.2 to the Company’s Form S-1 filed on March 24, 2009. |
| (3) | Incorporated by reference to Exhibit 14.1 to the Company’s Form 10-k filed on March 29, 2011. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on December 1, 2023.
| | Good Gaming, Inc. |
| | |
| | By: | /s/ David B. Dorwart |
| | | David Dorwart |
| | | Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| Signature | | Title | | Date |
| | | | | |
| /s/ David B. Dorwart | | | | |
| David Dorwart | | Chief Executive Officer and Chairman of the Board | | December 1, 2023 |
| | | | | |
| /s/ Domenic Fontana | | | | |
| Domenic Fontana | | Chief Financial Officer and Director | | December 1, 2023 |
| | | | | |
| /s/ Jordan Axt | | | | |
| Jordan Axt | | Chief Marketing Officer and Director | | December 1, 2023 |
| | | | | |
| /s/ David Sterling | | | | |
| David Sterling | | Chief Operating Officer and Director | | December 1, 2023 |
