UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
[X] QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 000-53949
Good Gaming, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 46-3917807 | |||||
of incorporation) | Identification Number) | |||||
415 McFarlan Road, Suite 108
Kennett Square, PA 19348
(Address of principal executive offices and Zip Code)
(888) 295-7279
Registrant’s telephone number, including area code
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.
YES [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 (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large“large accelerated filer, "accelerated“accelerated filer," "non-accelerated” “non-accelerated filer,"” and "smaller“smaller reporting company"company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large Accelerated Filer | [ ] | Accelerated Filer | [ ] |
| Non-accelerated Filer | [ ] | Smaller Reporting Company | [X] |
| (Do not check if smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
As of May 10, 2018, there were 28,568,195 issued and outstanding shares of common stock of the registrant, par value $0.001.
TABLE OF CONTENTS
| | Page | |
| Part I FINANCIAL INFORMATION | ||
| Item 1 | Financial Statements | ||
| Item 2 | |||
| Item 3 | |||
| Item 4 | Controls and Procedures | ||
| Part II OTHER INFORMATION | |||
| Item 1 | Legal Proceedings | ||
| Item 1A | Risk Factors | ||
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | ||
| Item 3 | Defaults Upon Senior Securities | ||
| Item 4 | Mine Safety Disclosures | ||
| Item 5 | Other Information | ||
| Item 6 | Exhibits | ||
| Signatures | 30 | ||
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, all of which are subject to risks and uncertainties. Forward-looking statements can be identified by the use of words such as “expects,” “plans,” “will,” “forecasts,” “projects,” “intends,” “estimates,” and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address our growth strategy, financial results and product and development programs. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward looking statement can be guaranteed and actual future results may vary materially.
These risks and uncertainties, many of which are beyond our control, include, and are not limited to:
| our growth strategies; | |||
| | |||
| ● | our future financing capabilities and anticipated need for working capital; | ||
| ● | the anticipated trends in our industry; | ||
| ● | acquisitions of other companies or assets that we might undertake in the future; | ||
| ● | current and future competition. | ||
| Good Gaming, Inc. | ||||||||
(formerly HDS International Corp.) | ||||||||
| Balance Sheets | ||||||||
(Expressed in U. S. Dollars | ||||||||
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current Assets | ||||||||
| Cash | $ | 77,181 | $ | 47,900 | ||||
| Note receivable | - | 10,500 | ||||||
| Total Current Assets | 77,181 | 58,400 | ||||||
| Fixed assets | ||||||||
| Equipment, net of depreciation | 10,752 | 11,424 | ||||||
| Total fixed assets | 10,752 | 11,424 | ||||||
| Other Assets | ||||||||
| Gaming Software, net of amortization | 930,000 | 990,000 | ||||||
| Total Other Assets | 930,000 | 990,000 | ||||||
| Total Assets | $ | 1,017,933 | $ | 1,059,824 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 121,018 | $ | 117,658 | ||||
| Accounts payable and accrued liabilities - related party | - | - | ||||||
| Convertible debentures, net of unamortized discount of $0 and $36,088, respectively | 200,000 | 56,585 | ||||||
| Note payable ViaOne | 288,000 | 75,000 | ||||||
| Derivative liability | 153,816 | 228,605 | ||||||
| Total Current Liabilities | 762,834 | 477,848 | ||||||
| Convertible debentures, long-term | - | 150,000 | ||||||
| Note payable equipment | 13,440 | 13,440 | ||||||
| Total long term liabilities | 13,440 | 163,440 | ||||||
| Total Liabilities | 776,274 | 641,288 | ||||||
| Stockholders' Deficit | ||||||||
| Class A Preferred Stock | ||||||||
| Authorized: 249,999,000 preferred shares, with a par value of $0.001 per share Issued and outstanding: 7,500,000 shares | 7,500 | 7,500 | ||||||
| Class B Preferred Stock | ||||||||
| Authorized: 200,000,000 preferred shares, with a par value of $0.001 per share Issued and outstanding: 162,028,779 and 161,528,779 shares, respectively | 162,029 | 161,529 | ||||||
| Class C Preferred Stock | ||||||||
| Authorized: 1,000 preferred shares, with a par value of $0.001 per share Issued and outstanding: 1,000 and 1,000 shares, respectively | 1 | 1 | ||||||
| Common Stock | ||||||||
| Authorized: 2,000,000,000 common shares, with a par value of $0.001 per share Issued and outstanding: 1,995,840,000 and 1,999,990,000 shares, respectively | 1,995,840 | 1,999,990 | ||||||
| Stock subscriptions payable | ||||||||
| Additional paid-in capital | 1,769,124 | 1,758,889 | ||||||
| Accumulated deficit | (3,692,835 | ) | (3,509,373 | ) | ||||
| Total Stockholders' equity (deficit) | 241,659 | 418,536 | ||||||
| Total liabilities and stockholders' equity (deficit) | $ | 1,017,933 | $ | 1,059,824 | ||||
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||
| Good Gaming, Inc. | ||||||||
| (formerly HDS International Corp.) | ||||||||
| Statements of Operations | ||||||||
| (Expressed in U. S. Dollars | ||||||||
| (Unaudited) | ||||||||
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenues | $ | 2,519 | $ | - | ||||
| Operating Expenses | ||||||||
| Consulting fees | - | 6,000 | ||||||
| General and administrative | 256,410 | 107,881 | ||||||
| Professional fees | 2,000 | 5,000 | ||||||
| Stock compensation | - | 41,921 | ||||||
| Total Operating Expenses | 258,410 | 160,802 | ||||||
| Net Loss Before Other Expenses | (255,891 | ) | (160,802 | ) | ||||
| Other Income (Expenses) | ||||||||
| Interest expense | (3,360 | ) | (3,360 | ) | ||||
| Interest income | 1,000 | |||||||
| Debt Restructure | - | 58,300 | ||||||
| Gain(Loss) on Change in fair value of derivative liability | 74,789 | (311,359 | ) | |||||
| Total Other Income (Expenses) | 72,429 | (256,419 | ) | |||||
| Net Loss | $ | (183,462 | ) | $ | (417,221 | ) | ||
| Net Loss Per Share, Basic and Diluted | $ | - | $ | - | ||||
| Weighted Average Shares Outstanding | 1,998,447,117 | 1,995,290,000 | ||||||
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||
| Good Gaming, Inc. | ||||||||
| (formerly HDS International Corp.) | ||||||||
| Statements of Cash Flows | ||||||||
| (Expressed in U. S. Dollars | ||||||||
| (Unaudited) | ||||||||
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Operating Activities | ||||||||
| Net Loss | $ | (183,462 | ) | $ | (417,221 | ) | ||
| Adjustment to reconcile net loss to | ||||||||
| net cash used in operating activities | ||||||||
| Accretion of debt discount | - | 311,359 | ||||||
| Amortization of software | 60,000 | 30,000 | ||||||
| Depreciation | 672 | |||||||
| Amortization of deferred financing costs | - | - | ||||||
| Gain(Loss) on change in fair value of derivative liability | (74,789 | ) | - | |||||
| Stock compensation | - | 41,921 | ||||||
| Debt Reduction | (58,300 | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| Due from affiliate | - | 83,171 | ||||||
| Accounts payable and accrued liabilities | 3,360 | 8,360 | ||||||
| Accounts payable and accrued liabilities-related parties | - | - | ||||||
| Net Cash Provided by (Used in) Operating Activities | (194,219 | ) | (710 | ) | ||||
| Financing activities | ||||||||
| Proceeds from purchase of Good Gaming | - | 1,723 | ||||||
| Proceeds from note payable | 213,000 | - | ||||||
| Repayment of note receivable | 10,500 | - | ||||||
| Proceeds from related parties | - | - | ||||||
| Net Cash Provided by (Used in) Financing activities | 223,500 | 1,723 | ||||||
| Change in Cash | 29,281 | 1,013 | ||||||
| Cash, Beginning of Period | 47,900 | - | ||||||
| Cash, End of period | $ | 77,181 | $ | 1,013 | ||||
| Non-cash investing and financing activities | ||||||||
| Adjustment to Derivative liability | $ | (74,789 | ) | $ | - | |||
| Common shares issued for conversion of debt | $ | 6,585 | $ | - | ||||
| Common shares issued for payment of related party payable | $ | - | $ | 6,670 | ||||
| Debt Discount due to beneficial conversion feature | $ | - | $ | - | ||||
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||
Good Gaming, Inc.
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
(Unaudited)
| March 31, 2018 | December 31, 2017 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | 101,147 | $ | 61,037 | ||||
| Prepaid expenses | 2,541 | - | ||||||
| Due from Affliate | - | 700 | ||||||
| Total Current Assets | 103,688 | 61,737 | ||||||
| Property and Equipment, Net | 153,693 | 10,160 | ||||||
| Gaming Software, Net | 690,000 | 750,000 | ||||||
| TOTAL ASSETS | $ | 947,381 | $ | 821,897 | ||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable and Accrued Expenses | $ | 120,508 | $ | 105,544 | ||||
| Derivative Liability | 325,693 | 570,643 | ||||||
| Notes Payable | 13,440 | 13,440 | ||||||
| Convertible Debentures, current | 117,910 | 183,065 | ||||||
| Due to Related Party- Tri State Phone Distribution, LLC | 118,500 | - | ||||||
| Notes Payable Related Party- ViaOne Services | 740,351 | 838,796 | ||||||
| Total Current Liabilities | 1,436,402 | 1,711,488 | ||||||
| Total Liabilities | 1,436,402 | 1,711,488 | ||||||
| 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: 106,511 and 164,781 Shares, respectively | 107 | 165 | ||||||
| Class C Preferred Stock | ||||||||
| Authorized: 1 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 1 and 1 Shares, respectively | 1 | 1 | ||||||
| Class D Preferred Stock | ||||||||
| Authorized: 350 Preferred Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 210 and 105 Shares, respectively | 1 | 1 | ||||||
| Common Stock | ||||||||
| Authorized: 200,000,000 Common Shares, With a Par Value of $0.001 Per Share Issued and Outstanding: 23,683,195 and 2,881,424 Shares, respectively | 23,683 | 2,881 | ||||||
| Additional Paid-In Capital | 4,345,784 | 3,996,373 | ||||||
| Accumulated Deficit | (4,858,605 | ) | (4,889,020 | ) | ||||
| Total Stockholders’ Deficit | (489,021 | ) | (889,591 | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDER’S DEFICIT | $ | 947,381 | $ | 821,897 | ||||
The accompanying notes are an integral part of these consolidated financial statements
Good Gaming, Inc
Consolidated Statement of Operations
(Expressed in U.S Dollars)
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Revenues | $ | 34,732 | $ | 2,519 | ||||
| Cost of Revenues | - | - | ||||||
| Gross Profit | 34,732 | 2,519 | ||||||
| Operating Expenses | ||||||||
| General & Administrative | 19,601 | 59,783 | ||||||
| Contract Labor | 32,426 | 135,955 | ||||||
| Payroll Expense | 26,331 | - | ||||||
| Depreciation and Amortization Expense | 61,217 | 60,672 | ||||||
| Professional Fees | 103,097 | 2,000 | ||||||
| Total Operating Expenses | 242,672 | 258,410 | ||||||
| Operating Loss | (207,940 | ) | (255,891 | ) | ||||
| Other Income (Expense) | ||||||||
| Interest Income | - | 1,000 | ||||||
| Interest Expense | (6,595 | ) | (3,360 | ) | ||||
| Gain (Loss) on Change in Fair Value of Derivative Liability | 244,950 | 74,789 | ||||||
| Total Other Income (Loss) | 238,355 | 72,429 | ||||||
| Net Income (Loss) | $ | 30,415 | $ | (183,462 | ) | |||
| Net Income (Loss) Per Share, Basic and Diluted | $ | - | $ | (0.09 | ) | |||
| Weighted Average Shares Outstanding | 7,293,597 | 1,998,447 | ||||||
The accompanying notes are an integral part of these consolidated financial statements
Good Gaming, Inc
Consolidated Statements of Cash Flows
(Expressed in U.S Dollars)
(Unaudited)
For the Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Operating Activities | ||||||||
| Net Income (Loss) | $ | 30,415 | $ | (183,462 | ) | |||
| Adjustment To Reconcile Net Loss to Net Cash Used In Operating Activities | ||||||||
| Depreciation and Amortization | 61,217 | 60,672 | ||||||
| Change In Fair Value Of Derivative Liability | (244,950 | ) | (74,789 | ) | ||||
| Changes in operating assets and liabilities | ||||||||
| Due from Affiliate | 700 | - | ||||||
| Prepaid expenses | (2,541 | ) | - | |||||
| Accounts Payable and Accrued Liabilities | 14,964 | 3,360 | ||||||
| Net Cash Provided By (Used in) Operating Activities | (140,195 | ) | (194,219 | ) | ||||
| Investing Activities | ||||||||
| Purchase of Property and Equipment | (26,250 | ) | - | |||||
| Net Cash Provided By (Used in) Investing Activities | (26,250 | ) | - | |||||
| Financing Activities | ||||||||
| Repayment of Note Receivable | - | 10,500 | ||||||
| Proceeds From Note Payable | - | 213,000 | ||||||
| Proceeds From Sale Of Preferred Stock CL D | 105,000 | - | ||||||
| Due To ViaOne Services | 101,555 | - | ||||||
| Net Cash Provided By (Used In) Financing Activities | 206,555 | 223,500 | ||||||
| Change in Cash and Cash Equivalents | 40,110 | 29,281 | ||||||
| Cash and Cash Equivalents, Beginning Of Period | 61,037 | 47,900 | ||||||
| Cash and Cash Equivalents, End Of Period | $ | 101,147 | $ | 77,181 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for taxes | $ | - | $ | - | ||||
| Non-Cash Investing And Financing Activities | ||||||||
| Unpaid Property and Equipment Acquired | $ | 118,500 | $ | - | ||||
| Common Shares Issued for Conversion Of Debt | $ | 265,155 | $ | 6,585 | ||||
| Shares Issued For Acquisition Of Software | $ | - | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements
Good Gaming, Inc.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
| 1. | Nature of Operations and Continuance of Business |
Good Gaming, Inc. (Formerly HDS International Corp.) (the "Company"“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 the over 205250 million eSportsesports players and participants worldwide that want to compete at the high school or college level. A substantial portion of the Company'sCompany’s activities hashave involved developing a business plan and establishing contacts and visibility in the marketplace and the Company has not generated minimalany substantial revenue to date.
Consolidation
The accompanying condensed consolidated financial statements include the accounts and operations of the Company acquired Good Gaming's assets including intellectual property, trademarks, software code, equipment and other from CMG Holdingsits’ wholly owned subsidiary, Crypto Strategies Group, Inc. (OTCQB: CMGO).
Going Concern
These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated minimal revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As of
March 31,| 2. | Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the periods endingyear ended December 31, 2017.
Reclassifications
Certain reclassifications have been made to the three months ended March 31, 2017 to the statement of operations and 2016 includestatement of cash flows to reflect consistency with the accountscurrent presentation.
Use of the Company.Estimates
The preparation of consolidated 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 consolidated 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'sCompany’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of March 31, 2017Amounts receivable from credit card processors are also considered cash equivalents because they are both short-term and 2016, the Company had no cash equivalents.
| highly liquid in nature. Intangible Assets Intangible |
Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstance 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 records at is fair value calculated by using an option pricing model such as a multi-nominal lattice 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 consolidated 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.
Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes, as of its inception. 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.
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“Fair Value Measurements" 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's categorizationinstrument is 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'sCompany’s consolidated balance sheet as at March 31, 20172018 and 20162017 as follows:
| Description | Fair Value Measurements at March 31, 2018 Using Fair Value Hierarchy | |||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liability | $ | 325,693 | $ | - | $ | - | $ | 325,693 | ||||||||
| Total | $ | 325,693 | $ | - | $ | - | $ | 325,693 | ||||||||
| Description | Fair Value Measurements at March 31, 2017 Using Fair Value Hierarchy | |||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liability | $ | 228,605 | $ | - | $ | - | $ | 228,605 | ||||||||
| Total | $ | 228,605 | $ | - | $ | - | $ | 228,605 | ||||||||
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.
| Balance, December 31, 2016 | Conversions | Changes in Fair Values | Balance, March 31, 2017 | |||||||||||||
| $ | 228,605 | $ | — | $ | (74,789 | ) | $ | 153,816 | ||||||||
Advertising Expenses
Advertising expenses are included in general and administrative expenses in the consolidated Statements of Operations and are expensed as incurred. The Company incurred $1,666 in advertising and promotion expenses in the three months ended March 31, 2018.
Revenue Recognition
The company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the company determines are within the scope of Topic 606, the company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Revenues primarily include revenues from microtransactions 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 May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which was amended in 2015 and 2016. The new revenue recognition standard relates to revenue from contracts with customers and will supersede nearly all current U.S. GAAP guidance on this topic and eliminate industry-specific guidance.
The underlying principle is to use a five-step analysis of transactions to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The standard, as amended, is effective for annual periods beginning December 15, 2017. The Company has implemented the ASU and the adoption of the standard did not impact our consolidated financial statements.
The Company has implemented all other new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. Other Assets
Property and Equipment consisted of the following:
| March 31, | ||||||||
| 2018 | 2017 | |||||||
| Computers and servers | $ | 39,226 | $ | 13,440 | ||||
| Bitmining machines | 118,500 | - | ||||||
| $ | 157,726 | $ | 13,440 | |||||
| Accumulated Depreciation | (4,033 | ) | (2,688 | ) | ||||
| $ | 153,693 | $ | 10,752 | |||||
Depreciation expense for the three months ended March 31, 2018 and 2017 was $779 and $2,688, respectively.
On February 17, 2016, the Company acquired Good Gaming’s assets including intellectual property, trademarks, software code, equipment and other from CMG Holdings Group, Inc. The Company valued the software purchased at $1,200,000 at purchase date February 18, 2016.$1,200,000. The software has a useful life of 5 years. During the three months ended March 31, 2018, the Company acquired two additional software servers for $26,250. Amortization for the three months ended March 31, 2018 and 2017 was $60,437 and $60,000, respectively. The software consisted of the following:
| March 31, | ||||||||
| 2018 | 2017 | |||||||
| Software | $ | 1,200,000 | $ | 1,200,000 | ||||
| Accumulated Amortization | (510,000 | ) | (270,000 | ) | ||||
| $ | 690,000 | $ | 930,000 | |||||
4. Debt
Convertible Debentures
On April 15, 2015, the Company entered into a $100,000 convertible debenture with a non-related party. During the quarter ended June 30, 2015, the Company received the first $50,000 payment. The remaining $50,000 payment will be made at the request of the borrower. No additional payments have been made as of September 30, 2017. Under the terms of the debenture, the amount is unsecured and was due on October 16, 2016. The note is currently in default and bears interest at 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 is sent by the holder to the Company. HGT and the company are currently solving disputes regarding this note via litigation.
On April 1, 2015, we entered into a transaction with Iconic Holdings, LLC (the “Purchaser”), whereby Iconic Holdings agreed to provide up to $600,000 through a structured convertible promissory note (the “Note”), with funds to be received in tranches. The note bears interest of 10% and was due April 1, 2016. The initial proceeds of $40,000 was received on April 9, 2015, with $30,000 remitted and delivered to us, $4,000 retained by the Purchaser as an original issue discount, and $6,000 retained by the Purchaser for legal expenses. On February 17, 2016 as part of a settlement between the lender and the Company, the note along with a remaining balance of $8,300 from former JABRO-Asher notes were restructured to a principal amount of $25,000 with a due date of June 18, 2017 and an interest rate of 0%. The lender is subject to strict lock-up and leak-out provisions. Additionally, as part of the February 2016 settlement with the lender, the lender funded $100,000 new debentures (the “$100,000 Convertible Promissory Note”) due August 2018 bearing 0% interest with the lender subject to strict lock-up and leak-out provisions.
On June 27, 2017, Iconic Holdings’ $100,000 Convertible Promissory Note issued on February 18, 2016 was amended to reflect an advisement of the conversion price of $.10 cents to $.08 cents per common share.
On June 29, 2017, Iconic Holdings, LLC entered into a 10% Convertible Promissory Note with the Company in the principal amount of $27,000 (the “Note”). Upon the execution of this note the sum of $9,000 has been remitted and delivered to the Company. On August 14, 2017, Iconic Holdings, LLC remitted and delivered to the Company another $9,000. The Company is only required to repay the amount funded and the Company is not required to repay any unfunded portion of this Note. As of March 31, 2017, the Company has received a total $18,000 of the $27,000 principal amount. On April 16, 2018, the note was fully converted.
On July 5, 2017, Iconic Holdings converted $15,895 of its $100,000 Convertible Promissory Note. On July 25, 2017, Iconic Holdings converted $18,950 of its $100,000 Convertible Promissory Note.
On January 23, 2018, Iconic Holdings converted $65,155 of its $100,000 Convertible Promissory Note. Accordingly, the $100,000 Convertible Promissory Note issued on February 18, 2016 was fully converted into 1,250,001 shares of common stock.
As part of the asset purchase agreement between HDS International Corp. and CMG Holdings Group, Inc., SirenGPS was issued a $60,000 0% interest convertible debenture that matures in August 2018. The debentures are convertible into common stock at a 20% discount to the 20-day moving average of the Company’s common stock after a period of seven months. The debt is calculatedsubject to strict lock-up and leak-out provisions. SirenGPS has agreed to sell this security to the Company or to an investor of the Company’s choosing at $60,000.
| 4. |
| Derivative Liabilities |
The following inputs and assumptions were used to value the convertible debentures outstanding during the years ended March 31, 2018 and March 31, 2017: The projected annual volatility for each valuation period was based on the historic volatility |
A summary of the activity of the derivative liability is shown below:
| Balance December 31, 2015 | $ | 453,741 | ||
| Adjustment for Conversion | 18,415 | |||
| Mark to market adjustment at December 31, 2016 | (243,551 | ) | ||
| Balance December 31, 2016 | 228,605 | |||
| Adjustment for Conversion | - | |||
| Mark to market adjustment at March 31, 2017 | (74,789 | ) | ||
| Balance March 31, 2017 | $ | 153,816 |
| Balance, March, 2017 | $ | 153,816 | ||
| Change in value | 172,507 | |||
| Balance, March 31, 2018 | 325,693 |
| Common Stock |
Share Transactions for the three months ended MarchYear Ended December 31, 2017:
On August 16, 2016, January 4, 2017, the Company exchanged 1.15MM SeriesHillwinds Ocean Energy converted 70,000 shares of its common stock to 500 shares of Class B Preferred Shares with an investor for 179,450,000 common shares which were retired into treasury. These common shares were pledged to Iconic Holdings, LLC contractually as collateral against a $25,000 convertible debenture that was restructured in February 2016. By agreement, the lender converted a portion of this note into common shares eliminating debt from the Company’s balance sheet. The Company has agreed to deliver an additional 70,050,000 common shares to the lender by year-end 2016, which will eliminate the debenture in its entirety. Iconic Holdings has agreed to lock-up a $100,000 convertible debenture for a period of one-year effective June 10, 2016, subject to strict covenants that will protect common shareholders from significant dilution. The net effect of this Agreement is that the common share float of the Company has not been increased and that shareholders will not be negatively impacted by a common stock increase and additional dilution.
On January 5, 2017, Iconic Holdings converted $6,585 of convertible debt into 65,850,00065,585 shares of the Company'sCompany’s common stock.
On January 4,July 5, 2017, Hillwinds Ocean Energy Cancelled 70,000,000Iconic Holdings converted $15,895 of convertible debt into 198,688 shares of the CompanyCompany’s common stock in exchange for 500,000stock.
On July 13, 2017, a shareholder converted 1,000 Series B Preferred Shares (“Series B Preferred Shares”) into 200,000 shares of the Company’s common stock.
On July 25, 2017, Iconic Holdings converted $18,950 of convertible debt into 236,875 shares of the Company’s common stock.
On August 11, 2017, an investor converted 1,250 Series B Preferred Shares into 250,000 shares of the Company’s common stock.
At March 31, 2017, the Company had 21,891,805 shares of common stock reserved for issuance relating to convertible debentures and Series D Preferred Stock.
Share Transactions for the Year Ended March 31, 2018:
On January 8, 2018, Silver Linings Management converted 15,000 shares of the Company’s Series B Stock.
On January 8, 2018, Britton & Associates converted 5,000 the Company’s Series B Preferred Shares in 1,000,000 common shares of the Company.
On January 9, 2018, ViaOne Services converted $200,000 its convertible note into 8,333,333 common shares of the Company.
On January 12, 2018, SSB Trading converted 10,000 the Company’s Series B Preferred Shares into 2,000,000 common shares of the Company.
On January 12, 2018, CMG Holdings converted 5,605 the Company’s Series B Preferred Shares into 1,211,000 common shares of the Company.
On January 18, 2018, CMG Holdings converted 9,000 the Company’s Series B Preferred Shares into 1,800,000 common shares of the Company.
On January 23, 2018, Iconic Holdings converted $65,155 of its convertible note into 814,438 common shares of the Company.
On January 26, 2018, Michael Tadin converted 5,000 the Company’s Series B Preferred Shares into 1,000,000 common shares of the Company.
On February 9, 2018, Vik Grover converted 8,665 the Company’s Series B Preferred Shares into 1,733,000 common shares of the Company.
| Preferred Stock |
Our Articles of Incorporation which were amended effective July 22, 2016, authorize us to issue up to 450,000,0002,250,350 shares of preferred stock, $0.001 par value. Of the 450,000,0002,250,000 authorized shares of preferred stock, the total number of shares of Class A Preferred Shares the Corporation shall havehas the authority to issue is Two Hundred Forty Nine Million,thousand Nine Hundred Ninety Nine Thousand (249,999,000)(249,999), with a stated par value of $0.001 per share, and the total number of shares of Class B Preferred Shares the Corporation shall havehas the authority to issue is Two Hundred Million (200,000,000)(2,000,000), with a stated par value of $0.001 per share and the total number of newly authorizedshares of Class C Preferred Shares the Corporation shall havehas the authority to issue is One Thousand (1,000).(1), par value $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'Directors’ power to set the terms of, and our ability to issue, preferred stock will provide flexibility in connection with possible financing or acquisition transactions in the future. The issuance of preferred stock, however, could adversely affect the voting power of holders of common stock and decrease the amount of any liquidation distribution to such holders. The presence of outstanding preferred stock could also have the effect of delaying, deterring or preventing a change in control of our company.
As of March 31, 2017,2018, we had 7,500,0007,500 shares of our Class A preferred stock issued and outstanding. As of March 31, 2018, we had 106,511 shares of Class B preferred stock issued and outstanding. As of March 31, 2018, we had 1 shares of Class C Preferred Stock issued and outstanding.
The 7,500,0007,500 issued and outstanding shares of Class A Preferred Stock are convertible into shares of common stock at a rate of 20 common shares for each one Class A Preferred Share. The 162,028,779106,511 issued and outstanding shares of Class B Preferred Stock are convertible into shares of common stock at a rate of 200 common shares for each one Class B Preferred Share. The 1,000 issued and outstanding shares of Class C Preferred Stock are are not convertible . They are Voting preferred shares If all of our Class A Preferred Stock and Class B Preferred Stock, issued and Class C Preferred Stock wasoutstanding as of March 31, 2018 are converted into shares of common stock, the number of issued and outstanding shares of our common stock will increase by 32,555,755,80021,452,200 shares.
The 1 issued 130,300,000and outstanding share of series B preferred stock. 86,650,000Class C Preferred Stock has voting rights equivalent to 51% of all shares were issued for the purchase of Good Gaming software, 1,150,000 shares were issued in exchange for 179,450,000 shares of commons stockentitled to vote and 42,500,000 shares were issued for stock subscriptions receivable.
The 210 issued and outstanding shares of Class D Preferred Stock are convertible into shares of common stock at a rate of 125% of the conversion amount at a price that is the lower of 110% of the volume weighted average prices (“VWAP”) of the common stock on the closing date, the VWAP of the common stock on the conversion date or the VWAP of the common stock on the date prior to the conversion date. for each one Class A Preferred Share. The shares of Class D Preferred Stock are convertible beginning 6 months from the issue date. At March 31, 2017, no shares of Class D Preferred Stock were eligible to be converted to common stock.
The 210 issued and outstanding shares of Class D Preferred Stock are entitled to cumulative dividends at a rate of 5% of the face value of shares, or the number of shares multiplied by 1,000. The dividends accrue commencing on the issuance date of the preferred shares and accrue whether or not declared and whether or not there is sufficient earnings or surplus. The dividends are payable quarterly, with the first dividend date being March 31, 2017. The dividends are payable in cash or shares of common stock. At March 31, 2018, the Company had $2,532 in cumulative unpaid dividends.
The Class A, Class B, Class C and Class D have a liquidation preference to the common shareholders.
| 7. | Warrant |
In connection with the $100,000 convertible debenture issued to HGT Capital, LLC, the Company issued HGT Capital, LLC a warrant to purchase 100,000 shares of the Company’s common stock at $1.00 per share. This warrant was not exercised, is exercisable through April 15, 2020 and had a subscription receivable for 5,000,000remaining life of 2.29 years as of March 31, 2018. The intrinsic value of the warrant at March 31, 2018 was zero as the exercise price exceeded the closing stock price.
| 8. | Related Party Transactions |
On or around April 7, 2016, Silver Linings Management, LLC funded the Company $13,439.50 in the form of convertible debentures secured by certain high-powered gaming machines purchased from XIDAX. Such note bears interest at a rate of 10% per annum payable in cash or kind at the option of the Company matures on April 1, 2018, and is convertible into Series B Preferred shares as consideration for an investment inat the Company.
On November 30, 2016, ViaOne Services, LLC (“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 issued as noted above, 42,500,000 shares.
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 B Preferred stock investors have agreedC Stock, which was subject of the Pledge Agreement.
The Note as amended increased from time to lock-up their investmentstime 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 periodmonthly management fee of one year as of May 2016.
At March 31, 2017, we had
The Company’s Chairman and Chief Executive Officer is the Chairman of Class C Preferred Stock issued and outstanding held by Barbara Laken, who sits on our BoardViaOne.
The amount receivable from an affiliate of Directors.
| Income Taxes |
The Company has a net operating loss carried forward of $3,697,793$1,576,720 available to offset taxable income in future years which commence expiring in fiscal 2031.
The significant components of deferred income tax assets and liabilities at March 31, 2018 and 2017 are as follows:
| 2018 | 2017 | |||||||
| Net Operating Loss Carryforward | $ | 331,111 | $ | 562,497 | ||||
| Valuation allowance | (331,111 | ) | $ | (562,497 | ) | |||
| 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 27%21% and 27%35%, respectively, to the net loss before income taxes calculated for each jurisdiction. The tax effect of the significant temporary differences, which comprise future tax assets and liabilities, are as follows:
| 2017 | 2016 | |||||||
| Income tax recovery at statutory rate | $ | 47,105 | $ | 104,305 | ||||
| Valuation allowance change | $ | (47,105 | ) | $ | (104,305 | ) | ||
| Provision for income taxes | $ | - | $ | - | ||||
| The Significant components of deferred income tax assets and liabilities at September 30, 2016 and December 31, 2015 are as follows: | ||||||||
| Net operating loss carried forward | $ | 3,697,793 | $ | 3,509,373 | ||||
| Valuation allowance | $ | (3,697,793 | ) | $ | (3,509,373 | ) | ||
| Net deferred income tax asset | $ | - | $ | - | ||||
| 2018 | 2017 | |||||||
| Income tax recovery at statutory rate | $ | 6,387 | $ | (64,212 | ) | |||
| Valuation allowance change | (6,387 | ) | $ | 64,212 | ||||
| Provision for income taxes | $ | - | $ | - | ||||
| 10. | Commitments and Contingencies |
HGT Capital LLC (“HGT”) has filed a lawsuit against the Company, claiming breach of contract due to a default on a $50,000 junior loan made by HGT to HDS International Corp., our predecessor, in 2015. The Company has retained counsel to represent it on this matter and responded with affirmative defenses in the Supreme Court of New York. HGT’s motion for summary judgment is scheduled for oral argument on May 31, 2018. The Company intends to vigorously contest such action.
| 11. | Acquisition |
On March 21, 2018, the Company announced the acquisition of Crypto Strategies Group, Inc. as it diversifies into the cryptocurrency market for $500. As the acquisition was between entities under common control with the Company, the assets and liabilities were recorded at their carrying amount on the date of transfer. On the date of transfer, Crypto Strategies Group, Inc. had no asset or liabilities.
| 12. | Subsequent Events |
On April 12, 2018, the Company announced it has received confirmation for its uplisting to the change in ownership provisionsOTCQB platform.
On April 13, 2018, Red Diamond converted 5 shares of Preferred D stock into 555,556 of the Tax Reform ActCompany’s common shares.
On April 17, 2018, Red Diamond Red Diamond converted 5 shares of 1986, net operating loss carry forwardsPreferred D stock into 609,756 of the Company’s common shares.
On April 23, 2018, Red Diamond Red Diamond converted 5 shares of Preferred D stock into 806,452 of the Company’s common shares.
On April 16, 2018, Iconic Holdings converted 18,000 of a convertible note into 1,892,828 of the Company’s common shares.
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 of directors of the Company may decide at its sole discretion to grant equity awards to certain employees and consultants as set forth in the 2018 Plan.
On May 3, 2018, the Company filed a Certificate of Amendment to Articles of Incorporation with the Secretary of the State of Nevada which, among other things, increased its authorized shares of common stock from 100,000,000 to 200,000,000, par value $0.001 per share. The Certificate of Amendment became effective on May 3, 2018.
| 17 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Cautionary Statements
This Quarterly Report on Form 10-Q (“Form 10-Q”) may contain “forward-looking statements,” as that term is used in federal securities laws, about Good Gaming, Inc. (“GMER,” “we,” “our,” “us,” the “Company,” “management”) and its financial condition, results of operations and business. These statements include, among others:
| ● | statements concerning the potential benefits that we may experience from our business activities and certain transactions we contemplate or have completed; and | |
| ● | statements of GMER’s expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this Form 10-Q. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” “opines,” or similar expressions used in this Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause GMER’s actual results to be materially different from any future results expressed or implied by GMER in those statements. The most important facts that could prevent GMER from achieving its stated goals include, but are not limited to, the following: |
| (a) | volatility or decline of our stock price; | |
| (b) | potential fluctuation of quarterly results; | |
| (c) | failure of GMER to achieve revenues or profits; | |
| (d) | inadequate capital to continue or expand our business, and inability to raise additional capital or financing to implement our business plans; | |
| (e) | decline in demand for GMER’s products and services; | |
| (f) | rapid adverse changes in markets; | |
| (g) | litigation with or legal claims and allegations by outside parties against us, including but not limited to challenges to our intellectual property rights; and | |
| (h) | insufficient revenues to cover operating costs. |
There is no assurance that GMER will be profitable, be able to successfully develop, manage or market its products and services, be able to attract or retain qualified executives and personnel, be able to obtain customers for Federal income tax reporting purposesits products or services, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, the exercise of outstanding warrants and stock options, or the conversion of convertible promissory notes, and other risks inherent in GMER’s businesses.
Because the statements are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwardsrisks and uncertainties, actual results may be limited.
Overview
The Company was incorporated on November 3, 2008 under the laws of the State of Nevada, to engage in providing certain business services.
The Good Gaming Inc. from CMG Holdings Group, Inc. (OTCQB: CMGO). Onplatform was established in early 2014 by its founding members who recognized the need that date,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 Company’s former CEO, Paul Rauner, resigned. Andbusiness infrastructure for the Company appointed Vik Groverrapidly growing esports industry, similar to the positionshigh 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 CEOthe esports industry by focusing on more than approximately 250 million gamers that fall below the professional level but are above the casual level, classified as “amateurs.” Good Gaming distinguishes itself from its direct and Director. Vik Groverindirect competitors by being the first company to offer multi-game, multi-console services at the amateur esports level. The Company is a former Wall Street analyst and investment banker with 20 years' experience in telecommunications, media and technology. In addition, Barbara Laken and David Dorwart were elected by the majority shareholdersnot exclusive to the Company's Board of Directors. Ms. Laken is a former teacher, with experience creating specialized formats for advanced placement and special needs programs, with emphasis on systems management and curriculum development. A published novelist and co-author of an optioned screenplay. 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 May 4, 2016, the Company announced that it hashad 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, platformInc. 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 established in early 2014elected by the founding members who had recognizedmajority shareholders to the need that hundredsCompany’s Board. Mr. Dorwart is the Co-Founder and Chairman of millionsAssist Wireless, Inc., a provider of gamers worldwide have a desirelifeline wireless services to play games at a competitive level. The founders recognized that while professional eSportstens of thousands of subscribers primarily in the Midwest.
On June 27, 2017 the Board of Directors of the Company appointed David B. Dorwart, 59 years old, as the Company’s Chief Executive Officer. On June 21, 2017, Mr. Dorwart was quickly establishing itself, there were no structure or organizations on a large scale for amateur gamers.
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, age 37, 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. Good GamingHe has worked in all aspects of Finance, Accounting, Treasury, and Operations.
Jordan Majkszak Axt, a new board member, age 36, 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 beaccelerate its move to free cash flow generation.
On August 29, 2017, Eric Brown became the gateway for amateur eSports athletes to compete atChief Operating Officer.
In September of 2017, the semi-professional level, improve their gaming skills, and interact with veteran gamers globally in a destination site and social networking framework.
In March of hardware or software titles.
Technology
In 2016, the Company completed its 2.0 tournament platform and as a result, has runthereafter ran dozens of robotic internal test tournaments and held numerous free-to-play tournaments of increasing sizeon large scales with its partner The Syndicate, the owner of the world’s longest running online gaming guild withthat has 1,200 members worldwide. Good Gaming also 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 flawlessly.smoothly. The system is designed to scale to 512,000 concurrent competitors. The
Business Strategy
In the past, our management team’s strategy was to be a full-service company endeavoring to provide 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’s our ambition and strategy to be great at providing a place for amateurs to play. By focusing on what the gaming universe needs, it allows us to focus on the promotion of teams, leagues and competition. We will continue with this strategy because over this past year, we have been successful in managing the tournaments. We intend to begin with local servers and expand organically from there. We recognize there are millions of players who desire to compete within the gaming community.
Minecraft is another business strategy. We have a well-established server and will continue to devote resources to developing and acquiring other Minecraft assets. 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.
In our evaluation of our current business model, we have decided not to pursue the operation as a tournament platform. We feel there are too many great platforms that allow complete integration via APIs to run our tournaments. These companies have spent and continued spending millions of dollars establishing their platforms. It’s what they do very well and they rely on companies such as Good Gaming’s proprietary technologyGaming to run and host tournaments.
We previously developed our own codes and have a platform whichthat really is quite good to handle tournaments but needs some improvement to be commercially ready. In fact, it’s this platform that we have used up to now to run our Hearthstone tournaments. Although it is functional, the challenge is that it costs too much capital to maintain and improve the platform. At this this point, it’s an asset we have and we may try to monetize this at some point.
We cannot provide any assurance that our focus on hosting the esports tournaments will be successful and profitable in the future or at all.
Offices
Our executive offices are located at 415 McFarlan Rd, Suite 108, Kennett Square, PA 19501. Our telephone number is (888) 295-7279.
Critical Accounting Policies and Estimates
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 circumstance 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 infinitely scalablefair value of the asset. Long-lived assets and stress tested Yii framework geared for Web 2.0 development, Good Gaming willcertain identifiable intangible assets to be abledisposed of are reported at the lower of carrying amount or fair value less costs to offer publishers and vendorssell.
Beneficial Conversion Features
From time to time, the Company may issue convertible notes that may contain an innovative approachembedded 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 gaming interactions. Currentlywhich 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 no way for gamers to barter their skillsa contingent exercise provision. The derivative liability is records at is 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 laborlosses 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 open market in a non-fragmented and less cumbersome process. As competitive gaming reaches critical mass, how gamers interact and barter their skills and labor will become critical if not the most economically lucrative endeavor. The “gamers” economy it expected to grow from tens of millions of dollars every year to multiple billions of dollars and the Good Gaming founders believe that we are rapidly approaching that time.
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 liabilities 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 offering social networking functionality so gamers can interact, track eachto recognize interest and penalties accrued on uncertain tax positions, if any, as part of the income tax provision. The Company has no liabilities 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 communicate. Good Gaming alsoASC 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 is completing a content suite to offer videos, blogs, and forums. Additionally,categorized within the Company intends to host multiple games onlinefair value hierarchy is based upon the lowest level of input that subscribersis significant to the sitefair 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 playbe derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for freewhich there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or for fees dependingliabilities.
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s consolidated balance sheet as at March 31, 2018 and 2017 as follows:
| Description | Fair Value Measurements at March 31, 2018 Using Fair Value Hierarchy | |||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liability | $ | 325,693 | $ | - | $ | - | $ | 325,693 | ||||||||
| Total | $ | 325,693 | $ | - | $ | - | $ | 325,693 | ||||||||
| Description | Fair Value Measurements at March 31, 2017 Using Fair Value Hierarchy | |||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liability | $ | 228,605 | $ | - | $ | - | $ | 228,605 | ||||||||
| Total | $ | 228,605 | $ | - | $ | - | $ | 228,605 | ||||||||
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 Good Gaming status/player level.
Advertising Expenses
Advertising expenses are included in general and administrative expenses in the ability to trade itemsconsolidated Statements of Operations and laborare expensed as incurred. The Company incurred $1,666 in advertising and promotion expenses in the three months ended March 31, 2018.
Revenue Recognition
The company recognizes revenue when its customer obtains control of promised goods or services, in an efficient manner. This provisional patentamount that reflects the consideration which the company expects to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the company determines are within the scope of Topic 606, the company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Revenues primarily include revenues from microtransactions 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.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which was not extendedamended in 2015 and has since expired.2016. The Company intendsnew revenue recognition standard relates to filerevenue from contracts with customers and will supersede nearly all current U.S. GAAP guidance on this topic and eliminate industry-specific guidance.
The underlying principle is to use a patent for its 2.0 framework later this year, as it is based on proprietary codingfive-step analysis of transactions to recognize revenue when promised goods or services are transferred to customers in an amount that can handle more scope and scale thanreflects the legacy 1.0 patent filing. The market for these transactionsconsideration that is expected to grow from a few hundred million dollars in 2014 to billions of dollars by 2020.
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 offer gamers the premiere destination site for amateur eSports worldwide. In 2017, the Company intends to perfect is B2C model targeting gamers directly. In 2017, Good Gaming also intends to launch a B2B program sodoes not believe that there are any other groups, including colleges, restaurants, bars et al. can offer their own tournaments using its platform. In 2018, the Company intends to work on a 3.0 systemnew accounting pronouncements that will integrate with mobile networks and offer additional features to its customers.
RESULTS OF OPERATIONS
Our auditors have issued a going concern opinion inon the financial statements for the year ended December 31, 2016.
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| �� | ||||||||
| Current Assets | $ | 77,181 | $ | 58,400 | ||||
| Current Liabilities | 762,834 | 477,848 | ||||||
| Working Capital (Deficit) | (685,653 | ) | (419,448 | ) | ||||
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Cash Flows from (used in) Operating Activities | $ | (194,219 | ) | $ | (710 | ) | ||
| Cash Flows from (used in) Financing Activities | 223,500 | 1,723 | ||||||
| Net Increase (decrease) in Cash During Period | 29,281 | 1,013 | ||||||
Plan of Operation – Milestones
We are at the early stage of our new business operations. Over the next twelve months, our primary target milestones include:
| 1 | Continue to achieve substantial growth within our Minecraft division. This is a profitable center for us and we expect the continued growth of our existing server, good-gaming.com as well as the re-launch of our acquired servers minecade.com and olimpocraft.com which we expect will contribute substantially to our profitability. Additionally, we will look to expand this division into other avenues. |
| 2 | Launch an in-person gaming product. We expect to launch this product in the second quarter of 2018 and anticipate substantial growth by the end of the year. |
| 3 | Continue to evaluate opportunities which have synergies to our existing business line. |
| 4 | Anticipate sustainable financial profitability this year. |
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 revenueslittle 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
March 31, 2018 as compared to March 31, 2017
| ● | Working Capital |
| March 31, 2018 | March 31, 2017 | |||||||
| Current Assets | $ | 103,688 | $ | 77,181 | ||||
| Current Liabilities | 1,436,402 | 762,834 | ||||||
| Working Capital (Deficit) | $ | (1,332,714 | ) | $ | (685,653 | ) | ||
| ● | Operating Revenues |
We have generated $34,732 in revenue in the three months ended March 31, 2018 and $2,519 and $0 forin revenue in the three months ended March 31, 2017, and 2016.
| ● | Operating Expenses and Net Loss |
Operating expenses for the three months ended March 31, 20172018 were $258,410$242,672 compared with $160,802$258,410 for the three months ended March 31, 2016.2017. The increase in operating expenses was attributed to an increase in professional fees for day to day operations offset by a decrease in consulting fees of $6,000, and a decrease in professional fees of $3,000, an increase in general and administrative fees of $118,529 for day-to-day operating costs and decrease in stock compensation of $41,921.
During the three months ended March 31, 2017,2018, the Company recorded net income of $30,415 compared with a net loss of $183,462 compared with net loss of $417,221 for the three months ended March 31, 2016. In addition2017. The decrease in net loss was attributed to the above,increase in revenues and the Company incurred $3,360 of interest expense relating to debt balances, $74,789 for gain ondecrease in the change in fair value of derivatively liabilities and $1,000 interest income.
| ● | Liquidity and Capital Resources |
As atof March 31, 2017,2018, the Company'sCompany’s cash balance was $77,181consisted of $101,147 compared to cash balance of $47,900$77,181 as at December 31, 2016. As of March 31, 2017, the Company's total assets were $1,017,933 compared to total assets of $1,059,824 as at December 31, 2016.2017. The increase in the cash balance was due to increase in note receivable and decrease in total assets was attributed to the repayment of a note receivable, depreciation and amortization.
As of March 31, 2018, the Company had total liabilities of $776,274$1,436,402 compared with total liabilities of $641,288$776,274 as at Decemberof March 31, 2016.2017. The increase in total liabilities is attributedwas attributable to an increase of account payablein financing and accrued liabilities of $3,360, which pertained to trade accounts payable as well as a decrease in convertible debentures of $6,585, a decrease in derivative liabilities of $39,831 and an increase in note payable in 213,000.
As of March 31, 2017,2018, the Company has a working capital deficit of $685,653$1,332,714 compared with a working capital deficit of $419,448 at December$685,653 as of March 31, 20162017 with the increase in the working capital deficit attributed to the increases in accounts payable and accrued liabilities, convertible debentures and derivative liabilities during the period as discussed above also an increase duein financing the Company received for day to day operating costs.
Cash flow from affiliate.
Operating Activities
During the three months ended March 31, 20172018, the Company used $194,219$140,195 of cash for operating activities compared to the use of $710cash in an amount of cash$194,219 for operating activities during the three months ended March 31, 2016.2017. The decrease in the use of cash for operating activities was attributed to the net decrease in derivative liabilities.
Cash flow from Investing Activities
During the quarter ended March 31, 2018, the Company had $26,250 in cash used in investing activities compared to $0 for the quarter ended March 31, 2017. The increase in cash used in operationsinvesting activities was a result of accretion of debt discount, stock compensation, debt reduction, due from affiliate and accounts payable accrued liabilities.
Cash flow from Financing Activities
During the year ended March 31, 2018, the Company received $204,743 of proceeds from financing activities compared to $223,500 during the year ended March 31, 2017. The increase in proceeds from financing activities was due to receiving proceeds from the sale of preferred stock and services on its proprietary Mercenary System. The launch is imminent and should leave soft launch in a matter of 1-2 weeks.convertible debentures.
Going Concern
We have not attained profitable operations and are dependent upon the continued financial support from our shareholders, the abilityobtaining financing to raise equity or debt financing,pursue any extensive acquisitions and the attainment of profitable operations from our future business. These factors raiseactivities. As such, there is substantial doubt regardingabout our ability to continue as a going concern for a period of one year from the issuance of these financial statements without further financing.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholdersstockholders.
Future Financings.
We will continue to rely on debentures,equity sales of our preferred stock and/or common stockshares in order to continue to fund our business operations. The CompanyIssuances of additional shares will consider selling securitiesresult in the futuredilution to fund operations. existing stockholders.
There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
Market risk is the risk of loss from adverse changes in market prices and rates. The Company's market risk arises primarily from the fact that the area in which we do business is highly competitive and constantly evolving. The market in which we do business is highly competitive and constantly evolving. We face competition from the larger and more established companies, from companies that have greater resources, including but not limited to, more money, and greater ability to expand their markets also cut into our potential customers. Many of our competitors have longer operating histories, significantly greater financial strength, nationwide advertising coverage and other resources that we do not have. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
Based on theirthe evaluation of our disclosure controls and procedures(asprocedures (as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the "Exchange Act"“Exchange Act”), our principal executive officer and principal financial officer have concluded that as of the end of the three-month period ended March 31, 2018 covered by this quarterly report on Form 10-Q, such disclosure controls and procedures were not effective due to the lack of segregation of duties and lack of a formal review process that includes multiple levels of review to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions arewere performed by an external consultant with no oversight by a professional with accounting expertise. Our CEO/CFO doesChief Executive Officer and Chief Financial Officer did not possess accounting expertise and our company does not have an audit committee. This weakness iswas due to the company'sCompany’s lack of working capital to hire additional staff. To remedy this material weakness, we intendSubsequently, with the completion of transition in the management and Board, the financial management will be lead by a certified public accountant with extensive accounting experience who follows the standards of U.S. generally accepted accounting principles and internal controls procedures to engage another accountant to assist withensure the faithful representation of the financial statements, including the results of operations, financial position, and cash flows of the reporting as soon as our finances will allow.
Changes in Internal Control over Financial Reporting
Except as noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter of 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
HGT Capital LLC (“HGT”) has filed a lawsuit against Good Gamingthe Company, claiming breach of contract due to a default on a $50,000 junior loan made by HGT to HDS International Corp., our predecessor, in 2015. Good GamingThe Company has retained counsel to represent it on this matter and responded with affirmative defenses in the Supreme Court of New York.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered sales of equity securities and use of proceeds
On August 16, 2016 the Company issued 130,300,000 share of series B preferred stock. 86,650,000 shares were issued for the purchase of Good Gaming software, 1,150,000 shares were issued in exchange for 179,450,000January 8, 2018, Silver Linings Management converted 15,000 shares of commons stock and 42,500,000the Company’s Series B Preferred Shares into 3,000,000 common shares of the Company.
On January 8, 2018, Britton & Associates converted 5,000 the Company’s Series B Preferred Shares in 1,000,000 common shares of the Company.
On January 9, 2018, ViaOne Services converted $200,000 its convertible note into 8,333,333 common shares of the Company.
On January 12, 2018, SSB Trading converted 10,000 the Company’s Series B Preferred Shares into 2,000,000 common shares of the Company.
On January 12, 2018, CMG Holdings converted 5,605 the Company’s Series B Preferred Shares into 1,211,000 common shares of the Company.
On January 18, 2018, CMG Holdings converted 9,000 the Company’s Series B Preferred Shares into 1,800,000 common shares of the Company.
On January 23, 2018, Iconic Holdings converted $65,155 of its convertible note into 814,438 common shares of the Company.
On January 26, 2018, Michael Tadin converted 5,000 the Company’s Series B Preferred Shares into 1,000,000 common shares of the Company.
On February 9, 2018, Vik Grover converted 8,665 the Company’s Series B Preferred Shares into 1,733,000 common shares of the Company.
The issuances referenced above were issued for stock subscriptions receivable.
Except the issuances as listed herein, there were no unregistered sales of equity securities that have not been disclosed on the Company’s current reports during the three months ended March 31, 2018.
On May 3, 2018, the Company filed a Certificate of Amendment to Articles of Incorporation with the Secretary of the State of Nevada which, among other things, increased its authorized shares of common stock from 100,000,000 to 200,000,000, par value $0.001 per share. The Certificate of Amendment became effective on May 3, 2018. The description of the Certificate of Amendment to Articles of Incorporation is not purported to be complete and is incorporated by reference to a current report on Form 8-k filed with the SEC on May 4, 2018.
| | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 | ||
| 31.2 | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 | ||
| 32.1 | Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 | ||
| 32.2 | Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 | ||
| 101.INS | XBRL Instance Document | ||
| 101.SCH | XBRL Taxonomy Extension Schema | ||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
| 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | ||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
| Exhibit | Incorporated by reference | Filed | |||||||||
| Number | Form | Date | Number | herewith | |||||||
| 3.1 | Articles of Incorporation. | S-1 | 3/24/09 | 3.1 | |||||||
| 3.2 | Bylaws. | S-1 | 3/24/09 | 3.2 | |||||||
| 3.3 | Amended and Restated Articles of Incorporation. | 8-K | 6/14/11 | 3.1a | |||||||
| 3.4 | Amended and Restated Articles of Incorporation. | 8-K | 8/17/11 | 3.1 | |||||||
| 10.1 | Exchange Note Purchase Agreement between Jabro Funding Corp. and Iconic Holdings, LLC dated March 31, 2015. | 10-K | 4/15/15 | 10.1 | |||||||
| 10.2 | Exchange Note Purchase Agreement with Iconic Holdings, LLC dated April 1,2015. | 10-K | 4/15/15 | 10.2 | |||||||
| 10.3 | Convertible Promissory Note with Iconic Holdings, LLC dated April 1, 2015. | 10-K | 4/15/15 | 10.3 | |||||||
| 10.4 | Investment Agreement (ELOC) and Registration Rights Agreement with Iconic Holdings, LLC dated April 2, 2015. | 10-K | 4/15/15 | 10.4 | |||||||
| 10.5 | Common Stock Purchase Warrant with Iconic Holdings, LLC dated April 6, 2015. | 10-K | 4/15/15 | 10.5 | |||||||
| 10.6 | Stock Conversion and Subscription Agreement with Hillwinds Ocean Energy, LLC dated April 3, 2015. | 10-K | 4/15/15 | 10.6 | |||||||
| 10.7 | Stock Conversion and Subscription Agreement with SirenGPS, Inc. dated April 3, 2015. | 10-K | 4/15/15 | 10.7 | |||||||
| 10.8 | Promissory Note issued to HGT Capital LLC. dated April 15, 2015 | 8-K | 4/21/15 | 10.1 | |||||||
| 10.9 | Settlement Agreement and Mutual Release dated February 17, 2016 | 10-Q | 3/31/16 | 10.1 | |||||||
| 10.10 | Convertible Promissory Note dated February 17, 2016 | 10-Q | 3/31/16 | 10.2 | |||||||
| 10.11 | Note Purchase Agreement dated November 30, 2016 | X | |||||||||
| 10.12 | Stock Pledge Agreement dated November 30, 2016 | X | |||||||||
| 10.13 | Secured Promissory Note dated January 31, 2017 | X | |||||||||
| 10,14 | Second Amendment to Secured Promissory Note dated March 31, 2017 | X | |||||||||
| 14.1 | Code of Ethics. | 10-K | 3/29/11 | 14.1 | |||||||
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | |||||||||
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | |||||||||
| 101.INS | XBRL Instance Document. | X | |||||||||
| 101.SCH | XBRL Taxonomy Extension – Schema. | X | |||||||||
| 101.CAL | XBRL Taxonomy Extension – Calculations. | X | |||||||||
| 101.LAB | XBRL Taxonomy Extension – Labels. | X | |||||||||
| 101.PRE | XBRL Taxonomy Extension – Presentation. | X | |||||||||
| 101.DEF | XBRL Taxonomy Extension – Definition. | X | |||||||||
| Reports on Form 8-K: | |||||||||||
| Regulation FD Disclosure - Press Release | 8-K | 3/2/17 | 7.01, 8.01 & 9.01 | ||||||||
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report has beento be signed belowon its behalf by the following person on behalf of the Registrant and in the capacities on this 17th of May 2017.
| May 15, 2018 | ||
| BY: | ||