Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 10, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Black Ridge Oil & Gas, Inc. | |
Entity Central Index Key | 0001490161 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity File Number | 000-53952 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | NV | |
Entity Common Stock, Shares Outstanding | 2,743,759 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
CONDENSED BALANCE SHEETS (Unaud
CONDENSED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 417,109 | $ 108,756 |
Investment in Allied Esports Entertainment, Inc. securities | 2,242,207 | 6,982,300 |
Receivable from Allied Esports Entertainment, Inc. | 0 | 505 |
Prepaid expenses | 25,684 | 47,151 |
Total current assets | 2,685,000 | 7,138,712 |
Property and equipment: | ||
Property and equipment | 0 | 134,202 |
Less accumulated depreciation | 0 | (127,803) |
Total property and equipment, net | 0 | 6,399 |
Total assets | 2,685,000 | 7,145,111 |
Current liabilities: | ||
Accounts payable | 110,569 | 35,727 |
Accrued expenses | 262,532 | 14,220 |
Deferred compensation | 0 | 1,396,460 |
Total current liabilities | 373,101 | 1,446,407 |
Notes payable | 262,925 | 0 |
Total liabilities | 636,026 | 1,446,407 |
Commitments and contingencies | 0 | 0 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 500,000,000 shares authorized, 1,600,424 shares issued and outstanding | 1,600 | 1,600 |
Additional paid-in capital | 37,825,774 | 37,054,503 |
Accumulated deficit | (35,778,400) | (31,357,399) |
Total stockholders' equity | 2,048,974 | 5,698,704 |
Total liabilities and stockholders' equity | $ 2,685,000 | $ 7,145,111 |
CONDENSED BALANCE SHEETS (Una_2
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Stockholders' equity: | ||
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 1,600,424 | 1,600,424 |
Common stock, shares outstanding | 1,600,424 | 1,600,424 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total revenues | $ 0 | $ 153,279 | $ 0 | $ 153,279 |
General and administrative expenses | ||||
Salaries and benefits | 483,050 | 279,621 | 936,304 | 910,191 |
Stock-based compensation | 322,888 | 2,836,920 | 393,831 | 2,892,738 |
Professional services | 130,234 | 40,287 | 327,090 | 79,978 |
Other general and administrative expenses | 45,001 | 69,157 | 186,380 | 185,035 |
Total general and administrative expenses | 981,173 | 3,225,985 | 1,843,605 | 4,067,942 |
Depreciation and amortization | 380 | 131 | 1,030 | 754 |
Total operating expenses | 981,553 | 3,226,116 | 1,844,635 | 4,068,696 |
Net operating loss | (981,553) | (3,072,837) | (1,844,635) | (3,915,417) |
Other income (expense): | ||||
Gain on deconsolidation of subsidiary | 0 | 26,322,687 | 0 | 26,322,687 |
Merger incentive expense | 0 | (5,874,000) | 0 | (5,874,000) |
Interest expense, including $-0- and $377,440 of warrants issued as a debt discount for the three and nine months ended September 30, 2020, respectively | (1,695) | 0 | (384,456) | 0 |
Other income | 14 | 0 | 16 | 51 |
Loss on disposal of property and equipment | (5,369) | 0 | (5,369) | 0 |
Gain (loss) on investment in Allied Esports Entertainment, Inc. securities | (1,503,601) | 2,094,690 | (2,186,557) | 2,094,690 |
Total other income (expense) | (1,510,651) | 22,543,377 | (2,576,366) | 22,543,428 |
Net income (loss) before provision for income taxes | (2,492,204) | 19,470,540 | (4,421,001) | 18,628,011 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net income (loss) from continuing operations, net of tax | (2,492,204) | 19,470,540 | (4,421,001) | 18,628,011 |
Net income from discontinued operations | 0 | (8,152,165) | 0 | (7,421,050) |
Net income (loss) before non-controlling interest | (2,492,204) | 11,318,375 | (4,421,001) | 11,206,961 |
Less net loss attributable to redeemable non-controlling interest | 0 | (142,919) | 0 | (1,332,529) |
Net income (loss) attributable to Black Ridge Oil & Gas, Inc. | $ (2,492,204) | $ 11,175,456 | $ (4,421,001) | $ 9,874,432 |
Weighted average common shares outstanding - basic | 1,600,424 | 1,600,424 | 1,600,424 | 1,600,424 |
Weighted average common shares outstanding - fully diluted | 1,600,424 | 1,601,241 | 1,600,424 | 1,601,337 |
Net income per common share - basic | $ (1.56) | $ 6.98 | $ (2.76) | $ 6.17 |
Net income per common share - fully diluted | $ (1.56) | $ 6.98 | $ (2.76) | $ 6.17 |
Management Fee Income [Member] | ||||
Total revenues | $ 0 | $ 153,279 | $ 0 | $ 153,279 |
CONDENSED STATEMENTS OF OPERA_2
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | |||
Warrants issued as a debt discount | $ 0 | $ 377,440 | $ 0 |
STATEMENT OF CHANGES IN STOCKHO
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 1,600,424 | |||
Beginning balance, value at Dec. 31, 2018 | $ 1,600 | $ 36,953,977 | $ (35,487,902) | $ 1,467,675 |
Common stock options granted for services to employees and directors | 83,705 | 83,705 | ||
Net income (loss) attributable to Black Ridge Oil & Gas, Inc. | 9,874,432 | 9,874,432 | ||
Ending balance, shares at Sep. 30, 2019 | 1,600,424 | |||
Ending balance, value at Sep. 30, 2019 | $ 1,600 | 37,037,682 | (25,613,470) | 11,425,812 |
Beginning balance, shares at Jun. 30, 2019 | 1,600,424 | |||
Beginning balance, value at Jun. 30, 2019 | $ 1,600 | 37,009,795 | (36,788,926) | 222,469 |
Common stock options granted for services to employees and directors | 27,887 | 27,887 | ||
Net income (loss) attributable to Black Ridge Oil & Gas, Inc. | 11,175,456 | 11,175,456 | ||
Ending balance, shares at Sep. 30, 2019 | 1,600,424 | |||
Ending balance, value at Sep. 30, 2019 | $ 1,600 | 37,037,682 | (25,613,470) | 11,425,812 |
Beginning balance, shares at Dec. 31, 2019 | 1,600,424 | |||
Beginning balance, value at Dec. 31, 2019 | $ 1,600 | 37,054,503 | (31,357,399) | 5,698,704 |
Common stock options granted for services to employees and directors | 393,831 | 393,831 | ||
Common stock warrants granted to employees and directors for personal guaranty on debt | 377,440 | 377,440 | ||
Net income (loss) attributable to Black Ridge Oil & Gas, Inc. | (4,421,001) | (4,421,001) | ||
Ending balance, shares at Sep. 30, 2020 | 1,600,424 | |||
Ending balance, value at Sep. 30, 2020 | $ 1,600 | 37,825,774 | (35,778,400) | 2,048,974 |
Beginning balance, shares at Jun. 30, 2020 | 1,600,424 | |||
Beginning balance, value at Jun. 30, 2020 | $ 1,600 | 37,502,886 | (33,286,196) | 4,218,290 |
Common stock options granted for services to employees and directors | 322,888 | 322,888 | ||
Net income (loss) attributable to Black Ridge Oil & Gas, Inc. | (2,492,204) | (2,492,204) | ||
Ending balance, shares at Sep. 30, 2020 | 1,600,424 | |||
Ending balance, value at Sep. 30, 2020 | $ 1,600 | $ 37,825,774 | $ (35,778,400) | $ 2,048,974 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) attributable to Black Ridge Oil & Gas, Inc. | $ (4,421,001) | $ 9,874,432 |
Net income from discontinued operations | 0 | 7,421,050 |
Net loss attributable to redeemable non-controlling interest | 0 | 1,332,529 |
Adjustments to reconcile net loss attributable to Black Ridge Oil & Gas, Inc. to net cash used in operating activities: | ||
Gain on deconsolidation of subsidiary | 0 | (26,322,687) |
Merger incentive expense | 0 | 5,874,000 |
Depreciation and amortization | 1,030 | 754 |
Loss on disposal of property and equipment | 5,369 | 0 |
(Gain) Loss on investment in Allied Esports Entertainment, Inc. securities, net | 2,186,557 | (2,094,690) |
Amortization of stock options | 393,831 | 83,705 |
Amortization of stock warrants issued as a debt discount | 377,440 | 0 |
Deferred compensation | 0 | 2,809,033 |
Decrease (increase) in current assets: | ||
Accounts receivable | 0 | 13 |
Accounts receviable, related party | 505 | (181,211) |
Prepaid expenses | 21,467 | 17,863 |
Increase (decrease) in current liabilities: | ||
Accounts payable | 74,842 | 16,481 |
Accrued expenses | 248,312 | 28,136 |
Net cash used in operating activities of continuing operations | (1,111,648) | (1,140,592) |
Net cash used in operating activities of discontinued operations | 0 | (8,618,568) |
Net cash used in operating activities | (1,111,648) | (9,759,160) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash disposed in deconsolidation | 0 | (9,991,684) |
Purchase of property and equipment | 0 | (809) |
Proceeds received from sale of investment in Allied Esports Entertainment, Inc. securities | 1,157,076 | 0 |
Net cash provided by (used in) investing activities of continuing operations | 1,157,076 | (9,992,493) |
Net cash provided by investing activities of discontinued operations | 0 | 16,880,792 |
Net cash provided by investing activities | 1,157,076 | 6,888,299 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds received from notes payable | 802,025 | 0 |
Repayments on notes payable | (539,100) | 0 |
Net cash provided by financing activities from continuing operations | 262,925 | 0 |
Net cash provided by financing activities from discontinuing operations | 0 | 1,431,974 |
Net cash provided by financing activities | 262,925 | 1,431,974 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 308,353 | (1,438,887) |
CASH AT BEGINNING OF PERIOD | 108,756 | 1,503,500 |
CASH AT END OF PERIOD | 417,109 | 64,613 |
SUPPLEMENTAL INFORMATION: | ||
Interest paid | 4,895 | 0 |
Income taxes paid | 0 | 751,630 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Value of debt discounts attributable to warrants | 377,440 | 0 |
Value of investment in securities distributed to board members and employees | 1,133,281 | 0 |
Recognition of subsidiary equity upon deconsolidation | 0 | 8,498,212 |
BRAC Redemptions of redeemable preferred stock from trust account | 0 | 126,205,985 |
BRAC redeemable preferred stock transferred to equity | 0 | 15,865,798 |
BRAC stock issued in merger | 0 | 51,632,255 |
BRAC stock issued to settle intercompany debt | 0 | 19,300,000 |
BRAC loan and accrued interest assumed to settle intercompany debt | 0 | 10,992,877 |
BRAC stock issued to settle liabilities | $ 0 | $ 5,917,500 |
1. Organization and Nature of B
1. Organization and Nature of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Business | Note 1 – Organization and Nature of Business Effective April 2, 2012, Ante5, Inc. changed its corporate name to Black Ridge Oil & Gas, Inc., and continues to be quoted on the OTCQB under the trading symbol “ANFC”. Black Ridge Oil & Gas, Inc. (formerly Ante5, Inc.) (the “Company” and “BROG”) became an independent company in April 2010. We became a publicly traded company when our shares began trading on July 1, 2010. From October 2010 through August 2019, we had been engaged in the business of acquiring oil and gas leases and participating in the drilling of wells in the Bakken and Three Forks trends in North Dakota and Montana and /or managing similar assets for third parties. On September 26, 2017, the Company finalized an equity raise utilizing a rights offering and backstop agreement, raising net proceeds of $5,051,675 and issuing 1,439,400 shares. The proceeds were used to sponsor a special purpose acquisition company, discussed below, with the remainder for general corporate purposes. On October 10, 2017, the Company’s sponsored special purpose acquisition company, Black Ridge Acquisition Corp. (“BRAC”), completed an IPO raising $138,000,000 of gross proceeds (including proceeds from the exercise of an over-allotment option by the underwriters on October 18, 2017). In addition, the Company purchased 445,000 BRAC units at $10.00 per unit in a private placement transaction for a total contribution of $4,450,000 in order to fulfill its obligations in sponsoring BRAC, On October 1, 2020 the Company completed its acquisition of S-FDF, LLC pursuant to an Asset Purchase Agreement detailed in Footnote 15, Subsequent Events. In connection with the closing of the Asset Purchase Agreement, the Company acquired $2.5 million in cash and certain assets and agreements related to the Seller’s freeze-dried fruits and vegetables business for human consumption and entered into certain employment and registration rights agreements. The Company currently owns 1,779,529 shares of Allied Esports Entertainment, Inc. (NASDAQ: AESE), the surviving entity after BRAC’s business combination (“Sponsor Shares”), after selling 368,871 shares for total proceeds of $1,282,067, selling warrants to purchase 505,000 shares of AESE (NASDAQ: AESEW) (“Sponsor Warrants”) for total proceeds of $73,668, and distributing 537,100 Sponsor Shares on August 9, 2020 to employees and directors under the 2018 Management Incentive Plan, dated March 6, 2018. |
2. Basis of Presentation and Si
2. Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 2 – Basis of Presentation and Significant Accounting Policies The interim condensed financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to not make the information presented misleading. These statements reflect all adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. It is suggested that these interim condensed financial statements be read in conjunction with the audited financial statements for the year ended December 31, 2019, which were included in our Annual Report on Form 10-K/A. The Company follows the same accounting policies in the preparation of interim reports. Reclassifications In the prior year, the income, expense and cash flows from Black Ridge Acquisition Corp., a wholly-owned subsidiary formed on October 10, 2017, which was consolidated as a variable interest entity through August 9, 2019, the date that BRAC completed a business combination with Allied Esports Entertainment, Inc. (“AESE”), were consolidated and have been retrospectively classified as discontinued operations. In addition, prior period investment in Allied Esports Entertainment, Inc. securities of $6,982,300 were reclassified from long term assets to current assets to conform to current period presentation. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Environmental Liabilities The Company was formerly a direct owner of assets in the oil and gas industry. Oil and gas companies are subject, by their nature, to environmental hazard and clean-up costs. At this time, management knows of no substantial losses from environmental accidents or events which would have a material effect on the Company. Cash in Excess of FDIC Limits The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC) up to $250,000 and $500,000, respectively, under current regulations. The Company didn’t have any cash in excess of SIPC insured limits at September 30, 2020, and has not experienced any losses in such accounts. Income Taxes The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not. Basic and Diluted Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants and restricted stock. The number of potential common shares outstanding relating to stock options, warrants and restricted stock is computed using the treasury stock method. The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and nine months ended September 30, 2020 and 2019 are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Weighted average common shares outstanding – basic 1,600,424 1,600,424 1,600,424 1,600,424 Plus: Potentially dilutive common shares: Common stock warrants – 817 – 913 Weighted average common shares outstanding – diluted 1,600,424 1,601,241 1,600,424 1,601,337 For the three and nine months ended September 30, 2020, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. Stock options and warrants excluded from the calculation of diluted EPS because their effect was anti-dilutive were 35,488 three and nine months ended September 30, 2019. Fair Value of Financial Instruments Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company had no items that required fair value measurement on a recurring basis. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of three to seven years. Expenditures for replacements, renewals, and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Long-lived assets are evaluated for impairment to determine if current circumstances and market conditions indicate the carrying amount may not be recoverable. Depreciation expense was $1,030 and $754 for the nine months ended September 30, 2020 and 2019, respectively. Revenue Recognition The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognized revenue from management services through our previously consolidated Special Purpose Acquisition Company (“SPAC”), Black Ridge Acquisition Corp. until December 31, 2019. Revenue was primarily generated from BRAC in the form of management services performed within the state of Minnesota on a fixed fee basis. Revenue from the performance of those services was recognized upon completion of the services, at which time the services were delivered to the customer, and collectability of the fee was reasonably assured. We typically required payment within thirty days of the completion of services. Management estimates an allowance for doubtful accounts based on the aging of its receivables. Stock-Based Compensation The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 2018-07 (ASC 2018-07). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance. Stock-based compensation was $393,831 and $83,705, consisting entirely of expenses related to common stock options issued for services for the nine months ended September 30, 2020 and 2019, respectively, using the Black-Scholes options pricing model and an effective term of 6 to 6.5 years based on the weighted average of the vesting periods and the stated term of the option grants and the discount rate on 5 to 7 year U.S. Treasury securities at the grant date. In addition, $377,440 of expenses related to the amortization of warrants issued in consideration of personal guarantees provided for debt financing for the nine months ended September 30, 2020, using the Black-Scholes options pricing model and an effective term of 5 years based on the weighted average of the vesting periods and the stated term of the warrant grants and the discount rate on 5 year U.S. Treasury securities at the grant date were recognized as interest expense for the nine months ended September 30, 2020. Uncertain Tax Positions In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Various taxing authorities may periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. Black Ridge Oil & Gas, Inc. has not yet undergone an examination by any taxing authorities. The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed below, management believes there have been no developments to recently issued accounting standards, including expected dates of adoption and estimated effects on our financial statements, from those disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2019. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases |
3. Going Concern
3. Going Concern | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 3 – Going Concern As shown in the accompanying financial statements, as of September 30, 2020, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $35,778,400. As of September 30, 2020, the Company’s cash on hand may not be sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is currently seeking sources of capital to fund the requirements of the Asset Purchase Agreement. The Company intends to sell its AESE shares to continue as a going concern, however, there can be no assurance the share price will be sufficient to sustain operations, therefore the Company may be dependent upon its ability to secure equity and/or debt financing and there are also no assurances that the Company will be successful; therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. |
4. Related Party
4. Related Party | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party | Note 4 – Related Party Management Incentive Plan On March 1, 2018, the Board of Directors (the “Board”) of the Company approved and adopted the Black Ridge Gas, Inc. 2018 Management Incentive Plan (the “Plan”) and the form of 2018 Management Incentive Plan Award Agreement (the “Award Agreement”). In connection with the approval of the Plan and Award Agreement, the Board approved the issuance of awards (the “Awards”) to certain individuals including officers and directors (the “Grantees”), representing a percentage of the shares of BRAC held by the Company as of the date of closing of a business combination for the acquisition of a target business as described in the BRAC prospectus dated October 4, 2017, as follows: Percentage of BRAC Shares Owned by the Name Company Granted to the Grantee Bradley Berman 1.6% Lyle Berman 1.6% Benjamin Oehler 1.6% Joe Lahti 1.6% Kenneth DeCubellis 4.0% Michael Eisele 2.8% James Moe 2.1% Following the AESE merger on August 9, 2019, the Company owned 2,685,500 shares of AESE common stock and 505,000 warrants to purchase AESE (NASDAQ: AESEW). During the nine months ending September 30, 2020, the Company sold some of these securities, resulting in gross proceeds of $1,157,076, consisting of 368,870 shares of common stock for total proceeds of $1,083,408, and the sale of warrants to purchase 505,000 shares for total proceeds of $73,668. The Company also distributed 537,101 Sponsor Shares on August 9, 2020 to employees and directors under the 2018 Management Incentive Plan. Employees and directors were required to remain in their positions for a one-year period from the AESE merger, with certain exceptions, to receive the granted shares. The AESE Plan Shares had a fair market value of $1,133,281 on August 10, 2020, when the shares were distributed. The Company recognized $1,396,460 of compensation expense related to the Plan during the year ended December 31, 2019. For the nine months ended September 30, 2020, the Company recognized a gain of $263,179 related to the reduction in the value of the shares to be paid to employees on August 10, 2020, which was offset against the Company’s loss on the investment in AESE shares due to changes in the AESE market price between December 31, 2019 and September 30, 2020. Lease Agreement Upon closing of the Asset Purchase Agreement, the Company assumed the Seller’s obligations under a real property lease for its facility in Irving, Texas under which an entity owned entirely by Ira Goldfarb is the landlord. |
5. Fair Value of Financial Inst
5. Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note 5 – Fair Value of Financial Instruments Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value. The Company has cash and cash equivalents and a revolving credit facility that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability. The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of September 30, 2020 and December 31, 2019: Fair Value Measurements at September 30, 2020 Level 1 Level 2 Level 3 Assets Cash $ 417,109 $ – $ – Investment in Allied Esports Entertainment, Inc. securities 2,242,207 – – Total assets 2,659,316 – – Liabilities Notes payable – (262,925 ) – Total liabilities – (262,925 ) – $ 2,659,316 $ (262,925 ) $ – Fair Value Measurements at December 31, 2019 Level 1 Level 2 Level 3 Assets Cash $ 108,756 $ – $ – Investment in Allied Esports Entertainment, Inc. 6,982,300 – – Total assets 7,091,056 – – Liabilities None – – – Total liabilities – – – $ 7,091,056 $ – $ – There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the nine months ended September 30, 2020. |
6. Prepaid Expenses
6. Prepaid Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses | Note 6 – Prepaid Expenses Prepaid expenses consist of the following: September 30, December 31, 2020 2019 Prepaid insurance costs $ 3,185 $ 21,090 Prepaid employee benefits 8,082 11,587 Prepaid office and other costs 14,417 14,474 Total prepaid expenses $ 25,684 $ 47,151 |
7. Property and Equipment
7. Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property and equipment: | |
Property and Equipment | Note 7 – Property and Equipment Property and equipment at September 30, 2020 and December 31, 2019, consisted of the following: September 30, December 31, 2020 2019 Property and equipment $ – $ 134,202 Less: Accumulated depreciation and amortization – (127,803 ) Total property and equipment, net $ – $ 6,399 On September 30, 2020, the Company disposed of computer equipment no longer in service. No proceeds were received on the disposal of the equipment, resulting in a loss on disposal of fixed assets of $5,369, which represented the net book value at the time of disposal. The Company recognized depreciation expense of $1,030 and $754 for the nine-month periods ended September 30, 2020 and 2019, respectively. |
8. Investments in Allied Esport
8. Investments in Allied Esports Entertainment, Inc. | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Allied Esports Entertainment, Inc. | Note 8 – Investment in Allied Esports Entertainment, Inc. Following the close of BRAC’s merger, the Company retained 2,685,500 shares of Allied Esports Entertainment Inc. (NASDAQ: AESE) common stock with a value, based on the closing stock of $4.45 on the merger, of $11,950,475, and tradeable warrants to purchase 505,000 shares of AESE (NASDAQ: AESEW) (“Sponsor Warrants”), of which the Company currently owns 1,779,529 shares, after selling 368,870 shares for total proceeds of $1,157,076, selling warrants to purchase 505,000 Sponsor Warrants for total proceeds of $73,668, and distributing 537,101 Sponsor Shares on August 10, 2020 to employees and directors under the 2018 Management Incentive Plan. As noted in Note 4 - Related Party Transactions, 20% or 537,101, of the shares were distributed to employees, officers and directors one year from the date of the merger, or on August 10, 2020. After the distribution and recent sales, the Company still holds 1,799,529 shares of AESE common stock. As of September 30, 2020, the market value of the Company’s investment in AESE’s common stock was $2,242,207, based on the closing stock price of $1.26 per share, resulting in gains and losses on our investment in securities, as follows: Net loss on investment in Allied Esports Entertainment, Inc. securities for the nine months ended September 30, 2020 $ (2,186,557 ) Less: Net gains and losses recognized during 2020 on equity securities sold during the period (198,012 ) Unrealized losses recognized during 2020 on equity securities still held at September 30, 2020 $ (2,384,569 ) During the third quarter of 2020, the Company sold 51,902 of these shares for total proceeds of $120,596, resulting in a loss on investment of $14,352. During the second quarter of 2020, the Company sold 316,968 of these shares for total proceeds of $962,812, resulting in a gain on investment of $363,813. In accordance with a brokerage account agreement with RBC Capital Markets, LLC, 500,000 of these shares were used as collateral for a $700,000 promissory note pursuant to a commercial pledge and security agreement, dated March 10, 2020, described below, which was subsequently repaid. Under this standard brokerage agreement, the Company will be able to borrow funds secured by the value of the AESE shares pursuant to a standard margin account arrangement. |
9. Notes Payable
9. Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 9 – Notes Payable Notes payable consists of the following at September 30, 2020 and December 31, 2019, respectively: September 30, December 31, 2020 2019 On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2021. All remaining principal and accrued interest is due and payable on June 16, 2050. The EIDL Note may be repaid at any time without penalty. $ 150,000 $ – On April 24, 2020, the Company entered into a loan agreement with Kensington Bank (“Kensington”), as lender (the “Loan Agreement”) encompassing a $112,925 Promissory Note issued to Kensington (the “PPP Note”) pursuant to Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides loans to qualifying businesses and is administered by the U.S. Small Business Administration (the “SBA”). The PPP Note bears interest at 1.00% per annum, with interest payable monthly beginning November 24, 2020, and principal due in full on April 24, 2022. The PPP Note may be repaid at any time without penalty. Under the Payroll Protection Program, the Company will be eligible for loan forgiveness up to the full amount of the PPP Note and any accrued interest. The forgiveness amount will be equal to the amount that the Company spends during the 24-week period beginning April 24, 2020 on payroll costs, payment of rent on any leases in force prior to February 15, 2020 and payment on any utility for which service began before February 15, 2020. The maximum amount of loan forgiveness for non-payroll expenses is 40% of the amount of the PPP Note. No assurance is provided that the Company will obtain forgiveness under the PPP Note in whole or in part. 112,925 – On November 25, 2019, the Company entered into a credit account agreement (“Margin Account”) with RBC Capital Markets, LLC (“RBC”). The Margin Account enables the Company to borrow against the Company’s AESE shares that are held in an account with RBC. The advances received on margin bear interest at rates of between 1.00% and 2.75% over the Base Lending Rate, depending on the average outstanding debit balance. The Base Lending Rate is internally determined by RBC using Broker Call, Prime Rate as determined by commercial banks utilized by RBC CM, Fed Funds, RBC CM’s cost of funds, and other commercially recognized rates of interest. The margin loans are collateralized by the underlying AESE shares. A total of $122,100 was borrowed on the Margin Account over various dates between January 29, 2020 and March 6, 2020. The outstanding balance was repaid in full on, or about, March 12, 2020 out of the proceeds of the loan from Cadence Bank, described below. – – On March 12, 2020, the Company entered into a business loan agreement with Cadence Bank, N.A. (“Cadence”), as lender encompassing a $700,000 Promissory Note issued to Cadence (the “Note”), a Security Agreement by the Company in favor of Cadence and limited commercial guarantees by the Company’s Chief Executive Officer and Interim Chief Financial Officer, who is one in the same, and members of the Company’s Board of Directors (the “Guarantors”) (collectively, the “Cadence Loan”). The Note carried interest at a rate of 0.50 percentage points over the prime rate, as published in the Wall Street Journal, payable monthly, and was due on March 9, 2021. The Note could be repaid at any time without penalty. The Note was secured by all of the Company’s rights, title and interests in and to 500,000 shares of the common stock of Allied Esports Entertainment Inc. (NASDAQ: AESE) currently owned by the Company and held in the Company’s brokerage account with RBC Capital Markets, LLC. On March 26, 2020, the Company subsequently entered into a separate letter agreement with the Guarantors (the “Letter Agreement”), which provides that if the Company defaults or fails to make any payment due under the Cadence Loan and the Guarantors are required to make payment to Cadence pursuant to the Guarantees, then the Company agrees to issue additional equity interests or rights to Guarantors reflecting ninety-five percent (95%) of the outstanding equity of the Company at the time of such default to participating Guarantors who have made the payments to Cadence. All equity issuances will be subject to any third party or shareholder approvals required at the time of issuance. A total of $417,000 was advanced on the loan and subsequently repaid in full on June 30, 2020. – – Total notes payable 262,925 – Less unamortized derivative discounts: – – Notes payable 262,925 – Less: current maturities – – Notes payable, less current maturities $ 262,925 $ – The Company recorded total discounts of $377,440, consisting of debt discounts on warrants granted to four officers and directors for warrants issued in consideration of personal guarantees provided for debt financing incurred during the nine months ended September 30, 2020. The discounts were amortized to stock-based compensation expense over the term of the note, until repayment, using the straight-line method, which closely approximated the effective interest method. The Company recorded $377,440 of stock-based compensation expense pursuant to the amortization of note discounts during the nine months ended September 30, 2020. The Company recognized $384,456 of interest expense, consisting of $7,016 of interest and $377,440 of stock-based warrant expense pursuant to the amortization of the debt discount on the business loans during the nine months ended September 30, 2020. |
10. Changes in Stockholders' Eq
10. Changes in Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Changes in Stockholders' Equity | Note 10 – Changes in Stockholders’ Equity Reverse Stock Split On February 21, 2020, the Company effected a 1-for-300 reverse stock split (the “Reverse Stock Split”). No fractional shares were issued. Instead, the Company issued the following to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split: · Stockholders owning 300 or more shares of Common Stock received (1) one share of Common Stock for every 300 shares owned and (2) cash in lieu of fractional shares upon the surrender of such stockholder’s shares; · Stockholders owning between 25 and 300 shares of Common Stock had their ownership of shares of Common Stock rounded up to one share; and · Stockholders owning fewer than 25 shares of Common Stock received cash in lieu of fractional shares upon the surrender of such stockholders’ shares and no longer own shares of Common Stock. Any cash payment in lieu of fractional shares were based on the volume weighted average of the closing sales prices of the Company’s Common Stock on the OTCQB operated by OTC Markets Group Inc. (the “OTCQB”) during regular trading hours for the five consecutive trading days immediately preceding the Effective Date, which was $0.018 per share prior to the effects of the reverse stock split. The Company was authorized to issue 500,000,000 shares of common stock prior to the Reverse Stock Split, which remains unaffected. The Reverse Stock Split did not have any effect on the stated par value of the common stock, or the Company’s authorized preferred stock. Unless otherwise stated, all share and per share information in this Interim Report has been retroactively adjusted to reflect the Reverse Stock Split. Preferred Stock The Company has 20,000,000 authorized shares of $0.001 par value preferred stock. No shares have been issued to date. Common Stock The Company has 500,000,000 authorized shares of $0.001 par value common stock. As of September 30, 2020, and December 31, 2019, a total of 1,600,424 shares of common stock have been issued. |
11. Options
11. Options | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Options | Note 11 – Options The 2020 Equity Plan was approved by written consent of a majority of shareholders of record as of November 12, 2019 and adopted by the Board on December 5, 2019, as provided in the definitive information statement filed with Securities and Exchange Commission on January 10, 2020 (the “DEF 14C”). The description of the 2020 Equity Plan is qualified in its entirety by the text of the 2020 Equity Plan, a copy of which was attached as Annex C to the DEF 14C. Outstanding Options Options to purchase an aggregate total of 273,871 shares of common stock at a weighted average strike price of $16.32, exercisable over a weighted average life of 8.75 years were outstanding as of September 30, 2020. Options Granted On February 26, 2020, the Company’s Board of Directors granted an aggregate amount of 240,000 stock options pursuant to the 2020 Equity Plan to purchase shares of the Company’s common stock to several officers, directors, and employees at an exercise price of $5.41 per share, which represents the closing price of the Company’s shares on the OTCQB marketplace on February 20, 2020. The officers and directors receiving grants and the amounts of such grants were as follows: Stock Option Name and Title Shares Granted Ken DeCubellis, Chief Executive Officer and Interim Chief Financial Officer 60,377 Michael Eisele, Chief Operating Officer 42,264 Bradley Berman, Chairman of the Board and Director 24,151 Joseph Lahti, Director 24,151 Benjamin Oehler, Director 24,151 Lyle Berman, Director 24,151 Total: 199,245 All of the stock options granted under the 2020 Equity Plan presented in the table above will vest in five equal installments, commencing one year from the date of grant on February 26, 2021, and continuing for the next four anniversaries thereof until fully vested, with the exception of 83,019 options that were awarded to four employees, whose vesting periods were accelerated to be fully vested as of September 30, 2019, pursuant to severance agreements. No options were granted during the nine months ended September 30, 2019. The Company recognized a total of $393,831, and $83,705 of compensation expense during the nine months ended September 30, 2020 and 2019, respectively, related to common stock options issued to Employees and Directors that are being amortized over the implied service term, or vesting period, of the options. The remaining unamortized balance of these options is $517,070 as of September 30, 2020. Options Exercised No options were exercised during the nine months ended September 30, 2020 and 2019. Options Forfeited A total of 333 options with a weighted average exercise price of $90, and 457 options with a weighted average exercise price of $9.83 expired and were forfeited during the nine months ended September 30, 2020 and 2019, respectively. |
12. Warrants
12. Warrants | 9 Months Ended |
Sep. 30, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | Note 12 – Warrants Outstanding Warrants Warrants to purchase an aggregate total of 106,300 shares of common stock at a $3.99 strike price, exercisable over a weighted average life of 9.36 years were outstanding as of September 30, 2020. Warrants Granted In consideration for four officers and director’s willingness to serve as guarantors of the Cadence Loan, the Company issued warrants to each of the Guarantors (the “Guarantor Warrants”) for the purchase of the Company’s common stock on March 12, 2020. The Guarantor Warrants entitle each Guarantor to purchase 26,250 shares of the Company's common stock (the “Warrant Shares”) at an exercise price of $4.00 per share. The Guarantor Warrants expire on March 12, 2030. No warrants were granted during the comparative nine months ended September 30, 2019. The officers and directors receiving grants and the amounts of such grants were as follows: Stock Warrant Name and Title Shares Granted Ken DeCubellis, Chief Executive Officer and Interim Chief Financial Officer 26,250 Bradley Berman, Chairman of the Board and Director 26,250 Lyle Berman, Director 26,250 Benjamin Oehler, Director 26,250 Total: 105,000 Warrants Exercised No warrants were exercised during the nine months ended September 30, 2020 and 2019. |
13. Income Taxes
13. Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13 – Income Taxes The Company accounts for income taxes under ASC Topic 740, Income Taxes, Losses incurred during the period from April 9, 2011 (inception) to September 30, 2020 could be used to offset future tax liabilities. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. As of September 30, 2020, net deferred tax assets were $7,013,057, with no deferred tax liability, primarily related to net operating loss carryforwards. A valuation allowance of approximately $7,013,057 was applied to the net deferred tax assets. Therefore, BROG has no tax expense for 2020 to date. In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on, or before September 30, 2020. |
14. Commitments
14. Commitments | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 14 – Commitments The Company from time to time may be involved in various inquiries, administrative proceedings and litigation relating to matters arising in the normal course of business. The Company is not aware of any inquiries or administrative proceedings and is not currently a defendant in any material litigation and is not aware of any threatened litigation that could have a material effect on the Company. The Company periodically maintains cash balances at banks in excess of federally insured amounts. The extent of loss, if any, to be sustained as a result of any future failure of a bank or other financial institution is not subject to estimation at this time. |
15. Subsequent Events
15. Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 – Subsequent Events The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued. Asset Purchase On October 1, 2020, the Company completed its acquisition of S-FDF, LLC, a Texas limited liability company, pursuant to an Asset Purchase Agreement, between the Company and the Seller, dated June 9, 2020, as subsequently amended effective October 1, 2020. In connection with the closing of the Asset Purchase Agreement, the Company acquired $2.5 million in cash and certain assets and agreements related to the Seller’s freeze-dried fruits and vegetables business for human consumption and entered into certain employment and registration rights agreements. The Company did not assume any liabilities of Seller or any liabilities, liens, or encumbrances pertaining to or encumbering the Purchased Assets except for those related to agreements or arrangements specified in the Asset Purchase Agreement. The Seller transferred the Purchased Assets to the Company in exchange for the issuance of 1,120,000 shares of the Company’s common stock to the Seller, representing 41.18% of the Company’s issued and outstanding common stock. The number of Seller Shares to be issued is subject to adjustment, as specified in the Asset Purchase Agreement, based on the extent to which the amount of cash proceeds held by the Company, as derived from the sale of the Company’s holdings of Sponsor Shares, are less than $5 million or greater than $6 million on the date specified in the Asset Purchase Agreement. The Final Determination Date will be the first anniversary of the closing of the Asset Purchase Agreement and the Company has contributed $4 million to the business in the form of proceeds from either the sale of Sponsor Shares after October 1, 2020, proceeds from a financing secured by the AESE Shares after June 9, 2020, proceeds from an equity or convertible debt financing, legal fees paid in connection with the Asset Purchase Agreement, expenses incurred by the Company after August 1, 2020 (except for severance related to change in control payments made to the Company's employees), and the Company's cash as of October 1, 2020 (the “Company Contribution”). If the Company Contribution is less than $4 million on January 1, 2021, then the Final Determination Date will be January 1, 2021 Pursuant to its obligations under the Asset Purchase Agreement, on the Closing Date the Company, (a) created three new seats on the Company’s Board of Directors and appointed the Seller’s principals, Ira Goldfarb and Claudia Goldfarb, and a third person designated by the Goldfarbs, Greg Creed, as directors, (b) entered into employment agreements with Ira Goldfarb and Claudia Goldfarb, (c) delivered a registration rights agreement with respect to the Seller Shares and any shares of common stock delivered as part of the employment compensation for Ira Goldfarb or Claudia Goldfarb, and (d) amended the Company’s 2020 Stock Incentive Plan to increase the number of shares of common stock reserved thereunder. At closing, the Company also assumed the Seller’s obligations under a real property lease for its facility in Irving, Texas under which an entity owned entirely by Ira Goldfarb is the landlord. Adoption of Non-Employee Director Compensation Plan On October 1, 2020, the Company adopted a Non-Employee Director Compensation Plan. Pursuant to the Plan, each non-employee director will receive annual compensation of $25,000 to be paid in cash or common stock, at the Company’s election, each October 1, beginning with October 1, 2020. On October 1, 2020, the Company issued 4,167 shares to Mr. Bradley Berman, Mr. Lyle Berman, Mr. Joseph Lahti, Mr. Benjamin Oehler, and Mr. Creed under the Non-Employee Director Compensation Plan. In addition, the plan provides for annual compensation of $15,000 to be paid in cash or common stock, at the Company's election, each October 1, beginning with October 1, 2020, to Board committee chairs. On October 1, 2020, the Company issued 2,500 shares to Mr. Benjamin Oehler as its Audit Committee Chair. Amendment to 2020 Stock Incentive Plan As a condition to closing on the Asset Purchase Agreement, the Board approved an increase in the number of shares of common stock reserved under the 2020 Stock Incentive Plan adopted in January 2020, from 320,000 shares to a total of 514,150 shares. The increase remains subject to shareholder approval, to be provided, if at all, by October 1, 2021. Option Grants On October 1, 2020, Mr. Creed was granted options to purchase 24,151 shares of the Company’s common stock at an exercise price of $6.00 per share, which represented the closing price of the Company’s shares on the OTCQB marketplace on October 1, 2020. These options will vest 60% as of January 1, 2024 and 20% each anniversary thereafter until fully vested. On October 2, 2020, the Company’s Board of Directors also granted an aggregate amount of 115,250 stock options pursuant to the 2020 Equity Plan to purchase shares of the Company’s common stock to several officers, directors, and employees at an exercise price of $5.25 per share, which represents the closing price of the Company’s shares on the OTCQB marketplace on October 2, 2020. The options are exercisable over a ten-year term, and vest 60% on the 3 rd Stock Option Name and Title Shares Granted Ira Goldfarb, Chairman of the Board and Director 50,000 Claudia Goldfarb, Chief Executive Officer 50,000 Total: 100,000 Management Changes Ken DeCubellis stepped down from his roles as the Company’s Chief Executive Officer and interim Chief Financial Officer on September 30, 2020, and will serve as a transition resource employee and assist with the integration of the Seller’s freeze-dried fruit business into the Company's existing operations through December 15, 2020, or the earlier termination of his employment. Effective October 1, 2020, in connection with closing of the Asset Purchase Agreement, Ira Goldfarb was appointed as the Company’s Executive Chairman and Chairman of the Board, and Claudia Goldfarb was appointed as the Company’s Chief Executive Officer. Effective October 5, 2020, Brad Burke was appointed and agreed to serve on an interim basis as the Company’s Chief Financial Officer. |
2. Basis of Presentation and _2
2. Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Reclassifications | Reclassifications In the prior year, the income, expense and cash flows from Black Ridge Acquisition Corp., a wholly-owned subsidiary formed on October 10, 2017, which was consolidated as a variable interest entity through August 9, 2019, the date that BRAC completed a business combination with Allied Esports Entertainment, Inc. (“AESE”), were consolidated and have been retrospectively classified as discontinued operations. In addition, prior period investment in Allied Esports Entertainment, Inc. securities of $6,982,300 were reclassified from long term assets to current assets to conform to current period presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Environmental Liabilities | Environmental Liabilities The Company was formerly a direct owner of assets in the oil and gas industry. Oil and gas companies are subject, by their nature, to environmental hazard and clean-up costs. At this time, management knows of no substantial losses from environmental accidents or events which would have a material effect on the Company. |
Cash in Excess of FDIC Insured Limits | Cash in Excess of FDIC Limits The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC) up to $250,000 and $500,000, respectively, under current regulations. The Company didn’t have any cash in excess of SIPC insured limits at September 30, 2020, and has not experienced any losses in such accounts. |
Income Taxes | Income Taxes The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not. |
Basic and Diluted Earnings (Loss) Per Share | Basic and Diluted Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants and restricted stock. The number of potential common shares outstanding relating to stock options, warrants and restricted stock is computed using the treasury stock method. The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and nine months ended September 30, 2020 and 2019 are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Weighted average common shares outstanding – basic 1,600,424 1,600,424 1,600,424 1,600,424 Plus: Potentially dilutive common shares: Common stock warrants – 817 – 913 Weighted average common shares outstanding – diluted 1,600,424 1,601,241 1,600,424 1,601,337 For the three and nine months ended September 30, 2020, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. Stock options and warrants excluded from the calculation of diluted EPS because their effect was anti-dilutive were 35,488 three and nine months ended September 30, 2019. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company had no items that required fair value measurement on a recurring basis. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of three to seven years. Expenditures for replacements, renewals, and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Long-lived assets are evaluated for impairment to determine if current circumstances and market conditions indicate the carrying amount may not be recoverable. Depreciation expense was $1,030 and $754 for the nine months ended September 30, 2020 and 2019, respectively. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognized revenue from management services through our previously consolidated Special Purpose Acquisition Company (“SPAC”), Black Ridge Acquisition Corp. until December 31, 2019. Revenue was primarily generated from BRAC in the form of management services performed within the state of Minnesota on a fixed fee basis. Revenue from the performance of those services was recognized upon completion of the services, at which time the services were delivered to the customer, and collectability of the fee was reasonably assured. We typically required payment within thirty days of the completion of services. Management estimates an allowance for doubtful accounts based on the aging of its receivables. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 2018-07 (ASC 2018-07). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance. Stock-based compensation was $393,831 and $83,705, consisting entirely of expenses related to common stock options issued for services for the nine months ended September 30, 2020 and 2019, respectively, using the Black-Scholes options pricing model and an effective term of 6 to 6.5 years based on the weighted average of the vesting periods and the stated term of the option grants and the discount rate on 5 to 7 year U.S. Treasury securities at the grant date. In addition, $377,440 of expenses related to the amortization of warrants issued in consideration of personal guarantees provided for debt financing for the nine months ended September 30, 2020, using the Black-Scholes options pricing model and an effective term of 5 years based on the weighted average of the vesting periods and the stated term of the warrant grants and the discount rate on 5 year U.S. Treasury securities at the grant date were recognized as interest expense for the nine months ended September 30, 2020. |
Uncertain Tax Positions | Uncertain Tax Positions In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Various taxing authorities may periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. Black Ridge Oil & Gas, Inc. has not yet undergone an examination by any taxing authorities. The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed below, management believes there have been no developments to recently issued accounting standards, including expected dates of adoption and estimated effects on our financial statements, from those disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2019. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases |
2. Basis of Presentation and _3
2. Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Basis Of Presentation And Significant Accounting Policies | |
Schedule of weighted average common shares | The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and nine months ended September 30, 2020 and 2019 are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Weighted average common shares outstanding – basic 1,600,424 1,600,424 1,600,424 1,600,424 Plus: Potentially dilutive common shares: Common stock warrants – 817 – 913 Weighted average common shares outstanding – diluted 1,600,424 1,601,241 1,600,424 1,601,337 |
4. Related Party (Tables)
4. Related Party (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Percentage of BRAC Shares Owned by the Company Granted to the Grantee | In connection with the approval of the Plan and Award Agreement, the Board approved the issuance of awards (the “Awards”) to certain individuals including officers and directors (the “Grantees”), representing a percentage of the shares of BRAC held by the Company as of the date of closing of a business combination for the acquisition of a target business as described in the BRAC prospectus dated October 4, 2017, as follows: Percentage of BRAC Shares Owned by the Name Company Granted to the Grantee Bradley Berman 1.6% Lyle Berman 1.6% Benjamin Oehler 1.6% Joe Lahti 1.6% Kenneth DeCubellis 4.0% Michael Eisele 2.8% James Moe 2.1% |
5. Fair Value of Financial In_2
5. Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Valuation of financial instruments at fair value | The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of September 30, 2020 and December 31, 2019: Fair Value Measurements at September 30, 2020 Level 1 Level 2 Level 3 Assets Cash $ 417,109 $ – $ – Investment in Allied Esports Entertainment, Inc. securities 2,242,207 – – Total assets 2,659,316 – – Liabilities Notes payable – (262,925 ) – Total liabilities – (262,925 ) – $ 2,659,316 $ (262,925 ) $ – Fair Value Measurements at December 31, 2019 Level 1 Level 2 Level 3 Assets Cash $ 108,756 $ – $ – Investment in Allied Esports Entertainment, Inc. 6,982,300 – – Total assets 7,091,056 – – Liabilities None – – – Total liabilities – – – $ 7,091,056 $ – $ – |
6. Prepaid Expenses (Tables)
6. Prepaid Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of prepaid expenses | Prepaid expenses consist of the following: September 30, December 31, 2020 2019 Prepaid insurance costs $ 3,185 $ 21,090 Prepaid employee benefits 8,082 11,587 Prepaid office and other costs 14,417 14,474 Total prepaid expenses $ 25,684 $ 47,151 |
7. Property and Equipment (Tabl
7. Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property and equipment: | |
Property and equipment | Property and equipment at September 30, 2020 and December 31, 2019, consisted of the following: September 30, December 31, 2020 2019 Property and equipment $ – $ 134,202 Less: Accumulated depreciation and amortization – (127,803 ) Total property and equipment, net $ – $ 6,399 |
8. Investments in Allied Espo_2
8. Investments in Allied Esports Entertainment, Inc. (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments In Allied Esports Entertainment Inc. | |
Schedule of gains and losses on investment | As of September 30, 2020, the market value of the Company’s investment in AESE’s common stock was $2,242,207, based on the closing stock price of $1.26 per share, resulting in gains and losses on our investment in securities, as follows: Net loss on investment in Allied Esports Entertainment, Inc. securities for the nine months ended September 30, 2020 $ (2,186,557 ) Less: Net gains and losses recognized during 2020 on equity securities sold during the period (198,012 ) Unrealized losses recognized during 2020 on equity securities still held at September 30, 2020 $ (2,384,569 ) |
9. Notes Payable (Tables)
9. Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Notes payable | Notes payable consists of the following at September 30, 2020 and December 31, 2019, respectively: September 30, December 31, 2020 2019 On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2021. All remaining principal and accrued interest is due and payable on June 16, 2050. The EIDL Note may be repaid at any time without penalty. $ 150,000 $ – On April 24, 2020, the Company entered into a loan agreement with Kensington Bank (“Kensington”), as lender (the “Loan Agreement”) encompassing a $112,925 Promissory Note issued to Kensington (the “PPP Note”) pursuant to Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides loans to qualifying businesses and is administered by the U.S. Small Business Administration (the “SBA”). The PPP Note bears interest at 1.00% per annum, with interest payable monthly beginning November 24, 2020, and principal due in full on April 24, 2022. The PPP Note may be repaid at any time without penalty. Under the Payroll Protection Program, the Company will be eligible for loan forgiveness up to the full amount of the PPP Note and any accrued interest. The forgiveness amount will be equal to the amount that the Company spends during the 24-week period beginning April 24, 2020 on payroll costs, payment of rent on any leases in force prior to February 15, 2020 and payment on any utility for which service began before February 15, 2020. The maximum amount of loan forgiveness for non-payroll expenses is 40% of the amount of the PPP Note. No assurance is provided that the Company will obtain forgiveness under the PPP Note in whole or in part. 112,925 – On November 25, 2019, the Company entered into a credit account agreement (“Margin Account”) with RBC Capital Markets, LLC (“RBC”). The Margin Account enables the Company to borrow against the Company’s AESE shares that are held in an account with RBC. The advances received on margin bear interest at rates of between 1.00% and 2.75% over the Base Lending Rate, depending on the average outstanding debit balance. The Base Lending Rate is internally determined by RBC using Broker Call, Prime Rate as determined by commercial banks utilized by RBC CM, Fed Funds, RBC CM’s cost of funds, and other commercially recognized rates of interest. The margin loans are collateralized by the underlying AESE shares. A total of $122,100 was borrowed on the Margin Account over various dates between January 29, 2020 and March 6, 2020. The outstanding balance was repaid in full on, or about, March 12, 2020 out of the proceeds of the loan from Cadence Bank, described below. – – On March 12, 2020, the Company entered into a business loan agreement with Cadence Bank, N.A. (“Cadence”), as lender encompassing a $700,000 Promissory Note issued to Cadence (the “Note”), a Security Agreement by the Company in favor of Cadence and limited commercial guarantees by the Company’s Chief Executive Officer and Interim Chief Financial Officer, who is one in the same, and members of the Company’s Board of Directors (the “Guarantors”) (collectively, the “Cadence Loan”). The Note carried interest at a rate of 0.50 percentage points over the prime rate, as published in the Wall Street Journal, payable monthly, and was due on March 9, 2021. The Note could be repaid at any time without penalty. The Note was secured by all of the Company’s rights, title and interests in and to 500,000 shares of the common stock of Allied Esports Entertainment Inc. (NASDAQ: AESE) currently owned by the Company and held in the Company’s brokerage account with RBC Capital Markets, LLC. On March 26, 2020, the Company subsequently entered into a separate letter agreement with the Guarantors (the “Letter Agreement”), which provides that if the Company defaults or fails to make any payment due under the Cadence Loan and the Guarantors are required to make payment to Cadence pursuant to the Guarantees, then the Company agrees to issue additional equity interests or rights to Guarantors reflecting ninety-five percent (95%) of the outstanding equity of the Company at the time of such default to participating Guarantors who have made the payments to Cadence. All equity issuances will be subject to any third party or shareholder approvals required at the time of issuance. A total of $417,000 was advanced on the loan and subsequently repaid in full on June 30, 2020. – – Total notes payable 262,925 – Less unamortized derivative discounts: – – Notes payable 262,925 – Less: current maturities – – Notes payable, less current maturities $ 262,925 $ – |
11. Options (Tables)
11. Options (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of option granted to officers and directors | The officers and directors receiving grants and the amounts of such grants were as follows: Stock Option Name and Title Shares Granted Ken DeCubellis, Chief Executive Officer and Interim Chief Financial Officer 60,377 Michael Eisele, Chief Operating Officer 42,264 Bradley Berman, Chairman of the Board and Director 24,151 Joseph Lahti, Director 24,151 Benjamin Oehler, Director 24,151 Lyle Berman, Director 24,151 Total: 199,245 |
12. Warrants (Tables)
12. Warrants (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of warrants granted to officers and directors | The officers and directors receiving grants and the amounts of such grants were as follows: Stock Warrant Name and Title Shares Granted Ken DeCubellis, Chief Executive Officer and Interim Chief Financial Officer 26,250 Bradley Berman, Chairman of the Board and Director 26,250 Lyle Berman, Director 26,250 Benjamin Oehler, Director 26,250 Total: 105,000 |
1. Organization and Nature of_2
1. Organization and Nature of Business (Details Narrative) - USD ($) | 9 Months Ended | |||
Oct. 10, 2017 | Sep. 26, 2017 | Sep. 30, 2020 | Aug. 09, 2019 | |
AESE [Member] | AESE Common Stock [Member] | ||||
Investment shares owned | 1,779,529 | 2,685,500 | ||
AESE [Member] | Subject to distribution rights [Member] | ||||
Investment shares owned | 537,100 | |||
Equity Raise [Member] | ||||
Stock issued new, shares | 1,439,400 | |||
Proceeds from sale of equity | $ 5,051,675 | |||
Private Placement [Member] | BRAC [Member] | ||||
Payment for investment | $ 4,450,000 |
2. Basis of Presentation and _4
2. Basis of Presentation and Significant Accounting Policies (Details - Basic and Diluted Loss Per Share) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basis Of Presentation And Significant Accounting Policies Details Basic And Diluted Loss Per Share Abstract | ||||
Weighted average common shares outstanding - basic | 1,600,424 | 1,600,424 | 1,600,424 | 1,600,424 |
Plus potentially diluted common shares, Stocks and Warrants | 0 | 817 | 0 | 913 |
Weighted average common shares outstanding - fully diluted | 1,600,424 | 1,601,241 | 1,600,424 | 1,601,337 |
2. Basis of Presentation and _5
2. Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||||
Cash uninsured amount | $ 0 | $ 0 | |||
Investment in Allied Esports Entertainment, Inc. securities | 5,073,353 | 5,073,353 | $ 6,982,300 | ||
Depreciation expense | 1,030 | $ 754 | |||
Share based compensation | 393,831 | 83,705 | |||
Amortization of warrants | $ 0 | $ 377,440 | $ 0 | ||
Stock excluded from calculation of diluted EPS | 35,488 | 35,488 |
3. Going Concern (Details Narra
3. Going Concern (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (35,778,400) | $ (31,357,399) |
4. Related Party (Details-AESE
4. Related Party (Details-AESE Shares Owned by the Company Granted to the Grantee) - BRAC [Member] | Oct. 04, 2017 |
Mr. Bradley Berman [Member] | |
Percentage of AESE Shares Owned by the Company to be Granted to the Grantee | 1.60% |
Mr. Lyle Berman [Member] | |
Percentage of AESE Shares Owned by the Company to be Granted to the Grantee | 1.60% |
Mr. Benjamin Oehler [Member] | |
Percentage of AESE Shares Owned by the Company to be Granted to the Grantee | 1.60% |
Mr. Joe Lahti [Member] | |
Percentage of AESE Shares Owned by the Company to be Granted to the Grantee | 1.60% |
Mr. Kenneth DeCubellis [Member] | |
Percentage of AESE Shares Owned by the Company to be Granted to the Grantee | 4.00% |
Mr. Michael Eisele [Member] | |
Percentage of AESE Shares Owned by the Company to be Granted to the Grantee | 2.80% |
Mr. James Moe [Member] | |
Percentage of AESE Shares Owned by the Company to be Granted to the Grantee | 2.10% |
4. Related Party (Details Narra
4. Related Party (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Aug. 09, 2020 | Aug. 09, 2019 | |
Compensation expense | $ 393,831 | $ 83,705 | |||||
Proceeds from sale of investment shares | 1,157,076 | $ 0 | |||||
Plan and Award Agreement [Member] | |||||||
Compensation expense | $ 1,396,460 | ||||||
AESE [Member] | |||||||
Proceeds from sale of investment shares | 1,157,076 | ||||||
AESE [Member] | AESE Warrants [Member] | |||||||
Investment shares owned | 505,000 | ||||||
Proceeds from sale of investment shares | $ 73,668 | ||||||
Investment shares sold | 505,000 | ||||||
AESE [Member] | Committed Shares [Member] | |||||||
Realized gain on investment | $ 263,179 | ||||||
AESE [Member] | AESE Common Stock [Member] | |||||||
Investment shares owned | 1,779,529 | 1,779,529 | 2,685,500 | ||||
Fair value of investment | $ 2,242,207 | $ 2,242,207 | |||||
Proceeds from sale of investment shares | $ 120,596 | $ 962,812 | $ 1,083,408 | ||||
Investment shares sold | 51,902 | 316,968 | 368,870 | ||||
AESE [Member] | AESE Common Stock [Member] | Employees and Directors [Member] | |||||||
Fair value of investment | $ 1,133,281 | ||||||
Investment shares distributed | 537,101 |
5. Fair Value of Financial In_3
5. Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value Inputs Level 1 [Member] | ||
Assets | ||
Cash | $ 417,109 | $ 108,756 |
Investment in Allied Esports Entertainment, Inc. securities | 2,242,207 | 6,982,300 |
Fair value of assets | 2,659,316 | 7,091,056 |
Liabilities | ||
Notes payable | 0 | 0 |
Fair value of liabilities | 0 | 0 |
Fair value net assets and liablilties | 2,659,316 | 7,091,056 |
Fair Value, Inputs, Level 2 [Member] | ||
Assets | ||
Cash | 0 | 0 |
Investment in Allied Esports Entertainment, Inc. securities | 0 | 0 |
Fair value of assets | 0 | 0 |
Liabilities | ||
Notes payable | (262,925) | 0 |
Fair value of liabilities | (262,925) | 0 |
Fair value net assets and liablilties | (262,925) | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Assets | ||
Cash | 0 | 0 |
Investment in Allied Esports Entertainment, Inc. securities | 0 | 0 |
Fair value of assets | 0 | 0 |
Liabilities | ||
Notes payable | 0 | 0 |
Fair value of liabilities | 0 | 0 |
Fair value net assets and liablilties | $ 0 | $ 0 |
6. Prepaid Expenses (Details)
6. Prepaid Expenses (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance costs | $ 3,185 | $ 21,090 |
Prepaid employee benefits | 8,082 | 11,587 |
Prepaid office and other costs | 14,417 | 14,474 |
Total prepaid expenses | $ 25,684 | $ 47,151 |
7. Property and Equipment (Deta
7. Property and Equipment (Details-Property and equipment) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Property and equipment: | ||
Property and equipment | $ 0 | $ 134,202 |
Less: Accumulated depreciation and amortization | 0 | (127,803) |
Total property and equipment, net | $ 0 | $ 6,399 |
7. Property and Equipment (De_2
7. Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property and equipment: | ||||
Loss on disposal of fixed assets | $ (5,369) | $ 0 | $ (5,369) | $ 0 |
Depreciation expense | $ 1,030 | $ 754 |
8. Investments in Allied Espo_3
8. Investments in Allied Esports Entertainment, Inc. (Details - Gains and losses on investment ) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Investments In Allied Esports Entertainment Inc.Details Gains And Losses On Investment Abstract | |
Net loss on investment in Allied Esports Entertainment, Inc. securities for the nine months ended September 30, 2020 | $ (2,186,557) |
Less: Net gains and losses recognized during 2020 on equity securities sold during the period | (198,012) |
Unrealized losses recognized during 2020 on equity securities still held at September 30, 2020 | $ (2,384,569) |
8. Investments in Allied Espo_4
8. Investments in Allied Esports Entertainment, Inc. (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Aug. 09, 2019 | |
Proceeds from sale of investment shares | $ 1,157,076 | $ 0 | ||||
Investment in Allied Esports Entertainment, Inc. securities | $ 2,242,207 | 2,242,207 | $ 6,982,300 | |||
AESE [Member] | ||||||
Proceeds from sale of investment shares | $ 1,157,076 | |||||
AESE [Member] | AESE Common Stock [Member] | ||||||
Investment shares owned | 1,779,529 | 1,779,529 | 2,685,500 | |||
Investment shares owned, fair value | $ 2,242,207 | $ 2,242,207 | ||||
Investment shares sold | 51,902 | 316,968 | 368,870 | |||
Proceeds from sale of investment shares | $ 120,596 | $ 962,812 | $ 1,083,408 | |||
Realized gain (loss) on investment | $ (14,352) | $ 363,813 |
9. Notes Payable (Details)
9. Notes Payable (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Total notes payable | $ 262,925 | $ 0 |
Less unamortized derivative discounts: | 0 | 0 |
Notes payable | 262,925 | 0 |
Less: current maturities | 0 | 0 |
Notes payable, less current maturities | 262,925 | 0 |
Notes Payable 3 [Member] | ||
Total notes payable | 0 | 0 |
Notes Payable 4 [Member] | ||
Total notes payable | 0 | 0 |
Notes Payable 1 [Member] | ||
Total notes payable | 150,000 | 0 |
Notes Payable 2 [Member] | ||
Total notes payable | $ 112,925 | $ 0 |
9. Notes Payable (Details Narra
9. Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 16, 2020 | Apr. 24, 2020 | Mar. 12, 2020 | Dec. 31, 2019 | |
Proceeds from note payable | $ 802,025 | $ 0 | ||||||
Repayment of note payable | 539,100 | 0 | ||||||
Unamortized discount | $ 0 | 0 | $ 0 | |||||
Stock-based compensation | 322,888 | $ 2,836,920 | 393,831 | 2,892,738 | ||||
Interest expense | 384,456 | |||||||
Amortization of stock warrants issued as a debt discount | $ 0 | 377,440 | $ 0 | |||||
Interest [Member] | ||||||||
Interest expense | 7,016 | |||||||
Stock-based warrant expense [Member] | ||||||||
Interest expense | 377,440 | |||||||
Notes Payable 3 [Member] | ||||||||
Proceeds from note payable | 122,100 | |||||||
Repayment of note payable | 122,100 | |||||||
Notes Payable 4 [Member] | ||||||||
Repayment of note payable | $ 417,000 | |||||||
Kensington Bank [Member] | Notes Payable 2 [Member] | ||||||||
Debt maturity date | Apr. 24, 2022 | |||||||
Cadence Bank [Member] | Notes Payable 4 [Member] | ||||||||
Debt face amount | $ 700,000 | |||||||
Debt interest rate description | 0.50 percentage points over prime | |||||||
Debt maturity date | Mar. 9, 2021 | |||||||
Collateral description | AESE shares | |||||||
Unamortized discount | $ 377,440 | |||||||
Notes Payable 1 [Member] | EIDL [Member] | ||||||||
Debt face amount | $ 150,000 | |||||||
Debt interest rate description | 3.75% per annum | |||||||
Debt maturity date | Jun. 16, 2050 | |||||||
Payment frequency | monthly | |||||||
Periodic payment amount | $ 731 | |||||||
Notes Payable 2 [Member] | PPP Note [Member] | Kensington Bank [Member] | ||||||||
Debt face amount | $ 112,925 | |||||||
Debt interest rate description | 1.00% per annum | |||||||
Debt maturity date | Apr. 24, 2022 |
10. Changes in Stockholders_ Eq
10. Changes in Stockholders’ Equity (Details Narrative) | 2 Months Ended | ||
Feb. 21, 2020 | Sep. 30, 2020$ / sharesshares | Dec. 31, 2019$ / sharesshares | |
Equity [Abstract] | |||
Preferred stock, par value (in Dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | |
Common stock, par value (in Dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Common stock, shares authorized | 500,000,000 | 500,000,000 | |
Common stock, shares issued | 1,600,424 | 1,600,424 | |
Reverse stock split | On February 21, 2020, the Company effected a 1-for-300 reverse stock split | ||
Reverse stock split ratio | .00333 |
11. Options (Details)
11. Options (Details) - Stock Options [Member] | 2 Months Ended |
Feb. 26, 2020shares | |
Options granted | 199,245 |
Ken DeCubellis [Member] | |
Options granted | 60,377 |
Michael Eisele [Member] | |
Options granted | 42,264 |
Bradley Berman [Member] | |
Options granted | 24,151 |
Joseph Lahti [Member] | |
Options granted | 24,151 |
Benjamin Oehler [Member] | |
Options granted | 24,151 |
Lyle Berman [Member] | |
Options granted | 24,151 |
11. Options (Details Narrative)
11. Options (Details Narrative) - USD ($) | 2 Months Ended | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share based compensation | $ 322,888 | $ 2,836,920 | $ 393,831 | $ 2,892,738 | |
Stock Options [Member] | |||||
Options outstanding | 273,871 | 273,871 | |||
Options term | 8 years 9 months | ||||
Strike Price | $ 16.32 | ||||
Options granted | 240,000 | 0 | |||
Options granted, weighted average exercise price | $ 5.41 | ||||
Share based compensation | $ 393,831 | $ 83,705 | |||
Unamortized share based compensation | $ 517,070 | $ 517,070 | |||
Options exercised | 0 | 0 | |||
Options forfeited | 333 | 457 | |||
Options forfeited, weighted average exercise price | $ 90 | $ 9.83 |
12. Warrants (Details)
12. Warrants (Details) - Guarantor Warrants [Member] | 2 Months Ended |
Mar. 12, 2020shares | |
Stock Warrant shares granted | 105,000 |
Ken DeCubellis [Member] | |
Stock Warrant shares granted | 26,250 |
Bradley Berman [Member] | |
Stock Warrant shares granted | 26,250 |
Lyle Berman [Member] | |
Stock Warrant shares granted | 26,250 |
Benjamin Oehler [Member] | |
Stock Warrant shares granted | 26,250 |
12. Warrants (Details Narrative
12. Warrants (Details Narrative) - $ / shares | 2 Months Ended | 9 Months Ended | |
Mar. 12, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Warrant [Member] | |||
Warrants Outstanding | 106,300 | ||
Warrant exercise price | $ 3.99 | ||
Weighted average life | 9 years 4 months 9 days | ||
Warrant expiration date | Sep. 22, 2022 | ||
Warrants exercised | 0 | 0 | |
Guarantor Warrants [Member] | |||
Warrant exercise price | $ 4 | ||
Warrant expiration date | Mar. 12, 2030 | ||
Number of securities into which the warrant may be converted | 26,250 | ||
Warrants exercised | 0 |
13. Income Taxes (Details Narra
13. Income Taxes (Details Narrative) | Sep. 30, 2020USD ($) |
Income Tax Disclosure [Abstract] | |
Net deferred tax assets | $ 7,013,057 |
Valuation allowance | 7,013,057 |
Deferred tax liability | $ 0 |