Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Aug. 31, 2020 | Oct. 14, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | SIMPLICITY ESPORTS & GAMING Co | |
Entity Central Index Key | 0001708410 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,329,190 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Aug. 31, 2020 | May 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 498,645 | $ 160,208 |
Accounts receivable, net | 122,175 | 127,653 |
Inventory | 31,660 | 15,787 |
Prepaid expenses | 22,675 | 5,588 |
Total Current Assets | 675,155 | 309,236 |
Other Assets | ||
Goodwill | 5,180,141 | 5,155,141 |
Intangible assets, net | 2,224,760 | 2,141,374 |
Deferred brokerage fees | 144,698 | 149,223 |
Property and equipment | 318,598 | 232,733 |
Right of use asset, operating lease | 441,986 | 490,984 |
Security deposits | 14,885 | 14,885 |
Deferred equity issuance costs | 128,614 | 98,198 |
Total Other Assets | 8,453,682 | 8,282,538 |
TOTAL ASSETS | 9,128,837 | 8,591,774 |
Current Liabilities | ||
Accounts payable | 116,178 | 126,716 |
Accrued expenses | 764,818 | 1,421,842 |
Convertible note payable | 1,603,881 | 1,127,320 |
Note payable - related party | 64,728 | |
Operating lease obligation, current | 136,630 | 151,867 |
Current portion of deferred revenues | 3,795 | 3,795 |
Common stock payable | 75,000 | 75,000 |
Total Current Liabilities | 2,700,302 | 2,971,268 |
Operating lease obligation, net of current portion | 305,355 | 339,116 |
Deferred revenues | 358,304 | 365,718 |
Total Liabilities | 3,363,961 | 3,676,102 |
Commitments and Contingencies - Note 6 | ||
Stockholders' Equity | ||
Preferred stock - $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding | ||
Common stock - $0.0001 par value; 36,000,000 shares authorized; 9,929,190 and 7,988,975 shares issued and outstanding as of August 31, 2020 and May 31, 2020, respectively | 933 | 799 |
Additional paid-in capital | 12,411,574 | 11,131,404 |
Accumulated deficit | (6,850,258) | (6,195,044) |
Total Simplicity Esports and Gaming Company Stockholders' Equity | 5,562,249 | 4,937,159 |
Non-Controlling Interest | 202,627 | (21,487) |
Total Stockholder's Equity | 5,764,876 | 4,915,672 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 9,128,837 | $ 8,591,774 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Aug. 31, 2020 | May 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 1,000,000 | 1,000,000 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 36,000,000 | 36,000,000 |
Common stock, issued | 9,329,190 | 7,988,975 |
Common stock, outstanding | 9,329,190 | 7,988,975 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Revenue | ||
Total Revenue | $ 200,601 | $ 74,000 |
Cost of Goods Sold | (40,511) | |
Gross Profit | 160,090 | 74,493 |
Operating Expenses | ||
General and Administrative Expenses | (645,362) | (438,953) |
Loss from Operations | (485,272) | (364,460) |
Other (Expense) Income | ||
Debt Forgiveness (Expense) Income | (12,135) | 85,238 |
Interest Expense | (154,128) | (6,675) |
Interest Income | 7 | 2,504 |
Foreign exchange loss | (19,572) | |
Total Other (Expense) Income | (185,828) | 81,067 |
Loss Before Provision for Income Taxes | (671,100) | (283,393) |
Provision for Income Taxes | ||
Net income attributable to noncontrolling interest | 15,886 | |
Net loss available to common shareholders | $ (655,214) | $ (283,393) |
Basic and diluted net loss per share | $ (0.08) | $ (0.04) |
Basic and diluted weighted average number of common shares outstanding | 8,595,266 | 7,264,845 |
Franchise Royalties and License Fees [Member] | ||
Revenue | ||
Total Revenue | $ 80,818 | $ 46,738 |
Franchise Termination Revenue [Member] | ||
Revenue | ||
Total Revenue | 6,465 | |
Company-Owned Stores Sales [Member] | ||
Revenue | ||
Total Revenue | 76,938 | 4,419 |
Esports Revenue [Member] | ||
Revenue | ||
Total Revenue | $ 36,380 | $ 23,336 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Non-Controlling Interest [Member] | Accumulated Deficit [Member] | Total |
Beginning balance at May. 31, 2019 | $ 700 | $ 9,442,027 | $ (3,574,806) | $ 5,867,921 | |
Beginning balance, shares at May. 31, 2019 | 7,003,975 | ||||
Shares issued for PLAYlive Nation acquisition | $ 75 | 1,439,925 | 1,440,000 | ||
Shares issued for PLAYlive Nation acquisition, shares | 750,000 | ||||
Vesting of Common Shares | 27,000 | 27,000 | |||
Net loss attributable to non-controlling interest | |||||
Net loss | (283,393) | (283,393) | |||
Ending balance at Aug. 31, 2019 | $ 775 | 10,908,952 | (3,858,199) | 7,051,528 | |
Ending balance, shares at Aug. 31, 2019 | 7,753,975 | ||||
Beginning balance at May. 31, 2019 | $ 700 | 9,442,027 | (3,574,806) | 5,867,921 | |
Beginning balance, shares at May. 31, 2019 | 7,003,975 | ||||
Ending balance at May. 31, 2020 | $ 799 | 11,131,404 | (21,487) | (6,195,044) | 4,915,672 |
Ending balance, shares at May. 31, 2020 | 7,988,975 | ||||
Shares issued for cash | $ 2 | 24,998 | $ 25,000 | ||
Shares issued for cash, shares | 23,809 | 250,000 | |||
Shares issued in connection with conversion of note payable | $ 9 | 99,991 | $ 100,000 | ||
Shares issued in connection with conversion of note payable, shares | 85,905 | ||||
Shares issued in connection with notes payable | $ 10 | 102,207 | 102,217 | ||
Shares issued in connection with notes payable, shares | 98,333 | ||||
Shares issued in connection with settlement of accounts payable and accrued liabilities | $ 2 | 45,998 | 46,000 | ||
Shares issued in connection with settlement of accounts payable and accrued liabilities, shares | 25,000 | ||||
Shares issued in connection with franchise acquisition | $ 15 | 164,985 | 165,000 | ||
Shares issued in connection with franchise acquisition, shares | 150,000 | ||||
Shares issued in connection with consulting agreement | $ 3 | 22,775 | 22,778 | ||
Shares issued in connection with consulting agreement, shares | 27,778 | ||||
Shares issued to directors, officers and employees as compensation | $ 93 | 819,216 | $ 819,309 | ||
Shares issued to directors, officers and employees as compensation, shares | 929,390 | 250,000 | |||
Non-controlling interest of original investment in subsidiaries | 240,000 | $ 240,000 | |||
Net loss attributable to non-controlling interest | (15,886) | 15,886 | |||
Net loss | (655,214) | (655,214) | |||
Ending balance at Aug. 31, 2020 | $ 933 | $ 12,411,574 | $ 202,627 | $ (6,850,258) | $ 5,764,876 |
Ending balance, shares at Aug. 31, 2020 | 9,329,190 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (671,101) | $ 283,000 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 27,135 | 8,651 |
Amortization expense | 66,614 | 51,406 |
Debt forgiveness income | 12,135 | (85,238) |
Issuance of shares for services | 150,095 | 27,000 |
Provision for uncollectible accounts | 52,549 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 5,478 | (57,074) |
Inventory | 11,127 | |
Prepaid expenses | (17,087) | |
Security deposits | (2,568) | |
Deferred brokerage fees | 4,525 | |
Deferred revenues | (7,414) | |
Accounts payable | (10,538) | 6,004 |
Accrued expenses | 185,620 | (223,603) |
Due from related party | (14,108) | |
Net cash (used in) operating activities | (202,997) | (572,923) |
Cash flows from investing activities: | ||
Cash purchased in acquisition | 26,180 | |
Lease liability net of lease asset | (776) | |
Purchase of property and equipment | (96,506) | |
Net cash used in investing activities | (71,102) | |
Cash flows from financing activities: | ||
Proceeds from notes payable | 748,150 | |
Repayment of note payable | (201,300) | |
Deferred financing costs | (30,416) | |
Private placement funds received | 25,000 | 50,000 |
Net cash provided by financing activities | 541,434 | 50,000 |
Net change in cash | 338,437 | (594,025) |
Cash - beginning of period | 160,208 | 1,540,158 |
Cash - end of period | 498,645 | 946,133 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for interest | 48,800 | |
Cash paid for income taxes | ||
Supplemental Non-Cash Investing and Financing Information: | ||
Common stock issued in franchise repurchase (Merchandise $14,500, FF&E $59,000, customer database $18,500, Goodwill $13,000, restrictive covenant $60,000) | 165,000 | |
Common stock issued in connection with acquisition | 1,440,000 | |
Common stock issued in connection with settlement of accounts payable | 46,000 | |
Common stock issued in connection with previously accrued compensation | $ 629,115 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Merchandise [Member] | ||
Repurchase of franchise | $ 14,500 | $ 14,500 |
FF&E [Member] | ||
Repurchase of franchise | 59,000 | 59,000 |
Customer Database [Member] | ||
Repurchase of franchise | 18,500 | 18,500 |
Goodwill [Member] | ||
Repurchase of franchise | 13,000 | 13,000 |
Restrictive Covenant [Member] | ||
Repurchase of franchise | $ 60,000 | $ 60,000 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Aug. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS Simplicity Esports and Gaming Company F/K/A Smaaash Entertainment Inc. (the “Company,” “we,” or “our”), was organized as a blank check company organized under the laws of the State of Delaware on April 17, 2017. The Company was formed under the name I-AM Capital Acquisition Company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). On November 20, 2018, the Company changed its name from I-AM Capital Acquisition Company to Smaaash Entertainment Inc. On January 2, 2019, the Company changed its name from Smaaash Entertainment Inc. to Simplicity Esports and Gaming Company. Through our wholly owned subsidiary, Simplicity Esports, LLC, acquired on January 2, 2019, the Company has begun to implement a unique approach to ensure the ultimate fan friendly esports experience. Our intention is to have gamers involved at the grassroots level and feel a sense of unity as we compete with top class talent. Our management and players are known within the esports community and we plan to use their skills to create a seamless content creation plan helping gamers feel closer to our brand than any other in the industry. Simplicity is an established brand in the Esports industry with an engaged fan base competing in popular games across different genres, including PUBG, Gears of War, Smite, Guns of Boom, and multiple EA Sports titles. Additionally, the Simplicity stream team encompasses a unique group of casters, influencers, and personalities, all of whom connect to Simplicity’s dedicated fan base. Simplicity also has begun to open and operate esports gaming centers that will provide the public an opportunity to experience and enjoy gaming and Esports in a social setting, regardless of skill or experience. Through our wholly owned subsidiary, PLAYlive Nation, Inc. (“PLAYlive”), acquired on July 29, 2019, the Company has a network of franchised Gaming Centers. As August 31, 2020, approximately 41 locations were considered to be operational, in various states including Arizona, California, Idaho, Florida, Maryland, Michigan, Mississippi, Montana, Oregon, South Carolina, Texas, Utah and Washington. As of August 31, 2020, a number of these locations were unable to resume regular operations as the result of restrictions imposed by municipalities related to COVID-19 (Note 2). PLAYlive offers a video gaming lounge concept to qualified franchisees. PLAYlive currently offers single-unit location franchises, as well as agreements to develop multiple locations. This PLAYlive model is being interlaced with the esports gaming centers mentioned above to create the ultimate gaming center. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the condensed consolidated financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC on August 31, 2020. The interim results for the three months ended August 31, 2020, are not necessarily indicative of the results to be expected for the year ending May 31, 2021 or for any future interim periods. Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. Basis of Consolidation The condensed consolidated financial statements include the operations of the Company and its wholly owned subsidiaries, Simplicity Esports, LLC, PLAYlive Nation, Inc., and PLAYlive Nation Holdings, LLC, its 76% owned subsidiary Simplicity One Brasil Ltd, its 79% owned subsidiaries Simplicity Happy Valley, LLC and Simplicity Redmond, LLC, and its 51% owned subsidiary Simplicity El Paso, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and cash equivalents The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no cash equivalents. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed consolidated balance sheet. Foreign Currencies Revenue and expenses are translated at average rates of exchange prevailing during the year. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition As of January 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and the adoption did not have a material impact on the Company’s consolidated financial statements. The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods and services. Our revenue is derived from the three sources listed below. The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Company-owned Store Sales The Company-owned stores principally generate revenue from retail esports gaming centers. Revenues from Company-owned stores are recognized when the products are delivered, or the service is provided. Franchise Royalties and Fees Franchise royalties are based on six percent of franchise store sales after a minimum level of sales occur and are recognized as sales occur. Any royalty reductions, including waivers or those offered as part of a new store development incentive or as incentive for other behaviors, are recognized at the same time as the related royalty, as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on, a monthly basis. The Company recognizes initial franchise license fee revenue when the Company has performed substantially all the services required in the franchise agreement. Fees received that do not meet these criteria are recorded as deferred revenues until earned. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 years. Franchise license renewal fees, which generally occur every 10 years, are billed before the renewal date. Fees received for future license renewal periods are amortized over the life of the renewal period. The Company offers various incentive programs for franchisees including royalty incentives, new store opening incentives (i.e. development incentives) and other support initiatives. Royalties and franchise fees sales are reduced to reflect any royalty incentives earned or granted under these programs that are in the form of discounts. Commissary sales are comprised of gaming equipment and supplies sold to franchised stores and are recognized as revenue upon shipment or delivery of the related products to the franchisees. Payments are generally due within 30 days. Fees for information services, including software maintenance fees, marketing fees and website maintenance, graphic and promotion fees are recognized as revenue as such services are provided. Esports Revenue Esports is a form of competition using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game tournaments or leagues, particularly between professional players, individually or as teams. Revenues from Esports revenues are recognized when the competition is completed, and prize money is awarded. Revenues earned from team sponsorships, prize winnings, league sponsorships, and from the Company’s share of league revenues are included in esports revenue. Deferred Revenues Deferred revenues are classified as current or long-term based on when management estimates the revenues will be recognized. The Company receives payments from franchisees in advance of all performance obligations having been met, including but not limited to franchise locations being opened. As certain conditions agreed to in these franchise agreements are performed, revenues are recognized. Deferred costs include commissions paid to brokers related to the sale of specific new franchises which have not met revenue recognition criteria as of August 31, 2020. These costs are recognized in the same period as the initial franchise fee revenue is recognized. Accounts Receivable The Company estimates the allowance for doubtful accounts based on an analysis of specific customers (i.e. franchisees), taking into consideration the age of past due accounts and an assessment of the customer’s ability to pay. Accounts receivable are written off against the allowance when management determines it is probable the receivable is worthless. Customer account balances with invoices dated over 90 days old are considered delinquent and considered in the allowance assessment. The Company performs credit evaluations of its customers and, generally, requires no collateral. Management has assessed accounts receivable and an allowance for doubtful accounts of approximately $105,000 has been recorded. Property and Equipment Property and equipment and leasehold improvements are recorded at its historical cost. The cost of property and equipment is depreciated over the estimated useful lives, when placed in service (ranging from 3 -5 years), of the related assets utilizing the straight-line method of depreciation. The cost of leasehold improvements is depreciated (amortized) over the lesser of the length of the related leases or the estimated useful lives of the assets. Ordinary repairs and maintenance are expensed when incurred and major repairs will be capitalized and expensed if they benefit future periods. Intangible Assets and Impairment Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. These costs are included in intangible assets on our condensed consolidated balance sheet and amortized on a straight-line basis when placed into service over their estimated useful lives of the costs, which is 3 to 5 years. The Company periodically reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Goodwill Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but we assess our goodwill for impairment at least annually. We have assessed goodwill and qualitative considerations indicated no impairment. Franchise Locations Through PLAYlive, the Company’s wholly owned subsidiary, the Company has entered into franchise agreements with third parties. As of August 31, 2020, 41 locations were considered to be operational, in various states including Arizona, California, Idaho, Florida, Maryland, Michigan, Mississippi, Montana, Oregon, South Carolina, Texas, Utah and Washington. As of August 31, 2020, a number of these locations were unable to resume regular operations as a result of the restrictions imposed by municipalities related to COVID-19. In addition, we have five additional franchise locations that are currently in the final stages of preparation for opening. Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation Equity-Based Payments to Non-Employees Leases In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02-Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company elected to adopt this update early as of January l, 2019 using the modified retrospective transition method and prior periods have not been restated. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $110,003 and operating lease liability of $107,678. Due to the simplistic nature of the Company’s leases, no retained earnings adjustment was required. See Note 6 for further details. Basic Loss Per Share The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Basic loss per share is calculated by dividing the Company’s net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated by dividing the Company’s net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. When the Company records a loss from operations, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of diluted net loss per common share. Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “ Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the consolidated financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was signed into law. As a result of Tax Reform, the U.S. statutory tax rate was lowered from 35% to 21% effective January 1, 2018, among other changes. ASC Topic 740 requires companies to recognize the effect of tax law changes in the period of enactment; therefore, the Company was required to revalue its deferred tax assets and liabilities at the new rate. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain tax effects of Tax Reform. The ultimate impact may differ from this provisional amount, possibly materially, as a result of additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of Tax Reform. Recently Issued and Recently Adopted Accounting Pronouncements Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following is summary of recent accounting developments. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any other new standards that it believes merit further discussion, and the Company expects that none would have a significant impact on its financial statements. Going Concern, Liquidity and Management’s Plan The Company’s unaudited condensed consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the unaudited condensed consolidated financial statements, the Company has an accumulated deficit of approximately $6.9 million, a working capital deficit of approximately $2.0 million as of August 31, 2020, and a net loss of approximately $0.7 million for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the of the date that the unaudited financial statements are issued. The Company has commenced operations and has begun to generate revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of private and/or public offerings. While the Company believes in the viability of its strategy and its ability to generate sufficient revenue and to raise additional funds, there can be no assurances to that effect. Should the Company fail to raise additional capital, it may be compelled to reduce the scope of its planned future business activities. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, to generate sufficient revenue and to raise additional funds by way of public and/or private offerings. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. As a result, all of our corporate and franchised Simplicity Gaming Centers were closed effective April 1, 2020. We commenced reopening Simplicity Gaming Centers as of May 1, 2020 and have since reopened three corporate and 23 franchised Simplicity Gaming Centers as of October 15, 2020. Although our franchise agreements with franchisees of Simplicity Gaming Centers require a minimum monthly royalty payment to us from the franchisees regardless of whether the franchised Simplicity Gaming Centers are operating, there is a potential risk that franchisees of Simplicity Gaming Centers will default in their obligations to pay their minimum monthly royalty payment to us resulting in either an increase in accounts receivables or a bad debt expense where account receivables are no longer collectible due to franchisee’s inability to pay the minimum monthly royalty payments owed by the franchisee. We have not written off as bad debt any accounts receivables attributable to franchisee minimum monthly royalty payments owed during the COVID-19 pandemic. However, we have recorded an allowance for doubtful accounts of approximately $105,000, as our collection efforts are ongoing. We have experienced an increase in our account receivables by approximately $32,000 and $14,000 during the quarters ended May 31, 2020 and August 31, 2020, respectively. Notwithstanding, it is unclear exactly how much of the increase in accounts receivables is attributable to the impact of COVID-19. For the months of July and August 2020, we have waived the minimum monthly royalty payment obligations for the months of July and August 2020 and are instead billing the franchisees a true-up of 6% of gross sales without a minimum. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations. The measures taken to date will impact the Company’s business for the fiscal quarters ended May 31, 2020 and August 31, 2020 and will potentially continue to impact the Company’s business. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Aug. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | NOTE 3 — PROPERTY, PLANT AND EQUIPMENT The following is a summary of property, plant, and equipment—at cost, less accumulated depreciation: August 31, 2020 May 31, 2020 Leasehold improvements $ 52,189 $ 52,189 Property and equipment 356,314 243,314 Total cost 408,503 295,503 Less accumulated depreciation (89,905 ) (62,770 ) Net property plant and equipment $ 318,598 $ 232,713 Depreciation expense for the three months ended August 31, 2020 and 2019 was $27,135 and $8,651, respectively. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Aug. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | NOTE 4 — INTANGIBLE ASSETS The following table sets forth the intangible assets, including accumulated amortization as of August 31, 2020: August 31, 2020 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4 years $ 1,023,118 $ 341,039 $ 682,079 Trademarks Indefinite 866,000 - 866,000 Customer database 2 years 35,000 2,917 32,083 Restrictive covenant 2 years 115,000 9,583 105,417 Customer contracts 10 years 546,000 8,152 537,848 Internet domain 2 years 3,000 1,667 1,333 $ 2,588,118 $ 363,358 $ 2,224,760 The following tables set forth the intangible assets, including accumulated amortization as of May 31, 2020: May 31, 2020 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4.50 years $ 1,023,118 $ 289,884 $ 733,234 Trademarks Indefinite 866,000 - 866,000 Customer Contracts 10 years 546,000 5,443 540,557 Internet domain 2.50 years 3,000 1,417 1,583 $ 2,438,118 $ 296,744 $ 2,141,374 The following table sets forth the future amortization of the Company’s intangible assets as of August 31, 2020 for the fiscal years ending May 31: 2021 2022 2023 2024 2025 Thereafter Total Non-Competes $ 153,468 $ 204,624 $ 204,624 $ 119,363 $ - $ - $ 682,079 Customer contracts 53,785 53,785 53,785 53,785 53,785 268,923 537,848 Restrictive covenant 43,125 57,500 4,792 - - - 105,417 Customer database 13,125 17,500 1,458 - - - 32,083 Internet domain 750 583 - - - - 1,333 Total $ 264,253 $ 333,992 $ 264,659 $ 173,148 $ 53,785 $ 268,923 $ 1,358,760 Amortization expense for the three months ended August 31, 2020 and 2019 was $66,614 and $51,406, respectively. Goodwill The Company’s goodwill carrying amounts relate to the acquisitions of Simplicity Esports LLC, PLAYlive Nation Inc. and Simplicity El Paso, LLC. The composition of the goodwill balance, is as follows: August 31, 2020 May 31, 2020 Simplicity Esports, LLC $ 4,456,250 $ 4,456,250 Simplicity El Paso, LLC 25,000 - PLAYlive Nation Inc. 698,891 698,891 Total Goodwill $ 5,180,141 $ 5,155,141 |
Acquisitions
Acquisitions | 3 Months Ended |
Aug. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 5 — ACQUISITIONS The Simplicity One Acquisition On January 14, 2020 the Company acquired a 90% interest in Simplicity One Brasil Ltda, for approximately $2,000. This interest was reduced during the three months ended August 31, 2020 as more fully described in Note 6. Simplicity El Paso, LLC On June 26, 2020, the Company through its wholly owned subsidiary, Simplicity El Paso, LLC acquired a 51% controlling interest in an existing franchise in exchange for 150,000 shares of common stock at $1.10 per share. The total purchase price for the acquisition was $315,000 of which $150,000 was paid in cash by the 49% minority interest owner, an unrelated third party, and $165,000 in common stock by the Company. This has been accounted for by the Company using the acquisition method under business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. All fair value measurements of acquired assets and liabilities are non-recurring in nature and classified as level 3 on the fair value hierarchy. The table below presents a provisional allocation of the gross $315,000 purchase price as of August 31, 2020 Merchandise $ 27,000 Furniture, Fixtures and Equipment 113,000 Customer Database 35,000 Goodwill 25,000 Restrictive Covenant 115,000 Total value of acquisition $ 315,000 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Aug. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 6 — RELATED PARTY TRANSACTIONS Private Units In addition, the Sponsor purchased an aggregate of 254,500 Private Units at $10.00 per Private Unit for proceeds of $2,545,000 in the aggregate in the Private Placement. This purchase took place on a private placement basis simultaneously with the completion of the Initial Public Offering. This issuance was be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The Sponsor committed to purchase from the Company up to an additional 26,250 Private Units if the underwriters’ over-allotment option was exercised in full. On September 13, 2017, 7,000 additional Private Units were purchased by the Sponsor at $10.00 per Private Unit upon the partial exercise of the over-allotment option. Kaplan Promissory Note On May 12, 2020 (the “Issue Date”), the Company issued a promissory note (the “Kaplan Note”) in the principal sum of $90,000 in favor of Jed Kaplan, the Company’s Chief Executive Officer, interim Chief Financial Officer, member of the Company’s Board of Directors and greater than 5% stockholder of the Company. The Kaplan Note matures on the first business day following the 150-day anniversary of the Issue Date (the “Maturity Date”). The Company will use the proceeds of the Kaplan Note to fund the operations of Simplicity One Brasil Ltda, the Company’s majority owned subsidiary (“Simplicity Brasil”). As of May 31, 2020, advances under the terms of this note were $64,728. On various dates subsequent to May 31, 2020, Mr. Kaplan funded $25,272 pursuant to the Kaplan Promissory Note. With the contributions subsequent to May 31, 2020, the principal balances outstanding and due Mr. Kaplan amounted to $90,000. On June 22, 2020, Mr. Kaplan agreed to exchange the debt of the Kaplan Promissory Note with a principal balance of $90,000 in exchange for the Company assigning to Mr. Kaplan a 10% equity interest in Simplicity One Brasil, Ltda, a subsidiary of the Company. Equity Sales Effective June 1, 2020, the Company issued 23,809 shares of our restricted Common Stock., sold effective May 7, 2020 at a price of $1.09 per share, to William H. Herrmann, Jr. a member of our board of directors, for an aggregate purchase price of $25,000. The Company maintains its cash balance at a financial services company that is owned by an officer of the Company. The Company maintains a portion of its cash balance at a financial services company that is owned by an officer of the Company. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Aug. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 7 — COMMITMENTS AND CONTINGENCIES Nasdaq Delisting On December 10, 2018, the Company received a written notice (the “Notice”) from the Listing Qualifications Division of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company has not complied with the requirements of IM-5101-2 of the listing rules of Nasdaq (the “Listing Rules”). The Notice stated that after its Business Combination, the Company had not demonstrated that its common stock met Listing Rule 5505(b)(1) that requires a market value of publicly held shares of at least $15 million. Additionally, the Company has not provided evidence that its common stock has at least 300 round lot holders as required by Listing Rule 5505(a)(3) and that its warrant has at least 400 round lot holders as required by Listing Rule 5515(a)(4). Finally, the Company does not comply with Listing Rule 5515(a)(2) which requires that for initial listing of a warrant the underlying security must be listed on Nasdaq. On January 7, 2019, the Company received a second written notice from Nasdaq informing it that the Company failed to comply with Listing Rule 5250(e)(2) which requires companies listed on Nasdaq to timely file notification forms for the Listing of Additional Shares (the “LAS Notification”). The Company was required to submit the LAS Notification 15 days prior to the issuance of the securities, however, the Company filed the LAS Notification for the issuance of the Series A-1 Note and Series A-2 Note and for the share exchange under our Share Exchange Agreement after such 15-day periods. Nasdaq notified the Company that each of these matters serves as an additional and separate basis for delisting the Company’s securities and that the review panel will consider these matters in rendering a determination regarding the Company’s continued listing on Nasdaq. Management of Simplicity Esports and Gamily Company has decided that moving from The Nasdaq Stock Market (“Nasdaq”) to the OTCQB is more appropriate for the Company at this time, while the Company builds out its planned network of retail esport centers. On April 1, 2019, the Company was notified by Nasdaq that it would delist the Company’s common stock and warrants. The Company’s common stock and warrants were previously suspended from trading on Nasdaq, effective January 25, 2019. On April 2, 2019, Nasdaq filed a Notification of Removal from Listing and/or Registration under Section 12(b) of the Securities and Exchange Act of 1934 on Form 25 with the Securities and Exchange Commission relating to the Company’s common stock and warrants. As a result, the Company’s common stock and warrants were delisted from Nasdaq effective April 2, 2019. The Company’s common stock and warrants are quoted on the OTCQB under the symbols “WINR” and “WINRW,” respectively. Registration Rights Pursuant to a registration rights agreement the Company entered into with its initial stockholders and initial purchasers of the Private Units (and constituent securities) at the closing of the Initial Public Offering, the Company is required to register certain securities for sale under the Securities Act. These holders are entitled under the registration rights agreement to make up to three demands that the Company register certain of its securities held by them for sale under the Securities Act and to have the securities covered thereby registered for resale pursuant to Rule 415 under the Securities Act. In addition, these holders have the right to include their securities in other registration statements filed by the Company. The Company will bear the costs and expenses of filing any such registration statements. Unit Purchase Option The Company sold to the underwriters (and/or their designees), for $100, an option to purchase up to a total of 250,000 Units (which increased to 260,000 Units upon the partial exercise of the underwriters’ over-allotment option), exercisable at $11.50 per Unit (or an aggregate exercise price of $2,990,000) upon the closing of the Initial Public Offering. The UPO may be exercised for cash or on a cashless basis, at the holder’s option, at any time during the period commencing on the later of the first anniversary of the effective date of the registration statement relating to the Initial Public Offering and the closing of the Company’s initial Business Combination and terminating on the fifth anniversary of such effectiveness date. The Units issuable upon exercise of this UPO are identical to those offered in the Initial Public Offering, except that the exercise price of the warrants underlying the Units sold to the underwriters is $13.00 per share. Operating Lease Right of Use Obligation The Company adopted Topic 842 on January 1, 2019. The Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With the adoption of Topic 842, the Company’s condensed consolidated balance sheet now contains the following line items: Operating lease right-of-use assets, Current portion of operating lease liabilities and Operating lease liabilities, net of current portion. As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified as operating leases under the new standard. The Company has determined that the identified operating leases did not contain non-lease components and require no further allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases, so we used our incremental borrowing rate as the discount rate. Our weighted average discount rate is 10.4% and the weighted average remaining lease terms are 41 months. As of August 31, 2020, operating lease right-of-use assets and liabilities arising from operating leases was $441,986 and $441,985, respectively. During the year ended May 31, 2020, the Company recorded operating lease expense of approximately $56,000. The following is a schedule showing the future minimum lease payments under operating leases by fiscal years and the present value of the minimum payments as of August 31, 2020. 2021 $ 126,395 2022 $ 147,278 2023 $ 151,832 2024 $ 133,900 2025 $ 90,017 Total Operating Lease Obligations $ 649,422 Less: Amount representing interest $ (207,436 ) Present Value of minimum lease payments $ 441,986 Employment Agreements, Board Compensation and Bonuses On July 29, 2020, the Company entered into a new employment agreement (the “Kaplan 2020 Agreement”) with Mr. Kaplan. Such employment agreement replaced the Kaplan 2018 Agreement. As a result, the Kaplan 2018 Agreement was terminated and is of no further force or effect. Pursuant to the terms of the Kaplan 2020 Agreement, the Company agreed to pay Mr. Kaplan a monthly base salary of $5,000; provided, however, that the parties agreed that such base salary will be deferred and will accumulate until the Company has sufficient cash available to make such payments, to be reasonably determined by the Board of Directors and Mr. Kaplan, at which time all accrued and unpaid base salary will be paid. In addition, Mr. Kaplan will receive an equity grant of 15,000 shares of common stock per month, which shares will be fully vested upon grant. Mr. Kaplan will also be eligible to receive a quarterly bonus in the form of cash or equity shares and will be entitled to participate in the Company’s employee benefit plans. In addition, if, during the term of the Kaplan 2020 Agreement, the Company’s shares are approved for listing on a U.S. national securities exchange, the Company will pay Mr. Kaplan a $50,000 cash bonus, to be paid upon such listing begin effective. The term of the Kaplan 2020 Agreement is for an initial one-year term, which shall automatically renew for successive one-year terms unless either party provides 60 days’ advance written notice of its intention not to renew the Kaplan 2020 Agreement at the conclusion of the then applicable term. The term of the Kaplan 2020 Agreement may be terminated by the Company with or without cause or by Mr. Kaplan with or without good reason, as such terms are defined therein. On July 29, 2020, the Board of Directors approved for Mr. Kaplan a $75,000 cash bonus and authorized the issuance of 250,000 shares of the Company’s common stock both related to his performance during the fiscal year ended May 31, 2020. As of August 31, 2020, the Company has accrued $75,000 related to Mr. Kaplans cash bonus. During the three months ended August 31, 2020, the 250,000 shares of common stock valued at $216,625 were issued. On July 29, 2020, the Company entered into a new employment agreement (the “Franklin 2020 Agreement”) with Mr. Franklin. Such employment agreement replaced the Franklin 2018 Agreement. As a result, the Franklin 2018 Agreement was terminated and is of no further force or effect. Pursuant to the terms of the Franklin 2020 Agreement, the Company agreed to pay Mr. Franklin a monthly base salary of $12,500; provided, however, that the parties agreed that such base salary will be deferred and will accumulate until the Company has sufficient cash available to make such payments, to be reasonably determined by the Board of Directors and Mr. Franklin, at which time all accrued and unpaid base salary will be paid. In addition, Mr. Franklin will receive an equity grant of 6,250 shares of common stock per month, which shares will be fully vested upon grant. Mr. Franklin will also be eligible to receive a quarterly bonus in the form of cash or equity shares and will be entitled to participate in the Company’s employee benefit plans. In addition, if, during the term of the Franklin 2020 Agreement, the Company’s shares are approved for listing on a U.S. national securities exchange, the Company will pay Mr. Franklin a $50,000 cash bonus, to be paid upon such listing begin effective. On July 29, 2020, the Board of Directors approved for Mr. Franklin a $75,000 cash bonus and authorized the issuance of 250,000 fully vested shares of the Company’s common stock both related to his performance during the fiscal year ended May 31, 2020. As of August 31, 2020, the Company has accrued $75,000 related to Mr. Franklins cash bonus and $216,625 related to the Common Shares to be issued to Mr. Franklin. On July 29, 2020, the Board of Directors approved the issuance of 192,000 shares of common stock to an employee and the Directors of the Company for services provided during the fiscal year ended May 31, 2020. Litigation On August 5, 2020, a lawsuit styled Duncan Wood v. PLAYlive Nation, Inc. and Simplicity eSports and Gaming Company (Case No. 20-1043) was filed in the U.S. District Court for the District of Delaware. The complaint alleges unlawful failure to make timely and reasonable payment of wages, breach of contract, breach of the duty of good faith and fair dealing and unjust enrichment. The plaintiff seeks monetary damages for compensation alleged to be owed, treble damages, interest on all wage compensation, reasonable attorneys’ fees and other relief as the Court deems just and proper. Defendants’ responsive pleading is not yet due and has not been filed. The litigation is in its initial stages and the Company is unable to reasonably predict its potential outcome. The Company, however, believes that the lawsuit is without merit and intends to vigorously defend the claims and remains in discussion with the counter-party. |
Debt
Debt | 3 Months Ended |
Aug. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 8 - DEBT The table below presents outstanding debt instruments as of August 31, and May 31, 2020: AUGUST 31, 2020 MAY 31, 2020 10% Fixed Convertible Promissory Note $ - $ 152,500 Discount 10% Convertible Promissory Note - (25,180 ) June 18, 2020 self-amortization promissory note 555,000 - Discount June 18, 2020 self-amortization promissory note (119,190 ) - August 7, 2020 self-amortization promissory note 333,333 - Discount August 7, 2020 self-amortization promissory note (65,262 ) - Related Party Note - 64,728 Convertible Note Payable 900,000 1,000,000 Total $ 1,603,881 $ 1,192,048 10% Fixed Convertible Promissory Note On April 29, 2020 (the “Effective Date”), the Company issued a 10% Fixed Convertible Promissory Note (the “Harbor Gates Note”), with a maturity date of October 29, 2020 (the “Maturity Date”), in the principal sum of $152,000 in favor of Harbor Gates Capital, LLC (“Harbor Gates”). Pursuant to the terms of the Harbor Gates Note, the Company agreed to pay to Harbor Gates $152,500 (the “Principal Sum”) and to pay “guaranteed” interest on the principal balance at an amount equivalent to 10% of the Principal Sum, to the extent such Principal Sum and “guaranteed” interest and any other interest, fees, liquidated damages and/or items due to Harbor Gates have not been repaid or converted into Company common stock in accordance with the terms of the Harbor Gates Note. The Harbor Gates Note carries an original issue discount (“OID”) of $2,500. Accordingly, on the Effective Date, Harbor Gates delivered $150,000 to the Company in exchange for the Harbor Gates Note. In addition to the “guaranteed” interest, and upon the occurrence of an Event of Default (as hereinafter defined), additional interest would accrue from the date of the Event of Default at the rate equal to the lower of 20% per annum or the highest rate permitted by law. The Company may prepay the Harbor Gates Note according to the following schedule: Days Since Payment Amount Under 30 115% of Principal Amount (as hereinafter defined) so paid 31-60 120% of Principal Amount so paid 61-90 125% of Principal Amount so paid 91-180 135% of Principal Amount so paid 135% of the remaining unpaid and unconverted Principal Amount, plus all accrued and unpaid interest will be due and payable on the Maturity Date. “Principal Amount” refers to the sum of (i) the original principal amount of the Harbor Gates Note (including the OID, prorated if the Harbor Gates Note has not been funded in full); (ii) all guaranteed and other accrued but unpaid interest under the Harbor Gates Note; (iii) any fees due under the Harbor Gates Notes; (iv) liquidated damages; and (v) any default payments owing under the Harbor Gates Note, in each case previously paid or added to the Principal Amount. Pursuant to the terms of the Harbor Gates Note, the Company agreed to issue Harbor Gates shares of Company common stock in two tranches as follows: (i) 10,000 shares of common stock within three trading days of the Effective Date; and (ii) In the event the average of the three volume weighted average prices for the Company’s common stock during the three consecutive trading days immediately preceding the date which is the 180 th If an Event of Default (as defined in the Promissory Note) occurs, the outstanding Principal Amount of the Harbor Gates Note owing in respect thereof through the date of acceleration, shall become, at Harbor Gates’ election, immediately due and payable in cash at the “Mandatory Default Amount”. The Mandatory Default Amount means 35% of the outstanding Principal Amount of the Harbor Gates Note will be automatically added to the Principal Sum of the Harbor Gates Note and tack back to the Effective Date for purposes of Rule 144 promulgated under the 1934 Act. Commencing five days after the occurrence of any Event of Default that results in the eventual acceleration of the Harbor Gates Note, the Harbor Gates Note will accrue additional interest, in addition to the Harbor Gates Note’s “guaranteed” interest, at a rate equal to the lesser of 20% per annum or the maximum rate permitted under applicable law. If the Harbor Gates Note was not retired on or before the Maturity Date, then at any time and from time to time after the Maturity Date, and subject to the terms hereof and restrictions and limitations contained in the Harbor Gates Note, Harbor Gates had the right, at Harbor Gates’ sole option, to convert in whole or in part the outstanding and unpaid Principal Amount under the Harbor Gates Note into shares of the Company’s common stock at the Variable Conversion Price. The “Variable Conversion Price” will be equal to the lower of: (a) $1.00, or (b) 70% of the lowest volume weighted average price of the Company’s common stock during the 15 consecutive trading days prior to the date on Harbor Gates elects to convert all or part of the Harbor Gates Note. The Company intends to prepay the Harbor Gates Note in accordance with its terms so that no amount under the Harbor Gates Note is converted into shares of the Company’s common stock. On July 2, 2020, the 10% Fixed Convertible Promissory Note was repaid in full. A cash payment of $201,300 including principal of $152,500, guaranteed interest of $15,200 and prepayment penalties of $33,600 was made to the lender. In connection with the repayment of the note the Company recorded a charge to interest expense in the amount of $73,980 comprised of $48,800 related to interest and prepayment penalties and $25,180 related to accelerated accretion of unamortized debt discount recorded in connection with the original issue discount and in connection with common shares issued to the lender. June 18, 2020 Self-Amortization Promissory Note On June 18, 2020 (the “Issue Date”), Simplicity Esports and Gaming Company, a Delaware corporation (the “Company”), entered into a securities purchase agreement (the “SPA”) with an accredited investor (the “Holder”), pursuant to which the Company issued a 12% self-amortization promissory note (the “Amortization Note”) with a maturity date of June 18, 2021 (the “Maturity Date”), in the principal sum of $550,000. Pursuant to the terms of the Amortization Note, the Company agreed to pay to $550,000 (the “Principal Sum”) to the Holder and to pay interest on the principal balance at the rate of 12% per annum. The Amortization Note carries an original issue discount (“OID”) of $55,000. Accordingly, on the Closing Date (as defined in the SPA), the Holder paid the purchase price of $495,000 in exchange for the Amortization Note. In addition, pursuant to the terms of the SPA, the Company issued 55,000 shares of the Company’s common stock to the Holder as additional consideration. The Company may prepay the Amortization Note at any time prior to the date that an Event of Default (as defined in the Amortization Note) (each an “Event of Default”) occurs at an amount equal to 100% of the Principal Sum then outstanding plus accrued and unpaid interest (no prepayment premium). The Amortization Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Amortization Note or SPA. The Company is required to make amortization payments to the Holder according to the following schedule: Payment Date Payment Amount 10/16/2020 $ 66,125.00 11/16/2020 $ 66,125.00 12/16/2020 $ 66,125.00 01/18/2021 $ 66,125.00 02/18/2021 $ 66,125.00 03/18/2021 $ 66,125.00 04/16/2021 $ 66,125.00 05/18/2021 $ 66,125.00 06/18/2021 $ 65,921.26 Total: $ 594,921.26 Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five (5) calendar days (provided, however, that this five (5) calendar day cure period shall not apply to any event of default under Sections 3.1, 3.2, and 3.19 of the Amortization Note), the Amortization Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125% (the “Default Amount”). Upon the occurrence of an Event of Default (as hereinafter defined), additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. The Company shall have the right to pay the Default Amount in cash at any time, provided, however that the Holder may convert the Amortization Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% contained in the Amortization Note) at any time after the date that is five (5) calendar days after the Amortization Note becomes immediately due and payable as a result of an Event of Default until the Company has repaid the Amortization Note in cash. If the aforementioned event occurs, the conversion price will be equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. The Company intends to repay the Amortization Note in accordance with its terms so that no amount under the Amortization Note is converted into shares of the Company’s common stock. The Company recorded a total debt discount in the amount of $149,500 in connection with the common shares issued to the lender an original issue discount associated with the note. The Company recognized interest expense of $30,310 related to amortization of the discount during the quarter ended August 31, 2020. August 7, 2020 Self-Amortization Promissory Note On August 7, 2020 (the “Issue Date”), the Company, entered into a securities purchase agreement (the “SPA”) with FirstFire Global Opportunities Fund, LLC, an accredited investor (the “Holder”), pursuant to which the Company issued a 12% self-amortization promissory note (the “Amortization Note”) with a maturity date of August 7, 2021 (the “Maturity Date”), in the principal sum of $333,333. Pursuant to the terms of the Amortization Note, the Company agreed to pay to $333,333 (the “Principal Sum”) to the Holder and to pay interest on the principal balance at the rate of 12% per annum. The Amortization Note carries an original issue discount (“OID”) of $33,333. Accordingly, on the Closing Date (as defined in the SPA), the Holder paid the purchase price of $300,000 in exchange for the Amortization Note. In addition, pursuant to the terms of the SPA, the Company agreed to issue 33,333 shares of the Company’s common stock to the Holder as additional consideration. The Company may prepay the Amortization Note at any time prior to the date that an Event of Default (as defined in the Amortization Note) (each an “Event of Default”) occurs at an amount equal to 100% of the Principal Sum then outstanding plus accrued and unpaid interest (no prepayment premium). The Amortization Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Amortization Note or SPA. The Company is required to make amortization payments to the Holder according to the following schedule: Payment Date Payment Amount 12/07/2020 $ 40,075.75 01/07/2021 $ 40,075.75 02/08/2021 $ 40,075.75 03/08/2021 $ 40,075.75 04/07/2021 $ 40,075.75 05/07/2021 $ 40,075.75 06/07/2021 $ 40,075.75 07/07/2021 $ 40,075.75 08/07/2021 $ 39,952.34 Total: $ 360,558.34 Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five (5) calendar days (provided, however, that this five (5) calendar day cure period shall not apply to any event of default under Sections 3.1, 3.2, and 3.19 of the Amortization Note), the Amortization Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125% (the “Default Amount”). Upon the occurrence of an Event of Default (as hereinafter defined), additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. The Company shall have the right to pay the Default Amount in cash at any time, provided, however that the Holder may convert the Amortization Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% contained in the Amortization Note) at any time after the date that is five (5) calendar days after the Amortization Note becomes immediately due and payable as a result of an Event of Default until the Company has repaid the Amortization Note in cash. If the aforementioned event occurs, the conversion price will be equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. The Company intends to repay the Amortization Note in accordance with its terms so that no amount under the Amortization Note is converted into shares of the Company’s common stock. The Company recorded a total debt discount in the amount of $82,999 in connection with the common shares issued to the lender an original issue discount associated with the note. The Company recognized interest expense of $23,477 related to amortization of the discount during the quarter ended August 31, 2020. Related Party - Kaplan Promissory Note On May 12, 2020 (the “Issue Date”), the Company issued a promissory note (the “Kaplan Note”) in the principal sum of $90,000 in favor of Jed Kaplan, the Company’s Chief Executive Officer, interim Chief Financial Officer, member of the Company’s Board of Directors and greater than 5% stockholder of the Company. The Kaplan Note matures on the first business day following the 150-day anniversary of the Issue Date (the “Maturity Date”). The Company will use the proceeds of the Kaplan Note to fund the operations of Simplicity One Brasil Ltda, the Company’s majority owned subsidiary (“Simplicity Brasil”). Pursuant to the terms of the Kaplan Note, the Company agreed to pay to Mr. Kaplan the lesser of (i) the principal sum of $90,000 (the “Maximum Commitment”), or (ii) the aggregate principal amount of all direct advances of the proceeds of the Kaplan Note (each, an “Advance”), together with any interest thereon, and any and all other amounts which may be due and payable thereunder from time to time. Subject to the terms of the Kaplan Note, Mr. Kaplan agreed to make one direct Advance to and for the benefit of the Company on the Issue Date in the amount of $45,000, and one additional Advance to and for the benefit of the Company at such time as the Company may request during the two month period following the Issue Date. The total of the aggregate principal balance of all Advances (collectively referred to herein as the “Principal Amount”) outstanding at any time shall not exceed the Maximum Commitment. Advances made by Mr. Kaplan to the Company under the Kaplan Note which have been repaid may not be borrowed again. Prior to the Maturity Date or an Event of Default (as hereinafter defined), the Principal Amount outstanding under the Kaplan Note will bear interest at a rate of 3% (the “Interest Rate”). From and after the Maturity Date or upon and during the continuance of an Event of Default, interest will accrue on the unpaid Principal Amount during any such period at an annual rate (the “Default Rate”) equal to 10% plus the Interest Rate; provided, however, that in no event will the Default Rate exceed the maximum rate permitted by law. The Company may prepay the Kaplan Note, in whole or in part, without a prepayment penalty, at any time provided that an Event of Default has not then occurred. As of May 31, 2020, the balance of the Kaplan noted was $64,728. During the three months ended August 31, 2020 Mr. Kaplan advanced an additional $25,272 under the terms of the note. During the quarter ended August 31, 2020, Mr. Kaplan exchanged the note together with accrued interest in exchange for his acquisition of a 10% interest in the Company’s wholly owned subsidiary Simplicity Brasil. Convertible Note Payable On December 20, 2018, the Company entered into a securities exchange agreement (“Exchange Agreement”) with Maxim. Pursuant to the terms of the Exchange Agreement, Maxim agreed to surrender and exchange the Note. In exchange, the Company issued to Maxim a Series A-1 Exchange Convertible Note in the principal amount of $500,000 (the “Series A-1 Note”) and a Series A-2 Exchange Convertible Note in the principal amount of $1,000,000 (the “Series A-2 Note,” and collectively with Series A-1 Note, the “Exchange Notes”). As of December 31, 2018, upon the closing of the Acquisition, the Series A-1 Note automatically converted into 193,648 shares of the Company’s common stock. The original amount of the promissory note was $1,800,000, the total amount of the two exchange notes is $1,500,000, and the difference of $300,000 was recorded as debt forgiveness income. Prior to conversion, the Series A-1 Note bore interest at 2.67% per annum, was payable quarterly and had a maturity date of the earlier of the closing date of the Acquisition (as defined below) or June 20, 2020 (the “Maturity Date”). The Company was permitted to pay the interest in cash or at its sole discretion, in shares of its common stock or a combination of cash and common stock. However, the Company could only pay the interest in shares of its common stock if (i) all the equity conditions specified in the note (“Equity Conditions”) had been met (unless waived by Maxim in writing) during the 20 trading days immediately prior to the interest payment date (“Interest Notice Period”), (ii) the Company had provided proper notice pursuant to the terms of the note and (iii) the Company had delivered to Maxims’ account certain number of shares of its common stock to be applied against such interest payment prior to (but no more than five trading days before) the Interest Notice Period. The Series A-1 Note was convertible into shares of the Company’s common stock (“Conversion Shares”) at an initial conversion price of $1.93 per share, subject to adjustment for any stock dividends and splits, rights offerings, distributions, combinations or similar transactions. Upon the closing of the Acquisition, the conversion price was automatically adjusted to equal the arithmetic average of the volume weighted average price (“VWAP”) of the Company’s common stock in the five trading days prior to the closing date of the Acquisition. Maxim was permitted to convert the Series A-1 Note at any time, in whole or in part, provided that upon receipt of a notice of conversion Maxim, the Company had the right to repay all or any portion of the Series A-1 Note included in the notice of conversion. Additionally, the Series A-1 Note would have automatically converted into shares of the Company’s common stock on the earlier of the Maturity Date or the closing date of the Acquisition provided that (i) no event of default then existed, and (ii) solely if such automatic conversion date was also the Maturity Date, each of the Equity Conditions had been met (unless waived in writing by Maxim) on each trading day during the 20 trading day period ending on the trading day immediately prior to the automatic conversation date. At any time prior to the Maturity Date, the Company also had the right to elect to redeem some or all of the outstanding principal amount for cash in an amount (the “Optional Redemption Amount”) equal to the sum of (a) 100% of the then outstanding principal amount of the note, (b) accrued but unpaid interest and (c) all liquidated damages and other amounts due in respect of the note (the “Optional Redemption”). The Company could only effect an Optional Redemption if each of the Equity Conditions had been met (unless waived in writing by Maxim) on each trading day during the period commencing on the date when the notice of the Optional Redemption was delivered to the date of the Optional Redemption and through and including the date payment of the Optional Redemption Amount was actually made in full. Except as otherwise provided in the Series A-1 Note, including, without limitation, an Option Redemption, the Company may not prepay any portion of the principal amount of the note without the prior written consent of Maxim. Pursuant to the terms of the Series A-1 Note, the Company was not permitted to convert any portion of the Series A-1 Note if doing so results in Maxim beneficially owning more than 4.99% of the outstanding common stock of the Company after giving effect to such conversion, provided that on 61 days’ prior written notice from Maxim to the Company, that percentage could increase to 9.99%. However, if there was an automatic conversion, and the conversion would result in the Company issuing a number of shares in excess of the beneficial ownership limitation, then any such shares in excess of the beneficial ownership limitation would be held in abeyance for the benefit of Maxim until such time or times, if ever, as its right thereto would not result in Maxim exceeding the beneficial ownership limitation, at which time or times Maxim would be issued such shares to the same extent as if there had been no such limitation. The Series A-1 Note contained restrictive covenants which, among other things, restricted the Company’s ability to repay or repurchase any indebtedness, make distributions on or repurchase its common stock or enter into transactions with its affiliates. The Series A-2 Note has terms substantially similar to those of the Series A-1 Note except that the Series A-2 Note has a maturity date of June 20, 2020, and an initial conversion price of $1.93, which will be automatically adjusted to the lower of (i) the conversion price then in effect, and (ii) the greater of the arithmetic average of the VWAP of the Company’s common stock in the five trading days prior to the notice of conversion and $0.50. As of December 31, 2018, upon the closing of the Acquisition, the Series A-1 Note automatically converted into 193,648 shares of the Company’s common stock On June 4, 2020, $100,000 in principal was converted into 85,905 shares of common stock in accordance with the terms of the Maxim Note. On June 18, 2020, the Company and Maxim entered into that certain first amendment to the Maxim Note (the “Amendment”), pursuant to which the Parties agreed to the following: (i) Maxim’s resale of the Company’s common stock (the “Common Stock”) underling the Maxim Note shall be limited to 10% of the daily volume of the Common Stock on each respective trading day, (ii) the maturity date of the Maxim Note was extended to December 31, 2020, (iii) the principal amount of the Maxim Note was increased by $100,000, and (iv) the reference to “$1.93” in Section 4(b) of the Maxim Note was replaced with “$1.15”. During the three months ended August 31, 2020 the company recorded interest expense of $18,044, total principal and accrued interest on Maxim note amounted to $900,000 and $55,869 as of August 31, 2020. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Aug. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 9 -STOCKHOLDERS’ EQUITY Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. As of August 31, 2020, there were no shares of preferred stock issued or outstanding. Common Stock On August 17, 2020, the Company amended its certificate of incorporation to increase the total number of authorized shares of the Company’s common stock from 20,000,000 to 36,000,000. Holders of the shares of the Company’s common stock are entitled to one vote for each share. At, August 31, 2020 and May 31, 2020, there were 9,929,190 and 7,988,975 shares of common stock issued and outstanding respectively. Excluded from the Company’s outstanding shares as of August 31, 2020 are 600,000 shares issued to Triton Funds, LP., the Company’s transfer agent erroneously transferred 725,000 shares of common stock under the Equity Line to the custodial account of Triton, resulting in an over-issuance of 600,000 shares to Triton. The Company notified Triton of this error and that the Company terminated the Common Stock Purchase Agreement with Triton. As of October 15, 2020, the Company is currently awaiting the return of the shares issued in error from Triton to the treasury so such shares will no longer be issued and outstanding. In order to effectuate the return of the shares, the Company’s transfer agent is requiring a medallion guaranteed stock power from Triton. Triton is cooperating and is currently seeking a medallion guaranteed stock power to facilitate the cancellation of such shares. Effective June 1, 2020, the Company issued 23,809 shares of our restricted common stock, sold effective May 7, 2020 at a price of $1.09 per share, to William H. Herrmann, Jr. a member of our board of directors, for an aggregate purchase price of $25,000. Effective June 4, 2020, the Company issued 85,905 shares of common stock at $1.16 per share in connection with the conversion of $100,000 in principal of the Convertible Note Payable, Note 8. Effective June 18, 2020, pursuant to the terms of that certain Securities Purchase Agreement between the Company and an accredited investor, pursuant to which the Company issued a 12% self-amortization promissory note (Note 8) in the principal amount of $550,000, the Company issued 55,000 shares of common stock at $1.13 per share, to such accredited investor as additional consideration for the purchase of such note. Effective June 30, 2020, the company issued 78,890 shares of common stock at $0.97 per share to various employees of the Company as compensation. Effective July 1, 2020 we issued 25,000 shares of common stock at $1.84 per share in satisfaction of an outstanding balance owed to a vendor. Effective July 1,2020 pursuant to the terms of that certain 10% Fixed Convertible Promissory Note dated April 29, 2020 in the principal amount of $152,500 issued by the Company in favor of Harbor Gates Capital, LLC, the Company issued 10,000 shares of our restricted common stock, issued at $0.99 per share, to Harbor Gates Capital, LLC as additional consideration for the purchase of such note. On July 1, 2020, the Company acquired the assets of one of its top performing franchisee owned esports gaming centers on Fort Bliss U.S. Military base in El Paso, TX. In connection with the acquisition the Company issued 150,000 restricted shares at $1.65 per share. Effective July 31, 2020 and August 31, 2020, the Company issued 320,000 and 45,000 shares of common stock to Mr. Kaplan in connection with previously accrued compensation and current period compensation. Common shares were valued as follows; 250,000 at $0.865 per share, 50,000 at $1.01 per share, 10,000 at $1.84 per share, 20,000 at $0.93 per share 20,000 at $1.38 per share and 15,000 at $0.82 per share. Effective July 31, 2020 and August 31, 2020, the Company issued 271,000 and 16,500 shares of common stock to Mr. Franklin in connection with previously accrued compensation and current period compensation. Common shares were valued as follows; 250,000 at $0.865 per share, 15,000 at $1.01 per share 3,000 at $1.84 per share, 3,000 at $0.93 per share, 9,000 at $1.38 per share and 7,500 at $0.82 per share. Effective July 31, 2020 and August 31, 2020, the Company issued 190,000 shares of common stock valued at $0.87 per share and 6,000 shares of common stock valued at $1.01 per share to the Directors and an employee of the Company in connection with previously accrued compensation and current period compensation. Effective August 1, 2020, the Company entered into a marketing agreement whereby the Company issued 27,778 shares of common stock at $1.10 per share. Effective August 10, 2020, pursuant to the terms of that certain Securities Purchase Agreement between the Company and an accredited investor pursuant to which we issued a 12% self-amortization promissory note (Note 8) in the principal amount of $333,333, the Company issued 33,333 shares of common stock at $0.91 per share. Stock - Based Compensation Effective June 30, 2020, the company issued 78,890 shares of common stock at $0.97 per share to various employees of the Company as compensation. Effective July 31, 2020 and August 31, 2020, the Company issued 320,000 and 45,000 shares of common stock to Mr. Kaplan in connection with previously accrued compensation and current period compensation. Effective July 31, 2020 and August 31, 2020, the Company issued 271,000 and 16,500 shares of common stock to Mr. Franklin in connection with previously accrued compensation and current period compensation. Effective July 31, 2020 and August 31, 2020, the Company issued 190,000 and 6,000 shares of common stock to the Directors and an employee of the Company in connection with previously accrued compensation and current period compensation. Share based compensation for the three months ended August 31, 2020 and August 31, 2019 was $150,095 and $45,000, respectively. Warrants The Company did not issue any warrants during the quarter ended August 31, 2020. A summary of the status of the Company’s outstanding stock warrants as of August 31, 2020 is as follows: Number of Average Expiration Outstanding – May 31, 2020 6,424,000 $ 10.38 Granted – August 31, 2020 - Outstanding – August 31, 2020 6,424.000 $ 10.38 May, 2024 Warrants exercisable – August 31, 2020 6,424,000 |
Segment and Related Information
Segment and Related Information | 3 Months Ended |
Aug. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment and Related Information | NOTE 10 — SEGMENT AND RELATED INFORMATION Historically, the Company had one operating segment. However, with the acquisition of PLAYlive and the opening of Company-owned retail stores, the Company’s operations are now managed through three operating segments: Franchise royalties and license fees, Company-owned stores and Esports revenue. These three operating segments and corporate are presented below as its reportable segments. Summarized financial information concerning our reportable segments for the three months ended August 31 is shown in the following tables: August 31, 2020: Revenues Net Depreciation Capital Goodwill Total Franchise royalties and fees $ 87,000 $ (3,000 ) $ - $ - $ 699,000 $ 1,721,000 Company-owned stores 77,000 (38,000 ) 38,000 - 25,000 1,329,000 Esports revenue 37,000 (105,000 ) 55,000 - 4,456,000 5,665,000 Corporate - (509,000 ) - - - 414,000 Total $ 201,000 $ (655,000 ) $ 93,000 $ - $ 5,180,000 $ 9,129,000 August 31, 2019: Revenues Net Depreciation Capital Goodwill Total Franchise royalties and fees $ 47,000 $ 500 $ 400 $ - $ 2,226,000 $ 2,263,000 Company-owned stores 4,000 (24,000 ) 7,200 97,000 - 440,000 Esports revenue 23,000 (62,500 ) - - 4,456,000 5,947,000 Corporate - (197,000 ) 1,000 - - 1,000,000 Total $ 74,000 $ 283,000 $ 8,600 $ 97,000 $ 6,682,000 $ 9,650,000 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Aug. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 11 — SUBSEQUENT EVENTS The Company has applied to list its common stock and warrants on the Nasdaq Capital Market. In order to obtain Nasdaq Capital Market listing approval, the Company obtained approval of its Board of Directors and stockholders of (i) a reverse stock split of the outstanding shares of the Company’s common stock in the range from 1-for-2 to 1-for-10, which ratio was to be selected by the Company’s Board of Directors, with any fractional shares being rounded up to the next higher whole shares (the “Reverse Split”), and (ii) an increase in the Company’s authorized shares of common stock from 20,000,000 to 36,000,000 shares of common stock. The increase in authorized shares became effective on August 17, 2020. On September 28, 2020, the Company’s Board of Directors approved the Reverse Split in a ratio of 1-for-6 and on September 29, 2020, the Company filed an amended and restated certificate of amendment to the Company’s Third Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), implementing the Reverse Split in a ratio of 1-for-6, effective October 13, 2020. On October 12, 2020, the Company filed a certificate of amendment to the Certificate of Incorporation changing the effective date of the Reverse Split, in a ratio of 1-for-6, to November 4, 2020. The Company expects that the Reverse Split in a ratio of 1-for-6 will be effective on or about November 4, 2020; provided, however, that in no event will the Reverse Split become effective until it has been processed by the Financial Industry Regulatory Authority (FINRA). The Reverse Split is intended to allow the Company to meet the minimum share price requirement of the Nasdaq Capital Market. There is no assurance that the Company’s listing application will be approved by the Nasdaq Capital Market. On April 10, 2020, the Company filed a registration statement on Form S-1 with the SEC relating to the offer by the Company of units of the Company, each of which consists of one share of common stock and one warrant to purchase one share of our common stock. No sales of units will be made prior to effectiveness of the registration statement on Form S-1. On September 28, 2020, the Company filed Pre-Effective Amendment No. 1 to the registration statement on Form S-1 with the SEC. There can be no assurance that the registration statement on Form S-1, as amended, will be declared effective by the SEC. On September 30, 2019, the SEC declared effective the Company’s registration statement on Form S-1 (the “September 2019 Registration Statement”) related to (i) the issuance by the Company of up to 6,449,000 shares of common stock, which consist of (a) 5,200,000 shares of common stock that may be issued upon the exercise of 5,200,000 warrants (the “Public Warrants”) originally sold as part of units in the Company’s initial public offering (the “IPO”) and which entitle the holder to purchase common stock at an exercise price of $11.50 per share of common stock, (b) 261,500 shares of common stock that may be issued upon the exercise of 261,500 warrants (the “Private Placement Warrants”) underlying units originally issued in a private placement that closed simultaneously with the consummation of the IPO (the “Private Placement Units”), which entitle the holder to purchase common stock at an exercise price of $11.50 per share of common stock, and (c) 987,500 shares of our common stock, which represent shares of common stock that may be issued upon the exercise of 987,500 warrants (the “2019 Warrants”, and together with the Public Warrants and Private Placement Warrants, the “Warrants”) originally sold as part of units in a private placement that commenced on March 27, 2019 (the “2019 Private Placement”) and which entitle the holder to purchase common stock at an exercise price of $4.00 per share of common stock, and (ii) the resale from time to time of 6,465,617 shares of common stock and 261,500 Private Placement Warrants by the selling securityholders named in the prospectus or their permitted transferees. On October 13, 2020, the SEC declared effective the Company’s post-effective amendment, filed on October 5, 2020 (the “Post-Effective Amendment”), to the September 2019 Registration Statement. The Post-Effective Amendment updates the financial statements and other information contained in the September 2019 Registration Statement. No additional securities were registered pursuant to the Post-Effective Amendment. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the condensed consolidated financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC on August 31, 2020. The interim results for the three months ended August 31, 2020, are not necessarily indicative of the results to be expected for the year ending May 31, 2021 or for any future interim periods. |
Emerging Growth Company | Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. |
Basis of Consolidation | Basis of Consolidation The condensed consolidated financial statements include the operations of the Company and its wholly owned subsidiaries, Simplicity Esports, LLC, PLAYlive Nation, Inc., and PLAYlive Nation Holdings, LLC, its 76% owned subsidiary Simplicity One Brasil Ltd, its 79% owned subsidiaries Simplicity Happy Valley, LLC and Simplicity Redmond, LLC, and its 51% owned subsidiary Simplicity El Paso, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and cash equivalents The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no cash equivalents. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. |
Financial Instruments | Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed consolidated balance sheet. |
Foreign Currencies | Foreign Currencies Revenue and expenses are translated at average rates of exchange prevailing during the year. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition As of January 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and the adoption did not have a material impact on the Company’s consolidated financial statements. The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods and services. Our revenue is derived from the three sources listed below. The following describes principal activities, separated by major product or service, from which the Company generates its revenues: |
Company-owned Stores Sales | Company-owned Store Sales The Company-owned stores principally generate revenue from retail esports gaming centers. Revenues from Company-owned stores are recognized when the products are delivered, or the service is provided. |
Franchise Royalties and Fees | Franchise Royalties and Fees Franchise royalties are based on six percent of franchise store sales after a minimum level of sales occur and are recognized as sales occur. Any royalty reductions, including waivers or those offered as part of a new store development incentive or as incentive for other behaviors, are recognized at the same time as the related royalty, as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on, a monthly basis. The Company recognizes initial franchise license fee revenue when the Company has performed substantially all the services required in the franchise agreement. Fees received that do not meet these criteria are recorded as deferred revenues until earned. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 years. Franchise license renewal fees, which generally occur every 10 years, are billed before the renewal date. Fees received for future license renewal periods are amortized over the life of the renewal period. The Company offers various incentive programs for franchisees including royalty incentives, new store opening incentives (i.e. development incentives) and other support initiatives. Royalties and franchise fees sales are reduced to reflect any royalty incentives earned or granted under these programs that are in the form of discounts. Commissary sales are comprised of gaming equipment and supplies sold to franchised stores and are recognized as revenue upon shipment or delivery of the related products to the franchisees. Payments are generally due within 30 days. Fees for information services, including software maintenance fees, marketing fees and website maintenance, graphic and promotion fees are recognized as revenue as such services are provided. |
Esports Revenue | Esports Revenue Esports is a form of competition using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game tournaments or leagues, particularly between professional players, individually or as teams. Revenues from Esports revenues are recognized when the competition is completed, and prize money is awarded. Revenues earned from team sponsorships, prize winnings, league sponsorships, and from the Company’s share of league revenues are included in esports revenue. |
Deferred Revenues | Deferred Revenues Deferred revenues are classified as current or long-term based on when management estimates the revenues will be recognized. The Company receives payments from franchisees in advance of all performance obligations having been met, including but not limited to franchise locations being opened. As certain conditions agreed to in these franchise agreements are performed, revenues are recognized. Deferred costs include commissions paid to brokers related to the sale of specific new franchises which have not met revenue recognition criteria as of August 31, 2020. These costs are recognized in the same period as the initial franchise fee revenue is recognized. |
Accounts Receivable | Accounts Receivable The Company estimates the allowance for doubtful accounts based on an analysis of specific customers (i.e. franchisees), taking into consideration the age of past due accounts and an assessment of the customer’s ability to pay. Accounts receivable are written off against the allowance when management determines it is probable the receivable is worthless. Customer account balances with invoices dated over 90 days old are considered delinquent and considered in the allowance assessment. The Company performs credit evaluations of its customers and, generally, requires no collateral. Management has assessed accounts receivable and an allowance for doubtful accounts of approximately $105,000 has been recorded. |
Property and Equipment | Property and Equipment Property and equipment and leasehold improvements are recorded at its historical cost. The cost of property and equipment is depreciated over the estimated useful lives, when placed in service (ranging from 3 -5 years), of the related assets utilizing the straight-line method of depreciation. The cost of leasehold improvements is depreciated (amortized) over the lesser of the length of the related leases or the estimated useful lives of the assets. Ordinary repairs and maintenance are expensed when incurred and major repairs will be capitalized and expensed if they benefit future periods. |
Intangible Assets and Impairment | Intangible Assets and Impairment Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. These costs are included in intangible assets on our condensed consolidated balance sheet and amortized on a straight-line basis when placed into service over their estimated useful lives of the costs, which is 3 to 5 years. The Company periodically reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. |
Goodwill | Goodwill Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but we assess our goodwill for impairment at least annually. We have assessed goodwill and qualitative considerations indicated no impairment. |
Franchise Locations | Franchise Locations Through PLAYlive, the Company’s wholly owned subsidiary, the Company has entered into franchise agreements with third parties. As of August 31, 2020, 41 locations were considered to be operational, in various states including Arizona, California, Idaho, Florida, Maryland, Michigan, Mississippi, Montana, Oregon, South Carolina, Texas, Utah and Washington. As of August 31, 2020, a number of these locations were unable to resume regular operations as a result of the restrictions imposed by municipalities related to COVID-19. In addition, we have five additional franchise locations that are currently in the final stages of preparation for opening. |
Stock-based Compensation | Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation Equity-Based Payments to Non-Employees |
Leases | Leases In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02-Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company elected to adopt this update early as of January l, 2019 using the modified retrospective transition method and prior periods have not been restated. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $110,003 and operating lease liability of $107,678. Due to the simplistic nature of the Company’s leases, no retained earnings adjustment was required. See Note 6 for further details. |
Basic Loss Per Share | Basic Loss Per Share The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Basic loss per share is calculated by dividing the Company’s net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated by dividing the Company’s net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. When the Company records a loss from operations, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of diluted net loss per common share. |
Income Taxes | Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “ Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the consolidated financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was signed into law. As a result of Tax Reform, the U.S. statutory tax rate was lowered from 35% to 21% effective January 1, 2018, among other changes. ASC Topic 740 requires companies to recognize the effect of tax law changes in the period of enactment; therefore, the Company was required to revalue its deferred tax assets and liabilities at the new rate. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain tax effects of Tax Reform. The ultimate impact may differ from this provisional amount, possibly materially, as a result of additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of Tax Reform. |
Recently Issued and Recently Adopted Accounting Pronouncements | Recently Issued and Recently Adopted Accounting Pronouncements Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following is summary of recent accounting developments. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any other new standards that it believes merit further discussion, and the Company expects that none would have a significant impact on its financial statements. |
Going Concern, Liquidity and Management's Plan | Going Concern, Liquidity and Management’s Plan The Company’s unaudited condensed consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the unaudited condensed consolidated financial statements, the Company has an accumulated deficit of approximately $6.9 million, a working capital deficit of approximately $2.0 million as of August 31, 2020, and a net loss of approximately $0.7 million for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the of the date that the unaudited financial statements are issued. The Company has commenced operations and has begun to generate revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of private and/or public offerings. While the Company believes in the viability of its strategy and its ability to generate sufficient revenue and to raise additional funds, there can be no assurances to that effect. Should the Company fail to raise additional capital, it may be compelled to reduce the scope of its planned future business activities. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, to generate sufficient revenue and to raise additional funds by way of public and/or private offerings. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. As a result, all of our corporate and franchised Simplicity Gaming Centers were closed effective April 1, 2020. We commenced reopening Simplicity Gaming Centers as of May 1, 2020 and have since reopened three corporate and 23 franchised Simplicity Gaming Centers as of October 15, 2020. Although our franchise agreements with franchisees of Simplicity Gaming Centers require a minimum monthly royalty payment to us from the franchisees regardless of whether the franchised Simplicity Gaming Centers are operating, there is a potential risk that franchisees of Simplicity Gaming Centers will default in their obligations to pay their minimum monthly royalty payment to us resulting in either an increase in accounts receivables or a bad debt expense where account receivables are no longer collectible due to franchisee’s inability to pay the minimum monthly royalty payments owed by the franchisee. We have not written off as bad debt any accounts receivables attributable to franchisee minimum monthly royalty payments owed during the COVID-19 pandemic. However, we have recorded an allowance for doubtful accounts of approximately $105,000, as our collection efforts are ongoing. We have experienced an increase in our account receivables by approximately $32,000 and $14,000 during the quarters ended May 31, 2020 and August 31, 2020, respectively. Notwithstanding, it is unclear exactly how much of the increase in accounts receivables is attributable to the impact of COVID-19. For the months of July and August 2020, we have waived the minimum monthly royalty payment obligations for the months of July and August 2020 and are instead billing the franchisees a true-up of 6% of gross sales without a minimum. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations. The measures taken to date will impact the Company’s business for the fiscal quarters ended May 31, 2020 and August 31, 2020 and will potentially continue to impact the Company’s business. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | The following is a summary of property, plant, and equipment—at cost, less accumulated depreciation: August 31, 2020 May 31, 2020 Leasehold improvements $ 52,189 $ 52,189 Property and equipment 356,314 243,314 Total cost 408,503 295,503 Less accumulated depreciation (89,905 ) (62,770 ) Net property plant and equipment $ 318,598 $ 232,713 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The following table sets forth the intangible assets, including accumulated amortization as of August 31, 2020: August 31, 2020 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4 years $ 1,023,118 $ 341,039 $ 682,079 Trademarks Indefinite 866,000 - 866,000 Customer database 2 years 35,000 2,917 32,083 Restrictive covenant 2 years 115,000 9,583 105,417 Customer contracts 10 years 546,000 8,152 537,848 Internet domain 2 years 3,000 1,667 1,333 $ 2,588,118 $ 363,358 $ 2,224,760 The following tables set forth the intangible assets, including accumulated amortization as of May 31, 2020: May 31, 2020 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4.50 years $ 1,023,118 $ 289,884 $ 733,234 Trademarks Indefinite 866,000 - 866,000 Customer Contracts 10 years 546,000 5,443 540,557 Internet domain 2.50 years 3,000 1,417 1,583 $ 2,438,118 $ 296,744 $ 2,141,374 |
Schedule of Future Amortization of Intangible Assets | The following table sets forth the future amortization of the Company’s intangible assets as of August 31, 2020 for the fiscal years ending May 31: 2021 2022 2023 2024 2025 Thereafter Total Non-Competes $ 153,468 $ 204,624 $ 204,624 $ 119,363 $ - $ - $ 682,079 Customer contracts 53,785 53,785 53,785 53,785 53,785 268,923 537,848 Restrictive covenant 43,125 57,500 4,792 - - - 105,417 Customer database 13,125 17,500 1,458 - - - 32,083 Internet domain 750 583 - - - - 1,333 Total $ 264,253 $ 333,992 $ 264,659 $ 173,148 $ 53,785 $ 268,923 $ 1,358,760 |
Schedule of Goodwill | The composition of the goodwill balance, is as follows: August 31, 2020 May 31, 2020 Simplicity Esports, LLC $ 4,456,250 $ 4,456,250 Simplicity El Paso, LLC 25,000 - PLAYlive Nation Inc. 698,891 698,891 Total Goodwill $ 5,180,141 $ 5,155,141 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of Estimated Fair Value of Assets Acquired and Liabilities | The table below presents a provisional allocation of the gross $315,000 purchase price as of August 31, 2020 Merchandise $ 27,000 Furniture, Fixtures and Equipment 113,000 Customer Database 35,000 Goodwill 25,000 Restrictive Covenant 115,000 Total value of acquisition $ 315,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule Showing the Future Minimum Lease Payments | The following is a schedule showing the future minimum lease payments under operating leases by fiscal years and the present value of the minimum payments as of August 31, 2020. 2021 $ 126,395 2022 $ 147,278 2023 $ 151,832 2024 $ 133,900 2025 $ 90,017 Total Operating Lease Obligations $ 649,422 Less: Amount representing interest $ (207,436 ) Present Value of minimum lease payments $ 441,986 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Schedule of Outstanding Debt Instrument | The table below presents outstanding debt instruments as of August 31, and May 31, 2020: AUGUST 31, 2020 MAY 31, 2020 10% Fixed Convertible Promissory Note $ - $ 152,500 Discount 10% Convertible Promissory Note - (25,180 ) June 18, 2020 self-amortization promissory note 555,000 - Discount June 18, 2020 self-amortization promissory note (119,190 ) - August 7, 2020 self-amortization promissory note 333,333 - Discount August 7, 2020 self-amortization promissory note (65,262 ) - Related Party Note - 64,728 Convertible Note Payable 900,000 1,000,000 Total $ 1,603,881 $ 1,192,048 |
Schedule of Prepayment of Debt Note | The Company may prepay the Harbor Gates Note according to the following schedule: Days Since Payment Amount Under 30 115% of Principal Amount (as hereinafter defined) so paid 31-60 120% of Principal Amount so paid 61-90 125% of Principal Amount so paid 91-180 135% of Principal Amount so paid |
Schedule of Amortization Payments | |
June 18, 2020 Self-Amortization Note [Member] | |
Schedule of Amortization Payments | The Company is required to make amortization payments to the Holder according to the following schedule: Payment Date Payment Amount 10/16/2020 $ 66,125.00 11/16/2020 $ 66,125.00 12/16/2020 $ 66,125.00 01/18/2021 $ 66,125.00 02/18/2021 $ 66,125.00 03/18/2021 $ 66,125.00 04/16/2021 $ 66,125.00 05/18/2021 $ 66,125.00 06/18/2021 $ 65,921.26 Total: $ 594,921.26 |
August 7, 2020 Self-Amortization Note [Member] | |
Schedule of Amortization Payments | The Company is required to make amortization payments to the Holder according to the following schedule: Payment Date Payment Amount 12/07/2020 $ 40,075.75 01/07/2021 $ 40,075.75 02/08/2021 $ 40,075.75 03/08/2021 $ 40,075.75 04/07/2021 $ 40,075.75 05/07/2021 $ 40,075.75 06/07/2021 $ 40,075.75 07/07/2021 $ 40,075.75 08/07/2021 $ 39,952.34 Total: $ 360,558.34 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Equity [Abstract] | |
Schedule of Outstanding Stock Warrants | A summary of the status of the Company’s outstanding stock warrants as of August 31, 2020 is as follows: Number of Average Expiration Outstanding – May 31, 2020 6,424,000 $ 10.38 Granted – August 31, 2020 - Outstanding – August 31, 2020 6,424.000 $ 10.38 May, 2024 Warrants exercisable – August 31, 2020 6,424,000 |
Segment and Related Informati_2
Segment and Related Information (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Summarized financial information concerning our reportable segments for the three months ended August 31 is shown in the following tables: August 31, 2020: Revenues Net Depreciation Capital Goodwill Total Franchise royalties and fees $ 87,000 $ (3,000 ) $ - $ - $ 699,000 $ 1,721,000 Company-owned stores 77,000 (38,000 ) 38,000 - 25,000 1,329,000 Esports revenue 37,000 (105,000 ) 55,000 - 4,456,000 5,665,000 Corporate - (509,000 ) - - - 414,000 Total $ 201,000 $ (655,000 ) $ 93,000 $ - $ 5,180,000 $ 9,129,000 August 31, 2019: Revenues Net Depreciation Capital Goodwill Total Franchise royalties and fees $ 47,000 $ 500 $ 400 $ - $ 2,226,000 $ 2,263,000 Company-owned stores 4,000 (24,000 ) 7,200 97,000 - 440,000 Esports revenue 23,000 (62,500 ) - - 4,456,000 5,947,000 Corporate - (197,000 ) 1,000 - - 1,000,000 Total $ 74,000 $ 283,000 $ 8,600 $ 97,000 $ 6,682,000 $ 9,650,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Dec. 22, 2017 | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 | Dec. 31, 2019 | Jan. 01, 2019 |
Federal depository insurance coverage | $ 250,000 | |||||
Allowance for doubtful accounts | 105,000 | $ 105,000 | ||||
Operating lease right-of-use asset | 441,986 | $ 490,984 | ||||
Operating lease liability | $ 136,630 | 151,867 | ||||
Statutory tax rate | 35.00% | 21.00% | ||||
Increase in accounts reeivable | $ 14,000 | 32,000 | ||||
Accumulated deficit | (6,850,258) | $ (6,195,044) | ||||
Working capital deficit | (2,000,000) | |||||
Net loss | $ (671,101) | $ 283,000 | ||||
Accounting Standards Update 2016-02 [Member] | ||||||
Operating lease right-of-use asset | $ 110,003 | |||||
Accounting Standards Update 2016-02 [Member] | Operating Lease Current Liabilities [Member] | ||||||
Operating lease liability | $ 107,678 | |||||
Minimum [Member] | ||||||
Property, plant and equipment, useful life | 3 years | |||||
Finite lived intangible asset, useful life | 3 years | |||||
Maximum [Member] | ||||||
Property, plant and equipment, useful life | 5 years | |||||
Finite lived intangible asset, useful life | 5 years | |||||
Minimum monthly royalty payment obligations percentage | 6.00% | |||||
Simplicity One Brasil Ltd [Member] | ||||||
Equity method investment, ownership percentage | 76.00% | |||||
Simplicity Happy Valley, LLC and Simplicity Redmond, LLC [Member] | ||||||
Equity method investment, ownership percentage | 79.00% | |||||
Simplicity El Paso, LLC [Member] | ||||||
Equity method investment, ownership percentage | 51.00% |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 27,135 | $ 8,651 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) | Aug. 31, 2020 | May 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 408,503 | $ 295,503 |
Less accumulated depreciation | (89,905) | (62,770) |
Net property plant and equipment | 318,598 | 232,733 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 52,189 | 52,189 |
Property and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 356,314 | $ 243,314 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 66,614 | $ 51,406 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2020 | May 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible assets, Cost | $ 2,588,118 | $ 2,438,118 |
Accumulated Amortization | 363,358 | 296,744 |
Intangible assets, Net Carrying Value | $ 2,224,760 | $ 2,141,374 |
Non-Competes [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, useful life | 4 years | 4 years 6 months |
Finite lived intangible assets, Cost | $ 1,023,118 | $ 1,023,118 |
Accumulated Amortization | 341,039 | 289,884 |
Intangible assets, Net Carrying Value | $ 682,079 | $ 733,234 |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, useful life, description | Indefinite | Indefinite |
Finite lived intangible assets, Cost | $ 866,000 | $ 866,000 |
Accumulated Amortization | ||
Intangible assets, Net Carrying Value | $ 866,000 | $ 866,000 |
Customer Database [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, useful life | 2 years | |
Finite lived intangible assets, Cost | $ 35,000 | |
Accumulated Amortization | 2,917 | |
Intangible assets, Net Carrying Value | $ 32,083 | |
Restrictive Covenant [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, useful life | 2 years | |
Finite lived intangible assets, Cost | $ 115,000 | |
Accumulated Amortization | 9,583 | |
Intangible assets, Net Carrying Value | $ 105,417 | |
Customer Contracts [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, useful life | 10 years | 10 years |
Finite lived intangible assets, Cost | $ 546,000 | $ 546,000 |
Accumulated Amortization | 8,152 | 5,443 |
Intangible assets, Net Carrying Value | $ 537,848 | $ 540,557 |
Internet Domain [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, useful life | 2 years | 2 years 6 months |
Finite lived intangible assets, Cost | $ 3,000 | $ 3,000 |
Accumulated Amortization | 1,667 | 1,417 |
Intangible assets, Net Carrying Value | $ 1,333 | $ 1,583 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Future Amortization of Intangible Assets (Details) | Aug. 31, 2020USD ($) |
2021 | $ 264,253 |
2022 | 333,992 |
2023 | 264,659 |
2024 | 173,148 |
2025 | 53,785 |
Thereafter | 268,923 |
Total | 1,358,760 |
Non-Competes [Member] | |
2021 | 153,468 |
2022 | 204,624 |
2023 | 204,624 |
2024 | 119,363 |
2025 | |
Thereafter | |
Total | 682,079 |
Customer Contracts [Member] | |
2021 | 53,785 |
2022 | 53,785 |
2023 | 53,785 |
2024 | 53,785 |
2025 | 53,785 |
Thereafter | 268,923 |
Total | 537,848 |
Restrictive Covenant [Member] | |
2021 | 43,125 |
2022 | 57,500 |
2023 | 4,792 |
2024 | |
2025 | |
Thereafter | |
Total | 105,417 |
Customer Database [Member] | |
2021 | 13,125 |
2022 | 17,500 |
2023 | 1,458 |
2024 | |
2025 | |
Thereafter | |
Total | 32,083 |
Internet Domain [Member] | |
2021 | 750 |
2022 | 583 |
2023 | |
2024 | |
2025 | |
Thereafter | |
Total | $ 1,333 |
Intangible Assets - Schedule _3
Intangible Assets - Schedule of Goodwill (Details) - USD ($) | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 |
Goodwill | $ 5,180,141 | $ 5,155,141 | $ 6,682,000 |
The Simplicity Esports, LLC [Member] | |||
Goodwill | 4,456,250 | 4,456,250 | |
Simplicity El Paso, LLC [Member] | |||
Goodwill | 25,000 | ||
PLAYLive Nation, Inc [Member] | |||
Goodwill | $ 698,891 | $ 698,891 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) | Jun. 26, 2020 | Jan. 14, 2020 | Aug. 31, 2020 | Jul. 01, 2020 | Jun. 04, 2020 |
Percentage interest acquired | 49.00% | ||||
Payment on acquisition | $ 150,000 | ||||
Share issued price per share | $ 1.84 | $ 1.16 | |||
Purchase price | 315,000 | ||||
Common stock issued during the period | $ 25,000 | ||||
Unrelated Third Party [Member] | |||||
Common stock issued during the period | $ 165,000 | ||||
Simplicity One Brasil Ltd [Member] | |||||
Percentage interest acquired | 90.00% | ||||
Payment on acquisition | $ 2,000 | ||||
Simplicity El Paso, LLC [Member] | |||||
Percentage interest acquired | 51.00% | ||||
Shares issued franchise acquisition | 150,000 | ||||
Share issued price per share | $ 1.10 | ||||
Purchase price | $ 315,000 |
Acquisitions - Schedule of Esti
Acquisitions - Schedule of Estimated Fair Value of Assets Acquired and Liabilities (Details) - USD ($) | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 |
Goodwill | $ 5,180,141 | $ 5,155,141 | $ 6,682,000 |
Simplicity El Paso, LLC [Member] | |||
Merchandise | 27,000 | ||
Furniture, Fixtures and Equipment | 113,000 | ||
Customer Database | 35,000 | ||
Goodwill | 25,000 | ||
Restrictive Covenant | 115,000 | ||
Total value of acquisition | $ 315,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Jul. 01, 2020 | Jun. 02, 2020 | Sep. 30, 2019 | Sep. 13, 2017 | Aug. 31, 2020 | Oct. 13, 2020 | Jun. 22, 2020 | May 31, 2020 | May 12, 2020 | May 07, 2020 |
Number of shares purchased | 6,465,617 | |||||||||
Number of shares issued restricted shares | 150,000 | |||||||||
William H. Herrmann [Member] | ||||||||||
Number of shares issued restricted shares | 23,809 | |||||||||
William H. Herrmann [Member] | Restricted Stock [Member] | ||||||||||
Sale of stock, price per share | $ 1.09 | |||||||||
Number of shares issued restricted shares | 23,809 | |||||||||
Number of shares issued restricted shares, value | $ 25,000 | |||||||||
Kaplan Promissory Note [Member] | ||||||||||
Debt instrument, face amount | $ 45,000 | |||||||||
Kaplan Promissory Note [Member] | Jed Kaplan [Member] | ||||||||||
Debt instrument, face amount | $ 25,272 | $ 25,272 | $ 90,000 | $ 64,728 | $ 90,000 | |||||
Equity method investment, ownership percentage | 10.00% | 10.00% | 5.00% | |||||||
Debt principal amount | $ 90,000 | |||||||||
I-AM Capital Partners LLC (the "Sponsor") [Member] | ||||||||||
Number of shares agreed to be purchased under commitment | 26,250 | |||||||||
Private Placement [Member] | ||||||||||
Number of shares purchased | 254,500 | |||||||||
Sale of stock, price per share | $ 10 | |||||||||
Proceeds from sale of private units | $ 2,545,000 | |||||||||
Private Placement [Member] | I-AM Capital Partners LLC (the "Sponsor") [Member] | ||||||||||
Number of shares purchased | 7,000 | |||||||||
Sale of stock, price per share | $ 10 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | Aug. 31, 2020 | Jul. 31, 2020 | Jul. 29, 2020 | Sep. 30, 2019 | Aug. 31, 2020 | May 31, 2020 |
Other Commitments [Line Items] | ||||||
Number of shares issued under purchase option | 6,465,617 | |||||
Weighted average discount rate | 10.40% | 10.40% | ||||
Weighted average remaining lease term | 41 months | 41 months | ||||
Operating lease right-of-use assets | $ 441,986 | $ 441,986 | $ 490,984 | |||
Operating lease expense | $ 56,000 | |||||
Number of common stock shares issued | 250,000 | |||||
Accrued interest | 216,625 | $ 216,625 | ||||
Operating Lease Liabilities [Member] | ||||||
Other Commitments [Line Items] | ||||||
Operating lease liabilities | $ 441,986 | $ 441,986 | ||||
Underwriter [Member] | ||||||
Other Commitments [Line Items] | ||||||
Sale of stock, price per share | $ 13 | $ 13 | ||||
Jed Kaplan [Member] | ||||||
Other Commitments [Line Items] | ||||||
Cash bonus | $ 75,000 | |||||
Number of common stock shares issued | 45,000 | 320,000 | ||||
Accrued interest | $ 75,000 | $ 75,000 | ||||
Jed Kaplan [Member] | Kaplan 2020 Agreement [Member] | ||||||
Other Commitments [Line Items] | ||||||
Monthly base salary | $ 5,000 | |||||
Number of shares of common stock fully vested upon grant | 15,000 | |||||
Cash bonus | $ 50,000 | |||||
Initial term | 1 year | |||||
Board of Directors [Member] | ||||||
Other Commitments [Line Items] | ||||||
Number of common stock shares issued | 250,000 | |||||
Mr. Franklin [Member] | ||||||
Other Commitments [Line Items] | ||||||
Number of shares of common stock fully vested upon grant | 250,000 | |||||
Cash bonus | $ 216,625 | $ 75,000 | 216,625 | |||
Number of common stock shares issued | 16,500 | 271,000 | ||||
Accrued interest | $ 75,000 | 75,000 | ||||
Mr. Franklin [Member] | Franklin 2020 Agreement [Member] | ||||||
Other Commitments [Line Items] | ||||||
Monthly base salary | $ 12,500 | |||||
Number of shares of common stock fully vested upon grant | 6,250 | |||||
Cash bonus | $ 50,000 | |||||
Employee and Directors [Member] | ||||||
Other Commitments [Line Items] | ||||||
Number of common stock shares issued for services | 192,000 | |||||
Initial Public Offering [Member] | ||||||
Other Commitments [Line Items] | ||||||
Market value of shares held | $ 15,000,000 | 15,000,000 | ||||
Initial Public Offering [Member] | Underwriters [Member] | ||||||
Other Commitments [Line Items] | ||||||
Aggregate exercise price of unit sold to underwriters | $ 100 | |||||
Number of shares issued under purchase option | 250,000 | |||||
Options exercisable, per unit | 11.50 | 11.50 | ||||
Over-Allotment Option [Member] | Underwriters [Member] | ||||||
Other Commitments [Line Items] | ||||||
Aggregate exercise price of unit sold to underwriters | $ 2,990,000 | |||||
Number of shares issued under purchase option | 260,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule Showing the Future Minimum Lease Payments (Details) - Operating Lease Liabilities [Member] | Aug. 31, 2020USD ($) |
2021 | $ 126,395 |
2022 | 147,278 |
2023 | 151,832 |
2024 | 133,900 |
2025 | 90,017 |
Total Operating Lease Obligations | 649,422 |
Less: Amount representing interest | (207,436) |
Present Value of minimum lease payments | $ 441,986 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Aug. 31, 2020 | Aug. 10, 2020 | Aug. 07, 2020 | Jul. 31, 2020 | Jul. 02, 2020 | Jul. 01, 2020 | Jun. 18, 2020 | Jun. 04, 2020 | Apr. 29, 2020 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 20, 2018 | Aug. 31, 2020 | Aug. 31, 2019 | Oct. 13, 2020 | Jun. 22, 2020 | May 31, 2020 | May 12, 2020 |
Number of common stock issued | 25,000 | 85,905 | 250,000 | |||||||||||||||
Interest expenses | $ 154,128 | $ 6,675 | ||||||||||||||||
Principal amount of convertible securities | $ 100,000 | 100,000 | ||||||||||||||||
Jed Kaplan [Member] | ||||||||||||||||||
Number of common stock issued | 45,000 | 320,000 | ||||||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 12.00% | |||||||||||||||||
Principal amount of debt instrument | $ 333,333 | |||||||||||||||||
Number of common stock issued | 33,333 | |||||||||||||||||
Series A-1 Exchange Convertible Note [Member] | ||||||||||||||||||
Number of conversion of shares | 193,648 | |||||||||||||||||
Series A-1 Exchange Convertible Note [Member] | Accredited Investor [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 12.00% | |||||||||||||||||
Number of common stock issued | 55,000 | |||||||||||||||||
FirstFire Global Oppurtunities Fund, LLC [Member] | Securities Purchase Agreement [Member] | Accredited Investor [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 12.00% | |||||||||||||||||
Debt maturity date | Aug. 7, 2021 | |||||||||||||||||
Principal amount of debt instrument | $ 333,333 | |||||||||||||||||
Repayment of debt | 333,333 | |||||||||||||||||
Original issue discount | $ 33,333 | |||||||||||||||||
Number of common stock issued | 33,333 | |||||||||||||||||
FirstFire Global Oppurtunities Fund, LLC [Member] | Securities Purchase Agreement [Member] | Accredited Investor [Member] | Paid the Purchase Price In Exchange Of Amortization of Notes [Member] | ||||||||||||||||||
Repayment of debt | $ 300,000 | |||||||||||||||||
Securities Exchange Agreement [Member] | Series A-1 Exchange Convertible Note [Member] | ||||||||||||||||||
Principal amount of convertible securities | 1,500,000 | |||||||||||||||||
Debt forgiveness income | $ 300,000 | |||||||||||||||||
10% Fixed Convertible Promissory Note [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 10.00% | |||||||||||||||||
Principal amount of debt instrument | $ 152,500 | |||||||||||||||||
Repayment of debt | 201,300 | |||||||||||||||||
Interest repaid | 15,200 | |||||||||||||||||
Prepaid penalties | 33,600 | |||||||||||||||||
Debt interest expenses | 73,980 | |||||||||||||||||
Debt principal | 48,800 | |||||||||||||||||
Interest and prepayment penalties | $ 25,180 | |||||||||||||||||
10% Fixed Convertible Promissory Note [Member] | Harbor Gates Capital, LLC [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 10.00% | |||||||||||||||||
Debt maturity date | Oct. 29, 2020 | |||||||||||||||||
Principal amount of debt instrument | $ 152,000 | |||||||||||||||||
Repayment of debt | 152,500 | |||||||||||||||||
Original issue discount | $ 2,500 | |||||||||||||||||
Remaining unpaid principal amount percentage | 135.00% | |||||||||||||||||
Number of common stock issued | 10,000 | |||||||||||||||||
10% Fixed Convertible Promissory Note [Member] | Harbor Gates Capital, LLC [Member] | Two Tranches [Member] | ||||||||||||||||||
Debt description | 10,000 shares of common stock within three trading days of the Effective Date; and In the event the average of the three volume weighted average prices for the Company's common stock during the three consecutive trading days immediately preceding the date which is the 180th day following the Effective Date is less than $1.00 per share, then Harbor Gates will be entitled, and the Company will issue to Harbor Gates additional shares of common stock as set forth in the Harbor Gates Note. | |||||||||||||||||
Number of common stock issued | 10,000 | |||||||||||||||||
10% Fixed Convertible Promissory Note [Member] | Harbor Gates Capital, LLC [Member] | Guaranteed [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 20.00% | |||||||||||||||||
10% Fixed Convertible Promissory Note [Member] | Harbor Gates Capital, LLC [Member] | Mandatory Default Amount [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 35.00% | 35.00% | ||||||||||||||||
Harbor Gates Note [Member] | ||||||||||||||||||
Variable Conversion price of common stock description | The "Variable Conversion Price" will be equal to the lower of: (a) $1.00, or (b) 70% of the lowest volume weighted average price of the Company's common stock during the 15 consecutive trading days prior to the date on Harbor Gates elects to convert all or part of the Harbor Gates Note. | |||||||||||||||||
Self-Amortization Note [Member] | Delaware Corporation [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||||
Original issue discount | $ 82,999 | $ 149,500 | ||||||||||||||||
Interest expenses | $ 30,310 | |||||||||||||||||
Self-Amortization Note [Member] | Delaware Corporation [Member] | Securities Purchase Agreement [Member] | Accredited Investor [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 12.00% | |||||||||||||||||
Debt maturity date | Jun. 18, 2021 | |||||||||||||||||
Principal amount of debt instrument | $ 550,000 | |||||||||||||||||
Repayment of debt | 550,000 | |||||||||||||||||
Original issue discount | $ 55,000 | |||||||||||||||||
Debt description | The Holder paid the purchase price of $495,000 in exchange for the Amortization Note. In addition, pursuant to the terms of the SPA, the Company agreed to issue 55,000 shares of the Company's common stock to the Holder as additional consideration. | |||||||||||||||||
Number of common stock issued | 55,000 | |||||||||||||||||
Self-Amortization Note [Member] | Delaware Corporation [Member] | Securities Purchase Agreement [Member] | Holders [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 125.00% | 125.00% | ||||||||||||||||
Equity method investment, ownership percentage | 4.99% | 4.99% | ||||||||||||||||
Self-Amortization Note [Member] | Delaware Corporation [Member] | Securities Purchase Agreement [Member] | Holders [Member] | Minimum [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 15.00% | 15.00% | ||||||||||||||||
Self-Amortization Note [Member] | Delaware Corporation [Member] | Securities Purchase Agreement [Member] | Lenders [Member] | ||||||||||||||||||
Interest expenses | 23,477 | |||||||||||||||||
Kaplan Promissory Note [Member] | ||||||||||||||||||
Principal amount of debt instrument | $ 45,000 | |||||||||||||||||
Kaplan Promissory Note [Member] | Jed Kaplan [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 3.00% | |||||||||||||||||
Principal amount of debt instrument | $ 25,272 | $ 25,272 | $ 25,272 | $ 90,000 | $ 64,728 | $ 90,000 | ||||||||||||
Equity method investment, ownership percentage | 10.00% | 10.00% | 10.00% | 5.00% | ||||||||||||||
Debt instrument, effective interest percentage | 10.00% | |||||||||||||||||
Series A 1 Exchange Convertible Note [Member] | ||||||||||||||||||
Number of conversion of shares | 193,648 | |||||||||||||||||
Series A 1 Exchange Convertible Note [Member] | Securities Exchange Agreement [Member] | Series A-1 Exchange Convertible Note [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 2.67% | |||||||||||||||||
Principal amount of convertible securities | $ 500,000 | |||||||||||||||||
Description of payment terms | The Company was permitted to pay the interest in cash or at its sole discretion, in shares of its common stock or a combination of cash and common stock. However, the Company could only pay the interest in shares of its common stock if (i) all the equity conditions specified in the note ("Equity Conditions") had been met (unless waived by Maxim in writing) during the 20 trading days immediately prior to the interest payment date ("Interest Notice Period"), (ii) the Company had provided proper notice pursuant to the terms of the note and (iii) the Company had delivered to Maxims' account certain number of shares of its common stock to be applied against such interest payment prior to (but no more than five trading days before) the Interest Notice Period. | |||||||||||||||||
Conversion price | $ 1.93 | |||||||||||||||||
Description of restrictive conversion terms | The Company was not permitted to convert any portion of the Series A-1 Note if doing so results in Maxim beneficially owning more than 4.99% of the outstanding common stock of the Company after giving effect to such conversion, provided that on 61 days' prior written notice from Maxim to the Company, that percentage could increase to 9.99%. | |||||||||||||||||
Series A 2 Exchange Convertible Note [Member] | Securities Exchange Agreement [Member] | Series A-1 Exchange Convertible Note [Member] | ||||||||||||||||||
Principal amount of convertible securities | $ 1,000,000 | |||||||||||||||||
Description of conversion terms | Automatically adjusted to the lower of (i) the conversion price then in effect, and (ii) the greater of the arithmetic average of the VWAP of the Company's common stock in the five trading days prior to the notice of conversion and $0.50. | |||||||||||||||||
Promissory Note [Member] | Securities Exchange Agreement [Member] | Series A-1 Exchange Convertible Note [Member] | ||||||||||||||||||
Principal amount of debt instrument | $ 1,800,000 | $ 1,800,000 | ||||||||||||||||
Maxim Note [Member] | ||||||||||||||||||
Debt instrument, default interest rate | 10.00% | |||||||||||||||||
Debt description | The Parties agreed to the following: (i) Maxim's resale of the Company's common stock (the "Common Stock") underling the Maxim Note shall be limited to 10% of the daily volume of the Common Stock on each respective trading day, (ii) the maturity date of the Maxim Note was extended to December 31, 2020, (iii) the principal amount of the Maxim Note was increased by $100,000, and (iv) the reference to "$1.93" in Section 4(b) of the Maxim Note was replaced with "$1.15". | |||||||||||||||||
Debt interest expenses | 18,044 | |||||||||||||||||
Debt principal | 900,000 | |||||||||||||||||
Interest and prepayment penalties | $ 55,869 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt Instrument (Details) - USD ($) | Aug. 31, 2020 | May 31, 2020 |
Total | $ 1,603,881 | $ 1,192,048 |
10% Fixed Convertible Promissory Note [Member] | ||
Total | 152,500 | |
Discount 10% Convertible Promissory Note [Member] | ||
Total | (25,180) | |
June 18, 2020 Self-Amortization Note [Member] | ||
Total | 555,000 | |
Discount June 18, 2020 Self-Amortization Note [Member] | ||
Total | (119,190) | |
August 7, 2020 Self-Amortization Note [Member] | ||
Total | 333,333 | |
Discount August 7, 2020 Self-Amortization Note [Member] | ||
Total | (65,262) | |
Related Party Note [Member] | ||
Total | 64,728 | |
Convertible Note Payable [Member] | ||
Total | $ 900,000 | $ 1,000,000 |
Debt - Schedule of Prepayment o
Debt - Schedule of Prepayment of Debt Note (Details) | 3 Months Ended |
Aug. 31, 2020 | |
Under 30 [Member] | |
Payment Amount | 115% of Principal Amount (as hereinafter defined) so paid |
Debt interest rate | 115.00% |
31-60 [Member] | |
Payment Amount | 120% of Principal Amount so paid |
Debt interest rate | 120.00% |
61-90 [Member] | |
Payment Amount | 125% of Principal Amount so paid |
Debt interest rate | 125.00% |
91-180 [Member] | |
Payment Amount | 135% of Principal Amount so paid |
Debt interest rate | 135.00% |
Debt - Schedule of Amortization
Debt - Schedule of Amortization Payments (Details) | Aug. 31, 2020USD ($) |
June 18, 2020 Self-Amortization Note [Member] | Holders [Member] | |
Total | $ 594,921 |
June 18, 2020 Self-Amortization Note [Member] | 10/16/2020 [Member] | |
Total | 66,125 |
June 18, 2020 Self-Amortization Note [Member] | 11/16/2020 [Member] | |
Total | 66,125 |
June 18, 2020 Self-Amortization Note [Member] | 12/16/2020 [Member] | |
Total | 66,125 |
June 18, 2020 Self-Amortization Note [Member] | 01/18/2021 [Member] | |
Total | 66,125 |
June 18, 2020 Self-Amortization Note [Member] | 02/18/2021 [Member] | |
Total | 66,125 |
June 18, 2020 Self-Amortization Note [Member] | 03/18/2021 [Member] | |
Total | 66,125 |
June 18, 2020 Self-Amortization Note [Member] | 04/16/2021 [Member] | |
Total | 66,125 |
June 18, 2020 Self-Amortization Note [Member] | 05/18/2021 [Member] | |
Total | 66,125 |
June 18, 2020 Self-Amortization Note [Member] | 06/18/2021 [Member] | |
Total | 65,921 |
August 7, 2020 Self-Amortization Note [Member] | Holders [Member] | |
Total | 360,558 |
August 7, 2020 Self-Amortization Note [Member] | 12/07/2020 [Member] | |
Total | 40,075 |
August 7, 2020 Self-Amortization Note [Member] | 01/07/2021 [Member] | |
Total | 40,075 |
August 7, 2020 Self-Amortization Note [Member] | 02/08/2021 [Member] | |
Total | 40,075 |
August 7, 2020 Self-Amortization Note [Member] | 03/08/2021 [Member] | |
Total | 40,075 |
August 7, 2020 Self-Amortization Note [Member] | 04/07/2021 [Member] | |
Total | 40,075 |
August 7, 2020 Self-Amortization Note [Member] | 05/07/2021 [Member] | |
Total | 40,075 |
August 7, 2020 Self-Amortization Note [Member] | 06/07/2021 [Member] | |
Total | 40,075 |
August 7, 2020 Self-Amortization Note [Member] | 07/07/2021 [Member] | |
Total | 40,075 |
August 7, 2020 Self-Amortization Note [Member] | 08/07/2021 [Member] | |
Total | $ 39,952 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Aug. 31, 2020 | Aug. 10, 2020 | Aug. 01, 2020 | Jul. 31, 2020 | Jul. 01, 2020 | Jun. 30, 2020 | Jun. 18, 2020 | Jun. 04, 2020 | Jun. 02, 2020 | Aug. 31, 2020 | Aug. 31, 2019 | Aug. 17, 2020 | Aug. 16, 2020 | Jul. 02, 2020 | May 31, 2020 | May 07, 2020 | Apr. 29, 2020 |
Class of Stock [Line Items] | |||||||||||||||||
Preferred stock, authorized | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||||
Preferred stock, issued | |||||||||||||||||
Preferred stock, outstanding | |||||||||||||||||
Common stock, authorized | 36,000,000 | 36,000,000 | 36,000,000 | 20,000,000 | 36,000,000 | ||||||||||||
Common stock holders rights | One vote for each share. | ||||||||||||||||
Common stock, issued | 9,329,190 | 9,329,190 | 7,988,975 | ||||||||||||||
Common stock, outstanding | 9,329,190 | 9,329,190 | 7,988,975 | ||||||||||||||
Number of common stock shares issued | 25,000 | 85,905 | 250,000 | ||||||||||||||
Number of shares of common stock restricted | 150,000 | ||||||||||||||||
Share price | $ 1.84 | $ 1.16 | |||||||||||||||
Proceeds from issuance of common stock | $ 100,000 | ||||||||||||||||
Number of common stock shares issued stock based compensation | 250,000 | ||||||||||||||||
Stock-based compensation | $ 150,095 | $ 45,000 | |||||||||||||||
10% Fixed Convertible Promissory Note [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Debt instrument, default interest rate | 10.00% | ||||||||||||||||
Debt instrument, face amount | $ 152,500 | ||||||||||||||||
Marketing Agreement [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 27,778 | ||||||||||||||||
Share price | $ 1.10 | ||||||||||||||||
Securities Purchase Agreement [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 33,333 | ||||||||||||||||
Share price | $ 0.91 | ||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||
Debt instrument, face amount | $ 333,333 | ||||||||||||||||
William H. Herrmann [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of shares of common stock restricted | 23,809 | ||||||||||||||||
Share price | $ 1.09 | ||||||||||||||||
Proceeds from issuance of common stock | $ 25,000 | ||||||||||||||||
Accredited Investor [Member] | Series A-1 Exchange Convertible Note [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 55,000 | ||||||||||||||||
Share price | $ 1.13 | ||||||||||||||||
Proceeds from issuance of common stock | $ 550,000 | ||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||
Employees [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 78,890 | ||||||||||||||||
Share price | $ 0.97 | ||||||||||||||||
Jed Kaplan [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 45,000 | 320,000 | |||||||||||||||
Number of common stock shares issued stock based compensation | 45,000 | 320,000 | |||||||||||||||
Mr. Franklin [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 16,500 | 271,000 | |||||||||||||||
Number of common stock shares issued stock based compensation | 16,500 | 271,000 | |||||||||||||||
Directors and Employee [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 6,000 | 190,000 | |||||||||||||||
Share price | $ 1.01 | $ 0.87 | $ 1.01 | ||||||||||||||
Number of common stock shares issued stock based compensation | 6,000 | 190,000 | |||||||||||||||
Various Employees [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Share price | $ 0.97 | ||||||||||||||||
Number of common stock shares issued stock based compensation | 78,890 | ||||||||||||||||
Harbor Gates Capital, LLC [Member] | 10% Fixed Convertible Promissory Note [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 10,000 | ||||||||||||||||
Share price | $ 0.99 | ||||||||||||||||
Debt instrument, default interest rate | 10.00% | ||||||||||||||||
Debt instrument, face amount | $ 152,000 | ||||||||||||||||
Common Stock [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 23,809 | ||||||||||||||||
Number of common stock shares issued stock based compensation | 929,390 | ||||||||||||||||
Common Stock [Member] | Jed Kaplan [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 250,000 | 250,000 | |||||||||||||||
Share price | $ 0.865 | $ 0.865 | $ 0.865 | ||||||||||||||
Common Stock [Member] | Mr. Franklin [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 250,000 | 250,000 | |||||||||||||||
Share price | $ 0.865 | $ 0.865 | $ 0.865 | ||||||||||||||
Common Stock [Member] | Triton Funds LP [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 600,000 | ||||||||||||||||
Common Stock One [Member] | Jed Kaplan [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 50,000 | 50,000 | |||||||||||||||
Share price | $ 1.01 | $ 1.01 | $ 1.01 | ||||||||||||||
Common Stock One [Member] | Mr. Franklin [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 15,000 | 15,000 | |||||||||||||||
Share price | $ 1.01 | $ 1.01 | $ 1.01 | ||||||||||||||
Common Stock One [Member] | Triton Funds LP [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 725,000 | ||||||||||||||||
Common Stock Two [Member] | Jed Kaplan [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 10,000 | 10,000 | |||||||||||||||
Share price | $ 1.84 | $ 1.84 | $ 1.84 | ||||||||||||||
Common Stock Two [Member] | Mr. Franklin [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 3,000 | 3,000 | |||||||||||||||
Share price | $ 1.84 | $ 1.84 | $ 1.84 | ||||||||||||||
Common Stock Two [Member] | Triton Funds LP [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 600,000 | ||||||||||||||||
Common Stock Three [Member] | Jed Kaplan [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 20,000 | 20,000 | |||||||||||||||
Share price | $ 0.93 | $ 0.93 | $ 0.93 | ||||||||||||||
Common Stock Three [Member] | Mr. Franklin [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 3,000 | 3,000 | |||||||||||||||
Share price | $ 0.93 | $ 0.93 | 0.93 | ||||||||||||||
Common Stock Four [Member] | Jed Kaplan [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 20,000 | 20,000 | |||||||||||||||
Share price | $ 1.38 | $ 1.38 | 1.38 | ||||||||||||||
Common Stock Four [Member] | Mr. Franklin [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 9,000 | 9,000 | |||||||||||||||
Share price | $ 1.38 | $ 1.38 | 1.38 | ||||||||||||||
Common Stock Five [Member] | Jed Kaplan [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 15,000 | 15,000 | |||||||||||||||
Share price | $ 0.82 | $ 0.82 | 0.82 | ||||||||||||||
Common Stock Five [Member] | Mr. Franklin [Member] | |||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||
Number of common stock shares issued | 7,500 | 7,500 | |||||||||||||||
Share price | $ 0.82 | $ 0.82 | $ 0.82 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Outstanding Stock Warrants (Details) - Warrant [Member] | 3 Months Ended |
Aug. 31, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares stock warrants outstanding, Beginning balance | 6,424,000 |
Number of shares stock warrants, Granted | |
Number of shares stock warrants outstanding, Ending balance | 6,424 |
Warrants exercisable, Ending | 6,424,000 |
Average exercise price stock warrants, Beginning balance | $ / shares | $ 10.38 |
Average exercise price stock warrants, Granted | $ / shares | |
Average exercise price stock warrants, Ending balance | $ / shares | $ 10.38 |
Stock warrants granted shares, Expiration Date | May 2024 |
Segment and Related Informati_3
Segment and Related Information (Details Narrative) | 3 Months Ended |
Aug. 31, 2020Integer | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Segment and Related Informati_4
Segment and Related Information - Schedule of Segment Reporting Information (Details) - USD ($) | 3 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | May 31, 2020 | |
Revenues | $ 200,601 | $ 74,000 | |
Net Loss | (671,101) | 283,000 | |
Depreciation and Amortization | 93,000 | 8,600 | |
Capital Expenditures | 97,000 | ||
Goodwill | 5,180,141 | 6,682,000 | $ 5,155,141 |
Total Assets | 9,128,837 | 9,650,000 | $ 8,591,774 |
Franchise Royalties and Fees [Member] | |||
Revenues | 87,000 | 47,000 | |
Net Loss | (3,000) | 500 | |
Depreciation and Amortization | 400 | ||
Capital Expenditures | |||
Goodwill | 699,000 | 2,226,000 | |
Total Assets | 1,721,000 | 2,263,000 | |
Company Owned Stores [Member] | |||
Revenues | 77,000 | ||
Net Loss | (38,000) | ||
Depreciation and Amortization | 38,000 | ||
Capital Expenditures | |||
Goodwill | 25,000 | ||
Total Assets | 1,329,000 | ||
Esports Revenue [Member] | |||
Revenues | 37,000 | 23,000 | |
Net Loss | (105,000) | (62,500) | |
Depreciation and Amortization | 55,000 | ||
Capital Expenditures | |||
Goodwill | 4,456,000 | 4,456,000 | |
Total Assets | 5,665,000 | 5,947,000 | |
Corporates [Member] | |||
Revenues | |||
Net Loss | (509,000) | ||
Depreciation and Amortization | |||
Capital Expenditures | |||
Goodwill | |||
Total Assets | $ 414,000 | ||
Company Owned Stores [Member] | |||
Revenues | 4,000 | ||
Net Loss | (24,000) | ||
Depreciation and Amortization | 7,200 | ||
Capital Expenditures | 97,000 | ||
Goodwill | |||
Total Assets | 440,000 | ||
Corporate [Member] | |||
Revenues | |||
Net Loss | (197,000) | ||
Depreciation and Amortization | 1,000 | ||
Capital Expenditures | |||
Goodwill | |||
Total Assets | $ 1,000,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - $ / shares | Jul. 01, 2020 | Jun. 04, 2020 | Sep. 30, 2019 | Aug. 31, 2020 | Aug. 17, 2020 | Aug. 16, 2020 | May 31, 2020 |
Reverse stock split | A reverse stock split of the outstanding shares of the Company's common stock in the range from 1-for-2 to 1-for-10 | ||||||
Common stock, authorized | 36,000,000 | 36,000,000 | 20,000,000 | 36,000,000 | |||
Number of common stock shares issued | 25,000 | 85,905 | 250,000 | ||||
Resale of common stock | 6,465,617 | ||||||
Common stock description | The Company's registration statement on Form S-1 (the "September 2019 Registration Statement") related to (i) the issuance by the Company of up to 6,449,000 shares of common stock, which consist of (a) 5,200,000 shares of common stock that may be issued upon the exercise of 5,200,000 warrants (the "Public Warrants") originally sold as part of units in the Company's initial public offering (the "IPO") and which entitle the holder to purchase common stock at an exercise price of $11.50 per share of common stock, (b) 261,500 shares of common stock that may be issued upon the exercise of 261,500 warrants (the "Private Placement Warrants") underlying units originally issued in a private placement that closed simultaneously with the consummation of the IPO (the "Private Placement Units"), which entitle the holder to purchase common stock at an exercise price of $11.50 per share of common stock, and (c) 987,500 shares of our common stock, which represent shares of common stock that may be issued upon the exercise of 987,500 warrants (the "2019 Warrants", and together with the Public Warrants and Private Placement Warrants, the "Warrants") originally sold as part of units in a private placement that commenced on March 27, 2019 (the "2019 Private Placement") and which entitle the holder to purchase common stock at an exercise price of $4.00 per share of common stock, and (ii) the resale from time to time of 6,465,617 shares of common stock and 261,500 Private Placement Warrants by the selling securityholders named in the prospectus or their permitted transferees. | ||||||
Initial Public Offering [Member] | |||||||
Shared issued upon exercise | 5,200,000 | ||||||
Number of warrants sold | 5,200,000 | ||||||
Common stock exercise price | $ 11.50 | ||||||
Private Placement [Member] | |||||||
Shared issued upon exercise | 261,500 | ||||||
Number of warrants sold | 261,500 | ||||||
Common stock exercise price | $ 11.50 | ||||||
Resale of common stock | 254,500 | ||||||
2019 Private Placement [Member] | |||||||
Shared issued upon exercise | 987,500 | ||||||
Number of warrants sold | 987,500 | ||||||
Common stock exercise price | $ 4 | ||||||
Private Placement Warrants [Member] | |||||||
Number of warrants sold | 261,500 | ||||||
Maximum [Member] | |||||||
Number of common stock shares issued | 6,449,000 |