Cautionary Statements
This Quarterly Report on Form 10-Q ("Form 10-Q") may contain "forward-looking
statements," as that term is used in federal securities laws, about Good Gaming,
Inc. ("GMER," "we," "our," "us," the "Company," "management") and its financial
condition, results of operations and business. These statements include, among
others:
? statements concerning the potential benefits that we may experience from our
business activities and certain transactions we contemplate or have
completed; and
? statements of GMER's expectations, beliefs, future plans and strategies,
anticipated developments, and other matters that are not historical facts.
These statements may be made expressly in this Form 10-Q. You can find many
of these statements by looking for words such as "believes," "expects,"
"anticipates," "estimates," "opines," or similar expressions used in this
Form 10-Q. These forward-looking statements are subject to numerous
assumptions, risks, and uncertainties that may cause GMER's actual results to
be materially different from any future results expressed or implied by GMER
in those statements. The most important facts that could prevent GMER from
achieving its stated goals include, but are not limited to, the following:
(a) volatility or decline of our stock price;
(b) potential fluctuation of quarterly results;
(c) failure of GMER to achieve revenues or profits;
(d) inadequate capital to continue or expand our business, and inability to
raise additional capital or financing to implement our business plans;
(e) the decline in demand for GMER's products and services;
(f) rapid adverse changes in markets;
(g) litigation with or legal claims and allegations by outside parties against
us, including but not limited to challenges to our intellectual property
rights; and
(h) insufficient revenues to cover operating costs.
There is no assurance that GMER will be profitable, able to successfully
develop, manage or market its products and services, be able to attract or
retain qualified executives and personnel, able to obtain customers for its
products or services, additional dilution in outstanding stock ownership may be
incurred due to the issuance of more shares, warrants and stock options, the
exercise of outstanding warrants and stock options, or the conversion of
convertible promissory notes, and other risks inherent in GMER's businesses.
Because the statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by the forward-looking
statements. GMER cautions you not to place undue reliance on the statements,
which speak only as of the date of this Form 10-Q. The cautionary statements
contained or referred to in this section should be considered in connection with
any subsequent written or oral forward-looking statements that GMER or persons
acting on its behalf may issue. GMER does not undertake any obligation to review
or confirm analysts expectations or estimates or to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date of this Form 10-Q, or to reflect the occurrence of unanticipated
events.
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Overview
The Company was incorporated on November 3, 2008, under the laws of the State of
Nevada, to engage in certain business services. Our goal is to become a leading
tournament gaming provider as well as an online destination, targeting over 250
million esports players and participants worldwide that want to compete at the
high school or college level. We are a developmental stage business, have
generated limited revenues to date, and have a history of operating losses.
The Good Gaming platform was established in early 2014 by its founding members
who recognized the need that millions of gamers worldwide desired to play games
at competitive levels. The founders recognized that there was no structure or
organization on a large scale for amateur gamers while professional esports was
quickly establishing itself.
Good Gaming is effectively building the business infrastructure for the rapidly
growing esports industry, similar to the high school and college athletic
industry. Good Gaming is designed to be the gateway for amateur esports athletes
to compete at the semi-professional level, improve their gaming skills, and
interact with veteran gamers globally in a destination site and social
networking framework.
Good Gaming differs from the professional level of the esports industry by
focusing on more than approximately 250 million gamers that fall below the
professional level but are above the casual level, classified as "amateurs."
Good Gaming distinguishes itself from its direct and indirect competitors by
being the first company to offer multi-game, multi-console services at the
amateur esports level. The Company is not exclusive to any particular hardware
or software vendor.
On May 4, 2016, the Company announced that it had completed its first closed
public beta testing of their 2.0 tournament platform to determine the
functionality, speed, ease of use, and accuracy of the system and are preparing
to enter into full-blown production.
On February 18, 2016, the Company, formerly HDS International Corp., acquired
the assets of Good Gaming, Inc. from CMG Holdings Group, Inc. (OTCQB: CMGO). On
that date, the Company's former CEO, Paul Rauner, resigned. The Company
appointed Vikram Grover to the positions of CEO and Director of the board of
directors (the "Board"). Vikram Grover is a former Wall Street analyst and
investment banker with more than 20 years of experience in telecommunications,
media, and technology. In addition, David Dorwart was elected by the majority
shareholders to the Company's Board. Mr. Dorwart is the Co-Founder and Chairman
of Assist Wireless, Inc., a provider of lifeline wireless services to tens of
thousands of subscribers primarily in the Midwest.
On June 27, 2017, the Board of Directors of the Company appointed David B.
Dorwart as the Company's Chief Executive Officer. On June 21, 2017, Mr. Dorwart
was appointed to serve as the Chairman of the Board of Directors. David B.
Dorwart, Chairman and CEO of Good Gaming, Inc., brings over 31 years of start-up
entrepreneurism and executive level management to the Company. Mr. Dorwart was a
CoFounder and CEO of dPi Teleconnect, a prepaid wireless provider, for 10 years.
During his tenure, he grew the company from a start-up to $75 million in
revenues before selling the company. Over the last 9 years, he has been involved
with several other successful projects including Assist Wireless, Brooklet
Energy Distribution, PayGo Distributors, and Britton & Associates. He is
currently the Chairman and CoFounder of ViaOne Services, a company that
specializes in wireless communications and provides intricate multi-faceted
services for start-up companies utilizing industry experts. By virtue of their
ownership of this Series C Preferred Stock, ViaOne is the Company's principal
stockholder.
On June 27, 2017, the Company also bolstered its Board of Directors with
executive-level professionals by adding two seasoned individuals who specialize
in organization and finance as well as the branding and marketing of established
and emerging organizations that are poised to show significant growth.
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Domenic Fontana is currently the Sr. Vice President of ViaOne Services and a
board member. He is an experienced CPA and financial executive who has worked in
progressively more advanced executive roles throughout his career. Having worked
at Verizon, eBay, and now ViaOne Services over the last 14 years, he has
developed intimate and extensive knowledge of executive level management and the
telecommunications industry. He has worked in all aspects of Finance,
Accounting, Treasury, and Operations.
Jordan Majkszak Axt, a board member, is a results-producing marketing
professional with over 18 years of experience successfully developing marketing
and branding strategies. He has been consistently noted by executives,
colleagues, and journalists for his specific expertise in bringing products and
services online with a comprehensive digital go-to-market strategy. He has
previously held executive-level positions as Director of Marketing for
ProfitPoint Inc. and Clutch Holdings LLC. He is currently Vice President of
Marketing of ViaOne Services where he develops all marketing and customer
acquisition strategies for several consumer-facing brands.
On July 10, 2017, the Company's Board of Directors elected David Dorwart its
CEO. Additionally, the Board of Directors approved to elect Domenic Fontana and
Jordan Axt to the Company's Board of Directors.
On August 8, 2017, the board of directors of the Company accepted Vikram
Grover's resignation as the Treasurer of the Company and as a member of the
Board, effective immediately.
On August 8, 2017, the Board of the Company accepted Barbara Laken's resignation
as the Secretary of the Company and as a member of the Board, effective
immediately.
On August 9, 2017, the Company announced a strategic review of its business,
which prompted improvements to its business model and a reduction in expenses
designed to accelerate its move to free cash flow generation.
On August 29, 2017, Eric Brown became the Chief Operating Officer.
In September of 2017, the Company began focusing on its Minecraft server by
enhancing the development staff and launched an offering of microtransactions
after it saw the opportunity to generate revenue without adding a great deal of
overhead. The initial offering of microtransactions exceeded revenue
expectations and the Company has continued to expand the Minecraft server
offerings. The Company also began pursuing the acquisition of additional
Minecraft servers that were already established to begin scaling this effort.
In March of 2017, the Company began exploring potential partnerships with
various franchise opportunities related to both LAN centers and Virtual Reality
centers. Financial analysis and research on these opportunities is ongoing.
On March 21, 2018, the Company acquired Crypto Strategies Group, Inc. for
consideration of $500.
On December 12, 2018, the Company dissolved Crypto Strategies Group, Inc.
In March 2019, the Company discontinued Minecade and Olimpo servers and decided
to focus on Minecraft servers.
On March 11, 2019, Eric Brown resigned from the Chief Operating Officer's
position.
On March 19, 2021, the Company formulated a new plan to create a new game called
"MicroBuddies™" that combines Ethereum ERC721 NFTs (Non-fungible tokens),
non-standard ERC20 tokens (GOO™), and strategic gameplay to replicate and create
unique and rare NFTs. The game will be played online via the MicroBuddies
website and blockchain transactions take place on the Polygon Network.
On May 25th, 2021, Good Gaming, Inc. filed for a trademark on MicroBuddies™ and
other related game terms.
On May 28th, 2021, the initial launch of MicroBuddies™ began with the "Genesis
Event", which is the sale of Nano Factory Tokens at a discounted rate of 0.05
Ethereum. We expect to raise the prices of Nano Factory Token prices to 0.15
Ethereum prior to the full game launch in Q3 2021. Nano Factory Tokens obtained
during the Genesis Event will be used to synthesize a Generation 0 Microbuddy™
when the game fully launches in the 3rd Quarter of 2021. Nano Factory Tokens are
limited to 3 purchases per wallet. Unsold Nano Factory Tokens will be destroyed
and no Nano Factory Tokens will be made available ever again.
On September 14, 2021, Good Gaming, Inc. met all qualifications and have been
accepted by OTC Markets to uplist from Pink Sheet Current to the OTCQB tier for
trading.
On September 23, 2021, the Company announced that MicroBuddies™ will be launched
on the mainnet using Polygon, which is an Ethereum compatible blockchain
building platform that provides a secure and lower-cost alternative to
Ethereum's escalating gas fees and wait times. The Company also announced
October 5, 2021 as it's official launch date for beta testing to begin.
6
Technology
In 2016, the Company completed its 2.0 tournament platform and thereafter ran
dozens of robotic internal test tournaments and held numerous free-to-play
tournaments on large scales with its partner The Syndicate, the owner of the
world's longest-running online gaming guild that has 1,200 members worldwide.
Good Gaming conducted two closed public beta tournaments of hundreds of
participants in May 2016 in order to fully vet the system. After making roughly
100 fixes and changes to the system, it now runs smoothly. The system is
designed to scale to 512,000 concurrent competitors. The Company has updated the
system to handle team tournaments, which will further expand its opportunity to
popular titles that have tens of millions of active players and has recently
launched titles that have the potential for cross-platform play among Gaming PC,
Microsoft Xbox, and Sony PlayStation.
In 2017, the Company ran hundreds of tournaments on a regular basis with a
dedicated customer base of over 30,000 members. Additionally, the Company
expanded its website by offering content relevant to the member base with
information relating to gameplay strategy and game news. This generated nearly
100,000 unique visits per month. In an effort to monetize that traffic, the
Company employed the use of Google display advertising and tested a subscription
model. After careful evaluation of the Company's strategy, management decided to
move away from free tournaments and custom content and focus on growing and
monetizing our Minecraft server, which has grown substantially in popularity.
This decision was a result of comprehensive competitive analysis and evaluations
made in how the esports industry was shifting in its space. Tournaments and
custom content are currently suspended while the Company grows revenue and
focuses on expanding its efforts with Minecraft. The Company has also
aggressively evaluated several business models and acquisition opportunities to
resume its previous success as it is related to tournaments.
In 2018, the Company acquired the Minecade and Olimpo Minecraft servers in order
to deliver on expansion efforts. This move, coupled with the continued
advancement of the core Good Gaming Minecraft server substantially increased
revenues and traffic. By the end of the year, the Company struck a deal with a
prominent Minecraft influencer, which resulted in the single highest monthly
earnings achieved within the Minecraft division, to date.
In 2019, following a severe downturn of business in the Minecraft sector as a
whole, the Company decided to temporarily suspend the Minecade and Olimpo
networks and refocus its efforts back on the core Good Gaming server. Much of
the year was spent upgrading and overhauling the server's existing
infrastructure, which had grown stale over prior years. The Company adopted its
strategy to target long-term success and consistency through major innovations
in the SkyBlock and Prison game modes and began work towards an ambitious full
recode of the Minecade server.
In 2020, the Company finalized its infrastructure overhaul for use in upcoming
releases. A new, experimental version of Prison, Prison MMO, was launched as an
early access game mode in February 2020. Prison MMO is designed to be a
self-sustaining Minecraft game mode that incorporates elements of the Massively
Multiplayer Online video game genre. The Company expects steady growth from this
mode as it continues developing Prison MMO. On April 1, 2020, the Company
released its first iteration of a new SkyBlock game mode, SkyBlock Spring, to
some strong success. During the third quarter of 2020, the Company implemented a
new workflow management style and released its summer edition of SkyBlock. The
release of the summer edition signified a renewed focus on consistent growth
through regular, player-focused updates. The Company's fall release of Prison in
October 2020 resulted in its single highest revenue-producing month of the year,
to date.
In 2021, the Company kicked off the first quarter with major upgrades to its
Winter edition of SkyBlock along with the release of its Winter edition of
Prison. The Company used this period to experiment with new release schedules
and game mechanics with the goal of identifying how to further strengthen future
releases. Additionally, the Company formulated a new plan to create a new game
called "MicroBuddies™" that combines Ethereum ERC721 NFTs (Non-fungible tokens),
non-standard ERC20 tokens (GOO™), and strategic gameplay to replicate and create
unique and rare NFTs. The game will be played online via the MicroBuddies
website and blockchain transactions take place on the Polygon Network.
Business Strategy
In the past, our management team's strategy was to be a full-service company
providing best-in-class tournaments, the best platform on which they are played,
and content that is all about the esports world. We have looked at this strategy
and have changed the way we view our business.
It was our ambition and strategy to be great at providing a place for amateurs
to play. By focusing on what the gaming universe is lacking, it allowed us to
focus on the promotion of teams, leagues, and competition. We intended to begin
with local servers and expand organically from there. We recognized there are
millions of players who desire to compete within the gaming community.
In addition to focusing on our Minecraft division, the Company decided to invest
in the creation of its new game, MicroBuddies™ that combines Ethereum ERC721
NFTs (Non-fungible tokens), non-standard ERC20 tokens (GOO™), and strategic
gameplay to replicate and create unique and rare NFTs. ERC20 "GOO" tokens are
limited to use as an in-game currency only. This strategy will allow us to enter
the emerging NFT and blockchain gaming space. Initial revenues from
MicroBuddies™ will come from the sale of Nano Factory Tokens that will be used
to synthesize generation 0 of MicroBuddies™. Ongoing MicroBuddies™ revenues will
be generated from a 5% royalty on all of the sales of MicroBuddy™ NFTs in
third-party marketplaces. We will continue to devote resources to developing and
modifying Minecraft assets by introducing new SkyBlock Seasons and Minecraft
Prison game modes within our server. We feel that we have learned how to
monetize this business segment and will be able to continue to grow and have it
as a meaningful part of our business strategy.
Offices
Our executive offices are located at 415 McFarlan Rd, Suite 108, Kennett Square,
PA 19501. Our telephone number is (888) 295-7279.
7
Recently Issued Accounting Pronouncements
None.
RESULTS OF OPERATIONS
Our auditors have issued a going concern opinion on the financial statements for
the year ended December 31, 2020. This means that our auditors believed there
was substantial doubt that we could continue as an ongoing business for the next
twelve months from the date of issuance of this going concern opinion unless we
obtained additional capital. We generated little revenue in the past. We have
completed the development of our website, sourced out suppliers for products to
sell, and sourced out customers to buy our products. Accordingly, we need to
raise cash from sources other than operations. Our other source for cash at this
time is investments by others in our company and the revenue we generate from
the sales of our products. We need to raise cash to continue our project and
build our operations.
Plan of Operation - Milestones
We are at an early stage of our new business operations. Over the next twelve
months, our primary target milestones include:
1 Continue to achieve growth within our Minecraft division.
2 Complete the sales of the Nano Factory Tokens during the Genesis Event with
MicroBuddies™ and successfully launch and promote awareness of the
MicroBuddies ™ game
3 Continue to evaluate opportunities that have synergies to our existing
business line.
Limited operating history and need for additional capital
There is limited historical financial information about us upon which to base an
evaluation of our performance relating to our new business direction. We have
generated little revenue. We cannot guarantee we will be successful in our
business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources
and possible cost overruns due to price and cost increases in services and
products.
8
Results of Operations
The three months ended September 30, 2021, as compared to September 30, 2020
? Working Capital
September 30, September 30,
2021 2020
Current Assets $ 16,667 $ 19,319
Current Liabilities 19,460,129 3,306,105
Working Capital (Deficit) $ (19,443,462 ) $ (3,286,786 )
? Operating Revenues
We have generated $269,355 in revenue in the three months ended September 30,
2021, and $2,554 in revenue in the three months ended September 30, 2020, which
reflects an increase of $266,801 or 10,446%. The increase in revenue was
attributed to the sales of Nano Factory Tokens (NFTs) for the new game called
MicroBuddies™.
? Operating Expenses and Net Loss
Operating expenses for the three months ended September 30, 2021, were $452,176
compared with $104,343 for the three months ended September 30, 2020, which
reflects an increase of $347,833 or 333%. The increase in expenses was
attributed to a change in professional fees, contract labor, and advertising
expenses that are directly related to the new game MicroBuddies™.
During the three months ended September 30, 2021, the Company recorded a net
loss of $12,325,187 compared with a net income of $86,475 for the three months
ended September 30, 2020, which reflects a decrease in net income of $12,411,662
or -14,353%. The decrease in net income was attributed to the change in the
value of the Company's derivative liabilities.
The Nine months ended September 30, 2021, as compared to September 30, 2020
? Operating Revenues
We have generated $329,885 in revenue in the nine months ended September 30,
2021, and $7,880 in revenue in the nine months ended September 30, 2020, which
reflects an increase of $322,005 or 4,086% attributed to the sales of Nano
Factory Tokens (NFTs) for the new game called MicroBuddies™.
? Operating Expenses and Net Loss
Operating expenses for the nine months ended September 30, 2021, were $702,987
compared with $311,751 for the nine months ended September 30, 2020, which
reflects an increase of $391,236 or 125% was attributed to a change in
professional fees, contract labor, and advertising expenses that are directly
related to the new game MicroBuddies™.
During the nine months ended September 30, 2021, the Company recorded a net loss
of $15,636,203 compared with a net loss of $551,605 for the nine months ended
September 30, 2020, which reflects a decrease of $15,084,598 or -2735%. The
increase in net loss was attributed to the change in the value of the Company's
derivative liabilities.
? Liquidity and Capital Resources
As of September 30, 2021, the Company's cash balance consisted of $3,833
compared to a cash balance of $3,069 as of September 30, 2020. The increase in
the cash balance was attributed to the increase in financing that we received
for day-to-day activities. As of September 30, 2021, the Company had $344,130 in
total assets compared to total assets of $25,734 on September 30, 2020. The
increase in total assets was attributed to the purchase of digital assets that
create NFTs for MicroBuddies for a limited period of time.
As of September 30, 2021, the Company had total liabilities of $19,460,129
compared with total liabilities of $3,306,105 as of September 30, 2020. The
increase in liabilities was attributable to an increase in financing and
derivative liabilities.
As of September 30, 2021, the Company has a working capital deficit of
$19,443,462 compared with a working capital deficit of $3,286,786 as of
September 30, 2020, with the increase in the working capital deficit attributed
to an increase in financing the Company received for general working capital
purposes and the change in the value of the Company's derivative liabilities.
9
Cash flow from Operating Activities
During the nine months ended September 30, 2021, the Company used $211,135 of
cash for operating activities compared to the use of cash in an amount of
$317,000 for operating activities during the nine months ended September 30,
2020, which reflects a decrease of $105,865 or 33.40%. The decrease in the use
of cash for operating activities was attributed to the change in the value of
the Company's derivative liabilities offset by expenses related to MicroBuddies.
Cash flow from Investing Activities
The Company had $323,207 in cash used in investing activities compared to $5,335
for the quarter ended September 30, 2021, and September 30, 2020. The Company
decided to purchase digital assets that create NFTs for MicroBuddies.
Cash flow from Financing Activities
During the nine month ended September 30, 2021, the Company received $535,870 of
proceeds from financing activities compared to $323,382 during the nine month
ended September 30, 2020, which reflects an increase of $212,488 or 65.71%. The
increase in proceeds from financing activities was due to the increase in
financing that we received for day-to-day activities, which is directly related
to MicroBuddies and the Company issued stock based compensation for employees
and contractors working on MicroBuddies.
Going Concern
We have not attained profitable operations and are dependent upon obtaining
financing to pursue any extensive acquisitions and activities. For these
reasons, our auditors stated in their report on our audited financial statements
that they have substantial doubt that we will be able to continue as a going
concern for a period of one year from the issuance of these financial statements
without further financing.
Off-Balance Sheet Arrangements
As of September 30, 2021, we had no significant off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures, or capital resources
that are material to stockholders.
Future Financings
We will continue to rely on equity sales of our preferred shares in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to existing stockholders.
There is no assurance that we will achieve any additional sales of the equity
securities or arrange for debt or other financings to fund our operations and
other activities.
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GOOD GAMING, INC. 
