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APPLICABLE ONLY TO CORPORATE ISSUERS: | ||
As of June 30, 2016, there were 1,995,290,000 shares of the registrant's $0.001 par value common stock issued and outstanding. |
Good Gaming, Inc. | |||
Form 10-Q | |||
For the Fiscal Quarter Ended June 30, 2016 | |||
TABLE OF CONTENTS | |||
Page | |||
Part I | |||
Item 1 | Financial Statements | 3 | |
Item 2 | Management Discussion and Analysis of Financial Condition and Results of Operations | 14 | |
Item 3 | Quantitave and Qualitative Disclosures About Market Risk | 18 | |
Item 4 | Controls and Procedures | 18 | |
Part II | |||
Item 1 | Legal Proceedings | 19 | |
Item 1A | Risk Factors | 19 | |
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 19 | |
Item 3 | Defaults Upon Senior Securities | 20 | |
Item 4 | Mine Safety Disclosures | 20 | |
Item 5 | Other Information | 20 | |
Item 6 | Exhibits | 21 | |
22 | |||
Signatures |
1.
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Nature of Operations and Continuance of Business
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2.
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Summary of Significant Accounting Policies
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(a)
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Basis of Presentation and Principles of Consolidation
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(b)
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These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company's fiscal year-end is December 31.
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(c)
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Use of Estimates
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(d)
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Cash and Cash Equivalents
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(e)
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Intangible Assets
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2.
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Summary of Significant Accounting Policies (continued)
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(f)
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Impairment of Long-Lived Assets
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(g)
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Beneficial Conversion Features
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(h)
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Derivative Liability
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(i)
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Basic and Diluted Net Loss Per Share
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(j)
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Income Taxes
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(k)
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Comprehensive Loss
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(l)
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Financial Instruments
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2.
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Summary of Significant Accounting Policies (continued)
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Balance, December 31, 2014
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Conversions
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Changes in Fair Values
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Balance, June 30, 2016
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|||||||||||||
Derivative Liability
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$
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453,741
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$
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—
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$
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281,359
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$
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735,100
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(m)
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Recent Accounting Pronouncements
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3.
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Other Assets
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4.
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Debt
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(a)
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On April 15, 2015, the Company entered into a $100,000 convertible debenture with a non-related party. During the quarter ended June 30, 2015 The Company received the first $50,000 payment. The remaining $50,000 payment will be made at the request of the borrower. No additional payments have been made as of March 31, 2016. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and is due on October 16, 2016. The note is convertible into shares of common stock any time after the maturity date at a conversion rate of 50% of the average of the five lowest closing bid prices of the Company's common stock for the thirty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As of March 31, 2016, the Company recorded accrued interest of $1,260 (December, 31, 2015 $3,894), which has been included in accounts payable and accrued liabilities. The lender has agreed to sell this investment to the Company or to an investor of the Company’s choosing at face value plus interest.
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(b)
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On April 1, 2015, we entered into a transaction with Iconic Holdings, LLC (the "Purchaser"), whereby Iconic Holdings agreed to provide up to $600,000 through a structured convertible promissory note (the "Note"), with funds to be received in tranches. The note bears interest of 10% and is due April 1, 2016. The initial proceeds of $40,000 was received on April 9, 2015, with $30,000 remitted and delivered to us, $4,000 retained by the Purchaser as an original issue discount, and $6,000 retained by the Purchaser for legal expenses. In February 2016 as part of a settlement between the lender and the Company, the note along with a remaining balance of $8300 from former JABRO-Asher notes were restructured to a principle amount of $25,000 with a due date of June 18, 2017 and a 0% interest rate. The lender is subject to strict lock-up and leak-out provisions. Additionally, as part of the February 2016 settlement with the lender, the lender funded $100,000 new debentures due August 2018 bearing 0% interest with the lender subject to strict lock-up and leak-out provisions. The Company is currently negotiating the lock-up of these debentures from conversion into common stock for a period of one-year commencing June 10, 2016.
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(c)
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As part of the asset purchase agreement between HDS International Corp. and CMG Holdings Group, Inc., SirenGPS was issued a $60,000 0% interest convertible debenture that matures in August 2018. The debentures are convertible into common stock at a 20% discount to the 20-day moving average of the Company’s common stock after a period of seven months. The debt is subject to strict lock-up and leak-out provisions. SirenGPS has agreed to sell this security to the Company or to an investor of the Company’s choosing at face value.
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(d)
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On or around April 7, 2016, Silver Linings Management, LLC funded the Company $13,439.50 in the form of convertible debentures secured by certain high-powered gaming machines purchased from XIDAX. The notes bear interest at a rate of 10% per annum payable in cash or kind at the option of the Company, mature April 1, 2018, and are convertible into Series B Preferred shares at the option of the holder at any time.
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The Company did not allocate to equity any increase in note value due to the fact that the conversion value was lower than the par value. Thereby creating a zero or negative value.
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5.
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Derivative Liabilities
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Balance December 31, 2014
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$ | 70,290 | ||
Adjustment for Conversion
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(64,767 | ) | ||
Mark to market adjustment at December 31, 2015
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448,218 | |||
Balance December 31, 2015
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453,741 | |||
Adjustment for Conversion
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- | |||
Mark to market adjustment at June 30, 2016
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281,359 | |||
Balance June 30, 2016
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$ | 735,100 |
6.
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Common Stock
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7.
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Preferred Stock
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7.
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Preferred Stock
(continued)
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8.
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Related Party Transactions
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(a)
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As at June 30,2016, the Company owes $0 (December 31, 2015 – $570) to the previous President and CEO of the Company for reimbursement of expenses which has been included in accounts payable and accrued liabilities – related parties. The amount owing is unsecured, non-interest bearing, and due on demand.
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As at June 30, 2016, the Company owes $0 (December 31, 2015 – $6,100) to the previous President and CEO of the Company for reimbursement of expenses which has been included in accounts payable and accrued liabilities – related parties. The amount owing is unsecured, non-interest bearing, and due on demand.
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9.
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Income Taxes
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10.
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Stock Subscriptions
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11.
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Consulting Agreements
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On or around April 14, 2016, the Company formed and advisory Board and engaged Syndicate Studios, LLC for consulting services and issuing the Syndicate Studios 100,000,000 warrants with a two-year expiration and a strike price of $0.0002. The warrants do not vest for one year and are subject to mutually agreed to performance criteria. Sean Stalzer, owner of The Syndicate, has already been instrumental in introducing the Company to games publishers, members of the media, and gamers who have been vetting the Good Gaming 2.0 platform for the past few months.
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12.
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Subsequent Events
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On July 25, 2016, the Company engaged Kevin Harrington Enterprises (KBHJJ LLC) to provide consulting services, including introductions to potential investors and sponsors for eSports tournaments, among other things. As part of the Agreement, the Company appointed Kevin Harrington to its Advisory Board and issued KBHJJ one hundred million common stock purchase warrants with a two-year expiration, cashless exercise, and strike price of $0.0003. The warrants do not vest for a period of one year.
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ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION. |
June 31, | December 31, | |||||||
2016 | 2015 | |||||||
Current Assets | $ | 392,724 | $ | - | ||||
Current Liabilities | 918,786 | 639,842 | ||||||
Working Capital (Deficit) | (526,062 | ) | (639,872 | ) |
June 30, | December 31, | |||||||
2016 | 2015 | |||||||
Cash Flows from (used in) Operating Activities | $ | (149,453 | ) | $ | (73 | ) | ||
Cash Flows from (used in) Investment Activities | (13,440 | ) | - | |||||
Cash Flows from (used in) Financing Activities | 295,163 | - | ||||||
Net Increase (decrease) in Cash During Period | 132,270 | (73 | ) |
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Operating Revenues
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We have not generated any revenues since inception.
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Operating Expenses and Net Loss
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Liquidity and Capital Resources
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Cashflow from Operating Activities
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Cashflow from Investing Activities
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Cashflow from Financing Activities
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During the six months ended June 30, 2016, the Company received $1,723 cash from the purchase of Good Gaming assets. compared to $0 during the six months ended June 30, 2015. The Company received $113,440 in convertible debentures, $30,000 from sale of Cl B preferred stock and $150,000 from stock subscriptions.
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Subsequent Developments
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On July 25, 2016, the Company engaged Kevin Harrington Enterprises (KBHJJ LLC) to provide consulting services, including introductions to potential investors and sponsors for eSports tournaments, among other things. As part of the Agreement, the Company appointed Kevin Harrington to its Advisory Board and issued KBHJJ one hundred million common stock purchase warrants with a two-year expiration, cashless exercise, and strike price of $0.0003. The warrants do not vest for a period of one year.
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Going Concern
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ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
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Share Sales – Series B Preferred Shares
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On or around February 18, 2016, as part of the closing of the Good Gaming asset sale by CMG Holdings Group to HDS International Corp., CMG Holdings is due an additional 85,600,000 Series B Preferred Shares. These shares due are currently in the form of a subscription payable by HDS International to CMG Holdings Group.
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On or around February 18, 2016, Vikram Grover was issued 859,073 Series B Preferred shares in lieu of compensation due for services rendered to SirenGPS in 2015.
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On or around February 23, 2016, Andrew Albrecht was issued 2,000,000 Series B Preferred shares as consideration for an investment in the Company.
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On or around February 26, 2016, William Schultz funded monies to the Company and had a subscription receivable for 2,500,000 Series B Preferred shares as consideration for an investment in the Company.
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On or around February 26, 2016, Paul Rauner was issued 800,000 Series B Preferred shares as consideration for the strategic change of control transaction with CMG Holdings Group, Inc.
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On or around February 26, 2016, Galina Berkovich was issued 800,000 Series B Preferred shares as consideration for the strategic change of control transaction with CMG Holdings Group, Inc.
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On or around February 26, 2016, Bernard Mangold was issued 400,000 Series B Preferred shares as consideration for the strategic change of control transaction with CMG Holdings Group, Inc.
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On or around March 7, 2016, Silver Lining Management, an entity controlled by David Dorwart, our Director, funded monies to the Company and had a subscription receivable for 5,000,000 Series B Preferred shares as consideration for an investment in the Company.
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On or around March 15, 2016, Brett Nesland was issued 1,000,000 Series B Preferred shares as consideration for an investment in the Company.
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On or around April 22, 2016, William Crusoe was issued 1,000,000 Series B Preferred shares as consideration for an investment in the Company. The investor has since agreed to lockup his shares for a period of one year.
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On or around April 22, 2016, Francesca Dorwart was issued 1,000,000 Series B Preferred shares as consideration for an investment in the Company.
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The vast majority of the Series B Preferred stock investors have agreed to lock-up their investments for a period of one year as of May 2016.
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ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
ITEM 4. | MINE SAFETY DISCLOSURE. |
ITEM 5. | OTHER INFORMATION. |
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The vast majority of the Series B preferred stock investors have agreed to lock-up their investments for a period of one year. The vast majority of the convertible note holders have agreed to lock-up their investments for a period of one year. The balance have agreed to sell their positions to the Company or to investors of the Company’s choosing
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ITEM 6. | EXHIBITS |
Exhibit | I ncorporated by reference | Filed | |||
Number | Form | Date | Number | herewith | |
3.1 | Articles of Incorporation. | S-1 | 3/24/09 | 3.1 | |
3.2
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Bylaws.
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S-1
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3/24/09
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3.2
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3.3
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Amended and Restated Articles of Incorporation.
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8-K
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6/14/11
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3.1a
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3.4
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Amended and Restated Articles of Incorporation.
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8-K
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8/17/11
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3.1
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10.1 | Exchange Note Purchase Agreement between Jabro Funding Corp. and Iconic Holdings, LLC dated March 31, 2015. | 10-K | 4/15/15 | 10.1 | |
10.2 | Exchange Note Purchase Agreement with Iconic Holdings, LLC dated April 1,2015. | 10-K | 4/15/15 | 10.2 | |
10.3 | Convertible Promissory Note with Iconic Holdings, LLC dated April 1, 2015. | 10-K | 4/15/15 | 10.3 | |
10.4 | Investment Agreement (ELOC) and Registration Rights Agreement with Iconic Holdings, LLC dated April 2, 2015. | 10-K | 4/15/15 | 10.4 | |
10.5 | Common Stock Purchase Warrant with Iconic Holdings, LLC dated April 6, 2015. | 10-K | 4/15/15 | 10.5 | |
10.6 | Stock Conversion and Subscription Agreement with Hillwinds Ocean Energy, LLC dated April 3, 2015. | 10-K | 4/15/15 | 10.6 | |
10.7 | Stock Conversion and Subscription Agreement with SirenGPS, Inc. dated April 3, 2015. | 10-K | 4/15/15 | 10.7 | |
10.8
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Promissory Note issued to HGT Capital LLC. dated April 15, 2015
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8-K
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4/21/15
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10.1
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10.9 | Settlement Agreement and Mutual Release dated February 17, 2016 | 10-Q | 3/31/16 | 10.1 | |
10.10 | Convertible Promissory Note dated February 17, 2016 | 10-Q | 3/31/16 | 10.2 | |
14.1
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Code of Ethics.
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10-K
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3/29/11
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14.1
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X
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X
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101.INS | XBRL Instance Document. | X | |||
101.SCH | XBRL Taxonomy Extension – Schema. | X | |||
101.CAL | XBRL Taxonomy Extension – Calculations. | X | |||
101.LAB | XBRL Taxonomy Extension – Labels. | X | |||
101.PRE | XBRL Taxonomy Extension – Presentation. | X | |||
101.DEF | XBRL Taxonomy Extension – Definition. | X | |||
Reports on Form 8-K: | |||||
Amendment to Articles of Incorporation - Change of Name | 8-K | 6/30/16 | 5.03 and 7.02 | ||
HDS INTERNATIONAL CORP. | ||
(the "Registrant") | ||
BY: | VIKRAM GROVE | |
Vikram Grover | ||
President, Principal Executive Officer, | ||
Principal Financial Officer and Principal Accounting Officer |
1.
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I have reviewed this Form 10-Q for the quarter ended June 30, 2016 of Good Gaming, Inc.
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and,
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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