Cautionary Statements
This Quarterly Report on Form 10-Q ("Form 10-Q") may contain "forward-looking
statements," as that term is used in federal securities laws, about Good Gaming,
Inc. ("GMER," "we," "our," "us," the "Company," "management") and its financial
condition, results of operations and business. These statements include, among
others:
? statements concerning the potential benefits that we may experience from our
business activities and certain transactions we contemplate or have completed;
and
? statements of GMER's expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical facts. These
statements may be made expressly in this Form 10-Q. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"estimates," "opines," or similar expressions used in this Form 10-Q. These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause GMER's actual results to be materially different
from any future results expressed or implied by GMER in those statements. The
most important facts that could prevent GMER from achieving its stated goals
include, but are not limited to, the following:
(a) volatility or decline of our stock price;
(b) potential fluctuation of quarterly results;
(c) failure of GMER to achieve revenues or profits;
(d) inadequate capital to continue or expand our business, and inability to raise
additional capital or financing to implement our business plans;
(e) decline in demand for GMER's products and services;
(f) rapid adverse changes in markets;
(g) litigation with or legal claims and allegations by outside parties against
us, including but not limited to challenges to our intellectual property
rights; and
(h) insufficient revenues to cover operating costs.
There is no assurance that GMER will be profitable, 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.
4
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 which
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 which are poised to show significant growth.
5
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 15 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. Mr. Axt has
previously held executive level positions as Director of Marketing for
ProfitPoint Inc. and Clutch Holdings LLC. Mr. Axt is currently Vice President of
Marketing of ViaOne Services where he develops all marketing and customer
acquisition strategies for 14 consumer facing brands.
On July 10, 2017, the Company's Board of Directors elected David Dorwart its
CEO. Additionally, the Board of Directors approved 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 on the Board, effective
immediately.
On August 9, 2017, the Company announced a strategic review of its business,
which prompted improvements to its business model and a reduction in expenses
designed to 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 December 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 was the sale of Nano Factory Tokens at a discounted rate of 0.05
Ethereum. We raised the prices of Nano Factory Token to 0.15 Ethereum prior to
the full game launch in Q4 2021. Nano Factory Tokens obtained during the Genesis
Event were used to synthesize a Generation 0 Microbuddy™ at the game launch in
the 4th Quarter of 2021. Nano Factory Tokens were limited to 3 purchases per
wallet. Unsold Nano Factory Tokens were destroyed, and no Nano Factory Tokens
will be made available ever again.
6
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 the official launch date for beta testing to begin.
On November 11, 2021, the Company entered into a securities purchase agreement
with a several institutional and accredited investors pursuant to which the
Company will sell to the Investors in a private placement an aggregate of (i)
15,922,156 shares of common stock, (ii) pre-funded warrants to purchase up to an
aggregate of 4,811,181 shares of common stock and (iii) warrants to purchase up
to an aggregate of 20,733,337 shares of common stock for gross proceeds to the
Company of approximately $3,100,000. The combined purchase price for one share
of common stock and a warrant to purchase one share of common stock is $0.15 and
the combined purchase price for one pre-funded warrant to purchase one share of
common stock and a warrant to purchase one share of common stock is 0.1499.
On December 13, 2021, the Company announced that the mainnet launch of the
"MicroBuddies™" NFT game will be on Friday, December 17, 2021 at 7:00 PM EST.
This announcement comes after more than 95% of players involved in Beta I and
Beta II testing programs voted to launch the game at this time, based on
gameplay and user experience.
On December 21, 2021, the Company filed Amended and Restated Articles of
Incorporation with the Secretary of State of the State of Nevada in order to
increase the total number of authorized shares of the Company from two hundred
two million two hundred fifty thousand (202,250,000) authorized shares to two
hundred five million (205,000,000) authorized shares. Addition to that, the
Company filed a Certificate of Designation with the Secretary of State of the
State of Nevada, which established two million seven hundred fifty thousand
(2,750,000) shares of the Company's Series E Convertible Preferred Stock. Each
of the Series E Shares are convertible at the option of the holder at any time
into 1,000 shares of the Company's common stock. The holders of the Series E
Shares will vote together with the common stock on an as-converted basis. The
Series E Shares are not entitled to any dividend except that in the event that
the Board of Directors of the Company declares a dividend to any other class of
stock, Series E Shares are entitled to a dividend equal to what they would
receive on an as converted to common stock basis.
On March 7, 2022, the holder of one (1) share of Series C Preferred Stock of the
Company that entitles such holder to vote a majority of the issued and
outstanding voting securities of the Company's approved by written consent that
the Company adopt 2022 Stock Incentive Plan (the "2022 Plan"), which replaced
the 2018 Stock Incentive Plan. There are 30,000,000 shares authorized under the
2022 Plan, which is an increase from 10,000,000 authorized under the 2018 Plan.
Under the 2022 Plan, the board of directors of the Company (the "Board") may
decide at its sole discretion to grant equity awards to certain employees and
consultants, including employees and consultants of ViaOne Services, Inc., who
are also deemed consultants of the Company. In addition, on March 7, 2022,
Advisors, including David Dorwart, Kevin LaPierre, Brian Young, Brandon Young,
Byron Young, and Suleman Bhmani were each granted 762,395 shares under the 2022
Plan. Mr. Dorwart was also granted 885,600 shares as the principal executive
officer of the Company and David Sterling was granted 264,553 shares under the
2022 Plan.
On March 10, 2022, the Company issued a press release announcing enhancements to
its MicroBuddies NFT Game and the adoption of the 2022 Plan.
7
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 game play 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 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 adapted 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 which 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 gamemode, 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.The game
was launched on December 17, 2021 after more than 95% of players involved in
Beta 1 and 2 testing programs voted to launch the game based on gameplay and
user experience.
8
Business Strategy
In the past, our management team's business strategy was to be a full-service
company providing best in class Esports gaming tournaments and Minecraft
experiences. With the onset of the pandemic, the Esports industry has suffered a
considerable amount of lost business opportunities. We were not immune to the
effects of the pandemic on our Esports business. In addition, the size of the
PC-based Minecraft gaming community has shrunk considerably. We have taken a
hard look at both the Esports and Minecraft business verticals and determined
that both strategies are no longer in the best interest of the company and our
shareholders. We feel that both the Esports and Minecraft verticals do not have
significant upside in the future. As so, the Esports and Minecraft business
verticals will not comprise a meaningful segment of our ongoing business
strategy. We will not designate any future investment in either of these
verticals for the foreseeable future.
With the rise in the popularity of the crypto-currency and blockchain
technologies, the Company has decided to invest in the creation of its new game,
"MicroBuddies™" which combines Ethereum ERC721 NFTs (Non-fungible tokens),
non-standard ERC20 tokens (GOO™), and strategic, long-tail web browser gameplay
to replicate and create unique and collectible 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 and a .01 MATIC per "MicroBuddy™" replication. In 2022,
we will introduce additional initiatives around the "MicroBuddies™ intellectual
property. We expect the ancillary "MicroBuddies™" initiatives to create
consistent, recurring revenue over the life of the property.
Moving forward, we are going to expand the "MicroBuddies™" intellectual property
to metaverse/virtual world social gaming experiences. There are many current and
emerging metaverse/virtual world platforms. Some existing platforms already have
greater than one hundred million users while other platforms are slated to
launch later in 2022 or in 2023. We see building "MicroBuddies™" themed gaming
experiences in these types of metaverses/virtual worlds as a solid strategy to
create long tail revenue engines while exposing the "MicroBuddies™" franchise to
large, diverse audiences.
Employees
We have three full-time consultants, and three part-time contractors working on
various Good Gaming initiatives. The full-time consultants consist of one Chief
Operating Officer, one Software Engineer and one Community Manager. The
part-time consultant team consists of two graphic designers and one video
editor. Pursuant to our Management Services Agreement with ViaOne Services LLC,
certain employees of ViaOne are deemed to be consultants of the Company.
Offices
Our executive offices are located at 415 McFarlan Rd, Suite 108, Kennett Square,
PA 19501. Our telephone number is (844) 419-7445.
9
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, 2021. 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 MicroBuddies™ vertical via ancillary
gaming initiatives across a variety of interactive platforms.
2 Continue to promote and increase players of the Digital Collectibles game
MicroBuddies™ to expand revenue generated by the various aspects of game play.
3 Launch the metaverse/virtual world gaming initiative within a well-established
third party experience that has a large, already established, global reach.
Continue to evaluate opportunities that have synergies to our existing business
line and create continuing revenue streams.
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.
10
Results of Operations
The six months ended June 30, 2022 as compared to June 30, 2021
? Working Capital
June 30, 2022 June 30, 2021
Current Assets $ 1,576,692 $ 5,145
Current Liabilities 446,704 6,984,781
Working Capital (Deficit) $ 1,129,988 $ (6,979,636 )
? Operating Revenues
We have generated $1,744 in revenue in the six months ended June 30, 2022 and
$60,529 in revenue in the six months ended June 30, 2021, which reflects a
decrease of $58,785 or -97.1%. The decrease in revenue was attributed to the
decrease in activity on the Microbuddies game.
? Operating Expenses and Net Loss
Operating expenses for the six months ended June 30, 2022 were $906,257 compared
with $250,811 for the six months ended June 30, 2021, which reflects an increase
of $655,446 or 261.3%. The increase in expenses was attributable to a change in
professional fees for advertising and promotion, increase in Viaone monthly
management fee, and charge for employee stock compensation program.
During the six months ended June 30, 2022, the Company recorded net loss of
($1,177,735) compared with a net loss of ($3,311,016) for the six months ended
June 30, 2021, which reflects an decrease of $2,133,281 or -64%. The decrease in
net loss was attributed to recognition of impairment to the fair value of
derivative liability in 2022.
? Liquidity and Capital Resources
As of June 30, 2022, the Company's cash balance consisted of $1,552,889 compared
to cash balance of $5,145 as of June 30, 2021. The increase in the cash balance
was attributed to the increase in additional paid in capital for common stock.
As of June 30, 2022 the Company had $1,690,721 in total assets compared to total
assets of $61,718 at June 30, 2021. The increase in total assets was attributed
to additional investment capital payments received.
As of June 30, 2022, the Company had total liabilities of $446,704 compared with
total liabilities of $6,984,781 as of June 30, 2021. The decrease in liabilities
was attributable to Viaone Note conversion to shares of stock and decrease in
derivative liabilities.
As of June 30, 2022, the Company has a working capital of $1,129,988 compared
with a working capital deficit of $6,979,636 as of June 30, 2021. The positive
working capital is due to additional investor capital payments, used for general
working capital purposes.
11
Cash flow from Operating Activities
During the six months ended June 30, 2022, the Company used $888,131, of cash
for operating activities compared to the use of cash in an amount of $169,460
for operating activities during the six months ended June 30, 2021, which
reflects an increase of $718,671 or 4.24%. The increase in the use of cash for
operating activities was attributed to the company's increase in advertising and
promotions and management fees.
Cash flow from Investing Activities
The Company had $39,681 in cash generated from investing activities during the
six month ended June 30, 2022 and $51,778 in cash used in investing activities
for the six month ended June 30, 2021. The increase of $39,681 in cash in
investing activities was attributed to the sale of digital assets related to the
creation of NFTs for MicroBuddies.
Cash flow from Financing Activities
During the six months ended June 30, 2022, the Company used $6,628 in financing
activities compared to $224,078 cash generated during the six months ended June
30, 2021, which reflects a decrease of $230,706. The decrease in proceeds from
financing activities was due to the decrease in financing that we received for
day-to-day activities.
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 June 30, 2022, 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 financing to fund our operations and
other activities.
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© Edgar Online, source Glimpses
GOOD GAMING, INC. 
