What changed in this filing

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Item 1. Financial Statements

2020-08-11 compared with 2020-05-15 · 464 added, 261 removed, 662 unchanged (52% of the section changed)

1 unchanged sentence

BLACK RIDGE OIL & GAS, INC.

CONSOLIDATED BALANCE SHEETS

CONDENSED BALANCE SHEETS

Current assets:

Investment in Allied Esports Entertainment, Inc.

Receivable from Allied Esports Entertainment, Inc.

5 unchanged sentences

Total property and equipment, net

Investment in Allied Esports Entertainment, Inc.

LIABILITIES AND STOCKHOLDERS' EQUITY

3 unchanged sentences

Deferred compensation

Notes payable, net of $251,205 of debt discounts at March 31, 2020

Total current liabilities

Long term liabilities

Notes payable

Total liabilities

1 unchanged sentence

Stockholders' equity:

Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares

issued and outstanding

Common stock, $0.001 par value, 500,000,000 shares authorized, 1,600,424

shares issued and outstanding

Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued and outstanding

Common stock, $0.001 par value, 500,000,000 shares authorized, 1,600,424 shares issued and outstanding

Additional paid-in capital

8 unchanged sentences

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Management fee income

11 unchanged sentences

Other income (expense):

Interest expense, including $13,795 of warrants issued as a debt discount

Loss on investments

Interest expense, including $363,645 and $377,440 of warrants issued as a debt discount for the three and six months ended June 30, 2020, respectively

Gain (loss) on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

Net loss before provision for income taxes

Net income (loss) before provision for income taxes

Provision for income taxes

Net income from continuing operations, net of tax

Net income (loss) from continuing operations, net of tax

Net income from discontinued operations

Net loss before non-controlling interest

Net income (loss) before non-controlling interest

Less net loss attributable to redeemable non-controlling interest

Net loss attributable to Black Ridge Oil & Gas, Inc.

Net income (loss) attributable to Black Ridge Oil & Gas, Inc.

$ (1,928,797 )

$ (1,301,024 )

Weighted average common shares outstanding - basic

4 unchanged sentences

BLACK RIDGE OIL & GAS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three Months Ended June 30, 2019

Stockholders'

Balance, December 31, 2018

Balance, March 31, 2019

$ (36,093,222 )

Common stock options granted for services to employees and directors

Net loss attributable to Black Ridge Oil & Gas, Inc.

Balance, June 30, 2019

$ (36,723,909 )

For the Three Months Ended June 30, 2020

Stockholders'

Balance, March 31, 2020

$ (34,002,978 )

Common stock options granted for services to employees and directors

Common stock warrants granted to employees and directors for personal guaranty on debt

Net income attributable to Black Ridge Oil & Gas, Inc.

Balance, June 30, 2020

$ (33,286,196 )

For the Six Months Ended June 30, 2019

Stockholders'

Balance, December 31, 2018

$ (35,422,885 )

Common stock options granted for services to employees and directors

Net loss attributable to Black Ridge Oil & Gas, Inc.

Balance, June 30, 2019

$ (36,723,909 )

For the Six Months Ended June 30, 2020

Stockholders'

Balance, December 31, 2019

$ (31,357,399 )

Common stock options granted for services to employees and directors

Common stock warrants granted to employees and directors for personal guaranty on debt

Net loss attributable to Black Ridge Oil & Gas, Inc.

Balance, March 31, 2020

See accompanying notes to unaudited condensed

financial statements.

Balance, June 30, 2020

$ (33,286,196 )

See accompanying notes to unaudited condensed financial statements.

BLACK RIDGE OIL & GAS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

$ (1,928,797 )

$ (1,301,024 )

Net income from discontinued operations

Net loss attributable to redeemable non-controlling interest

Adjustments to reconcile net loss attributable to Black Ridge Oil & Gas,

Adjustments to reconcile net loss

attributable to Black Ridge Oil & Gas, Inc.

to net cash used in operating activities:

1 unchanged sentence

Loss on investment in Allied Esports Entertainment, Inc.

securities, net

Amortization of stock options

12 unchanged sentences

Purchase of property and equipment

Net cash used in investing activities of continuing operations

Proceeds received from sale of investment in Allied Esports Entertainment, Inc.

Net cash provided by (used in) investing activities of continuing operations

Net cash provided by investing activities of discontinued operations

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an equity raise utilizing a rights offering and backstop agreement, raising net proceeds of $5,051,675 and issuing 1,439,400 shares.

The proceeds were used to sponsor a special purpose acquisition company, discussed below,

with the remainder for general corporate purposes.

The proceeds were used to sponsor a special purpose acquisition company, discussed below, with the remainder for general corporate

October 10, 2017, the Company’s sponsored special purpose acquisition company, Black Ridge Acquisition Corp.

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a business combination agreement and the business combination closed on August 9, 2019.

Following the close of the business combination

the Company commenced a strategic review to identify, review and explore alternatives for the Company, including a merger,

acquisition, or a business combination.

The Company currently owns 2,685,500 shares of Allied Esports Entertainment, Inc.

AESE), the surviving entity after BRAC’s business combination (“Sponsor Shares”).

537,100 of the Sponsor Shares

are subject to distribution rights to officers and directors under the 2018 Management Incentive Plan dated March 6, 2018.

Company is evaluating plans for the remaining Sponsor Shares which could include a distribution of some or all of the Sponsor Share

proceeds after expiration of the lock-up agreement on August 9, 2020, presuming that as of such date AESE has repaid or converted

amounts it owes pursuant to the bridge financing Note Purchase Agreement and Notes dated as of October 11, 2018 and May 17, 2019.

The Company currently owns 2,368,532 shares

of Allied Esports Entertainment, Inc.

AESE), the surviving entity after BRAC’s business combination (“Sponsor

Shares”), after selling 316,968 shares for a total of $962,812, and warrants to purchase 505,000 shares of AESE (NASDAQ:

AESEW) (“Sponsor Warrants”).

Of the remaining Sponsor Shares, 537,100 are subject to distribution rights to officers

and directors under the 2018 Management Incentive Plan dated March 6, 2018.

2020, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), between the Company

and S-FDF, LLC, a Texas limited liability company (the “Seller”), pursuant to which the Company will acquire $2.5

million in cash and certain assets and agreements related to the Seller’s freeze dried fruits and vegetables

business for human consumption (the “Purchased Assets”) and enter into certain employment and registration rights

The Company will not assume any liabilities of Seller or any liabilities, liens, or encumbrances pertaining to or

encumbering the Purchased Assets except for those related to agreements or arrangements specified in the Asset Purchase

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Subject to the

terms of Asset Purchase Agreement, Seller will transfer the Purchased Assets to the Company in exchange for the issuance of 1,120,000

shares of the Company’s common stock to the Seller representing 41.18% of the Company’s issued and outstanding common

stock (the “Seller Shares”).

The amount of Seller Shares to be issued is subject to adjustment, as specified in the

Asset Purchase Agreement, based on the extent to which the amount of cash proceeds held by the Company, as derived from the sale

of the Company’s holdings of Sponsor Shares, are less than $5 million or greater

than $6 million on the date specified in the Asset Purchase Agreement (the “Final Determination Date”).

Determination Date will be the first anniversary of the closing of the Asset Purchase Agreement if closing occurs by January 1,

2021, and the Company has contributed $4 million to the business in the form of proceeds from either the sale of Sponsor Shares,

proceeds from a financing secured by the AESE Shares, proceeds from an equity or convertible debt financing, legal fees paid in

connection with the Asset Purchase Agreement or expenses incurred by the Company after August 1, 2020 (the “Company Contribution”).

If the Company Contribution is less than $4 million on January 1, 2021, then the Final Determination Date will be January 1, 2021.

The Company expects to close the transaction on or about October 1, 2020, subject to extension by mutual agreement of the

The Asset Purchase

Agreement may be terminated in the event of a material breach of the provisions of the Asset Purchase Agreement, by mutual consent

of the Company and Seller, by either the Company or Seller after October 31, 2020 absent a material breach or failure to comply

with the provisions of the Asset Purchase Agreement, or by either party upon payment of a $5 million termination fee.

Note 2 –

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The Company follows the same accounting policies in the preparation of interim reports.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Reclassifications

In the prior year, the income, expense

and cash flows from Black Ridge Acquisition Corp.

(“BRAC”), a wholly-owned subsidiary formed on October 10, 2017, which

and cash flows from Black Ridge Acquisition Corp., a wholly-owned subsidiary formed on October 10, 2017, which

was consolidated as a variable interest entity through August 9, 2019, the date that BRAC completed a business combination with

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(“AESE”), were consolidated and have been retrospectively classified as discontinued

In addition, prior period investment in Allied Esports Entertainment, Inc.

securities of $6,982,300 were reclassified

from long term assets to current assets to conform to current period presentation.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Use of Estimates

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Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC) up to $250,000 and $500,000, respectively, under current

The Company didn’t have any cash in excess of FDIC and SIPC insured limits at March 31, 2020 and December 31,

The Company has not experienced any losses in such accounts.

The Company had $44,718 of cash in excess of SIPC insured limits at June 30, 2020.

The Company has not experienced

any losses in such accounts.

The Company recognizes deferred tax assets

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valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

Basic and Diluted Loss Per Share

The basic net loss per common share is

computed by dividing the net loss by the weighted average number of common shares outstanding.

Diluted net loss per common share

is computed by dividing the net loss adjusted on an “as if converted”

basis, by the weighted average number of common

shares outstanding plus potential dilutive securities.

For the periods presented, potential dilutive securities had an anti-dilutive

effect and were not included in the calculation of diluted net loss per common share.

Basic and Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”)

are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period

(the denominator).

Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential

common shares outstanding (if dilutive) during each period.

Potential common shares include stock options, warrants and restricted

The number of potential common shares outstanding relating to stock options, warrants and restricted stock is computed using

the treasury stock method.

The reconciliation of the denominators

used to calculate basic EPS and diluted EPS for the three months ended June 30, 2020 and 2019 are as follows:

Three Months Ended June 30,

Weighted average common shares outstanding –

Potentially dilutive common shares:

Common stock warrants

Weighted average common shares outstanding –

For the six months ended June 30, 2020

and 2019, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss

per common share.

Stock options and warrants excluded from the calculation of diluted EPS because their effect was anti-dilutive

were 378,871 and 36,788 as of June 30, 2020 and 2019, respectively.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Fair Value of Financial Instruments

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on a recurring basis.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Property and Equipment

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not be recoverable.

Depreciation expense was $271 and $443 for the three months ended March 31, 2020 and 2019, respectively.

Depreciation expense was $650 and $623 for the six months ended June 30, 2020 and 2019, respectively.

Revenue Recognition

The Company recognized management fee income

as services were provided.

The Company recognizes revenue in accordance

with ASC 606 —

Revenue from Contracts with Customers.

Under ASC 606, the Company recognized revenue from management services

through our previously consolidated Special Purpose Acquisition Company (“SPAC”), Black Ridge Acquisition Corp.

December 31, 2019.

Revenue was primarily generated from BRAC

in the form of management services performed within the state of Minnesota on a fixed fee basis.

Revenue from the performance

of those services was recognized upon completion of the services, at which time the services were delivered to the customer, and

collectability of the fee was reasonably assured.

We typically required payment within thirty days of the completion of services.

Management estimates an allowance for doubtful accounts based on the aging of its receivables.

The Company accounts for equity instruments

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disincentives for nonperformance.

Stock-based compensation was $21,489 and $27,931 consisting entirely of expenses related to common

stock options issued for services of $21,489 and $27,931 for the three months ended March 31, 2020 and 2019, respectively, using

the Black-Scholes options pricing model and an effective term of 6 to 6.5 years based on the weighted average of the vesting periods

and the stated term of the option grants and the discount rate on 5 to 7 year U.S.

Stock-based compensation was $70,943 and $55,818, consisting entirely of expenses related to

common stock options issued for services for the six months ended June 30, 2020 and 2019, respectively, using the Black-Scholes

options pricing model and an effective term of 6 to 6.5 years based on the weighted average of the vesting periods and the stated

term of the option grants and the discount rate on 5 to 7 year U.S.

Treasury securities at the grant date.

In addition, $377,440

of expenses related to the amortization of warrants issued in consideration of personal guarantees provided for debt financing

for the three months ended March 31, 2020, using the Black-Scholes options pricing model and an effective term of 5 years based

on the weighted average of the vesting periods and the stated term of the warrant grants and the discount rate on 5 year U.S.

securities at the grant date were recognized as interest expense for the three months ended March 31, 2020.

for the six months ended June 30, 2020, using the Black-Scholes options pricing model and an effective term of 5 years based on

the weighted average of the vesting periods and the stated term of the warrant grants and the discount rate on 5 year U.S.

securities at the grant date were recognized as interest expense for the six months ended June 30, 2020.

Uncertain Tax Positions

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on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Various taxing authorities may periodically

10 unchanged sentences

position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Recent Accounting Pronouncements

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As shown in the accompanying financial

statements, as of March 31, 2020, the Company had a cash balance of $52,097, and total working capital of negative $882,749.

Company has incurred recurring losses from operations resulting in an accumulated deficit of $34,002,978, and as of March 31, 2020,

the Company’s cash on hand may not be sufficient to sustain operations.

These factors raise substantial doubt about the Company’s

ability to continue as a going concern.

The Company is currently seeking additional sources of capital to fund short term operations.

The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the

Company will be successful;

therefore, without sufficient financing it would be unlikely for the Company to continue as a going

statements, as of June 30, 2020, the Company has incurred recurring losses from operations resulting in an accumulated deficit

of $33,286,196.

As of June 30, 2020, the Company’s cash on hand may not be sufficient to sustain operations.

These factors

raise substantial doubt about the Company’s ability to continue as a going concern.

The Company is currently seeking sources

of capital to fund the requirements of the Asset Purchase Agreement.

The Company intends to sell its AESE shares to continue as

a going concern, however, there can be no assurance the share price will be sufficient to sustain operations, therefore the Company

may be dependent upon its ability to secure equity and/or debt financing and there are also no assurances that the Company will

be successful;

therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.

The financial statements do not include

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October 4, 2017, as follows:

Percentage of BRAC Shares Owned by the

Company Granted to the Grantee

of BRAC Shares Owned by the Company Granted to the Grantee

Bradley Berman

2 unchanged sentences

Michael Eisele

As of March 31, 2020, and following the

AESE merger on August 9, 2019, the Company owned 2,685,500 shares of AESE common stock.

As a result, 537,100 shares of AESE common

stock (the “AESE Shares”) are committed to employees and directors of the Company.

Following the AESE merger on August 9,

2019, the Company owned 2,685,500 shares of AESE common stock.

During the quarter ending June 30, 2020, the Company sold 316,968

shares for a total of $962,812, leaving 2,368,532 shares owned in AESE common stock.

Of these 2,368,532 shares, 537,100 shares

(the “AESE Plan Shares”) are committed to employees and directors of the Company.

Employees and directors are required

to remain in their positions for a one-year period, with certain exceptions, to receive the granted shares.

The AESE Shares had

a fair market value of $843,247 on March 31, 2020.

The Company recognized the $1,396,460 of compensation expense related to the

Plan during the year ended December 31, 2019.

For the three months ended March 31, 2020, the Company recognized a gain of $553,213

related to the reduction in the value of the shares to be paid to employees on August 9, 2020, which was offset against the Company’s

loss on the investment in AESE shares due to changes in the AESE market price between December 31, 2019 and March 31, 2020.

adjustments will be required each quarter to adjust the deferred compensation liability until the shares can be transferred to

the employees.

to remain in their positions for a one-year period from the AESE merger, with certain exceptions, to receive the granted shares.

The AESE Plan Shares had a fair market value of $1,133,281 on June 30, 2020.

The Company recognized $1,396,460 of compensation

expense related to the Plan during the year ended December 31, 2019.

For the six months ended June 30, 2020, the Company recognized

a gain of $263,179 related to the reduction in the value of the shares to be paid to employees on August 10, 2020, which was

offset against the Company’s loss on the investment in AESE shares due to changes in the AESE market price between December

31, 2019 and June 30, 2020.

Subsequent adjustments will be required each quarter to adjust the deferred compensation liability

until the shares can be transferred to the employees.

Note 5 –

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Condensed Financial Statements

The following schedule summarizes the

valuation of financial instruments at fair value on a recurring basis in the balances sheet as of March 31, 2020 and December

Fair Value Measurements at March 31, 2020

The following schedule summarizes the valuation

of financial instruments at fair value on a recurring basis in the balance sheets as of June 30, 2020 and December 31, 2019:

Fair Value Measurements at June 30, 2020

Investment in Allied Esports Entertainment, Inc.

Notes payable, net of $251,205 of debt discounts at March 31, 2020

Notes payable

Total liabilities

3 unchanged sentences

There were no transfers of financial assets

or liabilities between Level 1 and Level 2 inputs for the three months ended March 31, 2020.

or liabilities between Level 1 and Level 2 inputs for the six months ended June 30, 2020.

Note 6 –

9 unchanged sentences

Property and Equipment

Property and equipment at March 31, 2020 and December 31, 2019,

Property and equipment at June 30, 2020 and December 31, 2019,

consisted of the following:

3 unchanged sentences

The Company recognized depreciation expense of $650 and $623

for the three-month periods ended March 31, 2020 and 2019, respectively.

for the six-month periods ended June 30, 2020 and 2019, respectively.

Note 8 –

4 unchanged sentences

AESE) common stock with a value, based on the

closing stock of $4.45 on the merger, of $11,950,475.

As noted in Note 4 - Related Party Transactions, 20% or 537,100, of the shares

are committed to be released to employees one year from the date of the merger, or on August 19, 2020.

Therefore, the Company recorded

a deferred compensation liability of $843,247 to recognize the commitment to employees as of March 31, 2020.

As of March 31, 2020, the market value

of the Company’s investment in AESE’s common stock was $4,216,235, based on the closing stock price of $1.57 per share.

Thus, we recognized a loss of $2,766,065, as offset by a gain of $553,213 pursuant to the change in the market value of the stock

committed to employees and directors, resulting in a net loss of $2,212,852 as of March 31, 2020.

The balance in deferred compensation

is also adjusted quarterly to reflect changes in the market value of the AESE common stock commitment.

closing stock of $4.45 on the merger, of $11,950,475, and tradeable warrants to purchase 505,000 shares of AESE (NASDAQ:

(“Sponsor Warrants”), of which the Company currently owns 2,368,532 shares, after selling 316,968 shares for a total

of $962,812 during the second quarter of 2020, and the warrants to purchase 505,000 Sponsor Warrants.

As noted in Note 4 - Related

Party Transactions, 20% or 537,100, of the shares are committed to be released to employees one year from the date of the merger,

or on August 10, 2020.

Therefore, the Company recorded a deferred compensation liability of $1,133,281 to recognize the commitment

to employees as of June 30, 2020.

As of June 30, 2020, the market value of

the Company’s investment in AESE’s common stock was $4,997,603, based on the closing stock price of $2.11 per share,

and the investment in AESEW was $75,750, based on the closing warrant price of $0.15 per warrant, for a total investment in AESE

securities of $5,073,353, resulting in gains and losses on our investment in securities, as follows:

Net loss on investment in Allied Esports Entertainment, Inc.

securities for the six months ended June 30, 2020

Net gains and losses recognized during 2020 on equity securities sold during the period

Gain on deferred compensation payable in shares of AESE

Unrealized loss recognized during 2020 on equity securities still held at June 30, 2020

$ (1,084,831 )

On January 2, 2020, the Company deposited

500,000 shares of its holdings of AESE pursuant to its brokerage account agreement with RBC Capital Markets, LLC.

were subsequently used as collateral the $700,000 promissory note, described below, pursuant to a commercial pledge and security

were subsequently used as collateral for the $700,000 promissory note, described below, pursuant to a commercial pledge and security

agreement, dated March 10, 2020.

2 unchanged sentences

to a standard margin account arrangement.

The current value of the deposited AESE shares is $933,900 based on a closing price of

$1.65 as of May 5, 2020.

During the second quarter of 2020, the Company sold 316,968 of these shares for total

proceeds of $962,812, resulting in a gain on investment of $363,813.

The value of the remaining 249,032 deposited AESE shares is

$525,458 based on a closing price of $2.11 as of June 30, 2020.

BLACK RIDGE OIL & GAS, INC.

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Notes payable consists of the following

at March 31, 2020 and December 31, 2019, respectively:

at June 30, 2020 and December 31, 2019, respectively:

On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum.

In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets.

Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2021.

All remaining principal and accrued interest is due and payable on June 16, 2050.

The EIDL Note may be repaid at any time without penalty.

On April 24, 2020, the Company entered into a loan agreement with Kensington Bank (“Kensington”), as lender (the “Loan Agreement”) encompassing a $112,925 Promissory Note issued to Kensington (the “PPP Note”) pursuant to Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides loans to qualifying businesses and is administered by the U.S.

Small Business Administration (the “SBA”).

The PPP Note bears interest at 1.00% per annum, with interest payable monthly beginning November 24, 2020, and principal due in full on April 24, 2022.

The PPP Note may be repaid at any time without penalty.

Under the Payroll Protection Program, the Company will be eligible for loan forgiveness up to the full amount of the PPP Note and any accrued interest.

The forgiveness amount will be equal to the amount that the Company spends during the 24-week period beginning April 24, 2020 on payroll costs, payment of rent on any leases in force prior to February 15, 2020 and payment on any utility for which service began before February 15, 2020.

The maximum amount of loan forgiveness for non-payroll expenses is 40% of the amount of the PPP Note.

No assurance is provided that the Company will obtain forgiveness under the PPP Note in whole or in part.

On November 25, 2019, the Company entered into a credit account agreement (“Margin Account”) with RBC Capital Markets, LLC (“RBC”).

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(“Cadence”), as lender encompassing a $700,000 Promissory Note issued to Cadence (the “Note”), a Security Agreement by the Company in favor of Cadence and limited commercial guarantees by the Company’s Chief Executive Officer and Interim Chief Financial Officer, who is one in the same, and members of the Company’s Board of Directors (the “Guarantors”) (collectively, the “Cadence Loan”).

The Note bears interest at a rate of 0.50 percentage points over the prime rate, as published in the Wall Street Journal, payable monthly, and is due on March 9, 2021.

The Note may be repaid at any time without penalty.

The Note is secured by all of the Company’s rights, title and interests in and to 500,000 shares of the common stock of Allied Esports Entertainment Inc.

The Note carried interest at a rate of 0.50 percentage points over the prime rate, as published in the Wall Street Journal, payable monthly, and was due on March 9, 2021.

The Note could be repaid at any time without penalty.

The Note was secured by all of the Company’s rights, title and interests in and to 500,000 shares of the common stock of Allied Esports Entertainment Inc.

AESE) currently owned by the Company and held in the Company’s brokerage account with RBC Capital Markets, LLC.

1 unchanged sentence

All equity issuances will be subject to any third party or shareholder approvals required at the time of issuance.

A total of $417,000 was advanced on the loan and subsequently repaid in full on June 30, 2020.

Total notes payable

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$377,440, consisting of debt discounts on warrants granted to four officers and directors for warrants issued in consideration

of personal guarantees provided for debt financing incurred during the three months ended March 31, 2020.

The discounts are

being amortized to stock-based compensation expense over the term of the note using the straight-line method, which closely approximates

of personal guarantees provided for debt financing incurred during the six months ended June 30, 2020.

The discounts were amortized

to stock-based compensation expense over the term of the note, until repayment, using the straight-line method, which closely approximated

the effective interest method.

The Company recorded $377,440 of stock-based compensation expense pursuant to the amortization of

note discounts during the three months ended March 31, 2020.

note discounts during the six months ended June 30, 2020.

The Company recognized $382,761 of interest

expense, consisting of $1,314 of interest and $13,795 of stock-based warrant expense pursuant to the amortization of the debt discount

on the business loans during the three months ended March 31, 2020.

expense, consisting of $5,321 of interest and $377,440 of stock-based warrant expense pursuant to the amortization of the debt

discount on the business loans during the six months ended June 30, 2020.

Note 10 –

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shares of $0.001 par value common stock.

As of March 31, 2020, and December 31, 2019, a total of 1,600,424 shares of common

As of June 30, 2020, and December 31, 2019, a total of 1,600,424 shares of common

stock have been issued.

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in the definitive information statement filed with Securities and Exchange Commission on January 10, 2020 (the “DEF 14C”).

The description of the 2020 Equity Plan is qualified in its entirety by the text of the 2020 Equity Plan, a copy of which was

attached as Annex C to the DEF 14C.

The description of the 2020 Equity Plan is qualified in its entirety by the text of the 2020 Equity Plan, a copy of which was attached

as Annex C to the DEF 14C.

Outstanding Options

1 unchanged sentence

of 273,871 shares of common stock at a weighted average strike price of $16.32, exercisable over a weighted average life of nine

years were outstanding as of March 31, 2020.

years were outstanding as of June 30, 2020.

Options Granted

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on February 26, 2021, and continuing for the next four anniversaries thereof until fully vested.

No options were granted during the three

months ended March 31, 2019.

No options were granted during the six

months ended June 30, 2019.

The Company recognized a total of $70,943,

and $27,931 of compensation expense during the three months ended March 31, 2020 and 2019, respectively, related to common

stock options issued to Employees and Directors that are being amortized over the implied service term, or vesting period, of the

The remaining unamortized balance of these options is $889,412 as of March 31, 2020.

and $55,818 of compensation expense during the six months ended June 30, 2020 and 2019, respectively, related to common stock options

issued to Employees and Directors that are being amortized over the implied service term, or vesting period, of the options.

remaining unamortized balance of these options is $839,958 as of June 30, 2020.

Options Exercised

No options were exercised during the three

months ended March 31, 2020 and 2019.

No options were exercised during the six

months ended June 30, 2020 and 2019.

Options Forfeited

No options were forfeited during the three

months ended March 31, 2020.

A total of 125,000 options expired and were forfeited during the three months ended March 31, 2019.

A total of 333 options with a weighted

average exercise price of $90, and 457 options with a weighted average exercise price of $9.83 expired and were forfeited during

the six months ended June 30, 2020 and 2019, respectively.

BLACK RIDGE OIL & GAS, INC.

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Warrants to purchase an aggregate total

of 1,300 shares of common stock at a $3.00 strike price, exercisable until September 22, 2022 were outstanding as of March 31,

of 1,300 shares of common stock at a $3.00 strike price, exercisable until September 22, 2022 were outstanding as of June 30, 2020.

Warrants Granted

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The Guarantor Warrants expire on March 12, 2030.

No warrants were granted during the three months ended

March 31, 2019.

No warrants were granted during the comparative six

months ended June 30, 2019.

The officers and directors receiving grants and the amounts of such grants were as follows:

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Warrants Exercised

No warrants were exercised during the three

months ended March 31, 2020 and 2019.

No warrants were exercised during the six

months ended June 30, 2020 and 2019.

Note 13 –

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and the amounts calculated for income tax purposes.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Losses incurred during the period from

April 9, 2011 (inception) to March 31, 2020 could be used to offset future tax liabilities.

April 9, 2011 (inception) to June 30, 2020 could be used to offset future tax liabilities.

Accounting standards require the consideration

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benefits of deferred tax assets will not be realized.

As of March 31, 2020, net deferred tax assets were $6,770,453, with no deferred

As of June 30, 2020, net deferred tax assets were $6,564,319, with no deferred

tax liability, primarily related to net operating loss carryforwards.

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In accordance with FASB ASC 740, the Company

has evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on, or before March

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

has evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on, or before June

Note 14 –

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occurred after the balance sheet date through the date these financial statements were issued.

On April 24, 2020, the Company entered

into a loan agreement with Kensington Bank (“Kensington”), as lender (the “Loan Agreement”) encompassing

a $112,925 Promissory Note issued to Kensington (the “PPP Note”) pursuant to the Payroll Protection Program established

as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides loans to qualifying

businesses and is administered by the U.S.

Small Business Administration (the “SBA”).

The PPP Note bears interest at

1.00% per annum, payable monthly beginning November 24, 2020, and is due on April 24, 2022.

The PPP Note may be repaid at any time

without penalty.

Under the Payroll Protection Program, the

Company will be eligible for loan forgiveness up to the full amount of the PPP Note and any accrued interest.

The forgiveness amount

will be equal to the amount that the Company spends during the 8-week period beginning April 24, 2020 on payroll costs, payment

of rent on any leases in force prior to February15, 2020 and payment on any utility for which service began before February 15,

The maximum amount of loan forgiveness for non-payroll expenses is 25% of the amount of the PPP Note.

No assurance is provided

that the Company will obtain forgiveness under the PPP Note in whole or in part.

The PPP Note contains customary events

of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory

The occurrence of an event of default may result in a claim for the immediate repayment of all amounts outstanding under

such PPP Note, collection of all amounts owing from the Company, filing suit and obtaining judgment against the Company.

On July 9, 2020, the Company sold an additional

20,000 shares of AESE stock in accordance with the 10b5-1 plan, dated June 15, 2020 at an average price of $2.50 per share, resulting

in total proceeds of $50,000.

On August 10, 2020, the Company sold another

113,000 shares of AESE stock in accordance with the 10b5-1 plan.

The shares were sold at an average price of $2.0191 per share,

resulting in total proceeds of $228,158.

Of these share sales, 101,098 shares were sold on behalf of the employees out of the 2018

Management Incentive Plan (“MIP”) in order to cover payroll tax withholdings, and the remaining 11,902 shares, were

sold by the Company to fund the employer’s portion of payroll taxes.

The remaining 436,002 shares of the 537,100 shares previously

committed under the MIP are being distributed to employees.

After the distribution and recent sales, the Company still holds 1,799,530

shares of AESE common stock.

MANAGEMENT’S DISCUSSION

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results to differ materially from those set forth in the forward-looking statements include the following:

failure to successfully complete the closing of the S-FDF LLC Asset Purchase Agreement;

failure to identify acquire or invest in alternatives for

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Board’s evaluation of strategic options ;

the effect of the coronavirus (“COVID-19”) pandemic

on our efforts to identify, review and explore strategic alternatives and our ability to obtain funding through various

financing transactions or arrangements;

the effect of the coronavirus (“COVID-19”)

pandemic on our efforts to identify, review and explore strategic alternatives and our ability to obtain funding through

various financing transactions or arrangements;

volatility or decline of our stock price;

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potential fluctuation in quarterly results;

our failure to collect payments owed to us;

material defaults on monetary obligations owed us, resulting in unexpected losses;

inadequate capital of our clients to acquire working interests in oil and gas prospects and to

participate in the drilling and production of oil and other hydrocarbons;

low trading volume and price of our investment in AESE Shares;

inability to maintain adequate liquidity to meet our financial obligations;

unavailability of oil and gas prospects to acquire for our clients;

failure to acquire or grow new business ourselves

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the sponsor and manager of Black Ridge Acquisition Corp.

(“BRAC”) beginning in May of 2017, the Company was focused

beginning in May of 2017, the Company was focused

on identifying and closing a business combination for BRAC, which closed on August 9, 2019.

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including a merger, acquisition, or a business combination.

The Company currently owns 2,685,500 Sponsor Shares.

Of those shares,

537,100 of the Sponsor Shares are subject to distribution rights to officers and directors under the 2018 Management Incentive

Plan dated March 6, 2018.

Black Ridge is evaluating plans for the remaining Sponsor Shares which could include a distribution of

some or all of the Sponsor Share proceeds after expiration of the lock-up agreement on August 9, 2020, presuming that as of such

date AESE has repaid or converted amounts it owes pursuant to the bridge financing Note Purchase Agreement and Notes dated as of

October 11, 2018 and May 17, 2019.

The result of that review is the transaction with S-FDF described below.

The Company currently owns 2,368,532 Sponsor Shares , after selling 316,968 shares for a total of $962,812 .

Of those remaining shares, 537,100 of the Sponsor Shares are subject to distribution rights to officers and directors under the

2018 Management Incentive Plan dated March 6, 2018.

Black Ridge expects to use the remaining Sponsor Shares to fulfill its obligations

related to the Asset Purchase Agreement described below.

June 9, 2020, the Company entered into an Asset Purchase Agreement, between the Company and S-FDF, LLC, a Texas limited liability

company, pursuant to which the Company will acquire $2.5 million in cash and certain assets and agreements related to the

Seller’s freeze dried fruits and vegetables business for human consumption and enter into certain employment and registration

rights agreements.

The Company will not assume any liabilities of Seller or any liabilities, liens, or encumbrances pertaining

to or encumbering the Purchased Assets except for those related to agreements or arrangements specified in the Asset Purchase Agreement.

to the terms of Asset Purchase Agreement, Seller will transfer the Purchased Assets to the Company in exchange for the issuance

of 1,120,000 shares of the Company’s common stock to the Seller representing 41.18% of the Company’s issued and outstanding

common stock.

The amount of Seller Shares to be issued is subject to adjustment, as specified in the Asset Purchase Agreement,

based on the extent to which the amount of cash proceeds held by the Company, as derived from the sale of the Company’s holdings

of Sponsor Shares, are less than $5 million or greater than $6 million on the date

specified in the Asset Purchase Agreement.

The Final Determination Date will be the first anniversary of the closing of the Asset

Purchase Agreement if closing occurs by January 1, 2021, and the Company has contributed $4 million to the business in

the form of proceeds from either the sale of Sponsor Shares, proceeds from a financing secured by the AESE Shares, proceeds from

an equity or convertible debt financing, legal fees paid in connection with the Asset Purchase Agreement or expenses incurred by

the Company after August 1, 2020.

If the Company Contribution is less than $4 million on January 1, 2021, then the Final Determination

Date will be January 1, 2021.

The Company expects to close the transaction on or about October 1, 2020, subject to extension

by mutual agreement of the parties.

Going Concern Uncertainty

As of March 31, 2020,

the Company had a cash balance of $52,097, and total working capital of negative $882,749.

The Company has incurred recurring losses

from operations resulting in an accumulated deficit of $34,002,978, and as of March 31, 2020, the Company’s cash on hand

may not be sufficient to sustain operations.

These factors raise substantial doubt about the Company’s ability to continue

as a going concern.

The Company is currently seeking additional sources of capital to fund short term operations.

however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will

be successful;

therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.

As of June 30, 2020,

the Company has incurred recurring losses from operations resulting in an accumulated deficit of $33,286,196, and as of June 30,

2020, the Company’s cash on hand may not be sufficient to sustain operations.

These factors raise substantial doubt about

the Company’s ability to continue as a going concern.

The Company is currently seeking sources of capital to fund the requirements

of the Asset Purchase Agreement including selling its shares of AESE or other sources of capital.

The Company intends to sell its

AESE shares to continue as a going concern, however, there can be no assurance the share price will be sufficient to sustain operations,

therefore the Company may be dependent upon its ability to secure equity and/or debt financing and there are also no assurances

that the Company will be successful;

therefore, without sufficient financing it would be unlikely for the Company to continue as

a going concern.

We continue to pursue

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Results of Operations for the Three

Months Ended March 31, 2020 and 2019.

Months Ended June 30, 2020 and 2019.

The following table

summarizes selected items from the statement of operations for the three months ended March 31, 2020 and 2019, respectively.

summarizes selected items from the statement of operations for the three months ended June 30, 2020 and 2019, respectively.

Three Months Ended

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Interest expense, including $363,645 of warrants issued as a debt discount

Loss on investment in Allied Esports Entertainment, Inc.

Gain on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

Net loss from continuing operations, net of tax

Net income (loss) from continuing operations, net of tax

Provision for income taxes

Net profit from continuing operations, net of tax

Net income (loss) from continuing operations, net of tax

Net income from discontinued operations

Net loss before non-controlling interest

Net income (loss) before non-controlling interest

Net loss attributable to redeemable non-controlling interest

Net loss attributable to Black Ridge Oil & Gas, Inc.

$ (2,645,579 )

Net income (loss) attributable to Black Ridge Oil & Gas, Inc.

Management fee revenue

The Company didn’t

earn any management fees from its management agreement with BRAC during the three months ended March 31, 2020, compared to $30,000

during the three months ended March 31, 2019.

The Company did not

earn any management fees from its management agreement with BRAC during the three months ended June 30, 2020, compared to $30,000

during the three months ended June 30, 2019.

The decrease is attributable to the termination of the agreement subsequent to the

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Salaries and benefits

for the three months ended March 31, 2020 were $219,724 compared to $318,110 for the three months ended March 31, 2019, a decrease

for the three months ended June 30, 2020 were $233,530, compared to $312,460 for the three months ended June 30, 2019, a decrease

of 78,930, or 25%.

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Stock-based compensation

expense for the three months ended March 31, 2020 was $21,489 compared to $27,931 for the three months ended March 31, 2019, a

decrease of $6,442 or 23%.

Included in the expense for the three months ended March 31, 2020, was $16,685 of expense related

to the 2020 Stock Incentive Plan, and $4,804 related to the 2019 Stock Incentive Plan.

Amortization of stock options decreased

as a significant group of options became fully amortized at the end of 2019.

expense for the three months ended June 30, 2020 was $49,454, compared to $27,887 for the three months ended June 30, 2019, an

increase of $21,567, or 77%.

Stock-based compensation consisted entirely of expense on stock options.

Amortization of stock options

increased as new options were granted toward the end of February 2020, with a five-year vesting period.

Professional services

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of $99,889, or 834%.

The increase was primarily due to accounting services provided by an outside consultant and legal costs associated

with the reverse stock split, stock option agreements and Cadence loan agreement.

The increase was primarily due to professional services related to our asset purchase agreement with S-FDF,

Other general and administrative expenses

Other general and administrative

expenses for the three months ended March 31, 2020 was $91,150 compared to $56,558 for the three months ended March 31, 2019, an

increase of $34,592, or 61%.

The increase is primarily attributable to increased stock services expense related to the reverse

expenses for the three months ended June 30, 2020 was $50,229, compared to $59,320 for the three months ended June 30, 2019, a

decrease of $9,091, or 15%.

The decrease is primarily attributable to decreased administrative activity as we focused on finalizing

the Asset Purchase Agreement.

Depreciation expense

for the three months ended March 31, 2020 was $271, compared to $443 for the three months ended March 31, 2019, a decrease of $172,

for the three months ended June 30, 2020 was $379, compared to $180 for the three months ended June 30, 2019, a decrease of $199,

The decrease is attributable to certain equipment becoming fully amortized.

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In the three months

ended March 31, 2020, other expense was $2,227,961, consisting of $1,314 of interest expense derived from the business loans the

Company received from Cadence Bank, N.A and RBC Capital Markets, LLC, and $13,795 of expense related to the amortization

of warrants issued in consideration of personal guarantees provided for debt financing, along with a net loss on investments in

Allied Esports Entertainment, Inc.

of $2,212,852, compared to $51 of other income, consisting entirely of other income related

to a refund received during the three months ended March 31, 2019.

ended June 30, 2020, other expense was $1,162,246, consisting of $367,652 of interest expense derived from the business loans the

Company received from Cadence Bank, N.A and RBC Capital Markets, LLC and additional operating loans from the PPP and EIDL

programs, including $363,645 of expense related to the amortization of warrants issued in consideration of personal guarantees

provided for debt financing, along with a net gain on investments in Allied Esports Entertainment, Inc.

of $1,529,896.

no other income (expenses) during the comparative three months ended June 30, 2019.

Provision for income taxes

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Net income from discontinued

operations of $332,411 during the three months ended March 31, 2019, consisting primarily of $811,335 of interest income on investments

in the trust account for the benefit of potential redeeming shareholders and a gain of $4,733 on investments, as offset by $223,726

operations of $338,704 during the three months ended June 30, 2019, consisting primarily of $824,289 of interest income on investments

in the trust account for the benefit of potential redeeming shareholders, as offset by a loss of $6,255 on investments, $162,540

of general and administrative expenses, $116,914 of professional fees and $199,876 of income taxes.

Results of Operations for the Six Months

Ended June 30, 2020 and 2019.

The following table

summarizes selected items from the statement of operations for the six months ended June 30, 2020 and 2019, respectively.

Six Months Ended

Management fee income

Total revenues:

Operating expenses:

General and administrative expenses:

Salaries and benefits

Stock-based compensation

Professional services

Other general and administrative expenses

Total general and administrative expenses

Depreciation and amortization

Total operating expenses

Net operating loss

Other income (expense)

Interest expense, including $377,440 of warrants issued as a debt discount

Loss on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

Net loss from continuing operations, net of tax

Provision for income taxes

Net loss from continuing operations, net of tax

Net income from discontinued operations

Net loss before non-controlling interest

Net loss attributable to redeemable non-controlling interest

Net loss attributable to Black Ridge Oil & Gas, Inc.

$ (1,928,797 )

$ (1,301,024 )

Management fee revenue

The Company did not

earn any management fees from its management agreement with BRAC during the six months ended June 30, 2020, compared to $60,000

during the six months ended June 30, 2019.

The decrease is attributable to the termination of the agreement subsequent to the merger

between BRAC and AESE on August 9, 2019.

General and administrative expenses

Salaries and benefits

for the six months ended June 30, 2020 were $453,254, compared to $630,570 for the six months ended June 30, 2019, a decrease of

$177,316, or 28%.

The decrease in salaries and benefits was primarily due to a headcount decrease and decreased health benefit

Stock-based compensation

expense for the six months ended June 30, 2020 was $70,943, compared to $55,818 for the six months ended June 30, 2019, an increase

of $15,125, or 27%.

Stock-based compensation consisted entirely of expense on stock options.

Amortization of stock options increased

as new options were granted toward the end of February 2020, with a five-year vesting period.

Professional services

General and administrative

expenses related to professional services were $196,856 for the 2020 period, compared to $39,691 for the 2019 period, an increase

of $157,165, or 396%.

The increase was primarily due to professional services related to our asset purchase agreement with S-FDF,

Other general and administrative expenses

Other general and administrative

expenses for the six months ended June 30, 2020 was $141,379, compared to $115,878 for the six months ended June 30, 2019, an increase

of $25,501, or 22%.

The increase is primarily attributable to increased stock services expense related to the reverse stock split.

Depreciation expense

for the six months ended June 30, 2020 was $650, compared to $623 for the six months ended June 30, 2019, an increase of $27, or

The increase is attributable to the addition of new computer equipment in 2020.

Other income (expense)

In the six months ended

June 30, 2020, other expense was $1,065,715, consisting of $382,761 of interest expense derived from the business loans the Company

received from Cadence Bank, N.A, RBC Capital Markets, LLC and additional operating loans from the PPP and EIDL programs, including

$377,440 of expense related to the amortization of warrants issued in consideration of personal guarantees provided for debt financing,

along with a net loss on investments in Allied Esports Entertainment, Inc.

of $682,956, as offset by $2 of interest income, compared

to $51 of other income, consisting entirely of other income related to a refund received during the six months ended June 30, 2019.

Provision for income taxes

The Company had no

income tax expense in the 2020 or 2019 periods, as the Company continues to reserve against any deferred tax assets due to the

uncertainty of realization of any benefit.

Net profit (loss)

from discontinued operations

Net income from discontinued

operations relates to the income and expenses of BRAC during the periods prior to deconsolidation.

Net income from discontinued

operations of $671,115 during the six months ended June 30, 2019, consisting primarily of $1,635,625 of interest income on investments

in the trust account for the benefit of potential redeeming shareholders, as offset by a loss of $1,522 on investments, $386,266

of general and administrative expenses, $190,267 of professional fees and $386,455 of income taxes.

Liquidity and Capital Resources

The following table

summarizes our total current assets, liabilities and working capital at March 31, 2020 and December 31, 2019, respectively.

summarizes our total current assets, liabilities and working capital at June 30, 2020 and December 31, 2019, respectively.

Current Assets

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$ (1,289,995 )

As of March 31, 2020,

we had negative working capital of $882,749.

Liabilities of $843,247 related to the 2018 Management Incentive Plan are included

in current liabilities as of March 31, 2020, which will be settled in common stock from the Company’s Investment in Allied

Esports Entertainment, Inc., a long-term asset.

As of June 30, 2020,

we had working capital of $4,475,466.

Liabilities of $1,133,281 related to the 2018 Management Incentive Plan are included in current

liabilities as of June 30, 2020, which will be settled in common stock from the Company’s Investment in Allied Esports Entertainment,

Inc., a long-term asset.

The following table

summarizes our cash flows during the three-month periods ended March 31, 2020 and 2019, respectively.

Three Months Ended

summarizes our cash flows during the six-month periods ended June 30, 2020 and 2019, respectively.

Six Months Ended

Net cash used in operating activities

$ (2,127,947 )

Net cash provided by investing activities

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Net change in cash and cash equivalents

$ (1,235,433 )

Net cash used in operating

activities was $321,659 and $741,799 for the three months ended March 31, 2020 and 2019, respectively, a period over period decrease

activities was $682,885 and $2,127,947 for the six months ended June 30, 2020 and 2019, respectively, a period over period improvement

of $1,445,062.

The decrease was primarily due to a decrease of $1,388,920 in net losses in discontinued operations of BRAC.

in working capital from continuing operating activities resulted in a decrease in cash of $56,659 in the three months ended March

31, 2020, as compared to a decrease in cash of $646,975 for the same period in the previous year.

in working capital from continuing operating activities resulted in a decrease in cash used in operating activities of $56,142

in the six months ended June 30, 2020, as compared to a decrease in cash used in operating activities of $455,571 for the same

period in the previous year.

Net cash provided by

investing activities were $-0- and $94,824 for the three months ended March 31, 2020 and 2019, respectively.

In the period ended

March 31, 2019, virtually all the cash was provided from discontinued operations and was the result of transfers and withdrawals

from the Trust Account.

investing activities were $962,812 and $892,514 for the six months ended June 30, 2020 and 2019, respectively.

Cash provided by

investing activities were comprised of proceeds of $962,812 from the sale of Allied Esports Entertainment, Inc.

securities during

the six months ended June 30, 2020.

In the comparative period ended June 30, 2019, virtually all the cash was provided from discontinued

operations and was the result of transfers and withdrawals from the Trust Account.

Net cash provided by

financing activities was $265,000 and $-0- for the three months ended March 31, 2020 and 2019, respectively.

financing activities was $262,925 and $-0- for the six months ended June 30, 2020 and 2019, respectively.

All of the 2020 activity

was the result of net proceeds from notes payable.

was the result of $802,025 of net proceeds from notes payable, as offset by $539,100 of repayments.

Satisfaction of our cash obligations

for the next 12 months

As of March 31, 2020,

our balance of cash was $52,097 and we had total working capital of negative $882,749.

We expect to incur significant costs related

to a potential business combination which will put a strain on our cash resources.

Our plan for satisfying our cash requirements

for the next twelve months is through cash on hand and additional financing in the form of equity or debt as needed.

12, 2020, the Company received a business loan from Cadence Bank, N.A.

via a $700,000 Promissory Note, of which the Company

drew down $265,000, a Security Agreement by the Company and limited commercial guarantees by the Company’s Chief Executive

Officer and Interim Chief Financial Officer and members of the Company’s Board of Directors (the “Guarantors”).

The Note bears interest at a rate of 0.500 percentage points over the prime rate, currently 4.25% per annum, payable monthly,

is due on March 9, 2021 and is secured by all of the Company’s rights, title and interests in and to 500,000 shares of the

common stock of Allied Esports Entertainment Inc.

AESE) currently owned by the Company and held in the Company’s

brokerage account with RBC Capital Markets, LLC.

As of June 30, 2020,

our balance of cash was $651,608 and we had total working capital of $4,475,466.

We expect to incur significant costs related to

a potential business combination which will put a strain on our cash resources.

Our plan for satisfying our cash requirements for

the next twelve months is through cash on hand and the sale of its AESE shares, however, there can be no assurance the share price

will be sufficient to cover our cash obligations for the next 12 months, therefore, additional financing in the form of equity

or debt may be needed.

The Company realized $962,812 of proceeds on the sale of 316,968 shares of AESE stock, and received proceeds

of $112,925 on a PPP loan and $150,000 of proceeds on an EIDL loan to be used as working

capital to alleviate economic injury caused by COVID-19 during the second quarter of 2020.

Pursuant to the Asset Purchase

Agreement we entered into with S-FDF, LLC on June 9, 2020, we will need to contribute $4 million to

the business in the form of proceeds from either the sale of Sponsor Shares, proceeds from a financing secured by the AESE Shares,

or proceeds from equity or convertible debt financing by January 1, 2020.

The net fair value of the Sponsor Shares and Sponsor

Warrants, less the deferred compensation under the Management Incentive Plan Award Agreement is approximately $4 million currently,

however, there can be no assurance we will be able to realize these proceeds upon the sale of the securities.

Off-Balance Sheet Arrangements

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policies are more fully described in Note 2 of the footnotes to our financial statements appearing elsewhere in this Form 10-Q,

and Note 2 of the footnotes to the financial statements provided in our Annual Report on Form 10-K/A for the fiscal year ended December

and Note 2 of the footnotes to the financial statements provided in our Annual Report on Form 10-K/A for the fiscal year ended

December 31, 2019.

QUANTITATIVE AND QUALITATIVE

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as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required

by this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements