What changed in this filing

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Item 1. Financial Statements

2020-11-12 compared with 2020-08-11 · 454 added, 358 removed, 768 unchanged (51% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

September 30,

Current assets:

17 unchanged sentences

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

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Management fee income

11 unchanged sentences

Other income (expense):

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 on deconsolidation of subsidiary

Merger incentive expense

Interest expense, including $-0- and $377,440 of warrants issued as a debt discount for the three and nine months ended September 30, 2020, respectively

Loss on disposal of property and equipment

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

5 unchanged sentences

Net income (loss) before non-controlling interest

Less net loss attributable to redeemable non-controlling interest

Less net income attributable to redeemable non-controlling interest

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

8 unchanged sentences

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three Months Ended June 30, 2019

For the Three Months

Ended September 30, 2019

Stockholders'

Balance, March 31, 2019

Balance, June 30, 2019

$ (36,788,926 )

Common stock options granted for services to employees and directors

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

Balance, June 30, 2019

Net income attributable to Black Ridge Oil

Balance, September 30, 2019

$ (25,613,470 )

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

Stockholders'

Balance, March 31, 2020

Balance, June 30, 2020

$ (33,286,196 )

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

Net loss attributable to Black Ridge Oil &

Balance, September 30, 2020

$ (35,778,400 )

For the Six Months Ended June 30, 2019

For the Nine Months Ended September 30, 2019

Stockholders'

2 unchanged sentences

Common stock options granted for services to employees and directors

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

Balance, June 30, 2019

Net income attributable to Black Ridge Oil

Balance, September 30, 2019

$ (25,613,470 )

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

Stockholders'

2 unchanged sentences

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, June 30, 2020

Common stock warrants granted to employees and directors for personal

guaranty on debt

Net loss attributable to Black Ridge Oil &

Balance, September 30, 2020

$ (35,778,400 )

2 unchanged sentences

CONDENSED STATEMENTS OF CASH FLOWS

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

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

$ (1,928,797 )

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

$ (4,421,001 )

1 unchanged sentence

Net loss attributable to redeemable non-controlling interest

Adjustments to reconcile net loss

attributable to Black Ridge Oil & Gas, Inc.

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

to net cash used in operating activities:

Gain on deconsolidation of subsidiary

(26,322,687 )

Merger incentive expense

Depreciation and amortization

Loss on investment in Allied Esports Entertainment, Inc.

Loss on disposal of property and equipment

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

securities, net

1 unchanged sentence

Amortization of stock warrants issued as a debt discount

Deferred compensation

Decrease (increase) in current assets:

9 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Cash disposed in deconsolidation

Purchase of property and equipment

17 unchanged sentences

Value of debt discounts attributable to warrants

Value of investment in securities distributed to board members and employees

Recognition of subsidiary equity upon deconsolidation

BRAC Redemptions of redeemable preferred stock from trust account

$ 126,205,985

BRAC redeemable preferred stock transferred to equity

BRAC stock issued in merger

BRAC stock issued to settle intercompany debt

BRAC loan and accrued interest assumed to settle intercompany debt

BRAC stock issued to settle liabilities

See accompanying notes to unaudited condensed financial statements.

28 unchanged sentences

BROG owned 22% of the outstanding common stock of BRAC and managed BRAC’s operations via a management services agreement.

On December 19, 2018, BRAC entered into

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

On December 19, 2018, BRAC entered into a business combination agreement, which subsequently closed on August 9, 2019.

On October 1,

2020 the Company completed its acquisition of S-FDF, LLC pursuant to an Asset Purchase Agreement detailed in Footnote 15, Subsequent

In connection with the closing of the Asset Purchase Agreement, the Company acquired $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 entered

into certain employment and registration rights agreements.

The Company currently owns 1,779,529 shares

1 unchanged sentence

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.

Shares”), after selling 368,871 shares for total proceeds of $1,282,067, selling warrants to purchase 505,000 shares of AESE

AESEW) (“Sponsor Warrants”) for total proceeds of $73,668, and distributing 537,100 Sponsor Shares on August 9,

2020 to employees and directors under the 2018 Management Incentive Plan, dated March 6, 2018.

Note 2 –

15 unchanged sentences

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

Reclassifications

In the prior year, the income, expense

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

Allied Esports Entertainment, Inc.

(“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

Reclassifications

In the prior year, the income, expense

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 Allied Esports Entertainment,

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

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.

Use of Estimates

15 unchanged sentences

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

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

The Company has not experienced

The Company didn’t have any cash in excess of SIPC insured limits at September 30, 2020, and has not experienced

any losses in such accounts.

13 unchanged sentences

the treasury stock method.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

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,

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

Three Months Ended

Nine Months Ended

September 30,

Weighted average common shares outstanding –

2 unchanged sentences

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

For the three and nine months ended September

30, 2020, 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

were 35,488 three and nine months ended September 30, 2019.

Fair Value of Financial Instruments

16 unchanged sentences

not be recoverable.

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

Depreciation expense was $1,030 and $754 for the nine months ended September 30, 2020 and 2019, respectively.

Revenue Recognition

7 unchanged sentences

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.

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.

Management estimates

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

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Stock-Based Compensation

The Company accounts for equity instruments

9 unchanged sentences

Stock-based compensation was $393,831 and $83,705, 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

common stock options issued for services for the nine months ended September 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

3 unchanged sentences

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

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.

for the nine months ended September 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 nine months ended September 30, 2020.

Uncertain Tax Positions

7 unchanged sentences

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

35 unchanged sentences

The Company adopted this guidance

effective January 1, 2019, and the standard did not have a material impact on the Company’s combined financial statements

and related disclosures.

effective January 1, 2019, and the standard did not have a material impact on the Company’s financial statements and related

disclosures until the closing of the asset purchase with S-FDF, LLC on October 1, 2020.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Note 3 –

1 unchanged sentence

As shown in the accompanying financial

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

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

of $35,778,400.

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

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

These factors

12 unchanged sentences

a going concern.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Note 4 –

Related Party

Management Incentive Plan

On March 1, 2018, the Board of Directors

7 unchanged sentences

October 4, 2017, as follows:

of BRAC Shares Owned by the Company Granted to the Grantee

Percentage of BRAC Shares Owned by the

Company Granted to the Grantee

Bradley Berman

3 unchanged sentences

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 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.

2019, the Company owned 2,685,500 shares of AESE common stock and 505,000 warrants to purchase AESE (NASDAQ:

nine months ending September 30, 2020, the Company sold some of these securities, resulting in gross proceeds of $1,157,076, consisting

of 368,870 shares of common stock for total proceeds of $1,083,408, and the sale of warrants to purchase 505,000 shares for total

proceeds of $73,668.

The Company also distributed 537,101 Sponsor Shares on August 9, 2020 to employees and directors under

the 2018 Management Incentive Plan.

Employees and directors were required 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 August 10, 2020, when the shares were distributed.

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

Plan during the year ended December 31, 2019.

For the nine months ended September 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 September

Lease Agreement

Upon closing of the Asset Purchase Agreement,

the Company assumed the Seller’s obligations under a real property lease for its facility in Irving, Texas under which an

entity owned entirely by Ira Goldfarb is the landlord.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Note 5 –

21 unchanged sentences

that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

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

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

Fair Value Measurements at September 30, 2020

Investment in Allied Esports Entertainment, Inc.

1 unchanged sentence

Total liabilities

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Fair Value Measurements at December 31, 2019

2 unchanged sentences

There were no transfers of financial assets

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

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

Note 6 –

1 unchanged sentence

Prepaid expenses consist of the following:

September 30,

Prepaid insurance costs

2 unchanged sentences

Total prepaid expenses

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Note 7 –

Property and Equipment

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

Property and equipment at September 30, 2020 and December 31,

2019, consisted of the following:

September 30,

Property and equipment

1 unchanged sentence

Total property and equipment, net

The Company recognized depreciation expense of $650 and $623

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

On September 30, 2020, the Company disposed

of computer equipment no longer in service.

No proceeds were received on the disposal of the equipment, resulting in a loss on

disposal of fixed assets of $5,369, which represented the net book value at the time of disposal.

The Company recognized depreciation expense

of $1,030 and $754 for the nine-month periods ended September 30, 2020 and 2019, respectively.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Note 8 –

5 unchanged sentences

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.

(“Sponsor Warrants”), of which the Company currently owns 1,779,529 shares, after selling 368,870 shares for total

proceeds of $1,157,076, selling warrants to purchase 505,000 Sponsor Warrants for total proceeds of $73,668, and distributing 537,101

Sponsor Shares on August 10, 2020 to employees and directors under the 2018 Management Incentive Plan.

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:

Party Transactions, 20% or 537,101, of the shares were distributed to employees, officers and directors one year from the date

of the merger, or on August 10, 2020.

After the distribution and recent sales, the Company still holds 1,799,529 shares of

AESE common stock.

As of September 30, 2020, the market value

of the Company’s investment in AESE’s common stock was $2,242,207, based on the closing stock price of $1.26 per share,

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

securities for the nine months ended September 30, 2020

$ (2,186,557 )

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

Unrealized losses recognized during 2020 on equity securities still held at September 30, 2020

$ (2,384,569 )

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 for the $700,000 promissory note, described below, pursuant to a commercial pledge and security

agreement, dated March 10, 2020.

On February 10, 2020, an additional 66,000 of AESE shares were deposited into this brokerage account.

Under this standard brokerage agreement, the Company will be able to borrow funds secured by the value of the AESE shares pursuant

to a standard margin account arrangement.

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.

During the third quarter of 2020, the Company

sold 51,902 of these shares for total proceeds of $120,596, resulting in a loss on investment of $14,352.

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.

In accordance with a brokerage account

agreement with RBC Capital Markets, LLC, 500,000 of these shares were used as collateral for a $700,000 promissory note pursuant

to a commercial pledge and security agreement, dated March 10, 2020, described below, which was subsequently repaid.

standard brokerage agreement, the Company will be able to borrow funds secured by the value of the AESE shares pursuant to a standard

margin account arrangement.

BLACK RIDGE OIL & GAS, INC.

3 unchanged sentences

Notes payable consists of the following

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

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

September 30,

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.

18 unchanged sentences

The outstanding balance was repaid in full on, or about, March 12, 2020 out of the proceeds of the loan from Cadence Bank, described below.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

On March 12, 2020, the Company entered into a business loan agreement with Cadence Bank, N.A.

12 unchanged sentences

Notes payable, less current maturities

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

The Company recorded total discounts of

$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 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 six months ended June 30, 2020.

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

The Company recognized $384,456 of interest

expense, consisting of $7,016 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.

discount on the business loans during the nine months ended September 30, 2020.

Note 10 –

10 unchanged sentences

shares and no longer own shares of Common Stock.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Any cash payment in lieu of fractional

15 unchanged sentences

shares of $0.001 par value common stock.

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

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

stock have been issued.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Note 11 –

6 unchanged sentences

Options to purchase an aggregate total

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 June 30, 2020.

of 273,871 shares of common stock at a weighted average strike price of $16.32, exercisable over a weighted average life of 8.75

years were outstanding as of September 30, 2020.

Options Granted

15 unchanged sentences

the 2020 Equity Plan presented in the table above will vest in five equal installments, commencing one year from the date of grant

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

No options were granted during the six

months ended June 30, 2019.

on February 26, 2021, and continuing for the next four anniversaries thereof until fully vested, with the exception of 83,019 options

that were awarded to four employees, whose vesting periods were accelerated to be fully vested as of September 30, 2019, pursuant

to severance agreements.

No options were granted during the nine

months ended September 30, 2019.

The Company recognized a total of $393,831,

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.

and $83,705 of compensation expense during the nine months ended September 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

The remaining unamortized balance of these options is $517,070 as of September 30, 2020.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Options Exercised

No options were exercised during the six

months ended June 30, 2020 and 2019.

No options were exercised during the nine

months ended September 30, 2020 and 2019.

Options Forfeited

1 unchanged sentence

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.

Condensed Financial Statements

the nine months ended September 30, 2020 and 2019, respectively.

Note 12 –

1 unchanged sentence

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 June 30, 2020.

of 106,300 shares of common stock at a $3.99 strike price, exercisable over a weighted average life of 9.36 years were outstanding

as of September 30, 2020.

Warrants Granted

6 unchanged sentences

The Guarantor Warrants expire on March 12, 2030.

No warrants were granted during the comparative six

months ended June 30, 2019.

No warrants were granted during the comparative nine

months ended September 30, 2019.

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

7 unchanged sentences

Warrants Exercised

No warrants were exercised during the six

months ended June 30, 2020 and 2019.

No warrants were exercised during the nine

months ended September 30, 2020 and 2019.

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Note 13 –

4 unchanged sentences

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 June 30, 2020 could be used to offset future tax liabilities.

Accounting standards require the consideration

of a valuation allowance for deferred tax assets if it is “more likely than not”

that some component or all of the

benefits of deferred tax assets will not be realized.

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.

A valuation allowance of approximately $6,564,319 was applied

to the net deferred tax assets.

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

Accounting standards require the

consideration of a valuation allowance for deferred tax assets if it is “more likely than not”

that some component

or all of the benefits of deferred tax assets will not be realized.

As of September 30, 2020, net deferred tax assets were $7,013,057,

with no deferred tax liability, primarily related to net operating loss carryforwards.

A valuation allowance of approximately $7,013,057

was applied to the net deferred tax assets.

Therefore, BROG has no tax expense for 2020 to date.

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 June

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

Note 14 –

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

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.

Asset Purchase

On October 1,

2020, the Company completed its acquisition of S-FDF, LLC, a Texas limited liability company, pursuant to an Asset Purchase Agreement,

between the Company and the Seller, dated June 9, 2020, as subsequently amended effective October 1, 2020.

In connection with the

closing of the Asset Purchase Agreement, the Company acquired $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 entered into certain employment and

registration rights agreements.

The Company did 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.

The Seller transferred 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 number 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.

Final Determination Date will be the first anniversary of the closing of the Asset Purchase Agreement and the Company has contributed

$4 million to the business in the form of proceeds from either the sale of Sponsor Shares after October 1, 2020, proceeds

from a financing secured by the AESE Shares after June 9, 2020, proceeds from an equity or convertible debt financing, legal fees

paid in connection with the Asset Purchase Agreement, expenses incurred by the Company after August 1, 2020 (except for severance

related to change in control payments made to the Company's employees), and the Company's cash as of October 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 .

BLACK RIDGE OIL & GAS, INC.

Condensed Financial Statements

Pursuant to its obligations under the Asset

Purchase Agreement, on the Closing Date the Company, (a) created three new seats on the Company’s Board of Directors and

appointed the Seller’s principals, Ira Goldfarb and Claudia Goldfarb, and a third person designated by the Goldfarbs, Greg

Creed, as directors, (b) entered into employment agreements with Ira Goldfarb and Claudia Goldfarb, (c) delivered a registration

rights agreement with respect to the Seller Shares and any shares of common stock delivered as part of the employment compensation

for Ira Goldfarb or Claudia Goldfarb, and (d) amended the Company’s 2020 Stock Incentive Plan to increase the number of shares

of common stock reserved thereunder.

At closing, the Company also assumed the Seller’s obligations under a real property

lease for its facility in Irving, Texas under which an entity owned entirely by Ira Goldfarb is the landlord.

Adoption of Non-Employee Director Compensation

On October 1, 2020, the Company adopted

a Non-Employee Director Compensation Plan.

Pursuant to the Plan, each non-employee director will receive annual compensation of

$25,000 to be paid in cash or common stock, at the Company’s election, each October 1, beginning with October 1, 2020.

October 1, 2020, the Company issued 4,167 shares to Mr.

Bradley Berman, Mr.

Lyle Berman, Mr.

Joseph Lahti, Mr.

Benjamin Oehler,

Creed under the Non-Employee Director Compensation Plan.

In addition, the plan provides for annual compensation of $15,000

to be paid in cash or common stock, at the Company's election, each October 1, beginning with October 1, 2020, to Board committee

On October 1, 2020, the Company issued 2,500 shares to Mr.

Benjamin Oehler as its Audit Committee Chair.

Amendment to 2020 Stock Incentive Plan

As a condition to closing on the Asset

Purchase Agreement, the Board approved an increase in the number of shares of common stock reserved under the 2020 Stock Incentive

Plan adopted in January 2020, from 320,000 shares to a total of 514,150 shares.

The increase remains subject to shareholder approval,

to be provided, if at all, by October 1, 2021.

Option Grants

On October 1, 2020, Mr.

Creed was granted

options to purchase 24,151 shares of the Company’s common stock at an exercise price of $6.00 per share, which represented

the closing price of the Company’s shares on the OTCQB marketplace on October 1, 2020.

These options will vest 60% as of

January 1, 2024 and 20% each anniversary thereafter until fully vested.

On October 2, 2020, the Company’s

Board of Directors also granted an aggregate amount of 115,250 stock options pursuant to the 2020 Equity Plan to purchase shares

of the Company’s common stock to several officers, directors, and employees at an exercise price of $5.25 per share, which

represents the closing price of the Company’s shares on the OTCQB marketplace on October 2, 2020.

The options are exercisable

over a ten-year term, and vest 60% on the 3 rd anniversary of the grant date and 20% each anniversary thereafter, until

fully vested.

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

Name and Title

Shares Granted

Ira Goldfarb, Chairman of the Board and Director

Claudia Goldfarb, Chief Executive Officer

Management Changes

Ken DeCubellis stepped down from his roles

as the Company’s Chief Executive Officer and interim Chief Financial Officer on September 30, 2020, and will serve as a transition

resource employee and assist with the integration of the Seller’s freeze-dried fruit business into the Company's existing

operations through December 15, 2020, or the earlier termination of his employment.

Effective October 1, 2020, in connection

with closing of the Asset Purchase Agreement, Ira Goldfarb was appointed as the Company’s Executive Chairman and Chairman

of the Board, and Claudia Goldfarb was appointed as the Company’s Chief Executive Officer.

Effective October 5, 2020, Brad Burke was

appointed and agreed to serve on an interim basis as the Company’s Chief Financial Officer.

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

the Company that generate shareholder value, including a merger, acquisition, or a business combination in connection with our

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 ability to obtain funding through various financing transactions or arrangements;

volatility or decline of our stock price;

4 unchanged sentences

inability to maintain adequate liquidity to meet our financial obligations;

failure to acquire or grow new business ourselves

failure to timely launch our freeze-dried fruit product offerings and obtain sufficient sales and

distributions;

litigation, disputes and legal claims involving outside parties;

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the sponsor and manager of Black Ridge Acquisition Corp.

beginning in May of 2017, the Company was focused

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

Upon BRAC (renamed Allied Esports Entertainment,

following the merger or “AESE”, and hereafter named as such following the merger) completing its business combination,

we continued to provide additional management services to BRAC until December 31, 2019 .

beginning in May of 2017, the Company was focused on identifying and closing

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

Upon BRAC (renamed Allied Esports Entertainment, Inc.

the merger or “AESE”, and hereafter named as such following the merger) completing its business combination, we continued

to provide additional management services to BRAC until December 31, 2019 .

the close of the Merger, the Company commenced a strategic review to identify, review and explore alternatives for the Company,

1 unchanged sentence

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.

The Company currently owns 1,779,529 shares of Allied Esports Entertainment, Inc.

AESE), the surviving entity after

BRAC’s business combination, after selling 368,870 shares for total proceeds of $1,083,408, selling warrants to purchase

505,000 shares of AESE (NASDAQ:

AESEW) for total proceeds of $73,668, and distributing 537,101 Sponsor Shares on August 10,

2020 to employees and directors under the 2018 Management Incentive Plan.

October 1, 2020, the Company completed its acquisition of S-FDF, LLC, as detailed in Footnote 15, Subsequent Events.

Going Concern Uncertainty

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,

As of September 30,

2020, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $35,778,400, and as of September

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

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Results of Operations for the Three

Months Ended June 30, 2020 and 2019.

Months Ended September 30, 2020 and 2019.

The following table

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

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

Three Months Ended

September 30,

Management fee income

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Other income (expense)

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

Gain on investment in Allied Esports Entertainment, Inc.

Gain on deconsolidation of subsidiary

(26,322,687 )

Merger incentive expense

Interest expense

Loss on disposal of property and equipment

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

Total other income (expense)

(24,054,028 )

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

(21,962,744 )

Provision for income taxes

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

(21,962,744 )

Net income from discontinued operations

Net income (loss) before non-controlling interest

(13,810,579 )

Net loss attributable to redeemable non-controlling interest

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

Management fee revenue

$ (2,492,204 )

$ (13,667,660 )

Management fee income

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

merger between BRAC and AESE on August 9, 2019.

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

$153,279 during the three months ended September 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

1 unchanged sentence

Salaries and benefits

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%.

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

for the three months ended September 30, 2020 were $483,050, compared to $279,621 for the three months ended September 30, 2019,

an increase of $203,429, or 73%.

The increase in salaries and benefits was primarily due to payroll taxes on the distribution of

AESE shares to employees in the current period pursuant to the Management Incentive Plan and accrued severance pay to former officers

and employees.

Stock-based compensation

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.

expense for the three months ended September 30, 2020 was $322,888, compared to $2,836,920 for the three months ended September

30, 2019, a decrease of $2,514,032, or 89%.

Stock-based compensation consisted of stock options expense in both periods, and $2,809,033

of expense related to the 2018 Management Incentive Plan (the “2018 Plan”) in the prior period.

Amortization of stock

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

period was accelerated pursuant to separation agreements entered into on September 30, 2020.

Professional services

5 unchanged sentences

Other general and administrative

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.

expenses for the three months ended September 30, 2020 was $45,001, compared to $69,157 for the three months ended September 30,

2019, a decrease of $24,156, or 35%.

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

on completing the asset purchase with S-FDF, LLC.

Depreciation expense

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.

for the three months ended September 30, 2020 was $380, compared to $131 for the three months ended September 30, 2019, an increase

of $249, or 190%.

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

Other income (expense)

In the three months

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.

ended September 30, 2020, other expense was $1,510,651, consisting of $1,695 of interest expense derived from the operating loans

the Company received from the PPP and EIDL programs, a loss on the disposal of equipment of $5,369, and a net loss on investments

in Allied Esports Entertainment, Inc.

securities of $1,503,601, as offset by $14 of interest income.

During the comparative three

months ended September 30, 2019, other income was $22,543,377, consisting of the gain upon deconsolidation of BRAC of $26,322,687

and an offsetting merger incentive expense of $5,874,000 to recognize the cost related to transferring shares of AESE stock to

the former owners of Allied Esports and WPT and other investors as an incentive to participate in the merger, and a gain of $2,094,690

on the investment in Allied Esports Entertainment, Inc.

pursuant to the change in fair market value of the AESE shares.

Provision for income taxes

2 unchanged sentences

uncertainty of realization of any benefit.

Net profit (loss)

from discontinued operations

Net income from

discontinued operations

Net income from discontinued

1 unchanged sentence

Net income from discontinued

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.

operations for the three months ended September 30, 2019 was $8,152,165.

Results of Operations for the Nine Months

Ended September 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

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

Nine Months Ended

September 30,

Management fee income

11 unchanged sentences

Other income (expense)

Gain on deconsolidation of subsidiary

(26,322,687 )

Merger incentive expense

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

Loss on investment in Allied Esports Entertainment, Inc.

Loss on disposal of property and equipment

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

Total other income (expense)

Net loss from continuing operations, net of tax

(25,119,794 )

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

(23,049,012 )

Provision for income taxes

Net loss from continuing operations, net of tax

(23,049,012 )

Net income from discontinued operations

Net loss before non-controlling interest

(15,627,962 )

Net loss attributable to redeemable non-controlling interest

1 unchanged sentence

$ (14,295,433 )

$ (1,301,024 )

Management fee revenue

Management fee income

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.

earn any management fees from its management agreement with BRAC during the nine months ended September 30, 2020, compared to $153,279

during the nine months ended September 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

1 unchanged sentence

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

for the nine months ended September 30, 2020 were $936,304, compared to $910,191 for the nine months ended September 30, 2019,

an increase of $26,113, or 3%.

The increase in salaries and benefits was primarily due to payroll taxes on the distribution of

AESE shares to employees in the current period pursuant to the Management Incentive Plan and accrued severance pay to former officers

and employees.

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.

expense for the nine months ended September 30, 2020 was $393,831, compared to $2,892,738 for the nine months ended September 30,

2019, a decrease of $2,498,907, or 86%.

Stock-based compensation consisted of stock options expense in both periods, and $2,809,033

of expense related to the 2018 Management Incentive Plan in the prior period.

Amortization of stock options increased as new options

were granted toward the end of February 2020, with a five-year vesting period, and the vesting period was accelerated pursuant

to separation agreements entered into on September 30, 2020.

Professional services

5 unchanged sentences

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.

expenses for the nine months ended September 30, 2020 was $186,380, compared to $185,035 for the nine months ended September 30,

2019, an increase of $1,345, or 1%.

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

for the nine months ended September 30, 2020 was $1,030, compared to $754 for the nine months ended September 30, 2019, an increase

of $276, or 37%.

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.

In the nine months

ended September 30, 2020, other expense was $2,576,366, consisting of $384,456 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, a loss on the disposal of equipment of $5,369, along with a net loss on investments in Allied Esports

Entertainment, Inc.

of $2,186,557, as offset by $16 of interest income, compared to other income of $22,543,428 during the nine

months ended September 30, 2019, consisting of the $26,322,687 gain upon deconsolidation of BRAC and an offsetting merger incentive

expense of $5,874,000 to recognize the cost related to transferring shares of AESE stock to the former owners of Allied Esports

and WPT and other investors as incentive to participate in the merger, interest income of $51 and a gain of $2,094,690 on the investment

in Allied Esports Entertainment, Inc.

pursuant to the change in fair market value the AESE shares.

Provision for income taxes

2 unchanged sentences

uncertainty of realization of any benefit.

Net profit (loss)

from discontinued operations

Net income from

discontinued operations

Net income from discontinued

1 unchanged sentence

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.

operations of $7,421,050 during the nine months ended September 30, 2019.

Liquidity and Capital Resources

The following table

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

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

September 30,

Current Assets

1 unchanged sentence

Working Capital

$ (1,289,995 )

As of June 30, 2020,

As of September 30,

2020, we had working capital of $2,311,899.

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

Six Months Ended

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

Nine Months Ended

September 30,

Net cash used in operating activities

$ (1,111,648 )

$ (9,759,160 )

Net cash provided by investing activities

3 unchanged sentences

Net cash used in operating

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 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.

activities was $1,111,648 and $9,759,160 for the nine months ended September 30, 2020 and 2019, respectively, a period over period

improvement of $8,647,512.

The decrease was primarily due to a decrease of $8,618,568 in net losses in discontinued operations

Changes in working capital from continuing operating activities resulted in a decrease in cash of $169,715 in the nine

months ended September 30, 2020, as compared to a decrease in cash of $181,718 for the same period in the previous year.

Net cash provided by

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.

investing activities were $1,157,076 and $6,888,299 for the nine months ended September 30, 2020 and 2019, respectively.

Cash provided

by investing activities were comprised of proceeds of $1,157,076 from the sale of Allied Esports Entertainment, Inc.

during the nine months ended September 30, 2020.

In the comparative period ended September 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 $262,925 and $-0- for the six months ended June 30, 2020 and 2019, respectively.

All of the 2020 activity

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

financing activities was $262,925 and $1,431,974 for the nine months ended September 30, 2020 and 2019, respectively.

2020 activity was the result of $802,025 of net proceeds from notes payable, as offset by $539,100 of repayments, compared to $1,431,974

of cash provided by financing activities from discontinued operations in the comparative nine months ended September 30, 2019.

Satisfaction of our cash obligations

for the next 12 months

As of June 30, 2020,

As of September 30,

2020, our balance of cash was $417,109 and we had total working capital of $2,311,899.

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.

We expect to incur significant costs related

to the freeze-dried fruit Asset Purchase Agreement which closed on October 1, 2020, 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 $1,157,076 of proceeds on the sale of 469,968

shares of AESE stock and 505,000 AESEW warrants, 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 after October 1, 2020, proceeds from a financing secured by the AESE Shares after June 9, 2020, proceeds

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

by the Company after August 1, 2020 (except for severance related to change in control payments made to the Company's employees),

and the Company's cash as of October 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 net fair value of the Sponsor

Shares is approximately $1.8 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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What changed 10-Q

Item 1. Financial Statements