Allied Gaming & Entertainment, Inc. (NASDAQ: AGAE) (the
“Company” or “AGAE”), a global experiential entertainment company,
today announced financial results for the fourth quarter and full
year ended December 31, 2022. This release refers to “continuing”
and “discontinued” operations due to the sale of the Company’s
subsidiaries owning and operating its poker-related business, the
World Poker Tour® (“World Poker Tour,” or “WPT®”) on July 12, 2021.
Unless otherwise noted, results presented in this release relate to
the continuing operations of the Company and its Allied Esports
business, and excludes the operations of the World Poker Tour,
which are classified as discontinued operations of the Company.
“We experienced positive momentum in 2022, with revenues up 28%
over 2021, primarily driven by an increase in live events at our
HyperX Arena in Las Vegas and our Allied Esports Truck along with
sponsorship revenue from Season One of our original content series,
Elevated,” said Yinghua Chen, the Company’s Chief Executive
Officer. “In addition, during the fourth quarter we rebranded as
Allied Gaming & Entertainment to better reflect our positioning
as a global experiential entertainment company and also concluded
our strategic review process. Moving forward, we are confident that
building upon Allied’s original focus of live events and
Multiplatform Content, while also adding new revenue drivers such
as live virtual entertainment events and online gaming tournaments,
will result in future positive financial results.”
Full Year 2022 Financial Results
Revenues: Total revenues of $6.4 million increased 28% in 2022
compared to 2021. The increase in revenue year-over-year was
primarily driven by an increase in sponsorship revenue and revenue
from live-events that took place at our HyperX Arena and within our
Allied Esports Truck operations.
Costs and expenses: Total costs and expenses were $18.1 million
in 2022, a decrease of 13% compared to 2021. The net decrease in
costs and expenses is primarily due to a $2.6 million, or 20%,
reduction in general and administrative expenses, consisting
principally of stock based compensation to a former CEO, corporate
payroll, and bonuses & professional fees related to the sale of
WPT®, a $1.2 million or 38% reduction in depreciation and
amortization expense, and a $0.3 million reduction in our
multi-platform content costs, partially offset by a $1.3 million or
35% increase in our In-person pillar expenses related to the strong
post-pandemic recovery of our live events.
Our 2022 loss from continuing operations was $10.8 million
compared to a loss of $15.1 million in 2021.
Adjusted EBITDA loss was $8.6 million for 2022 compared to a
loss of $10.5 million in 2021. A reconciliation of the GAAP-basis
net loss to adjusted EBITDA is provided in the table at the end of
this press release.
Fourth Quarter 2022 Financial Results
Revenues: Total revenues of $1.2 million decreased 37% for the
fourth quarter of 2022 compared to the fourth quarter of 2021. The
decline from the fourth quarter of 2021 was driven by the
non-recurring nature of our 2021 live-streaming partnership with
Trovo.
Costs and expenses: Total costs and expenses for the fourth
quarter of 2022 were $3.8 million, a decrease of 33% compared to
the fourth quarter of 2021. The net decrease in costs and expenses
is primarily due to a $1.4 million, or a 41%, reduction in general
and administrative expenses, consisting primarily of a decline in
corporate professional fees and compensation expense at our Las
Vegas arena and within our European operations.
The effort in reducing AGAE’s expenses has significantly
improved the Company’s loss from continuing operations in the
fourth quarter, which was $1.7 million compared to a loss of $3.8
million in the prior year period.
Furthermore, our adjusted EBITDA loss was $1.7 million for the
fourth quarter of 2022, a 21% improvement compared to a loss of
$2.1 million in the fourth quarter of 2021. A reconciliation of the
GAAP-basis net loss to adjusted EBITDA is provided in the table at
the end of this press release.
Balance Sheet
As of December 31, 2022, the Company had a cash and short-term
investments position of $86.8 million, including $5.0 million of
restricted cash. This compared to $97.9 million in cash and
short-term investments at December 31, 2021, which also included
$5.0 million of restricted cash. At December 31, 2022, the Company
had a working capital position of $79.1 million compared to $89.0
million at December 31, 2021. AGAE’s working capital on December
31, 2022 was reduced by a lease liability of $1.2 million recorded
in connection with the Company’s implementation of the new leasing
standard (ASC 842) on that date. As of December 31, 2022, the
Company had approximately 39.1 million shares of outstanding common
stock.
Operational Update
Allied Esports produced 89 events in the fourth quarter of 2022,
with 45 proprietary events and 44 third party events. Third party
events were up 25.3% over the fourth quarter of 2021 and were
highlighted by Red Cross Rescue Royale, Splinter Fest, Mogul Moves,
CYN Tempest Awards and PBR-Mario Kart.
Live event and production business continued to grow stronger
with the Company’s HyperX Arena Las Vegas posting its best year to
date while growing revenues by 49.6% and improving adjusted EBITDA
by 11.3% over 2021.
The Allied Esports Truck was active with seven eNASCAR Arcade
events taking place in the fourth quarter of 2022 at the YellaWood
500 at Talladega Superspeedway in Talladega, Alabama; the Miami
Boys and Girls Club Pop-Up Event at the Hank Kline Boys and Girls
Club in Miami, Florida; the Dixie Vodka 400 at Homestead-Miami
Speedway in Homestead, Florida; the Xfinity 500 at Martinsville
Speedway in Ridgeway, Virginia; the Pop-Up Event at Arizona State
University in Tempe, Arizona in support of Champions Week; the
NASCAR Cup Series Championship at Phoenix Raceway in Phoenix,
Arizona; and the Cotton Bowl at AT&T Stadium in Arlington,
Texas.
Corporate Developments
During the fourth quarter of 2022, the Company announced the
conclusion of its previously announced strategic review process.
The strategic review was overseen by the Company’s Board of
Directors and included the assistance of The Benchmark Company.
After carefully considering possible alternatives, the Company
determined that its shareholders’ interests would be best served by
restructuring its existing esports business operations and
expanding its focus to include a broader array of entertainment and
gaming products and services in lieu of seeking a single business
combination transaction.
In conjunction with the conclusion of the strategic review
process, the Company changed its corporate name and rebranded to
“Allied Gaming & Entertainment Inc.” The Company’s common stock
continues to be publicly traded on the Nasdaq Capital Market under
the new ticker symbol “AGAE.”
Also during the quarter, the Company authorized a stock
repurchase program of up to $10 million of its outstanding shares
of common stock. During the fourth quarter, the Company bought back
a total of 581,746 shares at an average selling price of $1.02 for
a total cost of $593,110. Moving forward, the manner, timing and
amount of any purchase will continue to be based on an evaluation
of market conditions, stock price and other factors.
Fourth Quarter and Full Year 2022 Conference Call
The Company will host a conference call today at 2:00 p.m.
Pacific Time / 5:00 p.m. Eastern Time to discuss its fourth quarter
and full year 2022 financial results. Participants may join the
conference call by dialing 1-877-407-0792 (United States) or
1-201-689-8263 (International).
A live webcast of the conference call will also be available on
Allied Gaming & Entertainment’s Investor Relations site here.
Additionally, financial information presented on the call will be
available on Allied Gaming & Entertainment’s Investor Relations
site. For those unable to participate in the conference call, a
telephonic replay of the call will also be available shortly after
the completion of the call, until 11:59 p.m. ET on Thursday, April
6, 2023, by dialing 1-844-512-2921 (United States) or
1-412-317-6671 (International) and using the replay passcode:
13737018.
About Allied Gaming & Entertainment
Allied Gaming & Entertainment Inc. (Nasdaq: AGAE) is a
global experiential entertainment company focused on providing a
growing world of gamers with unique experiences through renowned
assets, products and services. For more information, visit
alliedgaming.gg.
Non-GAAP Financial Measures
As a supplement to our financial measures presented in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), the Company presents certain non-GAAP measures of
financial performance. These non-GAAP financial measures are not
intended to be considered in isolation from, as a substitute for,
or as more important than, the financial information prepared and
presented in accordance with GAAP. In addition, these non-GAAP
measures have limitations in that they do not reflect all of the
items associated with the company’s results of operations as
determined in accordance with GAAP.
The Company provides net income (loss) and earnings (loss) per
share in accordance with GAAP. In addition, the Company provides
EBITDA (defined as GAAP net income (loss) from continuing
operations before interest (income) expense, income taxes,
depreciation, and amortization). The Company defines “Adjusted
EBITDA” as EBITDA excluding certain non-cash charges, such as
stock-based compensation, inducement expense, extinguishment losses
and impairment losses.
In the future, the Company may also consider whether other items
should also be excluded in calculating the non-GAAP financial
measures used by the Company. Management believes that the
presentation of these non-GAAP financial measures provides
investors with additional useful information to measure the
Company’s financial and operating performance. In particular, these
measures facilitate comparison of our operating performance between
periods and help investors to better understand the operating
results of the Company by excluding certain items that may not be
indicative of the Company’s core business, operating results, or
future outlook. Additionally, we consider quantitative and
qualitative factors in assessing whether to adjust for the impact
of items that may be significant or that could affect an
understanding of our ongoing financial and business performance or
trends. Internally, management uses these non-GAAP financial
measures, along with others, in assessing the Company’s operating
results, measuring compliance with any applicable requirements of
the Company’s debt financing agreements in place at such time, as
well as in planning and forecasting.
The Company’s non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and our
non-GAAP definitions of the “EBITDA” and “Adjusted EBITDA” do not
have a standardized meaning. Therefore, other companies may use the
same or similarly named measures, but include or exclude different
items, which may not provide investors a comparable view of the
Company’s performance in relation to other companies.
Management compensates for the limitations resulting from the
exclusion of these items by considering the impact of the items
separately and by considering the Company’s GAAP, as well as
non-GAAP, financial results and outlook, and by presenting the most
comparable GAAP measures directly ahead of non-GAAP measures, and
by providing a reconciliation that indicates and describes the
adjustments made.
Forward Looking Statements
This communication contains certain forward-looking statements
under federal securities laws. Forward-looking statements may
include our statements regarding our goals, beliefs, strategies,
objectives, plans, including product and service developments,
future financial conditions, results or projections or current
expectations. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “intend” or “continue,” the negative of such terms, or
other comparable terminology. These statements are subject to known
and unknown risks, uncertainties, assumptions and other factors
that may cause actual results to be materially different from those
contemplated by the forward-looking statements. These
forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside our control, that could cause
actual results or outcomes to differ materially from those
discussed in these forward-looking statements. Important factors,
among others, that may affect actual results or outcomes include:
the ability to meet Nasdaq’s continued listing standards; our
ability to execute on our business plan; the ability to retain key
personnel; potential litigation; general economic and market
conditions impacting demand for our services; a change in our plans
to retain or invest the net cash proceeds from the WPT sale
transaction; our inability to enter into one or more future
acquisition or strategic transactions using the net proceeds from
the WPT sale transaction; and our ability, or a decision not to
pursue strategic options for the esports business. You should
consider the areas of risk described in connection with any
forward-looking statements that may be made herein. The business
and operations of AGAE are subject to substantial risks, which
increase the uncertainty inherent in the forward-looking statements
contained in this communication. Except as required by law, we
undertake no obligation to release publicly the result of any
revision to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events. Further information on
potential factors that could affect our business and results is
described under “Item 1A. Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2021, as filed with the
SEC on May 26, 2022, as well as subsequent reports we file with the
SEC. Readers are also urged to carefully review and consider the
various disclosures we made in such Annual Report on Form 10-K and
in subsequent reports with the SEC.
Allied Gaming & Entertainment, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31,
2022
2021
Assets Current Assets Cash
$
11,167,442
$
92,887,030
Short-term investments
70,000,000
Interest receivable
677,397
Accounts receivable
72,739
389,040
Prepaid expenses and other current assets
459,274
984,777
Total Current Assets
82,376,852
94,260,847
Restricted cash
5,000,000
5,000,000
Property and equipment, net
4,005,622
6,136,893
Digital assets
49,761
Intangible assets, net
22,836
26,827
Deposits
379,105
379,105
Operating lease right-of-use asset
5,845,549
Other assets
49,950
Total Assets
$
97,729,675
$
105,803,672
Liabilities and Stockholders' Equity Current Liabilities
Accounts payable
$
317,561
$
341,161
Accrued expenses and other current liabilities
1,645,379
2,966,245
Accrued expenses - related party
-
1,800,000
Deferred revenue
108,428
141,825
Operating lease liability, current portion
1,227,164
-
Total Current Liabilities
3,298,532
5,249,231
Deferred rent
-
1,907,634
Operating lease liability, non-current portion
6,527,075
-
Total Liabilities
9,825,607
7,156,865
Commitments and Contingencies Stockholders' Equity Preferred stock,
$0.0001 par value, 1,000,000 shares authorized, none issued and
outstanding
-
-
Common stock, $0.0001 par value; 100,000,000 shares authorized,
39,085,470 and 39,116,907 shares issued at December 31, 2022 and
2021, respectively, and 38,503,724 and 39,116,907 shares
outstanding at December 31, 2022 and 2021, respectively
3,909
3,912
Additional paid in capital
198,526,614
197,784,972
Accumulated deficit
(110,235,568
)
(99,411,683
)
Accumulated other comprehensive income
219,675
269,606
Treasury stock, at cost, 581,746 and 0 shares at December 31, 2022
and 2021, respectively
(610,562
)
-
Total Stockholders' Equity
87,904,068
98,646,807
Total Liabilities and Stockholders' Equity
$
97,729,675
$
105,803,672
Allied Gaming & Entertainment, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and
Comprehensive Loss
For the Three Months
Ended
For the Years Ended
December 31,
December 31,
2022
2021
2022
2021
Revenues: In-person
$
1,216,512
$
1,573,478
$
6,100,912
$
4,201,259
Multiplatform content
428
371,097
251,558
754,781
Total Revenues
1,216,940
1,944,575
6,352,470
4,956,040
Costs and Expenses: In-person (exclusive of depreciation and
amortization)
992,298
1,245,776
4,994,610
3,688,527
Multiplatform content (exclusive of depreciation and amortization)
14,056
172,465
109,563
386,723
Selling and marketing expenses
49,199
77,989
234,813
294,417
General and administrative expenses
2,012,228
3,393,539
10,482,421
13,052,963
Depreciation and amortization
777,242
809,955
2,065,348
3,305,895
Impairment of property and equipment
67,500
-
Impairment of digital assets
-
-
164,411
-
Total Costs and Expenses
3,845,023
5,699,724
18,118,666
20,728,525
Loss From Operations
(2,628,083
)
(3,755,149
)
(11,766,196
)
(15,772,485
)
Other Income (Expense): Gain on forgiveness of PPP loans and
interest
-
-
-
912,475
Other income (expense), net
198,868
(496
)
153,009
68,917
Conversion inducement expense
-
-
-
-
Extinguishment loss on acceleration of debt redemption
-
-
-
-
Interest income (expense)
755,209
659
789,302
(268,752
)
Total Other Income (Expense)
954,077
163
942,311
712,640
Loss from continuing operations
(1,674,006
)
(3,754,986
)
(10,823,885
)
(15,059,845
)
(Loss) income from discontinued operations, net of tax provision:
(Loss) income from discontinued operations before the sale of WPT
-
-
-
66,741
Gain on sale of WPT
-
(2,570,894
)
-
77,858,835
Income from discontinued operations
-
(2,570,894
)
-
77,925,576
Net income (loss)
$
(1,674,006
)
$
(6,325,880
)
$
(10,823,885
)
$
62,865,731
Comprehensive Loss Net Income (Loss)
$
(1,674,006
)
$
(6,325,880
)
$
(11,069,968
)
$
62,865,731
Other comprehensive (loss) income: Foreign currency translation
adjustments
43,151
9,241
(49,931
)
78,640
Total Comprehensive Income (Loss)
74,280,563
(6,503,519
)
$
(11,119,899
)
$
62,944,371
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are non-GAAP financial measures and
should not be considered as a substitute for net income (loss),
operating income (loss) or any other performance measure derived in
accordance with United States generally accepted accounting
principles (“GAAP”) or as an alternative to net cash provided by
operating activities as a measure of AGAE’s profitability or
liquidity. AGAE’s management believes EBITDA and Adjusted EBITDA
are useful because they allow external users of its financial
statements, such as industry analysts, investors, lenders and
rating agencies, to more effectively evaluate its operating
performance, compare the results of its operations from period to
period and against AGAE’s peers without regard to AGAE’s financing
methods, hedging positions or capital structure and because it
highlights trends in AGAE’s business that may not otherwise be
apparent when relying solely on GAAP measures. AGAE presents EBITDA
and Adjusted EBITDA because it believes EBITDA and Adjusted EBITDA
are important supplemental measures of its performance that are
frequently used by others in evaluating companies in its industry.
Because EBITDA and Adjusted EBITDA exclude some, but not all, items
that affect net income (loss) and may vary among companies, the
EBITDA and Adjusted EBITDA AGAE presents may not be comparable to
similarly titled measures of other companies. AGAE defines “EBITDA”
as earnings before interest, income taxes, depreciation and
amortization of intangibles. AGAE defines “Adjusted EBITDA” as
EBITDA excluding stock-based compensation, gain on forgiveness of
PPP loans, transaction costs and other charges related to the sale
of WPT, impairment losses, conversion inducement expenses and
extinguishment losses.
The following table presents a reconciliation of EBITDA and
Adjusted EBITDA to net loss from continuing operations, AGAE’s most
directly comparable financial measure calculated and presented in
accordance with GAAP.
Three Months Ended December
31,
Years Ended December
31,
2022
2021
2022
2021
Continuing operations Net loss from continuing operations
$
(1,674,006
)
$
(3,754,986
)
$
(10,823,885
)
$
(15,059,845
)
Interest (income) expense, net
(755,209
)
(659
)
(789,302
)
268,752
Federal, state, and foreign taxes
-
-
-
(48,400
)
Depreciation and amortization
777,242
809,955
2,065,348
3,305,895
EBITDA
(1,651,973
)
(2,945,690
)
(9,547,839
)
(11,533,598
)
Stock compensation
(1,920
)
842,511
791,309
1,923,873
PPP loan forgiveness
-
-
-
(912,475
)
Impairment expense
-
-
164,411
-
Adjusted EBITDA
$
(1,653,893
)
$
(2,103,179
)
$
(8,592,119
)
$
(10,522,200
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230322005775/en/
Investor Contact: Tyler Drew Addo Investor Relations
ir@alliedgaming.gg 310-829-5400
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