Allied Gaming & Entertainment, Inc. (NASDAQ: AGAE) (the
“Company” or “AGAE”), a global experiential entertainment company,
today announced financial results for the second quarter ended June
30, 2024.
“These are exciting times at Allied Gaming & Entertainment
as our business is very well positioned with a number of growth
catalysts in the near future,” stated Yinghua Chen, Chief Executive
Officer of AGAE. “We are particularly bullish on our most recent
announcement, the formation of the World Mahjong Tour, which will
utilize the highly successful and sustainable business model of
World Poker Tour to bring Mahjong to enthusiasts around the world.
We look forward to our opening season, with the champion being
crowned at our HyperX Arena in the spring of 2025.”
Second Quarter 2024 Financial Results
Revenues: Total revenues of $2.6 million were up 11% from $2.4
million in the prior quarter, but decreased 19% compared to $3.3
million in the second quarter of 2023. The year-over-year decrease
was primarily attributable to a $2.0 million decline in
multi-platform revenues from our branded content production arm,
offset by $1.7 million in current period casual mobile gaming
revenues following the Company’s strategic investment in Z-Tech in
the fourth quarter of 2023.
Costs and expenses: Total costs and expenses were $7.9 million,
an increase of 70% compared to the second quarter of 2023. The
year-over-year increase was primarily attributable to a $3.0
million increase in general and administrative expenses primarily
driven by legal and other costs incurred in response to legal
actions by an activist shareholder.
Net loss for the second quarter of 2024 was $3.9 million
compared to a net loss of $0.7 million in the prior year
period.
Furthermore, adjusted EBITDA loss was $1.4 million for the
second quarter of 2024 compared to a loss of $1.7 million in the
prior quarter and a loss of $1.1 million in the second quarter of
2023. A reconciliation of the GAAP-basis net income (loss) to
adjusted EBITDA is provided in the table at the end of this press
release.
Balance Sheet
As of June 30, 2024, the Company had a cash and short-term
investments position of $95.2 million, including $5.0 million of
restricted cash, compared to $78.6 million at December 31, 2023. At
June 30, 2024, the Company had a working capital position of $61.8
million compared to $66.4 million at December 31, 2023. As of June
30, 2024, the Company had approximately 38.2 million shares of
outstanding common stock.
Operational Update
HyperX Arena hosted 65 event days in the second quarter of 2024,
with 25 proprietary event days and 40 third-party event days.
Third-party events were highlighted by WPT Choctaw Championship,
WPT Seminole Hard Rock Poker Showdown final table, Mobile Legends
Bang Bang 2024 NACT Spring Grand Finale, 2024 Licensing
International Excellence Awards, and the Sonic Boombox Unofficial
LVL Up Afterparty.
Corporate Developments
Subsequent to the end of the quarter, AGAE announced the launch
of the World Mahjong Tour (“WMT”), a series of events that will
bring the game of Mahjong to a global stage. The first WMT Premier
event finale is set to take place in the spring of 2025 at HyperX
Arena in Las Vegas. In addition to the tournament series, WMT will
introduce proprietary mobile games, Mahjong-themed content
production, and a comprehensive membership services model.
Second Quarter 2024 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 second quarter
2024 financial results. Participants may join the conference call
by dialing 1-800-225-9448 (United States) or 1-203-518-9708
(international) and providing the conference ID “Allied”.
A live webcast of the conference call will also be available on
Allied Gaming & Entertainment’s Investor Relations site at
ir.alliedgaming.gg. 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. Eastern Time on Monday, September 2, 2024, by
dialing 1-844-512-2921 (United States) or 1-412-317-6671
(International) and using the replay passcode: 11156478.
About Allied Gaming & Entertainment
Allied Gaming & Entertainment Inc. (Nasdaq: AGAE) is a
global experiential entertainment company focused on providing a
growing world of gamers and concertgoers 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. Non-GAAP financial measures are
not an alternative to the Company’s GAAP financial results and may
not be calculated in the same manner as similar measures presented
by other companies.
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 and non-recurring
charges, such as stock-based compensation, business acquisition
transaction costs and impairment expense.
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. The inclusion of
such information should not be regarded as a representation by the
Company, or any person, that the objectives of the Company will be
achieved. Important factors, among others, that may affect actual
results or outcomes include: risks associated with the future
direction or governance of the Company; our ability to execute on
our strategic and business plans; the substantial uncertainties
inherent in the acceptance of existing and future products and
services; the ability to retain key personnel; current and
potential litigation and related legal expenses; general economic
and market conditions impacting demand for our services; our
inability to enter into one or more future acquisition or strategic
transactions; 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, 2023, as filed with the U.S. Securities and Exchange
Commission (the “SEC”) on March 28, 2024, as amended by the Form
10-K/A filed with the SEC on April 29, 2024, 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
June 30,
December 31,
2024
2023
(unaudited) Assets Current Assets Cash and cash
equivalents
$
33,303,635
$
16,320,583
Short-term investments
54,800,000
56,500,000
Interest receivable
2,095,405
792,223
Accounts receivable
377,589
529,369
Deposits, current portion
3,700,000
3,700,000
Prepaid expenses and other current assets
457,645
498,886
Total Current Assets
94,734,274
78,341,061
Restricted cash
5,000,000
5,000,000
Property and equipment, net
3,378,118
3,834,193
Digital assets
49,300
49,300
Intangible assets, net
5,801,239
6,254,731
Deposits, non-current portion
376,678
392,668
Operating lease right-of-use asset
4,944,215
5,415,678
Goodwill
12,413,826
12,729,056
Total Assets
$
126,697,650
$
112,016,687
Liabilities and Stockholders' Equity Current Liabilities
Accounts payable
$
1,138,571
$
371,830
Accrued expenses and other current liabilities
857,175
763,512
Deferred revenue
350,265
103,748
Operating lease liability, current portion
1,545,350
1,482,977
Loans payable
29,076,365
9,230,168
Total Current Liabilities
32,967,726
11,952,235
Operating lease liability, non-current portion
4,816,517
5,560,251
Deferred tax liability
1,069,014
1,096,160
Total Liabilities
38,853,257
18,608,646
Commitments and Contingencies (Note 9) Stockholders' Equity
Preferred stock, $0.0001 par value, 1,000,000 shares authorized,
none issued and outstanding
-
-
Series A Preferred stock, $0.0001 par value, 50,000 shares
designated, none issued and outstanding
-
-
Common stock, $0.0001 par value; 100,000,000 shares authorized,
40,465,097 and 39,085,470 shares issued at June 30, 2024 and
December 31, 2023, and 38,185,313 and 36,805,686 shares outstanding
at June 30, 2024 and December 31, 2023, respectively
4,047
3,909
Additional paid in capital
199,266,718
198,677,132
Accumulated deficit
(119,173,397
)
(113,671,029
)
Accumulated other comprehensive income
257,222
433,565
Treasury stock, at cost, 2,279,784 shares at June 30, 2024 and
December 31, 2023
(2,693,653
)
(2,693,653
)
Total Allied Gaming & Entertainment Inc. Stockholders'
Equity
77,660,937
82,749,924
Non-controlling interest
10,183,456
10,658,117
Total Stockholders' Equity
87,844,393
93,408,041
Total Liabilities and Stockholders' Equity
$
126,697,650
$
112,016,687
The accompanying notes are an integral part of these
condensed consolidated financial statements.
ALLIED GAMING &
ENTERTAINMENT INC. AND SUBSIDIARIES
Condensed Consolidated
Statements of Operations
(unaudited)
For the Three Months
Ended
For the Six Months
Ended
June 30,
June 30,
2024
2023
2024
2023
Revenues:
In-person
$
917,362
$
1,267,773
$
2,172,560
$
2,461,103
Multiplatform content
52
2,000,322
111
2,000,424
Casual mobile gaming
1,722,454
-
2,846,258
-
Total Revenues
2,639,868
3,268,095
5,018,929
4,461,527
Costs and Expenses: In-person
(exclusive of depreciation and amortization)
502,203
643,831
1,138,166
1,316,053
Multiplatform content (exclusive of depreciation and amortization)
-
1,517,311
-
1,517,707
Casual mobile gaming (exclusive of depreciation and amortization)
1,561,165
-
2,498,070
-
Research and development expenses
173,533
-
368,744
-
Selling and marketing expenses
54,361
66,941
108,049
121,539
General and administrative expenses
5,236,160
2,223,025
8,091,482
4,766,372
Depreciation and amortization
402,698
212,218
780,168
790,778
Total Costs and Expenses
7,930,120
4,663,326
12,984,679
8,512,449
Loss From Operations
(5,290,252
)
(1,395,231
)
(7,965,750
)
(4,050,922
)
Other Income (Expense): Other income
(expense), net
14,399
(11,113
)
1,241
16,342
Gain realized on foreign currency transactions
351,434
-
351,434
-
Interest income, net
1,041,468
715,126
1,900,673
1,449,575
Net Loss
(3,882,951
)
(691,218
)
(5,712,402
)
(2,585,005
)
Less: net loss attributable to non-controlling interest
(79,693
)
-
(210,034
)
-
Net Loss Attributable to Common Stockholders
$
(3,803,258
)
$
(691,218
)
$
(5,502,368
)
$
(2,585,005
)
Net Loss per Common Share
Basic and Diluted
$
(0.09
)
$
(0.02
)
$
(0.13
)
$
(0.07
)
Weighted Average Number of Common
Shares Outstanding: Basic and Diluted
43,212,071
37,199,100
41,034,900
37,559,922
The accompanying notes are an integral
part of these condensed consolidated financial statements.
Allied Gaming & Entertainment, Inc. and
Subsidiaries 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 and non-recurring, infrequent or
unusual items.
The following table presents a reconciliation of EBITDA and
Adjusted EBITDA from net loss, AGAE’s most directly comparable
financial measure calculated and presented in accordance with
GAAP.
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net loss
$
(3,882,951
)
$
(691,218
)
$
(5,712,402
)
$
(2,585,005
)
Interest income, net
(1,041,468
)
(715,126
)
(1,900,673
)
(1,449,575
)
Depreciation and amortization
402,698
212,218
780,168
790,778
EBITDA
(4,521,721
)
(1,194,126
)
(6,832,907
)
(3,243,802
)
Non-recurring legal fees
2,938,034
-
3,138,034
-
Stock compensation
202,308
66,856
673,908
71,982
Adjusted EBITDA
$
(1,381,379
)
$
(1,127,270
)
$
(3,020,965
)
$
(3,171,820
)
Note: the non-recurring legal fees relate to a
shareholder complaint filed in the Court of Chancery of the State
of Delaware on March 7, 2024
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240816870651/en/
Investor Contact: Tyler Drew Addo Investor Relations
agae@addo.com 310-829-5400
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