AGAE Allied Gaming and Entertainment Inc

Allied Gaming & Entertainment, Inc. (NASDAQ: AGAE) (the “Company” or “AGAE”), a global experiential entertainment company, today announced financial results for the first quarter ended March 31, 2024.

"After building momentum throughout 2023, we’ve had a strong start to the year," stated Yinghua Chen, Chief Executive Officer of AGAE. "Along with the exciting events we have confirmed for the second quarter, we have a strong pipeline of opportunities in front of us, both locally and abroad throughout 2024. In addition, Z-Tech is trending well for the remainder of the year as we look to further capitalize on the massive and growing market of gaming & entertainment."

First Quarter 2024 Financial Results

Revenues: Total revenues of $2.4 million increased 99% compared to $1.2 million in the first quarter of 2023. The year-over-year increase was primarily attributable to an increase in 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 $5.1 million, an increase of 31% compared to the first quarter of 2023. The year-over-year increase was primarily attributable to Z-Tech’s promotion, research and development, and other operating expenses.

Net loss for the first quarter of 2024 improved to $1.8 million compared to a net loss of $1.9 million in the prior year period.

Furthermore, adjusted EBITDA loss was $1.7 million for the first quarter of 2024, an improvement from a loss of $2.0 million in the first 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 March 31, 2024, the Company had a cash and short-term investments position of $83.3 million, including $5.0 million of restricted cash, compared to $78.6 million at December 31, 2023. At March 31, 2024, the Company had a working capital position of $67.2 million compared to $66.4 million at December 31, 2023. As of March 31, 2024, the Company had approximately 45.6 million shares of outstanding common stock.

Operational Update

Allied Esports produced 63 events in the first quarter of 2024, with 33 proprietary events and 30 third-party events. Third-party events were highlighted by PlayVS Live: Gridiron Showdown; Second Annual P&G Battle of the Paddles at Super Bowl LVIII; 3rd Annual Battle for Charity Esports Tournament; Gitlab; and the Blitz Experience.

Corporate Developments

During the quarter, AGAE announced a partnership with World Poker Tour®, (“WPT®”), and Wynn Macau, in which the companies will work together to bring an inaugural WPT event to Macau. In partnership with AGAE, World Poker Tour will be at Wynn Macau for the first time from June 18-24, 2024.

First 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 first quarter 2024 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 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, May 27, 2024, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and using the replay passcode: 13746377.

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; potential litigation; 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 SEC on March 27, 2024, as amended, 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

  March 31, December 31,

2024

2023

(unaudited) Assets Current Assets Cash and cash equivalents

$

7,300,965

 

$

16,320,583

 

Short-term investments

 

69,642,386

 

 

56,500,000

 

Interest receivable

 

1,319,578

 

 

792,223

 

Accounts receivable

 

477,790

 

 

529,369

 

Loan receivable

 

1,340,149

 

 

-

 

Deposits, current portion

 

3,700,000

 

 

3,700,000

 

Prepaid expenses and other current assets

 

550,572

 

 

498,886

 

Total Current Assets

 

84,331,440

 

 

78,341,061

 

Restricted cash

 

5,000,000

 

 

5,000,000

 

Property and equipment, net

 

3,608,688

 

 

3,834,193

 

Digital assets

 

49,300

 

 

49,300

 

Intangible assets, net

 

6,009,070

 

 

6,254,731

 

Deposits, non-current portion

 

385,524

 

 

392,668

 

Operating lease right-of-use asset

 

5,141,048

 

 

5,415,678

 

Goodwill

 

12,490,536

 

 

12,729,056

 

Total Assets

$

117,015,606

 

$

112,016,687

 

Liabilities and Stockholders' Equity Current Liabilities Accounts payable

$

172,975

 

$

371,830

 

Accrued expenses and other current liabilities

 

496,992

 

 

763,512

 

Deferred revenue

 

105,650

 

 

103,748

 

Operating lease liability, current portion

 

1,484,332

 

 

1,482,977

 

Loans payable

 

14,856,822

 

 

9,230,168

 

Total Current Liabilities

 

17,116,771

 

 

11,952,235

 

  Operating lease liability, non-current portion

 

5,191,538

 

 

5,560,251

 

Deferred tax liability

 

1,075,620

 

 

1,096,160

 

Total Liabilities

 

23,383,929

 

 

18,608,646

 

Commitments and Contingencies Stockholders' Equity Series A Preferred stock, $0.0001 par value, 50,000 shares authorized, none issued and outstanding

 

-

 

 

-

 

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, 47,853,097 and 39,085,470 shares issued at March 31, 2024 and December 31, 2023, and 45,573,313 and 36,805,686 shares outstanding at March 31, 2024 and December 31, 2023, respectively

 

4,780

 

 

3,909

 

Additional paid in capital

 

205,660,677

 

 

198,677,132

 

Accumulated deficit

 

(115,370,139

)

 

(113,671,029

)

Accumulated other comprehensive income

 

299,880

 

 

433,565

 

Stock subscription receivable

 

(4,597,000

)

 

-

 

Treasury stock, at cost, 2,279,784 shares at March 31, 2024 and December 31, 2023

 

(2,693,653

)

 

(2,693,653

)

Total Allied Gaming & Entertainment Inc. Stockholders' Equity

 

83,304,545

 

 

82,749,924

 

Non-controlling interest

 

10,327,132

 

 

10,658,117

 

Total Stockholders' Equity

 

93,631,677

 

 

93,408,041

 

Total Liabilities and Stockholders' Equity

$

117,015,606

 

$

112,016,687

 

  The accompanying notes are an integral part of these consolidated financial statements.

Allied Gaming & Entertainment, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)

  For the Three Months Ended March 31,

2024

2023

  Revenues: In-person

$

1,255,198

 

$

1,193,330

 

Multiplatform content

 

59

 

 

101

 

Casual mobile gaming

 

1,123,804

 

 

-

 

Total Revenues

 

2,379,061

 

 

1,193,431

 

Costs and Expenses: In-person (exclusive of depreciation and amortization)

 

635,963

 

 

672,222

 

Multiplatform content (exclusive of depreciation and amortization)

 

-

 

 

395

 

Casual mobile games (exclusive of depreciation and amortization)

 

936,905

 

 

-

 

Research and development expenses

 

195,211

 

 

-

 

Selling and marketing expenses

 

53,688

 

 

54,598

 

General and administrative expenses

 

2,857,800

 

 

2,543,347

 

Depreciation and amortization

 

374,992

 

 

578,560

 

Total Costs and Expenses

 

5,054,559

 

 

3,849,122

 

Loss From Operations

 

(2,675,498

)

 

(2,655,691

)

Other Income (Expense): Other (expense) income, net

 

(13,158

)

 

27,455

 

Interest income, net

 

859,205

 

 

734,449

 

Net Loss

 

(1,829,451

)

 

(1,893,787

)

Less: net loss attributable to non-controlling interest

 

(130,341

)

 

-

 

Net Loss Attributable to Common Stockholders

$

(1,699,110

)

$

(1,893,787

)

Net Loss per Common Share Basic and Diluted

$

(0.04

)

$

(0.05

)

Weighted Average Number of Common Shares Outstanding:

 

38,863,783

 

 

37,924,754

 

  The accompanying notes are an integral part of these consolidated financial statements.

Allied Gaming & Entertainment, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

  For the Three Months Ended March 31,

2024

2023

Net Loss

$

(1,829,451

)

$

(1,893,787

)

Other comprehensive income (loss): Foreign currency translation adjustments

 

(334,329

)

 

1,880

 

Total comprehensive loss

 

(2,163,780

)

 

(1,891,907

)

Less: Net loss attributable to non-controlling interest

 

(130,341

)

 

-

 

Less: Other comprehensive loss attributable to non-controlling interest

 

(200,644

)

 

-

 

Comprehensive Loss Attributable to Common Stockholders

$

(1,832,795

)

$

(1,891,907

)

  The accompanying notes are an integral part of these consolidated financial statements.

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.

 

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

March 31,

2024

2023

Net Loss Attributable to Common Stockholders

$

(1,699,110

)

$

(1,893,787

)

Interest income, net

 

(859,205

)

 

(734,449

)

Depreciation and amortization

 

374,992

 

 

578,560

 

EBITDA

 

(2,183,323

)

 

(2,049,676

)

Stock compensation

 

471,600

 

 

5,126

 

Adjusted EBITDA

$

(1,711,723

)

$

(2,044,550

)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240520483200/en/

Investor Contact: Tyler Drew Addo Investor Relations agae@addo.com 310-829-5400