Allied Esports Entertainment, Inc. (NASDAQ: AESE) (the
“Company” or “AESE”), a global esports entertainment company, today
announced financial results for the first quarter ended March 31,
2022, as well as an update on key business initiatives. 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.
Commenting on the first quarter 2022 results and strategic
process, the Company’s Interim CEO, Lyle Berman, said, “I am very
pleased with the operational performance of our Esports business,
which generated record revenue and adjusted EBITDA during the
quarter and has continued to gain momentum as we emerge from the
pandemic and move to a more normalized environment. This solid
operational recovery is helping drive strong interest from outside
parties as we move ahead with our previously stated objective to
pursue strategic alternatives for the Esports operations, including
a potential sale of the business.”
Mr. Berman continued, “Concurrently, we continue to make
progress in our ongoing efforts to invest the cash on our balance
sheet to acquire or merge with an existing business. At the end of
the first quarter, our cash balance totaled nearly $96 million,
including restricted cash. We remain focused on finding the best
opportunity available to maximize value for our shareholders. While
we are limited in what we can currently disclose about the process,
I look forward to providing the market with an update on our
progress at the appropriate time.”
First Quarter 2022 Financial Results
Revenues: Total revenues of $2.4 million increased 381% for the
first quarter of 2022 compared to the first quarter of 2021. The
improvement was driven by increased foot traffic at the Company’s
HyperX Arena Las Vegas due to an increased number of events,
sponsorship revenue from the launch of Allied Esports’ first
original branded content offering, as well as first time
Non-Fungible Token (NFT) sales and other encouraging results from
the Company’s Multiplatform Content pillar.
Costs and expenses: Total costs and expenses for the first
quarter of 2022 were $6.2 million, an increase of 15% compared to
the first quarter of 2021. Costs and expenses increased primarily
due to the increase in in-person expenses due to the recovery of
live in-person events.
Net loss for the first quarter of 2022 was $3.8 million compared
to a net loss of $3.3 million in the prior year period.
Adjusted EBITDA loss was $2.5 million for the first quarter of
2022 compared to a loss of $3.3 million in the first 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 March 31, 2022, the Company had a cash position of $95.7
million, including $5.0 million of restricted cash compared to
$97.9 million at December 31, 2021, which also included $5.0
million of restricted cash. As of March 31, 2022, the Company had
approximately 39.1 million shares of outstanding common stock.
Operational Update
Allied Esports achieved its best quarterly performance of all
time in both revenue and adjusted EBITDA during the first quarter,
culminating in positive adjusted EBITDA results in the month of
March.
During the quarter, Allied Esports' content division, AE
Studios, launched its first original branded content offering,
ELEVATED Presented by Progressive Insurance, with supporting
sponsors Tyson Foods and HyperX. ELEVATED is a new live and
interactive show on Twitch that gives streamers exposure and
awareness to a larger audience. The initial run of ELEVATED, which
is currently in development on its second season, delivered over 10
million live views and 3 million VOD views.
Also during the quarter, the company's first NFT collection,
EPICBEAST, minted 1,958 NFTs on the Ethereum Blockchain, propelling
Allied Esports into the next evolution of the Internet, Web3, which
leverages digital ownership powered by blockchain technology in the
development, activation, rewarding and monetization of
communities.
During the first quarter, Allied Esports produced 92 events with
68 proprietary events and 24 third party productions across its
North American and European business units. Proprietary and third
party events at HyperX Arena Las Vegas were up 56%, with total
in-arena tournament entries up 42% compared to the fourth quarter
of 2021. Third party events were highlighted by the Unified Pro-Am
Association World Championship, LVL UP EXPO, the Rainbow Six North
America League, the European Qualifiers for Ubisoft's Six
Invitational and DIGI1.
Lastly, Allied Esports announced a partnership with NASCAR to
execute the eNASCAR Arcade at 17 NASCAR Cup Series events in 2022
with five events having taken place during the first quarter,
including the Busch Light Clash at The Coliseum in Los Angeles, the
DAYTONA 500 in Daytona, Florida, the Wise Power 400 at Auto Club
Speedway in Fontana, California, the Ruoff Mortgage 500 at Phoenix
Raceway in Phoenix, Arizona and the EchoPark Automotive Grand Prix
at Circuit of the Americas in Austin, Texas.
Corporate Developments
As previously announced, late in 2021, AESE engaged The
Benchmark Company, LLC to serve as the Company’s exclusive
financial advisor in connection with a potential business
combination transaction. The Company has reviewed a number of
potential target investment opportunities over the past several
months, and due diligence, as well as the continued sourcing of
other opportunities, remains ongoing. AESE intends to provide
further updates in due course when appropriate.
Additionally, as previously announced, the Company remains in
the process of exploring strategic options for the Esports business
and intends to provide further updates in due course when
appropriate.
About Allied Esports Entertainment
Allied Esports Entertainment, Inc. (NASDAQ: AESE) is a global
esports entertainment venture dedicated to providing transformative
live experiences, multiplatform content and interactive services to
audiences worldwide. For more information, visit
alliedesports.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, but also excluding certain non-recurring
items, such as the forgiveness of loans from the Paycheck
Protection Program (PPP).
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, 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 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 AESE 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 Esports Entertainment,
Inc. and Subsidiaries
Condensed Consolidated Balance
Sheets
March 31, December 31,
2022
2021
(unaudited) Assets Current Assets Cash
$
90,728,536
$
92,887,030
Accounts receivable
889,929
389,040
Prepaid expenses and other current assets
802,317
984,777
Total Current Assets
92,420,782
94,260,847
Restricted cash
5,000,000
5,000,000
Property and equipment, net
5,334,573
6,136,893
Digital assets
218,785
-
Intangible assets, net
25,829
26,827
Deposits
379,105
379,105
Total Assets
$
103,379,074
$
105,803,672
Liabilities and Stockholders' Equity Current Liabilities
Accounts payable
$
388,209
$
341,161
Accrued expenses and other current liabilities, current portion
3,374,331
2,966,245
Accrued expenses - related party
1,800,000
1,800,000
Deferred revenue
365,537
141,825
Total Current Liabilities
5,928,077
5,249,231
Deferred rent
1,891,127
1,907,634
Accrued expenses, non-current portion
250,000
-
Total Liabilities
8,069,204
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,
39,116,907 shares issued and outstanding at March 31, 2022 and
December 31, 2021
3,912
3,912
Additional paid in capital
198,186,268
197,784,972
Accumulated deficit
(103,162,880
)
(99,411,683
)
Accumulated other comprehensive income
282,570
269,606
Total Stockholders' Equity
95,309,870
98,646,807
Total Liabilities and Stockholders' Equity
$
103,379,074
$
105,803,672
Allied Esports Entertainment,
Inc. and Subsidiaries
Condensed Consolidated
Statements of Operations and Comprehensive Loss
For the Three Months Ended March 31,
2022
2021
Revenues: In-person
$
2,203,066
501,028
Multiplatform content
208,988
-
Total Revenues
2,412,054
501,028
Costs and Expenses: In-person (exclusive of depreciation and
amortization)
1,810,353
537,867
Multiplatform content (exclusive of depreciation and amortization)
21,133
-
Selling and marketing expenses
69,038
43,934
General and administrative expenses
3,451,870
3,913,022
Depreciation and amortization
808,612
881,959
Total Costs and Expenses
6,161,006
5,376,782
Loss From Operations
(3,748,952
)
(4,875,754
)
Other Expense: Other (expense) income, net
(6,707
)
55,142
Interest income (expense), net
4,462
(153,106
)
Total Other Expense
(2,245
)
(97,964
)
Loss from continuing operations
(3,751,197
)
(4,973,718
)
Income from discontinued operations, net of tax provision
-
1,637,042
Net loss
$
(3,751,197
)
$
(3,336,676
)
Basic and Diluted Net Loss (Income) per Common Share
Continuing operations
$
(0.10
)
$
(0.13
)
Discontinued operations, net of tax
$
-
$
0.04
Weighted Average Number of Common Shares Outstanding:
Basic and Diluted
39,064,463
38,963,668
Comprehensive Loss Net Loss
$
(3,751,197
)
$
(3,336,676
)
Other comprehensive (loss) income: Foreign currency translation
adjustments
12,964
25,336
Total Comprehensive Loss
$
(3,738,233
)
$
(3,311,340
)
RECONCILIATION OF GAAP NET
LOSS FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA
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 AESE’s
profitability or liquidity. AESE’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 AESE’s peers without regard to AESE’s financing
methods, hedging positions or capital structure and because it
highlights trends in AESE’s business that may not otherwise be
apparent when relying solely on GAAP measures. AESE 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 AESE presents may not be comparable to
similarly titled measures of other companies. AESE defines EBITDA
as earnings before interest, income taxes, depreciation and
amortization of intangibles. AESE defines Adjusted EBITDA as EBITDA
excluding stock-based compensation, gain on forgiveness of PPP
loans, transaction costs and other charges relate to sale of WPT,
impairment losses, conversion inducement expenses and
extinguishment losses.
The following table presents a
reconciliation of EBITDA and Adjusted EBITDA from net loss, to
AESE’s most directly comparable financial measure calculated and
presented in accordance with GAAP.
Three Months Ended
March 31,
2022
2021
Continuing operations Net loss from continuing operations
$
(3,751,197
)
$
(4,973,718
)
Interest income, net
4,462
153,106
Depreciation and amortization
808,612
881,959
EBITDA
(2,938,123
)
(3,938,653
)
Stock compensation
401,296
643,148
Adjusted EBITDA
$
(2,536,827
)
$
(3,295,505
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220624005354/en/
Investor Contact: Lasse Glassen Addo Investor Relations
lglassen@addo.com 424-238-6249
Media Contact: Brian Fisher Allied Esports Entertainment
brian@alliedesports.com
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