The accompanying notes are an integral part of these condensed consolidated
financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 1 – Business Organization and Nature
of Operations
Allied Gaming & Entertainment
Inc. (“AGAE” and together with its subsidiaries, “the Company”) operates a public esports and entertainment company
through its wholly owned subsidiaries Allied Esports International, Inc., (“AEII”), Esports Arena Las Vegas, LLC (“ESALV”),
Allied Mobile Entertainment Inc. (“AME”), Allied Experiential Entertainment Inc. (“AEE”), and Allied Esports
GmbH (“AEG” and together with AEII, AME and ESALV, “Allied Esports”). AEII produces a variety of esports and
gaming-related content, including world class tournaments, live and virtual events, and original programming to continuously foster an
engaged gaming community. ESALV operates HyperX Arena Las Vegas, the world’s most recognized esports facility. AME is engaged in
the development and worldwide distribution of mobile casual games. AEE is currently inactive.
Note 2 – Significant Accounting Policies
There have been no material
changes to the Company’s significant accounting policies as set forth in the Company’s audited consolidated financial statements
included in the Annual Report on Form 10-K for the year ended December 31, 2022.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly,
they do not include all of the information and disclosures required by U.S. GAAP for annual consolidated financial statements. In the
opinion of management, the accompanying condensed consolidated financial statements include all adjustments which are considered necessary
for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2023, and for the
three months ended March 31, 2023 and 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative
of the operating results for the full year ending December 31, 2023 or any other period. These unaudited condensed consolidated financial
statements have been derived from the accounting records of AGAE and Allied Esports and should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022,
filed with the Securities and Exchange Commission (“SEC”) on March 24, 2023.
Fair Value of Financial Instruments
The Company measures the
fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures”
(“ASC 820”).
ASC 820 defines fair value
as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes
a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs
when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 - quoted prices in
active markets for identical assets or liabilities.
Level 2 - quoted prices for
similar assets and liabilities in active markets or inputs that are observable.
Level 3 - inputs that are
unobservable (for example, cash flow modeling inputs based on assumptions).
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
The following table provides
information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair
value hierarchy utilized to determine such fair values:
| As of March 31, 2023 | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Digital assets | |
$ | 49,392 | | |
$ | - | | |
$ | - | | |
$ | 49,392 | |
| | |
| | | |
| | | |
| | | |
| | |
| Sponsor warrants | |
| - | | |
| - | | |
| 100 | | |
| 100 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total | |
$ | 49,392 | | |
$ | - | | |
$ | 100 | | |
$ | 49,492 | |
| As of December 31, 2022 | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Digital assets | |
$ | 49,761 | | |
$ | - | | |
$ | - | | |
$ | 49,761 | |
| | |
| | | |
| | | |
| | | |
| | |
| Sponsor warrants | |
| - | | |
| - | | |
| 100 | | |
| 100 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total | |
$ | 49,761 | | |
$ | - | | |
$ | 100 | | |
$ | 49,861 | |
The carrying amounts of the
Company’s financial instruments, such as cash equivalents, accounts receivable, short-term investments, interest receivable, accounts
payable, operating lease liabilities, and accrued liabilities approximate fair value due to the short-term nature of these instruments.
Short-term investments consist
of certificates of deposit with original maturities of greater than three months but less than or equal to twelve months when purchased.
See Digital Assets below for further details on digital assets.
The Sponsor Warrants are
carried at fair value as of March 31, 2023 and December 31, 2022. The Sponsor Warrants are valued using level 3 inputs. The fair value
of the Sponsor Warrants is estimated using the Black-Scholes option pricing method. Significant level 3 inputs used to calculate the
fair value of the Sponsor Warrants include the share price on the valuation date, expected volatility, expected term and the risk-free
interest rate.
The following is a roll forward
of the Company’s Level 3 instruments during the three months ended March 31, 2023:
| Balance, January 1, 2023 | |
$ | 100 | |
| Change in fair value of sponsor warrants | |
| - | |
| Balance, March 31, 2023 | |
$ | 100 | |
The key inputs into the Black-Scholes
model used to value Sponsor Warrants at the relevant measurement dates were as follows:
| | |
March 31, | | |
December 31, | |
| Input | |
2023 | | |
2022 | |
| Risk-free rate | |
| 4.35 | % | |
| 4.57 | % |
| Remaining term in years | |
| 1.36 | | |
| 1.61 | |
| Expected volatility | |
| 57.0 | % | |
| 56.0 | % |
| Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
| Fair value of common stock | |
$ | 1.21 | | |
$ | 1.05 | |
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
Net Loss per Common Share
Basic loss per common share
is computed by dividing net loss attributable to the Company by the weighted average number of common shares outstanding during the period.
Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of
common shares outstanding, plus the impact of common shares, if dilutive, resulting from the potential exercise of outstanding stock
options and warrants and vesting of restricted stock awards.
The following table presents
the computation of basic and diluted net loss per common share:
| | |
For the Three Months Ended | |
| | |
March 31, | |
| | |
2023 | | |
2022 | |
| Numerator: | |
| | |
| |
| Net loss | |
$ | (1,893,787 | ) | |
$ | (3,751,197 | ) |
| | |
| | | |
| | |
| Denominator: | |
| | | |
| | |
| Weighted-average common shares outstanding | |
| 38,389,202 | | |
| 39,116,907 | |
| Less: weighted-averages unvested restricted shares | |
| - | | |
| (52,444 | ) |
Denominator for basic and diluted net loss per share | |
| 38,389,202 | | |
| 39,064,463 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
Basic and Diluted Net Loss per Common Share | |
$ | (0.05 | ) | |
$ | (0.10 | ) |
The following securities
are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:
| | |
For the Three Months Ended
March 31, | |
| | |
2023 | | |
2022 | |
| Options | |
| 1,540,000 | | |
| 2,415,000 | |
| Warrants | |
| 20,091,549 | | |
| 20,091,549 | |
| Equity purchase options | |
| - | | |
| 600,000 | |
| Contingent consideration shares (1) | |
| 192,308 | | |
| 192,308 | |
| | |
| 21,823,857 | | |
| 23,298,857 | |
| (1) | Holders who elected to convert a certain former Bridge Note
from the Company into common stock are entitled to receive contingent consideration shares equal to the product of (i) 3,846,153 shares,
multiplied by (ii) that holder’s investment amount, divided by (iii) $100,000,000, if at any time within five years after the August
9, 2019 closing date, the last exchange-reported sale price of common stock trades at or above $13.00 for thirty (30) consecutive calendar
days. |
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
Revenue
Recognition
To determine the proper revenue
recognition method, the Company evaluates each of its contractual arrangements to identify its performance obligations. A performance
obligation is a promise in a contract to transfer a distinct good or service to the customer. The majority of the Company’s contracts
have a single performance obligation because the promise to transfer the individual good or service is not separately identifiable from
other promises within the contract and is therefore not distinct. Some of the Company’s contracts have multiple performance obligations,
primarily related to the provision of multiple goods or services. For contracts with more than one performance obligation, the Company
allocates the total transaction price in an amount based on the estimated relative standalone selling prices underlying each performance
obligation.
The Company recognizes revenue
primarily from the following sources:
In-person revenue
The Company’s in-person
revenue is comprised of event revenue, sponsorship revenue, merchandising revenue and other revenue. Event revenues from the rental of
the Allied Esports arena and gaming trucks are recognized over the term of the event based on the number of days completed relative to
the total days of the event, as this method best depicts the transfer of control to the customer. In-person revenue also includes revenue
from ticket sales, admission fees and food and beverage sales for events held at the Company’s esports properties. Ticket
revenue is recognized at the completion of the applicable event. Point of sale revenues, such as food and beverage, gaming and merchandising
revenues, are recognized when control of the related goods are transferred to the customer.
The Company also generates
sponsorship revenue from the naming rights of its esports arena and from the production and distribution of programming over interactive
live-streaming services.
Sponsorship revenues from
naming rights of the Company’s esports arena are recognized on a straight-line basis over the contractual term of the agreement.
Subscription revenues from program distribution are recognized over the term of the contract under the “output method” as
the programs are distributed. The Company has determined that this method provides a faithful depiction of the transfer of goods or services
to the customer.
The Company records deferred
revenue to the extent that payment has been received for services that have yet to be performed.
In-person revenue was comprised
of the following for the three months ended March 31, 2023 and 2022:
| | |
For the Three Months Ended | |
| | |
March 31, | |
| | |
2023 | | |
2022 | |
| Event revenue | |
$ | 561,077 | | |
$ | 536,597 | |
| Sponsorship revenue | |
| 359,741 | | |
| 1,326,250 | |
| Food and beverage revenue | |
| 88,974 | | |
| 201,318 | |
| Ticket and gaming revenue | |
| 130,137 | | |
| 117,779 | |
| Merchandising revenue | |
| 53,401 | | |
| 21,122 | |
| Total in-person revenue | |
$ | 1,193,330 | | |
$ | 2,203,066 | |
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
Multiplatform revenue
Multiplatform revenue was
comprised of the following for the three months ended March 31, 2023 and 2022:
| | |
For the Three Months Ended | |
| | |
March 31, | |
| | |
2023 | | |
2022 | |
| NFT revenue | |
| 26 | | |
$ | 208,758 | |
| Distribution revenue | |
| 75 | | |
| 230 | |
| Total multiplatform revenue | |
$ | 101 | | |
$ | 208,988 | |
The Company’s NFT revenue
was generated from the sale of non-fungible tokens (NFTs). The Company’s NFTs exist on the Ethereum Blockchain under the Company’s
EPICBEAST brand, a digital art collection of 1,958 unique beasts inspired by past and present e-sport games. The Company uses the NFT
exchange, OpenSea, to facilitate the sale of NFTs. The Company, through OpenSea, has custody and control of the NFT prior to the delivery
to the customer and records revenue at a point in time when the NFT is delivered to the customer and the customer pays. The Company has
no obligations for returns, refunds or warranty after the NFT sale.
The Company also earns a
royalty of up to 10% of the sale price when an NFT is resold by its owner in a secondary market transaction. The Company recognizes this
royalty as revenue when the sale is consummated.
The Company’s distribution
revenue is generated primarily through the distribution of content to online channels. Any advertising revenue earned by online channels
is shared with the Company. The Company recognizes online advertising revenue at the point in time when the advertisements are placed
in the video content.
Revenue recognition
The following table summarizes
our revenue recognized under ASC 606 in our condensed consolidated statements of operations:
| | |
For the Three Months Ended | |
| | |
March 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Revenues Recognized at a Point in Time: | |
| | |
| |
| NFT revenue | |
$ | 26 | | |
$ | 208,758 | |
| Food and beverage revenue | |
| 88,974 | | |
| 201,318 | |
| Ticket and gaming revenue | |
| 130,137 | | |
| 117,779 | |
| Merchandising revenue | |
| 53,401 | | |
| 21,122 | |
| Distribution revenue | |
| 75 | | |
| 230 | |
| Total Revenues Recognized at a Point in Time | |
| 272,613 | | |
| 549,207 | |
| | |
| | | |
| | |
| Revenues Recognized Over a Period of Time: | |
| | | |
| | |
| Event revenue | |
| 561,077 | | |
| 536,597 | |
| Sponsorship revenue | |
| 359,741 | | |
| 1,326,250 | |
| Total Revenues Recognized Over a Period of Time | |
| 920,818 | | |
| 1,862,847 | |
| Total Revenues | |
$ | 1,193,431 | | |
$ | 2,412,054 | |
The timing of the Company’s
revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior
to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services,
the Company records deferred revenue until the performance obligations are satisfied. As of March 31, 2023 and December 31, 2022,
the Company had contract liabilities of $1,146,200 and $108,428, respectively, which is included in deferred revenue on the condensed
consolidated balance sheet.
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
As of March 31, 2023, $89,439
of performance obligations in connection with contract liabilities included within deferred revenue on the December 31, 2022 consolidated
balance sheet have been satisfied. The Company expects to satisfy the remaining performance obligations of $18,989 related to its December
31, 2022 deferred revenue balance within the next twelve months. During the three months ended March 31, 2023 and 2022, there was no
revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.
Digital Assets
The Company accepts Ether
as a form of payment for NFT sales. The Company accounts for digital assets held as the result of the receipt of Ether, as indefinite-lived
intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. The Company has ownership of and control over
the digital assets and the Company may use third-party custodial services to secure them. The digital assets are initially recorded at
cost and are subsequently remeasured, net of any impairment losses incurred since the date of acquisition.
The Company determines the
fair value of its digital assets on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices
on the active exchange(s) that the Company has determined is the principal market for Ether (Level 1 inputs). The Company performs
an analysis each quarter to identify whether events or changes in circumstances, or decreases in the quoted prices on active exchanges,
indicate that it is more likely than not that the Company’s digital assets are impaired. In determining if an impairment has occurred,
the Company considers the lowest market price quoted on an active exchange since acquiring the respective digital asset. If the then
current carrying value of a digital asset exceeds the fair value, an impairment loss has occurred with respect to those digital assets
in the amount equal to the difference between their carrying values and the fair value of such assets.
The impaired digital assets
are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent
increase in fair value. Gains are not recorded until realized upon sale, at which point they are presented net of any impairment losses
for the same digital assets held. In determining the gain or loss to be recognized upon sale, the Company calculates the difference between
the sales price and carrying value of the digital assets sold immediately prior to sale. Impairment losses and gains or losses on sales
are recognized within operating expenses in our consolidated statements of operations and comprehensive loss. There were no impairment
losses for the three months ended March 31, 2023 and 2022 and no digital assets were sold during the same time periods.
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
The following table sets
forth changes in our digital assets for the three months ended March 31, 2023:
| Balance, January 1, 2023 | |
$ | 49,761 | |
| Received from customers | |
| 26 | |
| Expenses paid using digital assets | |
| (395 | ) |
| Balance, March 31, 2023 | |
$ | 49,392 | |
Concentration Risks
Financial instruments that
potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, short-term investments
and trade accounts receivable. The Company holds cash, cash equivalents and short-term investments at major financial institutions, which
often exceed Federal Deposit Insurance Corporation’s insurance limits. As of March 31, 2023, one customer represented 100% of the
Company’s accounts receivable balance. Historically, the Company has not experienced any losses due to such concentration of credit
risk.
During the three months ended
March 31, 2023 and 2022, and 0% and 3%, respectively, of the Company’s revenues were from customers in foreign countries.
During the three months ended
March 31, 2023, the Company’s two largest customers accounted for 26%, and 11% of the Company’s consolidated revenues. During
the three months ended March 31, 2022, the Company’s two largest customers accounted for 41%, and 12% of the Company’s consolidated
revenues.
Foreign Currency Translation
The Company’s reporting
currency is the United States Dollar. The functional currencies of the Company’s operating subsidiaries are their local currencies
(United States Dollar and Euro). Euro-denominated assets and liabilities are translated into the United States Dollar using the exchange
rate at the balance sheet date (1.0877 and 1.0699 at March 31, 2023 and December 31, 2022, respectively), and revenue and expense accounts
are translated using the weighted average exchange rate in effect for the period (1.0727 and 1.1165 for the three months ended March
31, 2023 and 2022, respectively). Resulting translation adjustments are made directly to accumulated other comprehensive income.
The Company engages in foreign
currency denominated transactions with customers and suppliers, as well as between subsidiaries with different functional currencies.
Realized losses of $942 and $1,890 arising from exchange rate fluctuations on transactions denominated in a currency other than the reporting
currency for the three months ended March 31, 2023 and 2022, respectively, are recognized in operating results in the accompanying condensed
consolidated statements of operations.
Subsequent Events
The Company evaluates events
that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company
did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed
consolidated financial statements, except as disclosed.
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued
Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments. This update requires financial assets measured at amortized cost basis to be presented
at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events,
including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported
amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting
companies. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within
those fiscal years, with early adoption permitted. The Company adopted this ASU on January 1, 2023, using the modified retrospective
approach and it did not have a material impact on its condensed consolidated financial statements.
In August 2020, the FASB
issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,
to clarify the accounting for certain financial instruments with characteristics of liabilities and equity. The amendments in this update
reduce the number of accounting models for convertible debt instruments and convertible preferred stock by removing the cash conversion
model and the beneficial conversion feature model. Limiting the accounting models will result in fewer embedded conversion features being
separately recognized from the host contract. Convertible instruments that continue to be subject to separation models are (1) those
with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative,
and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial
premiums for which the premiums are recorded as paid-in-capital. In addition, this ASU improves disclosure requirements for convertible
instruments and earnings-per-share guidance. The ASU also revises the derivative scope exception guidance to reduce form-over-substance-based
accounting conclusions driven by remote contingent events. The amendments in this update are effective for our fiscal years beginning
after December 15, 2023, and interim periods within those fiscal years. Early adoption will be permitted, but no earlier than for fiscal
years beginning after December 15, 2020. The Company early adopted ASU 2020-06 effective January 1, 2023 which eliminated the need to
assess whether a beneficial conversion feature needs to be recognized upon the issuance of new convertible instruments.
Note 3 – Accrued Expenses and Other
Current Liabilities
Accrued expenses and other current
liabilities consist of the following:
| | |
March 31, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| Compensation expense | |
$ | 1,570,186 | | |
$ | 1,546,805 | |
| Event costs | |
| 1,596 | | |
| 8,411 | |
| Legal and professional fees | |
| 241,047 | | |
| 43,676 | |
| Warrant liabilities | |
| 100 | | |
| 100 | |
| Other accrued expenses | |
| 83,945 | | |
| 46,387 | |
| Accrued expenses and other current liabilities | |
$ | 1,896,874 | | |
$ | 1,645,379 | |
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 4 – Commitments and Contingencies
Litigations, Claims, and Assessments
The Company is involved in
various disputes, claims, liens and litigation matters arising out of the normal course of business. While the outcome of these disputes,
claims, liens and litigation matters cannot be predicted with certainty, after consulting with legal counsel, management does not believe
that the outcome of these matters will have a material adverse effect on the Company’s consolidated financial position, results
of operations or cash flows.
Operating Leases
Allied Esports leases an
arena in Las Vegas, Nevada, for the purpose of hosting Esports activities (the “Las Vegas Lease”). The arena opened to the
public on March 23, 2018 (the “Commencement Date”). Initial lease terms are for minimum monthly payments of $125,000 for
60 months from the Commencement Date with an option to extend for an additional 60 months at $137,500 per month. Additional annual tenant
obligations are estimated at $2 per square foot for Allied’s portion of real estate taxes and $5 per square foot for common area
maintenance costs. The Las Vegas Lease expires on May 31, 2023. However, the Company plans on extending the lease an additional five
years representing an additional commitment of $8,250,000.
The Company also leases office
and production space in Germany, pursuant to a lease dated August 1, 2020 which expires on July 31, 2023 (the “Germany Lease”).
Rent expense under the lease is €4,000 (approximately $4,280 United States dollars) per month.
The Company’s aggregate
lease expense incurred during the three months ended March 31, 2023 and 2022 amounted to $401,208 and $415,987, respectively, of which
$320,994 and $320,994, respectively, is included within in-person costs and $80,214 and $94,993, respectively, is included in general
and administrative expenses on the accompanying consolidated statements of operations.
A summary of the Company’s
right-of-use assets and liabilities is as follows:
| | |
For the Three Months Ended | |
| | |
March 31, | |
| | |
2023 | | |
2022 | |
| Cash paid for amounts included in the measurement of lease liabilities: | |
| | |
| |
| Operating cash flows used in operating activities | |
$ | 280,615 | | |
$ | 267,215 | |
| | |
| | | |
| | |
| Right-of-use assets obtained in exchange for lease obligations | |
| | | |
| | |
| Operating leases | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Weighted Average Remaining Lease Term (Years) | |
| | | |
| | |
| Operating leases | |
| 5.17 | | |
| 6.17 | |
| | |
| | | |
| | |
| Weighted Average Discount Rate | |
| | | |
| | |
| Operating leases | |
| 5.0 | % | |
| 5.0 | % |
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
A summary of the Company’s remaining operating
lease liabilities is as follows:
| For the Year Ending December 31, | |
Amount | |
| 2023 | |
$ | 1,212,500 | |
| 2024 | |
| 1,650,000 | |
| 2025 | |
| 1,650,000 | |
| 2026 | |
| 1,650,000 | |
| 2027 | |
| 1,650,000 | |
| Thereafter | |
| 687,500 | |
| Total lease payments | |
| 8,500,000 | |
| Less: amount representing imputed interest | |
| (1,026,376 | ) |
| Present value of lease liability | |
| 7,473,624 | |
| Less: current portion | |
| (1,279,117 | ) |
| Lease liability, non-current portion | |
$ | 6,194,507 | |
Note 5 – Intangible Assets, net
Intangible assets consist
of the following:
| | |
Intellectual Property | | |
Licenses | | |
Total Intangibles | | |
Accumulated Amortization | | |
Total | |
| Balance as of January 1, 2023 | |
$ | 37,165 | | |
$ | - | | |
$ | 37,165 | | |
$ | (14,329 | ) | |
$ | 22,836 | |
| Purchases of intangibles | |
| - | | |
| 565,000 | | |
| 565,000 | | |
| - | | |
| 565,000 | |
| Amortization expense | |
| - | | |
| - | | |
| - | | |
| (999 | ) | |
| (999 | ) |
| Balance as of March 31, 2023 | |
$ | 37,165 | | |
$ | 565,000 | | |
$ | 602,165 | | |
$ | (15,328 | ) | |
$ | 586,837 | |
On February 27, 2023, the Company purchased a
five-year exclusive worldwide software license to operate four mobile casual games which will be amortized over a useful life of 5 years.
As of March 31, 2023 the software has not yet been placed into service.
ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 6 – Stockholders’ Equity
Stock Options
A summary of the option activity
during the three months ended March 31, 2023 is presented below:
| | |
| | |
Weighted | | |
Weighted | | |
| |
| | |
| | |
Average | | |
Average | | |
| |
| | |
Number of | | |
Exercise | | |
Remaining | | |
Intrinsic | |
| | |
Options | | |
Price | | |
Term (Yrs) | | |
Value | |
| | |
| | |
| | |
| | |
| |
| Outstanding, January 1, 2023 | |
| 1,675,000 | | |
$ | 2.54 | | |
| | | |
| | |
| Granted | |
| - | | |
| - | | |
| | | |
| | |
| Exercised | |
| - | | |
| - | | |
| | | |
| | |
| Expired | |
| (85,000 | ) | |
| 4.09 | | |
| | | |
| | |
| Forfeited | |
| (50,000 | ) | |
| 4.09 | | |
| | | |
| | |
| Outstanding, March 31, 2023 | |
| 1,540,000 | | |
$ | 3.62 | | |
| 6.57 | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Exercisable, March 31, 2023 | |
| 1,195,000 | | |
$ | 3.71 | | |
| 6.49 | | |
$ | - | |
Options outstanding and exercisable
as of March 31, 2023 are as follows:
| Options Outstanding | | |
Options Exercisable | |
| | | |
| | |
Weighted | | |
| |
| | | |
Outstanding | | |
Average | | |
Exercisable | |
| Exercise | | |
Number of | | |
Remaining Life | | |
Number of | |
| Price | | |
Options | | |
In Years | | |
Options | |
| $ | 2.11 | | |
| 40,000 | | |
| 7.25 | | |
| 20,000 | |
| $ | 2.17 | | |
| 120,000 | | |
| 7.35 | | |
| 120,000 | |
| $ | 2.21 | | |
| 350,000 | | |
| 8.34 | | |
| 237,500 | |
| $ | 2.48 | | |
| 120,000 | | |
| 8.10 | | |
| 60,000 | |
| $ | 4.09 | | |
| 630,000 | | |
| 5.25 | | |
| 527,500 | |
| $ | 5.66 | | |
| 280,000 | | |
| 6.47 | | |
| 230,000 | |
| | | | |
| 1,540,000 | | |
| 6.49 | | |
| 1,195,000 | |
For the three months ended
March 31, 2023 and 2022, the Company recorded $5,126 and $318,951, respectively, of stock-based compensation expense related to stock
options. As of March 31, 2023, there was $264,281 of unrecognized stock-based compensation expense related to the stock options that
will be recognized over the weighted average remaining vesting period of 1.87 years.
Restricted Common Stock
For the three months ended
March 31, 2023 and 2022, the Company recorded $0 and $82,345, respectively, of stock-based compensation expense related to restricted
stock.