Allied Gaming & Entertainment Announces a Strategic Investment to Become Largest Shareholder of Beijing Lianzhong Zhihe Technology Co.
August 16 2023 - 4:05PM
Business Wire
Transaction significantly expands AGAE’s mobile
games business and geographic reach and is expected to be
immediately accretive
Allied Gaming & Entertainment, Inc. (NASDAQ: AGAE) (the
“Company” or “AGAE”), a global experiential entertainment company,
today announced a strategic investment in Beijing Lianzhong Zhihe
Technology Co. (“Zhihe”), a prominent mobile games developer and
operator with proven distribution capabilities. AGAE will assume a
controlling interest in the Board and become the Company’s largest
shareholder.
Founded in Beijing in April, 2022, Zhihe has rapidly emerged as
a trailblazing mobile games developer and operator, specializing in
the innovation, research, development and operation of premium card
and Mahjong casual games. Leveraging advanced in-game advertising
strategies, Zhihe has efficiently generated substantial revenue
streams. Within a relatively short period of time, Zhihe has
established a premier leisure entertainment platform and community,
which further solidifies its connection with customers, enhancing
engagement and fostering enduring relationships.
“We are delighted to announce our strategic investment in
Beijing Lianzhong Zhihe Technology Co.,” stated Yinghua Chen,
AGAE’s Chief Executive Officer. “In just over a year, Zhihe has
made remarkable strides in the expansive mobile games market, which
will harmonize seamlessly with our strategic goals and the
establishment of our subsidiary, Allied Mobile Entertainment
(‘AME’). Zhihe brings a compelling library of popular mobile games
that will bring significant traction to AME, while also providing
distribution channels for our current portfolio of casual mobile
games that are in the process of testing and pre-public launching.
We look forward to working with their leadership team to drive
future value and realize the synergies of our businesses.”
In just nine months of operations in the fiscal year of 2022,
Zhihe generated revenue of approximately $10 million (USD), with
positive results in key financial areas, including EBITDA,
operating cash flow and net income. Unaudited interim results for
the first five months of 2023 indicate an upward trajectory in all
key financial areas, including revenues.
Terms of Deal
On August 16, 2023, AME agrees to acquire 40% equity interests
of Beijing Lianzhong Zhihe Technology Co. indirectly held by
Ourgame International Holdings Limited, a major stockholder of
AGAE, for approximately $7 million (USD), in cash. The acquisition
is subject to customary closing conditions and is expected to close
by the end of September 2023. For financial reporting purposes, the
Company expects to consolidate the post-acquisition financial
statements of Zhihe, which the Company believes will strengthen its
financial performance measures and enhance value for its
stockholders.
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.
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 our ability to
execute on our business and strategic plans; the substantial
uncertainties inherent in the acceptance of existing and future
products and services; our ability to acquire and integrate new
businesses and assets, the ability to retain key personnel;;
general economic and market conditions impacting demand for our
services;; our inability to enter into one or more future
acquisition or strategic transactions using our cash reserve; 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,
2022, as filed with the SEC on March 24, 2023, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230815867900/en/
Investor Contact: Tyler Drew Addo Investor Relations
ir@alliedgaming.gg
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