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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

Golden Nugget Online Gaming, Inc.

(Exact name of registrant as specified in its charter)

001-38893

(Commission File Number)

Delaware

    

 83-3593048

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

1510 West Loop South, Houston, Texas 77027

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: 713-850-1010

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading

Symbol(s)

    

Name of each exchange on which

registered

Class A common stock, $0.0001 par value

 

GNOG

 

The Nasdaq Global Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  No

As of November 8, 2021, 46,570,396 shares of Class A common stock, par value $0.0001 per share, and 31,657,545 shares of Class B common stock, par value $0.0001 per share were issued and outstanding.

TABLE OF CONTENTS

Page

Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020

3

Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020

4

Unaudited Consolidated Statements of Changes in Stockholders’ Deficit for the three and nine months ended September 30, 2021 and 2020

5

Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020

6

Notes to Unaudited Consolidated Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3. Quantitative and Qualitative Disclosures about Market Risk

30

Item 4. Controls and Procedures

30

Part II. Other Information

Item 1. Legal Proceedings

31

Item 1A. Risk Factors

32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3. Defaults Upon Senior Securities

33

Item 4. Mine Safety Disclosures

33

Item 5. Other Information

33

Item 6. Exhibits

34

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “will”, “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, contingencies and uncertainties include, but are not limited to, the following:

uncertainties as to the timing of the consummation of the DraftKings Merger (as such term is defined herein);
the ability of DraftKings Inc. (“DraftKings”) and us to satisfy the conditions to the consummation of the DraftKings Merger, including receipt of required antitrust clearance, regulatory approvals and stockholder approvals for the DraftKings Merger (and the risks that such regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction);
the risk that the DraftKings Merger disrupts DraftKings’ or our current plans and operations as a result of the announcement and consummation of the DraftKings Merger;
the occurrence of events that may give rise to a right of DraftKings or us to terminate the Merger Agreement (as such term is defined herein);

the possibility that, following the consummation of the DraftKings Merger, costs or difficulties related to the integration of our and DraftKings’ operations will be greater than expected;

the risk that stockholder litigation in connection with the DraftKings Merger may affect the timing or the ability of the parties to consummate the DraftKings Merger or result in significant costs of defense, indemnification and liability;

failure to otherwise close or realize the anticipated benefits of the DraftKings Merger, including as a result of integrating the businesses;

our ability to maintain the listing of our shares of Class A common stock on the Nasdaq Stock Market LLC (“Nasdaq”);

our ability to raise financing in the future;

our success in retaining or recruiting officers, key employees or directors;

factors relating to our future business, operations and financial performance, including:

our inability to compete with other forms of entertainment for consumers’ discretionary time and income;

1

market conditions and global and economic factors beyond our control, including the potential adverse effects of the ongoing global COVID-19 pandemic and reductions in discretionary consumer spending, among others;

our inability to attract and retain users;

our inability to profitably expand into new markets;

changes in applicable laws or regulations;

the failure of third-party service providers to perform services and protect intellectual property rights required for the operation of GNOG’s business;

the possibility that we may be adversely affected by other economic, business, and/or competitive factors; and

other factors detailed herein under the sections entitled “Risk Factors.”

Forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. For a discussion of the risks involved in our business and investing in our common stock, see the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020.

2

PART I

ITEM 1. FINANCIAL STATEMENTS

Golden Nugget Online Gaming, Inc.

Consolidated Balance Sheets

(In thousands, except par value and share amounts)

September 30, 

December 31, 

2021

2020

(Unaudited)

Assets

    

  

    

  

Cash and cash equivalents

$

134,371

$

77,862

Restricted cash

 

70,030

 

54,570

Accounts receivable - trade and other

 

11,328

 

6,372

Income taxes receivable

 

685

 

685

Other current assets

 

599

 

938

Total current assets

 

217,013

 

140,427

Property and equipment, net

 

1,831

 

606

Deferred tax assets

 

40,420

 

34,716

Other assets, net

 

29,693

 

2,976

Total assets

$

288,957

$

178,725

Liabilities and Stockholder's Deficit

 

  

 

  

Liabilities

 

  

 

  

Accounts payable

$

22,116

$

10,061

Accrued salary and payroll taxes

 

3,825

 

2,946

Accrued gaming and related taxes

 

31,506

 

16,716

Payable to an affiliate

 

3,916

 

2,757

Interest payable

 

50

 

54

Deferred revenue - current

 

3,464

 

3,269

Current portion of long-term debt

 

397

 

Customer deposits

 

44,833

 

44,250

Total current liabilities

 

110,107

 

80,053

Long-term debt

 

134,198

 

141,727

Tax receivable agreement liability

 

24,243

 

23,334

Warrant derivative liabilities

62,010

176,359

Deferred revenue - long-term

 

3,847

 

5,821

Total liabilities

 

334,405

 

427,294

Commitments and contingencies (Note 9)

 

  

 

Redeemable non-controlling interests

 

549,891

 

617,607

Stockholders' deficit

 

  

 

Preferred stock, $0.0001 par value, 1,000,000 authorized, no shares issued or outstanding

Class A common stock, $0.0001 par value, 220,000,000 shares authorized, 46,570,396 and 36,982,320 issued and outstanding

 

5

 

4

Class B common stock, $0.0001 par value, 50,000,000 shares authorized, 31,657,545 and 31,350,625 issued and outstanding

 

3

 

3

Additional paid-in capital

 

162,118

 

Accumulated deficit

 

(757,465)

 

(866,183)

Total stockholders' deficit

 

(595,339)

 

(866,176)

Total liabilities and stockholders' deficit

$

288,957

$

178,725

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

3

Golden Nugget Online Gaming, Inc.

Unaudited Consolidated Statements of Operations

(In thousands, except per share amounts)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2021

2020

2021

2020

Revenues

    

  

    

  

    

  

    

  

    

Gaming

$

31,792

$

22,938

$

82,886

$

59,890

Other

 

3,846

 

2,990

 

11,192

 

8,201

Total revenue

 

35,638

 

25,928

 

94,078

 

68,091

Costs and expenses

 

  

 

  

 

  

 

  

Cost of revenue

17,007

 

10,241

 

43,868

 

26,930

Advertising and promotion

16,618

 

5,284

 

47,496

 

12,870

General and administrative expense

 

7,858

 

2,187

 

21,260

 

5,648

Merger related expenses

 

2,763

 

 

2,763

 

Depreciation and amortization

 

76

 

55

 

160

 

138

Total costs and expenses

 

44,322

 

17,767

 

115,547

 

45,586

Operating income (loss)

 

(8,684)

 

8,161

 

(21,469)

 

22,505

Other expense (income)

 

 

  

 

  

 

  

Interest expense, net

 

5,180

 

11,311

 

15,983

 

19,077

Loss (gain) on warrant derivatives

18,944

(71,031)

Other expense (income)

 

(101)

 

 

331

 

Total other expense (income)

 

24,023

 

11,311

 

(54,717)

 

19,077

Income (loss) before income taxes

 

(32,707)

 

(3,150)

 

33,248

 

3,428

Provision for income taxes

 

(1,361)

 

(1,376)

 

(3,477)

 

914

Net income (loss)

 

(31,346)

 

(1,774)

 

36,725

 

2,514

Net loss attributable to non-controlling interests

 

5,590

 

 

16,126

 

Net income (loss) attributable to GNOG

$

(25,756)

$

(1,774)

$

52,851

$

2,514

Earnings (loss) per share:

Basic

$

(0.55)

 

n/a

$

1.18

 

n/a

Diluted

$

(0.55)

 

n/a

$

(0.44)

 

n/a

Weighted-average number of common shares outstanding:

 

  

 

  

 

 

  

Basic

 

46,570

 

n/a

 

44,826

 

n/a

Diluted

 

46,570

 

n/a

 

78,755

 

n/a

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

4

Golden Nugget Online Gaming, Inc.

Unaudited Consolidated Statement of Changes in Stockholders’ Deficit

(In thousands)

Additional

Note

Total

Redeemable

Class A Common Stock

Class B Common Stock

Paid-in

Accumulated

From Parent of

Stockholder's

Non-controlling

Shares

Amount

Shares

Amount

Capital

Deficit

Old GNOG

Deficit

Interests

Balance, June 30, 2021

    

46,570

    

$

5

    

31,658

    

$

3

    

$

158,740

    

$

(580,178)

    

$

    

$

(421,430)

    

$

403,950

Net income (loss)

 

 

 

 

 

 

(25,756)

 

 

(25,756)

 

(5,590)

Contribution from LF LLC

RSUs vested

Stock-based compensation

3,378

3,378

Adjustment of redeemable non-controlling interests to redemption value

 

 

 

 

 

 

(151,531)

 

 

(151,531)

 

151,531

Balance, September 30, 2021

 

46,570

 

5

 

31,658

 

3

 

162,118

 

(757,465)

 

 

(595,339)

 

549,891

Additional

Note

Total

Redeemable

Class A Common Stock

Class B Common Stock

Paid-in

Accumulated

From Parent of

Stockholder's

Non-controlling

Shares

Amount

Shares

Amount

Capital

Deficit

Old GNOG

Deficit

Interests

Balance, June 30, 2020

    

    

$

    

    

$

    

$

    

$

(10,717)

    

$

(288,478)

    

$

(299,195)

    

$

Net income (loss)

 

 

 

 

 

 

(1,774)

 

 

(1,774)

 

Note receivable from parent of Old GNOG

Contribution from parent of Old GNOG

10,674

(707)

9,967

Dividend to parent of Old GNOG

 

 

 

 

 

 

(16,792)

 

 

(16,792)

 

Balance, September 30, 2020

 

 

 

 

 

 

(18,609)

 

(289,185)

 

(307,794)

 

Additional

Note

Total

Redeemable

Class A Common Stock

Class B Common Stock

Paid-in

Accumulated

From Parent of

Stockholder's

Non-controlling

Shares

Amount

Shares

Amount

Capital

Deficit

Old GNOG

Deficit

Interests

Balance, December 31, 2020

    

36,982

    

$

4

    

31,351

    

$

3

    

$

    

$

(866,183)

    

$

    

$

(866,176)

    

$

617,607

Net income (loss)

 

 

 

 

 

 

52,851

 

 

52,851

 

(16,126)

Warrant exercises, net

9,584

1

153,411

153,412

Contribution from LF LLC

307

4,277

RSUs vested

4

Stock-based compensation

8,707

8,707

Adjustment of redeemable non-controlling interests to redemption value

 

55,867

55,867

(55,867)

Balance, September 30, 2021

 

46,570

 

5

 

31,658

 

3

 

162,118

 

(757,465)

 

 

(595,339)

 

549,891

Additional

Note

Total

Redeemable

Class A Common Stock

Class B Common Stock

Paid-in

Accumulated

From Parent of

Stockholder's

Non-controlling

Shares

Amount

Shares

Amount

Capital

Deficit

Old GNOG

Deficit

Interests

Balance, December 31, 2019

    

    

$

    

    

$

    

$

    

$

(8,385)

    

$

    

$

(8,385)

    

$

Net income (loss)

 

 

 

 

 

 

2,514

 

 

2,514

 

Note receivable from parent of Old GNOG

(288,000)

(288,000)

Contribution from parent of Old GNOG

18,085

(1,185)

16,900

Dividend to parent of Old GNOG

 

 

 

 

 

 

(30,823)

 

 

(30,823)

 

Balance, September 30, 2020

 

 

 

 

 

 

(18,609)

 

(289,185)

 

(307,794)

 

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

5

Golden Nugget Online Gaming, Inc.

Unaudited Consolidated Statements of Cash Flows

(In thousands)

Nine Months Ended September 30, 

2021

2020

Cash flows from operating activities

    

  

    

  

    

Net income

$

36,725

$

2,514

Adjustments to reconcile net income to net cash provided by operating activities

 

  

 

  

Depreciation and amortization

 

160

 

138

Stock-based compensation

 

8,707

 

Gain on warrant derivative

(71,031)

Gain on tax receivable liability and other

(1,292)

Deferred tax provision

 

(3,477)

 

(2,872)

Amortization of debt issuance costs, discounts and other

 

4,108

 

2,175

Changes in assets and liabilities, net and other:

 

  

 

  

Accounts receivable - trade and other

 

(4,956)

 

(910)

Other assets

 

(26,138)

 

33

Accounts payable

 

12,055

 

7,275

Accrued liabilities and other

 

15,669

 

6,349

Payable to an affiliate

 

1,159

 

Interest payable

 

(4)

 

108

Deferred revenue

 

(1,779)

 

3,077

Customer deposits

 

583

 

6,547

Net cash (used in) provided by operating activities

 

(29,511)

 

24,434

Cash flows from investing activities

 

  

 

  

Property and equipment additions

 

(628)

 

(11)

Net cash used in investing activities

 

(628)

 

(11)

Cash flows from financing activities

 

  

 

  

Proceeds from term loan, net of discount

 

 

288,000

Repayment of term loan

 

(12,237)

 

Note from parent of Old GNOG treated as a distribution in the recapitalization

 

 

(288,000)

Payment of equipment loans

 

 

(45)

Cash received from warrant exercises, net

110,068

Contribution from LF, LLC

4,277

16,792

Dividend to parent of Old GNOG

 

 

(30,823)

Net cash provided by (used in) financing activities

 

102,108

 

(14,076)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

71,969

 

10,347

Cash, cash equivalents and restricted cash

 

  

 

  

Beginning of year

 

132,432

 

38,932

End of year

$

204,401

$

49,279

Disclosure of cash, cash equivalents and restricted cash

 

  

 

  

Cash and cash equivalents

$

134,371

$

3,612

Restricted cash

 

70,030

 

45,667

Total cash

$

204,401

$

49,279

Supplemental disclosure of cash flow information

 

  

 

  

Cash paid during the period for:

 

  

 

  

Interest

$

13,898

$

16,792

Non-cash financing activities:

 

  

 

  

Accretion on note from parent of Old GNOG

$

$

1,185

Contribution receivable from parent of Old GNOG

$

$

108

Warrant exercise impact on the tax receivable agreement

$

26

$

Non-cash proceeds on warrant exercises

$

43,318

$

The accompany notes are an integral part of these financial statements.

6

Golden Nugget Online Gaming, Inc.

Notes to Unaudited Consolidated Financial Statements

1.     Nature of Operations and Recent Developments

Golden Nugget Online Gaming, Inc. (formerly known as Landcadia Holdings II, Inc. or “GNOG”, the “Company”, “we”, “our” or “us”) is an online gaming, or iGaming, and digital sports entertainment company focused on providing our customers with the most enjoyable, realistic and exciting online gaming experience in the market. We currently operate in New Jersey, Michigan and West Virginia where we offer patrons the ability to play their favorite casino games and bet on live-action sports events, and in Virginia, where we offer online sports betting only.

Acquisition Transaction

On December 29, 2020 (the “Closing Date”) we completed the acquisition of Golden Nugget Online Gaming, LLC (formerly known as Golden Nugget Online Gaming, Inc., or “Old GNOG”), a New Jersey limited liability company and wholly-owned subsidiary of GNOG Holdco (“GNOG LLC”). The acquisition was completed pursuant to the purchase agreement, dated June 28, 2020 (the “Purchase Agreement”) by and among the Company, LHGN HoldCo, LLC, a Delaware limited liability company and newly formed, wholly-owned subsidiary of the Company (“Landcadia Holdco”), Landry’s Fertitta, LLC, a Texas limited liability company (“LF LLC”), GNOG Holdings, LLC, a Delaware limited liability company and newly formed, wholly-owned subsidiary of LF LLC (“GNOG Holdco”), and GNOG LLC. The transactions contemplated by the Purchase Agreement are referred to herein as the “Acquisition Transaction.” The Acquisition Transaction was accounted for as a reverse recapitalization and the reported amounts from operations prior to the Acquisition Transaction are those of Old GNOG.

Following the Acquisition Transaction, we operate as an umbrella partnership C-corporation, or “Up-C,” meaning that substantially all of our assets are held indirectly through Golden Nugget Online Gaming LLC (“GNOG LLC”), our indirect subsidiary, and our business is conducted through GNOG LLC.

DraftKings Merger

 

On August 9, 2021, the Company,  DraftKings Inc., a Nevada corporation (“DraftKings”), New Duke Holdco, Inc., a Nevada corporation and a wholly owned subsidiary of DraftKings (“New DraftKings”), Duke Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of New DraftKings (“Duke Merger Sub”), and Gulf Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of New DraftKings (“Gulf Merger Sub” and, together with Duke Merger Sub, the “Merger Subs”), entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which DraftKings will, among other things, acquire all of the Company’s issued and outstanding shares of common stock (the “GNOG Shares”).  The transactions contemplated by the Merger Agreement and the other related transactions are referred to herein as the “DraftKings Merger”.

 

On the terms and subject to the conditions set forth in the Merger Agreement, (a) at the Duke Effective Time (as defined in the Merger Agreement), Duke Merger Sub will be merged with and into DraftKings in accordance with the Nevada Revised Statutes (the “NRS”), with DraftKings becoming the surviving corporation (the “Duke Surviving Corporation”) and (b) at the Gulf Effective Time (as defined in the Merger Agreement), Gulf Merger Sub will be merged with and into the Company in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), with the Company becoming the surviving corporation (the “Gulf Surviving Corporation”, and together with the Duke Surviving Corporation, collectively the “Surviving Corporations”). In connection with the DraftKings Merger, certain affiliates of Tilman Fertitta will consummate certain reorganization transactions to allow Landcadia HoldCo, LLC to become a wholly-owned subsidiary of the Company following the consummation of the DraftKings Merger.

 

The Merger Agreement provides that upon the consummation of the DraftKings Merger, each holder of GNOG Shares (each, a “GNOG Shareholder”) will receive 0.365 (the “Exchange Ratio”) of a share of New DraftKings Class A common stock (the “New DraftKings Class A Common Stock”) for each GNOG Share issued and outstanding immediately prior to the Gulf Effective Time, other than any Excluded Shares (as defined in the Merger Agreement).

 

Each share of DraftKings Class A common stock (“DraftKings Class A Common Stock”) issued and outstanding immediately prior to the Duke Effective Time (other than excluded shares) will be cancelled, cease to

7

exist and be converted into one validly issued, fully paid and non-assessable share of New DraftKings Class A Common Stock and each share of DraftKings Class B common stock issued and outstanding immediately prior to the Duke Effective Time (other than excluded shares) shall be converted into one validly issued, fully paid and non-assessable share of New DraftKings Class B common stock.

 

            At the Gulf Effective Time, each outstanding restricted stock unit (a “GNOG RSU”) issued by the Company that (i) were outstanding on the date of the Merger Agreement or (ii) are issued to existing employees of the Company prior to the completion of the DraftKings Merger in accordance with existing agreements, will vest, be cancelled, and entitle the holder thereof to receive a number of shares of New DraftKings Class A Common Stock equal to the number of shares of the Company’s common stock subject to such GNOG RSU immediately prior to the Gulf Effective Time multiplied by the Exchange Ratio, less a number of shares of New DraftKings Class A Common Stock equal to any applicable withholding taxes. All other issued and outstanding GNOG RSUs will be automatically converted into an equivalent restricted stock unit of New DraftKings that entitles the holder thereof to a number of shares of New DraftKings Class A Common Stock equal to the number of shares of the Company’s common stock subject to such GNOG RSU immediately prior to the Gulf Effective Time multiplied by the Exchange Ratio, and will remain outstanding in New DraftKings.

 

At the Gulf Effective Time, each outstanding warrant issued by the Company (“Private Placement Warrant”) to purchase shares of the Company’s Class A common stock (“GNOG Class A Common Stock”) will automatically and without any required action on the part of the holder convert into a warrant to purchase a number of New DraftKings Class A Common Stock equal to the product of (x) the number of shares of GNOG Class A Common Stock subject to such Private Placement Warrant immediately prior to the Gulf Effective Time multiplied by (y) the Exchange Ratio, and the exercise price of such Private Placement Warrant will be determined by dividing (1) the per share exercise price of such Private Placement Warrant immediately prior to the Gulf Effective Time by (2) the Exchange Ratio. 

The DraftKings Merger is expected to be a tax-deferred transaction to the Company’s stockholders and warrant holders, and the closing of the DraftKings Merger is conditioned on the receipt of a tax opinion to such effect.

 

The DraftKings Merger is expected to close in the first quarter of 2022, subject to the satisfaction or waiver of certain conditions, including, among others, (i) the absence of certain legal restraints that would prohibit or seek to prohibit DraftKings Merger; (ii) the receipt of certain regulatory approvals; (iii) the approval for listing on Nasdaq of the shares of New DraftKings Class A Common Stock to be issued to DraftKings stockholders and the Company’s stockholders; (iv) the Commercial Agreement (as defined in the Merger Agreement) being in full force and effect; (v) the absence, since the date of the Merger Agreement, of any effect, event, development, change, state of facts, condition, circumstance or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the Company or DraftKings; and (vi) the Registration Statement on Form S-4 becoming effective in accordance with the provisions of the Securities Act of 1933 as amended (the “Securities Act”).

Related Agreements

Concurrently with the execution of the Merger Agreement, DraftKings entered into a support and registration rights agreement (the “Support Agreement”) with New DraftKings, Tilman J. Fertitta (“Fertitta”), Fertitta Entertainment, Inc., a Texas corporation (“FEI”), Landry’s Fertitta, LLC, a Texas limited liability company (“Landry’s Fertitta”), Golden Landry’s LLC, a Texas limited liability company (“Golden Landry’s”) and Golden Fertitta, LLC, a Texas limited liability company (“Golden Fertitta” and together with Fertitta, FEI, Landry’s Fertitta and Golden Landry’s, the “Fertitta Parties”), pursuant to which the Fertitta Parties agreed (i) not to transfer the New DraftKings Class A Common Stock that the Fertitta Parties will receive in the DraftKings Merger prior to the first anniversary of the closing of the DraftKings Merger, and (ii) from the date of the Support Agreement to the five-year anniversary of the closing of the DraftKings Merger, not to engage in a Competing Business (as defined in the Support Agreement). New DraftKings agreed to provide the Fertitta Parties with shelf registration rights with respect to New DraftKings Class A Common Stock and warrants to purchase New DraftKings Class A Common Stock that the Fertitta Parties will receive in connection with the DraftKings Merger. In addition, the Fertitta Parties have agreed to execute (and cause its affiliates to execute) all such agreements and take such action as required to waive the obligations of all Fertitta Parties to make interest payments on behalf of the Company and of the Company to issue equity in relation to such payments.


8

COVID-19

During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic has significantly impacted the economic conditions around the world, accelerating during the last half of March 2020, as federal, state and local governments react to the public health crisis. The direct impact on us has been primarily through an increase in new patrons utilizing online gaming due to closures of land-based casinos and suspensions, postponement and cancellations of major sports seasons and sporting events, although sports betting accounted for less than 1% of our revenues for 2020. Land-based casinos reopened in July 2020 with significant restrictions, which eased over time. However, virus cases began to increase in the fall and winter of 2020 and capacity restrictions were reinstituted. During 2021 there has been additional concerns regarding COVID-19 variants; as a result, the ultimate impact of this pandemic on our financial and operating results is unknown and will depend, in part, on the length of time that these disruptions exist and the subsequent behavior of new patrons after land-based casinos reopen fully.

A significant or prolonged decrease in consumer spending on entertainment or leisure activities could have an adverse effect on the demand for the Company's product offerings, reducing cash flows and revenues, and thereby materially harming the Company's business, financial condition and results of operations. In addition, a recurrence of COVID-19 cases or an emergence of additional variants or strains could cause other widespread or more severe impacts depending on where infection rates are highest. As steps taken to mitigate the spread of COVID-19 have necessitated a shift away from a traditional office environment for many employees, the Company has business continuity programs in place to ensure that employees are safe and that the business continues to function with minimal disruptions to normal work operations while employees work remotely. The Company will continue to monitor developments relating to disruptions and uncertainties caused by COVID-19.

2.     Summary of Significant Accounting Policies

Basis of Presentation

The acquisition of Old GNOG has been accounted for as a reverse recapitalization. Under this method of accounting, Old GNOG was treated as the acquirer for financial reporting purposes. Therefore, the consolidated financial statements included herein reflect (i) the historical operating results of Old GNOG prior to the Acquisition Transaction, (ii) our combined results following the Acquisition Transaction, (iii) the assets, liabilities and accumulated deficit of Old GNOG at their historical amounts, and (iv) our equity and earnings per share presented for the period from the Closing Date through the end of the year.

Interim Financial Statements

The unaudited consolidated financial statements include all the accounts of GNOG and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany accounts and transactions have been eliminated. Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. The interim financial information provided is unaudited, but includes all adjustments which management considers necessary for the fair presentation of the results for these periods. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period and should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Form 10-K/A filed with the SEC.

In management’s opinion, these unaudited consolidated financial statements contain all adjustments necessary to fairly present our financial position, results of operations, cash flows and changes in stockholders’ equity for all periods presented. Interim results for the nine months ended September 30, 2021 may not be indicative of the results that will be realized for the full year ending December 31, 2021.

Use of Estimates

The preparation of these unaudited consolidated financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the period

9

reported. Management utilizes estimates, including, but not limited to, the useful lives of assets and inputs used to calculate the tax receivable agreement liability. Actual results could differ from those estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This guidance requires recognition of most lease liabilities on the balance sheet to give investors, lenders, and other financial statement users a more comprehensive view of a company’s long-term financial obligations, as well as the assets it owns versus leases. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2021, and for interim periods within annual periods after December 15, 2022. In July 2018, the FASB issued ASU 2018-11 making transition requirements less burdensome. The standard provides an option to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in the Company’s financial statements. We are currently evaluating the impact that this guidance will have on our financial statements as well as the expected adoption method. We do not believe the adoption of this standard will have a material impact on our financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments”, as additional guidance on the measurement of credit losses on financial instruments. The new guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. In addition, the guidance amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The new guidance is effective for all public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual periods beginning after December 15, 2018. In October 2019, the FASB approved a proposal which grants smaller reporting companies additional time to implement FASB standards on current expected credit losses (CECL) to January 2023. As a smaller reporting company, we will defer adoption of ASU No. 2016-13 until January 2023. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

3.     Revenues from Contracts with Customers

The following table summarizes revenues from contract with customers disaggregated by revenue generating activity (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

2021

2020

2021

2020

Gaming

    

$

31,792

    

$

22,938

    

$

82,886

    

$

59,890

    

Market access and live dealer studio

 

2,933

 

2,301

 

8,667

 

6,319

Reimburseables

 

913

 

689

 

2,525

 

1,882

Total revenue

$

35,638

$

25,928

$

94,078

$

68,091

Casino gaming revenue and reimbursable revenue is recognized at a point in time, while market access and live dealer studio revenue are earned over time.

The following table provides information about receivables, contract assets and contract liabilities related to contracts with customers (in thousands):

September 30, 

December 31, 

2021

2020

Receivables, which are included in "Accounts receivable - trade and other"

    

$

8,645

    

$

4,703

    

Contract liabilities (1)

$

(7,420)

$

(9,136)

10

(1)

As of September 30, 2021, includes $3.5 million recorded as deferred revenue, $0.1 million of loyalty program liability recorded as accrued gaming and related taxes and $3.8 million recorded as deferred revenue - long-term in our consolidated balance sheets. As of December 31, 2020, includes $3.3 million recorded as deferred revenue – current, $46 thousand of loyalty program liability recorded as accrued gaming and related taxes and $5.8 million recorded as deferred revenue - long-term in our consolidated balance sheets.

Significant changes in contract liabilities balances during 2021 and 2020 are as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

2021

2020

2021

2020

Decrease due to recognition of revenue

    

$

1,038

    

$

453

    

$

3,364

    

$

1,775

    

Increase due to cash received, excluding amounts recognized as revenue

$

34

$

(261)

$

1,648

$

4,873

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2021. The estimated revenue does not include amounts of variable consideration that are constrained (in thousands):

Year Ending December 31, 

    

2021

$

1,115

2022

 

3,129

2023

 

1,433

2024

 

571

2025

 

322

Thereafter

 

850

Total

$

7,420

4.    Long-term debt

Long-term debt is comprised of the following (in thousands):

September 30, 

December 31, 

    

2021

    

2020

    

  

    

  

    

Term loan, LIBOR + 12.0% (floor 1.0%), interest only due October 4, 2023

$

139,385

$

150,000

Less: Deferred debt issuance costs - term loan

 

(2,199)

 

(3,233)

Less: Unamortized discount - term loan

 

(3,593)

 

(5,040)

Equipment notes, net of unamortized discount for imputed interest of $40 at interest rates of 2.4% to 2.8%

1,002

Total debt, net of unamortized debt issuance costs and discounts

 

134,595

 

141,727

Less: Current portion

 

(397)

 

Long-term debt

$

134,198

$

141,727

On April 28, 2020, we entered into a term loan credit agreement that is guaranteed by the parent of Old GNOG, comprised of a $300.0 million interest only term loan due October 4, 2023 (the “term loan”). Net proceeds received from the term loan of $288.0 million, net of original issue discount, were sent to the parent of Old GNOG, who issued Old GNOG a note receivable due October 2024 (as amended and restated following the Acquisition Transaction, the “Second A&R Intercompany Note”) (Note 10) in the same amount, with substantially similar terms as the credit agreement. The Second A&R Intercompany Note was accounted for as contra-equity, similar to a subscription receivable, however in the reverse recapitalization recorded in connection with the Acquisition Transaction, the Second A&R Intercompany Note was accounted for as a distribution to the parent of Old GNOG, reducing retained earnings. The term loan was issued at a 4% discount. The term loan bears interest at the London Interbank Offered Rate (“LIBOR”) plus 12%, with a 1% floor, and interest payments are made quarterly. The term loan is secured by the Second A&R Intercompany Note which effectively, but indirectly provides pari passu security interest with the Golden Nugget, LLC senior secured credit facility.

11

In February 2021, we repaid $10.6 million of the term loan and incurred a prepayment premium of $1.6 million which was expensed as other expense in our consolidated statement of operations. Additionally, we expensed $0.2 million in deferred debt issuance costs and $0.4 million in unamortized debt discount as interest expense in our consolidated statement of operations for the nine months ended September 30, 2021.

In connection with the Acquisition Transaction, we repaid $150.0 million of the $300.0 million term loan and incurred a prepayment premium of $24.0 million, which along with other related fees and expenses was expensed as other expense in our consolidated statement of operations. Additionally, we expensed $3.3 million in deferred debt issuance costs and $5.0 million in unamortized discount as interest expense in our consolidated statement of operations for the year ended December 31, 2020.

The term loan credit agreement contains certain negative covenants including restrictions on incurring additional indebtedness or liens, liquidation or dissolution, limitations on disposal of assets and paying dividends. The term loan credit agreement also contains a make-whole provision that is in effect through April 2022. The prepayment premium under the make-whole provision is calculated as (A) the present value of (i) 100% of the aggregate principal amount of the term loan prepaid, plus (ii) all required remaining scheduled interest payments through April 2022, minus (B) the outstanding principal amount being prepaid.

We also entered into several equipment notes to finance computer equipment and other related infrastructure with original terms of three to four years that mature from June 2024 to August 2025.

5.    Financial Instruments and Fair Value

Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1

Unadjusted quoted market prices for identical assets or liabilities;

Level 2

Quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets or liabilities; and

Level 3

Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The carrying value of certain of our assets and liabilities, consisting primarily of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and certain accrued liabilities approximates their fair value due to the short-term nature of such instruments.

Our public warrants and sponsor warrants were carried at fair value as of December 31, 2020. The public warrants are valued using level 1 inputs and the sponsor warrants are valued using level 3 inputs. All of the public warrants were exercised or redeemed during the first quarter of 2021. The fair value of the sponsor warrants as of December 31, 2020 and September 30, 2021 was estimated using a modified version of the Black-Scholes option pricing formula for European calls. Specifically, we assumed a term for the sponsor warrants equal to the contractual term from the Closing Date. We then discounted the resulting value to the valuation date using a risk-free interest rate. 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.




12

The following provides a reconciliation of our warrant derivative liabilities measured at fair value on a recurring basis (in thousands):

September 30, 2021

    

Level 1

    

Level 3

    

Total

Balance at beginning of the period

$

94,875

$

81,484

$

176,359

Gain on warrant derivatives

(51,557)

(19,474)

(71,031)

Reclassified to additional paid-in capital upon exercise

(43,318)

(43,318)

Ending balance

$

$

62,010

$

62,010

The following table provides qualitative information regarding our level 3 fair value measurements:

    

 

September 30, 

 

    

2021

 

Stock price

$

17.37

Strike price

$

11.50

Term (in years)

 

4.25

Volatility

 

65.0

%

Risk-free rate

 

0.81

%

Dividend yield

 

0.0

%

Fair value of warrants

$

10.54

The fair value of our long-term debt is determined by Level 1 measurements based on quoted market prices. The fair value and carrying value of our long-term debt as of September 30, 2021 was $152.6 million and $135.8 million, respectively. The fair value and carrying value of our long-term debt as of December 31, 2020 was $171.0 million and $145.0 million, respectively.

6.    Supplemental Balance Sheet Information

Other long-term assets are comprised of the following (in thousands):

September 30, 

December 31, 

2021

2020

Prepaid market access royalties and other, net

    

$

29,445

    

$

2,970

Computer software, net

 

248

 

6

$

29,693

$

2,976

Accrued gaming and related taxes are comprised of the following (in thousands):

September 30, 

December 31, 

2021

2020

Gaming related, excluding taxes

    

$

23,531

    

$

10,046

Taxes, other than payroll and income taxes

 

7,975

 

6,670

$

31,506

$

16,716

Gaming related liabilities, excluding taxes, include liabilities for restricted cash on deposit in our market access partner’s patron holding accounts in excess of regulatorily required amounts.

7.    Stock-based Compensation

In 2020, we adopted the Golden Nugget Online Gaming, Inc. 2020 Incentive Award Plan (the “2020 Plan”) providing for common stock-based awards to employees, non-employee directors and consultants. The 2020 Plan permits the granting of various types of awards, including awards of nonqualified stock options, ISOs, stock appreciation rights, restricted stock awards, restricted stock units, other stock-based awards, other cash-based awards, dividend equivalents, and/or performance compensation awards or any combination of the foregoing. The

13

2020 Plan provides for an aggregate of 5,000,000 shares of Class A common stock to be delivered; provided that the total number of shares that will be reserved, and that may be issued, under the Incentive Plan will automatically increase on the first trading day of each calendar year, beginning with calendar year 2021, by a number of shares equal to one percent (1%) of the total outstanding shares of Class A common stock on the last day of the prior calendar year. Restricted stock and restricted stock units may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than the market price of the underlying stock on the date of grant. As of September 30, 2021, approximately 3,023,479 shares were available for future awards.

A summary of compensation cost recognized for stock-based payment arrangements is as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

2021

2020

2021

2020

Compensation cost recognized:

    

  

    

  

    

  

    

  

    

Restricted stock units

$

3,378

$

$

8,707

$

$

3,378

$

$

8,707

$

We have granted 5 months to 5-year time vested and 3-year performance based restricted stock unit awards where each unit represents the right to receive, at the end of a vesting period, one share of our Class A common stock with no exercise price. The fair value of restricted stock unit awards was determined based on the fair market value of our shares on the grant date. As of September 30, 2021, there was $41.1 million of total unrecognized compensation cost related to unvested restricted stock unit awards. This cost is expected to be recognized over a weighted-average period of 1.5 years.

A summary of the status of our restricted stock unit awards and of changes in our restricted stock unit awards outstanding for the nine months ended September 30, 2021 is as follows:

    

    

    

Weighted

Average

Grant-Date

Fair Value

Shares

Per Share

Outstanding at January 1, 2021

 

1,035,000

$

25.49

Granted

 

1,311,344

 

18.10

Vested and converted

 

(3,849)

 

19.49

Forfeited/expired

 

 

Outstanding at September 30, 2021

 

2,342,495

$

21.36

8.  Stockholder’s Deficit and Loss per Share

Common Stock

As of September 30, 2021, we had 46,570,396 shares of Class A common stock, par value $0.0001, outstanding of a total of 220,000,000 shares authorized. Holders of Class A common stock are entitled to cast one vote per share of Class A common stock and will share ratably if and when any dividend is declared.

As of September 30, 2021, we had 31,657,545 shares of Class B common stock, par value $0.0001, outstanding of a total of 50,000,000 shares authorized. There is no public market for our Class B common stock. New shares of Class B common stock may be issued only to, and registered in the name of, Mr. Fertitta or his affiliates (including all successors, assigns and permitted transferees) (collectively, the “Permitted Class B Owners”). We may not issue additional shares of Class B common stock other than in connection with the valid issuance of Landcadia Holdco Class B Units in accordance with the A&R HoldCo LLC Agreement to any Permitted Class B Owner. For so long as Mr. Fertitta and his affiliates beneficially own 30% or more of the total number of (i) shares of Class A common stock outstanding as of the Closing Date and (ii) shares of Class A common stock that were issued upon exchange of the Landcadia Holdco Class B Units held by Mr. Fertitta and his affiliates as of the Closing (the “Sunset Event”),

14

holders of Class B common stock are entitled to cast 10 votes per share of Class B common stock. The voting power of the shares held by Mr. Fertitta and his affiliates is subject to an automatic downward adjustment to the extent necessary for the total voting power of all shares of our common stock beneficially held by Mr. Fertitta and his affiliates not to exceed 79.9%. To the extent Mr. Fertitta and his affiliates exchange Landcadia Holdco Class B Units (and a corresponding number of shares of Class B common stock have been cancelled), the number of votes per share of each remaining share of Class B common stock will increase, up to 10 votes per share. In no event will the shares of Class B common stock have more than 10 votes or less than 1 vote per share. Once Mr. Fertitta and his affiliates cease to beneficially own 30% or more of the total number of (i) shares of Class A common stock outstanding as of the Closing and (ii) shares of Class A common stock that were issued upon exchange of the Landcadia Holdco Class B Units held by Mr. Fertitta and his affiliates as of the closing, the holders of the shares of Class B common stock will be entitled to one (1) vote per share. Holders of Class B common stock will not participate in any dividend declared by the board of directors. Beginning 180 days after the closing of the Acquisition Transaction, each holder of Class B Units is entitled to cause Landcadia Holdco to exchange all or a portion of its Class B Units (upon the surrender of a corresponding number of shares of Class B common stock) for either one share of Class A common stock or, or at our election, in its capacity as the sole managing member of Landcadia Holdco, the cash equivalent of the market value of one share of Class A common stock.

Dividends

During the three and nine months ended September 30, 2020, we made dividend payments of $16.8 million and $30.8 million to the parent of Old GNOG, respectively. No dividend payments were made during the three and nine months ended September 30, 2021.

Warrants

On February 4, 2021 we announced that we would redeem all of our outstanding public warrants to purchase shares of our Class A common stock that were issued under the warrant agreement dated May 6, 2019 (the “Warrant Agreement”), by and between us and Continental Stock Transfer & Trust Company, as warrant agent and transfer agent, and that remain outstanding following 5:00 p.m. New York City time on March 8, 2021 for a redemption price of $0.01 per warrant. Warrants that were issued under the Warrant Agreement in a private placement and held by the founders of the Company were not subject to this redemption.

Under the terms of the Warrant Agreement, we were entitled to redeem all of our outstanding public warrants for $0.01 per public warrant if the reported closing price of our common stock was at least $18.00 per share on each of twenty trading days within a thirty-trading day period ending on the third trading day prior to the date on which a notice of redemption is given. This performance threshold was achieved following the market close on January 28, 2021.

A total of 9,584,227 warrants were exercised through March 8, 2021 for cash proceeds of $110.2 million. All other public warrants were redeemed on March 8, 2021. The exercised warrants had been accounted for as a derivative liability and carried on our balance sheets at fair value prior to exercise. Upon exercise, the fair value of the derivative liability was reclassified to additional paid-in capital in accordance with ASC 815-40 40-2.

As of September 30, 2021, we had 5,883,333 sponsor warrants outstanding. Each sponsor warrant entitles the holder to purchase one share of Class A common stock at $11.50 per share. The sponsor warrants were not transferable, assignable or salable until 30 days after the completion of the Acquisition Transaction and they are non-redeemable so long as they are held by the initial purchasers of the sponsor warrants or their permitted transferees. If the sponsor warrants are held by someone other than the initial purchasers or their permitted transferees, the sponsor warrants will be redeemable by us and exercisable by such holders on the same basis as the public warrants. Otherwise, the sponsor warrants have terms and provisions that are identical to those of the public warrants except that the sponsor warrants may be exercised on a cashless basis.

Redeemable Non-Controlling Interests

In connection with the Acquisition Transaction, 31,350,625 Landcadia Holdco Class B Units were issued to LF LLC, representing 45.9% economic interest with no voting rights. An additional 306,920 Class B units were issued in connection with additional contributions made by LF LLC during the nine months ended September 30, 2021. Beginning 180 days after the closing of the Acquisition Transaction, the holder of the Class B Units is entitled to

15

redeem all or a portion of such Class B Units, to be settled in cash or shares of Class A Common Stock, at the sole discretion of the Company’s independent Directors. Since the holder of the Class B Units has 79.9% voting control, these Class B Units are classified as temporary equity in accordance with ASC 480-10-S99-3A and represent a non-controlling interest. The non-controlling interest has been adjusted to redemption value as of September 30, 2021 in accordance with paragraph 15 option b of ASC 480-10-S99-3A. This measurement adjustment results in a corresponding adjustment to shareholders’ deficit through adjustments to additional paid-in capital and retained earnings. The redemption value of the Class B Units was $549.9 million on September 30, 2021. The redemption value is calculated by multiplying the 31,657,545 Class B Units by the $17.37 trading price of our Class A common stock on September 30, 2021.

Concurrent with future redemptions of the Class B Units, an equal number of shares of the Class B common stock will be cancelled.

Earnings (Loss) per Share

    

Three

 

Nine

Months Ended

 

Months Ended

September 30,

 

September 30,

Numerator:

2021

 

2021

Net income (loss)

$

(31,346)

$

36,725

Less: Net loss attributable to non-controlling interests

 

5,590

 

16,126

Net income attributable to GNOG - basic

(25,756)

52,851

Less: Gain on warrant derivatives

(71,031)

Add: Net loss attributable to non-controlling interests

(16,126)

Net loss attributable to GNOG - diluted

$

(25,756)

$

(34,306)

Denominator:

 

  

 

  

Weighted average shares outstanding - Class A common stock

 

46,570

 

44,767

Weighted average shares outstanding - RSUs

59

Subtotal - basic

46,570

44,826

Weighted average shares outstanding - Warrants

2,430

Weighted average shares outstanding - Class B Units redeemed

 

 

31,499

Weighted average shares outstanding - diluted

 

46,570

 

78,755

Earnings (loss) per share:

 

  

 

  

Basic

$

(0.55)

$

1.18

Diluted

$

(0.55)

$