Core Viewpoint - Allied Gaming & Entertainment, Inc. has made an initial investment in Bitcoin and Ethereum as part of its corporate treasury management strategy, marking its first step towards incorporating cryptocurrency into its balance sheet and laying the groundwork for broader blockchain and Real World Asset tokenization initiatives [1] Group 1 - The company is a global experiential entertainment entity [1] - The investment in Bitcoin (BTC) and Ethereum (ETH) signifies a strategic move towards cryptocurrency integration [1] - This initiative is part of a larger plan to explore blockchain technology and tokenization of Real World Assets [1]

Core Viewpoint - Knighted Pastures has withdrawn its nominations for the Board of Allied Gaming due to a court ruling that prevents changes to the Board's composition, which has made continuing the proxy contest unfeasible [1][2]. Group 1: Legal Developments - The United States District Court for the Central District of California issued a preliminary injunction that halts the election of six directors to Allied Gaming's Board, based on claims that Knighted Pastures is part of an undisclosed group with other shareholders [1]. - Knighted Pastures has appealed the District Court Order but has decided to abandon the proxy contest due to the high costs associated with the lawsuit and the delay in holding a shareholder vote [2]. Group 2: Company Actions and Statements - Knighted Pastures has donated its shares to multiple charities as part of its decision to step back from its investment in Allied Gaming [2]. - The Managing Member of Knighted Pastures, Roy Choi, stated that the company has previously succeeded in two lawsuits that preserved shareholder value by preventing Allied Gaming from executing unfair share issuances [2].

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis for the interim period [ITEM 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, changes in stockholders' equity, cash flows, and detailed notes on accounting policies [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | **Assets** | | | | Total Current Assets | $87,528,937 | $94,745,632 | | Total Assets | $108,576,901 | $112,687,259 | | **Liabilities & Equity** | | | | Total Current Liabilities | $42,653,904 | $30,478,161 | | Total Liabilities | $46,502,777 | $35,157,377 | | Total Stockholders' Equity | $62,074,124 | $77,529,882 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section details the Company's revenues, costs, expenses, and net loss for the reported periods, reflecting operational performance Unaudited Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $1,919,483 | $2,639,868 | $4,194,618 | $5,018,929 | | Total Costs and Expenses | $8,011,461 | $7,930,120 | $15,538,219 | $12,984,679 | | Loss From Operations | $(6,091,978) | $(5,290,252) | $(11,343,601) | $(7,965,750) | | Total Other (Expense) Income | $1,258,011 | $1,407,301 | $1,609,747 | $2,253,348 | | Net Loss | $(4,833,967) | $(3,882,951) | $(9,733,854) | $(5,712,402) | | Net Loss Attributable to Common Stockholders | $(4,811,134) | $(3,803,258) | $(9,647,618) | $(5,502,368) | | Net Loss per Common Share (Basic and Diluted) | $(0.12) | $(0.09) | $(0.23) | $(0.13) | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the Company's net loss and other comprehensive income/loss items, such as foreign currency adjustments, for the periods Unaudited Condensed Consolidated Statements of Comprehensive Loss | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(4,833,967) | $(3,882,951) | $(9,733,854) | $(5,712,402) | | Foreign currency translation adjustments | $180,533 | $(106,641) | $250,914 | $(440,970) | | Total comprehensive loss | $(4,653,434) | $(3,989,592) | $(9,482,940) | $(6,153,372) | | Comprehensive Loss Attributable to Common Stockholders | $(4,694,217) | $(3,845,916) | $(9,488,572) | $(5,678,711) | [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines changes in the Company's stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric | Balance - January 1, 2025 | Balance - June 30, 2025 | | :----------------------------------- | :------------------------ | :---------------------- | | Common Stock Shares | 46,385,798 | 40,299,180 | | Common Stock Amount | $4,639 | $4,030 | | Additional Paid-in Capital | $205,948,565 | $199,886,928 | | Accumulated Deficit | $(130,428,314) | $(139,986,504) | | Total Allied Gaming & Entertainment Inc. Stockholders' Equity | $73,010,817 | $57,549,427 | | Total Stockholders' Equity | $77,529,882 | $62,074,124 | - Cancellation of common stock previously issued pursuant to a Securities Purchase Agreement resulted in a decrease of **6,000,000 shares** and **$6,352,228** in total stockholders' equity for the six months ended June 30, 2025[17](index=17&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the Company's cash inflows and outflows from operating, investing, and financing activities for the reported periods Unaudited Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Used In Operating Activities | $(3,074,127) | $(4,539,188) | | Net Cash (Used In) Provided By Investing Activities | $(34,086,901) | $1,686,586 | | Net Cash Provided By Financing Activities | $955,692 | $19,846,197 | | Net (Decrease) Increase In Cash, Cash Equivalents, And Restricted Cash | $(36,166,827) | $16,983,052 | | Cash, cash equivalents, and restricted cash - End of Period | $23,075,975 | $38,303,635 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1 – Business Organization and Nature of Operations](index=9&type=section&id=Note%201%20%E2%80%93%20Business%20Organization%20and%20Nature%20of%20Operations) This note describes Allied Gaming & Entertainment Inc.'s corporate structure and the nature of its esports, gaming, and entertainment operations - Allied Gaming & Entertainment Inc. (AGAE) operates as a public esports and entertainment company through various subsidiaries, including Allied Esports Media Inc. (AEM), Allied Esports International, Inc. (AEII), Esports Arena Las Vegas, LLC (ESALV), Allied Mobile Entertainment Inc. (AME), Allied Mobile Entertainment (Hong Kong) Limited (AME-HK), Allied Experiential Entertainment Inc. (AEE), AGAE Investment Limited, Beijing Lianhuan Technology Co., Ltd (BLT), Allied Commercial Development (Hainan) Co., Ltd (ACD), and Allied Esports GmbH (AEG)[27](index=27&type=chunk) - Key operations include: AEII producing esports and gaming content, ESALV operating HyperX Arena Las Vegas, AME-HK owning a **40% interest** in Beijing Lianzhong Zhihe Technology Co. (ZTech) for mobile casual games in China, AEE owning a **51% interest** in Skyline Music Entertainment Limited for event organization, and ACD developing esports venues in Hainan[27](index=27&type=chunk) [Note 2 – Significant Accounting Policies](index=9&type=section&id=Note%202%20%E2%80%93%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies used in preparing the condensed consolidated financial statements, including recent ASU adoptions - The Company's unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include all necessary adjustments for fair presentation[29](index=29&type=chunk) - The Company adopted ASU 2023-08 on January 1, 2025, requiring digital assets to be measured at fair value with changes recognized in net income, resulting in a cumulative-effect adjustment of **$89,428** to retained earnings[66](index=66&type=chunk)[88](index=88&type=chunk) - The Tax Reform Act of 2025, signed on July 4, 2025, includes significant changes to U.S. corporate income tax law, which the Company is currently evaluating for its impact on financial statements[67](index=67&type=chunk)[68](index=68&type=chunk) [Note 3 – Short-Term Investments](index=14&type=section&id=Note%203%20%E2%80%93%20Short-Term%20Investments) This note details the Company's short-term investment portfolio, including certificates of deposit, fixed rate deposits, and various linked notes Short-Term Investments | Investment Type | Balance as of January 1, 2025 | Balance as of June 30, 2025 | | :-------------------------------- | :---------------------------- | :-------------------------- | | Certificates of Deposit | $3,800,000 | $398,091 | | Fixed Rate Deposits | $5,000,000 | $15,433,500 | | US Treasury Note | - | - | | Equity Linked Notes | - | - | | ETF Linked Notes | - | - | | FX Linked Notes | - | $6,049,410 | | Bond Linked Notes | - | $12,013,920 | | Total Short-term Investments | $8,800,000 | $33,894,921 | - Interest income from certificates of deposit and fixed rate deposits decreased significantly from **$1,365,314** in H1 2024 to **$203,042** in H1 2025[69](index=69&type=chunk) - New investments in H1 2025 include equity linked notes (**9.0% p.a.**), ETF linked notes (**9% p.a.**), FX linked notes (**6% p.a.**), and bond linked notes (**6.28%-8.56% p.a.**), contributing to interest income[71](index=71&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [Note 4 – Marketable Securities](index=15&type=section&id=Note%204%20%E2%80%93%20Marketable%20Securities) This note provides a summary of changes in marketable securities, including sales proceeds, gains/losses, and foreign currency adjustments Marketable Securities | Metric | Amount | | :----------------------------------- | :------- | | Balance as of January 1, 2025 | $3,483,211 | | Proceeds from sale of marketable securities | $(1,245,689) | | Net realized / unrealized gain on marketable securities | $512,593 | | Foreign currency transaction adjustment | $256,050 | | Balance as of June 30, 2025 | $3,006,165 | [Note 5 – Insurance Recovery Receivable](index=15&type=section&id=Note%205%20%E2%80%93%20Insurance%20Recovery%20Receivable) This note discloses the Company's insurance recovery receivable for attorney fees and defense costs, received shortly after the reporting period - The Company recorded a **$1.3 million** insurance recovery receivable as of June 30, 2025, for attorney fees and defense costs, which was received on July 10, 2025[77](index=77&type=chunk) [Note 6 – Loans Receivable](index=15&type=section&id=Note%206%20%E2%80%93%20Loans%20Receivable) This note details the Company's loans receivable, including new issuances, repayments, and collateral arrangements, with foreign currency impacts Loans Receivable | Metric | Amount | | :----------------------------------- | :----------- | | Balance as of January 1, 2025 | $17,629,915 | | Loans issued | $10,552,822 | | Foreign currency transaction adjustment | $1,130,852 | | Loans repaid | $(4,500,000) | | Balance as of June 30, 2025 | $24,813,589 | - Several loans were issued and amended in H1 2025, including Loan 1 (**JPY 1.324 billion**, **5% p.a.**, extended to June 30, 2025), Loan 2 (**JPY 736.9 million**, **7.5% p.a.**, extended to December 31, 2025), and new Loan 5 (**$9.5 million USD**, maturing September 30, 2025)[78](index=78&type=chunk)[79](index=79&type=chunk)[82](index=82&type=chunk) - Collateral for Loans 1, 2, 4, and 5 was increased on April 15, 2025, with the Additional Guarantor pledging an equity interest whose fair value exceeded the principal balance of outstanding loans[83](index=83&type=chunk) [Note 7 – Land Use Rights, Net](index=17&type=section&id=Note%207%20%E2%80%93%20Land%20Use%20Rights,%20Net) This note describes the Company's acquisition of 40-year land use rights in China and the associated amortization - The Company acquired **40-year** land use rights for approximately **3.2 acres** in Lingshui Li Autonomous County, PRC, for a total of **$3.7 million (RMB 27.5 million)**, with the final payment made on April 22, 2025[85](index=85&type=chunk) Land Use Rights, Net | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Land use rights | $3,881,291 | - | | Foreign currency transaction adjustment | $70,556 | - | | Less: accumulated amortization | $(16,272) | - | | Total land use rights, net | $3,935,575 | - | [Note 8 – Digital Assets](index=17&type=section&id=Note%208%20%E2%80%93%20Digital%20Assets) This note explains the Company's adoption of ASU 2023-08 for digital assets, requiring fair value measurement and income recognition of changes - Effective January 1, 2025, the Company adopted ASU 2023-08, requiring digital assets to be measured at fair value with changes recognized in the condensed consolidated statement of operations[88](index=88&type=chunk) Digital Assets | Metric | Amount | | :----------------------------------- | :------- | | Balance, January 1, 2025 | $49,300 | | Cumulative effect adjustment upon adoption of ASU 2023-08 | $89,428 | | Change in fair value of digital assets | $(35,221) | | Balance, June 30, 2025 | $103,507 | [Note 9 – Investment In Unconsolidated Affiliate](index=17&type=section&id=Note%209%20%E2%80%93%20Investment%20In%20Unconsolidated%20Affiliate) This note details the Company's equity method investment in an unconsolidated affiliate for an animated film production, including capital contributions - On January 27, 2025, the Company made a **$2.4 million** capital contribution to Flywheel AB3 Investor LLC, acquiring a **33% ownership interest** for an animated film production, with an additional **$600,000** capital contribution commitment[90](index=90&type=chunk)[117](index=117&type=chunk) - The investment is accounted for under the equity method, and the Company has a right of first negotiation for promotional events related to the film[91](index=91&type=chunk)[93](index=93&type=chunk) [Note 10 – Accrued Expenses and Other Current Liabilities](index=18&type=section&id=Note%2010%20%E2%80%93%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note provides a breakdown of accrued expenses and other current liabilities, including compensation, event costs, and legal fees Accrued Expenses and Other Current Liabilities | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Compensation expense | $234,254 | $269,064 | | Event costs | $26,838 | $34,722 | | Legal and professional fees | $1,073,604 | $641,336 | | Other accrued expenses | $189,592 | - | | Other current liabilities | - | $206,285 | | Accrued expenses and other current liabilities | $1,524,288 | $1,151,407 | [Note 11 – Loans Payable](index=18&type=section&id=Note%2011%20%E2%80%93%20Loans%20Payable) This note details the Company's credit facility and loans payable, including borrowings, repayments, and interest rates, with foreign currency impacts - AME-HK has a **$35 million** credit facility with Morgan Stanley Bank Asia Limited, used for various term loans and borrowings[95](index=95&type=chunk) Loans Payable | Metric | Balance as of January 1, 2025 | Balance as of June 30, 2025 | | :----------------------------------- | :---------------------------- | :-------------------------- | | Additional borrowings under credit facility | - | $30,248,163 | | Repayment of borrowings | - | $(22,692,471) | | Foreign currency transaction adjustment | - | $2,664,720 | | Balance as of June 30, 2025 | $25,756,757 | $35,977,169 | - The weighted average interest rate on outstanding loans payable as of June 30, 2025, is **1.00%**, with interest expense increasing from **$18,222** in H1 2024 to **$108,132** in H1 2025[102](index=102&type=chunk) [Note 12 – Commitments and Contingencies](index=19&type=section&id=Note%2012%20%E2%80%93%20Commitments%20and%20Contingencies) This note outlines the Company's legal commitments and contingencies, including ongoing litigation and operating lease obligations - The Company is involved in ongoing litigation with Knighted Pastures, LLC, a dissident stockholder, regarding alleged breaches of fiduciary duty and a proxy contest, leading to significant legal expenses[104](index=104&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - A lawsuit filed by Timothy G. Schuebel alleges the Shareholder Rights Plan is contrary to Delaware law; the Board approved an amendment to moot the claims, and the matter is pending[113](index=113&type=chunk) Operating Lease Commitments | Operating Lease Metric | 2025 | 2026 | 2027 | 2028 | Total Lease Payments | | :----------------------------------- | :--- | :--- | :--- | :--- | :------------------- | | Amount | $937,666 | $1,850,672 | $1,736,369 | $712,500 | $5,237,207 | | Weighted Average Remaining Lease Term (Years) | 2.86 | | Weighted Average Discount Rate | 5.04% | [Note 13 – Stockholders' Equity](index=22&type=section&id=Note%2013%20%E2%80%93%20Stockholders'%20Equity) This note details changes in stockholders' equity, including common stock and warrant activity related to a terminated securities purchase agreement - On April 25, 2025, the Company terminated a Securities Purchase Agreement with Blue Planet New Energy Technology Limited, refunding **$6.6 million** and receiving back **6,000,000 common shares** and corresponding warrants[119](index=119&type=chunk)[121](index=121&type=chunk) Warrant Activity | Warrant Activity | Number of Warrants | | :----------------------------------- | :----------------- | | Outstanding, January 1, 2025 | 7,454,546 | | Reversal upon termination of securities purchase agreement | (6,000,000) | | Forfeited | (1,454,546) | | Outstanding, June 30, 2025 | 0 | [Note 14 – Segment Reporting](index=22&type=section&id=Note%2014%20%E2%80%93%20Segment%20Reporting) This note provides financial information by reportable segment: Esports, Casual Mobile Gaming, and Live Concert Promotion, along with geographic assets - The Company operates three reportable business segments: Esports (video game events and tournaments), Casual mobile gaming (through ZTech), and Live concert promotion and events organizing (through Skyline)[124](index=124&type=chunk) Segment Revenue (3 Months Ended June 30) | Segment Revenue (3 Months Ended June 30) | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | E-sports | $1,161,075 | $917,414 | | Casual Mobile Gaming | $758,408 | $1,722,454 | | Concerts | - | - | | Total Revenue | $1,919,483 | $2,639,868 | Segment Revenue (6 Months Ended June 30) | Segment Revenue (6 Months Ended June 30) | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | E-sports | $2,817,887 | $2,172,671 | | Casual Mobile Gaming | $1,376,731 | $2,846,258 | | Concerts | - | - | | Total Revenue | $4,194,618 | $5,018,929 | Total Assets by Geographic Location | Total Assets by Geographic Location | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | United States | $12,650,394 | $25,191,733 | | China | $95,926,507 | $87,495,526 | | Total consolidated assets | $108,576,901 | $112,687,259 | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=26&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's analysis of the Company's financial condition and results of operations, including business overview, corporate developments, revenue, expenses, liquidity, and critical accounting estimates [The Company](index=26&type=section&id=The%20Company) This section describes Allied Gaming and Entertainment Inc. as a global experiential entertainment company focused on esports, gaming, and live events - Allied Gaming and Entertainment Inc. is a global experiential entertainment company focused on providing unique experiences to gamers through esports, gaming, and entertainment content and services[132](index=132&type=chunk) - The Company operates through three subsidiaries: Allied Esports International (AEI) for competitive esports properties and content, Allied Mobile Entertainment (AME) for mobile games in China, and Allied Experiential Entertainment (AEE) for live entertainment events and strategic investments in intellectual properties like 'The Angry Birds Movie 3'[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - Growth strategy includes adapting to technological advancements, gamer trends, new games, and expanding into new vertical markets such as live influencer events, top artist concerts, and interactive content monetization, requiring significant capital expenditures[137](index=137&type=chunk)[138](index=138&type=chunk) [Corporate Developments](index=27&type=section&id=Corporate%20Developments) This section highlights key corporate events, including the termination of a securities purchase agreement and Nasdaq non-compliance notices - On April 25, 2025, the Company terminated a Securities Purchase Agreement with Blue Planet, refunding **$6.6 million** and receiving back **6,000,000 common shares** and warrants[139](index=139&type=chunk) - The Company received a Nasdaq notice on June 18, 2025, for non-compliance with Listing Rule 5620(a) (failure to hold annual meeting) and 5250(c)(1) (Form 10-Q), leading to an appeal hearing on July 31, 2025[140](index=140&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) This section covers recent leadership changes and the potential financial impact of new U.S. federal tax law, the 'One Big Beautiful Bill Act' - Ms. Yinghua Chen resigned as CEO on June 24, 2025, to focus on AEI's content strategy, and Mr. Yangyang (James) Li was appointed as the new CEO, while continuing as President and Chairman of the Board[142](index=142&type=chunk) - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law on July 4, 2025, introducing changes to U.S. federal tax law, which the Company is currently assessing for its financial statement impact[143](index=143&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the Company's financial performance, detailing revenues, costs, and net loss for the reported interim periods [Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=28&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the Company's financial results for the three months ended June 30, 2025 and 2024, highlighting revenue and expense changes Results of Operations for the Three Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (Favorable/Unfavorable) | | :----------------------------------- | :--------------------------- | :--------------------------- | :----------------------------- | | In-person Revenues | $1,161 | $917 | $244 (Favorable) | | Casual Mobile Gaming Revenue | $758 | $1,723 | $(965) (Unfavorable) | | Total Revenues | $1,919 | $2,640 | $(721) (Unfavorable) | | Loss From Operations | $(6,092) | $(5,290) | $(802) (Unfavorable) | | Net Loss | $(4,834) | $(3,883) | $(951) (Unfavorable) | - In-person experience revenues increased by **27%** due to higher revenue from arena events, while casual mobile gaming revenue decreased due to market contraction and increased competition[146](index=146&type=chunk)[147](index=147&type=chunk) - General and administrative expenses increased by **15%** primarily due to a **$1.5 million** increase in legal and professional fees related to dissident stockholder complaints and a proxy contest, partially offset by a **$1.3 million** insurance reimbursement[151](index=151&type=chunk) - Other (expense) income, net, increased by **$70 thousand** in expense, primarily due to a loss on the sale of treasury bonds, while a **$0.8 million** gain on marketable securities was recognized[153](index=153&type=chunk)[155](index=155&type=chunk) [Results of Operations for the Six Months Ended June 30, 2025 and 2024](index=31&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the Company's financial results for the six months ended June 30, 2025 and 2024, detailing revenue, expense, and net loss trends Results of Operations for the Six Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (Favorable/Unfavorable) | | :----------------------------------- | :--------------------------- | :--------------------------- | :----------------------------- | | In-person Revenues | $2,818 | $2,173 | $645 (Favorable) | | Casual Mobile Gaming Revenue | $1,377 | $2,846 | $(1,469) (Unfavorable) | | Total Revenues | $4,195 | $5,019 | $(824) (Unfavorable) | | Loss From Operations | $(11,344) | $(7,966) | $(3,378) (Unfavorable) | | Net Loss | $(9,734) | $(5,712) | $(4,022) (Unfavorable) | - In-person experience revenues increased by **30%** due to more arena events, while casual mobile gaming revenue decreased by **51.6%** due to market contraction and competition[159](index=159&type=chunk)[160](index=160&type=chunk) - General and administrative expenses increased by **42%** due to a **$3.8 million** increase in legal and professional fees related to stockholder complaints and a proxy contest, partially offset by a **$1.3 million** insurance reimbursement[164](index=164&type=chunk) - Foreign currency transaction loss increased significantly to **$1.1 million** (from a **$0.4 million** gain in 2024) due to exchange rate changes between JPY and USD affecting loans and investments[170](index=170&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's financial liquidity, capital resources, working capital, and primary sources of funds Liquidity and Capital Resources (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Current Assets | $87,529 | $94,746 | | Current Liabilities | $42,654 | $30,478 | | Working Capital Surplus | $44,875 | $64,268 | - As of June 30, 2025, the Company had **$23.1 million** in cash and cash equivalents, **$33.9 million** in short-term investments, and **$3.0 million** in marketable securities, with a working capital surplus of **$44.9 million**[174](index=174&type=chunk) - Primary liquidity sources include cash from operations, existing cash and short-term investments, and interest income from loan facilities[173](index=173&type=chunk) [Cash Flows from Operating, Investing and Financing Activities](index=34&type=section&id=Cash%20Flows%20from%20Operating,%20Investing%20and%20Financing%20Activities) This section analyzes the Company's cash flow changes from operating, investing, and financing activities for the reported periods Cash Flows from Operating, Investing and Financing Activities (in thousands) | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(3,074) | $(4,539) | | Net cash (used in) provided by investing activities | $(34,087) | $1,687 | | Net cash provided by financing activities | $956 | $19,846 | - Net cash used in operating activities decreased by **$1.5 million**, primarily due to changes in operating assets and liabilities[177](index=177&type=chunk) - Net cash used in investing activities was **$34.1 million** in H1 2025, driven by purchases of short-term investments, loans receivable, land use rights, and an investment in an unconsolidated affiliate, partially offset by maturities of short-term investments and loan repayments[178](index=178&type=chunk) - Net cash provided by financing activities significantly decreased from **$19.8 million** in H1 2024 to **$1.0 million** in H1 2025, mainly due to repayment of short-term loans and the cancellation of common stock previously issued[180](index=180&type=chunk) [Off-Balance Sheet Arrangements](index=34&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements that would significantly impact the Company's financial condition - The Company has no material off-balance sheet arrangements that would significantly affect its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources[181](index=181&type=chunk) [Critical Accounting Estimates](index=34&type=section&id=Critical%20Accounting%20Estimates) This section identifies critical accounting estimates, such as income taxes and asset impairment, requiring significant management judgment and assumptions - Critical accounting estimates include accounting for income taxes, impairment of long-lived assets, and impairment of goodwill, which require significant management judgment and assumptions[183](index=183&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.](index=35&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the Company - The Company has no applicable quantitative and qualitative disclosures about market risk[184](index=184&type=chunk) [ITEM 4. Controls and Procedures.](index=35&type=section&id=ITEM%204.%20Controls%20and%20Procedures.) This section details the effectiveness of the Company's disclosure controls and procedures, acknowledging inherent limitations in any control system, and confirms no material changes in internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting of information required in Exchange Act reports[185](index=185&type=chunk) - The Company acknowledges inherent limitations in control systems, which can only provide reasonable assurance against error or fraud, and that controls can be circumvented[186](index=186&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[187](index=187&type=chunk) [PART II - OTHER INFORMATION](index=36&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not included in the financial statements, covering legal proceedings, risk factors, and other disclosures [ITEM 1. LEGAL PROCEEDINGS.](index=36&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) This section outlines the Company's involvement in various legal proceedings, primarily focusing on ongoing litigation with a dissident stockholder, Knighted Pastures, LLC, and a separate complaint regarding the Shareholder Rights Plan, both of which could impact the Company's operations and financial performance - The Company is subject to ongoing litigation with Knighted Pastures, LLC, a major stockholder, involving allegations of fiduciary duty breaches and a proxy contest, which has caused significant legal expenses and diverted management attention[189](index=189&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - A lawsuit filed by Timothy G. Schuebel challenges the Company's Shareholder Rights Plan, with the Board having approved an amendment to moot the claims, and the matter is currently pending[193](index=193&type=chunk) - The U.S. District Court for the Central District of California issued an order on August 1, 2025, enjoining any vote at the Company's 2024 and 2025 Annual Meeting regarding changes to the composition of Allied's board of directors[192](index=192&type=chunk) [ITEM 1A. RISK FACTORS.](index=37&type=section&id=ITEM%201A.%20RISK%20FACTORS.) This section highlights key risks, including the Company's non-compliance with Nasdaq listing requirements, which could lead to delisting and adverse effects on stock price and capital raising ability, and the ongoing aggressive proxy contest and related litigation by Knighted Pastures, LLC, which has incurred significant legal expenses and impaired business strategy - The Company is not in compliance with Nasdaq's Listing Rule 5620(a) (failure to hold annual meeting) and 5250(c)(1) (Form 10-Q), risking delisting, which could adversely affect stock price, liquidity, and ability to raise capital[195](index=195&type=chunk)[196](index=196&type=chunk) - Ongoing aggressive proxy contest and related shareholder litigation by Knighted Pastures, LLC, has caused significant legal expenses, disrupted operations, and diverted management attention, potentially leading to reputational harm and adverse impacts on business strategy[197](index=197&type=chunk)[198](index=198&type=chunk)[200](index=200&type=chunk) - An adverse judgment in the Rule 13D Action against Knighted Pastures could result in the Company losing control of its Board of Directors, seriously impairing business operations, financial conditions, and stock price[201](index=201&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS.](index=38&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20AND%20USE%20OF%20PROCEEDS.) This section states that there were no unregistered sales of equity securities or purchases of equity securities by the issuer and affiliated purchasers during the reporting period - No unregistered sales of equity securities occurred during the reporting period[202](index=202&type=chunk) - No purchases of equity securities by the issuer and affiliated purchasers occurred during the reporting period[203](index=203&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES.](index=38&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) This section indicates that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[204](index=204&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES.](index=38&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[205](index=205&type=chunk) [ITEM 5. OTHER INFORMATION.](index=38&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) This section confirms that no director or officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[206](index=206&type=chunk) [ITEM 6. EXHIBITS.](index=39&type=section&id=ITEM%206.%20EXHIBITS.) This section lists the exhibits filed with the Form 10-Q, including certifications, XBRL documents, and an amendment to the Rights Agreement - Exhibits include certifications from the CEO and CFO (31.1*, 31.2*, 32.1**, 32.2**), Inline XBRL documents (101.INS*, 101.SCH*, 101.CAL*, 101.DEF*, 101.LAB*, 101.PRE*, 104*), and an amendment to the Rights Agreement (4.1)[207](index=207&type=chunk) [SIGNATURES](index=40&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, confirming its submission by authorized officers [SIGNATURES](index=40&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, confirming its submission on behalf of Allied Gaming & Entertainment Inc. by its authorized officers - The report is signed by Yangyang Li, President and Chief Executive Officer (Principal Executive Officer), and Roy Anderson, Chief Financial Officer (Principal Financial Officer), on August 14, 2025[210](index=210&type=chunk)[211](index=211&type=chunk)

[Company Overview](index=1&type=section&id=Company%20Overview) [Company Introduction](index=1&type=section&id=1.1%20Company%20Introduction) Allied Gaming & Entertainment, Inc. (AGAE) is a global experiential entertainment company focused on providing unique experiences to gamers and concertgoers through its assets, products, and services - Allied Gaming & Entertainment, Inc. (NASDAQ: AGAE) is a global experiential entertainment company[1](index=1&type=chunk)[9](index=9&type=chunk) - The company is dedicated to providing unique experiences to a growing audience of gamers and concertgoers through its renowned assets, products, and services[9](index=9&type=chunk) [CEO Statement and Strategic Outlook](index=1&type=section&id=1.2%20CEO%20Statement%20and%20Strategic%20Outlook) New CEO Yangyang Li stated that despite Q2 performance being impacted by dissident shareholder interference, the company made significant progress on key strategic initiatives, including strategic investments in iconic IPs like Angry Birds 3, with these efforts expected to reflect in financial results in coming quarters - New CEO Yangyang Li stated that second-quarter performance was impacted by interference related to dissident shareholders[2](index=2&type=chunk) - The company made progress on key strategic initiatives, including participating in strategic investments in iconic intellectual properties such as Angry Birds 3[2](index=2&type=chunk) - These efforts are expected to increasingly reflect in the company's financial results in the coming quarters[2](index=2&type=chunk) [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) [Revenues](index=1&type=section&id=2.1%20Revenues) Total revenue for Q2 2025 was **$1.9 million**, a **27% year-over-year decrease**, primarily due to a **$1.0 million** reduction in mobile gaming revenue, partially offset by a **$0.2 million** increase in live event revenue | Metric | Q2 2025 | Q2 2024 | YoY Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total Revenue ($) | $1.9 million | $2.6 million | -$0.7 million | -27% | | Mobile Gaming Revenue ($) | - | -$1.0 million | - | - | | Live Event Revenue ($) | - | +$0.2 million | - | - | - Total revenue decreased by **27% year-over-year**, primarily due to a **$1.0 million** reduction in mobile gaming revenue, partially offset by a **$0.2 million** increase in live event revenue[3](index=3&type=chunk) [Costs and Expenses](index=1&type=section&id=2.2%20Costs%20and%20Expenses) Total costs and expenses for Q2 2025 slightly increased to **$8.0 million** from **$7.9 million** in the prior year, with a decrease in casual mobile gaming expenses offset by a **$0.5 million** rise in general and administrative expenses, mainly due to dissident shareholder-related legal and professional fees | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Costs & Expenses ($) | $8.0 million | $7.9 million | +$0.1 million | | General & Administrative Expenses ($) | - | +$0.5 million | - | - General and administrative expenses increased primarily due to **$0.5 million** in legal and professional fees related to dissident shareholder complaints and proxy contests[4](index=4&type=chunk) [Net Loss and Adjusted EBITDA](index=1&type=section&id=2.3%20Net%20Loss%20and%20Adjusted%20EBITDA) Net loss widened to **$4.8 million** and Adjusted EBITDA loss increased to **$2.1 million** in Q2 2025, both deteriorating compared to the prior year | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Loss ($) | $4.8 million | $3.9 million | Loss widened by $0.9 million | | Adjusted EBITDA Loss ($) | $2.1 million | $1.7 million | Loss widened by $0.4 million | [Balance Sheet Highlights](index=1&type=section&id=Balance%20Sheet%20Highlights) [Key Financial Position Metrics](index=1&type=section&id=3.1%20Key%20Financial%20Position%20Metrics) As of June 30, 2025, the company's cash and short-term investment position and working capital both decreased compared to December 31, 2024 | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Cash & Short-term Investments ($) | $60.0 million | $71.5 million | -$11.5 million | | Working Capital ($) | $44.9 million | $64.3 million | -$19.4 million | | Common Shares Outstanding (shares) | 38.0 million shares | - | - | [Operational Update](index=2&type=section&id=Operational%20Update) [Event Activities](index=2&type=section&id=4.1%20Event%20Activities) In Q2 2025, the company hosted **75 events**, comprising **36 owned events** and **39 third-party event days**, spanning gaming, street culture, esports, and brand licensing - The company hosted **75 events** in Q2 2025, including **36 owned events** and **39 third-party event days**[8](index=8&type=chunk) - Third-party events included SNEAKS Showdown, Power Esports Conference, EVE Offsite, Licensing International 2025 Awards, and multiple World Poker Tour events[8](index=8&type=chunk) [Non-GAAP Financial Measures Explanation](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) [GAAP vs. Non-GAAP Definitions and Rationale](index=2&type=section&id=5.1%20GAAP%20vs.%20Non-GAAP%20Definitions%20and%20Rationale) The company provides EBITDA and Adjusted EBITDA as supplements to GAAP financial measures to help investors evaluate operating performance more effectively by excluding certain non-cash, non-recurring, or unusual items that may not represent core business, while emphasizing these non-GAAP metrics are not GAAP substitutes and may differ from other companies' calculations - The company provides EBITDA and Adjusted EBITDA as supplements to GAAP financial measures to help external users evaluate operating performance and facilitate period-to-period and peer comparisons[10](index=10&type=chunk)[24](index=24&type=chunk) - EBITDA is defined as earnings before interest, income taxes, depreciation, and amortization; Adjusted EBITDA further excludes non-cash, non-recurring, and unusual items such as stock-based compensation, non-recurring legal fees, restricted cash repayments, and unrealized foreign currency transactions[11](index=11&type=chunk)[24](index=24&type=chunk) - The company acknowledges the limitations of non-GAAP measures, as they do not reflect all GAAP items and different companies may use varying calculation methods, thus lacking standardized meaning[10](index=10&type=chunk)[14](index=14&type=chunk)[24](index=24&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) [Disclaimer and Risk Factors](index=3&type=section&id=6.1%20Disclaimer%20and%20Risk%20Factors) This communication contains forward-looking statements under federal securities laws, involving potential growth opportunities, future financial conditions, and operating plans, which are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations, with readers advised to consult the 'Risk Factors' section in its 10-K annual report and subsequent SEC filings - Forward-looking statements include potential growth opportunities, objectives, beliefs, strategies, plans, product and service development, future financial condition, results, or projections[16](index=16&type=chunk) - These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from forward-looking statements[16](index=16&type=chunk) - Readers should consult the 'Risk Factors' section in the company's Annual Report on Form 10-K filed on December 31, 2024, and subsequent SEC reports for more information on factors that could potentially impact business and results[17](index=17&type=chunk) [Investor Contact](index=4&type=section&id=Investor%20Contact) [Contact Information](index=4&type=section&id=7.1%20Contact%20Information) Investors can contact Addo Investor Relations for further information - Investor contact information is Addo Investor Relations, email: agae@addo.com[18](index=18&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=8.1%20Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, present the company's assets, liabilities, and stockholders' equity | | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and Cash Equivalents ($) | $23,075,975 | $59,242,802 | | Short-term Investments ($) | $33,894,921 | $8,800,000 | | Total Current Assets ($) | $87,528,937 | $94,745,632 | | Total Assets ($) | $108,576,901 | $112,687,259 | | **Liabilities and Stockholders' Equity** | | | | Total Current Liabilities ($) | $42,653,904 | $30,478,161 | | Total Liabilities ($) | $46,502,777 | $35,157,377 | | Total Stockholders' Equity ($) | $62,074,124 | $77,529,882 | | Total Liabilities and Stockholders' Equity ($) | $108,576,901 | $112,687,259 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=8.2%20Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations for the three and six months ended June 30, 2025, and June 30, 2024, detail revenues, costs and expenses, and net loss | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | **Revenues:** | | | | | | Live ($) | $1,160,995 | $917,362 | $2,817,750 | $2,172,560 | | Multi-platform Content ($) | $80 | $52 | $137 | $111 | | Casual Mobile Gaming ($) | $758,408 | $1,722,454 | $1,376,731 | $2,846,258 | | **Total Revenues ($)** | **$1,919,483** | **$2,639,868** | **$4,194,618** | **$5,018,929** | | **Costs and Expenses:** | | | | | | Total Costs & Expenses ($) | $8,011,461 | $7,930,120 | $15,538,219 | $12,984,679 | | **Operating Loss ($)** | **($6,091,978)** | **($5,290,252)** | **($11,343,601)** | **($7,965,750)** | | **Loss Before Income Taxes ($)** | **($4,833,967)** | **($3,882,951)** | **($9,733,854)** | **($5,712,402)** | | **Net Loss ($)** | **($4,833,967)** | **($3,882,951)** | **($9,733,854)** | **($5,712,402)** | | Net Loss Attributable to Common Stockholders ($) | ($4,811,134) | ($3,803,258) | ($9,647,618) | ($5,502,368) | | Basic and Diluted Net Loss Per Share ($) | ($0.11) | ($0.09) | ($0.22) | ($0.13) | [Non-GAAP Financial Measures Reconciliation](index=7&type=section&id=8.3%20Non-GAAP%20Financial%20Measures%20Reconciliation) A reconciliation of GAAP net loss to EBITDA and Adjusted EBITDA is provided, with footnotes explaining adjustments for non-recurring legal fees and proxy contest costs | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Net Loss ($) | ($4,833,967) | ($3,882,951) | ($9,733,854) | ($5,712,402) | | Interest Income, Net ($) | ($1,015,094) | ($1,041,468) | ($1,879,399) | ($1,900,673) | | Depreciation and Amortization ($) | $389,712 | $402,968 | $772,150 | $780,168 | | **EBITDA ($)** | **($5,459,349)** | **($4,521,451)** | **($10,841,103)** | **($6,832,907)** | | Non-recurring Legal Fees (1) ($) | $2,403,541 | $2,938,034 | $4,027,488 | $3,138,034 | | Non-recurring Proxy Contest Costs (2) ($) | $1,074,533 | - | $1,077,851 | - | | Marketable Securities Investment (Gain) ($) | ($787,869) | - | ($512,593) | - | | Money Market Fund Investment (Gain) ($) | ($19,588) | - | ($386,109) | - | | Foreign Currency Transaction (Loss) Gain, Net ($) | $535,745 | ($351,434) | $1,101,041 | ($351,434) | | Stock-based Compensation ($) | $190,762 | $202,308 | $379,198 | $673,908 | | **Adjusted EBITDA ($)** | **($2,062,225)** | **($1,732,543)** | **($5,154,227)** | **($3,372,399)** | - Footnotes explain non-recurring legal fees relate to shareholder complaints, and non-recurring proxy contest costs relate to proxy litigation between the company and dissident shareholders[27](index=27&type=chunk)

Core Viewpoint - Knighted Pastures, LLC, which owns approximately 31.5% of Allied Gaming's shares, advocates for change in the company's board and recommends shareholders vote for their nominee, Roy Choi, at the upcoming annual meeting [1][2]. Group 1: Operational Performance and Governance - Allied Gaming has underperformed financially and operationally across various metrics, lacking a clear strategy and exhibiting poor corporate governance [2][4]. - The company's overall financial performance has been characterized by slow revenue growth and persistent losses since 2019, continuing into Q1 2025 [4]. - There are significant concerns regarding the independence of the board, particularly due to ties with the largest shareholder, Ourgame, which raises questions about governance and decision-making [3][6]. Group 2: Proxy Advisory Firm's Recommendations - Institutional Shareholder Services Inc. (ISS) has recommended that stockholders vote for the election of Knighted's Class B director candidate, Roy Choi, citing the need for boardroom change [1][4]. - ISS supports Knighted's critique of Allied Gaming's unfocused strategy and lack of transparency in capital allocation decisions, which have led to operational challenges and litigation risks [4][6]. Group 3: Strategic Vision - Knighted emphasizes the need to restore accountability in the boardroom and implement a coherent strategic vision to unlock Allied Gaming's untapped potential for sustainable growth [4][5]. - The company has faced challenges with operational performance and has not provided shareholders with sufficient information to evaluate its performance effectively [4].

Core Viewpoint - Knighted Pastures, LLC, which owns approximately 31.5% of Allied Gaming's shares, advocates for the election of its Class B nominees to the Board, citing the need for change due to the current Board's operational and financial underperformance [1][2][4]. Summary by Relevant Sections Operational Performance - Allied Gaming has experienced consistent losses and slow revenue growth since 2019, continuing into Q1 2025 [4]. - The company's operational performance has been characterized by challenges that have led to a lack of clarity in its strategic direction [4]. Corporate Governance - Concerns have been raised regarding the independence of the Board, particularly due to ties with the largest shareholder, Ourgame [4][6]. - The current governance framework is described as concerning, with a lack of transparency in capital allocation decisions and strategic initiatives [3][4]. Strategic Direction - Knighted criticizes Allied Gaming's strategy as unfocused, lacking clear value and synergies across its operational segments [4]. - ISS has validated Knighted's concerns, noting that the company does not provide sufficient information for shareholders to evaluate its performance [4]. Shareholder Engagement - Knighted urges shareholders to vote for its nominees on the BLUE proxy card, emphasizing the need for accountability and a coherent strategic vision [4][5].

PART I: FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the quarter ended March 31, 2025 [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) The company reported a net loss of $4.9 million for Q1 2025, driven by increased general and administrative expenses, with total assets rising to $117.9 million and liabilities to $45.0 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets increased to $117.9 million, primarily due to a rise in short-term investments, while total liabilities grew to $45.0 million from increased loans payable Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $19,486 | $59,243 | | Short-term investments | $49,204 | $8,800 | | Total Current Assets | $98,009 | $94,746 | | **Total Assets** | **$117,861** | **$112,687** | | **Liabilities & Equity** | | | | Loans payable | $34,511 | $25,757 | | Total Current Liabilities | $40,706 | $30,478 | | **Total Liabilities** | **$44,972** | **$35,157** | | **Total Stockholders' Equity** | **$72,889** | **$77,530** | - Total assets increased by **$5.2 million**, primarily due to a **$40.4 million** increase in short-term investments, which was offset by a **$39.7 million** decrease in cash and cash equivalents[10](index=10&type=chunk) - Total liabilities increased by **$9.8 million**, mainly driven by an **$8.7 million** increase in loans payable[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations reveals a widened net loss of $4.9 million in Q1 2025, primarily due to a significant increase in general and administrative expenses Statement of Operations Summary (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues:** | | | | In-person | $1,657 | $1,255 | | Casual mobile gaming | $618 | $1,124 | | **Total Revenues** | **$2,275** | **$2,379** | | **Costs and Expenses:** | | | | General and administrative expenses | $5,481 | $2,858 | | **Total Costs and Expenses** | **$7,527** | **$5,055** | | **Loss From Operations** | **($5,252)** | **($2,675)** | | **Net Loss** | **($4,900)** | **($1,829)** | | **Net Loss per Share (Basic & Diluted)** | **($0.11)** | **($0.04)** | - Net loss attributable to common stockholders widened to **$4.8 million**, or **($0.11)** per share, compared to a loss of **$1.7 million**, or **($0.04)** per share, in the prior-year period[12](index=12&type=chunk) - The increase in net loss was primarily driven by a **92%** increase in general and administrative expenses, which rose to **$5.5 million** from **$2.9 million** year-over-year[12](index=12&type=chunk)[144](index=144&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow analysis indicates a net decrease in cash of $39.8 million, primarily driven by increased cash used in investing activities for short-term investments Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($2,184) | ($2,145) | | Net Cash Used in Investing Activities | ($45,092) | ($14,493) | | Net Cash Provided By Financing Activities | $7,506 | $7,627 | | **Net Decrease In Cash** | **($39,757)** | **($9,020)** | - Cash used in investing activities significantly increased to **$45.1 million**, mainly due to **$64.0 million** in purchases of short-term investments and a **$2.5 million** investment in an unconsolidated affiliate[20](index=20&type=chunk)[158](index=158&type=chunk) - Cash provided by financing activities was **$7.5 million**, resulting from **$19.2 million** in proceeds from short-term loans, partially offset by **$11.7 million** in repayments[20](index=20&type=chunk)[160](index=160&type=chunk) [Selected Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Financial%20Statements) Key notes detail business segments, revenue trends, significant new investments, ongoing legal proceedings, and subsequent events including a terminated securities purchase agreement and CEO change - **Business Segments:** The company operates through three main subsidiaries: Allied Esports Media (AEM) for esports events, a **40%** interest in ZTech for casual mobile games in China, and a **51%** interest in Skyline for live entertainment events[25](index=25&type=chunk) - **Revenue Breakdown:** In Q1 2025, in-person revenue (events, sponsorships) increased to **$1.66 million** from **$1.26 million** YoY, while casual mobile gaming revenue decreased to **$0.62 million** from **$1.12 million** YoY[40](index=40&type=chunk)[45](index=45&type=chunk) - **New Investments:** In Q1 2025, the company invested **$64 million** in new short-term investments, including equity-linked, ETF-linked, and bond-linked notes, and made a **$2.4 million** investment in Flywheel AB3 for "The Angry Birds Movie 3"[64](index=64&type=chunk)[79](index=79&type=chunk) - **Legal Proceedings:** The company is involved in a second lawsuit with stockholder Knighted Pastures, LLC, alleging breach of fiduciary duty, which is currently stayed pending the company's 2024/2025 annual meeting, with no estimable potential loss[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - **Subsequent Events:** On April 25, 2025, the company terminated a Securities Purchase Agreement with Blue Planet, refunding **$6.6 million**, and on June 24, 2025, Yinghua Chen resigned as CEO, succeeded by Yangyang (James) Li[119](index=119&type=chunk)[120](index=120&type=chunk) [Management's Discussion and Analysis (MD&A)](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management attributes the wider net loss to increased legal fees and declining mobile gaming revenue, while liquidity remains strong despite Nasdaq delisting concerns and a terminated securities agreement [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Total revenues slightly decreased to $2.3 million, with in-person revenue growth offset by a significant decline in casual mobile gaming, leading to a wider operating loss Results of Operations Comparison (in thousands) | Account | Q1 2025 | Q1 2024 | Favorable (Unfavorable) | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$2,275** | **$2,379** | **($104)** | | In-person | $1,657 | $1,255 | $402 | | Casual mobile gaming | $618 | $1,124 | ($506) | | **Total Costs and Expenses** | **$7,527** | **$5,055** | **($2,472)** | | General and administrative expenses | $5,481 | $2,858 | ($2,623) | | **Loss From Operations** | **($5,252)** | **($2,675)** | **($2,577)** | | **Net Loss** | **($4,900)** | **($1,829)** | **($3,071)** | - In-person revenues increased by **32%** due to higher revenue from arena events[139](index=139&type=chunk) - Casual mobile gaming revenue decreased by **45%** due to market contraction and increased competition[140](index=140&type=chunk) - General and administrative expenses increased by **92%** (**$2.6 million**), primarily from a **$3.2 million** increase in legal and professional fees related to a dissident stockholder complaint[144](index=144&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a working capital surplus of $57.3 million, primarily supported by cash, short-term investments, and funds from the World Poker Tour sale Working Capital (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Assets | $98,009 | $94,746 | | Current Liabilities | $40,706 | $30,478 | | **Working Capital Surplus** | **$57,303** | **$64,268** | - As of March 31, 2025, the company had cash and cash equivalents of **$19.5 million**, short-term investments of **$49.2 million**, and marketable securities of **$2.1 million**[154](index=154&type=chunk) - The primary source of liquidity has been cash and short-term investments, including funds from the previous sale of the World Poker Tour[153](index=153&type=chunk) [Corporate Developments](index=28&type=section&id=Corporate%20Developments) Recent corporate developments include the termination of a $6.6 million securities purchase agreement and ongoing Nasdaq non-compliance issues leading to a delisting appeal - On April 25, 2025, the company terminated a Securities Purchase Agreement from October 2024, refunding a **$6.6 million** purchase price to Blue Planet[130](index=130&type=chunk) - The company received deficiency letters from Nasdaq for late filings of its 10-K and 10-Q reports and for not holding an annual meeting within twelve months of its fiscal year-end[131](index=131&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk) - Nasdaq has initiated procedures to delist the company's securities, which the company has appealed, with a hearing scheduled for July 31, 2025[134](index=134&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company has indicated that this section is not applicable for this reporting period - Not applicable[165](index=165&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[166](index=166&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[168](index=168&type=chunk) PART II: OTHER INFORMATION This section covers ongoing legal proceedings, significant risk factors related to Nasdaq listing compliance, and other standard disclosures for the reporting period [Legal Proceedings](index=34&type=section&id=ITEM%201.%20Legal%20Proceedings.) The company is engaged in ongoing litigation with stockholder Knighted Pastures, LLC, including a stayed breach of fiduciary duty complaint and a new lawsuit filed by the company - A complaint filed by Knighted Pastures, LLC in November 2024 regarding a transaction with Blue Planet is currently stayed by the court pending the outcome of the company's combined 2024/2025 annual meeting scheduled for August 4, 2025[173](index=173&type=chunk) - On June 11, 2025, the company filed a lawsuit against Knighted Pastures, LLC and others, alleging failure to disclose a coordinated group of stockholders acquiring more than **5%** of the company's stock[174](index=174&type=chunk) - A separate complaint filed in September 2024 by stockholder Timothy G Schuebel regarding the company's Shareholder Rights Plan is also pending[175](index=175&type=chunk) [Risk Factors](index=34&type=section&id=ITEM%201A.%20Risk%20Factors.) The primary risk factor is the company's non-compliance with Nasdaq listing requirements, leading to delisting procedures and potential severe impacts on stock price and liquidity - The company is not in compliance with Nasdaq Listing Rule 5250(c)(1) for late filings and Listing Rule 5620(a) for not holding an annual meeting within twelve months of its fiscal year-end[177](index=177&type=chunk)[181](index=181&type=chunk) - Nasdaq has determined to initiate procedures to delist the company's securities, a decision the company has appealed, with a hearing scheduled for July 31, 2025[181](index=181&type=chunk) - Potential consequences of delisting include limited market quotations, classification as a "penny stock," reduced analyst coverage, and a decreased ability to obtain future financing[182](index=182&type=chunk)[187](index=187&type=chunk) [Other Information (Items 2, 3, 4, 5, 6)](index=36&type=section&id=Other%20Information) This section confirms no unregistered sales of equity securities, no defaults on senior securities, no mine safety disclosures, and no Rule 10b5-1 trading arrangements by directors or officers during the quarter - **Item 2:** No unregistered sales of equity securities or purchases of equity by the issuer were made during the period[182](index=182&type=chunk)[183](index=183&type=chunk) - **Item 3 & 4:** There were no defaults upon senior securities, and mine safety disclosures are not applicable[184](index=184&type=chunk)[185](index=185&type=chunk) - **Item 5:** No director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the quarter[186](index=186&type=chunk)

Revenue Performance - Total revenues increased by approximately $1.4 million, or 18.6%, to $9.1 million for the year ended December 31, 2024, compared to $7.7 million for 2023[175]. - Casual mobile gaming revenue surged to $4.4 million in 2024 from $0.7 million in 2023, reflecting a growth of approximately $3.7 million, or 528.6%[178]. - In-person experience revenue decreased by $0.3 million, or 6.0%, to $4.7 million in 2024 from $5.0 million in 2023[176]. - Multiplatform content revenues dropped by approximately $2.0 million, or 100%, to $0 in 2024 due to the absence of the live streaming event "Elevated" that occurred in 2023[177]. Expenses and Losses - General and administrative expenses rose by approximately $5.8 million, or 76%, to $13.4 million in 2024, primarily due to increased payroll costs and professional fees[184]. - Impairment of goodwill was approximately $9.6 million for 2024, compared to $0 for 2023, indicating a significant decline in the fair value of a reporting unit[186]. - Research and development expenses increased to $866 thousand in 2024 from $163 thousand in 2023, driven by costs related to new casual mobile game development[182]. - For the years ended December 31, 2024 and 2023, the company incurred net losses of approximately $22.6 million and $3.6 million, respectively, with net cash used in operations of approximately $9.8 million and $8.1 million[196][200]. - The increase in net cash used in operating activities from 2023 to 2024 was approximately $1.7 million, primarily due to the increase in net loss[200]. Cash and Investments - Interest income increased by approximately $0.7 million, or 24%, to $3.7 million in 2024, attributed to interest earned on new investments[193]. - Current assets grew to $94.7 million in 2024 from $78.3 million in 2023, while current liabilities increased to $30.5 million from $12.0 million[195]. - As of December 31, 2024, the company had cash and cash equivalents of approximately $59.2 million, with working capital of approximately $64.3 million[196]. - Net cash provided by investing activities for the year ended December 31, 2024 was approximately $23.8 million, significantly higher than $6.1 million in 2023[201][202]. - Net cash provided by financing activities for the year ended December 31, 2024 was approximately $23.9 million, compared to $7.1 million in 2023[203][204]. Capital Management - The company had no material commitments for capital expenditures as of December 31, 2024[206]. - The stock repurchase program authorized by the Board allows for the repurchase of up to $10.0 million of common stock, with $7,305,926 available as of December 31, 2024[207]. - The total number of shares repurchased during the years ended December 31, 2024 and 2023 was 514 and 1,698,038, respectively, at an average price of $1.23 per share[207]. - Cash requirements for current liabilities include approximately $25.8 million for loans payable and $2.5 million for accounts payable and accrued expenses[196]. - The company intends to meet its cash requirements from its current cash and cash equivalents balance[196].

Financial Data and Key Metrics Changes - Total revenues for Q3 2024 were $2.2 million, representing a 93% increase from Q3 2023, primarily driven by higher casual mobile gaming revenues and increased in-person revenues at HyperX and Open Mobile arenas [14] - Total costs and expenses for Q3 2024 were $3.3 million, up from $1.8 million in the prior year, mainly due to investments in Z-Tech and other operational costs [15] - The net loss for Q3 2024 was $4.0 million, compared to a net income of $0.1 million in Q3 2023, impacted by a $3 million loss on a settlement and a $1.2 million net unrealized loss on foreign currency transactions [16] - Adjusted EBITDA loss improved to $0.1 million from a loss of $0.3 million in Q3 2023 [17] - Cash and short-term investments totaled $80.2 million as of September 30, 2024, compared to $78.6 million at the end of 2023 [18] Business Line Data and Key Metrics Changes - The HyperX Arena hosted 61 event days in Q3 2024, with 34 being third-party events, indicating strong demand for the venue [6] - The Omen Mobile arena had its busiest quarter since 2023, hosting significant events and tournaments, showcasing its versatility beyond e-sports [8] - The launch of two new casual mobile games was part of the strategy to expand the gaming portfolio, focusing on card and Mahjong games with strong user retention [11] Market Data and Key Metrics Changes - The World Mahjong Tour (WMT) is set to kick off with two satellite events in Los Angeles and Beijing, aiming to attract significant interest leading up to the finale in Las Vegas [9] - The company is co-hosting the RhythmX Music Festival in Macau in partnership with the Strawberry Music Festival, aiming to establish it as a landmark event [10] Company Strategy and Development Direction - The company is focused on capitalizing on significant assets and gearing up for the World Mahjong Tour, launching new mobile game titles, and increasing demand at its arenas [20] - The strategic investment from Yellow River Global Capital is expected to provide valuable resources and expertise to accelerate growth initiatives [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about substantial progress impacting both top and bottom lines, driven by upcoming events and strategic initiatives [20] Other Important Information - The company recorded a $5 million redistribution of escrow funds related to a settlement agreement, affecting cash and working capital positions [19] Q&A Session Summary - The Q&A session concluded without any recorded questions or answers, indicating a wrap-up of the conference call [22]

Revenue Performance - Total revenues for the three months ended September 30, 2024, increased to approximately $2.16 million, a rise of 93% from $1.12 million in the same period of 2023[125] - In-person experience revenues rose by approximately $0.2 million, or 20%, to approximately $1.35 million for the three months ended September 30, 2024, compared to $1.12 million for the same period in 2023[126] - Casual mobile gaming revenue was $0.8 million for the three months ended September 30, 2024, attributed to the business combination with ZTech on October 31, 2023[127] - Total revenues increased by approximately $1.6 million, or 29%, to $7.2 million for the nine months ended September 30, 2024, compared to $5.6 million for the same period in 2023[139] - Casual mobile gaming revenue was $3.7 million for the nine months ended September 30, 2024, compared to $0.0 million for the same period in 2023, driven by the business combination with ZTech[142] Expenses and Losses - Total costs and expenses increased to $3.34 million for the three months ended September 30, 2024, up from $1.76 million in the same period of 2023, representing a 90% increase[125] - Loss from operations for the three months ended September 30, 2024, was $1.18 million, compared to a loss of $0.64 million in the same period of 2023[125] - Research and development expenses were $158,000 for the three months ended September 30, 2024, reflecting the costs related to the development of new casual mobile games for ZTech[130] - General and administrative expenses increased by approximately $0.4 million, or 47%, to approximately $1.3 million for the three months ended September 30, 2024, primarily due to increased payroll costs[133] - Net loss attributable to common stockholders was approximately $9.5 million for the nine months ended September 30, 2024, compared to a net loss of $2.5 million for the same period in 2023[139] Cash Flow and Financing - Cash and cash equivalents were approximately $10.9 million as of September 30, 2024, not including approximately $66.7 million of short-term investments[155] - Net cash used in operating activities increased to approximately $13.2 million for the nine months ended September 30, 2024, from $4.6 million for the same period in 2023[158] - Net cash provided by financing activities for the nine months ended September 30, 2024 was approximately $28 million, a significant increase from the net cash used of approximately $2.1 million during the same period in 2023[162] - The net cash provided in 2024 included proceeds from short-term loans of approximately $28 million and $2 million from the issuance of common stock, offset by a $2 million return of proceeds upon cancellation of previously issued common stock[162] Accounting and Estimates - The company prepares its financial statements in accordance with U.S. generally accepted accounting principles, requiring management to make estimates affecting reported amounts of assets and liabilities[164] - Critical accounting estimates include assumptions about highly uncertain matters, with goodwill impairment being a significant area of focus[165] Other Financial Information - The Company entered into a Securities Purchase Agreement with Blue Planet, agreeing to sell 6,000,000 shares at $1.10 per share for a total of $6.6 million[121] - The Company reported a net loss attributable to common stockholders of $4.03 million for the three months ended September 30, 2024[125] - The Company expects operating expenses to increase as it expands marketing efforts and operations in new vertical markets[115] - General and administrative expenses increased by approximately $3.7 million, or 66%, to $9.4 million for the nine months ended September 30, 2024, from $5.7 million for the same period in 2023[148] - Interest income, net, increased to approximately $2.9 million for the nine months ended September 30, 2024, from approximately $2.2 million for the same period in 2023[152] - Loss on foreign currency transactions was approximately $0.8 million for the nine months ended September 30, 2024, compared to $0.0 million for the same period in 2023[151] - Total current assets increased to approximately $102.8 million as of September 30, 2024, compared to $78.3 million as of December 31, 2023[154] - The company recognized a loss of $3.0 million related to an escrow settlement with Brookfield Property Partners during the nine months ended September 30, 2024[135] - The company does not engage in any off-balance sheet financing activities or have interests in variable interest entities[163]