Hall of Fame Resort & Entertainment pany(HOFV) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's financial statements, notes, and management's analysis of financial condition Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements and detailed notes for Q3 2024 and 2023 Condensed Consolidated Balance Sheets Total assets decreased and liabilities increased from December 31, 2023, to September 30, 2024, reducing equity Balance Sheet Summary | Metric | September 30, 2024 (unaudited) | December 31, 2023 | | :---------------------- | :----------------------------- | :---------------- | | Total Assets | $435,640,564 | $441,896,633 | | Total Liabilities | $341,938,767 | $315,159,219 | | Total Equity | $93,701,797 | $126,737,414 | - Cash and restricted cash decreased from $11,816,083 at December 31, 2023, to $7,484,428 at September 30, 2024[7][16] - Notes payable, net, increased from $219,532,941 at December 31, 2023, to $241,587,376 at September 30, 2024[7] Condensed Consolidated Statements of Operations Net loss significantly reduced for Q3 and nine months ended September 30, 2024, due to lower expenses and grants Statements of Operations Summary (3 Months Ended Sep 30) | Metric (3 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :------------ | :------------- | | Total Revenues | $7,501,626 | $8,744,829 | | Total Operating Expenses | $14,653,110 | $18,783,342 | | Loss from Operations | $(7,151,484) | $(10,038,513) | | Total Other Income (Expense) | $2,731,154 | $(6,125,839) | | Net Loss | $(4,420,330) | $(16,164,352) | | Net Loss per Share (Basic/Diluted) | $(0.72) | $(2.89) | Statements of Operations Summary (9 Months Ended Sep 30) | Metric (9 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :------------- | :------------- | | Total Revenues | $16,392,610 | $17,992,539 | | Total Operating Expenses | $39,026,004 | $52,124,170 | | Loss from Operations | $(22,633,394) | $(34,131,631) | | Total Other Income (Expense) | $(11,906,094) | $(14,718,507) | | Net Loss | $(34,539,488) | $(48,850,138) | | Net Loss per Share (Basic/Diluted) | $(5.42) | $(8.77) | - Other income significantly increased to $9,763,126 for the three months and $10,263,126 for the nine months ended September 30, 2024, primarily due to government grants[9][133][134] Condensed Consolidated Statement of Changes in Stockholders' Equity Stockholders' equity decreased from $126.7 million to $93.7 million due to net loss, partially offset by compensation and warrants Stockholders' Equity Summary | Metric | January 1, 2024 | September 30, 2024 | | :----------------------------------- | :-------------- | :----------------- | | Total Stockholders' Equity | $126,737,414 | $93,701,797 | | Net Loss | - | $(34,539,488) | | Stock-based Compensation | - | $522,443 | | Warrants issued for financing liability proceeds | - | $1,666,000 | Condensed Consolidated Statements of Cash Flows Cash used in operating and investing activities decreased, while financing activities declined, leading to a net decrease in cash Cash Flow Summary (9 Months Ended Sep 30) | Cash Flow Activity (9 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------------------- | :-------------- | :-------------- | | Net cash used in operating activities | $(7,126,021) | $(19,606,299) | | Net cash used in investing activities | $(8,682,184) | $(20,069,154) | | Net cash provided by financing activities | $11,476,550 | $17,918,352 | | Net decrease in cash and restricted cash | $(4,331,655) | $(21,757,101) | | Cash and restricted cash, end of period | $7,484,428 | $11,759,281 | - The decrease in cash used in operating activities was primarily due to a $14.3 million decrease in net loss and a $4.7 million increase in paid-in-kind interest[272] - Investing activities saw a $20.5 million decrease in capital spending on project development, partially offset by an $8.4 million increase from asset sales[273] Notes to the Condensed Consolidated Financial Statements These notes detail the company's organization, accounting policies, debt, equity, revenue, related-party transactions, and subsequent events Note 1: Organization, Nature of Business, and Liquidity HOFRE faces significant liquidity challenges, including recurring losses and substantial debt maturities, raising going concern doubts - HOFRE operates the Hall of Fame Village and a DoubleTree by Hilton hotel, leveraging professional football[21] - The company has an accumulated deficit of $252.0 million as of September 30, 2024, and sustained recurring losses[23] - As of September 30, 2024, unrestricted cash was $2.6 million and restricted cash was $4.9 million; $7.1 million was used in operating activities[23] - Approximately $97.1 million of debt is due through November 13, 2025, including $11.2 million due by December 4, 2024[23] - The company is in default or risks default on approximately $81 million of gross principal outstanding loan agreements due to the waterpark ground lease termination[25] - Management believes these conditions raise substantial doubt about the company's ability to continue as a going concern[26] Note 2: Summary of Significant Accounting Policies This note outlines the company's accounting principles, including basis of presentation, consolidation, estimates, and specific policies - Warrants not indexed to the company's own stock are accounted for as liabilities at fair value and remeasured each balance sheet date[31] - Restricted cash includes escrow reserve accounts for capital improvements and debt service, totaling $4,915,073 as of September 30, 2024[33] - Revenue is recognized when a customer obtains control of promised goods or services, applying a five-step model[41] - The company uses an asset and liability approach for income taxes, establishing a valuation allowance when deferred tax assets are unlikely to be realized[47][48] Warrant Liability Summary | Warrant Liability Type | September 30, 2024 | December 31, 2023 | | :-------------------------- | :----------------- | :---------------- | | Public Series A Warrants | $161,000 | $204,000 | | Private Series A Warrants | - | - | | Series B Warrants | - | $21,000 | | Total Warrant Liability | $161,000 | $225,000 | - The company has excluded 14,970,656 potentially dilutive securities from net loss per share calculation as of September 30, 2024, due to its loss position[68][69] [Note 3: Property and