Hall of Fame Resort & Entertainment pany(HOFV) - 2024 Q4 - Annual Report

PART I Item 1. Business HOFRE operates Hall of Fame Village, a multi-phase resort and entertainment complex leveraging professional football, diversifying revenue through destination assets, media, and gaming - HOFRE operates Hall of Fame Village, a multi-use sports and entertainment destination leveraging professional football, with a strategy spanning destination assets, media, and gaming[15] - Phase I of Hall of Fame Village is operational, encompassing Tom Benson Hall of Fame Stadium, the 80% sold ForeverLawn Sports Complex, and Hall of Fame Village Media[16][22] - Phase II development includes the Constellation Center for Excellence, Center for Performance, Play Action Plaza, Fan Engagement Zone, and two hotels, with Phase III planning for residential and additional attractions[18][38] - The company holds licenses for physical and online sports betting in Ohio, partnering with Betr for mobile services and hosting eSports tournaments[17][39] - The waterpark ground lease was terminated on October 26, 2024, due to a non-payment default, requiring surrender of premises and improvements[23][69] Recent Developments Key recent developments include amendments to equity and loan agreements, a significant state grant, termination of a management contract, and the CEO's resignation - The Equity Distribution Agreement was amended on April 8, 2024, increasing agent compensation to 4.0% of gross offering proceeds, but the ATM facility expired on September 14, 2024[49][50] - Multiple loan agreements with Stark County Port Authority, City of Canton, Stark Community Foundation, and NewMarket Project Inc. were amended in May-June 2024, generally extending maturity dates (e.g., to 2044 or 2046) and, in some cases, increasing principal balances or deferring interest payments[51][52][54][55][56][57][63][64][65][66] - The Company received a $9.8 million grant from the State of Ohio on August 9, 2024, for Hall of Fame Village operations[67] - The management agreement with Shula's Steak Houses was terminated, with the Company taking over management and rebranding the restaurant as 'Gridiron Gastropub' on August 18, 2024[68] - On October 26, 2024, the waterpark ground lease was terminated due to a payment default of approximately $2.6 million, leading to an event of default under loan agreements totaling $81 million[69][70][73] - On September 27, 2024, a non-binding proposal was received from IRG Canton Village Member, LLC to take the Company private, which is currently under evaluation by a Special Committee[78] - Michael Crawford resigned as President, CEO, and Chairman, effective May 18, 2025, and entered into a retention and consulting agreement for a $300,000 bonus and consulting fees[86][87][88] Item 1A. Risk Factors. The Company faces significant risks including recurring losses, substantial debt, going concern doubt, waterpark lease default, take-private uncertainty, and potential Nasdaq delisting - The Company is an early-stage company with a history of losses and expects to incur significant expenses and continuing losses during the construction of Hall of Fame Village[93][96] Total Consolidated Debt Outstanding | As of Date | Amount (approx.) | | :----------- | :--------------- | | Dec 31, 2024 | $251.2 million | - Recurring losses, significant debt, and a deficient cash position (approx. $0.4 million unrestricted cash as of Dec 31, 2024) raise substantial doubt about the Company's ability to continue as a going concern, with $109.5 million in debt principal payments due through December 31, 2025[101] - The termination of the waterpark ground lease on October 26, 2024, due to a $2.6 million payment default, triggered events of default under approximately $81 million of the Company's loan agreements[104][105][108] - The non-binding proposal from IRG Canton Village Member, LLC to take the Company private has no assurance of resulting in a definitive transaction, and its failure could adversely impact the stock price[109][110] - The Company faces risks related to attracting and retaining key employees, including the recent resignation of the President, CEO, and Chairman, Michael Crawford[113][116] - Failure to comply with Nasdaq's continued listing standards (e.g., minimum bid price, annual meeting requirement) could lead to delisting, negatively affecting stock liquidity and market price[144][145][146] - Material weaknesses in internal control over financial reporting were identified as of December 31, 2024, related to the review and analysis of financial statement information and controls over non-routine transactions[151][152] Item 1B. Unresolved Staff Comments. The Company has no unresolved staff comments to report - Not applicable[170] Item 1C. Cybersecurity. The Company has established policies and processes for assessing, identifying, and managing cybersecurity risks, with Board oversight and no material challenges to date - The Company has established policies and processes for assessing, identifying, and managing material cybersecurity threats, integrated into its overall risk management systems[171] - Periodic risk assessments are conducted to identify threats, evaluate likelihood and potential damage, and assess the sufficiency of existing safeguards, often with consultant assistance[172][175] - The Board of Directors and Audit Committee provide oversight of cybersecurity risk management, with the CEO, Assistant General Counsel, and Chief Accounting Officer primarily responsible for day-to-day management[177][178][180] - To date, the Company has not encountered cybersecurity challenges that have materially impaired its operations or financial standing[176] Item 2. Properties. The Company owns real property in Canton, Ohio, for Hall of Fame Village and the DoubleTree Hotel, with certain parcels subject to ground leases and mortgages, and recent asset dispositions - The Company owns real property in Canton, Ohio, for the Hall of Fame Village and the DoubleTree by Hilton Hotel[182] - Certain Hall of Fame Village parcels, including the Tom Benson Hall of Fame Stadium, are subject to long-term ground leases with the Canton City School District[182] - On January 11, 2024, the Company sold an 80% interest in the ForeverLawn Sports Complex[183] - The waterpark ground lease was terminated on October 26, 2024, due to a non-payment event of default, requiring the surrender of the premises[184] Item 3. Legal Proceedings. Information regarding legal proceedings is incorporated by reference from Note 8, 'Contingencies,' to the Company's Consolidated Financial Statements - Legal proceedings information is detailed in Note 8, 'Contingencies,' of the Consolidated Financial Statements[185] Item 4. Mine Safety Disclosures. Mine safety disclosures are not applicable to the Company - Not applicable[186] PART II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters And Issuer's Purchases Of Equity Securities. The Company's Common Stock trades on NASDAQ under "HOFV" with 90 holders of record as of March 21, 2025, and no history or intention of paying cash dividends - The Company's Common Stock trades on The NASDAQ Capital Market under the symbol "HOFV"[187] Common Stock Holders | As of Date | Holders of Record | | :----------- | :---------------- | | Mar 21, 2025 | 90 | - The Company has never paid cash dividends on its Common Stock and does not intend to in the foreseeable future[189] Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The Company, a resort and entertainment entity, continues to incur losses and faces significant liquidity challenges, with total revenues decreasing by 12.1% in 2024 and net loss improving to $55.9 million - The Company is a resort and entertainment company focused on professional football, operating the Hall of Fame Village with diversified revenue streams across destination-based assets, media, and gaming[192] - The Company generates revenue from sponsorships, rents, events, exclusive programming, attractions, and hotel and restaurant operations, with expected increases as additional assets and events are introduced[196][199] - Operating expenses include event/media production, personnel, campus maintenance, food and beverage costs, hotel operations, and depreciation, expected to increase with further Phase II asset completion and event programming[200] Key Financial Performance (Years Ended December 31) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :---------------------------------------- | :------------- | :------------- | :------------- | :--------- | | Total revenues | $21,205,933 | $24,129,673 | $(2,923,740) | -12.1% | | Operating expenses | $27,883,661 | $43,171,407 | $(15,287,746) | -35.4% | | Hotel operating expenses | $5,981,485 | $6,491,625 | $(510,140) | -7.9% | | Impairment expense | $0 | $8,845,000 | $(8,845,000) | -100.0% | | Depreciation expense | $17,007,248 | $15,069,782 | $1,937,466 | 12.9% | | Loss from operations | $(29,666,461) | $(49,448,141) | $19,781,680 | 40.0% | | Interest expense, net | $(27,284,545) | $(18,763,838) | $(8,520,707) | 45.4% | | Government grant | $9,763,126 | $0 | $9,763,126 | N/A | | Change in fair value of warrant liability | $150,000 | $686,000 | $(536,000) | -78.1% | | Loss on termination of financing liability| $(5,168,550) | $0 | $(5,168,550) | N/A | | Net loss | $(55,862,635) | $(68,753,804) | $12,891,169 | 18.7% | | Net loss per share – basic and diluted | $(8.72) | $(11.97) | $3.25 | 27.1% | - The Company has sustained recurring losses, with an accumulated deficit of $273.6 million as of December 31, 2024, and had $0.4 million in unrestricted cash and $4.0 million in restricted cash, with $109.5 million in debt principal payments due by December 31, 2025[223] Cash Flow Summary (Years Ended December 31) | Activity | 2024 | 2023 | | :----------------- | :-------------- | :-------------- | | Operating Activities | $(10,914,970) | $(27,000,438) | | Investing Activities | $(7,767,670) | $(27,826,165) | | Financing Activities | $11,314,108 | $33,126,304 | | Net decrease in cash and restricted cash | $(7,368,532) | $(21,700,299) | Item 7A. Quantitative and Qualitative Disclosure About Market Risk. The Company is not exposed to market risk related to interest rates on foreign currencies - The Company is not exposed to market risk related to interest rates on foreign currencies[237] Item 8. Financial Statements and Supplementary Data. The financial statements required by this Item are included in Item 15 of this report, starting on page F-1 - Financial statements are located starting on page F-1 of this report[238] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There have been no changes in or disagreements with accountants on accounting and financial disclosure - None[239] Item 9A. Controls and Procedures. As of December 31, 2024, the Company's disclosure controls were ineffective due to material weaknesses in financial reporting, though management concluded financial statements are fairly presented - As of December 31, 2024, the Company's disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[240][244] - Material weaknesses were identified related to the precise and timely review and analysis of information for financial statements and disclosures, and ineffective control activities surrounding non-routine transactions[245] - Management is implementing remediation efforts, including designing and testing additional business process controls, but these efforts are ongoing and not yet fully remediated[246][250] - Despite the material weaknesses, management concluded that the consolidated financial statements in this Annual Report on Form 10-K fairly present the Company's financial position, results of operations, and cash flows in conformity with U.S. GAAP[241][154] Item 9B. Other Information. There is no other information to report under this item - None[248] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. This item is not applicable to the Company - Not Applicable[249] PART III Item 10. Directors, Executive Officers and Corporate Governance. The Company's Board of Directors, with eight members and six independent, oversees risk management through committees, and has policies on insider trading and ethics Directors as of March 26, 2025 | Name | Age | Position | | :---------------- | :-- | :------------------------------------- | | Michael Crawford | 57 | President and Chief Executive Officer, Chairman | | Marcus LaMarr Allen | 65 | Director | | Anthony J. Buzzelli | 76 | Director, Audit Committee Chair | | David Dennis | 67 | Director | | Karl L. Holz | 74 | Director, Lead Independent Director | | Stuart Lichter | 76 | Director | | Mary Owen | 47 | Director, Nominating and Corporate Governance Committee Chair | | Kimberly K. Schaefer | 59 | Director, Compensation Committee Chair | Executive Officers as of March 21, 2025 | Name | Age | Position | | :---------------- | :-- | :-------------------------------------------- | | Michael Crawford | 57 | President, Chief Executive Officer and Chairman | | Lisa Gould | 49 | Senior Vice President of Human Resources & Information Technology | | Anne Graffice | 53 | Executive Vice President of Global Marketing and Public Affairs | | John Van Buiten | 38 | Vice President of Accounting / Corporate Controller | - The Board is divided into three classes with staggered three-year terms, with six directors identified as independent[277][280] - The Board has overall responsibility for risk oversight, supported by its Audit, Compensation, and Nominating and Corporate Governance Committees[285] - The Company has adopted an Insider Trading Policy prohibiting hedging and speculative transactions, and a Code of Business Conduct and Ethics applicable to all directors, executive officers, and employees[296][297][298] Item 11. Executive Compensation. Executive compensation for named officers includes salary, bonuses, and stock awards, with Michael Crawford's 2024 total compensation at $1.79 million, and director compensation including retainers and restricted stock units Summary Compensation Table (Years Ended December 31) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | :-------------------------------------------------------- | :--- | :--------- | :-------- | :--------------- | :----------------------------------------- | :------------------------- | :----------- | | Michael Crawford, President, Chief Executive Officer and Chairman | 2024 | 976,153 | 720,000 | - | - | 94,159 | 1,790,312 | | | 2023 | 900,000 | 982,244 | 855,843 | 180,037 | 54,916 | 2,973,040 | | Tara Charnes, General Counsel and Secretary | 2024 | 251,790 | 160,000 | - | - | 10,966 | 422,756 | | | 2023 | 309,000 | 125,006 | 113,940 | 36,966 | 8,804 | 593,716 | | Anne Graffice, Executive Vice President of Global Marketing & Public Affairs | 2024 | 299,230 | 50,000 | - | - | 13,266 | 362,496 | | | 2023 | 285,401 | 122,909 | 56,963 | 10,584 | 13,435 | 489,292 | | Lisa Gould, Senior Vice President of Human Resources & Information Technology | 2024 | 190,000 | 65,600 | - | - | 13,383 | 268,983 | - Michael Crawford's 2023 PSU award, eligible for 8,896 PSUs, was waived by him, and he resigned as President, CEO, and Chairman effective May 18, 2025, entering a retention and consulting agreement for a $300,000 bonus and consulting fees[316][317][318] - Tara Charnes resigned as General Counsel and Corporate Secretary effective August 31, 2024, and subsequently entered a consulting services agreement[326] - The Company maintains a 401(k) plan with matching contributions for employees, including named executive officers[332] Director Compensation (2024) | Name | Fees earned or paid in cash ($) | Stock Awards ($) | Total ($) | | :------------------ | :------------------------------ | :--------------- | :-------- | | Marcus LaMarr Allen | 50,500 | — | 50,500 | | Jerome Bettis | 48,000 | — | 48,000 | | Anthony J. Buzzelli | 67,500 | — | 67,500 | | David Dennis | 63,000 | — | 63,000 | | James J. Dolan | 41,625 | — | 41,625 | | Karl L. Holz | 68,125 | — | 68,125 | | Mary Owen | 63,375 | — | 63,375 | | Kimberly K. Schaefer| 69,375 | — | 69,375 | Item 12. Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters. Stuart Lichter and his affiliates collectively hold 72.3% beneficial ownership of Common Stock, with all directors and executive officers owning 74.1% as a group, and 342,805 shares remaining available under equity compensation plans Beneficial Ownership of Common Stock (as of March 21, 2025) | Name and Address of Beneficial Owner | Number of Shares | Percentage | | :---------------------------------------------------- | :--------------- | :--------- | | Stuart Lichter | 13,593,978 | 72.3% | | All current directors and executive officers as a group (12 individuals) | 13,938,992 | 74.1% | | HOF Village, LLC | 840,168 | 12.3% | | CH Capital Lending, LLC | 11,856,828 | 66.6% | | IRG Canton Village Member, LLC | 840,168 | 12.3% | | IRG Canton Village Manager, LLC | 840,168 | 12.3% | | Industrial Realty Group, LLC | 459,534 | 6.4% | | Midwest Lender Fund, LLC | 405,294 | 5.7% | - The beneficial ownership percentages are based on approximately 6,698,645 shares of Common Stock outstanding as of March 21, 2025[348] Equity Compensation Plan Information (as of December 31, 2024) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------------ | :-------------------------------------------------------------------------------- | :------------------------------------------------------------------------------ | :------------------------------------------------------------------------------------------------------------------------------------------ | | Equity compensation plans approved by security holders | 152,151 | $— | 253,057 | | Equity compensation plans not approved by security holders | 27,937 | $— | 89,748 | | Total | 180,088 | $— | 342,805 | - Mr. Lichter did not timely report four transactions attributable to various loan amendments and assignments under Section 16(a) of the Exchange Act, but all transactions were subsequently reported[360] Item 13. Certain Relationships and Related Transactions and Director Independence. The Company has a policy for reviewing related person transactions, including significant agreements with HOF Village, PFHOF, and various financial arrangements with IRG and its affiliates, controlled by director Stuart Lichter - The Company has a written related person transaction policy for reviewing and approving transactions exceeding $120,000 involving directors, executive officers, 5% beneficial owners, and their immediate family or affiliated entities[362][363] - A Director Nominating Agreement grants HOF Village the right to designate four directors and PFHOF one, based on ownership thresholds[366] - The Amended and Restated Global License Agreement with PFHOF, effective September 11, 2024, licenses PFHOF marks for HOFV projects, removing the previous annual license fee requirement[370][718] - IRG and its affiliates (controlled by director Stuart Lichter) provide master development and project management services, general corporate support, and are lenders for numerous significant loans, including various Term Loan, Bridge Loan, and Note & Security Agreements[376][377][378][379][382][391][396][399][403][406][407][429][433][434] - Stuart Lichter personally guarantees the MKG DoubleTree Loan and indemnifies Hanover Insurance Company for the Constellation EME 3 Guarantee Bond[414][419] - A non-binding proposal from IRG Canton Village Member, LLC to acquire all outstanding Common Stock not owned by Buyer and its affiliates is currently being evaluated by a Special Committee[428] Item 14. Principal Accountant Fees and Services. Grant Thornton LLP billed the Company $507,703 in total fees for 2024, primarily for audit services, with the Audit Committee maintaining a pre-approval policy for all services Aggregate Fees Billed by Grant Thornton LLP | Fee Type | 2024 | 2023 | | :---------------- | :---------- | :---------- | | Audit Fees | $482,703 | $453,033 | | Audit-Related Fees| $25,000 | $42,500 | | Tax Fees | $- | $- | | All Other Fees | $- | $- | | Total | $507,703 | $495,533 | - The Audit Committee's charter requires pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm[440] - The Chair of the Audit Committee has delegated authority to pre-approve permissible non-audit services, with reporting to the full committee at its next meeting[441] PART IV Item 15. Exhibits and Financial Statement Schedules. This section lists the financial statements and a comprehensive catalog of exhibits filed with the Annual Report on Form 10-K, including corporate governance documents and various material contracts - The consolidated financial statements for the fiscal years ended December 31, 2024 and 2023 are included starting on page F-1[445] - A detailed list of exhibits is provided, covering corporate documents, warrant agreements, employment contracts, and numerous loan and security agreements, many of which involve related parties[446][448][450][451][452][453][454][456][457][458][459][460][461][462] Item 16. Form 10–K Summary. This item is not applicable and contains no summary - Not applicable[464] SIGNATURES SIGNATURES The Annual Report on Form 10-K was signed on March 26, 2025, by Michael Crawford as President and Chief Executive Officer, John Van Buiten as Vice President of Accounting/Corporate Controller, and other directors - The report was signed on March 26, 2025, by Michael Crawford (President and CEO) and John Van Buiten (VP of Accounting/Corporate Controller), along with other directors[468][469] Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Grant Thornton LLP issued an unqualified opinion on the Company's financial statements but highlighted a 'going concern' matter due to recurring losses, significant debt, and insufficient liquidity - Grant Thornton LLP issued an unqualified opinion on the consolidated financial statements for 2024 and 2023[473] - The auditors noted a 'going concern' issue due to recurring losses, $273.6 million accumulated deficit, $10.9 million cash used in operations in 2024, and $109.5 million in debt due by December 31, 2025, raising substantial doubt about the Company's ability to continue as a going concern[474][501] Consolidated Balance Sheets Total assets decreased from $441.9 million in 2023 to $366.7 million in 2024, while total liabilities decreased from $315.2 million to $294.5 million, and total equity attributable to HOFRE stockholders decreased to $73.2 million Consolidated Balance Sheet Highlights (as of December 31) | Metric | 2024 | 2023 | | :---------------------------------------- | :-------------- | :-------------- | | Cash | $432,174 | $3,243,353 | | Restricted cash | $4,015,377 | $8,572,730 | | Total assets | $366,705,811 | $441,896,633 | | Notes payable, net | $245,747,816 | $219,532,941 | | Financing liability | $17,784,179 | $62,982,552 | | Total liabilities | $294,474,352 | $315,159,219 | | Accumulated deficit | $(273,561,929) | $(216,643,882) | | Total equity attributable to HOFRE stockholders | $73,194,885 | $127,692,252 | Consolidated Statements of Operations The Company reported a net loss of $55.9 million in 2024, an improvement from $68.8 million in 2023, with total revenues decreasing by 12.1% and operating expenses significantly decreasing by 30.9% Consolidated Statements of Operations Highlights (Years Ended December 31) | Metric | 2024 | 2023 | | :---------------------------------------- | :-------------- | :-------------- | | Total revenues | $21,205,933 | $24,129,673 | | Total operating expenses | $50,872,394 | $73,577,814 | | Loss from operations | $(29,666,461) | $(49,448,141) | | Interest expense, net | $(27,284,545) | $(18,763,838) | | Government grant | $9,763,126 | $- | | Change in fair value of warrant liability | $150,000 | $686,000 | | Loss on termination of financing liability| $(5,168,550) | $- | | Net loss | $(55,862,635) | $(68,753,804) | | Net loss attributable to HOFRE stockholders | $(56,918,047) | $(69,745,539) | | Net loss per share, basic and diluted | $(8.72) | $(11.97) | Consolidated Statements of Changes in Stockholders' Equity Total equity decreased from $126.7 million at December 31, 2023, to $72.2 million at December 31, 2024, primarily due to the $55.9 million net loss, partially offset by stock-based compensation Changes in Stockholders' Equity (Years Ended December 31) | Metric | 2024 | 2023 | | :---------------------------------------- | :-------------- | :-------------- | | Balance as of January 1 | $126,737,414 | $191,258,112 | | Stock-based compensation | $641,252 | $2,756,849 | | Sale of shares under ATM | $113,428 | $39,261 | | Preferred stock dividends | $(1,064,000) | $(1,064,000) | | Warrants issued for financing liability proceeds | $1,666,000 | $- | | Net loss | $(55,862,635) | $(68,753,804) | | Balance as of December 31 | $72,231,459 | $126,737,414 | Consolidated Statements of Cash Flows Net decrease in cash and restricted cash improved to $7.4 million in 2024, with cash used in operating activities decreasing significantly to $10.9 million, and financing activities providing $11.3 million Consolidated Statements of Cash Flows (Years Ended December 31) | Cash Flows From | 2024 | 2023 | | :-------------------------- | :-------------- | :-------------- | | Operating Activities | $(10,914,970) | $(27,000,438) | | Investing Activities | $(7,767,670) | $(27,826,165) | | Financing Activities | $11,314,108 | $33,126,304 | | Net decrease in cash and restricted cash | $(7,368,532) | $(21,700,299) | | Cash and restricted cash, end of year | $4,447,551 | $11,816,083 | - Cash used in operating activities decreased by $16.1 million in 2024, primarily due to a lower net loss and increased non-cash adjustments like depreciation and paid-in-kind interest[227] - Cash used in investing activities decreased by $20.1 million, driven by a $29.2 million decrease in capital spending on project development and $8.4 million received from the sale of the sports complex[228] - Cash provided by financing activities decreased by $21.8 million, mainly due to a $19.1 million decrease in proceeds from notes payable and an $8.7 million increase in repayments[229] Notes to Consolidated Financial Statements The notes detail the Company's organization, accounting policies, and financial position, including going concern uncertainty, waterpark lease termination impact, and subsequent events like Nasdaq delisting notice and CEO resignation Note 1: Organization, Nature of Business, and Liquidity HOFRE, a resort and entertainment company, faces significant liquidity challenges with recurring losses and $273.6 million accumulated deficit, and the waterpark lease termination triggered $81 million in loan defaults, raising substantial doubt about its going concern ability - HOFRE is a resort and entertainment company focused on professional football, operating the Hall of Fame Village in Canton, Ohio, with diversified verticals including destination assets, media, and gaming[497] - The Company has sustained recurring losses, with an accumulated deficit of $273.6 million as of December 31, 2024, had $0.4 million in unrestricted cash and $4.0 million in restricted cash, and $109.5 million in debt due by December 31, 2025[501] - The termination of the waterpark ground lease on October 26, 2024, due to default, resulted in events of default under approximately $81 million of the Company's loan agreements[502] - These conditions raise substantial doubt about the Company's ability to continue as a going concern, requiring additional debt, construction lending, and equity financing[503] Note 2: Summary of Significant Accounting Policies This note details the Company's accounting policies, including U.S. GAAP consolidation, fair value measurement for warrant liabilities, capitalization of project development costs, impairment reviews, revenue recognition, and segment reporting as a single operating segment - The Company prepares consolidated financial statements in accordance with U.S. GAAP, consolidating wholly-owned subsidiaries and using the equity method for unconsolidated affiliates where it exerts significant influence[508][510] - Warrants not indexed to the Company's own stock are classified as derivative liabilities and remeasured at fair value each period, with changes recognized in earnings[515] - All costs related to Hall of Fame Village development are capitalized during construction and cease upon substantial completion or suspension of activities[519] - Long-lived assets are reviewed for impairment when indicators are present and undiscounted cash flows are less than carrying value, with a $7.7 million impairment loss recorded in 2023 for the ForeverLawn Sports Complex[521][522] - Revenue is recognized under ASC 606 across sponsorship agreements, rents, food & beverage, events, and hotel/restaurant operations, based on satisfying performance obligations[541][542] - The Company is managed as a single operating segment, with financial information and plans reviewed at the consolidated level by the President, CEO, & Chairman[561][562] Potentially Dilutive Securities Excluded from EPS (as of December 31) | Security Type | 2024 | 2023 | | :------------------------------------------------ | :----------- | :----------- | | Warrants to purchase shares of Common Stock | 3,681,403 | 2,793,649 | | Unvested restricted stock units | 205,754 | 163,922 | | Shares of Common Stock issuable upon conversion of convertible notes | 11,001,511 | 9,668,009 | | Shares of Common Stock issuable upon conversion of Series C Preferred Stock | 454,408 | 454,408 | | Total potentially dilutive securities | 15,343,076 | 13,082,959 | Note 3: Property and Equipment Property and equipment, net, decreased to $334.7 million in 2024, with project development costs significantly reduced, and the Company recorded $17.0 million in depreciation expense Property and Equipment, Net (as of December 31) | Category | 2024 | 2023 | | :---------------------------------------- | :-------------- | :-------------- | | Property and equipment, net, including property and equipment held for sale | $334,709,643 | $356,704,062 | | Project development costs | $10,404,499 | $59,366,200 | Depreciation and Capitalized Project Development Costs (Years Ended December 31) | Metric | 2024 | 2023 | | :---------------------------------------- | :-------------- | :-------------- | | Depreciation expense | $17,007,248 | $15,069,782 | | Capitalized project development costs | $16,395,806 | $47,985,893 | - On January 11, 2024, the Company sold an 80% interest in its ForeverLawn Sports Complex, with $12,325,227 of related assets classified as 'held for sale' as of December 31, 2023[591] Note 4: Notes Payable, net Notes payable, net, increased to $245.7 million in 2024, with $109.5 million in principal payments due in 2025, following numerous loan amendments extending maturities and modifying terms Notes Payable, Net (as of December 31) | Metric | 2024 | 2023 | | :---------------------------------------- | :-------------- | :-------------- | | Total Gross Principal Payments | $251,364,649 | $229,185,010 | | Less: Debt discount and deferred financing costs | $(5,616,833) | $(9,652,069) | | Total Net Principal Payments | $245,747,816 | $219,532,941 | Future Minimum Principal Payments on Notes Payable (as of December 31, 2024) | Year Ending December 31 | Amount | | :---------------------- | :-------------- | | 2025 | $109,533,630 | | 2026 | $5,904,740 | | 2027 | $7,757,437 | | 2028 | $14,596,832 | | 2029 | $3,818,096 | | Thereafter | $109,753,914 | | Total Gross Principal Payments | $251,364,649 | - Multiple loan agreements were amended in 2024, including those with the City of Canton, New Market/SCF, CH Capital, IRG, and Stark County, generally extending maturity dates and modifying repayment terms[608][611][616][617][618][619][627][636][639][644] - The Company secured a new $1.5 million SCF Loan and approximately $9.9 million from Constellation's Energy Made Easy program in 2024[647][649] Accrued Interest on Notes Payable (as of December 31) | Metric | 2024 | 2023 | | :----- | :------------ | :------------ | | Total | $1,029,112 | $804,713 | Note 5: Stockholders' Equity The Company's equity compensation plans have 172,448 shares remaining available, the ATM offering expired in September 2024, and 215,978 RSUs were granted in 2024, with 3,681,403 warrants outstanding at year-end - As of December 31, 2024, 111,092 shares remained available under the 2020 Omnibus Incentive Plan, and 61,356 shares under the 2023 Inducement Plan[654][656] - The Equity Distribution Agreement for an at-the-market offering expired on September 14, 2024, after the Company received net proceeds of $113,428 in 2024[662] Restricted Stock Units (RSUs) Activity (Year Ended December 31, 2024) | Metric | Number of shares | | :-------------------------- | :--------------- | | Non–vested at January 1, 2024 | 126,350 | | Granted | 215,978 | | Vested | (83,001) | | Forfeited | (56,281) | | Non–vested at December 31, 2024 | 203,046 | - Stock-based compensation expense for RSUs was $711,101 in 2024, while PSUs granted in 2023 were forfeited in 2024, leading to an $85,299 reversal of previously recognized compensation[669][674] Warrant Activity (Year Ended December 31, 2024) | Metric | Number of Shares | | :-------------------------- | :--------------- | | Outstanding - January 1, 2024 | 2,793,649 | | Granted | 890,313 | | Expired | (2,559) | | Outstanding – December 31, 2024 | 3,681,403 | Note 6: Sponsorship Revenue and Associated Commitments Net sponsorship revenue was $2.86 million in 2024, a slight increase from 2023, with $8.2 million in future cash expected from these agreements - Sponsorship revenue is generated from agreements offering strategic opportunities for brand recognition and other benefits[684] Net Sponsorship Revenue (Years Ended December 31) | Year | Amount | | :--- | :---------- | | 2024 | $2,860,451 | | 2023 | $2,819,041 | Scheduled Future Cash from Sponsorship Agreements (as of December 31, 2024) | Year Ending December 31 | Amount | | :---------------------- | :---------- | | 2025 | $2,107,015 | | Total | $8,195,524 | Note 7: Other Commitments The Company has management agreements for its DoubleTree Hotel and the rebranded 'Gridiron Gastropub', sports betting agreements with Betr, and received $10.3 million in government grants in 2024 - The management agreement with Crestline Hotels & Resorts for the DoubleTree Canton Downtown Hotel is set to terminate on November 21, 2025[687] - The management agreement with Shula's Steak Houses was terminated on August 18, 2024, and the restaurant was rebranded as 'Gridiron Gastropub'[691] - The Company has an Online Market Access Agreement with Betr for online sports betting in Ohio, which includes a limited equity interest in Betr and revenue sharing[693][694] - The deadline for the Company to accept at least one retail sports bet under its Type B license in Ohio has been extended to December 31, 2027[696] Other Liabilities (as of December 31) | Category | 2024 | 2023 | | :------------------------ | :---------- | :---------- | | Activation fund reserves | $121,748 | $126,685 | | Deferred revenue | $5,208,904 | $5,441,640 | | Deposits and other liabilities | $325,758 | $290,357 | | Total | $5,656,410 | $5,858,682 | - The Company received a $0.5 million Community Assistance Grant and a $9.8 million State of Ohio Grant in 2024, both recorded as 'Other income'[702][704] Note 8: Contingencies The Company is subject to occasional legal proceedings but has no pending litigation that would materially adversely affect its financial results - The Company does not have any pending litigation that would materially adversely affect its results of operations, financial condition, or cash flows[707] Note 9: Related-Party Transactions Related-party transactions include $2.6 million in advances from IRG Member, an amended Global License Agreement with PFHOF, a lease with Touchdown Work Place, and a non-binding take-private proposal from IRG Canton Village Member Due to Affiliates (as of December 31) | Affiliate | 2024 | 2023 | | :--------------- | :------------ | :------------ | | Due to IRG Member| $2,646,169 | $1,127,390 | | Due to PFHOF | $264,658 | $166,484 | | Total | $2,910,827 | $1,293,874 | - The Amended and Restated Global License Agreement with PFHOF, effective September 11, 2024, removed the requirement for an annual license fee[717][718] - A ten-year lease agreement was entered with Touchdown Work Place, LLC (managed by director Stuart Lichter) for commercial office space in the Constellation Center for Excellence[722] - A non-binding proposal from IRG Canton Village Member to acquire outstanding Common Stock not owned by Buyer and its affiliates is under evaluation by a Special Committee[724] - Stuart Lichter and his family trusts executed a General Indemnity Agreement in favor of Hanover Insurance Company, guaranteeing the Company's obligations under a guarantee bond for waterpark financing[731] Note 10: Concentrations In 2024, two customers accounted for 41.1% and 12.8% of sponsorship revenue and 17.8% and 13.8% of accounts receivable, with cash balances concentrated in third-party financial institutions - In 2024, two customers accounted for approximately 41.1% and 12.8% of sponsorship revenue[732] - As of December 31, 2024, two customers represented approximately 17.8% and 13.8% of accounts receivable[733] - Cash and restricted cash balances, which may exceed federally insured limits, are concentrated in third-party financial institutions, exposing the Company to risk if these institutions fail[734] Note 11: Leases The Company acts as both lessee and lessor, with operating lease ROU assets of $7.1 million and liabilities of $3.3 million, and generated $1.7 million in lease revenue as a lessor in 2024 Lease Information (as of December 31) | Category | 2024 | 2023 | | :---------------- | :-------------- | :-------------- | | Operating leases: Right-of-use assets | $7,144,366 | $7,387,693 | | Operating leases: Lease liability | $3,333,443 | $3,440,630 | | Financing leases: Right-of-use assets | $77,390 | $- | | Financing leases: Lease liability | $68,156 | $- | - The weighted-average remaining lease term for operating leases is 89.7 years, with a weighted-average discount rate of 10.0%[742] Future Minimum Lease Payments (Operating Leases, Undiscounted, as of December 31, 2024) | Year Ending December 31 | Amount | | :---------------------- | :-------------- | | 2025 | $301,400 | | Thereafter | $38,786,800 | | Total | $40,348,200 | - As a lessor, the Company's leased properties generated $1,696,675 in lease revenue in 2024, with future minimum lease revenue totaling $9.9 million[749] Note 12: Financing Liability The waterpark ground lease was terminated on October 26, 2024, due to a $2.6 million payment default, resulting in a $5.2 million loss and triggering defaults on $81 million of other loan agreements, with financing liability decreasing to $17.8 million - Sale-leaseback transactions for the Fan Engagement Zone and the waterpark were accounted for as financing arrangements, not true sales, due to the nature of the lease agreements[754] - The waterpark ground lease was terminated on October 26, 2024, due to a payment default of approximately $2.6 million, resulting in a $5,168,550 loss on termination of financing liability[759][760][766] - The termination of the waterpark ground lease triggered events of default under approximately $81 million of the Company's loan agreements[765] Financing Liability Carrying Value (as of December 31) | Year | Amount | | :--- | :-------------- | | 2024 | $17,784,179 | | 2023 | $62,982,552 | Remaining Future Cash Payments for Financing Liability (Undiscounted, as of December 31, 2024) | Year Ending December 31 | Amount | | :---------------------- | :-------------- | | 2025 | $1,259,335 | | Thereafter | $356,101,022 | | Total | $362,654,653 | Note 13: Disposition On January 11, 2024, the Company sold an 80% interest in its ForeverLawn Sports Complex for $10 million, resulting in a $140,041 loss on sale, with the remaining 20% accounted for as an equity-method investment - On January 11, 2024, the Company sold an 80% interest in its ForeverLawn Sports Complex to Sandlot Facilities, LLC for a $10 million purchase price[771] Loss on Sale of Sports Complex | Metric | Amount | | :---------------------- | :-------------- | | Purchase price | $10,000,000 | | Net purchase price | $9,785,778 | | Less: transaction costs | $(159,144) | | Less: book value of net assets sold | $(12,213,120) | | Plus: investment retained | $2,446,445 | | Loss on sale | $(140,041) | - The Company accounts for its retained 20% interest in the sports complex as an equity-method investment[772] Note 14: Income Taxes As of December 31, 2024, total deferred tax assets of $67.5 million were fully offset by a valuation allowance, resulting in a 0% effective tax rate due to significant net operating loss carry-forwards Net Deferred Tax Assets (Liabilities) (as of December 31) | Metric | 2024 | 2023 | | :------------------------ | :-------------- | :-------------- | | Total deferred tax assets | $67,463,602 | $53,072,102 | | Total deferred tax liabilities | $(3,223,633) | $(1,623,765) | | Total net deferred tax assets | $64,239,969 | $51,448,337 | | Less: valuation allowance | $(64,239,969) | $(51,448,337) | | Net deferred tax asset | $— | $— | Tax Attributes (as of December 31, 2024) | Attribute | Amount | Begins to expire | | :-------------------------------------- | :-------------- | :--------------- | | U.S. federal net operating loss carry–forwards | $279,521,326 | Indefinite | | U.S. local net operating loss carry–forwards | $279,963,638 | 2026 | - A full valuation allowance has been recognized for deferred tax assets, as it is not more likely than not that the benefits will be realized, resulting in a 0% effective tax rate for both 2024 and 2023[777][778] Note 15: Employee Benefit Plans The Company maintains a tax-qualified defined contribution 401(k) plan for employees, with employer matching contributions of $146,595 in 2024 - The Company maintains a tax-qualified defined contribution 401(k) plan[779] Employer Matching Contributions (Years Ended December 31) | Year | Amount | | :--- | :---------- | | 2024 | $146,595 | | 2023 | $191,073 | Note 16: Subsequent Events Subsequent events include a Nasdaq deficiency letter for failing to hold an annual meeting, further amendments to the CHCL loan agreement, and Michael Crawford's resignation as President, CEO, and Chairman - On January 10, 2025, the Company received a Nasdaq deficiency letter for failing to hold an annual meeting by December 31, 2023, and was granted an extension until June 30, 2025, to regain compliance[782][784] - The Note and Security Agreement with CHCL was amended multiple times in January-March 2025, increasing the 'Facility Amount' from $2.0 million to $6.5 million for general corporate purposes[786][790][791] - Michael Crawford resigned as President, CEO, and Chairman on March 12, 2025, effective May 18, 2025, to pursue another career opportunity, entering a Retention and Consulting Agreement for a $300,000 retention bonus and consulting services[792][793][794]