PART I. FINANCIAL INFORMATION Item 1. Financial Statements Financial statements show decreased assets and equity, increased liabilities, and continued net losses, raising going concern doubts Condensed Consolidated Balance Sheets Total assets decreased to $435.6 million, liabilities increased to $341.9 million, and equity fell to $93.7 million Condensed Consolidated Balance Sheets (in USD) | | September 30, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $435,640,564 | $441,896,633 | | Cash | $2,569,355 | $3,243,353 | | Property and equipment, net | $335,114,292 | $344,378,835 | | Project development costs | $71,910,357 | $59,366,200 | | Total Liabilities | $341,938,767 | $315,159,219 | | Notes payable, net | $241,587,376 | $219,532,941 | | Financing liability | $68,879,042 | $62,982,552 | | Total Equity | $93,701,797 | $126,737,414 | | Accumulated deficit | ($251,972,782) | ($216,643,882) | Condensed Consolidated Statements of Operations Revenues decreased in Q3 2024, but reduced expenses and a state grant significantly lowered the net loss Condensed Consolidated Statements of Operations (in USD) | Metric | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $7,501,626 | $8,744,829 | $16,392,610 | $17,992,539 | | Loss from Operations | ($7,151,484) | ($10,038,513) | ($22,633,394) | ($34,131,631) | | Other Income (Expense) | $2,731,154 | ($6,125,839) | ($11,906,094) | ($14,718,507) | | Net Loss | ($4,420,330) | ($16,164,352) | ($34,539,488) | ($48,850,138) | | Net Loss Per Share | ($0.72) | ($2.89) | ($5.42) | ($8.77) | Condensed Consolidated Statements of Cash Flows Net cash used in operations improved to $7.1 million, with overall cash decreasing by $4.3 million Condensed Consolidated Statements of Cash Flows (in USD) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 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 | Notes to the Condensed Consolidated Financial Statements Notes detail liquidity issues, going concern doubts, substantial debt, related-party transactions, and critical subsequent events - The company has sustained recurring losses, with an accumulated deficit of $252.0 million as of September 30, 2024. It has approximately $97.1 million of debt coming due through November 13, 2025. These conditions raise substantial doubt about the Company's ability to continue as a going concern2427 - On October 26, 2024, the company received a notice of termination for its waterpark ground lease due to a payment default. This event of default triggers cross-defaults under other loan agreements totaling approximately $81 million in gross principal outstanding26263268 - On September 27, 2024, Industrial Realty Group, Inc. (IRG), an affiliate of a director, delivered a non-binding proposal to acquire all outstanding shares of the company for $1.98 per share in cash. A special committee is evaluating the proposal25224 Notes Payable Breakdown (in USD) | Debt Category | Gross Principal (Sep 30, 2024) | | :--- | :--- | | Total Notes Payable | $247,995,932 | | Less: Debt discount and deferred financing costs | ($6,408,556) | | Total Net Notes Payable | $241,587,376 | Management's Discussion and Analysis of Financial Condition and Results of Operations MD&A discusses Hall of Fame Village operations, Q3 revenue decline, reduced operating loss, and severe liquidity challenges - The company's strategic plan involves three phases of development for the Hall of Fame Village. Phase I is operational, Phase II components are largely complete but the waterpark ground lease was terminated, and Phase III plans may include residential space and additional attractions275277 - On October 26, 2024, the company received a notice of lease termination for its waterpark due to a payment default of approximately $2.6 million. This default triggers cross-defaults on other loan agreements totaling approximately $81 million303304307 Q3 2024 Financial Performance Summary (in USD) | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $7.5M | $8.7M | -14.2% | | Operating Expenses | $8.6M | $12.4M | -30.7% | | Loss from Operations | ($7.2M) | ($10.0M) | +28.0% | | Net Loss | ($4.4M) | ($16.2M) | +72.8% | - The company's liquidity position is critical, with only $2.6 million in unrestricted cash as of September 30, 2024, and $97.1 million in debt principal payments due through November 13, 2025. Management states these conditions raise substantial doubt about the company's ability to continue as a going concern343348 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the current reporting period - Not applicable356 Controls and Procedures A material weakness in internal control over financial reporting was identified, rendering disclosure controls ineffective - A material weakness was identified in internal control over financial reporting related to the precise and timely review of information used for financial statement preparation358 - As a result of the material weakness, the CEO and interim PAO concluded that disclosure controls and procedures were not effective as of September 30, 2024359 - The company is continuing to implement its remediation plan for the material weakness360 PART II. OTHER INFORMATION Legal Proceedings The company has no pending litigation expected to materially adversely affect its financial condition or operations - The Company does not have any pending litigation that would have a material adverse effect on its results of operations, financial condition, or cash flows362 Risk Factors Key risks include material weakness in controls, going concern doubts, acquisition uncertainty, waterpark lease termination, and Nasdaq delisting - Going Concern: Recurring losses and significant upcoming debt payments raise substantial doubt about the company's ability to continue as a going concern368369 - Waterpark Lease Termination: The termination of the waterpark ground lease on October 26, 2024, due to default is expected to have a material adverse effect on liquidity and has resulted in defaults on other loan agreements totaling approximately $81 million373378 - Material Weakness: A material weakness in internal control over financial reporting has been identified, which could lead to inaccurate financial reporting and adversely affect investor confidence364365 - Acquisition Proposal Uncertainty: There is no assurance that the non-binding acquisition proposal from IRG will result in a definitive transaction, and the uncertainty could adversely impact the stock price371372 - Nasdaq Delisting Risk: The company is at risk of being delisted from Nasdaq if its minimum bid price remains below $1.00, which would negatively affect stock liquidity and market price381 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None383 Defaults Upon Senior Securities No defaults on senior securities were reported for the period, though subsequent events triggered other loan defaults - None reported for the period ended September 30, 2024384
HALL OF FAME RST.ENTM. EQ.WARRT(HOFVW) - 2024 Q3 - Quarterly Report