HALL OF FAME RST.ENTM. EQ.WARRT(HOFVW) - 2024 Q4 - Annual Report

PART I Business The company is a resort and entertainment entity facing significant financial challenges, including a terminated lease and a take-private proposal - The company operates through three business verticals: destination-based assets (Hall of Fame Village), media (Hall of Fame Village Media), and gaming (Gold Summit Gaming)[15] - The Hall of Fame Village development is structured in three phases; Phase I is operational, Phase II assets are mostly operational, and Phase III is in planning[16][18][38] - On January 11, 2024, the company sold an 80% interest in its ForeverLawn Sports Complex business to Sandlot Facilities, LLC[22][31][46] - The waterpark ground lease was terminated on October 26, 2024, due to a non-payment default, triggering cross-defaults on approximately $81 million of other loan agreements[23][69][73] - On September 27, 2024, the company received a preliminary, non-binding proposal from an affiliate of director Stuart Lichter to take the company private[78] - On March 12, 2025, Michael Crawford announced his resignation as President, CEO, and Chairman to pursue another opportunity[86][87][88] - The company received a $9.8 million grant from the State of Ohio in June 2024 to support the Hall of Fame Village development[67] Risk Factors The company faces substantial risks threatening its viability, including recurring losses, significant debt, and a deficient cash position - The company's recurring losses, significant debt, and deficient cash position have raised substantial doubt about its ability to continue as a going concern[101][102] - As of December 31, 2024, the company had total consolidated debt outstanding of approximately $251.2 million[98] - The termination of the waterpark ground lease has put key assets at risk, including the Tom Benson Hall of Fame Stadium, which could be foreclosed upon[104][107][112] - The company has experienced significant management turnover, including the resignations of its CFO, General Counsel, and President & CEO[114][115][116] - The company is at risk of being delisted from Nasdaq for failing to hold an annual meeting of stockholders within the required timeframe[144][145][146] - Management has identified material weaknesses in its internal control over financial reporting, which could lead to inaccurate financial reporting[151][152] Unresolved Staff Comments The company reports that it has no unresolved staff comments from the SEC - Not applicable[170] Cybersecurity The company has established processes for managing cybersecurity threats, with board oversight, and has experienced no material incidents to date - The company has integrated processes for assessing, identifying, and managing material risks from cybersecurity threats into its overall risk management system[171] - The Board of Directors has delegated administration of its cybersecurity risk oversight function to the Audit Committee[177] - The company has not encountered cybersecurity challenges that have materially impaired its operations or financial standing[176] Properties The company's property portfolio was significantly altered in 2024 by the sale of its sports complex interest and a waterpark lease termination - The company owns real property in Canton, Ohio, but certain key parcels are subject to long-term ground leases[182] - On January 11, 2024, the company sold 80% of its interest in the ForeverLawn Sports Complex business[183] - On October 26, 2024, the company surrendered the waterpark premises following a notice of termination on its ground lease[184] Legal Proceedings Information regarding legal proceedings is incorporated by reference from the notes to the Consolidated Financial Statements - The report refers to Note 8, "Contingencies," for information on legal proceedings[185] Mine Safety Disclosures This item is not applicable to the company - Not applicable[186] PART II 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", and the company has never paid cash dividends and does not intend to - The company's Common Stock is traded on The NASDAQ Capital Market under the symbol "HOFV"[187] - As of March 21, 2025, there were 90 holders of record of the Common Stock[188] - The company has never paid cash dividends and does not intend to in the foreseeable future[189] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses declining revenue, a reduced net loss, and a critical liquidity position that threatens the company's viability Results of Operations Fiscal year 2024 saw lower revenues but a smaller net loss due to reduced operating expenses and a government grant Consolidated Results of Operations (Years Ended December 31) | | 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) | | Total other expense | ($26,196,174) | ($19,305,663) | | 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) | - Total revenues decreased by $2.9 million (12.1%) year-over-year, mainly from lower event, restaurant, and hotel revenues[203][205][206] - Total operating expenses decreased by $22.7 million (30.9%) year-over-year, largely due to reduced operating costs and a non-recurring impairment charge[203][207][209] - Interest expense increased by $8.5 million (45.4%) due to higher debt levels and interest rates[211] - The company recognized a $9.8 million government grant from the State of Ohio in 2024, which was not present in 2023[215] - A loss of $5.2 million was recognized in 2024 due to the termination of the waterpark ground lease financing liability[221] Liquidity and Capital Resources The company's liquidity is critical, with minimal cash, significant near-term debt, and substantial doubt about its going concern status - The company's financial condition raises substantial doubt about its ability to continue as a going concern[225] - As of December 31, 2024, the company had approximately $0.4 million of unrestricted cash and $4.0 million of restricted cash[223] - The company has $109.5 million in debt principal payments coming due through December 31, 2025[223] Summary of Cash Flows (Years Ended December 31) | | 2024 | 2023 | | :--- | :--- | :--- | | Cash used in Operating Activities | ($10,914,970) | ($27,000,438) | | Cash used in Investing Activities | ($7,767,670) | ($27,826,165) | | Cash provided by Financing Activities | $11,314,108 | $33,126,304 | | Net decrease in cash and restricted cash | ($7,368,532) | ($21,700,299) | Quantitative and Qualitative Disclosure About Market Risk The company states that it 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] Financial Statements and Supplementary Data This section indicates that the required financial statements are included in Item 15 of the report, beginning on page F-1 - The financial statements required by this Item are included in Item 15 of this report and are presented beginning on page F-1[238] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[239] Controls and Procedures Management concluded that disclosure controls were not effective as of year-end due to material weaknesses in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024[240] - Material weaknesses were identified related to the precise and timely review of financial information and ineffective controls over non-routine transactions[245] - Management has designed and implemented additional controls and will continue to test their effectiveness as part of its remediation plan[246][250] Other Information The company reports no other information for this item - None[248] PART III Directors, Executive Officers and Corporate Governance This section provides biographical information for directors and officers and outlines the board's structure and governance policies - The report lists the eight members of the Board of Directors and four executive officers as of March 2025, providing detailed biographies for each[254][265] - The Board is divided into three classes (A, B, and C) with staggered three-year terms[277] - The company postponed its 2024 Annual Meeting of Stockholders to review a non-binding proposal to take the company private[279] - The Board has determined that six of its directors are independent in accordance with Nasdaq listing rules[280] Executive Compensation This section details NEO compensation, the CEO's resignation agreement, and director pay, noting unpaid fees for 2024 Summary Compensation Table for Named Executive Officers (2024) | Name | Position | Salary ($) | Bonus ($) | All Other Comp. ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Michael Crawford | President, CEO & Chairman | 976,153 | 720,000 | 94,159 | 1,790,312 | | Tara Charnes | General Counsel & Secretary | 251,790 | 160,000 | 10,966 | 422,756 | | Anne Graffice | EVP, Global Marketing & Public Affairs | 299,230 | 50,000 | 13,266 | 362,496 | | Lisa Gould | SVP, HR & IT | 190,000 | 65,600 | 13,383 | 268,983 | - CEO Michael Crawford resigned effective March 12, 2025, entering into a Retention and Consulting Agreement with a $300,000 retention bonus[317][318] - Independent director compensation for 2024 includes a $40,000 annual retainer, committee chair retainers, meeting fees, and a $75,000 RSU award[338] - As of March 26, 2025, independent directors had not received their cash compensation earned for the third and fourth quarters of 2024[340] Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters Ownership is highly concentrated, with director Stuart Lichter and affiliated entities beneficially owning a controlling stake of 72.3% Beneficial Ownership as of March 21, 2025 | Name 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% | - Beneficial ownership is highly concentrated, with director Stuart Lichter and his affiliated entities holding a controlling interest of 72.3%[349][353] Certain Relationships and Related Transactions and Director Independence The company has extensive related-party transactions, primarily involving financing from entities affiliated with director Stuart Lichter - The company has a Director Nominating Agreement with HOF Village, LLC (an IRG affiliate) and PFHOF, granting them rights to designate board members[365][366] - An Amended and Restated Global License Agreement with PFHOF governs the use of its marks, waiving the $600,000 annual license fee for 2024[717][718] - Entities affiliated with director Stuart Lichter, such as CH Capital Lending, LLC (CHCL) and Industrial Realty Group, LLC (IRG), are the company's primary lenders[376][379][391][396] - Stuart Lichter has personally guaranteed several of the company's financial obligations[414][419][424] - In late 2024 and early 2025, CHCL provided additional financing through a note that was amended multiple times to increase the facility up to $6.5 million[429][433][434] Principal Accountant Fees and Services Total fees billed by the principal accountant, Grant Thornton LLP, were $507,703 for fiscal year 2024, all pre-approved by the Audit Committee Accountant Fees (Fiscal Years) | 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, and all services were approved accordingly[440][442] PART IV Exhibits and Financial Statement Schedules This section lists all exhibits filed with the Form 10-K and indicates the location of the consolidated financial statements - The consolidated financial statements of the Company for the fiscal years covered by this Annual Report are located beginning on page F-1[445] - A detailed list of exhibits is provided, including foundational corporate documents, material contracts, and numerous loan and security agreements[446][448][449] Form 10–K Summary This item is not applicable to the company - Not applicable[464] Financial Statements Report of Independent Registered Public Accounting Firm The auditor issued an unqualified opinion but included a going concern paragraph due to recurring losses and significant debt - The auditor, Grant Thornton LLP, issued an unqualified opinion on the financial statements[473][479] - The audit report contains a "Going Concern" paragraph, highlighting substantial doubt about the Company's ability to continue operations[474] Consolidated Financial Statements The financial statements show a deteriorating financial position with decreased assets, a significant net loss, and a sharp drop in cash Consolidated Balance Sheets (as of December 31) | | 2024 | 2023 | | :--- | :--- | :--- | | Total assets | $366,705,811 | $441,896,633 | | Total liabilities | $294,474,352 | $315,159,219 | | Total equity | $72,231,459 | $126,737,414 | | Notes payable, net | $245,747,816 | $219,532,941 | Consolidated Statements of Operations (for the years ended December 31) | | 2024 | 2023 | | :--- | :--- | :--- | | Total revenues | $21,205,933 | $24,129,673 | | Loss from operations | ($29,666,461) | ($49,448,141) | | Net loss | ($55,862,635) | ($68,753,804) | Consolidated Statements of Cash Flows (for the years ended December 31) | | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($10,914,970) | ($27,000,438) | | Net cash used in investing activities | ($7,767,670) | ($27,826,165) | | Net cash provided by financing activities | $11,314,108 | $33,126,304 | | Cash and restricted cash, end of year | $4,447,551 | $11,816,083 | Notes to Consolidated Financial Statements The notes detail critical issues including going concern, a complex debt structure, and significant related-party transactions - Going Concern (Note 1): The company's recurring losses and $109.5 million of debt due through Dec 31, 2025, raise substantial doubt about its ability to continue as a going concern[501][503] - Notes Payable (Note 4): As of Dec 31, 2024, the company had $245.7 million in net notes payable, with significant amounts from related parties[596] - Financing Liability (Note 12): The termination of the waterpark ground lease resulted in a loss of $5.2 million and triggered defaults on approximately $81 million of other debt[759][765][766] - Disposition (Note 13): On January 11, 2024, the company sold an 80% interest in its ForeverLawn Sports Complex for a net purchase price of $9.8 million[771][772] - Subsequent Events (Note 16): Events after year-end include receiving a Nasdaq deficiency notice, increasing a credit facility with a related party, and the CEO's resignation[782][785][792]