Revenue Generation and Business Model - The company generated approximately $667,000 in revenue from 27 major tournaments, with seven sponsored by Fortune 500 companies[42]. - For 2025, tournaments and sponsorships are expected to constitute approximately 99% of total revenue, while subscriptions and merchandise will account for about 1%[43]. - The company plans to launch a paid subscription service in Q4 2025, offering four membership tiers with monthly fees ranging from $2.99 to $7.99[56]. - The revenue model primarily generates income from B2B tournaments and tertiary fees, with a focus on implementing a direct-to-consumer model for future growth[136]. - The company estimates that its monthly paid members can generate between $25 and $95 in annual revenue per member, excluding one-off purchases[77]. - Partnerships accounted for 99% of Brag House's revenue as of March 31, 2025[71]. - As of March 31, 2025, partnerships with major clients like McDonald's and Coca-Cola accounted for 99% of the company's revenue, highlighting the critical nature of these relationships[182]. - The company generates a growing portion of its revenue from advertising and sponsorship, which is expected to expand as online viewership increases[185]. User Engagement and Growth - Brag House has achieved nearly 1,400,000 video views of its content across platforms, representing a 148% year-over-year increase from 2020 to 2024[28]. - Brag House anticipates a user growth rate increase in 2025, aiming to convert viewers into subscribers and consumers to boost revenue from subscriptions and in-app purchases[47]. - The company had nearly 2,000 Bragger members as of March 31, 2025, indicating a growing user base[56]. - Women represent 45% of all U.S. gamers, highlighting a key demographic that Brag House aims to engage through its platform[39]. - Approximately 30% of the company's member users are women, who account for nearly 40% of its reach and views, indicating a higher diversity compared to other esports platforms[99]. - The company aims to expand its community of casual gamers, which represents more than 99% of all gamers globally, presenting a significant growth opportunity[82]. - The company must maintain a vibrant community culture to retain and expand its gamer community, which is critical for its success[140]. Strategic Partnerships and Collaborations - Brag House's strategic partnership with Learfield will provide access to media rights across nearly 200 universities, enhancing physical and digital activations[30]. - The company has secured a strategic partnership with Learfield Communications, focusing on sales representation for sponsorship opportunities, with revenue sharing based on services and assets[68][69]. - The company has finalized three major partnership agreements, including one with Learfield, a billion-dollar media company, to leverage its college network for sponsorship revenue and data insights[124]. Technology and Data Insights - The company plans to launch a proprietary machine learning-based SaaS platform for anonymized predictive data insights into Gen Z behavior, with a beta version expected in Q1 2026[31]. - The company has developed proprietary predictive data models to provide brands with in-depth insights into Gen Z consumer behavior, enhancing B2B partnerships[83]. - The future revenue model will offer brands access to insights derived from anonymized user data, expected to be implemented in Q1 2026[52]. Financial Performance and Risks - The company incurred a net loss of $3,288,519 for the year ended December 31, 2024, compared to a net loss of $4,672,348 for the year ended December 31, 2023, with an accumulated deficit of $14,647,702 as of December 31, 2024[119]. - The company has experienced significant growth since launching its gaming platform, but its historical growth rate may not predict future performance due to a limited operating history[132]. - The company faces intense competition in the esports industry, with established leagues and emerging startups potentially impacting revenue and profitability[141]. - Economic downturns and market conditions could adversely affect the company's financial performance, particularly in the entertainment and esports industries[125]. - The company has incurred operating losses to date, raising doubts about its ability to continue as a going concern without sufficient funding[119]. - The company may be required to pay up to $5 million to counterparties under certain agreements, which could adversely affect its liquidity and financial condition[222][223]. Compliance and Regulatory Challenges - The company faces regulatory risks related to user privacy, data collection, and online commerce, which could impact its operations and financial performance[187]. - Non-compliance with the GDPR could result in monetary penalties of up to €20 million or 4% of annual worldwide revenue, whichever is higher[192]. - The U.K. implemented GDPR-complementary legislation with penalties for noncompliance of up to £17.5 million or 4% of worldwide revenues, creating uncertainty in data transfer regulations[193]. - Ongoing compliance with evolving data protection laws requires significant time and resources, impacting operational efficiency[194]. Operational and Cybersecurity Risks - The company faces cyber risks that could disrupt operations and degrade user experience, potentially leading to significant legal and financial exposure[162]. - Any failure in the company's IT and data security infrastructure could adversely impact business operations and reputation[161]. - Data security breaches could result in legal liabilities and harm the company's profitability and reputation[160]. - The company has a material weakness related to the lack of cybersecurity policies and procedures, which could negatively impact operations[218]. Market Trends and Industry Insights - The global esports market generated over $2 billion in annual revenue in 2024, with the U.S. contributing nearly 45% ($871 million)[36]. - Esports viewership is projected to exceed 640 million spectators worldwide in 2025, with U.S. viewership estimated at 81 million in 2024, reflecting a 9% growth from 2021[37]. - The esports industry is expected to grow at a compound annual growth rate of 20.7%, potentially reaching $9.29 billion by 2032[36]. - The company operates through eight primary marketing channels, including a Collegiate Leads Program aimed at increasing brand awareness on college campuses across the U.S.[1]. Internal Controls and Governance - The company has identified material weaknesses in its internal control over financial reporting as of December 31, 2024, and 2023, which could lead to material misstatements in financial statements[218]. - The company expects to complete its remediation plan for identified weaknesses within the next 12 months, but cannot assure successful remediation[220]. - The company has not tested the effectiveness of its internal control over financial reporting, raising concerns about future compliance[220].
Brag House Holdings Inc(TBH) - 2024 Q4 - Annual Report