Hall of Fame Resort & Entertainment pany(HOFV) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Q1 2025 financial statements reveal declining assets, increased deficit, reduced equity, and persistent net losses, raising going concern doubts Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased, liabilities increased, and total equity significantly declined due to a growing accumulated deficit Condensed Consolidated Balance Sheet Highlights (unaudited) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $545,318 | $432,174 | | Total Assets | $364,686,678 | $366,705,811 | | Liabilities & Equity | | | | Notes payable, net | $251,947,817 | $245,747,816 | | Total Liabilities | $307,721,329 | $294,474,352 | | Accumulated Deficit | $(288,896,879) | $(273,561,929) | | Total Equity | $56,965,349 | $72,231,459 | Condensed Consolidated Statements of Operations Q1 2025 saw a 30% revenue decline, widening operating loss, and increased net loss attributable to stockholders, with flat net loss per share Condensed Consolidated Statements of Operations (unaudited) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenues | $2,945,333 | $4,191,315 | | Loss from Operations | $(8,372,328) | $(7,092,231) | | Net Loss | $(15,068,950) | $(14,630,176) | | Net Loss Attributable to HOFRE Stockholders | $(15,334,950) | $(14,887,588) | | Net Loss Per Share (basic and diluted) | $(2.30) | $(2.30) | Condensed Consolidated Statements of Cash Flows Q1 2025 saw improved operating cash flow, reduced investing cash outflow, increased financing cash inflow, resulting in a slight net cash increase Summary of Cash Flows (unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(1,465,710) | $(2,476,875) | | Net Cash Used in Investing Activities | $(102,800) | $(2,967,807) | | Net Cash Provided by Financing Activities | $1,645,632 | $512,766 | | Net Increase (Decrease) in Cash | $77,122 | $(4,931,916) | Notes to the Condensed Consolidated Financial Statements Notes detail accounting policies, going concern warning, debt defaults, related-party transactions, lease termination, Nasdaq delisting, and a subsequent merger agreement - The company has sustained recurring losses, with an accumulated deficit of $288.9 million as of March 31, 2025. It has approximately $117 million of debt coming due through March 31, 2026, and cash flows from operations are insufficient to meet operating costs. These conditions raise substantial doubt about the company's ability to continue as a going concern[25][27] - On October 26, 2024, the company received a notice of termination for its waterpark ground lease due to an event of default. This default triggered cross-defaults on other loan agreements totaling approximately $81 million in principal[26] - On May 7, 2025, the company entered into an Agreement and Plan of Merger with HOFV Holdings, LLC, an affiliate of director Stuart Lichter. Under the agreement, each share of common stock will be converted into the right to receive $0.90 in cash, and the company will become a wholly owned subsidiary of the buyer[228][229] - On April 10, 2025, the company received a deficiency letter from Nasdaq because its common stock bid price had closed below $1.00 per share for 30 consecutive business days. The company has 180 calendar days to regain compliance[220] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 revenue decline, widening operating loss, severe liquidity constraints, and substantial doubt about the company's ability to continue as a going concern Results of Operations Comparison (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Sponsorships, net | $566,263 | $859,731 | (34.1)% | | Event, rents, restaurant, etc. | $1,110,645 | $2,054,877 | (46.0)% | | Total Revenues | $2,945,333 | $4,191,315 | (29.7)% | | Total Operating Expenses | $11,317,661 | $11,283,546 | 0.3% | | Loss from Operations | $(8,372,328) | $(7,092,231) | (18.1)% | | Net Loss | $(15,068,950) | $(14,630,176) | (3.0)% | - The company's cash position is deficient as of May 13, 2025, and certain operational payments are not being made in the ordinary course of business. The company is seeking additional funding, but there are no assurances it can be raised on acceptable terms, if at all[277][279] - On May 7, 2025, the company entered into a merger agreement to be taken private by an affiliate of director Stuart Lichter. The transaction was approved by the Board based on the unanimous recommendation of a special committee of independent directors[262][264] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that this item is not applicable - Not applicable[287] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting - The company identified material weaknesses in internal control over financial reporting related to the review of financial statements and controls over non-routine transactions[289] - Due to these material weaknesses, the Chief Executive Officer and Vice President Accounting / Corporate Controller concluded that disclosure controls and procedures were not effective as of March 31, 2025[290] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no pending litigation that would materially adversely affect its financial condition or results of 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 flows[293] Item 1A. Risk Factors No material changes to risk factors have occurred since the prior annual report filing - No material changes to risk factors have occurred since the filing of the Annual Report on Form 10-K for the year ended December 31, 2024[294] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[295] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[296] Item 5. Other Information The company reported no other information for this item - None[298] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including various agreements and required certifications