Allied Gaming & Entertainment (AGAE) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis for the interim period ITEM 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, changes in stockholders' equity, cash flows, and detailed notes on accounting policies Condensed Consolidated Balance Sheets This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Assets | | | | Total Current Assets | $87,528,937 | $94,745,632 | | Total Assets | $108,576,901 | $112,687,259 | | Liabilities & Equity | | | | Total Current Liabilities | $42,653,904 | $30,478,161 | | Total Liabilities | $46,502,777 | $35,157,377 | | Total Stockholders' Equity | $62,074,124 | $77,529,882 | Unaudited Condensed Consolidated Statements of Operations This section details the Company's revenues, costs, expenses, and net loss for the reported periods, reflecting operational performance Unaudited Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $1,919,483 | $2,639,868 | $4,194,618 | $5,018,929 | | Total Costs and Expenses | $8,011,461 | $7,930,120 | $15,538,219 | $12,984,679 | | Loss From Operations | $(6,091,978) | $(5,290,252) | $(11,343,601) | $(7,965,750) | | Total Other (Expense) Income | $1,258,011 | $1,407,301 | $1,609,747 | $2,253,348 | | Net Loss | $(4,833,967) | $(3,882,951) | $(9,733,854) | $(5,712,402) | | Net Loss Attributable to Common Stockholders | $(4,811,134) | $(3,803,258) | $(9,647,618) | $(5,502,368) | | Net Loss per Common Share (Basic and Diluted) | $(0.12) | $(0.09) | $(0.23) | $(0.13) | Unaudited Condensed Consolidated Statements of Comprehensive Loss This section presents the Company's net loss and other comprehensive income/loss items, such as foreign currency adjustments, for the periods Unaudited Condensed Consolidated Statements of Comprehensive Loss | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(4,833,967) | $(3,882,951) | $(9,733,854) | $(5,712,402) | | Foreign currency translation adjustments | $180,533 | $(106,641) | $250,914 | $(440,970) | | Total comprehensive loss | $(4,653,434) | $(3,989,592) | $(9,482,940) | $(6,153,372) | | Comprehensive Loss Attributable to Common Stockholders | $(4,694,217) | $(3,845,916) | $(9,488,572) | $(5,678,711) | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity This section outlines changes in the Company's stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric | Balance - January 1, 2025 | Balance - June 30, 2025 | | :----------------------------------- | :------------------------ | :---------------------- | | Common Stock Shares | 46,385,798 | 40,299,180 | | Common Stock Amount | $4,639 | $4,030 | | Additional Paid-in Capital | $205,948,565 | $199,886,928 | | Accumulated Deficit | $(130,428,314) | $(139,986,504) | | Total Allied Gaming & Entertainment Inc. Stockholders' Equity | $73,010,817 | $57,549,427 | | Total Stockholders' Equity | $77,529,882 | $62,074,124 | - Cancellation of common stock previously issued pursuant to a Securities Purchase Agreement resulted in a decrease of 6,000,000 shares and $6,352,228 in total stockholders' equity for the six months ended June 30, 2025[17] Unaudited Condensed Consolidated Statements of Cash Flows This section summarizes the Company's cash inflows and outflows from operating, investing, and financing activities for the reported periods Unaudited Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Used In Operating Activities | $(3,074,127) | $(4,539,188) | | Net Cash (Used In) Provided By Investing Activities | $(34,086,901) | $1,686,586 | | Net Cash Provided By Financing Activities | $955,692 | $19,846,197 | | Net (Decrease) Increase In Cash, Cash Equivalents, And Restricted Cash | $(36,166,827) | $16,983,052 | | Cash, cash equivalents, and restricted cash - End of Period | $23,075,975 | $38,303,635 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements Note 1 – Business Organization and Nature of Operations This note describes Allied Gaming & Entertainment Inc.'s corporate structure and the nature of its esports, gaming, and entertainment operations - Allied Gaming & Entertainment Inc. (AGAE) operates as a public esports and entertainment company through various subsidiaries, including Allied Esports Media Inc. (AEM), Allied Esports International, Inc. (AEII), Esports Arena Las Vegas, LLC (ESALV), Allied Mobile Entertainment Inc. (AME), Allied Mobile Entertainment (Hong Kong) Limited (AME-HK), Allied Experiential Entertainment Inc. (AEE), AGAE Investment Limited, Beijing Lianhuan Technology Co., Ltd (BLT), Allied Commercial Development (Hainan) Co., Ltd (ACD), and Allied Esports GmbH (AEG)[27] - Key operations include: AEII producing esports and gaming content, ESALV operating HyperX Arena Las Vegas, AME-HK owning a 40% interest in Beijing Lianzhong Zhihe Technology Co. (ZTech) for mobile casual games in China, AEE owning a 51% interest in Skyline Music Entertainment Limited for event organization, and ACD developing esports venues in Hainan[27] Note 2 – Significant Accounting Policies This note outlines the significant accounting policies used in preparing the condensed consolidated financial statements, including recent ASU adoptions - The Company's unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include all necessary adjustments for fair presentation[29] - The Company adopted ASU 2023-08 on January 1, 2025, requiring digital assets to be measured at fair value with changes recognized in net income, resulting in a cumulative-effect adjustment of $89,428 to retained earnings[66][88] - The Tax Reform Act of 2025, signed on July 4, 2025, includes significant changes to U.S. corporate income tax law, which the Company is currently evaluating for its impact on financial statements[67][68] Note 3 – Short-Term Investments This note details the Company's short-term investment portfolio, including certificates of deposit, fixed rate deposits, and various linked notes Short-Term Investments | Investment Type | Balance as of January 1, 2025 | Balance as of June 30, 2025 | | :-------------------------------- | :---------------------------- | :-------------------------- | | Certificates of Deposit | $3,800,000 | $398,091 | | Fixed Rate Deposits | $5,000,000 | $15,433,500 | | US Treasury Note | - | - | | Equity Linked Notes | - | - | | ETF Linked Notes | - | - | | FX Linked Notes | - | $6,049,410 | | Bond Linked Notes | - | $12,013,920 | | Total Short-term Investments | $8,800,000 | $33,894,921 | - Interest income from certificates of deposit and fixed rate deposits decreased significantly from $1,365,314 in H1 2024 to $203,042 in H1 2025[69] - New investments in H1 2025 include equity linked notes (9.0% p.a.), ETF linked notes (9% p.a.), FX linked notes (6% p.a.), and bond linked notes (6.28%-8.56% p.a.), contributing to interest income[71][73][74][75] Note 4 – Marketable Securities This note provides a summary of changes in marketable securities, including sales proceeds, gains/losses, and foreign currency adjustments Marketable Securities | Metric | Amount | | :----------------------------------- | :------- | | Balance as of January 1, 2025 | $3,483,211 | | Proceeds from sale of marketable securities | $(1,245,689) | | Net realized / unrealized gain on marketable securities | $512,593 | | Foreign currency transaction adjustment | $256,050 | | Balance as of June 30, 2025 | $3,006,165 | Note 5 – Insurance Recovery Receivable This note discloses the Company's insurance recovery receivable for attorney fees and defense costs, received shortly after the reporting period - The Company recorded a $1.3 million insurance recovery receivable as of June 30, 2025, for attorney fees and defense costs, which was received on July 10, 2025[77] Note 6 – Loans Receivable This note details the Company's loans receivable, including new issuances, repayments, and collateral arrangements, with foreign currency impacts Loans Receivable | Metric | Amount | | :----------------------------------- | :----------- | | Balance as of January 1, 2025 | $17,629,915 | | Loans issued | $10,552,822 | | Foreign currency transaction adjustment | $1,130,852 | | Loans repaid | $(4,500,000) | | Balance as of June 30, 2025 | $24,813,589 | - Several loans were issued and amended in H1 2025, including Loan 1 (JPY 1.324 billion, 5% p.a., extended to June 30, 2025), Loan 2 (JPY 736.9 million, 7.5% p.a., extended to December 31, 2025), and new Loan 5 ($9.5 million USD, maturing September 30, 2025)[78][79][82] - Collateral for Loans 1, 2, 4, and 5 was increased on April 15, 2025, with the Additional Guarantor pledging an equity interest whose fair value exceeded the principal balance of outstanding loans[83] Note 7 – Land Use Rights, Net This note describes the Company's acquisition of 40-year land use rights in China and the associated amortization - The Company acquired 40-year land use rights for approximately 3.2 acres in Lingshui Li Autonomous County, PRC, for a total of $3.7 million (RMB 27.5 million), with the final payment made on April 22, 2025[85] Land Use Rights, Net | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Land use rights | $3,881,291 | - | | Foreign currency transaction adjustment | $70,556 | - | | Less: accumulated amortization | $(16,272) | - | | Total land use rights, net | $3,935,575 | - | Note 8 – Digital Assets This note explains the Company's adoption of ASU 2023-08 for digital assets, requiring fair value measurement and income recognition of changes - Effective January 1, 2025, the Company adopted ASU 2023-08, requiring digital assets to be measured at fair value with changes recognized in the condensed consolidated statement of operations[88] Digital Assets | Metric | Amount | | :----------------------------------- | :------- | | Balance, January 1, 2025 | $49,300 | | Cumulative effect adjustment upon adoption of ASU 2023-08 | $89,428 | | Change in fair value of digital assets | $(35,221) | | Balance, June 30, 2025 | $103,507 | Note 9 – Investment In Unconsolidated Affiliate This note details the Company's equity method investment in an unconsolidated affiliate for an animated film production, including capital contributions - On January 27, 2025, the Company made a $2.4 million capital contribution to Flywheel AB3 Investor LLC, acquiring a 33% ownership interest for an animated film production, with an additional $600,000 capital contribution commitment[90][117] - The investment is accounted for under the equity method, and the Company has a right of first negotiation for promotional events related to the film[91][93] Note 10 – Accrued Expenses and Other Current Liabilities This note provides a breakdown of accrued expenses and other current liabilities, including compensation, event costs, and legal fees Accrued Expenses and Other Current Liabilities | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Compensation expense | $234,254 | $269,064 | | Event costs | $26,838 | $34,722 | | Legal and professional fees | $1,073,604 | $641,336 | | Other accrued expenses | $189,592 | - | | Other current liabilities | - | $206,285 | | Accrued expenses and other current liabilities | $1,524,288 | $1,151,407 | Note 11 – Loans Payable This note details the Company's credit facility and loans payable, including borrowings, repayments, and interest rates, with foreign currency impacts - AME-HK has a $35 million credit facility with Morgan Stanley Bank Asia Limited, used for various term loans and borrowings[95] Loans Payable | Metric | Balance as of January 1, 2025 | Balance as of June 30, 2025 | | :----------------------------------- | :---------------------------- | :-------------------------- | | Additional borrowings under credit facility | - | $30,248,163 | | Repayment of borrowings | - | $(22,692,471) | | Foreign currency transaction adjustment | - | $2,664,720 | | Balance as of June 30, 2025 | $25,756,757 | $35,977,169 | - The weighted average interest rate on outstanding loans payable as of June 30, 2025, is 1.00%, with interest expense increasing from $18,222 in H1 2024 to $108,132 in H1 2025[102] Note 12 – Commitments and Contingencies This note outlines the Company's legal commitments and contingencies, including ongoing litigation and operating lease obligations - The Company is involved in ongoing litigation with Knighted Pastures, LLC, a dissident stockholder, regarding alleged breaches of fiduciary duty and a proxy contest, leading to significant legal expenses[104][107][109] - A lawsuit filed by Timothy G. Schuebel alleges the Shareholder Rights Plan is contrary to Delaware law; the Board approved an amendment to moot the claims, and the matter is pending[113] Operating Lease Commitments | Operating Lease Metric | 2025 | 2026 | 2027 | 2028 | Total Lease Payments | | :----------------------------------- | :--- | :--- | :--- | :--- | :------------------- | | Amount | $937,666 | $1,850,672 | $1,736,369 | $712,500 | $5,237,207 | | Weighted Average Remaining Lease Term (Years) | 2.86 | | Weighted Average Discount Rate | 5.04% | Note 13 – Stockholders' Equity This note details changes in stockholders' equity, including common stock and warrant activity related to a terminated securities purchase agreement - On April 25, 2025, the Company terminated a Securities Purchase Agreement with Blue Planet New Energy Technology Limited, refunding $6.6 million and receiving back 6,000,000 common shares and corresponding warrants[119][121] Warrant Activity | Warrant Activity | Number of Warrants | | :----------------------------------- | :----------------- | | Outstanding, January 1, 2025 | 7,454,546 | | Reversal upon termination of securities purchase agreement | (6,000,000) | | Forfeited | (1,454,546) | | Outstanding, June 30, 2025 | 0 | Note 14 – Segment Reporting This note provides financial information by reportable segment: Esports, Casual Mobile Gaming, and Live Concert Promotion, along with geographic assets - The Company operates three reportable business segments: Esports (video game events and tournaments), Casual mobile gaming (through ZTech), and Live concert promotion and events organizing (through Skyline)[124] Segment Revenue (3 Months Ended June 30) | Segment Revenue (3 Months Ended June 30) | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | E-sports | $1,161,075 | $917,414 | | Casual Mobile Gaming | $758,408 | $1,722,454 | | Concerts | - | - | | Total Revenue | $1,919,483 | $2,639,868 | Segment Revenue (6 Months Ended June 30) | Segment Revenue (6 Months Ended June 30) | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | E-sports | $2,817,887 | $2,172,671 | | Casual Mobile Gaming | $1,376,731 | $2,846,258 | | Concerts | - | - | | Total Revenue | $4,194,618 | $5,018,929 | Total Assets by Geographic Location | Total Assets by Geographic Location | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | United States | $12,650,394 | $25,191,733 | | China | $95,926,507 | $87,495,526 | | Total consolidated assets | $108,576,901 | $112,687,259 | ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section provides management's analysis of the Company's financial condition and results of operations, including business overview, corporate developments, revenue, expenses, liquidity, and critical accounting estimates The Company This section describes Allied Gaming and Entertainment Inc. as a global experiential entertainment company focused on esports, gaming, and live events - Allied Gaming and Entertainment Inc. is a global experiential entertainment company focused on providing unique experiences to gamers through esports, gaming, and entertainment content and services[132] - The Company operates through three subsidiaries: Allied Esports International (AEI) for competitive esports properties and content, Allied Mobile Entertainment (AME) for mobile games in China, and Allied Experiential Entertainment (AEE) for live entertainment events and strategic investments in intellectual properties like 'The Angry Birds Movie 3'[132][133][134][135] - Growth strategy includes adapting to technological advancements, gamer trends, new games, and expanding into new vertical markets such as live influencer events, top artist concerts, and interactive content monetization, requiring significant capital expenditures[137][138] Corporate Developments This section highlights key corporate events, including the termination of a securities purchase agreement and Nasdaq non-compliance notices - On April 25, 2025, the Company terminated a Securities Purchase Agreement with Blue Planet, refunding $6.6 million and receiving back 6,000,000 common shares and warrants[139] - The Company received a Nasdaq notice on June 18, 2025, for non-compliance with Listing Rule 5620(a) (failure to hold annual meeting) and 5250(c)(1) (Form 10-Q), leading to an appeal hearing on July 31, 2025[140] Recent Developments This section covers recent leadership changes and the potential financial impact of new U.S. federal tax law, the 'One Big Beautiful Bill Act' - Ms. Yinghua Chen resigned as CEO on June 24, 2025, to focus on AEI's content strategy, and Mr. Yangyang (James) Li was appointed as the new CEO, while continuing as President and Chairman of the Board[142] - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law on July 4, 2025, introducing changes to U.S. federal tax law, which the Company is currently assessing for its financial statement impact[143] Results of Operations This section analyzes the Company's financial performance, detailing revenues, costs, and net loss for the reported interim periods Results of Operations for the Three Months Ended June 30, 2025 and 2024 This section compares the Company's financial results for the three months ended June 30, 2025 and 2024, highlighting revenue and expense changes Results of Operations for the Three Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (Favorable/Unfavorable) | | :----------------------------------- | :--------------------------- | :--------------------------- | :----------------------------- | | In-person Revenues | $1,161 | $917 | $244 (Favorable) | | Casual Mobile Gaming Revenue | $758 | $1,723 | $(965) (Unfavorable) | | Total Revenues | $1,919 | $2,640 | $(721) (Unfavorable) | | Loss From Operations | $(6,092) | $(5,290) | $(802) (Unfavorable) | | Net Loss | $(4,834) | $(3,883) | $(951) (Unfavorable) | - In-person experience revenues increased by 27% due to higher revenue from arena events, while casual mobile gaming revenue decreased due to market contraction and increased competition[146][147] - General and administrative expenses increased by 15% primarily due to a $1.5 million increase in legal and professional fees related to dissident stockholder complaints and a proxy contest, partially offset by a $1.3 million insurance reimbursement[151] - Other (expense) income, net, increased by $70 thousand in expense, primarily due to a loss on the sale of treasury bonds, while a $0.8 million gain on marketable securities was recognized[153][155] Results of Operations for the Six Months Ended June 30, 2025 and 2024 This section compares the Company's financial results for the six months ended June 30, 2025 and 2024, detailing revenue, expense, and net loss trends Results of Operations for the Six Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (Favorable/Unfavorable) | | :----------------------------------- | :--------------------------- | :--------------------------- | :----------------------------- | | In-person Revenues | $2,818 | $2,173 | $645 (Favorable) | | Casual Mobile Gaming Revenue | $1,377 | $2,846 | $(1,469) (Unfavorable) | | Total Revenues | $4,195 | $5,019 | $(824) (Unfavorable) | | Loss From Operations | $(11,344) | $(7,966) | $(3,378) (Unfavorable) | | Net Loss | $(9,734) | $(5,712) | $(4,022) (Unfavorable) | - In-person experience revenues increased by 30% due to more arena events, while casual mobile gaming revenue decreased by 51.6% due to market contraction and competition[159][160] - General and administrative expenses increased by 42% due to a $3.8 million increase in legal and professional fees related to stockholder complaints and a proxy contest, partially offset by a $1.3 million insurance reimbursement[164] - Foreign currency transaction loss increased significantly to $1.1 million (from a $0.4 million gain in 2024) due to exchange rate changes between JPY and USD affecting loans and investments[170] Liquidity and Capital Resources This section discusses the Company's financial liquidity, capital resources, working capital, and primary sources of funds Liquidity and Capital Resources (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Current Assets | $87,529 | $94,746 | | Current Liabilities | $42,654 | $30,478 | | Working Capital Surplus | $44,875 | $64,268 | - As of June 30, 2025, the Company had $23.1 million in cash and cash equivalents, $33.9 million in short-term investments, and $3.0 million in marketable securities, with a working capital surplus of $44.9 million[174] - Primary liquidity sources include cash from operations, existing cash and short-term investments, and interest income from loan facilities[173] Cash Flows from Operating, Investing and Financing Activities This section analyzes the Company's cash flow changes from operating, investing, and financing activities for the reported periods Cash Flows from Operating, Investing and Financing Activities (in thousands) | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(3,074) | $(4,539) | | Net cash (used in) provided by investing activities | $(34,087) | $1,687 | | Net cash provided by financing activities | $956 | $19,846 | - Net cash used in operating activities decreased by $1.5 million, primarily due to changes in operating assets and liabilities[177] - Net cash used in investing activities was $34.1 million in H1 2025, driven by purchases of short-term investments, loans receivable, land use rights, and an investment in an unconsolidated affiliate, partially offset by maturities of short-term investments and loan repayments[178] - Net cash provided by financing activities significantly decreased from $19.8 million in H1 2024 to $1.0 million in H1 2025, mainly due to repayment of short-term loans and the cancellation of common stock previously issued[180] Off-Balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements that would significantly impact the Company's financial condition - The Company has no material off-balance sheet arrangements that would significantly affect its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources[181] Critical Accounting Estimates This section identifies critical accounting estimates, such as income taxes and asset impairment, requiring significant management judgment and assumptions - Critical accounting estimates include accounting for income taxes, impairment of long-lived assets, and impairment of goodwill, which require significant management judgment and assumptions[183] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk. This section states that there are no applicable quantitative and qualitative disclosures about market risk for the Company - The Company has no applicable quantitative and qualitative disclosures about market risk[184] ITEM 4. Controls and Procedures. This section details the effectiveness of the Company's disclosure controls and procedures, acknowledging inherent limitations in any control system, and confirms no material changes in internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting of information required in Exchange Act reports[185] - The Company acknowledges inherent limitations in control systems, which can only provide reasonable assurance against error or fraud, and that controls can be circumvented[186] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[187] PART II - OTHER INFORMATION This section provides additional information not included in the financial statements, covering legal proceedings, risk factors, and other disclosures ITEM 1. LEGAL PROCEEDINGS. This section outlines the Company's involvement in various legal proceedings, primarily focusing on ongoing litigation with a dissident stockholder, Knighted Pastures, LLC, and a separate complaint regarding the Shareholder Rights Plan, both of which could impact the Company's operations and financial performance - The Company is subject to ongoing litigation with Knighted Pastures, LLC, a major stockholder, involving allegations of fiduciary duty breaches and a proxy contest, which has caused significant legal expenses and diverted management attention[189][191][192] - A lawsuit filed by Timothy G. Schuebel challenges the Company's Shareholder Rights Plan, with the Board having approved an amendment to moot the claims, and the matter is currently pending[193] - The U.S. District Court for the Central District of California issued an order on August 1, 2025, enjoining any vote at the Company's 2024 and 2025 Annual Meeting regarding changes to the composition of Allied's board of directors[192] ITEM 1A. RISK FACTORS. This section highlights key risks, including the Company's non-compliance with Nasdaq listing requirements, which could lead to delisting and adverse effects on stock price and capital raising ability, and the ongoing aggressive proxy contest and related litigation by Knighted Pastures, LLC, which has incurred significant legal expenses and impaired business strategy - The Company is not in compliance with Nasdaq's Listing Rule 5620(a) (failure to hold annual meeting) and 5250(c)(1) (Form 10-Q), risking delisting, which could adversely affect stock price, liquidity, and ability to raise capital[195][196] - Ongoing aggressive proxy contest and related shareholder litigation by Knighted Pastures, LLC, has caused significant legal expenses, disrupted operations, and diverted management attention, potentially leading to reputational harm and adverse impacts on business strategy[197][198][200] - An adverse judgment in the Rule 13D Action against Knighted Pastures could result in the Company losing control of its Board of Directors, seriously impairing business operations, financial conditions, and stock price[201] ITEM 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS. This section states that there were no unregistered sales of equity securities or purchases of equity securities by the issuer and affiliated purchasers during the reporting period - No unregistered sales of equity securities occurred during the reporting period[202] - No purchases of equity securities by the issuer and affiliated purchasers occurred during the reporting period[203] ITEM 3. DEFAULTS UPON SENIOR SECURITIES. This section indicates that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[204] ITEM 4. MINE SAFETY DISCLOSURES. This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[205] ITEM 5. OTHER INFORMATION. This section confirms that no director or officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[206] ITEM 6. EXHIBITS. This section lists the exhibits filed with the Form 10-Q, including certifications, XBRL documents, and an amendment to the Rights Agreement - Exhibits include certifications from the CEO and CFO (31.1*, 31.2*, 32.1**, 32.2**), Inline XBRL documents (101.INS*, 101.SCH*, 101.CAL*, 101.DEF*, 101.LAB*, 101.PRE*, 104*), and an amendment to the Rights Agreement (4.1)[207] SIGNATURES This section contains the required signatures for the Form 10-Q, confirming its submission by authorized officers SIGNATURES This section contains the required signatures for the Form 10-Q, confirming its submission on behalf of Allied Gaming & Entertainment Inc. by its authorized officers - The report is signed by Yangyang Li, President and Chief Executive Officer (Principal Executive Officer), and Roy Anderson, Chief Financial Officer (Principal Financial Officer), on August 14, 2025[210][211]