Hall of Fame Resort & Entertainment pany(HOFV) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity changes, and cash flows, with detailed notes on organization, policies, debt, equity, and commitments Condensed Consolidated Balance Sheets Total assets and equity slightly decreased, while total liabilities increased, reflecting reduced cash and restricted cash, higher project development costs, and increased notes payable | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Total assets | $439,570,798 | $441,896,633 | | Total liabilities | $325,967,091 | $315,159,219 | | Total equity | $113,603,707 | $126,737,414 | | Cash | $2,713,210 | $3,243,353 | | Restricted cash | $4,170,957 | $8,572,730 | | Project development costs | $69,932,439 | $59,366,200 | | Notes payable, net | $221,653,857 | $219,532,941 | Condensed Consolidated Statements of Operations Net loss improved to $14.6 million in Q1 2024 from $19.4 million in Q1 2023, driven by increased revenues and decreased operating expenses, despite higher interest expense | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenues | $4,191,315 | $3,120,433 | | Total operating expenses | $11,283,546 | $17,686,279 | | Loss from operations | $(7,092,231) | $(14,565,846) | | Interest expense, net | $(6,521,534) | $(3,632,637) | | Net loss | $(14,630,176) | $(19,392,374) | | Net loss attributable to HOFRE stockholders | $(14,887,588) | $(19,609,797) | | Net loss per share, basic and diluted | $(2.30) | $(3.48) | - Total revenues increased by 34.3% ($4,191,315 in 2024 vs. $3,120,433 in 2023) for the three months ended March 31[10] - Net loss improved by 24.6% ($14,630,176 in 2024 vs. $19,392,374 in 2023) for the three months ended March 31[10] Condensed Consolidated Statement of Changes in Stockholders' Equity Total stockholders' equity decreased from $126.7 million to $113.6 million, primarily due to net loss, partially offset by additional paid-in capital from warrants | Metric | As of January 1, 2024 | As of March 31, 2024 | | :------------------------------------ | :-------------------- | :------------------- | | Total Equity | $126,737,414 | $113,603,707 | | Additional Paid-In Capital | $344,335,489 | $346,097,951 | | Accumulated Deficit | $(216,643,882) | $(231,531,470) | | Net Loss | $(14,621,588) | $(14,621,588) | - Total equity decreased by approximately $13.1 million from January 1, 2024, to March 31, 2024[12] Condensed Consolidated Statements of Cash Flows Net cash and restricted cash decreased by $4.9 million, with significantly less cash used in operating and investing activities, while financing activities provided less cash | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(2,476,875) | $(11,542,932) | | Net cash used in investing activities | $(2,967,807) | $(24,679,007) | | Net cash provided by financing activities | $512,766 | $17,406,477 | | Net decrease in cash and restricted cash | $(4,931,916) | $(18,815,462) | | Cash and restricted cash, end of period | $6,884,167 | $14,700,920 | - Net cash used in operating activities decreased by $9.1 million (from $11.5 million in 2023 to $2.5 million in 2024)[14][301] - Net cash used in investing activities decreased by $21.7 million (from $24.7 million in 2023 to $3.0 million in 2024), primarily due to proceeds from asset sales[14][303] Notes to the Condensed Consolidated Financial Statements These notes provide detailed disclosures on financial position, operations, and cash flows, covering accounting policies, debt, equity, commitments, related-party transactions, and subsequent events Note 1: Organization, Nature of Business, and Liquidity The company, a resort and entertainment entity, faces significant liquidity challenges, recurring losses, and substantial debt maturities, raising going concern doubts without additional financing - The Company's accumulated deficit was $231.5 million as of March 31, 2024[27] | Metric | As of March 31, 2024 | | :-------------------- | :------------------- | | Unrestricted cash | $2.7 million | | Restricted cash | $4.2 million | | Debt due through May 14, 2025 | $90.6 million | - The Company used $2.5 million cash for operating activities during the three months ended March 31, 2024[27] - Management believes these conditions raise substantial doubt about the Company's ability to continue as a going concern[28] Note 2: Summary of Significant Accounting Policies This note outlines key accounting policies for revenue recognition, fair value measurement, and net loss per share, detailing warrant accounting, revenue streams, estimates, and financial instrument hierarchy - The Company accounts for warrants not indexed to its own stock as liabilities at fair value, subject to remeasurement each balance sheet date[41] - Restricted cash balances were $4,170,957 as of March 31, 2024, and $8,572,730 as of December 31, 2023, held for capital improvements and debt service[44] - Revenue is recognized when a customer obtains control of promised goods or services, following a five-step model, with specific recognition criteria for sponsorships, events, rentals, hotel, restaurant, media content, and gaming license revenues[60][61][63][64] Fair Value of Warrant Liabilities | Warrant Type | Level | March 31, 2024 | December 31, 2023 | | :----------------------------- | :---- | :------------- | :---------------- | | Public Series A Warrants | 1 | $159,000 | $204,000 | | Private Series A Warrants | 3 | - | - | | Series B Warrants | 3 | $17,000 | $21,000 | | Total Warrant Liabilities | | $176,000 | $225,000 | - The change in fair value of warrant liability resulted in a $49,000 gain for the three months ended March 31, 2024, compared to a $238,000 loss in the prior year[10][89] Note 3: Property and Equipment Net property and equipment decreased to $341.6 million due to the sale of an 80% interest in the Sports Complex, while project development costs and depreciation expense increased | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------------------- | :------------- | :---------------- | | Property and equipment, net, including held for sale | $341,626,103 | $356,704,062 | | Project development costs | $69,932,439 | $59,366,200 | | Property and equipment held for sale | - | $12,325,227 | - Depreciation expense increased by 62.9% to $4,158,750 for the three months ended March 31, 2024, from $2,553,360 in the prior year[101] - The Company sold an 80% interest in its ForeverLawn Sports Complex on January 11, 2024, which was classified as 'held for sale' at December 31, 2023[100] Note 4: Notes Payable, net Net notes payable increased to $221.7 million, detailing loan amendments, IRG-affiliated loan extensions, and significant future principal payments, with $90.6 million due through May 2025 Notes Payable, Net | Metric | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Total Gross | $230,362,032 | $229,185,010 | | Debt discount and deferred financing costs | $(8,708,175) | $(9,652,069) | | Total Net | $221,653,857 | $219,532,941 | - Amortization of note discounts and deferred financing costs increased to $955,322 for the three months ended March 31, 2024, from $855,891 in the prior year[106] - The Company entered into multiple amendments with CH Capital Lending, LLC in Q1 2024, increasing the principal amount of the loan[116][117][118][119] - An omnibus extension on April 7, 2024, modified the maturity date for several IRG Debt Instruments from March 31, 2024, to March 31, 2025, with a 1% extension fee[121][123] Future Minimum Principal Payments on Notes Payable | Year Ending December 31, | Amount | | :------------------------- | :------------- | | 2024 (nine months) | $4,275,952 | | 2025 | $86,355,474 | | 2026 | $4,058,147 | | 2027 | $17,637,809 | | 2028 | $13,730,685 | | Thereafter | $104,303,965 | | Total Gross Principal Payments | $230,362,032 | Note 5: Stockholders' Equity This note details changes in stockholders' equity, including equity awards, at-the-market offerings, RSU and PSU activity, warrant modifications, and Series A Preferred Stock issuance - As of March 31, 2024, 101,006 shares remained available for issuance under the 2020 Omnibus Incentive Plan, and 76,674 shares under the 2023 Inducement Plan[133][135] - The Equity Distribution Agreement was amended on April 8, 2024, increasing agent compensation from 2.0% to 4.0% of gross offering proceeds[140] Restricted Stock Units (RSUs) Activity | Metric | Number of shares | Weighted average grant date fair value | | :-------------------------- | :--------------- | :----------------------------------- | | Non–vested at January 1, 2024 | 126,350 | $17.54 | | Granted | 181,781 | $3.21 | | Vested | (73,089) | $20.94 | | Forfeited | (24,842) | $10.98 | | Non–vested at March 31, 2024 | 210,200 | $4.73 | - For the three months ended March 31, 2024, the Company recorded $181,768 in stock-based compensation expense related to RSUs, a decrease from $600,377 in the prior year[145] - All Performance Stock Units (88,965 shares) were forfeited in January 2024 as performance criteria were not met, resulting in a reversal of $85,299 in stock-based compensation expense[150] Note 6: Sponsorship Revenue and Associated Commitments Sponsorship revenue increased by 27.7% to $859,731 in Q1 2024 due to new sponsorships, with future cash commitments totaling $8.9 million Sponsorship Revenue | Period | Amount | | :-------------------------------- | :----------- | | Three months ended March 31, 2024 | $859,731 | | Three months ended March 31, 2023 | $673,475 | | Increase | $186,256 (27.7%) | Scheduled Future Cash from Sponsorship Agreements | Year ending December 31, | Amount | | :------------------------- | :----------- | | 2024 (nine months) | $1,094,025 | | 2025 | $2,101,327 | | 2026 | $1,890,839 | | 2027 | $1,317,265 | | 2028 | $1,257,265 | | Thereafter | $1,257,265 | | Total | $8,917,986 | Note 7: Other Commitments The company has various commitments, including management and sports betting agreements, with the BETR online sports betting agreement including equity interest and $3.5 million in deferred revenue - Management fees for Crestline Hotels & Resorts decreased to $35,109 in Q1 2024 from $45,500 in Q1 2023[170] - Management fees for Shula's Steak Houses, LLLP increased to $24,374 in Q1 2024 from $0 in Q1 2023[173] - The online market access agreement with BETR grants the Company a limited equity interest and revenue sharing, with $3.5 million in deferred revenue remaining as of March 31, 2024[178] - Ohio granted an extension to June 30, 2024, for all retail sports betting license holders, as the Company does not currently have a retail sports betting partner[179] Other Liabilities | Category | March 31, 2024 | December 31, 2023 | | :---------------------- | :------------- | :---------------- | | Activation fund reserves | $243,661 | $126,685 | | Deferred revenue | $8,150,932 | $5,441,640 | | Deposits and other liabilities | $463,906 | $290,357 | | Total | $8,858,499 | $5,858,682 | Note 8: Contingencies The company is subject to occasional legal proceedings but has no pending litigation expected to materially adversely affect its financial results - 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[185] Note 9: Related-Party Transactions Related-party transactions involve advances from IRG Member affiliates and PFHOF, a Global License Agreement, financial support from IRGLLC, and a new lease with a director-managed entity Due to Affiliates | Affiliate | March 31, 2024 | December 31, 2023 | | :---------------- | :------------- | :---------------- | | Due to IRG Member | $1,961,221 | $1,127,390 | | Due to PFHOF | $765,585 | $166,484 | | Total | $2,726,806 | $1,293,874 | - The Global License Agreement with PFHOF requires annual license fees, ranging from $600,000 to $750,000, and has an initial term through December 31, 2036[192] - IRGLLC and its affiliates provide financial support, including facilitating waterpark construction financing and extending IRG Affiliate Lender loans to March 31, 2025, in exchange for fees, common stock, and loan modifications[199][200][201][202][207][208] - A new ten-year lease agreement was entered into with Touchdown Work Place, LLC, an entity managed by director Stuart Lichter, for approximately 12,331 square feet[214] Note 10: Concentrations The company has significant customer concentrations in sponsorship revenue and accounts receivable, with a few customers accounting for substantial percentages of both - For the three months ended March 31, 2024, two customers represented approximately 34.0% and 31.5% of the Company's sponsorship revenue[215] - As of March 31, 2024, four customers represented approximately 24.3%, 19.4%, 13.6% and 11.1% of the Company's sponsorship accounts receivable[216] Note 11: Leases The company leases ground for its stadium and facilities, with operating lease right-of-use assets of $7.3 million and lease liabilities of $3.3 million, and lease revenue significantly increased in Q1 2024 Operating Lease Information | Metric | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Right-of-use assets | $7,274,397 | $7,387,693 | | Lease liability | $3,321,009 | $3,440,630 | | Weighted-average remaining lease term | 90.6 years | 91.2 years | | Weighted-average discount rate | 10.0% | 10.0% | Lessor Commitments - Lease Revenue | Period | Amount | | :-------------------------------- | :----------- | | Three months ended March 31, 2024 | $641,577 | | Three months ended March 31, 2023 | $94,540 | | Increase | $547,037 | Future Minimum Lease Revenue (Undiscounted) | Year ending December 31, | Amount | | :------------------------- | :----------- | | 2024 (nine months) | $874,956 | | 2025 | $1,174,695 | | 2026 | $1,184,837 | | 2027 | $1,170,697 | | 2028 | $1,002,686 | | Thereafter | $4,216,921 | | Total | $9,624,792 | Note 12: Financing Liability Sale-leaseback transactions for the Fan Engagement Zone and waterpark are financing arrangements, with liability increasing to $65.9 million and significant future payments over 99 years - Sale-leaseback transactions for the Fan Engagement Zone and waterpark are accounted for as financing arrangements, meaning the property remains on the Company's books[237] Financing Liability Carrying Value | Metric | March 31, 2024 | March 31, 2023 | | :-------------------- | :------------- | :------------- | | Carrying value | $65,867,451 | $60,675,230 | Remaining Future Cash Payments Related to Financing Liability (Undiscounted) | Year ending December 31, | Amount | | :------------------------- | :--------------- | | 2024 (nine months) | $4,181,246 | | 2025 | $6,179,956 | | 2026 | $6,328,158 | | 2027 | $6,479,940 | | 2028 | $6,635,387 | | Thereafter | $2,294,927,035 | | Total Minimum Liability Payments | $2,324,731,722 | - On February 23, 2024, the waterpark ground lease was amended to include a $2.5 million tenant allowance, an increase in base rent, a pledge of the Company's 20% interest in the Sports Complex Entity, and the issuance of Series H Common Stock Purchase Warrants[238] Note 13: Disposition The company sold an 80% interest in its ForeverLawn Sports Complex for $10 million, incurring a $140,041 loss, with the remaining 20% now an equity-method investment - The Company sold an 80% interest in its ForeverLawn Sports Complex business for a $10 million purchase price on January 11, 2024[246] Loss on Sale of Sports Complex | Item | Amount | | :-------------------------- | :------------- | | Purchase price | $10,000,000 | | Net purchase price | $9,785,778 | | Less: transaction costs | $(159,144) | | Less: book value of net assets sold | $(12,213,120) | | Plus: investment retained | $2,446,445 | | Loss on sale | $(140,041) | - A $1.5 million holdback from the purchase price will be released in three $500,000 increments over 18 months[246] Note 14: Subsequent Events Subsequent events include an omnibus extension of IRG-related debt and a waterpark ground lease amendment; the company defaulted on a $1.2 million deferred base rent payment and is negotiating with the landlord - On April 7, 2024, an omnibus extension was executed for several IRG-related debt instruments, extending their maturity to March 31, 2025[249] - On May 10, 2024, a third amendment to the waterpark ground lease was entered into, removing a clause that prevented a cure period for deferred rent[250] - The Company has not paid the $1,197,907 deferred base rent due May 1, 2024, for the waterpark ground lease, which is an event of default[250] Item 2. Management's discussion and analysis of financial condition and results of operations Management discusses financial performance, condition, revenue and expense trends, recent developments, cash flow analysis, liquidity challenges, and going concern uncertainty Business Overview The company operates as a resort and entertainment entity focused on professional football, with diversified assets including Hall of Fame Village, media content, and Ohio sports betting licenses - The Company operates three business verticals: destination-based assets (Hall of Fame Village), Media Company (Hall of Fame Village Media), and gaming (Gold Summit Gaming)[254] - Phase I assets (Tom Benson Hall of Fame Stadium, ForeverLawn Sports Complex - 20% owned as of Jan 2024, Media Company, and gaming) are operational[255] - Phase II assets include Constellation Center for Excellence, Center for Performance, Play Action Plaza, Fan Engagement Zone, two hotels (one existing, one under construction), and the Gameday Bay Waterpark (under construction)[258] - Gold Summit Gaming holds licenses for physical and online sports betting in Ohio and has an agreement with BETR as its Mobile Management Services Provider[257] Key Components of the Company's Results of Operations Revenue streams include sponsorships, rents, events, hotel/restaurant, media, and gaming, expected to increase with new attractions, while operating expenses will rise with further development - Revenue is generated from sponsorships, rents, events, exclusive programming, attractions, hotel and restaurant operations, media content, and gaming licenses[259][261] - Operating expenses include production, personnel, campus maintenance, food and beverage costs, hotel operating expenses, and depreciation[263] - Revenues are expected to increase with the addition of events and the opening of the Gameday Bay Waterpark and Hilton Tapestry Hotel[262] - Operating expenses are expected to increase with more Phase II assets becoming operational, and the addition of top-performer events and sporting events[264] Recent Developments Recent developments include CH Capital Term Loan amendments, IRG debt extensions, waterpark ground lease changes, Sports Complex sale, and increased ATM facility agent compensation - Multiple amendments to the CH Capital Term Loan in Q1 2024 increased the principal amount to $14,417,076[268][270][271][272][273] - An omnibus extension on April 7, 2024, extended the maturity date of several IRG-related debt instruments from March 31, 2024, to March 31, 2025[274] - The waterpark ground lease was amended on February 23, 2024, to include a $2.5 million tenant allowance, increased base rent, a pledge of the Company's 20% interest in the Sports Complex Entity, and issuance of Series H Common Stock Purchase Warrants[275] - On January 11, 2024, the Company sold an 80% interest in the ForeverLawn Sports Complex for $10 million, forming a strategic partnership for youth sports programming[277][278] - ErieBank released $1,830,000 of held-back loan proceeds for waterpark construction and reduced the loan commitment by $2,000,000 on March 15, 2024[281] - Amendment No. 2 to the Equity Distribution Agreement, effective April 8, 2024, increased agent compensation from 2.0% to 4.0% for the ATM facility[282] Results of Operations Total revenues increased by 34.3% to $4.2 million in Q1 2024, and net loss improved by 24.6% to $14.6 million due to decreased operating expenses, despite higher interest expense | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change ($) | Change (%) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Sponsorships, net of activation costs | $859,731 | $673,475 | $186,256 | 27.7% | | Event, rents, restaurant and other revenue | $2,054,877 | $908,312 | $1,146,565 | 126.2% | | Hotel revenues | $1,276,707 | $1,538,646 | $(261,939) | (17.0%) | | Total revenues | $4,191,315 | $3,120,433 | $1,070,882 | 34.3% | | Operating expenses | $6,150,364 | $12,528,716 | $(6,378,352) | (50.9%) | | Hotel operating expenses | $974,432 | $1,459,203 | $(484,771) | (33.2%) | | Impairment expense | $0 | $1,145,000 | $(1,145,000) | (100.0%) | | Depreciation expense | $4,158,750 | $2,553,360 | $1,605,390 | 62.9% | | Interest expense, net | $(6,521,534) | $(3,632,637) | $(2,888,897) | 79.5% | | Amortization of discount on note payable | $(955,322) | $(855,891) | $(99,431) | 11.6% | | Change in fair value of warrant liability | $49,000 | $(238,000) | $287,000 | 120.6% | | Loss on sale of asset | $(140,041) | $0 | $(140,041) | N/A | | Income from equity method investments | $29,952 | $0 | $29,952 | N/A | | Net loss | $(14,630,176) | $(19,392,374) | $4,762,198 | (24.6%) | Liquidity and Capital Resources The company faces significant liquidity challenges with a $231.5 million accumulated deficit and $90.6 million debt due through May 2025, requiring additional financing and raising going concern doubts - Accumulated deficit was $231.5 million as of March 31, 2024[298] Cash and Debt Maturities | Metric | As of March 31, 2024 | | :-------------------------------- | :------------------- | | Unrestricted cash | $2.7 million | | Restricted cash | $4.2 million | | Debt principal payments due through May 14, 2025 | $90.6 million | - The Company used $2.5 million cash for operating activities during the three months ended March 31, 2024[298] - Management expects to need additional financing through debt, construction lending, and equity to fund its development plan and working capital[299] - These conditions raise substantial doubt about the Company's ability to continue as a going concern[299] Cash Flows Net cash used in operating activities decreased by $9.1 million, investing activities by $21.7 million due to asset sales, and financing activities provided $16.9 million less cash | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Operating Activities | $(2,476,875) | $(11,542,932) | $9,066,057 | (78.5%) | | Investing Activities | $(2,967,807) | $(24,679,007) | $21,711,200 | (88.0%) | | Financing Activities | $512,766 | $17,406,477 | $(16,893,711) | (97.1%) | | Net decrease in cash and restricted cash | $(4,931,916) | $(18,815,462) | $13,883,546 | (73.8%) | - The decrease in cash used in operating activities was primarily attributable to a $4.7 million decrease in net loss[301] - The decrease in cash used in investing activities was due to $15 million invested in treasury bills in Q1 2023, offset by an $8.1 million increase from asset sales in Q1 2024[303] - The decrease in cash provided by financing activities was primarily due to an $11.8 million decrease in notes payable proceeds and a $10.6 million increase in repayments of notes payable, partially offset by $3.5 million in proceeds from financing liability[304] Off-Balance Sheet Arrangements As of March 31, 2024, the company had no off-balance sheet arrangements - The Company did not have any off-balance sheet arrangements as of March 31, 2024[305] Critical Accounting Policies and Significant Judgments and Estimates Financial statement preparation requires management estimates and assumptions based on historical experience, which may differ from actual results - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenue, and expenses[306] - Key estimates and assumptions relate to credit losses, depreciation, capitalized project development costs, useful lives of long-lived assets, impairment, stock-based compensation, and fair value of financial instruments[39] Item 3. Quantitative and qualitative disclosures about market risk No quantitative or qualitative disclosures about market risk are applicable to the company for the reported period - This item is not applicable to the Company[308] Item 4. Controls and procedures The company's disclosure controls were ineffective as of March 31, 2024, due to a material weakness in financial reporting review, with remediation efforts underway - A material weakness in internal control over financial reporting was identified related to the precise and timely review and analysis of information for financial statements and disclosures[310] - As of March 31, 2024, the disclosure controls and procedures were not effective at the reasonable assurance level[311] - Despite the material weakness, management concluded that the condensed consolidated financial statements fairly present the financial position, results of operations, and cash flows[311] - Additional controls were implemented during Q1 2024 to remediate the material weakness, with a plan to test their effectiveness[313] PART II. OTHER INFORMATION Item 1. Legal proceedings The company is subject to routine legal proceedings but has no pending litigation expected to materially adversely affect its financial condition or operations - The Company does not have any pending litigation that, separately or in the aggregate, would have a material adverse effect on its results of operations, financial condition, or cash flows[315] Item 1A. Risk factors No material changes to risk factors since the 2023 10-K, except for a director exploring a potential extraordinary corporate transaction, creating uncertainty - Stuart Lichter, a director, and his affiliates are exploring a potential extraordinary corporate transaction (e.g., merger, reorganization, go-private, debt restructuring) with the Company[316][317] - This speculation creates uncertainty for visitors, partners, and employees, potentially impacting operations, employee retention, and management focus[321] Item 2. Unregistered sales of equity securities and use of proceeds The company made several unregistered sales of equity securities through 2020 Convertible Term Loan amendments, advancing $8.1 million in Q1 2024, convertible at $3.64 per share and exempt from registration - On January 11, 2024, the 2020 Convertible Term Loan was amended to advance $4,400,000, increasing the principal to $10,542,308[322] - Further amendments on January 17, February 1, and February 28, 2024, advanced an additional $2,200,000, $800,000, and $726,634 respectively, increasing the principal to $14,417,076[324][325][326] - These advances are convertible into common stock at $3.64 per share and are exempt from registration under Section 4(a)(2) of the Securities Act[322][324][325][326] - The Company and CHCL agreed to a Nasdaq 19.99% Cap on common stock issuance without stockholder approval, with the Company committed to seeking approval if necessary[327] Item 3. Defaults upon senior securities The company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported[328] Item 4. Mine safety disclosures This item is not applicable to the company - This item is not applicable to the Company[329] Item 5. Other information The company defaulted on a $1.2 million deferred base rent payment for the waterpark ground lease and is negotiating with the landlord to extend the forbearance payment date - The Company has not paid the deferred base rent of $1,197,907 due May 1, 2024, for the waterpark ground lease[330] - Failure to cure this non-payment within three days of written notice would be an event of default, potentially leading to acceleration of all remaining payments[330] - Negotiations are underway with the landlord to extend the base rent forbearance payment date[330] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various amendments to loan, security, and lease agreements, and certifications, supporting financial statements and disclosures - Exhibit 1.1: Amendment No. 2 to Equity Distribution Agreement, dated April 8, 2024[332] - Exhibits 10.1-10.8: Multiple amendments to Term Loan Agreements and Secured Cognovit Promissory Notes with CH Capital Lending, LLC, dated January 2024[332] - Exhibits 10.9-10.13: Amendments to Lease Agreements, Pledge and Security Agreement, and Series H Common Stock Purchase Warrant related to the waterpark, dated February 2024[332][333][334] - Exhibit 10.14: Omnibus Extension of Debt Instruments, dated April 7, 2024, with various lenders[334] - Exhibit 10.15: Third Amendment to Lease Agreement, dated May 10, 2024, for the waterpark ground lease[334]