HOFV
Hall of Fame Resort & Entertainment CO
NASDAQ
10-Q: Hall of Fame Resort & Entertainment Company Reports Q1 2024 Results, Revenue Up but Losses Persist
Sentiment:
Quarterly Report
14 May 2024 4:06 PM
Hall of Fame Resort & Entertainment Company saw a revenue increase in the first quarter of 2024, but net losses continued, raising concerns about the company's ability to operate as a going concern.
Worse than expected
The company's net loss of $14.6 million and the substantial doubt about its ability to continue as a going concern indicate worse than expected results.
Delay expected
The company has delayed payment of base rent for the waterpark ground lease, which could lead to a default.
Capital raise
The company expects that it will need to raise additional financing to accomplish its development plan and fund its working capital.
The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
There are no assurances that the company will be able to raise capital on terms acceptable to the Company or at all.
Summary
- Hall of Fame Resort & Entertainment Company (HOFRE) reported a net loss of $14.6 million for the first quarter of 2024, compared to a $19.4 million loss in the same period last year.
- Total revenue increased to $4.2 million, up from $3.1 million in Q1 2023, driven by growth in sponsorships and event revenues.
- Operating expenses decreased significantly to $11.3 million from $17.7 million year-over-year, primarily due to lower production and personnel costs.
- The company's accumulated deficit reached $231.5 million as of March 31, 2024.
- HOFRE has $90.6 million of debt coming due through May 14, 2025, and is seeking additional financing to fund its development plans and working capital.
- The company had $2.7 million in unrestricted cash and $4.2 million in restricted cash as of March 31, 2024.
- There is substantial doubt about the company's ability to continue as a going concern due to recurring losses and the need for additional capital.
Sentiment
Score: 3
Explanation: The document presents a mixed picture with revenue growth offset by significant losses, high debt, and going concern doubts. The need for additional capital and the potential default on the waterpark lease are major concerns.
Positives
- Sponsorship revenues increased by $186,256, or 27.7%, year-over-year.
- Event, rents, restaurant and other revenues increased by $1,146,565, or 126.2%, year-over-year.
- Operating expenses decreased by $6,378,352, or 50.9%, year-over-year.
- The net loss per share improved from $(3.48) to $(2.30) year-over-year.
Negatives
- Hotel revenues decreased by $261,939, or 17.0%, year-over-year due to lower occupancy and average daily rates.
- Total interest expense increased by $2,888,897, or 79.5%, year-over-year due to increased debt.
- The company has a significant amount of debt coming due in the next year.
- The company has an accumulated deficit of $231.5 million.
- The company used $2.5 million in cash for operating activities during the quarter.
- There is substantial doubt about the company's ability to continue as a going concern.
Risks
- The company's ability to continue as a going concern is in doubt due to recurring losses and the need for additional capital.
- The company has a significant amount of debt coming due in the next year, totaling $90.6 million through May 14, 2025.
- There is no assurance that the company will be able to raise capital on acceptable terms or at all.
- Failure to obtain sufficient capital may require the company to reduce the scope of its planned development.
- The company is in negotiations with a landlord regarding a missed rent payment, which could lead to a default under the waterpark ground lease.
- A director and certain affiliates are exploring a potential extraordinary corporate transaction, creating uncertainty for stakeholders.
Future Outlook
The company expects revenues to increase as it adds more events and opens the Gameday Bay Waterpark and Hilton Tapestry Hotel. However, the company needs to raise additional financing to accomplish its development plan and fund its working capital. There is no assurance that the company will be able to raise capital on acceptable terms or at all.
Management Comments
- The strategic plan for Hall of Fame Village involves three phases: Phase I, Phase II, and Phase III.
- We continue to pursue a diversified strategy across three business verticals, including destination-based assets, the Media Company, and gaming.
- We expect our revenues to continue to increase as we add in additional events and open our Gameday Bay Waterpark (under construction) and Hilton Tapestry Hotel (to be constructed).
Industry Context
The company operates in the sports and entertainment industry, leveraging the popularity of professional football. The company's performance is influenced by factors such as event attendance, sponsorship deals, and the development of its destination-based assets. The company is also venturing into media and gaming, which are growing sectors within the broader entertainment industry.
Comparison to Industry Standards
- Comparing HOFRE to other entertainment and resort companies, the revenue growth is positive, but the continued losses and high debt levels are concerning.
- Companies like Cedar Fair (FUN) and Six Flags (SIX) have established theme park operations with more predictable revenue streams and lower debt to equity ratios.
- HOFRE's reliance on development projects and the need for additional capital is a significant risk compared to more mature companies in the sector.
- The company's foray into sports betting and media is similar to strategies employed by companies like Penn National Gaming (PENN) and DraftKings (DKNG), but HOFRE is at a much earlier stage of development.
- The company's debt levels are high compared to industry averages, and the need for additional financing is a significant risk factor.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial instability and going concern doubts.
- Employees may experience uncertainty due to the company's financial challenges and potential restructuring.
- Customers may be impacted by potential delays or changes in the company's development plans.
- Suppliers and creditors face increased risk due to the company's financial instability.
- The company's ability to fulfill its obligations to the Pro Football Hall of Fame may be impacted by its financial situation.
Next Steps
- The company needs to secure additional financing to continue its development plans.
- The company needs to resolve the issue with the waterpark ground lease payment.
- The company needs to improve its financial performance to alleviate going concern doubts.
- The company needs to continue to develop and open its Phase II assets, including the waterpark and on-campus hotel.
Related Party Transactions
- The company has multiple related-party transactions with IRG and its affiliates, including loans and development fees.
- Stuart Lichter, a director of the Company, is President of IRGLLC and MLF and a director of CHCL.
- The company has a Global License Agreement with the Pro Football Hall of Fame (PFHOF).
- The company has a lease agreement with Touchdown Work Place, LLC, which is managed by a director of the company.
Key Dates
- 2020-07-01: The Company consummated a business combination with HOF Village, LLC.
- 2021-12-15: HOF Village Center for Excellence, LLC entered into a Loan Agreement with ErieBank.
- 2022-07-14: The Company entered into an Online Market Access Agreement with Instabet, Inc. (betr).
- 2022-09-27: The Company sold the land under the Fan Engagement Zone to Twain GL XXXVI, LLC.
- 2022-11-07: HOF Village Waterpark, LLC, sold the land under the future waterpark to Oak Street Real Estate Capital, LLC.
- 2023-01-12: The Company issued shares of 7.00% Series A Cumulative Redeemable Preferred Stock.
- 2024-01-11: HOF Village completed the sale of 80% of Sandlot HOFV Canton SC, LLC.
- 2024-03-15: ErieBank agreed to release a portion of the held back amount to HOFV CFE.
- 2024-03-31: End of the first quarter of 2024.
- 2024-04-07: The Company entered into a formal omnibus extension of certain debt instruments.
- 2024-04-08: The Company and Wedbush Securities Inc. and Maxim Group LLC entered into an Amendment No. 2 to the Equity Distribution Agreement.
- 2024-05-10: The parties entered into a third amendment to the waterpark lease agreement.
Keywords
Hall of Fame Resort & Entertainment Company, HOFRE, financial results, quarterly report, revenue, net loss, debt, going concern, sponsorships, operating expenses, capital raise, sports complex, waterpark, hotel, sports betting
HOFV
Hall of Fame Resort & Entertainment CO
NASDAQ
Sector: Communication Services
Filings with Classifications
Capital raise
25 June 2025 4:05 PM
Delisting Notice and Debt Amendment
- The company increased its 'Facility Amount' under the Note and Security Agreement by $2,000,000, from $12,000,000 to $14,000,000.
- This additional funding is provided by CH Capital Lending, LLC, an affiliate of a company director, Stuart Lichter.
Worse than expected
25 June 2025 4:05 PM
Delisting Notice and Debt Amendment
- The company is facing imminent delisting from Nasdaq, a significant negative event for a publicly traded company.
- The delisting is due to a failure to meet a fundamental corporate governance requirement (holding an annual shareholder meeting).
- While new funding was secured, it is from a related party, which can be viewed less favorably than arms-length financing, especially in the context of delisting.
Delay expected
25 June 2025 4:05 PM
Delisting Notice and Debt Amendment
- The company failed to hold its annual meeting of shareholders on or prior to June 30, 2025, which is a requirement by Nasdaq Listing Rule 5620(a).
Capital raise
29 May 2025 8:05 PM
Current Report
- The company increased its existing credit facility by $2,000,000, raising the total available amount to $12,000,000.
- This capital is provided by CH Capital Lending, LLC, an affiliate of a company director, Stuart Lichter.
- The funds are designated for general corporate purposes.
Delay expected
19 May 2025 4:05 PM
8-K Filing
- The maturity date was extended from March 31, 2025, to September 30, 2025, indicating a delay in the company's ability to meet its original repayment schedule.
Worse than expected
13 May 2025 4:06 PM
Quarterly Report
- The company's net loss increased slightly compared to the same period last year.
- Total revenue decreased significantly due to lower sponsorship and event revenues.
- Management expresses substantial doubt about the company's ability to continue as a going concern.
Capital raise
13 May 2025 4:06 PM
Quarterly Report
- The company states that it will need to raise additional financing to accomplish its development plan and fund its working capital.
- The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
- There are no assurances that the company will be able to raise capital on terms acceptable to the company or at all.
Capital raise
12 May 2025 11:32 PM
Merger Announcement
- The Buyer Parties' obligation to consummate the Merger is conditioned on receiving 'Parent Acquisition Financing' in an aggregate amount of not less than $20 million.
- The Buyer Parties' obligation to consummate the Merger is additionally conditioned on receiving 'additional project level financing' in an aggregate amount not less than $125 million.
Capital raise
8 May 2025 9:23 PM
Merger Announcement
- The merger is contingent on the Investor obtaining $20 million in financing.
- The merger is also conditioned on securing $125 million in additional project-level financing.
Worse than expected
8 May 2025 9:23 PM
Merger Announcement
- The acquisition price of $0.90 per share is significantly lower than the company's previous trading price, indicating a less favorable outcome for shareholders compared to previous expectations.
Worse than expected
8 May 2025 5:21 PM
Merger Announcement
- The company is being acquired for $0.90 per share, which may be considered worse than expected for investors who anticipated higher returns or continued growth as a public entity.
Capital raise
8 May 2025 5:21 PM
Merger Announcement
- The transaction is contingent on the Investor obtaining $20 million in financing.
- The transaction is also conditioned on prior or concurrent consummation of additional project level financing in an aggregate amount not less than $125 million.
Worse than expected
16 April 2025 4:05 PM
8-K Filing
- The company received a deficiency letter from Nasdaq due to its stock price falling below the minimum bid price requirement, indicating a negative development.
Delay expected
4 April 2025 8:05 PM
Current Report (8-K)
- The maturity dates of debt instruments and convertible notes have been delayed.
Delay expected
3 April 2025 11:43 AM
SEC Form 4
- The maturity dates of several convertible debt instruments were extended from March 31, 2025, to either September 30, 2025, or December 31, 2025.
Worse than expected
26 March 2025 5:00 PM
Annual Report
- The company's revenue decreased from 2023 to 2024.
- The company's net loss decreased from 2023 to 2024.
- The company's cash position is deficient and it requires additional capital to fund operations and debt service.
Capital raise
26 March 2025 5:00 PM
Annual Report
- The company's cash position is deficient, and it requires additional capital to fund operations and debt service.
- The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
Delay expected
26 March 2025 5:00 PM
Annual Report
- The Company postponed its 2024 Annual Meeting of Stockholders.
Delay expected
16 January 2025 5:13 PM
8-K Filing
- The company failed to hold its annual meeting within 12 months of its fiscal year end, resulting in a delay and a delisting notice from Nasdaq.
Worse than expected
16 January 2025 5:13 PM
8-K Filing
- The company received a delisting notice from Nasdaq for failing to hold its annual meeting within the required timeframe, which is a negative development.
Worse than expected
20 November 2024 4:05 PM
Current Report
- The high interest rate of 12%, potentially rising to 17%, suggests the company is in a weaker financial position and had to accept unfavorable terms.
- The extensive security interest granted to the lender indicates a lack of financial flexibility and a higher risk profile.
Worse than expected
13 November 2024 5:18 PM
Quarterly Report
- The company's net loss of $34.5 million for the nine months ended September 30, 2024, is worse than expected.
- The company's default on the waterpark ground lease and the risk of default on other loan agreements are worse than expected.
- The company's precarious cash position and the substantial doubt about its ability to continue as a going concern are worse than expected.
Capital raise
13 November 2024 5:18 PM
Quarterly Report
- The company is seeking additional funding through debt, construction lending, and equity financing.
- The company's ability to raise capital on acceptable terms or at all is uncertain.
Delay expected
13 November 2024 5:18 PM
Quarterly Report
- The company's waterpark project has been delayed due to the termination of the ground lease.
Worse than expected
31 October 2024 4:05 PM
Current Report
- The termination of the waterpark ground lease due to a payment default is a significantly worse outcome than expected.
- The company's inability to meet its financial obligations and the potential loss of key assets are also worse than expected.
Capital raise
31 October 2024 4:05 PM
Current Report
- The company is in discussions with IRG Canton Village Member, LLC regarding a non-binding proposal to take the company private, which could involve a capital raise or restructuring.
- The company's current financial situation suggests that a capital raise or restructuring is likely necessary to address its liquidity issues.
Delay expected
23 October 2024 4:05 PM
Current Report
- The 2024 Annual Meeting of Stockholders has been postponed from its original date of November 21, 2024.
Better than expected
17 September 2024 4:05 PM
Material Definitive Agreement
- The removal of the annual license fee and the waiver of the $600,000 payment for 2024 are better than the previous agreement.
Worse than expected
19 August 2024 5:04 PM
Shareholder Letter
- Second quarter revenue was below the prior year, indicating worse than expected performance.
Delay expected
19 August 2024 5:04 PM
Shareholder Letter
- The funding process for the Gameday Bay Waterpark and Hilton Tapestry Hotel has taken longer than originally anticipated due to a restrictive lending environment and multiple stakeholders.
Worse than expected
15 August 2024 4:05 PM
Quarterly Report
- The company's revenue decreased by 23% year-over-year, indicating worse than expected performance.
- The net loss attributable to shareholders increased to $15.8 million from $13.6 million in the prior year, indicating worse than expected performance.
Worse than expected
13 August 2024 4:05 PM
Quarterly Report
- The company's revenue decreased compared to the same period last year.
- The company's net loss increased compared to the same period last year.
- The company's hotel revenues decreased compared to the same period last year.
Capital raise
13 August 2024 4:05 PM
Quarterly Report
- The company expects that it will need to raise additional financing to accomplish its development plan and fund its working capital.
- The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
- The company may have to raise additional capital through the equity market, which could result in substantial dilution to existing stockholders.
Capital raise
14 May 2024 4:06 PM
Quarterly Report
- The company expects that it will need to raise additional financing to accomplish its development plan and fund its working capital.
- The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
- There are no assurances that the company will be able to raise capital on terms acceptable to the Company or at all.
Worse than expected
14 May 2024 4:06 PM
Quarterly Report
- The company's net loss of $14.6 million and the substantial doubt about its ability to continue as a going concern indicate worse than expected results.
Delay expected
14 May 2024 4:06 PM
Quarterly Report
- The company has delayed payment of base rent for the waterpark ground lease, which could lead to a default.
Better than expected
14 May 2024 8:39 AM
Quarterly Report
- The company's revenue increased by 34% year-over-year.
- The net loss attributable to shareholders decreased from $19.6 million to $14.9 million.
- The adjusted EBITDA loss improved from $10.9 million to $2.9 million.
Capital raise
29 April 2024 5:11 PM
Annual Report Amendment
- The company has multiple loan agreements with CH Capital Lending, LLC, and other related parties, some of which have been amended and restated.
- The company has issued Series A, B, and C Preferred Stock to related parties.
- The company has a history of using convertible notes and warrants to raise capital.
Worse than expected
29 April 2024 5:11 PM
Annual Report Amendment
- The company had to amend its annual report due to omitting required information, indicating a deficiency in internal controls or reporting processes.
Capital raise
29 April 2024 4:57 PM
SEC Form 4 Filing
- The document details multiple transactions involving convertible notes and term loans, indicating ongoing capital raising activities.
- CH Capital Lending, LLC advanced additional funds under the 2020 Convertible Term Loan in January and February 2024.
- The company has been paying interest by increasing the principal of the Convertible Notes due 2025.
Capital raise
8 April 2024 5:25 PM
8-K Filing
- The company has the ability to sell up to $14,661,873 of common stock through the at-the-market offering.
- The company amended its equity distribution agreement to increase agent compensation, which may incentivize sales.
Capital raise
25 March 2024 4:37 PM
Annual Results
- The company's authorized but unissued Common Stock and Preferred Stock are available for future issuances without stockholder approval.
- The company could utilize these shares for future offerings to raise additional capital.
Capital raise
21 March 2024 8:20 AM
Quarterly Report
- The company completed a $2.8 million public offering of common stock and warrants to increase institutional ownership and improve stock trading volumes.
Worse than expected
21 March 2024 8:20 AM
Quarterly Report
- The company's net loss for the full year increased significantly compared to the previous year, indicating worse than expected financial performance.
Worse than expected
29 February 2024 5:24 PM
Lease Amendment
- The company has increased its debt and diluted its equity through the warrant issuance.
- The company has increased its base rent obligations.
- The company has pledged a 20% membership interest in Sandlot HOFV Canton SC, LLC, as collateral.
Capital raise
29 February 2024 5:24 PM
Lease Amendment
- The company issued a Series H Common Stock Purchase Warrant to the landlord.
- The warrant allows the landlord to purchase 890,313 shares of the company's common stock.
- The exercise of the warrant could result in a capital raise for the company, but also dilute existing shareholders.
Worse than expected
18 January 2024 5:12 PM
Loan Agreement Amendment
- The company's debt has increased significantly to $12,751,934.09, indicating a worsening financial position despite the asset sale.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.