HOFV
Hall of Fame Resort & Entertainment CO
NASDAQ
10-Q: Hall of Fame Resort & Entertainment Faces Financial Headwinds Despite Merger Agreement
Sentiment:
Quarterly Report
13 May 2025 4:06 PM
Hall of Fame Resort & Entertainment reports a net loss for Q1 2025 and expresses substantial doubt about its ability to continue as a going concern, even as it enters into a merger agreement.
Capital raise
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.
Worse than expected
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.
Summary
- Hall of Fame Resort & Entertainment Company (HOFRE) reported a net loss of $15.07 million for the three months ended March 31, 2025, compared to a net loss of $14.63 million for the same period in 2024.
- Total revenues decreased to $2.95 million from $4.19 million year-over-year, primarily due to lower sponsorship and event revenues.
- The company's accumulated deficit reached $288.9 million as of March 31, 2025.
- HOFRE has approximately $0.5 million of unrestricted cash and $4.0 million of restricted cash as of March 31, 2025.
- The company has $117 million of debt coming due through March 31, 2026.
- Management expresses substantial doubt about the company's ability to continue as a going concern.
- HOFRE entered into a merger agreement with HOFV Holdings, LLC, with each share of common stock to be converted into the right to receive $0.90 in cash.
- The company received a delisting notice from Nasdaq due to its stock price falling below $1.00 per share.
- Michael Crawford resigned as President, CEO, and Chairman of the Board, effective May 18, 2025.
- The company extended the maturity date of certain debt instruments to September 30, 2025.
Sentiment
Score: 2
Explanation: The document presents a highly negative outlook due to recurring losses, substantial debt, going concern doubts, and a delisting notice, despite a merger agreement.
Positives
- The company entered into a merger agreement that, if completed, will provide shareholders with $0.90 per share.
- The company extended the maturity date of certain debt instruments to September 30, 2025, providing some short-term relief.
- Operating expenses decreased by $481,229, or 7.8%, compared to the same period last year.
Negatives
- The company reported a net loss of $15.07 million for Q1 2025.
- Total revenues decreased by 29.7% year-over-year.
- The company's accumulated deficit reached $288.9 million.
- Management expresses substantial doubt about the company's ability to continue as a going concern.
- The company received a delisting notice from Nasdaq.
- Michael Crawford resigned as President, CEO, and Chairman of the Board.
Risks
- The company's ability to continue as a going concern is in substantial doubt.
- The company may be required to reduce the scope of its planned development or significantly curtail its ongoing operations if it cannot obtain additional capital.
- The company is in default or risks becoming in default under certain loan agreements.
- The company's stock price may be negatively impacted by the Nasdaq delisting notice.
- The merger agreement may not be completed.
- The company's reliance on related-party transactions with entities affiliated with Stuart Lichter presents a potential conflict of interest.
Future Outlook
Management expresses substantial doubt about the company's ability to continue as a going concern and indicates a need to raise additional financing to accomplish its development plan and fund its working capital.
Industry Context
The company operates in the resort and entertainment industry, leveraging the popularity of professional football. The financial results reflect challenges in generating sufficient revenue to offset operating expenses and debt obligations.
Comparison to Industry Standards
- It is difficult to compare HOFRE directly to industry standards due to its unique business model, which combines a resort, entertainment destination, and media company focused on professional football.
- Comparable companies in the resort and entertainment industry, such as Cedar Fair (FUN) or Six Flags (SIX), typically have more diversified revenue streams and established operating histories.
- HOFRE's reliance on sponsorship revenue and event-driven income makes it particularly vulnerable to economic downturns and changes in consumer spending habits.
- The company's high debt load and negative cash flow from operations are also concerning compared to industry peers.
Stakeholder Impact
- Shareholders face the risk of dilution if the company raises additional equity financing.
- Shareholders may receive $0.90 per share if the merger agreement is completed.
- Employees face uncertainty due to the company's financial difficulties and management changes.
- Creditors face the risk of default if the company is unable to meet its debt obligations.
Next Steps
- The company needs to secure additional financing to continue operations.
- The company needs to regain compliance with Nasdaq listing requirements.
- The company needs to obtain stockholder approval for the merger agreement.
- The company needs to successfully complete the merger with HOFV Holdings, LLC.
Related Party Transactions
- The company has significant related-party transactions with entities affiliated with Stuart Lichter, a director of the company.
- These transactions include loans, services agreements, and leases.
- The company's reliance on these related-party transactions presents a potential conflict of interest.
Key Dates
- 2020-07-01: Effective date of the Companys omnibus incentive plan
- 2022-07-14: Company entered into an Online Market Access Agreement with Instabet, Inc.
- 2024-10-26: Company received a notice of termination due to event of default on its waterpark ground lease.
- 2025-03-12: Michael Crawford informed the Board of Directors of his intention to resign.
- 2025-03-18: Retention and Consulting Agreement signed with Michael Crawford.
- 2025-03-31: Omnibus Extension of Debt Instruments executed.
- 2025-03-31: Amendment to Note Purchase Agreement executed.
- 2025-04-10: Company received a deficiency letter from Nasdaq regarding minimum bid price.
- 2025-04-24: Karl L. Holz elected as non-executive Chairman of the Board of Directors.
- 2025-04-25: Fifth Amendment to Note and Security Agreement executed.
- 2025-05-07: Agreement and Plan of Merger entered into with HOFV Holdings, LLC.
- 2025-05-18: Michael Crawford's Employment Termination Date.
Keywords
Hall of Fame Resort & Entertainment, financial results, merger agreement, going concern, debt, Nasdaq, delisting, Michael Crawford, resignation, HOFV, IRG, CH Capital Lending, Omnibus Extension, sports betting, sponsorship, revenue, net loss, liquidity, capital resources
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.
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).
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.
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.
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.
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
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.
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.
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.
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
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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
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.
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
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.
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.