HOFV
Hall of Fame Resort & Entertainment CO
NASDAQ
10-Q: Hall of Fame Resort & Entertainment Reports Mixed Q2 Results Amidst Ongoing Development
Sentiment:
Quarterly Report
13 August 2024 4:05 PM
Hall of Fame Resort & Entertainment Company reported a net loss for the second quarter of 2024, while navigating ongoing development and financial restructuring.
Worse than expected
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
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.
Summary
- Hall of Fame Resort & Entertainment Company reported a net loss of $15.49 million for the three months ended June 30, 2024, and a net loss of $30.12 million for the six months ended June 30, 2024.
- The company's total revenue for the three months ended June 30, 2024, was $4.7 million, down from $6.1 million in the same period last year.
- Total revenue for the six months ended June 30, 2024, was $8.9 million, compared to $9.2 million for the same period in 2023.
- Operating expenses decreased to $13.1 million for the three months ended June 30, 2024, from $15.7 million in the same period last year.
- Operating expenses for the six months ended June 30, 2024, were $24.4 million, down from $33.3 million in the same period of 2023.
- The company's accumulated deficit was $247.3 million as of June 30, 2024.
- The company had approximately $1.5 million of unrestricted cash and $5.0 million of restricted cash as of June 30, 2024.
- The company has approximately $99.9 million of debt coming due through August 14, 2025.
- The company is seeking additional funding through debt, construction lending, and equity financing.
Sentiment
Score: 3
Explanation: The document presents a mixed picture with significant financial losses and ongoing concerns about the company's ability to continue as a going concern. While there are some positive developments, the overall sentiment is negative due to the financial challenges and need for additional capital.
Positives
- Operating expenses decreased significantly for both the three and six month periods ending June 30, 2024.
- The company received a $9.8 million grant from the State of Ohio in August 2024.
- Sponsorship revenues increased by 8.9% for the six months ended June 30, 2024 compared to the same period in 2023.
Negatives
- The company reported a net loss of $15.49 million for the three months ended June 30, 2024, and a net loss of $30.12 million for the six months ended June 30, 2024.
- Total revenue decreased for both the three and six month periods ending June 30, 2024.
- Hotel revenues decreased by 7.2% for the three months ended June 30, 2024, and 11.4% for the six months ended June 30, 2024.
- The company has a significant amount of debt coming due in the next year.
- The company has a large accumulated deficit of $247.3 million as of June 30, 2024.
Risks
- The company has a substantial amount of debt coming due through August 14, 2025, totaling $99.9 million.
- The company's ability to continue as a going concern is in doubt due to recurring losses and the need for additional financing.
- 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's disclosure controls and procedures were not effective at the reasonable assurance level due to a material weakness in internal control over financial reporting.
Future Outlook
The company expects revenues to increase as additional events are added and the Gameday Bay Waterpark and Hilton Tapestry Hotel are opened. The company also expects operating expenses to increase with the completion of Phase II assets and the addition of events.
Management Comments
- Management expects that it will need to raise additional financing to accomplish its development plan and fund its working capital.
- Management is seeking to obtain additional funding through debt, construction lending, and equity financing.
- Management believes that it will be able to negotiate an amendment that provides for extending the base rent forbearance payment date under the waterpark ground lease or a similar outcome.
Industry Context
The company operates in the resort and entertainment industry, leveraging the popularity of professional football. The results reflect the challenges of developing large-scale projects and the need for ongoing capital investment. The company's performance is impacted by the timing of events, hotel occupancy rates, and the progress of its development projects.
Comparison to Industry Standards
- Comparing HOFV to other entertainment and resort companies, the company's revenue is relatively low, reflecting its early stage of development.
- Companies like Cedar Fair (FUN) and Six Flags (SIX) have much higher revenues and established operations, but also have significantly higher operating costs.
- HOFV's high debt levels are a concern compared to more established companies with stronger balance sheets.
- The company's reliance on external financing is a risk factor compared to companies with more stable cash flows.
- The company's focus on a niche market (professional football) differentiates it from broader entertainment companies.
Stakeholder Impact
- Shareholders face the risk of dilution due to potential equity raises.
- Employees may be impacted by potential cost-cutting measures if the company fails to secure additional funding.
- Customers may experience changes in services and offerings as the company continues to develop its assets.
- Creditors face the risk of default if the company is unable to meet its debt obligations.
- Suppliers may be impacted by the company's financial instability.
Next Steps
- The company will continue to seek additional funding through debt, construction lending, and equity financing.
- The company will continue to develop Phase II assets, including the Gameday Bay Waterpark and Hilton Tapestry Hotel.
- The company will continue to negotiate with Oak Street regarding the waterpark ground lease.
- The company will transition management of the Don Shulas American Kitchen restaurant.
Related Party Transactions
- The company has related-party transactions with IRG Member, PFHOF, and other entities.
- The company entered into a Professional Services Agreement with IRG in conjunction with expanded services requested of an executive.
- The company entered into a Customer Contract with Constellation NewEnergy, Inc. which required a guarantee bond secured by a director and his family trusts.
Key Dates
- 2019-09-16: Date of the original Agreement and Plan of Merger.
- 2020-07-01: Date of the business combination with HOF Village, LLC.
- 2021-09-30: Date of the Equity Distribution Agreement with Wedbush Securities Inc. and Maxim Group LLC.
- 2022-07-14: Date of the Online Market Access Agreement with Instabet, Inc. (betr).
- 2022-09-27: Date of the sale-leaseback of the Fan Engagement Zone land to Twain GL XXXVI, LLC.
- 2022-11-07: Date of the sale-leaseback of the waterpark land to Oak Street Real Estate Capital, LLC.
- 2023-01-12: Date of the first issuance of Series A Preferred Stock.
- 2024-01-11: Date of the sale of 80% interest in the ForeverLawn Sports Complex.
- 2024-04-08: Date of Amendment No. 2 to the Equity Distribution Agreement.
- 2024-05-20: Date of the amendment to the Stark County Port Authority loan.
- 2024-06-05: Date of the amendments to the City of Canton loans.
- 2024-06-11: Date of the loan agreement with Stark Community Foundation, Inc.
- 2024-06-17: Date of the Customer Contract with Constellation NewEnergy, Inc.
- 2024-06-25: Date of the amendments to the Stark Community Foundation, Inc. and NewMarket Project, Inc. loans.
- 2024-06-28: Date the company was awarded a $9.8 million grant from the State of Ohio.
- 2024-08-09: Date the company received the $9.8 million grant from the State of Ohio.
Keywords
Hall of Fame Resort & Entertainment, Financial Results, Debt, Capital Raise, Resort, Entertainment, Sports, Gaming, Real Estate, Development
HOFV
Hall of Fame Resort & Entertainment CO
NASDAQ
Sector: Communication Services
Filings with Classifications
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
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.
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.
Delay expected
26 March 2025 5:00 PM
Annual Report
- The Company postponed its 2024 Annual Meeting of Stockholders.
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.
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.
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
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
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.
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
19 August 2024 5:04 PM
Shareholder Letter
- Second quarter revenue was below the prior year, indicating worse than expected performance.
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.
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.
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.
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.
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
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
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.