UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
For the transition period from ______________ to ______________
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S–T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act).
Yes ☐ No
As of August 8, 2023, there were
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Investments held to maturity | ||||||||
| Investments available for sale | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use lease assets | ||||||||
| Project development costs | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Liabilities | ||||||||
| Notes payable, net | $ | $ | ||||||
| Accounts payable and accrued expenses | ||||||||
| Due to affiliate | ||||||||
| Warrant liability | ||||||||
| Financing liability | ||||||||
| Derivative liability - interest rate swap | ||||||||
| Operating lease liability | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 6, 7, and 8) | ||||||||
| Stockholders’ equity | ||||||||
| Undesignated preferred stock, $ | ||||||||
| Series B convertible preferred stock, $ | ||||||||
| Series C convertible preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total equity attributable to HOFRE | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | ||||||||||||||||
| Sponsorships, net of activation costs | $ | $ | $ | $ | ||||||||||||
| Event, rents and other revenues | ||||||||||||||||
| Hotel revenues | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Hotel operating expenses | ||||||||||||||||
| Depreciation expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of discount on note payable | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||||||||||
| Change in fair value of interest rate swap | ( | ) | ||||||||||||||
| Change in fair value of securities available for sale | ||||||||||||||||
| Loss on extinguishment of debt | ( | ) | ||||||||||||||
| Total other (expense) income | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Preferred stock dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss attributable to non-controlling interest | ||||||||||||||||
| Net loss attributable to HOFRE stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(unaudited)
| Series B Convertible Preferred stock | Series C Convertible Preferred stock | Common Stock | Additional Paid-In | Accumulated | Total Equity Attributable to HOFRE | Non-controlling | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Stockholders | Interest | Equity | ||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Stock-based compensation on RSU and restricted stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock awards | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Cancellation of fractional shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Stock-based compensation on RSU and restricted stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock awards | ||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Sale of shares under ATM | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Balance as of January 1, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Stock-based compensation on RSU and restricted stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - common stock awards | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock awards | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Sale of shares under ATM | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with amendment of notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued in connection with amendment of notes payable | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Modification of Series C and Series D warrants | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Series B preferred stock dividend | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Exchange of Series B preferred stock for Series C preferred stock | ( | ) | ( | ) | - | |||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Stock-based compensation on RSU and restricted stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock awards | ||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with issuance of notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued in connection with issuance of notes payable | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Sale of shares under ATM | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash flows used in operating activities | ||||||||
| Depreciation expense | ||||||||
| Amortization of note discounts | ||||||||
| Accretion of financing liability | ||||||||
| Impairment of film costs | ||||||||
| Interest income on investments held to maturity | ( | ) | ||||||
| Interest paid in kind | ||||||||
| Loss on extinguishment of debt | ||||||||
| Change in fair value of interest rate swap | ||||||||
| Change in fair value of warrant liability | ( | ) | ||||||
| Change in fair value of securities available for sale | ( | ) | ||||||
| Stock-based compensation expense | ||||||||
| Non-cash operating lease expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Operating leases | ( | ) | ||||||
| Due to affiliates | ( | ) | ||||||
| Other liabilities | ||||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash Flows From Investing Activities | ||||||||
| Investments in securities held to maturity | ( | ) | ||||||
| Proceeds from securities held to maturity | ||||||||
| Additions to project development costs and property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from notes payable | ||||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Payment of financing costs | ( | ) | ( | ) | ||||
| Payment on financing liability | ( | ) | ||||||
| Payment of Series B dividends | ( | ) | ( | ) | ||||
| Proceeds from sale of common stock under ATM | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash and restricted cash | ( | ) | ||||||
| Cash and restricted cash, beginning of year | ||||||||
| Cash and restricted cash, end of period | $ | $ | ||||||
| Cash | $ | $ | ||||||
| Restricted Cash | ||||||||
| Total cash and restricted cash | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid during the year for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Project development cost acquired through accounts payable and accrued expenses, net | $ | $ | ||||||
| Amendment of Series C warrant liability for equity classification | $ | $ | ||||||
| Amendment of Series C and D warrants | $ | $ | ||||||
| Initial value of right of use asset upon adoption of ASC 842 | $ | $ | ||||||
| Accrued Series B preferred stock dividends | $ | $ | ||||||
| Shares issued in connection with amendment of notes payable | $ | $ | ||||||
| Warrants issued in connection with amendment of notes payable | $ | $ | ||||||
| Amounts due to affiliate exchanged for notes payable | $ | $ | ||||||
| Shares issued in connection with issuance of notes payable | $ | $ | ||||||
| Warrants issued in connection with issuance of notes payable | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1: Organization, Nature of Business, and Liquidity
Organization and Nature of Business
Hall of Fame Resort & Entertainment Company, a Delaware corporation (together with its subsidiaries, unless the context indicates otherwise, the “Company” or “HOFRE”), was incorporated in Delaware as GPAQ Acquisition Holdings, Inc., a wholly owned subsidiary of our legal predecessor, Gordon Pointe Acquisition Corp. (“GPAQ”), a special purpose acquisition company.
On July 1, 2020, the Company consummated a business combination with HOF Village, LLC, a Delaware limited liability company (“HOF Village”), pursuant to an Agreement and Plan of Merger dated September 16, 2019 (as amended on November 6, 2019, March 10, 2020 and May 22, 2020, the “Merger Agreement”), by and among the Company, GPAQ, GPAQ Acquiror Merger Sub, Inc., a Delaware corporation (“Acquiror Merger Sub”), GPAQ Company Merger Sub, LLC, a Delaware limited liability company (“Company Merger Sub”), HOF Village and HOF Village Newco, LLC, a Delaware limited liability company (“Newco”). The transactions contemplated by the Merger Agreement are referred to as the “Business Combination”.
The Company is a resort and entertainment company leveraging the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (“PFHOF”). Headquartered in Canton, Ohio, the Company owns the Hall of Fame Village, a multi-use sports, entertainment, and media destination centered around the PFHOF’s campus. The Company is pursuing a differentiation strategy across three pillars, including destination-based assets, HOF Village Media Group, LLC (“Hall of Fame Village Media”), and gaming.
The Company has entered into multiple agreements with PFHOF, and certain government entities, which outline the rights and obligations of each of the parties with regard to the property on which the Hall of Fame Village sits, portions of which are owned by the Company and portions of which are net leased to the Company by government and quasi-governmental entities (see Note 9 for additional information). Under these agreements, the PFHOF and the lessor entities are entitled to use portions of the Hall of Fame Village on a direct-cost basis.
Reverse Stock Split
On December 27, 2022, the Company effectuated a reverse stock split of its shares of common stock at a ratio of 1-for-22. See Note 5, Stockholders’ Equity, for additional information. As a result, the number of shares and income (loss) per share disclosed throughout this Quarterly Report on Form 10-Q have been retrospectively adjusted to reflect the reverse stock split.
6
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1: Organization, Nature of Business, and Liquidity (continued)
Liquidity and Going Concern
The Company has sustained recurring losses through June 30, 2023 and
the Company’s accumulated deficit was $
The Company has entered into the following financing transactions. See Note 4 for more information on these transactions.
In January 2023, the Company sold
On February 2, 2023, the Company received proceeds
from the issuance by Stark County Port Authority of $
On May 2, 2023, the Company issued
The Company expects that it will need to raise additional financing to accomplish its development plan over the next several years. 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, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If the Company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its financial condition and operating results, or it may not be able to continue to fund its ongoing operations. If management is unable to execute its planned debt and equity financing initiatives, these conditions raise substantial doubt about the Company’s ability to continue as a going concern to sustain operations for at least one year from the issuance of these condensed consolidated financial statements. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
7
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and Rule 10 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial position and operating results have been included in these statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2022, filed on March 27, 2023. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, 2023.
Consolidation
The condensed consolidated financial statements include the accounts and activity of the Company and its wholly owned subsidiaries. Investments in a variable interest entity in which the Company is not the primary beneficiary, or where the Company does not own a majority interest but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. All intercompany profits, transactions, and balances have been eliminated in consolidation.
The Company owns a
Reclassification
Certain financial statement line items of the Company’s historical presentation have been reclassified to conform to the corresponding financial statement line items in 2023. These reclassifications have no material impact on the historical operating loss, net loss, total assets, total liabilities, or Stockholders’ equity previously reported.
8
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). It may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. The Company will cease to be an emerging growth company on December 31, 2023.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such an extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and assumptions for the Company relate to bad debt, depreciation, costs capitalized to project development costs, useful lives of long-lived assets, potential impairment, accounting for debt modifications and extinguishments, stock-based compensation, and fair value of financial instruments (including the fair value of the Company’s warrant liability). Management adjusts such estimates when facts and circumstances dictate. Actual results could differ from those estimates.
9
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Warrant Liability
The Company accounts for warrants for shares of
the Company’s common stock, par value $
Cash and Restricted Cash
The Company considers all highly liquid investments with an original maturity of three months or less when purchased, to be cash equivalents. There were no cash equivalents as of June 30, 2023 and December 31, 2022, respectively. The Company maintains its cash and escrow accounts at national financial institutions. The balances, at times, may exceed federally insured limits.
Restricted cash includes escrow reserve accounts
for capital improvements and debt service as required under certain of the Company’s debt agreements. The balances as of June 30,
2023 and December 31, 2022 were $
Investments
The Company from time to time invests in debt
and equity securities, including companies engaged in complementary businesses. All marketable equity and debt securities held by the
Company are accounted for under ASC Topic 320, “Investments – Debt and Equity Securities.” As of June 30, 2023 and December
31, 2022, the Company held $
As of June 30, 2023 and December 31, 2022, the
Company also had $
10
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Accounts Receivable
Accounts receivable are generally amounts due under sponsorship and other agreements. Accounts receivable are reviewed for delinquencies on a case-by-case basis and are considered delinquent when the sponsor or customer has missed a scheduled payment. Interest is not charged on delinquencies.
The carrying amount of accounts receivable is
reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually
reviews all delinquent accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if
any, of the balance that will not be collected. As of June 30, 2023 and December 31, 2022, the Company has recorded an allowance for credit losses of $
Deferred Financing Costs
Costs incurred in obtaining financing are capitalized and amortized to additions in project development costs during the construction period over the term of the related loans, without regard for any extension options until the project or portion thereof is considered substantially complete. Upon substantial completion of the project or portion thereof, such costs are amortized as interest expense over the term of the related loan. Any unamortized costs are shown as an offset to “Notes Payable, net” on the accompanying condensed consolidated balance sheets.
Upon an extinguishment of debt (or a modification that is treated as an extinguishment), the remaining deferred financing costs are expensed against “Loss on Extinguishment of Debt”.
11
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Revenue Recognition
The Company follows the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue with Contracts with Customers, to properly recognize revenue. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company generates revenues from various streams such as sponsorship agreements, rents, events, and hotel and restaurant operations. The sponsorship arrangements, in which the customer sponsors a play area or event and receives specified brand recognition and other benefits over a set period of time, recognize revenue on a straight-line basis over the time period specified in the contract. The excess of amounts contractually due over the amounts of sponsorship revenue recognized are included in other liabilities on the accompanying condensed consolidated balance sheets. Contractually due but unpaid sponsorship revenue are included in accounts receivable on the accompanying condensed consolidated balance sheets. Refer to Note 6 for more details. Revenue for short-term rentals, and events are recognized at the time the respective event or service has been performed. Rental revenue for long term leases is recorded on a straight-line basis over the term of the lease beginning on the commencement date.
A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. If the contract does not specify the revenue by performance obligation, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price. Such prices are generally determined using prices charged to customers or using the Company’s expected cost plus margin. Revenue is recognized as the Company’s performance obligations are satisfied. If consideration is received in advance of the Company’s performance, including amounts which are refundable, recognition of revenue is deferred until the performance obligation is satisfied or amounts are no longer refundable.
The Company’s owned hotel revenues primarily consist of hotel room sales, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales, and other ancillary goods and services (e.g., parking) related to owned hotel properties. Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. Although the transaction prices of hotel room sales, goods, and other services are generally fixed and based on the respective room reservation or other agreement, an estimate to reduce the transaction price is required if a discount is expected to be provided to the customer. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling price of each component.
Restaurant revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales related taxes.
12
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Income Taxes
The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.
The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of June 30, 2023 and December 31, 2022, no liability for unrecognized tax benefits was required to be reported.
The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of operating expenses on the Company’s condensed consolidated statements of operations. There were no amounts incurred for penalties and interest for the three and six months ended June 30, 2023 and 2022. The Company does not expect its uncertain tax position to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. The Company’s effective tax rates of zero differ from the statutory rate for the years presented primarily due to the Company’s net operating loss, which was fully reserved for all years presented.
The Company has identified its United States tax return and its state tax return in Ohio as its “major” tax jurisdictions, and such returns for the years 2019 through 2022 remain subject to examination.
13
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Film and Media Costs
The Company capitalizes all costs to develop films
and related media as an asset, included in “project development costs” on the Company’s condensed consolidated balance
sheets. The costs for each film or media will be expensed over the expected release period. During the three months ended June 30, 2023
the Company recorded $
Accounting for Real Estate Investments
Upon the acquisition of real estate properties, a determination is made as to whether the acquisition meets the criteria to be accounted for as an asset or business combination. The determination is primarily based on whether the assets acquired and liabilities assumed meet the definition of a business. The determination of whether the assets acquired and liabilities assumed meet the definition of a business include a single or similar asset threshold. In applying the single or similar asset threshold, if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the assets acquired and liabilities assumed are not considered a business. Most of the Company’s acquisitions meet the single or similar asset threshold due to the fact that substantially all the fair value of the gross assets acquired is attributable to the real estate acquired.
Acquired real estate properties accounted for as asset acquisitions are recorded at cost, including acquisition and closing costs. The Company allocates the cost of real estate properties to the tangible and intangible assets and liabilities acquired based on their estimated relative fair values. The Company determines the fair value of tangible assets, such as land, building, furniture, fixtures, and equipment, using a combination of internal valuation techniques that consider comparable market transactions, replacement costs, and other available information and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition. The Company determines the fair value of identified intangible assets or liabilities, which typically relate to in-place leases, using a combination of internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition.
If a transaction is determined to be a business combination, the assets acquired, liabilities assumed, and any identified intangibles are recorded at their estimated fair values on the transaction date, and transaction costs are expensed in the period incurred.
14
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Fair Value Measurement
The Company follows FASB’s ASC 820–10, Fair Value Measurement, to measure the fair value of its financial instruments and non-financial instruments and to incorporate disclosures about fair value of its financial instruments. ASC 820–10 establishes a framework for measuring fair value and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820–10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.
The three levels of fair value hierarchy defined by ASC 820–10-20 are described below:
| Level 1 |
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |
| Level 2 |
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |
| Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these instruments.
The carrying amount of the Company’s notes payable is considered to approximate their fair value based on the borrowing rates currently available to the Company for loans with similar terms and maturities.
15
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Fair Value Measurement (continued)
The Company uses the fair value hierarchy to measure the fair value of its warrant liabilities, investments available for sale and interest rate swaps. The Company revalues its financial instruments at every reporting period. The Company recognizes gains or losses on the change in fair value of the warrant liabilities as “change in fair value of warrant liability” in the condensed consolidated statements of operations. The Company recognizes gains or losses on the change in fair value of the investments available for sale as “change in fair value of investments available for sale” in the condensed consolidated statements of operations. The Company recognizes gains or losses on the change in fair value of the interest rate swap as “change in fair value of interest rate swap” in the condensed consolidated statements of operations.
| June 30, | December 31, | |||||||||||
| Level | 2023 | 2022 | ||||||||||
| Warrant liabilities – Public Series A Warrants | 1 | $ | $ | |||||||||
| Warrant liabilities – Private Series A Warrants | 3 | |||||||||||
| Warrant liabilities – Series B Warrants | 3 | |||||||||||
| Fair value of aggregate warrant liabilities | $ | $ | ||||||||||
| Fair value of interest rate swap liability | 2 | $ | $ | |||||||||
| Investments available for sale | 3 | $ | $ | |||||||||
The Series A Warrants issued to the previous shareholders of GPAQ (the “Public Series A Warrants”) are classified as Level 1 due to the use of an observable market quote in the active market. Level 3 financial liabilities consist of the Series A Warrants issued to the sponsors of GPAQ (the “Private Series A Warrants”) and the Series B Warrants issued in the Company’s November 2020 follow-on public offering, for which there is no current market for these securities, and the determination of fair value requires significant judgment or estimation. Changes in fair value measurement categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded appropriately.
16
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Fair Value Measurement (continued)
Subsequent measurement
| Public Series A Warrants | Private Series A Warrants | Series B Warrants | Total Warrant Liability | |||||||||||||
| Fair value as of December 31, 2022 | $ | $ | $ | $ | ||||||||||||
| Change in fair value | ||||||||||||||||
| Fair value as of June 30, 2023 | $ | $ | $ | $ | ||||||||||||
| June 30, 2023 | December 31, 2022 | |||||||||||||||
| Private Series A Warrants | Series B Warrants | Private Series A Warrants | Series B Warrants | |||||||||||||
| Term (years) | ||||||||||||||||
| Stock price | $ | $ | $ | $ | ||||||||||||
| Exercise price | $ | $ | $ | $ | ||||||||||||
| Dividend yield | % | % | % | % | ||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Risk free interest rate | % | % | % | % | ||||||||||||
| Number of shares | ||||||||||||||||
The valuation of the investments available for sale were based on sales of similar equity instruments in the time periods near to the measurement dates.
17
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2: Summary of Significant Accounting Policies (continued)
Net Loss Per Common Share
Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods.
Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units and restricted stock awards, and (iii) conversion of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive.
For the three and six months ended June 30, 2023 and 2022, the Company was in a loss position and therefore all potentially dilutive securities would be anti-dilutive and the calculations are presented on the accompanying condensed consolidated statements of operations.
For the | ||||||||
| 2023 | 2022 | |||||||
| Warrants to purchase shares of Common Stock | ||||||||
| Unvested restricted stock awards | ||||||||
| Unvested restricted stock units to be settled in shares of Common Stock | ||||||||
| Shares of Common Stock issuable upon conversion of convertible notes | ||||||||
| Shares of Common Stock issuable upon conversion of Series B Preferred Stock | ||||||||
| Shares of Common Stock issuable upon conversion of Series C Preferred Stock | ||||||||
| Total potentially dilutive securities | ||||||||
18
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 3: Property and Equipment
| Useful Life | June 30, 2023 | December 31, 2022 | ||||||||
| Land | $ | $ | ||||||||
| Land improvements | ||||||||||
| Building and improvements | ||||||||||
| Equipment | ||||||||||
| Property and equipment, gross | ||||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||||
| Property and equipment, net | $ | $ | ||||||||
| Project development costs | $ | $ | ||||||||
For the three months ended June 30, 2023 and 2022,
the Company recorded depreciation expense of $
For the six months ended June 30, 2023 and 2022, the Company transferred
$
Included in project development costs are film
development costs of $
19
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4: Notes Payable, net
| Debt discount and deferred financing | Interest Rate | Maturity | ||||||||||||||||||||
| Gross | costs | Net | Stated | Effective | Date | |||||||||||||||||
| Preferred equity loan(2) | $ | $ | $ | % | % | |||||||||||||||||
| City of Canton Loan(3) | ( | ) | % | % | ||||||||||||||||||
| New Market/SCF | % | % | ||||||||||||||||||||
| JKP Capital Loan(5)(6) | % | % | ||||||||||||||||||||
| MKG DoubleTree Loan(7) | % | % | ||||||||||||||||||||
| Convertible PIPE Notes | ( | ) | % | % | ||||||||||||||||||
| Canton Cooperative Agreement | ( | ) | % | % | ||||||||||||||||||
| CH Capital Loan(5)(6)(8) | % | % | ||||||||||||||||||||
| Constellation EME #2(4) | % | % | ||||||||||||||||||||
| IRG Split Note(5)(6)(9) | % | % | ||||||||||||||||||||
| JKP Split Note(5)(6)(9) | % | % | ||||||||||||||||||||
| ErieBank Loan | ( | ) | % | % | ||||||||||||||||||
| PACE Equity Loan | ( | ) | % | % | ||||||||||||||||||
| PACE Equity CFP | ( | ) | % | % | ||||||||||||||||||
| CFP Loan(6)(10) | % | % | ||||||||||||||||||||
| Stark County Community Foundation | % | % | ||||||||||||||||||||
| CH Capital Bridge Loan(6) | % | % | ||||||||||||||||||||
| Stadium PACE Loan | ( | ) | % | % | ||||||||||||||||||
| Stark County Infrastructure Loan | % | % | ||||||||||||||||||||
| City of Canton Infrastructure Loan | ( | ) | % | % | ||||||||||||||||||
| TDD Bonds | ( | ) | % | % | ||||||||||||||||||
| TIF(11) | ( | ) | % | % | ||||||||||||||||||
| Total | $ | $ | ( | ) | $ | |||||||||||||||||
20
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4: Notes Payable, net (continued)
| Gross | Debt discount and deferred financing costs | Net | ||||||||||
| Preferred equity loan(2) | $ | $ | $ | |||||||||
| City of Canton Loan(3) | ( | ) | ||||||||||
| New Market/SCF | ||||||||||||
| JKP Capital loan(5)(6) | ||||||||||||
| MKG DoubleTree Loan(7) | ||||||||||||
| Convertible PIPE Notes | ( | ) | ||||||||||
| Canton Cooperative Agreement | ( | ) | ||||||||||
| CH Capital Loan(5)(6)(8) | ||||||||||||
| Constellation EME #2(4) | ||||||||||||
| IRG Split Note(5)(6)(9) | ||||||||||||
| JKP Split Note (5)(6)(9) | ||||||||||||
| ErieBank Loan | ( | ) | ||||||||||
| PACE Equity Loan | ( | ) | ||||||||||
| PACE Equity CFP | ( | ) | ||||||||||
| CFP Loan(6)(10) | ||||||||||||
| Stark County Community Foundation | ||||||||||||
| CH Capital Bridge Loan(6) | ||||||||||||
| Stadium PACE Loan | ( | ) | ||||||||||
| Stark County Infrastructure Loan | ||||||||||||
| City of Canton Infrastructure Loan | ( | ) | ||||||||||
| TDD Bonds | ( | ) | ||||||||||
| Total | $ | $ | ( | ) | $ | |||||||
During the three months ended June 30, 2023 and
2022, the Company recorded amortization of note discounts of $
During the six months ended June 30, 2023 and
2022, the Company recorded paid-in-kind interest of $
See below footnotes for the Company’s notes payable:
| (1) | ||
| (2) | ||
| (3) | ||
| (4) |
21
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4: Notes Payable, net (continued)
| (5) | ||
| (6) | ||
| (7) | ||
| (8) | ||
| (9) | ||
| (10) | ||
| (11) |
Accrued Interest on Notes Payable
| June 30, 2023 | December 31, 2022 | |||||||
| Preferred equity loan | $ | $ | ||||||
| City of Canton Loan | ||||||||
| New Market/SCF | ||||||||
| MKG DoubleTree Loan | ||||||||
| Canton Cooperative Agreement | ||||||||
| CH Capital Loan | ||||||||
| IRG Split Note | ||||||||
| JKP Split Note | ||||||||
| ErieBank Loan | ||||||||
| PACE Equity Loan | ||||||||
| CFP Loan | ||||||||
| Stark County Community Foundation | ||||||||
| CH Capital Bridge Loan | ||||||||
| Stadium PACE Loan | ||||||||
| TDD Bonds | ||||||||
| TIF | ||||||||
| Total | $ | $ | ||||||
The amounts above were included in “accounts payable and accrued expenses” on the Company’s condensed consolidated balance sheets.
22
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4: Notes Payable, net (continued)
TIF Loan
For the Company, the Development Finance Authority
of Summit County (“DFA Summit”) offered a private placement of $
The term of the TIF requires the Company to make
installment payments through July 31, 2048. The current imputed interest rate is
On December 27, 2022, the Company paid $
On February 2, 2023, the Company received proceeds
from the issuance on such date by Stark County Port Authority (“Port Authority”) of $
In connection with the issuance of the 2023 Bonds by the Port Authority, the Company transferred ownership of a portion of the roadway and related improvements within Hall of Fame Village grounds to the Port Authority. The Company maintains management rights and maintenance obligations with regard to such roadway pursuant to a Maintenance and Management Agreement among the Port Authority, the Company and the Company’s subsidiary, Newco.
23
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4: Notes Payable, net (continued)
TIF Loan (continued)
The 2023 Bonds will be repaid by the Port Authority from statutory service payments in lieu of taxes paid by the Company in connection with the Company’s Tom Benson Hall of Fame Stadium, ForeverLawn Sports Complex, Constellation Center for Excellence, Center for Performance, Retail I property, Retail II property, Play Action Plaza and an interior private roadway, net of the portion payable to Canton City School District and Plain Local School District and net of administrative fees of Stark County and the City of Canton, and from minimum service payments levied against those parcels excluding the Stadium and Sports Complex. Net statutory service payments are assigned by the City of Canton to the Port Authority for payment of the 2023 Bonds pursuant to a Cooperative Agreement among the Port Authority, City of Canton, the Company and Newco, and then pledged by the Port Authority to the 2023 Bond Trustee for payment of the 2023 Bonds pursuant to a Trust Indenture between the Port Authority and the 2023 Bond Trustee. Minimum service payments are a lien on the parcels under certain TIF declarations and supplements thereto, and are paid by the Company to the 2023 Bond Trustee.
The Company and Newco are required to make payments (“Developer Shortfall Payments”) to the extent the above described net statutory service payments and minimum service payments actually paid are not sufficient to pay the scheduled debt service on the 2023 Bonds, and entered into a guaranty of payment of minimum service payments under a Minimum Payment Guaranty until certain performance criteria (debt service coverage of 1.05x for the 2023 Bonds for three consecutive years) are met. In addition, a member of the Company’s board of directors, Stuart Lichter, individually and with his trust, guaranteed Developer Shortfall Payments until debt service coverage of 1.0x for the 2023 Bonds for three consecutive years are met.
To the extent statutory
service payments and minimum service payments exceed the amounts required for debt service on the 2023 Bonds, the excess paid will first
increase and/or restore the 2023 Bonds fund reserve to a maximum of
24
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4: Notes Payable, net (continued)
November 7, 2022 Refinancing Transactions
On November 7, 2022, the Company and IRG a entered into a letter agreement (the “IRG Letter Agreement”) whereby IRG agreed that IRG’s affiliates and related parties (“IRG Affiliate Lenders”) will provide the Company and its subsidiaries with certain financial support described below in exchange for certain consideration described below. The financial support provided under the IRG Letter Agreement consists of the following (“IRG Financial Support”):
| (a) | Extend the CH Capital Bridge Loan maturity to |
|
| (b) | Release the first position mortgage lien on the Tom Benson Hall of Fame Stadium | |
| (c) | Provide a $ |
|
| (d) | Provide a completion guarantee for the Company’s waterpark | |
| (e) | Amend IRG loans to provide an optional one-year extension
of maturity option to |
In exchange, the Company agreed in the IRG Letter Agreement to:
| (a) | Issue | |
| (b) | Increase interest rate on all IRG loans to | |
| (c) | Make all IRG loans convertible at $ | |
| (d) | Modify the Series C through Series G Warrants to be exercisable at $ |
In the IRG Letter Agreement, IRG and the Company
agreed to comply with all federal and state securities laws and Nasdaq listing rules and to insert “blocker” provisions for
the above-described re-pricing of the warrants and the conversion provisions, such that the total cumulative number of shares of Common
Stock that may be issued to IRG and its affiliated and related parties pursuant to the IRG Letter Agreement may not exceed the requirements
of Nasdaq Listing Rule 5635(d) (“Nasdaq
25
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4: Notes Payable, net (continued)
CFP Loan
On April 27, 2022, Midwest Lender Fund, LLC, a
limited liability company wholly owned by our director Stuart Lichter (“MLF”), loaned $
As part of the consideration for making the Loan,
on June 8, 2022 following stockholder approval, the Company issued to MLF: (A)
On November 7, 2022, the Company further amended
the CFP Loan in order to add an extension option that the Company may exercise at any time in order to extend the CFP Loan to March 31,
2025. In exchange for the amendment, the interest rate of the CFP Loan was increased to
Huntington Loan
On September 27, 2022, HOF Village Retail I, LLC
and HOF Village Retail II, LLC, subsidiaries of the Company, as borrowers (the “Subsidiary Borrowers”), entered into a loan
agreement with The Huntington National Bank, pursuant to which the lender agreed to loan up to $
The Loan matures on September 27, 2024 (the “Initial Maturity Date”). However, Subsidiary Borrowers have the option (the “Extension Option”) to extend the Initial Maturity Date for an additional thirty six (36) months.
As of June 30, 2023, the Company has not drawn under the loan agreement.
Additionally, in connection with the Huntington
Loan, on September 27, 2022, the Company entered into an interest rate swap agreement with a notional amount of $
26
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4: Notes Payable, net (continued)
Future Minimum Principal Payments
| For the years ending December 31, | Amount | |||
| 2023 (six months) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total Gross Principal Payments | $ | |||
| Less: Debt discount and deferred financing costs | ( | ) | ||
| Total Net Principal Payments | $ | |||
27
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5: Stockholders’ Equity
Reverse Stock Split
On September 29, 2022, our stockholders approved
amendments to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our shares of common stock, and
our Board approved a final reverse stock split ratio of 1-for-22. The reverse stock split became effective on December 27, 2022. On the
effective date, every 22 shares of issued and outstanding common stock were combined and converted into one issued and outstanding share
of common stock. Fractional shares were cancelled, and stockholders received cash in lieu thereof in the aggregate amount of $
The number of authorized shares of common stock and the par value per share of common stock remains unchanged. A proportionate adjustment was also made to the maximum number of shares of common stock issuable under the Hall of Fame Resort & Entertainment Company Amended 2020 Omnibus Incentive Plan (the “Plan”).
As a result, the number of shares and income (loss) per share disclosed throughout this Report on Form 10-Q have been retrospectively adjusted to reflect the reverse stock split.
Where applicable, the disclosures below have been adjusted to reflect the 1-for-22 reverse stock split effective December 27, 2022.
Authorized Capital
On November 3, 2020, the Company’s stockholders
approved an amendment to the Company’s charter to increase the authorized shares of Common Stock from
Series A Preferred Stock Designation
On October 8, 2020, the Company filed a Certificate
of Designations with the Secretary of State of the State of Delaware to establish preferences, limitations, and relative rights of the
Series A Preferred Stock. The number of authorized shares of Series A Preferred Stock is
28
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5: Stockholders’ Equity (continued)
2020 Omnibus Incentive Plan
On July 1, 2020, the Company’s omnibus incentive
plan (the “2020 Omnibus Incentive Plan”) became effective immediately. The 2020 Omnibus Incentive Plan was previously approved
by the Company’s stockholders and Board of Directors. Subject to adjustment, the maximum number of shares of Common Stock authorized
for issuance under the 2020 Omnibus Incentive Plan was
Equity Distribution Agreement
On September 30, 2021, the Company entered into
an Equity Distribution Agreement with Wedbush Securities Inc. and Maxim Group LLC with respect to an at-the-market offering program under
which the Company may, from time to time, offer and sell shares of the Company’s Common Stock having an aggregate offering price
of up to $
Issuance of Restricted Stock Awards
| Number of shares | Weighted average grant date fair value | |||||||
| Non–vested at January 1, 2023 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Non–vested at June 30, 2023 | $ | |||||||
For the three months ended June 30, 2023 and 2022, stock-based compensation
related to restricted stock awards was $
29
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5: Stockholders’ Equity (continued)
Issuance of Restricted Stock Units
During
the six months ended June 30, 2023, the Company granted an aggregate of
| Number of shares | Weighted average grant date fair value | |||||||
| Non–vested at January 1, 2023 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Non–vested at June 30, 2023 | $ | |||||||
For the three months ended June 30, 2023 and 2022,
the Company recorded $
Warrants
| Number of Shares | Weighted Average Exercise Price (USD) | Weighted Average Contractual Life (years) | Intrinsic Value (USD) | |||||||||||||
| Outstanding - January 1, 2023 | $ | $ | ||||||||||||||
| Outstanding – June 30, 2023 | $ | $ | ||||||||||||||
| Exercisable – June 30, 2023 | $ | $ | ||||||||||||||
30
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5: Stockholders’ Equity (continued)
Amended and Restated Series C Warrants
On March 1, 2022, in connection with the amendment
to the IRG Split Note (as described in Note 4), the Company amended its Series C Warrants to extend the term of the Series C Warrants
to March 1, 2027. The exercise price of $
The Company accounted for this modification as a cost of the IRG Split Note, whereby the Company calculated the incremental fair value of the Series C Warrants and recorded them as a discount against the IRG Split Note.
On November 7, 2022, the Company further amended
the Series C Warrants to reduce the exercise price to $
| Original Series C Warrants | March 1, 2022 Modification | November 7, 2022 Modification | ||||||||||
| Term (years) | ||||||||||||
| Stock price | $ | $ | $ | |||||||||
| Exercise price | $ | $ | $ | |||||||||
| Dividend yield | % | % | % | |||||||||
| Expected volatility | % | % | % | |||||||||
| Risk free interest rate | % | % | % | |||||||||
| Number of shares | ||||||||||||
| Aggregate fair value | $ | $ | $ | |||||||||
31
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5: Stockholders’ Equity (continued)
Amended and Restated Series D Warrants issue to CH Capital Lending
On March 1, 2022, in
connection with the amendment to the CH Capital Loan (as described in Note 4), the Company amended the Series D Warrants issued to CH
Capital Lending to extend the term of such Series D Warrants to March 1, 2027. The exercise price of $
On November 7, 2022, the Company further amended
the Series C Warrants to reduce the exercise price to $
| Original Series D Warrants | March 1, 2022 Modification | November 7, 2022 Modification | ||||||||||
| Term (years) | ||||||||||||
| Stock price | $ | $ | $ | |||||||||
| Exercise price | $ | $ | $ | |||||||||
| Dividend yield | % | % | % | |||||||||
| Expected volatility | % | % | % | |||||||||
| Risk free interest rate | % | % | % | |||||||||
| Number of shares | ||||||||||||
| Aggregate fair value | $ | $ | $ | |||||||||
On January 12, 2023, the Company issued to ADC LCR Hall of Fame Manager
II, LLC (the “Series A Preferred Investor”)
32
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5: Stockholders’ Equity (continued)
Compliance with Nasdaq Minimum Bid Requirement
As previously reported,
on May 24, 2022, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the
Nasdaq Stock Market (“Nasdaq”) notifying the Company that for the last 30 consecutive business days the bid price for the
Company’s common stock, par value $
On January 11, 2023, the Company received written notice from the Staff of Nasdaq informing the Company that it has regained compliance with the Minimum Bid Requirement because Nasdaq has determined that for 10 consecutive business days, the closing bid price of the Company’s Common Stock was at or above the Minimum Bid Requirement. Accordingly, Nasdaq has advised that the matter is now closed.
Hall of Fame Resort & Entertainment Company 2023 Inducement Plan
On January 24, 2023,
the Company’s board of directors adopted the Hall of Fame Resort & Entertainment Company 2023 Inducement Plan (the “Inducement
Plan”). The Inducement Plan is not subject to stockholder approval. The aggregate number of shares of Common Stock that
may be issued or transferred pursuant to awards covered by the Plan (including existing inducement awards amended to be subject to the
Inducement Plan) is
Note 6: Sponsorship Revenue and Associated Commitments
Johnson Controls, Inc.
On July 2, 2020, the Company entered into an Amended
and Restated Sponsorship and Naming Rights Agreement (the “Naming Rights Agreement”) among Newco, PFHOF and Johnson Controls,
Inc. (“JCI” or “Johnson Controls”), that amended and restated the Sponsorship
and Naming Rights Agreement, dated as of November 17, 2016 (the “Original Sponsorship Agreement”). Among other things, the
Amended Sponsorship Agreement: (i) reduced the total amount of fees payable to Newco during the term of the Amended Sponsorship Agreement
from $
JCI has a right to terminate the Naming Rights Agreement if the Company does not provide evidence to JCI by October 31, 2021 that it has secured sufficient debt and equity financing to complete Phase II, or if Phase II is not open for business by January 2, 2024, in each case subject to day-for-day extension due to force majeure and a notice and cure period. In addition, under the Naming Rights Agreement JCI’s obligation to make sponsorship payments to the Company may be suspended commencing on December 31, 2020, if the Company has not provided evidence reasonably satisfactory to JCI on or before December 31, 2020, subject to day-for-day extension due to force majeure, that the Company has secured sufficient debt and equity financing to complete Phase II.
Additionally, on October 9, 2020, Newco,
entered into a Technology as a Service Agreement (the “TAAS Agreement”) with JCI. Pursuant to the TAAS Agreement, JCI will
provide certain services related to the construction and development of the Hall of Fame Village (the “Project”), including,
but not limited to, (i) design assist consulting, equipment sales and turn-key installation services in respect of specified systems to
be constructed as part of Phase 2 and Phase 3 of the Project and (ii) maintenance and lifecycle services in respect of certain systems
constructed as part of Phase 1, and to be constructed as part of Phase 2 and Phase 3, of the Project. Under the terms of the TAAS Agreement,
Newco has agreed to pay JCI up to an aggregate of approximately $
The TAAS Agreement provides that in respect of the Naming Rights Agreement, Johnson Controls and Newco intend, acknowledge and understand that: (i) Newco’s performance under the TAAS Agreement is essential to, and a condition to Johnson Controls’ performance under, the Naming Rights Agreement; and (ii) Johnson Controls’ performance under the Naming Rights Agreement is essential to, and a condition to Newco’s performance under, the TAAS Agreement. In the TAAS Agreement, Johnson Controls and Newco represent, warrant and agree that the transactions agreements and obligations contemplated under the TAAS Agreement and the Naming Rights Agreement are intended to be, and shall be, interrelated, integrated and indivisible, together being essential to consummating a single underlying transaction necessary for the Project.
33
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 6: Sponsorship Revenue and Associated Commitments (continued)
Johnson Controls, Inc. (continued)
On May 10, 2022, the Company received from JCI a notice of termination (the “TAAS Notice”) of the TAAS Agreement effective immediately. The TAAS Notice states that termination of the TAAS Agreement by JCI is due to Newco’s alleged breach of its payment obligations. Additionally, JCI in the TAAS Notice demands the amount which is the sum of: (i) all past due payments and any other amounts owed by Newco under the TAAS Agreement; (ii) all commercially reasonable and documented subcontractor breakage and demobilization costs; and (iii) all commercially reasonable and documented direct losses incurred by JCI directly resulting from the alleged default by the Company and the exercise of JCI’s rights and remedies in respect thereof, including reasonable attorney fees.
Also on May 10, 2022, the
Company received from JCI a notice of termination (“Naming Rights Notice”) of the Name Rights Agreement, effective immediately.
The Naming Rights Notice states that the termination of the Naming Rights Agreement by JCI is due to JCI’s concurrent termination
of the TAAS Agreement. The Naming Rights Notice further states that the Company must pay JCI, within 30 days following the date of the
Naming Rights Notice, $
The Company disputes that it is in default under either the TAAS Agreement or the Naming Rights Agreement. The Company believes JCI is in breach of the Naming Rights Agreement and the TAAS Agreement due to their failure to make certain payments in accordance with the Naming Rights Agreement, and, on May 16, 2022, provided notice to JCI of these breaches.
The Company is pursuing dispute resolution
pursuant to the terms of the Naming Rights Agreement to simultaneously defend against JCI’s allegations and pursue its own
claims. The Company anticipates that resolution of the dispute regarding the Naming Rights Agreement will include the TAAS
Agreement. The parties participated in mediation in November 2022, but were unable to reach a resolution. On January 24, 2023, Newco
filed a demand for arbitration, asserting claims against JCI for breach of contract, breach of the implied duty of good faith and
fair dealing, and unjust enrichment. On February 16, 2023, JCI filed its response, generally denying Newco’s allegations and
asserting counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust
enrichment. On March 9, 2023, Newco filed its response to JCI’s counterclaims, generally denying JCI’s allegations. A
panel of three arbitrators has been constituted to hear and determine the dispute. The Company presently anticipates that the
arbitration hearing will be held during the fourth quarter of 2023 in Ohio. The ultimate outcome of this dispute cannot presently be
determined. However, in management’s opinion, the likelihood of a material adverse outcome is remote. Accordingly,
adjustments, if any, that might result from the resolution of this matter have not been reflected in the accompanying condensed
consolidated financial statements. During the year ended December 31, 2022, the Company suspended its revenue recognition until the
dispute is resolved and has recorded an allowance against the amounts due as of June 30, 2023 and December 31, 2022 in the amount of
$
34
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 6: Sponsorship Revenue and Associated Commitments (continued)
Other Sponsorship Revenue
The Company has additional revenue primarily from sponsorship programs that provide its sponsors with strategic opportunities to reach customers through our venue including advertising on our website. Sponsorship agreements may contain multiple elements, which provide several distinct benefits to the sponsor over the term of the agreement and can be for a single or multi-year term. These agreements provide sponsors various rights such as venue naming rights, signage within our venues, the ability to be the exclusive provider of a certain category of product, and advertising on our website and other benefits as detailed in the agreements.
Year ending December 31,
| 2023 (six months) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total | $ |
As services are provided, the Company is recognizing
revenue on a straight-line basis over the expected term of the agreement. During the three months ended June 30, 2023 and 2022, the Company
recognized $
Note 7: Other Commitments
Management Agreement with Crestline Hotels & Resorts
On October 22, 2019, the Company entered into
a management agreement with Crestline Hotels & Resorts (“Crestline”). The Company appointed and engaged Crestline as the
Company’s exclusive agent to supervise, direct, and control management and operation of the DoubleTree Canton Downtown Hotel. In
consideration of the services performed by Crestline, the Company agreed to the greater of:
35
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 7: Other Commitments (continued)
Constellation EME Express Equipment Services Program
On February 1, 2021, the Company entered into
a contract with Constellation whereby Constellation will sell and/or deliver materials and equipment purchased by the Company. The Company
is required to provide $
Sports Betting Agreements
On July 14, 2022, Newco entered into an Online
Market Access Agreement with Instabet, Inc. doing business as betr (“BETR”), pursuant to which BETR will serve as a Mobile
Management Services Provider (as defined under applicable Ohio gaming law) wherein BETR will host, operate and support a branded online
sports betting service in Ohio, subject to procurement of all necessary licenses. The initial term of the Online Market Access Agreement
is
As part of this agreement, Newco will receive
a limited equity interest in BETR and certain revenue sharing, along with the opportunity for sponsorship and cross-marketing. The limited
equity interest was in the form of penny warrants valued at $
On November 2, 2022, the Company secured conditional approval from the state for mobile and retail sports betting. The Ohio Casino Control Commission provided the required authorization for HOFV to gain licensing for a physical sports betting operation – called a sportsbook – as well as an online sports betting platform, under Ohio’s sports betting law HB29. As of January 1, 2023, sports betting is legal in Ohio for anyone in the state that is of legal betting age. The conditional approval requires that the Company accept bets under both the mobile and retail sports books prior to December 31, 2023. The Company satisfied that condition for the mobile sports book. However, the Company does not currently have a sports betting partner for its retail sports book. If the Company does not take an in-person sports bet through an approved retail partner at its designated facility by December 31, 2023, or otherwise obtain a waiver to this requirement, then the Ohio Casino Control Commission may take administrative actions to revoke the Company’s retail license.
During the three and
six months ended June 30, 2023, the Company recognized revenue of $
36
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 7: Other Commitments (continued)
Other Liabilities
| June 30, 2023 | December 31, 2022 | |||||||
| Activation fund reserves | $ | $ | ||||||
| Deferred revenue | ||||||||
| Deposits and other liabilities | ||||||||
| Total | $ | $ | ||||||
Other Commitments
The Company has other commitments, as disclosed in Notes 6, 8 and 9 within these condensed consolidated footnotes.
Note 8: Contingencies
During the normal course of its business, the Company is subject to occasional legal proceedings and claims. The Company does not have any pending litigation that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on its results of operations, financial condition, or cash flows.
Note 9: Related-Party Transactions
Due to Affiliates
| June 30, 2023 | December 31, 2022 | |||||||
| Due to IRG Member | $ | $ | ||||||
| Due to PFHOF | ||||||||
| Total | $ | $ | ||||||
IRG Canton Village Member, LLC, a member of HOF
Village, LLC controlled by our director Stuart Lichter (the “IRG Member”) and an affiliate, provides certain supporting services
to the Company. As noted in the Operating Agreement of HOF Village, LLC, an affiliate of the IRG Member, IRG Canton Village Manager, LLC,
the manager of HOF Village, LLC controlled by our director Stuart Lichter, may earn a master developer fee calculated as
The due to related party amounts in the table above are non-interest bearing advances from an affiliate of IRG Member due on demand.
The amounts above due to PFHOF relate to advances to and from PFHOF, including costs for onsite sponsorship activation, sponsorship sales support, shared services, event tickets, and expense reimbursements.
37
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 9: Related-Party Transactions (continued)
Global License Agreement
Effective April 8, 2022, Newco and PFHOF, entered
into a Global License Agreement (the “Global License Agreement”). The Global License Agreement consolidates and replaces the
First Amended and Restated License Agreement, the Amended and Restated Media License Agreement, and the Branding Agreement the parties
had previously entered into. The Global License Agreement sets forth the terms under which PFHOF licenses certain marks and works to Newco
and its affiliates to exploit existing PFHOF works and to create new works. The Global License Agreement grants Newco and its affiliates
an exclusive right and license to use the PFHOF marks in conjunction with theme-based entertainment and attractions within the City of
Canton, Ohio; youth sports programs, subject to certain exclusions; e-gaming and video games; and sports betting. The Global License Agreement
also grants Newco and its affiliates a non-exclusive license to use the PFHOF marks and works in other areas of use, with a right of first
refusal, subject to specified exclusions. The Global License Agreement acknowledges the existence of agreements in effect between PFHOF
and certain third parties that provide for certain restrictions on the rights of PFHOF, which affects the rights that can be granted to
Newco and its affiliates. These restrictions include, but are not limited to, such third parties having co-exclusive rights to exploit
content based on the PFHOF enshrinement ceremonies and other enshrinement events. The Global License Agreement requires Newco to pay PFHOF
an annual license fee of $
| For the years ending December 31, | Amount | |||
| 2023 (six months) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total Gross Principal Payments | $ | |||
During the three months ended June 30, 2023 and
2022, the Company paid $
38
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 9: Related-Party Transactions (continued)
Hotel Construction Loan Commitment Letter
On November 3, 2022,
the Company entered into a Commitment Letter (the “Hotel Construction Loan Commitment Letter”), by and among the Company,
as guarantor, HOF Village Hotel WP, LLC (“Hotel”), an indirect wholly owned subsidiary of the Company, as borrower, and Industrial
Realty Group, Inc. (“IRGInc”), as lender. Stuart Lichter, a director of the Company, is President and Chairman of the Board
of Industrial Realty Group, LLC (“IRGLLC”). Pursuant to the terms of the Hotel Construction Loan Commitment Letter, IRGInc
committed to provide, or to arrange for one of IRGInc’s affiliates to provide, a loan of $
The Hotel Construction
Loan will have a two-year term with one option to extend for twelve months, subject to standard extension conditions. The collateral for
the Hotel Construction Loan will include, without limitation:
IRG Financial Support and Consideration
On November 7, 2022, the Company entered into a letter agreement (the “IRG Letter Agreement”) with IRGLLC, pursuant to which IRGLLC agreed that IRGLLC and IRGLLC’s affiliates and related parties will provide the Company and its subsidiaries with certain financial support described below in exchange for certain consideration described below.
The financial support provided under the IRG Letter Agreement consists of the following (the “IRG Financial Support”):
Waterpark Construction Financing Facilitation. IRGLLC agreed that its affiliate CH Capital Lending, LLC (“CHCL”), would help facilitate the closing of financing with Oak Street with regard to construction of the Waterpark Project, by among other things, releasing CHCL’s first mortgage lien on the Stadium Leasehold Interests and pledge of membership interests in HOFV Stadium. In addition, IRGLLC agreed to provide a completion guaranty to facilitate other needed financing for the Waterpark Project, as required.
39
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 9: Related-Party Transactions (continued)
IRG Financial Support and Consideration (continued)
Extension of CHCL Bridge Loan. IRGLLC agreed that CHCL would extend to March 31, 2024 the maturity of the promissory note dated June 16, 2022, issued by the Company, HOF Village Retail I, LLC and HOF Village Retail II, LLC, as borrowers, to CHCL, as lender (the “Bridge Loan”).
Provide One Year Extension Option for All IRG Affiliate Lender Loans. All loans from affiliates and related parties of IRGLLC (“IRG Affiliate Lenders”) will be amended to provide for an optional one-year extension of their maturity until March 31, 2025 for a one percent extension fee, which is payable if and when an IRG Affiliate Lender loan is extended. The IRG Affiliate Lender loans consist of the following: (i) Bridge Loan, with an existing modified maturity date of March 31, 2024; (ii) the term loan, payable to CHCL, with an existing maturity of March 31, 2024; (iii) the first amended and restated promissory note, dated March 1, 2022, payable to IRG, LLC, with an existing maturity of March 31, 2024; (iv) the first amended and restated promissory note, dated March 1, 2022, payable to JKP Financial, LLC, with an existing maturity of March 31, 2024; (v) the Secured Cognovit Promissory Note, dated as of June 19, 2020, assigned June 30, 2020 and amended December 1, 2020 and March 1, 2022, payable to JKP Financial, LLC, with an existing maturity of March 31, 2024; and (vi) the promissory note, dated April 27, 2022, payable to Midwest Lender Fund, LLC (“MLF”), with an existing maturity of April 30, 2023, and with an option to extend the maturity until March 31, 2024.
Tapestry Hotel Construction Financing Commitment Letter. IRGLLC agreed to provide a commitment for financing the Hotel Project, as set forth in the Hotel Construction Loan Commitment Letter.
In consideration of the IRG Financial Support to be received by the Company and its subsidiaries, the Company agreed in the IRG Letter Agreement to provide the following consideration to IRGLLC and the IRG Affiliate Lenders:
The Company agreed to
make a payment of $
The Company agreed to
modify the IRG Affiliate Lender loans as follows: (i) all IRG Affiliate Lender loans will bear interest at
The Company agreed to modify the Series C through Series G warrants held by IRG Affiliate Lenders as follows: (i) the exercise price of the Series C through Series G warrants held by IRG Affiliate Lenders will be reset to Market Price; and (ii) the warrant expiration dates of the Series C through Series G warrants held by IRG Affiliate Lenders will be extended by two years from their current expiration dates.
40
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 9: Related-Party Transactions (continued)
IRG Financial Support and Consideration (continued)
In the IRG Letter Agreement,
Note 10: Concentrations
For the three months ended June 30, 2023,
For the six months ended June 30, 2023,
As of June 30, 2023,
At any point in time, the Company can have funds in their operating accounts and restricted cash accounts that are with third-party financial institutions. These balances in the U.S. may exceed the Federal Deposit Insurance Corporation insurance limits. While the Company monitors the cash balances in their operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or other adverse conditions in the financial markets occurs.
Note 11: Leases
The Company has entered into operating leases as the lessee primarily for ground leases under its stadium, sports complex, and parking facilities.
At the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2022, which were accounted for under ASC 840, were not reassessed for classification.
For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases and is subsequently presented at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term for all of the Company’s leases includes the noncancelable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed periodically for impairment.
Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the shorter of the lease term or its useful life and interest expense determined on an amortized cost basis, with the lease payments allocated between a reduction of the lease liability and interest expense.
41
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 11: Leases (continued)
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Operating leases: | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Lease liability | ||||||||
| Finance leases: | ||||||||
| Right-of-use assets | ||||||||
| Lease liability | ||||||||
| Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |||||||
| Operating lease cost | $ | $ | ||||||
| Other information: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Weighted-average remaining lease term – operating leases (in years) | ||||||||
| Weighted-average discount rate – operating leases | % | % | ||||||
| For The Years Ending December 31, | ||||
| 2023 (six months) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total future minimum lease payments, undiscounted | ||||
| Less: imputed interest | ( | ) | ||
| Present value of future minimum lease payments | $ | |||
42
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 11: Leases (continued)
Lessor Commitments
As of June 30, 2023, the Company’s Constellation
Center for Excellence and retail facilities were partially leased including leases by the Company’s subsidiaries. During the three
months ended June 30, 2023 and 2022, the Company recorded $
Year ending December 31:
| 2023 (six months) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total | $ |
Note 12: Financing Liability
On September 27, 2022 the Company sold the land
under the Company’s Fan Engagement Zone to Twain. Simultaneously, the Company entered into a lease agreement with Twain (the sale
of the property and simultaneous leaseback is referred to as the “Sale-Leaseback”). The Sale-Leaseback is repayable over a
On November 7, 2022, HOFV Waterpark sold the land
under the Company’s future waterpark. Simultaneously, the Company entered into a lease agreement with the buyer of the property.
The Sale-Leaseback for the waterpark is repayable over a 99-year term. Under the terms of the leaseback agreement, the Company’s
initial base rent is $
The Company accounted for the Sale-Leaseback transactions
with Twain and Oak Street as financing transactions with the purchaser of the property. The Company concluded the lease agreements both
met the qualifications to be classified as finance leases due to the significance of the present value of the lease payments, using a
discount rate of
The presence of a finance-type lease in the sale-leaseback transactions indicates that control of the land under the Fan Engagement Zone and HOFV Waterpark has not transferred to the buyer/lessor and, as such, the transactions were both deemed a failed sale-leaseback and must be accounted for as a financing arrangement. As a result of this determination, the Company is viewed as having received the sales proceeds from the buyer/lessor in the form of a hypothetical loan collateralized by its leased land. The hypothetical loan is payable as principal and interest in the form of “lease payments” to the buyer/lessor. As such, the Company will not derecognize the property from its books for accounting purposes until the lease ends.
43
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 12: Financing Liability (continued)
As of June 30, 2023, the carrying value of the
financing liability was $
As of December 31, 2022, the carrying value of
the financing liability was $
The Company has a right to re-purchase the land from Twain at any time on or after September 27, 2025 at a fixed price according to the lease. Oak Street and HOFV Waterpark also entered into a purchase option agreement, pursuant to which HOFV Waterpark is granted an option to purchase the waterpark property back from Oak Street that can be exercised during the period beginning on December 1, 2027 and ending on November 30, 2034.
| 2023 (six months) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total Minimum Liability Payments | ||||
| Imputed Interest | ( | ) | ||
| Total | $ |
Note 13: Subsequent Events
Subsequent events have been evaluated through August 10, 2023, the date the condensed consolidated financial statements were issued. Except as disclosed below, no events have been identified requiring disclosure or recording.
Pro Football Hall of Fame Purchase Agreement
On August 1, 2023, the Company and PFHOF entered into a real estate
purchase agreement, where by the Company agreed to sell to PFHOF certain real estate in exchange for $
44
Item 2. Management’s discussion and analysis of financial condition and results of operations
This Quarterly Report on Form 10–Q contains forward–looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward–looking statements. The statements contained herein that are not purely historical are forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward–looking statements are often identified by the use of words such as, but not limited to, “will,” “anticipate,” “estimates,” “should,” “expect,” “guidance,” “project,” “intend,” “plan,” “strategy,” “believe” and similar expressions or variations intended to identify forward–looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Factors that could cause or contribute to our results differing materially from those expressed or implied by forward–looking statements include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Form 10-K for the fiscal year ended December 31, 2022 as filed with the Securities and Exchange Commission (“SEC”) on March 27, 2023, and in our reports subsequently filed with the SEC. The forward–looking statements set forth herein speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward–looking statements to reflect events or circumstances after the date of such statements.
Unless the context otherwise requires, the “Company”, “we,” “our,” “us” and similar terms refer to Hall of Fame Resort & Entertainment Company, a Delaware corporation.
The following discussion should be read in conjunction with the Company’s Form 10-K for the year ended December 31, 2022, filed with the SEC and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.
Business Overview
We are a resort and entertainment company leveraging the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (“PFHOF”). Headquartered in Canton, Ohio, we own the Hall of Fame Village, a multi-use sports and entertainment destination centered around the PFHOF’s campus. We are creating a diversified set of revenue streams through developing themed attractions, premier entertainment programming and sponsorships. We are pursuing a diversified strategy across three pillars, including destination-based assets, the Media Company, and gaming.
The strategic plan has been developed into three phases: Phase I, Phase II, and Phase III. Phase I of the Hall of Fame Village is operational, consisting of the Tom Benson Hall of Fame Stadium, the ForeverLawn Sports Complex, and HOF Village Media Group, LLC (“Hall of Fame Village Media” or the “Media Company”). The Tom Benson Hall of Fame Stadium hosts multiple sports and entertainment events, including the NFL Hall of Fame Game, Enshrinement and Concert for Legends during the annual Pro Football Hall of Fame Enshrinement Week. The ForeverLawn Sports Complex hosts camps and tournaments for football players, as well as athletes from across the country in other sports such as lacrosse, rugby and soccer. Hall of Fame Village Media leverages the sport of professional football to produce exclusive programming. For example, licensing the extensive content controlled by the PFHOF.
45
We have developed new hospitality, attraction and corporate assets as part of our Phase II development plan. Phase II components of the Hall of Fame Village include the Constellation Center for Excellence (an office building including retail and meeting space, that opened in November 2021), the Center for Performance (a convention center/field house, that opened in August of 2022), the Play Action Plaza (completed in August of 2022), and the Fan Engagement Zone (Retail Promenade), core and shell for Retail I was completed in August of 2022 and the core and shell of Retail II was completed in November of 2022, two hotels (one on campus and one in downtown Canton that opened in November 2020), and the Hall of Fame Indoor Waterpark. The on-campus hotel and waterpark are expected to open in the fourth quarter of 2024. Phase III expansion plans may include a potential mix of residential space, additional attractions, entertainment, dining, merchandise and more.
Key Components of the Company’s Results of Operations
Revenue
We generate revenue from various streams such as sponsorship agreements, rents, events, and hotel and restaurant operations. The sponsorship arrangements, in which the customer sponsors an asset or event and receives specified brand recognition and other benefits over a set period of time, recognize revenue on a straight-line basis over the time period specified in the contract. Revenue for rents, cost recoveries, and events are recognized at the time the respective event or service has been performed. Rental revenue for long term leases is recorded on a straight-line basis over the term of the lease beginning on the commencement date.
Our owned hotel revenues primarily consist of hotel room sales, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales, and other ancillary goods and services (e.g., parking) related to owned hotel properties. Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided.
Restaurant revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales related taxes.
Operating Expenses
Our operating expenses include operating expenses, hotel operating expenses, and depreciation expense. These expenses have increased with completion of Phase II assets and would expect to continue to increase with completion of the on-campus hotel, waterpark, and Phase III development.
Our operating expenses include the costs associated with running and maintaining operational entertainment and destination assets such as the Tom Benson Hall of Fame Stadium and the ForeverLawn Sports Complex along within management and professional fees. Factors that will contribute to increased operating expenses include: more of our Phase II assets becoming operational, the addition of events for top performers, and sporting events.
Our depreciation expense includes the related costs of owning and operating significant property and entertainment assets. These expenses have grown as through completion of the Phase I and Phase II development.
46
Recent Developments
Dispute Regarding Naming Rights Agreement with Johnson Controls
The Company is in a dispute with JCI regarding the Naming Rights Agreement. The Company is pursuing dispute resolution pursuant to the terms of the Naming Rights Agreement to simultaneously defend against JCI’s allegations and pursue its own claims. The parties participated in mediation in November 2022, but were unable to reach a resolution. On January 24, 2023, Newco filed a demand for arbitration, asserting claims against JCI for breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment. On February 16, 2023, JCI filed its response, generally denying Newco’s allegations and asserting counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. On March 9, 2023, Newco filed its response to JCI’s counterclaims, generally denying JCI’s allegations. A panel of three arbitrators has been constituted to hear and determine the dispute. The Company anticipates that the hearing will be held during the fourth quarter of 2023 in Ohio. The ultimate outcome of this dispute cannot presently be determined. However, in management’s opinion, the likelihood of a material adverse outcome is remote. Accordingly, adjustments, if any, that might result from the resolution of this matter have not been reflected in the accompanying condensed consolidated financial statements. During the year ended December 31, 2022, the Company suspended its revenue recognition until the dispute is resolved and has recorded an allowance against the amounts due as of June 30, 2023 and December 31, 2022 in the amount of $7,187,500 and $4,812,500, respectively. The balances due under the Naming Rights Agreement as of June 30, 2023 and December 31, 2022 amounted to $8,697,917 and $6,635,417, respectively.
See Note 6: Sponsorship Revenue and Associated Commitments – Johnson Controls, Inc., for additional information relating to this dispute.
Amendment of Michael Crawford’s Employment Agreement
On April 17, 2023, Michael Crawford, President and Chief Executive Officer of the Company, voluntarily determined to reduce his base salary by $50,000 for each of fiscal years 2023-2026. Mr. Crawford decided to take the salary reduction as part of a focus on lowering Company costs. The voluntary salary reduction was effective May 1, 2023.
Appointment of Class A Director
On June 8, 2023, the Board of Directors of the Company appointed Mr. Jerome Bettis as a Class A director to fill a vacancy. As Class A director, Mr. Bettis’ initial term expires at the 2024 Annual Meeting of Stockholders. The Board determined that Mr. Bettis qualifies as an independent director in accordance with the Nasdaq listing rules. Mr. Bettis’ compensation as a director will be consistent with the compensation policies applicable to the Company’s other independent directors, as described in the Company’s definitive proxy statement on Schedule 14A filed with the U.S. Securities and Exchange Commission on April 25, 2023.
47
Results of Operations
The following table sets forth information comparing the components of net loss for the three months ended June 30, 2023 and the comparable period in 2022:
| For the Three Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Revenues | ||||||||
| Sponsorships, net of activation costs | $ | 691,236 | $ | 452,772 | ||||
| Event, rents and other revenue | 3,410,010 | 668,863 | ||||||
| Hotel revenues | 2,026,031 | 1,563,900 | ||||||
| Total revenues | 6,127,277 | 2,685,535 | ||||||
| Operating expenses | ||||||||
| Operating expenses | 10,693,853 | 7,316,113 | ||||||
| Hotel operating expenses | 1,587,620 | 1,316,150 | ||||||
| Depreciation expense | 3,373,076 | 3,527,581 | ||||||
| Total operating expenses | 15,654,549 | 12,159,844 | ||||||
| Loss from operations | (9,527,272 | ) | (9,474,309 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense, net | (4,404,146 | ) | (921,392 | ) | ||||
| Amortization of discount on note payable | (882,240 | ) | (1,122,324 | ) | ||||
| Change in fair value of warrant liability | (223,000 | ) | 2,423,000 | |||||
| Change in fair value of interest rate swap | 60,000 | - | ||||||
| Change in fair value of securities available for sale | 1,683,246 | - | ||||||
| Total other (expense) income | (3,766,140 | ) | 379,284 | |||||
| Net loss | $ | (13,293,412 | ) | $ | (9,095,025 | ) | ||
| Series B preferred stock dividends | (266,000 | ) | (266,000 | ) | ||||
| Loss attributable to non-controlling interest | 5,795 | 158,592 | ||||||
| Net loss attributable to HOFRE stockholders | $ | (13,553,617 | ) | $ | (9,202,433 | ) | ||
| Net loss per share – basic | $ | (2.39 | ) | $ | (1.78 | ) | ||
| Weighted average shares outstanding, basic and diluted | 5,660,385 | 5,183,035 | ||||||
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Three Months Ended June 30, 2023 as Compared to the Three Months Ended June 30, 2022
Sponsorship Revenues
Sponsorship revenues totaled $691,236 for the three months ended June 30, 2023 as compared to $452,772 for the three months ended June 30, 2022, representing an increase of $238,464, or 52.7%. This increase was primarily driven by the Company gaining new sponsorships.
Event, rents and other revenues
Revenue from event, rents and other revenues was $3,410,010 for the three months ended June 30, 2023 compared to $668,863 for the three months ended June 30, 2022, for an increase of $2,741,147, or 409.8%. This increase was primarily driven by an increase in event revenue, an increase in food and beverage sales, and an increase in revenue from short term rentals. These increases were the result of the hosting of the USFL, certain concerts and other events in our Tom Benson Hall of Fame Stadium, the resumption of many sports and other tournaments in our ForeverLawn Sports Complex, as well as revenue associated with the opening of our Don Shula’s American Kitchen restaurant.
Hotel Revenues
Hotel revenue was $2,026,031 for the three months ended June 30, 2023 compared to $1,563,900 from the three months ended June 30, 2022 for an increase of $462,131, or 29.5%. This was driven by an increase in guest stays and conferences at the hotel and an increase in the average daily rate.
Operating Expenses
Operating expense was $10,693,853 for the three months ended June 30, 2023 compared to $7,316,113 for the three months ended June 30, 2022, for an increase of $3,377,740, or 46.2%. This increase was primarily driven by higher personnel and related benefits costs, the timing of recognition for certain compensation-related expenses and an increase in production fees for our events and media productions.
Hotel Operating Expenses
Hotel operating expense was $1,587,620 for the three months ended June 30, 2023 compared to $1,316,150 for the three months ended June 30, 2022 for an increase of $271,470, or 20.6%. This increase was primarily driven by an increase in hotel occupancy and higher associated operating costs.
Depreciation Expense
Depreciation expense was $3,373,076 for the three months ended June 30, 2023 compared to $3,527,581 for the three months ended June 30, 2022, for a decrease of $154,505, or 4.4%. The decrease in depreciation expense is primarily the result of certain large assets becoming fully depreciated in 2022.
Interest Expense
Total interest expense was $4,404,146 for the three months ended June 30, 2023 compared to $921,392 for the three months ended June 30, 2022, for an increase of $3,482,754, or 378%. The increase in total interest expense was primarily due to an increase in the amount of total debt outstanding, a decrease in the proportion of debt that is capitalized for ongoing construction projects, and an increase in average interest rates.
Amortization of Debt Discount
Total amortization of debt discount was $882,240 for the three months ended June 30, 2023, compared to $1,122,324 for the three months ended June 30, 2022, for a decrease of $240,084, or 21.4%. The decrease is primarily due to the removal of discounts from IRG-related debt upon the modification of the debt in November 2022.
Change in Fair Value of Warrant Liability
The change in fair value warrant liability represents a loss of $223,000 for the three months ended June 30, 2023 compared to a gain of $2,423,000 for the three months ended June 30, 2022, for a decrease of $2,646,000 or 109.2%. The decrease in change in fair value of warrant liability was due primarily to a change in our stock price.
Change in Fair Value of Interest Rate Swap
The change in fair value of interest rate swap was $60,000 for the three months ended June 30, 2023. This was due to the change in fair value of the interest rate swap entered into in connection with an agreement with Huntington Bank.
Change in Fair Value of Securities Available for Sale
The change in fair value of securities available for sale was $1,683,246 for the three months ended June 30, 2023. This was due to the change in fair value of our penny warrants granted to us from our online sports betting partner.
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Six Months Ended June 30, 2023 as Compared to the Six Months Ended June 30, 2022
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Revenues | ||||||||
| Sponsorships, net of activation costs | $ | 1,364,711 | $ | 1,272,062 | ||||
| Event, rents and other revenues | 4,318,322 | 1,006,256 | ||||||
| Hotel revenues | 3,564,677 | 2,513,741 | ||||||
| Total revenues | 9,247,710 | 4,792,059 | ||||||
| Operating expenses | ||||||||
| Operating expenses | 24,367,569 | 14,982,722 | ||||||
| Hotel operating expenses | 3,046,823 | 2,469,262 | ||||||
| Depreciation expense | 5,926,436 | 6,769,866 | ||||||
| Total operating expenses | 33,340,828 | 24,221,850 | ||||||
| Loss from operations | (24,093,118 | ) | (19,429,791 | ) | ||||
| Other expense | ||||||||
| Interest expense, net | (8,036,783 | ) | (2,134,933 | ) | ||||
| Amortization of discount on note payable | (1,738,131 | ) | (2,478,298 | ) | ||||
| Change in fair value of warrant liability | (461,000 | ) | 7,173,000 | |||||
| Change in fair value of interest rate swap | (40,000 | ) | - | |||||
| Change in fair value of securities available for sale | 1,683,246 | - | ||||||
| Loss on extinguishment of debt | - | (148,472 | ) | |||||
| Total other (expense) income | (8,592,668 | ) | 2,411,297 | |||||
| Net loss | $ | (32,685,786 | ) | $ | (17,018,494 | ) | ||
| Series B preferred stock dividends | (532,000 | ) | (532,000 | ) | ||||
| Loss attributable to non-controlling interest | 54,372 | 235,964 | ||||||
| Net loss attributable to HOFRE stockholders | $ | (33,163,414 | ) | $ | (17,314,530 | ) | ||
| Net loss per share – basic and diluted | $ | (5.88 | ) | $ | (3.49 | ) | ||
| Weighted average shares outstanding, basic and diluted | 5,644,822 | 4,964,029 | ||||||
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Sponsorship Revenues
Sponsorship revenues totaled $1,364,711 for the six months ended June 30, 2023 as compared to $1,272,062 for the six months ended June 30, 2022, for an increase of $92,649, or 7.3%. This increase was primarily driven by the Company gaining new sponsorships.
Event, rents and other revenues
Revenue from event, rents and other revenues was $4,318,322 for the six months ended June 30, 2023 compared to $1,006,256 for the six months ended June 30, 2022, for an increase of $3,312,066, or 329.1%. This increase was primarily driven by an increase in events revenue, an increase in food and beverage sales, and higher revenue received from short term rentals. These increases were the result of the hosting of the USFL, concerts, and other events in our Tom Benson Hall of Fame Stadium, the resumption of many sports and other tournaments in our ForeverLawn Sports Complex, as well as revenue associated with the opening of our Don Shula’s American Kitchen restaurant.
Hotel Revenues
Hotel revenue was $3,564,677 for the six months ended June 30, 2023 compared to $2,513,741 from the six months ended June 30, 2022 for an increase of $1,050,936, or 41.8%. This increase was driven by increased occupancy and average daily rates.
Operating Expenses
Operating expense was $24,367,569 for the six months ended June 30, 2023 compared to $14,982,722 for the six months ended June 30, 2022, for an increase of $9,384,847, or 62.6%. This increase was driven by higher personnel and related benefits costs, the timing of recognition of certain compensation-related expenses, an increase in production and related costs for our events and media productions, and an increase in accounting, auditing and professional fees.
Hotel Operating Expenses
Hotel operating expense was $3,046,823 for the six months ended June 30, 2023 compared to $2,469,262 for the six months ended June 30, 2022 for an increase of $577,561, or 23.4%. This increase was driven by increased occupancy and higher related operating expenses.
Depreciation Expense
Depreciation expense was $5,926,436 for the six months ended June 30, 2023 compared to $6,769,866 for the six months ended June 30, 2022, for a decrease of $843,430, or 12.5%. The decrease was primarily the result of a large asset reaching full depreciation during 2022.
Interest Expense
Total interest expense was $8,036,783 for the six months ended June 30, 2023 compared to $2,134,933 for the six months ended June 30, 2022, for an increase of $5,901,850, or 276%. The increase in total interest expense is primarily due to the increase in our total debt outstanding, as well as a mix of higher interest rate loans.
Amortization of Debt Discount
Total amortization of debt discount was $1,738,131 for the six months ended June 30, 2023 compared to $2,478,298 for the six months ended June 30, 2022, for a decrease of $740,167, or 29.9%. The decrease is primarily due to the removal of discounts from IRG-related debt upon the modification of the debt in November 2022.
Change in Fair Value of Warrant Liability
The change in fair value warrant liability represents a loss of $461,000 for the six months ended June 30, 2023 compared to a gain of $7,173,000 for the six months ended June 30, 2022, for a change of $7,634,000 or 106.4%. The change in fair value of warrant liability was primarily due to a change in our stock price.
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Loss on Extinguishment of Debt
Loss on extinguishment of debt was $0 for the six months ended June 30, 2023, as compared to a loss of $148,472 for the six months ended June 30, 2022. The loss on extinguishment of debt is due to the refinancing of many of our debt instruments in March 2022.
Change in Fair Value of Interest Rate Swap
The change in fair value of interest rate swap was $(40,000) for the six months ended June 30, 2023. This was due to the change in fair value of the interest rate swap entered into in connection with an agreement with Huntington Bank.
Change in Fair Value of Securities Available for Sale
The change in fair value of securities available for sale was $1,683,246 for the six months ended June 30, 2023. This was due to the change in fair value of our penny warrants granted to us from our online sports betting partner.
Liquidity and Capital Resources
We have sustained recurring losses through June 30, 2023 and our accumulated deficit was $180,061,757 as of such date. Since inception, our operations have been funded principally through the issuance of debt and equity. As of June 30, 2023, we had approximately $9.3 million of unrestricted cash and $7.5 million of restricted cash, and $12.4 million of liquid investments held to maturity consisting of U.S. Treasury securities. Through August 10, 2024, we have $59.3 million in debt principal payments coming due. For a fee of one percent of the principal, we may extend the maturity of up to $42.1 million principal of debt until March 31, 2025.
We expect that we will need to raise additional financing to accomplish our development plan over the next several years. We are seeking to obtain additional funding through debt, construction lending, and equity financing. There are no assurances that we will be able to raise capital on terms acceptable to the Company or at all, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm its financial condition and operating results, or we may not be able to continue to fund our ongoing operations. If management is unable to execute its planned debt and equity financing initiatives, these conditions raise substantial doubt about our ability to continue as a going concern to sustain operations for at least one year from the issuance of these condensed consolidated financial statements. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Cash Flows
Since inception, we have primarily used our available cash to fund its project development expenditures. The following table sets forth a summary of cash flows for the periods presented:
| For the Three
Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash (used in) provided by: | ||||||||
| Operating Activities | $ | (19,683,133 | ) | $ | 5,422,198 | |||
| Investing Activities | (14,468,823 | ) | (40,022,805 | ) | ||||
| Financing Activities | 17,486,567 | 35,042,816 | ||||||
| Net decrease in cash and restricted cash | $ | (16,665,389 | ) | $ | 442,209 | |||
Cash Flows for the Six Months Ended June 30, 2023 as Compared to the Six Months Ended June 30, 2022
Operating Activities
Net cash used in operating activities was $19,683,133 during the six months ended June 30, 2023, which consisted primarily of our net loss of $32,685,786, offset by non-cash depreciation expense of $5,926,436, amortization of note discounts of $1,738,131, accretion of financing liability of $3,399,422, impairment of film costs of $1,145,000, interest income on investments held to maturity of $508,610, payment-in-kind interest rolled into debt of $2,282,040, a change in fair value of interest rate swap of $40,000, a change in fair value of warrant liability of $461,000 and increase in a change of fair value of securities available for sales of $1,683,246, stock-based compensation expense of $1,737,051 and a non-cash operating lease expense of $258,416. The changes in operating assets and liabilities consisted of an increase in accounts receivable of $829,818, an increase in prepaid expenses and other assets of $1,143,033, an increase in accounts payable and accrued expenses of $1,743,958, a decrease in due to affiliates of $456,167, and an increase in other liabilities of $2,539,138.
Net cash provided by operating activities was $5,422,198 during the six months ended June 30, 2022, which consisted primarily of our net loss of $17,018,494, offset by non-cash depreciation expense of $6,769,866, amortization of note discounts of $2,478,298, payment-in-kind interest rolled into debt of $1,681,722, a loss on forgiveness of debt of $148,472, stock-based compensation expense of $2,570,919, and a change in fair value of warrant liability of $7,173,000. The changes in operating assets and liabilities consisted of an increase in accounts receivable of $370,525, a decrease in prepaid expenses and other assets of $1,430,448, an increase in accounts payable and accrued expenses of $8,196,272, an increase in due to affiliates of $1,777,542, and an increase in other liabilities of $4,830,587.
52
Investing Activities
Net cash used in investing activities was $14,468,823 during the six months ended June 30, 2023 which consisted of investments in treasury securities of $64,606,946, proceeds from treasury securities of $69,815,000, and investments in project development costs of $19,676,877.
Net cash used in investing activities was $40,022,805 during the six months ended June 30, 2022, which consisted primarily of our project development costs.
Financing Activities
Net cash provided by financing activities was $17,486,567 during the six months ended June 30, 2023. This consisted primarily of $22,270,339 in proceeds from notes payable, offset by $783,191 in repayments of notes payable, $2,187,500 in payments of our sale leaseback arrangements and $1,552,342 in payment of financing costs.
Net cash provided by financing activities was $35,042,816 during the six months ended June 30, 2022. This consisted primarily of $20,714,311 in proceeds from notes payable and $17,983,214 of proceeds from equity raises under our ATM, offset by $3,144,677 in repayments of notes payable, and $210,032 in payment of financing costs.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2023.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
For information on our significant accounting policies please refer to Note 2 to our Unaudited Condensed Consolidated Financial Statements.
Item 3. Quantitative and qualitative disclosures about market risk
Not applicable.
Item 4. Controls and procedures
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors as appropriate to allow timely decisions regarding required disclosure.
Based on their evaluation as of June 30, 2023, the principal executive officer and principal financial officer of the Company have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2023, no changes to the Company’s internal control over financial reporting materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
53
PART II. OTHER INFORMATION
Item 1. Legal proceedings
During the normal course of its business, the Company is subject to occasional legal proceedings and claims. The Company does not have any pending litigation that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on its results of operations, financial condition, or cash flows.
Item 1A. Risk factors
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common and capital stock. There have been no material changes to our risk factors since our Annual Report on Form 10-K for the year ended December 31, 2022 except as follows:
Our business plan requires additional liquidity and capital resources that might not be available on terms that are favorable to us, or at all.
We have sustained recurring losses through June 30, 2023 and our accumulated deficit was $180,061,757 as of such date. Since inception, our operations have been funded principally through the issuance of debt and equity. As of June 30, 2023, we had approximately $9.3 million of unrestricted cash and $7.5 million of restricted cash, and $12.4 million of liquid investments held to maturity consisting of U.S. Treasury securities. Through August 10, 2024, we have $59.3 million in debt principal payments coming due. For a fee of one percent of the principal, the Company may extend the maturity of up to $42.1 million principal of debt until March 31, 2025.
While our strategy assumes that we will receive sufficient capital to have sufficient working capital, we currently do not have available cash and cash flows from operations to provide us with adequate liquidity for the near-term or foreseeable future. Our current projected liabilities exceed our current cash projections and we have very limited cash flow from current operations. We therefore will require additional capital and/or cash flow from future operations to fund the Company, our debt service obligations and our ongoing business. There is no assurance that we will be able to raise sufficient additional capital or generate sufficient future cash flow from our future operations to fund the Hall of Fame Village, our debt service obligations or our ongoing business. If the amount of capital we are able to raise, together with any income from future operations, is not sufficient to satisfy our liquidity and capital needs, including funding our current debt obligations, we may be required to abandon or alter our plans for the Company. The Company may have to raise additional capital through the equity market, which could result in substantial dilution to existing stockholders. If management is unable to execute its planned debt and equity financing initiatives, these conditions raise substantial doubt about our ability to continue to sustain operations for at least one year from the issuance of our condensed consolidated financial statements for the quarter ended June 30, 2023 included in this quarterly report on Form 10-Q. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Our ability to obtain necessary financing may be impaired by factors such as the health of and access to capital markets, our limited track record and the limited historical financial information available, or the substantial doubt about our ability to continue as a going concern. Any additional capital raised through the sale of additional shares of our capital stock, convertible debt or other equity may dilute the ownership percentage of our stockholders.
Item 2. Unregistered sales of equity securities and use of proceeds
None.
Item 3. Defaults upon senior securities
None.
Item 4. Mine safety disclosures
Not applicable.
Item 5. Other information
None.
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Item 6. Exhibits
| * | Filed herewith |
55
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HALL OF FAME RESORT & ENTERTAINMENT COMPANY | ||
| Date: August 10, 2023 | By: | /s/ Michael Crawford |
| Michael Crawford | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 10, 2023 | By: | /s/ Benjamin Lee |
| Benjamin Lee | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
56
Exhibit 31.1
CERTIFICATION PURSUANT TO SARBANES–OXLEY ACT OF 2002
I, Michael Crawford, certify that:
| 1. | I have reviewed this quarterly report on Form 10–Q of Hall of Fame Resort & Entertainment Company; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 10, 2023 | By: | /s/ Michael Crawford |
| Michael Crawford | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO SARBANES–OXLEY ACT OF 2002
I, Benjamin Lee, certify that:
| 1. | I have reviewed this quarterly report on Form 10–Q of Hall of Fame Resort & Entertainment Company; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 10, 2023 | By: | /s/ Benjamin Lee |
| Benjamin Lee | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
Exhibit 32
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES–OXLEY ACT OF 2002
In connection with the Quarterly Report of Hall of Fame Resort & Entertainment Company (the “Company”) on Form 10-Q for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
| 2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 10, 2023 | By: | /s/ Michael Crawford |
| Michael Crawford | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
| Date: August 10, 2023 | By: | /s/ Benjamin Lee |
| Benjamin Lee | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Revenues | ||||
| Sponsorships, net of activation costs | $ 691,236 | $ 452,772 | $ 1,364,711 | $ 1,272,062 |
| Event, rents and other revenues | 3,410,010 | 668,863 | 4,318,322 | 1,006,256 |
| Hotel revenues | 2,026,031 | 1,563,900 | 3,564,677 | 2,513,741 |
| Total revenues | 6,127,277 | 2,685,535 | 9,247,710 | 4,792,059 |
| Operating expenses | ||||
| Operating expenses | 10,693,853 | 7,316,113 | 24,367,569 | 14,982,722 |
| Hotel operating expenses | 1,587,620 | 1,316,150 | 3,046,823 | 2,469,262 |
| Depreciation expense | 3,373,076 | 3,527,581 | 5,926,436 | 6,769,866 |
| Total operating expenses | 15,654,549 | 12,159,844 | 33,340,828 | 24,221,850 |
| Loss from operations | (9,527,272) | (9,474,309) | (24,093,118) | (19,429,791) |
| Other income (expense) | ||||
| Interest expense, net | (4,404,146) | (921,392) | (8,036,783) | (2,134,933) |
| Amortization of discount on note payable | (882,240) | (1,122,324) | (1,738,131) | (2,478,298) |
| Change in fair value of warrant liability | (223,000) | 2,423,000 | (461,000) | 7,173,000 |
| Change in fair value of interest rate swap | 60,000 | (40,000) | ||
| Change in fair value of securities available for sale | 1,683,246 | 1,683,246 | ||
| Loss on extinguishment of debt | (148,472) | |||
| Total other (expense) income | (3,766,140) | 379,284 | (8,592,668) | 2,411,297 |
| Net loss | (13,293,412) | (9,095,025) | (32,685,786) | (17,018,494) |
| Preferred stock dividends | (266,000) | (266,000) | (532,000) | (532,000) |
| Loss attributable to non-controlling interest | 5,795 | 158,592 | 54,372 | 235,964 |
| Net loss attributable to HOFRE stockholders | $ (13,553,617) | $ (9,202,433) | $ (33,163,414) | $ (17,314,530) |
| Net loss per share, basic (in Dollars per share) | $ (2.39) | $ (1.78) | $ (5.88) | $ (3.49) |
| Weighted average shares outstanding, basic (in Shares) | 5,660,385 | 5,183,035 | 5,644,822 | 4,964,029 |
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Statement [Abstract] | ||||
| Net loss per share, diluted | $ (2.39) | $ (1.78) | $ (5.87) | $ (3.49) |
| Weighted average shares outstanding, diluted | 5,660,540 | 5,183,035 | 5,644,900 | 4,964,029 |
Organization, Nature of Business, and Liquidity |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Organization, Nature of Business, and Liquidity [Abstract] | |
| Organization, Nature of Business, and Liquidity | Note 1: Organization, Nature of Business, and Liquidity
Organization and Nature of Business
Hall of Fame Resort & Entertainment Company, a Delaware corporation (together with its subsidiaries, unless the context indicates otherwise, the “Company” or “HOFRE”), was incorporated in Delaware as GPAQ Acquisition Holdings, Inc., a wholly owned subsidiary of our legal predecessor, Gordon Pointe Acquisition Corp. (“GPAQ”), a special purpose acquisition company.
On July 1, 2020, the Company consummated a business combination with HOF Village, LLC, a Delaware limited liability company (“HOF Village”), pursuant to an Agreement and Plan of Merger dated September 16, 2019 (as amended on November 6, 2019, March 10, 2020 and May 22, 2020, the “Merger Agreement”), by and among the Company, GPAQ, GPAQ Acquiror Merger Sub, Inc., a Delaware corporation (“Acquiror Merger Sub”), GPAQ Company Merger Sub, LLC, a Delaware limited liability company (“Company Merger Sub”), HOF Village and HOF Village Newco, LLC, a Delaware limited liability company (“Newco”). The transactions contemplated by the Merger Agreement are referred to as the “Business Combination”.
The Company is a resort and entertainment company leveraging the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (“PFHOF”). Headquartered in Canton, Ohio, the Company owns the Hall of Fame Village, a multi-use sports, entertainment, and media destination centered around the PFHOF’s campus. The Company is pursuing a differentiation strategy across three pillars, including destination-based assets, HOF Village Media Group, LLC (“Hall of Fame Village Media”), and gaming.
The Company has entered into multiple agreements with PFHOF, and certain government entities, which outline the rights and obligations of each of the parties with regard to the property on which the Hall of Fame Village sits, portions of which are owned by the Company and portions of which are net leased to the Company by government and quasi-governmental entities (see Note 9 for additional information). Under these agreements, the PFHOF and the lessor entities are entitled to use portions of the Hall of Fame Village on a direct-cost basis.
Reverse Stock Split
On December 27, 2022, the Company effectuated a reverse stock split of its shares of common stock at a ratio of 1-for-22. See Note 5, Stockholders’ Equity, for additional information. As a result, the number of shares and income (loss) per share disclosed throughout this Quarterly Report on Form 10-Q have been retrospectively adjusted to reflect the reverse stock split.
Liquidity and Going Concern
The Company has sustained recurring losses through June 30, 2023 and the Company’s accumulated deficit was $180,061,757 as of such date. Since inception, the Company’s operations have been funded principally through the issuance of debt and equity. As of June 30, 2023, the Company had approximately $9.3 million of unrestricted cash, $7.5 million of restricted cash, and $12.4 million of liquid investments held to maturity, consisting of U.S. treasury securities. The Company has approximately $59.3 million of debt coming due through August 10, 2024. The Company may extend the maturity of up to $42.1 million principal of debt until March 31, 2025 for a fee of one percent of the outstanding principal. These factors raise substantial doubt about the Company’s ability to continue operations as a going concern.
The Company has entered into the following financing transactions. See Note 4 for more information on these transactions.
In January 2023, the Company sold 2,400 shares of the Company’s 7.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share for an aggregate purchase price of $2,400,000.
On February 2, 2023, the Company received proceeds from the issuance by Stark County Port Authority of $18,100,000 principal amount Tax Increment Financing Revenue Bonds, Series 2023.
On May 2, 2023, the Company issued 800 shares of the Company’s 7.00% Series A Cumulative Redeemable Preferred Stock at a price of $1,000 per share for an aggregate purchase price of $800,000.
The Company expects that it will need to raise additional financing to accomplish its development plan over the next several years. 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, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If the Company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its financial condition and operating results, or it may not be able to continue to fund its ongoing operations. If management is unable to execute its planned debt and equity financing initiatives, these conditions raise substantial doubt about the Company’s ability to continue as a going concern to sustain operations for at least one year from the issuance of these condensed consolidated financial statements. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
Summary of Significant Accounting Policies |
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| Summary of Significant Accounting Policies | Note 2: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and Rule 10 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial position and operating results have been included in these statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2022, filed on March 27, 2023. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, 2023.
Consolidation
The condensed consolidated financial statements include the accounts and activity of the Company and its wholly owned subsidiaries. Investments in a variable interest entity in which the Company is not the primary beneficiary, or where the Company does not own a majority interest but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. All intercompany profits, transactions, and balances have been eliminated in consolidation.
The Company owns a 60% interest in Mountaineer GM, LLC (“Mountaineer”), whose results are consolidated into the Company’s results of operations. The portion of Mountaineer’s net income (loss) that is not attributable to the Company is included in non-controlling interest.
Reclassification
Certain financial statement line items of the Company’s historical presentation have been reclassified to conform to the corresponding financial statement line items in 2023. These reclassifications have no material impact on the historical operating loss, net loss, total assets, total liabilities, or Stockholders’ equity previously reported.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). It may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. The Company will cease to be an emerging growth company on December 31, 2023.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such an extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and assumptions for the Company relate to bad debt, depreciation, costs capitalized to project development costs, useful lives of long-lived assets, potential impairment, accounting for debt modifications and extinguishments, stock-based compensation, and fair value of financial instruments (including the fair value of the Company’s warrant liability). Management adjusts such estimates when facts and circumstances dictate. Actual results could differ from those estimates.
Warrant Liability
The Company accounts for warrants for shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”) that are not indexed to its own stock as liabilities at fair value on the balance sheet under U.S. GAAP. Such warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other expense on the statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of such Common Stock warrants. At that time, the portion of the warrant liability related to such Common Stock warrants will be reclassified to additional paid-in capital.
Cash and Restricted Cash
The Company considers all highly liquid investments with an original maturity of three months or less when purchased, to be cash equivalents. There were no cash equivalents as of June 30, 2023 and December 31, 2022, respectively. The Company maintains its cash and escrow accounts at national financial institutions. The balances, at times, may exceed federally insured limits.
Restricted cash includes escrow reserve accounts for capital improvements and debt service as required under certain of the Company’s debt agreements. The balances as of June 30, 2023 and December 31, 2022 were $7,543,499 and $7,499,835, respectively.
Investments
The Company from time to time invests in debt and equity securities, including companies engaged in complementary businesses. All marketable equity and debt securities held by the Company are accounted for under ASC Topic 320, “Investments – Debt and Equity Securities.” As of June 30, 2023 and December 31, 2022, the Company held $12,359,877 and $17,033,515, respectively in securities to be held to maturity consisting of U.S government securities carried at amortized cost. The Company recognizes interest income on these securities ratably over their term utilizing the interest method.
As of June 30, 2023 and December 31, 2022, the Company also had $5,751,000 and $4,067,754, respectively in securities available for sale, which are marked to market value at each reporting period.
Accounts Receivable
Accounts receivable are generally amounts due under sponsorship and other agreements. Accounts receivable are reviewed for delinquencies on a case-by-case basis and are considered delinquent when the sponsor or customer has missed a scheduled payment. Interest is not charged on delinquencies.
The carrying amount of accounts receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all delinquent accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. As of June 30, 2023 and December 31, 2022, the Company has recorded an allowance for credit losses of $7,911,440 and $5,575,700, respectively.
Deferred Financing Costs
Costs incurred in obtaining financing are capitalized and amortized to additions in project development costs during the construction period over the term of the related loans, without regard for any extension options until the project or portion thereof is considered substantially complete. Upon substantial completion of the project or portion thereof, such costs are amortized as interest expense over the term of the related loan. Any unamortized costs are shown as an offset to “Notes Payable, net” on the accompanying condensed consolidated balance sheets.
Upon an extinguishment of debt (or a modification that is treated as an extinguishment), the remaining deferred financing costs are expensed against “Loss on Extinguishment of Debt”.
Revenue Recognition
The Company follows the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue with Contracts with Customers, to properly recognize revenue. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company generates revenues from various streams such as sponsorship agreements, rents, events, and hotel and restaurant operations. The sponsorship arrangements, in which the customer sponsors a play area or event and receives specified brand recognition and other benefits over a set period of time, recognize revenue on a straight-line basis over the time period specified in the contract. The excess of amounts contractually due over the amounts of sponsorship revenue recognized are included in other liabilities on the accompanying condensed consolidated balance sheets. Contractually due but unpaid sponsorship revenue are included in accounts receivable on the accompanying condensed consolidated balance sheets. Refer to Note 6 for more details. Revenue for short-term rentals, and events are recognized at the time the respective event or service has been performed. Rental revenue for long term leases is recorded on a straight-line basis over the term of the lease beginning on the commencement date.
A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. If the contract does not specify the revenue by performance obligation, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price. Such prices are generally determined using prices charged to customers or using the Company’s expected cost plus margin. Revenue is recognized as the Company’s performance obligations are satisfied. If consideration is received in advance of the Company’s performance, including amounts which are refundable, recognition of revenue is deferred until the performance obligation is satisfied or amounts are no longer refundable.
The Company’s owned hotel revenues primarily consist of hotel room sales, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales, and other ancillary goods and services (e.g., parking) related to owned hotel properties. Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. Although the transaction prices of hotel room sales, goods, and other services are generally fixed and based on the respective room reservation or other agreement, an estimate to reduce the transaction price is required if a discount is expected to be provided to the customer. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling price of each component.
Restaurant revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales related taxes.
Income Taxes
The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.
The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of June 30, 2023 and December 31, 2022, no liability for unrecognized tax benefits was required to be reported.
The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of operating expenses on the Company’s condensed consolidated statements of operations. There were no amounts incurred for penalties and interest for the three and six months ended June 30, 2023 and 2022. The Company does not expect its uncertain tax position to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. The Company’s effective tax rates of zero differ from the statutory rate for the years presented primarily due to the Company’s net operating loss, which was fully reserved for all years presented.
The Company has identified its United States tax return and its state tax return in Ohio as its “major” tax jurisdictions, and such returns for the years 2019 through 2022 remain subject to examination.
Film and Media Costs
The Company capitalizes all costs to develop films and related media as an asset, included in “project development costs” on the Company’s condensed consolidated balance sheets. The costs for each film or media will be expensed over the expected release period. During the three months ended June 30, 2023 the Company recorded $0 and in film and media costs. During the six months ended June 30, 2023 and 2022, the Company recorded $1,305,000 and $0 in film and media costs, respectively, including impairment of $1,145,000 and $0, respectively, as the Company does not anticipate recovering these costs. The impairment in Film and Media Costs is included in operating expenses on the Company’s condensed consolidated statements of operations.
Accounting for Real Estate Investments
Upon the acquisition of real estate properties, a determination is made as to whether the acquisition meets the criteria to be accounted for as an asset or business combination. The determination is primarily based on whether the assets acquired and liabilities assumed meet the definition of a business. The determination of whether the assets acquired and liabilities assumed meet the definition of a business include a single or similar asset threshold. In applying the single or similar asset threshold, if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the assets acquired and liabilities assumed are not considered a business. Most of the Company’s acquisitions meet the single or similar asset threshold due to the fact that substantially all the fair value of the gross assets acquired is attributable to the real estate acquired.
Acquired real estate properties accounted for as asset acquisitions are recorded at cost, including acquisition and closing costs. The Company allocates the cost of real estate properties to the tangible and intangible assets and liabilities acquired based on their estimated relative fair values. The Company determines the fair value of tangible assets, such as land, building, furniture, fixtures, and equipment, using a combination of internal valuation techniques that consider comparable market transactions, replacement costs, and other available information and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition. The Company determines the fair value of identified intangible assets or liabilities, which typically relate to in-place leases, using a combination of internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition.
If a transaction is determined to be a business combination, the assets acquired, liabilities assumed, and any identified intangibles are recorded at their estimated fair values on the transaction date, and transaction costs are expensed in the period incurred.
Fair Value Measurement
The Company follows FASB’s ASC 820–10, Fair Value Measurement, to measure the fair value of its financial instruments and non-financial instruments and to incorporate disclosures about fair value of its financial instruments. ASC 820–10 establishes a framework for measuring fair value and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820–10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.
The three levels of fair value hierarchy defined by ASC 820–10-20 are described below:
Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these instruments.
The carrying amount of the Company’s notes payable is considered to approximate their fair value based on the borrowing rates currently available to the Company for loans with similar terms and maturities.
The Company uses the fair value hierarchy to measure the fair value of its warrant liabilities, investments available for sale and interest rate swaps. The Company revalues its financial instruments at every reporting period. The Company recognizes gains or losses on the change in fair value of the warrant liabilities as “change in fair value of warrant liability” in the condensed consolidated statements of operations. The Company recognizes gains or losses on the change in fair value of the investments available for sale as “change in fair value of investments available for sale” in the condensed consolidated statements of operations. The Company recognizes gains or losses on the change in fair value of the interest rate swap as “change in fair value of interest rate swap” in the condensed consolidated statements of operations.
The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheets as of June 30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
The Series A Warrants issued to the previous shareholders of GPAQ (the “Public Series A Warrants”) are classified as Level 1 due to the use of an observable market quote in the active market. Level 3 financial liabilities consist of the Series A Warrants issued to the sponsors of GPAQ (the “Private Series A Warrants”) and the Series B Warrants issued in the Company’s November 2020 follow-on public offering, for which there is no current market for these securities, and the determination of fair value requires significant judgment or estimation. Changes in fair value measurement categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded appropriately.
Subsequent measurement
The following table presents the changes in fair value of the warrant liabilities:
The key inputs into the Black Scholes valuation model for the Level 3 valuations as of June 30, 2023 and December 31, 2022 are as follows:
The valuation of the investments available for sale were based on sales of similar equity instruments in the time periods near to the measurement dates.
Net Loss Per Common Share
Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods.
Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units and restricted stock awards, and (iii) conversion of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive.
For the three and six months ended June 30, 2023 and 2022, the Company was in a loss position and therefore all potentially dilutive securities would be anti-dilutive and the calculations are presented on the accompanying condensed consolidated statements of operations.
As of June 30, 2023 and 2022, the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive.
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Property and Equipment |
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| Property and Equipment | Note 3: Property and Equipment
Property and equipment consists of the following:
For the three months ended June 30, 2023 and 2022, the Company recorded depreciation expense of $3,373,076 and $3,527,581, respectively, and for the six months ended June 30, 2023 and 2022, of $5,926,436 and 6,769,866, respectively. For the six months ended June 30, 2023 and 2022, the Company incurred $19,676,877 and $40,022,805 of capitalized project development costs, respectively.
For the six months ended June 30, 2023 and 2022, the Company transferred $127,045,169 and $0 from Project development costs to Property and Equipment, respectively.
Included in project development costs are film development costs of $200,000 and $982,000 as of June 30, 2023 and December 31, 2022, respectively. |
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Notes Payable, net |
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| Notes Payable, net | Note 4: Notes Payable, net
Notes payable, net consisted of the following at June 30, 2023(1):
Notes payable, net consisted of the following at December 31, 2022:
During the three months ended June 30, 2023 and 2022, the Company recorded amortization of note discounts of $882,240 and $1,122,324, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded amortization of note discounts of $1,738,131 and $2,478,298, respectively.
During the six months ended June 30, 2023 and 2022, the Company recorded paid-in-kind interest of $2,282,040 and $1,681,722, respectively.
See below footnotes for the Company’s notes payable:
Accrued Interest on Notes Payable
As of June 30, 2023 and December 31, 2022, accrued interest on notes payable, were as follows:
The amounts above were included in “accounts payable and accrued expenses” on the Company’s condensed consolidated balance sheets.
TIF Loan
For the Company, the Development Finance Authority of Summit County (“DFA Summit”) offered a private placement of $10,030,000 in taxable development revenue bonds, Series 2018. The bond proceeds are to reimburse the developer for costs of certain public improvements at the Hall of Fame Village, which are eligible uses of tax-incremental funding (“TIF”) proceeds.
The term of the TIF requires the Company to make installment payments through July 31, 2048. The current imputed interest rate is 5.2%, which runs through July 31, 2028. The imputed interest rate then increases to 6.6% through July 31, 2038 and finally increases to 7.7% through the remainder of the TIF. The Company is required to make payments on the TIF semi-annually in June and December each year.
On December 27, 2022, the Company paid $9.7 million to reacquire the TIF bonds related to the Stadium PACE agreement. In January 2023, the DFA Summit issued new bonds as TIF proceeds.
On February 2, 2023, the Company received proceeds from the issuance on such date by Stark County Port Authority (“Port Authority”) of $18,100,000 principal amount Tax Increment Financing (“TIF”) Revenue Bonds, Series 2023 (“2023 Bonds”). Of the $18,100,000 principal amount, approximately $6.8 million was used to reimburse the Company for a portion of the cost of certain roadway improvements within the Hall of Fame Village grounds, approximately $8.6 million was used to pay off the Development Finance Authority of Summit County (“DFA”) Revenue Bonds, Series 2018 ( “2018 Bonds”) that had been acquired by the Company in December 2022 pursuant to a previously disclosed arrangement (such that the Company received the payoff of the 2018 Bonds), approximately $1.2 million was used to pay costs of issuance of the 2023 Bonds, and approximately $.9 million was used to fund a debt service reserve held by The Huntington National Bank (“2023 Bond Trustee”), as trustee for the 2023 Bonds. The maturity date of the 2023 Bonds is December 30, 2048. The interest rate on the 2023 Bonds is 6.375%. Interest payments are due on the 2023 Bonds semi-annually on June 30 and December 30 of each year, commencing June 30, 2023.
In connection with the issuance of the 2023 Bonds by the Port Authority, the Company transferred ownership of a portion of the roadway and related improvements within Hall of Fame Village grounds to the Port Authority. The Company maintains management rights and maintenance obligations with regard to such roadway pursuant to a Maintenance and Management Agreement among the Port Authority, the Company and the Company’s subsidiary, Newco.
The 2023 Bonds will be repaid by the Port Authority from statutory service payments in lieu of taxes paid by the Company in connection with the Company’s Tom Benson Hall of Fame Stadium, ForeverLawn Sports Complex, Constellation Center for Excellence, Center for Performance, Retail I property, Retail II property, Play Action Plaza and an interior private roadway, net of the portion payable to Canton City School District and Plain Local School District and net of administrative fees of Stark County and the City of Canton, and from minimum service payments levied against those parcels excluding the Stadium and Sports Complex. Net statutory service payments are assigned by the City of Canton to the Port Authority for payment of the 2023 Bonds pursuant to a Cooperative Agreement among the Port Authority, City of Canton, the Company and Newco, and then pledged by the Port Authority to the 2023 Bond Trustee for payment of the 2023 Bonds pursuant to a Trust Indenture between the Port Authority and the 2023 Bond Trustee. Minimum service payments are a lien on the parcels under certain TIF declarations and supplements thereto, and are paid by the Company to the 2023 Bond Trustee.
The Company and Newco are required to make payments (“Developer Shortfall Payments”) to the extent the above described net statutory service payments and minimum service payments actually paid are not sufficient to pay the scheduled debt service on the 2023 Bonds, and entered into a guaranty of payment of minimum service payments under a Minimum Payment Guaranty until certain performance criteria (debt service coverage of 1.05x for the 2023 Bonds for three consecutive years) are met. In addition, a member of the Company’s board of directors, Stuart Lichter, individually and with his trust, guaranteed Developer Shortfall Payments until debt service coverage of 1.0x for the 2023 Bonds for three consecutive years are met.
To the extent statutory service payments and minimum service payments exceed the amounts required for debt service on the 2023 Bonds, the excess paid will first increase and/or restore the 2023 Bonds fund reserve to a maximum of 10% of the original principal amount of the 2023 Bonds (i.e. $1,810,000) and then to redeem the 2023 Bonds, with the amount paid applied to the principal balance of the 2023 Bonds. The 2023 Bonds fund reserve (initially 5% (i.e., $905,000) subject to increase up to 10%) mentioned above will be maintained to be used for payment of debt service and administrative fees if there are insufficient funds generated from the statutory service payments, minimum service payments and Developer Shortfall Payments, and, to the extent unused, make the final 2023 Bonds payment of debt service.
November 7, 2022 Refinancing Transactions
On November 7, 2022, the Company and IRG a entered into a letter agreement (the “IRG Letter Agreement”) whereby IRG agreed that IRG’s affiliates and related parties (“IRG Affiliate Lenders”) will provide the Company and its subsidiaries with certain financial support described below in exchange for certain consideration described below. The financial support provided under the IRG Letter Agreement consists of the following (“IRG Financial Support”):
In exchange, the Company agreed in the IRG Letter Agreement to:
In the IRG Letter Agreement, IRG and the Company agreed to comply with all federal and state securities laws and Nasdaq listing rules and to insert “blocker” provisions for the above-described re-pricing of the warrants and the conversion provisions, such that the total cumulative number of shares of Common Stock that may be issued to IRG and its affiliated and related parties pursuant to the IRG Letter Agreement may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following approval of the Company’s stockholders. In addition, the provisions of the IRG Letter Agreement are limited by Nasdaq Listing Rule 5635(c), subject to approval of the Company’s stockholders. On June 7, 2023, the stockholders of the Company approved (i) issuance of shares of Common Stock in excess of the Nasdaq 19.99% Cap to IRG Affiliate Lenders with respect to transactions described in the IRG Letter Agreement; and (ii) the issuance to an entity wholly owned by a director of additional shares of Common Stock issuable upon the conversion of certain convertible debt and the exercise of certain warrants described in the IRG Letter Agreement.
CFP Loan
On April 27, 2022, Midwest Lender Fund, LLC, a limited liability company wholly owned by our director Stuart Lichter (“MLF”), loaned $4,000,000 (the “CFP Loan”) to HOF Village Center for Performance, LLC (“HOF Village CFP”). Interest accrues on the outstanding balance of the CFP Loan at 6.5% per annum, compounded monthly. The CFP Loan matures on April 30, 2023 or if HOF Village CFP exercises its extension option, April 30, 2024. The CFP Loan is secured by a mortgage encumbering the Center for Performance.
As part of the consideration for making the Loan, on June 8, 2022 following stockholder approval, the Company issued to MLF: (A) 5,681 shares (the “Commitment Fee Shares”) of Common Stock, and (B) a warrant to purchase 5,681 shares of Common Stock (“Series G Warrants”). The exercise price of the Series G Warrants will be $33 per share. The Series G Warrants will become exercisable one year after issuance, subject to certain terms and conditions set forth in the Series G Warrants. Unexercised Series G Warrants will expire five years after issuance. The exercise price of the Series G Warrants will be subject to a weighted-average antidilution adjustment.
On November 7, 2022, the Company further amended the CFP Loan in order to add an extension option that the Company may exercise at any time in order to extend the CFP Loan to March 31, 2025. In exchange for the amendment, the interest rate of the CFP Loan was increased to 12.5% per annum.
Huntington Loan
On September 27, 2022, HOF Village Retail I, LLC and HOF Village Retail II, LLC, subsidiaries of the Company, as borrowers (the “Subsidiary Borrowers”), entered into a loan agreement with The Huntington National Bank, pursuant to which the lender agreed to loan up to $10,000,000 to the Subsidiary Borrowers, which may be drawn upon the Project achieving certain debt service coverage ratios. Under the Note, the outstanding amount of the Loan bears interest at a per annum rate equal to the Term SOFR (as defined in the Note) plus a margin ranging from 2.60% to 3.50% per annum.
The Loan matures on September 27, 2024 (the “Initial Maturity Date”). However, Subsidiary Borrowers have the option (the “Extension Option”) to extend the Initial Maturity Date for an additional thirty six (36) months.
As of June 30, 2023, the Company has not drawn under the loan agreement.
Additionally, in connection with the Huntington Loan, on September 27, 2022, the Company entered into an interest rate swap agreement with a notional amount of $10 million to hedge a portion of the Company’s outstanding Secured Overnight Financing Rate (“SOFR”) debt with a fixed interest rate of 4.0%. The effective date of the interest rate swap is October 1, 2024 and the termination date is September 27, 2027.
Future Minimum Principal Payments
The minimum required principal payments on notes payable outstanding as of June 30, 2023 are as follows:
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| Stockholders’ Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Equity | Note 5: Stockholders’ Equity
Reverse Stock Split
On September 29, 2022, our stockholders approved amendments to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our shares of common stock, and our Board approved a final reverse stock split ratio of 1-for-22. The reverse stock split became effective on December 27, 2022. On the effective date, every 22 shares of issued and outstanding common stock were combined and converted into one issued and outstanding share of common stock. Fractional shares were cancelled, and stockholders received cash in lieu thereof in the aggregate amount of $118,344.
The number of authorized shares of common stock and the par value per share of common stock remains unchanged. A proportionate adjustment was also made to the maximum number of shares of common stock issuable under the Hall of Fame Resort & Entertainment Company Amended 2020 Omnibus Incentive Plan (the “Plan”).
As a result, the number of shares and income (loss) per share disclosed throughout this Report on Form 10-Q have been retrospectively adjusted to reflect the reverse stock split.
Where applicable, the disclosures below have been adjusted to reflect the 1-for-22 reverse stock split effective December 27, 2022.
Authorized Capital
On November 3, 2020, the Company’s stockholders approved an amendment to the Company’s charter to increase the authorized shares of Common Stock from 100,000,000 to 300,000,000. Consequently, the Company’s charter allows the Company to issue up to 300,000,000 shares of Common Stock and to issue and designate its rights, without stockholder approval, of up to 5,000,000 shares of preferred stock, par value $0.0001.
Series A Preferred Stock Designation
On October 8, 2020, the Company filed a Certificate of Designations with the Secretary of State of the State of Delaware to establish preferences, limitations, and relative rights of the Series A Preferred Stock. The number of authorized shares of Series A Preferred Stock is 52,800. The Series A Preferred Stock is mandatorily redeemable, and therefore classified as a liability on the Company’s condensed consolidated balance sheets within Notes Payable, net.
2020 Omnibus Incentive Plan
On July 1, 2020, the Company’s omnibus incentive plan (the “2020 Omnibus Incentive Plan”) became effective immediately. The 2020 Omnibus Incentive Plan was previously approved by the Company’s stockholders and Board of Directors. Subject to adjustment, the maximum number of shares of Common Stock authorized for issuance under the 2020 Omnibus Incentive Plan was 82,397 shares. On June 2, 2021, the Company held its 2021 Annual Meeting whereby the Company’s stockholders approved an amendment to the 2020 Omnibus Incentive Plan to increase by 181,818 the number of shares of Common Stock, that will be available for issuance under the 2020 Omnibus Incentive Plan. On June 7, 2023, the Company’s stockholders further approved an amendment to increase by 275,000 the number of shares available under the 2020 Omnibus Incentive Plan. As of June 30, 2023, 272,264 shares remained available for issuance under the 2020 Omnibus Incentive Plan.
Equity Distribution Agreement
On September 30, 2021, the Company entered into an Equity Distribution Agreement with Wedbush Securities Inc. and Maxim Group LLC with respect to an at-the-market offering program under which the Company may, from time to time, offer and sell shares of the Company’s Common Stock having an aggregate offering price of up to $50 million. From January 1 through June 30, 2023, there were 4,878 shares sold. The remaining availability under the Equity Distribution Agreement as of June 30, 2023 was approximately $25.9 million.
Issuance of Restricted Stock Awards
The Company’s activity in restricted Common Stock was as follows for the six months ended June 30, 2023:
For the three months ended June 30, 2023 and 2022, stock-based compensation related to restricted stock awards was $46,272 and $720,703, respectively. For the six months ended June 30, 2023 and 2022, stock-based compensation related to restricted stock awards was $96,929 and $1,453,460, respectively. Stock-based compensation related to restricted stock awards was included as a component of “Operating expenses” in the condensed consolidated statements of operations. As of June 30, 2023, unamortized stock-based compensation costs related to restricted share arrangements were $0.
Issuance of Restricted Stock Units
During the six months ended June 30, 2023, the Company granted an aggregate of 108,571 Restricted Stock Units (“RSUs”) to its employees and directors, of which 102,539 were granted under the 2020 Omnibus Incentive Plan and 6,032 were granted as inducement awards. The RSUs were valued at the value of the Company’s Common Stock on the date of grant, which approximated $14.17 per share for these awards. The RSUs granted to employees vest one third on the first anniversary of their grant, one third on the second anniversary of their grant, and one third on the third anniversary of their grant. The RSUs granted to directors vest one year from the date of grant.
The Company’s activity in RSUs was as follows for the six months ended June 30, 2023:
For the three months ended June 30, 2023 and 2022, the Company recorded $742,665 and $586,547, respectively, in stock-based compensation expense related to restricted stock units. For the six months ended June 30, 2023 and 2022, the Company recorded $1,343,041 and $1,088,959, respectively, in stock-based compensation expense related to restricted stock units. Stock-based compensation expense is a component of “Operating expenses” in the condensed consolidated statements of operations. As of June 30, 2023, unamortized stock-based compensation costs related to restricted stock units were $5,327,159 and will be recognized over a weighted average period of 1.57 years.
Warrants
The Company’s warrant activity was as follows for the six months ended June 30, 2023:
Amended and Restated Series C Warrants
On March 1, 2022, in connection with the amendment to the IRG Split Note (as described in Note 4), the Company amended its Series C Warrants to extend the term of the Series C Warrants to March 1, 2027. The exercise price of $30.80 per share was not amended, but the amendments subject the exercise price to a weighted-average antidilution adjustment. The amendments also remove certain provisions regarding fundamental transactions, which subsequently allowed the Series C Warrants to be derecognized as a liability and classified as equity.
The Company accounted for this modification as a cost of the IRG Split Note, whereby the Company calculated the incremental fair value of the Series C Warrants and recorded them as a discount against the IRG Split Note.
On November 7, 2022, the Company further amended the Series C Warrants to reduce the exercise price to $12.77 per share as part of the IRG Letter Agreement. See Note 4 for more information.
The following assumptions were used to calculate the fair value of Series C Warrants in connection with the modifications:
Amended and Restated Series D Warrants issue to CH Capital Lending
On March 1, 2022, in connection with the amendment to the CH Capital Loan (as described in Note 4), the Company amended the Series D Warrants issued to CH Capital Lending to extend the term of such Series D Warrants to March 1, 2027. The exercise price of $151.80 per share was not amended, but the amendments subject the exercise price to a weighted-average antidilution adjustment.
On November 7, 2022, the Company further amended the Series C Warrants to reduce the exercise price to $12.77 per share as part of the IRG Letter Agreement. See Note 4 for more information.
The following assumptions were used to calculate the fair value of Series D Warrants in connection with the modifications:
7.00% Series A Cumulative Redeemable Preferred Stock
On January 12, 2023, the Company issued to ADC LCR Hall of Fame Manager II, LLC (the “Series A Preferred Investor”) 1,600 shares of the Company’s 7.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”), at a price of $1,000 per share for an aggregate purchase price of $1,600,000. On January 23, 2023, the Company issued to the Series A Preferred Investor 800 additional shares of the Company’s Series A Preferred Stock at a price of $1,000 per share for an aggregate purchase price of $800,000. Additionally, on May 2, 2023, the Company issued to the Series A Preferred Investor 800 shares of the Company’s 7.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”), at a price of $1,000 per share for an aggregate purchase price of $800,000. The Company paid the Series A Preferred Investor an origination fee of 2% of the aggregate purchase price for each issuance. The issuance and sale of the shares to the Series A Preferred Investor is exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Series A Preferred Stock is not convertible into Common Stock. The Series A Preferred Investor has represented to the Company that it is an “accredited investor” as defined in Rule 501 of the Securities Act and that the shares are being acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof.
Compliance with Nasdaq Minimum Bid Requirement
As previously reported, on May 24, 2022, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that for the last 30 consecutive business days the bid price for the Company’s common stock, par value $0.0001 per share (“Common Stock”), had closed below the minimum requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).
On January 11, 2023, the Company received written notice from the Staff of Nasdaq informing the Company that it has regained compliance with the Minimum Bid Requirement because Nasdaq has determined that for 10 consecutive business days, the closing bid price of the Company’s Common Stock was at or above the Minimum Bid Requirement. Accordingly, Nasdaq has advised that the matter is now closed.
Hall of Fame Resort & Entertainment Company 2023 Inducement Plan
On January 24, 2023, the Company’s board of directors adopted the Hall of Fame Resort & Entertainment Company 2023 Inducement Plan (the “Inducement Plan”). The Inducement Plan is not subject to stockholder approval. The aggregate number of shares of Common Stock that may be issued or transferred pursuant to awards covered by the Plan (including existing inducement awards amended to be subject to the Inducement Plan) is 110,000. Awards covered by the Inducement Plan include only inducement grants under Nasdaq Listing Rule 5635(c)(4). |
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Sponsorship Revenue and Associated Commitments |
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| Sponsorship Revenue and Associated Commitments | Note 6: Sponsorship Revenue and Associated Commitments
Johnson Controls, Inc.
On July 2, 2020, the Company entered into an Amended and Restated Sponsorship and Naming Rights Agreement (the “Naming Rights Agreement”) among Newco, PFHOF and Johnson Controls, Inc. (“JCI” or “Johnson Controls”), that amended and restated the Sponsorship and Naming Rights Agreement, dated as of November 17, 2016 (the “Original Sponsorship Agreement”). Among other things, the Amended Sponsorship Agreement: (i) reduced the total amount of fees payable to Newco during the term of the Amended Sponsorship Agreement from $135 million to $99 million; (ii) restricted the activation proceeds from rolling over from year to year with a maximum amount of activation proceeds in one agreement year to be $750,000; and (iii) renamed the “Johnson Controls Hall of Fame Village” to “Hall of Fame Village”. This is a prospective change, which the Company reflected beginning in the third quarter of 2020.
JCI has a right to terminate the Naming Rights Agreement if the Company does not provide evidence to JCI by October 31, 2021 that it has secured sufficient debt and equity financing to complete Phase II, or if Phase II is not open for business by January 2, 2024, in each case subject to day-for-day extension due to force majeure and a notice and cure period. In addition, under the Naming Rights Agreement JCI’s obligation to make sponsorship payments to the Company may be suspended commencing on December 31, 2020, if the Company has not provided evidence reasonably satisfactory to JCI on or before December 31, 2020, subject to day-for-day extension due to force majeure, that the Company has secured sufficient debt and equity financing to complete Phase II.
Additionally, on October 9, 2020, Newco, entered into a Technology as a Service Agreement (the “TAAS Agreement”) with JCI. Pursuant to the TAAS Agreement, JCI will provide certain services related to the construction and development of the Hall of Fame Village (the “Project”), including, but not limited to, (i) design assist consulting, equipment sales and turn-key installation services in respect of specified systems to be constructed as part of Phase 2 and Phase 3 of the Project and (ii) maintenance and lifecycle services in respect of certain systems constructed as part of Phase 1, and to be constructed as part of Phase 2 and Phase 3, of the Project. Under the terms of the TAAS Agreement, Newco has agreed to pay JCI up to an aggregate of approximately $217 million for services rendered by JCI over the term of the TAAS Agreement.
The TAAS Agreement provides that in respect of the Naming Rights Agreement, Johnson Controls and Newco intend, acknowledge and understand that: (i) Newco’s performance under the TAAS Agreement is essential to, and a condition to Johnson Controls’ performance under, the Naming Rights Agreement; and (ii) Johnson Controls’ performance under the Naming Rights Agreement is essential to, and a condition to Newco’s performance under, the TAAS Agreement. In the TAAS Agreement, Johnson Controls and Newco represent, warrant and agree that the transactions agreements and obligations contemplated under the TAAS Agreement and the Naming Rights Agreement are intended to be, and shall be, interrelated, integrated and indivisible, together being essential to consummating a single underlying transaction necessary for the Project.
On May 10, 2022, the Company received from JCI a notice of termination (the “TAAS Notice”) of the TAAS Agreement effective immediately. The TAAS Notice states that termination of the TAAS Agreement by JCI is due to Newco’s alleged breach of its payment obligations. Additionally, JCI in the TAAS Notice demands the amount which is the sum of: (i) all past due payments and any other amounts owed by Newco under the TAAS Agreement; (ii) all commercially reasonable and documented subcontractor breakage and demobilization costs; and (iii) all commercially reasonable and documented direct losses incurred by JCI directly resulting from the alleged default by the Company and the exercise of JCI’s rights and remedies in respect thereof, including reasonable attorney fees.
Also on May 10, 2022, the Company received from JCI a notice of termination (“Naming Rights Notice”) of the Name Rights Agreement, effective immediately. The Naming Rights Notice states that the termination of the Naming Rights Agreement by JCI is due to JCI’s concurrent termination of the TAAS Agreement. The Naming Rights Notice further states that the Company must pay JCI, within 30 days following the date of the Naming Rights Notice, $4,750,000. The Company has not made such payment to date. The Naming Rights Notice states that Newco is also in breach of its covenants and agreements, which require Newco to provide evidence reasonably satisfactory to JCI on or before October 31, 2021, subject to day-for-day extension due to force majeure, that Newco has secured sufficient debt and equity financing to complete Phase II.
The Company disputes that it is in default under either the TAAS Agreement or the Naming Rights Agreement. The Company believes JCI is in breach of the Naming Rights Agreement and the TAAS Agreement due to their failure to make certain payments in accordance with the Naming Rights Agreement, and, on May 16, 2022, provided notice to JCI of these breaches.
The Company is pursuing dispute resolution pursuant to the terms of the Naming Rights Agreement to simultaneously defend against JCI’s allegations and pursue its own claims. The Company anticipates that resolution of the dispute regarding the Naming Rights Agreement will include the TAAS Agreement. The parties participated in mediation in November 2022, but were unable to reach a resolution. On January 24, 2023, Newco filed a demand for arbitration, asserting claims against JCI for breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment. On February 16, 2023, JCI filed its response, generally denying Newco’s allegations and asserting counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. On March 9, 2023, Newco filed its response to JCI’s counterclaims, generally denying JCI’s allegations. A panel of three arbitrators has been constituted to hear and determine the dispute. The Company presently anticipates that the arbitration hearing will be held during the fourth quarter of 2023 in Ohio. The ultimate outcome of this dispute cannot presently be determined. However, in management’s opinion, the likelihood of a material adverse outcome is remote. Accordingly, adjustments, if any, that might result from the resolution of this matter have not been reflected in the accompanying condensed consolidated financial statements. During the year ended December 31, 2022, the Company suspended its revenue recognition until the dispute is resolved and has recorded an allowance against the amounts due as of June 30, 2023 and December 31, 2022 in the amount of $7,187,500 and $4,812,500, respectively. The balances due under the Naming Rights Agreement as of June 30, 2023 and December 31, 2022 amounted to $8,697,917 and $6,635,417 respectively.
Other Sponsorship Revenue
The Company has additional revenue primarily from sponsorship programs that provide its sponsors with strategic opportunities to reach customers through our venue including advertising on our website. Sponsorship agreements may contain multiple elements, which provide several distinct benefits to the sponsor over the term of the agreement and can be for a single or multi-year term. These agreements provide sponsors various rights such as venue naming rights, signage within our venues, the ability to be the exclusive provider of a certain category of product, and advertising on our website and other benefits as detailed in the agreements.
As of June 30, 2023, scheduled future cash to be received under the agreements, excluding the Johnson Controls Naming Rights Agreement, is as follows:
Year ending December 31,
As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the agreement. During the three months ended June 30, 2023 and 2022, the Company recognized $691,236 and $452,772 of net sponsorship revenue, respectively, and for the six months ended June 30, 2023 and 2022, $1,364,711 and $1,272,062, respectively. |
Other Commitments |
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| Other Commitments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Other Commitments | Note 7: Other Commitments
Management Agreement with Crestline Hotels & Resorts
On October 22, 2019, the Company entered into a management agreement with Crestline Hotels & Resorts (“Crestline”). The Company appointed and engaged Crestline as the Company’s exclusive agent to supervise, direct, and control management and operation of the DoubleTree Canton Downtown Hotel. In consideration of the services performed by Crestline, the Company agreed to the greater of: 2.75% of gross revenues (which increased from 2% in the beginning of the agreement) or $10,000 per month in base management fees and other operating expenses. The agreement will be terminated on the fifth anniversary of the commencement date, or October 22, 2024. For the three months ended June 30, 2023 and 2022, the Company incurred $55,251 and $32,844, respectively in management fees, and for the six months ended June 30, 2023 and 2022, $100,751 and $62,844, respectively.
Constellation EME Express Equipment Services Program
On February 1, 2021, the Company entered into a contract with Constellation whereby Constellation will sell and/or deliver materials and equipment purchased by the Company. The Company is required to provide $2,000,000 to an escrow account held by Constellation, representing adequate assurance of future performance. Constellation will invoice the Company in 60 monthly installments, which began in April 2021 for $103,095. Additionally, the Company has one note payable with Constellation. See Note 4 for more information.
Sports Betting Agreements
On July 14, 2022, Newco entered into an Online Market Access Agreement with Instabet, Inc. doing business as betr (“BETR”), pursuant to which BETR will serve as a Mobile Management Services Provider (as defined under applicable Ohio gaming law) wherein BETR will host, operate and support a branded online sports betting service in Ohio, subject to procurement of all necessary licenses. The initial term of the Online Market Access Agreement is ten years.
As part of this agreement, Newco will receive a limited equity interest in BETR and certain revenue sharing, along with the opportunity for sponsorship and cross-marketing. The limited equity interest was in the form of penny warrants valued at $4,000,000. The grant date value of these warrants were recorded as deferred revenue (within Other Liabilities on the condensed consolidated Balance Sheets) and will be amortized over the life of the sports betting agreement.
On November 2, 2022, the Company secured conditional approval from the state for mobile and retail sports betting. The Ohio Casino Control Commission provided the required authorization for HOFV to gain licensing for a physical sports betting operation – called a sportsbook – as well as an online sports betting platform, under Ohio’s sports betting law HB29. As of January 1, 2023, sports betting is legal in Ohio for anyone in the state that is of legal betting age. The conditional approval requires that the Company accept bets under both the mobile and retail sports books prior to December 31, 2023. The Company satisfied that condition for the mobile sports book. However, the Company does not currently have a sports betting partner for its retail sports book. If the Company does not take an in-person sports bet through an approved retail partner at its designated facility by December 31, 2023, or otherwise obtain a waiver to this requirement, then the Ohio Casino Control Commission may take administrative actions to revoke the Company’s retail license.
During the three and six months ended June 30, 2023, the Company recognized revenue of $262,500 related to the Company’s online sports betting agreement.
Other Liabilities
Other liabilities consisted of the following at June 30, 2023 and December 31, 2022:
Other Commitments
The Company has other commitments, as disclosed in Notes 6, 8 and 9 within these condensed consolidated footnotes. |
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Contingencies |
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| Contingencies [Abstract] | |
| Contingencies | Note 8: Contingencies
During the normal course of its business, the Company is subject to occasional legal proceedings and claims. The Company does not have any pending litigation that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on its results of operations, financial condition, or cash flows. |
Related-Party Transactions |
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| Related-Party Transactions | Note 9: Related-Party Transactions
Due to Affiliates
Due to affiliates consisted of the following at June 30, 2023 and December 31, 2022:
IRG Canton Village Member, LLC, a member of HOF Village, LLC controlled by our director Stuart Lichter (the “IRG Member”) and an affiliate, provides certain supporting services to the Company. As noted in the Operating Agreement of HOF Village, LLC, an affiliate of the IRG Member, IRG Canton Village Manager, LLC, the manager of HOF Village, LLC controlled by our director Stuart Lichter, may earn a master developer fee calculated as 4.0% of development costs incurred for the Hall of Fame Village, including, but not limited to site assembly, construction supervision, and project financing. These development costs incurred are netted against certain costs incurred for general project management.
The due to related party amounts in the table above are non-interest bearing advances from an affiliate of IRG Member due on demand.
The amounts above due to PFHOF relate to advances to and from PFHOF, including costs for onsite sponsorship activation, sponsorship sales support, shared services, event tickets, and expense reimbursements.
Global License Agreement
Effective April 8, 2022, Newco and PFHOF, entered into a Global License Agreement (the “Global License Agreement”). The Global License Agreement consolidates and replaces the First Amended and Restated License Agreement, the Amended and Restated Media License Agreement, and the Branding Agreement the parties had previously entered into. The Global License Agreement sets forth the terms under which PFHOF licenses certain marks and works to Newco and its affiliates to exploit existing PFHOF works and to create new works. The Global License Agreement grants Newco and its affiliates an exclusive right and license to use the PFHOF marks in conjunction with theme-based entertainment and attractions within the City of Canton, Ohio; youth sports programs, subject to certain exclusions; e-gaming and video games; and sports betting. The Global License Agreement also grants Newco and its affiliates a non-exclusive license to use the PFHOF marks and works in other areas of use, with a right of first refusal, subject to specified exclusions. The Global License Agreement acknowledges the existence of agreements in effect between PFHOF and certain third parties that provide for certain restrictions on the rights of PFHOF, which affects the rights that can be granted to Newco and its affiliates. These restrictions include, but are not limited to, such third parties having co-exclusive rights to exploit content based on the PFHOF enshrinement ceremonies and other enshrinement events. The Global License Agreement requires Newco to pay PFHOF an annual license fee of $900,000 in the first contract year, inclusive of calendar years 2021 and 2022; an annual license fee of $600,000 in each of contract years two through six; and an annual license fee of $750,000 per year starting in contract year seven through the end of the initial term. The Global License Agreement also provides for an additional license royalty payment by Newco to PFHOF for certain usage above specified financial thresholds, as well as a commitment to support PFHOF museum attendance through Newco’s and its affiliates’ ticket sales for certain concerts and youth sports tournaments. The Global License Agreement has an initial term through December 31, 2036, subject to automatic renewal for successive five-year terms, unless timely notice of non-renewal is provided by either party.
The future minimum payments under this agreement as of June 30, 2023 are as follows:
During the three months ended June 30, 2023 and 2022, the Company paid $0 and $318,750 of the annual license fee, respectively, and for the six months ended June 30, 2023 and 2022, $300,000 and $318,750, respectively.
Hotel Construction Loan Commitment Letter
On November 3, 2022, the Company entered into a Commitment Letter (the “Hotel Construction Loan Commitment Letter”), by and among the Company, as guarantor, HOF Village Hotel WP, LLC (“Hotel”), an indirect wholly owned subsidiary of the Company, as borrower, and Industrial Realty Group, Inc. (“IRGInc”), as lender. Stuart Lichter, a director of the Company, is President and Chairman of the Board of Industrial Realty Group, LLC (“IRGLLC”). Pursuant to the terms of the Hotel Construction Loan Commitment Letter, IRGInc committed to provide, or to arrange for one of IRGInc’s affiliates to provide, a loan of $28,000,000 (the “Hotel Construction Loan”) to finance a portion of Hotel’s costs and expenses in connection with the ground-up development of a 180-room family hotel (the “Hotel Project”) on approximately 1.64 acres of land located in the Hall of Fame Village, Canton, Ohio (the “Hotel Property”), adjacent to the Waterpark Property. The commitment to provide the Hotel Construction Loan is subject to certain conditions, including the execution and delivery of definitive documentation with respect to the Hotel Construction Loan.
The Hotel Construction Loan will have a two-year term with one option to extend for twelve months, subject to standard extension conditions. The collateral for the Hotel Construction Loan will include, without limitation: (a) a first priority perfected mortgage encumbering the Hotel Property; (b) a first priority perfected assignment of leases and rents with respect to the Hotel Property; (c) a first priority perfected assignment of all permits, licenses, entitlements, approvals, and contracts with respect to the Hotel Property; (d) UCC-1 financing statements (all personal property, fixture filing and accounts and reserves); (e) equity pledge; and (f) all other agreements and assurances customary in similar financings by IRGInc. The Hotel Construction Loan will bear interest at a variable rate per annum equal to the one-month Term SOFR plus 6%, subject to a SOFR floor equal to the greater of (i) 4% and (ii) prevailing SOFR at closing of the Hotel Construction Loan. Payments of interest only will be made during the initial two-year term, with a payments of principal and interest based on a 25-year amortization during the extension term, if applicable. Hotel will pay 1% of the Hotel Construction Loan amount as an origination fee, payable in full at closing. The Hotel Construction Loan definitive documentation will have representations, warranties and events of default usual and customary for such type of loan.
IRG Financial Support and Consideration
On November 7, 2022, the Company entered into a letter agreement (the “IRG Letter Agreement”) with IRGLLC, pursuant to which IRGLLC agreed that IRGLLC and IRGLLC’s affiliates and related parties will provide the Company and its subsidiaries with certain financial support described below in exchange for certain consideration described below.
The financial support provided under the IRG Letter Agreement consists of the following (the “IRG Financial Support”):
Waterpark Construction Financing Facilitation. IRGLLC agreed that its affiliate CH Capital Lending, LLC (“CHCL”), would help facilitate the closing of financing with Oak Street with regard to construction of the Waterpark Project, by among other things, releasing CHCL’s first mortgage lien on the Stadium Leasehold Interests and pledge of membership interests in HOFV Stadium. In addition, IRGLLC agreed to provide a completion guaranty to facilitate other needed financing for the Waterpark Project, as required.
Extension of CHCL Bridge Loan. IRGLLC agreed that CHCL would extend to March 31, 2024 the maturity of the promissory note dated June 16, 2022, issued by the Company, HOF Village Retail I, LLC and HOF Village Retail II, LLC, as borrowers, to CHCL, as lender (the “Bridge Loan”).
Provide One Year Extension Option for All IRG Affiliate Lender Loans. All loans from affiliates and related parties of IRGLLC (“IRG Affiliate Lenders”) will be amended to provide for an optional one-year extension of their maturity until March 31, 2025 for a one percent extension fee, which is payable if and when an IRG Affiliate Lender loan is extended. The IRG Affiliate Lender loans consist of the following: (i) Bridge Loan, with an existing modified maturity date of March 31, 2024; (ii) the term loan, payable to CHCL, with an existing maturity of March 31, 2024; (iii) the first amended and restated promissory note, dated March 1, 2022, payable to IRG, LLC, with an existing maturity of March 31, 2024; (iv) the first amended and restated promissory note, dated March 1, 2022, payable to JKP Financial, LLC, with an existing maturity of March 31, 2024; (v) the Secured Cognovit Promissory Note, dated as of June 19, 2020, assigned June 30, 2020 and amended December 1, 2020 and March 1, 2022, payable to JKP Financial, LLC, with an existing maturity of March 31, 2024; and (vi) the promissory note, dated April 27, 2022, payable to Midwest Lender Fund, LLC (“MLF”), with an existing maturity of April 30, 2023, and with an option to extend the maturity until March 31, 2024.
Tapestry Hotel Construction Financing Commitment Letter. IRGLLC agreed to provide a commitment for financing the Hotel Project, as set forth in the Hotel Construction Loan Commitment Letter.
In consideration of the IRG Financial Support to be received by the Company and its subsidiaries, the Company agreed in the IRG Letter Agreement to provide the following consideration to IRGLLC and the IRG Affiliate Lenders:
The Company agreed to make a payment of $4,500,000 as a fee for providing the completion guaranty and other IRG Financial Support described above, payable to CHCL to be held in trust for the IRG Affiliate Lenders, to be allocated as the IRG Affiliate Lenders shall determine. The Company also agreed to issue 90,909 shares of common stock, par value $0.0001 per share (“Common Stock”) to the IRG Affiliate Lenders, to be allocated as the IRG Affiliate Lenders shall determine, in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering.
The Company agreed to modify the IRG Affiliate Lender loans as follows: (i) all IRG Affiliate Lender loans will bear interest at 12.5% per annum, compounded monthly, with payment required monthly at 8% per annum, and with the remaining interest accrued and deferred until maturity; (ii) the price at which the principal and accumulated and unpaid interest under the IRG Affiliated Lender loans is convertible into shares of Common Stock will be reset to a price equal to $12.77 per share; (iii) the Company and its subsidiaries will record a blanket junior mortgage on all real estate owned or leased by the Company and its subsidiaries, whether fee or leasehold estates, other than those parcels for which existing lenders prohibit junior financing; (iv) the Company agreed to acknowledge an existing pledge of the Company’s 100% membership interest in HOFV Newco and reflect that such pledge secures all amounts due under the IRG Affiliate Lender Loans; (v) all IRG Affiliate Lender loans will be cross-collateralized and cross-defaulted; (vi) the Company and its subsidiaries will covenant not to assign, pledge, mortgage, encumber or hypothecate any of the underlying assets, membership interests in affiliated entities or IP rights without IRGLLC’s written consent; (vii) prior development fees owed by the Company to IRGLLC will be accrued and added to the Bridge Loan, and future development fees owed by the Company to IRGLLC will be paid as when due; and (viii) the Company will pay to IRGLLC 25% of all contractual dispute cash settlements collected by the Company with regard to existing contractual disputes in settlement discussions, which shall be applied to outstanding IRG Affiliate Lender loans, first against accrued interest and other charges and then against principal.
The Company agreed to modify the Series C through Series G warrants held by IRG Affiliate Lenders as follows: (i) the exercise price of the Series C through Series G warrants held by IRG Affiliate Lenders will be reset to Market Price; and (ii) the warrant expiration dates of the Series C through Series G warrants held by IRG Affiliate Lenders will be extended by two years from their current expiration dates.
In the IRG Letter Agreement, IRGLLC and the Company agreed to comply with all federal and state securities laws and Nasdaq listing rules and to insert “blocker” provisions for the above-described re-pricing of the warrants and the conversion provisions, such that the total cumulative number of shares of Common Stock that may be issued to IRGLLC and its affiliated and related parties pursuant to the IRG Letter Agreement may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following approval of the Company’s stockholders. In addition, the provisions of the IRG Letter Agreement are limited by Nasdaq Listing Rule 5635(c). On June 7, 2023, the stockholders of the Company approved (i) issuance of shares of Common Stock in excess of the Nasdaq 19.99% Cap to IRG Affiliate Lenders with respect to transactions described in the IRG Letter Agreement; and (ii) the issuance to an entity wholly owned by a director of additional shares of Common Stock issuable upon the conversion of certain convertible debt and the exercise of certain warrants described in the IRG Letter Agreement. |
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Concentrations |
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Jun. 30, 2023 | |
| Concentrations [Abstract] | |
| Concentrations | Note 10: Concentrations
For the three months ended June 30, 2023, two customers represented approximately 42.3% and 18.0% of the Company’s sponsorship revenue. For the three months ended June 30, 2022, two customers represented approximately 65% and 28% of the Company’s sponsorship revenue. No other customer represented more than 10% of sponsorship revenue.
For the six months ended June 30, 2023, two customers represented approximately 42.6% and 18.2% of the Company’s sponsorship revenue. For the six months ended June 30, 2022, two customers represented approximately 45.7% and 19.5% of the Company’s sponsorship revenue. No other customer represented more than 10% of sponsorship revenue.
As of June 30, 2023, one customer represented approximately 84.0% of the Company’s sponsorship accounts receivable. As of December 31, 2022, one customer represented approximately 94.4% of the Company’s sponsorship accounts receivable. No other customer represented more than 10% of outstanding accounts receivable.
At any point in time, the Company can have funds in their operating accounts and restricted cash accounts that are with third-party financial institutions. These balances in the U.S. may exceed the Federal Deposit Insurance Corporation insurance limits. While the Company monitors the cash balances in their operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or other adverse conditions in the financial markets occurs. |
Leases |
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | Note 11: Leases
The Company has entered into operating leases as the lessee primarily for ground leases under its stadium, sports complex, and parking facilities.
At the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2022, which were accounted for under ASC 840, were not reassessed for classification.
For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases and is subsequently presented at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term for all of the Company’s leases includes the noncancelable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed periodically for impairment.
Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the shorter of the lease term or its useful life and interest expense determined on an amortized cost basis, with the lease payments allocated between a reduction of the lease liability and interest expense.
The Company’s operating leases are comprised primarily of ground leases and equipment leases. Balance sheet information related to our leases is presented below:
Other information related to leases is presented below:
As of June 30, 2023, the annual minimum lease payments of our operating lease liabilities were as follows:
As of June 30, 2023, the Company’s Constellation Center for Excellence and retail facilities were partially leased including leases by the Company’s subsidiaries. During the three months ended June 30, 2023 and 2022, the Company recorded $82,611 and $6,200 of lease revenue, respectively and for the six months ended June 30, 2023 and 2022, the Company recorded $177,151 and $14,318 of lease revenue, respectively. The future minimum lease commitments under these leases, excluding leases of the Company’s subsidiaries, are as follows:
Year ending December 31:
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Financing Liability |
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| Financing Liability | Note 12: Financing Liability
On September 27, 2022 the Company sold the land under the Company’s Fan Engagement Zone to Twain. Simultaneously, the Company entered into a lease agreement with Twain (the sale of the property and simultaneous leaseback is referred to as the “Sale-Leaseback”). The Sale-Leaseback is repayable over a 99-year term. Under the terms of the lease agreement, the Company’s initial base rent is approximately $307,125 per quarter, with annual increases of approximately 2% each year of the term.
On November 7, 2022, HOFV Waterpark sold the land under the Company’s future waterpark. Simultaneously, the Company entered into a lease agreement with the buyer of the property. The Sale-Leaseback for the waterpark is repayable over a 99-year term. Under the terms of the leaseback agreement, the Company’s initial base rent is $4,375,000 per annum, payable monthly, with customary escalations over the lease term. On November 7, 2022, Oak Street and HOFV Waterpark also entered into a Purchase Option Agreement (the “Purchase Option Agreement”), pursuant to which HOFV Waterpark is granted an option to purchase the Waterpark Property back from Oak Street that can be exercised during the period beginning on December 1, 2027 and ending on November 30, 2034 (the “Option Period”).
The Company accounted for the Sale-Leaseback transactions with Twain and Oak Street as financing transactions with the purchaser of the property. The Company concluded the lease agreements both met the qualifications to be classified as finance leases due to the significance of the present value of the lease payments, using a discount rate of 10.25% to reflect the Company’s incremental borrowing rate, compared to the fair value of the leased property as of the lease commencement date.
The presence of a finance-type lease in the sale-leaseback transactions indicates that control of the land under the Fan Engagement Zone and HOFV Waterpark has not transferred to the buyer/lessor and, as such, the transactions were both deemed a failed sale-leaseback and must be accounted for as a financing arrangement. As a result of this determination, the Company is viewed as having received the sales proceeds from the buyer/lessor in the form of a hypothetical loan collateralized by its leased land. The hypothetical loan is payable as principal and interest in the form of “lease payments” to the buyer/lessor. As such, the Company will not derecognize the property from its books for accounting purposes until the lease ends.
As of June 30, 2023, the carrying value of the financing liability was $61,299,829, representing $2,201,892,776 in remaining payments under the leases, net of a discount of $2,140,592,947. The lease payments are split between a reduction of principal and interest expense using the effective interest rate method.
As of December 31, 2022, the carrying value of the financing liability was $60,087,907, representing $2,204,080,276 in remaining payments under the leases, net of a discount of $2,143,992,369. The monthly lease payments are split between a reduction of principal and interest expense using the effective interest rate method.
The Company has a right to re-purchase the land from Twain at any time on or after September 27, 2025 at a fixed price according to the lease. Oak Street and HOFV Waterpark also entered into a purchase option agreement, pursuant to which HOFV Waterpark is granted an option to purchase the waterpark property back from Oak Street that can be exercised during the period beginning on December 1, 2027 and ending on November 30, 2034.
Remaining future cash payments related to the financing liability, for the fiscal years ending December 31 are as follows:
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 13: Subsequent Events
Subsequent events have been evaluated through August 10, 2023, the date the condensed consolidated financial statements were issued. Except as disclosed below, no events have been identified requiring disclosure or recording.
Pro Football Hall of Fame Purchase Agreement
On August 1, 2023, the Company and PFHOF entered into a real estate purchase agreement, where by the Company agreed to sell to PFHOF certain real estate in exchange for $250,000. There are certain other customary conditions that must be satisfied prior to the closing of the transaction. |
Accounting Policies, by Policy (Policies) |
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| Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and Rule 10 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial position and operating results have been included in these statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2022, filed on March 27, 2023. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, 2023. |
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| Consolidation | Consolidation The condensed consolidated financial statements include the accounts and activity of the Company and its wholly owned subsidiaries. Investments in a variable interest entity in which the Company is not the primary beneficiary, or where the Company does not own a majority interest but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. All intercompany profits, transactions, and balances have been eliminated in consolidation. The Company owns a 60% interest in Mountaineer GM, LLC (“Mountaineer”), whose results are consolidated into the Company’s results of operations. The portion of Mountaineer’s net income (loss) that is not attributable to the Company is included in non-controlling interest. |
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| Reclassification | Reclassification Certain financial statement line items of the Company’s historical presentation have been reclassified to conform to the corresponding financial statement line items in 2023. These reclassifications have no material impact on the historical operating loss, net loss, total assets, total liabilities, or Stockholders’ equity previously reported.
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| Emerging Growth Company | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). It may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. The Company will cease to be an emerging growth company on December 31, 2023. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such an extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. |
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| Use of Estimates | Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and assumptions for the Company relate to bad debt, depreciation, costs capitalized to project development costs, useful lives of long-lived assets, potential impairment, accounting for debt modifications and extinguishments, stock-based compensation, and fair value of financial instruments (including the fair value of the Company’s warrant liability). Management adjusts such estimates when facts and circumstances dictate. Actual results could differ from those estimates.
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| Warrant Liability | Warrant Liability The Company accounts for warrants for shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”) that are not indexed to its own stock as liabilities at fair value on the balance sheet under U.S. GAAP. Such warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other expense on the statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of such Common Stock warrants. At that time, the portion of the warrant liability related to such Common Stock warrants will be reclassified to additional paid-in capital. |
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| Cash and Restricted Cash | Cash and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less when purchased, to be cash equivalents. There were no cash equivalents as of June 30, 2023 and December 31, 2022, respectively. The Company maintains its cash and escrow accounts at national financial institutions. The balances, at times, may exceed federally insured limits. Restricted cash includes escrow reserve accounts for capital improvements and debt service as required under certain of the Company’s debt agreements. The balances as of June 30, 2023 and December 31, 2022 were $7,543,499 and $7,499,835, respectively. |
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| Investments | Investments The Company from time to time invests in debt and equity securities, including companies engaged in complementary businesses. All marketable equity and debt securities held by the Company are accounted for under ASC Topic 320, “Investments – Debt and Equity Securities.” As of June 30, 2023 and December 31, 2022, the Company held $12,359,877 and $17,033,515, respectively in securities to be held to maturity consisting of U.S government securities carried at amortized cost. The Company recognizes interest income on these securities ratably over their term utilizing the interest method. As of June 30, 2023 and December 31, 2022, the Company also had $5,751,000 and $4,067,754, respectively in securities available for sale, which are marked to market value at each reporting period.
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| Accounts Receivable | Accounts Receivable Accounts receivable are generally amounts due under sponsorship and other agreements. Accounts receivable are reviewed for delinquencies on a case-by-case basis and are considered delinquent when the sponsor or customer has missed a scheduled payment. Interest is not charged on delinquencies. The carrying amount of accounts receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all delinquent accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. As of June 30, 2023 and December 31, 2022, the Company has recorded an allowance for credit losses of $7,911,440 and $5,575,700, respectively. |
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| Deferred Financing Costs | Deferred Financing Costs Costs incurred in obtaining financing are capitalized and amortized to additions in project development costs during the construction period over the term of the related loans, without regard for any extension options until the project or portion thereof is considered substantially complete. Upon substantial completion of the project or portion thereof, such costs are amortized as interest expense over the term of the related loan. Any unamortized costs are shown as an offset to “Notes Payable, net” on the accompanying condensed consolidated balance sheets. Upon an extinguishment of debt (or a modification that is treated as an extinguishment), the remaining deferred financing costs are expensed against “Loss on Extinguishment of Debt”.
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| Revenue Recognition | Revenue Recognition The Company follows the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue with Contracts with Customers, to properly recognize revenue. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company generates revenues from various streams such as sponsorship agreements, rents, events, and hotel and restaurant operations. The sponsorship arrangements, in which the customer sponsors a play area or event and receives specified brand recognition and other benefits over a set period of time, recognize revenue on a straight-line basis over the time period specified in the contract. The excess of amounts contractually due over the amounts of sponsorship revenue recognized are included in other liabilities on the accompanying condensed consolidated balance sheets. Contractually due but unpaid sponsorship revenue are included in accounts receivable on the accompanying condensed consolidated balance sheets. Refer to Note 6 for more details. Revenue for short-term rentals, and events are recognized at the time the respective event or service has been performed. Rental revenue for long term leases is recorded on a straight-line basis over the term of the lease beginning on the commencement date. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. If the contract does not specify the revenue by performance obligation, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price. Such prices are generally determined using prices charged to customers or using the Company’s expected cost plus margin. Revenue is recognized as the Company’s performance obligations are satisfied. If consideration is received in advance of the Company’s performance, including amounts which are refundable, recognition of revenue is deferred until the performance obligation is satisfied or amounts are no longer refundable. The Company’s owned hotel revenues primarily consist of hotel room sales, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales, and other ancillary goods and services (e.g., parking) related to owned hotel properties. Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. Although the transaction prices of hotel room sales, goods, and other services are generally fixed and based on the respective room reservation or other agreement, an estimate to reduce the transaction price is required if a discount is expected to be provided to the customer. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling price of each component. Restaurant revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales related taxes.
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| Income Taxes | Income Taxes The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of June 30, 2023 and December 31, 2022, no liability for unrecognized tax benefits was required to be reported. The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of operating expenses on the Company’s condensed consolidated statements of operations. There were no amounts incurred for penalties and interest for the three and six months ended June 30, 2023 and 2022. The Company does not expect its uncertain tax position to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. The Company’s effective tax rates of zero differ from the statutory rate for the years presented primarily due to the Company’s net operating loss, which was fully reserved for all years presented. The Company has identified its United States tax return and its state tax return in Ohio as its “major” tax jurisdictions, and such returns for the years 2019 through 2022 remain subject to examination.
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| Film and Media Costs | Film and Media Costs The Company capitalizes all costs to develop films and related media as an asset, included in “project development costs” on the Company’s condensed consolidated balance sheets. The costs for each film or media will be expensed over the expected release period. During the three months ended June 30, 2023 the Company recorded $0 and in film and media costs. During the six months ended June 30, 2023 and 2022, the Company recorded $1,305,000 and $0 in film and media costs, respectively, including impairment of $1,145,000 and $0, respectively, as the Company does not anticipate recovering these costs. The impairment in Film and Media Costs is included in operating expenses on the Company’s condensed consolidated statements of operations. |
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| Accounting for Real Estate Investments | Accounting for Real Estate Investments Upon the acquisition of real estate properties, a determination is made as to whether the acquisition meets the criteria to be accounted for as an asset or business combination. The determination is primarily based on whether the assets acquired and liabilities assumed meet the definition of a business. The determination of whether the assets acquired and liabilities assumed meet the definition of a business include a single or similar asset threshold. In applying the single or similar asset threshold, if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the assets acquired and liabilities assumed are not considered a business. Most of the Company’s acquisitions meet the single or similar asset threshold due to the fact that substantially all the fair value of the gross assets acquired is attributable to the real estate acquired. Acquired real estate properties accounted for as asset acquisitions are recorded at cost, including acquisition and closing costs. The Company allocates the cost of real estate properties to the tangible and intangible assets and liabilities acquired based on their estimated relative fair values. The Company determines the fair value of tangible assets, such as land, building, furniture, fixtures, and equipment, using a combination of internal valuation techniques that consider comparable market transactions, replacement costs, and other available information and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition. The Company determines the fair value of identified intangible assets or liabilities, which typically relate to in-place leases, using a combination of internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition. If a transaction is determined to be a business combination, the assets acquired, liabilities assumed, and any identified intangibles are recorded at their estimated fair values on the transaction date, and transaction costs are expensed in the period incurred.
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| Fair Value Measurement | Fair Value Measurement The Company follows FASB’s ASC 820–10, Fair Value Measurement, to measure the fair value of its financial instruments and non-financial instruments and to incorporate disclosures about fair value of its financial instruments. ASC 820–10 establishes a framework for measuring fair value and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820–10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by ASC 820–10-20 are described below:
Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these instruments. The carrying amount of the Company’s notes payable is considered to approximate their fair value based on the borrowing rates currently available to the Company for loans with similar terms and maturities.
The Company uses the fair value hierarchy to measure the fair value of its warrant liabilities, investments available for sale and interest rate swaps. The Company revalues its financial instruments at every reporting period. The Company recognizes gains or losses on the change in fair value of the warrant liabilities as “change in fair value of warrant liability” in the condensed consolidated statements of operations. The Company recognizes gains or losses on the change in fair value of the investments available for sale as “change in fair value of investments available for sale” in the condensed consolidated statements of operations. The Company recognizes gains or losses on the change in fair value of the interest rate swap as “change in fair value of interest rate swap” in the condensed consolidated statements of operations. The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheets as of June 30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
The Series A Warrants issued to the previous shareholders of GPAQ (the “Public Series A Warrants”) are classified as Level 1 due to the use of an observable market quote in the active market. Level 3 financial liabilities consist of the Series A Warrants issued to the sponsors of GPAQ (the “Private Series A Warrants”) and the Series B Warrants issued in the Company’s November 2020 follow-on public offering, for which there is no current market for these securities, and the determination of fair value requires significant judgment or estimation. Changes in fair value measurement categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded appropriately.
Subsequent measurement The following table presents the changes in fair value of the warrant liabilities:
The key inputs into the Black Scholes valuation model for the Level 3 valuations as of June 30, 2023 and December 31, 2022 are as follows:
The valuation of the investments available for sale were based on sales of similar equity instruments in the time periods near to the measurement dates.
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| Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units and restricted stock awards, and (iii) conversion of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive. For the three and six months ended June 30, 2023 and 2022, the Company was in a loss position and therefore all potentially dilutive securities would be anti-dilutive and the calculations are presented on the accompanying condensed consolidated statements of operations. As of June 30, 2023 and 2022, the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive.
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Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of financial liabilities measured on a recurring basis and reported at fair value | The following table provides the financial liabilities
measured on a recurring basis and reported at fair value on the balance sheets as of June 30, 2023 and December 31, 2022 and indicates
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
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| Schedule of changes in fair value of the warrant liabilities | The following table presents the changes
in fair value of the warrant liabilities:
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| Schedule of Black Scholes valuation model for the Level 3 valuations | The key inputs into the Black Scholes valuation model for the Level
3 valuations as of June 30, 2023 and December 31, 2022 are as follows:
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| Schedule of outstanding common stock equivalents have been excluded from the calculation of net loss per share | As of June 30, 2023 and 2022,
the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact
would be anti-dilutive.
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Property and Equipment (Tables) |
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| Property and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment | Property and equipment consists of the following:
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Notes Payable, net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of notes payable, net | Notes payable, net consisted of the following
Notes payable, net consisted of the following at December 31, 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued interest on notes payable | As of June 30, 2023 and December 31, 2022, accrued
interest on notes payable, were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of principal payments on notes payable outstanding | The minimum required principal payments on notes
payable outstanding as of June 30, 2023 are as follows:
|
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Stockholders’ Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of restricted common stock | The Company’s activity in restricted Common
Stock was as follows for the six months ended June 30, 2023:
|
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| Schedule of warrant activity | The Company’s warrant activity was as follows for the six months
ended June 30, 2023:
|
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| Schedule of the fair value of series C warrants in connection | The following assumptions were used to calculate
the fair value of Series C Warrants in connection with the modifications:
The following assumptions were used to calculate the fair value of Series D Warrants in connection with the modifications:
|
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Sponsorship Revenue and Associated Commitments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| Sponsorship Revenue and Associated Commitments [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Schedule of future cash to be received under the agreement | As of June 30, 2023, scheduled future cash to
be received under the agreements, excluding the Johnson Controls Naming Rights Agreement, is as follows:
|
Other Commitments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other Commitments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other liabilities | Other liabilities consisted of the following at
June 30, 2023 and December 31, 2022:
|
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Related-Party Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Schedule of due to affiliates | Due to affiliates consisted of the following at
June 30, 2023 and December 31, 2022:
|
||||||||||||||||||||||||||||||||||||||||
| Schedule of future minimum payments | The future minimum payments under this agreement
as of June 30, 2023 are as follows:
|
||||||||||||||||||||||||||||||||||||||||
Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of operating leases | The Company’s operating leases are comprised primarily of ground
leases and equipment leases. Balance sheet information related to our leases is presented below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of information related to leases | Other information related to leases is presented below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of annual minimum lease payments of our operating lease liabilities | As of June 30, 2023, the annual minimum lease payments of our operating
lease liabilities were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of future minimum lease commitments | The future minimum lease commitments
under these leases, excluding leases of the Company’s subsidiaries, are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Liability (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Financing Liability [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of remaining future cash payments related to the financing liability | Remaining future cash payments related to the
financing liability, for the fiscal years ending December 31 are as follows:
|
Summary of Significant Accounting Policies (Details) - USD ($) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Summary of Significant Accounting Policies (Details) [Line Items] | |||
| Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | |
| Restricted cash | $ 7,543,499 | $ 7,499,835 | |
| Securities held | 12,359,877 | 17,033,515 | |
| Securities available for sale | 5,751,000 | 4,067,754 | |
| Doubtful accounts | 7,911,440 | $ 5,575,700 | |
| Film and media cost | 0 | ||
| Film and media costs | 1,305,000 | $ 0 | |
| Impairment amount | $ 1,145,000 | $ 0 | |
| Mountaineer GM, LLC [Member] | |||
| Summary of Significant Accounting Policies (Details) [Line Items] | |||
| Ownership percentage | 60.00% | ||
Summary of Significant Accounting Policies (Details) - Schedule of financial liabilities measured on a recurring basis and reported at fair value - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Fair value of aggregate warrant liabilities | $ 1,372,000 | $ 911,000 |
| Fair value of interest rate swap liability | 240,000 | 200,000 |
| Investments available for sale | 5,751,000 | 4,067,754 |
| Level 1 [Member] | Public Series A Warrants [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Warrant liabilities | 844,000 | 748,000 |
| Level 3 [Member] | Private Series A Warrants [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Warrant liabilities | 10,000 | |
| Level 3 [Member] | Series B Warrants [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Warrant liabilities | $ 518,000 | $ 163,000 |
Summary of Significant Accounting Policies (Details) - Schedule of Black Scholes valuation model for the Level 3 valuations - $ / shares |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Private Series A Warrants [Member] | ||
| Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
| Term (years) | 2 years | 2 years 6 months |
| Stock price | $ 10.45 | $ 8.06 |
| Exercise price | $ 253.11 | $ 253.11 |
| Dividend yield | 0.00% | 0.00% |
| Expected volatility | 77.47% | 52.27% |
| Risk free interest rate | 4.49% | 4.22% |
| Number of shares | $ 95,576 | $ 95,576 |
| Series B Warrants [Member] | ||
| Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
| Term (years) | 2 years 4 months 24 days | 2 years 10 months 24 days |
| Stock price | $ 10.45 | $ 8.06 |
| Exercise price | $ 30.81 | $ 30.81 |
| Dividend yield | 0.00% | 0.00% |
| Expected volatility | 91.34% | 63.86% |
| Risk free interest rate | 4.49% | 4.22% |
| Number of shares | $ 170,862 | $ 170,862 |
Property and Equipment (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Property and Equipment [Abstract] | |||||
| Depreciation expense | $ 3,373,076 | $ 3,527,581 | |||
| Depreciation expenses | $ 5,926,436 | $ 6,769,866 | |||
| Capitalized project development costs | 19,676,877 | 40,022,805 | |||
| Transferred amount | 127,045,169 | $ 0 | |||
| Film development costs | $ 200,000 | $ 200,000 | $ 982,000 | ||
Notes Payable, net (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2023 |
Dec. 27, 2022 |
Nov. 07, 2022 |
Sep. 27, 2022 |
Jun. 08, 2022 |
Apr. 27, 2022 |
Mar. 01, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jan. 12, 2023 |
Dec. 31, 2022 |
|||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Amortization of note discounts | $ (882,240) | $ 1,122,324 | $ 1,738,131 | $ 2,478,298 | |||||||||||||||
| Paid-in-kind interest | $ 2,282,040 | $ 1,681,722 | |||||||||||||||||
| Preferred stock, shares outstanding (in Shares) | |||||||||||||||||||
| Preferred stock, shares authorized (in Shares) | 4,917,000 | 4,917,000 | 4,917,000 | ||||||||||||||||
| Redeemed cash | 5 years | ||||||||||||||||||
| Maturity term | 3 years | ||||||||||||||||||
| Maturity date | Jul. 01, 2030 | Jul. 01, 2030 | |||||||||||||||||
| Mortgage loan | $ 7,400,000 | ||||||||||||||||||
| Private placement | $ 10,030,000 | ||||||||||||||||||
| Imputed interest rate | 5.20% | ||||||||||||||||||
| Company paid | $ 9,700,000 | ||||||||||||||||||
| Principal amount | $ 18,100,000 | ||||||||||||||||||
| Roadway improvements | 6,800,000 | ||||||||||||||||||
| Principal amount percentage | 10.00% | 10.00% | |||||||||||||||||
| Principal amount | $ 1,810,000 | ||||||||||||||||||
| Maturity loan | Mar. 31, 2024 | ||||||||||||||||||
| Financing commitment | $ 28,000,000 | $ 28,000,000 | |||||||||||||||||
| Maturity option | Mar. 31, 2025 | ||||||||||||||||||
| Percent fee | 1.00% | ||||||||||||||||||
| Issue shares (in Shares) | 90,909 | ||||||||||||||||||
| Increase interest rate | 12.50% | ||||||||||||||||||
| Conversion price, per share (in Dollars per share) | $ 12.77 | $ 12.77 | |||||||||||||||||
| Exercisable per share (in Dollars per share) | $ 12.77 | $ 12.77 | |||||||||||||||||
| Agreement percentage | 19.99% | ||||||||||||||||||
| Note payable description | (i) issuance of shares of Common Stock in excess of the Nasdaq 19.99% Cap to IRG Affiliate Lenders with respect to transactions described in the IRG Letter Agreement; and (ii) the issuance to an entity wholly owned by a director of additional shares of Common Stock issuable upon the conversion of certain convertible debt and the exercise of certain warrants described in the IRG Letter Agreement. | ||||||||||||||||||
| Company issued shares (in Shares) | 5,681 | ||||||||||||||||||
| Exercisable term | 1 year | ||||||||||||||||||
| Lender Loan | $ 10,000,000 | ||||||||||||||||||
| Notional amount | $ 10,000,000 | ||||||||||||||||||
| Fixed interest rate | 4.00% | ||||||||||||||||||
| Minimum [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Imputed interest rate | 6.60% | ||||||||||||||||||
| Principal amount percentage | 5.00% | 5.00% | |||||||||||||||||
| Loan interest | $ 2.6 | ||||||||||||||||||
| Maximum [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Imputed interest rate | 7.70% | ||||||||||||||||||
| Principal amount percentage | 10.00% | 10.00% | |||||||||||||||||
| Loan interest | $ 3.5 | ||||||||||||||||||
| Notes Payable [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Principal amount | $ 905,000 | ||||||||||||||||||
| Series A Preferred Stock [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Preferred stock, shares outstanding (in Shares) | 3,600 | 3,600 | 1,800 | ||||||||||||||||
| Preferred stock, shares authorized (in Shares) | 52,800 | 52,800 | 1,600 | 52,800 | |||||||||||||||
| Aquarian Mortgage Loan [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Loan modification costs | $ 38,000 | ||||||||||||||||||
| IRG Letter Agreement [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Cash | $ 4,500,000 | $ 4,500,000 | |||||||||||||||||
| CFP Loan [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Principal amount percentage | [1],[2],[3] | 12.50% | 12.50% | ||||||||||||||||
| Increase interest rate | 12.50% | ||||||||||||||||||
| Loan amount | $ 4,000,000 | ||||||||||||||||||
| Series G Warrants [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Purchase shares (in Shares) | 5,681 | ||||||||||||||||||
| Exercise price per share (in Dollars per share) | $ 33 | ||||||||||||||||||
| Expire term | 5 years | ||||||||||||||||||
| 2023 Bonds [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Debt service | $ 900,000 | ||||||||||||||||||
| Interest rate | 6.375% | ||||||||||||||||||
| 2023 Bonds [Member] | TIF [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Principal amount | $ 18,100,000 | ||||||||||||||||||
| DFA [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Development finance cost | 8,600,000 | ||||||||||||||||||
| 2023 Bonds [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Issuance cost | $ 1,200,000 | ||||||||||||||||||
| CFP Loan [Member] | |||||||||||||||||||
| Notes Payable, net (Details) [Line Items] | |||||||||||||||||||
| Interest rate | 6.50% | ||||||||||||||||||
| |||||||||||||||||||
Notes Payable, net (Details) - Schedule of notes payable, net - USD ($) |
6 Months Ended | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 208,964,760 | [1] | $ 185,195,572 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | (13,693,923) | [1] | (13,879,712) | ||||||||||||||||||||||
| Net | $ 195,270,837 | [1] | 171,315,860 | ||||||||||||||||||||||
| Interest Rate, Stated | 10.00% | ||||||||||||||||||||||||
| Preferred Equity Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [2] | $ 6,800,000 | [1] | 3,600,000 | |||||||||||||||||||||
| Debt discount and deferred financing costs | [2] | [1] | |||||||||||||||||||||||
| Net | [2] | $ 6,800,000 | [1] | 3,600,000 | |||||||||||||||||||||
| Interest Rate, Stated | [1],[2] | 7.00% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[2] | 7.00% | |||||||||||||||||||||||
| Maturity Date | [1],[2] | Various | |||||||||||||||||||||||
| City of Canton Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [3] | $ 3,425,000 | [1] | 3,450,000 | |||||||||||||||||||||
| Debt discount and deferred financing costs | [3] | (4,749) | [1] | (5,333) | |||||||||||||||||||||
| Net | [3] | $ 3,420,251 | [1] | 3,444,667 | |||||||||||||||||||||
| Interest Rate, Stated | [1],[3] | 0.50% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[3] | 0.53% | |||||||||||||||||||||||
| Maturity Date | [1],[3] | 7/1/2027 | |||||||||||||||||||||||
| New Market/SCF [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 2,999,989 | [1] | 2,999,989 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | [1] | ||||||||||||||||||||||||
| Net | $ 2,999,989 | [1] | 2,999,989 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 4.00% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 4.00% | |||||||||||||||||||||||
| Maturity Date | [1] | 12/30/2024 | |||||||||||||||||||||||
| JKP Capital loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [4],[5] | $ 9,367,890 | [1] | 9,158,711 | |||||||||||||||||||||
| Debt discount and deferred financing costs | [4],[5] | [1] | |||||||||||||||||||||||
| Net | [4],[5] | $ 9,367,890 | [1] | 9,158,711 | |||||||||||||||||||||
| Interest Rate, Stated | [1],[4],[5] | 12.50% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[4],[5] | 12.50% | |||||||||||||||||||||||
| Maturity Date | [1],[4],[5] | 3/31/2024 | |||||||||||||||||||||||
| MKG DoubleTree Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [6] | $ 15,300,000 | [1] | 15,300,000 | |||||||||||||||||||||
| Debt discount and deferred financing costs | [6] | [1] | |||||||||||||||||||||||
| Net | [6] | $ 15,300,000 | [1] | 15,300,000 | |||||||||||||||||||||
| Interest Rate, Stated | [1],[6] | 10.00% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[6] | 10.00% | |||||||||||||||||||||||
| Maturity Date | [1],[6] | 9/13/2023 | |||||||||||||||||||||||
| Convertible PIPE Notes [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 27,868,206 | [1] | 26,525,360 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | (6,452,215) | [1] | (8,097,564) | ||||||||||||||||||||||
| Net | $ 21,415,991 | [1] | 18,427,796 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 10.00% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 24.40% | |||||||||||||||||||||||
| Maturity Date | [1] | 3/31/2025 | |||||||||||||||||||||||
| Canton Cooperative Agreement [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 2,570,000 | [1] | 2,620,000 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | (164,861) | [1] | (168,254) | ||||||||||||||||||||||
| Net | $ 2,405,139 | [1] | 2,451,746 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 3.85% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 5.35% | |||||||||||||||||||||||
| Maturity Date | [1] | 5/15/2040 | |||||||||||||||||||||||
| CH Capital Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [4],[5],[7] | $ 9,048,146 | [1] | 8,846,106 | |||||||||||||||||||||
| Debt discount and deferred financing costs | [4],[5],[7] | [1] | |||||||||||||||||||||||
| Net | [4],[5],[7] | $ 9,048,146 | [1] | 8,846,106 | |||||||||||||||||||||
| Interest Rate, Stated | [1],[4],[5],[7] | 12.50% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[4],[5],[7] | 12.50% | |||||||||||||||||||||||
| Maturity Date | [1],[4],[5],[7] | 3/31/2024 | |||||||||||||||||||||||
| Constellation EME #2 [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [1],[8] | $ 3,049,642 | |||||||||||||||||||||||
| Debt discount and deferred financing costs | [1],[8] | ||||||||||||||||||||||||
| Net | [1],[8] | $ 3,049,642 | |||||||||||||||||||||||
| Interest Rate, Stated | [1],[8] | 5.93% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[8] | 5.93% | |||||||||||||||||||||||
| Maturity Date | [1],[8] | 4/30/2026 | |||||||||||||||||||||||
| IRG Split Note [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [1],[4],[5],[9] | $ 4,400,702 | |||||||||||||||||||||||
| Debt discount and deferred financing costs | [1],[4],[5],[9] | ||||||||||||||||||||||||
| Net | [1],[4],[5],[9] | $ 4,400,702 | |||||||||||||||||||||||
| Interest Rate, Stated | [1],[4],[5],[9] | 12.50% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[4],[5],[9] | 12.50% | |||||||||||||||||||||||
| Maturity Date | [1],[4],[5],[9] | 3/31/2024 | |||||||||||||||||||||||
| JKP Split Note [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [1],[4],[5],[9] | $ 4,400,702 | |||||||||||||||||||||||
| Debt discount and deferred financing costs | [1],[4],[5],[9] | ||||||||||||||||||||||||
| Net | [1],[4],[5],[9] | $ 4,400,702 | |||||||||||||||||||||||
| Interest Rate, Stated | [1],[4],[5],[9] | 12.50% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[4],[5],[9] | 12.50% | |||||||||||||||||||||||
| Maturity Date | [1],[4],[5],[9] | 3/31/2024 | |||||||||||||||||||||||
| ErieBank Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 19,888,626 | [1] | 19,465,282 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | (503,601) | [1] | (536,106) | ||||||||||||||||||||||
| Net | $ 19,385,025 | [1] | 18,929,176 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 9.25% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 9.49% | |||||||||||||||||||||||
| Maturity Date | [1] | 12/15/2034 | |||||||||||||||||||||||
| PACE Equity Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 8,104,871 | [1] | 8,250,966 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | (270,576) | [1] | (273,031) | ||||||||||||||||||||||
| Net | $ 7,834,295 | [1] | 7,977,935 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 6.05% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 6.18% | |||||||||||||||||||||||
| Maturity Date | [1] | 7/31/2047 | |||||||||||||||||||||||
| PACE Equity CFP [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 2,984,572 | [1] | 2,437,578 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | (26,252) | [1] | (27,586) | ||||||||||||||||||||||
| Net | $ 2,958,320 | [1] | 2,409,992 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 6.05% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 6.10% | |||||||||||||||||||||||
| Maturity Date | [1] | 7/31/2046 | |||||||||||||||||||||||
| CFP Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [5],[10] | $ 4,119,019 | [1] | 4,027,045 | |||||||||||||||||||||
| Debt discount and deferred financing costs | [5],[10] | [1] | |||||||||||||||||||||||
| Net | [5],[10] | $ 4,119,019 | [1] | 4,027,045 | |||||||||||||||||||||
| Interest Rate, Stated | [1],[5],[10] | 12.50% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[5],[10] | 12.50% | |||||||||||||||||||||||
| Maturity Date | [1],[5],[10] | 3/31/2024 | |||||||||||||||||||||||
| Stark County Community Foundation [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 5,000,000 | [1] | 5,000,000 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | [1] | ||||||||||||||||||||||||
| Net | $ 5,000,000 | [1] | 5,000,000 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 6.00% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 6.00% | |||||||||||||||||||||||
| Maturity Date | [1] | 5/31/2029 | |||||||||||||||||||||||
| CH Capital Bridge Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [5] | $ 10,724,551 | [1] | 10,485,079 | |||||||||||||||||||||
| Debt discount and deferred financing costs | [5] | [1] | |||||||||||||||||||||||
| Net | [5] | $ 10,724,551 | [1] | 10,485,079 | |||||||||||||||||||||
| Interest Rate, Stated | [1],[5] | 12.50% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[5] | 12.50% | |||||||||||||||||||||||
| Maturity Date | [1],[5] | 3/31/2024 | |||||||||||||||||||||||
| Stadium PACE Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 33,387,844 | [1] | 33,387,844 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | (4,042,020) | [1] | (4,091,382) | ||||||||||||||||||||||
| Net | $ 29,345,824 | [1] | 29,296,462 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 6.00% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 6.51% | |||||||||||||||||||||||
| Maturity Date | [1] | 1/1/2049 | |||||||||||||||||||||||
| Stark County Infrastructure Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 5,000,000 | [1] | 5,000,000 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | [1] | ||||||||||||||||||||||||
| Net | $ 5,000,000 | [1] | 5,000,000 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 6.00% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 6.00% | |||||||||||||||||||||||
| Maturity Date | [1] | 8/31/2029 | |||||||||||||||||||||||
| City of Canton Infrastructure Loan [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | $ 5,000,000 | [1] | 5,000,000 | ||||||||||||||||||||||
| Debt discount and deferred financing costs | (10,820) | [1] | (11,572) | ||||||||||||||||||||||
| Net | $ 4,989,180 | [1] | 4,988,428 | ||||||||||||||||||||||
| Interest Rate, Stated | [1] | 6.00% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 6.04% | |||||||||||||||||||||||
| Maturity Date | [1] | 6/30/2029 | |||||||||||||||||||||||
| TDD Bonds [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [1] | $ 7,425,000 | |||||||||||||||||||||||
| Debt discount and deferred financing costs | [1] | (661,989) | |||||||||||||||||||||||
| Net | [1] | $ 6,763,011 | |||||||||||||||||||||||
| Interest Rate, Stated | [1] | 5.41% | |||||||||||||||||||||||
| Interest Rate, Effective | [1] | 5.78% | |||||||||||||||||||||||
| Maturity Date | [1] | 12/1/2046 | |||||||||||||||||||||||
| TIF [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [1],[11] | $ 18,100,000 | |||||||||||||||||||||||
| Debt discount and deferred financing costs | [1],[11] | (1,556,840) | |||||||||||||||||||||||
| Net | [1],[11] | $ 16,543,160 | |||||||||||||||||||||||
| Interest Rate, Stated | [1],[11] | 6.375% | |||||||||||||||||||||||
| Interest Rate, Effective | [1],[11] | 6.71% | |||||||||||||||||||||||
| Maturity Date | [11] | 12/30/2048 | |||||||||||||||||||||||
| Constellation EME [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [8] | 3,536,738 | |||||||||||||||||||||||
| Debt discount and deferred financing costs | [8] | ||||||||||||||||||||||||
| Net | [8] | 3,536,738 | |||||||||||||||||||||||
| IRG Split Note [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [4],[5],[9] | 4,302,437 | |||||||||||||||||||||||
| Debt discount and deferred financing costs | [4],[5],[9] | ||||||||||||||||||||||||
| Net | [4],[5],[9] | 4,302,437 | |||||||||||||||||||||||
| JKP Split Note [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | [4],[5],[9] | 4,302,437 | |||||||||||||||||||||||
| Debt discount and deferred financing costs | [4],[5],[9] | ||||||||||||||||||||||||
| Net | [4],[5],[9] | 4,302,437 | |||||||||||||||||||||||
| TDD Bonds [Member] | |||||||||||||||||||||||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||
| Gross | 7,500,000 | ||||||||||||||||||||||||
| Debt discount and deferred financing costs | (668,884) | ||||||||||||||||||||||||
| Net | $ 6,831,116 | ||||||||||||||||||||||||
| |||||||||||||||||||||||||
Notes Payable, net (Details) - Schedule of principal payments on notes payable outstanding |
Jun. 30, 2023
USD ($)
|
|---|---|
| Schedule of Principal Payments on Notes Payable Outstanding [Abstract] | |
| 2023 (six months) | $ 15,961,612 |
| 2024 | 47,393,467 |
| 2025 | 32,220,218 |
| 2026 | 3,628,667 |
| 2027 | 7,465,957 |
| Thereafter | 102,294,839 |
| Total Gross Principal Payments | 208,964,760 |
| Less: Debt discount and deferred financing costs | (13,693,923) |
| Total Net Principal Payments | $ 195,270,837 |
Stockholders’ Equity (Details) - Schedule of warrant activity |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
USD ($)
$ / shares
shares
| |
| Schedule of Warrant Activity [Abstract] | |
| Number of Shares Outstanding, Beginning balance | shares | 2,003,649 |
| Weighted Average Exercise Price, Beginning balance | $ / shares | $ 149.09 |
| Weighted Average Contractual Life (years), Beginning balance | 2 years 10 months 9 days |
| Intrinsic Value, Beginning balance | $ | |
| Number of shares Outstanding, Ending balance | shares | 2,003,649 |
| Weighted Average Exercise Price, Ending balance | $ / shares | $ 149.09 |
| Weighted Average Contractual Life (years), Ending balance | 2 years 4 months 9 days |
| Intrinsic Value, Ending balance | $ | |
| Number of shares, Exercisable | shares | 2,003,649 |
| Weighted Average Exercise Price, Exercisable | $ / shares | $ 149.09 |
| Weighted Average Contractual Life (years), Exercisable | 2 years 4 months 9 days |
| Intrinsic Value, Exercisable | $ |
Sponsorship Revenue and Associated Commitments (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
|---|---|---|---|---|---|---|---|---|
Oct. 09, 2020 |
Jul. 02, 2020 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
May 10, 2022 |
|
| Sponsorship Revenue and Associated Commitments (Details) [Line Items] | ||||||||
| Agreement year | 1 year | |||||||
| Amount of activation proceeds | $ 750,000 | |||||||
| Payments for service | $ 217,000,000 | |||||||
| Received amount | $ 4,750,000 | |||||||
| Allowance against amounts | $ 7,187,500 | $ 4,812,500 | ||||||
| Balance due amount | 8,697,917 | $ 6,635,417 | ||||||
| Revenue recognized, net | $ 691,236 | $ 452,772 | $ 1,364,711 | $ 1,272,062 | ||||
| Maximum [Member] | ||||||||
| Sponsorship Revenue and Associated Commitments (Details) [Line Items] | ||||||||
| Sponsorship agreement amount | 135,000,000 | |||||||
| Minimum [Member] | ||||||||
| Sponsorship Revenue and Associated Commitments (Details) [Line Items] | ||||||||
| Sponsorship agreement amount | $ 99,000,000 | |||||||
Sponsorship Revenue and Associated Commitments (Details) - Schedule of future cash to be received under the agreement - First Data Merchant Services LLC [Member] |
Jun. 30, 2023
USD ($)
|
|---|---|
| Sponsorship Revenue and Associated Commitments (Details) - Schedule of future cash to be received under the agreement [Line Items] | |
| 2023 (six months) | $ 1,079,250 |
| 2024 | 2,426,265 |
| 2025 | 2,287,265 |
| 2026 | 2,017,265 |
| 2027 | 1,757,265 |
| Thereafter | 4,514,528 |
| Total | $ 14,081,838 |
Other Commitments (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
Jul. 14, 2022 |
Apr. 30, 2021 |
Oct. 22, 2019 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Feb. 01, 2021 |
|
| Other Commitments (Details) [Line Items] | ||||||
| Gross revenue percentage | 2.75% | |||||
| Percentage of agreement | 2.00% | |||||
| Base management fees and other operating expenses | $ 10,000 | |||||
| Commencement date | Oct. 22, 2024 | |||||
| Rent expenses relating to operating leases | $ 55,251 | $ 32,844 | ||||
| Management fees | 100,751 | $ 62,844 | ||||
| Escrow deposit | $ 2,000,000 | |||||
| Monthly installments | $ 103,095 | |||||
| Agreement term | 10 years | |||||
| Recognized revenue | $ 262,500 | |||||
| Warrants [Member] | ||||||
| Other Commitments (Details) [Line Items] | ||||||
| Equity interest in the form of warrants | $ 4,000,000 | |||||
Other Commitments (Details) - Schedule of other liabilities - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Schedule of Other Liabilities [Abstract] | ||
| Activation fund reserves | $ 3,652,119 | $ 3,511,185 |
| Deferred revenue | 9,276,086 | 6,867,970 |
| Deposits and other liabilities | 290,637 | 300,549 |
| Total | $ 13,218,842 | $ 10,679,704 |
Related-Party Transactions (Details) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
|
Mar. 31, 2023
USD ($)
|
Mar. 31, 2022
USD ($)
|
Jun. 30, 2023
USD ($)
m²
$ / shares
shares
|
Jun. 30, 2022
USD ($)
|
Dec. 31, 2022
$ / shares
|
|
| Related-Party Transactions (Details) [Line Items] | |||||
| Percentage of development costs | 4.00% | ||||
| Annual license fee | $ 600,000 | ||||
| License fee | $ 0 | $ 318,750 | $ 300,000 | $ 318,750 | |
| Acres of land (in Square Meters) | m² | 1.64 | ||||
| Hotel construction loan description | (a) a first priority perfected mortgage encumbering the Hotel Property; (b) a first priority perfected assignment of leases and rents with respect to the Hotel Property; (c) a first priority perfected assignment of all permits, licenses, entitlements, approvals, and contracts with respect to the Hotel Property; (d) UCC-1 financing statements (all personal property, fixture filing and accounts and reserves); (e) equity pledge; and (f) all other agreements and assurances customary in similar financings by IRGInc. The Hotel Construction Loan will bear interest at a variable rate per annum equal to the one-month Term SOFR plus 6%, subject to a SOFR floor equal to the greater of (i) 4% and (ii) prevailing SOFR at closing of the Hotel Construction Loan. Payments of interest only will be made during the initial two-year term, with a payments of principal and interest based on a 25-year amortization during the extension term, if applicable. Hotel will pay 1% of the Hotel Construction Loan amount as an origination fee, payable in full at closing. The Hotel Construction Loan definitive documentation will have representations, warranties and events of default usual and customary for such type of loan. | ||||
| Payments for other fee | $ 4,500,000 | ||||
| Share issued (in Shares) | shares | 90,909 | ||||
| Common stock per share (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||
| Percentage of bear Interest | 12.50% | ||||
| Accrued interest percentage | 8.00% | ||||
| Price per share (in Dollars per share) | $ / shares | $ 12.77 | ||||
| Membership interest | 100.00% | ||||
| Contractual percentage | 25.00% | ||||
| IRG letter agreement description | IRGLLC and the Company agreed to comply with all federal and state securities laws and Nasdaq listing rules and to insert “blocker” provisions for the above-described re-pricing of the warrants and the conversion provisions, such that the total cumulative number of shares of Common Stock that may be issued to IRGLLC and its affiliated and related parties pursuant to the IRG Letter Agreement may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following approval of the Company’s stockholders. In addition, the provisions of the IRG Letter Agreement are limited by Nasdaq Listing Rule 5635(c). | ||||
| Related party description | (i) issuance of shares of Common Stock in excess of the Nasdaq 19.99% Cap to IRG Affiliate Lenders with respect to transactions described in the IRG Letter Agreement; and (ii) the issuance to an entity wholly owned by a director of additional shares of Common Stock issuable upon the conversion of certain convertible debt and the exercise of certain warrants described in the IRG Letter Agreement. | ||||
| Hotel Construction Loan [Member] | |||||
| Related-Party Transactions (Details) [Line Items] | |||||
| Construction loan | $ 28,000,000 | ||||
| Contractual Agreement [Member] | |||||
| Related-Party Transactions (Details) [Line Items] | |||||
| Annual license fee | 750,000 | ||||
| License Agreement [Member] | |||||
| Related-Party Transactions (Details) [Line Items] | |||||
| Annual license fee | $ 900,000 | ||||
Related-Party Transactions (Details) - Schedule of due to affiliates - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Related-Party Transactions (Details) - Schedule of due to affiliates [Line Items] | ||
| Total | $ 399,318 | $ 855,485 |
| Due to IRG [Member] | ||
| Related-Party Transactions (Details) - Schedule of due to affiliates [Line Items] | ||
| Total | 345,253 | |
| Due to PFHOF [Member] | ||
| Related-Party Transactions (Details) - Schedule of due to affiliates [Line Items] | ||
| Total | $ 399,318 | $ 510,232 |
Related-Party Transactions (Details) - Schedule of future minimum payments |
Jun. 30, 2023
USD ($)
|
|---|---|
| Schedule of Future Minimum Payments [Abstract] | |
| 2023 | $ 300,000 |
| 2024 | 600,000 |
| 2025 | 600,000 |
| 2026 | 600,000 |
| 2027 | 600,000 |
| Thereafter | 6,750,000 |
| Total Gross Principal Payments | $ 9,450,000 |
Leases (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Leases [Abstract] | ||||
| Lease revenue | $ 82,611 | $ 6,200 | $ 177,151 | $ 14,318 |
Leases (Details) - Schedule of operating leases - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Operating Leases [Member] | ||
| Operating leases: | ||
| Right-of-use assets | $ 7,471,745 | $ 7,562,048 |
| Lease liability | 3,422,174 | 3,413,210 |
| Finance Leases [Member] | ||
| Finance leases: | ||
| Right-of-use assets | ||
| Lease liability |
Leases (Details) - Schedule of information related to leases - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Schedule of Information Related to Leases [Abstract] | ||
| Operating lease cost | $ 258,416 | $ 258,184 |
| Other information: | ||
| Operating cash flows from operating leases | $ 159,149 | $ 158,083 |
| Weighted-average remaining lease term – operating leases (in years) | 91 years 2 months 12 days | 92 years 10 days |
| Weighted-average discount rate – operating leases | 10.00% | 10.00% |
Leases (Details) - Schedule of annual minimum lease payments of our operating lease liabilities |
Jun. 30, 2023
USD ($)
|
|---|---|
| Schedule of Annual Minimum Lease Payments of Our Operating Lease Liabilities [Abstract] | |
| 2023 (nine months) | $ 159,149 |
| 2024 | 311,900 |
| 2025 | 311,900 |
| 2026 | 311,900 |
| 2027 | 311,900 |
| Thereafter | 41,125,000 |
| Total future minimum lease payments, undiscounted | 42,531,749 |
| Less: imputed interest | (39,109,575) |
| Present value of future minimum lease payments | $ 3,422,174 |
Leases (Details) - Schedule of future minimum lease commitments |
Jun. 30, 2023
USD ($)
|
|---|---|
| Schedule of Future Minimum Lease Commitments [Abstract] | |
| 2023 (nine months) | $ 328,369 |
| 2024 | 645,438 |
| 2025 | 641,542 |
| 2026 | 640,962 |
| 2027 | 619,495 |
| Thereafter | 2,972,365 |
| Total | $ 5,848,171 |
Financing Liability (Details) - USD ($) |
1 Months Ended | 6 Months Ended | 12 Months Ended | |
|---|---|---|---|---|
Nov. 07, 2022 |
Sep. 27, 2022 |
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Financing Liability [Abstract] | ||||
| Sale-leaseback term | 99 years | |||
| Initial base rent | $ 4,375,000 | $ 307,125 | ||
| Percentage of annual increases | 2.00% | |||
| Discount rate | 10.25% | |||
| Financing liability | $ 61,299,829 | $ 60,087,907 | ||
| Remaining payments under the leases | 2,201,892,776 | 2,204,080,276 | ||
| Net of discount | $ 2,140,592,947 | $ 2,143,992,369 |
Financing Liability (Details) - Schedule of remaining future cash payments related to the financing liability |
12 Months Ended |
|---|---|
|
Dec. 31, 2022
USD ($)
| |
| Schedule of Remaining Future Cash Payments Related to the Financing Liability [Abstract] | |
| 2023 (six months) | $ 1,832,031 |
| 2024 | 4,672,544 |
| 2025 | 5,865,396 |
| 2026 | 6,005,734 |
| 2027 | 6,149,455 |
| Thereafter | 2,177,367,616 |
| Total Minimum Liability Payments | 2,201,892,776 |
| Imputed Interest | (2,140,592,947) |
| Total | $ 61,299,829 |
Subsequent Events (Details) |
Aug. 01, 2023
USD ($)
|
|---|---|
| Subsequent Event [Member] | |
| Subsequent Events [Abstract] | |
| Real estate purchase agreement | $ 250,000 |