SEC Form 10-Q filed by Hall of Fame Resort & Entertainment Company
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 May 12, 2025, 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 | ||||||||
| March 31, 2025 | December 31, 2024 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Equity method investments | ||||||||
| 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 | ||||||||
| 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 March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | ||||||||
| Sponsorships, net of activation costs | $ | $ | ||||||
| Event, rents, restaurant, 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 | ||||||||
| Loss on sale of asset | ( | ) | ||||||
| (Loss) income from equity method investments | ( | ) | ||||||
| Total other expense | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Preferred stock dividends | ( | ) | ( | ) | ||||
| Loss attributable to non-controlling interest | ||||||||
| Net loss attributable to HOFRE stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding, basic and diluted | ||||||||
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 MONTHS ENDED MARCH 31, 2025 AND 2024
(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 |
|||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Stockholders | Interest | Equity | ||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2025 | - | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| Stock-based compensation on RSU and restricted stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, net of | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | - | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Stock-based compensation on RSU and restricted stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, net of | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Warrants issued for financing liability proceeds | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
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 Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash flows provided by (used in) operating activities | ||||||||
| Depreciation expense | ||||||||
| Amortization of note discount and deferred financing costs | ||||||||
| Amortization of financing liability | ||||||||
| Loss (income) from equity method investments | ( | ) | ||||||
| Interest paid in kind | ||||||||
| Loss on sale of asset | ||||||||
| Bad debt expense | ||||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||
| Stock-based compensation expense | ||||||||
| Non-cash operating lease expense | ||||||||
| Amortization of ROU assets under finance leases | ||||||||
| Accretion of finance lease liability | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Operating leases | ( | ) | ( | ) | ||||
| Due to affiliate | ||||||||
| Other liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Proceeds from sale of assets | ||||||||
| 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 finance leases | ( | ) | ||||||
| Payment on financing liability | ( | ) | ( | ) | ||||
| Proceeds from financing liabilities | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (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 Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| 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 | $ | $ | ||||||
| Warrants issued in connection with financing liability | $ | $ | ||||||
| Proceeds from sale of assets held in escrow | $ | $ | ||||||
| Accrued Series B preferred stock dividends | $ | $ | ||||||
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
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 DoubleTree by Hilton located in downtown Canton and the Hall of Fame Village, which is a multi-use sports and entertainment destination centered around the PFHOF’s campus. The Company is pursuing a multi-pronged strategy across three business verticals, including destination-based assets, Hall of Fame Village, HOF Village Media Group, LLC (“Hall of Fame Village Media”), and gaming (“Gold Summit Gaming”).
The Company has entered into multiple agreements with PFHOF, Sports Complex Newco (as defined in Note 12), Twain GL XXXVI, LLC, 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 other entities, government and quasi-governmental entities (see Note 9 for additional information). Under these agreements, the PFHOF and the lessor entities may be entitled to use portions of the Hall of Fame Village on a direct-cost basis.
6
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 1: Organization, Nature of Business, and Liquidity (continued)
Liquidity and Going Concern
The Company has sustained recurring losses through
March 31, 2025 and the Company’s accumulated deficit was $
On October 26, 2024, the Company received a notice
of termination due to event of default on its waterpark ground lease. Under the waterpark ground lease, the notice of termination required
that the Company immediately surrender the waterpark premises and related improvements to the landlord. The event of default under the
Waterpark Ground Lease results in an event of default under certain of the Company’s loan agreements. Such loan agreements under
which the Company is in default total approximately $
The Company will need to raise additional financing to accomplish its development plan and fund its working capital. The Company is seeking to obtain additional funding through debt, construction lending, and equity financing. There are no assurances that the Company will be able to raise capital on terms acceptable to the Company or at all. Cash flows generated from the Company’s operations are insufficient 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 or must significantly curtail its ongoing operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern including meeting its obligations as they come due 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.
On September 27, 2024, the Company received a nonbinding proposal from IRG (as defined below) related to a proposed acquisition of HOFV by IRG. In response to the proposal, the Company’s Board of Directors formed a special committee made up of independent, disinterested directors (the “Special Committee”) to evaluate the proposal. The Special Committee and IRG are currently in discussions on this proposed acquisition.
7
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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, 2024, filed on March 26, 2025. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, 2025.
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 considerable 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
Use of Estimates
The preparation of the 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 credit losses, depreciation, costs capitalized to project development costs, useful lives of long-lived assets, impairment, 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 $
8
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies (continued)
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 cash equivalents as of March 31, 2025 and December 31, 2024, 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 March 31,
2025 and December 31, 2024 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 "Accounting Standards Codification ("ASC")” Topic 320, “Investments – Debt and Equity Securities.” The Company recognizes interest income on these securities ratably over their term utilizing the interest method.
As of March 31, 2025 and December 31, 2024, the
Company also had $
Equity Method Investments
Investments in unconsolidated affiliates, which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost. These investments are included in equity method investment in the accompanying condensed consolidated balance sheets. The Company's share of the profits and losses from these investments is reported in “(Loss) income from equity method investments” in the accompanying condensed consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary.
Accounts Receivable
Accounts receivable are generally amounts due
under sponsorship and other agreements and are recorded at the invoiced amount. 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. As of January 1, 2024,
the Company's accounts receivable balance was $
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. The Company reviews its accounts receivable on a case-by-case basis and writes off any
accounts receivable for which collection efforts have been exhausted. As of March 31, 2025 and December 31, 2024, the Company has recorded
an allowance for credit losses of $
9
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies (continued)
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 utilizing the effective interest method 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.
Revenue Recognition
The Company follows the Financial Accounting Standards Board’s (“FASB”) 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, food & beverage, events (including admissions, concessions and parking), 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. 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 and concessions is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales related taxes.
10
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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
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 months ended March 31, 2025 and 2024. 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 2021 through 2024 remain subject to examination.
11
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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 March 31, 2025 and 2024, the Company did not recognize any film and media costs.
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, accounts receivable, 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 are considered to approximate their fair value based on the borrowing rates currently available to the Company for loans with similar terms and maturities.
12
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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 and investments available for sale. 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 securities available for sale” in the condensed consolidated statements of operations. The valuation of the investments available for sale was based on an option pricing model using market rate assumptions.
The following table provides the financial assets and liabilities measured on a recurring basis and reported at fair value on the condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Level | March 31, 2025 | December 31, 2024 | ||||||||
| 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 | $ | $ | ||||||||
| 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.
13
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies (continued)
Fair Value Measurement (continued)
Subsequent measurement
The following table presents the changes in fair value of the warrant liabilities:
| Public Series A Warrants | Private Series A Warrants | Series B Warrants | Total Warrant Liability | |||||||||||||
| Fair value as of December 31, 2024 | $ | $ | $ | $ | ||||||||||||
| Change in fair value | ( | ) | ( | ) | ||||||||||||
| Fair value as of March 31, 2025 | $ | $ | $ | $ | ||||||||||||
The key inputs into the Black Scholes valuation model for the Level 3 valuations as of March 31, 2025 and December 31, 2024 are as follows:
| March 31, 2025 | December 31, 2024 | |||||||||||||||
| 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 | ||||||||||||||||
14
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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 months ended March 31, 2025 and 2024, the Company was in a loss position and therefore all potentially dilutive securities would be anti-dilutive.
As of March 31, 2025 and 2024, the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive.
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Warrants to purchase shares of Common Stock | ||||||||
| 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 | ||||||||
Recent Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes, requiring more granular disclosure of the components of income taxes. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.
15
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 3: Property and Equipment
Property and equipment, net, including property and equipment held for sale consists of the following:
| Useful Life | March 31, 2025 | December 31, 2024 | ||||||||
| Land | $ | $ | ||||||||
| Land improvements | ||||||||||
| Building and improvements | ||||||||||
| Equipment | ||||||||||
| Property and equipment, gross | ||||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||||
| Property and equipment, net, including property and equipment held for sale | $ | $ | ||||||||
| Project development costs | $ | $ | ||||||||
For the three months ended March 31, 2025 and
2024, the Company recorded depreciation expense of $
For the three months ended March 31, 2025 and
2024, the Company transferred $
Included in project development costs are film
development costs of $
16
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 4: Notes Payable, net
Notes payable, net consisted of the following at March 31, 2025(1):
| Debt discount and deferred financing | Interest Rate | Maturity | ||||||||||||||||||||
| Gross | costs | Net | Stated | Effective | Date | |||||||||||||||||
| Preferred equity Loan(2) | $ | $ | $ | % | % | |||||||||||||||||
| City of Canton Loan(7) | % | % | ||||||||||||||||||||
| New Market/SCF(7) | % | % | ||||||||||||||||||||
| CHCL Capital Loan(5) | ( | ) | % | % | ||||||||||||||||||
| MKG DoubleTree Loan | % | % | ||||||||||||||||||||
| Convertible PIPE Notes | % | % | ||||||||||||||||||||
| Canton Cooperative Agreement(1) | ( | ) | % | % | ||||||||||||||||||
| CH Capital Loan(4)(5) | ( | ) | % | % | ||||||||||||||||||
| Constellation EME #2(3) | % | % | ||||||||||||||||||||
| IRG Split Note(5) | ( | ) | % | % | ||||||||||||||||||
| CHCL Split Note(5) | ( | ) | % | % | ||||||||||||||||||
| ErieBank Loan(6) | ( | ) | % | % | ||||||||||||||||||
| PACE Equity Loan | ( | ) | % | % | ||||||||||||||||||
| PACE Equity CFP | ( | ) | % | % | ||||||||||||||||||
| CFP Loan(5) | ( | ) | % | % | ||||||||||||||||||
| Stark County Community Foundation(7) | % | % | ||||||||||||||||||||
| CH Capital Bridge Loan(5) | ( | ) | % | % | ||||||||||||||||||
| Stadium PACE Loan | ( | ) | % | % | ||||||||||||||||||
| Stark County Infrastructure Loan(7) | % | % | ||||||||||||||||||||
| City of Canton Infrastructure Loan(7) | ( | ) | % | % | ||||||||||||||||||
| TDD Bonds | ( | ) | % | % | ||||||||||||||||||
| TIF | ( | ) | % | % | ||||||||||||||||||
| CH Capital Retail | ( | ) | % | % | ||||||||||||||||||
| DoubleTree TDD | ( | ) | % | % | ||||||||||||||||||
| DoubleTree PACE(1) | % | % | ||||||||||||||||||||
| Constellation EME #3(3) | % | % | ||||||||||||||||||||
| SCF Loan | % | % | ||||||||||||||||||||
| CH Capital 2024 Loan | % | % | ||||||||||||||||||||
| Total | $ | $ | ( | ) | $ | |||||||||||||||||
17
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 4: Notes Payable, net (continued)
Notes payable, net consisted of the following at December 31, 2024(1):
| Gross | Debt discount and deferred financing costs | Net | ||||||||||
| Preferred equity Loan(2) | $ | $ | $ | |||||||||
| City of Canton Loan(7) | ||||||||||||
| New Market/SCF(7) | ||||||||||||
| CHCL Capital Loan(5) | ( | ) | ||||||||||
| MKG DoubleTree Loan | ||||||||||||
| Convertible PIPE Notes | ( | ) | ||||||||||
| Canton Cooperative Agreement | ( | ) | ||||||||||
| CH Capital Loan(4)(5) | ( | ) | ||||||||||
| Constellation EME #2(3) | ||||||||||||
| IRG Split Note(5) | ( | ) | ||||||||||
| CHCL Split Note(5) | ( | ) | ||||||||||
| ErieBank Loan(6) | ( | ) | ||||||||||
| PACE Equity Loan | ( | ) | ||||||||||
| PACE Equity CFP | ( | ) | ||||||||||
| CFP Loan(5) | ( | ) | ||||||||||
| Stark County Community Foundation(7) | ||||||||||||
| CH Capital Bridge Loan(5) | ( | ) | ||||||||||
| Stadium PACE Loan | ( | ) | ||||||||||
| Stark County Infrastructure Loan(7) | ||||||||||||
| City of Canton Infrastructure Loan(7) | ( | ) | ||||||||||
| TDD Bonds | ( | ) | ||||||||||
| TIF | ( | ) | ||||||||||
| CH Capital Retail | ||||||||||||
| DoubleTree TDD | ( | ) | ||||||||||
| DoubleTree PACE | ||||||||||||
| Constellation EME #3(3) | ||||||||||||
| SCF Loan | ||||||||||||
| CH Capital 2024 Loan | ||||||||||||
| Total | $ | $ | ( | ) | $ | |||||||
During the three months ended March 31, 2025 and
2024, the Company recorded amortization of note discounts and deferred financing costs of $
During three months ended March 31, 2025 and 2024,
the Company recorded paid-in-kind interest of $
18
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 4: Notes Payable, net (continued)
See below footnotes for the Company’s notes payable:
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
As of March 31, 2025 and December 31, 2024, the Company had aggregate
amounts of $
CH Capital Term Loan
On January 11, 2024, the Company amended its Term Loan Agreement with CHCL in order to reflect the repayment of a portion of principal out of the proceeds from the sale of the Sports Complex business. The Promissory Note was amended to reflect the change to the outstanding principal balance.
On January 17, 2024,
the Company amended its Term Loan Agreement with CHCL to document a $
On February 1, 2024, the Company amended its Term
Loan Agreement with CHCL to document an $
On February 28, 2024, the Company amended its
Term Loan Agreement with CHCL to document a $
19
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 4: Notes Payable, net (continued)
CH Capital Term Loan, continued
On January 24, 2025, the Borrowers entered into a Second Amendment to Note and Security Agreement (“Second Amendment”), with CHCL.CHCL is an affiliate of Stuart Lichter, a director of the Company.
Pursuant to the Second Amendment, which modifies
the previously disclosed Note and Security Agreement, dated November 14, 2024, as amended by the First Amendment, dated January 10, 2025,
the parties agreed to: (i) modify the definition of “Facility Amount” in Section 1 of the original note to increase such amount
from $
Borrowers agreed to grant additional security to Lender to include the equity interests of any Borrower in HOF Village Retail I, LLC and HOF Village Retail II, LLC; all net income earned by Borrowers from the operation of the Gridiron Gastropub restaurant; and all rights of any Borrower, including any revenue received by any Borrower, under certain sponsorship agreements.
On February 21, 2025, the Borrowers entered into a Third Amendment to Note and Security Agreement (“Third Amendment”), with CHCL.
The Third Amendment modifies the definition of
“Facility Amount” in Section 1 of the original note and security agreement (as amended prior to the Third Amendment) to increase
the facility amount from $
On March 18, 2025, the Borrowers entered into
a Fourth Amendment to Note and Security Agreement (“Fourth Amendment”), with CHCL. The Fourth Amendment modifies the definition
of “Facility Amount” in Section 1 of the original note and security agreement to increase the facility amount from $
20
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 4: Notes Payable, net (continued)
IRG Loan Amendments
On March 31, 2025, the Company entered into a formal omnibus extension of debt instruments (“Omnibus Extension”) with CH Capital Lending, LLC, a Delaware limited liability company (“CHCL”), IRG, LLC, a Nevada limited liability company (“IRG”), and Midwest Lender Fund, LLC, a Delaware limited liability company (“MLF” individually; IRG, CHCL, and MLF referred to collectively as “Lenders”). The impacted agreements include the following, as amended from time to time (collectively, “Subject IRG Debt Instruments”):
| a. | The CH Capital Loan |
| b. | The CHCL Capital Loan (formerly the JKP Capital Loan) |
| c. | The IRG Split Note |
| d. | The CHCL Split Note (formerly the JKP Split Note) |
| e. | The CH Capital Bridge Loan |
| f. | The CFP Loan; and |
| g. | The CH Capital Retail Loan |
Pursuant to the Omnibus Extension, the Company and Lenders agreed to extend the maturity date of the Subject IRG Debt Instruments to September 30, 2025.
ErieBank Release of Cash Pledge
On March 15, 2024, ErieBank agreed to release
a portion of the held back amount to HOFV CFE with $
21
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 4: Notes Payable, net (continued)
Future Minimum Principal Payments
The minimum required principal payments on notes payable outstanding as of March 31, 2025 are as follows:
| For the years ending December 31, | Amount | |||
| 2025 (nine months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total Gross Principal Payments | $ | |||
| Less: Debt discount and deferred financing costs | ( | ) | ||
| Total Net Principal Payments | $ | |||
Note 5: Stockholders’ Equity
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
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 Inducement Plan (including existing inducement awards amended to be subject
to the Inducement Plan) is
Restricted Stock Units
During the three months ended March 31, 2025, the Company did not grant any Restricted Stock Units (“RSUs”). The RSUs previously issued were valued at the value of the Company’s Common Stock on the date of grant. 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.
22
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 5: Stockholders’ Equity (continued)
The Company’s activity in RSUs was as follows for the three months ended March 31, 2025:
| Number of shares | Weighted average grant date fair value | |||||||
| Non–vested at January 1, 2025 | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Non–vested at March 31, 2025 | $ | |||||||
For the three months ended March 31, 2025 and
2024, the Company recorded $
Warrants
The Company’s warrant activity was as follows for the three months ended March 31, 2025:
| Number of Shares | Weighted Average Exercise Price (USD) | Weighted Average Contractual Life (years) | Intrinsic Value (USD) | |||||||||||||
| Outstanding - January 1, 2025 | $ | $ | ||||||||||||||
| Outstanding – March 31, 2025 | $ | $ | ||||||||||||||
| Exercisable – March 31, 2025 | $ | $ | ||||||||||||||
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”)
As of May 13, 2025, the Company has not made its required payment that was due in the quarter ended December 31, 2024.
23
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 6: Sponsorship Revenue and Associated Commitments
Sponsorship Revenue
The Company has 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 March 31, 2025, scheduled future cash to be received under the agreements, are as follows:
| Year ending December 31, | ||||
| 2025 (nine months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ |
As services are provided, the Company recognizes
revenue on a straight-line basis over the expected term of the agreement. During the three months ended March 31, 2025 and 2024, 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. The
agreement will be terminated on the fifth anniversary of the hotel opening date, or November 21, 2025, unless otherwise extended. For
the three months ended March 31, 2025 and 2024, the Company incurred $
Management Agreement with Shula’s Steak Houses, LLLP
On October 7, 2020, the Company entered into a
management agreement with Shula’s Steak Houses, LLLP (“Shula’s”). The Company appointed and engaged Shula’s
to develop, operate and manage the Don Shula’s American Kitchen restaurant. The initial term of the agreement is for a period of
24
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 7: Other Commitments (continued)
Sports Betting Agreements
On July 14, 2022, the Company 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 and maintenance of all necessary licenses. The initial term of the Online
Market Access Agreement is
As part of this agreement, the Company 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 initially 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 H.B.29. 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 required 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. In November 2023, Ohio granted an extension to June 30, 2024 for all retail license holders.
In May of 2024, the Ohio
Casino Control Commission approved a waiver giving the Executive Director the immediate ability and discretion to extend the “use
it or lose it” compliance period for all licensed Type B sports gaming proprietors and service providers. With the approval of this
waiver and the proposed corresponding rule change, all licensees will be given the full length of their initial licensure period for compliance.
The Company now has until December 31, 2027, to accept at least one retail sports bet under its Type B license. If at least one sports
bet is not taken through an approved method before this date, the Company will not be eligible to apply for another license for a period
of one year after the expiration of the license. For the three months ended March 31, 2025 and 2024, the Company recorded $
25
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 7: Other Commitments (continued)
Other Liabilities
Other liabilities consisted of the following at March 31, 2025 and December 31, 2024:
| March 31, 2025 | December 31, 2024 | |||||||
| Activation fund reserves | $ | $ | ||||||
| Deferred revenue | ||||||||
| Deposits and other liabilities | ||||||||
| Total | $ | $ | ||||||
Chief Executive Officer Resignation
On March 12, 2025, Michael Crawford informed the Board of Directors of Hall of Fame Resort & Entertainment Company (the “Company”) that he intends to resign as President, Chief Executive Officer, and Chairman of the Board of Directors. The resignation is not due to any disagreement with the Company on any matter related to its operations, policies, or practices. Mr. Crawford is resigning to pursue another career opportunity. The Board has begun the process of recruiting and evaluating candidates to succeed Mr. Crawford.
Mr. Crawford and the Company have entered into
a Retention and Consulting Agreement, dated March 18, 2025 (the “Retention and Consulting Agreement”), which provides that
Mr. Crawford shall be paid an aggregate retention bonus of $
Under the Retention and Consulting Agreement,
Mr. Crawford will provide up to 10 hours per week of consulting services to the Company between the Employment Termination Date and August
18, 2025 (the “Consulting Period”). During the Consulting Period, the Company shall pay Mr. Crawford a consulting fee of $
26
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 7: Other Commitments (continued)
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
Due to affiliates consisted of the following at March 31, 2025 and December 31, 2024:
| March 31, 2025 | December 31, 2024 | |||||||
| 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. 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.
As of March 31, 2025 and December 31, 2024, PFHOF
owed the Company $
27
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 9: Related-Party Transactions (continued)
Global License Agreement
Effective April 8, 2022, the Company 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 the Company to exploit existing PFHOF works and to create new works. The Global License Agreement grants the Company 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 the Company 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 the Company. 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.
Effective September 11, 2024, the Company and PFHOF, entered into an Amended and Restated Global License Agreement (“A&R Agreement”). The A&R Agreement replaces the Global License Agreement the parties had previously entered into on April 8, 2022.
The A&R Agreement sets forth the terms under
which PFHOF licenses certain marks and works to the Company to utilize existing PFHOF marks and works in a HOFV proposed project. The
Company’s bona fide use of PFHOF marks shall be in connection with the Village campus, youth sports programs, e-gaming, and/or video
games, and such other fields of use that are not specifically set forth. The Company’s use and license rights of PFHOF marks and/or
works vary based on the nature of the proposed project and are subject to PFHOF’s approval in each instance. In connection with
any proposed project approved by PFHOF or use of any PFHOF work as approved by PFHOF, HOFV and PFHOF shall mutually agree on the license
fee and/or royalty to be paid to PFHOF in connection therewith taking into consideration all relevant factors and uses thereof. The previous
Global License Agreement required Newco to pay PFHOF an annual license fee of $
28
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 9: Related-Party Transactions (continued)
Related Party Lease Agreement
On November 1, 2023, HOF Village CFE, LLC (“Landlord”) entered into a ten-year lease agreement with Touchdown Work Place, LLC (“Tenant”) to commercial office space in the Company’s Constellation Center for Excellence, which included rent abatement of five months. On or about March 26, 2024, Landlord and Tenant negotiated a First Amendment to Lease Agreement to redefine the abatement period to six months, waiver of the security deposit, and Landlord agreed to provide monthly rent invoices for the term of the lease. Stuart Lichter is a director of the Company and the Managing Member of Touchdown Work Place, LLC.
IRG Proposal
On September 27, 2024, our Board of Directors received a preliminary, nonbinding proposal (“Proposed Transaction”) from IRG Canton Village Member (“Buyer”) related to a proposed acquisition by a to-be-formed affiliate of Buyer of all of the outstanding Common Stock not owned by Buyer, its affiliated entities and any potential co-investors in Buyer or its affiliates. In response to the Proposed Transaction, the Company’s Board of Directors formed a special committee made up of independent, disinterested directors (the “Special Committee”) to evaluate the proposal. There is no guarantee that any proposal made by IRG regarding a proposed transaction will be accepted by the Special Committee, that definitive documentation relating to any such transaction will be executed, or that a transaction will be consummated in accordance with that documentation, if at all. The Company and the Special Committee do not intend to comment on or disclose further developments regarding the Special Committee’s consideration of the Proposed Transaction unless and until it deems further disclosure is appropriate or required.
Agreements with Sports Complex Operator
As discussed in Note 2, the Company has an equity-method investment in Sports Complex Newco. In connection with this agreement, the Company and Sports Complex Newco also entered into a number of commercial agreements including, (i) the Facilities Management Agreement between HOF Village and Sports Complex Newco, pursuant to which HOF Village provides certain facilities services to Sports Complex Newco, (ii) the Marketing and SC Programming Collaboration Agreement among HOF Village, Sports Complex Newco and Purchaser Guarantor, pursuant to which the parties thereto collaborate with regard to marketing and programming of the ForeverLawn Sports Complex, (iii) the Marketing and CFP Programming Collaboration Agreement between HOF Village and Sports Complex Newco, pursuant to which the parties thereto collaborate with regard to marketing and programming at the Center for Performance, and (iv) the Food and Beverage Services Agreement between HOF Village and Sports Complex Newco, pursuant to which HOF Village provides certain food and beverage services to Sports Complex Newco.
As of March 31, 2025 and December 31, 2024, the
Company had accounts receivable due from Sports Complex Newco in the amount of $
29
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 9: Related-Party Transactions (continued)
Other Related Party Commitments
On or about June 3, 2024, the Company entered
a Professional Services Agreement with IRG in conjunction with expanded services requested of an executive. This executive is an IRG employee
who has been an integral part of the broader Hall of Fame Village team for many years who has helped lead the construction and development
of the Hall of Fame Village. The Professional Services Agreement more clearly defines the roles and responsibilities of this executive
and establishes appropriate guardrails and processes from a governance perspective (e.g., authority, reporting structure, confidentiality,
conflicts of interest). In exchange for an annual fee of $
On or about June 17, 2024, HOF Village Waterpark, LLC (“HOFV Waterpark”) entered into a Customer Contract for EME Express Services Equipment Program (“Customer Contract”) with Constellation NewEnergy, Inc. (“Constellation”). In connection with the transaction, Constellation required the placement of a guarantee bond as security, which the Company secured through Hanover Insurance Company. In conjunction with the placement of the guarantee bond, the Company, HOFV Waterpark, Mr. Stuart Lichter, a director of the Company, and two of Mr. Lichter’s family trusts executed a General Indemnity Agreement in favor of Hanover Insurance Company whereby Mr. Lichter and his trusts guarantee the Company’s obligations under the guarantee bond. The Company and HOFV Waterpark also entered a reimbursement agreement with Mr. Lichter and his trusts granting a security interest in certain energy efficient equipment furnished pursuant to the Customer Contract and agreeing to reimburse them for any payments made on their behalf, including any taxes, fees, penalties, costs and expenses incurred by them in connection with such payments.
Note 10: Concentrations
For the three months ended March 31, 2025, two
customers represented approximately
As of March 31, 2025, two customers represented
approximately
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.
30
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 11: Leases
The Company has entered into operating leases as the lessee primarily for ground leases under its stadium, sports complex, parking facilities and equipment leases.
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 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 right-of-use (“ROU”) lease 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.
31
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 11: Leases (continued)
Balance sheet information related to our leases is presented below:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Operating leases: | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Lease liability | ||||||||
| Financing leases: | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Lease liability | ||||||||
Other information related to leases is presented below:
| Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||
| Operating lease cost | $ | $ | ||||||
| Other information: | ||||||||
| Weighted-average remaining lease term – operating leases (in years) | ||||||||
| Weighted-average discount rate – operating leases | % | % | ||||||
| Finance lease cost | ||||||||
| Amortization of ROU asset | $ | $ | ||||||
| Interest on lease liabilities | $ | $ | ||||||
| Other information: | ||||||||
| Weighted-average remaining lease term – finance leases (in years) | ||||||||
| Weighted-average discount rate – finance leases | % | |||||||
As of March 31, 2025, the annual minimum lease payments of our operating lease liabilities were as follows:
| For The Years Ending December 31, | ||||
| 2025 (nine months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2027 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total future minimum lease payments, undiscounted | ||||
| Less: imputed interest | ( | ) | ||
| Present value of future minimum lease payments | $ | |||
32
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 11: Leases (continued)
As of March 31, 2025, the annual minimum lease payments of our financing lease liabilities were as follows:
| For The Years Ending December 31, | ||||
| 2025 (nine months) | $ | |||
| 2026 | ||||
| Thereafter | ||||
| Total future minimum lease payments, undiscounted | ||||
| Less: imputed interest | ( | ) | ||
| Present value of future minimum lease payments | $ | |||
Lessor Commitments
As of March 31, 2025 and December 31, 2024, the Company’s Constellation Center for Excellence and retail facilities were partially leased including leases by the Company’s subsidiaries.
Property and equipment currently under lease consists of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Land | $ | $ | ||||||
| Land improvements | ||||||||
| Building and improvements | ||||||||
| Equipment | ||||||||
| Property and equipment, gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Certain of the Company’s lease arrangements have a base rent component plus a component of lease income that is variable based on the respective tenant’s sales performance.
Lease revenue is included in “Event, rents,
restaurant, and other revenues” in the condensed consolidated statements of operations. During the three months ended March 31,
2025 and 2024, the Company recorded $
| Year ending December 31: | ||||
| 2025 (nine months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
33
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 12: Financing Liability
On September 27, 2022 the Company sold the land
under the Company’s Fan Engagement Zone to Twain GL XXXVI, LLC (“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
The Company accounted for the Sale-Leaseback transactions
with Twain as a financing transaction with the purchaser of the property. The Company concluded the lease agreement met the qualifications
to be classified as a finance lease 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 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.
34
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 12: Financing Liability (continued)
On October 26, 2024, the Company received from Oak Street Real Estate Capital, LLC (“HFAKOH001 LLC”) a notice of lease termination due to an event of default under the Sale-Leaseback, dated as of November 7, 2022, between HOF Village Waterpark, LLC and HFAKOH001 LLC for the waterpark property. Under the Sale-Leaseback, the termination requires that the Company immediately surrender the waterpark premises under such lease to the Landlord and any improvements thereto (including the construction of new buildings thereon) with all fixtures appurtenant thereto.
The default identified in the notice is a payment
default under the Sale-Leaseback. HFAKOH001 LLC had agreed to forbear exercising remedies for the payment default until October 25, 2024.
The outstanding principal balance of unpaid base rent under the Sale-Leaseback (inclusive of default interest and late fees accrued up
to the date of termination) was approximately $
In addition to unpaid rent, the Waterpark Ground Lease provides that Landlord is entitled to recover the following as damages: (i) the amount by which the unpaid rent for what would have been the remaining term of the Waterpark Ground Lease exceeds the then fair market rental value of the waterpark premises, both discounted to present value, plus (ii) any damages, including without limitation reasonable attorneys’ fees and court costs, which Landlord sustains as a result of the breach of the covenants of the Waterpark Ground Lease other than for the payment of rent, in each case plus interest.
The notice states that Landlord retains the absolute and unconditional right to pursue any and all remedies available under the Waterpark Ground Lease and related security agreements and applicable law, concurrently or consecutively, at Landlord’s sole discretion. The Company’s subsidiary HOF Village Newco, LLC (“Guarantor”) guaranteed Tenant’s obligations under the Waterpark Ground Lease pursuant to a limited recourse guaranty dated as of November 7, 2022. The security agreements and collateral that support Tenant and Guarantor’s obligations under the Waterpark Ground Lease consist of the following:
| ● | Tom Benson Hall of Fame Stadium. Guarantor pledged and granted
in favor of Landlord |
35
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 12: Financing Liability (continued)
| ● |
| ● | Real Estate Adjacent to Hall of Fame Village. Guarantor granted Landlord a security interest in ten undeveloped residential real estate parcels and four commercial real estate parcels owned by Guarantor located adjacent to Hall of Fame Village and certain related security interests, pursuant to an Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of February 29, 2024. |
As of March 31, 2025, the carrying value of the
financing liability was $
Remaining future cash payments related to the financing liability, for the years ending December 31 are as follows:
| 2025 (nine months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total Minimum Liability Payments | ||||
| Imputed Interest | ( | ) | ||
| Total | $ |
36
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 13: Subsequent Events
Subsequent events have been evaluated through May 13, 2025, the date the condensed consolidated financial statements were issued. Except as disclosed below, no events have been identified requiring disclosure or recording.
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
On April 10, 2025, the Company received a deficiency
letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC
(“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the bid price for the Company’s common
stock (the “Common Stock”) had closed below $
The Notice has no immediate effect on the listing
of the Common Stock. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days to regain compliance with
the Minimum Bid Requirement. To regain compliance, the closing bid price of the Common Stock must be at least $
Appointment of Chairman of the Board of Directors
On April 24, 2025, in anticipation of Mr. Crawford’s Employment Termination Date, the Company’s Board of Directors (“Board”) elected Karl L. Holz, who has been a member of the Board since July 2020, as non-executive Chairman of the Board of Directors, effective May 18, 2025. As previously disclosed, the Board has affirmatively determined that Mr. Holz qualifies as an independent director in accordance with the Nasdaq listing rules.
Appointment of Principal Executive and Principal Financial Officers
On April 24, 2025, in connection with Mr. Crawford’s upcoming Employment Termination Date, the Board promoted the Company’s Senior Vice President of Human Resources and Information Technology, to the role of Executive Vice President of Business Administration and principal executive officer, effective May 18, 2025. In addition, the Company’s Senior Vice President of Finance, was promoted with the additional designation of principal financial officer, effective May18, 2025. Mr. Crawford, who is currently serving as principal executive officer and principal financial officer, will continue to serve in such capacities until his Employment Termination Date.
Fifth Amendment to Note and Security Agreement
On April 25, 2025, Hall of Fame Resort & Entertainment Company, a Delaware corporation (the “Company”), and its subsidiaries HOFVillage Newco, LLC, a Delaware limited liability company (“Newco”), HOF Village Retail I, LLC, a Delaware limited liability company (“Retail I”), and HOF Village Retail II, LLC, a Delaware limited liability company (“Retail II,” and collectively with the Company, Newco and Retail I “Borrowers”), entered into a Fifth Amendment to Note and Security Agreement (“Fifth Amendment”),with CH Capital Lending, LLC, a Delaware limited liability company (“Lender” or “CHCL”). CHCL is an affiliate of Stuart Lichter, a director of the Company.
The Fifth Amendment
modifies the definition of “Facility Amount” in Section 1 of the original note and security agreement (as amended prior
to the Fifth Amendment) to increase the facility amount from $
37
Hall of Fame Resort & Entertainment Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 13: Subsequent Events (continued)
Waterpark, Hotel and Stadium Lease Restructuring Letter of Intent
On April 17, 2025, the
Company entered into a letter of intent with HFAKOH001 LLC (“Landlord”), CH Capital Lending, LLC, and Stuart Lichter (the
“Lease Restructuring LOI”), which outlines (i) certain non-binding terms regarding the waterpark property, the on-site hotel
property, the stadium property, the Company’s
Agreement and Plan of Merger
On May 7, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with HOFV Holdings, LLC, a Delaware limited liability company (“Parent”), Omaha Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”, and together with Parent, the “Buyer Parties”), and, solely as guarantor of certain of Parent’s obligations under the Merger Agreement, CH Capital Lending, LLC, a Delaware limited liability company (“Guarantor” or “CHCL”).
The Merger Agreement
provides that, among other things and on the terms and subject to the conditions of the Merger Agreement, at the effective time of the
Merger (the “Effective Time”), (a) Merger Sub will merge with and into the Company (the “Merger”),
with the Company surviving the Merger as a wholly owned subsidiary of Parent (the “Surviving Corporation”), (b) each
issued and outstanding share of common stock of the Company, par value $
The Merger Agreement and the other transactions contemplated thereby (the “Transaction”) were approved by the Company’s Board of Directors (the “Company Board”) based upon the unanimous recommendation of a special committee thereof consisting only of independent and disinterested directors. Subject to the terms of the Merger Agreement, the Company Board resolved to recommend that the Company’s stockholders vote in favor of adoption of the Merger Agreement and approval of the Merger.
38
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, 2024 as filed with the Securities and Exchange Commission (“SEC”) on March 26, 2025, 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, 2024, 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, which is a multi-use sports and entertainment destination centered around the PFHOF’s campus and the DoubleTree by Hilton located in downtown Canton. We have created a diversified set of revenue streams through the development of themed attractions, premier entertainment programming and sponsorships. We continue to pursue a diversified strategy across three business verticals, including destination-based assets, Hall of Fame Village, Hall of Fame Village Media and Gold Summit Gaming.
The strategic plan for Hall of Fame Village involves 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 (ownership reduced to 20% as of January 11, 2024), and Hall of Fame Village Media. The Tom Benson Hall of Fame Stadium hosts multiple sports and entertainment events, including the National Football League (“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. Hall of Fame Village Media has created short-form and long-form media entertainment through multiple distribution channels. This includes The Perfect Ten, Inspired, The GOAT Code, Next Man Up: NFL Alumni Academy and Hometown Heroes.
39
We have procured licenses in the State of Ohio for both a physical sports betting operation and online sports betting platform. We have entered into an agreement with Instabet, Inc. doing business as betr (“Betr”) as our mobile management services provider. Currently, the Company does not have a sports betting partner for its retail sports book. In addition, the gaming vertical hosts multiple eSports tournaments within the destination along with other types of gaming tournaments and interactive events.
We have developed new hospitality, attractions, 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), the Fan Engagement Zone (retail promenade), core and shell for Retail I (completed in August of 2022), and the core and shell of Retail II (completed in November of 2022), and two hotels (one to-be-constructed on campus, and one in downtown Canton that opened in November 2020). 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, exclusive programming, attractions 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 property and events. 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 and concessions is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales related taxes.
Our media content and distribution revenue is recognized as content is released. Our gaming license revenue is recognized over the term of the license agreement.
We expect our revenues to continue to increase as we add in additional events, tenants, experiences and open additional assets.
Operating Expenses
Our operating expenses include event/media production expenses, personnel expenses, campus maintenance expenses, food and beverage cost of sales, hotel operating expenses, and depreciation expense. These expenses have increased with completion of Phase II assets and we would expect these will continue to increase after completion of additional events, programming, and assets, and Phase III development.
Our depreciation expense includes the related costs of owning and operating significant property and entertainment assets. These expenses have grown through completion of the Phase I and Phase II development.
40
Recent Developments
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard
On January 10, 2025, the Company received a deficiency letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market, LLC (“Nasdaq”) stating that the Company failed to hold an annual meeting of stockholders within 12 months after its fiscal year ended December 31, 2023, as required by Nasdaq Listing Rule 5620(a) (the “Annual Meeting Requirement”).
The Notice had no immediate impact on the listing of the Company’s common stock (the “Common Stock”) on Nasdaq.
On February 18, 2025, the Company submitted to the Staff a plan of compliance which describes the circumstances under which it became noncompliant with the Annual Meeting Requirement and the Company’s plan with which it will regain compliance. The Staff has determined to grant the Company an extension until June 30, 2025 to regain compliance with the Annual Meeting Requirement by holding an annual meeting of shareholders.
Second Amendment to Note and Security Agreement
On January 24, 2025, the Company and its subsidiaries HOF Village Newco, LLC, a Delaware limited liability company (“Newco”), HOF Village Retail I, LLC, a Delaware limited liability company (“Retail I”), and HOF Village Retail II, LLC, a Delaware limited liability company (“Retail II,” and collectively with the Company, Newco, Retail I “Borrowers”) entered into a Second Amendment to Note and Security Agreement (“Second Amendment”), with CH Capital Lending, LLC, a Delaware limited liability company (“Lender” or “CHCL”). CHCL is an affiliate of Stuart Lichter, a director of the Company.
Pursuant to the Second Amendment, which modifies the previously disclosed Note and Security Agreement, dated November 14, 2024, as amended by the First Amendment, dated January 10, 2025, the parties agreed to: (i) modify the definition of “Facility Amount” in Section 1 of the original note to increase such amount from $2,000,000 to $4,150,000, which allows Borrowers to request up to an additional $2,150,000 loan for general corporate purposes, subject to certain restrictions; and (ii) amend the definition of “Maturity Date” to mean the earliest to occur of (a) closing of the proposal to take the Company private; (b) the termination date, as defined in any definitive agreement and plan of merger entered in connection with a take private transaction, if applicable; or (c) the occurrence of certain events of default under the original instrument. As part of the agreement, Borrowers agree to establish a springing deposit account control agreement (the “DACA”) for a control account to hold cash collateral. Borrowers may use funds in the control account for ordinary business purposes, subject to the terms of the DACA.
Borrowers agreed to grant additional security to Lender to include the equity interests of any Borrower in HOF Village Retail I, LLC and HOF Village Retail II, LLC; all net income earned by Borrowers from the operation of the Gridiron Gastropub restaurant; and all rights of any Borrower, including any revenue received by any Borrower, under certain sponsorship agreements.
Third Amendment to Note and Security Agreement
On February 21, 2025, the Company entered into a Third Amendment to Note and Security Agreement (“Third Amendment”), with CHCL.
The Third Amendment modifies the definition of “Facility Amount” in Section 1 of the original note and security agreement (as amended prior to the Third Amendment) to increase the facility amount from $4,150,000 to $5,150,000 allowing the Borrowers to request an additional $1,000,000 for general corporate purposes, subject to certain restrictions.
Fourth Amendment to Note and Security Agreement
On March 18, 2025, the Company entered into a Fourth Amendment to Note and Security Agreement (“Fourth Amendment”), with CHCL.
The Fourth Amendment modifies the definition of “Facility Amount” in Section 1 of the original note and security agreement to increase the facility amount from $5,150,000 to $6,500,000 allowing the Borrowers to request an additional $1,350,000 for general corporate purposes, subject to certain restrictions.
Resignation of President, Chief Executive Officer and Chairman
On March 12, 2025, Michael Crawford informed the Board of Directors of the Company that he intends to resign as President, Chief Executive Officer, and Chairman of the Board of Directors. The resignation is not due to any disagreement with the Company on any matter related to its operations, policies, or practices. Mr. Crawford is resigning to pursue another career opportunity. The Board has begun the process of recruiting and evaluating candidates to succeed Mr. Crawford.
41
Mr. Crawford and the Company and its subsidiary HOF Village Newco, LLC (collectively, the “Parties”) have entered into a Retention and Consulting Agreement, dated March 18, 2025 (the “Retention and Consulting Agreement”), which provides that Mr. Crawford shall be paid an aggregate retention bonus of $300,000, including $73,000 for the agreed-upon value of unused accrued vacation, payable in increments of $100,000 on each of March 31, 2025, April 30, 2025, and May 31, 2025, provided that Mr. Crawford continues to serve as President, Chief Executive Officer, and Chairman of the Board through May 18, 2025 (the “Employment Termination Date”). Until the Employment Termination Date, Mr. Crawford would also continue to receive his base salary and other benefits due under the Amended and Restated Employment Agreement among the Parties dated November 22, 2022, as amended by Amendment to Amended and Restated Employment Agreement, effective May 1, 2023 (as amended, the “Employment Agreement”). Mr. Crawford agrees his termination of employment on the Employment Termination Date will constitute neither termination by the Company without cause nor termination by Mr. Crawford for good reason under the Employment Agreement. No sooner than the Employment Termination Date, and no later than 14 days after the Employment Termination Date, Mr. Crawford shall deliver to the Company an effective and irrevocable general release of claims.
Under the Retention and Consulting Agreement, Mr. Crawford will provide up to 10 hours per week of consulting services to the Company between the Employment Termination Date and August 18, 2025 (the “Consulting Period”). During the Consulting Period, the Company shall pay Mr. Crawford a consulting fee of $500 per hour.
Omnibus Extension of Certain Debt Instruments
On March 31, 2025, we entered into a formal omnibus extension of debt instruments (“Omnibus Extension”)with CH Capital Lending, LLC, a Delaware limited liability company (“CHCL”), IRG, LLC, a Nevada limited liability company(“IRG”), and Midwest Lender Fund, LLC, a Delaware limited liability company (“MLF” individually; IRG, CHCL, and MLF referred to collectively as “Lenders”). The impacted agreements include the following, as amended from time to time (collectively, “Subject IRG Debt Instruments”):
(a) that certain Term Loan Agreement (as amended or modified from time to time), dated December 1, 2020, as assigned to CHCL in its capacity as “Administrative Agent” for itself and the other lenders, on March 1, 2022, and all agreements, instruments, and promissory notes executed in connection with such Term Loan Agreement, as subsequently amended;
(b) that certain Secured Cognovit Promissory Note, effective as of November 7, 2022, by and among certain of the Borrowers, as makers, and JKP Financial, LLC (“JKP”), as holder, as modified by the Omnibus Release of Youth Fields Borrower from Certain Debt Instruments, dated as of January 11, 2024, by CHCL, IRG, JKP, and/or MLF, in favor of HOF Village Youth Fields, LLC, and the Omnibus Extension of Debt Instruments, dated April 7, 2024, which relates to that certain Secured Cognovit Promissory Note, dated as of June 19, 2020, made by certain of the Borrowers, as assigned by HOF Village, LLC to Newco pursuant to that certain Contribution Agreement dated as of June 30, 2020, by and between HOF Village, LLC and Newco, and as amended by that certain First Amendment to Secured Promissory Note, dated as of December 1, 2020 and the Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, among Newco, HOF Village Hotel II, LLC, the Company, and JKP, which note was assigned by JKP to IRG Master Holdings, LLC, effective January 15, 2025, as subsequently assigned effective January 15, 2025 to CHCL;
(c) that certain Secured Cognovit Promissory Note, dated effective as of November 7, 2022, made by certain of the Borrowers, as modified by the Omnibus Release of Youth Fields Borrower from Certain Debt Instruments, dated as of January 11, 2024, by CHCL,IRG, JKP, and/or MLF, in favor of HOF Village Youth Fields, LLC, which was assigned by JKP to IRG Master Holdings, LLC, effective January 15, 2025, as subsequently assigned effective January 15, 2025 to CHCL;
(d) that certain Second Amended and Restated Secured Cognovit Promissory Note, dated effective as of November 7, 2022, from certain of the Borrowers and others to CHCL as subsequently amended;
(e) that certain Joinder and Second Amended and Restated Secured Cognovit Promissory Note, dated effective as of November 7, 2022, from certain of the Borrowers and others to IRG as may have been subsequently amended; and
(f) that certain Secured Cognovit Promissory Note, dated effective as of November 7, 2022, from certain of the Borrowers and others to MLF as may have been subsequently amended, which relates to that certain Cognovit Promissory Note, dated as of April27, 2022, from certain of the Borrowers to MLF as may have been subsequently amended.
Pursuant to the Omnibus Extension, the Borrower and Lenders agreed to extend the maturity date of the Subject IRG Debt Instruments to September 30, 2025.
42
Amendment to Note Purchase Agreement
On March 31, 2025, we entered into an Amendment to Note Purchase Agreement (the “Amendment”) with holders of approximately 79% of the outstanding 8.00% Convertible Notes due 2025 (“8.00% Convertible Notes”) issued under the Note Purchase Agreement dated as of July 1, 2020, as amended, restated, supplemented and otherwise modified from time to time up to March 31, 2025, by and among the Company and the purchasers listed on the signature pages hereto. The Amendment extends the maturity date of 8.00% Convertible Notes to December 31, 2025. CHCL, which signed the Amendment, owns approximately 43% of the outstanding 8.00% Convertible Notes. CHCL is an affiliate of Stuart Lichter, a director of the Company.
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
On April 10, 2025, we received a deficiency letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the bid price for the Company’s common stock (the “Common Stock”) had closed below $1.00 per share, which is the minimum bid price required to maintain continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule5550(a)(2) (the “Minimum Bid Requirement”).
The Notice has no immediate effect on the listing of the Common Stock. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days to regain compliance with the Minimum Bid Requirement. To regain compliance, the closing bid price of the Common Stock must be at least $1.00 per share for a minimum of ten consecutive business days during this 180-day period, at which time the Staff will provide written notification to the Company that it complies with the Minimum Bid Requirement, unless the Staff exercises its discretion to extend this ten-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). The compliance period for the Company will expire on October 7, 2025.
Fifth Amendment to Note and Security Agreement
On April 25, 2025, we entered into a Fifth Amendment to Note and Security Agreement (“Fifth Amendment”),with CHCL.
The Fifth Amendment modifies the definition of “Facility Amount” in Section 1 of the original note and security agreement (as amended prior to the Fifth Amendment) to increase the facility amount from $6,500,000 to $8,000,000 allowing the Borrowers to request an additional $1,500,000 for general corporate purposes, subject to certain restrictions.
Agreement and Plan of Merger
On May 7, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with HOFV Holdings, LLC, a Delaware limited liability company (“Parent”), Omaha Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”, and together with Parent, the “Buyer Parties”), and, solely as guarantor of certain of Parent’s obligations under the Merger Agreement, CH Capital Lending, LLC, a Delaware limited liability company (“Guarantor” or “CHCL”).
The Merger Agreement provides that, among other things and on the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), (a) Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent (the “Surviving Corporation”), (b) each issued and outstanding share of common stock of the Company, par value $0.0001 per share (the “Company Common Stock”), as of immediately prior to the Effective Time (other than Owned Company Shares (as defined below) or dissenting shares) will be converted into the right to receive $0.90 in cash without interest and subject to applicable withholding (the “Merger Consideration”), (c) each share of Company Common Stock held in the treasury of the Company, any shares of Company Common Stock owned by the Buyer Parties, and any shares of Company Common Stock owned by affiliates of the Buyer Parties immediately prior to the Effective Time (collectively, “Owned Company Shares”) will automatically be canceled and will cease to exist without any conversion thereof or consideration paid therefor, (d) each share of 7.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share, of the Company and each share of 7.00% Series C Convertible Preferred Stock, par value $0.0001 per share, of the Company immediately prior to the Effective Time will automatically be canceled and will cease to exist without any conversion thereof or consideration paid therefor, and (e) each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time will automatically be converted into and become one fully paid, nonassessable share of common stock, par value $0.0001 per share, of the Surviving Corporation, which will thereafter represent the ownership of shares of common stock of the Surviving Corporation.
The Merger Agreement and the other transactions contemplated thereby (the “Transaction”) were approved by our Board of Directors (the “Company Board”) based upon the unanimous recommendation of a special committee thereof consisting only of independent and disinterested directors. Subject to the terms of the Merger Agreement, the Company Board resolved to recommend that the Company’s stockholders vote in favor of adoption of the Merger Agreement and approval of the Merger.
43
Results of Operations
The following table sets forth information comparing the components of net loss for the three months ended March 31, 2025 and the comparable period in 2024:
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | ||||||||
| Sponsorships, net of activation costs | $ | 566,263 | $ | 859,731 | ||||
| Event, rents, restaurant and other revenue | 1,110,645 | 2,054,877 | ||||||
| Hotel revenues | 1,268,425 | 1,276,707 | ||||||
| Total revenues | 2,945,333 | 4,191,315 | ||||||
| Operating expenses | ||||||||
| Operating expenses | 5,669,135 | 6,150,364 | ||||||
| Hotel operating expenses | 1,414,701 | 974,432 | ||||||
| Depreciation expense | 4,233,825 | 4,158,750 | ||||||
| Total operating expenses | 11,317,661 | 11,283,546 | ||||||
| Loss from operations | (8,372,328 | ) | (7,092,231 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense, net | (5,524,454 | ) | (6,521,534 | ) | ||||
| Amortization of discount on note payable | (1,148,719 | ) | (955,322 | ) | ||||
| Change in fair value of warrant liability | 34,000 | 49,000 | ||||||
| Loss on sale of asset | - | (140,041 | ) | |||||
| (Loss) income from equity method investments | (57,449 | ) | 29,952 | |||||
| Total other expense | (6,696,622 | ) | (7,537,945 | ) | ||||
| Net loss | $ | (15,068,950 | ) | $ | (14,630,176 | ) | ||
| Preferred stock dividends | (266,000 | ) | (266,000 | ) | ||||
| Loss attributable to non-controlling interest | - | 8,588 | ||||||
| Net loss attributable to HOFRE stockholders | $ | (15,334,950 | ) | $ | (14,887,588 | ) | ||
| Net loss per share, basic and diluted | $ | (2.30 | ) | $ | (2.30 | ) | ||
| Weighted average shares outstanding, basic and diluted | 6,672,941 | 6,486,044 | ||||||
44
Three Months Ended March 31, 2025 as Compared to the Three Months Ended March 31, 2024
Sponsorship Revenues
Sponsorship revenues totaled $566,263 for the three months ended March 31, 2025, as compared to $859,731 for the three months ended March 31, 2024, representing a decrease of $293,468, or 34.1%. This decrease was primarily due to sponsorship contracts term ending.
Event, rents, restaurant and other revenues
Revenue from event, rents, restaurant and other revenues was $1,110,645 for the three months ended March 31, 2025, compared to $2,054,877 for the three months ended March 31, 2024, for a decrease of $944,232, or 46.0%. The decrease was primarily due to a decrease in revenue from food & beverage sales, rentals, and parking.
Hotel Revenues
Hotel revenue was $1,268,425 for the three months ended March 31, 2025, compared to $1,276,707 from the three months ended March 31, 2024 for a slight decrease of $8,282, or 0.6%.
Operating Expenses
Operating expense was $5,669,135 for the three months ended March 31, 2025, compared to $6,150,364 for the three months ended March 31, 2024, for a decrease of $481,229, or 7.8%. This decrease was primarily driven by a decrease in production fees for our events and media, a decrease in personnel and related benefits costs, as well as a decrease in professional fees.
Hotel Operating Expenses
Hotel operating expense was $1,414,701 for the three months ended March 31, 2025, compared to $974,432 for the three months ended March 31, 2024, for an increase of $440,269, or 45.2%. This increase was primarily driven by a reversal of property tax expense taken in the first quarter of 2024.
Depreciation Expense
Depreciation expense was $4,233,825 for the three months ended March 31, 2025, compared to $4,158,750 for the three months ended March 31, 2024, for an increase of $75,075, or 1.8%. The increase in depreciation expense is primarily the result of the completion of additional major assets being put into service.
Interest Expense
Total interest expense was $5,524,454 for the three months ended March 31, 2025, compared to $6,521,534 for the three months ended March 31, 2024, for a decrease of $997,080, or 15.3%. The decrease in total interest expense was primarily due to the termination of the waterpark ground lease.
Amortization of Debt Discount
Total amortization of debt discount was $1,148,719 for the three months ended March 31, 2025, compared to $955,322 for the three months ended March 31, 2024, for an increase of $193,397, or 20.2%. The increase is primarily due to additional debt and extension fees.
45
Change In Fair Value of Warrant Liability
The change in fair value warrant liability was $34,000 for the three months ended March 31, 2025, compared to $49,000 for the three months ended March 31, 2024, for a decrease of $15,000 or 30.6%. The decrease in change in fair value of warrant liability was due primarily to a change in our stock price.
Loss on sale of asset
The loss on sale of asset was $0 for the three months ended March 31, 2025, compared to $140,041 for the three months ended March 31, 2024. The loss on sale of asset was due to the Sandlot arrangement, which was entered into on January 11, 2024.
(Loss) income from equity method investments
The loss from equity method investments was $57,449 for the three months ended March 31, 2025, compared to gain of $29,952 for the three months ended March 31, 2024. The income from equity method investments was due to the Sandlot arrangement, which was entered into on January 11, 2024.
Liquidity and Capital Resources
We have sustained recurring losses through March 31, 2025, and our accumulated deficit was $288.9 million as of such date. Since inception, the Company’s operations have been funded principally through the issuance of debt and equity. As of March 31, 2025, we had approximately $0.5 million of unrestricted cash and $4.0 million of restricted cash. Through March 31, 2026, we have $117 million in debt principal payments coming due. At May 13, 2025, the Company’s cash position is deficient and certain payments for our operations are not being made in the ordinary course of business.
Certain of our liquidity requirements have been, and may continue to be, funded in part by loans from CHCL, an affiliate of the Company’s director Stuart Lichter, and certain other affiliates of Mr. Lichter.
We will need to raise additional financing to accomplish our development plan and fund our working capital. 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. Cash flows generated from our operations are insufficient to meet our 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 our financial condition and operating results, or we may not be able to continue to fund or must significantly curtail our ongoing operations. 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 our project development expenditures. The following table sets forth a summary of cash flows for the periods presented:
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash (used in) provided by: | ||||||||
| Operating Activities | $ | (1,465,710 | ) | $ | (2,476,875 | ) | ||
| Investing Activities | (102,800 | ) | (2,967,807 | ) | ||||
| Financing Activities | 1,645,632 | 512,766 | ||||||
| Net increase (decrease) in cash and restricted cash | $ | 77,122 | $ | (4,931,916 | ) | |||
46
Cash Flows for the Three Months Ended March 31, 2025 as Compared to the Three Months Ended March 31, 2024
Operating Activities
Net cash used in operating activities was $1.5 million for the three months ended March 31, 2025, a change of $2.1 million from the same period in the prior year. The increase in cash used operating activities was primarily attributable to a $4.9 million increase in the change in accounts payable and accrued expenses, offset by a $2.2 million decrease in the change in other liabilities, and a $1.3 million decrease in the change in due to affiliates.
Investing Activities
Net cash used in investing activities was $0.1 million during the three months ended March 31, 2025, compared to $3.0 million for the three months ended March 31, 2024. The Company experienced a decrease of $8.1 in the proceeds from the sale of assets during the period, offset by an $5.1 million decrease in additions to project development costs and property and equipment.
Financing Activities
Net cash provided by financing activities was $1.6 million during the three months ended March 31, 2025, an increase of $1.1 million from the same period last year. The increase was primarily attributable to a decrease of $8.4 million in repayments of notes payable, offset by a decrease of $4.2 million in notes payable proceeds and a decrease of $3.5 million in proceeds from our financing liability.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of March 31, 2025.
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.
47
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. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we are required to apply our judgment in evaluating the cost-benefit relationship of our disclosure controls and procedures.
In connection with the preparation of our consolidated financial statements for the year ended December 31, 2024, we concluded there were material weaknesses in internal control over financial reporting related to the precise and timely review and analysis of information used to prepare our financial statements and disclosures in accordance with U.S. GAAP and we did not maintain effective controls over non-routine transactions. We have taken steps to remediate these material weaknesses in internal control over financial reporting; however, we are not yet able to determine whether the steps we are taking will fully remediate the material weaknesses.
Because of the material weaknesses in our internal control over financial reporting as previously disclosed, our Chief Executive Officer and Vice President Accounting / Corporate Controller concluded that, as of March 31, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level. Our management, including our Chief Executive Officer and Vice President Accounting / Corporate Controller, have concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the condensed consolidated financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2025, the Company continued to implement its plan of remediation for the material weakness discussed above. There have been no other changes to the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
48
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, 2024, 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, 2024.
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
49
Item 6. Exhibits
| * | Filed herewith |
| † | Management contract or compensatory plan or arrangement. |
50
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: May 13, 2025 | By: | /s/ Michael Crawford |
| Michael Crawford | ||
| Chief Executive Officer and Director | ||
| (Principal Executive and Financial Officer) | ||
| Date: May 13, 2025 | By: | /s/ John Van Buiten |
| John Van Buiten | ||
| Vice President of Accounting/Corporate Controller | ||
| (Principal Accounting Officer) |
51