1. 61542-02A1..1香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任。OURGAMEINTERNATIONALHOLDINGSLIMITED聯眾國際控股有限公司*（根據開曼群島法律註冊成立之有限公司）（股份代號：6899）海外監管公告—10-K表格本公告乃根據香港聯合交易所有限公司證券上市規則第13.10B條發佈。謹請參閱有關文件附件，該文件已由AlliedGaming&EntertainmentInc.(曾用名AlliedEsportsEntertainmentInc.)於二零二三年三月二十四日（美國時間）在美國證券交易委員會網站發佈。承董事會命聯眾國際控股有限公司*行政總裁兼執行董事陸京生北京，二零二三年三月二十五日於本公告日期，董事會包括執行董事陸京生先生；非執行董事劉學明先生、高麗平女士、華彧民先生、于冰女士、王茹遠女士丶王潤群先生及肖雲丹女士；以及獨立非執行董事馬少華先生、章力先生、郭玉石先生及戴冰先生。*僅供識別UNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONWashington,D.C.20549FORM10-K(MARKONE)ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934ForthefiscalyearendedDecember31,2022TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934ForthetransitionperiodfromtoCommissionfilenumber:001-38226ALLIEDGAMING&ENTERTAINMENTINC.(ExactNameofRegistrantasSpecifiedinItsCharter)Delaware82-1659427(Stateorotherjurisdictionofincorporationororganization)(I.R.S.EmployerIdentificationNo.)745FifthAve,Suite500NewYork,NY10151(Addressofprincipalexecutiveoffices)(646)768-4241(Registrant’stelephonenumber,includingareacode)SecuritiesregisteredpursuanttoSection12(b)oftheAct:ofeachclassTradingSymbol(s)NameofeachexchangeonwhichregisteredCommonStockAGAENASDAQSecuritiesregisteredpursuanttoSection12(g)oftheAct:NoneIndicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesNoIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheExchangeAct.YesNoIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNoIndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitandpostsuchfiles).YesNoIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,smallerreportingcompanyoranemerginggrowthcompany.Seedefinitionof“largeacceleratedfiler,”“acceleratedfiler”,“smallerreportingcompany”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct.LargeacceleratedfilerAcceleratedfilerNon-acceleratedfilerSmallerreportingcompanyEmerginggrowthcompanyIfanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.Indicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagement’sassessmentoftheeffectivenessofitsinternalcontroloverfinancialreportingunderSection404(b)oftheSarbanes-OxleyAct(15U.S.C.7262(b))bytheregisteredpublicaccountingfirmthatpreparedorissueditsauditreport.IfsecuritiesareregisteredpursuanttoSection12(b)oftheAct,indicatebycheckmarkwhetherthefinancialstatementsoftheregistrantincludedinthefilingreflectthecorrectionofanerrortopreviouslyissuedfinancialstatements.Indicatebycheckmarkwhetheranyofthoseerrorcorrectionsarerestatementsthatrequiredarecoveryanalysisofincentive-basedcompensationreceivedbyanyoftheregistrant’sexecutiveofficersduringtherelevantrecoveryperiodpursuantto§240.10D-1(b).Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).YesNoTheaggregatemarketvalueofcommonstockoutstanding,otherthansharesheldbyaffiliatesoftheregistrantasofJune30,2022(thelastbusinessdayoftheregistrant’smostrecentlycompletedsecondfiscalquarter),wasapproximately$25,607,206basedonthepriceof$1.43,theclosingpriceonJune30,2022.Forpurposesofthiscomputation,allofficers,directors,and10%beneficialownersoftheregistrantaredeemedtobeaffiliates.Suchdeterminationshouldnotbedeemedtobeanadmissionthatsuchofficers,directorsor10%beneficialowners,areorwere,infact,affiliatesoftheregistrant.AsofMarch21,2023,39,085,470sharesofcommonstock,parvalue$0.0001pershare,wereissuedandoutstanding.DOCUMENTSINCORPORATEDBYREFERENCEPortionsoftheRegistrant’sdefinitiveproxystatementrelatingtoits2023annualmeetingofstockholderstobefiledwiththeSecuritiesandExchangeCommissionwithin120daysaftertheendofthefiscalyearendedDecember31,2022areincorporatedhereinbyreferenceinPartIIIofthisAnnualReportonForm10-K.TABLEOFCONTENTSCautionaryNoteRegardingForward-LookingStatements;RiskFactorSummaryiiPARTI1Item1.Business1Item1A.RiskFactors6Item1B.UnresolvedStaffComments18Item2.Properties18Item3.LegalProceedings18Item4.MineSafetyDisclosures18PARTII19Item5.MarketforRegistrant’sCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities19Item6.[Reserved.]19Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations20Item7A.QuantitativeandQualitativeDisclosuresaboutMarketRisk26Item8.FinancialStatementsandSupplementaryData26Item9.ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure26Item9A.ControlsandProcedures26Item9B.OtherInformation27Item9C.DisclosureRegardingForeignJurisdictionsthatPreventInspections27PARTIII28Item10.Directors,ExecutiveOfficersandCorporateGovernance28Item11.ExecutiveCompensation28Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters28Item13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence28Item14.PrincipalAccountingFeesandServices28PARTIV29Item15.Exhibits,FinancialStatementSchedules29Item16.Form10-KSummary29iCAUTIONARYNOTEREGARDINGFORWARD-LOOKINGSTATEMENTS;RISKFACTORSUMMARYTheinformationinthisReportincludes“forward-lookingstatements”underSection27AoftheSecuritiesActof1933,asamended(the“SecuritiesAct”)andSection21EoftheSecuritiesExchangeActof1934,asamended(the“ExchangeAct”).Allstatements,otherthanstatementsofhistoricalfactincludedinthisReport,regardingourstrategy,futureoperations,financialposition,estimatedrevenuesandlosses,projectedcosts,prospects,plansandobjectivesofmanagementareforward-lookingstatements.WhenusedinthisReport,thewords“could,”“believe,”“anticipate,”“intend,”“estimate,”“expect,”“project”andsimilarexpressionsareintendedtoidentifyforward-lookingstatements,althoughnotallforward-lookingstatementscontainsuchidentifyingwords.Whenconsideringforward-lookingstatements,youshouldkeepinmindtheriskfactorsandothercautionarystatementsdescribedundertheheading“RiskFactors”includedinthisReport.Theseforward-lookingstatementsarebasedonourcurrentexpectationsandassumptionsaboutfutureeventsandarebasedoncurrentlyavailableinformationastotheoutcomeandtimingoffutureevents.Nevertheless,anddespitethefactthatmanagement’sexpectationsandestimatesarebasedonassumptionsmanagementbelievestobereasonableanddatamanagementbelievestobereliable,ouractualresults,performanceorachievementsaresubjecttofuturerisksanduncertainties,anyofwhichcouldmateriallyaffectouractualperformance.Wecautionyouthattheseforward-lookingstatementsaresubjecttonumerousrisksanduncertainties,mostofwhicharedifficulttopredictandmanyofwhicharebeyondourcontrol.ShouldoneormoreoftherisksoruncertaintiesdescribedinthisReportoccur,orshouldunderlyingassumptionsproveincorrect,ouractualresultsandplanscoulddiffermateriallyfromthoseexpressedinanyforward-lookingstatements.Allforward-lookingstatements,expressedorimplied,includedinthisReportareexpresslyqualifiedintheirentiretybythiscautionarynote.Thiscautionarynoteshouldalsobeconsideredinconnectionwithanysubsequentwrittenororalforward-lookingstatementsthatweorpersonsactingonourbehalfmayissue.Exceptasotherwiserequiredbyapplicablelaw,wedisclaimanydutytoupdateanyforward-lookingstatements,allofwhichareexpresslyqualifiedbythestatementsinthissection,toreflecteventsorcircumstancesafterthedateofthisReport.Asummaryoftheprincipalriskfactorsthatmakeinvestinginoursecuritiesriskyandmightcauseouractualresultstodifferissetforthbelow.Thefollowingisonlyasummaryoftheprincipalrisksthatmaymateriallyadverselyaffectourbusiness,financialcondition,resultsofoperationsandcashflows.Thissummaryshouldbereadinconjunctionwiththemorecompletediscussionoftheriskfactorsweface,whicharesetforthinthesectionentitled“RiskFactors”inthisReport.RiskFactorSummary●Wemaynotbeabletosuccessfullyexecuteournewstrategicandbusinessplans.●Alliedgeneratesaportionofitsrevenuesfromadvertisingandsponsorship.Ifitfailstoattractmoreadvertisersandsponsorstoitsliveevents,tournamentsorcontent,orifadvertisersorsponsorsarelesswillingtoadvertisewithorsponsorAllied,itsrevenuesmaybeadverselyaffected.●Allied’sbusinessmodelmaynotremaineffective,anditcannotguaranteethatitsfuturemonetizationstrategieswillbesuccessfullyimplementedorgeneratesustainablerevenuesandprofit.●Allied’sgrowthstrategydependsontheavailabilityofsuitablelocationsforitsproprietaryandlicensedesportsarenasanditsabilitytoopennewlocationsandoperatethemprofitably●Alliedhasnotenteredintodefinitivelicenseagreementswithallgamepublishersthatitcurrentlyhasrelationshipswith,anditmayneverdoso.●EvenifAlliedisabletolicenseitsbrandtothirdpartyesportsoperators,thereisariskthatthoseoperatorscoulddamageitsbrandbyoperatingesportsarenasthatarenotatAllied’sstandardsofoperation.ii●Allied’sgrowthstrategyincludesdeployingadditionalmobilearenasintheU.S.andEuropetohostitstournamentsandeventsanditmustoperatethemprofitably.●ThenatureofhostingesportseventsexposesAlliedtonegativepublicityorcustomercomplaints,includinginrelationto,amongotherthings,accidents,injuriesortheftsatthearenas,andhealthandsafetyconcerns.●Allied’smarketingandadvertisingeffortsmayfailtoresonatewithgamers.●Theesportsgamingindustryiscompetitive,andgamersmayprefercompetitors’arenas,leagues,competitionsortournamentsoverthoseofferedbyAllied.●IfAlliedfailstokeepitsexistinggamersengaged,acquirenewgamersandexpandinterestinitsliveevents,leagues,tournamentsandcompetitions,itsbusiness,itsabilitytoachieveprofitabilityanditsprospectsmaybeadverselyaffected.●AdeclineinthenumberofgamersmayadverselyaffecttheengagementlevelofgamerswithAllied’stournamentandentertainmentplatformunderdevelopmentandmayreduceourrevenueopportunitiesandhaveamaterialandadverseeffectonourbusiness,financialconditionandresultsofoperations.●ThereisnoguaranteethatAlliedwillbeabletocompleteitsplannedonlineesportstournamentandgamingsubscriptionplatform,orthatsuchplatformoncecompletedwillbeorremainpopular.●IfAlliedfailstomaintainandenhanceitsbrands,itsbusiness,resultsofoperationsandprospectsmaybemateriallyandadverselyaffected.●IfAlliedfailstoanticipateandsuccessfullyimplementnewesportstechnologiesoradoptnewbusinessstrategies,technologiesormethods,itsbusinessmaysuffer.●Alliedusesthird-partyservicesinconnectionwithitsbusiness,andanydisruptiontotheseservicescouldresultinadisruptiontoitsbusiness.●Alliedmaynotbeabletoprocurethenecessarypermitsandlicensestooperateitsarenas.●NegotiationswithunionizedemployeescoulddelayopeningoroperatingAllied’sarenas.●Allied’sbusinessissubjecttoregulation,andchangesinapplicableregulationsmaynegativelyimpactitsbusiness.●Alliedhashistoricallyoperatedatanetlossonaconsolidatedbasis,andthereisnoguaranteethatthatitwillbeabletobeprofitable.●Ourbusinessdependssubstantiallyonthecontinuingeffortsofourexecutiveofficers,keyemployeesandqualifiedpersonnel,andourbusinessoperationsmaybeseverelydisruptedifwelosetheservicesofsuchpersonnel.●OurgameInternationalHoldingsLimitedownsasignificantpercentageofouroutstandingcommonstock,enablingittoexertsignificantinfluenceoverouroperationsandactivities,whichmayaffectthetradingpriceofourcommonstock.●Allied’slicensescertainbrandnamesunderagreementsthatwillexpireandmayalsobesubjecttoclaimsofinfringementofthird-partyintellectualpropertyrights.iiiPARTIItem1.BusinessOverviewofBusinessUnlessotherwisestatedorthecontextotherwiserequires,theterms“we,”“us,”“our,”“AGAE,”“Allied”andthe“Company”refertoAlliedGaming&Entertainment,Inc.anditssubsidiaries.Alliedisaglobalexperientialentertainmentcompanyfocusedonprovidingagrowingaudienceofgamerswithuniqueexperiencesthroughrenownedassets,products,andservices.PriortoJuly2021,theCompanyownedandoperatedWorldPokerTour(“WPT”)businessesandAlliedEsportsbusiness.OnJuly12,2021,theCompanycompleteditssaleofitsbusinesscomprisingtheWPTbusinessforgrossproceedsofapproximately$106million.AsofDecember312022,theCompany’soperationincludesAlliedEsportsInternational,whichownsandoperatesHyperXArenaLasVegas,oneoftheworld’smostrecognizedesportsandentertainmenteventsfacilities,twomobilearenas-AlliedEsportsTrucks,andoriginalcontentstudiowhichcreatesandproducesproprietarycontentseriestoservebrandactivationandpromotion,fansandcommunityengagement.TheCompanyoffersavarietyofesportsandgaming-relatedcontent,includingworldclasstournaments,liveandvirtualentertainmentandgamingevents,andoriginalprogrammingtocontinuouslyfosteranengagedgamingcommunity.InDecember2022,theCompanycompletedastrategicreviewofitsbusinessoperationsandannouncedplanstorestructuretheexistingesportsbusinessandexpanditsfocustoincludeabroaderarrayofentertainmentandgamingproductsandservices.Underthisplan,theCompanyintendstopursuemultiplechannelsofopportunitiesinsteadofasinglesignificantcorporatetransactionsuchasanacquisitionofcomplimentaryassetsorbusinesses,anditiscurrentlyexploringopportunitiestoleverageitslocation-based-entertainmentexpertisewithafocusongaminglifestyleandexperientialentertainment,aswellasgrowingitsdigitalfootprintandmonetizationcapabilitiesthroughmobilegaming.Theentertainmentindustryhaswitnessedtherapidgrowthofgaming,whichnowranksamongthelargestandfastest-growingmarkets.Asof2021,withastaggering3.1billiongamersworldwide,theglobalgamingindustrywasvaluedat$202.64billionandisprojectedtogrowatacompoundannualgrowthrate(CAGR)of10.2%between2022and2023.Mobilegamingandesportsarethemajordriverofthisexponentiallygrowingmarket.Esports,anabbreviationof“electronicsports,”encompassesadiverserangeofcompetitiveelectronicgamesthatareplayedbygamersagainsteachother.PopularesportsgamesincludeFortnite,LeagueofLegends,Dota2,Counter-Strike,CallofDuty,Overwatch,andFIFA.Unlikethetraditionalvideogameswhereplayerscanplayaloneagainstthecomputerorconsole,esportshasevolvedtoincludeacommunityandspectatoraspect.Competitivegameplayagainstanotherperson,eitherindividuallyorinteams,viewedbyanonlineandin-personaudience,hasbecomeacentralfeatureofesports.Additionally,gamedevelopershavegreatlyincreasedthewatchabilityofgames,whichhasmadethespectatoraspectofgamingmuchmoreprevalentandfurtherdrivesexpansionofthegamingmarket.Esportshasnowbecomesopopularthatmanycollegesofferscholarshipsinesportsandthebest-knownesportsteamsarereceivingmainstreamsponsorshipsandarebeingboughtorinvestedinbycelebrities,athletesandprofessionalsportsteams.Thehighestprofileesportsgamershavesignificantonlineaudiencesastheystreamthemselvesplayingagainstotherplayersonlineandpotentiallycangeneratemillionsofdollarsinsponsorshipmoneyandsubscriptionfeesfromtheironlinestreamingchannels.Meanwhile,theindustryofwatchingotherpeopleplayvideogamescontinuestosurgeinpopularity.In2022,thegameslive-streamingaudiencegrewby14.5%yearoveryearto927.3million(Newzooreport).Itisestimatedthatthiscategorywillreach1.21billionby2025ataCAGRof+12.7%.Foryearstocome,infrastructuredevelopmentandthegrowthofmobileesportswillbethekeydriversinemergingregions,whilethediversificationofcontentislikelytodriveviewingbehaviorinwesternmarkets.Alliedwillcontinuetouseathree-pillarstrategyinitsgamingandentertainmentservices;in-personexperiences,multiplatformcontent,andinteractiveservicesbothindependentlyandinconnectionwithitsstrategicpartners.OurGrowthStrategiesIn-personExperiencesWithitsworldclassgamingandlivebroadcastingequippedfacilities,HyperXArenaLasVegas,Alliedwillcontinuedeliveringfirst-in-classliveexperiencestocustomerswhichwillallowthemtocompeteagainstotherplayersinworldesportscompetitions,tohostliveeventswithinfluencersthatpotentiallystreamtomillionsofviewersworldwidewithunprecedentlyengagedexperience,toproduceanddistributeincredibleentertainmentcontentwithitson-siteproductionfacilitiesandstudios.Allied’sflagshipHyperXArenaLasVegasservesasamarqueedestinationforesportsfansgloballyandhasbecomeoneofthemostrecognizedesportsandliveentertainmentvenuesintheworld.Additionally,Alliedhastwomobileesportsarenas,whichare18-wheelsemi-trailersthatconvertintofirstclassesportsarenasandcompetitionstageswithfullcontentproductioncapabilitiesandinteractivetalentstudios.Throughourrenownedassets,Alliedbelievesitcanoffercustomersanunmatchedabilitytoparticipateinsimultaneousglobalesportseventsandoffersponsorsandpartnersatrulyscalableglobalplatformandaudiencetopromotetheirbusinessesandproducts.1FlagshipArena.InMarch2018,Alliedopeneditsfirstflagshiparena,theHyperXArenaLasVegas,attheLuxorHotel&CasinoontheVegasstrip,whosepyramidisoneofthemostvisiblelandmarksinLasVegas.Thisarenahasover130gamingstations,twobars,foodservice,privaterooms,anunmatchedfull-scalebroadcastandproductionfacility,andspaceforupto1,000peopleforevents.Thearenaiscustom-builtforesportstournamentsandhasabroadcast-readytelevisionstudiotobroadcastliveeventsandproducecontent.Alliedmonetizesthearenathroughhostingorrentingthespaceforliveevents;merchandisesales;dailyusagefeesfromday-to-daygamersusingthegamingstations;tournamententryandplayervenuefees;foodandbeverage;andalong-termsponsorship(i.e.,ourHyperXnamingrightsrelationship).AffiliateArenas.OneofAllied’sstrategicadvantagesisitsglobalnetworkofesportsarenapartners,whichenablesittohosteventsandpromotecompetitionsaroundtheworld,withthosecompetitionsculminatinginliveeventsheldattheflagshiparenainLasVegas.AlliedachievesthisthroughitsAffiliateProgram,whichconsistsofstrategicpartnershipswiththird-partyesportsoperatorsaroundtheglobe.Alliedgenerallychargestheseaffiliatesanupfrontfeeandaminimalannualrevenueshareofgrossrevenue,startinginthesecondyearoftheoperationofthevenue.Allied’sbrandvisibilityandreputationhavealreadyresultedinaffiliatearrangementswitharenasandgamingcentersinChinaandamulti-yearagreementwithFortressEsportsPtyLtd,anewgaming,esportsandentertainmentvenueenterpriseinAustralia,whichopeneditsfirstaffiliatearenainMelbourneinMarch2020andreopenedduringtheCOVID-19pandemicinDecember2021.ThisnetworkofaffiliatearenasallowsAlliedtoscaleitsbrandpenetrationworldwideonarapidbasis,drivingmoregamersintotheAlliedecosystem,withminimalcoststoAllied.Furthermore,thecontentproducedbytheseaffiliatearenascanbesoldbyAllied,withminimalproductioncosts.MobileArenas.Themobilearenasare18-wheelertrucksthatexpandoutintofullyfunctionalesportsarenaswitheventhosting,broadcastingandproductioncapabilities.Themobilityofthetrucksmakesthemidealforsponsorstoreachalargeaudienceinmultiplelocationsataneconomicalcost.Thetrucksserveasmobilebillboardsforpotentialthird-partysponsorship,aswellastheAlliedbrand,providinghighlyvisiblebrandpresencewherevertheyappear.MultiplatformContentBuiltuponstate-of-the-artuniquefacilitiesandagrowinggamerscommunity,Alliedcontinuestoproducesuccessfulgamerscentricoriginalcontentprograming.Allied’soriginalcontentseriesElevated,designedtohelpup-and-comingTwitchstreamersbreakthroughtheclutter,getdiscoveredandgrowtheiraudiences,hasbroughtinmorethan10millionliveviewersand3millionVODviewsover4episodesduringitsSeason1debutinMarchof2022.TheserieswasrenewedforSeason2withstrongersupportfromourbrandpartnerProgressiveInsurance,bydoublingtheproductionandexpandedto10episodesforSeason2,whichwillairinQ22023.Alliedhasalsosignedamulti-year,multi-episodecontentpartnershipwiththeYESNetworktoproduceoriginalseriesWannabe,whichexploresthejourneysofprofessionalgamersandprofessionalathleteswhohaveappearedontheYESNetwork,allofwhomhaveastrongpassionforesportsandcompetitivegaming,andthecommonthemesbetweentheirdifferentcareers.Eachepisodedelvesintotheearlydreamsoftheseindividualsandtracestheirpathstosuccess.Thishighlyentertainingoriginalcontentseriescontinuestostrengthenourbrandengagement,expandourfansout-reach,andbuildupmulti-channelmonetizationthroughsponsorship,advertisement,anddistribution.WebelieveAllied’secosystemofesportsbrandedpropertiesgivesitthereach,reputationandexperiencetoproduceworld-classliveevents,inpartnershipwithsomeofthemostprominentnamesintheesportsandentertainmentindustry.TheseliveeventsprovideAlliedwiththematerialtoproduceexcitingcontentthatcanbedistributedviathreedifferentformats,eachofwhichhasitsownrevenuegenerationmodel:livestreaming,post-producedepisodiccontent,andshort-formrepackagedcontent.LiveStreaming.AccordingtoareportbyStreamlabsandStreamHatchet,in2022,viewerswatchedatotalof29.5billionhoursoflivegamingcontentonpopularstreamingplatformssuchasTwitch,YoutubeGaming,andFacebookGaming.Thisrepresentsadecreaseof13.5%fromthepreviousyear’s34.0billionhours,whichmaybeattributedinparttotheeasingofCOVID-19restrictionsandthesubsequentrecoveryofliveeventsandtravel.Twitchisthemostpopularformofesportscontentdeliverychanneltoday,asitoffersthebestinteractiveexperiencesfortheaudience.VastimprovementsintechnologyandInternetserviceandspeedhavemadelivestreamingwithlargeaudienceswidelyavailabletoday.Well-knowngamerslivestreamthemselvesplayingtheirfavoritegamesonanyofthepopularstreamingservices(Twitch,YouTube,FacebookGaming,etc.)toaworldwideaudience.Thestreamersderiverevenuefromadsales,sponsorship,subscriptionfeesandgiftpaymentsfromspectators.ThroughAllied’secosystemofesportsarenas,Alliedcanofferstreamersalargeplatformtoputonliveeventsthatcanbesimultaneouslystreamedonboththestreamer’schannelsandonAllied’schannels.2Post-ProducedEpisodicContent.Alliedcontinuestodevelopesportsentertainmentprogrammingarounditsliveexperiencesand,usingitsexperiencededitingandproductionteams,createserial,episodiccontentandsegmentsthattellcompellingstorylinesarounditsgamingtalent,inpersonexperiences,andgamingeventsaroundtheworld.AllieddrawsfromitsknowledgeandexperienceindevelopingWPT,whichtooktheslow-pacedgameofpokeranddramatizeditandcreatedstorylinesthatmadeforexcitingandcompellingviewing.Thispost-producedcontentcanbevaluablerealestateforsponsors,asAlliedcanintegratesponsorsseamlesslyintotheshowinawaythatfeelsorganictotheviewers.Alliedcanfocusondifferentstorylines,createexcitementviaeditingandmusicinclusion,andgenerallyelevatetheproductionqualityfromthatachievableinalivestream.Alliedcanthenmonetizethisepisodiccontentviasponsorship,advertising,sellingthecontentitselftothirdpartydistributors,orevenuseitasamarketingtooltodrivecustomerstocometoAllied’sbrandedproperties,buyitsmerchandiseorotherwiseinteractwithAllied.Short-FormRepackagedContent.ThelibraryofcontentAlliedwilldevelopfromeventscanbecutintosmallerclipsthatcanbeusedasmarketingandpromotionoftheAlliedbrandonsocialmedia.Alliedcanalsoeditcontenttocreatenewcontent,suchas“bestof”shows,focusingononeparticulargameasplayedbymultiplewell-knownstreamers,regionalshowsfocusingontalentfromaparticularcountry,andsoon.Allied’sglobalbrandedesportspropertiesecosystemwillcreateopportunitiesforliveeventswhichprovidematerialtodevelopgreatcontent,allofwhichAlliedcanmonetizeinmultipleways.ThelargecustomerbaseAllieddevelopsthroughthesein-personexperiences,livestreamsandcontentdistributionwillgiveitacustomerbasetolaunchinteractiveservices.InteractiveservicesNewzoo’sconsumerresearchrevealsthatactiveengagementisbecomingincreasinglypopularacrossallgenerations,withconsumersspendingnearly15hoursperweekengagingwithgames.Alliediswell-positionedtocapitalizeonthistrendbyleveragingitsuniquephysicalassets,suchastheHyperXArenaLasVegasandAlliedEsportsTrucks’liveeventsandbroadcastingcapabilities,aswellasitstechnologypartnerships.TheCompanyaimstobecometheworld’sleadinglive/virtualinteractivespaceforcontentcreatorsandbroadcasters,withaparticularemphasisondirectaudiencemonetizationthroughonlineticketsales.Alliedisworkingwithvariousstreamingtechnologypartnerstoprovidehyper-engaged,real-timeinteractivestreamingexperiencestoawiderangeofinfluencers,includingYouTubers,Twitchstreamers,podcasters,andsportsstars.Byfocusingondeliveringhighlyinteractiveandengagingexperiencestoitsaudiences,Alliedcanunlocknewrevenuestreamsandprovideaplatformforinfluencerstomonetizetheircontentmoreeffectively.Withthepotentialforsignificantgrowthinthecomingyears,Alliediswell-positionedtobecomeakeyplayerintherapidlyevolvingworldofinteractivecontentmonetization.CorporateOrganizationOurprincipalofficesarelocatedat745FifthAvenue,Suite500,NewYork,NY10151,andourtelephonenumberatthatofficeis(646)768-4241.AlliedGaming&EntertainmentInc.,(“AGAE”),formerlyknownasAlliedEsportsEntertainmentInc.,or“AESE”,andpriortothatwasknownasBlackRidgeAcquisitionCorp,or“BRAC”,wasincorporatedinDelawareonMay9,2017asablankcheckcompanyforthepurposeofeffectingamerger,shareexchange,assetacquisition,sharepurchase,recapitalization,reorganizationorothersimilarbusinesscombinationwithoneormorebusinessesorentities.AlliedEsportsMedia,Inc.(“AEM”),aDelawarecorporation,wasformedinNovember2018toactasaholdingcompanyforAlliedEsportsInternationalInc.(“AlliedEsports”)andimmediatelypriortocloseoftheMerger(asdefinedbelow)toalsoincludeNobleLinkGlobalLimited(“NobleLink”).AlliedEsports,togetherwithitssubsidiariesdescribedbelowownsandoperatestheesports-relatedbusinessesofAGAE.NobleLink(priortotheAEMMerger)anditswhollyownedsubsidiariesPeerlessMediaLimited,ClubServices,Inc.andWPTEnterprises,Inc.operatedthepoker-relatedbusinessofAGAEpriortotheirsaleonJuly12,2021,andarecollectivelyreferredtohereinas“WorldPokerTour”or“WPT.”PriortotheMerger,asdescribedbelow,NobleLinkandAlliedEsportsweresubsidiariesofOurgameInternationalHoldingsLimited(“Ourgame”).3OnDecember19,2018,BRAC,NobleLinkandAEMexecutedanAgreementandPlanofReorganization(asamendedfromtimetotime,the“MergerAgreement”).OnAugust9,2019(the“ClosingDate”),NobleLinkwasmergedwithandintoAEM,withAEMbeingthesurvivingentity,whichwasaccountedforasacommoncontrolmerger(the“AEMMerger”).Further,onAugust9,2019,asubsidiaryofAGAEmergedwithAEMpursuanttotheMergerAgreement,withAEMbeingthesurvivingentity(the“Merger”).TheMergerwasaccountedforasareverserecapitalization,andAEMisdeemedtobetheaccountingacquirer.Consequently,theassetsandliabilitiesandthehistoricaloperationsthatarereflectedinthecombinedfinancialstatementspriortotheMergerarethoseofAlliedEsportsandWPT.TheCompanyoperatesthroughitswhollyownedsubsidiariesAlliedEsportsInternational,Inc.,(“AEII”),EsportsArenaLasVegas,LLC(“ESALV”)andAlliedEsportsGmbH(“AEGmbH”).AEIIoperatesglobalcompetitiveesportspropertiesdesignedtoconnectplayersandfansviaanetworkofconnectedarenas.ESALVoperatesaflagshipgamingarenalocatedattheLuxorHotelinLasVegas,Nevada.AEGmbHoperatesamobileesportstruckthatservesasbothabattlegroundandcontentgenerationhubandalsooperatesastudioforrecordingandstreaminggamingevents.Duetotheincreasinguncertaintyofmacro-economicenvironment,theCompanycloseddowntheAEGmbHofficeinDecember2022andwillmanageitsoperationsthroughAllied’sfacilitiesintheU.S.OurfiscalyearendsDecember31.Neitherwenoranyofourpredecessorshavebeeninbankruptcy,receivership,oranysimilarproceeding.GovernmentRegulationAlliedintendstooffersubscribersthechancetowincashandprizeswhenplayingesportsgamesandtournamentsontheesportsgamingplatformitintendstodevelop.Alliedissubjecttothecomplicatedlawsandregulationsinvariousstatesorcountriesoversweepstakes,promotionsandgiveaways.AnynegativefindingoflawregardingthecharacterizationofthetypeofonlineactivitycarriedoutontheesportsgamingplatformcouldlimitorpreventAllied’sabilitytoobtainsubscribersinthosejurisdictions.Inaddition,AlliedissubjecttoanumberofforeignanddomesticlawsandregulationsthataffectcompaniesconductingbusinessontheInternet.Inaddition,lawsandregulationsrelatingtouserprivacy,datacollection,retention,electroniccommerce,consumerprotection,content,advertising,localization,andinformationsecurityhavebeenadoptedorarebeingconsideredforadoptionbymanyjurisdictionsandcountriesthroughouttheworld.IntellectualPropertyWebelievethattomaintainacompetitiveadvantageinthemarketplace,wemustdevelopandmaintainprotectionoftheproprietaryaspectsofourtechnologyandourintellectualproperty.Werelyontrademarksandothermeasurestoprotectourintellectualproperty,andvigorouslydefendsuchintellectualpropertyasnecessary(e.g.ceaseanddesistlettersdirectedtoinfringingthirdparties).Alliedhasone(1)patentintheU.S.relatedtosystemsandmethodsforlatencyinnetworkedcompetitivemultiplayergamingthatwasissuedbytheUPSTOinJuly2020.Inadditiontothepatent,Allied’sintellectualpropertyportfolioincludesthefollowing:(1)approximatelysixty(60)registereddomainnames,(2)anexclusiveworldwide(excludingthePRC)casualgamingsoftwarelicense,and(3)approximatelytwenty-five(25)trademarks,including,butnotlimitedto,“Allied”–whichhasbeenfiledintheU.S.,“Allied”–whichboldmarkhasbeenfiledinChinaandEurope;the“Allied”logos–whichhavebeenfiledintheU.S.andEurope;the“AlliedMemberPropertyNetwork”logo–whichhasbeenfiledintheU.S.,China,andEurope;the“BigBetty”logos–whichhavebeenregisteredinEurope;“EsportsSuperstars”logo–whichhasbeenfiledintheU.S.;“LegendSeries”logo–whichhasbeenfiledintheU.S.andEurope;the“Allied”emblem–whichhasbeenfiledinChinaandEurope,and“GloryRoad”–whichhasbeenfiledintheU.S.Alliedupdatesitsintellectualpropertyportfoliofromtimetotimeasappropriate.4CompetitionTheesportsgamingindustryiscompetitive.Competitorsrangefromestablishedleaguesandchampionshipsowneddirectly,aswellasleaguesfranchisedbywell-knownandcapitalizedgamepublishersanddevelopers,interactiveentertainmentcompanies,diversifiedmediacompaniesandemergingstart-ups.Newcompetitorswilllikelycontinuetoemerge,andmanyofthesecompetitorswillhavegreaterfinancialresourcesthanAllied.Theesportsandentertainmentbusinessisarapidlygrowingindustry,andthereareseveralcompetitorsthatAlliedmayface.Someofthekeypotentialcompetitorsinclude:1.OtheresportsorganizationssuchasESLandFaceit,whichalsohostesportstournamentsandevents.2.GaminglifestyleinfluencersnetworksuchasFaZeClan,100thieves,whichownsgaminginfluencersthathavestrongbrandpartnershipscouldcreatecompetitiontoAlliedonsponsorshipandadvertisingrevenue.3.GamingcompaniessuchasTencent,ActivisionBlizzard,andElectronicArts,whichareinvolvedingamedevelopmentandalsohosttheirownesportseventsintheirownselectedvenues.4.LiveentertainmentcompaniessuchasLiveNationandAEG,whichalsohostliveeventsandconcertsandmayexpandintotheesportsspace.5.TraditionalmediacompaniessuchasESPNandTurnerBroadcasting,whichhavecreatedtheirownesportsleaguesandarebroadcastingesportseventsontheirnetworks.Overall,theesportsandentertainmentindustryisbecomingincreasinglycompetitive,withmanyplayersvyingforashareofthegrowingmarket.Tosucceedinthisindustry,Alliedwillneedtocontinuetoinnovateanddifferentiateusfromourcompetitors,whilealsoprovidingcompellingandengagingexperiencesfortheiraudiences.TerritoriesWesellproductsandservicesworldwideandcollaboratewithglobalbrandstargetingworldwidegamingcommunities.OuresportstournamentsattractparticipantsfromNorthAmerica,LatinAmerica,Europe,theMiddleEast,andAsia.OurliveeventsandoriginalcontentarestreamedonglobalplatformssuchasTwitchandYouTube,makingthemaccessibletoaudiencesaroundtheworld.Additionally,weusevarioussocialmediaplatformssuchasTwitter,Instagram,TikTokandadvertisingplatformssuchasGoogleadandFacebooktoincreaseawareness.EmployeesAsofMarch24,2023,wehad78employees,including29employeesthatoperatedundercollective-bargainingagreements.AvailableInformationOurcompany’swebsiteaddressis.Throughthiswebsite,Allied’sfilingswiththeSecuritiesandExchangeCommission(“SEC”),includingitsAnnualReportsonForm10-K,QuarterlyReportsonForm10-Q,andCurrentReportsonForm8-K,andanyamendmentstothosereports,aswellasproxystatementsandotherdocuments,areaccessible(freeofcharge)assoonasreasonablypracticableaftermaterialsareelectronicallyfiledorfurnishedtotheSEC.TheinformationprovidedonourwebsiteisnotpartofthisoranyotherreportwefileorfurnishtotheSEC.TheSECalsomaintainsawebsitethatcontainsreports,proxyandinformationstatementsandotherinformationregardingissuesthatfileelectronicallywiththeSEC.OurfilingswiththeSECareavailabletothepublicontheSEC’swebsiteat.5Item1A.RiskFactorsInvestinginoursecuritiesinvolvesahighdegreeofrisk.Youshouldcarefullyconsiderthespecificrisksdescribedbelowbeforemakinganinvestmentdecision.Anyoftheriskswedescribebelowcouldcauseourbusiness,financialcondition,resultsofoperationsorfutureprospectstobemateriallyadverselyaffected.Themarketpriceofourcommonstockcoulddeclineifoneormoreoftheserisksanduncertaintiesdevelopintoactualeventsandyoucouldloseallorpartofyourinvestment.Additionalrisksanduncertaintiesnotcurrentlyknowntousorthatwecurrentlydeemtobeimmaterialalsomaymateriallyandadverselyaffectourbusiness,financialcondition,resultsofoperationsorfutureprospects.Amountswithinthe“RiskFactors”sectionarestatedinthousandswiththeexceptionofshareinformation.RisksRelatedtoOurBusinessOperationsWemaynotbeabletoexecutesuccessfullyourrecentlyannouncednewstrategicandbusines。
2. splans.AsaresultofoursaleoftheWPTbusinessinJuly2021,wehavedisposedofsubstantiallyallofouroperatingassetsotherthancash,investmentsandouresportsbusiness.InDecember2022,weannouncedplanstorestructureourexistingesportsbusinessandexpanditsfocustoincludeabroaderarrayofentertainmentandgamingproductsandservices.Underthisplan,weintendtopursuemultiplechannelsofopportunitiesinsteadofasinglesignificantcorporatetransactionsuchasanacquisitionofcomplimentaryassetsorbusinesses,andwecurrentlyexploringopportunitiestoleverageitslocation-based-entertainmentexpertisewithafocusongaminglifestyleandexperientialentertainment,aswellasgrowingitsdigitalfootprintandmonetizationcapabilitiesthroughmobilegaming.However,wemayencounterdifficultiesandchallengesintheimplementationofourplans,includingbutarenotlimitedto:●Lackofexperiencesandexpertiseinnewmarketsandofferings;●Intensecompetitionwithothermorewell-establishedplayers;●Inabilitytocreatecontentandproductsthatattractgamers,consumersandothercustomers;●Failuretosecurepartnershipandcollaboratorstoexecuteourplans;●Inabilitytoidentifyanddevelopviabletargetsinacquisitionsandjointventures;●Lackofresourcesandstrategicsupportinpursuingnewopportunities;●Inabilitytoimplementsuccessfulsalesandmarketingeffortsandtosecuresponsorship;●Macroeconomictrendandslowdowningamingandentertainmentindustries;●Difficultiesinobtaininginvestmentandcapitaltofunddesiredprojects;and●Highercostsinregulatorycompliancerequirements.Ifwearenotabletoexecuteourstrategiesandplanssuccessfullyandtimely,wewillnotbeabletogrowourbusinessandgeneratesufficientrevenuetoachieveprofitability,whichmayadverselyaffectyourinvestmentinourstock.Inaddition,ifournewstrategicplanfails,wewillnotbeabletorelyonourexistingAlliedEsportsbusinesstogeneratepositivefinancialperformanceandmayberequiredtoseekotheroptionsandalternativestocontinueourbusinessoperations,whichmaybesubjecttonewrisksanduncertainties.6Alliedissubjecttorisksassociatedwithoperatinginarapidlydevelopingindustryandarelativelynewmarket.ManyelementsofAllied’s’businessareunique,evolvingandrelativelyunproven.Itsbusinessandprospectsdependonthecontinuingdevelopmentoflivestreamingofcompetitiveesportsgaming.Themarketforesportsgamingcompetitionisrelativelynewandrapidlydevelopingandissubjecttosignificantchallenges.Allied’sbusinessreliesuponitsabilitytogrowandgarneranactivegamercommunity,andsuccessfullymonetizethiscommunitythroughtournamentfees,liveeventticketsales,andadvertisingandsponsorships.Inaddition,Allied’scontinuedgrowthdepends,inpart,onitsabilitytorespondtoconstantchangesintheesportsgamingindustry,includingtechnologicalevolution,shiftsingamertrendsanddemands,introductionsofnewgames,gamepublisherintellectualpropertyrightpractices,andindustrystandardsandpractices.Whilechangeinthisindustrymaybeinevitable,andAlliedwilltrytoadaptitsbusinessmodelasneededtoaccommodatechangeandremainontheforefrontofitscompetitors,Alliedmaybeunsuccessfulindoingsoanddoesnotprovideanyguaranteesorassurancesofsuccessastheindustrycontinuestoevolve.Alliedmaynotbeabletogeneratesufficientrevenuetoachieveandsustainprofitability.Alliedexpectsitsoperatingexpensestoincreasesignificantlyasitcontinuestoexpanditsmarketingeffortsandoperationsinexistingandnewgeographiesandverticalmarkets(includingitsonlineesportstournamentandgamingsubscriptionplatformitintendstodevelop).Inaddition,Alliedexpectstocontinuetoincursignificantlegal,accountingandotherexpensesrelatedtobeingapubliccompany.Ifitsrevenuedeclinesorfailstogrowataratefasterthantheseincreasesinoperatingexpenses,itwillnotbeabletoachieveprofitabilityinfutureperiods.Asaresult,Alliedmaygeneratelosses.Alliedcannotassureyouthatitwillachieveprofitability.Alliedgeneratesaportionofitsrevenuesfromadvertisingandsponsorship.Ifitfailstoattractmoreadvertisersandsponsorstoitsliveevents,tournamentsorcontent,orifadvertisersorsponsorsarelesswillingtoadvertisewithorsponsorAllied,itsrevenuesmaybeadverselyaffected.Alliedgeneratesrevenuefromadvertisingandsponsorship,anditexpectstofurtherdevelopandexpanditsfocusontheserevenuesinthefuture.Theserevenuespartlydependontheadvertisers’willingnesstoadvertiseintheesportsgamingindustry.Iftheesportsgamingadvertisingandsponsorshipmarketdoesnotcontinuetogrow,orifAlliedisunabletocaptureandretainasufficientshareofthatmarket,Allied’sabilitytoachieveprofitabilitymaybemateriallyandadverselyaffected.Furthermore,withunfavorableeconomicexternalfactors,sponsorsandadvertisersmaynothaveenoughbudgetallocationsforspendinginsponsorshipandadvertisinginesports,whichwouldalsoleadtoanadverseimpactonAllied’srevenuestream.Allied’sbusinessmodelmaynotremaineffectiveanditcannotguaranteethatitsfuturemonetizationstrategieswillbesuccessfullyimplementedorgeneratesustainablerevenuesandprofit.Alliedgeneratesrevenuesfromadvertisingandsponsorshipofitsliveevents,itscontent,thesaleofmerchandising,andtheoperationofitsesportsarenas.Alliedhasgenerated,andexpectstocontinuetogenerate,asubstantialportionofrevenuesusingthisrevenuemodelinthenearterm.AlthoughAlliedanticipatesgrowthinAllied’sbusinessutilizingthisrevenuemodel,thereisnoguaranteethatgrowthwillcontinueinthefuture,andthedemandforitsofferingsmaychange,decreasesubstantiallyordissipate,oritmayfailtoanticipateandserveesportsgamerdemandseffectively.Publichealthcrises,suchastheCOVID-19pandemicmayalsocontinuetocausethedemandforourin-personeventstoreduceandshiftdemandtoonlinegaming.Alliedmaydeterminetoenterintonewopportunitiestoexpanditsbusiness,includingonlinegamingplatforms,whichmayormaynotbesuccessful.Anysuchexpansionsinvolveadditionalrisksandcoststhatcouldmateriallyandadverselyaffectitsbusiness.EvenifAlliedisabletolicenseitsbrandtothirdpartyesportsoperators,thereisariskthatthoseoperatorscoulddamageitsbrandbyoperatingesportsarenasthatarenotatAllied’sstandardsofoperation.AsAlliedlicensestheAlliedbrandtothirdpartyesportsarenaoperatorsaroundtheworld,itwilldependonthoseoperatorstorunthosearenasataqualitylevelsimilartoAllied’sownedandoperatedarenas.Allied’sstrategydependsoncustomersassociatingthethirdpartyesportsarenasaspartofAllied’snetworkofaffiliatedarenas,whichitbelieveswillexpanditsbrandrecognitionandincreasecustomers,revenue,andgrowth.IfAllied’saffiliatearenasarepoorlyoperated,orifthoseoperatorsfailtouseAllied’snameandbrandinginamannerconsistentwithAllied’scorporatemessagingandbranding,oriftherearesafetyissuesorothernegativeoccurrencesataffiliatearenas,Allied’snameandbrandcouldbesignificantlydamaged,whichwouldmakeitsexpansiondifficultandmateriallyadverselyaffectitsresultsofoperationsandfinancialcondition.7Allied’slong-termgrowthstrategyincludesdeployingadditionalmobilearenasintheU.S.andEuropetohostitstournamentsandeventsanditmustoperatethemprofitably.AkeyelementofAllied’slong-termgrowthstrategyistoextenditsbrandbyincreasingandaddingtoitsportfolioofmobilearenasintheU.S.andEurope,aswebelievedoingsowillprovideattractivereturnsoninvestment.Addingthesemobilearenaswilldependuponanumberoffactors,manyofwhicharebeyondAllied’scontrol,includingbutnotlimitedtoourability,ortheabilityofourlicensees,to:●reachacceptableagreementsregardingtheleaseoracquisitionofthetrucksthatarethebasisofthemobilearenas;●complywithapplicablezoning,licensing,landuseandenvironmentalregulationsandordersandobtainrequiredpermitsandapprovals;●raiseorhaveavailableanadequateamountofcashorcurrentlyavailablefinancingforconstructionofthemobilearenasandtherelatedoperationalcosts;●timelyhire,trainandretaintheskilledmanagementandotheremployeesnecessarytooperatethemobilearenas;●efficientlymanagetheamountoftimeandmoneyusedtobuildandoperateeachnewmobilearena;and●managetherisksofroadhazards,accidents,trafficviolations,etc.thatmayimpedetheoperationsofthemobilearenas.ThenatureofhostingesportseventsexposesAlliedtonegativepublicityorcustomercomplaints,includinginrelationto,amongotherthings,accidents,injuriesortheftsatthearenas,andhealthandsafetyconcerns.Allied’sbusinessofhostingesportseventsinherentlyexposesittonegativepublicityorcustomercomplaintsasaresultofaccidents,injuriesor,inextremecases,deathsarisingfromincidentsoccurringatourarenas,includinghealth,safetyorsecurityissues,andqualityandservicestandards.EvenisolatedorsporadicincidentsoraccidentsmayhaveanegativeimpactonAllied’sbrandimageandreputation,thearenas’popularitywithgamersandspectatorsortheabilitytohostesportseventsatall.Allied’smarketingandadvertisingeffortsmayfailtoresonatewithgamers.Allied’sliveevents,tournamentsandcompetitionsaremarketedthroughadiversespectrumofadvertisingandpromotionalprogramssuchasonlineandmobileadvertising,marketingthroughwebsites,eventsponsorshipanddirectcommunicationswiththeesportsgamingcommunityincludingviaemail,blogsandotherelectronicmeans.AnincreasingportionofAllied’smarketingactivityistakingplaceonsocialmediaplatformsthatareeitheroutside,ornottotallywithin,itsdirectcontrol.Changestogamerpreferences,marketingregulations,privacyanddataprotectionlaws,technologychangesorservicedisruptionsmaynegativelyimpactitsabilitytoreachtargetgamers.Allied’sabilitytomarketitstournamentsandcompetitionsisdependentinpartuponthesuccessoftheseprograms.Theesportsgamingindustryiscompetitive,andgamersmayprefercompetitors’arenas,leagues,competitionsortournamentsoverthoseofferedbyAllied.Theesportsgamingindustryiscompetitive.Competitorsrangefromestablishedleaguesandchampionshipsowneddirectly,aswellasleaguesfranchisedbywell-knownandcapitalizedgamepublishersanddevelopers,interactiveentertainmentcompanies,diversifiedmediacompaniesandemergingstart-ups.Newcompetitorswilllikelycontinuetoemerge.ManyofthesecompetitorsmayhavegreaterfinancialresourcesthanAllied.IfAllied’scompetitorsdevelopandlaunchcompetingarenas,leagues,tournamentsorcompetitions,Allied’srevenueandmarginscoulddecline.8Alliedmaynotprovideeventsortournamentswithgamesortitlesforwhichtheesportsgamingcommunityisinterested.Alliedmustattractandretainthepopularesportsgamingtitlesinordertomaintainandincreasethepopularityofitsliveevents,leagues,tournamentsandcompetitions.Alliedmustidentifyandlicensepopulargamesthatresonatewiththeesportsgamercommunityonanongoingbasis.Alliedcannotassureyouthatitcanattractandlicensepopularesportsgamesfromtheirpublishers,andfailuretodosowouldhaveamaterialandadverseimpactonAllied’sresultsofoperationsandfinancialconditions.IfAlliedfailstokeepitsexistinggamersengaged,acquirenewgamersandexpandinterestinitsliveevents,leagues,tournamentsandcompetitions,itsbusiness,itsabilitytoachieveprofitabilityanditsprospectsmaybeadverselyaffected.Allied’ssuccessdependsonitsabilitytomaintainandgrowthenumberofgamersattendingitsliveevents,tournamentsandcompetitions,andkeepitsgamersandattendeeshighlyengaged.Inordertoattract,retainandengagegamersandremaincompetitive,Alliedmustcontinuetodevelopandexpanditsliveevents,leagues,produceengagingtournamentsandcompetitions,andimplementnewcontentformats,technologiesandstrategiestoimproveitsproductofferings.Thereisnoassuranceitwillbeabletodoso.AdeclineinthenumberofgamersmayadverselyaffecttheengagementlevelofgamerswithAllied’stournamentandentertainmentplatformunderdevelopmentmayreduceourrevenueopportunitiesandhaveamaterialandadverseeffectonourbusiness,financialconditionandresultsofoperations.ItisvitaltoAllied’soperationsthatitsplannedonlineesportstournamentandgamingsubscriptionsplatformberesponsivetoevolvinggamerpreferencesandofferfirst-tieresportsgamecontentandotherservicesthatattractsgamers.Alliedmustalsokeepprovidinggamersnewfeaturesandfunctionstoenablesuperiorcontentviewingandinteraction,orthenumberofgamersutilizingtheplatformwilllikelydecline.Anydeclineinthenumberofgamerswilllikelyhaveamaterialandadverseeffectonouroperations.ThereisnoguaranteethatAlliedwillbeabletocompleteitsplannedonlineesportstournamentandgamingsubscriptionplatform,orthatsuchplatformoncecompletedwillbeorremainpopular.Alliedcannotassureyouthattheonlineesportstournamentandgamingsubscriptionplatformitintendstodevelopwillbecompletedinatimelymanneror,ifcompleted,becomepopularwithgamerstooffsetthecostsincurredtooperateandexpandit.Thiswillrequiresubstantialcostsandexpenses.Ifsuchincreasedcostsandexpensesdonoteffectivelytranslateintoimprovedgamerengagement,Allied’sresultsofoperationsmaybemateriallyandadverselyaffected.IfAlliedfailstomaintainandenhanceitsbrands,itsbusiness,resultsofoperationsandprospectsmaybemateriallyandadverselyaffected.Alliedbelievesthatmaintainingandenhancingitsbrandsisimportantforitsbusinesstosucceedbyincreasingthenumberofgamersandengagementbytheesportscommunity.SinceAlliedoperatesinahighlycompetitivemarket,brandmaintenanceandenhancementdirectlyaffectsitsabilitytomaintainandenhanceitsmarketposition.AsAlliedexpands,itmayconductvariousmarketingandbrandpromotionactivitiesusingvariousmethodstocontinuepromotingitsbrands,butitcannotassureyouthattheseactivitieswillbesuccessful.Inaddition,negativepublicity,regardlessofitsveracity,couldharmAllied’sbrandsandreputation,whichmaymateriallyandadverselyaffectAllied’sbusiness,resultsofoperationsandprospects.9IfAlliedfailstoanticipateandsuccessfullyimplementnewesportstechnologiesoradoptnewbusinessstrategies,technologiesormethods,itsbusinessmaysuffer.RapidtechnologychangesintheesportsgamingmarketrequiresAlliedtoanticipate,sometimesyearsinadvance,whichtechnologiesitmustdevelop,implementandtakeadvantageofinordertobeandremaincompetitiveintheesportsgamingmarket.Alliedhasinvested,andinthefuturemayinvest,innewbusinessstrategiesincludingitsto-be-developedonlineesportstournamentandentertainmentsubscriptionplatform,technologies,products,orgamestoengageagrowingnumberofgamersanddeliverthebestgamingexperiencespossible.Theseendeavorsinvolvesignificantrisksanduncertainties,andnoassurancecanbegiventhatthetechnologyitadoptsandthefeaturesitpursueswillbesuccessful.IfAllieddoesnotsuccessfullyimplementthesenewtechnologies,itsreputationmaybemateriallyadverselyaffectedanditsfinancialconditionandoperatingresultsmaybeimpacted.Alliedusesthird-partyservicesinconnectionwithitsbusiness,andanydisruptiontotheseservicescouldresultinadisruptiontoitsbusiness,negativepublicityandaslowdowninthegrowthofitsusers,materiallyandadverselyaffectingitsbusiness,financialconditionandresultsofoperations.Allied’sbusinessdependsonservicesprovidedby,andrelationshipswith,variousthirdparties,includingcloudhosting,serveroperators,broadbandproviders,andcomputingperipheralsuppliers,amongothers.ThefailureofanyofthesepartiestoperformincompliancewithouragreementsmaynegativelyimpactAllied’sbusiness.Additionally,ifsuchthirdpartiesincreasetheirprices,failtoprovidetheirserviceseffectively,terminatetheirserviceoragreementsordiscontinuetheirrelationshipswithAllied,Alliedcouldsufferserviceinterruptions,reducedrevenues,orincreasedcosts,anyofwhichmayhaveamaterialadverseeffectonitsbusiness,financialcondition,andresultsofoperations.Alliedmaynotbeabletoprocurethenecessarypermitsandlicensestooperateitsarenas.Alliedmustobtaincertainpermitsandlicenses,includingliquorlicenses,tooperateitsarenas.Oftentheseprocessescanbeexpensiveandtimeconsuming.ThereisnoguaranteethatAlliedwillbeabletoobtainsuchpermitsandlicensesonatimelyorcost-effectivebasis.AnydelayscouldjeopardizetheabilityofAlliedtooperatethearenasandhostevents.Asaresult,Allied’sbusinesscouldsuffer.Rulesandregulationsgoverningsweepstakes,promotionsandgiveawaysvarybystateandcountryandtheserulesandregulationscouldrestrictoreliminateAllied’sabilitytogeneraterevenuesonitsesportsgamingplatformitintendstodevelop,whichcouldmateriallyandadverselyimpacttheviabilityofthisbusiness.Aspartofitsesportsgamingplatformtobedeveloped,Alliedintendstooffersubscribersthechancetowincashandprizeswhenplayingesportsgamesandtournamentsontheplatform.Awardingcashandprizeswouldrequirecompliancewiththelawsorregulationsinvariousstatesorcountriesoversweepstakes,promotionsandgiveaways,whicharecomplexandconstantlychanging.AnynegativefindingoflawregardingthecharacterizationofthetypeofonlineactivitycarriedoutontheesportsgamingplatformcouldlimitorpreventAllied’sabilitytoobtainsubscribersinthosejurisdictions,whichinturncouldsignificantlyimpactAllied’sabilitytogeneraterevenue.TheabilityorwillingnesstoworkwithAlliedbypaymentprocessorsandotherserviceprovidersnecessarytoconducttheesportsgamingplatformbusinessalsomaybelimitedduetosuchchangesinlawsoranyperceivednegativeconsequencesofengaginginthebusinessofsweepstakes,promotionsandgiveawaysthatwillbeutilizedbytheesportsgamingplatform.NegotiationswithunionizedemployeescoulddelayopeningoroperatingAllied’sarenas.CertainofAllied’semployeesarerepresentedbyoneormoreunions.Alliedwillneedtoengagesuchunionstoseektoemploytheservicesoftheemployeesonmutuallyacceptableterms.However,Alliedcannotguaranteethatsuchnegotiationswillbetimelyconcludedtoavoidinterruptioninitstournamentschedule,orthatsuchnegotiationswillultimatelyresultinanagreement.AnyfailuretotimelyconcludethenegotiationscouldcauseadelayinAllied’sabilitytotimelyopenarenasorhostevents.EitheroftheseeventswouldadverselyaffectAllied’sabilitytoachieveprofitability.10Allied’sbusinessissubjecttoregulation,andchangesinapplicableregulationsmaynegativelyimpactitsbusiness.AlliedissubjecttoanumberofforeignanddomesticlawsandregulationsthataffectcompaniesconductingbusinessontheInternet.Inaddition,lawsandregulationsrelatingtouserprivacy,datacollection,retention,electroniccommerce,consumerprotection,content,advertising,localization,andinformationsecurityhavebeenadoptedorarebeingconsideredforadoptionbymanyjurisdictionsandcountriesthroughouttheworld.TheselawscouldharmAllied’sbusinessbylimitingtheproductsandservicesitcanofferconsumersorthemannerinwhichitoffersthem.Thecompliancecostsfortheselawsmayincreaseinthefutureasaresultofchangesininterpretation.Furthermore,Allied’sfailuretocomplywiththeselawsortheapplicationoftheselawsinanunanticipatedmannermayharmitsbusinessandresultinpenaltiesorsignificantlegalliability.Alliedhashistoricallyoperatedatanetlossonaconsolidatedbasis,andthereisnoguaranteethatthatitwillbeabletobeprofitable.ThehistoricaloperationsofAlliedhaveresultedinnetlossesfromcontinuingoperationsof$11.1millionand$15.1millionfortheyearsendedDecember31,2022and2021,respectively.WedonotknowwithanydegreeofcertaintywhetherorwhentheconsolidatedoperationsofAlliedwillbecomeprofitable.Evenifweareabletoachieveprofitabilityinfutureperiods,wemaynotbeabletosustainorincreaseourprofitabilityinsuccessiveperiods.Wehaveformulatedourbusinessplansandstrategiesbasedoncertainassumptionsregardingtheacceptanceofourbusinessmodelandthemarketingofourproductsandservices.Nevertheless,ourassessmentsregardingmarketsize,marketshare,marketacceptanceofourproductsandservicesandavarietyofotherfactorsmayproveincorrect.Ourfuturesuccesswilldependuponmanyfactors,includingfactorsbeyondourcontrolandthosethatcannotbepredictedatthistime.Forecastsofourmarketandmarketgrowthmayprovetobeinaccurate,andevenifthemarketsinwhichwecompeteachievetheforecastedgrowth,therecanbenoassurancethatourbusinesswillgrowatsimilarrates,oratall.GrowthforecastsincludedinSECfilingsrelatingtoourmarketopportunitiesandtheexpectedgrowthinthosemarketsaresubjecttosignificantuncertaintyandarebasedonassumptionsandestimateswhichmayprovetobeinaccurate.Wealsoplantooperateinanumberofforeignmarkets,andadownturninanyofthosemarketscouldhaveasignificantadverseeffectonourbusinesses.Evenifthesemarketsmeetoursizeestimateandexperiencestheforecastedgrowth,wemaynotgrowourbusinessatasimilarrate,oratall.Ourgrowthissubjecttomanyfactors,includingoursuccessinimplementingourbusinessstrategy,whichissubjecttomanyrisksanduncertainties.Accordingly,theforecastsofmarketgrowthshouldnotbetakenasindicativeofourfuturegrowth.Anyactualorperceivedfailurebyustocomplywithourprivacypoliciesorlegalorregulatoryrequirementsinoneormultiplejurisdictionscouldresultinproceedings,actionsorpenaltiesagainstus.Alliedhasimplementedvariousfeaturesintendedtobettercomplywithapplicableprivacyandsecurityrequirementsinthecollectionanduseofcustomerdata,butthesefeaturesdonotensurecomplianceandmaynotbeeffectiveagainstallpotentialprivacyanddatasecurityconcerns.Awidevarietyofdomesticandforeignlawsandregulationsapplytothecollection,use,retention,protection,disclosure,transfer,disposalandotherprocessingofpersonaldata.Thesedataprotectionandprivacy-relatedlawsandregulationsareevolvingandmayresultinregulatoryandpublicscrutinyandescalatinglevelsofenforcementandsanctions.Ourfailuretocomplywithapplicablelawsandregulations,ortoprotectanypersonaldata,couldresultinenforcementactionsagainstus,includingfines,claimsfordamagesbycustomersandotheraffectedindividuals,damagetoourreputationandlossofgoodwill(bothinrelationtoexistingcustomersandprospectivecustomers),anyofwhichcouldadverselyaffectourbusiness,operatingresults,financialperformanceandprospects.EvolvingandchangingdefinitionsofpersonaldataandpersonalinformationwithintheEuropeanUnion(“EU”),theUnitedStatesandelsewheremaylimitorinhibitourabilitytooperateorexpandourbusiness.InjurisdictionsoutsideoftheUnitedStates,wemayfacedataprotectionandprivacyrequirementsthataremorestringentthanthoseinplaceintheUnitedStates.WeareatriskofenforcementactionstakenbycertainEUdataprotectionauthoritiesuntilsuchpointintimethatwemaybeabletoensurethatalltransfersofpersonaldatatousintheUnitedStatesfromtheEUareconductedincompliancewithallapplicableregulatoryobligations,theguidanceofdataprotectionauthoritiesandevolvingbestpractices.TheEuropeanGeneralDataProtectionRegulation(“GDPR”)mayimposeadditionalobligations,costsandrisksuponourbusiness.TheGDPRmayincreasesubstantiallythepenaltiestowhichwecouldbesubjectintheeventofanynon-compliance.Inaddition,wemayincursubstantialexpenseincomplyingwiththeobligationsimposedbytheGDPRandwemayberequiredtomakesignificantchangesinourbusinessoperations,allofwhichmayadverselyaffectourrevenuesandourbusinessoverall.11Loss,retentionormisuseofcertaininformationandallegedviolationsoflawsandregulationsrelatingtoprivacyanddatasecurity,andanyrelevantclaims,mayexposeustopotentialliabilityandmayrequireustoexpendsignificantresourcesondatasecurityandinrespondingtoanddefendingsuchallegationsandclaims.Inaddition,futurelaws,regulations,standardsandotherobligations,andchangesintheinterpretationofexistinglaws,regulations,standardsandotherobligationscouldimpairourabilitytocollect,useordisclosedatarelatingtoindividuals,whichcouldincreaseourcostsandimpairourabilitytomaintainandgrowourcustomerbaseandincreaseourrevenue.Alliedpubliclypostsitsprivacypoliciesandpracticesconcerningprocessing,useanddisclosureofthepersonallyidentifiableinformationprovidedtoitbywebsitevisitors.Publicationofsuchprivacypoliciesandotherstatementspublishedthatprovidepromisesandassurancesaboutprivacyandsecuritycansubjectustopotentialstateandfederalactioniftheyarefoundtobedeceptiveormisrepresentativeofactualpoliciesandpracticesorifactualpracticesarefoundtobeunfair.Evolvingandchangingdefinitionsofwhatconstitutes“PersonalInformation”and“PersonalData”withintheEU,theUnitedStatesandelsewhere,especiallyrelatingtoclassificationofIPaddresses,machineordeviceidentificationnumbers,locationdataandotherinformation,maylimitorinhibitourabilitytooperateorexpandourbusiness,includinglimitingtechnologyalliancerelationshipsthatmayinvolvethesharingofdata.Ourfailuretoraiseadditionalcapitalorgeneratecashflowsnecessarytoexpandouroperationsandinvestinnewbusinessinitiativesinthefuturecouldreduceourabilitytocompetesuccessfullyandharmouroperatingresults.Inthefuturewemayneedtoraiseadditionalfunds,andwemaynotbeabletoobtainadditionaldebtorequityfinancingonfavorableterms,ifatall.Ifweraiseadditionalequityfinancing,oursecurityholdersmayexperiencesignificantdilutionoftheirownershipinterests.Ifweengageindebtfinancing,wemayberequiredtoaccepttermsthatrestrictourabilitytoincuradditionalindebtedness,forceustomaintainspecifiedliquidityorotherratiosorrestrictourabilitytopaydividendsormakeacquisitions.Ifwecannotraisecapitalonacceptableterms,oratall,wewillnotbeabletoexecutesuccessfullyourbusinessplans,includingtheinabilityto:●developandenhanceourproductsandservices;●continuetoexpandournetworkofarenas;●hire,trainandretainemployees;●respondtocompetitivepressuresorunanticipatedworkingcapitalrequirements;or●pursueacquisitionopportunities.Althoughwehavebeenabletofundourcurrentworkingcapitalrequirementsthroughoperations,debtandequityfinancing,thereisnoassurancethatwewillbeabletodosointhefuture.Wemayexperiencesecuritybreachesandcyberthreats.Wefacecyberrisksandthreatsthatcoulddamage,disruptorallowthirdpartiestogainimproperaccesstoournetworksandplatforms,supportinginfrastructure,intellectualpropertyandotherassets.Inaddition,werelyontechnologicalinfrastructure,includingthirdpartycloudhostingandbroadband,providedbythirdpartybusinesspartnerstosupportthefunctionalityofourplatformsandcontentdistribution.Thesebusinesspartnersarealsosubjecttocyberrisksandthreats.Suchcyberrisksandthreatsmaybedifficulttodetect.Thetechniquesthatmaybeusedtoobtainunauthorizedaccessordisable,degrade,exploitorsabotagethesenetworksandgamingplatformschangefrequentlyandoftenarenotdetected.Oursystemsandprocessesandthoseofourthird-partybusinesspartnersmaynotbeadequate.Anyfailuretopreventormitigatesecuritybreachesorcyberrisks,orrespondadequatelytoasecuritybreachorcyberrisk,couldresultininterruptionstoourplatforms,degradethegamer/userexperiences,causegamers/userstoloseconfidenceinourplatformsandceaseutilizingthem,aswellassignificantlegalandfinancialexposure.Thiscouldharmourbusinessandreputation,disruptourrelationshipswithpartnersanddiminishourcompetitiveposition.12Globalhealththreats,suchasthecurrentCOVID-19pandemic,couldhaveamaterialadverseeffectonourbusiness.Ourbusinesscouldbeadverselyaffectedbytheeffectsofawidespreadoutbreakofcontagiousdiseaseorglobalorregionalepidemicorpandemic.Asignificantoutbreakofcontagiousdiseasesinthehumanpopulation,suchastheCOVID-19pandemiccouldresultinawidespreadhealthcrisisthatcouldadverselyaffecttheeconomiesandfinancialmarketsofmanycountries,resultinginaneconomicdownturnthatcouldaffectdemandforourproductsandservices.Asaglobalentertainmentcompanythathostsnumerousliveeventswithspectatorsandparticipantsindestinationcities,suchoutbreakmaycausepeopletoavoidtravelingtoandattendingourevents,whichwilladverselyaffectourbusinessoperationsandfinancialresults.RisksRelatedtoIntellectualPropertyAlliedlicensedcertainbrandnamesunderagreementsthathaveexpiredandmayalsobesubjecttoclaimsofinfringementofthird-partyintellectualpropertyrights.Allied’slicensewithathirdpartytousethenames“EsportsArenaLasVegas”and“EsportsArenaDrive”,whicharepartofthebrandingforitsLasVegasflagshipesportsarenalocationanditsUS-basedmobilearena,respectively,endedinJuly2021.AlthoughAlliedintendstomarketandpromoteitsesportsarenasusingintellectualpropertyitownsandcontrols,andisdiscontinuinguseofsuchbranding,therearenoassurancesthatthoseeffortswillbefruitfulandthatitwillbeabletomaintainbrandawarenessoncethelicenseexpires.Furthermore,thirdpartiesmayclaimthatAlliedhasinfringedtheirintellectualpropertyrights.AlthoughAlliedtakesstepstoavoidviolatingtheintellectualpropertyrightsofothers,itispossiblethatthirdpartiesstillmayclaiminfringement.Infringementclaimsagainstus,whethervalidornot,maybeexpensivetodefendanddiverttheattentionofAllied’smanagementandemployeesfrombusinessoperations.SuchclaimsorlitigationcouldrequireAlliedtopaydamages,royalties,legalfeesandothercosts.Alliedalsocouldberequiredtostopoffering,distributingorsupportingesportsgames,itsto-be-developedgamingplatformorotherfeaturesorserviceswhichincorporatetheaffectedintellectualpropertyrights,redesignproducts,featuresorservicestoavoidinfringement,orobtainalicense,allofwhichcouldbecostlyandharmitsbusiness.Allied’stechnology,contentandbrandsaresubjecttothethreatofpiracy,unauthorizedcopyingandotherformsofintellectualpropertyinfringement.Alliedregardsitstechnology,contentandbrandsasproprietaryandtakesmeasurestoprotectitfrominfringement.Piracyandotherformsofunauthorizedcopyinganduseoftechnology,contentandbrandsarepersistent,andpolicingisdifficult.Further,thelawsofsomecountriesdonotprotectintellectualpropertyrightstothesameextentasthelawsoftheUnitedStates,orarepoorlyenforced.LegalprotectionofAllied’srightsmaybeineffectiveinsuchcountries,whichcouldhaveamaterialadverseeffectonitsbusiness,financialconditionandresultsofoperations.Alliedmaynotbeabletopreventothersfromunauthorizeduseofitsintellectualproperty,whichcouldharmourbusinessandcompetitiveposition.Alliedregardsitsregisteredtrademarkandpendingtrademarks,servicemarks,pendingpatents,domainnames,tradesecrets,proprietarytechnologiesandsimilarintellectualpropertyascriticaltoitssuccess.Alliedreliesontrademarkandpatentlaw,tradesecretprotectionandconfidentialityandlicenseagreementswithitsemployeesandotherstoprotectitsproprietaryrights.Alliedhasinvestedsignificantresourcestodevelopitsownintellectualpropertyandacquirelicensestouseanddistributetheintellectualpropertyofothers.Failuretomaintainorprotecttheserightscouldharmitsbusiness.Inaddition,anyunauthorizeduseofourintellectualpropertybythirdpartiesmayadverselyaffectitscurrentandfuturerevenues.Alliedmaynotbeabletodevelopcompellingintellectualpropertycontentorsecuremediacontentdistributorstopromote,sell,anddistributesuchcontent,whichcouldharmitsbusinessandcompetitiveposition.Alliedintendstoproducelicensablecontentfromthevariousliveevents,tournaments,anditsowninitiativesandbrandstoselltoviewersworldwide.Thereisnoguaranteethatitwillbeabletodevelopcontentthatiscompellingtoitstargetedcustomers.Mediaandgamingcompanycompetitors,manyofwhicharebetterfunded,arealsocreatingcontentfromesportsevents,anditwillbedifficulttocreatecontentthatstandsoutandattractscustomers.Furthermore,tocarryoutAllied’sworldwidedistributionplans,filmandmediadistributionpartnerswillbeneededand,intheevent,AlliedisnotabletosecurecontentdistributorsontermsacceptabletoAllied,thiswillhaveasignificantadverseimpactonrevenuestreamsfromthesaleorlicensingofintellectualproperty.13Alliedhasnotenteredintodefinitivelicenseagreementswithallgamepublishersthatitcurrentlyhasrelationshipswith,anditmayneverdoso.AlthoughAlliedhasrelationshipswithmanygamepublishersfortournamenteventandcontentexperiencesinvolvingtheirrespectiveintellectualpropertiesandentersintodefinitivelicenseagreementswithsuchgamepublishersfromtimetotime,Allieddoesnothavedefinitivelicenseagreementsinplacewithallofitsgamepublishers.Noassurancescanbegivenastowhenorifitwillbeabletocometoagreeabletermswithgamepublishersforanyfuturelicenseagreements.IfAlliedisunabletocometomutuallyagreeabletermsandenterintodefinitivelicenseagreementswithgamepublishers,gamepublishersmayunilaterallychoosetodiscontinueitsrelationshipwithAllied,therebypreventingAlliedfromofferingtournamenteventandcontentexperiencesusingtheirgameintellectualproperty.ShouldgamepublisherschoosenottoallowAlliedtooffertournamenteventandcontentexperiencesinvolvingtheirintellectualpropertytoAllied’scustomers,thepopularityofAllied’stournamentsandcontentmaydecline,whichcouldmateriallyandadverselyaffectitsresultsofoperationsandfinancialcondition.GeneralRiskFactorsThemarketpriceofsharesofourcommonstockmaybevolatile,whichcouldcausethevalueofyourinvestmenttodecline.Themarketpriceofourcommonstockmaybehighlyvolatileandcouldbesubjecttowidefluctuations.Securitiesmarketsworldwideexperiencesignificantpriceandvolumefluctuations.Thismarketvolatility,aswellasgeneraleconomic,marketorpoliticalconditions,couldreducethemarketpriceofsharesofourcommonstockregardlessofouroperatingperformance.Inaddition,ouroperatingresultscouldbebelowtheexpectationsofpublicmarketanalystsandinvestorsduetoanumberofpotentialfactors,includingvariationsinourquarterlyoperatingresultsordividends,ifany,tostockholders,additionsordeparturesofkeymanagementpersonnel,failuretomeetanalysts’earningsestimates,publicationofresearchreportsaboutourindustry,litigationandgovernmentinvestigations,changesorproposedchangesinlawsorregulationsordifferinginterpretationsorenforcementthereofaffectingourbusiness,adversemarketreactiontoanyindebtednesswemayincurorsecuritieswemayissueinthefuture,changesinmarketvaluationsofsimilarcompaniesorspeculationinthepressorinvestmentcommunity,announcementsbyourcompetitorsofsignificantcontracts,acquisitions,dispositions,strategicpartnerships,jointventuresorcapitalcommitments,adversepublicityabouttheindustriesweparticipateinorindividualscandals,and,inresponse,themarketpriceofsharesofourcommonstockcoulddecreasesignificantly.Youmaybeunabletoresellyoursharesofcommonstockatoraboveapriceyoufeelisappropriate.Inthepastfewyears,stockmarketshaveexperiencedextremepriceandvolumefluctuations.Inthepast,followingperiodsofvolatilityintheoverallmarketandthemarketpriceofacompany’ssecurities,securitiesclassactionlitigationhasoftenbeeninstitutedagainstthesecompanies.Suchlitigation,ifinstitutedagainstus,couldresultinsubstantialcostsandadiversionofourmanagement’sattentionandresources.Ifouroperatingandfinancialperformanceinanygivenper。
3. ioddoesnotmeettheguidancethatweprovidetothepublic,themarketpriceofourcommonstockmaydecline.Wemay,butarenotobligatedto,providepublicguidanceonourexpectedoperatingandfinancialresultsforfutureperiods.Anysuchguidancewillbecomprisedofforward-lookingstatementssubjecttotherisksanduncertaintiesdescribedinourpublicfilingsandpublicstatements.Ouractualresultsmaynotalwaysbeinlinewithorexceedanyguidancewehaveprovided,especiallyintimesofeconomicuncertainty.If,inthefuture,ouroperatingorfinancialresultsforaparticularperioddonotmeetanyguidanceweprovideortheexpectationsofinvestmentanalysts,orifwereduceourguidanceforfutureperiods,themarketpriceofourcommonstockmaydeclineaswell.Evenifwedoissuepublicguidance,therecanbenoassurancethatwewillcontinuetodosointhefuture.Weincurincreasedcostsandaresubjecttoadditionalregulationsandrequirementsasaresultofbeingapubliccompany,whichcouldlowerourprofitsormakeitmoredifficulttorunourbusiness.Asapubliccompany,weincursignificantlegal,accountingandotherexpensesthatarenotincurredbyprivatecompanies,includingcostsassociatedwithpubliccompanyreportingrequirements.WealsohaveincurredandwillcontinuetoincurcostsassociatedwiththeSarbanes-OxleyAct,andrelatedrulesimplementedbytheSECandtheNasdaqCapitalMarket.Theexpensesgenerallyincurredbypubliccompaniesforreportingandcorporategovernancepurposeshavebeenincreasing.Weexpecttheserulesandregulationstoincreaseourlegalandfinancialcompliancecostsandtomakesomeactivitiesmoretime-consumingandcostly,althoughwearecurrentlyunabletoestimatethesecostswithanydegreeofcertainty.Theselawsandregulationsalsomaymakeitmoredifficultorcostlyforustoobtaincertaintypesofinsurance,includingdirectorandofficerliabilityinsurance,andwemaybeforcedtoacceptreducedpolicylimitsandcoverageorincursubstantiallyhighercoststoobtainthesameorsimilarcoverage.TheselawsandregulationscouldalsomakeitmoredifficultforustoattractandretainqualifiedpersonstoserveonourBoardofDirectors,onourboardcommitteesorasourexecutiveofficers.Furthermore,ifweareunabletosatisfyourobligationsasapubliccompany,wecouldbesubjecttodelistingofourcommonstockontheNasdaqmarket,fines,sanctionsandotherregulatoryactionandpotentiallycivillitigation.14Ourbusinessdependssubstantiallyonthecontinuingeffortsofourexecutiveofficers,keyemployeesandqualifiedpersonnel,andourbusinessoperationsmaybeseverelydisruptedifwelosetheservicesofsuchpersonnel.Ourfuturesuccessdependssubstantiallyonthecontinuedeffortsofourexecutiveofficersandkeyemployees.Ifoneormoreofourexecutiveofficersorkeyemployeesareunableorunwillingtocontinuetheirserviceswithus,wemightnotbeabletoreplacethemeasily,inatimelymanner,oratall.Sincetheesportsgamingindustryischaracterizedbyhighdemandandintensecompetitionfortalent,wecannotassureyouthatwewillbeabletoattractorretainqualifiedstafforotherhighlyskilledemployees.Ifanyofourexecutiveofficersorkeyemployeesterminatetheirserviceswithus,ourbusinessmaybeseverelydisrupted,ourfinancialconditionandresultsofoperationsmaybemateriallyandadverselyaffectedandwemayincuradditionalexpensestorecruit,trainandretainqualifiedpersonnel.Throughitswholly-ownedsubsidiaryPrimoVitalLimited,OurgameInternationalHoldingsLimited(“Ourgame”)ownsasignificantpercentageofouroutstandingcommonstock,enablingittoexertsignificantinfluenceoverouroperationsandactivities,whichmayaffectthetradingpriceofourcommonstock.AccordingtoitsSECfilings,Ourgame,throughPrimoVitalLimited,beneficiallyownsandcontrolsapproximately35.8%ofouroutstandingcommonstock.PrimoVitalLimitedisentitledtofullvotingrightswithrespecttothesharesofcommonstockthatitowns.ThisconcentratedownershipenablesOurgametoexertsignificantinfluenceoverallmattersrequiringstockholdervotes,including:theelectionofdirectors;mergers,consolidations,acquisitionsandotherstrategictransactions;thesaleofallorsubstantiallyallofourassetsandotherdecisionsaffectingourcapitalstructure;amendmentstoourCertificateofIncorporationorourbylaws;andourwindingupanddissolution.TheinterestsofOurgamemaynotalwayscoincidewithourinterestsortheinterestsofourotherstockholders,andOurgame’sinfluencemaydelay,deterorpreventactsthatwouldbefavoredbyusorourotherstockholders.Thisconcentrationofownershipmayalsohavetheeffectofdelaying,preventingordeterringachangeincontroloftheCompany.Also,Ourgamemayseektocauseustotakecoursesofactionthat,initsjudgment,couldenhanceitsinvestmentsinus,butwhichmightinvolveriskstoourotherstockholdersoradverselyaffectusorourotherstockholders.Asaresult,themarketpriceofoursharescoulddecline.Inaddition,thisconcentrationofshareownershipmayadverselyaffectthetradingpriceofoursharesbecauseprospectiveinvestorsmayperceivedisadvantagesinowningsharesinacompanysuchasourcompanywithsuchasignificantstockholder.15Ourfailuretoachieveandmaintainaneffectivesystemofdisclosurecontrolsandinternalcontroloverfinancialreportingcouldadverselyaffectourfinancialpositionandlowerourstockprice.Asapubliccompany,wearesubjecttothereportingrequirementsoftheExchangeAct,theSarbanes-OxleyAct,andtherulesandregulationsoftheapplicablelistingstandardsofNasdaq.TheSarbanes-OxleyActrequires,amongotherthings,thatwemaintaineffectivedisclosurecontrolsandproceduresandinternalcontroloverfinancialreporting.Effectiveinternalcontrolsarenecessaryforustoprovidereliablefinancialreports.Nevertheless,allinternalcontrolsystems,nomatterhowwelldesigned,haveinherentlimitations.Eventhosesystemsdeterminedtobeeffectivecanprovideonlyreasonableassurancewithrespecttofinancialstatementpreparationandpresentation.ManagementidentifiedthefollowingmaterialweaknessesindicativeofsmallerreportingcompaniesasofDecember31,2022:●inadequatesegregationofdutiesresultingfromlimitedaccountingstaffandresources;and●inadequateinformationtechnologygeneralcontrolsasitrelatestouseraccessandchangemanagement.Asacompanywithlimitedaccountingresources,asignificantamountofmanagement’stimeandattentionhasbeenandwillbedivertedfromourbusinesstoworktowardcompliancewiththeseregulatoryrequirements.Thisdiversionofmanagement’stimeandattentionmayhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Thesematerialweaknessesandanysignificantdeficienciescouldharmouroperatingresultsorcauseustofailtomeetourreportingobligationsandmayresultinarestatementofourfinancialstatementsforpriorperiods.AnyfailuretoimplementandmaintaineffectiveinternalcontroloverfinancialreportingalsocouldadverselyaffecttheresultsofperiodicmanagementevaluationsandanyannualindependentregisteredpublicaccountingfirmattestationreportsregardingtheeffectivenessofourinternalcontroloverfinancialreportingthatwemayberequiredtoincludeinourperiodicreportsthatwillbefiledwiththeSEC.Ineffectivedisclosurecontrolsandproceduresandinternalcontroloverfinancialreportingcouldalsocauseinvestorstoloseconfidenceinourreportedfinancialandotherinformation,whichwouldlikelyhaveanegativeeffectonthetradingpriceofourcommonstock.Inaddition,ifweareunabletocontinuetomeettheserequirements,wemaynotbeabletomaintainourcommonstocklistingonNasdaq.Increasesininterestratesmaycausethemarketpriceofourcommonstocktodecline.Whileinterestrateshaveinrecentyearsbeenatrecordlowlevels,thelikelyreturntoincreasesininterestratesmaycauseacorrespondingdeclineindemandforequityinvestments.Anysuchincreaseininterestratesorreductionindemandforourcommonstockresultingfromotherrelativelymoreattractiveinvestmentopportunitiesmaycausethemarketpriceofourcommonstocktodecline.Wehavenocurrentplanstopaycashdividendsonourcommonstock;asaresult,youmaynotreceiveanyreturnoninvestmentunlessyousellyourcommonstockforapricegreaterthanthatwhichyoupaidforit.WehavenocurrentplanstopaydividendsonourcommonstockwiththeproceedsoftheWPTsaletransaction.Anyfuturedeterminationtopaydividendswillbemadeatthediscretionofourboardofdirectors,subjecttoapplicablelaws,andwilldependonanumberoffactors,includingourfinancialcondition,resultsofoperations,capitalrequirements,contractual,legal,taxandregulatoryrestrictions,generalbusinessconditionsandotherfactorsthatourboardofdirectorsmaydeemrelevant.Asaresult,youmaynotreceiveanyreturnonaninvestmentinourcommonstockunlessyousellyourcommonstockforapricegreaterthanthatwhichyoupaidforit.16Ifsecuritiesorindustryanalystsdonotpublishresearchorreportsaboutourbusinessorpublishnegativereports,themarketpriceofourcommonstockcoulddecline.Thetradingmarketforourcommonstockwillbeinfluencedbytheresearchandreportsthatindustryorsecuritiesanalystspublishaboutusorourbusiness.Ifoneofmoreoftheseanalystsceasescoverageofusorfailstopublishreportsonusregularly,wecouldlosevisibilityinthefinancialmarkets,whichinturncouldcausethemarketpriceortradingvolumeofourcommonstocktodecline.Moreover,ifoneormoreoftheanalystswhocoverusdowngradesourcommonstockorifourreportingresultsdonotmeettheirexpectations,themarketpriceofourcommonstockcoulddecline.Youwillbedilutedbythefutureissuanceofcommonstock,preferredstock,orsecuritiesconvertibleintocommonorpreferredstock,inconnectionwithourincentiveplans,acquisitions,capitalraisesorotherwise.Ouramendedandrestatedcertificateofincorporationauthorizesustoissuethesesharesofcommonstockandoptions,rights,warrantsandappreciationrightsrelatingtocommonstockfortheconsiderationandonthetermsandconditionsestablishedbyourBoardofDirectorsinitssolediscretion,whetherinconnectionwithacquisitionsorotherwise.Inthefuture,weexpecttoobtainfinancingortofurtherincreaseourcapitalresourcesbyissuingadditionalsharesofourcapitalstockorofferingdebtorotherequitysecurities,includingseniororsubordinatednotes,debtsecuritiesconvertibleintoequityorsharesofpreferredstock.Issuingadditionalsharesofourcapitalstockorotherequitysecuritiesorsecuritiesconvertibleintoequitymaydilutetheeconomicandvotingrightsofourexistingstockholdersorreducethemarketpriceofourcommonstockorboth.Debtsecuritiesconvertibleintoequitycouldbesubjecttoadjustmentsintheconversionratiopursuanttowhichcertaineventsmayincreasethenumberofequitysecuritiesissuableuponconversion.Preferredshares,ifissued,couldhaveapreferencewithrespecttoliquidatingdistributionsorapreferencewithrespecttodividendpaymentsthatcouldlimitourabilitytopaydividendstotheholdersofourcommonstock.Ourdecisiontoissuesecuritiesinanyfutureofferingwilldependonmarketconditionsandotherfactorsbeyondourcontrol,whichmayadverselyaffecttheamount,timingornatureofourfutureofferings.Asaresult,holdersofourcommonstockbeartheriskthatourfutureofferingsmayreducethemarketpriceofourcommonstockanddilutetheirstockholdingsinus.Additionally,wehavereservedanaggregateof7,800,000sharesofcommonstockforissuanceunderour2019EquityIncentivePlan(asamended,the“2019Plan”).Anycommonstockthatweissue,includingunderour2019Planorotherequityincentiveplansthatwemayadoptinthefuture,woulddilutethepercentageownershipheldbyourcommonstockholders.WehavefiledaneffectiveregistrationstatementonFormS-8undertheSecuritiesActtoregistersharesofourcommonstockorsecuritiesconvertibleintoorexchangeableforsharesofourcommonstockissuedpursuanttoour2019Plan.Accordingly,sharesregisteredundersuchregistrationstatementwillbeavailableforsaleintheopenmarketuponissuance.TheCompany’samendedandrestatedcertificateofincorporationprovidesthat,tothefullestextentpermittedbylaw,theCourtofChanceryoftheStateofDelawarewillbetheexclusiveforumforcertainlegalactionsbetweentheCompanyanditsstockholders,whichcouldlimittheCompany’sstockholders’abilitytoobtainajudicialforumviewedbythestockholdersasmorefavorablefordisputeswiththeCompanyortheCompany’sdirectors,officersoremployees.TheCompany’sCertificateofIncorporation,asamended,providesthatunlesstheCompanyconsentsinwritingtotheselectionofanalternativeforum,thesoleandexclusiveforumforanystockholder(includingabeneficialowner)tobring(i)anyderivativeactionorproceedingbroughtonbehalfoftheCompany,(ii)anyactionassertingaclaimofbreachofafiduciarydutyowedbyanydirector,officerorotheremployeeoftheCompanytotheCompanyortheCompany’sstockholders,(iii)anyactionassertingaclaimarisingpursuanttoanyprovisionoftheDelawareGeneralCorporationLawortheCertificateofIncorporation,asamended,ortheCompany’sBylaws,or(iv)anyactionassertingaclaimgovernedbytheinternalaffairsdoctrineshallbetheCourtofChanceryoftheStateofDelaware(oriftheCourtofChancerydoesnothavejurisdiction,anotherstatecourtlocatedwithintheStateofDelaware,orifnostatecourtlocatedwithintheStateofDelawarehasjurisdiction,thefederaldistrictcourtfortheDistrictofDelaware)inallcasessubjecttothecourt’shavingpersonaljurisdictionovertheindispensablepartiesnamedasdefendants.ThisexclusiveforumprovisiondoesnotapplytosuitsbroughttoenforceadutyorliabilitycreatedbytheExchangeAct.Itcouldapply,however,toasuitthatfallswithinoneormoreofthecategoriesenumeratedintheexclusiveforumprovisionandassertsclaimsundertheSecuritiesAct,inasmuchasSection22oftheSecuritiesActcreatesconcurrentjurisdictionforfederalandstatecourtsoverallsuitsbroughttoenforceanydutyorliabilitycreatedbytheSecuritiesActortheruleandregulationsthereunder.ThereisuncertaintyastowhetheracourtwouldenforcesuchprovisionwithrespecttoclaimsundertheSecuritiesAct,andourstockholderswillnotbedeemedtohavewaivedourcompliancewiththefederalsecuritieslawsandtherulesandregulationsthereunder.17Anypersonorentitypurchasingorotherwiseacquiringanyinterestinanyofoursecuritiesshallbedeemedtohavenoticeofandconsentedtotheseprovisions.Theseexclusive-forumprovisionsmaylimitastockholder’sabilitytobringaclaiminajudicialforumofitschoosingfordisputeswithusorourdirectors,officersorotheremployees,whichmaydiscouragelawsuitsagainstusandourdirectors,officersandotheremployees.IfacourtweretofindthechoiceofforumprovisioncontainedinourCertificateofIncorporation,asamended,tobeinapplicableorunenforceableinanaction,wemayincuradditionalcostsassociatedwithresolvingsuchactioninotherjurisdictions,whichcouldharmourbusiness,resultsofoperations,andfinancialcondition.Evenifwearesuccessfulindefendingagainsttheseclaims,litigationcouldresultinsubstantialcostsandbeadistractiontotheCompany’smanagement.OurBoardofDirectors’abilitytoissueundesignatedpreferredstockandtheexistenceofanti-takeoverprovisionsmaydepressthevalueofourcommonstock.TheCompany’sauthorizedcapitalincludes1,000,000sharesofundesignatedpreferredstock.OurBoardhasthepowertoissueanyorallofthesharesofpreferredstock,includingtheauthoritytoestablishoneormoreseriesandtofixthepowers,preferences,rightsandlimitationsofsuchclassorseries,withoutseekingstockholderapproval,subjecttocertainlimitationsonthispowerunderNasdaqlistingrequirements.Further,asaDelawarecorporation,wearesubjecttoprovisionsoftheDelawareGeneralCorporationLawregarding“businesscombinations.”Wemay,inthefuture,consideradoptingadditionalanti-takeovermeasures.TheauthorityofourBoardtoissueundesignatedstockandtheanti-takeoverprovisionsofDelawarelaw,aswellasanyfutureanti-takeovermeasuresadoptedbyus,may,incertaincircumstances,delay,deterorpreventtakeoverattemptsandotherchangesincontrolofourcompanythatarenotapprovedbyourBoard.Asaresult,ourstockholdersmayloseopportunitiestodisposeoftheirsharesatfavorablepricesgenerallyavailableintakeoverattemptsorthatmaybeavailableunderamergerproposalandthemarketprice,votingandotherrightsoftheholdersofcommonstockmayalsobeaffected.Thefailureoffinancialinstitutionsortransactionalcounterpartiescouldadverselyaffectourcurrentandprojectedbusinessoperationsandourfinancialconditionandresultsofoperations.OnMarch10,2023,SiliconValleyBank(“SVB”)wasclosedbytheCaliforniaDepartmentofFinancialProtectionandInnovation,andtheFederalDepositInsuranceCorporation(“FDIC”)wasappointedasreceiver.Similarly,onMarch12,2023,SignatureBankandSilvergateCapitalCorp.wereeachenteredintoreceivership.AstatementbytheDepartmentoftheTreasury,theFederalReserveandtheFDICstatedthatalldepositorsofSVBwouldhaveaccesstoalloftheirmoneyafteronlyonebusinessdayofclosure,includingfundsheldinuninsureddepositaccounts.Thestandarddepositinsuranceamountisupto$250,000perdepositor,perinsuredbank,foreachaccountownershipcategory.AlthoughwedonothaveanyfundsdepositedwithSVBandSignatureBank,weregularlymaintaincashbalanceswithotherfinancialinstitutionsinexcessoftheFDICinsurancelimit.Afailureofadepositoryinstitutiontoreturndepositscouldimpactaccesstoourinvestedcashorcashequivalentsandcouldadverselyimpactouroperatingliquidityandfinancialperformance.Item1B.UnresolvedStaffCommentsNone.Item2.PropertiesTheCompany’smainofficesarelicensedandarelocatedat745FifthAvenue,Suite500,NewYork,NY10151.TheCompanyconsidersthisofficespaceadequateforitscurrentofficeoperations.TheinitialtermexpiredonJuly31,2022,andtheCompanyhasbeenonamonth-to-monthbasisthereafter.Alliedoperatesitsflagshiparena,theHyperXEsportsArenaLasVegas,attheLuxorCasinoontheVegasstrip,whosepyramidisoneofthemostvisiblelandmarksinLasVegas.Thisarenahas80to100gamingstations,twobars,foodservice,privaterooms,aproductionfacility,andspaceforupto1,000peopleforevents.Thearenaiscustom-builtforesportstournamentsandhasabroadcast-readytelevisionstudiotobroadcastliveeventsandproducecontent.TheleasetermexpiresonMay23,2023andtheCompanypaysbaserentof$125,000permonth.TheCompanyhastheoptiontoextendforanadditional60monthsat$137,500permonthItem3.LegalProceedingsForinformationregardinglegalproceedings,seeNote12“CommitmentsandContingencies”,totheConsolidatedFinancialStatementsincludedinthisAnnualReportonForm10-K.TheCompanyisinvolvedinvariousdisputes,claims,liensandlitigationmattersarisingoutofthenormalcourseofbusiness.Whiletheoutcomeofthesedisputes,claims,liensandlitigationmatterscannotbepredictedwithcertainty,afterconsultingwithlegalcounsel,managementdoesnotbelievethat,exceptassetforthabove,theoutcomeofthesematters,eitherindividuallyorcollectively,willhaveamaterialadverseeffectontheCompany’sconsolidatedfinancialposition,resultsofoperationsorcashflows.Item4.MineSafetyDisclosuresNotapplicable.18PARTIIItem5.MarketforRegistrant’sCommonEquity,RelatedStockholderMatters,andIssuerPurchasesofEquitySecuritiesMarketInformationOurcommonstockistradedontheNASDAQCapitalMarketunderthesymbol“AGAE.”HoldersOnMarch21,2023,therewere23holdersofrecordofourcommonstock,oneofwhichwasCede&Co.,anomineeforTheDepositoryTrustCompany,orDTC.SharesofcommonstockthatareheldbyfinancialinstitutionsasnomineesforbeneficialownersaredepositedintoparticipantaccountsatDTC,andareconsideredtobeheldofrecordbyCede&Co.asonestockholder.DividendsWeanticipatethatwewillretainallavailablefundsandanyfutureearnings,ifany,foruseintheoperationofourbusinessanddonotanticipatepayingcashdividendsintheforeseeablefuture.Inaddition,ourfuturecreditfacilitiesandfuturedebtinstrumentsmaymateriallyrestrictourabilitytopaydividendsonourcommonstock.Paymentoffuturecashdividends,ifany,willbeatthediscretionofourBoardofDirectorsaftertakingintoaccountvariousfactors,includingourfinancialcondition,operatingresults,currentandanticipatedcashneeds,therequirementsofourcurrentorthen-existingdebtinstrumentsandotherfactorsourBoardofDirectorsdeemsrelevant.RecentSalesofUnregisteredSecuritiesNone.SecuritiesAuthorizedforIssuanceUnderEquityCompensationPlansInformationaboutourequitycompensationplaninItem12ofPartIIIofthisAnnualReportonForm10-Kisincorporatedhereinbyreference.PurchasesofEquitySecuritiesbytheIssuerandAffiliatedPurchasersOnNovember11,2022,ourBoardofDirectors(the“Board”)authorizedastockrepurchaseprogramunderwhichweareauthorizedtorepurchaseupto$10millionofouroutstandingsharesofcommonstockthroughNovember17,2024.Themanner,timingandamountofanypurchasewillbebasedonanevaluationofmarketconditions,stockpriceandotherfactors.RepurchasesundertheprogramwillbemadeinopenmarkettransactionsincompliancewiththeSecuritiesandExchangeCommissionRule10b-18andfederalsecuritieslaws.ThestockrepurchaseprogramdoesnotobligatetheCompanytoacquireanyparticularamountofcommonstock,anditmaybeextended,suspendedordiscontinuedatanytimeattheCompany’sdiscretion.ThestockrepurchasewillbefundedusingtheCompany’sworkingcapital.Thefollowingtableprovidesinformationwithrespecttorepurchasesmadeunderthestockrepurchaseprogramsinceinception:PeriodTotalNumberofSharesPurchasedAveragePricePaidPerShareTotalNumberofSharesPurchasedasPartofPubliclyAnnouncedProgramApproximateDollarValueofSharesAvailabletobePurchasedUndertheProgramOctober1,2022toOctober31,2022-$--$-November1,2022toNovember30,2022-$--$-December1,2022toDecember31,2022581,746$1.02581,746$9,389,438Item6.[Reserved]19Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperationsThefollowingdiscussionshouldbereadinconjunctionwiththefinancialstatementsandrelatedfortheyearsendedDecember31,2022and2021,whichareincludedelsewhereinthisAnnualReportonForm10-K.ThisManagement’sDiscussionandAnalysisofFinancialConditionandResultsofOperationscontainsstatementsthatareforward-looking.Thesestatementsarebasedoncurrentexpectationsandassumptionsthataresubjecttorisk,uncertaintiesandotherfactors.Thesestatementsareoftenidentifiedbytheuseofwordssuchas“may,”“will,”“expect,”“believe,”“anticipate,”“intend,”“could,”“estimate,”or“continue,”andsimilarexpressionsorvariations.Actualresultscoulddiffermateriallybecauseofthefactorsdiscussedin“RiskFactors”elsewhereinthisAnnualReportonForm10-K,andotherfactorsthatwehavenotidentified.TheCompanyAlliedisaglobalexperientialentertainmentcompanyfocusedonprovidingagrowingaudienceofgamerswithuniqueexperiencesthroughrenownedassets,products,andservices.AlliedEsportsInternational,Inc.operatesglobalcompetitiveesportspropertiesdesignedtoconnectplayersandfansviaanetworkofconnectedarenas.EsportsArenaLasVegas,LLCoperatesaflagshipgamingarenalocatedattheLuxorHotelinLasVegas,Nevada.AlliedEsportsGmbHoperatesamobileesportstrucksthatservesasbothabattlegroundandcontentgenerationhubandalsooperatesastudioforrecordingandstreaminggamingevents.TheCompanyoffersavarietyofesportsandgaming-relatedcontent,includingworldclasstournaments,liveandvirtualentertainmentandgamingevents,andoriginalprogrammingtocontinuouslyfosteranengagedgamingcommunity.AlliedEsportsoperatessolelythroughitswhollyownedsubsidiaries.InDecember2022,theCompanycompletedastrategicreviewofitsbusinessoperationsandannouncedplanstorestructuretheexistingesportsbusinessandexpanditsfocustoincludeabroaderarrayofentertainmentandgamingproductsandservices.Underthisplan,theCompanyintendstopursuemultiplechannelsofopportunitiesinsteadofasinglesignificantcorporatetransactionsuchasanacquisitionofcomplimentaryassetsorbusinesses,anditiscurrentlyexploringopportunitiestoleverageitslocation-based-entertainmentexpertisewithafocusongaminglifestyleandexperientialentertainment,aswellasgrowingitsdigitalfootprintandmonetizationcapabilitiesthroughmobilegaming.Allied’sin-personexperiencesincludeliveeventshostedatitsflagshiparena,HyperXArenaLasVegas,anaffiliatearenawithoneofitsglobalnetworkofesportsarenapartners,anditsmobilearenas.Allied’smultiplatformcontentincludeitspartnershipswithlivestreamers,post-producedepisodiccontent,andshort-formrepackagedcontent.Allied’sinteractiveservicesincludestrategicpartnershipswithvariouscontentcreators,broadcasters,andstreamingtechnologypartnerstoprovideinteractivestreamingexperienceswithawiderangeofinfluencers.AlliedEsportsGamingisoneofthelargestandfastestgrowingmarketsintheentertainmentsector,withanestimated2.56billiongamersplayingesportsglobally,andesportsisthemajordriverofthisgrowth.Esports,shortfor“electronicsports,”isagenerallabelthatcomprisesadiverseofferingofcompetitiveelectronicgamesthatgamersplayagainsteachother.Itisprojectedthatby2023,646millionpeoplewillbewatchingesportsglobally,andthatglobalesportsrevenuewillgrowtoapproximately$1.5billion.Theesportsgamingindustryisrelativelynewandischallenging.Competitionisrapidlydeveloping.Allied’sbusinessreliesuponitsabilitytogrowandgarneranactivegamercommunity,andsuccessfullymonetizethiscommunitythroughtournamentfees,liveeventticketsales,andadvertisingandsponsorshipsutilizingathree-pillarapproach,whichincludes:●in-personexperiences;●developingmultiplatformcontent;and●providinginteractiveservices.Itsgrowthalsodepends,inpart,onitsabilitytorespondtotechnologicalevolution,shiftsingamertrendsanddemands,introductionsofnewgames,gamepublisherintellectualpropertyrightpractices,andindustrystandardsandpractices.Whilechangeinthisindustrymaybeinevitable,AlliedEsportswilltrytoadaptitsbusinessmodelasneededtoaccommodatechangeandremainontheforefrontofitscompetitors.Allied’sbusinessplanrequiressignificantcapitalexpenditures,anditexpectsitsoperatingexpensestoincreasesignificantlyasitcontinuestoexpanditsmarketingeffortsandoperationsinexistingandnewgeographiesandverticalmarkets(includingitsonlineesportstournamentandgamingsubscriptionplatformitintendstodevelop).AkeyelementofAllied’sgrowthstrategyistoextenditsbrandbyopeningadditionalflagshiparenasthroughouttheworldandbylicensingtheAlliedbrandtothirdpartyesportsarenaoperators,whichitbelieveswillprovideattractivereturnsoninvestment.COVID-19Pandemic.TheCOVID-19pandemichadanadverseeffectontheCompany.Asaglobalentertainmentcompany,ourbusinessrevenueisgeneratedthroughlive,inpersoneventswithparticipantsandspectatorsinmultipledestinationcities.Thepandemicresultedingovernmentregulationandrestrictionsontravel,resultinginsignificantlydecreasedattendanceforourevents.Alliedwasforcedtocancelorpostponedliveevents,anduntilAllied’sflagshipgamingarenalocatedattheLuxorHotelinLasVegas,NevadareopenedonJune25,2020,operateonlineonly.Thearenaiscurrentlyrunningatfullcapacityfordailyplayandweeklytournaments.Duringthecourseof2022,therisksoftheCOVID-19pandemiclargelysubsidedandrestrictionsonlive,in-personeventswerelifted.WhiletheCOVID-19pandemicadverselyaffectedourfinancialperformanceduringfiscalyear2022,wedonotanticipatesuchanadverseeffectin2023.20ResultsofOperationsContinuingOperationsOurcontinuingoperationsconsistofouresportsgamingoperations,whichtakeplaceatglobalcompetitiveesportspropertiesdesignedtoconnectplayersandfansviaanetworkofconnectedarenas.ThroughoursubsidiaryAlliedEsports,weofferesportsfansstate-of-the-artfacilitiestocompeteagainstotherplayersinesportscompetitions,hostliveeventswithesportssuperstarsthatpotentiallystreamtomillionsofviewersworldwide,produceanddistributeesportscontentwithatouron-siteproductionfacilitiesandstudios.AtourflagshiparenainLasVegas,Nevada,weprovideanattractivefacilityforhostingcorporateevents,tournaments,gamelaunchesorotherevents.Additionally,AlliedEsportshastwomobileesportsarenas,whichare18-wheelsemi-trailersthatconvertintofirstclassesportsarenasandcompetitionstageswithfullcontentproductioncapabilitiesandinteractivetalentstudios.DiscontinuedOperationsTheWorldPokerTourisaninternationallytelevisedgamingandentertainmentwithbrandpresenceinland-basedpokertournaments,television,onlineandmobile.Leadinginnovationinthesportofpokersince2002,WPThelpedignitetheglobalpokerboomwiththecreationofauniquetelevisionshowbasedonaseriesofhigh-stakespokertournaments.SaleofWPTBusiness.OnJanuary19,2021,theCompanyanditsdirectandindirectwholly-ownedsubsidiaries,AlliedEsportsMedia,Inc.(“EsportsMedia,”andtogetherwiththeCompany,the“SellingParties”)andClubServices,Inc.(“CSI”),enteredintoaStockPurchaseAgreement(the“OriginalAgreement”)withElementPartners,LLC(“Buyer”),pursuanttowhichtheSellingPartiessold100%oftheoutstandingcapitalstockofCSItotheBuyer.PriortothesaleofCSIcapitalstock,CSIwastheCompany’sindirectwholly-ownedsubsidiarythatowned100%oftheoutstandingcapitalstockofeachofthelegalentitiesthatcollectivelyoperateorengageintheCompany’spoker-relatedbusinessandassets(the“WPTBusiness”).ThesaleofCSIisreferredtohereinasthe“SaleTransaction”.TheSellingParties,CSIandBuyerenteredintoanAmendedandRestatedStockPurchaseAgreementonMarch19,2021,andthereafteramendedsuchagreementonMarch29,2021(asamended,the“StockPurchaseAgreement”).UndertheStockPurchaseAgreement,theBuyeragreedtopayEsportsMediaatotalpurchasepriceof$105millionforthestockofCSI(the“basepurchaseprice”)attheclosingoftheSaleTransaction,asfurtherdescribedbelow.ThebasepurchasepricewasadjustedtoreflecttheamountofCSI’scash,indebtednessandaccruedandunpaidtransactionexpensesasoftheclosingoftheSaleTransaction.Buyerremitteda$10.0millionadvancepaymentofthebasepurchasepriceinconnectionwiththeexecutionoftheStockPurchaseAgreementandpaidthebalanceofthebasepurchasepriceattheclosingoftheSaleTransaction.ThesaleoftheWPTbusinesswasclosedonJuly12,2021for$106.0million.TheCompanyrecordedagainonthesaleofWPTasfollows:CashconsiderationforsaleofWPT(1)$106,049,884Less:bookvalueofassetssoldCash3,579,988Accountsreceivable2,999,352Restrictedcash100,000Prepaidexpensesandotherassets264,385Propertyandequipment,net1,429,706Goodwill4,083,621Intangibleassets,net10,986,463Deposits79,500Deferredproductioncosts12,684,054Netbookvalueofassetssold36,207,069Add:liabilitiesassumedbybuyerAccountspayable487,579Accruedexpensesandotherliabilities5,567,072Deferredrevenue1,807,176Deferredrent2,619,967Totalliabilitiesassumed10,481,794Less:transactionexpenses(2)2,465,774GainonsaleofWPT(3)$77,858,835(1)Includes$105,120ofpost-closingadjustments.(2)Includes$1,165,774oflegalandprofessionalfeesand$1,300,000ofamountsreimbursedtotheCompany’sprincipalstockholder.SeeNote7-AccruedExpenseandOtherCurrentLiabilitiesforadditionaldetails.(3)ManagementhasdeterminedthattherearenocurrentfederalorstateincometaxespayableinconnectionwiththesaleofWPT,afterconsideringtheCompany’staxbasisinthestockofWPT,aswellastheCompany’sprojectedtaxlossesforthe2021taxyear.21YearEndedDecember31,2022ComparedtotheYearEndedDecember31,2021FortheYearsEndedDecember31,Favorable(inthousands)20222021(Unfavorable)Revenues:In-person$6,101$4,201$1,900Multiplatformcontent251755(504)TotalRevenues6,3524,9561,396CostsandExpenses:In-person(exclusiveofdepreciationandamortization)4,9943,689(1,305)Multiplatformcontent(exclusiveofdepreciationandamortization)110387277Sellingandmarketingexpenses23529459Generalandadministrativeexpenses10,48213,0532,571Depreciationandamortization2,0653,3061,241Impairmentofpropertyandequipment68-(68)Impairmentofdigitalassets164-(164)LossFromOperations(11,766)(15,773)4,007GainonforgivenessofPPPloansandinterest-912(912)Otherincome,net1536984Interestincome(expense),net789(268)1,057Lossfromcontinuingoperations(10,824)(15,060)4,236Incomefromdiscontinuedoperations-67(67)GainonsaleofWPT-77,859(77,859)Incomefromdiscontinuedoperations,netoftax-77,926(77,926)Netincome(loss)$(10,824)$62,866$(73,690)RevenuesIn-personexperiencerevenuesincreasedbyapproximately$1.9million,or45%,toapproximately$6.1millionfortheyearendedDecember31,2022fromapproximately$4.2millionfortheyearendedDecember31,2021.Theincreaseofin-personexperiencerevenueswasdrivenby(a)a$1.1millionincreaseinsponsorshiprevenuefromanewcontractenteredintointhefirstquarterof2022,(b)a$0.4millionincreaseinfoodandbeverage,ticketandgamingandmerchandisingrevenueprimarilyattributabletotheremovalofCOVID-19pandemic-relatedcapacityrestrictionsattheCompany’sHyperXEsportsArenainLasVegasonJune1,2021,and(c)a$0.4millionincreaseineventrevenue.The$0.4millionincreaseineventrevenueincludeda$1.1millionincreaseinstudioandtruckrentalrevenue,$0.3millionincreaseinHyperXEsportsArenaeventrevenueprimarilyattributabletolargereventsoccurringin2022comparedto2021anda$1.0milliondecreaseinrentalrevenuethatwasdrivenbyanewcontractenteredintoin2021thatdidnotrenewin2022.Multiplatformcontentrevenuesdecreasedbyapproximately$504thousand,or67%,toapproximately$251thousandfortheyearendedDecember31,2022fromapproximately$755thousandfortheyearendedDecember31,2021.Thedecreaseofmultiplatformcontentrevenueswasdrivenbyacontractenteredintointhesecondquarterof2021thatdidnotrenewin2022.CostsandexpensesIn-personcosts(exclusiveofdepreciationandamortization)increasedbyapproximately$1.3million,or35%,toapproximately$5.0millionfortheyearendedDecember31,2022fromapproximately$3.7millionfortheyearendedDecember31,2021.Theincreaseofin-personcostswasdrivenby(a)a$1.8millionincreaseineventcostsresultingfromlargereventsandadditionaltournamentswithhigherpayoutsprimarilyattributabletotheremovalofCOVID-19pandemic-relatedcapacityrestrictionsattheCompany’sHyperXEsportsArenainLasVegasonJune1,2021,and(b)$0.4millionofhighertruckcostsresultingfromtheadditionaltruckstopsforourNASCARevents.Thiswasoffsetbyadecreaseof$0.9millioninproductioncostsdrivenbythenewcontractenteredintoin2021whichdidnotrenewin2022.Multiplatformcontentcosts(exclusiveofdepreciationandamortization)decreasedbyapproximately$277thousand,or72%,toapproximately$110thousandfortheyearendedDecember31,2022fromapproximately$387thousandfortheyearendedDecember31,2021.Thedecreaseinmultiplatformcontentcostscorrespondstohighercostsinthesecondquarterof2021resultingfromanewcontractthatdidnotrenewin2022.ThiswaspartiallyoffsetbyanincreaseincostsassociatedwiththesaleofNFTfortheyearendedDecember31,2022.22Sellingandmarketingexpensesdecreasedbyapproximately$59thousand,or20%,toapproximately$235thousandfortheyearendedDecember31,2022fromapproximately$294thousandfortheyearendedDecember31,2021.Thedecreaseinsellingandmarketingexpenseswasdrivenbyhigherexpensesin2021astheCompanyincreasedmarketingeffortstoincreaseawarenessoftheHyperXEsportsArenainLasVegasreopening。
4. tofullcapacity.Generalandadministrativeexpensesdecreasedbyapproximately$2.6million,or20%,toapproximately$10.5millionfortheyearendedDecember31,2022fromapproximately$13.1millionfortheyearendedDecember31,2021.ThedecreaseingeneralandadministrativeexpensesresultedfromhigherexpensesduringthetwelvemonthsendedDecember31,2021asfollows:(i)$1.1millioninstock-basedcompensationfromtheissuanceofdirectorgrantsandrestrictedstockunitsissuedtotheCompany’sformerCEOduring2021;(ii)$0.7millioninlegalandprofessionalfeesrelatedtothesaleofWPT;and(iii)$1.1millionincorporatepayrollandbonus;and(iv)$0.1millioninothergeneralandadministrativeexpenses.Thedecreaseincorporatepayrollexpensefrom2021wasoffsetbya$0.4millionincreasein2022severancebenefitexpensesincurredinconnectionwiththeterminationofourformerCEO.Depreciationandamortizationdecreasedbyapproximately$1.2million,or38%,toapproximately$2.1millionfortheyearendedDecember31,2022,fromapproximately$3.3millionfortheyearendedDecember31,2021.Thedecreasewasprimarilyduetoanout-of-periodadjustmentof$0.6milliontocorrecttheamortizationofleaseholdimprovementsinpriorperiods.Impairmentofpropertyandequipmentwasapproximately$68thousandfortheyearendedDecember31,2022comparedto$0fortheyearendedDecember31,2021.Theimpairmentresultedfrommanagement’sdeterminationthattheprojectedcashflowsfromcertainequipmentwillnotbesufficienttorecoverthecarryingvalueofthoseassets.Werecognizedanimpairmentofdigitalassetsofapproximately$164thousandfortheyearendedDecember31,2022.Theimpairmentlossisaresultofthemarketpriceonactiveexchangesfallingbelowthecarryingvalueofthedigitalassets.TheCompanydidnothaveanyEtherorotherdigitalassetsonthebooksduringtheyearendedDecember31,2021.GainonforgivenessofPPPloansandinterestWerecognizedagainonthefullforgivenessofthePPPloansandrelatedinterestofapproximately$912thousandduringtheyearendedDecember31,2021.Otherincome,netWerecognizedotherincome,net,ofapproximately$153thousandduringtheyearendedDecember31,2022,comparedto$69thousandrecordedfortheyearendedDecember31,2021.Theincreasewasduetothereversalofanincometaxpayablethatwasnolongerdue.Thiswasslightlyoffsetbychangesinthefairvalueofthewarrantliabilityin2022.Interestincome(expense),netInterestincome(expense),netwasapproximately$0.8millionandapproximately$(0.3)millionfortheyearsendedDecember31,2022and2021,respectively,representinganincreaseofinterestincomeofapproximately$1.1million,or394%.ThedecreaseininterestexpensewasaresultoftheuseoftheproceedsofthesaleofWPTtooffsettheprincipalbalanceofnotespayableandconvertiblenotesoutstandingduringtheperiod.InterestincomefortheyearendedDecember31,2022wasaresultofinterestearnedonthecashreceivedfromthesaleofWPT.ResultsofDiscontinuedOperationsWerecognizedincomefromdiscontinuedoperations,netoftax,of$77.9millionduringtheyearendedDecember31,2021,primarilyasaresultofthesaleoftheWPTbusinessonJuly12,2021.23LiquidityandCapitalResourcesThefollowingtablesummarizesourtotalcurrentassets,liabilitiesandworkingcapitalsurplusfromcontinuingoperationsatDecember31,2022andDecember31,2021,respectively.December31,(inthousands)20222021CurrentAssets$82,377$94,261CurrentLiabilities$3,298$5,249WorkingCapitalSurplus$79,079$89,012Ourprimarysourcesofliquidityandcapitalresourcesarecashandshort-terminvestmentsonthebalancesheetandfundsraisedthroughdebtorequityfinancing.AsofDecember31,2022,wehadcashof$11.2million(notincludingapproximately$70.0millionofshort-terminvestmentsand$5.0millionofrestrictedcash)andworkingcapitalfromcontinuingoperationsofapproximately$79.1million.FortheyearsendedDecember31,2022and2021,weincurrednetlossesfromcontinuingoperationsofapproximately$10.8millionand$15.1million,respectively,andusedcashincontinuingoperationsofapproximately$11.0millionand$10.1million,respectively.Cashrequirementsforourcurrentliabilitiesincludeapproximately$2.0millionforaccountspayableandaccruedexpensesand$1.2millionforthecurrentportionofanoperatingleaseliability.Cashrequirementsfornon-currentliabilitiesincludeapproximately$6.5millionforthenon-currentportionofanoperatingleaseliability.TheCompanyintendstomeetthesecashrequirementsfromitscurrentcashbalance.OnJuly12,2021,wecompletedthesaleoftheWPTbusinessforanaggregatepurchasepriceof$106.0million.WiththesaleoftheWPTbusiness,webelieveourcurrentcashonhandissufficienttomeetouroperatingandcapitalrequirementsforatleastthenexttwelvemonthsfromthedateofthisReport.CashFlowsfromOperating,InvestingandFinancingActivitiesThetablesbelowsummarizecashflowsfromcontinuingoperationsfortheyearsendedDecember31,2022and2021,respectively.FortheYearsEndedDecember31,(inthousands)20222021Netcashprovidedby(usedin)Operatingactivities$(10,934)$(10,079)Investingactivities$(70,135)$105,858Financingactivities$(611)$(3,421)NetCashUsedinOperatingActivitiesNetcashusedinoperatingactivitiesprimarilyrepresentstheresultsofoperationsexclusiveofnon-cashexpensesplustheimpactofchangesinoperatingassetsandliabilities.NetcashusedinoperatingactivitiesfortheyearsendedDecember31,2022and2021wasapproximately$11.0millionand$10.1million,respectively,representinganincreaseof$0.9million.DuringtheyearsendedDecember31,2022and2021,thenetcashusedinoperatingactivitieswasprimarilyattributabletothenetlossfromcontinuingoperationsofapproximately$10.8millionand$15.1million,respectively,$4.0millionand$3.8million,respectively,ofnetnon-cashexpenses,andapproximately($4.1)millionand$1.2million,respectively,ofcash(usedin)providedbychangesinthelevelsofoperatingassetsandliabilities.24NetCash(UsedIn)ProvidedByInvestingActivitiesNetcash(usedin)providedbyinvestingactivitiesprimarilyrelatestocashusedforthepurchaseofpropertyandequipmentandotherinvestmentactivity.NetcashusedininvestingactivitiesduringtheyearendedDecember31,2022wasapproximately$70.1million,whichconsistedprimarilyofapproximately$70.0millionforthepurchaseofcertificatesofdeposit.NetcashprovidedbyinvestingactivitiesduringtheyearendedDecember31,2021wasapproximately$105.9million,whichconsistedprimarilyofapproximately$106.0millioncashconsiderationforthesaleofWPT,partiallyoffsetbyapproximately$192thousandofcashusedforthepurchaseofpropertyandequipment.NetCashUsedinFinancingActivitiesNetcashusedinfinancingactivitiesfortheyearendedDecember31,2022wasapproximately$0.6millioncomparedtoapproximately$3.4millionfortheyearendedDecember31,2021.NetcashusedinfinancingactivitiesduringtheyearendedDecember31,2022representedthepurchaseoftreasurystock.NetcashusedinfinancingactivitiesduringtheyearendedDecember31,2021representedtherepaymentsofbridgeloansduringtheperiod.CashFlowsfromDiscontinuedOperationsCashheldbytheWPTbusinessofapproximately$3.6millionwassoldinconnectionwiththe2021saleoftheWPTbusiness.Nocashwasprovidedby,or(usedin),discontinuedoperationsin2022.CapitalExpendituresAsofDecember31,2022,theCompanyhadnomaterialcommitmentsforcapitalexpenditures.StockRepurchaseProgramOnNovember11,2022,ourBoardofDirectors(the“Board”)authorizedastockrepurchaseprogramunderwhichweareauthorizedtorepurchaseupto$10millionofouroutstandingsharesofcommonstockthroughNovember17,2024.Themanner,timingandamountofanypurchasewillbebasedonanevaluationofmarketconditions,stockpriceandotherfactors.RepurchasesundertheprogramwillbemadeinopenmarkettransactionsincompliancewiththeSecuritiesandExchangeCommissionRule10b-18andfederalsecuritieslaws.ThestockrepurchaseprogramdoesnotobligatetheCompanytoacquireanyparticularamountofcommonstock,anditmaybeextended,suspendedordiscontinuedatanytimeattheCompany'sdiscretion.ThestockrepurchasewillbefundedusingtheCompany'sworkingcapital.ThetotalnumberofsharespurchasedbytheCompanybetweenDecember1,2022,andDecember31,2022,was581,746.Theaveragepricepershareforthesharespurchasedwas$1.02.Theapproximatedollarvalueofthesharesavailabletobepurchasedundertheprogramis$9,389,438asofDecember31,2022.Off-BalanceSheetArrangementsTheCompanydoesnotengageinanyoff-balancesheetfinancingactivities,nordoestheCompanyhaveanyinterestinentitiesreferredtoasvariableinterestentities.CriticalAccountingEstimatesandPoliciesThepreparationofconsolidatedfinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica(“GAAP”)requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilities,contingentassetsandliabilities,eachasofthedateofthefinancialstatements,andrevenuesandexpensesduringtheperiodspresented.Onanongoingbasis,managementevaluatestheirestimatesandassumptions,andtheeffectsofanysuchrevisionsarereflectedinthefinancialstatementsintheperiodinwhichtheyaredeterminedtobenecessary.Managementbasestheirestimatesonhistoricalexperienceandonvariousotherfactorsthattheybelievearereasonableunderthecircumstances,theresultsofwhichformthebasisformakingjudgmentsaboutthecarryingvalueofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualoutcomescoulddiffermateriallyfromthoseestimatesinamannerthatcouldhaveamaterialeffectonourconsolidatedfinancialstatements.WhileoursignificantaccountingpoliciesaremorefullydescribedinNote2–SummaryofSignificantAccountingPoliciestoourconsolidatedfinancialstatements,webelievethattherewerenocriticalaccountingpoliciesandestimatesthataffectthepreparationoffinancialstatements.25Item7A.QuantitativeandQualitativeDisclosuresaboutMarketRiskNotapplicable.Item8.FinancialStatementsandSupplementaryDataSeeIndextoConsolidatedFinancialStatementsonPageF-1.Item9.ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosureTherehavebeennochangesinordisagreementswithaccountantsonaccountingandfinancialdisclosure.Item9A.ControlsandProceduresEvaluationofDisclosureControlsandProceduresAsoftheendoftheperiodcoveredbythisAnnualReportonForm10-K,wecarriedoutanevaluation,underthesupervisionandwiththeparticipationofourmanagement,includingourprincipalexecutiveofficerandprincipalfinancialofficer,oftheeffectivenessofthedesignandoperationofourdisclosurecontrolsandprocedures(asdefinedintheExchangeActRules13a-15(e)and15d-15(e))(the“ExchangeAct”).Basedontheforegoingevaluation,ourprincipalexecutiveofficerandprincipalfinancialofficerconcludedthat,asofDecember31,2022,ourdisclosurecontrolsandprocedureswerenoteffectiveatthereasonableassurancelevelbecauseofthematerialweaknessesdiscussedbelow.Amaterialweaknessisadeficiency,oracombinationofdeficiencies,ininternalcontroloverfinancialreporting,suchthatthereisareasonablepossibilitythatamaterialmisstatementofourannualorinterimfinancialstatementswillnotbepreventedordetectedonatimelybasis.ManagementidentifiedthefollowingmaterialweaknessesindicativeofmanysmallerreportingcompaniesasofDecember31,2022:●inadequatesegregationofdutiesresultingfromlimitedaccountingstaffandresources;and●inadequateinformationtechnologygeneralcontrolsasitrelatestouseraccessandchangemanagement.TheCompanyexperiencedsomekeypersonnelturnoverinitsaccountingandinformationtechnologyareasduring2022.ThisplacedasignificantimpactontheCompany’sinternalcontrolsleadingtothematerialweaknessdescribedabove.Ourmanagement,undertheoversightofourAuditCommittee,andinconsultationwithoutsideadvisors,hasbegunevaluatingandimplementingmeasuresdesignedtoensurethatcontroldeficienciescontributingtothematerialweaknessareremediated.Theseremediationmeasuresincludebutarenotlimitedto:(i)reorganizingrolesandresponsibilitiestoaddresssegregationofdutiesissues,(ii)evaluatingandimplementingenhancedprocesscontrolsarounduseraccessandchangemanagement;and(iii)monitoringandconductingregularassessmentoftheeffectivenessofinternalcontrols.Webelievetheaboveactionswillbeeffectiveinremediatingthematerialweaknessdescribedaboveandwewillcontinuetodevotetimeandattentiontotheseremedialefforts.However,aswecontinuetoevaluateandtakeactionstoimproveourinternalcontrolsoverfinancialreporting,wemaytakeadditionalactionstoaddresscontroldeficienciesormodifycertainoftheremediationmeasuresdescribedabove.Ourremediationeffortswillnotbeconsideredcompleteuntiltheappliablecontrolsoperateforasufficientperiodandourmanagementhasconcluded,throughtesting,thatthesecontrolsareoperatingeffectively.Nevertheless,notwithstandingthematerialweaknessesininternalcontroloverfinancialreportingdescribedabove,ourmanagementhasconcludedthatourconsolidatedfinancialstatementsincludedintheAnnualReportonForm10-KarefairlystatedinallmaterialrespectsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Management’sAnnualReportonInternalControloverFinancialReportingOurmanagement,includingourprincipalexecutiveofficerandprincipalfinancialofficer,isresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting(asdefinedinRules13a-15(f)and15d-15(f)undertheExchangeAct).InternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithU.S.GAAP.Ourinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat:(i)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsofourassets;(ii)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithU.S.GAAP,andthatourreceiptsandexpendituresarebeingmadeonlyinaccordancewithauthorizationsofourmanagementanddirectors;and(iii)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofourassetsthatcouldhaveamaterialeffectonthefinancialstatements.26Underthesupervisionandwiththeparticipationofourmanagement,includingourprincipalexecutiveofficerandprincipalfinancialofficer,weconductedanevaluationoftheeffectivenessofourinternalcontroloverfinancialreportingasofDecember31,2022,basedontheInternalControl-IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO).Basedonthisevaluation,ourprincipalexecutiveofficerandprincipalfinancialofficerhaveconcludedthatourinternalcontroloverfinancialreportingwasnoteffectiveasofDecember31,2022,asaresultofthematerialweaknessesdescribedabove.ChangesinInternalControloverFinancialReportingTherehavebeennochangesintheCompany’sinternalcontroloverfinancialreportingthroughthedateofthisReportorduringthequarterendedDecember31,2022,thatmateriallyaffected,orisreasonablylikelytomateriallyaffect,theCompany’sinternalcontroloverfinancialreporting.InherentLimitationsoftheEffectivenessofControlsManagementdoesnotexpectthatourdisclosurecontrolsandproceduresorourinternalcontroloverfinancialreportingwillpreventordetectallerrorandfraud.Acontrolsystem,nomatterhowwelldesignedandoperated,isbaseduponcertainassumptionsandcanprovideonlyreasonable,notabsolute,assurancethatitsobjectiveswillbemet.Further,noevaluationofcontrolscanprovideabsoluteassurancethatmisstatementsduetoerrororfraudwillnotoccurorthatallcontrolissuesandinstancesoffraud,ifany,withintheCompanyhavebeendetected.AttestationReportofRegisteredPublicAccountingFirmThisAnnualReportdoesnotcontainanattestationreportofourindependentregisteredpublicaccountingfirmrelatedtointernalcontroloverfinancialreporting.Ourinternalcontroloverfinancialreportingwasnotsubjecttoattestationbyourindependentregisteredpublicaccountingfirmaswearenotanacceleratedfiler,noralargeacceleratedfiler.Item9B.OtherInformationNone.Item9C.DisclosureRegardingForeignJurisdictionsthatPreventInspectionsNotapplicable.27PARTIIIItem10.Directors,ExecutiveOfficersandCorporateGovernanceTheinformationcalledforbythisitemisincorporatedhereinbyreferencetothedefinitiveProxyStatementforour2023AnnualMeetingofStockholders,whichwillbefiledwiththeSECpursuanttoRegulation14AundertheExchangeAct.Item11.ExecutiveCompensationTheinformationcalledforbythisitemisincorporatedhereinbyreferencetothedefinitiveProxyStatementforour2023AnnualMeetingofStockholders,whichwillbefiledwiththeSECpursuanttoRegulation14AundertheExchangeAct.Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMattersTheinformationcalledforbythisitemisincorporatedhereinbyreferencetothedefinitiveProxyStatementforour2023AnnualMeetingofStockholders,whichwillbefiledwiththeSECpursuanttoRegulation14AundertheExchangeAct.Item13.CertainRelationshipsandRelatedTransactions,andDirectorIndependenceTheinformationcalledforbythisitemisincorporatedhereinbyreferencetothedefinitiveProxyStatementforour2023AnnualMeetingofStockholders,whichwillbefiledwiththeSECpursuanttoRegulation14AundertheExchangeAct.Item14.PrincipalAccountantFeesandServicesTheinformationcalledforbythisitemisincorporatedhereinbyreferencetothedefinitiveProxyStatementforour2023AnnualMeetingofStockholders,whichwillbefiledwiththeSECpursuanttoRegulation14AundertheExchangeAct.28PARTIVItem15.Exhibits,FinancialStatementSchedules(a)See“IndextoConsolidatedFinancialStatements”onpageF-1and“ExhibitIndex”on.(b)See“ExhibitIndex”on.(c)Notapplicable.Item16.Form10-KSummaryNotapplicable.29EXHIBITINDEXExhibitNo.Description2.1AgreementandPlanofReorganization,datedDecember19,2018,byandamongBlackRidgeAcquisitionCorp.,BlackRidgeMergerSub,Corp.,AlliedEsportsEntertainment,Inc.,NobleLinkGlobalLimited,OurgameInternationalHoldingsLtd.,andPrimoVitalLtd.(incorporatedbyreferencetoExhibit2.1totheCompany’sCurrentReportonForm8-KfiledonDecember19,2018)2.2AmendmenttoAgreementandPlanofReorganization,datedAugust5,2019(incorporatedbyreferencetoExhibit2.2totheCompany’sCurrentReportonForm8-KfiledAugust15,2019)2.3AgreementofMerger,datedAugust9,2019,betweenNobleLinkGlobalLimitedandAlliedEsportsMedia,Inc.(incorporatedbyreferencetoExhibit2.3totheCompany’sCurrentReportonForm8-KfiledAugust15,2019)2.4PlanofMerger,datedAugust9,2019,betweenNobleLinkGlobalLimitedandAlliedEsportsMedia,Inc.(incorporatedbyreferencetoExhibit2.4totheCompany’sCurrentReportonForm8-KfiledAugust15,2019)2.5StockPurchaseAgreement,datedJanuary19,2021,byandamongAlliedEsportsEntertainment,Inc.,AlliedEsportsMedia,Inc.,ClubServices,Inc.,andElementPartners,LLC(incorporatedbyreferencetoExhibit2.1totheCompany’sCurrentReportonForm8-KfiledJanuary19,2021)2.6AmendedandRestatedStockPurchaseAgreement,datedMarch19,2021,byandamongAlliedEsportsEntertainment,Inc.,AlliedEsportsMedia,Inc.,ClubServices,Inc.,andElementPartners,LLC(incorporatedbyreferencetoExhibit2.1totheCompany’sCurrentReportonForm8-KfiledMarch22,2021)2.7AmendmentNo.1toAmendedandRestatedStockPurchaseAgreement,datedMarch29,2021,byandamongAlliedEsportsEntertainment,Inc.,AlliedEsportsMedia,Inc.,ClubServices,Inc.,andElementPartners,LLC(incorporatedbyreferencetoExhibit2.1totheCompany’sCurrentReportonForm8-KfiledMarch30,2021)3.1SecondAmendedandRestatedCertificateofIncorporation(incorporatedbyreferencetoExhibit3.1totheCompany’sCurrentReportonForm8-KfiledAugust15,2019)3.2AmendmenttotheSecondAmendedandRestatedCertificateofIncorporationofAlliedEsportsEntertainment,Inc.(incorporatedbyreferencetoExhibit3.1totheCompany’sCurrentReportonForm8-KfiledJuly27,2020)3.3SecondAmendmenttotheSecondAmendedandRestatedCertificateofIncorporationofAlliedEsportsEntertainment,Inc.(incorporatedbyreferencetoExhibit3.1totheCompany’sQuarterlyReportonForm10-QfiledNovember9,2020)3.4CertificateofAmendmenttotheSecondAmendedandRestatedCertificateofIncorporationofAlliedEsportsEntertainment,Inc.(incorporatedbyreferencetoExhibit3.1totheCompany’sCurrentReportonForm8-KfiledonDecember1,2022)3.5AmendedandRestatedBylaws(incorporatedbyreferencetoExhibit3.2totheCompany’sCurrentReportonForm8-KfiledonDecember1,2022)4.1SpecimencommonstockCertificate(incorporatedbyreferencetoExhibit4.2totheCompany’sFormS-1/AfiledSeptember22,2017)4.2SpecimenwarrantCertificate(incorporatedbyreferencetoExhibit4.3totheCompany’sFormS-1/AfiledSeptember22,2017)4.3SpecimenRightsCertificate(incorporatedbyreferencetoExhibit4.4totheCompany’sFormS-1/AfiledSeptember22,2017)4.4FormofwarrantAgreementbetweenContinentalStockTransfer&TrustCompanyandtheCompany(incorporatedbyreferencetoExhibit4.5totheCompany’sFormS-1/AfiledSeptember22,2017)4.5*DescriptionofRegistrant’sSecurities4.6FormofCommonStockPurchaseWarrantissuedJune8,2020(incorporatedbyreferencetoExhibit4.1totheCompany’sCurrentReportonForm8-KfiledJune8,2020)4.7AlliedEsportsEntertainment,Inc.2019StockIncentivePlan(incorporatedbyreferencetoAnnexAtotheCompany’sDefinitiveProxyStatementonSchedule14AfiledAugust24,2021)4.8AlliedEsportsEntertainment,Inc.2019StockIncentiveplanAmendmentdatedDecember30,2021(incorporatedbyreferencetotheCompany’sCurrentReportonForm8-KfiledDecember30,2021)30ExhibitNo.Description10.1PliskaEmploymentAgreementdatedJanuary24,2018(incorporatedbyreferencetoExhibit10.49totheCompany’sCurrentReportonForm8-KfiledAugust15,2019)10.2PliskaEmploymentAgreementAmendmentdatedJune1,2018(incorporatedbyreferencetoExhibit10.50totheCompany’sCurrentReportonForm8-KfiledAugust15,2019)10.3PliskaEmploymentAgreementSecondAmendmentdatedDecember19,2018(incorporatedbyreferencetoExhibit10.51totheCompany’sCurrentReportonForm8-KfiledAugust15,2019)10.4ChangeinControlAgreementdatedDecember31,2020byandbetweenAlliedEsportsEntertainment,Inc.andAdamPliska(incorporatedbyreferencetoExhibit10.3totheCompany’sCurrentReportonForm8-KfiledJanuary19,2021)10.5RestrictedStockUnitAgreementdatedJanuary19,2021byandbetweenAlliedEsportsEntertainment,Inc.andFrankNg(incorporatedbyreferencetoExhibit10.2totheCompany’sCurrentReportonForm8-KfiledonJanuary19,2021)10.6AssignmentandAssumptionAgreementdatedApril24,2020amongOurgameInternationalHoldingsLimited,TrisaraVentures,LLC,AdamPliskaandtheCompany(incorporatedbyreferencetoExhibit10.2totheCompany’sCurrentReportonForm8-KfiledonApril30,2020)10.7SeparationAgreementandReleasedatedFebruary16,2022byandbetweenLibing(Claire)WuandtheCompany(incorporatedbyreferencetoExhibit10.1totheCompany’sCurrentReportonForm8-KfiledFebruary18,2022)10.8ReleaseandNon-disparagementAgreementdatedMarch7,2022byandbetweenJerryLewinandtheCompany(incorporatedbyreferencetoExhibit10.14totheCompany’sAnnualReportonForm10-KfiledMay25,2022)10.9SettlementAgreement,datedApril15,2022,byandbetweenOurgameInternationalHoldingsLimitedandtheCompany(incorporatedbyreferencetoExhibit10.15totheCompany’sAnnualReportonForm10-KfiledMay25,2022)21.1*SubsidiariesofCompany23.1*ConsentofZHCPA,LLC23.2*ConsentofMarcumLLP31.1*ChiefExecutiveOfficerCertificationpursuanttoExchangeActRule13a-14(a)31.2*ChiefFinancialOfficerCertificationpursuanttoExchangeActRule13a-14(a)32.1*ChiefExecutiveOfficerCertificationpursuantto18U.S.C.Section135032.2*ChiefFinancialOfficerCertificationpursuantto18U.S.C.Section1350101.INS*InlineXBRLInstanceDocument*101.SCH*InlineXBRLTaxonomyExtensionSchema*101.CAL*InlineXBRLTaxonomyExtensionCalculationLinkbase*101.DEF*InlineXBRLTaxonomyExtensionDefinitionLinkbase*101.LAB*InlineXBRLTaxonomyExtensionLabelLinkbase*101.PRE*InlineXBRLTaxonomyExtensionPresentationLinkbase*104*CoverPageInteractiveDataFile(formattedasInlineXBRLandcontainedinExhibit101)*Furnishedherewith.ManagementcontractorcompensatoryplanorarrangementrequiredtobefiledasanexhibittothisAnnualReportonForm10-KpursuanttoItem15(a)(3)andItem15(b)ofthisAnnualReportonForm10-K.31SIGNATURESPursuanttotherequirementsofSection13or15(d)oftheSecuritiesActof1934,theRegistranthasdulycausedthisReporttobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized.March24,2023ALLIEDGAMING&ENTERTAINMENT,INC.By:/s/YinghauChenName:YinghauChen:ChiefExecutiveOfficer(PrincipalExecutiveOfficer)PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisReporthasbeensignedbelowbythefollowingpersonsonbehalfoftheregistrantandinthecapacitiesandonthedatesindicated.NameDate/s/YinghauChenChiefExecutiveOfficer(principalexecutiveofficer)andDirectorMarch24,2023YinghauChen/s/RoyAndersonChiefFinancialOfficer(principalfinancialandaccountingofficer)March24,2023RoyAnderson/s/LyleBermanDirectorMarch24,2023LyleBerman/s/BradleyBermanDirectorMarch24,2023BradleyBerman/s/YushiGuoDirectorMarch24,2023YushiGuo/s/JosephLahtiDirectorMarch24,2023JosephLahti/s/YangyangLiDirectorMarch24,2023YangyangLi/s/Jingsheng(Jason)LuDirectorMarch24,2023Jingsheng(Jason)Lu/s/BenjaminOehlerDirectorMarch24,2023BenjaminOehler/s/AdamPliskaDirectorMarch24,2023AdamPliska/s/Guanzhou(Jerry)QinDirectorMarch24,2023Guanzhou(Jerry)Qin/s/YuanfeiQuDirectorMarch24,2023YuanfeiQu32ALLIEDGAMING&ENTERTAINMENTINC.ANDSUBSIDIARIESINDEXTOCONSOLIDATEDFINANCIALSTATEMENTSReportofIndependentRegisteredPublicAccountingFirm(PCAOBID:6413)F-2-F-3ConsolidatedBalanceSheetsasofDecember31,2022and2021F-4ConsolidatedStatementsofOperationsfortheYearsEndedDecember31,2022and2021F-5ConsolidatedStatementsofComprehensiveIncome(Loss)fortheYearsEndedDecember31,2022and2021F-6ConsolidatedStatementsofChangesinStockholders’EquityfortheYearsEndedDecember31,2022and2021F-7ConsolidatedStatementsofCashFlowsfortheYearsEndedDecember31,2022and2021F-8NotestoConsolidatedFinancialStatementsF-10F-1REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTotheShareholdersandBoardofDirectorsofAlliedGaming&EntertainmentInc.OpinionontheFinancialStatementsWehaveauditedtheaccompanyingconsolidatedbalancesheetsofAlliedGaming&EntertainmentInc.anditssubsidiaries(the“Company”)asofDecember31,2022,andtherelatedconsolidatedstatementofoperations,comprehensiveincome(loss),changesinshareholders’equity,andcashflowsfortheyearendedDecember31,2022,andtherelatednotes(collectivelyreferredtoastheconsolidatedfinancialstatements).Inouropinion,theconsolidatedfinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCompanyasofDecember31,2022,andtheresultsofitsoperationsanditscashflowsfortheyearendedDecember31,2022inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.BasisforOpinionTheseconsolidatedfinancialstatementsaretheresponsibilityoftheCompany’smanagement.OurresponsibilityistoexpressanopinionontheCompany’sconsolidatedfinancialstatementsbasedonouraudits.WeareapublicaccountingfirmregisteredwiththePublicCompanyAccountingOversightBoard(UnitedStates)(“PCAOB”)andarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.TheCompanyisnotrequiredtohave,norwereweengagedtoperform,anauditofitsinternalcontroloverfinancialreporting.Aspartofouraudits,wearerequiredtoobtainanunderstandingofinternalcontroloverfinancialreporting,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheCompany’sinternalcontroloverfinancialreporting.Accordingly,weexpressnosuchopinion.Ourauditsincludedperformingprocedurestoassesstherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresintheconsolidatedfinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.Webelievethatourauditsprovideareasonablebasisforouropinion.CriticalAuditMattersThecriticalauditmatterscommunicatedbelowaremattersarisingfromthecurrentperiodauditofthefinancialstatementsthatwerecommunicatedorrequiredtobecommunicatedtotheauditcommitteeandthat:(1)relatetoaccountsordisclosuresthatarematerialtothefinancialstatementsand(2)involvedourespeciallychallenging,subjective,orcomplexjudgments.Wedeterminedthattherewerenocriticalauditmatters./s/ZHCPA,LLCWehaveservedastheCompany’sauditorsince2022.Denver,ColoradoMarch24,2023F-2REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTotheShareholdersandBoardofDirectorsofAlliedEsportsEntertainment,Inc.andSubsidiariesOpinionontheFinancialStatementsWehaveauditedtheaccompanyingconsolidatedbalancesheetofAlliedEsportsEntertainment,Inc.andSubsidiaries(the“Company”)asofDecember31,2021,therelatedconsolidatedstatementsofoperations,comprehensiveincome(loss),stockholders’equityandcashflowsfortheyearendedDecember31,2021,andtherelatednotes(collectivelyreferredtoasthe“financialstatements”).Inouropinion,thefinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCompanyasofDecember31,2021andtheresultsofitsoperationsanditscashflowsfortheyearendedDecember31,2021,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.BasisforOpinionThesefinancialstatementsaretheresponsibilityoftheCompany'smanagement.OurresponsibilityistoexpressanopinionontheCompany'sfinancialstatementsbasedonouraudit.WeareapublicaccountingfirmregisteredwiththePublicCompanyAccountingOversightBoard(UnitedStates)("PCAOB")andarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.TheCompanyisnotrequiredtohave,norwereweengagedtoperform,anauditofitsinternalcontroloverfinancialreporting.AspartofourauditwearerequiredtoobtainanunderstandingofinternalcontroloverfinancialreportingbutnotforthepurposeofexpressinganopinionontheeffectivenessoftheCompany'sinternalcontroloverfinancialreporting.Accordingly,weexpressnosuchopinion.Ourauditincludedperformingprocedurestoassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthefinancialstatements.Ourauditalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatourauditprovidesareasonablebasisforouropinion./s/MarcumLLPWehaveservedastheCompany’sauditorfrom2018toNovember2022.Melville,NYMay26,2022F-3AlliedGaming&EntertainmentInc.andSubsidiariesConsolidatedBalanceSheetsDecember31,20222021AssetsCurrentAssetsCashandcashequivalents$11,167,442$92,887,030Short-terminvestments70,000,000-Interestreceivable677,397-Accountsreceivable72,739389,040Prepaidexpensesandothercurrentassets459,274984,777TotalCurrentAssets82,376,85294,260,847Restrictedcash5,000,0005,000,000Propertyandequipment,net4,005,6226,136,893Digitalassets49,761-Intangibleassets,net22,83626,827Deposits379,105379,105Operatingleaseright-of-useasset5,845,549-Otherassets49,950-TotalAssets$97,729,675$105,803,672LiabilitiesandStockholders’EquityCurrentLiabilitiesAccountspayable$317,561$341,161Accruedexpensesandothercurrentliabilities1,645,3792,966,245Accruedexpenses-relatedparty-1,800,000Deferredrevenue108,428141,825Operatingleaseliability,currentportion1,227,164-TotalCurrentLiabilities3,298,5325,249,231Deferredrent-1,907,634Operatingleaseliability,non-currentportion6,527,075-TotalLiabilities9,825,6077,156,865CommitmentsandContingencies(Note12)Stockholders’EquityPreferredstock,$0.0001parvalue,1,000,000sharesauthorized,noneissuedandoutstanding--Commonstock,$0.0001parvalue;100,000,000sharesauthorized,39,085,470and39,116,907sharesissuedatDecember31,2022and2021,respectively,and38,503,724and39,116,907sharesoutstandingatDecember31,2022and2021,respectively3,9093,912Additionalpaidincapital198,526,614197,784,972Accumulateddeficit(110,235,568)(99,411,683)Accumulatedothercomprehensiveincome219,675269,606Treasurystock,atcost,581,746and0sharesatDecember31,2022and2021,respectively(610,562)-TotalStockholders’Equity87,904,06898,646,807TotalLiabilitiesandStockholders’Equity$97,729,675$105,803,672Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.F-4AlliedGaming&EntertainmentInc.andSubsidiariesConsolidatedStatementsofOperationsFortheYearsEndedDecember31,20222021Revenues:In-person$6,100,912$4,201,259Multiplatformcontent251,558754,781TotalRevenues6,352,4704,956,040CostsandExpenses:In-person(exclusiveofdepreciationandamortization)4,994,6103,688,527Multiplatformcontent(exclusiveofdepreciationandamortization)109,563386,723Sellingandmarketingexpenses234,813294,417Generalandadministrativeexpenses10,482,42113,052,963Depreciationandamortization2,065,3483,305,895Impairmentofpropertyandequipment67,500-Impairmentofdigitalassets164,411-TotalCostsandExpenses18,118,66620,728,525LossFromOperations(11,766,196)(15,772,485)OtherIncome(Expense):GainonforgivenessofPPPloansandinterest-912,475Otherincome,net153,00968,917Interestincome(expense),net789,302(268,752)TotalOtherExpense942,311712,640Lossfromcontinuingoperations(10,823,885)(15,059,845)Incomefromdiscontinuedoperations-66,741GainonsaleofWPT-77,858,835Incomefromdiscontinuedoperations,netoftax-77,925,576Net(loss)income$(10,823,885)$62,865,731BasicandDilutedNetLoss(Income)perCommonShareCon。
5. tinuingoperations$(0.28)$(0.39)Discontinuedoperations,netoftax$-$2.00WeightedAverageNumberofCommonSharesOutstanding:BasicandDiluted39,071,50139,004,317Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.F-5AlliedGaming&EntertainmentInc.andSubsidiariesConsolidatedStatementsofComprehensiveIncome(Loss)FortheYearsEndedDecember31,20222021Comprehensive(Loss)IncomeNet(Loss)Income$(10,823,885)$62,865,731Othercomprehensive(loss)income:Foreigncurrencytranslationadjustments(49,931)78,640TotalComprehensive(Loss)Income$(10,873,816)$62,944,371Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.F-6AlliedGaming&EntertainmentInc.andSubsidiariesConsolidatedStatementsofChangesinStockholders’EquityForTheYearsEndedDecember31,2022and2021AdditionalAccumulatedOtherTotalCommonStockTreasuryStockPaid-inComprehensiveAccumulatedStockholders’SharesAmountSharesAmountCapitalIncomeDeficitEquityBalance-January1,202138,506,844$3,851-$-$195,488,181$190,966$(162,277,414)$33,405,584Stock-basedcompensation:Commonstockissued126,58413--199,987--200,000Restrictedsharesissued80,0008--(8)---Amortizationofstockoptions----1,224,699--1,224,699Amortizationofrestrictedcommonstock----260,433--260,433Sharesissuedforredemptionofdebtandaccruedinterest529,38353--821,814--821,867Shareswithheldforemployeepayrolltax(100,904)(10)--(210,137)--(210,147)Restrictedstockawardsforfeiteduponresignationofemployee(25,000)(3)--3---Netincome------62,865,73162,865,731Othercomprehensiveincome-----78,640-78,640Balance-December31,202139,116,9073,912--197,784,972269,606(99,411,683)98,646,807Stock-basedcompensation:Restrictedcommonstock----82,345--82,345Stockoptions----708,964--708,964Shareswithheldforemployeepayrolltax(31,437)(3)(49,667)--(49,670)Repurchasesofcommonstock--581,746(610,562)---(610,562)Netloss------(10,823,885)(10,823,885)Foreigncurrencytranslationadjustments-----(49,931)-(49,931)Balance-December31,202239,085,4703,909581,746(610,562)198,526,614219,675(110,235,568)87,904,068Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.F-7AlliedGaming&EntertainmentInc.andSubsidiariesConsolidatedStatementsofCashFlowsFortheYearsEndedDecember31,20222021CashFlowsFromOperatingActivitiesNet(loss)income$(10,823,885)$62,865,731Adjustmentstoreconcilenet(loss)incometonetcashusedinoperatingactivities:Incomefromdiscontinuedoperations,netoftaxprovision-(77,925,576)Stock-basedcompensation791,3091,323,872Shareswithheldforemployeepayrolltaxexpense-(210,147)Non-cashrentexpense868,210-GainonforgivenessofPPPloansandinterest-(912,475)Digitalcurrencyreceivedasrevenue(250,252)-Impairmentofdigitalassets164,411-Impairmentofpropertyandequipment67,500-Lossonequipmentdisposal33,583-Expensespaidusingdigitalassets77,106-Changeinfairvalueofwarrantliabilities(3,100)200Amortizationofdebtdiscount-3,646Non-cashinterestexpense-45,451Depreciationandamortization2,065,3483,305,895Deferredrent216,024214,568Changesinoperatingassetsandliabilities:Accountsreceivable315,708(118,710)Interestreceivable(677,397)-Prepaidexpensesandothercurrentassets519,463(83,875)Deposits-245,895Accountspayable(22,356)(556,783)Accruedexpensesandothercurrentliabilities(3,159,571)1,087,802Accruedinterest-(146,894)Operatingleaseliability(1,083,178)-Duetoaffiliates-697,548Deferredrevenue(33,397)84,807TotalAdjustments(110,589)(72,944,776)NetCashUsedInOperatingActivities(10,934,474)(10,079,045)CashFlowsFromInvestingActivitiesCashconsiderationforsaleofWPT-106,049,886Expendituresonsoftwaredevelopmentcosts(49,950)-Purchasesofshort-terminvestments(70,000,000)-Investmentindigitalassets(41,026)-Purchasesofpropertyandequipment(44,386)(191,668)NetCash(UsedIn)ProvidedByInvestingActivities(70,135,362)105,858,218CashFlowsFromFinancingActivitiesRepaymentsofbridgeloans-(3,421,096)Purchaseoftreasurystock(610,562)-NetCashUsedInFinancingActivities(610,562)(3,421,096)CashFlowsFromDiscontinuedOperationsOperatingactivities-63,956Investingactivities-(17,259)Changeincashbalanceofdiscontinuedoperations-3,633,291CashsoldinconnectionwithsaleofWPT-(3,679,988)NetCashProvidedByDiscontinuedOperations--Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.F-8AlliedGaming&EntertainmentInc.andSubsidiariesConsolidatedStatementsofCashFlows,continuedFortheYearsEndedDecember31,20222021EffectofExchangeRateChangesonCash(39,190)104,730Net(Decrease)IncreaseInCash,CashEquivalents,AndRestrictedCash(81,719,588)92,462,807Cash,cashequivalents,andrestrictedcash-BeginningofYear97,887,0305,424,223Cash,cashequivalents,andrestrictedcash-EndofYear$16,167,442$97,887,030Cashandrestrictedcashconsistedofthefollowing:Cash$11,167,442$92,887,030Restrictedcash5,000,0005,000,000$16,167,442$97,887,030SupplementalDisclosuresofCashFlowInformationCashpaidduringtheyearforinterest$-$350,471Non-CashInvestingandFinancingActivities:Shareswithheldforaccruedemployeepayrolltaxliability$49,670$-ROUassetandleaseliability,netofdeferredrent,recognizeduponadoptionofASC842$6,713,759$-Sharesissuedforredemptionofdebtandaccruedinterest$-$821,867Forgivenessofamountsduetoaffiliate$-$9,370,261Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.F-9AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsNote1–BackgroundandBasisofPresentationAlliedGaming&EntertainmentInc.(“AGAE”andtogetherwithitssubsidiaries,“theCompany”)operatesapublicesportsandentertainmentcompany,consistingoftheAlliedEsportsbusinessand,untilthesaleofWPTonJuly12,2021,theWorldPokerTourbusiness.AlliedEsportsoperatesthroughitswhollyownedsubsidiariesAlliedEsportsInternational,Inc.,(“AEII”),EsportsArenaLasVegas,LLC(“ESALV”)andAlliedEsportsGmbH(“AEG”).AEIIoperatesglobalcompetitiveesportspropertiesdesignedtoconnectplayersandfansviaanetworkofconnectedarenas.ESALVoperatesaflagshipgamingarenalocatedattheLuxorHotelinLasVegas,Nevada.AEGoperatesamobileesportstruckthatservesasbothabattlegroundandcontentgenerationhubandalsooperatesastudioforrecordingandstreaminggamingevents.AGAE’sformerlywhollyownedsubsidiaries,PeerlessMediaLimited,ClubServices,Inc.(“CSI”)andWPTEnterprises,Inc.,operatedthepoker-relatedbusinessofAESEandarecollectivelyreferredtohereinas“WorldPokerTour”or“WPT”.WorldPokerTourisaninternationallytelevisedgamingandentertainmentcompanythathasbeeninvolvedinthesportofpokersince2002andcreatedatelevisionshowbasedonaseriesofhigh-stakespokertournaments.OnJanuary19,2021,theCompanyenteredintoastockpurchaseagreement(asamendedandrestated,the“SPA”)forthesaleof100%ofthecapitalstockofCSI.CSIowns100%ofeachofthelegalentitieswhichcompriseWorldPokerTour.OnJuly12,2021,theCompanyconsummatedthesaleoftheWorldPokerTourbusiness.AsaresultoftheCompany’ssaleofWPT,theconsolidatedstatementsofoperationsandcomprehensivelossfortheyearendedDecember31,2021,andtheconsolidatedstatementsofcashflowsfortheyearendedDecember31,2021,presenttheresultsandaccountsofWorldPokerTourasdiscontinuedoperations.SeeNote3–SaleofWPT.Note2–SignificantAccountingPoliciesBasisofPresentationandPrinciplesofConsolidationTheaccompanyingconsolidatedfinancialstatementshavebeenderivedfromtheaccountingrecordsofAGAEanditsconsolidatedsubsidiaries.Allsignificantintercompanybalanceshavebeeneliminatedintheconsolidatedfinancialstatements.TheconsolidatedfinancialstatementshavebeenpreparedinaccordancewithUnitedStatesGenerallyAcceptedAccountingPrinciples(“U.S.GAAP”)andpursuanttotheaccountingrulesandregulationsoftheUnitedStatesSecuritiesandExchangeCommission(“SEC”).UseofEstimatesPreparationoffinancialstatementsinconformitywithU.S.GAAPrequiresmanagementtomakeestimates,judgmentsandassumptionsthataffectthereportedamountsofassets,liabilities,revenuesandexpenses,togetherwithamountsdisclosedintherelatednotestothefinancialstatements.TheCompany’ssignificantestimatesusedinthesefinancialstatementsinclude,butarenotlimitedto,thevaluationandcarryingamountofdeferredtaxassets,stock-basedcompensation,andaccountsreceivablereserves,aswellastherecoverabilityandusefullivesoflong-livedassets,includingintangibleassetsandpropertyandequipment.CertainoftheCompany’sestimatescouldbeaffectedbyexternalconditions,includingthoseuniquetotheCompanyandgeneraleconomicconditions.ItisreasonablypossiblethattheseexternalfactorscouldhaveaneffectontheCompany’sestimatesandcouldcauseactualresultstodifferfromthoseestimates.CashandCashEquivalentsAllshort-terminvestmentsoftheCompanythathaveamaturityofthreemonthsorlesswhenpurchasedareconsideredtobecashequivalents.AsofDecember31,2022and2021,theCompany’scashequivalentsconsistofCertificateofDepositsof$10millionand$0,respectively.Accruedinterestreceivableoncashequivalentstotaled$80,137and$0atDecember31,2022and2021,respectivelyandisincludedincurrentassetsintheaccompanyingconsolidatedbalancesheets.RestrictedCashRestrictedcashconsistsof$5.0millionofcashheldinanescrowaccounttobeutilizedforvariousapprovedstrategicinitiativesandesportseventprogramspursuanttoanagreementwithBrookfieldPropertyPartners(SeeNote12–CommitmentsandContingencies,InvestmentAgreements).Short-termInvestmentsShort-terminvestmentsconsistofcertificatesofdepositwithoriginalmaturitiesofgreaterthanthreemonthsbutlessthanorequaltotwelvemonthswhenpurchased.Accruedinterestreceivableonshort-terminvestmentstotaled$597,260and$0atDecember31,2022and2021,respectivelyandisincludedincurrentassetsintheaccompanyingconsolidatedbalancesheets.AccountsReceivableAccountsreceivablearecarriedattheircontractualamountslessallowancefordoubtfulaccounts.Managementestablishesanallowancefordoubtfulaccountsbasedonitshistoriclossexperienceandcurrenteconomicconditions.Lossesarechargedtotheallowancewhenmanagementdeemsfurthercollectioneffortswillnotproduceadditionalrecoveries.AsofDecember31,2022and2021,therewasnoallowancefordoubtfulaccounts.F-10AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsPropertyandEquipmentPropertyandequipmentarestatedatcost,netofaccumulateddepreciationusingthestraight-linemethodovertheirestimatedusefullivesoncetheassetisplacedinservice.Leaseholdimprovementsareamortizedoverthelesserof(a)theusefullifeoftheasset;or(b)theremainingleaseterm(includingrenewalperiodsthatarereasonablyassured).Expendituresformaintenanceandrepairswhichdonotextendtheeconomicusefullifeoftherelatedassetsarechargedtooperationsasincurred,andexpenditureswhichextendtheeconomiclifearecapitalized.Whenassetsareretiredorotherwisedisposedof,thecostsandrelatedaccumulateddepreciationoramortizationareremovedfromtheaccountsandanygainorlossondisposalisrecognizedinthestatementofoperationsfortherespectiveperiod.Theestimatedusefullivesofpropertyandequipmentareasfollows:Officeequipment3-5yearsComputerequipment3-5yearsProductionequipment5yearsFurnitureandfixtures3-5yearsEsportsgamingtruck5yearsLeaseholdimprovementsLessorof10yearsorremainingleasetermInternalUseSoftwareDevelopmentCostsThecostsincurredinthepreliminarystagesofsoftwaredevelopmentareexpensedasincurred.Onceanapplicationhasreachedthedevelopmentstage,internalandexternalcosts,ifdirectandincremental,arecapitalizedandincludedwithinotherassetsontheaccompanyingbalancesheet.Oncetheyarereadyforintendedusetheyareamortizedonastraight-linebasisovertheirestimatedusefullives.AsofDecember31,2022and2021,nointernalusesoftwarehasbeenplacedintoservice(seeNote12–CommitmentsandContingencies–SystemDevelopmentAgreementforadditionaldetails).IntangibleAssetsTheCompany’sintangibleassetsconsistoftheAlliedEsportstrademarks,whicharebeingamortizedoverausefullifeof10years.Intangibleassetswithindefinitelivesarenotamortizedbutareevaluatedatleastannuallyforimpairmentandmoreoftenwheneverchangesinfactsandcircumstancesmayindicatethatthecarryingvaluemaynotberecoverable.ImpairmentofLong-LivedAssetsTheCompanyreviewsfortheimpairmentoflong-livedassetswhenevereventsorchangesincircumstancesindicatethatthecarryingamountofanassetmaynotberecoverable.TheCompanymeasuresthecarryingamountoftheassetagainsttheestimatedundiscountedfuturecashflowsassociatedwithit.Shouldthesumoftheexpectedfuturenetcashflowsbelessthanthecarryingvalueoftheassetbeingevaluated,animpairmentlosswouldberecognizedfortheamountbywhichthecarryingvalueoftheassetexceedsitsfairvalue.TheevaluationofassetimpairmentrequirestheCompanytomakeassumptionsaboutfuturecashflowsoverthelifeoftheassetbeingevaluated.Theseassumptionsrequiresignificantjudgmentandactualresultsmaydifferfromassumedandestimatedamounts.DuringtheyearendedDecember31,2022,theCompanyrecognizedanimpairmentof$164,411relatedtodigitalassets,andanimpairmentof$67,500relatedtopropertyandequipment,duetomanagement’sdeterminationthatthefuturecashflowsfromtheseassetsarenotexpectedtobesufficienttorecovertheircarryingvalue.Noimpairmentcostsonlong-livedassetswererecognizedduringtheyearendedDecember31,2021.F-11AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsWarrantLiabilitiesEntitiesmustconsiderwhethertoclassifycontractsthatmaybesettledinitsownstock,suchaswarrants,asequityoftheentityorasanassetorliability.Ifaneventthatisnotwithintheentity’scontrolcouldrequirenetcashsettlement,thenthecontractshouldbeclassifiedasanassetoraliabilityratherthanasequity.Withregardtothewarrantscurrentlyoutstanding:●Managementhasdeterminedthatitspubliclytradedwarrants(the“publicwarrants”)areofaformthatqualifyforequityclassification.●ManagementhasdeterminedthatthecommonstockpurchasewarrantsissuedbytheCompanyonJune8,2020inconnectionwiththeissuanceofconvertiblenotes(the“convertiblenotewarrants”)areofaformthatqualifyforequityclassification.●ManagementhasdeterminedthatthewarrantspreviouslyissuedtotheCompany’ssponsor(the“SponsorWarrants”)containprovisionsthatchangedependingonwhoholdsthesponsorwarrant.IftheSponsorWarrantsareheldbysomeoneotherthantheinitialpurchasersortheirpermittedtransferees,theSponsorWarrantswillberedeemablebytheCompanyandexercisablebysuchholdersonthesamebasisasthepublicwarrants.ThisfeatureprecludestheSponsorWarrantsfrombeingindexedtotheCompany’scommonstock,andthustheSponsorWarrantsareclassifiedasaliabilitymeasuredatfairvalue,withchangesinfairvalueeachperiodreportedinearnings.AsofDecember31,2022and2021,thefairvalueofwarrantliabilitiesrelatedtoourSponsorWarrantstotaled$100and$3,200,respectively,whichisincludedinaccruedexpensesandothercurrentliabilitiesintheaccompanyingconsolidatedbalancesheet.SeeNote7–AccruedExpensesandOtherCurrentLiabilities.FairValueofFinancialInstrumentsTheCompanymeasuresthefairvalueoffinancialassetsandliabilitiesbasedontheguidanceofASC820“FairValueMeasurementsandDisclosures”(“ASC820”).ASC820definesfairvalueastheexchangepricethatwouldbereceivedforanassetorpaidtotransferaliability(anexitprice)intheprincipalormostadvantageousmarketfortheassetorliabilityinanorderlytransactionbetweenmarketparticipantsonthemeasurementdate.ASC820alsoestablishesafairvaluehierarchy,whichrequiresanentitytomaximizetheuseofobservableinputsandminimizetheuseofunobservableinputswhenmeasuringfairvalue.ASC820describesthreelevelsofinputsthatmaybeusedtomeasurefairvalue:Level1-quotedpricesinactivemarketsforidenticalassetsorliabilities.Level2-quotedpricesforsimilarassetsandliabilitiesinactivemarketsorinputsthatareobservable.Level3-inputsthatareunobservable(forexample,cashflowmodelinginputsbasedonassumptions).ThefollowingtableprovidesinformationabouttheCompany’sfinancialassetsmeasuredatfairvalueonarecurringbasisandindicatesthelevelofthefairvaluehierarchyutilizedtodeterminesuchfairvalues:AsofDecember31,2022Level1Level2Level3TotalDigitalassets$49,761$-$-$49,761Sponsorwarrants--100100Short-terminvestments-70,000,000-70,000,000Total$49,761$70,000,000$100$70,049,861AsofDecember31,2021Level1Level2Level3TotalDigitalassets$-$-$-$-Sponsorwarrants--3,2003,200Short-terminvestments----Total$-$-$3,200$3,200F-12AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsThecarryingamountsoftheCompany’sfinancialinstruments,suchascashequivalents,accountsreceivable,interestreceivable,accountspayable,operatingleaseliabilities,andaccruedliabilitiesapproximatefairvalueduetotheshort-termnatureoftheseinstruments.TheSponsorWarrantsarecarriedatfairvalueasofDecember31,2022and2021.TheSponsorWarrantsarevaluedusinglevel3inputs.ThefairvalueoftheSponsorWarrantsisestimatedusingtheBlack-Scholesoptionpricingmethod.Significantlevel3inputsusedtocalculatethefairvalueoftheSponsorWarrantsincludethesharepriceonthevaluationdate,expectedvolatility,expectedtermandtherisk-freeinterestrate.ThefollowingisarollforwardoftheCompany’sLevel3instruments:Balance,January1,2021$3,000Changeinfairvalueofsponsorwarrants200Balance,December31,20213,200Changeinfairvalueofsponsorwarrants(3,100)Balance,December31,2022$100ThekeyinputsintotheBlack-Scholesmodelattherelevantmeasurementdateswereasfollows:December31,December31,Input20222021Risk-freerate4.57%0.97%Remainingterminyears1.612.61Expectedvolatility56.0%46.0%Exerciseprice$11.50$11.50Fairvalueofcommonstock$1.05$1.81IncomeTaxesTheCompanyrecognizesdeferredtaxassetsandliabilitiesfortheexpectedfuturetaxconsequencesofitemsthathavebeenincludedinthefinancialstatementsortaxreturns.Underthismethod,deferredtaxassetsandliabilitiesarebasedonthedifferencesbetweenthefinancialstatementandtaxbasesofassetsandliabilitiesusingenactedtaxratesineffectfortheyearinwhichthedifferencesareexpectedtoreverse.Deferredtaxassetsarereducedbyavaluationallowancetotheextentmanagementconcludesitismorelikelythannotthattheassetswillnotberealized.Theeffectondeferredtaxassetsandliabilitiesofachangeintaxratesisrecognizedinthestatementsofoperationsintheperiodthatincludestheenactmentdate.TheCompanyrecognizesthetaxbenefitfromanuncertainincometaxpositiononlyifitismorelikelythannotthatthetaxpositionwillbesustainedonexaminationbythetaxingauthorities,basedonthetechnicalmeritsoftheposition.Thetaxbenefitsrecognizedinthefinancialstatementsfromsuchapositionshouldbemeasuredbasedonthelargestbenefitthathasagreaterthan50%likelihoodofbeingrealizeduponultimatesettlementbyexaminingtaxingauthorities.TheCompany’spolicyistorecognizeinterestandpenaltiesaccruedonuncertainincometaxpositionsininterestexpenseintheCompany’sstatementsofoperations.AsofDecember31,2022and2021,theCompanyhadnoliabilityforunrecognizedtaxbenefits.TheCompanydoesnotexpecttheunrecognizedtaxbenefitstochangesignificantlyoverthenext12months.LeasesSeeNote2SignificantAccountingPolicies–RecentlyAdoptedAccountingPronouncementsforfurtherdetailsontheadoptionofASC842.CommitmentsandContingenciesLiabilitiesforlosscontingenciesarisingfromclaims,assessments,litigation,finesandpenaltiesandothersourcesarerecordedwhenitisprobablethataliabilityhasbeenincurredandtheamountoftheassessmentcanbereasonablyestimated.NetLossperCommonShareBasiclosspercommonshareiscomputedbydividingnetlossattributabletotheCompanybytheweightedaveragenumberofcommonsharesoutstandingduringtheperiod.Dilutedlosspercommonshareiscomputedbydividingnetlossattributabletocommonstockholdersbytheweightedaveragenumberofcommonsharesoutstanding,plustheimpactofcommonshares,ifdilutive,resultingfromthepotential(a)exerciseofoutstandingstockoptionsandwarrants;(b)theconversionofconvertibleinstruments;and(c)vestingofrestrictedstockawards.F-13AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsThefollowingsecuritiesareexcludedfromthecalculationofweightedaveragedilutivecommonsharesbecausetheirinclusionwouldhavebeenanti-dilutive:AsofDecember31,20222021Restrictedcommonshares-80,000Options1,675,0002,415,000Warrants20,091,54920,091,549Equitypurchaseoptions-600,000Contingentconsiderationshares(1)192,308192,30821,958,85723,378,857(1)Holderswhoelectedtoconverttheirconvertibledebtintocommonstockareentitledtoreceivecontingentconsiderationsharesequaltotheproductof(i)3,846,153shares,multipliedby(ii)thatholder’sinvestmentamount,dividedby(iii)$100,000,000,ifatanytimewithinfiveyearsafterAugust9,2019,thelastexchange-reportedsalepriceofcommonstocktradesatorabove$13.00forthirty(30)consecutivecalendardays.RevenueRecognitionTodeterminetheproperrevenuerecognitionmethod,theCompanyevaluateseachofitscontractualarrangementstoidentifyitsperformanceobligations.Aperformanceobligationisapromiseinacontracttotransferadistinctgoodorservicetothecustomer.ThemajorityoftheCompany’scontractshaveasingleperformanceobligationbecausethepromisetotransfertheindividualgoodorserviceisnotseparatelyidentifiablefromotherpromiseswithinthecontractandisthereforenotdistinct.SomeoftheCompany’scontractshavemultipleperformanceobligations,primarilyrelatedtotheprovisionofmultiplegoodsorservices.Forcontractswithmorethanoneperformanceobligation,theCompanyallocatesthetotaltransactionpriceinanamountbasedontheestimatedrelativestandalonesellingpricesunderlyingeachperformanceobligation.TheCompanyrecognizesrevenuefromcontinuingoperationsprimarilyfromthefollowingsources:In-personrevenueTheCompany’sin-personrevenueiscomprisedofeventrevenue,sponsorshiprevenue,merchandisingrevenueandotherrevenue.EventrevenuesfromtherentaloftheAlliedEsportsarenaandgamingtrucksarerecognizedoverthetermoftheeventbasedonthenumberofdayscompletedrelativetothetotaldaysoftheevent,asthismethodbestdepictsthetransferofcontroltothecustomer.In-personrevenuealsoincludesrevenuefromticketsales,admissionfeesandfoodandbeveragesalesforeventsheldattheCompany’sesportsproperties.Ticketrevenueisrecognizedatthecompletionoftheapplicableevent.Pointofsalerevenues,suchasfoodandbeverage,gamingandmerchandisingrevenues,arerecognizedwhencontroloftherelatedgoodsaretransferredtothecustomer.TheCompanyalsogeneratessponsorshiprevenuefromthenamingrightsofitsesportsarenaandfromtheproductionanddistributionofprogrammingoverinteractivelive-streamingservices.SponsorshiprevenuesfromnamingrightsoftheCompany’sesportsarenaarerecognizedonastraight-linebasisoverthecontractualtermoftheagreement.Subscriptionrevenuesfromprogramdistributionarerecognizedoverthetermofthecontractunderthe“outputmethod”astheprogramsaredistributed.TheCompanyhasdeterminedthatthismethodprovidesafaithfuldepictionofthetransferofgoodsorservicestothecustomer.TheCompanyrecordsdeferredrevenuetotheextentthatpaymenthasbeenreceivedforservicesthathaveyettobeperformed.In-personrevenuewascomprisedofthefollowingfortheyearsendedDecember31,2022and2021:FortheYearsEndedDecember31,20222021Eventrevenue$2,803,396$2,459,613Sponsorshiprevenue1,838,908779,487Foodandbeveragerevenue832,282446,202Ticketandgamingrevenue529,201480,519Merchandisingrevenue97,12535,338Otherrevenue-100Totalin-personrevenue$6,100,912$4,201,259F-14AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsMultiplatformrevenueMultiplatformrevenuewascomprisedofthefollowingfortheyearsendedDecember31,2022and2021:FortheYearsEndedDecember31,20222021NFTrevenue$250,252$-Distributionrevenue1,306754,781Totalmultiplatformrevenue$251,558$754,781TheCompany’sNFTrevenuewasgeneratedfromthesaleofnon-fungibletokens(NFTs).TheCompany’sNFTsexistontheEthereumBlockchainundertheCompany’sEPICBEASTbrand,adigitalartcollectionof1,958uniquebeastsinspiredbypastandpresente-sportgames.TheCompanyusestheNFTexchange,OpenSea,tofacilitatethesaleofNFTs.TheCompany,throughOpenSea,hascustodyandcontroloftheNFTpriortothedeliverytothecustomerandrecordsrevenueatapointintimewhentheNFTisdeliveredtothecustomerandthecustomerpays.TheCompanyhasnoobligationsforreturns,refundsorwarrantyaftertheNFTsale.TheCompanyalsoearnsaroyaltyofupto10%ofthesalepricewhenanNFTisresoldbyitsownerinasecondarymarkettransaction.TheCompanyrecognizesthisroyaltyasrevenuewhenthesaleisconsummated.TheCompany’sdistributionrevenueisgeneratedprimarilythroughthedistributionofcontenttoonlinechannels.AnyadvertisingrevenueearnedbyonlinechannelsissharedwiththeCompany.TheCompanyrecognizesonlineadvertisingrevenueatthepointintimewhentheadvertisementsareplacedinthevideocontent.RevenuerecognitionThefollowingtablesummarizesourrevenuerecognizedunderASC606inourconsolidatedstatementsofoperations:FortheYearsEndedDecember31,20222021RevenuesRecognizedataPointinTime:NFTrevenue$250,252$-Distributionrevenue1,306754,781Foodandbeveragerevenue832,282446,202Ticketandgamingrevenue529,201480,519Merchandisingrevenue97,12535,338Otherrevenue-100TotalRevenuesRecognizedataPointinTime1,710,1661,716,940RevenuesRecognizedOveraPeriodofTime:Eventrevenue2,803,3962,459.613Sponsorshiprevenue1,838,908779,487TotalRevenuesRecognizedOveraPeriodofTime4,642,3043,239,100TotalRevenues$6,352,470$4,956,040ThetimingoftheCompany’srevenuerecognitionmaydifferfromthetimingofpaymentbyitscustomers.AreceivableisrecordedwhenrevenueisrecognizedpriortopaymentandtheCompanyhasanunconditionalrighttopayment.Alternatively,whenpaymentprecedestheprovisionoftherelatedservices,theCompanyrecordsdeferredrevenueuntiltheperformanceobligationsaresatisfied.AsofDecember31,2022and2021,theCompanyhadcontractliabilitiesof$108,428and$141,825,respectively,whichareincludedindeferredrevenueonthebalancesheet.AsofDecember31,2022,$129,236ofperformanceobligationsinconnectionwithcontractliabilitiesincludedwithindeferredrevenueontheprioryearconsolidatedbalancesheethavebeensatisfied.TheCompanyexpectstosatisfytheremainingperformanceobligationsof$12,589relatedtoitsDecember31,2021deferredrevenuebalanceand$108,428relatedtoitsDecember31,2022balancewithinthenexttwelvemonths.DuringtheyearsendedDecember31,2022and2021,therewasnorevenuerecognizedfromperformanceobligationssatisfied(orpartiallysatisfied)inpreviousperiods.F-15AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsDigitalAssetsTheCompanyacceptsEtherasaformofpaymentforNFTsales.TheCompanyaccountsfordigitalassetsheldastheresultofthereceiptofEther,asindefinite-livedintangibleassetsinaccordancewithASC350,Intangibles—GoodwillandOther.TheCompanyhasownershipofandcontroloverthedigitalassetsandtheCompanymayusethird-partycustodialservicestosecurethem.Thedigitalassetsareinitiallyrecordedatcostandaresubsequentlyremeasured,netofanyimpairmentlossesincurredsincethedateofacquisition.TheCompanydeterminesthefairvalueofitsdigitalassetsonanonrecurringbasisinaccordancewithASC820,FairValueMeasurement,basedonquotedpricesontheactiveexchange(s)thattheCompanyhasdeterminedistheprincipalmarketforEther(Level1inputs).TheCompanyperformsananalysiseachquartertoidentifywhethereventsorchangesincircumstances,ordecreasesinthequotedpricesonactiveexchanges,indicatethatitismorelikelythannotthattheCompany’sdigitalassetsareimpaired.Indeterminingifanimpairmenthasoccurred,theCompanyconsidersthelowestmarketpricequotedonanactiveexchangesinceacquiringtherespectivedigitalasset.Ifthethencurrentcarryingvalueofadigitalassetexceedsthefairvalue,animpairmentlosshasoccurredwithrespecttothosedigitalassetsintheamountequaltothedifferencebetweentheircarryingvaluesandthefairvalueofsuchassets.Theimpaireddigitalassetsarewrittendowntotheirfairvalueatthetimeofimpairmentandthisnewcostbasiswillnotbeadjustedupwardforanysubsequentincreaseinfairvalue.Gainsarenotrecordeduntilrealizeduponsale,atwhichpointtheyarepresentednetofanyimpairmentlossesforthesamedigitalassetsheld.Indeterminingthegainorlosstoberecognizeduponsale,theCompanycalculatesthedifferencebetweenthesalespriceandcarryingvalueofthedigitalassetssoldimmediatelypriortosale.Impairmentlossesandgainsorlossesonsalesarerecognizedwithinoperatingexpensesinourconsolidatedstatementsofoperationsandcomprehensiveloss.TheCompanyrecordedanimpairmentlossof$164,411fortheyearendedDecember31,2022.Stock-BasedCompensationTheCompanymeasuresthecostofservicesreceivedinexchangeforanawardofequityinstrumentsbasedonthefairvalueoftheawardonthedateofgrant.Thefairvalueamountisthenrecognizedovertheperiodduringwhichservicesarerequiredtobeprovidedinexchangefortheaward,usuallythevestingperiod.Theestimationofstock-basedawardsthatwillultimatelyvestrequiresjudgment,andtotheextentactualresultsorupdatedestimatesdifferfromoriginalestimates,suchamountsarerecordedasacumulativeadjustmentintheperiodthattheestimatesarerevised.TheCompanyaccountsforforfeituresastheyoccur.AdvertisingCostsAdvertisingcostsfromcontinuingoperationsarechargedtooperationsintheyearincurredandtotaled$69,232and$127,612fortheyearsendedDecember31,2022and2021,respectively.ConcentrationRisksFinancialinstrumentsthatpotentiallysubjecttheCompanytoconcentrationofcreditriskconsistofcashandcashequivalents,short-terminvestments,andaccountsreceivable.ConcentrationsofcreditriskwithrespecttotradeaccountsreceivablearegenerallydiversifiedduetothelargenumberofentitiescomprisingtheCompany’scustomerbaseandtheirdispersionacrossmanydifferentindustriesandgeographies.TheCompanymaintainscashdepositsandshort-terminvestmentswithmajorU.S.financialinstitutionsthatatvarioustimesmayexceedFederalDepositInsuranceCorporation(“FDIC”)insurancelimits.TheCompanyhasnotexperiencedanylossesinsuchaccounts,periodicallyevaluatesthecreditworthinessofthefinancialinstitutionsandhasdeterminedthecreditexposuretobenegligible.F-16AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsDuringtheyearsendedDecember31,2022and2021,3%and4%,respectively,oftheCompany’srevenuesfromcontinuingoperationswerefromcustomersinforeigncountries.DuringtheyearendedDecember31,2022,theCompany’sthreelargestcustomersaccountedfor17%,16%,and10%oftheCompany’sconsolidatedrevenuesfromcontinuingoperations.DuringtheyearendedDecember31,2021,theCompany’sthreelargestcustomersaccountedfor20%,15%,and13%oftheCompany’sconsolidatedrevenuesfromcontinuingoperations.AsofDecember31,2022,theCompany’stwolargestcustomersrepresented74%and19%,respectively,oftheCompany’saccountsreceivable.AsofDecember31,2021,theCompany’sfourlargestcustomersrepresented31%,29%,15%and10%,respectively,oftheCompany’saccountsreceivable.ForeignCurrencyTranslationTheCompany’sreportingcurrencyistheUnitedStatesDollar.ThefunctionalcurrenciesoftheCompany’soperatingsubsidiariesaretheirlocalcurrencies(UnitedStatesDollarandEuro).Euro-denominatedassetsandliabilitiesaretranslatedintotheUnitedStatesDollarusingtheexchangerateatthebalancesheetdate(1.0699and1.1342atDecember31,2022and2021,respectively),andrevenueandexpenseaccountsaretranslatedusingtheweightedaverageexchangerateineffectfortheperiod(1.0536and1.1830fortheyearsendedDecember31,2022and2021,respectively).Resultingtranslationadjustmentsaremadedirectlytoaccumulatedothercomprehensiveincome(loss).TheCompanyengagesinforeigncurrencydenominatedtransactionswithcustomersandsuppliers,aswellasbetweensubsidiarieswithdifferentfunctionalcurrencies.Realizedlossesof$17,641and$53,538arisingfromexchangeratefluctuationsontransactionsdenominatedinacurrencyotherthanthefunctionalcurrencyfortheyearsendedDecember31,2022and2021,respectively,arerecognizedinoperatingresultsintheconsolidatedstatementsofoperations.SubsequentEventsTheCompanyevaluateseventsthathaveoccurredafterthebalancesheetdatebutbeforethefinancialstatementsareissued.Basedupontheevaluation,theCompanydidnotidentifyanyrecognizedornon-recognizedsubsequenteventsthatwouldhaverequiredadjustmentordisclosureintheconsolidatedfinancialstatements,exceptasdisclosed.DiscontinuedOperationsTheresultsofoperationsofWPTfortheperiodfromJanuary1throughJuly12,2021areincludedin“(Loss)incomefromdiscontinuedoperations,netoftaxprovision”intheaccompanyingConsolidatedStatementsofOperations.ReclassificationsCertainprioryearbalanceshavebeenreclassifiedinordertoconformtocurrentyearpresentation.Thesereclassificationshadnoeffectonpreviouslyreportedresultsofoperationsorlosspershare.F-17AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsRecentlyIssuedAccountingPronouncementsInAugust2020,theFASBissuedASU2020-06,Debt—DebtwithConversionandOtherOptions(Subtopic470-20)andDerivativesandHedging—ContractsinEntity’sOwnEquity(Subtopic815-40):AccountingforConvertibleInstrumentsandContractsinanEntity’sOwnEquity,toclarifytheaccountingforcertainfinancialinstrumentswithcharacteristicsofliabilitiesandequity.Theamendmentsinthisupdatereducethenumberofaccountingmodelsforconvertibledebtinstrumentsandconvertiblepreferredstockbyremovingthecashconversionmodelandthebeneficialconversionfeaturemodel.Limitingtheaccountingmodelswillresultinfewerembeddedconversionfeaturesbeingseparatelyrecognizedfromthehostcontract.Convertibleinstrumentsthatcontinuetobesubjecttoseparationmodelsare(1)thosewithembeddedconversionfeaturesthatarenotclearlyandcloselyrelatedtothehostcontract,thatmeetthedefinitionofaderivative,andthatdonotqualifyforascopeexceptionfromderivativeaccountingand(2)convertibledebtinstrumentsissuedwithsubstantialpremiumsforwhichthepremiumsarerecordedaspaid-in-capital.Inaddition,thisASUimprovesdisclosurerequirementsforconvertibleinstrumentsandearnings-per-shareguidance.TheASUalsorevisesthederivativescopeexceptionguidancetoreduceform-over-substance-basedaccountingconclusionsdrivenbyremotecontingentevents.TheamendmentsinthisupdateareeffectiveforourfiscalyearsbeginningafterDecember15,2023,andinterimperiodswithinthosefiscalyears.Earlyadoptionwillbepermitted,butnoearlierthanfo。
6. rfiscalyearsbeginningafterDecember15,2020.TheCompanyearlyadoptedASU2020-06effectiveJanuary1,2023whicheliminatestheneedtoassesswhetherabeneficialconversionfeatureneedstoberecognizedupontheissuanceofnewconvertibleinstruments.TheadoptionofASU2020-06isnotexpectedtohaveamaterialimpactontheCompany’sfinancialposition,resultsofoperationsorcashflows.RecentlyAdoptedAccountingPronouncementsOnMay3,2021,theFinancialAccountingStandardsBoard(the“FASB”)issuedAccountingStandardsUpdate(“ASU”)2021-04,EarningsPerShare(Topic260),Debt—ModificationsandExtinguishments(Subtopic470-50),Compensation—StockCompensation(Topic718),andDerivativesandHedging—ContractsinEntity’sOwnEquity(Subtopic815-40):Issuer’sAccountingforCertainModificationsorExchangesofFreestandingEquity-ClassifiedWrittenCallOptions.Thisnewstandardprovidesclarificationandreducesdiversityinanissuer’saccountingformodificationsorexchangesoffreestandingequity-classifiedwrittencalloptions(suchaswarrants)thatremainequityclassifiedaftermodificationorexchange.ThisstandardiseffectiveforfiscalyearsbeginningafterDecember15,2021,includinginterimperiodswithinthosefiscalyears.Issuersshouldapplythenewstandardprospectivelytomodificationsorexchangesoccurringaftertheeffectivedateofthenewstandard.Earlyadoptionispermitted,includingadoptioninaninterimperiod.Ifanissuerelectstoearlyadoptthenewstandardinaninterimperiod,theguidanceshouldbeappliedasofthebeginningofthefiscalyearthatincludesthatinterimperiod.ThisstandardwasadoptedonJanuary1,2022anddidnothaveamaterialimpactontheCompany’sconsolidatedfinancialstatements.F-18AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsInNovember2021,theFASBissuedASU2021-10,GovernmentAssistance(Topic832),whichincreasesthetransparencyofgovernmentassistanceincludingthedisclosureof(1)thetypeofassistance,(2)anentity’saccountingfortheassistance,and(3)theeffectoftheassistanceonanentity’sfinancialstatements.TheamendmentsinthisupdateareeffectivefortheCompanyinthefinancialstatementsissuedforannualperiodsbeginningafterDecember15,2021.TheCompanyadoptedthisstandardonJanuary1,2022anditdidnothaveamaterialeffectonitsconsolidatedfinancialstatements.InFebruary2016,theFASBissuedAccountingStandardsUpdate(“ASU”)2016-02,“Leases(Topic842).”ASU2016-02requiresthatalesseerecognizetheassetsandliabilitiesthatarisefromoperatingleases.Alesseeshouldrecognizeinthestatementoffinancialpositionaliabilitytomakeleasepayments(theleaseliability)andaright-of-useassetrepresentingitsrighttousetheunderlyingassetfortheleaseterm.Intransition,lesseesandlessorsarerequiredtorecognizeandmeasureleasesatthebeginningoftheearliestperiodpresentedusingamodifiedretrospectiveapproach.ThisamendmentwillbeeffectiveforprivatecompaniesandemerginggrowthcompaniesforfiscalyearsbeginningafterDecember15,2021,andinterimperiodswithinfiscalyearsbeginningafterDecember15,2022.TheFASBissuedASUNo.2018-10“CodificationImprovementstoTopic842,Leases”andASUNo.2018-11“Leases(Topic842)TargetedImprovements”inJuly2018,andASUNo.2018-20“Leases(Topic842)-NarrowScopeImprovementsforLessors”inDecember2018.ASU2018-10andASU2018-20providecertainamendmentsthataffectnarrowaspectsoftheguidanceissuedinASU2016-02.ASU2018-11allowsallentitiesadoptingASU2016-02tochooseanadditional(andoptional)transitionmethodofadoption,underwhichanentityinitiallyappliesthenewleasesstandardattheadoptiondateandrecognizesacumulative-effectadjustmenttotheopeningbalanceofretainedearningsintheperiodofadoption.TheCompanyadoptedASU2016-02onDecember31,2022,effectiveJanuary1,2022underthemodifiedretrospectivetransitionapproachusingeffectivedateasthedateofinitialapplication.Upontransition,theCompanyappliedthepackageofpracticalexpedientspermittedunderASC842transitionguidancetoitsentireleaseportfolioonJanuary1,2022.Asaresult,theCompanywasnotrequiredtoreassess(i)whetheranyexpiredorexistingcontractsareorcontainleases,(ii)theclassificationofanyexpiredorexistingleases,and(iii)initialdirectcostsforanyexistingleases.Furthermore,theCompanymadeanaccountingpolicyelectionnottorecognizeleaseassetsandleaseliabilitiesforleaseswithatermof12monthsorless,aspermittedbyASC842.TheCompanydeterminesleaseexistenceandclassificationatinceptionwhenanagreementconveystherighttocontrolidentifiedpropertyforaperiodoftimeinexchangeforconsideration.TheadoptionofthisASUhadamaterialimpactontheCompany’sfinancialstatements,primarilyasaresultofrecordingright-of-useassetsandleaseliabilitiesforitsoperatingleasesintheapproximateamountsof$6.7millionand$8.8millionandderecognizingdeferredrentintheapproximateamountof$2.1million.Note3–SaleofWPTTransactionDuringthefirstquarterof2021,AGAEenteredintotheSPAtoselltheequityinterestsofitssubsidiariesthatownandoperateitsWPTbusiness(the“SaleTransaction”),subjecttoshareholderandregulatoryapprovals,foratotalbasepurchasepriceof$105million.ThisbasepurchasepricewasadjustedtoreflecttheamountofCSI’scash(lesscashrequiredtosatisfyemployeepaymentobligations),indebtednessandaccruedandunpaidtransactionexpensesasoftheclosingoftheSaleTransaction.TheWPTbusinesshasbeenrecastasdiscontinuedoperations,andtheassetsandliabilitiesofWPTareclassifiedasassetsandliabilitiesofdiscontinuedoperations.SeeNote1–BackgroundandNatureofOperations.InreachingitsdecisiontoenterintotheSPA,theCompany’sBoardofDirectors,inconsultationwithmanagementaswellasitsfinancialandlegaladvisors,consideredanumberoffactors,includingtherisksandchallengesfacingtheWPTbusinessinthefutureascomparedtotheopportunitiesavailabletotheWPTbusinessinthefuture,andtheavailabilityofstrategicalternatives.Aftercarefulconsideration,theBoardofDirectorsunanimouslyapprovedtheSPA.F-19AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsOnJuly12,2021,theCompanyconsummatedthesaleoftheWPTbusiness.ImmediatelypriortotheSaleTransaction,WPTforgave$9,370,261ofamountsduefromaffiliates,whichwasrecordedasanequitytransactiononthestand-alonebooksofWPTanditsaffiliatesanddidnothaveaneffectontheconsolidatedfinancialstatements.TheCompanyrecordedagainonthesaleoftheWPTbusinessintheamountof$77,858,835,asfollows:CashconsiderationforsaleofWPT(1)$106,049,884Less:bookvalueofassetssoldCash3,579,988Accountsreceivable2,999,352Restrictedcash100,000Prepaidexpensesandotherassets264,385Propertyandequipment,net1,429,706Goodwill4,083,621Intangibleassets,net10,986,463Deposits79,500Deferredproductioncosts12,684,054Netbookvalueofassetssold36,207,069Add:liabilitiesassumedbybuyerAccountspayable487,579Accruedexpensesandotherliabilities5,567,072Deferredrevenue1,807,176Deferredrent2,619,967Totalliabilitiesassumed10,481,794Less:transactionexpenses(2)2,465,774GainonsaleofWPT$77,858,835(1)Includes$105,120ofpost-closingadjustments(2)Includes$1,165,774oflegalandprofessionalfeesand$1,300,000ofamountsreimbursedtotheCompany’sprincipalstockholder.SeeNote7-AccruedExpenseandOtherCurrentLiabilitiesforadditionaldetails(3)ManagementhasdeterminedthattherearenocurrentfederalorstateincometaxespayableinconnectionwiththesaleofWPT,afterconsideringtheCompany’staxbasisinthestockofWPT,aswellastheCompany’sprojectedtaxlossesforthe2021taxyear.F-20AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsAboutWPTWPTisaninternationallytelevisedgamingandentertainmentcompanywithbrandpresenceinland-basedtournaments,television,onlineandmobileapplications.WPThasbeeninvolvedinthesportofpokersince2002andcreatedatelevisionshowbasedonaseriesofhigh-stakespokertournaments.WPThasbroadcastedgloballyinmorethan150countriesandterritoriesanditsshowsaresponsoredbyestablishedbrandsinmanyareas,includingwatches,crystal,playingcardsandonlinesocialpokeroperators.WPTalsooperatesClubWPT.com,asubscription-basedsitethatoffersitsmembersinsideaccesstotheWPTcontentdatabase,aswellassweepstakes-basedpokerproductthatallowsmemberstoplayforrealcashandprizesin36statesandterritoriesacrosstheUnitedStatesand4foreigncountries.WPTalsoparticipatesinstrategicbrandlicensing,partnership,andsponsorshipopportunities.ResultsofDiscontinuedOperationsResultsandnetincome(loss)fromdiscontinuedoperationsareasfollows,reflectingtheresultsandnetincome(loss)oftheWPTbusinessthroughthedateoftheSaleTransaction:FortheperiodfromJanuary1,2021throughJuly12,2021Revenues$13,017,362Operatingcostsandexpenses13,640,146(Loss)incomefromoperations(622,784)Otherincome,net689,525(Loss)incomefromdiscontinuedoperationsbeforethesaleofWPT66,741GainonsaleofWPT77,858,835Netincomefromdiscontinuedoperations,beforetax77,925,576Incometax-Incomefromdiscontinuedoperations,netoftaxprovision$77,925,576Note4–InvestmentsTheCompanyownsa25%non-votingmembershipinterestinEsportsArena,LLC(“ESA”)andESA’swhollyownedsubsidiary.BecausetheCompanydoesnothavetheabilitytoexercisesignificantinfluenceovertheoperatingandfinancialpoliciesofESAandbecausetheinvestmentdoesn’thaveareadilydeterminablemarketvalue,theCompanyelectedtoaccountforitusingtheadjustedcostmethod.Duringthesecondquarterof2020,theCompanyrecordedanadditionalimpairmentchargeintheamountof$1,138,631,relatedtoitsinvestmentinESA,inordertoreducethecarryingvalueoftheCompany’sinvestmentinESAto$0.Accordingly,thereis$0relatedtotheCompany’sinvestmentinESAontheCompany’sbalancesheetasofDecember31,2022and2021.F-21AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsNote5–PropertyandEquipment,netPropertyandequipmentconsistofthefollowing:AsofDecember31,20222021Officeequipment(1)$793,395$870,394Computerequipment563,042546,945Esportsgamingtruck1,222,4061,222,406Furnitureandfixtures680,795654,058Productionequipment7,948,5557,919,208Leaseholdimprovements4,578,0814,678,03815,786,27415,891,049Less:accumulateddepreciationandamortization(11,780,652)(9,754,156)Propertyandequipment,net$4,005,622$6,136,893(1)ThedecreaseinofficeequipmentisaresultofadecreaseintheFXrateyearoveryear.DuringtheyearsendedDecember31,2022and2021,depreciationandamortizationexpenseamountedto$2,061,357and$3,305,698,respectively.DuringtheyearsendedDecember31,2022and2021,theCompanyrecordedimpairmentexpenseof$67,500and$0relatedtoitspropertyandequipment.Note6–IntangibleAssets,netIntangibleassetsconsistofthefollowing:IntellectualPropertyAccumulatedAmortizationTotalBalanceasofJanuary1,2022$37,165$(10,338)$26,827Amortizationexpense-(3,991)(3,991)BalanceasofDecember31,2022$37,165$(14,329)$22,836WeightedaverageremainingamortizationperiodatDecember31,2022(inyears)5.7IntangibleassetsconsistoftheAlliedEsportstrademarks,whicharebeingamortizedoverausefullifeof10years.DuringtheyearsendedDecember31,2022and2021,amortizationexpenseamountedto$3,991and$3,991,respectively.Estimatedfutureamortizationexpenseisasfollows:YearsEndedDecember31,Amount2023$3,99120243,99120253,99120263,99120273,991Thereafter2,881$22,836F-22AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsNote7–AccruedExpensesandOtherCurrentLiabilitiesAccruedexpensesandothercurrentliabilitiesconsistofthefollowing:AsofDecember31,20222021Compensationexpense$1,546,805$2,202,621Currentportionofdeferredrent-198,504Eventcosts8,4118,874Legalandprofessionalfees43,676368,691Warrantliabilities1003,200Otheraccruedexpenses46,387172,858Accruedexpensesandothercurrentliabilities$1,645,379$2,966,245Accruedexpenses,relatedparty(1)$-$1,800,000(1)RepresentsamountsaccruedtoreimburseaprincipalshareholderforcostsincurredinconnectionwithspecifiedCompanytransactions,including$1,300,000incurredinconnectionwiththesaleofWPT.SeeNote12-CommitmentsandContingencies,PrincipalShareholderMatterforadditionaldetails.Note8–ConvertibleDebtandConvertibleDebt,RelatedPartySeniorSecuredConvertibleNotesDuringJanuary2021,theCompanyissued529,383sharesofitscommonstockinfullsatisfactionofprincipalandinterestintheaggregateamountof$821,867owedinconnectionwithitsSeniorSecuredConvertibleNotes(the“SeniorNotes”).DuringyearsendedDecember31,2022and2021,theCompanyrecordedamortizationofdebtdiscountof$0and$3,646,respectfully,andrecordednon-cashinterestexpenseintheamount$0and$46,110,respectfully,relatedtotheSeniorNotes.NobalanceremainsoutstandinginconnectionwiththeSeniorSecuredConvertibleNotesasofDecember31,2022orDecember31,2021.ConvertibleBridgeNotesandConvertibleBridgeNotes,RelatedPartyUponthesaleofWPT,theCompanyrepaid$2,000,000infullsatisfactionofallremainingbalancesowedonitsconvertiblebridgenotespayable(the“ConvertibleBridgeNotes”)(seeNote3–SaleofWPT),ofwhich$1,000,000waspaidinconnectionwithaConvertibleBridgeNoteowedtothespouseoftheCompany’sthenCEOanddirector.TherewasnobalanceoutstandingontheConvertibleBridgeNotesandallrelateddebtdiscountwasfullyamortizedasofDecember31,2021.DuringtheyearendedDecember31,2021,theCompanyrecordedinterestexpenseof$124,848relatedtotheConvertibleBridgeNotes(ofwhich$62,424wasinconnectionwiththeConvertibleBridgeNoteowedtothespouseoftheCompany’sthenCEOandDirector).Note9–BridgeNotePayableUponthesaleofWPT,theCompanyrepaid$1,421,096infullsatisfactionofaBridgeNotePayable,suchthatthebalanceoutstandingontheBridgeNotewas$0asofDecember31,2021(seeNote8–ConvertibleDebtandConvertibleDebt,RelatedParty).TheCompanyrecordedinterestexpenseof$0and$89,643duringtheyearsendedDecember31,2022and2021,respectively,inconnectionwiththeBridgeNote.SeeNote3-SaleofWPT.Note10–LoansPayableInAugust2021,theCompanywasawardedfullforgivenessofloansprovidedinconnectionwiththePaycheckProtectionProgram(“PPP”)undertheCaresActandaccruedinterestthereon.DuringtheyearendedDecember31,2021,theCompanyrecognizedagainonforgivenessofthePPPLoansandaccruedinterestintheamountof$912,475.F-23AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsNote11–IncomeTaxesTheCompanyanditssubsidiariesfileincometaxreturnsintheUnitedStates(federalandCalifornia)andGermany.TheU.S.andforeigncomponentsoflossbeforeincometaxesfromcontinuingoperationswereasfollows:FortheYearsEndedDecember31,20222021UnitedStates$(10,233,357)$(14,568,373)Foreign(590,528)(491,472)Lossbeforeincometaxes$(10,823,885)$(15,059,845)Theincometaxprovision(benefit)fromcontinuingoperationsfortheyearsendedDecember31,2022and2021consistsofthefollowing:FortheYearsEndedDecember31,20222021FederalCurrent$-$-Deferred(1,911,425)(2,857,515)Stateandlocal:Current--Deferred(182,041)(272,144)ForeignCurrent--Deferred(79,577)(66,229)(2,173,043)(3,195,888)Changeinvaluationallowance2,173,0433,195,888Incometaxprovision(benefit)$-$-Thereconciliationoftheexpectedtaxexpense(benefit)basedontheU.S.federalstatutoryratesfor2022and2021,respectively,withtheactualexpenseisasfollows:FortheYearsEndedDecember31,20222021U.S.Federalstatutoryrate21.0%21.0%Statetaxes,netoffederalbenefit5.6%6.1%Permanentdifferences(0.4)%1.5%Untaxedforeignjurisdictions0.0%0.0%Lowertaxedforeignjurisdictions(0.7)%(0.4)%Changeindeferredtaxes(4.4)%(6.9)%Ratechangeimpact0.0%0.0%Changeinvaluationallowance(20.1)%(21.3)%Other(1.0)%0.0%Total0.0%0.0%F-24AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsThetaxeffectsoftemporarydifferencesthatgiverisetodeferredtaxassetsarepresentedbelow:AsofDecember31,20222021DeferredTaxAssets:Netoperatinglosscarryforwards$15,989,995$13,561,888Productioncosts267,152272,810Investment5,506,8295,800,616Stock-basedcompensation862,216730,832Capitalizedstart-upcosts125,727224,682Accrualsandother1,316,6071,674,367Grossdeferredtaxassets24,068,52622,265,195ValuationAllowance(23,431,688)(21,258,645)Deferredtaxassets,netofvaluationallowance636,8381,006,550DeferredTaxLiabilities:Propertyandequipment(636,838)(1,006,550)DeferredTaxLiabilities(636,838)(1,006,550)Deferredtaxassets,netofvaluationallowance$-$-AsofDecember31,2022,theCompanyhad$66,807,857,$22,313,829and$5,316,581offederal,stateandforeignnetoperatingloss(“NOL”)carryforwardsavailabletooffsetagainstfuturetaxableincome.ThefederalNOLmaybecarriedforwardindefinitely.Forstatetaxpurposes,theseNOLswillbegintoexpirein2038.FortheforeignNOLs,theseNOLscanbecarriedforwardindefinitely.ThefederalandstateNOLcarryoversaresubjecttoannuallimitationsunderSection382oftheU.S.InternalRevenueCodewhenthereisagreaterthan50%ownershipchange,asdeterminedundertheregulations.TheCompanyisnotawarethatanyannuallimitationshavebeentriggered.TheCompanyremainssubjecttothepossibilitythatafuturegreaterthan50%ownershipchangecouldtriggerannuallimitationsontheusageofNOLs.Forfederalincometaxpurposes,theCompany’sfutureutilizationofitsNOLsmaybelimitedto80%oftaxableincomeasprovidedunderTaxCutsandJobsActof2017.TheCompanyassessesthelikelihoodthatdeferredtaxassetswillberealized.ASC740,“IncomeTaxes”requiresthatavaluationallowancebeestablishedwhenitis“morelikelythannot”thatall,oraportionof,deferredtaxassetswillnotberealized.Areviewofallavailablepositiveandnegativeevidenceneedstobeconsidered,includingthescheduledreversalofdeferredtaxliabilities,projectedfuturetaxableincome,andtaxplanningstrategies.Afterconsiderationofalltheinformationavailable,managementbelievesthatuncertaintyexistswithrespecttofuturerealizationofitsdeferredtaxassetsandhas,therefore,establishedafullvaluationallowanceasofDecember31,2022and2021.TheCompanyissubjecttotaxationintheU.S.andvariousstatejurisdictions.Ingeneral,theCompany’staxreturnsremainsubjecttoexaminationbyvarioustaxingauthoritiesbeginningwiththetaxyearendedDecember31,2018.However,totheextenttheCompanyhastaxattributecarryforwards,thetaxyearsinwhichtheattributewasgeneratedmaystillbeadjusteduponexaminationbytheInternalRevenueServiceorstatetaxauthorities.NotaxauditswerecommencedorwereinprocessduringtheyearsendedDecember31,2022and2021.TheCompanyreviewsitsfilingpositionsforallopentaxyearsinallU.S.federalandstatejurisdictionswheretheCompanyisrequiredtofile.TheCompanyrecognizesliabilitiesforuncertaintaxpositionsbasedonatwo-stepprocess.Totheextentataxpositiondoesnotmeetamore-likely-than-notlevelofcertainty,nobenefitisrecognizedinthefinancialstatements.Ifapositionmeetsthemore-likely-than-notlevelofcertainty,itisrecognizedintheconsolidatedfinancialstatementsatthelargestamountthathasagreaterthan50%likelihoodofbeingrealizeduponultimatesettlement.TheCompanyhasnotrecognizedanyliabilityrelatedtouncertaintaxprovisionsasofDecember31,2022and2021.TheCompany’spracticeistorecognizeinterestand/orpenaltiesrelatedtoincometaxmattersininterestexpense.TheCompanyhadnoaccrualforinterestorpenaltiesatDecember31,2022andDecember31,2021,respectively,andhasnotrecognizedinterestand/orpenaltiesduringtheyearsthenendedastherearenomaterialunrecognizedtaxbenefits.Managementdoesnotanticipateanymaterialchangestotheamountofunrecognizedtaxbenefitswithininthenext12months.Note12–CommitmentsandContingenciesLitigations,Claims,andAssessmentsTheCompanyisinvolvedinvariousdisputes,claims,liensandlitigationmattersarisingoutofthenormalcourseofbusiness.Whiletheoutcomeofthesedisputes,claims,liensandlitigationmatterscannotbepredictedwithcertainty,afterconsultingwithlegalcounsel,managementdoesnotbelievethattheoutcomeofthesematterswillhaveamaterialadverseeffectontheCompany’sconsolidatedfinancialposition,resultsofoperationsorcashflows.PrincipalShareholderMatterDuringAugust2021,theCompanyreceiveda$2.3millionexpensereimbursementrequestfromaprincipalshareholder.TheprincipalshareholderallegedthatformerofficersoftheCompanyverballyagreedtoreimbursecertaincostsoftheprincipalshareholderthatwereincurredinconnectionwithspecifiedCompanytransactions.OnApril6,2022,theCompanyreachedasettlementagreementwiththeprincipalshareholderinwhichtheCompanyagreedtoreimbursetheprincipalshareholderanaggregateof$1.8millionforthefullandfinalsettlementofanyandallclaimsbytheprincipalshareholder.F-25AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsOperatingLeasesEffectiveonMarch23,2017,AlliedEsportsenteredintoanon-cancellableoperatingleasefor30,000squarefeetofeventspaceinLasVegas,Nevada,forthepurposeofhostingEsportsactivities(the“LasVegasLease”).ThearenaopenedtothepubliconMarch23,2018(the“CommencementDate”).Initialleasetermsareforminimummonthlypaymentsof$125,000for60monthsfromtheCommencementDatewithanoptiontoextendforanadditional60monthsat$137,500permonth.Additionalannualtenantobligationsareestimatedat$2persquarefootforAllied’sportionofrealestatetaxesand$5persquarefootforcommonareamaintenancecosts.TheLasVegasLeaseexpiresonMay31,2023.However,theCompanyplansonextendingtheleaseanadditionalfiveyearsrepresentinganadditionalcommitmentof$8,250,000.TheCompanyalsoleasesofficeandproductionspaceinGermany,pursuanttoaleasedatedAugust1,2020whichexpiresonJuly31,2023(the“GermanyLease”).Rentexpenseundertheleaseis€4,000(approximately$4,280UnitedStatesdollars)permonth.Theleaseincludesanoptiontoextendforanadditionalthree-yearterm.TheCompany’saggregaterentexpenseincurredduringtheyearsendedDecember31,2022and2021amountedto$1,722,801and$1,714,895,respectively,ofwhich$1,283,976and$1,216,415,respectively,isincludedwithinin-personcostsand$438,825and$498,480,respectively,isincludedingeneralandadministrativeexpensesontheaccompanyingconsolidatedstatementsofoperations.AsummaryoftheCompany’sright-of-useassetsandliabilitiesisasfollows:FortheYearEndedDecember31,2022Cashpaidforamountsincludedinthemeasurementofleaseliabilities:Operatingcashflowsusedinoperatingactivities$1,083,178Right-of-useassetsobtainedinexchangeforleaseobligationsOperatingleases$-WeightedAverageRemainingLeaseTermOperatingleases5.42WeightedAverageDiscountRateOperatingleases5.0%ThescheduledfutureminimumleasepaymentsundertheCompany’scontinuingnon-cancellableoperatingleasesareasfollows:FortheYearEndingDecember31,Amount2023$1,587,50020241,650,00020251,650,00020261,650,00020271,650,000Thereafter687,500Totalleasepayments8,875,000Less:amountrepresentingimputedinterest(1,120,761)Presentvalueofleaseliability7,754,239Less:currentportion(1,227,164)Leaseliability,non-currentportion$6,527,075Theright-of-useassetandoperatingleaseliabilitybalanceincludestheimpactofthefive-yearrenewaloptionthattheCompanyisreasonablycertaintoexercise.However,therenewaloptionhasnotyetbeenexecuted.BrookfieldPartnershipOnJanuary14,2020,theCompanyissued758,725sharesofitscommonstocktoBPRCumulusLLC,anaffiliateofBrookfieldPropertyPartners(“Brookfield”)inexchangefor$5,000,000(the“PurchasePrice”)pursuanttoaSharePurchaseAgreement(the“BrookfieldAgreement”).ThePurchasePricewasplacedintoescrowandistobeusedbytheCompanyoritssubsidiariestodevelopintegratedesportsexperiencevenuesatmutuallyagreeduponshoppingmallsownedand/oroperatedbyBrookfieldoranyofitsaffiliates(each,an“InvestorMall”),thatwillincludeadedicatedgamingspaceandproductioncapabilitiestoattractandtoactivateesportsandotheremergingliveevents(each,an“EsportsVenue”).Tothatend,halfofthePurchasePricewillbereleasedfromescrowtotheCompanyupontheexecutionofawrittenleaseagreementbetweenBrookfieldandtheCompanyforthefirstEsportsVenue,andtheotherhalfwillbereleasedtotheCompanyupontheexecutionofawrittenleaseagreementbetweenBrookfieldandtheCompanyforthesecondEsportsVenue.ThebalanceheldinescrowasofDecember31,2022is$5,000,000andisreflectedinrestrictedcashontheaccompanyingconsolidatedbalancesheet.Asofthedateofthisdocument,noadditionaldocumentshavebeendraftedorexecutedbetweentheCompanyandBrookfieldasthepartieshavenothadfurtherdiscussionsonmovingforwardwithanyleasessincetheyweredelayedduringthepandemic.F-26AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsSystemDevelopmentAgreementOnOctober31,2022,theCompanyenteredintoasystemdevelopmentagreementtodevelopanAlliedGamingmembershipmanagementsystemandeventorganizersystem.Pursuanttothetermsoftheagreement,theCompanyhascommittedtospendanaggregateamountof$199,800infourequalpaymentsof$49,950.TheCompanymadeitsfirstpaymentof$49,950onNovember23,2022whichwascapitalizedandincludedwithinotherassetsontheaccompanyingbalancesheetasofDecember31,2022.SeeNote2–SignificantAccountingPolicies–InternalUseSoftwareDevelopmentCostsforadditionaldetails.FormerChiefExecutiveOfficerAgreementsOnJuly13,2021,FrankNgresignedaschiefexecutiveofficeroftheCompany,effectiveimmediately.Inconnectionwithhisresignation,theCompanyenteredintoaReleaseandSeparationAgreementwithMr.Ng(the“SeparationAgreement”)pursuanttowhich,amongotherthings,Mr.NgagreedtoprovidereasonableassistancetotheCompany(when,asandifrequested)inconnectionwiththeCompany’sEsportsdivision,Mr.NgreleasedanyandallclaimshemayhaveagainsttheCompanyanditssubsidiaries(subjecttocertainexclusions),andtheCompanyagreedtoprovideMr.Ngwithcertainseparationbenefits,including$400,000(gross)inseverancepaypayableoveratwelve-monthperiod,acceleratedvestingof225,000unvestedstockoptionspreviouslygrantedtoMr.NgpursuanttoanOptionAgreementdatedeffectiveNovember21,2019,andacceleratedvestingofallunvestedsharesofrestrictedstockpreviouslygrantedtoMr.NgpursuanttoanExecutiveRestrictedStockAgreementdatedAugust7,2020.AppointmentandResignationofChiefExecutiveOfficer,PresidentandGeneralCounselOnJuly13,2021,theCompanyappointedLibing(Claire)WuasitsChiefExecutiveOfficer,PresidentandGeneralCounsel.TheCompanyenteredintoanemploymentagreement(the“CEOAgreement”)withMs.Wuthatprovidedfor,amongotherthings,paymenttoMs.Wuofanannualbasesalaryequalto$500,000,subjecttocertaincost-of-livingadjustments.Uponcommencementofheremployment,Ms.Wureceiveda$200,000bonusandwasgranted80,000sharesofrestrictedcommonstock,subjecttotransferandforfeiturerestrictionsuntiltheshares’scheduledvestingonAugust16,2022,andten-yearstockoptionstopurchaseupto200,000sharesoftheCompany’scommonstockatanexercisepriceof$2.21persharethatwerescheduledtovestinfourequalannualinstallmentscommencingontheone-yearanniversaryofthegrantdate.OnFebruary18,2022,Ms.WuresignedasChiefExecutiveOfficerandGeneralCounseloftheCompany.Inconnectionwithherresignation,theCompanyenteredintoaSeparationAgreementandReleasewithMs.Wu(the“Release”)pursuanttowhich,amongotherthings,Ms.WureleasedtheCompanyfromanyandallclaimsshemayhaveagainsttheCompany(subjecttocertainexclusions),andtheCompanyagreedtoprovideMs.Wuwithcertainseparationbenefits,including$750,000inseverancepayableoveran18-monthperiodwhichwasexpensedimmediately,andacceleratedvestingof200,000unvestedstockoptionsand80,000sharesofrestrictedstockthatweregrantedatthecommencementofMs.Wu’semployment.AsnofuturesubstantiveserviceswillbeperformedbyMs.Wu,theCompanyrecognizedstock-basedcompensationexpenseof$0and$258,979,respectively,relatedtothemodificationoftheseequityawardsduringtheyearendedDecember31,2022.AtDecember31,2022,$333,333ofaccruedexpensesisincludedonthebalancesheet,relatedtoMs.Wu’sseverancebenefit.TheReleasealsocontainsacustomarynon-disparagementprovision.BoardofDirectorsHoMinKimandMayaRogersresignedfromtheCompany’sBoardofDirectors(“Board”)onMay5,2021.InconnectionwithMs.Rogers’andMr.Kim’sresignations,theBoardpermittedtheacceleratedvestingof10,000outstandingoptionspreviouslyissuedtoeachpersonfortheirdirectorservicesscheduledtovestonSeptember19,2021andextendedtheexerciseperiodtoexercise20,000vestedoutstandingoptionsissuedtoeachpersontoSeptember19,2029.OnMay3,2021,FrankNgresignedfromtheBoardofDirectors(the“Board”).InconnectionwithMr.Ng’sresignation,theBoardpermittedtheacceleratedvestingof10,000outstandingoptionspreviouslyissuedtoMr.NgforhisdirectorservicesscheduledtovestonSeptember19,2021andextendedtheexerciseperiodtoexercise20,000vestedoutstandingoptionsissuedtoMr.NgtoSeptember19,2029.OnJuly6,2021,theBoardapprovedthefollowingcompensationfornon-executivedirectors:(i)annual$30,000feefordirectorservices;(ii)annual$10,000feefornon-chaircommitteeservices(cappedat$10,000perdirector);and(iii)annual$15,000feeforcommitteechairs(cappedat$15,000perdirector).TheCompanyhastheoptiontopaysuchamountsincashorstockfromtheCompany’sincentiveplan(valuedattheclosingpriceofAGAEcommonstockonthetradingdayimmediatelypriortoissuance),withthecurrentfeespayableincash.ThefeesarepayablemonthlybytheCompany.OnFebruary18,2022,JerryLewinresignedasaClassCDirectoroftheCompany.InappreciationofMr.Lewin’sservicestotheCompanyasadirector,ChairoftheCompensationCommitteeandamemberoftheAuditCommittee,theCompanypaidtoMr.Lewin$25,000,acceleratedthevestingof40,000unvestedstockoptionspreviouslygrantedtoMr.LewinpursuanttoanoptionagreementdatedeffectiveMay6,2021,andextendedtheexerciseperiodofsuchoptionstoMay6,2031.TheCompanyrecognizedstock-basedcompensationexpenseof$32,909relatedtothemodificationoftheseawardsduringtheyearendedDecember31,2022.F-27AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsNote13–Stockholders’EquityEquityIncentivePlanOnDecember30,2021,thestockholdersapprovedanamendmenttothe2019EquityIncentivePlan(the“Plan”)toincreasethenumberofsharesofcommonstockauthorizedunderthePlanfrom3,463,305sharesto3,763,305shares.AsofDecember31,2022therewere1,344,904sharesavailableundertheplan.EquityPurchaseOptionOnAugust19,2019,theCompanysoldanoptiontopurchaseupto600,000units,exercisableat$11.50perUnit,inconnectionwithAGAE’sinitialpublicoffering(the“EquityPurchaseOption”).EachUnitconsistedofoneandone-tenthsharesofcommonstockandawarranttopurchaseoneshareofcommonstockat$11.50pershare.EffectiveupontheclosingoftheMerger,theunitsconvertedbytheirtermsintothesharesandwarrants,andtheoptionrepresentedtheabilitytobuysuchsecuritiesdirectly(andnotunits).TheEquityPurchaseOptionexpiredonOctober4,2022.CommonStockInJanuary2021,theCompanyissued529,383sharesofitscommonstockvaluedat$821,867fortheredemptionof$674,909ofdebtandaccruedinterest(SeeNote8-ConvertibleDebtandConvertibleDebt,RelatedParty,SeniorSecuredConvertibleNotes).DuringtheyearendedDecember31,2021,theCompanyissuedtoitsnon-executivedirectorsanaggregateof126,584sharesofcommonstockfromits2019EquityIncentivePlanfortheirdirectorservicestotheCompany.TheCompanyrecognizedstock-basedcompensationof$200,000inconnectionwiththeissuanceofthesesharesduringtheyearendedDecember31,2021.TreasuryStockOnNovember21,2022,theCompany’sBoardofDirectorsauthorizedastockrepurchaseprogramofupto$10millionofitsoutstandingsharesofcommonstock.FortheyearendedDecember31,2022,theCompanyrepurchased581,746sharesatacostof$610,562.AsofDecember31,2022,approximately$9.4millionofauthorizationremainedavailabletorepurchasecommonstockunderthisprogram.StockOptionsAsummaryoftheoptionactivityduringtheyearendedDecember31,2022ispresentedbelow:WeightedWeightedAverageAverageNumberofExerciseRemainingIntrinsicOptionsPriceTerm(Yrs)ValueOutstanding,January1,20222,415,000$3.73Granted--Exercised--Expired(615,000)3.97Forfeited(125,000)3.55Outstanding,December31,20221,675,000$2.544.73$-Exercisable,December31,20221,280,000$3.746.74$-F-28AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsOptionsoutstandingandexercisableasofDecember31,2022areasfollows:OptionsOutstandingOptionsExercisableWeightedAverageOutstandingNumberofRemainingLifeExercisableNumberofExercisePriceOptionsInYearsOptions$2.1140,0007.5020,000$2.17120,0007.60120,000$2.21350,0007.19237,500$2.48120,0008.3560,000$4.09765,0005.69612,500$5.66280,0006.72230,0001,675,0006.741,280,000TheoptiongrantsdescribedbelowwereissuedfromtheCompany’s2019StockIncentivePlan(“IncentivePlan”).OnMay6,2021,theCompanygrantedten-yearstockoptionstopurchaseanaggregateof160,000sharesofcommonstocktoitsdirectors.Thesharesvestinequalannualinstallmentsoverfouryearsandhaveanexercisepriceof$2.48pershare,whichrepresentstheCompany’sclosingstockpriceonthedaypriortothedateofgrant.Theoptionshadanaggregategrantdatefairvalueof$145,777andarebeingamortizedintoexpenseoverthevestingperiod.OnJuly13,2021,theCompanygrantedten-yearstockoptionstopurchaseanaggregateof200,000sharesofcommonstocktoMs.Wu.Thesharesvestinequalannualinstallmentsoverfouryearsandhaveanexercisepriceof$2.21pershare,whichrepresentstheCompany’sclosingstockpriceonthedaypriortothedateofgrant.Theoptionshadanaggregategrantdatefairvalueof$202,910andarebeingamortizedoverthevestingperiod.OnNovember11,2021,theCompanygrantedten-yearstockoptionstopurchaseanaggregateof150,000sharesofcommonstocktoseveralofitsdirectors.Thesharesvestinequalannualinstallmentsoverfouryearsandhaveanexercisepriceof$2.21pershare,whichrepresentstheCompany’sclosingstockpriceonthedaypriortothedateofgrant.Theoptionshadanaggregategrantdatefairvalueof$159,756andarebeingamortizedintoexpenseoverthevestingperiod.OnFebruary18,2022,JerryLewinresignedasaClassCDirectoroftheCompany.InappreciationofMr.Lewin’sservicestotheCompanyasadirector,ChairoftheCompensationCommitteeandamemberoftheAuditCommittee,theCompanypaidtoMr.Lewin$25,000,acceleratedvestingof40,000unvestedstockoptionspreviouslygrantedtoMr.LewinpursuanttoanOptionAgreementdatedeffectiveMay6,2021,andextendedtheexerciseperiodofsuchoptionstoMay6,2031.TherewerenooptionsgrantedduringtheyearendedDecember31,2022.ThegrantdatevalueofoptionsgrantedduringtheyearendedDecember31,2021wascalculatedusingtheBlack-Scholesoptionpricingmodel,withthefollowingassumptionsused:Riskfreeinterestrate0.94%-1.58%Expectedterm(years)6.25Expectedvolatility40%-46%Expecteddividends0.00%TheweightedaveragegrantdatefairvalueofthestockoptionsgrantedduringtheyearendedDecember31,2021was$1.00pers。
7. hare.Theexpectedtermusedforoptionsistheestimatedperiodoftimethatoptionsgrantedareexpectedtobeoutstanding.TheCompanyutilizesthe“simplified”methodtodevelopanestimateoftheexpectedtermof“plainvanilla”optiongrants.TheCompanyisutilizinganexpectedvolatilityfigurebasedonareviewofthehistoricalvolatilities,overaperiodoftime,equivalenttotheexpectedlifeoftheinstrumentbeingvalued,ofsimilarlypositionedpubliccompanieswithinitsindustry.Therisk-freeinterestratewasdeterminedfromtheimpliedyieldsfromU.S.Treasuryzero-couponbondswitharemainingtermconsistentwiththeexpectedtermoftheinstrumentbeingvalued.FortheyearsendedDecember31,2022and2021,theCompanyrecorded$708,964and$1,224,699,respectively,ofstock-basedcompensationexpenserelatedtostockoptions,ofwhich$0and$767,942,respectively,wasincludedin(loss)incomefromdiscontinuedoperationsbeforethesaleofWPTontheaccompanyingconsolidatedstatementsofoperations.AsofDecember31,2022,therewas$347,858ofunrecognizedstock-basedcompensationexpenserelatedtothestockoptionsthatwillberecognizedovertheweightedaverageremainingvestingperiodof1.7years.F-29AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsRestrictedCommonStockAsummaryofthenon-vestedrestrictedcommonstockactivityduringtheyearendedDecember31,2022ispresentedbelow:WeightedNumberofAverageRestrictedGrantDateStockFairValueNon-vestedbalance,January1,202280,000$2.00Vested(80,000)2.00Non-vestedbalance,December31,2022-$-FortheyearsendedDecember31,2022and2021,theCompanyrecorded$82,345and$260,433,respectively,ofstock-basedcompensationexpenserelatedtorestrictedstockofwhich$0and$14,848,respectively,wasincludedin(loss)incomefromdiscontinuedoperationsbeforethesaleofWPTontheaccompanyingstatementsofoperations.AsofDecember31,2022,allstock-basedcompensationexpenserelatedtorestrictedstockhasbeenrecognized.DuringtheyearendedDecember31,2021,100,904sharesofcommonstockvaluedat$210,147werewithheldbytheCompanytocoveremployeepayrolltaxliabilitiesinconnectionwiththevestingofrestrictedstock,including23,411sharesvaluedat$50,802foremployeepayrolltaxliabilitiesrelatedtorestrictedstockvestedduringtheyearendedDecember31,2020and77,493sharesvaluedat$159,345forrestrictedstockvestedduringtheyearendedDecember31,2021.DuringtheyearendedDecember31,2022,31,437sharesofcommonstockvaluedat$49,670werewithheldbytheCompanytocoveremployeepayrolltaxliabilitiesinconnectionwiththevestingofrestrictedstockvestedduringtheyearendedDecember31,2022.RestrictedStockUnitsOnJanuary19,2021,theCompanyenteredintoaRestrictedStockUnitAgreementwithaFormerCEO,pursuanttowhichtheFormerCEOreceivedrestrictedstockunitshavingastatedvalueequalto$1,000,000.Therestrictedstockunitsrepresenttherighttoreceive$1,000,000,contingentupontheclosingoftheSaleTransaction,whichispayableupontheearlierof(i)thesaleofsubstantiallyalloftheassetsorequityinterestscomprisingtheCompany’sesportsbusiness,or(ii)thetwo-yearanniversaryoftheSaleTransaction(providedthattheFormerCEOprovidesconsultingservices(when,asandifrequested)totheCompanythroughsuchdate).Atthetimeofpayment,theCompanymayelecttopaythe$1,000,000awardincashorinsharesofcommonstockvaluedatthefairmarketvalueofourcommonstockontheVestingDate,oranycombinationthereof.TheCompanyrecordedachargetostock-basedcompensationandacorrespondingcredittoaccruedcompensationexpenseintheamountof$1,000,000fortheyearendedDecember31,2021,representingthefullamortizationofthisawardbecausetheCompanydoesn’texpecttheFormerCEOtoprovidesubstantiveservices.Allissuancesofcommonstockwillbeissuedfromthe2019EquityIncentivePlan.IfpaymentsorbenefitsprovidedortobeprovidedbytheCompanyoritsaffiliatestotheFormerCEOpursuanttotheagreementorotherwise(“CoveredPayments”)constitute“parachutepayments”withinthemeaningofSection280GoftheInternalRevenueCodeof1986(the“Code”)thatwouldbesubjecttotheexcisetaximposedunderSection4999oftheCode(collectively,the“ExciseTax”),paymentstobemadeundertheagreementwillbereducedtotheminimumextentnecessarytoensurethatnoportionoftheCoveredPaymentsissubjecttotheExciseTax.WarrantsPriortotheAugust9,2019ClosingDateoftheMerger(seeNote1–BackgroundandBasisofPresentation),BlackRidgeAcquisitionCorp.(“BRAC’)issued14,305,000five-yearwarrants(the“BRACWarrants”)forthepurchaseoftheCompany’scommonstockat$11.50pershareinconnectionwithBRAC’sinitialpublicoffering.ThesepreviouslyissuedBRACWarrantsaredeemedtobeissuedinconnectionwiththeMerger,asaresultofthereverserecapitalization.AsofresultoftheAugust9,2019Merger,theCompanyissuedtotheformerownersofAlliedGamingandWPTfive-yearwarrantstopurchaseanaggregateof3,800,003sharesofcommonstockatapriceof$11.50pershareandissuedfive-yearwarrantsforthepurchaseofanaggregateof532,000sharesofcommonstocktotheNoteholderswithanexercisepriceof$11.50pershare.OnJune8,2020,theCompanyissuedwarrantsforthepurchaseof1,454,546sharesofcommonstockat$4.13pershareinconnectionwiththeissuanceofSeniorSecuredConvertibleNotes(SeeNote8–ConvertibleDebtandConvertibleDebt,RelatedParty,SeniorSecuredConvertibleNotes).F-30AlliedGaming&EntertainmentInc.andSubsidiariesNotestoConsolidatedFinancialStatementsAsummaryofwarrantsoutstandingandexercisableasofDecember31,2022ispresentedbelow:WarrantsOutstandingWarrantsExercisableExercisePriceExercisableIntoOutstandingNumberofWarrantsWeightedAverageRemainingLifeinYearsExercisableNumberofWarrants$11.50CommonStock18,637,0031.618,637,003$4.13CommonStock1,454,5462.41,454,54620,091,54920,091,549Note14–SubsequentEventsLicenseAgreementOnFebruary27,2023,AlliedMobileEntertainment,Inc(“AME”),anewlyincorporatedandwhollyownedsubsidiaryofAGAE,enteredintoanagreementwithaglobalinternettechnologycompanyunderwhichAMEwasgrantedafive-yearexclusiveworldwide(excludingthePRC)softwarelicensetooperatefourmobilecasualgamesfora$500,000up-frontfeeandaone-timetechnicalupgradeservicefeeof$65,000.ThelicenseagreementprovidesAMEwithanoptiontorenewtheagreementforanadditionalfiveyearsunderidenticaltermsandconditionsandaprioritytonegotiateaperpetuallicensefollowingthefive-yearrenewalperiod.F-31EXHIBIT4.5DescriptionofRegistrant’sSecuritiesAsMarch24,2023,AlliedGaming&Entertainment,Inc.hastwoclassesofsecuritiesregisteredunderSection12oftheSecuritiesExchangeActof1934,asamended(the“ExchangeAct”):(1)ourCommonStock;and(2)Warrants.Thefollowingisadescriptionofourcommonstock,warrants,andcertainmaterialprovisionsofDelawarelaw,ourCertificateofIncorporation,asamended,andourBylaws,asamended.Thefollowingisonlyasummaryandisqualifiedbyapplicablelaw,ourCertificateofIncorporation,asamended,andourBylaws.CopiesofourCertificateofIncorporation,asamended,andourBylaws,asamendedareincludedasexhibitstotheReportofwhichthisExhibitisapart.CommonStockVoting.Theholdersofourcommonstockareentitledtoonevoteforeachoutstandingshareofcommonstockownedbythatshareholderoneverymatterproperlysubmittedtotheshareholdersfortheirvote.Shareholdersarenotentitledtovotecumulativelyfortheelectionofdirectors.DividendRights.Subjecttothedividendrightsoftheholdersofanyoutstandingseriesofpreferredstock,holdersofourcommonstockareentitledtoreceiveratablysuchdividendsandotherdistributionsofcashoranyotherrightorpropertyasmaybedeclaredbyourBoardofDirectorsoutofourassetsorfundslegallyavailableforsuchdividendsordistributions.LiquidationRights.Intheeventofanyvoluntaryorinvoluntaryliquidation,dissolutionorwindingupofouraffairs,holdersofourcommonstockwouldbeentitledtoshareratablyinourassetsthatarelegallyavailablefordistributiontoshareholdersafterpaymentofliabilitiesandafterthesatisfactionofanyliquidationpreferenceowedtotheholdersofanypreferredstock.Conversion,RedemptionandPreemptiveRights.Holdersofourcommonstockhavenoconversion,redemption,preemptive,subscriptionorsimilarrights.WarrantsEachwarrantentitlestheregisteredholdertopurchaseoneshareofcommonstockatapriceof$11.50pershare,subjecttoadjustmentasdiscussedbelow,atanytimeafterSeptember9,2019untilexpiration.However,nowarrantswillbeexercisableforcashunlesswehaveaneffectiveandcurrentregistrationstatementcoveringthesharesofcommonstockissuableuponexerciseofthewarrantsandacurrentprospectusrelatingtosuchsharesofcommonstock.Notwithstandingtheforegoing,ifaregistrationstatementcoveringthesharesofcommonstockissuableuponexerciseofthepublicwarrantsisnoteffectivewithinaspecifiedperiodfollowingtheconsummationofourmergeronAugust9,2019,warrantholdersmay,untilsuchtimeasthereisaneffectiveregistrationstatementandduringanyperiodwhenweshallhavefailedtomaintainaneffectiveregistrationstatement,exercisewarrantsonacashlessbasispursuanttotheexemptionprovidedbySection3(a)(9)oftheSecuritiesAct,providedthatsuchexemptionisavailable.Ifthatexemption,oranotherexemption,isnotavailable,holderswillnotbeabletoexercisetheirwarrantsonacashlessbasis.Insuchevent,eachholderwouldpaytheexercisepricebysurrenderingthewarrantsforthatnumberofsharesofcommonstockequaltothequotientobtainedbydividing(x)theproductofthenumberofsharesofcommonstockunderlyingthewarrants,multipliedbythedifferencebetweentheexercisepriceofthewarrantsandthe“fairmarketvalue”(definedbelow)by(y)thefairmarketvalue.The“fairmarketvalue”forthispurposewillmeantheaveragereportedlastsalepriceofthesharesofcommonstockforthe5tradingdaysendingonthetradingdaypriortothedateofexercise.Thewarrantswillexpireonthefifthanniversaryofourcompletionofaninitialbusinesscombination,at5:00p.m.,NewYorkCitytime,orearlieruponredemptionorliquidation.Wemaycallthewarrantsforredemption(excludingcertainwarrants),inwholeandnotinpart,atapriceof$0.01perwarrant.●atanytimeafterthewarrantsbecomeexercisable,●uponnotlessthan30days’priorwrittennoticeofredemptiontoeachwarrantholder,●if,andonlyif,thereportedlastsalepriceofthesharesofcommonstockequalsorexceeds$18.00pershare(asadjustedforstocksplits,stockdividends,reorganizationsandrecapitalizations),forany20tradingdayswithina30tradingdayperiodendingonthethirdbusinessdaypriortothenoticeofredemptiontowarrantholders;and●if,andonlyif,thereisacurrentregistrationstatementineffectwithrespecttothesharesofcommonstockunderlyingsuchwarrants.Therighttoexercisewillbeforfeitedunlessthewarrantsareexercisedpriortothedatespecifiedinthenoticeofredemption.Onandaftertheredemptiondate,arecordholderofawarrantwillhavenofurtherrightsexcepttoreceivetheredemptionpriceforsuchholder’swarrantuponsurrenderofsuchwarrant.Theredemptioncriteriaforourwarrantshavebeenestablishedatapricewhichisintendedtoprovidewarrantholdersareasonablepremiumtotheinitialexercisepriceandprovideasufficientdifferentialbetweenthethen-prevailingsharepriceandthewarrantexercisepricesothatifthesharepricedeclinesasaresultofourredemptioncall,theredemptionwillnotcausethesharepricetodropbelowtheexercisepriceofthewarrants.Ifwecallthewarrantsforredemptionasdescribedabove,ourmanagementwillhavetheoptiontorequireallholdersthatwishtoexercisewarrantstodosoona“cashlessbasis.”Insuchevent,eachholderwouldpaytheexercisepricebysurrenderingthewarrantsforthatnumberofsharesofcommonstockequaltothequotientobtainedbydividing(x)theproductofthenumberofsharesofcommonstockunderlyingthewarrants,multipliedbythedifferencebetweentheexercisepriceofthewarrantsandthe“fairmarketvalue”(definedbelow)by(y)thefairmarketvalue.The“fairmarketvalue”shallmeantheaveragereportedlastsalepriceofthesharesofcommonstockforthe5tradingdaysendingonthethirdtradingdaypriortothedateonwhichthenoticeofredemptionissenttotheholdersofwarrants.ThewarrantsareinregisteredformunderawarrantagreementbetweenContinentalStockTransfer&TrustCompany,aswarrantagent,andus.Thewarrantagreementprovidesthatthetermsofthewarrantsmaybeamendedwithouttheconsentofanyholdertocureanyambiguityorcorrectanydefectiveprovision,butrequirestheapproval,bywrittenconsentorvote,oftheholdersofatleast50%ofthethenoutstandingwarrants(includingtheprivatewarrants)inordertomakeanychangethatadverselyaffectstheinterestsoftheregisteredholders.Theexercisepriceandnumberofsharesofcommonstockissuableonexerciseofthewarrantsmaybeadjustedincertaincircumstancesincludingintheeventofastockdividend,extraordinarydividendorourrecapitalization,reorganization,mergerorconsolidation.However,thewarrantswillnotbeadjustedforissuancesofsharesofcommonstockatapricebelowtheirrespectiveexerciseprices.Thewarrantsmaybeexerciseduponsurrenderofthewarrantcertificateonorpriortotheexpirationdateattheofficesofthewarrantagent,withtheexerciseformonthereversesideofthewarrantcertificatecompletedandexecutedasindicated,accompaniedbyfullpaymentoftheexerciseprice,bycertifiedorofficialbankcheckpayabletous,forthenumberofwarrantsbeingexercised.Thewarrantholdersdonothavetherightsorprivilegesofholdersofsharesofcommonstockandanyvotingrightsuntiltheyexercisetheirwarrantsandreceivesharesofcommonstock.Aftertheissuanceofsharesofcommonstockuponexerciseofthewarrants,eachholderwillbeentitledtoonevoteforeachshareheldofrecordonallmatterstobevotedonbystockholders.Underthetermsofthewarrantagreement,wehaveagreedtouseourbesteffortstohavedeclaredeffectiveaprospectusrelatingtothesharesofcommonstockissuableuponexerciseofthewarrantsandkeepsuchprospectuscurrentuntiltheexpirationofthewarrants.However,wecannotassureyouthatwewillbeabletodosoand,ifwedonotmaintainacurrentprospectusrelatingtothesharesofcommonstockissuableuponexerciseofthewarrants,holderswillbeunabletoexercisetheirwarrantsforcashandwewillnotberequiredtonetcashsettleorcashsettlethewarrantexercise.2Warrantholdersmayelecttobesubjecttoarestrictionontheexerciseoftheirwarrantssuchthatanelectingwarrantholderwouldnotbeabletoexercisetheirwarrantstotheextentthat,aftergivingeffecttosuchexercise,suchholderwouldbeneficiallyowninexcessof9.8%ofthesharesofcommonstockoutstanding.Nofractionalshareswillbeissueduponexerciseofthewarrants.If,uponexerciseofthewarrants,aholderwouldbeentitledtoreceiveafractionalinterestinashare,wewill,uponexercise,rounduptothenearestwholenumberthenumberofsharesofcommonstocktobeissuedtothewarrantholder.Anti-TakeoverProvisionsWearesubjecttoSection203oftheDelawareGeneralCorporationLaw.Subjecttocertainexceptions,Section203preventsapubliclyheldDelawarecorporationfromengagingina“businesscombination”withany“interestedstockholder”forthreeyearsfollowingthedatethatthepersonbecameaninterestedstockholder,unlesseithertheinterestedstockholderattainedsuchstatuswiththeapprovalofourBoardofDirectors,thebusinesscombinationisapprovedbyourBoardofDirectorsandstockholdersinaprescribedmannerortheinterestedstockholderacquiredatleast85%ofouroutstandingvotingstockinthetransactioninwhichitbecameaninterestedstockholder.A“businesscombination”includes,amongotherthings,amergerorconsolidationinvolvingusandthe“interestedstockholder”andthesaleofmorethan10%ofourassets.Ingeneral,an“interestedstockholder”isanyentityorpersonbeneficiallyowning15%ormoreofouroutstandingvotingstockandanyentityorpersonaffiliatedwithorcontrollingorcontrolledbysuchentityorperson.TherestrictionscontainedinSection203arenotapplicabletoanyofourexistingstockholdersthatwillown15%ormoreofouroutstandingvotingstockupontheclosingofthisoffering.BylawsCertainprovisionsofourcorporatebylawscouldhaveanti-takeovereffects.TheseprovisionsareintendedtoenhancethelikelihoodofcontinuityandstabilityinthecompositionofourcorporatepoliciesformulatedbyourBoardofDirectors.Inaddition,theseprovisionsalsoareintendedtoensurethatourBoardofDirectorswillhavesufficienttimetoactinwhatourBoardofDirectorsbelievestobeinthebestinterestsofourCompanyandourshareholders.Nevertheless,theseprovisionscoulddelayorfrustratetheremovalofincumbentdirectorsortheassumptionofcontrolofusbytheholderofalargeblockofcommonstock,andcouldalsodiscourageormakemoredifficultamerger,tenderoffer,orproxycontest,evenifsucheventwouldbefavorabletotheinterestofourshareholders.Theseprovisionsaresummarizedbelow.AdvanceNoticeProvisionsforRaisingBusinessorNominatingDirectors.Sections2.2and3.3ofourBylawscontainadvance-noticeprovisionsrelatingtotheabilityofshareholderstoraisebusinessatashareholdermeetingandmakenominationsfordirectorstoserveonourBoardofDirectors.Theseadvance-noticeprovisionsgenerallyrequireshareholderstoraisebusinesswithinaspecifiedperiodoftimepriortoameetinginorderforthebusinesstobeproperlybroughtbeforethemeeting.Similarly,ourBylawsprescribethetimingofsubmissionsfornominationstoourBoardofDirectorsandthecertainoffactualandbackgroundinformationrespectingthenomineeandtheshareholdermakingthenomination.NumberofDirectorsandVacancies.OurBylawsprovidethatthenumberofdirectorsshallbefixedfromtimetotimebytheBoard.ThebylawsalsoprovidethatourBoardhastheright,exceptasmaybeprovidedinthetermsofanyseriesofpreferredstockcreatedbyresolutionsoftheboard,tofillvacancies,includingvacanciescreatedbyanydecisionofourBoardtoincreasethenumberofdirectorscomprisingtheboard.CertificateofIncorporation–Blank-CheckPreferredStockPowerUnderourCertificateofIncorporation,asamended,ourBoardhastheauthoritytofixbyresolutionthetermsandconditionsofoneormoreseriesofpreferredstockandprovidebyresolutionfortheissuanceofsharesofsuchseries.3Webelievethattheavailabilityofourpreferredstock,ineachcaseissuableinseries,andadditionalsharesofcommonstockcouldfacilitatecertainfinancingsandacquisitionsandprovideameansformeetingothercorporateneedswhichmightarise.Theauthorizedsharesofourpreferredstock,aswellasauthorizedbutunissuedsharesofcommonstock,willbeavailableforissuancewithoutfurtheractionbyourshareholders,unlessshareholderactionisrequiredbyapplicablelawortherulesofanystockexchangeonwhichanyseriesofourstockmaythenbelisted,orexceptasmaybeprovidedinthetermsofanypreferredstockcreatedbyresolutionofourBoard.TheseprovisionsgiveourBoardthepowertoapprovetheissuanceofaseriesofpreferredstock,oradditionalsharesofcommonstock,thatcould,dependingonitsterms,eitherimpedeorfacilitatethecompletionofamerger,tenderofferorothertakeoverattempt.Forexample,theissuanceofnewsharesofpreferredstockmightimpedeabusinesscombinationifthetermsofthosesharesincludevotingrightswhichwouldenableaholdertoblockbusinesscombinationsor,alternatively,mightfacilitateabusinesscombinationifthoseshareshavegeneralvotingrightssufficienttocauseanapplicablepercentagevoterequirementtobesatisfied.MarketInformationOurcommonstockistradedontheNASDAQCapitalMarketunderthesymbol“AGAE.”OurwarrantsaretradedontheOTCMarketunderthesymbol“AGAEW.”4Exhibit21.1Ourcorporatestructure,includingourprincipaloperatingsubsidiaries,isasfollows:NameofsubsidiaryJurisdictionofincorporationororganizationAlliedEsportsMedia,Inc.DelawareAlliedEsportsInternational,Inc.NevadaeSportsArenaLasVegas,LLCDelawareAlliedEsportsGmbHGermanyEsportsArena,LLC(25%ownershipinterest)CaliforniaExhibit23.1CONSENTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTotheBoardofDirectorsandStockholdersofAlliedGaming&EntertainmentInc.WeherebyconsenttotheincorporationbyreferenceintheRegistrationStatementonFormS-3(FileNo.333-248696),andintheRegistrationStatementsonFormS-8(FileNos.333-239984and333-267849)ofourreportdatedMarch24,2023,withrespecttoourauditsoftheconsolidatedfinancialstatementsofAlliedGaming&EntertainmentInc.asofandfortheyearendedDecember31,2022,whichareincorporatedinthisAnnualReportonForm10-KofAlliedGaming&EntertainmentInc.fortheyearendedDecember31,2022.Wealsoconsenttothereferencetousundertheheading“Experts”insuchRegistrationStatement./s/ZHCPA,LLCDenver,ColoradoMarch24,20231600Broadway,Suite1600,Denver,CO,80202,USA.Phone:1.303.386.7224Fax:1.303.386.7101Email:admin@zhcpa.usExhibit23.2INDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM’SCONSENTWeconsenttotheincorporationbyreferenceintheRegistrationStatementofAlliedGaming&EntertainmentInc.“formerlyknownasAlliedEsportsEntertainmentInc.”onFormS-3(FileNo.333-248696)andintheRegistrationStatementsofAlliedGaming&EntertainmentInc.onFormS-8(FileNos.333-239984and333-267849)ofourreportwithrespecttoourauditoftheconsolidatedfinancialstatementsofAlliedEsportsEntertainment,Inc.andSubsidiariesasofDecember31,2021andfortheyearendedDecember31,2021,whichreportisincludedinthisAnnualReportonForm10-KofAlliedGaming&EntertainmentInc.fortheyearendedDecember31,2022./s/MarcumLLPMarcumLLPMelville,NYMarch24,2023Exhibit31.1CERTIFICATIONOFCHIEFEXECUTIVEOFFICERPURSUANTTOSECTION302OFTHESARBANES-OXLEYACTOF2002I,YinghuaChen,certifythat:1.IhavereviewedthisreportonForm10-KofAlliedEsportsEntertainment,Inc.,2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;4.Theregistrant’sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:a.Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethatmaterialinformationrelatingtotheregistrant,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared;b.Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples;c.Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;andd.Disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscalquarter(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant’sinternalcontroloverfinancialreporting.5.Theregistrant’sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeoftheregistrant’sboardofdirectors(orpersonsperformingtheequivalentfunctions):a.Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelytoadverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;andb.Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleinthesmallbusinessissuer’sinternalcontroloverfinancialreporting.Dated:March24,2023/s/YinghuaChenYinghuaChen,PresidentandChiefExecutiveOfficer(PrincipalExecutiveOfficer)Exhibit31.2CERTIFICATIONOFCHIEFFINANCIALOFFICERPURSUANTTOSECTION302OFTHESARBANES-OXLEYACTOF2002I,RoyL.Anderson,certifythat:1.IhavereviewedthisreportonForm10-KofAlliedEsportsEntertainment,Inc.;2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;4.Theregistrant’sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:a.Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethatmaterialinformationrelatingtotheregistrant,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared;b.Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples;c.Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;andd.Disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscalquarter(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant’sinternalcontroloverfinancialreporting.5.Theregistrant’sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeoftheregistrant’sboardofdirectors(orpersonsperformingtheequivalentfunctions):a.Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelytoadverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;andb.Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleinthesmallbusinessissuer’sinternalcontroloverfinancialreporting.Date:March24,2023/s/RoyL.AndersonRoyL.Anderson,ChiefFinancialOfficer(PrincipalFinancialOfficer)Exhibit32.1CERTIFICATIONPURSUANTTO18U.S.C.SECTION1350,ASADOPTEDPURSUANTTOSECTION906OFTHESARBANES-OXLEYACTOF2002InconnectionwiththeAnnualReportofAlliedEsportsEntertainment,Inc.(the“Company”)onForm10-KforthefiscalyearendingDecember31,2022(the“Report”)I,YinghuaChen,PresidentandChiefExecutiveOfficeroftheCompany,certify,pursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002,thattothebestofmyknowledgeandbelief:(1)TheReportfullycomplieswiththerequirementsofSection13(a)or15(d)oftheSecuritiesExchangeActof1934;and(2)TheinformationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultsofoperationsoftheCompany.Dated:March24,2023/s/YinghuaChenYinghuaChen,PresidentandChiefExecutiveOfficerThiscertificationaccompaniestheReportpursuanttoSection906oftheSarbanes-OxleyActof2002andshallnot,excepttotheextentrequiredbytheSarbanes-OxleyActof2002,bedeemedfiledbytheCompanyforpurposesofSection18oftheSecuritiesExchangeActof1934,asamended.Exhibit32.2CERTIFICATIONPURSUANTTO18U.S.C.SECTION1350,ASADOPTEDPURSUANTTOSECTION906OFTHESARBANES-OXLEYACTOF2002InconnectionwiththeAnnualReportofAlliedEsportsEntertainment,Inc.(the“Company”)onForm10-KforthefiscalyearendingDecember31,2022(the“Report”)I,RoyAnderson,ChiefFinancialOfficeroftheCompany,certify,pursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002,thattothebestofmyknowledgeandbelief:(1)TheReportfullycomplieswiththerequirementsofSection13(a)or15(d)oftheSecuritiesExchangeActof1934;and(2)TheinformationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultsofoperationsoftheCompany.Dated:March24,2023/s/RoyL.AndersonRoyL.Anderson,ChiefFinancialOfficerThiscertificationaccompaniestheReportpursuanttoSection906oftheSarbanes-OxleyActof2002andshallnot,excepttotheextentrequiredbytheSarbanes-OxleyActof2002,bedeemedfiledbytheCompanyforpurposesofSection18oftheSecuritiesExchangeActof1934,asamended.<>/ColorImageDict<>/JPEG2000ColorACSImageDict<>/JPEG2000ColorImageDict<>/AntiAliasGrayImagesfalse/CropGrayImagesfalse/GrayImageMinResolution300/GrayImageMinResolutionPolicy/OK/DownsampleGrayImagesfalse/GrayImageDownsampleType/Bicubic/GrayImageResolution300/GrayImageDepth-1/GrayImageMinDownsampleDepth2/GrayImageDownsampleThreshold1.50000/EncodeGrayImagestrue/GrayImageFilter/DCTEncode/AutoFilterGrayImagestrue/GrayImageAutoFilterStrategy/JPEG/GrayACSImageDict<>/GrayImageDict<>/JPEG2000GrayACSImageDict<>/JPEG2000GrayImageDict<>/AntiAliasMonoImagesfalse/CropMonoImagesfalse/MonoImageMinResolution1200/MonoImageMinResolutionPolicy/OK/DownsampleMonoImagesfalse/MonoImageDownsampleType/Bicubic/MonoImageResolution300/MonoImageDepth-1/MonoImageDownsampleThreshold1.50000/EncodeMonoImagestrue/MonoImageFilter/CCITTFaxEncode/MonoImageDict<>/AllowPSXObjectsfalse/CheckCompliance[/None]/PDFX1aCheckfalse/PDFX3Checkfalse/PDFXCompliantPDFOnlyfalse/PDFXNoTrimBoxErrortrue/PDFXTrimBoxToMediaBoxOffset[0.000000.000000.000000.00000]/PDFXSetBleedBoxToMediaBoxtrue/PDFXBleedBoxToTrimBoxOffset[0.000000.000000.000000.00000]/PDFXOutputIntentProfile()/PDFXOutputConditionIdentifier()/PDFXOutputCondition()/PDFXRegistryName()/PDFXTrapped/False/CreateJDFFilefalse/Description<>>/Namespace[(Adobe)(Common)(1.0)]/OtherNamespaces[<><>/FormElementsfalse/GenerateStructurefalse/IncludeBookmarksfalse/IncludeHyperlinksfalse/IncludeInteractivefalse/IncludeLayersfalse/IncludeProfilesfalse/MarksOffset0/MarksWeight0.283460/MultimediaHandling/UseObjectSettings/Namespace[(Adobe)(CreativeSuite)(2.0)]/PDFXOutputIntentProfileSelector/DocumentCMYK/PageMarksFile/JapaneseWithCircle/PreserveEditingtrue/UntaggedCMYKHandling/LeaveUntagged/UntaggedRGBHandling/UseDocumentProfile/UseDocumentBleedfalse>><>]>>setdistillerparams<>setpagedevice。
