UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
10–K
(Mark One
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended:
December 31, 2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
from to
Commission File Number 001-38363
HALL
OF FAME RESORT & ENTERTAINMENT COMPANY
(Exact name of registrant
as specified in its charter)
| Delaware | | 84-3235695 |
(State or other jurisdiction
of incorporation or organization) | | (I.R.S. Employer
Identification No.) |
2014 Champions Gateway Canton, OH | | 44708 |
| (Address of principal executive offices) | | (Zip Code) |
(330) 458-9176
(Registrant’s telephone number, including
area code)
Securities registered under section 12(b) of the
Act:
| Title of each class | | Trading Symbol(s) | | Name of each exchange on
which registered |
| Common Stock, $0.0001 par value per share | | HOFV | | Nasdaq Capital Market |
| Warrants to purchase 0.064578 shares of Common Stock | | HOFVW | | Nasdaq Capital Market |
Securities registered under section 12(g) of the
Act:
Not applicable
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company.
See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and
“emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by checkmark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2023, the last day of the registrant’s
most recently completed second fiscal quarter; the aggregate market value of the registrant’s common stock held by non–affiliates
of the registrant was approximately $6,401,712.
As of March 20, 2024, the registrant had outstanding
6,502,308 shares of common stock, $0.0001 par value.
DOCUMENTS INCORPORATED
BY REFERENCE
Portions of the registrant’s Proxy Statement for the 2024 Annual
Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.
Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year
ended December 31, 2023.
HALL OF FAME RESORT & ENTERTAINMENT COMPANY
AND SUBSIDIARIES
INDEX
NOTE REGARDING FORWARD–LOOKING STATEMENTS
This Annual Report on
Form 10-K may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are generally identified by use of words such as “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,”
“projection,” “outlook,” “target,” “seek,” or words of similar meaning. These forward-looking
statements include, but are not limited to, statements regarding future opportunities for the Company and the Company’s estimated
future results. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently
subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and
generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking
statements.
In addition to factors
identified elsewhere in this Annual Report on Form 10-K, the following risks, among others, could cause actual results and the timing
of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
| ● | the
benefits of the Business Combination (defined below); |
| ● | the
future financial performance of the Company and its subsidiaries, including HOF Village (as
defined below); |
| ● | changes
in the market in which the Company competes; |
| ● | expansion
and other plans and opportunities; |
| ● | the
Company’s ability to raise financing in the future; |
| ● | the
Company’s ability to maintain the listing of its Common Stock on the Nasdaq Capital
Market (“Nasdaq”); and |
| ● | other
factors detailed under the section titled “Risk Factors” in this Report. |
Actual results, performance
or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions
on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future
performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance.
All information set forth herein speaks only as of the date hereof, in the case of information about the Company, or as of the date of
such information, in the case of information from persons other than the Company, and we disclaim any intention or obligation to update
any forward-looking statements as a result of developments occurring after the date of this Annual Report on Form 10-K. Forecasts and
estimates regarding the Company’s industry and end markets are based on sources we believe to be reliable, however there can be
no assurance these forecasts and estimates will prove accurate in whole or in part. Any annualized, pro forma, projected and estimated
numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
PART I
Item 1. Business
Unless the context otherwise requires, references
in this Annual Report on Form 10-K to the “Company”, “HOFRE,” “we,” “our,” “us”
and similar terms refer to Hall of Fame Resort & Entertainment Company, a Delaware corporation.
Overview
We are a resort and entertainment company leveraging
the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing
business as the Pro Football Hall of Fame (“PFHOF”). We have created a diversified set of revenue streams through the development
of themed attractions, premier entertainment programming and sponsorships. We continue to pursue a diversified strategy across three pillars,
including destination-based assets, the Media Company (defined below), and gaming. Headquartered in Canton, Ohio, we own the Hall of Fame
Village, which is a multi-use sports and entertainment destination centered around the PFHOF’s campus and the DoubleTree by Hilton
located in downtown Canton.
The strategic plan for Hall of Fame Village involves
three phases: Phase I, Phase II, and Phase III. Phase I of the Hall of Fame Village is operational, consisting of the Tom Benson Hall
of Fame Stadium, the ForeverLawn Sports Complex (ownership reduced to 20% as of January 11, 2024), and HOF Village Media Group, LLC (“Hall
of Fame Village Media” or the “Media Company”) and gaming. The Tom Benson Hall of Fame Stadium hosts multiple sports
and entertainment events, including the National Football League (“NFL”) Hall of Fame Game, Enshrinement and Concert for Legends during the annual Pro Football Hall
of Fame Enshrinement Week. The ForeverLawn Sports Complex hosts camps and tournaments for football players, as well as athletes from across
the country in other sports such as lacrosse, rugby and soccer. Hall of Fame Village Media leverages the sport of professional football
to produce exclusive programming.
We have developed new hospitality, attractions
and corporate assets as part of our Phase II development plan. Phase II components of the Hall of Fame Village include the Constellation
Center for Excellence (an office building including retail and meeting space, that opened in November 2021), the Center for Performance
(a convention center/field house, that opened in August of 2022), the Play Action Plaza (completed in August of 2022), and the Fan Engagement
Zone (Retail Promenade), core and shell for Retail I was completed in August of 2022 and the core and shell of Retail II was completed
in November of 2022, two hotels (one on campus, to be constructed, and one in downtown Canton that opened in November 2020), and the Gameday
Bay Waterpark (currently under construction). Phase III expansion plans may include a potential mix of residential space, additional attractions,
entertainment, dining, merchandise and more.
Corporate History
and Background
The Hall of Fame Resort & Entertainment Company
(formerly known as GPAQ Acquisition Holdings, Inc.) was incorporated in Delaware on August 29, 2019, as a subsidiary of Gordon Pointe
Acquisition Corp. (“GPAQ”), a special purpose acquisition company formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase or other similar business combination with one or more businesses or assets.
On July 1, 2020, we consummated the previously
announced business combination with HOF Village, LLC, a Delaware limited liability company (“Original HOF Village”), pursuant
to an Agreement and Plan of Merger dated September 16, 2019 (as amended on November 6, 2019, March 10, 2020 and May 22, 2020, the “Merger
Agreement”), by and among the Company, GPAQ Acquiror Merger Sub, Inc., a Delaware corporation (“Acquiror Merger Sub”),
GPAQ Company Merger Sub, LLC, a Delaware limited liability company (“Company Merger Sub”), Original HOF Village and HOF Village
Newco, LLC, a Delaware limited liability company (“HOF Village”). The transactions contemplated by the Merger Agreement are
referred to in this Annual Report on Form 10-K as the “Business Combination.”
On September 29, 2022, our stockholders approved
an amendment to our Certificate of Incorporation to effect a reverse stock split of our shares of Common Stock, and our Board subsequently
approved a final reverse stock split ratio of 1-for-22 (the “Reverse Stock Split”). The Reverse Stock Split became effective
at 12:01am Eastern Time on December 27, 2022 (the “Effective Time”). At the Effective Time, every 22 shares of issued and
outstanding Common Stock were combined and converted into one issued and outstanding share of Common Stock. Fractional shares were cancelled
and stockholders received cash in lieu thereof. All outstanding restricted stock unit awards, warrants and other securities settled in,
exercisable for or convertible into shares of Common Stock were adjusted as a result of the reverse split, as required by their respective
terms. A proportionate adjustment was also made to the maximum number of shares of Common Stock issuable under the Hall of Fame Resort
& Entertainment Company Amended 2020 Omnibus Incentive Plan (the “Plan”). The number of authorized shares of Common Stock
and the par value per share of Common Stock remains unchanged at $0.0001 per share.
The Reverse Stock Split
was intended to bring the Company into compliance with the minimum bid price requirement for maintaining its listing on the Nasdaq. The
Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s
equity (other than as a result of the payment of cash in lieu of fractional shares).
On January 11, 2024,
HOF Village completed the sale to Sandlot Facilities, LLC (“Sandlot”) of 80% of a newly formed limited liability company
named Sandlot HOFV Canton SC, LLC, to which the Company, HOF Village and HOF Village Youth Fields, LLC had contributed the ForeverLawn
Sports Complex business prior to closing. For more information, see “Recent Developments—Sale to Sandlot; Strategic Partnership
for Youth Sports Programming at the Hall of Fame Village below.”
Business Strategy
Our unique position and multimedia approach makes
us the only company of our kind fully poised to capitalize on the popularity of professional football, one of the most popular brands
in sports worldwide (as measured by total league revenue and number of fans). Our principal business objectives are to successfully develop
and operate Destination Based Assets such as the Hall of Fame Village as a premiere destination resort and entertainment company leveraging
the expansive popularity of professional football and the Pro Football Hall of Fame; Hall of Fame Village Media taking advantage of direct
access to exclusive content; and a gaming vertical that spans across fantasy sports in addition to growth areas of eGaming and sports
betting. The resort and entertainment platform will significantly extend the presence of the Pro Football Hall of Fame, the singular
institution focused on honoring and preserving the legends and values of professional football. We are located in Canton, Ohio, the birthplace
of American professional football. It is in a market area within an 8-hour driving distance to nearly half of the NFL franchises and
with limited themed attractions. Together with the PFHOF, we intend to become an elite entertainment venue and premier attraction for
the region. The current operational assets of the PFHOF and the Company currently attract over three million visitors annually from across
the United States.
Strategic Relationship with PFHOF
PFHOF is a distinct entity from us but serves
as a significant shareholder and aligned partner. The Pro Football Hall of Fame Museum, which is owned and operated by PFHOF and not
the Company, is a 501(c)(3) not-for-profit educational institution that focuses on the education, promotion, preservation and honoring
of the individuals and moments that shaped professional football’s history. Since opening in 1963, the Museum has grown in both
size and stature. The building was expanded in 1971, 1978 and 1995, and completed major exhibit gallery renovations in 2003, 2008, and
2009. Together, these improvements have transformed the original 19,000 square-foot Hall of Fame Museum into an exciting internationally
recognized institution and travel destination. Today, the Pro Football Hall of Fame stands as a shining tribute to professional football
and the over 300 men who have been enshrined, receiving their Gold Jackets. The Pro Football Hall of Fame Museum and the Gold Jacket
enshrinees serve as unique and valuable partners that contribute to the development of the Hall of Fame Village.
Strategic Relationship with Sandlot
Sandlot is a distinct entity from us but serves
as an aligned partner. On January 11, 2024, HOF Village completed the sale to Sandlot Facilities, LLC (“Sandlot”) of 80% of
a newly formed limited liability company named Sandlot HOFV Canton SC, LLC (“Sports Complex Newco”), to which the Company,
HOF Village and HOF Village Youth Fields, LLC had contributed the ForeverLawn Sports Complex business prior to closing. HOF Village has
entered into certain commercial arrangements that consist of (i) the Facilities Management Agreement between HOF Village and Sports Complex
Newco, pursuant to which HOF Village provides certain facilities services to Sports Complex Newco, (ii) the Marketing and SC Programming
Collaboration Agreement among HOF Village, Sports Complex Newco and Purchaser Guarantor, pursuant to which the parties thereto collaborate
with regard to marketing and programming of the ForeverLawn Sports Complex, (iii) the Marketing and CFP Programming Collaboration Agreement
between HOF Village and Sports Complex Newco, pursuant to which the parties thereto collaborate with regard to marketing and programming
at the Center for Performance, and (iv) the Food and Beverage Services Agreement between HOF Village and Sports Complex Newco, pursuant
to which HOF Village provides certain food and beverage services to Sports Complex Newco. For more information, see “Recent Developments—Sale
to Sandlot; Strategic Partnership for Youth Sports Programming at the Hall of Fame Village” below.
About Phase I
We had invested approximately $250 million of
capital to build Phase I of the Hall of Fame Village. Phase I, already complete, includes the Tom Benson Hall of Fame Stadium, the ForeverLawn
Sports Complex, Hall of Fame Village Media, as well as land and infrastructure to support future phases of development.
Tom Benson Hall of Fame Stadium
The Tom Benson Hall of Fame Stadium holds up
to 23,000 spectators and hosts events such as the annual Pro Football Hall of Fame Enshrinement Week including other premier sporting
events such as the Historic Black College Hall of Fame Game, the Ohio State High School Football Championships, Women’s Football
Alliance Championships and Division III college football championships. In 2023, the Company hosted two USFL teams along with the semi-final
and championship games. During the Pro Football Hall of Fame Enshrinement Week, Tom Benson Hall of Fame Stadium hosts the Hall of Fame
Game, the first NFL game of the pre-season, and the Hall of Fame Enshrinement ceremony for NFL players and other enshrinees. The design
of the Tom Benson Hall of Fame Stadium with cut-away seats, allows it to serve as an elite concert venue. The Tom Benson Hall of Fame
Stadium has hosted performances by national recording artists such as Aerosmith, Tim McGraw, Journey, Zac Brown Band as well as comedian
acts like Dave Chappelle, Kevin Hart, and Bill Burr.
ForeverLawn Sports Complex
The ForeverLawn Sports Complex consists of eight
full-sized fields. Support buildings including concessions, ticketing, restrooms and storage facilities were completed in or prior to
the third quarter of 2022. The Sports Complex hosts camps and tournaments for football players as well as athletes from other sports such
as lacrosse, rugby and soccer from across the country. For more information regarding the ForeverLawn Sports Complex,
see “Recent Developments—Sale to Sandlot; Strategic Partnership for Youth Sports Programming at the Hall of Fame Village below.”
Hall of Fame Village Media
In 2017, HOF Village formed a sports and entertainment
media company, Hall of Fame Village Media, leveraging the sport of professional football to produce exclusive content. Hall of Fame Village
Media has the ability to serve multiple media formats including full length feature films, live and taped television specials, studio
shows, live sports events, books and artwork. Through our partnership with the PFHOF, Hall of Fame Village Media has access to millions
of pieces of photo, video and document archives.
During 2022, Hall of Fame Village Media co-produced
Inspired, a series celebrating inspirational NFL figures who have used their platform to help those in need while uniting communities.
Inspired aired on over 100 Gray Television local channels.
Also during 2022, Hall of Fame Village Media
co-produced The Perfect 10, a documentary film profiling the exclusive group of NFL athletes who are both Heisman Trophy winners
and Pro Football Hall of Fame inductees. We sold The Perfect 10 to Fox, where it aired across the country on Fox stations during
Super Bowl weekend.
In 2023, Hall of Fame Village Media co-produced
The GOAT Code, a series that provides viewers with an intimate look into the lives and journeys of iconic athletes. The series
provided insights into how these players transcended the game to become The Greatest of All Time.
Hall of Fame Village Media has entered into a
number of partnership deals including ReachTV and other NFL greats such as Jimmy Johnson and Rashad Jennings.
About Phase II
Phase II added additional strategic attractions,
hospitality, and corporate assets in a well-planned and synergistic manner intended to increase consumer appeal and drive revenue and
profitability growth.
As a part of Phase II, we have completed the development
of our Hilton DoubleTree Hotel, the Constellation Center for Excellence (a state of the art building used for both commercial offices
and retail in the West End Zone of the Tom Benson Hall of Fame Stadium), the Center for Performance (one of the largest indoor sports
domes in the United States), the Fan Engagement Zone (our retail promenade offering a variety of food and beverage options for our guests),
and Play Action Plaza (our football themed area for recreation and events which includes three amusement rides). We are currently underway
in our development of Gameday Bay Waterpark, which we expect to open in early 2025. We also own the land and received zoning approval
for our on-campus Hilton Tapestry hotel. We expect to begin construction on the Hilton Tapestry hotel in mid-2024, with completion targeted
in the first half of 2025.
In Phase II, the critical business strategies
are to drive further asset development, increased event programming, new alliance sponsorships, media development and explore additional
growth verticals:
| ● | Further
Asset Development: We have constructed additional assets in Phase II to attract and entertain
guests. In November 2020, we opened the DoubleTree by Hilton hotel in downtown Canton. In
October 2021, we opened our Constellation Center for Excellence. In November 2022, we opened
the Center for Performance, which provides a variety of year-round programming options. The
Fan Engagement Zone (retail promenade) offering a variety of food and beverage options, as
well as other specialized entertainment alternatives opened in September 2022. A green space
area called Play-Action Plaza provides 3.5 acres for football-themed recreation, events,
and formal gatherings including amusement rides. Additional assets will include the Gameday
Bay Waterpark and an on-campus Hilton Tapestry hotel attached to the waterpark. Future destination-themed
assets can include live entertainment, gaming, dining, and residential within Hall of Fame
Village and within major NFL franchise cities. Construction began on Phase II in 2020, and
all assets within Phase II are projected to be operational by the middle of 2025. |
| ● | Increased
Event Programming: We are utilizing the Tom Benson Hall of Fame Stadium for an expanded
offering of live entertainment and events, including top performers, sporting events and
festival programming. Also, given the appeal and popularity of youth sports, additional year-round
programming is expected to be available across multiple sports. In November 2022, we opened
our Center for Performance, our indoor sports dome, which enables us to host sports and other
events year-round. During 2023, we hosted two USFL franchises for an entire season,
and hosted the USFL finals and semi-finals. Additionally, in 2023, we hosted multiple top
tier artists and comedians, including Zac Brown Band, Kidz Bop, Bill Burr, and Kevin Hart, and
hosted other successful events. In 2024 and moving forward, there are also plans for multiple
concerts, including Carrie Underwood, multi-day comedy and music festivals, and on-going
business event productions. |
| ● | New
Alliance Sponsorships: We have been successful in attracting a strong sponsorship base
and will continue to seek significant partnerships with leading companies and brands across
a range of untapped categories. These partnerships are expected to be in the form of naming
rights agreements or additional category-specific sponsorships. HOF Village plans to target
a number of industry verticals for additional sponsorship revenue, such as financial services,
autos, telecom and beverages. |
| ● | Media Development: We are developing
original content from both event programming and direct access to millions of pieces of historic Pro Football artifacts located
within the PFHOF archive through Hall of Fame Village Media. We are planning on producing full-length films, shows and other digital
content marketing through multiple channels of distribution. Advanced discussions with media leaders, creative, development and
distribution partners are ongoing. We are working on expanding our team and partnerships and have a robust slate of new content in
development. |
| ● | Hall
of Fame Village Gaming: Gaming is expected to be a connective tissue that integrates
the rest of the business units across the Company. This encompasses eSports as a way to increase
engagement, as well as gaming as a part of offsite asset building and programming, purpose-driven
physical destination resort locations, and broadcast/streaming gaming content within media. |
| ● | Sports
Betting: We procured two sports betting licenses to develop sports betting both online
and on campus in connection with sports betting legislation in the State of Ohio. In 2023,
our mobile betting partner, Betr, went live offering both monetary and token (free-to-play)
microbets. |
| ● | Exploring
Additional Growth Verticals: HOF Village has begun exploring additional growth verticals
as part of Phase II. In the future, the Company will seek opportunities to expand certain
destination-based assets in other geographic markets leveraging the popularity of professional
football. |
About Phase III
With Phase I and Phase II assets providing a solid foundation, growth
is expected to continue with the development of Phase III, which the Company anticipates will include a potential mix of residential space,
and additional attractions, entertainment, dining, merchandise and more. The Company is currently in planning the future assets to be
constructed in Phase III and expects to begin construction sometime after the completion of Phase II.
Competition
We currently face and will continue to face competition
in each of our businesses, as follows:
| ● | Tom
Benson Hall of Fame Stadium, the ForeverLawn Sports Complex and the Center for Performance
will compete with other facilities and venues across the region and country for hosting concerts,
athletic events (including professional sports events, sports camps and tournaments) and
other major conventions. |
| ● | Hall
of Fame Village Media will compete (i) with other media and content producers to obtain creative
and performing talent, sports and other programming content, story properties, advertiser
support, distribution channels and market share and (ii) for viewers with other broadcast,
cable and satellite services as well as with home entertainment products, new sources of
broadband and mobile delivered content and internet usage. |
| ● | The
Gameday Bay Waterpark and the Hall of Fame hotels, will compete with other theme parks and
resorts, such as Cedar Point, located in Sandusky, Ohio, and other theme parks, retail and
tourist destinations in Ohio and around the country, and with other forms of entertainment,
lodging, tourism and recreation activities. The Fan Engagement Zone, will compete with other
food and beverage, and retail locations. |
| ● | The
Constellation Center for Excellence and the Fan Engagement Zone (retail promenade) will compete
for tenants with other suppliers of commercial and/or retail space. |
| ● | Our
sports betting and e-gaming will compete with other sports betting providers attempting to
enter the Ohio sports betting market. |
Employees
As of March 21, 2024, we have 98 employees that
perform various administrative, finance and accounting, event planning, sports programming, media development, and corporate management
functions for the Company and its subsidiaries. Additionally, we have a pool of 146 seasonal, part-time, and event-specific staff that
we are able to activate when needed.
Properties
We own real property in Canton, Ohio, at the
site of the Hall of Fame Village development and our DoubleTree by Hilton Hotel. Certain parcels of real property on which the Hall of
Fame Village is located, including the parcel on which Tom Benson Hall of Fame Stadium is located, are owned by the Canton City School
District (Board of Education), and are subject to long-term ground leases and agreements with us for the use and development of such
property.
The land under our Fan Engagement Zone and Gameday Bay waterpark are
both subject to respective sale-leaseback financing arrangements. Both financing arrangements allow us to buy back the property at our
option within certain time periods.
On January 11, 2024, HOF Village completed the
sale to Sandlot of 80% of a newly formed limited liability company named Sandlot HOFV Canton SC, LLC, to which the Company, HOF Village
and HOF Village Youth Fields, LLC had contributed the ForeverLawn Sports Complex business (including the ground lease) prior to closing.
For more information, see “Recent Developments—Sale to Sandlot; Strategic Partnership for Youth Sports Programming at the
Hall of Fame Village” above.
Smaller Reporting Company
We are a “smaller reporting company”
as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations,
including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until
the last day of any fiscal year for so long as either (1) the market value of our shares of Common Stock held by non-affiliates did not
equal or exceed $250 million as of the prior June 30, or (2) our annual revenues did not equal or exceed $100 million during such completed
fiscal year and the market value of our shares of Common Stock held by non-affiliates did not equal or exceed $700 million as of the
prior June 30.
Recent Developments
Dispute Regarding Naming Rights Agreement
with Johnson Controls
The Company was in a dispute with Johnson Controls,
Inc. (“JCI”) regarding the Naming Rights Agreement. The Company pursued dispute resolution pursuant to the terms of the Naming
Rights Agreement to simultaneously defend against JCI’s allegations and pursue its own claims. The parties participated in mediation
in November 2022, but were unable to reach a resolution. On January 24, 2023, the Company filed a demand for arbitration, asserting claims
against JCI for breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment. On February 16,
2023, JCI filed its response, generally denying the Company’s allegations and asserting counterclaims for breach of contract, breach
of the implied covenant of good faith and fair dealing, and unjust enrichment. On March 9, 2023, the Company filed its response to JCI’s
counterclaims, generally denying JCI’s allegations. A panel of three arbitrators had been constituted to hear and determine the
dispute. On October 4, 2023, the Company and JCI commenced an arbitration hearing in Ohio to determine the outcome of the dispute.
On December 13, 2023, the Company received notice
from the arbitration panel that the panel had awarded the Company a total amount of approximately $2.87 million. Neither the Company nor
JCI appealed the ruling, and both the Naming Rights Agreement and the Technology as a Service (“TAAS”) Agreement are considered
terminated as of the date of the ruling. During the year ended December 31, 2023, the Company recognized a gain of $4.1 million, representing
the net book value of (a) amounts accrued under the TAAS, (b) amounts accrued under the Naming Rights Agreement, and (c) deferred revenue
under the Naming Rights Agreement, net of amounts due from JCI under the Naming Rights Agreement. This gain is included in “Other
income” on the Company’s consolidated statements of operations.
See Note 6: Sponsorship Revenue and Associated
Commitments – Johnson Controls, Inc., in our consolidated financial statements included herein for additional information relating
to this dispute.
Amendment Number 10 to Term Loan Agreement
On January 11, 2024, Hall of Fame Resort &
Entertainment Company, HOF Village Newco, LLC (“HOF Village”) and HOF Village Youth Fields, LLC (“HOFV YF”) entered
into Amendment Number 10 to Term Loan Agreement (“Amendment Number 10”) with CH Capital Lending, LLC (“Lender”),
an affiliate of our director Stuart Lichter.
Amendment Number 10, and the related amendments
described below, were entered as a condition of closing the Transaction, defined below, to (i) release HOFV YF from certain debt instruments
with Lender, IRG, LLC, a Nevada limited liability company, JKP Financial, LLC, a Delaware limited liability company, and Midwest Lender
Fund, LLC, a Delaware limited liability company; (ii) partially release a mortgage by CH Capital Lending, LLC releasing the leasehold
property owned by HOFV YF from the mortgage; and (iii) release collateral owned by HOFV YF from the security agreement.
Amendment Number 10 also memorializes the outstanding
principal amount of $6,142,308 after applying proceeds from the Transaction and adding $4,400,000 back to the outstanding principal amount
for funds immediately advanced to the Company resulting in a new loan amount of $10,542,308. Additionally, the Company and HOF Village
irrevocably instructed the Purchaser (defined below) in the Transaction to deliver the Holdback Amount (defined below), if any, owing
to HOF Village pursuant to the Transaction to Lender for and on behalf of the Company.
Second Amendment to Second Amended and Restated Secured Cognovit
Promissory Note
On January 11, 2024, the Company and HOF Village
entered into a Second Amendment to Second Amended and Restated Secured Cognovit Promissory Note (“Second Amendment to Second A&R
Secured Cognovit Promissory Note with CH Capital Lending, LLC (“Lender”), an affiliate of our director Stuart Lichter.
The Second Amendment to Second A&R Secured
Cognovit Promissory Note was entered to (i) credit $8,126,633 in proceeds from the closing of the Transaction toward the principal amount
of $14,268,942 resulting in a balance of approximately $6,142,308; (ii) add $4,400,000 to the outstanding principal amount for funds
immediately advanced to the Company resulting in a new loan amount of $10,542,308 with all other terms, covenants and conditions of the
Note, the Loan Agreement and other Loan Documents remaining as originally written.
Sale to Sandlot; Strategic Partnership for Youth Sports Programming
at the Hall of Fame Village
On January 11, 2024, HOF Village completed a strategic partnership with Josh Harris and David Blitzer to elevate and expand youth sports
programming at the ForeverLawn Sports Complex. The partnership will increase the strength and reach of both parties and demonstrates a
commitment to use the power of sports to inspire, educate, and uplift youth. The programming will extend to HOF Village’s Center
for Performance.
HOF Village completed
the sale to Sandlot Facilities, LLC (“Sandlot”) of 80% of a newly formed limited liability company named Sandlot HOFV Canton
SC, LLC (“Sports Complex Newco”), to which the Company, HOF Village and HOF Village Youth Fields, LLC had contributed the
ForeverLawn Sports Complex business prior to closing for a $10 million purchase price.
The Transaction occurred
pursuant to the terms of the previously disclosed Membership Interest Purchase Agreement, dated December 22, 2023 (the “Purchase
Agreement”), among the Company, HOF Village, Sandlot and Sandlot Youth Sports Holdings, LLC (“Purchaser Guarantor”).
Under the Purchase Agreement, Sandlot held back $1.5 million of the Purchase Price (the “Holdback Amount”) to secure certain
indemnification obligations of the Company and HOF Village, which holdback will be released by Sandlot for HOF Village in three $500,000
increments at 6, 12 and 18 months after the January 11, 2024 closing date of the Transaction (the “Closing”), subject to post-Closing
adjustment of the Purchase Price and any indemnification claims pursuant to the Purchase Agreement.
Available Information
Our Internet address is https://www.hofreco.com.
Our website and the information contained therein or linked thereto are not part of this Annual Report. We make available free of charge
through our website the following materials: our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, proxy statements, registration statements and amendments to those reports filed or furnished pursuant to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material
with, or furnish them to the U.S. Securities and Exchange Commission (the “SEC”). The SEC maintains a website that contains
reports, proxy statements and other information regarding issuers that file electronically with the SEC. These materials may be obtained
electronically by accessing the SEC’s website at www.sec.gov.
Item 1A. Risk Factors.
Certain factors may have a material adverse effect
on our business, financial condition and results of operations. You should carefully consider the risks described below, in addition
to other information contained in this Annual Report on Form 10-K, including our financial statements and related notes. If any of these
risks and uncertainties actually occur, our business, financial condition and results of operations may be materially adversely affected.
As a result, the market price of our securities could decline, and you could lose all or part of your investment. Additionally, the risks
and uncertainties described in this Annual Report on Form 10-K are not the only risks and uncertainties that we face. Additional risks
and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our
business, financial condition and results of operations.
Summary of Risk Factors
Our business is subject to a number of risks,
including risks that may prevent us from achieving our business objectives or may adversely affect our business and financial performance.
These risks are discussed more fully below and include, but are not limited to, the following:
| |
● |
We are an early-stage company with a minimal track record and limited historical financial information available. |
| ● | In addition to revenue from operations, we are relying on various forms
of financing and debt to finance the Company. |
| ● | We do business with multiple branded partners, including, but not limited
to, PFHOF, the NFL, Sandlot, and others. Incidents or adverse publicity concerning any of our branded partners could harm our reputation
as well as negatively impact our revenues and profitability. |
| ● | We could be adversely affected by declines in discretionary consumer
spending, consumer confidence and general and regional economic conditions as well as changes in consumer tastes and preferences for sports
and entertainment products. |
| ● | Our
business may be adversely affected by defaults or bankruptcy of our tenants and partners. |
| ● | Our
sports betting and eSports operations are subject to a variety of laws,
and which could subject us to claims or otherwise harm our business. Any change in existing
regulations or their interpretation, or the regulatory climate applicable to our products
and services, or changes in tax rules and regulations or interpretation thereof related to
our products and services, could adversely impact our ability to operate our business as
currently conducted or as we seek to operate in the future, which could have a material adverse
effect on our financial condition and results of operations. |
| ● | We are dependent on our management team, specifically our
President and Chief Executive Officer, and the loss of one or more key employees could harm our business and prevent us from
implementing our business plan in a timely manner. |
| ● | The
high fixed cost structure of the Company’s operations may result in significantly lower
margins if revenues decline. |
| ● | Cyber
security risks and the failure to maintain the integrity of internal or guest data could
result in damages to our reputation, the disruption of operations and/or subject us to costs,
fines or lawsuits. |
| ● | The
suspension or termination of, or the failure to obtain, any business or other licenses may
have a negative impact on our business. |
| ● | We
will have to increase leverage to develop the Company, which could further exacerbate the
risks associated with our substantial indebtedness, and we may not be able to generate sufficient
cash flow from operations to service all of our indebtedness and may be forced to take other
actions to satisfy our obligations under our indebtedness, which may not be successful. |
| ● | Our business plan and ability to run a profitable business model requires
additional liquidity and capital resources that might not be available on terms that are favorable to us, or at all. If we cannot obtain
additional liquidity and capital resources, we may be unable to continue as a going concern. |
| ● | We
currently do not intend to pay dividends on our Common Stock. Consequently, our stockholders’
ability to achieve a return on their investment will depend on appreciation in the price
of our Common Stock. |
| ● | Our
Series A Warrants and Series B Warrants are accounted for as liabilities and the changes
in value of such warrants could have a material effect on our financial statements. |
| ● | The
trading price of our securities has been, and likely will continue to be, volatile. |
| ● | We
may be required to take write-downs or write-offs, restructuring and impairment or other
charges that could have a significant negative effect on our financial condition, results
of operations and our stock price, which could cause our stockholders to lose some
or all of their investment. |
Risks Related to Our Business
We are an early
stage company with a minimal track record and limited historical financial information available.
HOF Village was formed
as a limited liability company on December 16, 2015 by certain affiliates of Industrial Realty Group and a subsidiary of PFHOF, to own
and operate the Hall of Fame Village in Canton, Ohio, as a premiere destination resort and entertainment company leveraging the expansive
popularity of professional football and the PFHOF. As a result of the Business Combination, HOF Village became our wholly owned subsidiary.
As of the date hereof, we anticipate that the Hall of Fame Village will have the following major components:
Phase
I:
| ● | Tom
Benson Hall of Fame Stadium |
| ● | ForeverLawn
Sports Complex |
| ● | Hall
of Fame Village Media |
Phase
II:
| |
● |
Gameday Bay Waterpark |
| |
|
|
| |
● |
Two hotels (Hilton Tapestry on campus and Hilton DoubleTree in downtown Canton about five minutes from campus) |
| |
|
|
| |
● |
Constellation Center for Excellence (Office Building, Retail and Meeting Space) |
| |
● |
Center for Performance (Field House and Convention Center) |
| |
● |
Fan Engagement Zone (Retail promenade) |
| |
● |
Play Action Plaza (Green space for recreation, events and informal gatherings) |
| |
● |
Fantasy sports, sports betting and eSports |
Phase
III (Potential):
| |
● |
Entertainment, dining,
merchandise and more |
The components in Phase I are complete. As a part of Phase II, we have
completed the development of our Hilton DoubleTree Hotel, the Constellation Center for Excellence (a state of the art building used for
both commercial offices and retail in the West End Zone of the Tom Benson Hall of Fame Stadium), the Center for Performance (one of the
largest indoor sports domes in the United States), the Fan Engagement Zone (our retail promenade offering a variety of food and beverage
options for our guests), and Play Action Plaza (our football themed area for recreation and events which includes three amusement rides).
We are currently underway in our development of Gameday Bay Waterpark, which we expect to open in early 2025. We also own the land and
received zoning approval for our on-campus Hilton Tapestry hotel. We expect to begin construction on the Hilton Tapestry hotel in mid-2024,
with completion targeted in the first half of 2025. Phase III is still in the planning stage and has not commenced operations or generated
any revenue. The components of the Hall of Fame Village have limited operating history and business track record.
Because we are in the
early stages of executing our business strategy, we cannot provide assurance that, or when, we will be profitable. We will need to make
significant investments to develop and operate the Hall of Fame Village and expect to incur significant expenses in connection with operating
components of the Hall of Fame Village, including costs for entertainment, talent fees, marketing, salaries and maintenance of properties
and equipment. In addition, our business strategy is broad and may be subject to significant modifications in the future. Our current
strategy may not be successful, and if not successful, we may be unable to modify it in a timely and successful manner. A company with
this extent of operations still in the planning stage is highly speculative and subject to an unusually high degree of risk.
We expect to incur significant
capital, operational and marketing expenses for a few years in connection with our planned Phase II and III expansion. Any failure to
achieve or sustain profitability may have a material adverse impact on the value of the shares of our Common Stock.
Our ability to
implement our proposed business strategy may be materially and adversely affected by many known and unknown factors.
Our business strategy
relies upon our future ability to successfully develop and operate the Hall of Fame Village as well as our other business verticals.
Our strategy assumes that we will be able to, among other things: secure sufficient capital to repay our indebtedness; continue to lease
or to acquire additional property in Canton, Ohio at attractive prices and develop such property into efficient and profitable operations;
and maintain our relationships with key partners, including PFHOF, the general contractors for the Hall of Fame Village, and various
other design firms, technology consultants, managers and operators and vendors that we are relying on for the successful development
and operation of the Hall of Fame Village, as well as to develop new relationships and partnerships with third parties that will be necessary
for the success of the Hall of Fame Village. These assumptions, which are critical to our prospects for success, are subject to significant
economic, competitive, regulatory and operational uncertainties, contingencies and risks, many of which are beyond our control. These
uncertainties are particularly heightened by the fact that we have significantly limited historical financial results or data on which
financial projections might be based.
Our future ability to execute our business strategy
and develop the various components of the Hall of Fame Village is uncertain, and it can be expected that one or more of our assumptions
will prove to be incorrect and that we will face unanticipated events and circumstances that may adversely affect our proposed business.
Any one or more of the following factors, or other factors which may be beyond our control, may have a material adverse effect on our
ability to implement our proposed strategy:
| ● | inability
to complete development and construction on schedule, on budget or otherwise in a timely
and cost-effective manner; |
| ● | issues
impacting the brands of the PFHOF or the NFL; |
| ● | inability
to secure and maintain relationships and sponsorships with key partners, or a failure by
key partners to fulfill their obligations; |
| ● | failure
to manage rapidly expanding operations in the projected time frame; |
| ● | our
or our partners’ ability to provide innovative entertainment that competes favorably
against other entertainment parks and similar enterprises on the basis of price, quality,
design, appeal, reliability and performance; |
| ● | increases
in operating costs, including capital improvements, insurance premiums, general taxes, real
estate taxes and utilities, affecting our profit margins; |
| ● | general
economic, political and business conditions in the United States and, in particular, in the
Midwest and the geographic area around Canton, Ohio; |
| ● | inflation,
appreciation of the real estate and fluctuations in interest rates; or |
| ● | existing
and future governmental laws and regulations, including changes in our ability to use or
receive Tourism Development District (“TDD”) funds, tax-increment financing (“TIF”)
funds or other state and local grants and tax credits (including Ohio Film Tax Credits). |
In addition to
revenue from operations, we are relying on various forms of financing and debt to finance the Company.
We have obtained and
currently expect to continue to obtain a portion of the capital required for the development and operations of the Hall of Fame Village
from various forms of public financing and public debt, including Tourism Development District (“TDD”) funds, tax increment
financing (“TIF”) funds, state and local grants and tax credits, which depend, in part, on factors outside of our control.
Canton City Council was permitted to designate up to 600 acres as a TDD and to approve the collection of additional taxes within that
acreage to be used to foster tourism development. Canton City Council passed legislation allowing the collection of a 5% admissions tax
and an additional 2% gross receipts tax and agreed to give the revenue from its 3% municipal lodging tax collected at any hotels built
in the TDD to the Hall of Fame Village for 30 years. Our ability to obtain funds from TDD depends on, among other things, ticket sales
(including parking lots, garages, stadiums, auditoriums, museums, athletic parks, swimming pools and theaters), wholesale, retail and
some food sales within the TDD and revenues from our hotels within the TDD. For TIF funds, the amount of property tax that a specific
district generates is set at a base amount and as property values increase, property tax growth above that base amount, net of property
taxes retained by the school districts, can be used to fund redevelopment projects within the district. Our ability to obtain TIF funds
is dependent on the value of developed property in the specific district, the collection of general property taxes from property owners
in the specific district, the time it takes the tax assessor to update the tax rolls and market interest rates at the time the tax increment
bonds are issued.
If we are unable to
realize the expected benefits from these various forms of public financing and public debt, we may need to obtain alternative financing
through other means, including private transactions. If we are required to obtain alternative financing, such alternative financing may
not be available at all or may not be available in a timely manner or on terms substantially similar or as favorable to public financing
and public debt, which could significantly affect our ability to develop the Hall of Fame Village, increase our cost of capital and have
a material adverse effect on our results of operations, cash flows and financial position.
If we were to obtain
financing through private investment in public equity investments or other alternative financing, it could subject us to risks that,
if realized, would adversely affect us, including the following:
| ● | our
cash flows from operations could be insufficient to make required payments of principal of
and interest on any debt financing, and a failure to pay would likely result in acceleration
of such debt and could result in cross accelerations or cross defaults on other debt; |
| ● | such
debt may increase our vulnerability to adverse economic and industry conditions; |
| ● | to
the extent that we generate and use any cash flow from operations to make payments on such
debt, it will reduce our funds available for operations, development, capital expenditures
and future investment opportunities or other purposes; |
| ● | debt
covenants may limit our ability to borrow additional amounts, including for working capital,
capital expenditures, debt service requirements, executing our development plan and other
purposes; |
| ● | restrictive
debt covenants may limit our flexibility in operating our business, including limitations
on our ability to make certain investments; incur additional indebtedness; create certain
liens; incur obligations that restrict the ability of our subsidiaries to make payments to
us; consolidate, merge or transfer all or substantially all of our assets; or enter into
transactions with affiliates; and |
| ● | to
the extent that such debt bears interest at a variable rate, we would be exposed to the risk
of increased interest rates. |
We are dependent
on our management team, specifically, our President and Chief Executive Officer, and the loss of one or more key employees could harm
our business and prevent us from implementing our business plan in a timely manner.
We aim to recruit the
most qualified candidates, and strive for a diverse and well-balanced workforce. We reward and support employees through competitive pay,
benefits, and perquisite programs that allow employees to thrive. If we are unable to retain our President and Chief Executive Officer
or other key management personnel at our Company, the underlying business could suffer.
Changes in consumer
tastes and preferences for sports and entertainment products, including fantasy sports, sports betting and eSports, or declines in discretionary
consumer spending, consumer confidence or general and regional economic conditions could reduce demand for our offerings and products
and adversely affect the profitability of our business.
The success of our gaming vertical depends on our ability to consistently
provide, maintain and expand attractions and events as well as create and distribute media programming, visual experiences and consumer
products that meet changing consumer preferences. Consumers who are fans of professional football will likely constitute a substantial
portion of the attendance to the Hall of Fame Village. Our success depends in part on the continued popularity of professional football
and on our ability to successfully predict and adapt to tastes and preferences of this consumer group.
We do business
with multiple branded partners, including, but not limited to, PFHOF, the NFL, Sandlot, and others. Incidents or adverse publicity concerning
any of our branded partners could harm our reputation as well as negatively impact our revenues and profitability.
Our reputation is an
important factor in the success of our business. Our ability to attract and retain consumers depends, in part, upon the external perceptions
of our Company and the organizations and brands we are associated with, including, but not limited to the PFHOF, the NFL, and Sandlot,
as well as the quality of Hall of Fame Village and its services and our corporate and management integrity. If market recognition or the
perception of the Company or any of our branded partners diminishes, there may be a material adverse effect on our revenues, profits and
cash flow. In addition, the operations of Hall of Fame Village, involve the risk of accidents, illnesses, environmental incidents and
other incidents which may negatively affect the perception of guest and employee safety, health, security and guest satisfaction and which
could negatively impact our reputation, reduce attendance at our facilities and negatively impact our business and results of operations.
We could be adversely
affected by declines in discretionary consumer spending, consumer confidence and general and regional economic conditions as well as changes
in consumer tastes and preferences for sports and entertainment products.
Our success depends
to a significant extent on discretionary consumer spending, which is heavily influenced by general economic conditions and the availability
of discretionary income. The current economic environment, coupled with high volatility and uncertainty as to the future global economic
landscape, has had an adverse effect on consumers’ discretionary income and consumer confidence. Future volatile, negative or uncertain
economic conditions and recessionary periods or periods of significant inflation may adversely impact attendance and guest spending levels
at Hall of Fame Village, which would materially adversely affect our business, financial condition and results of operations.
Hall of Fame Village
is located in Canton, Ohio. The concentration of our operations in this market exposes us to greater risks than if our operations were
more geographically diverse. As a result, negative developments in the local economic conditions in the Midwest region, particularly
those impacting travel, hotel or other real estate operations, could reduce guest attendance, negatively impact consumer spending, increase
tenant defaults and otherwise have a material adverse effect on our profitability.
Other factors that can
affect consumer spending and confidence include severe weather, hurricanes, flooding, earthquakes and other natural disasters, elevated
terrorism alerts, terrorist attacks, military actions, air travel concerns, outbreaks of disease, and geopolitical events, as well as
various industry and other business conditions, including an ever-increasing number of sporting and entertainment options that compete
for discretionary spending. Such factors or incidents, even if not directly impacting us, can disrupt or otherwise adversely impact the
spending sentiment and interest of our present or potential customers and sponsors.
Additionally, the success
of our business depends on our ability to consistently provide, maintain and expand attractions and events as well as create and distribute
media programming, virtual experiences and consumer products that meet changing consumer preferences. Consumers who are fans of professional
football will likely constitute a substantial portion of the attendance to Hall of Fame Village, and our success depends in part on the
continued popularity of professional football and on our ability to successfully predict and adapt to tastes and preferences of this
consumer group. If our sports and entertainment offerings and products do not achieve sufficient consumer acceptance or if consumer preferences
change or consumers are drawn to other spectator sports and entertainment options, our business, financial condition or results of operations
could be materially adversely affected. In the past, we have hosted major professional football events, as well as other musical and
live entertainment events, and we can provide no assurance that we will be able to continue to host such events.
The Company operates
and will operate in highly competitive industries and our revenues, profits or market share could be harmed if we are unable to compete
effectively.
We will face substantial
competition in each of our businesses. For example:
| ● | Tom
Benson Hall of Fame Stadium, the ForeverLawn Sports Complex and the Center for Performance
will compete with other facilities and venues across the region and country for hosting concerts,
athletic events (including professional sports events, sports camps and tournaments) and
other major conventions; |
| ● | Hall
of Fame Village Media will compete (i) with other media and content producers to obtain creative
and performing talent, sports and other programming content, story properties, advertiser
support, distribution channels and market share and (ii) for viewers with other broadcast,
cable and satellite services as well as with home entertainment products, new sources of
broadband and mobile delivered content and internet usage; |
| ● | The
indoor waterpark, the Hilton hotels, and the retail promenade will compete for guests with
other theme parks, waterparks, and resorts, such as Cedar Point, located in Sandusky, Ohio,
and other theme parks, retail and tourist destinations in Ohio and around the country, and
with other forms of entertainment, lodging, tourism and recreation activities; and |
| ● | The
Constellation Center for Excellence and the Fan Engagement Zone (retail promenade) will compete
for tenants with other suppliers of commercial and/or retail space; |
Competition in each
of these areas may increase as a result of technological developments, changes in consumer preferences, economic conditions, changes
in market structure and other factors that affect the recreation, entertainment, vacation, retail, tourism and leisure industries generally.
Increased competition may divert consumers from Hall of Fame Village to other forms of entertainment, which could reduce our revenue
or increase our marketing costs. Our competitors may have substantially greater financial resources than we do, and they may be able
to adapt more quickly to changes in consumer preferences or devote greater resources to promotion of their offerings and services or
to development or acquisition of offerings and services that are perceived to be of a higher quality or value than our offerings and
services. As a result, we may not be able to compete successfully against such competitors.
We may not be
able to fund capital expenditures and investment in future attractions and projects.
A principal competitive
factor for Hall of Fame Village is the originality and perceived quality of its events, attractions and offerings. Even after completion
of the various components of the Hall of Fame Village, we will need to make continued capital investments through maintenance and the
regular addition of new events, attractions and offerings. Our ability to fund capital expenditures will depend on our ability to generate
sufficient cash flow from operations and to raise capital. We cannot assure our stockholders’ that our operations will be able
to generate sufficient cash flow to fund such costs, or that we will be able to obtain sufficient financing on adequate terms, or at
all, which could cause us to delay or abandon certain projects or plans.
The high fixed
cost structure of the Company’s operations may result in significantly lower margins if revenues decline.
We expect a large portion
of our operating expenses to be relatively fixed because the costs for full-time employees, maintenance, utilities, advertising and insurance
will not vary significantly with attendance. These fixed costs may increase at a greater rate than our revenues and may not be able to
be reduced at the same rate as declining revenues. If cost-cutting efforts are insufficient to offset declines in revenues or are impracticable,
we could experience a material decline in margins, revenues, profitability and reduced or negative cash flows. Such effects can be especially
pronounced during periods of economic contraction or slow economic growth.
Increased labor
costs, labor shortages or labor disruptions could reduce our profitability.
Because labor costs
are and will continue to be a major component of our operating expenses, higher labor costs could reduce our profitability. Higher labor
costs could result from, among other things, labor shortages that require us to raise labor rates in order to attract employees, and
increases in minimum wage rates. Higher employee health insurance costs could also adversely affect our profitability. Additionally,
increased labor costs, labor shortages or labor disruptions by employees of our third-party contractors and subcontractors could disrupt
our operations, increase our costs and affect our profitability.
Cyber security
risks and the failure to maintain the integrity of internal or guest data could result in damages to our reputation, the disruption of
operations and/or subject us to costs, fines or lawsuits.
We anticipate that we
will collect and retain large volumes of internal and guest data, including credit card numbers and other personally identifiable information,
for business purposes, including for transactional or target marketing and promotional purposes, and our various information technology
systems enter, process, summarize and report such data. We maintain personally identifiable information about our employees. The integrity
and protection of our guest, employee and company data will be critical to our business and our guests and employees are likely to have
a high expectation that we will adequately protect their personal information. The regulatory environment, as well as the requirements
imposed on us by the credit card industry, governing information, security and privacy laws is increasingly demanding and continues to
evolve. Maintaining compliance with applicable security and privacy regulations may increase our operating costs and/or adversely impact
our ability to market our theme parks, products and services to our guests.
We also expect to rely
on accounting, financial and operational management information technology systems to conduct our operations. If these information technology
systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely
manner, our business, financial condition and results of operations could be materially adversely affected.
We may face various
security threats, including cyber security attacks on our data (including our vendors’ and guests’ data) and/or information
technology infrastructure. Although we will utilize various procedures and controls to monitor and mitigate these threats, there can
be no assurance that these procedures and controls will be sufficient to prevent penetrations or disruptions to our systems. Furthermore,
a penetrated or compromised data system or the intentional, inadvertent or negligent release or disclosure of data could result in theft,
loss, fraudulent or unlawful use of guest, employee or company data which could harm our reputation or result in remedial and other costs,
fines or lawsuits and require significant management attention and resources to be spent. In addition, our insurance coverage and indemnification
arrangements that we enter into, if any, may not be adequate to cover all the costs related to cyber security attacks or disruptions
resulting from such events. To date, cyber security attacks directed at us have not had a material impact on our financial results. Due
to the evolving nature of security threats, however, the impact of any future incident cannot be predicted.
Investors are
subject to litigation risk and their respective investments in the shares of our Common Stock may be lost as a result of our legal liabilities
or the legal liabilities of our affiliates.
We or our affiliates
may from time to time be subject to claims by third parties and may be plaintiffs or defendants in civil proceedings. There can be no
assurance that claims will not be brought in the future if we cannot generate the revenue that we forecast or raise sufficient capital
to pay contractors in connection with constructing other components of the project. The expense of prosecuting claims, for which there
is no guarantee of success, and/or the expense of defending against claims by third parties and paying any amounts pursuant to settlements
or judgments, would generally be borne by the Company and could result in the reduction or complete loss of all of the assets of the
Company, and investors in our Common Stock could lose all or a part of their investment.
Our business may
be adversely affected by defaults or bankruptcy of our tenants and partners.
Our business may be
adversely affected if any future tenants at the Constellation Center for Excellence or the Fan Engagement Zone (retail promenade) default
on their obligations to us. A default by a tenant may result in the inability of such tenant to re-lease space from us on economically
favorable terms, or at all. In the event of a default by a tenant, we may experience delays in payments and incur substantial costs in
recovering our losses. In addition, our tenants may file for bankruptcy or be involved in insolvency proceedings, and we may be required
to expense costs associated with leases of bankrupt tenants and may not be able to replace future rents for tenant space rejected in
bankruptcy proceedings, which could adversely affect our properties. Any bankruptcies of our tenants could make it difficult for us to
enforce our rights as lessor and protect our investment.
Fluctuations in
real estate values may require us to write down the carrying value of our real estate assets or investments.
Real estate valuations
are subject to significant variability and fluctuation. The valuation of our real estate assets or real estate investments is inherently
subjective and based on the individual characteristics of each asset. Factors such as competitive market supply and demand for inventory,
changes in laws and regulations, political and economic conditions and interest and inflation rate fluctuations subject our valuations
to uncertainty. Our valuations are or will be made on the basis of assumptions that may not prove to reflect economic or demographic
reality. If the real estate market deteriorates, we may reevaluate the assumptions used in our analyses. As a result, adverse market
conditions may require us to write down the book value of certain real estate assets or real estate investments and some of those write-downs
could be material. Any material write-downs of assets could have a material adverse effect on our financial condition and results of
operations.
Our property taxes
could increase due to rate increases or reassessments or the imposition of new taxes or assessments or loss of tax credits, which may
adversely impact our financial condition and results of operations.
We are required to pay
state and local real property taxes and assessments on our properties. The real property taxes and assessments on our properties may
increase as property or special tax rates increase or if our properties are assessed or reassessed at a higher value by taxing authorities.
In addition, if we are obligated to pay new taxes or if there are increases in the property taxes and assessments that we currently pay,
our financial condition and results of operations could be adversely affected. We are relying on various forms of public financing and
public debt to finance the development and operations of the Company.
Our insurance
coverage may not be adequate to cover all possible losses that we could suffer and our insurance costs may increase.
Although we maintain
various safety and loss prevention programs and carry property and casualty insurance to cover certain risks, our coverage may not be
adequate to cover liabilities, we may not be able to obtain coverage at commercially reasonable rates, and we may not be able to obtain
adequate coverage should a catastrophic incident occur at our parks or at other parks. In addition, if we or other theme park operators
sustain significant losses or make significant insurance claims, then our ability to obtain future insurance coverage at commercially
reasonable rates could be materially adversely affected.
Our operations
and our ownership of property subject us to environmental requirements, and to environmental expenditures and liabilities.
We incur costs to comply
with environmental requirements, such as those relating to water use, wastewater and storm water management and disposal, air emissions
control, hazardous materials management, solid and hazardous waste disposal, and the clean-up of properties affected by regulated materials.
While we have received the required environmental approvals for Phases I and II of our development, environmental requirements must be
fully assessed for future phases of development.
We may be required to
investigate and clean-up hazardous or toxic substances or chemical releases, and other releases, from current or formerly owned or operated
facilities. In addition, in the ordinary course of our business, we generate, use and dispose of large volumes of water, which requires
us to comply with a number of federal, state and local regulations and to incur significant expenses. Failure to comply with such regulations
could subject us to fines and penalties and/or require us to incur additional expenses.
We cannot assure our
stockholders’ that we will not incur substantial costs to comply with new or expanded environmental requirements in the future
or to investigate or clean-up new or newly identified environmental conditions, which could also impair our ability to use or transfer
the affected properties and to obtain financing.
Our sports betting
and eSports operations are subject to a variety of laws, and which could subject us to claims or otherwise harm our business. Any change
in existing regulations or their interpretation, or the regulatory climate applicable to our products and services, or changes in tax
rules and regulations or interpretation thereof related to our products and services, could adversely impact our ability to operate our
business as currently conducted or as we seek to operate in the future, which could have a material adverse effect on our financial condition
and results of operations.
Our sports betting and
eSports operations are generally subject to laws and regulations relating to sports betting, fantasy sports and eSports in the jurisdictions
in which we are planning to conduct such operations or in some circumstances, in those jurisdictions in which we offer our services or
they are available, as well as the general laws and regulations that apply to all e-commerce businesses, such as those related to privacy
and personal information, tax and consumer protection. These laws and regulations vary from one jurisdiction to another and future legislative
and regulatory action, court decisions or other governmental action, which may be affected by, among other things, political pressures,
attitudes and climates, as well as personal biases, may have a material impact on our operations and financial results. In particular,
some jurisdictions have introduced regulations attempting to restrict or prohibit online gaming, while others have taken the position
that online gaming should be licensed and regulated and have adopted or are in the process of considering legislation and regulations
to enable that to happen. Additionally, some jurisdictions in which we may operate could presently be unregulated or partially regulated
and therefore more susceptible to the enactment or change of laws and regulations.
In May 2018, the
U.S. Supreme Court struck down as unconstitutional the Professional and Amateur Sports Protection Act of 1992 (“PASPA”).
This decision has the effect of lifting federal restrictions on sports betting and thus allows states to determine by themselves the
legality of sports betting. Since the repeal of PASPA, several states (including Washington D.C.) have legalized online sports betting.
To the extent new real money gaming or sports betting jurisdictions are established or expanded, we cannot guarantee that we will be
successful in penetrating such new jurisdictions. If we are unable to effectively develop and operate directly or indirectly within existing
or new jurisdictions or if our competitors are able to successfully penetrate geographic jurisdictions that we cannot access or where
we face other restrictions, there could be a material adverse effect on our sports betting, fantasy sports and eSports operations. Our
failure to obtain or maintain the necessary regulatory approvals in jurisdictions, whether individually or collectively, would have a
material adverse effect on our business. To operate in any jurisdiction, we may need to be licensed and obtain approvals of our product
offerings. This is a time-consuming process that can be extremely costly. Any delays in obtaining or difficulty in maintaining regulatory
approvals needed for expansion within existing jurisdictions or into new jurisdictions can negatively affect our opportunities for growth,
including the growth of our customer base, or delay our ability to recognize revenue from our offerings in any such jurisdictions.
Future legislative and
regulatory action, and court decisions or other governmental action, may have a material impact on our planned sports betting and eSports
operations. Governmental authorities could view us as having violated local laws, despite our efforts to obtain all applicable licenses
or approvals. There is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors
or public entities or incumbent monopoly providers, or private individuals, could be initiated against us, Internet service providers,
credit card and other payment processors, advertisers and others involved in the sports betting industry. Such potential proceedings
could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed upon
us or our licensees or other business partners, while diverting the attention of key executives. Such proceedings could have a material
adverse effect on our business, financial condition, results of operations and prospects, as well as impact our reputation.
Failure to comply
with regulatory requirements in a particular jurisdiction, or the failure to successfully obtain a license or permit applied for in a
particular jurisdiction, could impact our ability to comply with licensing and regulatory requirements in other jurisdictions, or could
cause the rejection of license applications or cancelation of existing licenses in other jurisdictions, or could cause financial institutions,
online and mobile platforms, advertisers and distributors to stop providing services to us which we rely upon to receive payments from,
or distribute amounts to, our users, or otherwise to deliver and promote our services.
Compliance with the
various regulations applicable to fantasy sports and real money gaming is costly and time-consuming. Regulatory authorities at the non-U.S.,
U.S. federal, state and local levels have broad powers with respect to the regulation and licensing of fantasy sports and real money
gaming operations and may revoke, suspend, condition or limit our fantasy sports or real money gaming licenses, impose substantial fines
on us and take other actions, any one of which could have a material adverse effect on our business, financial condition, results of
operations and prospects. These laws and regulations are dynamic and subject to potentially differing interpretations, and various legislative
and regulatory bodies may expand current laws or regulations or enact new laws and regulations regarding these matters. We will strive
to comply with all applicable laws and regulations relating to our business. It is possible, however, that these requirements may be
interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules. Non-compliance
with any such law or regulations could expose us to claims, proceedings, litigation and investigations by private parties and regulatory
authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business.
Any fantasy sports or
real money gaming license obtained could be revoked, suspended or conditioned at any time. The loss of a license in one jurisdiction
could trigger the loss of a license or affect our eligibility for such a license in another jurisdiction, and any of such losses, or
potential for such loss, could cause us to cease offering some or all of our offerings in the impacted jurisdictions. We may be unable
to obtain or maintain all necessary registrations, licenses, permits or approvals, and could incur fines or experience delays related
to the licensing process, which could adversely affect our operations. Our delay or failure to obtain or maintain licenses in any jurisdiction
may prevent us from distributing our offerings, increasing our customer base and/or generating revenues. We cannot assure our stockholders
that we will be able to obtain and maintain the licenses and related approvals necessary to conduct our planned sports betting operations.
Any failure to maintain or renew our licenses, registrations, permits or approvals could have a material adverse effect on our business,
financial condition, results of operations and prospects.
Negative events
or negative media coverage relating to, or a declining popularity of sports betting, the underlying sports or athletes, or online sports
betting in particular, or other negative coverage may adversely impact our ability to retain or attract users, which could have an adverse
impact on our proposed sports betting and eSports operations.
Public opinion can significantly
influence our business. Unfavorable publicity regarding us, for example, our product changes, product quality, litigation, or regulatory
activity, or regarding the actions of third parties with whom we have relationships or the underlying sports (including declining popularity
of the sports or athletes) could seriously harm our reputation. In addition, a negative shift in the perception of sports betting by
the public or by politicians, lobbyists or others could affect future legislation of sports betting, which could cause jurisdictions
to abandon proposals to legalize sports betting, thereby limiting the number of jurisdictions in which we can operate such operations.
Furthermore, illegal betting activity by athletes could result in negative publicity for our industry and could harm our brand reputation.
Negative public perception could also lead to new restrictions on or to the prohibition of sports betting in jurisdictions in which such
operations are currently legal. Such negative publicity could also adversely affect the size, demographics, engagement, and loyalty of
our customer base and result in decreased revenue or slower user growth rates, which could seriously harm our business.
The suspension
or termination of, or the failure to obtain, any business or other licenses may have a negative impact on our business.
We maintain a variety
of business licenses issued by federal, state and local authorities that are renewable on a periodic basis. We cannot guarantee that
we will be successful in renewing all of our licenses on a periodic basis. The suspension, termination or expiration of one or more of
these licenses could materially adversely affect our revenues and profits. Any changes to the licensing requirements for any of our licenses
could affect our ability to maintain the licenses. In addition, we do not yet have all of the appropriate licenses required for our operations,
including liquor licenses. The failure to obtain liquor or other licenses may negatively impact our business.
Delays or restrictions
in obtaining permits for capital investments could impair our business.
Our capital investments
require regulatory permits from one or more governmental agencies in order to build new theme parks, attractions and shows. Such permits
are typically issued by state agencies, but federal and local governmental permits may also be required. The requirements for such permits
vary depending on the location of such capital investments. As with all governmental permitting processes, there is a degree of uncertainty
as to whether a permit will be granted, the time it will take for a permit to be issued, and the conditions that may be imposed in connection
with the granting of the permit. Therefore, our capital investments in certain areas may be delayed, interrupted or suspended for varying
lengths of time, causing a loss of revenue to us and adversely affecting our results of operations.
If we do not receive
sufficient capital to substantially repay our indebtedness, our indebtedness may have a material adverse effect on our business, our
financial condition and results of operations and our ability to secure additional financing in the future, and we may not be able to
raise sufficient funds to repay our indebtedness.
If we do not have sufficient
funds to repay our debt at maturity, our indebtedness could subject us to many risks that, if realized, would adversely affect us, including
the following:
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the debt,
and a failure to pay would likely result in acceleration of such debt and could result in cross accelerations or cross defaults on
other debt; |
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our debt may increase our
vulnerability to adverse economic and industry conditions; |
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to the extent that we generate
and use any cash flow from operations to make payments on our debt, it will reduce our funds available for operations, development,
capital expenditures and future investment opportunities or other purposes; |
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debt covenants limit our ability to borrow additional amounts, including for working capital, capital
expenditures, debt service requirements, executing our development plan and other purposes; |
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restrictive debt covenants may limit our flexibility in operating our business,
including limitations on our ability to make certain investments; incur additional indebtedness; create certain liens; incur obligations
that restrict the ability of our subsidiaries to make payments to us; consolidate, merge or transfer all or substantially all of
our assets; or enter into transactions with affiliates; |
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to the
extent that our indebtedness bears interest at a variable rate, we are exposed to the risk of increased interest rates; |
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debt covenants may limit
our subsidiaries’ ability to make distributions to us; |
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the collateral securing
the debt, if any, could be foreclosed upon, including the foreclosure of real property interests under a mortgage and/or equity interest
or personal property pledged; and |
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if any debt is refinanced,
the terms of any refinancing may not be as favorable as the terms of the debt being refinanced. |
If we do not have sufficient
funds to repay our debt at maturity, it may be necessary to refinance the debt through additional debt or equity financings. If, at the
time of any refinancing, prevailing interest rates or other factors result in a higher interest rate on such refinancing, increases in
interest expense could adversely affect our cash flows and results of operations. If we are unable to refinance our debt on acceptable
terms or at all, we may be forced to dispose of uncollateralized assets on disadvantageous terms, postpone investments in the development
of our properties or the Hall of Fame Village or default on our debt. In addition, to the extent we cannot meet any future debt service
obligations, we will risk losing some or all of our assets that are pledged to secure such obligations.
Our business plan
and ability to run a profitable business model requires additional liquidity and capital resources that might not be available on terms
that are favorable to us, or at all.
We have sustained recurring
losses through December 31, 2023, and our accumulated deficit was $216,643,882 as of such date. Since inception, the Company’s
operations have been funded principally through the issuance of debt and equity. As of December 31, 2023, we had approximately $3.2 million
of unrestricted cash and $8.6 million of restricted cash. Through December 31, 2024, we have $62.1 million in debt principal payments
coming due.
While our strategy assumes
that we will receive sufficient capital, we currently do not have available cash and cash flows from operations to provide us with adequate
liquidity for the near-term or foreseeable future. Our current projected liabilities exceed our current cash projections and we have
very limited cash flow from current operations. We therefore will require additional capital and/or cash flow from future operations
to fund the Company, our debt service obligations and our ongoing business. There is no assurance that we will be able to raise sufficient
additional capital or generate sufficient future cash flow from our future operations to fund the Hall of Fame Village, our debt service
obligations or our ongoing business. If the amount of capital we are able to raise, together with any income from future operations,
is not sufficient to satisfy our liquidity and capital needs, including funding our current debt obligations, we may be required to abandon
or alter our plans for the Company. The Company may also have to raise additional capital through the equity market, which could result
in substantial dilution to existing stockholders.
Our ability to obtain
necessary financing may be impaired by factors such as the health of and access to capital markets, our limited track record and the limited
historical financial information available, or the substantial doubt about our ability to continue as a going concern. Any additional
capital raised through the sale of additional shares of our capital stock, convertible debt or other equity may dilute the ownership percentage
of our stockholders. If management is unable to execute its planned debt and equity financing initiatives, these conditions raise substantial
doubt about our ability to continue to sustain operations for at least one year from the issuance of our consolidated financial statements
for the year ended December 31, 2023 included in this annual report on Form 10-K. The accompanying consolidated financial statements do
not include any adjustments that might result from the outcome of these uncertainties.
Adverse developments affecting the financial
services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional
counterparties, could adversely affect our current and projected business operations and its financial condition and results of operations.
Actual events involving limited liquidity, defaults,
non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in
the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or
other similar risks, have in the past and may in the future lead to market-wide liquidity problems.
Inflation and rapid increases in interest rates
have led to a decline in the trading value of previously issued government securities with interest rates below current market interest
rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion
of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk
of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial
institutions for immediately liquidity may exceed the capacity of such program. There is no guarantee that the U.S. Department of Treasury,
FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial
institutions, or that they would do so in a timely fashion.
Although we assess our banking relationships
as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or
capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial
institutions with which we have arrangements directly, or the financial services industry or economy in general. These factors could
include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial,
credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or
concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial
institutions or financial services industry companies with which we have financial or business relationships, but could also include
factors involving financial markets or the financial services industry generally.
The results of events or concerns that involve
one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations
and our financial condition and results of operations. These could include, but may not be limited to, the following:
| ● | Delayed
access to deposits or other financial assets or the uninsured loss of deposits or other financial
assets; |
| ● | Loss
of access to revolving existing credit facilities or other working capital sources and/or
the inability to refund, roll over or extend the maturity of, or enter into new credit facilities
or other working capital resources; |
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Potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements; or |
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Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements. |
In addition, investor concerns regarding the
U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or
costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making
it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and
liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill
our other obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or
state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar
factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations
and financial condition and results of operations.
In addition, any further
deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by parties with whom we conduct
business, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations
and financial condition. For example, a party with whom we conduct business may fail to make payments when due, default under their agreements
with us, become insolvent or declare bankruptcy. Any bankruptcy or insolvency, or the failure to make payments when due, of any counterparty
of ours, or the loss of any significant relationships, could result in material losses to us and may material adverse impacts on our
business.
We will have to
increase leverage to develop the Company, which could further exacerbate the risks associated with our substantial indebtedness.
We will have to take
on substantially more debt to complete the construction of the Hall of Fame Village. We may incur additional indebtedness from time to
time in the future to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If and when
we incur additional indebtedness, the risks related to our indebtedness could intensify.
We may not be
able to generate sufficient cash flow from operations to service all of our indebtedness and may be forced to take other actions to satisfy
our obligations under our indebtedness, which may not be successful.
Our ability to make
scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject
to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond
our control. We may be unable to generate a level of cash flows from operating activities sufficient to permit us to pay the principal,
premium, if any, and interest on our indebtedness. Until such time as we can service our indebtedness with cash flow from operations,
we intend to service our indebtedness from other sources.
If our cash flows, cash
on hand and other capital resources are insufficient to fund our debt service obligations, we could face continued and future liquidity
concerns and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations,
seek additional indebtedness or equity capital, or restructure or refinance our indebtedness. We may not be able to effect any such alternative
measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us
to meet our scheduled debt service obligations. We may not be able to obtain proceeds in an amount sufficient to meet debt service obligations.
Our inability to generate
sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would
materially and adversely affect our financial position and results of operations.
The requirements
of being a public company may strain our resources and distract management.
We expect to incur significant
costs associated with our public company reporting requirements and costs associated with applicable corporate governance requirements.
These applicable rules and regulations are expected to significantly increase our legal and financial compliance costs and to make some
activities more time consuming and costly than those for privately owned companies that are not registrants with the SEC. Compliance
with these rules and regulations may divert management’s attention from other business concerns.
Risk Related to Our
Securities
If we fail to
comply with the reporting obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley Act, or if we fail to maintain adequate
internal control over financial reporting, our business, financial condition, and results of operations, and investors’ confidence
in us, could be materially and adversely affected.
As a public company,
we are required to comply with the periodic reporting obligations of the Exchange Act, including preparing annual reports, quarterly
reports, and current reports. Our failure to prepare and disclose this information in a timely manner and meet our reporting obligations
in their entirety could subject us to penalties under federal securities laws and regulations of the Nasdaq, expose us to lawsuits, and
restrict our ability to access financing on favorable terms, or at all.
In addition, pursuant
to Section 404 of the Sarbanes-Oxley Act, we are required to develop, evaluate and provide a management report of our systems of internal
control over financial reporting. During the course of the evaluation of our internal control over financial reporting, we have identified
and could identify areas requiring improvement and could be required to design enhanced processes and controls to address issues identified
through this review. This could result in significant delays and costs to us and require us to divert substantial resources, including
management time, from other activities.
If we fail to comply
with the requirements of Section 404 on a timely basis this could result in the loss of investor confidence in the reliability of our
financial statements, which in turn could, negatively impact the trading price of our stock, and adversely affect investors’ confidence
in the Company and our ability to access capital markets for financing.
We have identified
a material weakness in our internal control over financial reporting. If our remediation of this material weakness is not effective, or
if we experience additional material weaknesses in the future or otherwise fail to maintain effective internal controls in the future,
we may not be able to accurately report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
Our management is responsible
for establishing and maintaining adequate internal controls over financial reporting designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.
GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls over financial
reporting and to disclose any changes and material weaknesses identified through such evaluation of those internal controls. A material
weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with the
audit of our consolidated financial statements for the year ended December 31, 2023, management concluded that our internal controls over
financial reporting were not effective as of December 31, 2023, due to the existence of a material weaknesses as follows:
We identified, a material
weakness in internal control over financial reporting related to the precise and timely review and analysis of information used to prepare
our financial statements and disclosures in accordance with U.S. GAAP.
This material weakness
could impact our financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim
financial statements will not be prevented or detected on a timely basis. While we expect to have the identified material weakness remediated
during 2024, the work is ongoing, may be time consuming and costly, and there can be no assurance as to when we will successfully remediate
this material weakness.
As discussed above, we
have taken, and plan to take, a number of measures to remediate this material weakness; however, if we are unable to remediate our continuing material
weakness in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information
in a timely and reliable manner and we may incorrectly report financial information. Likewise, if our financial statements are not
filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common
stock is listed, the SEC or other regulatory authorities.
Failure to timely file
will cause us to be ineligible to utilize short form registration statements on Form S-3 or Form S-4, which may impair our ability to
obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition. In either case, there
could result a material adverse effect on our business. The existence of material weaknesses or significant deficiencies in internal control
over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the
trading price of our stock. In addition, we have and will continue to incur additional costs to remediate our material weakness in our
internal control over financial reporting.
If our management is unable to conclude that our internal control over
financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness
of our internal control over financial reporting, when required, lenders and investors may lose confidence in the accuracy and completeness
of our financial reports and we may face restricted access to various sources of financing in the future.
We currently do
not intend to pay dividends on our Common Stock. Consequently, our stockholders’ ability to achieve a return on their investment
will depend on appreciation in the price of our Common Stock.
We do not expect to
pay cash dividends on our Common Stock. Any future dividend payments are within the absolute discretion of our board of directors and
will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial
condition, level of indebtedness, contractual restrictions with respect to payment of dividends, business opportunities, anticipated
cash needs, provisions of applicable law and other factors that our board of directors may deem relevant.
We may be required
to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our
financial condition, results of operations and our stock price, which could cause our stockholders to lose some or all of their investment.
We may be forced to
write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses.
Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of
this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause
us to violate net worth or other covenants to which we may be subject. Accordingly, a stockholder could suffer a reduction in the value
of their shares of Common Stock.
Our Series A Warrants
and Series B Warrants, are accounted for as liabilities and the changes in value of such warrants could have a material effect on our
financial results.
On April 12, 2021, the
SEC staff issued the SEC Statement regarding the accounting and reporting considerations for warrants issued by SPACs. Specifically,
the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination,
which terms are similar to those governing our Series A Warrants and Series B Warrants. As a result of the SEC Statement, we reevaluated
the accounting treatment of such warrants, and determined to classify such warrants as derivative liabilities measured at fair value,
with changes in fair value each period reported in earnings.
As a result, included
on our balance sheets as of December 31, 2023 and 2022 contained elsewhere in this Annual Report are derivative liabilities related to
embedded features contained within our Series A Warrants and Series B Warrants. ASC Subtopic 815, Derivatives and Hedging, provides for
the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to
the change in the fair value being recognized in earnings in the statements of operations. As a result of the recurring fair value measurement,
our financial statements and results of operations may fluctuate quarterly, based on factors which are outside of our control. Due to
the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our Series A Warrants and Series B
Warrants each reporting period and that the amount of such gains or losses could be material.
On March 1, 2022, the
Series C Warrants were amended to, among other things, remove certain provisions that previously caused the Series C Warrants to be accounted
for as a liability.
The trading price
of our securities has been, and likely will continue to be, volatile and our stockholders could lose all or part of their investment.
The trading price of
our securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control,
including but not limited to our general business condition, the release of our financial reports and general economic conditions and
forecasts. Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.
The stock market in general, and Nasdaq, have experienced price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities,
may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be
similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline
in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain
additional financing in the future. Any of these factors could have a material adverse effect on our stockholders’ investment in
our securities, and our securities may trade at prices significantly below the price they paid for them. In such circumstances, the trading
price of our securities may not recover and may experience a further decline.
Anti-takeover
provisions contained in our Certificate of Incorporation and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
Our Certificate of Incorporation
contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.
We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these
provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of
a premium over prevailing market prices for our securities. These provisions include:
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no cumulative voting in
the election of directors, which limits the ability of minority stockholders to elect director candidates; |
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a classified board of directors
with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board
of directors; |
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the right of our board
of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or
removal of a director in certain circumstances, which prevents stockholders from being able to fill vacancies on our board of directors; |
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a prohibition on stockholder
action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; and |
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the requirement that a
meeting of stockholders may only be called by members of our board of directors or the stockholders holding a majority of our shares,
which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of
directors. |
Our Certificate
of Incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive
forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum
for disputes with us or our directors, officers, employees or stockholders.
Our Certificate of Incorporation
requires, to the fullest extent permitted by law, that derivative actions brought in HOFRE’s name, actions against directors, officers,
stockholders and employees for breach of fiduciary duty, actions under the Delaware General Corporation Law or under our Certificate
of Incorporation, or actions asserting a claim governed by the internal affairs doctrine may be brought only in the Court of Chancery
in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder’s counsel. This choice of forum provision does not preclude or contract the scope of exclusive federal
or concurrent jurisdiction for any actions brought under the Securities Act or the Exchange Act. Accordingly, such exclusive forum provision
will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders
will not be deemed to have waived its compliance with these laws, rules and regulations.
Any person or entity
purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the
forum provisions in our Certificate of Incorporation. This choice of forum provision does not exclude stockholders from suing in federal
court for claims under the federal securities laws but may limit a stockholder’s ability to bring such claims in a judicial forum
that it finds favorable for disputes with HOFRE or any of its directors, officers, other employees or stockholders, which may discourage
lawsuits with respect to such claims.
Alternatively, if a
court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in
an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business,
operating results and financial condition.
If securities
or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading
volume could decline.
The trading market for
our securities will depend in part on the research and reports that securities or industry analysts publish about us or our business.
If only a limited number of securities or industry analysts commence coverage of our Company, the trading price for our securities would
likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who covers
us downgrades our stock or publishes unfavorable research about our business, our stock price may decline. If one or more of these analysts
ceases coverage of our Company or fails to publish reports on us regularly, demand for our securities could decrease, which might cause
our stock price and trading volume to decline.
Our executive
officers and directors, and their affiliated entities, along with our six other largest stockholders, own a significant percentage of
our stock and will be able to exert significant control over matters subject to stockholder approval.
Our executive officers
and directors, together with entities affiliated with such individuals, beneficially own a large amount of our outstanding Common Stock.
Accordingly, these stockholders are able to exert significant control over matters subject to stockholder approval. This concentration
of ownership could delay or prevent a change in control of the Company.
We are a smaller
reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult
to compare our performance with other public companies.
We are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of any fiscal year for so long as either (1) the market value of our shares of Class A common stock
held by non-affiliates did not equal or exceed $250 million as of the prior June 30, or (2) our annual revenues did not equal or exceed
$100 million during such completed fiscal year and the market value of our shares of Class A common stock held by non-affiliates did
not equal or exceed $700 million as of the prior June 30.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 1C. Cybersecurity.
Risk management and strategy
We have established policies and processes for
assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk
management systems and processes. We routinely assess material risks from cybersecurity threats, including any potential unauthorized
occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability
of our information systems or any information residing therein.
We conduct periodic risk assessments to identify
cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information
systems that are vulnerable to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal
and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies,
procedures, systems, and safeguards in place to manage such risks.
Following these risk assessments, we re-design,
implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards;
and regularly monitor the effectiveness of our safeguards. Primary responsibility for assessing, monitoring and managing our cybersecurity
risks rests with our Director of IT, to manage the risk assessment and mitigation process.
As part of our overall risk management system,
we monitor and test our safeguards and train our employees on these safeguards, in collaboration with IT and management. Personnel at
all levels and departments are made aware of our cybersecurity policies through trainings.
We engage consultants, or other third parties
in connection with our risk assessment processes. These service providers assist us to design and implement our cybersecurity policies
and procedures, as well as to monitor and test our safeguards. We require each third-party service provider to certify that it has the
ability to implement and maintain appropriate security measures, consistent with all applicable laws, to implement and maintain reasonable
security measures in connection with their work with us, and to promptly report any suspected breach of its security measures that may
affect our company.
We have not encountered cybersecurity challenges
that have materially impaired our operations or financial standing. For additional information regarding risks from cybersecurity threats,
please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K.
Governance
One of the key functions of our board of directors
is informed oversight of our risk management process, including risks from cybersecurity threats. Our board of directors and audit committee
are responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management
of the material risks we face. Our board of directors has delegated administration of its cybersecurity risk oversight function to the
audit committee.
Our Chief Executive Officer, General Counsel
and Chief Accounting Officer are primarily responsible to assess and manage our material risks from cybersecurity threats with assistance
from third-party service providers and outside counsel, as needed.
Our Chief Executive Officer, General Counsel
and Chief Accounting Officer oversee our cybersecurity policies and processes, including those described in “Risk Management and
Strategy” above. The cybersecurity risk management program includes tools and activities to prevent, detect, and analyze current
and emerging cybersecurity threats, and plans and strategies to address threats and incidents.
Our Chief Executive Officer, General Counsel,
and Chief Accounting Officer provide periodic briefings to the audit committee regarding our company’s cybersecurity risks and
activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, activities of third parties,
and the like. Our audit committee provides regular updates to the board of directors on such reports.
Item 2. Properties.
The Company owns real property in Canton, Ohio,
at the site of the Hall of Fame Village development and the DoubleTree by Hilton Hotel. Certain parcels of real property on which the
Hall of Fame Village is located, including the parcel on which the Tom Benson Hall of Fame Stadium is located, are owned by the Canton
City School District (Board of Education) and are subject to long-term ground leases and agreements with the Company for the use and
development of such property.
On January 11, 2024, HOF Village completed the
sale to Sandlot of 80% of a newly formed limited liability company named Sandlot HOFV Canton SC, LLC, to which the Company, HOF Village
and HOF Village Youth Fields, LLC had contributed the ForeverLawn Sports Complex business (including the ground lease) prior to closing.
For more information, see “Recent Developments—Sale to Sandlot; Strategic Partnership for Youth Sports Programming at the
Hall of Fame Village” above.
Item 3. Legal Proceedings.
Information with respect to certain legal proceedings
is set forth in Note 8, “Contingencies,” to the Company’s Consolidated Financial Statements and is incorporated herein
by reference.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder
Matters And Issuer’s Purchases Of Equity Securities.
Reverse Stock Split
On December 27, 2022,
we completed a Reverse Stock Split of our shares of common stock at a ratio of 1-for-22. On the effective date, every 22 shares of issued
and outstanding common stock were combined and converted into one issued and outstanding share of common stock. Fractional shares were
cancelled and stockholders received cash in lieu thereof. The number of authorized shares of common stock and the par value per share
of common stock remains unchanged. All outstanding restricted stock unit awards, warrants and other
securities settled in, exercisable for or convertible into shares of Common Stock were adjusted as a result of the reverse split, as
required by their respective terms. A proportionate adjustment was also made to the maximum number of shares of common stock issuable
under the Hall of Fame Resort & Entertainment Company Amended 2020 Omnibus Incentive Plan (the “Plan”).
Market Information
Our Common Stock is traded on The NASDAQ Capital
Markets under the symbol “HOFV”.
Holders
On March 21, 2024, the Company had 103 holders
of record of our Common Stock.
Dividends
The Company has never declared or paid cash dividends
on its Common Stock and has no intention to do so in the foreseeable future.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion and analysis provides
information which our management believes is relevant to an assessment and understanding of our financial condition and results of operations.
This discussion and analysis should be read together with our results of operations and financial condition and the audited and unaudited
consolidated financial statements and related notes that are included elsewhere in this Annual Report on Form 10-K. In addition to historical
financial information, this discussion and analysis contains forward-looking statements based upon current expectations that involve
risks, uncertainties and assumptions. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Actual
results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of
various factors, including those set forth under “Risk Factors” or elsewhere in this Annual Report on Form 10-K.
Certain figures, such as interest rates and
other percentages, included in this section have been rounded for ease of presentation. Percentage figures included in this section have
not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason,
percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our
consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum
due to rounding.
Overview
We are a resort and entertainment company leveraging
the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing
business as the Pro Football Hall of Fame (“PFHOF”). We are creating a diversified set of revenue streams through developing
themed attractions, premier entertainment programming and sponsorships. We are pursuing a diversified strategy across three pillars,
including destination-based assets, the Media Company, and gaming. Headquartered in Canton, Ohio, we own the DoubleTree by Hilton located
in downtown Canton and the Hall of Fame Village, which is a multi-use sports and entertainment destination centered around the PFHOF’s
campus.
The strategic plan has been developed into three phases: Phase I, Phase
II, and Phase III. Phase I of the Hall of Fame Village is operational, consisting of the Tom Benson Hall of Fame Stadium, the ForeverLawn
Sports Complex (which as of January 11, 2024 is owned 20% by HOF Village), and HOF Village Media Group, LLC and gaming. The Tom Benson
Hall of Fame Stadium hosts multiple sports and entertainment events, including the NFL Hall of Fame Game, Enshrinement and Concert for
Legends during the annual Pro Football Hall of Fame Enshrinement Week. The ForeverLawn Sports Complex hosts camps and tournaments for
football players, as well as athletes from across the country in other sports such as lacrosse, rugby and soccer. Hall of Fame Village
Media leverages the sport of professional football to produce exclusive programming.
We have developed new hospitality, attraction
and corporate assets as part of our Phase II development plan. Phase II components of the Hall of Fame Village include the Constellation
Center for Excellence (an office building including retail and meeting space, that opened in November 2021), the Center for Performance
(a convention center/field house, that opened in August of 2022), the Play Action Plaza (completed in August of 2022), and the Fan Engagement
Zone (Retail Promenade with core and shell for Retail I was completed in August of 2022 and the core and shell of Retail II was completed
in November of 2022), two hotels (Hilton Tapestry on campus, to be constructed, and the Hilton DoubleTree located in downtown Canton
that opened in November 2020), and the Gameday Bay Waterpark, currently under construction. Phase III expansion plans may include a potential
mix of residential space, additional attractions, entertainment, dining, merchandise and more.
Key Components of the Company’s Results of Operations
Revenue
We generate revenue from various streams such
as sponsorship agreements, rents, events, and hotel and restaurant operations. The sponsorship arrangements, in which the customer sponsors
an asset or event and receives specified brand recognition and other benefits over a set period of time, recognize revenue on a straight-line
basis over the time period specified in the contract. Revenue for rents, cost recoveries, and events are recognized at the time the respective
event or service has been performed. Rental revenue for long term leases is recorded on a straight-line basis over the term of the lease
beginning on the commencement date.
Our owned hotel revenues primarily consist of
hotel room sales, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage
sales, and other ancillary goods and services (e.g., parking) related to owned hotel properties. Revenue is recognized when rooms are
occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services
are provided.
Restaurant revenue at Company-operated restaurants
is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales related taxes.
We expect our revenues to continue to increase
as we add in additional events, and open our Gameday Bay Waterpark and Hilton Tapestry Hotel.
Operating Expenses
Our operating expenses include production expenses, personnel expenses,
campus maintenance expenses, food and beverage cost of sales, hotel operating expenses, and depreciation expense. These expenses have
increased with completion of Phase II assets and we would expect these will continue to increase after completion of the on-campus hotel,
waterpark, and Phase III development.
Our operating expenses include the costs associated
with running and maintaining operational entertainment and destination assets such as the Tom Benson Hall of Fame Stadium and the ForeverLawn
Sports Complex along with management and professional fees. Factors that will contribute to increased operating expenses include: more
of our Phase II assets becoming operational, the addition of events for top performers, and sporting events.
Our depreciation expense includes the related
costs of owning and operating significant property and entertainment assets. These expenses have grown as through completion of the Phase
I and Phase II development.
Warrant Liabilities
We account for warrants
to purchase shares of our Common Stock that are not indexed to our own stock as liabilities at fair value on the balance sheet in accordance
with the Accounting Standards Codification Topic 815 “Derivatives and Hedging”. The warrants are subject to remeasurement
at each balance sheet date, and any change in fair value is recognized as a component of other income (expense) on the statements of
operations. We will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the
Common Stock warrants. At that time, the portion of the warrant liability related to the Common Stock warrants will be reclassified to
additional paid-in capital.
Results of Operations
The following table
sets forth information comparing the components of net loss for the years ended December 31, 2023 and the comparable period in 2022:
| | |
For the Years Ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Revenues | |
| | |
| |
| Sponsorships, net of activation costs | |
$ | 2,819,041 | | |
$ | 2,697,487 | |
| Event, rents, restaurant and other revenues | |
| 13,855,169 | | |
| 7,116,594 | |
| Hotel revenues | |
| 7,455,463 | | |
| 6,165,291 | |
| Total revenues | |
| 24,129,673 | | |
| 15,979,372 | |
| | |
| | | |
| | |
| Operating expenses | |
| | | |
| | |
| Operating expenses | |
| 43,171,407 | | |
| 35,982,464 | |
| Hotel operating expenses | |
| 6,491,625 | | |
| 5,949,839 | |
| Impairment expense | |
| 8,845,000 | | |
| - | |
| Depreciation expense | |
| 15,069,782 | | |
| 12,037,374 | |
| Total operating expenses | |
| 73,577,814 | | |
| 53,969,677 | |
| | |
| | | |
| | |
| Loss from operations | |
| (49,448,141 | ) | |
| (37,990,305 | ) |
| | |
| | | |
| | |
| Other income (expense) | |
| | | |
| | |
| Interest expense, net | |
| (18,763,838 | ) | |
| (5,377,146 | ) |
| Amortization of discount on note payable | |
| (3,589,858 | ) | |
| (6,250,721 | ) |
| Other income | |
| 4,265,937 | | |
| 604,912 | |
| Change in fair value of warrant liability | |
| 686,000 | | |
| 9,422,000 | |
| Change in fair value of interest rate swap | |
| 163,850 | | |
| (200,000 | ) |
| Change in fair value of investments available for sale | |
| (2,067,754 | ) | |
| - | |
| Loss on extinguishment of debt | |
| - | | |
| (6,377,051 | ) |
| Total other expense | |
| (19,305,663 | ) | |
| (8,178,006 | ) |
| | |
| | | |
| | |
| Net loss | |
$ | (68,753,804 | ) | |
$ | (46,168,311 | ) |
| | |
| | | |
| | |
| Preferred stock dividends | |
| (1,064,000 | ) | |
| (1,064,000 | ) |
| Loss attributable to non-controlling interest | |
| 72,265 | | |
| 285,807 | |
| | |
| | | |
| | |
| Net loss attributable to HOFRE stockholders | |
$ | (69,745,539 | ) | |
$ | (46,946,504 | ) |
| | |
| | | |
| | |
| Net loss per share – basic and diluted | |
$ | (11.97 | ) | |
$ | (9.01 | ) |
| | |
| | | |
| | |
| Weighted average shares outstanding, basic and diluted | |
| 5,826,504 | | |
| 5,208,054 | |
Year Ended December 31, 2023 as Compared
to the Year Ended December 31, 2022
Sponsorship Revenues
Sponsorship revenues
for the year ended December 31, 2023 increased by $121,554, or 4.5%, to $2,819,041 as compared to $2,697,487 for the year ended December
31, 2022. This increase was primarily due to additional event sponsorships.
Event, rents, restaurant and other revenues
Revenue from events, rents, restaurant and other
revenues for the year ended December 31, 2023 increased to $13,855,169 from $7,116,594 for the year ended December 31, 2022, for an increase
of $6,738,575, or 94.7%. This increase was primarily driven by an increase in events revenue, an increase in food and beverage sales,
and higher revenue received from short term rentals. These increases were the result of the hosting of the USFL, concerts, and other
events in our Tom Benson Hall of Fame Stadium, the resumption of many sports and other tournaments in our ForeverLawn Sports Complex,
as well as revenue associated with the opening of our Don Shula’s American Kitchen restaurant.
Hotel Revenues
Hotel revenues for the
year ended December 31, 2023 increased $1,290,172, or 20.9%, to $7,455,463, compared to $6,165,291 for the year ended December 31, 2022.
This increase was driven by increased occupancy and average daily rates.
Operating Expenses
Operating expenses were $43,171,407 for the year
ended December 31, 2023 as compared to $35,982,464 for the year ended December 31, 2022, an increase of $7,188,943, or 20.0%. This increase
was driven by higher personnel and related benefits costs, an increase in production and related costs for our events and media productions,
and an increase in accounting, auditing and professional fees.
Hotel Operating Expense
Our hotel operating
expense was $6,491,625 for the year ended December 31, 2023 as compared to $5,949,839 for the year ended December 31, 2022, an increase
of $541,786 or 9.1%. Hotel revenue and expenses are highly correlated and thus this increase was driven by having an increase in occupancy.
Impairment Expense
Impairment expense was
$8,845,000 for the year ended December 31, 2023 as compared to $0 for the year ended December 31, 2022. The impairment expense for 2023
was due to an impairment of the ForeverLawn Sports Complex in advance of a contemplated sale and the impairment of the film costs.
Depreciation Expense
Depreciation expense was $15,069,782 for the
year ended December 31, 2023 as compared to $12,037,374 for the year ended December 31, 2022, for an increase of $3,032,408, or 25.2%.
The increase was primarily the result of the completion of large assets which were put into service.
Interest Expense
Total interest expense
was $18,763,838 for the year ended December 31, 2023, as compared to $5,377,146 for the year ended December 31, 2022, an increase of $13,386,692,
or 249%. The increase in total interest expense was primarily due to an increase in the amount of total debt outstanding, a decrease in
the proportion of debt that is capitalized for ongoing construction projects, and an increase in average interest rates.
Amortization of Debt
Discount
Total amortization of debt discount was $3,589,858
for the year ended December 31, 2023, as compared to $6,250,721 for the year ended December 31, 2022, for a decrease of $2,660,863, or
42.6%. The decrease is primarily due to the removal of discounts from IRG-related debt upon the modification of the debt in November
2022.
Other Income
Other income was $4,265,937 for the year ended
December 31, 2023, as compared to $604,912 for the year ended December 31, 2022. The other income for 2023 was related to the gain on
the outcome of the arbitration with JCI.
Change in Fair Value of Warrant Liability
The change in fair value warrant liability represents
a gain of $686,000 for the year ended December 31, 2023, as compared to $9,422,000 for the year ended December 31, 2022, for a decrease
of $8,736,000 or 92.7%. The decrease in change in fair value of warrant liability was due primarily to a decrease in our stock price.
Change in Fair Value of Interest Rate Swap
The change in fair value of interest rate swap
liability was a gain of $163,850 for the year ended December 31, 2023, as compared to a loss of $200,000 for the year ended December
31, 2022, for an increase of $363,850 or 181.9%. The increase in change in fair value of interest rate swap was due to the disposal.
Change in Fair Value
of Investments Available for Sale
The change in fair value of investments available
for sale of $2,067,754 during the year ended December 31, 2023, was related to the change in fair value of certain warrants we hold issued
to us by our mobile sports betting partner.
Loss on Extinguishment
of Debt
Loss on extinguishment
of debt was $0 for the year ended December 31, 2023, as compared to $6,377,051 for the year ended December 31, 2022. The loss on extinguishment
of debt for the year ended December 31, 2022 is due to (a) $148,472 from the March 1, 2022 refinancing of many of our debt instruments
and (b) $6,228,579 from the November 7, 2022 refinancing of many of our debt instruments.
Liquidity and Capital Resources
We have sustained recurring losses through December
31, 2023, and our accumulated deficit was $216,643,882 as of such date. Since inception, the Company’s operations have been funded
principally through the issuance of debt and equity. As of December 31, 2023, we had approximately $3.2 million of unrestricted cash and
$8.6 million of restricted cash. Through December 31, 2024, we have $62.1 million in debt principal payments coming due. In January 2024,
the Company provided notice to IRG and its affiliated lenders to extend the maturity of $49.5 million of principal of its debt until March
31, 2025. The Company is currently working with its lenders to document such extension. During the year ended December 31, 2023, the Company
used cash for operating activities of $27,000,438.
We expect that we will need to raise additional
financing to accomplish our development plan and fund our working capital. We are seeking to obtain additional funding through debt, construction
lending, and equity financing. There are no assurances that we will be able to raise capital on terms acceptable to the Company or at
all, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If we are unable to obtain
sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our financial
condition and operating results, or we may not be able to continue to fund our ongoing operations. These conditions raise substantial
doubt about our ability to continue as a going concern to sustain operations for at least one year from the issuance of these consolidated
financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome
of these uncertainties.
Cash Flows
Since inception, the
Company has primarily used its available cash to fund its project development expenditures. The following table sets forth a summary
of cash flows for the periods presented:
| | |
For the Year Ended
December 31, | |
| | |
2023 | | |
2022 | |
| Cash (used in) provided by: | |
| | |
| |
| Operating Activities | |
$ | (27,000,438 | ) | |
$ | (4,892,748 | ) |
| Investing Activities | |
| (27,826,165 | ) | |
| (112,128,287 | ) |
| Financing Activities | |
| 33,126,304 | | |
| 133,149,377 | |
| Net (decrease) increase in cash and restricted cash | |
$ | (21,700,299 | ) | |
$ | 16,128,342 | |
Cash Flows for the Years Ended December 31, 2023 and 2022
Operating Activities
Net cash used in operating
activities was $27,000,438 during the year ended December 31, 2023, which consisted primarily of a net loss of $68,753,804, a non-cash
decrease in the fair value of our warrant liability of $686,000, offset by non-cash depreciation expense of $15,069,782, amortization
of note discounts and deferred financing costs of $3,577,034, payment-in-kind interest rolled into debt of $6,671,400, impairment of sports
fields and film costs of $8,845,000, recognition of film costs of $160,000, a decrease in change of fair value of investments available
for sale of $2,067,754, non-cash stock-based compensation expense of $2,756,849, an increase in accounts payable and accrued expenses
of $2,026,036, an increase in due to affiliates of $438,389, and a decrease in other liabilities of $383,655.
Net cash used in operating
activities was $4,892,748 during the year ended December 31, 2022, which consisted primarily of a net loss of $46,168,311, a non-cash
decrease in the fair value of our warrant liability of $9,422,000, offset by non-cash depreciation expense of $12,037,374, amortization
of note discounts of $6,250,721, payment-in-kind interest rolled into debt of $3,969,093, a loss on extinguishment of debt of $6,377,051,
non-cash stock-based compensation expense of $3,925,303, a decrease in prepaid expenses and other assets of $289,396, an increase in
accounts payable and accrued expenses of $9,924,830, an increase in due to affiliates of $3,015,292, and an increase in other liabilities
of $2,939,079.
Investing Activities
Net cash used in investing
activities was $27,826,165 during the year ended December 31, 2023, which consisted of project development costs of $45,590,651, proceeds
from securities held to maturity of $89,470,392, and $71,947,597 in investment in securities held to maturity. Net cash used in investing
activities was $112,128,287 during the year ended December 31, 2022 which consisted of project development costs of $95,167,689 and $16,960,598
in investment in the purchase of securities held to maturity.
Financing Activities
Net cash provided by
financing activities was $33,126,304 during the year ended December 31, 2023, which consisted primarily of $43,075,339 in proceeds from
notes payable and $2,500,996 of proceeds from common stock offering, offset by $5,757,301 in repayments of notes payable, $4,019,531
payment on financing liability and $2,226,310 in payment of financing costs.
Net cash provided by
financing activities was $133,149,377 during the year ended December 31, 2022, which consisted primarily of $79,196,400 in proceeds from
notes payable and $20,777,893 of proceeds from common stock and preferred stock, $65,588,519 from the proceeds from failed sale leaseback,
offset by $19,256,319 in repayments of notes payable, and $11,559,606 in payment of financing costs.
Off-Balance Sheet Arrangements
The Company did not
have any off-balance sheet arrangements as of December 31, 2023 and 2022.
Critical Accounting Policies and Significant
Judgments and Estimates
This discussion and analysis of the Company’s
financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared
in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial
statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods.
In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes
are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
The Company follows the Financial Accounting
Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue with Contracts
with Customers, to properly recognize revenue. Under ASC 606, revenue is recognized when a customer obtains control of promised goods
or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the
following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii)
determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize
revenue when (or as) the entity satisfies a performance obligation.
The Company generates revenues from various streams
such as sponsorship agreements, rents, events, and hotel and restaurant operations. The sponsorship arrangements, in which the customer
sponsors a play area or event and receives specified brand recognition and other benefits over a set period of time, recognize revenue
on a straight-line basis over the time period specified in the contract. The excess of amounts contractually due over the amounts of
sponsorship revenue recognized are included in other liabilities on the accompanying consolidated balance sheets. Contractually due but
unpaid sponsorship revenue are included in accounts receivable on the accompanying consolidated balance sheet. Refer to Note 6 for more
details. Revenue for rents, cost recoveries, and events are recognized at the time the respective event or service has been performed.
Rental revenue for long term leases is recorded on a straight-line basis over the term of the lease beginning on the commencement date.
A performance obligation is a promise in a contract
to transfer a distinct good or service to a customer. If the contract does not specify the revenue by performance obligation, the Company
allocates the transaction price to each performance obligation based on its relative standalone selling price. Such prices are generally
determined using prices charged to customers or using the Company’s expected cost plus margin. Revenue is recognized as the Company’s
performance obligations are satisfied. If consideration is received in advance of the Company’s performance, including amounts
which are refundable, recognition of revenue is deferred until the performance obligation is satisfied or amounts are no longer refundable.
The Company’s owned hotel revenues primarily
consist of hotel room sales, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and
beverage sales, and other ancillary goods and services (e.g., parking) related to owned hotel properties. Revenue is recognized when
rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods
and services are provided. Although the transaction prices of hotel room sales, goods, and other services are generally fixed and based
on the respective room reservation or other agreement, an estimate to reduce the transaction price is required if a discount is expected
to be provided to the customer. For package reservations, the transaction price is allocated to the performance obligations within the
package based on the estimated standalone selling price of each component.
For our rented properties, payments are generally
received over the course of the lease. For our long-term sponsorship partners, payments are generally received over the term of the sponsorship
agreement.
Restaurant revenue at Company-operated restaurants is recognized when
payment is tendered at the point of sale, net of sales tax, discounts and other sales related taxes.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
The Company is not exposed to market risk related
to interest rates on foreign currencies.
Item 8. Financial Statements and Supplementary Data.
The financial statements required by this Item
are included in Item 15 of this report and are presented beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Dismissal of Independent
Registered Public Accounting Firm
On
April 3, 2023, the Audit Committee (the “Audit Committee”) of the Board of Directors of Hall of Fame Resort & Entertainment
Company (the “Company”) approved the dismissal of Marcum LLP (“Marcum”) as the Company’s independent registered
public accounting firm, effective April 3, 2023.
Marcum’s
reports on the Company’s financial statements as of and for the fiscal years ended December 31, 2021 and December 31, 2022, did
not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting
principles.
During
the fiscal years ended December 31, 2021 and December 31, 2022, and in the subsequent interim period through April 3, 2023, there were
no (i) disagreements (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company
and Marcum on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedures, which,
if not resolved to the satisfaction of Marcum would have caused Marcum to make reference to the matter in their report; or (ii) reportable
events requiring disclosure pursuant to Item 304(a)(1)(v) of Regulation S-K.
Appointment of
Independent Registered Public Accounting Firm
On
April 3, 2023, the Audit Committee approved the appointment of Grant Thornton LLP (“Grant Thornton”) as the Company’s
new independent registered public accounting firm, effective immediately, to perform independent audit services for the fiscal year ending
December 31, 2023, subject to completion of Grant Thornton’s standard client acceptance procedures and execution of an engagement
letter.
During
the fiscal years ended December 31, 2021 and December 31, 2022, and from January 1, 2023 through April 3, 2023, the Company did not consult
Grant Thornton with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice
was provided to the Company by Grant Thornton that Grant Thornton concluded was an important factor considered by the Company in reaching
a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement,
as that term is described in Item 304(a)(1)(iv) of Regulation S-K under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and the related instructions to Item 304 of Regulation S-K under the Exchange
Act, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange
Act.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and
Procedures
We maintain disclosure controls and procedures designed to ensure that
the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including
our Chief Executive Officer and our Vice President Accounting / Corporate Controller, as appropriate to allow timely decisions regarding
required disclosures. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our
principal executive and financial officer) Vice President Accounting / Corporate Controller (our principal accounting officer) carried
out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2023.
Based on this evaluation, our Chief Executive Officer and Vice President Accounting / Corporate Controller concluded that our disclosure
controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) were not effective as December
31, 2023 due to a material weakness in in internal control over financial reporting noted in the paragraph below.
Notwithstanding the material weakness presented below, management has
concluded that the consolidated financial statements included elsewhere in this Annual Report on Form 10-K present fairly, in all material
respects, our financial position, results of operations, and cash flows, in conformity with US GAAP.
Limitations on Internal Control over Financial Reporting
An internal control
system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are
known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though
not eliminate, this risk.
Management’s
Annual Report on Internal Control over Financial Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f).
Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial
reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles
in the United States. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance
that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting
principles in the United States, and that our receipts and expenditures are being made only in accordance with the authorization of our
board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of our assets that could have a material effect on our financial statements.
Under the supervision and with the participation of our management,
including our Chief Executive Officer (our principal executive and financial officer) and our Vice President Accounting / Corporate Controller
(our principal accounting officer), we performed an assessment of the Company’s significant processes and key controls. Based on
this assessment, management concluded that our internal control over financial reporting was not effective as of December 31, 2023, due
to the existence of a material weakness.
Material Weakness
in Internal Control over Financial Reporting
A material weakness is
a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As previously
disclosed, a material weakness in internal control over financial reporting was identified related to the precise and timely review and
analysis of information used to prepare our financial statements and disclosures in accordance with U.S. GAAP.
Management’s
Plans for Remediation
We
have identified and implemented, and continue to implement, certain remediation efforts to improve the effectiveness of our internal control
over financial reporting. These remediation efforts are ongoing and include the following measures to address the material weakness
identified:
| - | We have designed additional controls
to supplement the existing business process controls, with these controls expected to be fully implemented by the end of Q1 2024. |
| | | |
| - | We
have tested the design of these controls and will test their effectiveness to ensure that
they are operating appropriately. |
We expect the above actions will be completed before the end of the
fiscal year ending December 31, 2024. The material weakness will not be considered remediated until the applicable controls operate for
a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. As we continue
to evaluate and improve the applicable controls, management may take additional remedial measures or modify the remediation plan described
above.
Changes in Internal Control over Financial
Reporting
In addition to the plan to remediate the material weakness discussed
above, we identified changes in our internal control over financial reporting during the fourth quarter of 2023, which were identified
in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15-d-15 under the Exchange Act, that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Specifically, following
the resignation of the Company’s Chief Financial Officer, the Company’s Chief Executive Officer was assigned to the role of
principal financial officer and the Company’s Vice President Accounting/Corporate Controller was assigned the role of principal
accounting officer.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections.
Not Applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this Item 10 is incorporated
by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission
within 120 days of the fiscal year ended December 31, 2023.
Item 11. Executive Compensation.
The information required
by this Item 11 is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2023.
Item 12. Security Ownership of Certain Beneficial Owners and Management
And Related Stockholder Matters.
The information required by this Item 12 is incorporated
by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission
within 120 days of the fiscal year ended December 31, 2023.
Item 13. Certain Relationships and Related Transactions and Director
Independence.
The information required
by this Item 13 is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2023.
Item 14. Principal Accountant Fees and Services.
The information required by this Item 14 is incorporated
by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission
within 120 days of the fiscal year ended December 31, 2023.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
Financial Statements
The consolidated financial statements of the
Company for the fiscal years covered by this Annual Report are located on beginning on page F-1 of this Annual Report.
Exhibits
| Exhibit No. |
|
Description |
| 3.1 |
|
Amended
and Restated Certificate of Incorporation of Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit
3.1 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020) |
| 3.2 |
|
Certificate
of Designations of 7.00% Series A Cumulative Redeemable Preferred Stock of Hall of Fame Resort & Entertainment Company (incorporated
by reference to Exhibit 3.1 of the Company’s Form 8-K (001-38363), filed with the Commission on October 15, 2020) |
| 3.3 |
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s
Form 8-K (001-38363), filed with the Commission on November 6, 2020) |
| 3.4 |
|
Certificate
of Designations of 7.00% Series B Convertible Preferred Stock of Hall of Fame Resort & Entertainment Company (incorporated by
reference to Exhibit 3.1 of the Company’s Form 8-K (001-38363), filed with the Commission on May 14, 2021) |
| 3.5 |
|
Certificate
of Designations of 7.00% Series C Convertible Preferred Stock of Hall of Fame Resort & Entertainment Company (incorporated by
reference to Exhibit 3.1 of the Company’s Form 8-K (001-38363), filed with the Commission on March 29, 2022) |
| 3.6 |
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s
Form 8-K (001-38363), filed with the Commission on December 27, 2022) |
| 3.7 |
|
Amended
and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (001-38363), filed with
the Commission on August 12, 2021) |
| 4.1 |
|
Specimen
Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K (001-38363), filed with the Commission
on July 8, 2020) |
| 4.2 |
|
Specimen
Warrant Certificate (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K (001-38363), filed with the Commission
on July 8, 2020) |
| 4.3 |
|
Form
of Warrant Agreement (incorporated by reference to Exhibit 4.2 to Gordon Pointe Acquisition Corp.’s Current Report on Form
8-K (File No. 001-38363) filed with the Commission on January 30, 2018) |
| 4.4 |
|
Form
of Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K (001-38363), filed with the Commission on November
19, 2020) |
| 4.5 |
|
Warrant
Agency Agreement, dated November 18, 2020, between Hall of Fame Resort & Entertainment Company and Continental Stock Transfer
& Trust Company (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K (001-38363), filed with the Commission
on November 19, 2020) |
| 4.6 |
|
Warrant
Agreement, dated as of July 1, 2020, by and among Hall of Fame Resort & Entertainment Company and purchasers party thereto (incorporated
by reference to Exhibit 4.8 of the Company’s Registration Statement on Form S-1 (File No. 333-256618) filed with the Commission
on May 28, 2021) |
| 4.7 |
|
Second
Amended and Restated Series C Warrant (No. 2020 W-1), effective as of November 7, 2022, issued by Hall of Fame Resort & Entertainment
Company to CH Capital Lending, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed
with the Commission on March 22, 2023) |
| 4.8 |
|
Second
Amended and Restated Series D Warrant (Series D No. W-1), effective as of November 7, 2022, issued by Hall of Fame Resort & Entertainment
Company to CH Capital Lending, LLC (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K (001-38363), filed
with the Commission on March 22, 2023) |
| 4.9 |
|
Amended
and Restated Series E Warrant (Series E No. W-1), effective as of November 7, 2022, issued by Hall of Fame Resort & Entertainment
Company to CH Capital Lending, LLC (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K (001-38363), filed
with the Commission on March 22, 2023) |
| 4.1 |
|
Amended
and Restated Series E Warrant (Series E No. W-2), effective as of November 7, 2022, issued by Hall of Fame Resort & Entertainment
Company to CH Capital Lending, LLC (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K (001-38363), filed
with the Commission on March 22, 2023) |
| 4.11 |
|
Amended
and Restated Series F Warrant (Series F No. W-1), effective as of November 7, 2022, issued by Hall of Fame Resort & Entertainment
Company to JKP Financial, LLC (incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K (001-38363), filed with
the Commission on March 22, 2023) |
| 4.12 |
|
Amended
and Restated Series F Warrant (Series F No. W-2), effective as of November 7, 2022, issued by Hall of Fame Resort & Entertainment
Company to JKP Financial, LLC (incorporated by reference to Exhibit 10.6 of the Company’s Form 8-K (001-38363), filed with
the Commission on March 22, 2023) |
| 4.13 |
|
Amended
and Restated Series G Warrant, dated as of November 7, 2022, issued by Hall of Fame Resort & Entertainment Company to Midwest
Lender Fund, LLC (incorporated by reference to Exhibit 10.7 of the Company’s Form 8-K (001-38363), filed with the Commission
on March 22, 2023) |
| 4.14 |
|
Warrant
Agency Agreement, dated October 13, 2023, by and between Hall of Fame Resort & Entertainment Company and Continental Stock Transfer
& Trust Company (incorporated by reference to Exhibit 4.1 of the Company’s Quarterly Report on Form 10-Q (001-38363), filed
with the Commission on November 14, 2023) |
| 4.15 |
|
Warrant
issued October 13, 2023, by Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 4.2 of the Company’s
Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November 14, 2023) |
| 4.16* |
|
Description of Registered Securities |
| 10.1 |
|
Global
License Agreement dated April 8, 2022, between National Football Museum, Inc. and HOF Village Newco, LLC (incorporated by reference
to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on April 14, 2022) |
| 10.2 |
|
Director
Nominating Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (File No.
333-252807) filed with the Commission on February 5, 2021) |
| 10.3† |
|
Hall
of Fame Resort & Entertainment Company Amended 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 of the
Company’s Form 8-K (001-38363), filed with the Commission on June 12, 2023) |
| 10.4† |
|
Form
of Restricted Stock Award Agreement under Hall of Fame Resort & Entertainment Company 2020 Omnibus Incentive Plan (incorporated
by reference to Exhibit 99.2 of the Company’s Registration Statement on Form S-8 (File No. 333-248851) filed with the Commission
on September 16, 2020) |
| 10.5† |
|
Form
of Restricted Stock Unit Award Agreement under Hall of Fame Resort & Entertainment Company 2020 Omnibus Incentive Plan (incorporated
by reference to Exhibit 99.5 of the Company’s Registration Statement on Form S-8 (File No. 333-248851) filed with the Commission
on September 16, 2020) |
| 10.6† |
|
Form
of Non-Employee Director Restricted Stock Unit Award Agreement under Hall of Fame Resort & Entertainment Company 2020 Omnibus
Incentive Plan (incorporated by reference to Exhibit 99.6 of the Company’s Registration Statement on Form S-8 (File No. 333-248851)
filed with the Commission on September 16, 2020) |
| 10.7† |
|
Hall
of Fame Resort & Entertainment Company 2023 Inducement Plan (incorporated by reference to Exhibit 99.1 of the Company’s
Registration Statement on Form S-8 (File No. 333-270572) filed with the Commission on March 15, 2023) |
| 10.8† |
|
Form
of Restricted Stock Unit Award under Hall of Fame Resort & Entertainment Company 2023 Inducement Plan (incorporated by reference
to Exhibit 99.2 of the Company’s Registration Statement on Form S-8 (File No. 333-270572) filed with the Commission on March
15, 2023) |
| 10.9† |
|
Amended
and Restated Employment Agreement, dated November 22, 2022, between Hall of Fame Resort & Entertainment Company, HOF Village
Newco, LLC and Michael Crawford (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with
the Commission on November 23, 2022) |
| 10.10† |
|
Amendment
to Amended and Restated Employment Agreement, effective May 1, 2023, between Hall of Fame Resort & Entertainment Company, HOF
Village Newco, LLC and Michael Crawford (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed
with the Commission on April 20, 2023) |
| 10.11† |
|
Employment
Agreement, dated February 14, 2022, by and between Benjamin Lee, HOF Village Newco, LLC and Hall of Fame Resort & Entertainment
Company (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on March
10, 2022) |
| 10.12† |
|
Employment
Agreement, dated December 1, 2019, by and between Anne Graffice and HOF Village, LLC (incorporated by reference to Exhibit 10.8 of
the Company’s Amendment No. 1 to Form S-3 on Form S-1 (File No. 333-240045), filed with the Commission on September 2, 2020) |
| 10.13† |
|
Employment
Agreement, dated August 31, 2020, by and between Tara Charnes and Hall of Fame Resort & Entertainment Company (incorporated
by reference to Exhibit 10.9 of the Company’s Amendment No. 1 to Form S-3 on Form S-1 (File No. 333-240045), filed with the
Commission on September 2, 2020) |
| 10.14† |
|
Amendment
No. 1, dated December 22, 2020, to Employment Agreement between Anne Graffice and HOF Village, LLC (incorporated by reference to
Exhibit 10.19 to the Company’s Registration Statement on Form S-1 (File No. 333-252807) filed with the Commission on February
5, 2021) |
| 10.15† |
|
Amendment
No. 1, dated December 22, 2020, to Employment Agreement between Tara Charnes and Hall of Fame Resort & Entertainment Company
(incorporated by reference to Exhibit 10.20 to the Company’s Registration Statement on Form S-1 (File No. 333-252807) filed
with the Commission on February 5, 2021) |
| 10.16† |
|
Form
of Retention Bonus Award Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K (001-38363), filed
with the Commission on November 23, 2022) |
| 10.17+ |
|
Note
Purchase Agreement, dated July 1, 2020, by and among Hall of Fame Resort & Entertainment Company and certain funds managed by
Magnetar Financial, LLC and the purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 10.7 of the
Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020) |
| 10.18 |
|
Registration
Rights Agreement, dated July 1, 2020, by and among Hall of Fame Resort & Entertainment Company and certain funds managed by Magnetar
Financial, LLC and the purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 10.8 of the Company’s
Form 8-K (001-38363), filed with the Commission on July 8, 2020) |
| 10.19 |
|
Note
Redemption and Warrant Agreement, dated July 1, 2020, by and among Hall of Fame Resort & Entertainment Company and certain funds
managed by Magnetar Financial, LLC and the purchasers listed on the signature pages thereto (incorporated by reference to Exhibit
10.9 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020) |
| 10.20 |
|
Joinder
and Second Amendment to Promissory Note, dated March 1, 2022, by and among HOF Village Newco, LLC, and HOF Village Hotel II, LLC,
as the makers, Hall of Fame Resort & Entertainment Company, and JKP Financial, LLC, as holder (incorporated by reference to Exhibit
10.4 of the Company’s Form 8-K (001-38363), filed with the Commission on March 2, 2022) |
| 10.21 |
|
Backup
Joinder and First Amended and Restated Secured Cognovit Promissory Note, effective as of November 7, 2022, by and among Hall of Fame
Resort & Entertainment Company, HOF Village Newco, LLC, HOF Village Youth Fields, LLC, as makers, and JKP Financial, LLC, as
holder (incorporated by reference to Exhibit 10.8 of the Company’s Form 8-K (001-38363), filed with the Commission on March
22, 2023) |
| 10.22 |
|
Letter
Agreement re Payment Terms, dated June 25, 2020, by and among Industrial Realty Group, LLC, IRG Master Holdings, LLC, HOF Village,
LLC and certain affiliates party thereto (incorporated by reference to Exhibit 10.12 of the Company’s Form 8-K (001-38363),
filed with the Commission on July 8, 2020) |
| 10.23+ |
|
Amendment
to Sponsorship and Services Agreement, dated June 15, 2020, by and among HOF Village, LLC, National Football Museum, Inc. and Constellation
NewEnergy, Inc. (incorporated by reference to Exhibit 10.14 of the Company’s Form 8-K (001-38363), filed with the Commission
on July 8, 2020) |
| 10.24+ |
|
Term
Loan Agreement, dated December 1, 2020, among Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, certain of
its subsidiaries, and Aquarian Credit Funding LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363),
filed with the Commission on December 3, 2020) |
| 10.25 |
|
Letter
Agreement, dated as of December 1, 2020, by and among Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, certain
of its subsidiaries, and IRG Master Holdings, LLC (incorporated by reference to Exhibit 10.36 to the Company’s Registration
Statement on Form S-1 (File No. 333-252807) filed with the Commission on February 5, 2021) |
| 10.26 |
|
Amendment
Number 1 to Term Loan Agreement, dated January 28, 2021, among Hall of Fame Resort & Entertainment Company, HOF Village Newco,
LLC, certain of its subsidiaries, Aquarian Credit Funding LLC, and the Lenders party thereto (incorporated by reference to Exhibit
10.36 of the Company’s Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-249133), filed with
the Commission on July 22, 2021) |
| 10.27 |
|
Amendment
Number 2 to Term Loan Agreement, dated February 15, 2021, among Hall of Fame Resort & Entertainment Company, HOF Village Newco,
LLC, certain of its subsidiaries, Aquarian Credit Funding LLC, and the Lenders party thereto (incorporated by reference to Exhibit
10.37 of the Company’s Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-249133), filed with
the Commission on July 22, 2021) |
| 10.28 |
|
Amendment
Number 3 to Term Loan Agreement, dated as of August 30, 2021 among Hall of Fame Resort & Entertainment Company, HOF Village Newco,
LLC, certain of its subsidiaries, Aquarian Credit Funding LLC, and the Lenders party thereto (incorporated by reference to Exhibit
10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on September 1, 2021) |
| 10.29 |
|
Amendment
Number 4 to Term Loan Agreement, dated as of August 30, 2021 among Hall of Fame Resort & Entertainment Company, HOF Village Newco,
LLC, certain of its subsidiaries, Aquarian Credit Funding LLC, and the Lenders party thereto (incorporated by reference to Exhibit
10.2 of the Company’s Form 8-K (001-38363), filed with the Commission on September 1, 2021) |
| 10.30 |
|
Amendment
Number 5 to Term Loan Agreement, dated as of December 15, 2021 among Hall of Fame Resort & Entertainment Company, HOF Village
Newco, LLC, certain of its subsidiaries, Aquarian Credit Funding LLC, and the Lenders party thereto (incorporated by reference to
Exhibit 10.5 of the Company’s Form 8-K (001-38363), filed with the Commission on December 16, 2021) |
| 10.31 |
|
Assignment
of Loan and Loan Documents, dated as of March 1, 2022, by and among Aquarian Credit Funding LLC, as administrative agent, Investors
Heritage Life Insurance Company (“IHLIC”), as a lender, and CH Capital Lending, LLC, as assignee (incorporated by reference
to Exhibit 10.44 of the Company’s Annual Report on Form 10-K (001-38363), filed with the Commission on March 14, 2022) |
| 10.32 |
|
Amendment
Number 6 to Term Loan Agreement, dated as of March 1, 2022, among Hall of Fame Resort & Entertainment Company, HOF Village Newco,
LLC, certain of its subsidiaries, and CH Capital Lending, LLC, as administrative agent and lender (incorporated by reference to Exhibit
10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on March 2, 2022) |
| 10.33 |
|
Amendment
Number 7 to Term Loan Agreement, dated as of August 5, 2022, among Hall of Fame Resort & Entertainment Company, HOF Village Newco,
LLC, certain of its subsidiaries, and CH Capital Lending, LLC, as administrative agent and lender (incorporated by reference to Exhibit
10.9 of the Company’s Form S-3 Registration Statement (File No. 333-266750), filed with the Commission on August 10, 2022) |
| 10.34 |
|
Amendment Number 8 to Term Loan Agreement, effective as of November
7, 2022, by Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC and HOF Village Youth Fields, LLC, as borrower, in
favor of CH Capital Lending, LLC, as administrative agent and lender (incorporated by reference to Exhibit 10.9 of the Company’s
Form 8-K (File No. 001-38363), filed with the Commission on March 22, 2023) |
| 10.35 |
|
Amendment
Number 9 to Term Loan Agreement, dated December 8, 2023 by Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC,
HOF Village Youth Fields, LLC, collectively as borrower, and CH Capital Lending, LLC, as administrative agent and lender (incorporated
by reference to Exhibit 10.2 of the Company’s Form 8-K (001-38363), filed with the Commission on December 14, 2023) |
| 10.36 |
|
Amendment
Number 10 to Term Loan Agreement, dated January 11, 2024 by Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC,
HOF Village Youth Fields, LLC, collectively as borrower, and CH Capital Lending, LLC, as administrative agent and lender (incorporated
by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on January 18, 2024) |
| 10.37 |
|
Amendment
Number 11 to Term Loan Agreement, dated January 17, 2024 by Hall of Fame Resort & Entertainment Company and HOF Village Newco,
LLC, collectively as borrower, and CH Capital Lending, LLC, as administrative agent and lender (incorporated by reference to Exhibit
10.7 of the Company’s Form 8-K (001-38363), filed with the Commission on January 18, 2024) |
| 10.38* |
|
Amendment Number 12 to Term Loan Agreement, dated February 1, 2024 by Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, HOF Village Youth Fields, LLC, collectively as borrower, and CH Capital Lending, LLC, as administrative agent and lender |
| 10.39* |
|
Amendment Number 13 to Term Loan Agreement, dated February 28, 2024 by Hall of Fame Resort & Entertainment Company and HOF Village Newco, LLC, collectively as borrower, and CH Capital Lending, LLC, as administrative agent and lender |
| 10.40* |
|
First Amendment to Lease Agreement, dated February 23, 2024, among HFAKOH001 LLC, as landlord, HOF Village Waterpark, LLC, as tenant, HOF Village Newco, LLC, as guarantor and HOF Village Stadium, LLC, as mortgagor |
| 10.41* |
|
Pledge and Security Agreement, dated February 23, 2024, between HOF Village Newco, LLC, as pledgor and HFAKOH001 LLC, as pledgee |
| 10.42* |
|
Series H Common Stock Purchase Warrant, dated February 23, 2024, by Hall of Fame Resort & Entertainment Company for the benefit of HFAKOH001 LLC, as holder |
| 10.43* |
|
Second Amendment to Lease Agreement, dated February 29, 2024, among HFAKOH001 LLC, as landlord, HOF Village Waterpark, LLC, as tenant, HOF Village Newco, LLC, as guarantor and HOF Village Stadium, LLC, as mortgagor |
| 10.44* |
|
Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated February 29, 2024, by HOF Village Newco, LLC, as mortgagor, for the benefit of HFAKOH001 LLC, as mortgagee |
| 10.45 |
|
Equity
Distribution Agreement, dated September 30, 2021, by and among Hall of Fame Resort & Entertainment Company, Wedbush Securities
Inc. and Maxim Group LLC (incorporated by reference to Exhibit 1.1 of the Company’s Form 8-K (001-38363), filed with the Commission
on October 1, 2021) |
| 10.46 |
|
Amendment
No. 1 to Equity Distribution Agreement, dated October 6, 2023, by and among Hall of Fame Resort & Entertainment Company, and
Maxim Group LLC and Wedbush Securities Inc. (incorporated by reference to Exhibit 1.2 of the Company’s Form 8-K (001-38363),
filed with the Commission on October 12, 2023) |
| 10.47 |
|
Joinder
and Second Amended and Restated Secured COGNOVIT Promissory Note, effective as of November 7, 2022, issued by Hall of Fame Resort
& Entertainment Company, HOF Village Newco, LLC and HOF Village Youth Fields, LLC to IRG, LLC (incorporated by reference to Exhibit
10.10 of the Company’s Form 8-K (001-38363), filed with the Commission on March 22, 2023) |
| 10.48 |
|
Joinder
and Second Amended and Restated Secured COGNOVIT Promissory Note, effective as of November 7, 2022, issued by Hall of Fame Resort
& Entertainment Company, HOF Village Newco, LLC and HOF Village Youth Fields, LLC to JKP Financial, LLC (incorporated by reference
to Exhibit 10.11 of the Company’s Form 8-K (001-38363), filed with the Commission on March 22, 2023) |
| 10.49 |
|
Loan
Agreement, dated December 15, 2021, between HOF Village Center For Excellence, LLC, as borrower, and ErieBank, a division of CNB
Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender (incorporated by reference to Exhibit 10.1 of the Company’s
Form 8-K (001-38363), filed with the Commission on December 16, 2021) |
| 10.50 |
|
Promissory
Note, dated December 15, 2021, issued by HOF Village Center For Excellence, LLC to ErieBank, a division of CNB Bank, a wholly owned
subsidiary of CNB Financial Corporation (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K (001-38363), filed
with the Commission on December 16, 2021) |
| 10.51 |
|
Guaranty
of Payment, dated December 15, 2021, by Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 10.3
of the Company’s Form 8-K (001-38363), filed with the Commission on December 16, 2021) |
| 10.52 |
|
Energy
Project Cooperative Agreement, dated December 15, 2021, among the City of Canton, Ohio, the Canton Regional Energy Special Improvement
District, Inc., HOF Village Center For Excellence, LLC and Pace Equity, LLC (incorporated by reference to Exhibit 10.4 of the Company’s
Form 8-K (001-38363), filed with the Commission on December 16, 2021) |
| 10.53 |
|
Promissory
Note, dated April 27, 2022, issued by HOF Village Center For Performance, LLC to Midwest Lender Fund, LLC (incorporated by reference
to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on April 29, 2022) |
| 10.54 |
|
Backup
Promissory Note, effective as of November 7, 2022, issued by Hall of Fame Resort & Entertainment Company, HOF Village Newco,
LLC, and HOF Village Youth Fields, LLC to Midwest Lender Fund, LLC (incorporated by reference to Exhibit 10.12 of the Company’s
Form 8-K (001-38363), filed with the Commission on March 22, 2023) |
| 10.55 |
|
Joinder
and First Amended and Restated Promissory Note, effective as of November 7, 2022, issued by Hall of Fame Resort & Entertainment
Company, HOF Village Newco, LLC, and HOF Village Youth Fields, LLC to CH Capital Lending, LLC (incorporated by reference to Exhibit
10.13 of the Company’s Form 8-K (001-38363), filed with the Commission on March 22, 2023) |
| 10.56 |
|
Business
Loan Agreement, dated June 16, 2022, between Hall of Fame Resort & Entertainment Company and Stark Community Foundation, Inc.
(incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K (001-38363), filed with the Commission on June 17, 2022) |
| 10.57 |
|
Energy
Project Cooperative Agreement, dated June 29, 2022, among HOF Village Stadium, LLC, Canton Regional Energy Special Improvement District,
Inc., SPH Canton St, LLC, and City of Canton, Ohio (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report
on Form 10-Q (001-38363), filed with the Commission on August 11, 2022) |
| 10.58 |
|
Business
Loan Agreement, dated August 31, 2022, between Hall of Fame Resort & Entertainment Company and Stark County Port Authority (incorporated
by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on September 7, 2022) |
| 10.59 |
|
Business
Loan Agreement, dated September 15, 2022, between Hall of Fame Resort & Entertainment Company and City of Canton, Ohio (incorporated
by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on September 16, 2022) |
| 10.60 |
|
Loan
Agreement, dated September 27, 2022, among HOF Village Retail I, LLC and HOF Village Retail II, LLC, as borrowers, and The Huntington
National Bank, as lender (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission
on September 29, 2022) |
| 10.61 |
|
Promissory
Note, dated September 27, 2022, issued by HOF Village Retail I, LLC and HOF Village Retail II, LLC, as borrowers, to The Huntington
National Bank, as lender (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K (001-38363), filed with the Commission
on September 29, 2022) |
| 10.62 |
|
Ground
Lease, dated September 27, 2022, among TWAIN GL XXXVI, LLC, as landlord, and HOF Village Retail I, LLC and HOF Village Retail II,
LLC, as tenants (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K (001-38363), filed with the Commission
on September 29, 2022) |
| 10.63 |
|
Guaranty
Fee Letter Agreement, dated September 27, 2022, among Hall of Fame Resort & Entertainment Company, HOF Village Retail I, LLC,
HOF Village Retail II, LLC, Stuart Lichter, and Stuart Lichter, Trustee of the Stuart Lichter Trust u/t/d dated November 13, 2011
(incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K (001-38363), filed with the Commission on September 29,
2022) |
| 10.64 |
|
Assignment
of Note, Security Instruments and Other Loan Documents, dated September 22, 2023, by The Huntington National Bank to and in favor
of CH Capital Lending, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (001-38363),
filed with the Commission on November 14, 2023) |
| 10.65 |
|
Joinder
and First Amendment to Loan Agreement, dated September 21, 2023 by and among HOF Village Retail I, LLC, HOF Village Retail II, LLC,
Hall of Fame Resort & Entertainment Company, collectively as borrower, and CH Capital Lending, LLC, as lender (incorporated by
reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November
14, 2023) |
| 10.66 |
|
Second
Amendment to Loan Agreement, dated October 6, 2023 by and among HOF Village Retail I, LLC, HOF Village Retail II, LLC, Hall of Fame
Resort & Entertainment Company, collectively as borrower, and CH Capital Lending, LLC, as lender (incorporated by reference to
Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November 14, 2023) |
| 10.67 |
|
Third
Amendment to Loan Agreement, dated October 16, 2023 by and among HOF Village Retail I, LLC, HOF Village Retail II, LLC, Hall of Fame
Resort & Entertainment Company, collectively as borrower, and CH Capital Lending, LLC, as lender (incorporated by reference to
Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November 14, 2023) |
| 10.68* |
|
Fourth Amendment to Loan Agreement, dated November 21, 2023, among HOF Village Retail I, LLC, HOF Village Retail II, LLC and Hall of Fame Resort & Entertainment Company, as borrowers and CH Capital Lending, LLC, as lender |
| 10.69 |
|
Fifth
Amendment to Loan Agreement, dated December 8, 2023 by and among Hall of Fame Resort & Entertainment Company, HOF Village Retail
I, LLC, HOF Village Retail II, LLC, collectively as borrower, and CH Capital Lending, LLC, as lender (incorporated by reference to
Exhibit 10.7 of the Company’s Form 8-K (001-38363), filed with the Commission on December 14, 2023) |
| 10.70 |
|
Payment
Guaranty, dated October 19, 2022, by HOF Village Newco, LLC to and for the benefit of the Director of Development of the State of
Ohio, and The Huntington National Bank, as trustee (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363),
filed with the Commission on October 25, 2022) |
| 10.71 |
|
Loan
Agreement, dated October 1, 2022, among the Director of Development of the State of Ohio, the Stark County Port Authority, as borrower,
and the HOF Village Center for Performance, LLC, as TDD bonds beneficiary (incorporated by reference to Exhibit 10.2 of the Company’s
Form 8-K (001-38363), filed with the Commission on October 25, 2022) |
| 10.72 |
|
Intercreditor
and Subordination Agreement, dated October 1, 2022, by and among the Director of Development of the State of Ohio, acting on behalf
of the State of Ohio, as junior lender; Midwest Lender Fund, LLC, as senior lender; and HOF Village Center for Performance, LLC,
as borrower (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K (001-38363), filed with the Commission on
October 25, 2022) |
| 10.73 |
|
Purchase
and Sale Agreement, dated November 7, 2022, between HFAKOH001 LLC as buyer and HOF Village Waterpark, LLC as seller (incorporated
by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on November 9, 2022) |
| 10.74 |
|
Ground
Lease Agreement, dated November 7, 2022, between HFAKOH001 LLC as landlord and HOF Village Waterpark, LLC as tenant (incorporated
by reference to Exhibit 10.2 of the Company’s Form 8-K (001-38363), filed with the Commission on November 9, 2022) |
| 10.75 |
|
Limited
Recourse Carveout Guaranty, dated November 7, 2022, by HOF Village Newco, LLC as guarantor and HFAKOH001 LLC as landlord (incorporated
by reference to Exhibit 10.3 of the Company’s Form 8-K (001-38363), filed with the Commission on November 9, 2022) |
| 10.76 |
|
Pledge
and Security Agreement, dated November 7, 2022, by HOF Village Newco, LLC as pledgor and HFAKOH001 LLC as landlord (incorporated
by reference to Exhibit 10.4 of the Company’s Form 8-K (001-38363), filed with the Commission on November 9, 2022) |
| 10.77 |
|
Post-Closing
Matters Agreement, dated November 7, 2022, among HOF Village Waterpark, LLC, HOF Village Newco, LLC and HFAKOH001 LLC
(incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K (001-38363), filed with the Commission on November 9,
2022) |
| 10.78 |
|
Purchase
Option Agreement, dated November 7, 2022, between HFAKOH001 LLC and HOF Village Waterpark, LLC (incorporated by reference to Exhibit
10.6 of the Company’s Form 8-K (001-38363), filed with the Commission on November 9, 2022) |
| 10.79 |
|
Hotel
Construction Loan Commitment Letter, signed November 3, 2022, among Industry Realty Group, Inc. as lender, Hall of Fame Resort &
Entertainment Company as guarantor, and HOF Village Hotel WP, LLC as borrower (incorporated by reference to Exhibit 10.7 of the Company’s
Form 8-K (001-38363), filed with the Commission on November 9, 2022) |
| 10.80 |
|
IRG
Letter Agreement, dated November 7, 2022, between Industrial Realty Group, LLC and its various affiliates and related parties and
Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 10.8 of the Company’s Form 8-K (001-38363),
filed with the Commission on November 9, 2022) |
| 10.81 |
|
Cooperative
Tax Increment Financing Agreement, dated as of February 1, 2023, among Stark County Port Authority, the City of Canton, Ohio, Hall
of Fame Resort & Entertainment Company and HOF Village Newco, LLC, and is joined by HOF Village Stadium, LLC, HOF Village Youth
Fields, LLC, HOF Village Center for Excellence, LLC, HOF Village Center for Performance, LLC, HOF Village Retail I, LLC, and
HOF Village Retail II, LLC (incorporated by reference to Exhibit 10.71 of the Company’s Annual Report on Form 10-K (001-38363),
filed with the Commission on March 27, 2023) |
| 10.82 |
|
Maintenance
and Management Agreement (Stark Port Public Roadway), dated as of February 1, 2023, by and between the Stark County Port Authority
and HOF Village Newco, LLC, and is joined by Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit
10.72 of the Company’s Annual Report on Form 10-K (001-38363), filed with the Commission on March 27, 2023) |
| 10.83 |
|
Minimum
Payment Guaranty, dated as of February 2, 2023, by Hall of Fame Resort & Entertainment Company and HOF Village Newco, LLC, to
the Stark County Port Authority and The Huntington National Bank (incorporated by reference to Exhibit 10.73 of the Company’s
Annual Report on Form 10-K (001-38363), filed with the Commission on March 27, 2023) |
| 10.84 |
|
Shortfall
Payment Guaranty, dated as of February 2, 2023, by Stuart Lichter, as trustee of The Stuart Lichter Trust U/T/D dated November 13,
2011, and Stuart Lichter to the Stark County Port Authority and The Huntington National Bank (incorporated by reference to Exhibit
10.74 of the Company’s Annual Report on Form 10-K (001-38363), filed with the Commission on March 27, 2023) |
| 10.85 |
|
Construction
Loan Agreement, dated September 14, 2020 by and among HOF Village Hotel II, LLC, as borrower, Stuart Lichter, as guarantor, and ErieBank,
a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender (incorporated by reference to Exhibit 10.9
of the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November 14, 2023) |
| 10.86 |
|
Second
Amendment to Loan Documents, dated September 13, 2023, by and among HOF Village Hotel II, LLC, as borrower, Stuart Lichter, as guarantor,
and ErieBank, a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender (incorporated by reference
to Exhibit 10.11 of the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November 14, 2023) |
| 10.87 |
|
Third
Amendment to Loan Documents, dated October 10, 2023, by and among HOF Village Hotel II, LLC, as borrower, Stuart Lichter, as guarantor,
and ErieBank, a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender (incorporated by reference
to Exhibit 10.12 of the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November 14, 2023) |
| 10.88 |
|
Cooperative
Agreement, dated October 1, 2023, among City of Canton, Ohio, the Canton Regional Energy Special Improvement District, Inc., HOF
Village Hotel II, LLC and U.S. Bank Trust Company, National Association, as Trustee (incorporated by reference to Exhibit 10.13 of
the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November 14, 2023) |
| 10.89 |
|
Cooperative
Agreement, dated October 1, 2023, among Cleveland-Cuyahoga County Port Authority, City of Canton, Ohio, HOF Village Hotel II, LLC
and The Huntington National Bank, as Trustee (incorporated by reference to Exhibit 10.14 of the Company’s Quarterly Report
on Form 10-Q (001-38363), filed with the Commission on November 14, 2023) |
| 10.9 |
|
First
Amended and Restated Promissory Note, dated December 8, 2023 by Hall of Fame Resort & Entertainment Company, HOF Village Retail
I, LLC, HOF Village Retail II, LLC, collectively as borrower, and CH Capital Lending, LLC, as lender (incorporated by reference to
Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on December 14, 2023) |
| 10.91 |
|
First
Amendment to Second Amended and Restated Secured Cognovit Promissory Note, dated December 8, 2023 by Hall of Fame Resort & Entertainment
Company, HOF Village Newco, LLC, HOF Village Youth Fields, LLC, collectively as borrower, and CH Capital Lending, LLC, as lender
(incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K (001-38363), filed with the Commission on December 14,
2023) |
| 10.92 |
|
Fifth
Amendment to and Spreader of Pledge and Security Agreement, dated December 8, 2023 by Hall of Fame Resort & Entertainment Company,
HOF Village Newco, LLC, HOF Village Youth Fields, LLC, collectively as grantor, and CH Capital Lending, LLC as administrative agent/collateral
agent and IRG, LLC, JKP Financial, LLC, and Midwest Lender Fund, LLC, collectively secured parties (incorporated by reference to
Exhibit 10.4 of the Company’s Form 8-K (001-38363), filed with the Commission on December 14, 2023) |
| 10.93 |
|
Third
Amendment to and Spreader of Open-End Fee and Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture
Filing, dated December 8, 2023 by HOF Village Youth Fields, LLC, HOF Village Parking, LLC, HOF Village Newco, LLC, collectively as
grantor, and CH Capital Lending, LLC as administrative agent or secured party (incorporated by reference to Exhibit 10.5 of the Company’s
Form 8-K (001-38363), filed with the Commission on December 14, 2023) |
| 10.94 |
|
Release,
dated December 8, 2023 by Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, HOF Village Youth Fields, LLC,
HOF Village Retail I, LLC, HOF Village Retail II, LLC, collectively as borrower and CH Capital Lending, LLC as administrative agent
and lender (incorporated by reference to Exhibit 10.6 of the Company’s Form 8-K (001-38363), filed with the Commission on December
14, 2023) |
| 10.95* |
|
Membership Interest Purchase Agreement, dated as of December 22, 2023, among Sandlot Facilities, LLC, as purchaser, Sandlot Youth Sports Holdings, LLC, as purchaser guarantor, HOF Village Newco, LLC, as seller, and Hall of Fame Resort & Entertainment Company |
| 10.96 |
|
Second
Amendment to Second Amended and Restated Secured Cognovit Promissory Note, dated January 11, 2024 by Hall of Fame Resort & Entertainment
Company, HOF Village Newco, LLC, HOF Village Youth Fields, LLC, collectively as borrower, and CH Capital Lending, LLC, as lender
(incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K (001-38363), filed with the Commission on January 18,
2024) |
| 10.97 |
|
Sixth
Amendment to and Spreader of Pledge and Security Agreement, dated January 11, 2024 by Hall of Fame Resort & Entertainment Company,
HOF Village Newco, LLC, HOF Village Youth Fields, LLC, collectively as grantor, and CH Capital Lending, LLC as administrative agent/collateral
agent and IRG, LLC, JKP Financial, LLC, and Midwest Lender Fund, LLC, collectively secured parties (incorporated by reference to
Exhibit 10.3 of the Company’s Form 8-K (001-38363), filed with the Commission on January 18, 2024) |
| 10.98 |
|
Fourth
Amendment to and Spreader of Open-End Fee and Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture
Filing, dated January 11, 2024 by HOF Village Youth Fields, LLC, HOF Village Parking, LLC, HOF Village Newco, LLC, collectively as
grantor, and CH Capital Lending, LLC as administrative agent or secured party (incorporated by reference to Exhibit 10.4 of the Company’s
Form 8-K (001-38363), filed with the Commission on January 18, 2024) |
| 10.99 |
|
Partial
Release of Mortgage, dated January 11, 2024 by CH Capital Lending, LLC as administrative agent or secured party (incorporated by
reference to Exhibit 10.5 of the Company’s Form 8-K (001-38363), filed with the Commission on January 18, 2024) |
| 10.100 |
|
Omnibus
Release of Youth Fields Borrower from Certain Debt Instruments, dated January 11, 2024 by CH Capital Lending, LLC as administrative
agent and IRG, LLC, JKP Financial, LLC and Midwest Lender Fund, LLC, collectively Lenders for the benefit of HOF Village Youth Fields,
LLC (incorporated by reference to Exhibit 10.6 of the Company’s Form 8-K (001-38363), filed with the Commission on January
18, 2024) |
| 10.101 |
|
Third
Amendment to Second Amended and Restated Secured Cognovit Promissory Note, dated January 17, 2024 by Hall of Fame Resort & Entertainment
Company and HOF Village Newco, LLC, collectively as borrower, and CH Capital Lending, LLC, as administrative agent and lender (incorporated
by reference to Exhibit 10.8 of the Company’s Form 8-K (001-38363), filed with the Commission on January 18, 2024) |
| 10.102 |
|
Limited
Waiver Agreement, dated October 6, 2023, by and among Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, HOF
Village Youth Fields, LLC, HOF Village Center for Performance, LLC, and CH Capital Lending, LLC, IRG, LLC and Midwest Lender Fund,
LLC (incorporated by reference to Exhibit 10.7 of the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission
on November 14, 2023) |
| 10.103 |
|
Limited
Waiver Agreement, dated October 6, 2023, by and among Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, HOF
Village Youth Fields, LLC, HOF Village Center for Performance, LLC, HOF Village Hotel II, LLC, and JKP Financial, LLC (incorporated
by reference to Exhibit 10.8 of the Company’s Quarterly Report on Form 10-Q (001-38363), filed with the Commission on November
14, 2023) |
| 10.104* |
|
Modification Agreement, dated October 6, 2023, among Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, HOF Village Youth Fields, LLC, as borrowers and IRG, LLC, CH Capital Lending, LLC, Midwest Lender Funds, LLC, as lenders |
| 10.105* |
|
Modification Agreement, dated October 6, 2023, between Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, HOF Village Youth Fields, LLC, as borrowers and JKP Financial, LLC, as lender |
| 10.106* |
|
Security Agreement, dated November 21, 2023, among Hall of Fame Resort & Entertainment Company, HOF Village Newco, LLC, as grantors, and CH Capital Lending, LLC, as lender |
| 10.107* |
|
Amendment to Global License Agreement, dated September 13, 2023, between HOF Village Newco, LLC and National Football Museum, Inc., doing business as the Pro Football Hall of Fame |
| 16.1 |
|
Letter
from Marcum LLP (incorporated by reference to Exhibit 16.1 of the Company’s Form 8-K (001-38363), filed with the Commission
on April 7, 2023) |
| 21.1* |
|
Subsidiaries |
| 23.1* |
|
Consent of independent registered public accountant. |
| 23.2* |
|
Consent of former independent registered public accountant. |
| 31.1* |
|
Certification of the Principal Executive and Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) |
| 31.2* |
|
Certification of the Principal Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) |
| 32* |
|
Certification of the Principal Executive and Financial Officer and Principal Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350 |
| 97.01* |
|
Executive Officer Compensation Recovery Policy |
| 101.SCH* |
Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL* |
Inline XBRL Taxonomy Extension Calculation
Linkbase Document. |
| 101.DEF* |
Inline XBRL Taxonomy Extension Definition
Linkbase Document. |
| 101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase
Document. |
| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation
Linkbase Document. |
| 104* |
|
Cover Page Interactive Data File (Embedded
as Inline XBRL document and contained in Exhibit 101). |
| * |
Filed herewith. |
| + |
Schedules and exhibits to
this exhibit have been omitted pursuant to Item 601(a)(5) of Registration S-K. The registrant hereby agrees to furnish a copy of any
omitted schedules and exhibits to the Commission upon request. |
| † | Management contract or compensatory plan or arrangement. |
Item 16. Form 10–K Summary.
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| |
HALL OF FAME RESORT & ENTERTAINMENT
COMPANY |
| March 25, 2024 |
|
|
| |
|
|
| |
By: |
/s/ Michael
Crawford |
| |
|
Michael Crawford |
| |
|
President and Chief Executive Officer (Principal Executive
and Financial Officer) |
Pursuant to the requirements of the Exchange
Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Michael Crawford |
|
Chief Executive Officer
and Director |
|
March 25, 2024 |
| Michael Crawford |
|
(Principal Executive and Financial Officer) |
|
|
| |
|
|
|
|
| /s/
John Van Buiten |
|
Vice President of Accounting/Corporate
Controller |
|
March 25, 2024 |
| John Van Buiten |
|
(Principal Accounting Officer) |
|
|
| |
|
|
|
|
| /s/
Anthony J. Buzzelli |
|
Director |
|
March 25, 2024 |
| Anthony J. Buzzelli |
|
|
|
|
| |
|
|
|
|
| /s/
David Dennis |
|
Director |
|
March 25, 2024 |
| David Dennis |
|
|
|
|
| |
|
|
|
|
| /s/
James J. Dolan |
|
Director |
|
March 25, 2024 |
| James J. Dolan |
|
|
|
|
| |
|
|
|
|
| /s/
Karl L. Holz |
|
Director |
|
March 25, 2024 |
| Karl L. Holz |
|
|
|
|
| |
|
|
|
|
| /s/
Stuart Lichter |
|
Director |
|
March 25, 2024 |
| Stuart Lichter |
|
|
|
|
| |
|
|
|
|
| /s/
Marcus Allen |
|
Director |
|
March 25, 2024 |
| Marcus Allen |
|
|
|
|
| |
|
|
|
|
| /s/
Mary Owen |
|
Director |
|
March 25, 2024 |
| Mary Owen |
|
|
|
|
| |
|
|
|
|
| /s/
Kimberly K. Schaefer |
|
Director |
|
March 25, 2024 |
| Kimberly K. Schaefer |
|
|
|
|
| |
|
|
|
|
| /s/
Jerome Bettis |
|
Director |
|
March 25, 2024 |
| Jerome Bettis |
|
|
|
|
Hall
of Fame Resort & Entertainment Company
Consolidated
Financial Statements
For
the Years Ended December 31, 2023 and 2022
Table
of Contents
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Hall of Fame Resort & Entertainment Company
Opinion on the financial statements
We have audited the accompanying consolidated balance sheet of Hall
of Fame Resort & Entertainment Company (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023,
the related consolidated statement of operations, changes in stockholders’ equity, and cash flows for the year ended December 31,
2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations
and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States
of America.
Going concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred a net loss
of $68.7 million and utilized cash from operations of $27.0 million during the year ended December 31, 2023. The Company has $62.1 million
of debt due through December 31, 2024 and will require additional funds to complete planned development projects. These conditions, along
with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Basis for opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical audit matters
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there were no critical audit matters.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2023.
Cleveland, Ohio
March 25, 2024
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders
and Board of Directors of
Hall
of Fame Resort & Entertainment Company
Opinion
on the Financial Statements
We have audited the accompanying consolidated balance sheet of Hall
of Fame Resort & Entertainment Company (the “Company”) as of December 31, 2022, the related consolidated statements of
operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2022, and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the
year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
/s/ Marcum llp
Marcum LLP
We served as the Company’s auditor 2019
to 2023.
New York, NY
March 27, 2023
HALL
OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
| | |
As
of December 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Assets | |
| | |
| |
| Cash | |
$ | 3,243,353 | | |
$ | 26,016,547 | |
| Restricted
cash | |
| 8,572,730 | | |
| 7,499,835 | |
| Investments
held to maturity | |
| - | | |
| 17,033,515 | |
| Investments
available for sale | |
| 2,000,000 | | |
| 4,067,754 | |
| Accounts
receivable, net | |
| 1,108,460 | | |
| 1,811,143 | |
| Prepaid
expenses and other assets | |
| 3,514,135 | | |
| 3,340,342 | |
| Property
and equipment, net | |
| 344,378,835 | | |
| 248,826,853 | |
| Property and equipment held for sale | |
| 12,325,227 | | |
| - | |
| Right-of-use
lease assets | |
| 7,387,693 | | |
| 7,562,048 | |
| Project
development costs | |
| 59,366,200 | | |
| 140,138,924 | |
| Total
assets | |
$ | 441,896,633 | | |
$ | 456,296,961 | |
| | |
| | | |
| | |
| Liabilities
and stockholders’ equity | |
| | | |
| | |
| Liabilities | |
| | | |
| | |
| Notes
payable, net | |
$ | 219,532,941 | | |
$ | 171,315,860 | |
| Accounts
payable and accrued expenses | |
| 21,825,540 | | |
| 17,575,683 | |
| Due
to affiliate | |
| 1,293,874 | | |
| 855,485 | |
| Warrant
liability | |
| 225,000 | | |
| 911,000 | |
| Financing
liability | |
| 62,982,552 | | |
| 60,087,907 | |
| Derivative
liability - interest rate swap | |
| - | | |
| 200,000 | |
| Operating
lease liability | |
| 3,440,630 | | |
| 3,413,210 | |
| Other
liabilities | |
| 5,858,682 | | |
| 10,679,704 | |
| Total
liabilities | |
| 315,159,219 | | |
| 265,038,849 | |
| | |
| | | |
| | |
| Commitments
and contingencies (Note 6, 7, and 8) | |
| | | |
| | |
| | |
| | | |
| | |
| Stockholders’
equity | |
| | | |
| | |
| Undesignated preferred stock, $0.0001 par value; 4,917,000 shares authorized; no shares issued or outstanding at December 31, 2023 and 2022 | |
| - | | |
| - | |
| Series B convertible preferred stock, $0.0001 par value; 15,200 shares designated; 200 shares issued and outstanding at December 31, 2023 and 2022; liquidation preference of $222,011 as of December 31, 2023 | |
| - | | |
| - | |
| Series C convertible preferred stock, $0.0001 par value; 15,000 shares designated; 15,000 shares issued and outstanding at December 31, 2023 and 2022; liquidation preference of $15,707,500 as of December 31, 2023 | |
| 2 | | |
| 2 | |
| Common stock, $0.0001 par value; 300,000,000 shares authorized; 6,437,020 and 5,604,869 shares issued and outstanding at December 31, 2023 and 2022, respectively | |
| 643 | | |
| 560 | |
| Additional
paid-in capital | |
| 344,335,489 | | |
| 339,038,466 | |
| Accumulated
deficit | |
| (216,643,882 | ) | |
| (146,898,343 | ) |
| Total
equity attributable to HOFRE | |
| 127,692,252 | | |
| 192,140,685 | |
| Non-controlling
interest | |
| (954,838 | ) | |
| (882,573 | ) |
| Total
equity | |
| 126,737,414 | | |
| 191,258,112 | |
| Total
liabilities and stockholders’ equity | |
$ | 441,896,633 | | |
$ | 456,296,961 | |
The
accompanying notes are an integral part of these consolidated financial statements.
HALL
OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
| | |
For
the Years Ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Revenues | |
| | |
| |
| Sponsorships,
net of activation costs | |
$ | 2,819,041 | | |
$ | 2,697,487 | |
| Event,
rents, restaurant, and other revenues | |
| 13,855,169 | | |
| 7,116,594 | |
| Hotel
revenues | |
| 7,455,463 | | |
| 6,165,291 | |
| Total
revenues | |
| 24,129,673 | | |
| 15,979,372 | |
| | |
| | | |
| | |
| Operating
expenses | |
| | | |
| | |
| Operating
expenses | |
| 43,171,407 | | |
| 35,982,464 | |
| Hotel
operating expenses | |
| 6,491,625 | | |
| 5,949,839 | |
| Impairment
expense | |
| 8,845,000 | | |
| - | |
| Depreciation
expense | |
| 15,069,782 | | |
| 12,037,374 | |
| Total
operating expenses | |
| 73,577,814 | | |
| 53,969,677 | |
| | |
| | | |
| | |
| Loss from
operations | |
| (49,448,141 | ) | |
| (37,990,305 | ) |
| | |
| | | |
| | |
| Other income
(expense) | |
| | | |
| | |
| Interest
expense, net | |
| (18,763,838 | ) | |
| (5,377,146 | ) |
| Amortization
of discount on note payable | |
| (3,589,858 | ) | |
| (6,250,721 | ) |
| Other
income | |
| 4,265,937 | | |
| 604,912 | |
| Change
in fair value of warrant liability | |
| 686,000 | | |
| 9,422,000 | |
| Change
in fair value of interest rate swap | |
| 163,850 | | |
| (200,000 | ) |
| Change
in fair value of investments available for sale | |
| (2,067,754 | ) | |
| - | |
| Loss
on extinguishment of debt | |
| - | | |
| (6,377,051 | ) |
| Total
other expense | |
| (19,305,663 | ) | |
| (8,178,006 | ) |
| | |
| | | |
| | |
| Net loss | |
$ | (68,753,804 | ) | |
$ | (46,168,311 | ) |
| | |
| | | |
| | |
| Preferred
stock dividends | |
| (1,064,000 | ) | |
| (1,064,000 | ) |
| Loss
attributable to non-controlling interest | |
| 72,265 | | |
| 285,807 | |
| | |
| | | |
| | |
| Net loss
attributable to HOFRE stockholders | |
$ | (69,745,539 | ) | |
$ | (46,946,504 | ) |
| | |
| | | |
| | |
| Net loss per share, basic and diluted | |
$ | (11.97 | ) | |
$ | (9.01 | ) |
| Weighted average shares outstanding, basic and diluted | |
| 5,826,504 | | |
| 5,208,054 | |
The
accompanying notes are an integral part of these consolidated financial statements.
HALL
OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2023 and 2022
| | |
Series
B
Convertible
Preferred stock | | |
Series
C
Convertible
Preferred stock | | |
Common
Stock | | |
Additional
Paid-In | | |
Retained
Earnings
(Accumulated | | |
Total
Equity
Attributable
to HOFRE | | |
Non-controlling | | |
Total
Stockholders’
| |
| | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit) | | |
Stockholders | | |
Interest | | |
Equity | |
| Balance
as of January 1, 2021 | |
| 15,200 | | |
$ | 2 | | |
| - | | |
$ | - | | |
| 4,434,662 | | |
$ | 443 | | |
$ | 305,126,404 | | |
$ | (99,951,839 | ) | |
$ | 205,175,010 | | |
$ | (596,766 | ) | |
$ | 204,578,244 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based
compensation on RSU and restricted stock awards | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 3,896,803 | | |
| - | | |
| 3,896,803 | | |
| - | | |
| 3,896,803 | |
| Stock-based
compensation - common stock awards | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,136 | | |
| - | | |
| 28,500 | | |
| - | | |
| 28,500 | | |
| - | | |
| 28,500 | |
| Issuance
of restricted stock awards | |
| - | | |
| - | | |
| - | | |
| - | | |
| 15,672 | | |
| 2 | | |
| (2 | ) | |
| - | | |
| - | | |
| - | | |
| - | |
| Vesting
of restricted stock units | |
| - | | |
| - | | |
| - | | |
| - | | |
| 29,710 | | |
| 3 | | |
| (3 | ) | |
| - | | |
| - | | |
| - | | |
| - | |
| Sale
of shares under ATM | |
| - | | |
| - | | |
| - | | |
| - | | |
| 988,007 | | |
| 98 | | |
| 20,403,418 | | |
| - | | |
| 20,403,516 | | |
| - | | |
| 20,403,516 | |
| Shares
issued in connection with modification of notes payable | |
| - | | |
| - | | |
| - | | |
| - | | |
| 39,091 | | |
| - | | |
| 803,057 | | |
| - | | |
| 803,061 | | |
| - | | |
| 803,061 | |
| Warrants
issued in connection with modification of notes payable | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4 | | |
| 1,088,515 | | |
| - | | |
| 1,088,515 | | |
| - | | |
| 1,088,515 | |
| Shares
issued in connection with issuance of notes payable | |
| - | | |
| - | | |
| - | | |
| - | | |
| 5,682 | | |
| 1 | | |
| 75,418 | | |
| - | | |
| 75,419 | | |
| - | | |
| 75,419 | |
| Warrants
issued in connection with issuance of notes payable | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 18,709 | | |
| - | | |
| 18,709 | | |
| - | | |
| 18,709 | |
| Shares
issued in connection with IRG restructuring | |
| - | | |
| - | | |
| - | | |
| - | | |
| 90,909 | | |
| 9 | | |
| 1,309,991 | | |
| - | | |
| 1,310,000 | | |
| - | | |
| 1,310,000 | |
| Modification
of Series C and Series D warrants | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 3,736,000 | | |
| - | | |
| 3,736,000 | | |
| - | | |
| 3,736,000 | |
| Modification
of warrants in connection with IRG restructuring | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,670,000 | | |
| - | | |
| 2,670,000 | | |
| - | | |
| 2,670,000 | |
| Preferred
stock dividends | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,064,000 | ) | |
| (1,064,000 | ) | |
| - | | |
| (1,064,000 | ) |
| Exchange
of Series B preferred stock for Series C preferred stock | |
| (15,000 | ) | |
| (2 | ) | |
| 15,000.00 | | |
| 2 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Amount
paid for fractional shares | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (118,344 | ) | |
| - | | |
| (118,344 | ) | |
| - | | |
| (118,344 | ) |
| Net
loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (45,882,504 | ) | |
| (45,882,504 | ) | |
| (285,807 | ) | |
| (46,168,311 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
as of December 31, 2022 | |
| 200 | | |
$ | - | | |
| 15,000 | | |
$ | 2 | | |
| 5,604,869 | | |
$ | 560 | | |
$ | 339,038,466 | | |
$ | (146,898,343 | ) | |
$ | 192,140,685 | | |
$ | (882,573 | ) | |
$ | 191,258,112 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based
compensation on RSU and restricted stock awards | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,756,849 | | |
| - | | |
| 2,756,849 | | |
| - | | |
| 2,756,849 | |
| Issuance
of restricted stock awards | |
| - | | |
| - | | |
| - | | |
| - | | |
| 25,546 | | |
| 3 | | |
| (3 | ) | |
| - | | |
| - | | |
| - | | |
| - | |
| Vesting of restricted stock units, net of 14,449 shares withheld for taxes | |
| - | | |
| - | | |
| - | | |
| - | | |
| 62,160 | | |
| 6 | | |
| (6 | ) | |
| - | | |
| - | | |
| - | | |
| - | |
| Sale
of shares under ATM | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4,878 | | |
| - | | |
| 39,261 | | |
| - | | |
| 39,261 | | |
| - | | |
| 39,261 | |
| Common
stock offering | |
| - | | |
| - | | |
| - | | |
| - | | |
| 750,000 | | |
| 75 | | |
| 2,500,921 | | |
| - | | |
| 2,500,996 | | |
| - | | |
| 2,500,996 | |
| Preferred
stock dividends | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,064,000 | ) | |
| (1,064,000 | ) | |
| - | | |
| (1,064,000 | ) |
| Cancellation
of fractional shares | |
| - | | |
| - | | |
| - | | |
| - | | |
| (10,433 | ) | |
| (1 | ) | |
| 1 | | |
| - | | |
| - | | |
| - | | |
| - | |
| Net
loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (68,681,539 | ) | |
| (68,681,539 | ) | |
| (72,265 | ) | |
| (68,753,804 | ) |
| Balance
as of December 31, 2023 | |
| 200 | | |
$ | - | | |
| 15,000 | | |
$ | 2 | | |
| 6,437,020 | | |
$ | 643 | | |
$ | 344,335,489 | | |
$ | (216,643,882 | ) | |
$ | 127,692,252 | | |
$ | (954,838 | ) | |
$ | 126,737,414 | |
The
accompanying notes are an integral part of these consolidated financial statements.
HALL
OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
| | |
For
the Years Ended December 31, | |
| | |
2023 | | |
2022 | |
| Cash Flows
From Operating Activities | |
| | |
| |
| Net
loss | |
$ | (68,753,804 | ) | |
$ | (46,168,311 | ) |
| Adjustments
to reconcile net loss to cash flows used in operating activities | |
| | | |
| | |
| Depreciation
expense | |
| 15,069,782 | | |
| 12,037,374 | |
| Amortization
of note discount and deferred financing costs | |
| 3,577,034 | | |
| 6,250,721 | |
| Amortization
of financing liability | |
| 6,914,176 | | |
| 1,156,362 | |
| Bad
debt expense | |
| 244,143 | | |
| 807,877 | |
| Recognition of film costs | |
| 160,000 | | |
| - | |
| Impairment
of sports fields and film costs | |
| 8,845,000 | | |
| - | |
| Interest
income on investments held to maturity | |
| (563,652 | ) | |
| (72,917 | ) |
| Interest
paid in kind | |
| 6,671,400 | | |
| 3,969,093 | |
| Loss
on extinguishment of debt | |
| - | | |
| 6,377,051 | |
| Gain
on sale of asset | |
| (148,796 | ) | |
| - | |
| Gain
on outcome of arbitration | |
| (4,117,141 | ) | |
| - | |
| Change
in fair value of warrant liability | |
| (686,000 | ) | |
| (9,422,000 | ) |
| Change
in fair value of interest rate swap | |
| (163,850 | ) | |
| 200,000 | |
| Change
in fair value of investments available for sale | |
| 2,067,754 | | |
| (67,754 | ) |
| Stock-based
compensation expense | |
| 2,756,849 | | |
| 3,925,303 | |
| Non-cash
operating lease expense | |
| 520,831 | | |
| 179,898 | |
| Changes
in operating assets and liabilities: | |
| | | |
| | |
| Accounts
receivable | |
| (798,752 | ) | |
| (251,795 | ) |
| Prepaid
expenses and other assets | |
| (357,126 | ) | |
| 289,396 | |
| Accounts
payable and accrued expenses | |
| 2,026,036 | | |
| 9,924,830 | |
| Operating
leases | |
| (319,056 | ) | |
| 17,753 | |
| Due
to affiliates | |
| 438,389 | | |
| 3,015,292 | |
| Other
liabilities | |
| (383,655 | ) | |
| 2,939,079 | |
| Net
cash used in operating activities | |
| (27,000,438
| ) | |
| (4,892,748 | ) |
| | |
| | | |
| | |
| Cash
Flows From Investing Activities | |
| | | |
| | |
| Additions
to project development costs and property and equipment | |
| (45,590,651 | ) | |
| (95,167,689 | ) |
| Proceeds
from securities held to maturity | |
| 89,470,392 | | |
| - | |
| Proceeds
from sale of property and equipment | |
| 241,691 | | |
| - | |
| Investment
in securities held to maturity | |
| (71,947,597 | ) | |
| (16,960,598 | ) |
| Net
cash used in investing activities | |
| (27,826,165 | ) | |
| (112,128,287 | ) |
| | |
| | | |
| | |
| Cash
Flows From Financing Activities | |
| | | |
| | |
| Proceeds
from notes payable | |
| 43,075,339 | | |
| 79,196,400 | |
| Payment
for fractional shares | |
| - | | |
| (118,344 | ) |
| Repayments
of notes payable | |
| (5,757,301 | ) | |
| (19,256,319 | ) |
| Payment
of financing costs | |
| (2,226,310 | ) | |
| (11,559,606 | ) |
| Payment
for repurchase of interest rate swap | |
| (36,150 | ) | |
| - | |
| Payment
of Series B dividends | |
| (450,000 | ) | |
| (750,000 | ) |
| Proceeds
from sale of common stock under ATM | |
| 39,261 | | |
| 20,777,893 | |
| Proceeds
from failed sale leaseback | |
| - | | |
| 65,588,519 | |
| Proceeds
from common stock offering | |
| 2,500,996 | | |
| - | |
| Payment
on financing liability | |
| (4,019,531 | ) | |
| (729,166 | ) |
| Net
cash provided by financing activities | |
| 33,126,304 | | |
| 133,149,377 | |
| | |
| | | |
| | |
| Net
(decrease) increase in cash and restricted cash | |
| (21,700,299 | ) | |
| 16,128,342 | |
| | |
| | | |
| | |
| Cash
and restricted cash, beginning of year | |
| 33,516,382 | | |
| 17,388,040 | |
| | |
| | | |
| | |
| Cash
and restricted cash, end of year | |
$ | 11,816,083 | | |
$ | 33,516,382 | |
| | |
| | | |
| | |
| Cash | |
$ | 3,243,353 | | |
$ | 26,016,547 | |
| Restricted
Cash | |
| 8,572,730 | | |
| 7,499,835 | |
| Total
cash and restricted cash | |
$ | 11,816,083 | | |
$ | 33,516,382 | |
The
accompanying notes are an integral part of these consolidated financial statements.
HALL
OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
| | |
For
the Years Ended December 31, | |
| | |
2023 | | |
2022 | |
| Supplemental disclosure of
cash flow information | |
| | |
| |
| Cash
paid during the year for interest | |
$ | 8,958,351 | | |
$ | 7,377,808 | |
| Cash
paid for income taxes | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Non-cash
investing and financing activities | |
| | | |
| | |
| Project
development cost acquired through accounts payable and accrued expenses, net | |
$ | 9,028,091 | | |
$ | 3,346,580 | |
| Reclassify
amounts from capitalized development costs to property and equipment | |
$ | 127,453,617 | | |
$ | 53,752,242 | |
| Amendment
of Series C warrant liability for equity classification | |
$ | - | | |
$ | 3,336,000 | |
| Amendment
of Series C and D warrants | |
$ | - | | |
$ | 400,000 | |
| Accrued
dividends | |
$ | 614,000 | | |
$ | 314,000 | |
| Initial
value of right of use asset upon adoption of ASC 842 | |
$ | - | | |
$ | 7,741,955 | |
| Amounts
due to affiliate exchanged for note payable | |
$ | - | | |
$ | 3,978,762 | |
| Accrued
interest rolled into notes payable in connection with modification | |
$ | - | | |
$ | 1,437,458 | |
| Shares
issued in connection with amendment of notes payable | |
$ | - | | |
$ | 803,061 | |
| Warrants
issued in connection with amendment of notes payable | |
$ | - | | |
$ | 1,088,515 | |
| Shares
issued in connection with issuance of notes payable | |
$ | - | | |
$ | 75,419 | |
| Warrants
issued in connection with issuance of notes payable | |
$ | - | | |
$ | 18,709 | |
| Shares
issued in connection with IRG debt restructuring | |
$ | - | | |
$ | 1,310,000 | |
| Increase
in fair value of warrants in connection with IRG debt restructuring | |
$ | - | | |
$ | 2,670,000 | |
| Penny
warrants received in consideration of sports betting agreement | |
$ | - | | |
$ | 4,000,000 | |
The
accompanying notes are an integral part of these consolidated financial statements.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
1: Organization, Nature of Business, and Liquidity
Organization
and Nature of Business
Hall
of Fame Resort & Entertainment Company, a Delaware corporation (together with its subsidiaries, unless the context indicates otherwise,
the “Company” or “HOFRE”), was incorporated in Delaware as GPAQ Acquisition Holdings, Inc., a wholly owned subsidiary
of our legal predecessor, Gordon Pointe Acquisition Corp. (“GPAQ”), a special purpose acquisition company.
On
July 1, 2020, the Company consummated a business combination with HOF Village, LLC, a Delaware limited liability company (“HOF
Village”), pursuant to an Agreement and Plan of Merger dated September 16, 2019 (as amended on November 6, 2019, March 10, 2020
and May 22, 2020, the “Merger Agreement”), by and among the Company, GPAQ, GPAQ Acquiror Merger Sub, Inc., a Delaware corporation
(“Acquiror Merger Sub”), GPAQ Company Merger Sub, LLC, a Delaware limited liability company (“Company Merger Sub”),
HOF Village and HOF Village Newco, LLC, a Delaware limited liability company (“Newco”). The transactions contemplated by
the Merger Agreement are referred to as the “Business Combination”.
The
Company is a resort and entertainment company leveraging the power and popularity of professional football and its legendary players
in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (“PFHOF”). Headquartered
in Canton, Ohio, the Company owns the DoubleTree by Hilton located in downtown Canton and the Hall of Fame Village, which is a multi-use
sports, entertainment, and media destination centered around the PFHOF’s campus. The Company is pursuing a differentiation strategy
across three pillars, including destination-based assets, HOF Village Media Group, LLC (“Hall of Fame Village Media”), and
gaming.
The
Company has entered into multiple agreements with PFHOF, and certain government entities, which outline the rights and obligations of
each of the parties with regard to the property on which the Hall of Fame Village sits, portions of which are owned by the Company and
portions of which are net leased to the Company by government and quasi-governmental entities (see Note 9 for additional information).
Under these agreements, the PFHOF and the lessor entities are entitled to use portions of the Hall of Fame Village on a direct-cost basis.
Reverse
Stock Split
On
December 27, 2022, the Company effectuated a reverse stock split of its shares of common stock at a ratio of 1-for-22. See Note 5, Stockholders’
Equity, for additional information. As a result, the number of shares and income (loss) per share disclosed throughout this Annual Report
on Form 10-K have been retrospectively adjusted to reflect the reverse stock split.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
1: Organization, Nature of Business, and Liquidity (continued)
Liquidity
and Going Concern
The Company has sustained recurring losses through
December 31, 2023 and the Company’s accumulated deficit was $216,643,882 as of such date. Since inception, the Company’s operations
have been funded principally through the issuance of debt and equity. As of December 31, 2023, the Company had approximately $3.2 million
of unrestricted cash and $8.6 million of restricted cash. The Company has approximately $62.1 million of debt coming due through December
31, 2024. In January 2024, the Company provided notice to IRG and its affiliated lenders to extend the maturity of $49.5 million of principal
of its debt until March 31, 2025. The Company is currently working with its lenders to document such extension. During the year ended
December 31, 2023, the Company used cash for operating activities of $27,000,438.
On January 11, 2024, HOF Village completed the
sale to Sandlot Facilities, LLC (“Sandlot”) for a $10 million purchase price, subject to adjustment (the “Purchase Price”),
of 80% of a newly formed limited liability company named Sandlot HOFV Canton SC, LLC (“Sports Complex Newco”), to which the
Company, HOF Village and HOF Village Youth Fields, LLC had contributed the ForeverLawn Sports Complex business prior to closing (the “Transaction”).
The Transaction occurred pursuant to the terms of the previously disclosed Membership Interest Purchase Agreement, dated December 22,
2023 (the “Purchase Agreement”), among the Company, HOF Village, Sandlot and Sandlot Youth Sports Holdings, LLC (“Purchaser
Guarantor”). Under the Purchase Agreement, Sandlot held back $1.5 million of the Purchase Price (the “Holdback Amount”)
to secure certain indemnification obligations of the Company and HOF Village, which holdback will be released by Sandlot for the benefit
of HOF Village in three $500,000 increments at 6, 12 and 18 months after the January 11, 2024 closing date of the Transaction (the “Closing”),
subject to post-Closing adjustment of the Purchase Price and any indemnification claims pursuant to the Purchase Agreement.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
1: Organization, Nature of Business, and Liquidity (continued)
Liquidity
and Going Concern (continued)
The Company expects that it will need to raise additional financing
to accomplish its development plan and fund its working capital. The Company is seeking to obtain additional funding through debt, construction
lending, and equity financing. There are no assurances that the Company will be able to raise capital on terms acceptable to the Company
or at all, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If the Company is
unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could
harm its financial condition and operating results, or it may not be able to continue to fund its ongoing operations. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern to meet its obligations as they come due for at least one year from the issuance of these consolidated
financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome
of these uncertainties.
Basis
of Presentation
The
accompanying consolidated financial statements of the Company for the years ended December 31, 2023 and 2022 have been prepared in accordance
with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations
of the United States Securities and Exchange Commission (“SEC”).
Consolidation
The
consolidated financial statements include the accounts and activity of the Company and its wholly owned subsidiaries. Investments in
a variable interest entity in which the Company is not the primary beneficiary, or where the Company does not own a majority interest
but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method.
All intercompany profits, transactions, and balances have been eliminated in consolidation.
The
Company owns a 60% interest in Mountaineer GM, LLC (“Mountaineer”), whose results are consolidated into the Company’s
results of operations. The portion of Mountaineer’s net income (loss) that is not attributable to the Company is included in non-controlling
interest.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies
Use
of Estimates
The
preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and
assumptions for the Company relate to credit losses, depreciation, costs capitalized to project development costs, useful lives of long-lived
assets, impairment, accounting for debt modifications and extinguishments, stock-based compensation, and fair value of financial instruments
(including the fair value of the Company’s warrant liability). Management adjusts such estimates when facts and circumstances dictate.
Actual results could differ from those estimates.
Warrant
Liability
The
Company accounts for warrants for shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”)
that are not indexed to its own stock as liabilities at fair value on the balance sheet under U.S. GAAP. Such warrants are subject to
remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense) on the statements
of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration
of such Common Stock warrants. At that time, the portion of the warrant liability related to such Common Stock warrants will be reclassified
to additional paid-in capital.
Property
and Equipment and Project Development Costs
Property
and equipment are recorded at historical cost and depreciated using the straight-line method over the estimated useful lives of the assets.
During the construction period, the Company capitalizes all costs related to the development of the Hall of Fame Village. Project development
costs include predevelopment costs, amortization of finance costs, real estate taxes, insurance, and other project costs incurred during
the period of development. The capitalization of costs began during the preconstruction period, which the Company defines as activities
that are necessary for the development of the project. The Company ceases cost capitalization when a portion of the project is held available
for occupancy and placed into service. This usually occurs upon substantial completion of all costs necessary to bring a portion of the
project to the condition needed for its intended use, but no later than one year from the completion of major construction activity.
The Company will continue to capitalize only those costs associated with the portion still under construction. Capitalization will also
cease if activities necessary for the development of the project have been suspended.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies (continued)
Impairment
of Long-Lived Assets
The Company reviews its property and equipment, right-of-use lease
assets, and projects under development for impairment whenever events or changes indicate that the carrying value of the long-lived assets
may not be fully recoverable. In cases where the Company does not expect to recover its carrying costs, an impairment charge is recorded.
The Company measures and records impairment losses
on its long-lived assets, including right-of-use lease assets, when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than their carrying amount. Considerable judgment by management is necessary to estimate
undiscounted future operating cash flows, and fair values and accordingly, actual results could vary significantly from such estimates.
In December 2023, the Company entered into an agreement to sell a portion of its ForeverLawn Sports Complex. The Company considered this
a triggering event for the purposes of evaluating for impairment. The purchase price of that transaction, which the Company used to measure
the fair value of the assets, was less than the carrying value of those assets. Therefore, during the year ended December 31, 2023, the
Company recorded an impairment loss of $7,700,000, which is included in “Impairment expense” on the Company’s consolidated
statements of operations.
Cash
and Restricted Cash
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased, to be cash equivalents.
There were no cash equivalents as of December 31, 2023 and 2022, respectively. The Company maintains its cash and escrow accounts at
national financial institutions. The balances, at times, may exceed federally insured limits.
Restricted
cash includes escrow reserve accounts for capital improvements and debt service as required under certain of the Company’s debt
agreements. The balances as of December 31, 2023 and 2022 were $8,572,730 and $7,499,835, respectively.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies (continued)
Investments
The
Company from time to time invests in debt and equity securities, including companies engaged in complementary businesses. All marketable
equity and debt securities held by the Company are accounted for under ASC Topic 320, “Investments – Debt and Equity Securities.”
As of December 31, 2023 and 2022, the Company held $0 and $17,033,515, respectively in securities to be held to maturity consisting of
U.S government securities carried at amortized cost. The Company recognizes interest income on these securities ratably over their term
utilizing the interest method.
As
of December 31, 2023 and 2022, the Company also had $2,000,000 and $4,067,754, respectively in investments available for sale, which
are marked to market value at each reporting period.
Accounts
Receivable
Accounts receivable are generally amounts due
under sponsorship and other agreements and are recorded at the invoiced amount. Accounts receivable are reviewed for delinquencies on
a case-by-case basis and are considered delinquent when the sponsor or customer has missed a scheduled payment. Interest is not charged
on delinquencies.
The carrying amount of accounts receivable is reduced by an allowance
that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all delinquent
accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that
will not be collected. The Company reviews its Accounts Receivable on a case by case basis, and writes off any accounts receivable for
which collection efforts have been exhausted. As of December 31, 2023 and 2022, the Company has recorded an allowance for credit losses
of $243,081 and $5,575,700, respectively. As of December 31, 2022, the Company’s allowance for credit losses primarily comprised
of its allowance for Johnson Controls, Inc., as further discussed in Note 6.
Deferred
Financing Costs
Costs
incurred in obtaining financing are capitalized and amortized to additions in project development costs during the construction period
over the term of the related loans, without regard for any extension options until the project or portion thereof is considered substantially
complete. Upon substantial completion of the project or portion thereof, such costs are amortized as interest expense over the term of
the related loan. Any unamortized costs are shown as an offset to “Notes Payable, net” on the accompanying consolidated balance
sheets.
Upon
an extinguishment of debt (or a modification that is treated as an extinguishment), the remaining deferred financing costs are expensed
against “Loss on Extinguishment of Debt”.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies (continued)
Revenue
Recognition
The
Company follows the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)
606, Revenue with Contracts with Customers, to properly recognize revenue. Under ASC 606, revenue is recognized when a customer
obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange
for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC
606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations
in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract;
and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The
Company generates revenues from various streams such as sponsorship agreements, rents, events, and hotel and restaurant operations. The
sponsorship arrangements, in which the customer sponsors a play area or event and receives specified brand recognition and other benefits
over a set period of time, recognize revenue on a straight-line basis over the time period specified in the contract. The excess of amounts
contractually due over the amounts of sponsorship revenue recognized are included in other liabilities on the accompanying consolidated
balance sheets. Contractually due but unpaid sponsorship revenue are included in accounts receivable on the accompanying consolidated
balance sheets. Refer to Note 6 for more details. Revenue for short-term rentals, and events are recognized at the time the respective
event or service has been performed. Rental revenue for long term leases is recorded on a straight-line basis over the term of the lease
beginning on the commencement date.
A
performance obligation is a promise in a contract to transfer a distinct good or service to a customer. If the contract does not specify
the revenue by performance obligation, the Company allocates the transaction price to each performance obligation based on its relative
standalone selling price. Such prices are generally determined using prices charged to customers or using the Company’s expected
cost plus margin. Revenue is recognized as the Company’s performance obligations are satisfied. If consideration is received in
advance of the Company’s performance, including amounts which are refundable, recognition of revenue is deferred until the performance
obligation is satisfied or amounts are no longer refundable.
The
Company’s owned hotel revenues primarily consist of hotel room sales, revenue from accommodations sold in conjunction with other
services (e.g., package reservations), food and beverage sales, and other ancillary goods and services (e.g., parking) related to owned
hotel properties. Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively.
Payment terms typically align with when the goods and services are provided. Although the transaction prices of hotel room sales, goods,
and other services are generally fixed and based on the respective room reservation or other agreement, an estimate to reduce the transaction
price is required if a discount is expected to be provided to the customer. For package reservations, the transaction price is allocated
to the performance obligations within the package based on the estimated standalone selling price of each component.
Restaurant
revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and
other sales related taxes.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies (continued)
Income
Taxes
The
Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes
is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income.
Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets
and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.
The
Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that
some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws
that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate
provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances
or reversals of reserves may be necessary.
Tax
benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The
amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.
A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that
do not meet these recognition and measurement standards. As of December 31, 2023 and 2022, no liability for unrecognized tax benefits
was required to be reported.
The
Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of operating
expenses on the Company’s consolidated statements of operations. There were no amounts incurred for penalties and interest for
the years ended December 31, 2023 and 2022. The Company does not expect its uncertain tax position to change during the next twelve months.
Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations
from its position. The Company’s effective tax rates of zero differ from the statutory rate for the years presented primarily due
to the Company’s net operating loss, which was fully reserved for all years presented.
The
Company has identified its United States tax return and its state tax return in Ohio as its “major” tax jurisdictions, and
such returns for the years 2019 through 2022 remain subject to examination.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies (continued)
Stock–Based
Compensation
The Company recognizes compensation expense for
all equity-based payments in accordance with ASC 718 “Compensation – Stock Compensation.” Under fair value recognition
provisions, the Company recognizes equity-based compensation net of an estimated forfeiture rate (based on historical expectations) and
recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.
Restricted stock units and restricted stock awards
are granted at the discretion of the Compensation Committee of the Company’s board of directors (the “Board of Directors”).
These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a 12 to 36-month
period.
Performance stock units are also granted at the
discretion of the Compensation Committee of the Board of Directors. These awards are restricted as to the transfer of ownership and vest
upon achievement of performance criteria determined by the Compensation Committee.
Segments
The
Company has evaluated its business to determine whether it has multiple operating segments. The Company has concluded that, as of December
31, 2023 and 2022, it only has one operating segment, given that its chief operating decision maker reviews the Company’s
results solely on a consolidated basis.
Advertising
The
Company expenses all advertising and marketing costs as they are incurred and records them as “Operating expenses” on the
Company’s consolidated statements of operations. Total advertising and marketing costs for the years ended December 31, 2023
and 2022 were $697,010 and $484,468, respectively.
Film
and Media Costs
The
Company capitalizes all costs to develop films and related media as an asset, included in “project development costs” on
the Company’s consolidated balance sheets. The costs for each film or media will be expensed over the expected release period.
During the years ended December 31, 2023 and 2022, the Company recorded $1,305,000 and $0 in film and media costs, respectively, including
an impairment charge of $1,145,000 and $0, respectively, as the Company does not anticipate recovering these costs. The impairment in
film and media costs is included in “Impairment expense” on the Company’s consolidated statements of operations.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies (continued)
Interest
Rate Swap
To
estimate fair value for the Company’s interest rate swap agreements, the Company utilizes a present value of future cash flows,
leveraging a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. The changes in fair value
of the Company’s interest rate swap are recorded within “other income (expense)” on the Company’s consolidated
statements of operations.
Fair
Value Measurement
The
Company follows FASB’s ASC 820–10, Fair Value Measurement, to measure the fair value of its financial instruments
and non-financial instruments and to incorporate disclosures about fair value of its financial instruments. ASC 820–10 establishes
a framework for measuring fair value and expands disclosures about fair value measurements. To increase consistency and comparability
in fair value measurements and related disclosures, ASC 820–10 establishes a fair value hierarchy which prioritizes the inputs
to valuation techniques used to measure fair value into three broad levels.
The
three levels of fair value hierarchy defined by ASC 820–10-20 are described below:
| Level
1 |
|
Quoted
market prices available in active markets for identical assets or liabilities as of the
reporting
date. |
| |
|
|
| Level
2 |
|
Pricing
inputs other than quoted prices in active markets included in Level 1, which are either
directly
or indirectly observable as of the reporting date. |
| |
|
|
| Level
3 |
|
Pricing
inputs that are generally unobservable inputs and not corroborated by market data. |
Financial
assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies,
or similar techniques and at least one significant model assumption or input is unobservable.
The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and
the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than
one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of
the instrument.
The
carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and other
current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these instruments.
The
carrying amount of the Company’s notes payable are considered to approximate their fair value based on the borrowing rates currently
available to the Company for loans with similar terms and maturities.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies (continued)
Fair
Value Measurement (continued)
The
Company uses the fair value hierarchy to measure the fair value of its warrant liabilities, investments available for sale and interest
rate swap. The Company revalues its financial instruments at every reporting period. The Company recognizes gains or losses on the change
in fair value of the warrant liabilities as “change in fair value of warrant liability” in the consolidated statements of
operations. The Company recognizes gains or losses on the change in fair value of the investments available for sale as “change
in fair value of investments available for sale” in the consolidated statements of operations. The Company recognizes gains or
losses on the change in fair value of the interest rate swap as “change in fair value of interest rate swap” in the consolidated
statements of operations.
The
following table provides the financial liabilities measured on a recurring basis and reported at fair value on the consolidated balance
sheets as of December 31, 2023 and 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine
such fair value:
| | |
| | |
December
31, | |
| | |
Level | | |
2023 | | |
2022 | |
| Warrant liabilities
– Public Series A Warrants | |
| 1 | | |
$ | 204,000 | | |
$ | 748,000 | |
| Warrant liabilities –
Private Series A Warrants | |
| 3 | | |
| - | | |
| - | |
| Warrant
liabilities – Series B Warrants | |
| 3 | | |
| 21,000 | | |
| 163,000 | |
| Fair
value of aggregate warrant liabilities | |
| | | |
$ | 225,000 | | |
$ | 911,000 | |
| | |
| | | |
| | | |
| | |
| Fair
value of interest rate swap liability | |
| 2 | | |
$ | - | | |
$ | 200,000 | |
| | |
| | | |
| | | |
| | |
| Investments
available for sale | |
| 3 | | |
$ | 2,000,000 | | |
$ | 4,067,754 | |
The
Series A Warrants issued to the previous shareholders of GPAQ (the “Public Series A Warrants”) are classified as Level 1
due to the use of an observable market quote in the active market. Level 3 financial liabilities consist of the Series A Warrants issued
to the sponsors of GPAQ (the “Private Series A Warrants”) and the Series B Warrants issued in the Company’s November
2020 follow-on public offering, for which there is no current market for these securities, and the determination of fair value requires
significant judgment or estimation. Changes in fair value measurement categorized within Level 3 of the fair value hierarchy are analyzed
each period based on changes in estimates or assumptions and recorded appropriately.
The Company also used Level 3 assumptions to determine
the impairment of its ForeverLawn Sports Complex during the year ended December 31, 2023.
Subsequent
measurement
The
following table presents the changes in fair value of the warrant liabilities:
| | |
Public
Series
A Warrants | | |
Private
Series A
Warrants | | |
Series
B
Warrants | | |
Series
C
Warrants | | |
Total
Warrant
Liability | |
| Fair
value as of December 31, 2021 | |
$ | 4,617,000 | | |
$ | 110,000 | | |
$ | 2,416,000 | | |
$ | 6,526,000 | | |
$ | 13,669,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Amendment
of warrants to equity classification | |
| - | | |
| - | | |
| - | | |
| (3,336,000 | ) | |
| (3,336,000 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Change
in fair value | |
| (3,869,000 | ) | |
| (110,000 | ) | |
| (2,253,000 | ) | |
| (3,190,000 | ) | |
| (9,422,000 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Fair
value as of December 31, 2022 | |
$ | 748,000 | | |
$ | - | | |
$ | 163,000 | | |
| - | | |
$ | 911,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Change
in fair value | |
| (544,000 | ) | |
| - | | |
| (142,000 | ) | |
| - | | |
| (686,000 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair
value as of
December 31, 2023 | |
$ | 204,000 | | |
$ | - | | |
$ | 21,000 | | |
$ | - | | |
$ | 225,000 | |
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
2: Summary of Significant Accounting Policies (continued)
Fair
Value Measurement (continued)
The
key inputs into the Black Scholes valuation model for the Level 3 valuations as of December 31, 2023 and 2022 are as follows:
| | |
December
31, 2023 | | |
December
31, 2022 | |
| | |
Private
Series A Warrants | | |
Series
B Warrants | | |
Private
Series A Warrants | | |
Series
B Warrants | |
| Term (years) | |
| 1.5 | | |
| 1.9 | | |
| 2.5 | | |
| 2.9 | |
| Stock price | |
$ | 3.25 | | |
$ | 3.25 | | |
$ | 8.06 | | |
$ | 8.06 | |
| Exercise price | |
$ | 253.11 | | |
$ | 30.81 | | |
$ | 253.11 | | |
$ | 30.81 | |
| Dividend yield | |
| 0.0 | % | |
| 0.0 | % | |
| 0.0 | % | |
| 0.0 | % |
| Expected volatility | |
| 88.37 | % | |
| 85.42 | % | |
| 52.27 | % | |
| 63.86 | % |
| Risk free interest rate | |
| 4.23 | % | |
| 4.23 | % | |
| 4.22 | % | |
| 4.22 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Number of shares | |
| 95,576 | | |
| 170,862 | | |
| 95,576 | | |
| 170,862 | |
The
valuation of the investments available for sale was based on an option pricing model using market rate assumptions. The interest rate
swap was terminated in 2023.
Net
Loss Per Common Share
Basic
net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods.
Diluted
net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period.
The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the
exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units and restricted stock awards, and (iii) conversion
of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive.
For
the years ended December 31, 2023 and 2022, the Company was in a loss position and therefore all potentially dilutive securities would
be anti-dilutive.
As
of December 31, 2023 and 2022, the following outstanding common stock equivalents have been excluded from the calculation of net loss
per share because their impact would be anti-dilutive.
| | |
For the Years Ended December 31, | |
| | |
2023 | | |
2022 | |
| Warrants to purchase shares of Common Stock | |
| 2,793,649 | | |
| 2,003,649 | |
| Unvested restricted stock units to be settled in shares of Common Stock | |
| 163,922 | | |
| 134,799 | |
| Shares of Common Stock issuable upon conversion of convertible notes | |
| 9,668,009 | | |
| 3,245,847 | |
| Shares of Common Stock issuable upon conversion of Series B Preferred Stock | |
| 2,971 | | |
| 2,971 | |
| Shares of Common Stock issuable upon conversion of Series C Preferred Stock | |
| 454,408 | | |
| 454,545 | |
| Total potentially dilutive securities | |
| 13,082,959 | | |
| 5,841,811 | |
Recent
Accounting Standards
On January 1, 2023, the Company adopted the Accounting
Standards Update (“ASU”) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments” (“ASU 2016-13”). Financial Instruments—Credit Losses (Topic 326) amends
guideline on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at
amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires
an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is
deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale
debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that
credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net
investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade
receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not
excluded from the scope that have the contractual right to receive cash. The amendments in this ASU are effective for fiscal years beginning
after December 15, 2022, including interim periods within those fiscal years. The adoption of ASU 2016-13 has had no material impact on
our consolidated financial statements.
In November 2023, the Financial Accounting Standards
Board (“FASB”) issued ASU 2023-07, Segment Reporting, to improve reportable segment disclosure requirements, primarily
through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023,
and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the
impact of this standard on our consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes, requiring
more granular disclosure of the components of income taxes. This ASU is effective for fiscal years beginning after December 15, 2024 on
a prospective basis. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial
statements and related disclosures.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
3: Property and Equipment
Property and equipment, net, including property
and equipment held for sale consists of the following:
| | |
Useful Life | |
December 31,
2023 | | |
December 31,
2022 | |
| Land | |
| |
$ | 27,651,699 | | |
$ | 12,414,473 | |
| Land improvements | |
25 years | |
| 48,478,397 | | |
| 51,808,296 | |
| Building and improvements | |
15 to 39 years | |
| 344,006,337 | | |
| 239,068,974 | |
| Equipment | |
5 to 10 years | |
| 13,314,547 | | |
| 7,212,246 | |
| Property and equipment, gross | |
| |
| 433,450,980 | | |
| 310,503,989 | |
| | |
| |
| | | |
| | |
| Less: accumulated depreciation | |
| |
| (76,746,918 | ) | |
| (61,677,136 | ) |
| Property and equipment, net, including property and equipment held for sale | |
| |
$ | 356,704,062 | | |
$ | 248,826,853 | |
| | |
| |
| | | |
| | |
| Project development costs | |
| |
$ | 59,366,200 | | |
$ | 140,138,924 | |
On January 11, 2024, pursuant to a membership
purchase agreement dated December 22, 2023, the Company sold an 80% interest in its ForeverLawn Sports Complex. These assets qualify as
“held for sale” under ASC 360 as of December 31, 2023. Therefore, the Company has included the property and equipment anticipated
to be sold, in the amount of $12,325,227 as “Property and equipment held for sale” on the Company’s consolidated balance
sheet as of December 31, 2023. The Company had no assets that qualified as held for sale as of December 31, 2022.
For
the years ended December 31, 2023 and 2022, the Company recorded depreciation expense of $15,069,782 and $12,037,374, respectively. For
the years ended December 31, 2023 and 2022, the Company incurred $47,985,893 and $65,221,191 of capitalized project development costs,
respectively.
For
the years ended December 31, 2023 and 2022, the Company transferred $127,453,617 and $53,803,747 from Project development costs to Property
and Equipment, respectively.
Included
in project development costs are film development costs of $200,000 and $982,000 as of December 31, 2023 and 2022, respectively.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
4: Notes Payable, net
Notes
payable, net consisted of the following at December 31, 2023(1):
| |
|
|
|
|
Debt
discount |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
and
deferred |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
financing |
|
|
|
|
|
Interest
Rate |
|
|
Maturity |
| |
|
Gross |
|
|
costs |
|
|
Net |
|
|
Stated |
|
|
Effective |
|
|
Date |
| Preferred equity
loan(2) |
|
$ |
6,800,000 |
|
|
$ |
- |
|
|
$ |
6,800,000 |
|
|
|
7.00 |
% |
|
|
7.00 |
% |
|
Various |
| City of Canton Loan(3) |
|
|
3,387,500 |
|
|
|
(4,155 |
) |
|
|
3,383,345 |
|
|
|
0.50 |
% |
|
|
0.53 |
% |
|
7/1/2027 |
| New Market/SCF |
|
|
2,999,989 |
|
|
|
- |
|
|
|
2,999,989 |
|
|
|
4.00 |
% |
|
|
4.00 |
% |
|
12/30/2024 |
| JKP Capital Loan(5)(6) |
|
|
9,982,554 |
|
|
|
- |
|
|
|
9,982,554 |
|
|
|
12.50 |
% |
|
|
12.50 |
% |
|
3/31/2024 |
| MKG DoubleTree Loan(7) |
|
|
11,000,000 |
|
|
|
- |
|
|
|
11,000,000 |
|
|
|
10.25 |
% |
|
|
10.25 |
% |
|
9/13/2028 |
| Convertible PIPE Notes |
|
|
29,279,034 |
|
|
|
(4,721,488 |
) |
|
|
24,557,546 |
|
|
|
10.00 |
% |
|
|
24.40 |
% |
|
3/31/2025 |
| Canton Cooperative Agreement |
|
|
2,520,000 |
|
|
|
(161,400 |
) |
|
|
2,358,600 |
|
|
|
3.85 |
% |
|
|
5.35 |
% |
|
5/15/2040 |
| CH Capital Loan(5)(6)(8)(12) |
|
|
14,278,565 |
|
|
|
- |
|
|
|
14,278,565 |
|
|
|
12.50 |
% |
|
|
12.50 |
% |
|
3/31/2024 |
| Constellation EME #2(4) |
|
|
2,543,032 |
|
|
|
- |
|
|
|
2,543,032 |
|
|
|
5.93 |
% |
|
|
5.93 |
% |
|
4/30/2026 |
| IRG Split Note(5)(6)(9) |
|
|
4,689,449 |
|
|
|
- |
|
|
|
4,689,449 |
|
|
|
12.50 |
% |
|
|
12.50 |
% |
|
3/31/2024 |
| JKP Split Note(5)(6)(9) |
|
|
4,689,449 |
|
|
|
- |
|
|
|
4,689,449 |
|
|
|
12.50 |
% |
|
|
12.50 |
% |
|
3/31/2024 |
| ErieBank Loan |
|
|
19,888,626 |
|
|
|
(470,357 |
) |
|
|
19,418,269 |
|
|
|
9.50 |
% |
|
|
9.74 |
% |
|
12/15/2034 |
| PACE Equity Loan |
|
|
8,104,871 |
|
|
|
(268,042 |
) |
|
|
7,836,829 |
|
|
|
6.05 |
% |
|
|
6.18 |
% |
|
7/31/2047 |
| PACE Equity CFP |
|
|
2,984,572 |
|
|
|
(24,878 |
) |
|
|
2,959,694 |
|
|
|
6.05 |
% |
|
|
6.10 |
% |
|
7/31/2046 |
| CFP Loan(6)(10) |
|
|
4,389,284 |
|
|
|
- |
|
|
|
4,389,284 |
|
|
|
12.50 |
% |
|
|
12.50 |
% |
|
3/31/2024 |
| Stark County Community Foundation |
|
|
5,000,000 |
|
|
|
- |
|
|
|
5,000,000 |
|
|
|
6.00 |
% |
|
|
6.00 |
% |
|
5/31/2029 |
| CH Capital Bridge Loan(6) |
|
|
11,426,309 |
|
|
|
- |
|
|
|
11,426,309 |
|
|
|
12.50 |
% |
|
|
12.50 |
% |
|
3/31/2024 |
| Stadium PACE Loan |
|
|
33,387,844 |
|
|
|
(1,123,635 |
) |
|
|
32,264,209 |
|
|
|
6.00 |
% |
|
|
6.51 |
% |
|
1/1/2049 |
| Stark County Infrastructure
Loan |
|
|
5,000,000 |
|
|
|
- |
|
|
|
5,000,000 |
|
|
|
6.00 |
% |
|
|
6.00 |
% |
|
8/31/2029 |
| City of Canton Infrastructure
Loan |
|
|
5,000,000 |
|
|
|
(10,047 |
) |
|
|
4,989,953 |
|
|
|
6.00 |
% |
|
|
6.04 |
% |
|
6/30/2029 |
| TDD Bonds |
|
|
7,345,000 |
|
|
|
(654,905 |
) |
|
|
6,690,095 |
|
|
|
5.41 |
% |
|
|
5.78 |
% |
|
12/1/2046 |
| TIF(11) |
|
|
18,100,000 |
|
|
|
(1,544,466 |
) |
|
|
16,555,534 |
|
|
|
6.375 |
% |
|
|
6.71 |
% |
|
12/30/2048 |
| CH Capital Retail |
|
|
10,183,932 |
|
|
|
- |
|
|
|
10,183,932 |
|
|
|
12.5 |
% |
|
|
12.5 |
% |
|
12/4/2027 |
| DoubleTree TDD |
|
|
3,445,000 |
|
|
|
(668,696 |
) |
|
|
2,776,304 |
|
|
|
6.875 |
% |
|
|
8.53 |
% |
|
5/15/2044 |
| DoubleTree PACE |
|
|
2,760,000 |
|
|
|
- |
|
|
|
2,760,000 |
|
|
|
6.625 |
% |
|
|
6.625 |
% |
|
5/15/2040 |
| Total |
|
$ |
229,185,010 |
|
|
$ |
(9,652,069 |
) |
|
$ |
219,532,941 |
|
|
|
|
|
|
|
|
|
|
|
Notes
payable, net consisted of the following at December 31, 2022:
| | |
Gross | | |
Debt
discount
and deferred
financing costs | | |
Net | |
| Preferred Equity
Loan(2) | |
$ | 3,600,000 | | |
$ | - | | |
$ | 3,600,000 | |
| City of Canton Loan(3) | |
| 3,450,000 | | |
| (5,333 | ) | |
| 3,444,667 | |
| New Market/SCF | |
| 2,999,989 | | |
| - | | |
| 2,999,989 | |
| JKP Capital loan(5)(6) | |
| 9,158,711 | | |
| - | | |
| 9,158,711 | |
| MKG DoubleTree Loan(7) | |
| 15,300,000 | | |
| - | | |
| 15,300,000 | |
| Convertible PIPE Notes | |
| 26,525,360 | | |
| (8,097,564 | ) | |
| 18,427,796 | |
| Canton Cooperative Agreement | |
| 2,620,000 | | |
| (168,254 | ) | |
| 2,451,746 | |
| CH Capital Loan(5)(6)(8)(12) | |
| 8,846,106 | | |
| - | | |
| 8,846,106 | |
| Constellation EME #2(4) | |
| 3,536,738 | | |
| - | | |
| 3,536,738 | |
| IRG Split Note(5)(6)(9) | |
| 4,302,437 | | |
| - | | |
| 4,302,437 | |
| JKP Split Note (5)(6)(9) | |
| 4,302,437 | | |
| - | | |
| 4,302,437 | |
| ErieBank Loan | |
| 19,465,282 | | |
| (536,106 | ) | |
| 18,929,176 | |
| PACE Equity Loan | |
| 8,250,966 | | |
| (273,031 | ) | |
| 7,977,935 | |
| PACE Equity CFP | |
| 2,437,578 | | |
| (27,586 | ) | |
| 2,409,992 | |
| CFP Loan(6)(10) | |
| 4,027,045 | | |
| - | | |
| 4,027,045 | |
| Stark County Community Foundation | |
| 5,000,000 | | |
| - | | |
| 5,000,000 | |
| CH Capital Bridge Loan(6) | |
| 10,485,079 | | |
| - | | |
| 10,485,079 | |
| Stadium PACE Loan | |
| 33,387,844 | | |
| (4,091,382 | ) | |
| 29,296,462 | |
| Stark County Infrastructure
Loan | |
| 5,000,000 | | |
| - | | |
| 5,000,000 | |
| City of Canton Infrastructure
Loan | |
| 5,000,000 | | |
| (11,572 | ) | |
| 4,988,428 | |
| TDD Bonds | |
| 7,500,000 | | |
| (668,884 | ) | |
| 6,831,116 | |
| Total | |
$ | 185,195,572 | | |
$ | (13,879,712 | ) | |
$ | 171,315,860 | |
During
the years ended December 31, 2023 and 2022, the Company recorded amortization of note discounts of $3,589,858 and $6,250,721, respectively.
During
years ended December 31, 2023 and 2022, the Company recorded paid-in-kind interest of $6,671,400 and $3,969,093, respectively.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
4: Notes Payable, net (continued)
See
below footnotes for the Company’s notes payable:
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
4: Notes Payable, net (continued)
Accrued
Interest on Notes Payable
As
of December 31, 2023 and 2022, accrued interest on notes payable, were as follows:
| | |
December
31, 2023 | | |
December
31, 2022 | |
| Preferred Equity
Loan | |
$ | 5,930 | | |
$ | 64,575 | |
| City of Canton Loan | |
| 5,925 | | |
| 1,555 | |
| MKG DoubleTree Loan | |
| 80,144 | | |
| 121,656 | |
| Canton Cooperative Agreement | |
| 92,926 | | |
| 48,708 | |
| CH Capital Loan | |
| 4,713 | | |
| 55,328 | |
| IRG Split Note | |
| - | | |
| 28,490 | |
| JKP Split Note | |
| - | | |
| 35,138 | |
| ErieBank Loan | |
| 178,893 | | |
| 140,394 | |
| PACE Equity Loan | |
| 204,569 | | |
| 213,842 | |
| CFP Loan | |
| 6,672 | | |
| 5,245 | |
| CH Capital Bridge Loan | |
| - | | |
| 70,659 | |
| Stadium PACE Loan | |
| 166,939 | | |
| 166,939 | |
| TDD Bonds | |
| - | | |
| 13,533 | |
| DoubleTree PACE | |
| 15,238 | | |
| - | |
| DoubleTree TDD | |
| 42,764 | | |
| - | |
| Total | |
$ | 804,713 | | |
$ | 966,062 | |
The
amounts above were included in “accounts payable and accrued expenses” on the Company’s consolidated balance sheets.
TIF
Loan
On February 2, 2023,
the Company received proceeds from the issuance on such date by Stark County Port Authority (“Port Authority”) of $18,100,000
principal amount Tax Increment Financing (“TIF”) Revenue Bonds, Series 2023 (“2023 Bonds”). Of the $18,100,000
principal amount, approximately $6.8 million was used to reimburse the Company for a portion of the cost of certain roadway improvements
within the Hall of Fame Village grounds, approximately $8.6 million was used to pay off the Development Finance Authority of Summit County
(“DFA”) Revenue Bonds, Series 2018 (“2018 Bonds”) that had been acquired by the Company in December 2022 pursuant
to a previously disclosed arrangement (such that the Company received the payoff of the 2018 Bonds), approximately $1.2 million was used
to pay costs of issuance of the 2023 Bonds, and approximately $0.9 million was used to fund a debt service reserve held by The Huntington
National Bank (“2023 Bond Trustee”), as trustee for the 2023 Bonds. The maturity date of the 2023 Bonds is December 30, 2048.
The interest rate on the 2023 Bonds is 6.375%. Interest payments are due on the 2023 Bonds semi-annually on June 30 and December 30 of
each year, commencing June 30, 2023.
In
connection with the issuance of the 2023 Bonds by the Port Authority, the Company transferred ownership of a portion of the roadway and
related improvements within Hall of Fame Village grounds to the Port Authority. The Company maintains management rights and maintenance
obligations with regard to such roadway pursuant to a Maintenance and Management Agreement among the Port Authority and the Company.
The
2023 Bonds will be repaid by the Port Authority from statutory service payments in lieu of taxes paid by the Company in connection with
the Company’s Tom Benson Hall of Fame Stadium, ForeverLawn Sports Complex, Constellation Center for Excellence, Center for Performance,
Retail I property, Retail II property, Play Action Plaza and an interior private roadway, net of the portion payable to Canton City School
District and Plain Local School District and net of administrative fees of Stark County and the City of Canton, and from minimum service
payments levied against those parcels excluding the Stadium and Sports Complex. Net statutory service payments are assigned by the City
of Canton to the Port Authority for payment of the 2023 Bonds pursuant to a Cooperative Agreement among the Port Authority, City of Canton
and the Company, and then pledged by the Port Authority to the 2023 Bond Trustee for payment of the 2023 Bonds pursuant to a Trust Indenture
between the Port Authority and the 2023 Bond Trustee. Minimum service payments are a lien on the parcels under certain TIF declarations
and supplements thereto, and are paid by the Company to the 2023 Bond Trustee.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
4: Notes Payable, net (continued)
TIF
Loan (continued)
The
Company is required to make payments (“Developer Shortfall Payments”) to the extent the above described net statutory service
payments and minimum service payments actually paid are not sufficient to pay the scheduled debt service on the 2023 Bonds, and entered
into a guaranty of payment of minimum service payments under a Minimum Payment Guaranty until certain performance criteria (debt service
coverage of 1.05x for the 2023 Bonds for three consecutive years) are met. In addition, a member of the Company’s board of directors,
Stuart Lichter, individually and with his trust, guaranteed Developer Shortfall Payments until debt service coverage of 1.0x for the
2023 Bonds for three consecutive years are met.
To
the extent statutory service payments and minimum service payments exceed the amounts required for debt service on the 2023 Bonds, the
excess paid will first increase and/or restore the 2023 Bonds fund reserve to a maximum of 10% of the original principal amount of the
2023 Bonds (i.e., $1,810,000) and then to redeem the 2023 Bonds, with the amount paid applied to the principal balance of the 2023 Bonds.
The 2023 Bonds fund reserve (initially 5% (i.e., $905,000) subject to increase up to 10%) mentioned above will be maintained to be used
for payment of debt service and administrative fees if there are insufficient funds generated from the statutory service payments, minimum
service payments and Developer Shortfall Payments, and, to the extent unused, make the final 2023 Bonds payment of debt service.
November
7, 2022 Refinancing Transactions
On
November 7, 2022, the Company and IRG entered into a letter agreement (the “IRG Letter Agreement”) whereby IRG agreed that
IRG’s affiliates and related parties (“IRG Affiliate Lenders”) will provide the Company and its subsidiaries with certain
financial support described below in exchange for certain consideration described below. The financial support provided under the IRG
Letter Agreement consists of the following (“IRG Financial Support”):
| (a) | Extend the CH Capital Bridge Loan maturity to March 31, 2024 |
| (b) | Release
the first position mortgage lien on the Tom Benson Hall of Fame Stadium |
| (c) | Provide
a financing commitment for the Company’s Hilton Tapestry Hotel |
| (d) | Provide
a completion guarantee for the Company’s waterpark |
| (e) | Amend IRG loans to provide an optional one-year extension of maturity option to March 31, 2025 for a one percent fee |
In
exchange, the Company agreed in the IRG Letter Agreement to:
| (a) | Issue 90,909 shares to IRG and pay $4,500,000 in cash out of the Oak Street financing (See Note 12) |
| (b) | Increase interest rate on all IRG loans to 12.5% per annum of which 4.5% is paid in kind |
| (c) | Make all IRG loans convertible at $12.77 per share |
| (d) | Modify the Series C through Series G Warrants to be exercisable at $12.77 per share |
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
4: Notes Payable, net (continued)
November
7, 2022 Refinancing Transactions (continued)
In
the IRG Letter Agreement, IRG and the Company agreed to comply with all federal and state securities laws and Nasdaq listing rules and
to insert “blocker” provisions for the above-described re-pricing of the warrants and the conversion provisions, such that
the total cumulative number of shares of Common Stock that may be issued to IRG and its affiliated and related parties pursuant to the
IRG Letter Agreement may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such
limitation will not apply following approval of the Company’s stockholders. In addition, the provisions of the IRG Letter Agreement
are limited by Nasdaq Listing Rule 5635(c), subject to approval of the Company’s stockholders. On June 7, 2023, the stockholders
of the Company approved (i) issuance of shares of Common Stock in excess of the Nasdaq 19.99% Cap to IRG Affiliate Lenders with respect
to transactions described in the IRG Letter Agreement; and (ii) the issuance to an entity wholly owned by a director of additional shares
of Common Stock issuable upon the conversion of certain convertible debt and the exercise of certain warrants described in the IRG Letter
Agreement.
CFP
Loan
On
April 27, 2022, Midwest Lender Fund, LLC, a limited liability company wholly owned by our director Stuart Lichter (“MLF”),
loaned $4,000,000 (the “CFP Loan”) to HOF Village Center for Performance, LLC (“HOF Village CFP”). Interest accrues
on the outstanding balance of the CFP Loan at 6.5% per annum, compounded monthly. The CFP Loan matures on March 31, 2024. The CFP Loan
is secured by a mortgage encumbering the Center for Performance.
As
part of the consideration for making the Loan, on June 8, 2022 following stockholder approval, the Company issued to MLF: (A) 5,681 shares
(the “Commitment Fee Shares”) of Common Stock, and (B) a warrant to purchase 5,681 shares of Common Stock (“Series
G Warrants”). The exercise price of the Series G Warrants will be $33 per share. The Series G Warrants will become exercisable
one year after issuance, subject to certain terms and conditions set forth in the Series G Warrants. Unexercised Series G Warrants will
expire five years after issuance. The exercise price of the Series G Warrants will be subject to a weighted-average antidilution adjustment.
On
November 7, 2022, the Company further amended the CFP Loan in order to add an extension option that the Company may exercise at any time
in order to extend the CFP Loan to March 31, 2025. In exchange for the amendment, the interest rate of the CFP Loan was increased to
12.5% per annum.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
4: Notes Payable, net (continued)
Huntington
Loan – CH Capital Retail
On
September 27, 2022, HOF Village Retail I, LLC and HOF Village Retail II, LLC, subsidiaries of the Company, as borrowers (the “Subsidiary
Borrowers”), entered into a loan agreement with The Huntington National Bank (“HNB”), pursuant to which the lender
agreed to loan up to $10,000,000 to the Subsidiary Borrowers, which may be drawn upon the Project achieving certain debt service coverage
ratios. Under the Note, the outstanding amount of the Loan bears interest at a per annum rate equal to the Term Secured Overnight Financing
Rate (“SOFR”) (as defined in the Note) plus a margin ranging from 2.60% to 3.50% per annum.
The
Loan was to mature on September 27, 2024 (the “Initial Maturity Date”). However, Subsidiary Borrowers have the option (the
“Extension Option”) to extend the Initial Maturity Date for an additional 36 months.
Additionally,
in connection with the Huntington Loan, on September 27, 2022, the Company entered into an interest rate swap agreement with a notional
amount of $10 million to hedge a portion of the Company’s outstanding SOFR debt with a fixed interest rate of 4.0%. On September
21, 2023, the Company repurchased and terminated the interest rate swap.
On
September 21, 2023, CH Capital Lending, LLC (“Lender”), an affiliate of our director Stuart Lichter, succeeded to the rights
and obligations of HNB under the Loan Agreement pursuant to the Assignment of Note, Security Instrument and Other Loan Documents. Also,
on September 21, 2023, the Company, Retail and Lender entered into the Joinder and First Amendment to Loan Agreement (“First Joinder
and Amendment”), pursuant to which (i) the Company becomes a borrower under the Loan Agreement (the Company together with Retail,
“Borrower”); (ii) the Loan Agreement is amended to provide that Borrower will have the right to use up to Two Million Dollars
($2,000,000) of the loan proceeds for the purpose of paying the costs of construction of the Hall of Fame Village Waterpark which will
be owned by the Company or its affiliates or subsidiaries.
On
October 6, 2023, the Loan Agreement was amended to which no interest or principal shall be due and payable from the effective date through
the initial maturity date and all interest that accrues during the deferral period shall accrue at the non-default rate and be added
to the outstanding principal balance of the loan and the loan was increased to $4,000,000.
On
October 16, 2023, the Loan Agreement was amended such that Lender waives conditions to loan funding up to the amount of $6,000,000, with
any future waiver of conditions to additional loan funding subject to the written consent of Lender. The effect of this amendment is
to permit the Company to draw an additional $2,000,000 under the $10,000,000 Loan Agreement for the Permitted Purpose.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
4: Notes Payable, net (continued)
Huntington
Loan – CH Capital Retail (continued)
On
December 8, 2023, the Company, Retail and Lender entered into a First Amended and Restated Promissory Note (“First A&R Promissory
Note”). The First A&R Promissory Note was entered to (i) set the interest rate at 12.5% per annum, compounded monthly, rather
than the original variable rate, and paid in kind (“PIK”) interest will continue through the maturity date; (ii) modifies
the payment terms and maturity date to state interest is due and payable with the entire outstanding principal balance together with
accrued unpaid interest on December 4, 2027; and (iii) adds a right to convert the Note into shares of common stock, par value $0.0001
per share (‘Common Stock”), of the Company at an initial conversion price equal to $3.66.
Modification
Agreements
On
October 6, 2023, the Company and certain of its subsidiaries entered into a Modification Agreement with CH Capital Lending, LLC, IRG,
LLC and Midwest Lender Fund, LLC (“IRG Investors”) that deferred interest payments from July 1, 2023 until March 31, 2024
(“Deferral Period”) owed under its loan arrangements with such IRG Investors. Simultaneously, the Company and certain of
its subsidiaries entered into a similar Modification Agreement with JKP Financial LLC (“JKP”) that deferred interest payments
during the Deferral Period owed under its loan arrangements with JKP.
DoubleTree
Finance Transactions
On
October 10, 2023, HOF Village Hotel II, LLC (“Hotel II”), a subsidiary of the Company, as borrower, and ErieBank, a division
of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender (“ErieBank”) entered into a Third Amendment
to Loan Documents (“Third Amendment to Loan”) and Second Amendment to Promissory Note (“Second Amendment to Note”),
with consent from subordinate lienholders Newmarket Project Inc. (“Newmarket”) and the City of Canton, Ohio (“City”),
which extended the maturity date of an existing loan with ErieBank from October 13, 2023 to December 15, 2034, reflected a reduction
in the outstanding principal balance of the Note from $15,300,000 to $11,000,000 using proceeds from the PACE Bonds and TDD Bonds discussed
below, and adjusted the interest rate to 3.5% plus the five year Federal Home Loan Bank Rate of Pittsburgh, with a floor of 7.5% per
annum. In connection with entering into the Third Amendment to Loan and the Second Amendment to Note, Hotel II paid customary fees and
expenses.
On
October 10, 2023, Hotel II closed on a transaction that included entering into an Energy Project Cooperative Agreement (the “PACE
Cooperative Agreement”) among the City of Canton, Ohio (the “City”), the Canton Regional Energy Special Improvement
District, Inc., Hotel II, the Development Finance Authority of Summit County (“DFA”), and U.S. Bank Trust Company, National
Association (“US Bank”), as trustee. Pursuant to the PACE Cooperative Agreement and a Resolution of the City Council of the
City approving the Petition for Special Assessments for Special Energy Improvement Projects (the “Petition”) submitted by
Hotel II, the City approved refinance of certain special energy improvements related to the hotel located in downtown Canton. DFA agreed
to issue Jobs & Improvement Fund Program Taxable Revenue Bonds, Series 2023B (the “PACE Bonds”) in the original principal
amount of $2,760,000. Hotel II agreed to pay special assessments levied on the property and to make certain minimum service payments
with respect to the property equal to such special assessments, which payments are in the amount of all debt service and related charges
in connection with the PACE Bonds. The PACE Bonds have a maturity date of May 15, 2040 and shall bear interest at the rate of 6.625%
calculated on the basis of a 360-day year consisting of 12 months of 30 days each on May 15 and November 15 of each year commencing on
November 15, 2023.
On
October 10, 2023, Hotel II closed on a transaction that included entering into a Tourism Development District Cooperative Agreement (the
“TDD Cooperative Agreement”) among the City of Canton, Ohio (the “City”), Hotel II, Cleveland-Cuyahoga County
Port Authority (“CCCPA”), and Huntington National Bank, as trustee. Pursuant to the TDD Cooperative Agreement, the CCCPA
agreed to issue its Port of Cleveland Bond Fund Taxable Development Revenue Bonds, Series 2023B (“TDD Bonds”) in the original
principal amount of $3,445,000. The TDD Bonds are primarily payable from tourism development district revenues (“TDD Revenues”)
derived from gross receipts and hotel tax. Hotel II also agreed to make minimum service payments to HNB, as trustee, with respect to
improvements on the property in accordance with the terms of the TDD Declaration in the event of a shortfall in TDD Revenues. CCCPA has
agreed to pledge the TDD revenue and any minimum service payments to HNB to secure debt service charges on the bonds. The Series TDD
Bonds shall mature on May 15, 2044 and shall bear interest payable on each May 15 and November 15, commencing May 15, 2024 at the interest
rate equal to 6.875% per annum. The Bond Reserve Deposit of 10% of the proceeds from the TDD Bonds was paid from the proceeds of the
TDD Bonds.
Future
Minimum Principal Payments
The
minimum required principal payments on notes payable outstanding as of December 31, 2023 are as follows:
| For
the years ending December 31, | |
Amount | |
| 2024 | |
$ | 62,057,010 | |
| 2025 | |
| 37,023,027 | |
| 2026 | |
| 4,058,147 | |
| 2027 | |
| 7,116,194 | |
| 2028 | |
| 13,730,685 | |
| Thereafter | |
| 105,199,947 | |
| Total
Gross Principal Payments | |
$ | 229,185,010 | |
| | |
| | |
| Less: Debt discount and deferred
financing costs | |
| (9,652,069 | ) |
| | |
| | |
| Total Net Principal Payments | |
$ | 219,532,941 | |
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
5: Stockholders’ Equity
Reverse
Stock Split
On
September 29, 2022, our stockholders approved amendments to our Amended and Restated Certificate of Incorporation to effect a reverse
stock split of our shares of common stock, and our Board approved a final reverse stock split ratio of 1-for-22. The reverse stock split
became effective on December 27, 2022. On the effective date, every 22 shares of issued and outstanding common stock were combined and
converted into one issued and outstanding share of common stock. Fractional shares were cancelled, and stockholders received cash in
lieu thereof in the aggregate amount of $118,344.
The
number of authorized shares of common stock and the par value per share of common stock remains unchanged. A proportionate adjustment
was also made to the maximum number of shares of common stock issuable under the Hall of Fame Resort & Entertainment Company Amended
2020 Omnibus Incentive Plan (the “Plan”).
Where
applicable, the disclosures below have been adjusted to reflect the 1-for-22 reverse stock split effective December 27, 2022.
Authorized
Capital
On
November 3, 2020, the Company’s stockholders approved an amendment to the Company’s charter to increase the authorized shares
of Common Stock from 100,000,000 to 300,000,000. Consequently, the Company’s charter allows the Company to issue up to 300,000,000
shares of Common Stock and to issue and designate its rights, without stockholder approval, of up to 5,000,000 shares of preferred stock,
par value $0.0001.
Series
A Preferred Stock Designation
On
October 8, 2020, the Company filed a Certificate of Designations with the Secretary of State of the State of Delaware to establish preferences,
limitations, and relative rights of the Series A Preferred Stock. The number of authorized shares of Series A Preferred Stock is 52,800.
The Series A Preferred Stock is mandatorily redeemable, and therefore classified as a liability on the Company’s consolidated balance
sheets within Notes Payable, net.
Series
B Convertible Preferred Stock Designation
On
May 13, 2021, the Company filed a Certificate of Designations with the Secretary of State of the State of Delaware to establish preferences,
limitations, and relative rights of the 7.00% Series B Preferred Stock (as defined below). The number of authorized shares of Series
B Preferred Stock is 15,200.
The
Company had 200 shares of 7.00% Series B Convertible Preferred Stock (“Series B Preferred Stock”) outstanding
and 15,200 shares authorized as of December 31, 2023 and December 31, 2022. On the third anniversary of the date on which shares
of Series B Preferred Stock are first issued (the “Automatic Conversion Date”), each share of Series B Preferred Stock, except
to the extent previously converted pursuant to an Optional Conversion (as defined below), shall automatically be converted into shares
of Common Stock (the “Automatic Conversion”). At any time following the date on which shares of Series B Preferred Stock
are first issued, and from time to time prior to the Automatic Conversion Date, each holder of Series B Preferred Stock shall have the
right, but not the obligation, to elect to convert all or any portion of such holder’s shares of Series B Preferred Stock into
shares of Common Stock, on terms similar to the Automatic Conversion (any such conversion, an “Optional Conversion”). The
conversion price is approximately $67.32.
7.00%
Series C Convertible Preferred Stock
On
March 28, 2022, the Company filed a Certificate of Designations with the Secretary of State of the State of Delaware to establish preferences,
limitations, and relative rights of its Series C Preferred Stock. The number of authorized shares of Series C Preferred Stock is 15,000.
On
March 28, 2022, in accordance with the previously announced Amendment Number 6 to Term Loan Agreement by and among the Company and CH
Capital Lending, the Company entered into a Securities Exchange Agreement (the “Exchange Agreement”) with CH Capital Lending,
pursuant to which the Company exchanged in a private placement (the “Private Placement”) each share of the Company’s
Series B Convertible Preferred Stock, that is held by CH Capital Lending for one share of the Company’s Series C Preferred Stock,
resulting in the issuance of 15,000 shares of Series C Preferred Stock to CH Capital Lending. The Series C Preferred Stock
is convertible into shares of the Company’s common stock. The shares of Series B Preferred Stock exchanged, and the Series C Preferred
Stock acquired, have an aggregate liquidation preference of $15 million plus any accrued but unpaid dividends to the date of payment.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
5: Stockholders’ Equity (continued)
2020
Omnibus Incentive Plan
On
July 1, 2020, the Company’s omnibus incentive plan (the “2020 Omnibus Incentive Plan”) became effective immediately.
The 2020 Omnibus Incentive Plan was previously approved by the Company’s stockholders and Board of Directors. Subject to adjustment,
the maximum number of shares of Common Stock authorized for issuance under the 2020 Omnibus Incentive Plan was 82,397 shares. On June
2, 2021, the Company held its 2021 Annual Meeting whereby the Company’s stockholders approved an amendment to the 2020 Omnibus
Incentive Plan to increase by 181,818 the number of shares of Common Stock, that will be available for issuance under the 2020 Omnibus
Incentive Plan. On June 7, 2023, the Company’s stockholders further approved an amendment to increase by 275,000 the number of
shares available under the 2020 Omnibus Incentive Plan. As of December 31, 2023 and 2022, 252,418 and 90,643, shares remained available
for issuance under the 2020 Omnibus Incentive Plan respectively.
Hall
of Fame Resort & Entertainment Company 2023 Inducement Plan
On
January 24, 2023, the Company’s board of directors adopted the Hall of Fame Resort & Entertainment Company 2023 Inducement
Plan (the “Inducement Plan”). The Inducement Plan is not subject to stockholder approval. The aggregate number
of shares of Common Stock that may be issued or transferred pursuant to awards covered by the Plan (including existing inducement awards
amended to be subject to the Inducement Plan) is 110,000. Awards covered by the Inducement Plan include only inducement grants
under Nasdaq Listing Rule 5635(c)(4).
Equity
Distribution Agreement
On
September 30, 2021, the Company entered into an Equity Distribution Agreement with Wedbush Securities Inc. and Maxim Group LLC with respect
to an at-the-market offering program under which the Company may, from time to time, offer and sell shares of the Company’s Common
Stock having an aggregate offering price of up to $50,000,000 (as of September 30, 2023). From January 1 through September 30, 2023,
there were 4,878 shares sold.
On
October 10, 2023, the Company reduced the amount of shares of its Common Stock that could be issued and sold pursuant to its “at-the-market”
program (“ATM”) with Wedbush Securities Inc. and Maxim Group LLC, as agents (the “Agents”), to an amount equal
to $39,016,766. The reduction in the amount of shares that can be issued and sold under the ATM was effected pursuant to the Amendment
No. 1 to Equity Distribution Agreement, which amended the Company’s Equity Distribution Agreement with the Agents, dated September
30, 2021 (the “Equity Distribution Agreement”), to reduce the aggregate offering price under the Equity Distribution Agreement
from $50,000,000 to $39,016,766.
The
Underwriting Agreement (defined below) requires that we not issue any shares of our Common Stock for 90 days after October 11, 2023,
subject to certain exceptions, and as a result, we have suspended sales pursuant to our ATM under our Equity Distribution Agreement during
such period.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
5: Stockholders’ Equity (continued)
Underwriting
Agreement; Public Offering
On
October 11, 2023, the Company entered into a underwriting agreement (the “Underwriting Agreement”) with Maxim Group LLC
(“Maxim” or the “Underwriter”), relating to a firm commitment public offering of (a) 750,000 shares of our
common stock (the “Common Stock”), $0.0001 par value per share (the “Common Stock”) and (b) warrants to
purchase up to 750,000 shares of Common Stock, at an exercise price of $3.75 per share (the “Warrants”), at an aggregate
price of $3.75 per share and accompanying Warrants. Following closing, the Warrants are exercisable at $3.75 per share for a
five-year period. Under the terms of the Underwriting Agreement, we granted the Underwriters a 45-day option to purchase up to an
additional 112,500 shares of Common Stock and Warrants from us. The Underwriters purchased warrants to purchase 40,000 shares of
Common Stock under the over-allotment option. The closing of the offering occurred on October 13, 2023. The
gross proceeds from this offering were $2,812,500 and the net proceeds from this offering were $2,500,996. The warrants were
exercisable immediately, had an exercise price of $3.75, and expire on October 13, 2028. The warrants were classified as equity as
they were not mandatorily redeemable and contained no features that require them to be recorded as a derivative
liability.
Issuance
of Restricted Stock Awards
The
Company’s activity in restricted Common Stock was as follows for the year ended December 31, 2023:
| | |
Number
of shares | | |
Weighted
average grant date fair value | |
| Non–vested at January 1, 2023 | |
| - | | |
$ | - | |
| Granted | |
| 25,546 | | |
$ | 7.84 | |
| Vested | |
| (25,546 | ) | |
$ | 7.84 | |
| Non–vested at December 31, 2023 | |
| - | | |
$ | | |
For
the years ended December 31, 2023 and 2022, stock-based compensation related to restricted stock awards was $200,240 and $1,746,799,
respectively. Stock-based compensation related to restricted stock awards was included as a component of “Operating expenses”
in the consolidated statements of operations. As of December 31, 2023, unamortized stock-based compensation costs related to restricted
share arrangements were $0.
Issuance
of Restricted Stock Units
During
the year ended December 31, 2023, the Company granted an aggregate of 121,571 Restricted Stock Units (“RSUs”) to its employees
and directors, of which 109,083 were granted under the 2020 Omnibus Incentive Plan and 12,488 were granted under the HOFV 2023 Inducement
Plan. The RSUs were valued at the value of the Company’s Common Stock on the date of grant, which approximated $14.02 per share
for these awards. The RSUs granted to employees vest one third on the first anniversary of their grant, one third on the second anniversary
of their grant, and one third on the third anniversary of their grant. The RSUs granted to directors vest one year from the date of grant.
The
Company’s activity in RSUs was as follows for the year ended December 31, 2023:
| | |
Number
of
shares | | |
Weighted
average
grant date
fair value | |
| Non–vested
at January 1, 2023 | |
| 134,799 | | |
$ | 28.74 | |
| Granted | |
| 121,571 | | |
$ | 13.21 | |
| Vested | |
| (76,609 | ) | |
$ | 29.57 | |
| Forfeited | |
| (53,411 | ) | |
$ | 18.71 | |
| Non–vested
at December 31, 2023 | |
| 126,350 | | |
$ | 17.54 | |
For
the years ended December 31, 2023 and 2022, the Company recorded $2,471,029 and $2,150,004, respectively, in stock-based compensation
expense related to restricted stock units. Stock-based compensation expense is a component of “Operating expenses” in the
consolidated statements of operations. As of December 31, 2023, unamortized stock-based compensation costs related to restricted stock
units were $698,460 and will be recognized over a weighted average period of 0.8 years.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
5: Stockholders’ Equity (continued)
Issuance
of Performance Stock Units
During
the year ended December 31, 2023, the Company granted an aggregate of 88,965 Performance Stock Units (“PSUs”) to its Chief
Executive Officer under the 2020 Omnibus Incentive Plan. The PSUs were valued at the value of the Company’s Common Stock on the
date of grant, which approximated $9.62 per share for these awards. The PSUs vest upon the achievement of certain performance targets
during the year ended December 31, 2023 upon certification by the compensation committee in early 2024. In accordance with ASC 718, the
Company expensed the portion of the PSUs which were probable to vest.
The
Company’s activity in PSUs was as follows for the year ended December 31, 2023:
| | |
Number
of
shares | | |
Weighted
average
grant date
fair value | |
| Non–vested at January
1, 2023 | |
| - | | |
| | |
| Granted | |
| 88,965 | | |
$ | 9.62 | |
| Vested | |
| - | | |
| | |
| Forfeited | |
| - | | |
| | |
| Non–vested
at December 31, 2023 | |
| 88,965 | | |
$ | 9.62 | |
For
the years ended December 31, 2023 and 2022, the Company recorded $85,580 and $0, respectively, in stock-based compensation expense related
to performance stock units. Stock-based compensation expense is a component of “Operating expenses” in the consolidated statements
of operations. During January 2024, the Company determined that none of the performance criteria were met, and the entire PSU award was
forfeited. As of December 31, 2023, unamortized stock-based compensation costs related to performance stock units was $0.
Warrants
The
Company’s warrant activity was as follows for the year ended December 31, 2023:
| | |
Number
of Shares | | |
Weighted
Average Exercise Price (USD) | | |
Weighted
Average Contractual Life (years) | | |
Intrinsic
Value (USD) | |
| Outstanding - January 1, 2023 | |
| 2,003,649 | | |
$ | 149.09 | | |
| 2.86 | | |
$ | - | |
| Granted | |
| 790,000 | | |
$ | 3.75 | | |
| | | |
| | |
| Outstanding – December 31, 2023 | |
| 2,793,649 | | |
$ | 107.99 | | |
| 2.68 | | |
$ | - | |
| Exercisable – December 31, 2023 | |
| 2,793,649 | | |
$ | 107.99 | | |
| 2.68 | | |
$ | - | |
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
5: Stockholders’ Equity (continued)
Amended
and Restated Series C Warrants
On
March 1, 2022, in connection with the amendment to the IRG Split Note (as described in Note 4), the Company amended its Series C Warrants
to extend the term of the Series C Warrants to March 1, 2027. The exercise price of $30.80 per share was not amended, but the amendments
subject the exercise price to a weighted-average antidilution adjustment. The amendments also remove certain provisions regarding fundamental
transactions, which subsequently allowed the Series C Warrants to be derecognized as a liability and classified as equity.
The
Company accounted for this modification as a cost of the IRG Split Note, whereby the Company calculated the incremental fair value of
the Series C Warrants and recorded them as a discount against the IRG Split Note.
On
November 7, 2022, the Company further amended the Series C Warrants to reduce the exercise price to $12.77 per share as part of the IRG
Letter Agreement. See Note 4 for more information.
The
following assumptions were used to calculate the fair value of Series C Warrants in connection with the modifications:
| | |
Original
Series C
Warrants | | |
March
1, 2022
Modification | | |
November
7, 2022 Modification | |
| Term (years) | |
| 3.8 | | |
| 5.0 | | |
| 3.1 | |
| Stock price | |
$ | 22.22 | | |
$ | 22.22 | | |
$ | 14.52 | |
| Exercise price | |
$ | 30.80 | | |
$ | 30.80 | | |
$ | 12.77 | |
| Dividend yield | |
| 0.0 | % | |
| 0.0 | % | |
| 0.0 | % |
| Expected volatility | |
| 54.7 | % | |
| 50.8 | % | |
| 63.9 | % |
| Risk free interest rate | |
| 1.5 | % | |
| 1.5 | % | |
| 4.8 | % |
| Number of shares | |
| 455,867 | | |
| 455,867 | | |
| 455,867 | |
| Aggregate fair value | |
$ | 3,336,000 | | |
$ | 3,648,000 | | |
$ | 3,230,000 | |
Amended
and Restated Series D Warrants issue to CH Capital Lending
On
March 1, 2022, in connection with the amendment to the CH Capital Loan (as described in Note 4), the Company amended the Series D Warrants
issued to CH Capital Lending to extend the term of such Series D Warrants to March 1, 2027. The exercise price of $151.80 per share was
not amended, but the amendments subject the exercise price to a weighted-average antidilution adjustment.
On
November 7, 2022, the Company further amended the Series D Warrants to reduce the exercise price to $12.77 per share as part of the IRG
Letter Agreement. See Note 4 for more information.
The
following assumptions were used to calculate the fair value of Series D Warrants in connection with the modifications:
| | |
Original
Series D
Warrants | | |
March
1, 2022
Modification | | |
November
7, 2022
Modification | |
| Term (years) | |
| 3.8 | | |
| 3.8 | | |
| 3.1 | |
| Stock price | |
$ | 22.22 | | |
$ | 22.22 | | |
$ | 14.52 | |
| Exercise price | |
$ | 151.80 | | |
$ | 151.80 | | |
$ | 12.77 | |
| Dividend yield | |
| 0.0 | % | |
| 0.0 | % | |
| 0.0 | % |
| Expected volatility | |
| 63.5 | % | |
| 50.8 | % | |
| 63.9 | % |
| Risk free interest rate | |
| 1.3 | % | |
| 1.6 | % | |
| 4.8 | % |
| Number of shares | |
| 111,321 | | |
| 111,321 | | |
| 111,321 | |
| Aggregate fair value | |
$ | 50,000 | | |
$ | 138,000 | | |
$ | 910,000 | |
7.00%
Series A Cumulative Redeemable Preferred Stock
On
January 12, 2023, the Company issued to ADC LCR Hall of Fame Manager II, LLC (the “Series A Preferred Investor”) 1,600 shares
of the Company’s 7.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”),
at a price of $1,000 per share for an aggregate purchase price of $1,600,000. On January 23, 2023, the Company issued to the Series A
Preferred Investor 800 additional shares of the Company’s Series A Preferred Stock at a price of $1,000 per share for an aggregate
purchase price of $800,000. Additionally, on May 2, 2023, the Company issued to the Series A Preferred Investor 800 shares of the Company’s
Series A Preferred Stock, at a price of $1,000 per share for an aggregate purchase price of $800,000. The Company paid the Series A Preferred
Investor an origination fee of 2% of the aggregate purchase price for each issuance. The issuance and sale of the shares to the Series
A Preferred Investor is exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”). The Series A Preferred Stock is not convertible into Common Stock. The Series A Preferred Investor has represented to the
Company that it is an “accredited investor” as defined in Rule 501 of the Securities Act and that the shares are being acquired
for investment purposes and not with a view to, or for sale in connection with, any distribution thereof.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
6: Sponsorship Revenue and Associated Commitments
Johnson
Controls, Inc.
On
July 2, 2020, the Company entered into an Amended and Restated Sponsorship and Naming Rights Agreement (the “Naming Rights Agreement”)
among the Company, PFHOF and Johnson Controls, Inc. (“JCI” or “Johnson Controls”), that amended and restated
the Sponsorship and Naming Rights Agreement, dated as of November 17, 2016 (the “Original Sponsorship Agreement”). Among
other things, the Naming Rights Agreement: (i) reduced the total amount of fees payable to the Company during the term of the Naming
Rights Agreement from $135 million to $99 million; (ii) restricted the activation proceeds from rolling over from year to year with a
maximum amount of activation proceeds in one agreement year to be $750,000; and (iii) renamed the “Johnson Controls Hall of Fame
Village” to “Hall of Fame Village powered by Johnson Controls”. This is a prospective change, which the Company reflected
beginning in the third quarter of 2020.
JCI
had a right to terminate the Naming Rights Agreement if the Company did not provide evidence to JCI by October 31, 2021 that it had secured
sufficient debt and equity financing to complete Phase II, or if Phase II was not open for business by January 2, 2024, in each case
subject to day-for-day extension due to force majeure and a notice and cure period. In addition, under the Naming Rights Agreement JCI’s
obligation to make sponsorship payments to the Company could have been suspended commencing on December 31, 2020, if the Company had
not provided evidence reasonably satisfactory to JCI on or before December 31, 2020, subject to day-for-day extension due to force majeure,
that the Company had secured sufficient debt and equity financing to complete Phase II.
Additionally,
on October 9, 2020, the Company, entered into a Technology as a Service Agreement (the “TAAS Agreement”) with JCI. Pursuant
to the TAAS Agreement, JCI provided certain services related to the construction and development of the Hall of Fame Village (the “Project”),
including, but not limited to, (i) design assist consulting, equipment sales and turn-key installation services in respect of specified
systems to be constructed as part of Phase II and Phase III of the Project and (ii) maintenance and lifecycle services in respect of
certain systems constructed as part of Phase I, and to be constructed as part of Phase II and Phase III, of the Project. Under the terms
of the TAAS Agreement, the Company had agreed to pay JCI up to an aggregate of approximately $217 million for services rendered by JCI
over the term of the TAAS Agreement.
On
May 10, 2022, the Company received from JCI a notice of termination (the “TAAS Notice”) of the TAAS Agreement effective immediately.
The TAAS Notice stated that termination of the TAAS Agreement by JCI was due to the Company’s alleged breach of its payment obligations.
Additionally, JCI in the TAAS Notice demanded the amount which is the sum of: (i) all past due payments and any other amounts owed by
the Company under the TAAS Agreement; (ii) all commercially reasonable and documented subcontractor breakage and demobilization costs;
and (iii) all commercially reasonable and documented direct losses incurred by JCI directly resulting from the alleged default by the
Company and the exercise of JCI’s rights and remedies in respect thereof, including reasonable attorney fees.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
6: Sponsorship Revenue and Associated Commitments (continued)
Johnson
Controls, Inc. (continued)
Also
on May 10, 2022, the Company received from JCI a notice of termination (“Naming Rights Notice”) of the Naming Rights Agreement,
effective immediately. The Naming Rights Notice stated that the termination of the Naming Rights Agreement by JCI was due to JCI’s
concurrent termination of the TAAS Agreement. The Naming Rights Notice further stated that the Company must pay JCI, within 30 days following
the date of the Naming Rights Notice, $4,750,000. The Naming Rights Notice stated that the Company was also in breach of its covenants
and agreements, which require the Company to provide evidence reasonably satisfactory to JCI on or before October 31, 2021, subject to
day-for-day extension due to force majeure, that the Company had secured sufficient debt and equity financing to complete Phase II.
The
Company disputed that it was in default under either the TAAS Agreement or the Naming Rights Agreement. The Company believed JCI was
in breach of the Naming Rights Agreement and the TAAS Agreement due to their failure to make certain payments in accordance with the
Naming Rights Agreement, and, on May 16, 2022, provided notice to JCI of these breaches.
The
Company pursued dispute resolution pursuant to the terms of the Naming Rights Agreement to simultaneously defend against JCI’s
allegations and pursue its own claims. On October 4, 2023, the Company and JCI commenced an arbitration hearing in Ohio to determine
the outcome of the dispute. On December 13, 2023, the Company received notice from the arbitration panel that the panel had awarded the
Company a total amount of approximately $2.87 million. The Company expects that, once paid by JCI, this entire amount will be paid directly
towards the cost of the arbitration and other legal fees in connection with the arbitration. Neither the Company nor JCI has appealed
the ruling, and both the Naming Rights Agreement and the TAAS Agreement are considered terminated as of the date of the ruling. During
the year ended December 31, 2023, the Company recognized a gain of $4.1 million, representing the net book value of (a) amounts accrued
under the TAAS, (b) amounts accrued under the Naming Rights Agreement, and (c) deferred revenue under the Naming Rights Agreement, net
of amounts due from JCI under the Naming Rights Agreement. This gain is included in “Other income” on the Company’s
consolidated statements of operations.
Other
Sponsorship Revenue
The
Company has additional revenue primarily from sponsorship programs that provide its sponsors with strategic opportunities to reach customers
through our venue including advertising on our website. Sponsorship agreements may contain multiple elements, which provide several distinct
benefits to the sponsor over the term of the agreement and can be for a single or multi-year term. These agreements provide sponsors
various rights such as venue naming rights, signage within our venues, the ability to be the exclusive provider of a certain category
of product, and advertising on our website and other benefits as detailed in the agreements.
As
of December 31, 2023, scheduled future cash to be received under the agreements, are as follows:
Year
ending December 31,
| 2024 | |
| 2,289,755 | |
| 2025 | |
| 1,886,077 | |
| 2026 | |
| 1,664,827 | |
| 2027 | |
| 1,317,265 | |
| 2028 | |
| 1,257,265 | |
| Thereafter | |
| 1,257,265 | |
| | |
| | |
| Total | |
$ | 9,672,454 | |
As
services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the agreement. During the
years ended December 31, 2023 and 2022, the Company recognized $2,819,041 and $2,697,487 of net sponsorship revenue, respectively.
Note
7: Other Commitments
Management
Agreement with Crestline Hotels & Resorts
On October 22, 2019, the Company entered into a management agreement with Crestline Hotels & Resorts (“Crestline”). The Company appointed and engaged Crestline as the Company’s exclusive agent to supervise, direct, and control management and operation of the DoubleTree Canton Downtown Hotel. The agreement will be terminated on the fifth anniversary of the commencement date, or October 22, 2024, unless otherwise extended. For the year ended December 31, 2023 and 2022, the Company incurred $208,275 and $154,131, respectively in management fees.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
7: Other Commitments (continued)
Management
Agreement with Shula’s Steak Houses, LLLP
On
October 7, 2020, the Company entered into a management agreement with Shula’s Steak Houses, LLLP (“Shula’s”).
The Company appointed and engaged Shula’s to develop, operate and manage the Don Shula’s American Kitchen restaurant. The
initial term of the agreement is for a period of ten years or October 7, 2030. For the years ended December 31, 2023 and 2022, the Company
incurred $104,894 and $0, respectively in management fees.
Constellation
EME Express Equipment Services Program
On
February 1, 2021, the Company entered into a contract with Constellation whereby Constellation will sell and/or deliver materials and
equipment purchased by the Company. The Company is required to maintain an escrow account held by Constellation, representing adequate
assurance of future performance. Constellation will invoice the Company in 60 monthly installments, which began in April 2021 for $103,095.
Additionally, the Company has one note payable with Constellation. See Note 4 for more information.
Sports
Betting Agreements
On
July 14, 2022, the Company entered into an Online Market Access Agreement with Instabet, Inc. doing business as betr (“BETR”),
pursuant to which BETR will serve as a Mobile Management Services Provider (as defined under applicable Ohio gaming law) wherein BETR
will host, operate and support a branded online sports betting service in Ohio, subject to procurement and maintenance of all necessary
licenses. The initial term of the Online Market Access Agreement is ten years.
As
part of this agreement, the Company will receive a limited equity interest in BETR and certain revenue sharing, along with the opportunity
for sponsorship and cross-marketing. The limited equity interest was in the form of penny warrants initially valued at $4,000,000 at
the grant date. The grant date value of these warrants was recorded as deferred revenue (within “Other liabilities” on the
consolidated balance sheets) and will be amortized over the life of the sports betting agreement. At December 31, 2023 and 2022, the
amount remaining in deferred revenue was $3,600,000 and $4,125,000, respectively. The Company is also recognizing the change in fair
value of the warrants under “Change in fair value of investments available for sale” on the consolidated statements of operations.
On
November 2, 2022, the Company secured conditional approval from the state for mobile and retail sports
betting.
The Ohio Casino Control Commission provided the required authorization for HOFV to gain licensing for a physical sports betting operation
– called a sportsbook – as well as an online sports betting platform, under Ohio’s sports betting law H.B.29.
As of January 1, 2023, sports betting is legal in Ohio for anyone in the state that is of legal betting age. The conditional approval
requires that the Company accept bets under both the mobile and retail sports books prior to December 31, 2023. The Company satisfied
that condition for the mobile sports book. However, the Company does not currently have a sports betting partner for its retail
sports book. In November 2023, Ohio granted an extension to June 30, 2025 for all retail license holders.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
7: Other Commitments (continued)
Other
Liabilities
Other
liabilities consisted of the following at December 31, 2023 and 2022:
| | |
December 31,
2023 | | |
December 31,
2022 | |
| Activation
fund reserves | |
$ | 126,685 | | |
$ | 3,511,185 | |
| Deferred
revenue | |
| 5,441,640 | | |
| 6,867,970 | |
| Deposits
and other liabilities | |
| 290,357 | | |
| 300,549 | |
| Total | |
$ | 5,858,682 | | |
$ | 10,679,704 | |
Of
the deferred revenue in existence as of January 1, 2023, $3,185,240 was recognized into revenue during the year ended December 31, 2023.
Of the deferred revenue in existence as of January 1, 2022 in the amount of $203,278, all amounts were recognized into revenue during
the year ended December 31, 2023.
Other
Commitments
The
Company has other commitments, as disclosed in Notes 6, 8 and 9 within these consolidated footnotes.
Note
8: Contingencies
During
the normal course of its business, the Company is subject to occasional legal proceedings and claims. The Company does not have any pending
litigation that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on its results of
operations, financial condition, or cash flows.
Note
9: Related-Party Transactions
Due
to Affiliates
Due
to affiliates consisted of the following at December 31, 2023 and 2022:
| | |
December 31,
2023 | | |
December 31,
2022 | |
| Due to IRG
Member | |
$ | 1,127,390 | | |
$ | 345,253 | |
| Due to PFHOF | |
| 166,484 | | |
| 510,232 | |
| Total | |
$ | 1,293,874 | | |
$ | 855,485 | |
IRG
Canton Village Member, LLC, a member of HOF Village, LLC controlled by our director Stuart Lichter (the “IRG Member”) and
an affiliate, provides certain supporting services to the Company. As noted in the Operating Agreement of HOF Village, LLC, an affiliate
of the IRG Member, IRG Canton Village Manager, LLC, the manager of HOF Village, LLC controlled by our director Stuart Lichter, may earn
a master developer fee calculated as 4.0% of development costs incurred for the Hall of Fame Village, including, but not limited to site
assembly, construction supervision, and project financing. These development costs incurred are netted against certain costs incurred
for general project management.
The
due to related party amounts in the table above are non-interest bearing advances from an affiliate of IRG Member due on demand. During
the year ended December 31, 2022, the Company rolled $3,127,304 in amounts due to IRG into the CH Capital Loan.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
9: Related-Party Transactions (continued)
Due
to Affiliates (continued)
The
amounts above due to PFHOF relate to advances to and from PFHOF, including costs for onsite sponsorship activation, sponsorship sales
support, shared services, event tickets, and expense reimbursements.
As
of December 31, 2023 and 2022, PFHOF owed the Company $74,167 and $10,049, respectively, which is included in “Accounts Receivable,
net” on the accompanying consolidated balance sheets.
Global
License Agreement
Effective
April 8, 2022, the Company and PFHOF, entered into a Global License Agreement (the “Global License Agreement”). The Global
License Agreement consolidates and replaces the First Amended and Restated License Agreement, the Amended and Restated Media License
Agreement, and the Branding Agreement the parties had previously entered into. The Global License Agreement sets forth the terms under
which PFHOF licenses certain marks and works to the Company to exploit existing PFHOF works and to create new works. The Global License
Agreement grants the Company and its affiliates an exclusive right and license to use the PFHOF marks in conjunction with theme-based
entertainment and attractions within the City of Canton, Ohio; youth sports programs, subject to certain exclusions; e-gaming and video
games; and sports betting. The Global License Agreement also grants the Company and its affiliates a non-exclusive license to use the
PFHOF marks and works in other areas of use, with a right of first refusal, subject to specified exclusions. The Global License Agreement
acknowledges the existence of agreements in effect between PFHOF and certain third parties that provide for certain restrictions on the
rights of PFHOF, which affects the rights that can be granted to the Company. These restrictions include, but are not limited to, such
third parties having co-exclusive rights to exploit content based on the PFHOF enshrinement ceremonies and other enshrinement events.
The Global License Agreement requires the Company to pay PFHOF an annual license fee of $900,000 in the first contract year, inclusive
of calendar years 2021 and 2022; an annual license fee of $600,000 in each of contract years two through six; and an annual license fee
of $750,000 per year starting in contract year seven through the end of the initial term. The Global License Agreement also provides
for an additional license royalty payment by the Company to PFHOF for certain usage above specified financial thresholds, as well as
a commitment to support PFHOF museum attendance through the Company’s and its affiliates’ ticket sales for certain concerts
and youth sports tournaments. Effective September 13, 2023, the Company and PFHOF entered into an Amendment to Global License Agreement,
which modified the structure of the ticket sales component to focus on event profitability, with PFHOF receiving a portion of net profits
realized from certain covered events at the Tom Benson Hall of Fame Stadium with caps tied to ticket sales. The Global License Agreement
has an initial term through December 31, 2036, subject to automatic renewal for successive five-year terms, unless timely notice of non-renewal
is provided by either party.
The
future minimum payments under this agreement as of December 31, 2023 are as follows:
| For
the years ending December 31, | |
Amount | |
| 2024 | |
$ | 600,000 | |
| 2025 | |
| 600,000 | |
| 2026 | |
| 600,000 | |
| 2027 | |
| 600,000 | |
| 2028 | |
| 750,000 | |
| Thereafter | |
| 6,000,000 | |
| Total
Gross Principal Payments | |
$ | 9,150,000 | |
During
the years ended December 31, 2023 and 2022, the Company paid $600,000 and $900,000 of the annual license fee, respectively. The Company
is in discussions with PFHOF regarding potential modifications to the Global License Agreement to help ensure alignment between usage
and fees.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
9: Related-Party Transactions (continued)
Hotel
Construction Loan Commitment Letter
On
November 3, 2022, the Company entered into a Commitment Letter (the “Hotel Construction Loan Commitment Letter”), by and
among the Company, as guarantor, HOF Village Hotel WP, LLC (“Hotel”), an indirect wholly owned subsidiary of the Company,
as borrower, and Industrial Realty Group, Inc. (“IRGInc”), as lender. Stuart Lichter, a director of the Company, is President
and Chairman of the Board of Industrial Realty Group, LLC (“IRGLLC”). Pursuant to the terms of the Hotel Construction Loan
Commitment Letter, IRGInc committed to provide, or to arrange for one of IRGInc’s affiliates to provide, a loan of $28,000,000
(the “Hotel Construction Loan”) to finance a portion of Hotel’s costs and expenses in connection with the ground-up
development of a 180-room family hotel (the “Hotel Project”) on approximately 1.64 acres of land located in the Hall of Fame
Village, Canton, Ohio (the “Hotel Property”), adjacent to the Waterpark Property. The commitment to provide the Hotel Construction
Loan was subject to certain closing conditions, including, but not limited to, the execution and delivery of definitive documentation
with respect to the Hotel Construction Loan. The Company and IRGInc did not reach agreement on definitive documentation by the target
closing date set forth in the Hotel Construction Loan Commitment Letter. IRGInc. has since informed the Company that it does not intend
to provide the Hotel Construction Loan directly through IRGInc. or one of its affiliates; however, IRGInc. and Mr. Lichter have continued
to play an active role in supporting the Company’s efforts to secure an alternative source for a different loan facility for a
comparable loan amount.
IRG
Financial Support and Consideration
On
November 7, 2022, the Company entered into a letter agreement (the “IRG Letter Agreement”) with IRGLLC, pursuant to which
IRGLLC agreed that IRGLLC and IRGLLC’s affiliates and related parties will provide the Company and its subsidiaries with certain
financial support described below in exchange for certain consideration described below.
The
financial support provided under the IRG Letter Agreement consists of the following (the “IRG Financial Support”):
Waterpark
Construction Financing Facilitation. IRGLLC agreed that its affiliate CH Capital Lending, LLC (“CHCL”), would help facilitate
the closing of financing with Oak Street with regard to construction of the waterpark project, by among other things, releasing CHCL’s
first mortgage lien on the Stadium Leasehold Interests and pledge of membership interests in HOFV Stadium. In addition, IRGLLC agreed
to provide a completion guaranty to facilitate other needed financing for the waterpark project, as required.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
9: Related-Party Transactions (continued)
IRG
Financial Support and Consideration (continued)
Extension
of CHCL Bridge Loan. IRGLLC agreed that CHCL would extend to March 31, 2024 the maturity of the promissory note dated June 16,
2022, issued by the Company, HOF Village Retail I, LLC and HOF Village Retail II, LLC, as borrowers, to CHCL, as lender (the “Bridge
Loan”).
Provide
One Year Extension Option for All IRG Affiliate Lender Loans. All loans from affiliates and related parties of IRGLLC (“IRG Affiliate
Lenders”) will be amended to provide for an optional one-year extension of their maturity until March 31, 2025 for a one percent
extension fee, which is payable if and when an IRG Affiliate Lender loan is extended. The IRG Affiliate Lender loans consist of the following:
(i) Bridge Loan, with an existing modified maturity date of March 31, 2024; (ii) the term loan, payable to CHCL, with an existing
maturity of March 31, 2024; (iii) the first amended and restated promissory note, dated March 1, 2022, payable to IRG, LLC, with
an existing maturity of March 31, 2024; (iv) the first amended and restated promissory note, dated March 1, 2022, payable to JKP Financial,
LLC, with an existing maturity of March 31, 2024; (v) the Secured Cognovit Promissory Note, dated as of June 19, 2020, assigned June
30, 2020 and amended December 1, 2020 and March 1, 2022, payable to JKP Financial, LLC, with an existing maturity of March 31, 2024;
and (vi) the promissory note, dated April 27, 2022, payable to Midwest Lender Fund, LLC (“MLF”), with an existing maturity
of April 30, 2023, and with an option to extend the maturity until March 31, 2024.
Tapestry
Hotel Construction Financing Commitment Letter. IRGLLC agreed to provide a commitment for financing the Hotel Project, as set forth
in the Hotel Construction Loan Commitment Letter.
In
consideration of the IRG Financial Support to be received by the Company and its subsidiaries, the Company agreed in the IRG Letter
Agreement to provide the following consideration to IRGLLC and the IRG Affiliate Lenders:
The
Company agreed to make a payment of $4,500,000 as a fee for providing the completion guaranty and other IRG Financial Support described
above, payable to CHCL to be held in trust for the IRG Affiliate Lenders, to be allocated as the IRG Affiliate Lenders shall determine.
The Company also agreed to issue 90,909 shares of common stock, par value $0.0001 per share (“Common Stock”) to the IRG Affiliate
Lenders, to be allocated as the IRG Affiliate Lenders shall determine, in reliance upon an exemption from the registration requirements
of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, as a transaction by an issuer not involving any public
offering.
The
Company agreed to modify the IRG Affiliate Lender loans as follows: (i) all IRG Affiliate Lender loans will bear interest at 12.5% per
annum, compounded monthly, with payment required monthly at 8% per annum, and with the remaining interest accrued and deferred until
maturity; (ii) the price at which the principal and accumulated and unpaid interest under the IRG Affiliated Lender loans is convertible
into shares of Common Stock will be reset to a price equal to $12.77 per share; (iii) the Company and its subsidiaries will record
a blanket junior mortgage on all real estate owned or leased by the Company and its subsidiaries, whether fee or leasehold estates, other
than those parcels for which existing lenders prohibit junior financing; (iv) the Company agreed to acknowledge an existing pledge
of the Company’s 100% membership interest in the Company and reflect that such pledge secures all amounts due under the IRG Affiliate
Lender Loans; (v) all IRG Affiliate Lender loans will be cross-collateralized and cross-defaulted; (vi) the Company and its subsidiaries
will covenant not to assign, pledge, mortgage, encumber or hypothecate any of the underlying assets, membership interests in affiliated
entities or IP rights without IRGLLC’s written consent; (vii) prior development fees owed by the Company to IRGLLC will be accrued
and added to the Bridge Loan, and future development fees owed by the Company to IRGLLC will be paid as when due; and (viii) the Company
will pay to IRGLLC 25% of all contractual dispute cash settlements collected by the Company with regard to existing contractual disputes
in settlement discussions, which shall be applied to outstanding IRG Affiliate Lender loans, first against accrued interest and other
charges and then against principal.
The
Company agreed to modify the Series C through Series G warrants held by IRG Affiliate Lenders as follows: (i) the exercise price
of the Series C through Series G warrants held by IRG Affiliate Lenders will be reset to Market Price; and (ii) the warrant expiration
dates of the Series C through Series G warrants held by IRG Affiliate Lenders will be extended by two years from their current expiration
dates.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
9: Related-Party Transactions (continued)
IRG
Financial Support and Consideration (continued)
In
the IRG Letter Agreement, IRGLLC and the Company agreed to comply with all federal and state securities laws and Nasdaq listing rules
and to insert “blocker” provisions for the above-described re-pricing of the warrants and the conversion provisions, such
that the total cumulative number of shares of Common Stock that may be issued to IRGLLC and its affiliated and related parties pursuant
to the IRG Letter Agreement may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except
that such limitation will not apply following approval of the Company’s stockholders. In addition, the provisions of the IRG Letter
Agreement are limited by Nasdaq Listing Rule 5635(c). On June 7, 2023, the stockholders of the Company approved (i) issuance of shares
of Common Stock in excess of the Nasdaq 19.99% Cap to IRG Affiliate Lenders with respect to transactions described in the IRG Letter
Agreement; and (ii) the issuance to an entity wholly owned by a director of additional shares of Common Stock issuable upon the conversion
of certain convertible debt and the exercise of certain warrants described in the IRG Letter Agreement.
Pro
Football Hall of Fame Purchase Agreement
On
August 1, 2023, the Company and PFHOF entered into a real estate purchase agreement, whereby the Company sold to PFHOF certain real
estate in exchange for $250,000. There were certain other customary conditions that were satisfied prior to the closing of the transaction.
Note
10: Concentrations
For
the year ended December 31, 2023, two customers represented approximately 41.6% and 17.7% of the Company’s sponsorship revenue.
For the year ended December 31, 2022, two customers represented approximately 43.5% and 18.5% of the Company’s sponsorship revenue.
No other customers exceeded 10% of sponsorship revenue in 2023 and 2022.
As
of December 31, 2023, three customers represented approximately 33.6%, 20.1% and 17.5% of the Company’s sponsorship accounts receivable.
As of December 31, 2022, one customer represented approximately 94.4% of the Company’s sponsorship accounts receivable. No other
customers exceeded 10% of outstanding accounts receivable as of December 31, 2023 and 2022.
At
any point in time, the Company can have funds in their operating accounts and restricted cash accounts that are with third-party financial
institutions. These balances in the U.S. may exceed the Federal Deposit Insurance Corporation insurance limits. While the Company monitors
the cash balances in their operating accounts, these cash and restricted cash balances could be impacted if the underlying financial
institutions fail or other adverse conditions in the financial markets occurs.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
11: Leases
The Company has entered into operating leases
as the lessee primarily for ground leases under its stadium, sports complex, parking facilities and equipment leases.
At
the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based
on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially
all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use
of the asset. Leases entered into prior to January 1, 2022, which were accounted for under ASC 840, were not reassessed for classification.
For
operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance
leases, the lease liability is initially measured in the same manner and date as for operating leases and is subsequently presented at
amortized cost using the effective interest method. The Company uses its incremental borrowing rate as the discount rate for leases,
unless an interest rate is implicitly stated in the lease. The present value of the lease payments is calculated using the incremental
borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that the
Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term
for all of the Company’s leases includes the noncancelable period of the lease plus any additional periods covered by either a
Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by
the lessor. All right-of-use (“ROU”) lease assets are reviewed periodically for impairment.
Lease
expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis
over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the shorter
of the lease term or its useful life and interest expense determined on an amortized cost basis, with the lease payments allocated between
a reduction of the lease liability and interest expense.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
11: Leases (continued)
Balance
sheet information related to our leases is presented below:
| | |
December
31, | | |
December
31, | |
| | |
2023 | | |
2022 | |
| Operating leases: | |
| | |
| |
| Right-of-use
assets | |
$ | 7,387,693 | | |
$ | 7,562,048 | |
| Lease
liability | |
| 3,440,630 | | |
| 3,413,210 | |
Other
information related to leases is presented below:
| | |
Year
Ended
December 31,
2023 | | |
Year
Ended
December 31,
2022 | |
| Operating
lease cost | |
$ | 521,939 | | |
$ | 470,171 | |
| Other
information: | |
| | | |
| | |
| Operating
cash flows from operating leases | |
| 240,234 | | |
| 318,298 | |
| Weighted-average
remaining lease term – operating leases (in years) | |
| 90.9 | | |
| 91.5 | |
| Weighted-average
discount rate – operating leases | |
| 10.0 | % | |
| 10.0 | % |
As
of December 31, 2023, the annual minimum lease payments of our operating lease liabilities were as follows:
| For The Years Ending
December 31, | |
| |
| 2024 | |
$ | 317,994 | |
| 2025 | |
| 315,104 | |
| 2026 | |
| 311,900 | |
| 2027 | |
| 311,900 | |
| 2028 | |
| 340,400 | |
| Thereafter | |
| 40,784,600 | |
| Total
future minimum lease payments, undiscounted | |
| 42,381,898 | |
| Less:
imputed interest | |
| (38,941,268 | ) |
| Present
value of future minimum lease payments | |
$ | 3,440,630 | |
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
11: Leases (continued)
Lessor
Commitments
As
of December 31, 2023 and 2022, the Company’s Constellation Center for Excellence and retail facilities were partially leased including
leases by the Company’s subsidiaries.
Property
and equipment currently under lease consists of the following:
| | |
December
31,
2023 | | |
December
31,
2022 | |
| Land | |
$ | 5,067,746 | | |
$ | 5,141,008 | |
| Land improvements | |
| 189,270 | | |
| 185,995 | |
| Building and improvements | |
| 71,160,127 | | |
| 52,420,168 | |
| Equipment | |
| 2,802,324 | | |
| 672,733 | |
| Property
and equipment, gross | |
| 79,219,467 | | |
| 58,419,904 | |
| | |
| | | |
| | |
| Less:
accumulated depreciation | |
| (5,056,214 | ) | |
| (1,983,382 | ) |
| Property
and equipment, net | |
$ | 74,163,253 | | |
$ | 56,436,522 | |
Certain of the Company’s lease arrangements have a component
of lease income that is variable based on certain sales thresholds of the tenant.
Lease
revenue is included in “Event, rents, restaurant, and other revenues” in the consolidated statements of operations. During
the years ended December 31, 2023 and 2022, the Company recorded $730,348 and $90,369 of lease revenue, respectively. The future minimum
lease revenue under these leases, excluding leases of the Company’s subsidiaries, are as follows:
Year
ending December 31:
| 2024 | |
$ | 921,552 | |
| 2025 | |
| 887,570 | |
| 2026 | |
| 892,159 | |
| 2027 | |
| 872,356 | |
| 2028 | |
| 698,568 | |
| Thereafter | |
| 2,662,249 | |
| Total | |
$ | 6,934,454 | |
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
12: Financing Liability
On
September 27, 2022 the Company sold the land under the Company’s Fan Engagement Zone to Twain GL XXXVI, LLC (“Twain”).
Simultaneously, the Company entered into a lease agreement with Twain (the sale of the property and simultaneous leaseback is referred
to as the “Sale-Leaseback”). The Sale-Leaseback is repayable over a 99-year term. Under the terms of the lease agreement,
the Company’s initial base rent is approximately $307,125 per quarter, with annual increases of approximately 2% each year of the
term. The Company has a right to re-purchase the land from Twain at any time on or after September 27, 2025 at a fixed price according
to the lease.
On
November 7, 2022, HOF Village Waterpark, LLC (“HOFV Waterpark”), sold the land under the Company’s future waterpark
to Oak Street Real Estate Capital, LLC (“Oak Street”). Simultaneously, the Company entered into a lease agreement with Oak
Street. The Sale-Leaseback for the waterpark is repayable over a 99-year term. Under the terms of the leaseback agreement, the Company’s
initial base rent is $4,375,000 per annum, payable monthly, with customary escalations over the lease term. On November 7, 2022, Oak
Street and HOFV Waterpark also entered into a Purchase Option Agreement (the “Purchase Option Agreement”), pursuant to which
HOFV Waterpark is granted an option to purchase the waterpark property back from Oak Street that can be exercised during the period beginning
on December 1, 2027 and ending on November 30, 2034 (the “Option Period”).
The
Company accounted for the Sale-Leaseback transactions with Twain and Oak Street as financing transactions with the purchaser of the property.
The Company concluded the lease agreements both met the qualifications to be classified as finance leases due to the significance of
the present value of the lease payments, using a discount rate of 10.25% to reflect the Company’s incremental borrowing rate, compared
to the fair value of the leased property as of the lease commencement date.
The
presence of a finance-type lease in the sale-leaseback transactions indicates that control of the land under the Fan Engagement Zone
and HOFV Waterpark has not transferred to the buyer/lessor and, as such, the transactions were both deemed a failed sale-leaseback and
must be accounted for as a financing arrangement. As a result of this determination, the Company is viewed as having received the sales
proceeds from the buyer/lessor in the form of a hypothetical loan collateralized by its leased land. The hypothetical loan is payable
as principal and interest in the form of “lease payments” to the buyer/lessor. As such, the Company will not derecognize
the property from its books for accounting purposes until the lease ends.
As
of December 31, 2023, the carrying value of the financing liability was $62,982,552, representing $2,200,060,745 in remaining payments
under the leases, net of a discount of $2,137,078,193. The lease payments are split between a reduction of principal and interest expense
using the effective interest rate method.
As
of December 31, 2022, the carrying value of the financing liability was $60,087,907, representing $2,204,080,276 in remaining payments
under the leases, net of a discount of $2,143,992,369. The monthly lease payments are split between a reduction of principal and interest
expense using the effective interest rate method.
Remaining
future cash payments related to the financing liability, for the years ending December 31 are as follows:
| 2024 | |
$ | 4,672,544 | |
| 2025 | |
| 5,865,396 | |
| 2026 | |
| 6,005,734 | |
| 2027 | |
| 6,149,455 | |
| 2028 | |
| 6,296,640 | |
| Thereafter | |
| 2,171,070,976 | |
| Total Minimum Liability
Payments | |
| 2,200,060,745 | |
| Imputed
Interest | |
| (2,137,078,193 | ) |
| Total | |
$ | 62,982,552 | |
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
13: Income Taxes
Significant
components of the net deferred tax assets (liabilities) were as follows:
| | |
As of December 31, | |
| | |
2023 | | |
2022 | |
| U.S. federal tax loss carry–forward | |
$ | 45,041,986 | | |
$ | 33,046,546 | |
| U.S. local tax loss carry–forward | |
| 4,297,582 | | |
| 3,109,971 | |
| Equity based compensation-RSUs | |
| 2,103,659 | | |
| 1,709,988 | |
| Allowance for bad debt | |
| 231,437 | | |
| 175,345 | |
| Lease liabilities | |
| 790,485 | | |
| 784,185 | |
| Property and equipment | |
| 591,387 | | |
| - | |
| Unrealized gains and losses on investments | |
| 15,566 | | |
| 15,566 | |
| Total deferred tax assets | |
| 53,072,102 | | |
| 38,841,611 | |
| Property and equipment | |
| - | | |
| (768,657 | ) |
| Right of use assets | |
| (1,623,765 | ) | |
| (1,737,381 | ) |
| Total deferred tax liabilities | |
| (1,623,765 | ) | |
| (2,506,038 | ) |
| Total net deferred tax assets | |
| 51,448,337 | | |
| 36,335,563 | |
| Less: valuation allowance | |
| (51,448,337 | ) | |
| (36,335,563 | ) |
| Net deferred tax asset | |
$ | — | | |
$ | — | |
As
of December 31, 2023, the Company had the following tax attributes:
| | |
Amount | | |
Begins to
expire | |
| U.S. federal net operating loss carry–forwards | |
$ | 214,485,646 | | |
| Indefinite | |
| U.S. local net operating loss carry–forwards | |
$ | 217,599,111 | | |
| 2026 | |
As
of December 31, 2022, the Company had the following tax attributes:
| | |
Amount | | |
Begins
to
expire | |
| U.S. federal
net operating loss carry–forwards | |
$ | 157,364,504 | | |
| Indefinite | |
| U.S. local net operating
loss carry–forwards | |
$ | 157,466,908 | | |
| 2026 | |
As it is not more likely than not that the resulting
deferred tax benefits will be realized, a full valuation allowance has been recognized for such deferred tax assets. As of December 31,
2023, the Company has not performed a review of its changes in ownership under Section 382 of the Internal Revenue Code. However, as the
Company’s net operating losses have a full valuation allowance, any limitations are expected to be immaterial. For the years ended
December 31, 2023 and 2022, the valuation allowance increased by $15,112,774 and $23,474,643, respectively.
The provision for (benefit from) income tax differs from the amount
computed by applying the statutory federal income tax rate to income before the provision for/(benefit from) income taxes. The sources
and tax effects of the differences are as follows:
| | |
For the Years Ended
December 31, | |
| | |
2023 | | |
2022 | |
| Expected Federal Tax | |
| (21.0 | )% | |
| (21.0 | )% |
| Local Tax (Net of Federal Benefit) | |
| (2.0 | ) | |
| (2.0 | ) |
| Non-controlling interest | |
| - | | |
| (0.1 | ) |
| Extinguishment of debt | |
| - | | |
| 1.8 | |
| Compensation limitation | |
| 0.4 | | |
| 0.7 | |
| Change in fair value of warrant liabilities | |
| (0.2 | ) | |
| (4.7 | ) |
| True up of prior year deferred tax assets | |
| 0.8 | | |
| (25.6 | ) |
| Change in valuation allowance | |
| 22.0 | | |
| 50.9 | |
| Effective rate of income tax | |
| - | % | |
| - | % |
The
Company files income tax returns in the U.S. federal jurisdiction and local (City of Canton) jurisdiction.
Note
14: Employee Benefit Plans
The
Company has a defined contribution plan (the “Defined Contribution Plan”) whereby employer contributions are discretionary
and determined annually. In addition, the Defined Contribution Plan allows participants to make elective deferral contributions through
payroll deductions, of which the Company will match a portion of those contributions. During the years ended December 31, 2023 and 2022,
the Company expensed matching contributions of $191,073 and $192,271, respectively.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
15: Subsequent Events
Subsequent events have been evaluated through
March 25, 2024, the date the consolidated financial statements were issued. Except for as disclosed in Note 1 and below, no other events
have been identified requiring disclosure or recording.
Sale
to Sandlot; Strategic Partnership for Youth Sports Programming at the Hall of Fame Village
On January 11, 2024, HOF Village completed the
sale of an 80% stake in its ForeverLawn Sports Complex business for a $10 million purchase price.
Under the Purchase Agreement, Sandlot held back
$1.5 million of the Purchase Price (the “Holdback Amount”) to secure certain indemnification obligations of the Company and
HOF Village, which holdback will be released by Sandlot for the benefit of HOF Village in three $500,000 increments at 6, 12 and 18 months
after the January 11, 2024 closing date of the Transaction (the “Closing”), subject to post Closing adjustment of the Purchase
Price and any indemnification claims pursuant to the Purchase Agreement.
Amendment
Number 10 to Term Loan Agreement
On January 11, 2024, the Company amended its
Term Loan Agreement with CH Capital in order to reflect the repayment of a portion of principal out of the proceeds from the sale of
the Sports Complex business. The Promissory Note was amended to reflect the change to the outstanding principal balance.
Fourth Amendment to and Spreader of Open-End Fee and Leasehold
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing
On January 11, 2024, the Fourth Amendment and
Spreader was entered to secure indebtedness to CH Capital and amend and spread the maximum principal indebtedness to Lender to include
principal amounts of all the secured instruments and reflect the total principal indebtedness shall not exceed $66,003,899, exclusive
of interest, taxes, legal fees and costs advanced for preservation of the property.
Amendment Number 11 to Term Loan Agreement
On January 17, 2024, the Company amended its Term
Loan Agreement with CH Capital to document a $2,200,000 advance to Borrower resulting in an increase of the principal amount of the loan
to $12,751,934. The Promissory Note was amended to reflect the increase of the outstanding principal balance.
Hall
of Fame Resort & Entertainment Company and Subsidiaries
Notes
to Consolidated Financial Statements
Note
15: Subsequent Events (continued)
Amendment Number 12 to Term Loan Agreement
On February 1, 2024, the Company amended its Term
Loan Agreement with CH Capital to document an $800,000 advance to Borrower resulting in an increase of the principal amount of the loan
to $13,690,442. To the extent monetary references in prior amendments to the underlying Note and Loan Agreement are inconsistent with
monetary references in this amendment, Borrower and Lender agreed such references in prior amendments are the result of minor computational
error plus the addition of accrued interest through January 31, 2024. The Promissory Note was amended to reflect the increase of the outstanding
principal balance.
Amendment Number 13 to Term Loan Agreement
On February 28, 2024, the Company amended its
Term Loan Agreement with CH Capital to document a $726,634 advance to Borrower resulting in an increase of the principal amount of the
loan to $14,417,076. The Promissory Note was amended to reflect the increase of the outstanding principal balance.
First Amendment to Waterpark Ground Lease
On February 23, 2024, HOF Village Waterpark, LLC
(“Tenant”) entered into a first amendment to lease agreement with HFAKOH001 LLC (“Landlord”) to amend the existing
waterpark ground lease to reflect: (a) Landlord’s tenant allowance for the benefit of the Tenant in the amount of $2,500,000, which
was funded and shall be used as follows: (i) $1,903,005 for the purpose of paying real estate taxes and other assessments; (ii) $388,679
for February rent due; and (iii) $208,316 which may be used by the Tenant for the purpose of construction of new improvements, by stadium
mortgagor for the purpose of paying taxes and assessments, or guarantor for the purpose of paying necessary operating expenses; (b) an
increase in the base rent; (c) the Tenant’s pledge pursuant to a pledge agreement of its twenty percent (20%) beneficial membership
interest in Sandlot HOFV Canton SC, LLC (“Sports Complex Entity”); and (d) the Company’s issuance of a Series H Common
Stock Purchase Warrant to Landlord to purchase 890,313 shares of the Company’s common stock, par value $0.0001 per share.
Second Amendment to Waterpark Ground Lease
On
February 29, 2024, Tenant entered into a second amendment to lease agreement with Landlord to memorialize: (a) Landlord’s forbearance
of base rent due for March and April of 2024, which shall be due on May 1, 2024; and (b) Landlord’s allowance for the benefit of
the Tenant of $1,000,000, which may be used (i) by Tenant for the purpose of construction of new improvements; (ii) by stadium mortgagor
for the purpose of paying taxes and assessments due to governmental entities or Stark County Port Authority pursuant to the Project Lease;
or (iii) by guarantor for paying other necessary operating expenses. Tenant executed a mortgage granting Landlord a security interest
in certain parcels, more fully described in Exhibit A of the Additional Parcels Mortgage.
ErieBank Release of Cash Pledge
On December 15, 2021, the HOF Village Center for
Excellence, LLC (“HOFV CFE”), a wholly-owned subsidiary of the Company, entered into a Loan Agreement with ErieBank, a division
of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation (“ErieBank”), pursuant to which HOFV CFE borrowed $22,040,000
(“ErieBank Loan”) in conjunction with the construction of the Center for Excellence. Pursuant to the terms of the ErieBank
Loan, ErieBank held back a portion of the loan proceeds pending HOFV CFE’s satisfaction of certain disbursement conditions.
On March 15, 2024, ErieBank agreed to release
a portion of the held back amount to HOFV CFE with $1,830,000 being released to HOFV CFE for its use in the ongoing construction of the
waterpark project and $2,000,000 being applied to reduce the underlying loan commitment from $22,040,000 to $20,040,000. In addition,
the parties agreed the loan will convert to a term loan on June 15, 2024 with the expiration of the interest-only period. The fixed rate
will be based on the five-year Federal Home Loan Bank of Pittsburgh rate plus 2.65% per annum pursuant to the existing loan documents.
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