Second Quarter 2019 Revenue of $ 7.3 Million, Up 18% Quarter-Over-Quarter

First Half 2019 Revenue of $ 13.6 Million, Up 40% Year-Over-Year

IRVINE, Calif .– (BUSINESS WIRE) -Allied Esports Entertainment, Inc. (NASDAQ: AESE) (or the “Company”), today provided financial results for three- and six-month periods ending June 30, 2019 as well as an update on several key business initiatives. As previously announced, the Company was formed on August 9, 2019 as a result of the completion of a business combination among Black Ridge Acquisition Corp.

"In the second quarter of the first half of 2019, we have successfully executed on our business plans and are excited about how both Allied and Exports are performing," said Frank Ng, CEO of Allied Esports Entertainment. "We are confident in our long-term strategy and look forward to continuing to drive growth and maximize shareholder value."

Capital Structure and Liquidity

The business combination generated $ 20.8 million in the gross proceeds for the Company. The table below outlines total cash following transaction-related expenses and payments.

(USD, millions)

Cash on Balance Sheet1

$

7.0

 

Proceeds From Business Combination

 

20.8

 

Transaction Expenses and Cash Considerations2

 

(6.1

)

Total Cash3

$

21.7

 

1 Cash on Balance Sheet of Allied and WPT as of June 30, 2019

2 Includes all cash transaction costs and cash paid at closing

3 Pro forma for business combination as of June 30, 2019. Includes restricted cash specifically allocated for strategic initiatives

Company's basic and diluted common shares outstanding totaled 23.1 million shares.

Allied and WPT Financial Results for the Three Months Ended June 30, 2019

Revenues: Total revenues in the second quarter of 2019 increased 17.7% to $ 7.3 million from $ 6.2 million in the first quarter of 2019.

Revenue growth in the quarter is driven by $ 0.3 million Increase in in-revenue revenues is primarily generated from the Company's flagship Esports Arena content. 0.8% to $ 2019 total revenues in the second quarter 5 revenues from WPT grew 5.1% to $ 2019 million over the previous quarter. HyperX Esports Arena Las Vegas, which opened in March 60, as well as increased revenue from the company's gaming truck events.

Revenue
 
(in thousands)

Three Months Ended

 

Six Months Ended

June 30,

 

March 31,

 

Percentage

 

June 30,

 

June 30,

 

Percentage

2019

 

2019

 

Change

 

2019

 

2018

 

Change

revenues:
Multiplatform

$

1,657

$

852

94.5

%

$

2,509

$

1,172

114.1

%

interactive

 

2,378

 

2,386

0.3 th

%

 

4,764

 

4,681

1.8

%

In-person

 

3,303

 

2,997

10.2

%

 

6,300

 

3,866

63.0

%

Total revenues

$

7,338

$

6,235

17.7

%

$

13,573

$

9,719

39.7

%

Costs and expenses: 30, 2019 were $ 10.1 million, consistent with the previous quarter. Increases in $ 1.0 million in multiplatform costs two primarily to increased productions costs and commissions were largely offset by reductions in interactive expenses and lack of any additional impairment of the Esports Arena Orange County and Esports Arena Oakland.

Expenses
 
(in thousands)

Three Months Ended

 

Six Months Ended

June 30,

 

March 31,

 

Percentage

 

June 30,

 

June 30,

 

Percentage

2019

 

2019

 

Change

 

2019

 

2018

 

Change

Cost and expenses:
Multiplatform (exclusive of depreciation and amortization)

$

1,540

$

581

165.1

%

$

2,121

$

1,054

101.2

%

Interactive (exclusive of depreciation and amortization)

 

515

 

892

42.3 th

%

 

1,407

 

1,290

9.1

%

In-person (exclusive of depreciation and amortization)

 

753

 

738

2.0

%

 

1,491

 

2,778

46.3 th

%

Online operating expenses

 

253

 

277

8.7 th

%

 

530

 

1,771

70.1 th

%

Selling and marketing expenses

 

1,036

 

903

14.7

%

 

1,939

 

2,841

31.7 th

%

General and administrative expenses

 

4,254

 

4,412

3.6 th

%

 

8,666

 

8,494

2.0

%

Depreciation and amortization

 

1,732

 

1,686

2.7

%

 

3,418

 

3,336

2.5

%

Impairment of investment in ESA

 

-

 

600

-

 

 

600

 

4,338

86.2 th

%

Total costs and expenses

$

10,083

$

10,089

0.1 th

%

$

20,172

$

25,902

22.1 th

%

Loss from operations in the three months ended June 30, 2019 improved to $ 2.7 million from $ 3.9 million in the first quarter of 2019. Net loss improved to $ 2.8 million from $ 3.9 million in the previous quarter.

Second quarter adjusted EBITDA, non-GAAP measure, improved by 35.5% to $ (1.0) million from $ (1.6) million in the first quarter of 2019. A reconciliation of the GAAP-basis net loss to EBITDA is provided in the table of the end of this press release.

Operational Update

Strategic Alliances: As previously announced, Simon, a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations, and TV Azteca, a premier sports television network in Mexico, have made investments in Allied Esports Entertainment and are strategic launching alliances with the Company.

Simon and Allied Esports will collaborate to create a new product offering focused on delivering experiences through integrated gaming venues and production facilities in select Simon US destinations The in-mall will be designed for tournament play and daily use with the capability to be expanded into common areas for larger export activities and live events. The two companies plan to announce additional details for the Simon Cup, a co-branded export and gaming festival festival this fall combining online and in-person play at select mall locations in the New York and Los Angeles markets, with the winners of the regionals moving on to HyperX Esports Arena Las Vegas for the final.

TV Azteca and Allied Exports will continue to work together to expand the landscape in Mexico through a number of immediate initiatives, including creating a XNUM-hour digital export channel dedicated to export and video gaming for the Mexican market and developing a network of exporting talent across Mexico and Latin America. Future considerations also include building a flagship export venue and additional export and facilities facilities in Mexico and developing a localized online exporting platform for the market.

The strategic alliance with TV Azteca has already proven to be successful. Weekly WPT programming, which debuted on TV Azteca's Azteca 7 network in July, has delivered increased viewership numbers, including 3 million viewers for a single telecast.

In addition, Allied Esports and TV Azteca have co-produced two export events from Mexico City. NATION VS NATION, which featured 40 competitors in a USA vs. Mexico format playing PLAYERUNKNOWN'S BATTLEGROUNDS, reached over 2 million viewers in the Mexican market during its broadcast in May. The second event, Smash Azteca, which took place August 16 and 17, will likely air in the Mexican market to a date to be announced.

Properties: Growth driven by HyperX Esports Arena Las Vegas and the HyperX Esports Trucks in North America and Europe was a variety of successful export and entertainment events on the first half of 2019. In Las Vegas, the arena hosted a number of partner events, including NBA 2K League "THE TURN," the 2019 NHL Gaming World Championship, the 2019 BIG3 Draft, Newegg's Triple Crown Royale and the Twitch Prime Crown Cup, as well as original events Rainbow Six Siege Allied Esports Vegas Minor, Day One and two episodes of PlayTime with KittyPlays.

The HyperX Esports Trucks continued to tour North America and Europe, making stops at some of the top pop culture and entertainment events. In North America, the mobile export venue made appearances at KAABOO Texas, the Dallas Dreamhack, the 2019 Electronic Entertainment Expo and Vid with 2019. The truck will make stops at Posty Fest in Dallas, Texas, at Dreamhack Atlanta, and part of The Simon Cup tournaments and festivals in New York and California.

In Europe, the HyperX Esports Truck appeared at TwitchCon Europe, Wacken Open Air and gamescon, and recently announced two years of the Mountain Dew Game Fuel League, in which Allied Esports will produce online qualifiers in nine countries and the HyperX Esports Truck will host the final stages of the tournament at MCM Comic With London in October.

World Poker Tour: The World Poker Tour celebrated the end of its 17th season at HyperX Esports Arena in Las Vegas this June with three final tables filmed for FOX Sports Regional Networks that will be broadcast across the globe. Season XVII concluded with the Baccarat Crystal WPT Tournament of Champions won by Ole Schemion for more than $ 440,000.

Season XVII of the World Poker Tour featured more than 60 global events, which will likely grow higher in Season XVIII, starting with the Zynga Poker WPT500 in Las Vegas. Along with the onsite events, the WPT continues to partner with philanthropic organizations, including the TGR Foundation, where for the eighth consecutive year, the WPT Foundation is proud sponsor of the annual Tiger's Poker Night at MGM Grand this May. The WPT and its naming sponsors, Baccarat and Hublot, enter another season of partnership for Season XVIII.

This fall, the WPT, including Australia and Cambodia, will continue to build on its existing partnership with partypoker LIVE across Europe.

About Allied Esports Entertainment

Allied Esports Entertainment (NASDAQ: AESE) is a global export entertainment venture dedicated to providing transformative live experiences, multi-platform content and interactive services to audiences worldwide through its strategic fusion of two powerful entertainment brands: Allied Exports and the World Poker Tour (WPT). Allied Esports Entertainment was created in August 2019 when Black Ridge Acquisition Corp. completed its business combination with Allied Esports and WPT Enterprises.

Allied Esports is an award-winning, innovative exporting company. Its mission to connect players, streamers and fans around the world, including its flagship venue, HyperX Esports Arena Las Vegas, its fleet of mobile export trucks, the HyperX Esports Trucks, and affiliated members of the Allied Esports Property Network, which serves as both competition battlegrounds and everyday content generation hubs.

World Poker Tour is the premier name in internationally televised gaming and entertainment with presence in land-based tournaments, television, online, and mobile. WPT ignited the global poker boom at 2002 with the creation of its iconic television show, now in its 18th season, based on a series of high-stakes poker tournaments. ClubWPT.com is a unique online membership platform that offers inside access to the WPT.

For more information about Allied Esports Entertainment and its subsidiaries, please visit AlliedEsportsEnt.com.

Non-GAAP Financial Measures

As a supplement to our financial measures in accordance with US Generally Accepted Accounting Principles ("GAAP"), Allied Esports Entertainment presents certain non-GAAP measures of financial performance. These non-GAAP financial measures are not intended to be considered in isolation from, as a substitute for, or more important than the financial information prepared and presented in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect the items associated with the company's results of operations as determined in accordance with GAAP.

Allied Esports Entertainment provides net income (loss) and earnings (loss) for share in accordance with GAAP. In addition, Allied Esports Entertainment provides EBITDA (defined as GAAP net income (loss) before interest (income) expense, income taxes, depreciation, and amortization). The Company defines Adjusted EBITDA as EBITDA excluding stock-based compensation and impairment losses.

In the future, Allied Esports Entertainment may also consider whether other items should also be excluded in calculating the non-GAAP financial measures used by the company. Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure. In particular, the measures facilitated comparisons of operating performance between periods and help investors to better understand the operating results of Allied Entertainment by excluding certain items that may be indicative of the company's core business, operating results, or future outlook. Additionally, we consider quantitative and qualitative factors in assessing the impact of items that may be significant or that could affect an ongoing financial and business performance or trends. Internationally, management uses these non-GAAP financial measures, assessing the company's operating results, and measuring compliance with the company's debt-financing concept, as well as in planning and forecasting.

Allied Esports Entertainment's non-GAAP financial measures, non-GAAP earnings per share, and non-GAAP or adjusted EBITDA do not have a standardized . Therefore, other companies may use the same or similar named measures, but exclude different items, which may provide investors with comparable views of Allied Entertainment's performance in relation to other companies.

Allied Esports Entertainment's GAAP, as well as non-GAAP, results and outlook, management and compensation of the limitations resulting from the exclusion of the items. non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.

Forward Looking Statements

This press release includes "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," " will, "" should, "" future, "" proposes "and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are a guarantee of future performance, uncertainties, assumptions and other important factors, which could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: the inability to recognize anticipated benefits of the business combination; the ability to meet Nasdaq's continued listing standards; costs related to the business combination; AESE's ability to execute on its business plan; the ability to retain key personnel; potential litigation; AESE's services and general economic and market conditions AESE does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Select World Poker Tour and Allied Esports Financial Information

 
Results of Operations
 
(in thousands)

Three Months Ended

 

Six Months Ended

June 30,

 

March 31,

 

Percentage

 

June 30,

 

June 30,

 

Percentage

2019

 

2019

 

Change

 

2019

 

2018

 

Change

revenues:
Multiplatform

$

1,657

 

$

852

 

94.5

%

$

2,509

 

$

1,172

 

114.1

%

interactive

 

2,378

 

 

2,386

 

0.3 th

%

 

4,764

 

 

4,681

 

1.8

%

In-person

 

3,303

 

 

2,997

 

10.2

%

 

6,300

 

 

3,866

 

63.0

%

Total revenues

 

7,338

 

 

6,235

 

17.7

%

 

13,573

 

 

9,719

 

39.7

%

Cost and expenses:
Multiplatform (exclusive of depreciation and amortization)

 

1,540

 

 

581

 

165.1

%

 

2,121

 

 

1,054

 

101.2

%

Interactive (exclusive of depreciation and amortization)

 

515

 

 

892

 

42.3 th

%

 

1,407

 

 

1,290

 

9.1

%

In-person (exclusive of depreciation and amortization)

 

753

 

 

738

 

2.0

%

 

1,491

 

 

2,778

 

46.3 th

%

Online operating expenses

 

253

 

 

277

 

8.7 th

%

 

530

 

 

1,771

 

70.1 th

%

Selling and marketing expenses

 

1,036

 

 

903

 

14.7

%

 

1,939

 

 

2,841

 

31.7 th

%

General and administrative expenses

 

4,254

 

 

4,412

 

3.6 th

%

 

8,666

 

 

8,494

 

2.0

%

Depreciation and amortization

 

1,732

 

 

1,686

 

2.7

%

 

3,418

 

 

3,336

 

2.5

%

Impairment of investment in ESA

 

-

 

 

600

 

100.0 th

%

 

600

 

 

4,338

 

86.2 th

%

Loss from operations

 

(2,745

)

 

(3,854

)

28.8 th

%

 

(6,599

)

 

(16,183

)

59.2

%

Loss on equity method investment

 

-

 

 

-

 

-

 

 

-

 

 

-

 

-

 

Interest expense, net

 

(67

)

 

-

 

-

 

 

(67

)

 

(1,313

)

94.9

%

Other income

 

-

 

 

-

 

-

 

 

-

 

 

(116

)

-

 

Net loss

$

(2,811

)

$

(3,854

)

27.1

%

$

(6,665

)

$

(17,612

)

62.2

%

Net loss attributed to non-controlling interest

 

-

 

 

-

 

-

 

 

-

 

 

2,804

 

Net loss attributed to Parent

 

(2,811

)

 

(3,854

)

27.1

%

 

(6,665

)

 

(14,808

)

55.0

%

 
 

Balance Sheet

 

(in thousands)

Three Months Ended

 

Year Ended

June 30,

 

March 31,

 

December 31,

2019

 

2019

 

2018

ASSETS:

Current assets

Cash and cash equivalents

6,969

5,705

10,471

Restricted cash

-

-

-

Accounts receivable

2,914

1,958

1,533

Prepaid expenses and other current assets

863

709

712

Total current assets

10,747

8,372

12,716

Property and equipment, net

19,756

20,412

21,020

Goodwill

4,084

4,084

4,084

Intangible assets, net

16,066

16,680

17,235

Deposits

633

633

633

Deferred production costs

10,736

10,123

9,059

Investment, ESA

1,139

1,139

500

Cash and marketable securities held in the Trust Account

-

-

-

Total assets

63,159

61,443

65,247

 

LIABILITIES AND STOCKHOLDERS 'EQUITY

Current liabilities

Payable accounts

1,219

1,587

1,072

Accrued expenses

3,198

2,394

2,442

Deferred revenue

3,223

3,118

3,308

Due to Parent

32,703

32,883

33,020

Convertible debt

3,000

-

-

Convertible debt, related party

1,000

-

-

Income taxes payable

-

-

-

Deferred income taxes

-

-

-

Note payable - related party

-

-

-

Total current liabilities

44,343

39,982

39,842

Interest payable

-

-

-

Convertible notes payable

-

-

-

Deferred rent

1,452

1,297

1,384

Total liabilities

45,795

41,279

41,226

 

Parent's net investment

17,364

20,164

24,021

Retained earnings (accumulated deficit)

-

-

-

Total Parent's Net Investment

17,364

20,164

24,021

Total Liabilities and Parent's Net Investment

63,159

61,443

65,247

 
 
Cash Flows from Operating, Investing and Financing Activities
 
(in thousands)

Three Months Ended

 

Six Months Ended

June 30,

 

March 31,

 

June 30,

 

June 30,

2019

 

2019

 

2019

 

2018

Net cash provided by (used in)
Operating Activities

$

(2,100

)

$

(2,865

)

$

(4,965

)

$

(9,989

)

Investing Activities

 

(459

)

 

(1,760

)

 

(2,219

)

 

(20,252

)

Financing Activities

 

3,820

 

 

(137

)

 

3,683

 

 

30,531

 

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(in thousands)
(Unaudited)

EBITDA and Adjusted EBITDA are non-GAAP financial measures and should be considered as a substitute for net income (loss), operating income (loss) or any other performance measure in accordance with United States generally accepted accounting principles (“GAAP”) or as an alternative to net cash provided by operating activities as a measure of AESE's profitability or liquidity. AESE's management believes EBITDA and Adjusted EBITDA are useful because they allow external users of financial statements, such as industry analysts, investors, rating agencies, to more effectively evaluate its operating performance, the results of its operations from period to period and against AESE's peers without regard to AESE's financing methods, hedging positions or capital structure and because it highlights trends in AESE's business that may be otherwise when relying solely on GAAP measures. AESE presents EBITDA and Adjusted EBITDA because it believes EBITDA and Adjusted EBITDA are important supplementary measures of its performance that are frequently used by others in evaluating companies in its industry. Because EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income (loss) and may vary among companies, the EBITDA and Adjusted EBITDA AESE presents may not be comparable to similarly titled measures of other companies. AESE defines EBITDA as earnings before interest, income taxes, depreciation and amortization of intangibles. AESE defines Adjusted EBITDA as EBITDA excluding stock-based compensation and impairment losses.

EBITDA from net loss, AESE's most directly comparable financial calculated and presented in accordance with GAAP.

Reconciliation of GAAP Net Loss to Adjusted EBITDA
 
(in thousands)

Three Months Ended

 

Six Months Ended

June 30,

 

March 31,

 

June 30,

 

June 30,

2019

 

2019

 

2019

 

2018

GAAP net loss

$

(2,811

)

$

(3,854

)

$

(6,665

)

$

(14,808

)

Interest expense

 

67

 

 

-

 

 

67

 

 

1,313

 

Income tax expense

 

-

 

 

-

 

 

-

 

 

-

 

Depreciation and amortization

 

1,732

 

 

1,686

 

 

3,418

 

 

3,336

 

Stock-based compensation expense

 

-

 

 

-

 

 

-

 

 

(779

)

Impairment

 

-

 

 

600

 

 

600

 

 

4,338

 

Adjusted EBITDA *

 

(1,012

)

 

(1,568

)

 

(2,580

)

 

(6,600

)

 

Contacts

Investor Contact:
Lasse Glassen
Addo Investor Relations
lglassen@addoir.com
424-238-6249

Media Contact:
Brian fisher
Allied Esports Entertainment
Brian@alliedesports.com
714-975-8368

Source BUSINESS WIRE