UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10–K/AK

(Amendment No. 1)

(Mark One)

(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, 20202022

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 82-127017384-3235695
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

2626 Fulton Drive NW

Canton, OH

 44718
(Address of principal executive offices) (Zip Code)

(330) 458-9176
(Registrant’s telephone number, including area 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 1.4213330.064578 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 filerAccelerated filer
Non-accelerated filerSmaller 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, 2020,2022, 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 $36,923,755.$26,948,075.

As of March 9, 2021,23, 2023, the registrant had outstanding 83,284,5975,646,898 shares of common stock, $0.0001 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the 20212023 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K/A10-K to the extent stated herein. Such proxy statement waswill be filed with the Securities and Exchange Commission on April 14, 2021.within 120 days of the registrant’s fiscal year ended December 31, 2022. 

 

EXPLANATORY NOTE

Hall of Fame Resort & Entertainment Company (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (the “Amendment”) to our Annual Report on Form 10-K for the year ended December 31, 2020, originally filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2021 (“Original Report”), to restate our financial statements and related footnote disclosures as of and for the year ended December 31, 2020 and the three and nine months ended September 30, 2020 (unaudited). This Form 10-K/A also amends certain other Items in the Original Report, as listed in “Items Amended in this Form 10-K/A” below.

Background of Restatement

The restatement is primarily related to consideration of the factors in determining whether to classify contracts that may be settled in an entity’s own stock as equity of the entity or as an asset or liability. On April 12, 2021, staff of the SEC issued a public statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). As a result of the SEC Statement, the Company reevaluated the accounting treatment of the Company’s warrants. 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 governing the Company’s (i) warrants issued in the July 2020 Business Combination (defined below), each of which is exercisable for 1.421333 shares of Common Stock at a price of $11.50 per share (the “Series A Warrants”), (ii) warrants issued in the November 2020 follow-on public offering, each of which is exercisable for one share of Common Stock at an exercise price of $1.40 per share (“Series B Warrants”), and (iii) warrants issues in a December 2020 private placement, each of which is exercisable for one share of Common Stock at an exercise price of $1.40 per share (“Series C Warrants”). The Company previously accounted for the Series A Warrants, Series B Warrants, and Series C Warrants as components of equity.

On April 23, 2021, the Company’s management concluded that the Company’s previously issued (i) audited consolidated financial statements as of and for the year ended December 31, 2020 included in the Original Report, and (ii) unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2020 included in the Company’s Quarterly Report on Form 10-Q for such period (collectively, the “Relevant Periods”) should be restated to reflect the impact of the SEC Statement and, accordingly, should no longer be relied upon. The Company’s management concluded that the Company Series A Warrants, Series B Warrants, and Series C Warrants do not meet the conditions to be classified in equity and instead should be recorded as liabilities on the consolidated balance sheet. The Audit Committee of the Board of Directors of the Company (the “Audit Committee”) approved management’s decision. This Amendment includes the restated financial statements for the Relevant Periods.

Effects of Restatement

As a result of the factors described above, the Company has included in this Amendment: (i) certain restated items on the previously issued balance sheet and statement of operations as of and for the three and nine months ended September 30, 2020 (the “September 10-Q”), and (ii) restated financial statements as of and for the year ended December 31, 2020 that were previously reported on the Original 10-K, to restate the following non-cash items:

overstatement of net assets acquired in our Business Combination with GPAQ of $30.0 million as of July 1, 2020;

understatement of liabilities of approximately $4.5 million and $19.1 million as of September 30, 2020 and December 31, 2020, respectively;
overstatement of net loss by approximately $25.5 million and $25.8 million for the nine months ended September 30, 2020 and for the year ended December 31, 2020, respectively; and
overstatement of basic and diluted net loss per share of $1.75 for the nine months ended September 30, 2020 and $0.97 for the year ended December 31, 2020.

The restatement of the financial statements had no impact on the Company’s liquidity or cash position.

See Notes 2 and 15 of the Notes to Consolidated Financial Statements included in this Amendment for additional information on the restatement and the related condensed consolidated financial statement effects.

Items Amended in the Form 10-K/A

This Form 10-K/A presents the Original Report, amended and restated with modifications as necessary to reflect the restatements. The following items have been amended to reflect the restatement:

Part I, Item 1A. Risk Factors

Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Part II, Item 8. Financial Statements

Part II. Item 9A. Controls and Procedures

Part IV, Item 15. Exhibit and Financial Statement Schedules

In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing in connection with this Form 10-K/A (Exhibits 31.1, 31.2, 32.1 and 32.2). This Form 10-K/A adds Exhibit 4.7, Description of Registered Securities, which was missing from the original Report.

Except as described above, this Form 10-K/A does not amend, update or change any other items or disclosures in the Original Report and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Form 10-K/A speaks only as of the date the Original Report was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Report to give effect to any subsequent events. Accordingly, this Form 10-K/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Report, including any amendment to those filings.

 

 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

INDEX

 

PART I1
Item 1. Business1
Item 1A. Risk Factors811
Item 1B. Unresolved Staff Comments2729
Item 2. Properties2729
Item 3. Legal Proceedings2729
Item 4. Mine Safety Disclosures2729
 
PART II2830
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer’s Purchases Of Equity Securities2830
Item 6. Selected Financial Data[Reserved]2830
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations2830
Item 7A. Quantitative and Qualitative Disclosure About Market Risk3536
Item 8. Financial Statements and Supplementary Data3536
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure3536
Item 9A. Controls and Procedures3537
Item 9B. Other Information37
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections37
  
PART III3738
Item 10. Directors, Executive Officers and Corporate Governance3738
Item 11. Executive Compensation3738
Item 12. Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters3738
Item 13. Certain Relationships and Related Transactions and Director Independence3738
Item 14. Principal Accountant Fees and Services3738
  
PART IV3839
Item 15. Exhibits and Financial Statement Schedules.Schedules3839
Item 16. Form 10–K Summary.Summary4045
SIGNATURES4146

 

i

 

 

NOTE REGARDING FORWARD–LOOKING STATEMENTS

 

This Annual Report on Form 10-K/A10-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/A,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 Newco (as defined below); changes in the market in which the Company competes; expansion and other plans and opportunities; the effect of the COVID-19 pandemic on the Company’s business; 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”); other factors detailed under the section titled “Risk Factors” in this Report.

the benefits of the Business Combination (defined below);

the future financial performance of the Company and its subsidiaries, including Newco (as defined below);

changes in the market in which the Company competes;

expansion and other plans and opportunities;

the effect of the COVID-19 pandemic on the Company’s business;

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/A.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. Annualized,Any annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

Unless the context indicates otherwise, references in this Annual Report on Form 10-K/A to the “Company,” “HOFRE,” “we,” “us,” “our” and similar terms refer to Hall of Fame Resort & Entertainment Company.

 

ii

 

 

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”). Headquartered in Canton, Ohio, we own the Hall of Fame Village, a multi-use sports and entertainment destination centered around the PFHOF’s campus. We expect to create a diversified set of revenue streams through developing themed attractions, premier entertainment programming and sponsorships. We are pursuing a differentiation strategy across three pillars, including destination-based assets, the Media Company, and gaming.

The strategic plan has been developed in three phases of growth: Phase I, Phase II, and Phase III. Phase I of the Hall of Fame Village is operational, consisting of the Tom Benson Hall of Fame Stadium, the ForeverLawn Sports Complex, and HOF Village Media Group, LLC (“Hall of Fame Village Media” or the “Media Company”). The Tom Benson Hall of Fame Stadium hosts multiple sports and entertainment events, including the NFL Hall of Fame Game, Enshrinement and Concert for Legends during the annual Pro Football Hall of Fame Enshrinement Week. The ForeverLawn Sports Complex hosts camps and tournaments for football players, as well as athletes from across the country in other sports such as lacrosse, rugby and soccer. Hall of Fame Village Media leverages the sport of professional football to produce exclusive programming. For example, licensing the extensive content controlled by the PFHOF as well as new programming assets developed from live events such as youth tournaments, camps and sporting events held at the ForeverLawn Sports Complex and the Tom Benson Hall of Fame Stadium.

We are developing new hospitality, attraction and corporate assets as part of our Phase II development plan. Phase II plans for future components of the Hall of Fame Village include two hotels (one on campus and one in downtown Canton that opened in November 2020), the Hall of Fame Indoor Waterpark, the Constellation Center for Excellence (an office building including retail and meeting space, that opened in October 2021), the Center for Performance (a convention center/field house, that opened in October of 2022), the Play Action Plaza (completed in December of 2022), and the Fan Engagement Zone (Retail Promenade), core and shell for Retail I was completed in September of 2022 and the core and shell of Retail II was completed in November of 2022). 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 (“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”), HOF Village and HOF Village Newco, LLC, a Delaware limited liability company (“Newco”). The transactions contemplated by the Merger Agreement are referred to in this Annual Report on Form 10-K/A10-K as the “Business Combination.”

 

Upon the consummation of the Business Combination: (i) Acquiror Merger Sub merged with and into GPAQ, with GPAQ continuing as the surviving entity (the “Acquiror Merger”) and (ii) Company Merger Sub merged with and into Newco, with Newco continuing as the surviving entity (the “Company Merger”). In advance of the Company Merger, HOF Village transferred all of its assets, liabilities and obligations to Newco pursuant to a contribution agreement. In connection with the closing of the Business Combination, the Company changed its name from “GPAQ Acquisition Holdings, Inc.” to “Hall of Fame Resort & Entertainment Company.” As a result of the Business Combination, GPAQ and Newco continue as our wholly owned subsidiaries.

In connection with the consummation of the Business Combination and pursuant to the Merger Agreement, (a) each issued and outstanding unit of GPAQ, if not already detached, was detached and each holder of such a unit was deemed to hold one share of GPAQ Class A common stock and one GPAQ warrant (“GPAQ Warrant”), (b) each issued and outstanding share of GPAQ Class A common stock (excluding any shares held by a GPAQ stockholder that elected to have its shares redeemed pursuant to GPAQ’s organizational documents) was converted automatically into the right to receive 1.421333 shares of our Common Stock, following which all shares of GPAQ Class A common stock ceased to be outstanding and were automatically canceled and cease to exist; (c) each issued and outstanding share of GPAQ Class F common stock was converted automatically into the right to receive one share of Common Stock, following which all shares of GPAQ Class F common stock ceased to be outstanding and were automatically canceled and cease to exist; (d) each issued and outstanding GPAQ Warrant (including GPAQ private placement warrants) was automatically converted into one Warrant (which we refer to in this Form 10-K/A as a “Series A Warrant”) to purchase 1.421333 shares of Common Stock per warrant, following which all GPAQ Warrants ceased to be outstanding and were automatically canceled and retired and cease to exist; and (e) each issued and outstanding membership interest in Newco converted automatically into the right to receive a pro rata portion of the Company Merger Consideration (as defined in the Merger Agreement), which was payable in shares of Common Stock.

The rights of holders of our Common Stock and Series A Warrants are governed by our amended and restated certificate of incorporation (the “Certificate of Incorporation”), our amended and restated bylaws (the “Bylaws’) and the Delaware General Corporation Law (the “DGCL”), and in the case of our Series A Warrants, the Warrant Agreement, dated January 24, 2018, between GPAQ and the Continental Stock Transfer & Trust Company, each of which is described below under “Description of Securities.” On November 3, 2020,September 29, 2022, our stockholders approved an amendment to our Certificate of Incorporation to increaseeffect 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 our Common Stock from 100,000,000 to 300,000,000.and the par value per share of Common Stock remains unchanged at $0.0001 per share.

 

Upon consummationThe Reverse Stock Split primarily 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 Business Combination and,payment of cash in connection therewith, we became a successor issuer to GPAQ by operationlieu of Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)fractional shares).

 

Overview

We are a resort and entertainment company leveraging the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (“PFHOF”). Headquartered in Canton, Ohio, we own the Hall of Fame Village powered by Johnson Controls, a multi-use sports and entertainment destination centered around the PFHOF’s campus. We expect to create a diversified set of revenue streams through developing themed attractions, premier entertainment programming and sponsorships. The strategic plan has been developed in three phases of growth.


 

The first phase of the Hall of Fame Village powered by Johnson Controls is operational, consisting of the Tom Benson Hall of Fame Stadium, the National Youth Football & Sports Complex, and HOF Village Media Group, LLC (“Hall of Fame Village Media”). In 2016, HOF Village substantially completed the Tom Benson Hall of Fame Stadium, a sports and entertainment venue with a seating capacity of approximately 23,000, with continued development of the end zones into 2021. 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. In 2016, HOF Village opened the National Youth Football & Sports Complex, which will consist of eight full-sized, multi-use regulation football fields, five of which have been completed in Phase I. The facility hosts camps and tournaments for football players, as well as athletes from across the country in other sports such as lacrosse, rugby and soccer. 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 programming by licensing the extensive content controlled by the PFHOF as well as new programming assets developed from live events such as youth tournaments, camps and sporting events held at the National Youth Football & Sports Complex and the Tom Benson Hall of Fame Stadium.

We are developing new hospitality, attraction and corporate assets surrounding the Pro Football Hall of Fame Museum as part of a Phase II development plan. Plans for future components of the Hall of Fame Village powered by Johnson Controls include two hotels (one on campus and one in downtown Canton about five minutes from campus that was opened in Q4 2020), the Hall of Fame Indoor Waterpark, the Constellation Center for Excellence (an office building including retail and meeting space), the Center for Performance (a convention center/field house), and the Hall of Fame Retail Promenade. We are pursuing a differentiation strategy across three pillars, including Destination-Based Assets, the Media Company, and Gaming (including the Fantasy Football League we acquired a majority stake in). Phase III expansion plans may include a potential mix of residential space, additional attractions, entertainment, dining, merchandise and more.

 

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 powered by Johnson Controls 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 includingthat spans across fantasy sports and potentialin addition to growth acrossareas 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 promoting 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 with limited themed attractions and within an 8-hour driving distance to nearly half of the NFL franchises. 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 approximately oneover two million visitors annually.

We are building a year-round, multi-use destination complex with a master development plan that calls for three Phases. Phase I, already complete, includes The Tom Benson Hall of Fame Stadium, the National Youth Football & Sports Complex, Hall of Fame Village Media, and complementary, long-term sponsorship agreements. Phase II, already begun, will add the Hall of Fame Indoor Waterpark, hotels as well as additional attractions, retail and commercial assets. Plans for Phase III include an immersive VR/AR attraction, a hotel with retail space, multi-family housing and certain other components under consideration.

  

Strategic Relationship with PFHOF

 

PFHOF is a distinct entity from the Companyus but serves as a significant shareholder and aligned partner. The Pro Football Hall of Fame, which is owned and operated by PHFOFPFHOF 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. The “Future 50” Expansion & Renovation Project has expanded the museum to 118,000 square feet. The two-year, $27 million project was completed in the summer of 2013 after a major renovation to 38,000 square feet of museum space was finished. Today, the Pro Football Hall of Fame stands as a shining tribute to professional football and the over 300 men who have earnedbeen enshrined, receiving their Gold Jackets and made professional football America’s most popular sport.Jackets. The Pro Football Hall of Fame Museum and the Gold Jacket inducteesenshrinees serve as unique and valuable partners that contribute to the development of the Hall of Fame Village.

 

See the section entitled “Risk Factors – The success of our business is substantially dependent upon the continued success of the PFHOF brand and museum experience and our ability to continue to secure favorable contracts with and maintain a good working relationship with PFHOF and its management team” for additional information relating to the relationship with PFHOF.

 

About Phase I

 

We have invested approximately $250 million of capital to build Phase I of the Hall of Fame Village powered by Johnson Controls and preparein preparation for Phase II and Phase III. Phase I, already complete, includes the Tom Benson Hall of Fame Stadium, the National Youth Football &ForeverLawn Sports Complex, Hall of Fame Village Media, complementary, long-term sponsorship agreements, as well as land and infrastructure to support Phase II and Phase III. We are executing strategies to significantly increase programming of the Tom Benson Hall of Fame Stadium and National Youth Football &ForeverLawn Sports Complex and developing unique media content through Hall of Fame Village Media.

 


Tom Benson Hall of Fame Stadium

The Tom Benson Hall of Fame Stadium holds up to 23,000 spectators and hosts the annual Pro Football Hall of Fame Enshrinement Week powered by Johnson Controls as well as other premier sporting events such as the Historic Black College Hall of Fame Game, the Ohio State High School Football Championships, the 2022 USFL Championships, Women’s Football Alliance Championships and the World Youth Football Championships.Division III football championships. During the Pro Football Hall of Fame Enshrinement Week, the Tom Benson Hall of Fame Stadium hosts the Hall of Fame Game, the first nationally televised NFL game of the season,pre-season, and the Hall of Fame Enshrinement for NFL players.players and other enshrinees. The design of the Tom Benson Hall of Fame Stadium is also equipped with cut-away seats, allowingallows 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, Pitbull, Toby Keith, Maroon 5, and Maroon 5.Journey as well as comedian Dave Chappelle.

 

National Youth Football &ForeverLawn Sports Complex

 

The National Youth Football &ForeverLawn Sports Complex will consistconsists of eight full sized fields, fivefull-sized fields. Support buildings including concessions, ticketing, restrooms and storage buildings were completed in or prior to the third quarter of which are completed (four turf fields and one grass field) and three of which are planned for Phase II construction.2022. The facility hosts camps and tournaments for football players as well as athletes from other sports such as lacrosse, rugby and soccer from across the country. Since 2017, the National Youth Football & Sports Complex has hosted the Pro Football Hall of Fame World Youth Championships. The World Youth Championships are a national competition, with a watch list of youth football teams developed by former NFL executives that compete in regional playoffs all over the country. The World Youth Championships allow the best teams in a variety of different weight, age and regional groups to compete at the National Youth Football & Sports Complex and the Tom Benson Hall of Fame Stadium. The 2017 and 2018 World Youth Championships featured special guests like PFHOF inductees Ray Lewis and Randy Moss and were broadcast on CBS Sports Network.


 

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, including content developed from live events such as tournaments, camps and sporting events held at the National Youth Football &ForeverLawn Sports Complex and the Tom Benson Hall of Fame Stadium. 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 over 50 millionmillions of pieces of photo, video and document archives. To date,

In 2021, Hall of Fame Village Media has produced broadcasts forbegan developing and selling Non-Fungible Tokens (“NFTs”), with initial launch focused on memorable plays from college and professional careers of six legendary football players. In 2022, we launched Hall of Fame Village Passes, enabling passholders access to exclusive experiences, community and digital collectables.

In 2021, Hall of Fame Village Media co-produced the World Youth Football Championships airedChase Tag primetime special on CBS Sports Network, National Signing Day, duringESPN, which top high school athletes announce their college commitments and is in the initial stages of producing six different sports related shows. Future live content iswas also expected to include programming with the NFL Alumni Association, including the NFL Alumni Academy taking parthosted at the Hall of Fame Village. In 2022, we produced in partnership with PFHOF, the Football Heaven podcast, the 10-episode series highlighting the collection of the museum’s archives and stories.

During 2022, Hall of Fame Village powered byMedia 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.

Hall of Fame Village Media also has entered into a number of partnership deals with Hall of Fame and other NFL players including Jimmy Johnson Controls campus in Canton, Ohio.and Rashad Jennings

 

Sponsorship Agreements

 

We are bringing together world-class sponsors and partners. To date, we have struck formal agreements related to sponsorship alliances for development support from best-in-class companies, including Johnson Controls, the founding partner and official naming rights partner, Constellation NewEnergy, Inc. (an Exelon Company), the official energy partner, First Data Merchant Services, LLC (now Fiserv), the official processing and payment solutions partner, Turf Nation, Inc.,ForeverLawn, the official artificial turf partner, Xenith, LLC,PepsiCo, our official soft drink provider, Commscope, the World Bowl official data communications networking partner, and Republic ServicesCleveland Clinic, the official healthcare provider of Ohio, LLC,ForeverLawn Sports Complex and the preferred waste and recycling partner.Tom Benson Hall of Fame Stadium.

 

Generally, under the terms of our sponsorship agreements, we will receive a fixed amount of revenue each year in exchange for granting certain rights to the relevant sponsor. The revenue may consist of a combination of cash, in-kind and/or activation funds. However, in some cases, the sponsorship fee may consist of a fixed initial payment with variable annual payments thereafter, based on our completion of certain projects or fulfillment of certain requirements.

 

Under the terms of the Naming Rights Agreement, we will receive a fixed amount of revenue each year in return for granting to Johnson Controls exclusive rights to designate the name of the destination complex as well as granting to Johnson Controls certain branding, signage, advertising and similar rights. The Naming Rights Agreement is scheduled to expire on December 31, 2034. We are obligated to spend $18 million as activation expenses for the benefit of promoting the Johnson Controls and our brands.

Under the terms of the Constellation Sponsorship Agreement, we will receive a fixed amount of revenue each year in return for granting Constellation exclusive rights to designate the name of the Constellation Center for Excellence as well as granting Constellation certain branding, signage, advertising and similar rights. The Constellation Sponsorship Agreement is scheduled to expire on December 31, 2029. The annual revenue consists of sponsorship fees and annual activation fund proceeds. Activation fund proceeds may be used for a media plan, hospitality packages, business development and other expenses for the benefit of promoting the Constellation and our brands. Annual activation fund proceeds must be used in a particular calendar year, and any unused funds are not rolled into future contract years.

See the section entitled “Risk Factors We partially rely on sponsorship contracts to generate revenue” for additional terms and conditions relating to the Naming Rights Agreement and the Constellation Sponsorship Agreement.information.


 

About Phase II

 

Phase II is expected to add 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. The Company has made material progress toward the full execution of Phase II.

 


To date, either through ground leases, purchase agreements, or through acquisition of title, the Company has acquired all land and received zoning approval from the City of Canton for the development of Phase II. In 2016 and 2017, the Company received significant support from the City of Canton through a pair of ordinances. In June 2016, the Planning Commission of the City of Canton amended the Planning and Zoning Code of Codified Ordinances of the City of Canton to include the Hall of Fame Village District, providing us with a zoning mechanism required to implement our mixed-use development plan. In February 2017, the Planning Commission of the City of Canton and City Council granted approval of the Hall of Fame Village Development plan, including plans for Phase II. The Company has gained control of over 200 parcels of land surrounding the Tom Benson Hall of Fame Stadium, Youth Fields,ForeverLawn Sports Complex, and Pro Football Hall of Fame Museum for the future development of the Hall of Fame Indoor Waterpark, on-campus hotel attached to the Hall of Fame Indoor Waterpark, and a retail promenadethe Fan Engagement Zone (retail promenade) offering a variety of food and beverage options, as well as other specialized entertainment alternatives.alternatives, and Play Action Plaza, a football-themed area for recreation and events which includes two amusement rides. The Company has commissioned and completed three separate Phase I Environmental Site Assessments on land underlying the Tom Benson Hall of Fame Stadium, National Youth Football &ForeverLawn Sports Complex and residential land acquired for Phase II of the development plan. To date, no recognized environmental conditions have been revealed.

In addition, the Company haswe have made significant progress in the design and development planningconstruction for Phase II. Phase II is projected to cost approximately $300$355 million in capital spending with construction beginningspending. We have made significant progress in 2020opening many of our Phase II assets, including the ForeverLawn Sports Complex, the Constellation Center for Excellence, the Fan Engagement Zone, Play Action Plaza, and the Center for Performance. The expectation is that allthe remaining components (notably the Hilton Tapestry Hotel and the Hall of Fame Indoor Waterpark) will be complete andcompletely operational by 2023. In 2018 the Company added significantly to its construction and planning resources withend of the goal of developing and delivering Company assets on time and on budget. The Company hired a leading project management firm and two top commercial construction groups, who formed a partnership to use national and local resources as the master general contractors of Phase II. Detailed estimates and a timeline were prepared by our management in conjunction with such master general contractors based upon schematic and design documents of Phase II, familiarity with the Ohio market and development expertise.2024 calendar year.

The Company’s master general contractors delivered schematic and design documents in March 2020. Required permits have been identified and are in the process of being secured. The Company received a Guaranteed Maximum Price (“GMP”) commitment from its project management consultants and general contractors in the first quarter of 2021. The GMP, along with the design and development work completed, will serve as critical elements in arranging a construction loan to meet the proposed schedule. The strategic plan reflects the $300million in capital spending, a construction loan/equity/public financing to support this spending and any other costs associated with completion and the attractive financial return characteristics of these assets. Construction began in 2020, and it is expected that all material components of Phase II will be complete and operational by 2023.

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 are planning to developconstructing additional assets in Phase II to attract and entertain guests. We have acquired or entered into agreements to acquire all land needed for Phase II development and are expected to have completed all of the design and development planning completed for each component in 2020. See developments that took place duringdevelopment. In November 2020, we opened the year related to Phase II, as described in greater detail below. In October 2019, HOF Village, after conducting diligence, acquired the McKinley Grand HotelDoubleTree by Hilton hotel in downtown Canton, Ohio to serve as its off-site hotel, which was rebranded a DoubleTree by Hilton. Renovation plans and permitting were completed in November 2019, demolition began in November 2019, renovations began in January 2020, and opened in November 2020.Canton. Additional assets will include the Hall of Fame Indoor Waterpark, an on-campus hotel attached to the waterpark, and a retail promenadewaterpark. The Fan Engagement Zone (retail promenade) offering a variety of food and beverage options, as well as other specialized entertainment alternatives. There also will be an office complex targeting medically based tenants expandingIn October 2021, we opened our Constellation Center for Excellence. In November 2022, we opened the corporate appeal of HOF Village, a Center for Performance, to providewhich provides a variety of year-round programming options, including the NFL Alumni Academy.options. A green space area which will be called Play-Action Plaza is expected to provideprovides 3.5 acres for fun, football-themed recreation, events, and formal gatherings.gatherings including amusement rides. Future destination-themed assets can include live entertainment, gaming, dining, and more all over the country alongside major NFL franchise cities. Construction began on Phase II in 2020, and all assets are projected to be operational by 2023.the end of 2024.

 

Increased Event Programming: HOF Village plansWe are planning to utilize 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 utilizing the national appeal of the Hall of Fame brand. HOF Village has made key strategic hires and partnerships who will help drive increased Event Programming and Alliance Sponsorships. In November 2022, we opened our Center for Performance, our indoor sports dome, which will allow us to host sports and other events year-round.  During 2022, we hosted the USFL finals and semi-finals, Women’s Football Alliance Championships, Freedom Bowl, along with a “Fatherhood Festival”. There are also plans for multiple concerts, multi-day festivals, and on-going business event productions. In partnership with the NFL Alumni Association and regional tourism bureaus, we are targeting the development of ‘Hall of Fame Huddle Programs’ and other youth programs in NFL cities.

 


New Alliance Sponsorships: HOF Village hasWe have been successful attracting a strong sponsorship base and will continue to formseek 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: HOF Village isWe are developing original content from both its event programming and its direct access to millions of pieces of historic Pro Football artifacts located within the PFHOF archive through Hall of Fame Village Media. HOF Village isWe are planning on producing full-length films, shows and other digital content marketing through multiple channels of distribution. Already advanced discussions with media leaders, creative, development and distribution partners have occurred. HOF Village entered intoWe are working on expanding our team and partnerships and have a consulting agreement with a media executive in June 2019. Under the terms of the consulting agreement, the media executive receives a monthly fee and provides assistance with assessing and identifying market opportunities for content development, developing a business plan for HOF Village’s media company, identifying sourcesrobust slate of new creative content and engaging in discussions with distributor channels to identify the types of content they are seeking. The initial term of the consulting agreement was four months, but the consulting agreement is currently being extended on a month-to-month basis and will automatically terminate at the end of any given month unless both parties agree to an extension. In September 2020, we terminated the consulting agreement described above and hired that consultant as the Executive Vice President of Content Development/Distribution. Further, in November 2020, we hired an Executive Vice President of Media Business Development.development.

Hall of Fame Village Gaming: eGamingGaming is expected to be thea connective tissue that integrates the rest of the business units across the Company. This encompasses Youth Sports 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. We entered the high-growth vertical of fantasy sports with the acquisitionlaunch of a majority stake in The Crown League, the first professional fantasy football league. The league has been rebranded to Hall of Fantasy League and is expected to relaunch in Fall 2021, which completed its second season in January 2023, with geo-based franchises professionally managed with ownership and influence from the public. In connection with our second season of Hall of Fantasy League, we also launched Legends Locker Room, a paid fantasy data service. There is potential for industry expertise to be provided by experienced fantasy analysts, and NFL Hall of Famers,Famers.

Sports Betting: We procured two sports betting licenses to develop sports betting both online and NFL Alumni.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. There also are expected to be opportunities to consider expanding certain destination-based assets in other geographic markets leveraging the popularity of professional football. Sports betting is not legalized in Ohio. We are poised to utilize existing brand partnerships with our newly rebranded Hall of Fantasy League and eGaming, both of which can be designed to accept sports wagering. We are exploring online partnerships to take advantage of sports betting opportunities that can create a revenue stream immediately while awaiting legalization in Ohio. We have hired several additional full-time employees to actively research these and other growth verticals. These Additional Growth Verticals are not included in the current set of financial projections.

 

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, including a potential mix of residential space, and additional attractions, entertainment, dining, merchandise and more. This next phase of development would potentially be initiated upon substantial completion of Phase II. The financial performance of Phase III is not currently fully reflected in the financial projections contained in this Annual Report on Form 10-K/A.

Competition

We currently face and will face competition in each of our businesses, as follows:

 

Tom Benson Hall of Fame Stadium, the National Youth Football &ForeverLawn Sports Complex and the planned 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 Hall of Fame Indoor Waterpark and the Hall of Fame hotels, and the retail promenade, if and when completed, 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 planned 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 9, 2021,23, 2023, we have 30114 employees that perform various administrative, finance and accounting, event planning, youth sports programming, media development, and corporate management functions for the Company and its subsidiaries.

Properties


Properties

We own real property in Canton, Ohio, at the site of the Hall of Fame Village powered by Johnson Controls development including the Tom Benson Hall of Fame Stadium and our main offices.DoubleTree by Hilton Hotel. Certain parcels of real property on which the Hall of Fame Village powered by Johnson Controlsis located, including the parcel on which Tom Benson Hall of Fame Stadium is located, are owned by the City of Canton and 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.

 

Emerging Growth Company and Smaller Reporting Company

 

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.


 

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company, which is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

 

We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Company’s initial public offering on January 30, 2018, (b) in which we have total annual revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.

 

Additionally, 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.

 

The COVID-19 Pandemic

 

DuringSince 2020, and continuing into 2021, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) pandemic. COVID-19 and the measures to prevent its spread impacted our business in a number of ways, most significantly with regard to a reduction in the number of events and attendance at events at Tom Benson Hall of Fame Stadium and National Youth Football andForeverLawn Sports Complex, which negatively impacts our ability to sell sponsorships. Also, we opened our newly renovated DoubleTree by Hilton in Canton in November 2020, butwhich negatively impacted the occupancy rate has been negatively impactedrates by the pandemic.pandemic, most recently with the Omicron variant in first quarter of 2022. Further, the COVID-19 pandemic has caused global supply chain disruptions, which negatively impacts our ability to obtain the materials needed to complete construction. The impact of these disruptions and the extent of their adverse impact on our financial and operating results will be dictated by the length of time that such disruptions continue, which will, in turn, depend on the currently unknowable duration and severity of the impacts of COVID-19, and among other things, the impact of governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward and developing strain mutations.

 


Recent Developments

 

Proposed Private Placement of Preferred Stock and Warrants to Purchase Common StockDispute Regarding Naming Rights Agreement with Johnson Controls

 

On January 28, 2021, we executedThe amended and restated sponsorship and naming rights agreement, dated as of July 2, 2020 (the “Naming Rights Agreement”), by and among HOF Village, PFHOF and Johnson Controls, Inc. (“JCI” or “Johnson Controls”) is scheduled to expire on December 31, 2034 but provides termination rights both to (a) HOF Village Newco, LLC, a binding term sheet with IRG, LLC pursuant to which we agreed to issue and sell to IRG, LLC in a private placement for a purchase price of $15,000,000 (i) shares of a new series of preferred stock, which are convertible into shares of our Common Stock (the “New Private Placement Preferred Stock”), having an aggregate liquidation preference of $15,000,000, and (ii) a number of warrants, convertible into shares of our Common Stock at an exercise price of $6.90 per share (the “New Private Placement Warrants”), equal to 50%wholly-owned subsidiary of the liquidation preference of the preferred stock toCompany (“Newco”), and PFHOF; and (b) Johnson Controls, which may be sold divided by the closing price of the Common Stock on a specified date (the “New Private Placement”). The New Private Placement is expected to closeexercised in the first quarterevent the other party, among other things, breaches any of 2021. Ifits covenants and agreements under the Naming Rights Agreement beyond certain notice and cure periods. Additionally, Johnson Controls has a right to terminate the Naming Rights Agreement if (i) we consummatedo not provide evidence to Johnson Controls by October 31, 2021, that we have secured sufficient debt and equity financing to complete Phase II, subject to day-for-day extensions due to force majeure and notice or cure periods; (ii) Phase II is not open for business by January 2, 2024, subject to day-for-day extensions due to force majeure and notice or cure periods; or (iii) Newco is in default beyond applicable notice and cure periods under certain agreements, such as the New Private Placement, we intend to deposit the net proceedsTechnology as necessary into the Proceeds Account (as defined herein), and use the net proceeds for general corporate purposes. We cannot give any assurance that the New Private Placement will be completed on the terms described herein, on a timely basis or at all.

Termination of SponsorshipService Agreement with Aultman Health FoundationJohnson Controls (the “TAAS Agreement”), among others. In addition, under the Naming Rights Agreement, Johnson Controls’ obligation to make sponsorship payments to Newco may be suspended if Newco has not provided evidence reasonably satisfactory to Johnson Controls on or before December 31, 2020, that Newco has secured sufficient debt and equity financing to complete Phase II, subject to day-for-day extensions due to force majeure. 

 

On January 12, 2021,In addition to the Company notified Aultman Health Foundation (“Aultman”) that the Company terminatedNaming Rights Agreement, Newco is party to a Technology as to itself, effective as of January 26, 2021, the Sponsorshipa Service Agreement dated December 6, 2016, among Aultman, PFHOF,October 9, 2020 with Johnson Controls (the "TAAS Agreement”).The TAAS Agreement provides that Johnson Controls will provide certain services related to the construction and HOF Village (subsequently assigned to Newco).

Purchase of Real Property from PFHOF

On February 3, 2021, the Company purchased for $1.75 million certain parcels of real property from PFHOF located at the sitedevelopment of the Hall of Fame Village powered(the “Project”). The TAAS Agreement provides that in respect of the Naming Rights Agreement, Johnson Controls and Newco intend, acknowledge and understand that: (i) Newco’s performance under the TAAS Agreement is essential to, and a condition to Johnson Controls’ performance under, the Naming Rights Agreement; and (ii) Johnson Controls’ performance under the Naming Rights Agreement is essential to, and a condition to Newco’s performance under, the TAAS Agreement. In the TAAS Agreement, Johnson Controls and Newco represent, warrant and agree that the transactions agreements and obligations contemplated under the TAAS Agreement and the Naming Rights Agreement are intended to be, and shall be, interrelated, integrated and indivisible, together being essential to consummating a single underlying transaction necessary for the Project. We anticipate that resolution of the dispute regarding the Naming Rights Agreement will include the TAAS Agreement. 

On May 10, 2022, we received from Johnson Controls a notice of termination (the “TAAS Notice”) of the TAAS Agreement effective immediately. The TAAS Notice states that termination of the TAAS Agreement by Johnson Controls. In connection withControls is due to our alleged breach of our payment obligations. Additionally, Johnson Controls in the purchase,TAAS Notice demands the Company granted certain easements to PFHOF to ensure accessibility toamount which is the PFHOF museum.sum of: (i) all past due payments and any other amounts owed by us 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 Johnson Controls directly resulting from the alleged default by us and the exercise of Johnson Controls’ rights and remedies in respect thereof, including reasonable attorney fees.


 

Also on May 10, 2022, we received from Johnson Controls a notice of termination (“Naming Rights Notice”) of the Name Rights Agreement, effective immediately. The Naming Rights Notice states that the termination of the Naming Rights Agreement by Johnson Controls is due to Johnson Controls’ concurrent termination of the TAAS Agreement. The Naming Rights Notice further states that we must pay Johnson Controls, within 30 days following the date of the Naming Rights Notice, $4,750,000. We have not made such payment to date. The Naming Rights Notice states that we are also in breach of its covenants and agreements, which required us to provide evidence reasonably satisfactory to Johnson Controls on or before October 31, 2021, subject to day-for-day extensions due to force majeure, that we have secured sufficient debt and equity financing to complete Phase II.

We dispute that we are in default under either the TAAS Agreement or the Naming Rights Agreement. Rather, we believe Johnson Controls is in breach of the Naming Rights Agreement and the TAAS Agreement due to their failure to make certain payments in accordance with the Naming Rights Agreement, and, on May 16, 2022, provided notice to Johnson Controls of these breaches. 

Pursuant to the dispute resolution procedures set forth in the Naming Rights Agreement, the parties participated in mediation in November 2022, but were unable to reach a resolution. On January 24, 2023, Newco filed a demand for arbitration with JAMS, asserting claims against JCI for breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment. On February 16, 2023, JCI filed its response, generally denying Newco’s allegations and asserting counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. A panel of three arbitrators will be constituted to hear and determine the dispute. The ultimate outcome of this dispute cannot presently be determined. However, in management’s opinion, the likelihood of a material adverse outcome is remote. Accordingly, adjustments, if any, that might result from the resolution of this matter have not been reflected in the accompanying consolidated financial statements. During the year ended December 31, 2022, the Company suspended its revenue recognition until the dispute is resolved and has recorded an allowance against the amounts due as of December 31, 2022 in the amount of $4,812,500. The balances due under the Naming Rights Agreement as of December 31, 2022 and December 31, 2021 amounted to $6,635,417 and $1,885,417, respectively.

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 (the “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.

February Follow-On Public OfferingCompliance with Nasdaq Minimum Bid Requirement

As previously reported, on May 24, 2022, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that for the last 30 consecutive business days the bid price for the Company’s common stock, par value $0.0001 per share (“Common Stock”), had closed below the minimum requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).

On December 27, 2022, we effected the Reverse Stock Split to, among other things, increase our stock price to be in compliance with the Minimum Bid Requirement.

On January 11, 2023, the Company received written notice from the Staff of Nasdaq informing the Company that it has regained compliance with the Minimum Bid Requirement because Nasdaq has determined that for 10 consecutive business days, the closing bid price of the Company’s Common Stock was at or above the Minimum Bid Requirement. Accordingly, Nasdaq has advised that the matter is now closed.


$18,100,000 principal amount Tax Increment Financing (“TIF”) Revenue Bonds

 

On February 12, 2021,2, 2023, the Company closed its public offeringreceived proceeds from the issuance on such date by Stark County Port Authority (“Port Authority”) of 12,244,897 shares$18,100,000 principal amount Tax Increment Financing (“TIF”) Revenue Bonds, Series 2023 (“2023 Bonds”). Of the $18,100,000 principal amount, approximately $6,767,543 was used to reimburse the Company for a portion of Common Stock at a public offering pricethe cost of $2.45 per sharecertain roadway improvements within the Hall of Fame Village grounds, approximately $8,628,502 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 termsCompany received the payoff of the underwriting agreement between2018 Bonds), approximately $1,169,916 was used to pay costs of issuance of the 2023 Bonds, and approximately $905,000 was used to fund a debt service reserve held by The Huntington National Bank (“2023 Bond Trustee”), as trustee for the 2023 Bonds. The maturity date of the 2023 Bonds is December 30, 2048. The interest rate on the 2023 Bonds is 6.375%. Interest payments are due on the 2023 Bonds semi-annually on June 30 and December 30 of each year, commencing June 30, 2023.

In connection with the issuance of the 2023 Bonds by the Port Authority, the Company transferred ownership of a portion of the roadway and related improvements within Hall of Fame Village grounds to the Port Authority. The Company maintains management rights and maintenance obligations with regard to such roadway pursuant to a Maintenance and Management Agreement among the Port Authority, the Company and Maxim Group LLC, entered into on February 9, 2021 (the “Underwriting Agreement”). On February 18, 2021,the Company’s subsidiary, Newco.

The 2023 Bonds will be repaid by the Port Authority from statutory service payments in lieu of taxes paid by the Company closed the sale of an additional 1,836,734 shares of Common Stock at $2.45 per share pursuant to the exercise of the underwriters’ over-allotment option in connection with its public offering that closed on February 12, 2021. Under the termsCompany’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 Underwritingportion 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 Youth Fields. 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 eachamong the Port Authority, City of Canton, the Company and Newco, and then pledged by the Port Authority to the 2023 Bond Trustee for payment of the 2023 Bonds pursuant to a Trust Indenture between the Port Authority and the 2023 Bond Trustee. Minimum service payments are a lien on the parcels under certain TIF declarations and supplements thereto, and are paid by the Company to the 2023 Bond Trustee.

The Company and Newco are required to make payments (“Developer Shortfall Payments”) to the extent the above described net statutory service payments and minimum service payments actually paid are not sufficient to pay the scheduled debt service on the 2023 Bonds, and entered into a guaranty of payment of minimum service payments under a Minimum Payment Guaranty until certain performance criteria (debt service coverage of 1.05x for the 2023 Bonds for three consecutive years) are met. In addition, a member of the Company’s executive officers,board of directors, Stuart Lichter, individually and stockholderswith his trust, guaranteed Developer Shortfall Payments until debt service coverage of more than 5%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 outstanding Common Stock signed lock-up agreements pursuantoriginal principal amount of the 2023 Bonds (i.e. $1,810,000) and then to which each agreed,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 certain exceptions, notincrease up to transact in10%) mentioned above will be maintained to be used for payment of debt service and administrative fees if there are insufficient funds generated from the Common Stock for a periodstatutory service payments, minimum service payments and Developer Shortfall Payments, and, to the extent unused, make the final 2023 Bonds payment of 90 days following February 12, 2021. Gross proceeds including the over-allotment, before underwriting discounts and commissions and estimated offering expenses, are approximately $34.5 million.debt service.

 

Shared Services AgreementIndustrial Realty Group, LLC Affiliate Lenders Transactions

As previously disclosed, on November 7, 2022, the Company entered into a letter agreement (the “IRG Letter Agreement”) with PFHOFIndustrial Realty Group, LLC (“IRGLLC”), pursuant to which IRGLLC agreed that IRGLLC and certain IRGLLC affiliates and related parties, which include CH Capital Lending, LLC (“CHCL”), IRG, LLC and JKP Financial, LLC (collectively, “IRG Affiliate Lenders”), will provide the Company and its subsidiaries, in exchange for certain specified consideration described below, the following financial support (the “IRG Financial Support”): (i) certain financial support for an indoor waterpark and a commitment for the financing of the ground-up development of a 180-room family hotel, (ii) an extension to March 31, 2024 of 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”), and (iii) amendment of all lending arrangements from IRG Affiliate Lenders 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. Stuart Lichter, a director of the Company, is President and Chairman of the Board of IRGLLC.


 

On March 9, 2021,17, 2023, pursuant to the IRG Letter Agreement the Company and certain of its subsidiaries signed amendments to (a) certain IRG Affiliate Lender credit arrangements (and entered into an additional Shared Services Agreement with PFHOF, which supplementsbackup notes for two credit arrangements) and (b) warrants issued by the existing Shared Services AgreementCompany held by among other things, providingIRG Affiliate Lenders (collectively, defined as Transaction Documents below), effective as of November 7, 2022 (unless otherwise noted), as consideration for the sharingIRG Financial Support. In particular, the Company amended the Series C through Series F warrants issued by the Company held by IRG Affiliate Lenders and, upon approval of coststhe Company’s stockholders under Nasdaq Listing Rule 5635(c), will amend the Series G warrant, as follows: (i) the exercise price of the Series C through Series G warrants held by IRG Affiliate Lenders is reset to a price equal to 105% of the average Nasdaq official closing price of the Company’s Common Stock for activities relatingthe five trading days immediately preceding the date of the Oak Street closing of November 7, 2022, which price is $0.58 per share prior to shared services.the Reverse Stock Split (the “Market Price”); and (ii) the warrant expiration dates of the Series C through Series G warrants held by IRG Affiliate Lenders are extended by two years from their current expiration dates. In addition, the Company amended certain IRG Affiliate Lender credit arrangements (and entered into backup notes for two credit arrangements) that are Transaction Documents as follows: (i) all IRG Affiliate Lender loans 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 is reset to a price equal to Market Price, subject in the case of loans to which Midwest Lender Fund, LLC is a party to approval of the Company’s stockholders under Nasdaq 5635(c); (iii) the Company and certain subsidiaries entered into a backup promissory note with each of JKP Financial, LLC and Midwest Lender Fund, LLC that provide benefits incremental to and offset by existing notes with such lenders; (iv) the Company agreed to acknowledge an existing pledge of the Company’s 100% membership interest in Newco and reflect that such pledge secures all amounts due under the IRG Affiliate Lender loans; (v) certain IRG Affiliate Lender loans were cross-collateralized and cross-defaulted; (vi) the Company and its subsidiaries covenanted not to assign, pledge, mortgage, encumber or hypothecate any of the underlying assets, membership interests in affiliated entities or intellectual property rights without the written consent of IRG Affiliate Lenders; (vii) prior development fees owed by the Company to IRG Affiliate Lenders were accrued and added to the Bridge Loan, and future development fees owed by the Company to IRG Affiliate Lenders will be paid as when due; and (viii) the Company agreed to pay to IRG Affiliate Lenders 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 amendment and restatement of the Series C through Series F warrants held by IRG Affiliate Lenders and the IRG Affiliate Lender loans (and entering into the two backup notes) and, upon approval of the Company’s stockholders under Nasdaq Listing Rule 5635(c), the Series G warrant and the effectiveness of the conversion provision in the backup promissory note issued to Midwest Lender Fund, LLC, are transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). Each of the IRG Affiliate Lenders has represented to the Company that it is an “accredited investor” as defined in Rule 501 of the Securities Act.

Notwithstanding anything to the contrary contained in the Transaction Documents (defined below), the Company and the IRG Affiliate Lenders agreed that the total cumulative number of additional shares of Common Stock that may be issued to the IRG Affiliate Lenders under the Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of Common Stock issued to the IRG Affiliate Lenders under the Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), the Company, at its election, will use reasonable commercial efforts to obtain stockholder approval of the Transaction Documents and the issuance of additional shares of Common Stock thereunder, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). For purposes hereof, “Transaction Documents” means the second amended and restated Series C warrant (Exhibit 4.7 to this Form 10-K), the second amended and restated Series D Warrant (Exhibit 4.8 to this Form 10-K), the two amended and restated Series E warrants (Exhibits 4.9 and 4.10 to this Form 10-K), the two amended and restated Series F warrants (Exhibits 4.11 and 4.12 to this Form 10-K), the amended and restated Series G warrant (Exhibit 4.13 to this Form 10-K), the joinder and second amended and restated secured cognovit promissory note issued to JKP Financial, LLC (Exhibit 10.41 to this Form 10-K), the joinder and second amended and restated secured cognovit promissory note issued to IRG, LLC (Exhibit 10.40 to this Form 10-K), the backup joinder and first amended and restated secured cognovit promissory note with JKP Financial, LLC (Exhibit 10.23 to this Form 10-K), the amendment number 8 to term loan agreement (Exhibit 10.36 to this Form 10-K), the second amended and restated secured cognovit promissory note issued to CHCL in connection with the term loan agreement, the fourth amendment to and spreader of the pledge and security agreement under the term loan agreement, the second amendment to and spreader of the mortgage under the term loan agreement, the joinder and first amended and restated secured cognovit bridge promissory note issued to CHCL (Exhibit 10.50 to this Form 10-K), and the backup promissory note issued to Midwest Lender Fund, LLC (Exhibit 10.49 to this Form 10-K).

Under Nasdaq Listing Rule 5635(c), stockholder approval is required prior to the issuance of Common Stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by a listed company of equity compensation. For this purpose, “equity compensation” includes Common Stock (and/or securities convertible into or exercisable for Common Stock) issued to our officers, directors, employees or consultants at a discount to the market value of the Common Stock, and “market value” is the closing bid price immediately preceding the time that the listed company enters into a binding agreement with such officer, director, employee or consultant to issue the equity compensation. Midwest Lender Fund, LLC is wholly-owned by our director Stuart Lichter. The amended and restated Series G warrant issued to Midwest Lender Fund, LLC and the backup promissory note issued to Midwest Lender Fund, LLC do not become effective unless and until approved by stockholders of the Company under Nasdaq Listing Rule 5635(c).

ATM Proceeds

From January 1 through March 13, 2023, the Company sold zero shares of Common Stock under the ATM. The Company did not utilize the at-the-market offering during the fiscal fourth quarter. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a discussion of sales under the Company’s at-the-market offering program for the year ended December 31, 2022.


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 internet website 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/A,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/A10-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.

Unless the context otherwise indicates or requires, as used in this section, the term “HOF Village” shall refer to HOF Village, LLC prior to the Business Combination and Newco following the consummation of the Business Combination.

 

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 limitedlimited to, the following:

We are an early stage company with a minimal track record and limited historical financial information available.

Our abilityWe are relying on various forms of public financing and public debt to implement our proposed business strategy may be materially and adversely affected by many known and unknown factors.finance the Company.

 The success of our business is substantially dependent upon the continued success of the PFHOF brand museum experience and our ability to continue to secure favorable contracts with and maintain a good working relationship with PFHOF and its management team.

 Hall of Fame Resort & EntertainmentIncidents or adverse publicity concerning the Company, will operate in highly competitive industries andPFHOF, or the NFL could harm our reputation as well as negatively impact our revenues profits or market share could be harmed if we are unable to compete effectively.and profitability.

 We rely partially on sponsorship contracts to generate revenues.

We could be adversely affected by declines in discretionary consumer spending, consumer confidence and general and regional economic conditions.

Our business may be adversely affected by tenant defaults or bankruptcy.

 Our planned sports betting, fantasy sports and eSports operations and the growth prospects and marketability of such operations are subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business.

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 and general and regional economic conditions could reduce demand for our offerings and products and adversely affect the profitability of our business


We are dependent on our management team, 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.

The COVID-19 pandemic could continue to have a material adverse effect on our business.

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 management determined that our disclosure controls and procedures were not effective as of December 31, 2020.
We currently do not intend to pay dividends on our Common Stock. Consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our Common Stock.

Our Series A Warrants Series B Warrants, and Series CB 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 and you could lose all or part of your investment.

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 you to lose some or all of your 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 powered by Johnson Controls 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 Newco became our wholly owned subsidiary. As of the date hereof, we anticipate that the Hall of Fame Village powered by Johnson Controls will have the following major components:

Phase I:

Tom Benson Hall of Fame Stadium

National Youth Football &ForeverLawn Sports Complex

Hall of Fame Village Media

Phase II:

Hall of Fame Indoor Waterpark (“Hall of Fame Indoor Waterpark”)

Two hotels (one on campus and one 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)

Retail promenade

Fan Engagement Zone (retail promenade)

Play Action Plaza (Green space for recreation, events and informal gatherings)

Sports Betting, Hall of Fantasy League (Fantasy Football) and NFTs

Phase III (Potential):

Residential space

Additional attractions

Entertainment, dining, merchandise and more


While theThe components in Phase I are substantially complete, and the DoubleTree by Hilton Canton Hotel opened in November 2020, to date most componentsand the Constellation Center for Excellence opened in October 2021, the additional fields and amenities opened at the ForeverLawn Sports Complex, we completed the Fan Engagement Zone, completed Play Action Plaza, and opened the Center for Performance. The remainder of Phase II, notable the Hilton Tapestry Hotel and Phase IIIHall of Fame Village Waterpark, are still in the process of construction. Phase III is still in the planning and construction stage and havehas not commenced operations or generated any revenue. The components of the Hall of Fame Village powered by Johnson Controls that have been developed in Phase I 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.

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 powered by Johnson Controls and expect to incur significant expenses in connection with operating components of the Hall of Fame Village powered by Johnson Controls, including costs for entertainment, talent fees, marketing, salaries and maintenance of properties and equipment. 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 powered by Johnson Controls 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, powered by Johnson Controls, 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, powered by Johnson Controls, 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 powered by Johnson Controls.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 powered by Johnson Controls 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:

the impact of the pandemic involving the novel strain of coronavirus, COVID-19, governmental reactions thereto, and economic conditions resulting from such governmental reactions to the pandemic on our business strategy, operations, financial results, as well as on our future ability to access debt or equity financing;

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 Alumni Association 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).


 

 

We are relying on various forms of public financing and public 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 powered by Johnson Controls from various forms of public financing and public debt, including TDD funds, TIF funds, state and local grants and tax credits, which depend, in part, on factors outside of our control. The concept of a TDD was created under state law specifically for Canton, Ohio and the Hall of Fame Village powered by Johnson Controls.Village. 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 powered by Johnson Controls 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, powered by Johnson Controls, 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 must retain our key management personnel.

 

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 the key management personnel at our Company, the underlying business could suffer.

 


The success of our business is substantially dependent upon the continued success of the PFHOF brand and museum experience and our ability to continue to secure favorable contracts with and maintain a good working relationship with PFHOF and its management team.

 

The success of our business is substantially dependent upon the continued success of the PFHOF brand and our ability to continue to secure favorable contracts with and maintain a good working relationship with PFHOF and its management team. PFHOF’s support and cooperation – through agreements, alliances, opportunities and otherwise –Our ability to harmonize our brand with PFHOF is of critical importanceimportant to our long-term success.

 

PFHOF is a 501(c)(3) not-for-profit organization that owns and operates the Pro Football Hall of Fame in Canton, Ohio. We are geographically located adjacent to PFHOF, and the local community and broader public generally view the Company and PFHOF as closely-connected affiliates. While PFHOF currently beneficially owns approximately 8%5% of the Company’s outstanding Common Stock, the Company is neither a subsidiary of nor controlled by PFHOF. PFHOF is a party to the Director Nominating Agreement, which among other things provides PFHOF with the right to designate one individual to be appointed or nominated for election to the Company’s board of directors, subject to certain conditions. Our director, Ed Roth, was designated by PFHOF pursuant to the Director Nominating Agreement.

 

We have entered into severalmultiple agreements with PFHOF that are of significance to our business, including: (i) a First Amended and RestatedGlobal License Agreement dated September 16, 2019April 8, 2022 (the “License Agreement”), (ii) an Amended and Restated Media License Agreement, dated July 1, 2020 (the “Media“Global License Agreement”), and (iii)(ii) Shared Services Agreements, dated June 30, 2020 and March 9, 2021 (the “Shared Services Agreements”). These agreements address topics that include, but are not limited to, the following:

License to use PFHOF marks. Under the License Agreement, PFHOF grants to our Company a non-transferable, non-exclusive right and license to use PFHOF marks in conjunction with the Hall of Fame Village complex (the “Village”), Legends Landing, any theme park, water park, theater, sports arena, sports facility, hotel, sports bar, general or specific location-based entertainment, youth sports programs (excluding certain NFL-sponsored youth sports programs) (“Exclusive Fields of Use”). The license is exclusive for the Exclusive Fields of Use only within the municipal boundary of the City of Canton, Ohio. Under the License Agreement, PFHOF agreed that it will not grant any third party a license to use PFHOF marks outside of Canton, Ohio, in connection with the themed entertainment industry without giving us a right of first refusal to accept such third-party offer. In addition, the License Agreement provides that, subject to certain exceptions, all communications with the National Football League (the “NFL”), its 32 member clubs and its Hall of Famers must be made exclusively through PFHOF rather than from the Company. Many of the Company’s events involve the participation of the NFL’s Hall of Famers. The Company therefore must rely on PFHOF’s cooperation and support to a significant extent in coordinating events and other activities involving any of these parties.

Sponsorships. The License Agreement provides that PFHOF and our Company have the right to jointly seek sponsorships from third parties in conjunction with the Village and to sublicense PFHOF marks to such sponsors. The License Agreement provides that PFHOF and our Company have the right to enter into exclusive sponsorships for their individually owned and operated assets. The License Agreement provides that our Company and PFHOF will use their best efforts to coordinate the marketing, sales and activation of sponsorships so as to maximize the revenue of both organizations and minimize any potential negative impact to either organization. We and PFHOF are both parties to sponsorship agreements that are important to our business, such as the Naming Rights Agreement and the Constellation Sponsorship Agreement. We also rely on a collaborative approach with PFHOF to pursue other joint sponsorship agreements with third parties. Our success in obtaining those sponsorship agreements is highly dependent on the maintenance of a good working relationship with PFHOF and its management team. In addition, once these sponsorships are obtained, the Company must rely on PFHOF’s cooperation in performing the obligations relating to PFHOF required by the sponsorship agreements. See “Risk Factors – Risk Related to Our Business – We rely on sponsorship contracts to generate revenues.”

Use of PFHOF media assets. The Media License Agreement provides for the sharing of media-related opportunities between PFHOF and our Company and sets forth the terms under which PFHOF enables our Company to exploit existing PFHOF works and create new works. Our ability to successfully monetize PFHOF assets (e.g., photographs, videos, memorabilia and other historically significant football-related assets) under the Media License Agreement depends upon PFHOF’s providing access to such media assets as contemplated by the terms of the Media License Agreement.

Shared Services. Under the Shared Services Agreements, our Company and PFHOF agree to act in good faith to coordinate with each other on certain services, including, without limitation, community relations, government relations, marketing and public relations, new business development, sponsorship activities and youth programming. Our success in these endeavors depends to a significant extent on PFHOF’s cooperation in coordinating these services and events.

In the past, we have had to renegotiate payment terms and other provisions in certain of our agreements with PFHOF as part of improving the Company’s financial position. If we were to lose or be required to renegotiate any of these agreements or if PFHOF failed to perform any of these agreements, our business may be adversely affected.


 

Changes in consumer tastes and preferences for sports and entertainment products could reduce demand for our offerings and products and adversely affect the profitability of our business.

 

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 majorityportion of the attendance to Hall of Fame Village, powered by Johnson Controls, 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.

 

Incidents or adverse publicity concerning the Company, PFHOF, the NFL or the NFL Alumni Association 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, the brands we are associated with, the quality of Hall of Fame Village powered by Johnson Controls and its services and our corporate and management integrity. If market recognition or the perception of the Company diminishes, there may be a material adverse effect on our revenues, profits and cash flow. In addition, the operations of Hall of Fame Village, powered by Johnson Controls, particularly the Hall of Fame Indoor Waterpark, 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 rely partially on sponsorship contracts to generate revenues.

 

We will receive a portion of our annual revenues from sponsorship agreements including the amended and restated sponsorship and naming rights agreement, dated as of July 2, 2020 (the “Naming Rights Agreement”), by and among HOF Village, PFHOF and Johnson Controls, the sponsorship and services agreement, dated as of December 19, 2018, as amended (the “Constellation Sponsorship Agreement”), by and among HOF Village, PFHOF and Constellation NewEnergy, Inc., a Delaware corporation (“Constellation”), and other sponsorship agreements for various content, media and live events produced at Hall of Fame Village powered by Johnson Controls such as title, official product and promotional partner sponsorships, billboards, signs and other media. We are continuously in negotiations with existing sponsors and actively seeking new sponsors as there is significant competition for sponsorships. Some of our live events may not secure a title sponsor, may not secure a sufficient number of sponsorships on favorable terms, or may not secure sponsorships sufficiently enough in advance of an event, which may lead to event cancellations or otherwise adversely affect the revenue generated from such events.

Additionally, we are in a dispute with Johnson Controls regarding the Naming Rights Agreement. The Company and JCI are currently undergoing the process of binding arbitration. The ultimate outcome of this dispute cannot presently be determined. For additional information, see “Recent Developments - Dispute Regarding Naming Rights Agreement is scheduled to expire on December 31, 2034, but provides termination rights both to (a) HOF Village and PFHOF and (b)with Johnson Controls, which may be exercised in the event the other party breaches any of its covenants and agreements under the Naming Rights Agreement beyond certain notice and cure periods, applies for or consents to the appointment of a custodian of any kind with respect to all or substantially all of its assets, becomes insolvent or is unable to pay its debts generally as they become due, makes a general assignment for the benefit of its creditors, files a voluntary petition seeking relief under any bankruptcy law, or an involuntary petition is filed by a creditor under any bankruptcy law and is approved by a court of competent jurisdiction. Additionally, Johnson Controls has a right to terminate the Naming Rights Agreement if Phase II is not open for business by January 2, 2024 and if HOF Village is in default beyond applicable notice and cure periods under certain agreements, such as the Technology as a Service Agreement, any loan document evidencing or securing any construction loan with respect to the Hall of Fame Village powered by Johnson Controls and any agreement with its general contractor with respect to the construction of the Hall of Fame Village powered by Johnson Controls, among others.

The Constellation Sponsorship Agreement is scheduled to expire on December 31, 2029, but provides termination rights both to (a) HOF Village and PFHOF and (b) Constellation, which may be exercised if a party would suffer material damage to its reputation by association with the other party or if there is an event of default. An event of default under the Constellation Sponsorship Agreement includes a party’s failure to perform its material obligations (which includes our failure to reach certain specified milestones in the construction of the Constellation Center for Excellence) for 60 days after receiving written notice from the other party and failure to cure such default; a party’s becoming insolvent or filing a voluntary petition in bankruptcy; a party’s being adjudged bankrupt; an involuntary petition under any bankruptcy or insolvency law being filed against a party; a party’s sale, assignment or transfer of all or substantially all of its assets (other than to an affiliate in the case of HOF Village or PFHOF). Additionally, Constellation has a right to terminate the Constellation Sponsorship Agreement effective as of December 31, 2023 for failure to recover its investment in the form of new business, if it provides written notice on or prior to December 1, 2022.


Loss of our existing title sponsors or other major sponsorship agreements, including the Naming Rights Agreement and Constellation Sponsorship Agreement, or failure to secure sponsorship agreements in the future on favorable terms, could have a material adverse effect on our business, financial condition and results of operations.Controls” above.

 

We could be adversely affected by declines in discretionary consumer spending, consumer confidence and general and regional economic conditions.

 

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 downturn as a result of COVID-19,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, powered by Johnson Controls, which would materially adversely affect our business, financial condition and results of operations.

 

Hall of Fame Village powered by Johnson Controls 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.

 

The Company 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 National Youth Football &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, if and when completed, 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;

 

 The planned Constellation Center for Excellence and the Fan Engagement Zone (retail promenade) will compete for tenants with other suppliers of commercial and/or retail space; and

 

 

The planned Hall of Fantasy League fantasy football league will face competition from existing fantasy football leagues as well as other forms of virtual entertainment and fan interactions during the professional football season.

 

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 powered by Johnson Controls 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 powered by Johnson Controls 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, powered by Johnson Controls, 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 from third parties. We cannot assure you 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 also expect to 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 tenant defaults or bankruptcy.

 

Our business may be adversely affected if any future tenants at the Constellation Center for Excellence or Hall of Fame retail promenadethe 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.

 

We seek to maintain comprehensive insurance coverage at commercially reasonable rates. Although we maintain various safety and loss prevention programs and carry property and casualty insurance to cover certain risks, our insurance policies do not cover all types of losses and liabilities. There can be no assurance that our insurance will be sufficient to cover the full extent of all losses or liabilities for which we are insured, and we cannot guarantee that we will be able to renew our current insurance policies on favorable terms, or at all. 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 you 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 planned sports betting, fantasy sports and eSports operations are subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing 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 planned sports betting, fantasy sports 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, fantasy sports 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 you 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, fantasy sports, 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, fantasy sports 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.

The maturity date of the Term Loan, which is secured by substantially all of our assets, is December 1, 2021. There can be no assurance that we will be able to repay the obligation upon maturity to avoid a default.

On December 1, 2020 (the “Effective Date”), we entered into a term loan agreement (the “Term Loan Agreement”) among the Company, Newco, and certain of Newco’s subsidiaries, as borrowers (collectively, the “Borrowers”), and Aquarian Credit Funding LLC (“Aquarian”), as lead arranger, administrative agent, collateral agent and representative of the lenders party thereto (the “Lenders”), pursuant to which we borrowed $40.0 million from the Lenders (the “Term Loan”). The term of the Term Loan Agreement is 12 months from the Effective Date (the “Term”). The Term Loan will bear interest at a fixed rate equal to 10.0% per annum, payable monthly in advance on the outstanding amount of the Term Loan during the Term.


On the Effective Date, we used approximately $4.04 million from the Term Loan to prefund an amount equal to the cash interest on the Term Loan for the entire Term into an account controlled by Aquarian. We used approximately $23.3 million from the Term Loan to pay the outstanding balance and fees under our bridge loan, dated March 20, 2018, among the Company, various lenders party thereto and GACP Finance Co., LLC (“Bridge Loan”). The remaining proceeds of the Term Loan, after payment of various fees and expenses, and subject to the Liquidity Covenant (defined below), are available for general corporate purposes.

The Term Loan Agreement contains customary affirmative and negative covenants for this type of loan, including without limitation (i) affirmative covenants, including the maintenance of certain key contracts and content rights, adherence to a detailed cash flow forecast including a hard cost and a soft cost construction budget, and (ii) negative covenants, including restrictions on additional indebtedness, prepayment of other indebtedness, transactions with related parties, additional liens, dividends, investments and advances, sales of assets, capital expenditures, mergers and acquisitions, and standard prohibitions on change of control. Additionally, from the Effective Date until repayment of the Term Loan, we must maintain, in an account controlled by Aquarian (the “Proceeds Account”), cash and cash equivalents equal to at least $7.5 million (the “Liquidity Covenant”). Subject to stated exceptions, we must deposit all funds received by the Borrowers during the Term from any and all sources into the Proceeds Account and must have Aquarian’s prior written approval to withdraw any amounts from the Proceeds Account, pursuant to a budget and schedule agreed upon by the parties. As of December 31, 2020, there was approximately $15 million in the Proceeds Account. We are also required to prepay the outstanding balance of the Term Loan under certain circumstances and the Lenders will have the right to approve certain types of transactions by us during the Term.

We have provided collateral in connection with the Term Loan, including, with certain exceptions: (i) a perfected, first priority security interest in all our real and intangible property, including cash and accounts (to be perfected through account control agreements), contracts, intellectual property, leases, plans and specifications, permits, licenses, approvals, entitlements, and development rights; (ii) a perfected first priority pledge of 100% of the portion of the ownership interests in our subsidiaries; and (iii) a first mortgage, an assignment of leases and rents, and environmental indemnity covering the property owned by the Borrowers (collateral protection to include other customary documentation, including but not limited to deeds in lieu and cognovits, subject to prior exhaustion of all customary notice and cure periods in the event of default, as detailed in the Term Loan documents).

The Term Loan is guaranteed up to $22.3 million (the “Guaranty”) by IRG Master Holding, Inc. (the “Guarantor”), an affiliate of Industrial Realty Group, LLC, a Nevada limited liability company (“IRG”), that is controlled by one of our directors, Stuart Lichter. The Guaranty will terminate upon the occurrence of any of the following events: (i) the payment in full of all obligations under the Term Loan Agreement; (ii) the Guarantor or any of its affiliates purchases $22.3 million of the principal amount of the Term Loan pursuant to a written agreement mutually acceptable to Aquarian, the required Lenders and the Guarantor (whether in the form of a co-lender arrangement or participation); or (iii) the Borrowers deposit in the Proceeds Account net cash proceeds from additional permitted equity issuances and/or permitted indebtedness in an amount equal to or greater than $25 million.

There can be no assurance that we will be able to meet certain construction deadlines under a Letter of Representations, which could cause a cross-default under the Term Loan.

If construction is delayed for any reason and we do not meet certain construction deadlines, we could be in breach of a letter of representations agreement with the Canton City School District and Stark County Port Authority (the “Letter of Representations”). A breach of the Letter of Representations would cause a cross-default under the Term Loan. If we default on our obligations under the Term Loan, Aquarian could accelerate the entire amount of the Term Loan, declare the unpaid balance (plus interest, fees and expenses) immediately due and payable and take other action to enforce the Term Loan, including foreclosure of substantially all of our assets that secure the Term Loan. An affiliate of Industrial Realty Group has guaranteed certain payment obligations under the Term Loan in the event of a default.

In connection with the Term Loan, HOF Village entered into a mortgage granting a security interest in its rights to certain premises that HOF Village leases from the Canton City School District and Stark County Port Authority. The Letter of Representations provides that any lien created by the mortgage or any other security interest granted in such premises in connection with the Term Loan will attach only to HOF Village’s and the other Borrowers’ interest in such premises and would remain subordinate to and not disturb the rights and interests of the City of Canton, Ohio, the Canton City School District, Stark County Port Authority, PFHOF, the State of Ohio, Plain Local School District, the Canton Symphony Orchestra, and persons identified as benefitted parties under any TIF revenue bond declaration. Additionally, the Letter of Representations provides that HOF Village and its relevant affiliates will remain bound to fulfill their respective obligations under the existing ground leases, project leases and certain other agreements with the Canton City School District and Stark County Port Authority and that HOF Village will cause certain payments to be made to Canton City School District and Stark County Port Authority.


 

 

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.

 

As of December 31, 2020,2022, the Company’s capital structure includes debt and debt-like obligations consisting of the following gross principal amounts:

 

approximately $9.7 million of net indebtedness to Development Finance Authority of Summit County, Ohio, representing tax-increment financing proceeds;

  Gross  Interest Rate  Maturity Date
Preferred equity loan $3,600,000   7.00% Various
City of Canton Loan  3,450,000   0.50% 7/1/2027
New Market/SCF  2,999,989   4.00% 12/30/2024
JKP Capital Loan  9,158,711   12.50% 3/31/2024
MKG DoubleTree Loan  15,300,000   9.25% 9/13/2023
Convertible PIPE Notes  26,525,360   10.00% 3/31/2025
Canton Cooperative Agreement  2,620,000   3.85% 5/15/2040
CH Capital Loan  8,846,106   12.50% 3/31/2024
Constellation EME #2  3,536,738   5.93% 4/30/2026
IRG Split Note  4,302,437   12.50% 3/31/2024
JKP Split Note  4,302,437   12.50% 3/31/2024
ErieBank Loan  19,465,282   8.50% 12/15/2034
PACE Equity Loan  8,250,966   6.05% 7/31/2047
PACE Equity CFP  2,437,578   6.05% 7/31/2046
CFP Loan  4,027,045   12.50% 3/31/2024
Stark County Community Foundation  5,000,000   6.00% 5/31/2029
CH Capital Bridge Loan  10,485,079   12.50% 3/31/2024
Stadium PACE Loan  33,387,844   6.00% 1/1/2049
Stark County Infrastructure Loan  5,000,000   6.00% 8/31/2029
City of Canton Infrastructure Loan  5,000,000   6.00% 6/30/2029
TDD Bonds  7,500,000   5.41% 12/1/2046
Total $185,195,572       

 

approximately $1.8 million of indebtedness outstanding pursuant to a loan and security agreement by and among JCIHOFV Financing, LLC (a wholly-owned subsidiary of the Company), HOF Village, PFHOF, other lenders and Wilmington Trust, National Association, as agent, collateralized by the Naming Rights Agreement;

Additionally, the Company has two financing transactions that were structured as sale leaseback type transactions, whereby the investors provided the Company with aggregate gross proceeds of $68 million in exchange for the sale of land, and the Company simultaneously entered into two leases over a period of 99 years.

 

approximately $1.8 million of indebtedness related to the Naming Rights Securitization


 

approximately $3.0 million drawn on a loan facility of up to $3.0 million with New Market Project, Inc., the proceeds of which are to be used for the development of the McKinley Grand Hotel;

approximately $3.5 million drawn on a loan facility of up to $3.5 million with the City of Canton, Ohio;

approximately $9.9 million in financing from Constellation through its Efficiency Made Easy (“EME”) program;

approximately $0.4 million of indebtedness outstanding representing a federal paycheck protection program loan to HOF Village;

approximately $7.0 million of indebtedness outstanding pursuant to a promissory note, by HOF Village in favor of JKP Financial, LLC;

approximately $15.3 million of net indebtedness outstanding pursuant to a construction loan agreement with Erie Bank, the proceeds of which are to be used for the development of the McKinley Grand Hotel; and

approximately $21.8 million of net indebtedness representing Convertible PIPE Notes with Magnetar Financial, LLC

approximately $2.7 million of net indebtedness representing a cooperating agreement with DFA Summit, the City of Canton, Ohio, the Canton Regional Special Improvement District, Inc. and the U.S. Bank National Association for the construction of the Series 2020C Project.

approximately $40.0 million of net indebtedness outstanding pursuant to a promissory note in favor of Aquarian Credit Funding, LLC

 

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:

 

 our cash flows from operations would be insufficient to make required payments of principal of and interest on 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;

 

 our 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 our debt, it will reduce our funds available for operations, development, capital expenditures and future investment opportunities or other purposes;

 

 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;
   
 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;

 

 to the extent that our indebtedness bears interest at a variable rate, we are exposed to the risk of increased interest rates;

 

 debt covenants may limit our subsidiaries’ ability to make distributions to us;

 

 causing an eventthe collateral securing the debt, if any, could be foreclosed upon, including the foreclosure of defaultreal property interests under the Term Loan if it is not repaid in full at maturity;a mortgage and/or equity interest or personal property pledged; and

 

 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 powered by Johnson Controls 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 requires additional liquidity and capital resources that might not be available on terms that are favorable to us, or at all.

 

While our strategy assumes that we will receive sufficient capital to have sufficient working capital, we currently do not have available cash and cash flows from operations to provide us with adequate liquidity for the near-term or foreseeable future. Our current projected liabilities exceed our current cash projections and we have very limited cash flow from current operations. We therefore will require additional capital and/or cash flow from future operations to fund the Company, our debt service obligations and our ongoing business. There is no assurance that we will be able to raise sufficient additional capital or generate sufficient future cash flow from our future operations to fund the Hall of Fame Village, powered by Johnson Controls, 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. As discussed in greater detail above, there can be no assurance that we will be able to repay the Term Loan obligation upon maturity or otherwise avoid a default. 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.

 


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;

Potential or actual breach of contractual obligations that require us to maintain letters or credit or other credit support arrangements; or

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.

 

While we used proceeds from the Business Combination and subsequent capital raises to pay down certain outstanding debt, we will have to take on substantially more debt to complete the construction of the Hall of Fame Village powered by Johnson Controls.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. The Term Loan restricts our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise indebtedness or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

 

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.

 


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.

 

Our management determined that our disclosure controls and procedures were not effective as of December 31, 2020.

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 Securities and Exchange Commission (“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 Chief Financial Officer, 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 Chief Financial Officer (our principal financial officer and 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, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer 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 of December 31, 2020 due to material weaknesses in our internal control over financial reporting as described below.

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 officer) and Chief Financial Officer (our principal financial officer and 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, 2020 due to the material weaknesses described below.

A material weakness is defined within the Public Company Accounting Oversight Board’s Auditing Standard No. 5 as 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 the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We determined that our internal control over financial reporting had the following material weaknesses:

Primarily due to the small size of the Company, the Company does not maintain sufficient segregation of duties to ensure the processing, review and authorization of all transactions including non-routine transactions.
Our processes lacked timely and complete reviews and analysis of information used to prepare our financial statements and disclosures in accordance with accounting principles generally accepted in the United States of America.


The Company is evaluating these weaknesses to determine the appropriate remedy. Because disclosure controls and procedures include those components of internal control over financial reporting that provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, management also determined that its disclosure controls and procedures were not effective as a result of the foregoing material weaknesses in its internal control over financial reporting.

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.

 


The COVID-19 pandemic has had, and is expected to continue to have, a material adverse effect on our business.

 

DuringSince 2020, and continuing into 2021, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) pandemic. COVID-19 and the measures to prevent its spread impacted our business in a number of ways, most significantly with regard to a reduction in the number of events and attendance at events at Tom Benson Hall of Fame Stadium and our National Youth Football andForeverLawn Sports Complex, which negatively impacts our ability to generate revenue. Also, we opened our newly renovated DoubleTree by Hilton in Canton in November 2020, but the occupancy rate has been negatively impacted by the pandemic. Further, the COVID-19 pandemic has caused global supply chain disruptions, which negatively impacts our ability to obtain the materials needed to complete construction and/or achieve expected construction timelines. The impact of these disruptions and the extent of their adverse impact on our financial and operating results will be dictated by the length of time that such disruptions continue, which will, in turn, depend on the currently unknowable duration and severity of the impacts of COVID-19, and among other things, the impact of governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward.

 

Even after restrictions loosen, the demand for sports and entertainment events may decrease as fears over travel or attending large-scale events linger due to concerns over the spread of COVID-19. If unemployment levels persist and economic disruption continues, the demand for entertainment activities, travel and other discretionary consumer spending may also decline as consumers have less money to spend. We may be required to enforce social distancing measures within our facilities by, among other things, limiting the number of people admitted or standing in lines at any time, or adding social distancing signage and markers. We may incur additional costs associated with maintaining the health and safety of our guests and employees, including facility improvements such as additional sanitization stations or requiring the broad use of personal protective equipment. If it is alleged or determined that illness associated with COVID-19 was contracted at one of our facilities, we may suffer reputational damage that could adversely affect attendance and future ticket sales.

 

Even after we are able to open our facilities, we may elect or be required to close them in the future in response to the continued impact of COVID-19 or outbreaks involving other epidemics. Any decrease in demand for the sports and entertainment industry would likely affect our business and financial results. The extent and duration of the long-term impact of COVID-19 remains uncertain and the full impact on our business operations cannot be predicted.

 

Risk Related to Our Securities

 

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 Series B Warrants, and Series CB 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 Series B Warrants, and Series CB 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 sheetsheets as of December 31, 20202022 and 2021 contained elsewhere in this Annual Report are derivative liabilities related to embedded features contained within our Series A Warrants Series B Warrants, and Series CB 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 statement 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 Series B Warrants, and Series CB 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 you could lose all or part of your 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:

 

 no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

 

 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;

 

 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;

 


 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

 

 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, along with our six other largest stockholders, will beneficially own approximately 49%30% of our outstanding Common Stock. Accordingly, these stockholders are able to exert significant control the election of a majority of our directors and the determination of all corporate actions.over matters subject to stockholder approval. This concentration of ownership could delay or prevent a change in control of the Company.


 

We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or 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 an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company, which is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

 

We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Company’s initial public offering on January 30, 2018, (b) in which we have total annual revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.

 

Additionally, 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 2. Properties

 

The Company owns real property in Canton, Ohio, at the site of the Hall of Fame Village powered by Johnson Controls development including the Tom Benson Hall of Fame Stadium and the Company’s principal corporate office.DoubleTree by Hilton Hotel. Certain parcels of real property on which the Hall of Fame Village powered by Johnson Controlsis located, including the parcel on which the Tom Benson Hall of Fame Stadium is located, are owned by the City of Canton and 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 February 3, 2021, the Company purchased for $1.75 million certain parcels of real property from PFHOF located at the site of the Hall of Fame Village powered by Johnson Controls.Village. In connection with the purchase, the Company granted certain easements to PFHOF to ensure accessibility to the PFHOF museum.

 

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”).

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.

 

Market Information

 

Our Common Stock is traded on The NASDAQ Capital Markets under the symbol “HOFV”.

 

Holders

 

On March 9, 2021,23, 2023, the Company had 112 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. Selected Financial Data[Reserved]

 

Not applicable.

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”). Headquartered in Canton, Ohio, we own the Hall of Fame Village, a multi-use sports and entertainment destination centered around the PFHOF’s campus. We expect to create a diversified set of revenue streams through developing themed attractions, premier entertainment programming and sponsorships.

The strategic plan has been developed in three phases of growth: Phase I, Phase II, and Phase III. Phase I of the Hall of Fame Village powered by Johnson Controls is operational, consisting of the Tom Benson Hall of Fame Stadium, the National Youth Football &ForeverLawn Sports Complex, and HOF Village Media Group, LLC (“Hall of Fame Village Media” or the “Media Company”). In 2016, HOF Village completed the Tom Benson Hall of Fame Stadium, a sports and entertainment venue with a seating capacity of approximately 23,000. 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. In 2016, HOF Village opened the National Youth Football &The ForeverLawn Sports Complex which will consist of eight full-sized, multi-use regulation football fields, five of which have been completed in Phase I. The facility hosts camps and tournaments for football players, as well as athletes from across the country in other sports such as lacrosse, rugby and soccer. In 2017, HOF Village formed a sports and entertainment media company, Hall of Fame Village Media leveragingleverages the sport of professional football to produce exclusive programming by licensing the extensive content controlled by the PFHOF as well as new programming assets developed from live events such as youth tournaments, business meetings, weddings, festivals, camps and sporting events and more held at the National Youth Football &ForeverLawn Sports Complex and the Tom Benson Hall of Fame Stadium (once the Tom Benson Hall of Fame Stadium is complete).Stadium.

 

We are developing new hospitality, attraction and corporate assets surrounding the Pro Football Hall of Fame Museum as part of aour Phase II development plan. PlansPhase II plans for future components of the Hall of Fame Village powered by Johnson Controls include two hotels (one on campus and one in downtown Canton about five minutes from campus that was opened in November 2020), the Hall of Fame Indoor Waterpark, the Constellation Center for Excellence (an office building including retail and meeting space)space, that opened in October 2021), the Center for Performance (a convention center/field house), the Play Action Plaza, and the Hall of Fame Retail Promenade.Fan Engagement Zone (retail promenade). We are pursuing a differentiation strategy across three pillars, including Destination-Based Assets, Hall of Fame Villagedestination-based assets, the Media Company, and Gaming (including the Fantasy Football League we acquired a majority stake in).gaming. Phase III expansion plans may include a potential mix of residential space, additional attractions, entertainment, dining, merchandise and more.

 


Business Combination

On July 1, 2020, we (formerly known as GPAQ Acquisition Holdings, Inc.) consummated the previously announced 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, Gordon Pointe Acquisition Corp., a Delaware corporation (“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 in this Annual Report on Form 10-K/A as the “Business Combination.”

Upon the consummation of the Business Combination: (i) Acquiror Merger Sub merged with and into GPAQ, with GPAQ continuing as the surviving entity (the “Acquiror Merger”) and (ii) Company Merger Sub merged with and into Newco, with Newco continuing as the surviving entity (the “Company Merger”). In advance of the Company Merger, HOF Village transferred all of its assets, liabilities and obligations to Newco pursuant to a contribution agreement. In connection with the closing of the Business Combination, the Company changed its name from “GPAQ Acquisition Holdings, Inc.” to “Hall of Fame Resort & Entertainment Company.” As a result of the Business Combination, GPAQ and Newco continue as our wholly owned subsidiaries.

In connection with the consummation of the Business Combination and pursuant to the Merger Agreement, (a) each issued and outstanding unit of GPAQ, if not already detached, was detached and each holder of such a unit was deemed to hold one share of GPAQ Class A common stock and one GPAQ warrant (“GPAQ Warrant”), (b) each issued and outstanding share of GPAQ Class A common stock (excluding any shares held by a GPAQ stockholder that elected to have its shares redeemed pursuant to GPAQ’s organizational documents) was converted automatically into the right to receive 1.421333 shares of our Common Stock, following which all shares of GPAQ Class A common stock ceased to be outstanding and were automatically canceled and cease to exist; (c) each issued and outstanding share of GPAQ Class F common stock was converted automatically into the right to receive one share of Common Stock, following which all shares of GPAQ Class F common stock ceased to be outstanding and were automatically canceled and cease to exist; (d) each issued and outstanding GPAQ Warrant (including GPAQ private placement warrants) was automatically converted into one Warrant (which we refer to in this Form 10-K/A as a “Series A Warrant”) to purchase 1.421333 shares of Common Stock per warrant, following which all GPAQ Warrants ceased to be outstanding and were automatically canceled and retired and cease to exist; and (e) each issued and outstanding membership interest in Newco converted automatically into the right to receive a pro rata portion of the Company Merger Consideration (as defined in the Merger Agreement), which was payable in shares of Common Stock. Our Common Stock is traded on Nasdaq under the symbol “HOFV” and our Series A Warrants are traded on Nasdaq under the symbol “HOFVW”.

The rights of holders of our Common Stock and Series A Warrants are governed by our amended and restated certificate of incorporation (the “Certificate of Incorporation”), our amended and restated bylaws (the “Bylaws’) and the Delaware General Corporation Law (the “DGCL”), and in the case of our Series A Warrants, the Warrant Agreement, dated January 24, 2018, between GPAQ and the Continental Stock Transfer & Trust Company (the “Series A Warrant Agreement”).

Key Components of the Company’s Results of Operations

Revenue

 

The Company’s sponsorshipWe generate revenue is derived from its agreements with third partiesvarious streams such as Johnson Controls, Inc. (“JCI”) and Constellation NewEnergy, Inc. (“Constellation”). These sponsorship agreements, rents, cost recoveries, events, and hotel 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. Revenue for rents, cost recoveries, and events are generally multi-year agreements to provide cashrecognized at the time the respective event or some other type of benefit toservice has been performed. Rental revenue for long term leases is recorded on a straight-line basis over the Company. Some agreements require the Company to use a portionterm of the sponsorship revenue to incur marketing and other activation costs associated withlease beginning on the agreement, and this revenue is shown net of those associated costs. Additionally, the Company’s Tom Benson Hall of Fame Stadium is used to host premier entertainment and sports events to generate event revenues. In addition to top entertainers, the stadium is used to host a variety of sporting events, including high school, college and professional football games throughout the year. The Company plans to continue to expand programming where applicable for its live event business. The Company’s other revenue is derived primarily from rents and cost reimbursement.commencement date.

 

The Company also entered into agreements with the NFL Alumni Association earlier in 2020. The Company also took a 60% ownership stake in HallOur owned hotel revenues primarily consist of Fantasy League earlier in 2020. The Company expects to recognizehotel 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 NFL Alumni Association, Youth Sports, DoubleTree Hotelgoods and the Hall of Fantasy League in 2021.services are provided.

 

Operating Expenses

The Company’sOur operating expenses include property operating expenses, depreciation expense, and other operating expenses. These expenses have increased in connection with putting the Company’s first phase into operationcompleting Phase I development. These expenses have increased with completion of Phase II assets and the Company expects these expenseswould expect to continue to increase with completion of the Company’s growth.on campus hotel, waterpark, and Phase III.

The Company’s propertyOur operating expenses include the costs associated with running its operational entertainment and destination assets such as the Tom Benson Hall of Fame Stadium and the National Youth Football &ForeverLawn Sports Complex. AsFactors that will contribute to increased operating expenses include: more of the Company’sour Phase II assets becomebecoming operational, and additionalthe addition of events for top performers, and sporting events are held, the Company expects these expenses to continue to increase with the Company’s development.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.


 

Other operating expenses include items such as management fees, commission expense, and professional fees. The Company expects these expenses to continue to increase with the Company’s growth.

The Company’s depreciation expense includes the related costs to owning and operating significant property and entertainment assets. These expenses have grown as the Company completed Phase I development and the assets associated with Phase I became operational. The Company expects these expenses to continue to grow as Phases II and III assets are developed and become operational.

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), net on the statement 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, 20202022 and the comparable period in 2019:2021:

  For the Year Ended
December 31,
  2020 2019
Revenues (Restated)  
Sponsorships, net of activation costs $6,424,201  $6,720,298 
Rents and cost recoveries  474,020   1,064,569 
Event revenues  38,750   76,464 
Hotel revenues  162,183   - 
Total revenues $7,099,154  $7,861,331 
         
Operating expenses        
Property operating expenses  26,631,821   16,707,537 
Hotel operating expenses  419,595   - 
Commission expense  1,671,964   1,003,226 
Depreciation expense  11,085,230   10,915,839 
Loss on abandonment of project development costs  -   12,194,783 
Total operating expenses $39,808,610  $40,821,385 
         
Loss from operations  (32,709,456)  (32,960,054)
         
Other expense        
Interest expense  (5,718,473)  (9,416,099)
Amortization of discount on note payable  (10,570,974)  (13,274,793)
Change in fair value of warrant liability  26,733,116   - 
Loss on extinguishment of debt  (4,282,220)  - 
Loss in joint venture  -   (252,934)
Business combination costs  (19,137,165)  - 
Total other expense $(12,975,716) $(22,943,826)
         
Net loss $(45,685,172) $(55,903,880)
         
Non-controlling interest  (196,506)  - 
         
Net loss attributable to HOFRE stockholders $(45,488,666) $(55,903,880)
         
Net loss per share – basic and diluted $(1.71) $(10.28)
         
Weighted average shares outstanding, basic and diluted  26,644,449   5,436,000 


  For the Years Ended
December 31,
 
  2022  2021 
       
Revenues      
Sponsorships, net of activation costs $2,697,487  $6,023,863 
Event, rents and cost recoveries  7,116,594   986,710 
Hotel revenues  6,165,291   3,759,811 
Total revenues $15,979,372  $10,770,384 
         
Operating expenses        
Operating expenses  35,982,464   28,801,125 
Hotel operating expenses  5,949,839   4,408,691 
Impairment expense  -   1,748,448 
Depreciation expense  12,037,374   12,199,148 
Total operating expenses $53,969,677  $47,157,412 
         
Loss from operations  (37,990,305)  (36,387,028)
         
Other expense        
Interest expense  (5,377,146)  (3,580,840)
Amortization of discount on note payable  (6,250,721)  (5,160,242)
Other income  604,912   - 
Change in fair value of warrant liability  9,422,000   (48,075,943)
Change in fair value of interest rate swap  (200,000)  - 
(Loss) Gain on extinguishment of debt  (6,377,051)  390,400 
Total other expense $(8,178,006) $(56,426,625)
         
Net loss $(46,168,311) $(92,813,653)
         
Series B preferred stock dividends  (1,064,000)  (697,575)
Loss attributable to non-controlling interest  285,807   400,260 
         
Net loss attributable to HOFRE stockholders $(46,946,504) $(93,110,968)
         
Net loss per share – basic and diluted $(9.01) $(22.69)
         
Weighted average shares outstanding, basic and diluted  5,208,054   4,104,358 

 

Year Ended December 31, 20202022 as Compared to the Year Ended December 31, 20192021

 

Sponsorship Revenues

 

The Company’s sponsorshipSponsorship revenues for the year ended December 31, 20202022 decreased by $296,097,$3,326,376, or 4.41%55.2%, to $6,424,201$2,697,487 as compared to $6,720,298$6,023,863 for the year ended December 31, 2019.2021. This changedecrease was primarily driven by our pausing the recognition of deferred revenue foron the JCI sponsorship agreements in place at June 30, 2019 as well as the impact of revisions to two sponsorship agreements effective in the third quarter of 2020.agreement while a dispute with Johnson Controls is resolved. For additional information, see “Dispute Regarding Naming Rights Agreement with Johnson Controls” above.

 


Rents

Event, rents and cost recoveriesCost Recoveries

 

The Company’s revenueRevenue from events, rents and cost recoveries for the year ended December 31, 2020 decreased2022 increased to $474,020$7,116,594 from $1,064,569$986,710 for the year ended December 31, 2019,2021, for a decreasean increase of $590,549,$6,129,884, or 55.47%621%. This change was primarily driven by an increase in Enshrinement activities and concerts, our hosting of the cancellationUSFL finals and other events at the Tom Benson Stadium along with utilization of many youth sports eventsour ForeverLawn Sports Complex, and the Pro Football Hallopening of Fame 2020 Enshrinement Festival due to the COVID-19 pandemic.Center for Performance.

 

Event Revenues

The Company’s event revenue for the year ended December 31, 2020 was $38,750 compared to $76,464 from the year ended December 31, 2019, for a decrease of $37,714, or 49.32%. This was primarily driven by the cancellation of private events that were to be held in the stadium during the COVID-19 pandemic. During 2020, we canceled 50 events due to COVID-19.

Hotel Revenues

 

The Company’s hotel revenueHotel revenues for the year ended December 31, 2020 was $162,1832022 increased $2,405,480, or 64%, to $6,165,291, compared to $0 from$3,759,811 for the year ended December 31, 2019.2021. This was driven by the openingincrease in travel and resumption of the DoubleTree Hotelconferences and other events that were affected in November 2020.2021 by COVID restrictions. Furthermore, our increased events on campus drove higher hotel occupancy rates during those events.

 

Property Operating Expenses

 

The Company’s property operating expense was $26,631,821Operating expenses were $35,982,464 for the year ended December 31, 20202022 as compared to $16,707,537$28,801,125 for the year ended December 31, 2019, for2021, an increase of $9,924,284,$7,181,339, or 59.40%24.9%. This increase was driven by the Company’s recording of $2,305,586a $2.9 million increase in show and event expenses, a $2.7 million increase in payroll and benefits, a $2.7 million increase in legal costs and a $1.0 million increase in licensing and permitting costs, offset by a $1.8 million decrease in stock-based compensation for restricted stock issued to select HOFRE leadership, increased headcount year over year resulting in additional payroll and related expenses of $4,208,029, additional insurance premiums of $1,102,810 and higher consulting fees of $952,887 for the year ended December 31, 2020.expense.

 

Hotel Operating ExpensesExpense

 

The Company’sOur hotel operating expense was $419,595$5,949,839 for the year ended December 31, 20202022 as compared to $4,408,691 for the year ended December 31, 2021, an increase of $1,541,148 or 35%. Hotel revenue and expenses are highly correlated and thus this increase was driven by having an increase in travel and group bookings during 2022.

Impairment Expense

Impairment expense was $0 for the year ended December 31, 2019. This increase was driven by the Company incurring operating expenses related2022 as compared to the DoubleTree Hotel being placed in service during the fourth quarter of 2020.

Commission Expense

The Company’s commission expense was $1,671,964$1,748,448 for the year ended December 31, 2020, as compared2021. The impairment expense for 2021 was due to $1,003,226an impairment of project development costs due to a change in plans for our Center for Performance, which caused us to abandon previous plans that will not benefit the year ended December 31, 2019, for an increase of $668,738, or 66.66%. The increase in commission expense is primarily the result of final prior year commissions fees paid per the agreements in place.current plan.

Depreciation Expense

 

The Company’s depreciationDepreciation expense was $11,085,230$12,037,374 for the year ended December 31, 20202022 as compared to $10,915,839$12,199,148 for the year ended December 31, 2019,2021, for an increasea decrease of $169,391,$161,774, or 1.55%1.3%. The increasedecrease in depreciation expense is primarily the result of additional depreciation expense incurred due to the DoubleTree Hotel being placeda number of larger assets becoming fully depreciated in service in the fourth quarter as well as renovations completed at the Company’s temporary office location earlier in the year.


Loss on Abandonment of Project Development Costs

The Company’s loss on abandonment of project development costs was $0 for the year ended December 31, 2020 as compared to $12,194,783 for the year ended December 31, 2019. The loss on abandonment of project development costs relates to costs previously capitalized but subsequently abandoned during 2019.early 2022.

 

Interest Expense

 

The Company’s totalTotal interest expense was $5,718,473$5,377,146 for the year ended December 31, 2020,2022, as compared to $9,416,099$3,580,840 for the year ended December 31, 2019, for a decrease2021, an increase of $3,697,626,$1,796,306, or 39.27%50.2%. The decreaseincrease in total interest expense is primarily due to extinguishmentan increase in the total amount of select debt instruments at the close of the Business Combination and the cancellation of a note we owed IRG in exchange for issuance of Common Stock and warrants in December, as well as changes in interest rates and certain interest expense due to affiliate that was waived under a revised agreement at June 30, 2020.outstanding.

 

Amortization of Debt Discount

 

The Company’s totalTotal amortization of debt discount was $10,570,974$6,250,721 for the year ended December 31, 2020,2022, as compared to $13,274,793$5,160,242 for the year ended December 31, 2019,2021, for a decreasean increase of $2,703,819,$1,090,479, or 20.37%21.1%. The decreaseincrease in total amortization of debt discount is primarily due to an increase in the conversiontotal amount of debt outstanding.

(Loss) Gain on Extinguishment of Debt

Loss on extinguishment of debt was $6,377,051 for the Company’s various outstanding notes payable throughoutyear ended December 31, 2022, as compared to a gain of $390,400 for the second halfyear ended December 31, 2021. The loss on extinguishment of 2020.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. The gain on extinguishment of debt during the year ended December 31, 2021 was related to the forgiveness of our Paycheck Protection Loan.


 

Change in Fair Value of Warrant Liability

 

The Company recorded change in fair value of its warrant liability represents a gain of $26,733,116$9,422,000 for the year ended December 31, 2020. The Company did not record any change in fair value2022, as compared to a loss of its warrant liability during the year ended December 31, 2019, as the warrants were not yet outstanding. The change in fair value was largely due to the decrease in our stock price from our initial Business Combination date through December 31, 2020, which has a significant effect on the value of the warrant liability.

Loss on Extinguishment of Debt

The Company’s loss on extinguishment of debt was $4,282,220$48,075,943 for the year ended December 31, 2020, as compared to $02021, for the year ended December 31, 2019.a decrease of $57,497,943 or 119.6%. The increasedecrease in loss on extinguishmentchange in fair value of debt iswarrant liability was due primarily due to IRG November Note conversion resulting in a $3,404,244 loss on extinguishment of debt along with various other notes payable converting into equity upon the consummation of the Business Combination.

Loss in Joint Venture

The Company’s loss in joint venture was $0 for the year ended December 31, 2020, as compared to $252,934 for the year ended December 31, 2019. The loss in joint venture is primarily due to the Company’s investment in Youth Sports that was changed from the equity method of accounting.

Business Combination Costs

The Company’s Business Combination costs were $19,137,165 for the year ended December 31, 2020, as compared to $0 for the year ended December 31, 2019. The Business Combination costs consisted of $6,233,473 in closing costs incurred for the Business Combination, $10,789,840 for shares issued to a related party, $2,218,187 related todecrease in our CEO’s restricted stock award in which one-third vested on July 2, 2020 in conjunction with the closing of the Business Combination, a $200,000 cash bonus to our CEO, and other legal and professional fees incurred in the Business Combination.price.

 

Liquidity and Capital Resources

 

The Company hasWe have sustained recurring losses and negative cash flows from operations through December 31, 2020. In addition, the Company has significant debt obligations maturing in the twelve-month period subsequent to the date these consolidated financial statements are issued.2022. Since inception, the Company’s operations have been funded principally through the issuance of debt and equity. As of December 31, 2020,2022, the Company had approximately $7$26 million of unrestricted cash, and $33$7.5 million of restricted cash respectively.and $17 million of liquid investments held to maturity consisting primarily of U.S. Treasury securities. Through March 27, 2024, we have $16.9 million in debt principal payments coming due.

On March 1, 2022, the Company and ErieBank agreed to extend the MKG DoubleTree Loan (as defined in Note 4) in principal amount of $15,300,000 to September 13, 2023.

On March 1, 2022, the Company executed a series of transactions with affiliates of Industrial Realty Group, LLC, a Nevada limited liability company that is controlled by the Company’s director Stuart Lichter (“IRG”), and JKP Financial LLC (“JKP”), whereby the IRG affiliates and JKP extended certain of the Company’s debt in aggregate principal amount of $22,853,831 to March 31, 2024.

On June 16, 2022, the Company entered into a loan agreement with CH Capital Lending LLC, which is an affiliate of the Company’s director Stuart Lichter (“CH Capital Lending”), whereby CH Capital Lending agreed to lend the Company $10,500,000.

On June 16, 2022, the Company entered into a loan agreement with Stark Community Foundation, whereby Stark Community Foundation agreed to lend to the Company $5,000,000. Through December 31, 2022, the total of $5,000,000 has been provided to the Company.

On July 1, 2022, the Company entered into an Energy Project Cooperative Agreement (the “EPC Agreement”) with Canton Regional Energy Special Improvement District, Inc., SPH Canton St, LLC, an affiliate of Stonehill Strategic Capital, LLC and City of Canton, Ohio. Under the EPC Agreement, the Company was provided $33,387,844 in Property Assessed Clean Energy (“PACE”) financing.

On August 31, 2022, the Company entered into a Business Loan Agreement (the “Business Loan Agreement”) with Stark County Port Authority (“Stark Port Authority”), pursuant to which the Company borrowed $5,000,000 (the “SCPA Loan”).

On September 15, 2022, the Company entered into a Business Loan Agreement with the City of Canton, Ohio (“City of Canton”), pursuant to which the Company borrowed $5,000,000 (the “Canton Loan”).

On September 27, 2022, the Company entered into a loan agreement with The Huntington National Bank, pursuant to which the lender agreed to loan up to $10,000,000, which may be drawn upon the retail center project achieving certain debt service coverage ratios. To date the Company has not received any funding from this loan agreement.

On September 27, 2022, the Company received approximately $14.7 million in proceeds from a failed sale-leaseback, net of financing costs and amounts held by the Landlord for future debt service. The Company recorded this transaction as a financing liability on the accompanying consolidated balance sheet.

On October 19, 2022, HOF Village Center for Performance, LLC and HOF Village Newco, LLC, subsidiaries of the Company, entered an Ohio Enterprise Bond Fund transaction (“OEBF”) with the State of Ohio and Stark County Port Authority. The OEBF issued $7,500,000 of Series 2022-3 bonds, the proceeds of which were loaned to the Stark County Port Authority and used to purchase Series 2022-A bonds.

On November 7, 2022, the Company received approximately $49 million in net proceeds from a failed sale-leaseback, net of financing costs.

On December 7, 2022, the Company announced it was granted a $15.8 million Transformational Mixed-Use Development (TMUD) tax credit award from the Ohio Tax Credit Authority and the Ohio Department of Development for construction of the waterpark and Hilton Tapestry hotel. The tax credit will be paid upon the Company achieving certain construction milestones.

 

On January 28, 2021,12, 2023, the Company executed a binding term sheet with IRG pursuant to whichsold 1,600 shares of the Company agreed to issue and sell to IRG in a private placement of preferred stock and warrants to purchase common stockCompany’s 7.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share for aan aggregate purchase price of $15 million. In addition, during February 2020, the Company received approximately $34.5 million from the issuance of shares of its common stock, net of offering costs, in an underwritten public offering. See Note 14 to the consolidated financial statements herein. The Company will deposit up to $25 million of the net proceeds from the private placement and the underwritten public offering in the Proceeds Account required under the Term Loan. The Company must have the lender’s prior written approval to withdraw any amounts from the Proceeds Account, pursuant to a budget and schedule agreed upon by HOFV and the lender.$1,600,000.

 


 

 

TheOn February 2, 2023, the Company believesreceived proceeds from the issuance by Stark County Port Authority of $18,100,000 principal amount Tax Increment Financing Revenue Bonds, Series 2023.

We believe that, as a result of these transactions, itwe currently hashave sufficient cash and financing commitments to meet itsour funding requirements over the next year. Notwithstanding, the Company expectswe expect that itwe will need to raise additional financing to accomplish itsour development plan over the next several years. The Company isWe are seeking to obtain additional funding through debt, construction lending, and equity financing. There are no assurances that the Companywe will be able to raise capital on terms acceptable to the Companyus or at all, or that cash flows generated from itsour operations will be sufficient to meet itsour current operating costs. If the Company iswe are unable to obtain sufficient amounts of additional capital, itwe may be required to reduce the scope of itsour planned development, which could harm itsour financial condition and operating results.

 

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,  For the Year Ended
December 31,
 
 2020  2019  2022  2021 
Cash (used in) provided by:             
Operating Activities $(18,365,271) $933,018  $(4,892,748) $(20,762,629)
Investing Activities  (17,579,550)  (16,723,883)  (112,128,287)  (70,734,055)
Financing Activities  67,383,690   15,987,507   133,149,377   68,831,263 
Net increase in cash and restricted cash $31,438,869  $196,642 
Net increase (decrease) in cash and restricted cash $16,128,342  $(22,665,421)

Cash Flows for the Years Ended December 31, 20202022 and 20192021

 

Operating Activities (Restated)

 

Net cash used in operating activities was $18,365,271$4,892,748 during the year ended December 31, 2020,2022, which consisted primarily of a net loss of $45,685,172,$46,168,311, a non-cash changedecrease in the fair value of our warrant liability of $26,733,116,$9,422,000, offset by non-cash depreciation expense of $11,085,230,$12,037,374, amortization of note discounts of $10,570,974,$6,250,721, payment-in-kind interest rolled into debt of $4,066,691, an increase in$3,969,093, a loss on extinguishment of $4,282,220, an increase indebt of $6,377,051, non-cash stock-based compensation expense of $4,523,773,$3,925,303, a decrease in prepaid expenses and other assets of $4,627,992,$289,396, an increase in accounts payable and accrued expenses of $29,264,412, a decrease$9,924,830, an increase in due to affiliates of $9,644,241,$3,015,292, and an increase in other liabilities of $4,721,670.$2,939,079.

 

Net cash provided byused in operating activities was $933,018$20,762,629 during the year ended December 31, 2019,2021, which consisted primarily of a net loss of $55,903,880,$92,813,653, offset by non-cash depreciation expense of $10,915,839,$12,199,148, a non-cash increase in the fair value of our warrant liability of $48,075,943, amortization of note discounts of $13,274,793, bad$5,160,242, payment-in-kind interest rolled into debt of $2,091,990, a gain on extinguishment of $390,400, non-cash stock-based compensation expense of $788,689, an increase on loss on abandonment of project development costs of $12,194,783, prepaid rent of $2,644,397, interest paid in kind of $5,722,638, an increase in accounts receivable of $360,677, an$5,582,634, a increase in prepaid expenses and other assets of $1,012,568,$680,999, an increase in accounts payable and accrued expenses of $3,650,041,$1,113,976, an increase in due to affiliates of $9,459,293,$95,399, and an increasea decrease in other liabilities of $1,849,398.$1,891,179.

 

Investing Activities

 

Net cash used in investing activities was $17,579,550$112,128,287 during the year ended December 31, 2020, and2022, which consisted of $48,614,331 of cash used for project development costs of $95,167,689 and $31,034,781$16,960,598 in investment in the purchase of proceeds from the Business Combination. During the year ended December 31, 2019, netsecurities held to maturity. Net cash used in investing activities was $16,723,883, which$70,734,055 during the year ended December 31, 2021 and consisted solely of cash used for project development costs.

 

Financing Activities

 

Net cash provided by financing activities was $67,383,690$133,149,377 during the year ended December 31, 2020,2022, which consisted primarily of $106,976,651$79,196,400 in proceeds from notes payable and 26,228,499$20,777,893 of proceeds from equity raises,common stock and preferred stock, $65,588,519 from the proceeds from failed sale leaseback, offset by $62,593,562$19,256,319 in repayments of notes payable, and $3,227,898 in payment of financing costs.

Net cash provided by financing activities was $15,987,507 during the year ended December 31, 2019, which consisted primarily of $23,588,122 in proceeds from notes payable, offset by $7,023,874 in repayments of notes payable and $576,741$11,559,606 in payment of financing costs.

 


 

Net cash provided by financing activities was $68,831,263 during the year ended December 31, 2021, which consisted primarily of $37,004,153 in proceeds from notes payable and $50,420,975 of proceeds from common stock and preferred stock, $23,485,200 from the proceeds from warrant exercises, offset by $39,941,576 in repayments of notes payable, and $1,569,779 in payment of financing costs.

 

Subsequent Financing Activity since December 31, 2020

Proposed Private Placement of Preferred Stock and Warrants to Purchase Common Stock

On January 28, 2021, the Company executed a binding term sheet with IRG, LLC (“IRG”) pursuant to which the Company agreed to issue and sell to IRG in a private placement for a purchase price of $15,000,000 (i) shares of a new series of preferred stock, which are convertible into shares of the Company’s Common Stock (the “New Private Placement Preferred Stock”), having an aggregate liquidation preference of $15,000,000, and (ii) a number of warrants, convertible into shares of the Company’s Common Stock at an exercise price of $6.90 per share (the “New Private Placement Warrants”), equal to 50% of the liquidation preference of the preferred stock to be sold divided by the closing price of the Common Stock on a specified date (the “New Private Placement”). The New Private Placement is expected to close in the first quarter of 2021. If the Company consummates the New Private Placement, the Company intends to deposit the net proceeds as necessary into the Proceeds Account (as defined herein), and use the net proceeds for general corporate purposes. The Company cannot give any assurance that the New Private Placement will be completed on the terms described herein, on a timely basis or at all.

February Follow-On Public Offering

On February 12, 2021, the Company closed its public offering of 12,244,897 shares of Common Stock at a public offering price of $2.45 per share pursuant to the terms of the underwriting agreement between the Company and Maxim Group LLC, entered into on February 9, 2021 (the “Underwriting Agreement”). On February 18, 2021, the Company closed the sale of an additional 1,836,734 shares of Common Stock at $2.45 per share pursuant to the exercise of the underwriters’ over-allotment option in connection with its public offering that closed on February 12, 2021. Under the terms of the Underwriting Agreement, each of the Company’s executive officers, directors and stockholders of more than 5% of the outstanding Common Stock signed lock-up agreements pursuant to which each agreed, subject to certain exceptions, not to transact in the Common Stock for a period of 90 days following February 12, 2021. Gross proceeds including the over-allotment, before underwriting discounts and commissions and estimated offering expenses, are approximately $34.5 million. 

Contractual Obligations and Commitments

The following is a summary of the contractual obligations as of December 31, 2020 and the effect of such obligations are expected to have on the liquidity and cash flows in future periods:

  Total  Less than
1 Year
  1-3 Years  3-5 Years  More than
5 Years
 
Notes payable commitments $116,957,539  $54,058,060  $21,499,819  $27,593,660  $13,806,000 
Project and ground leases $42,930,300  $321,900  $965,700  $965,700  $40,677,000 
Total $159,887,839  $54,379,960  $22,465,519  $28,559,360  $54,483,000 

The Company has various debt covenants that require certain financial information to be met. If the Company does not meet the requirements of the debt covenants, the Company will be responsible for paying the full outstanding amount of the note immediately. As of December 31, 2020, we were in compliance with all relevant debt covenants.

Off-Balance Sheet Arrangements

 

The Company did not have any off-balance sheet arrangements as of December 31, 2020.2022.

 

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.

 

For information on the Company’s significant accounting policies please refer to Note 2 to the Company’s Consolidated Financial Statements.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, cost recoveries, events, hotel operation, Hall of Fantasy League, and through the sale of non-fungible tokens. 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.

 

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

 

None.


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 Chief Financial Officer, 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 Chief Financial Officer (our principal financial officer and 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, 2020.2022. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer 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, 2020 due to material weaknesses in our internal control over financial reporting as described below.2022.

 

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 officer) and our Chief Financial Officer (our principal financial officer and 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, 2020 due to the material weaknesses described below.

A material weakness is defined within the Public Company Accounting Oversight Board’s Auditing Standard No. 5 as 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 the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We determined that our internal control over financial reporting had the following material weaknesses:

Primarily due to the small size of the Company, the Company does not maintain sufficient segregation of duties to ensure the processing, review and authorization of all transactions including non-routine transactions.

Our processes lacked timely and complete reviews and analysis of information used to prepare our financial statements and disclosures in accordance with accounting principles generally accepted in the United States of America.  This material weakness resulted in a material error in our accounting for our Warrants and a Restatement of our previously issued financial statements are more fully described in the Explanatory Note in this report and in Note 2, “Restatement of Previously Issued Financial Statements” to our consolidated financial statements included elsewhere in this report.

The Company is evaluating and remediating these weaknesses. Because disclosure controls and procedures include those components of internal control over financial reporting that provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, management also determined that its disclosure controls and procedures were not effective as a result of the foregoing material weaknesses in its internal control over financial reporting.

As a non-accelerated filer, the Company is not required to include in this report a report on the effectiveness of internal control over financial reporting by the Company’s independent registered public accounting firm.

Restatement of Previously Issued Financial Statements

On April 23, 2021, we revised our prior position on accounting for our warrants and concluded that our previously issued (i) audited consolidated financial statements as of and for the year ended December 31, 2020 included in our Annual Report on Form 10-K for such period, and (ii) unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2020 included in the Quarterly Report on Form 10-Q for such period, should not be relied on because of a misapplication in the guidance on warrant accounting. However, the restatement of the financial statements had no impact on the Company’s liquidity or cash position.2022.

 

Changes in Internal Control over Financial Reporting

 

During the quarter ended December 31, 2020, the Company was2022, there were no changes in the process of remediating its material weaknesses and to design an effectiveCompany’s internal control environment. However, the circumstancesover financial reporting that ledmaterially affected, or are reasonably likely to the restatement ofmaterially affect, our internal control over financial statements described in this Annual Report on Form 10-K/A had not yet been identified during the quarter ended December 31, 2020. We are in the process of improving our processes regarding the review and analysis of transactions to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards. Specifically, we plan to provide enhanced access to accounting literature and research materials and consult with third party professionals regarding complex accounting matters. The elements of our remediation plan can only be accomplished over time, and we cannot guarantee that these initiatives will ultimately have the intended effects.reporting.

 

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 20212023 Annual Meeting of Stockholders.Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2022.

 

Item 11. Executive Compensation

 

The information required by this Item 11 is incorporated by reference to our Proxy Statement for the 20212023 Annual Meeting of Stockholders.Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2022.

 

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 20212023 Annual Meeting of Stockholders.Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2022.

 

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 20212023 Annual Meeting of Stockholders.Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2022.

 

Item 14. Principal Accountant Fees and Services

 

The information required by this Item 14 is incorporated by reference to our Proxy Statement for the 20212023 Annual Meeting of Stockholders.Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2022.

 


 

 

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
   
2.1+ Agreement and Plan of Merger, dated as of September 16, 2019, by and among Gordon Pointe Acquisition Corp., GPAQ Acquisition Holdings, Inc., GPAQ Acquiror Merger Sub, Inc., GPAQ Company Merger Sub, LLC, HOF Village, LLC and HOF Village Newco, LLC (incorporated by reference to Exhibit 2.1 to Gordon Pointe Acquisition Corp.’s Current Report on Form 8-K (File No. 001-38363) filed with the Commission on September 17, 2019)
2.2 First Amendment to Agreement and Plan of Merger, dated as of November 5, 2019, by and among Gordon Pointe Acquisition Corp., GPAQ Acquisition Holdings, Inc., GPAQ Acquiror Merger Sub, Inc., GPAQ Company Merger Sub, LLC, HOF Village, LLC and HOF Village Newco, LLC (incorporated by reference to Exhibit 2.2 to Gordon Pointe Acquisition Corp.’s Current Report on Form 8-K (File No. 001-38363) filed with the Commission on November 8, 2019)
2.3 Second Amendment to Agreement and Plan of Merger, dated as of March 10, 2020, by and among Gordon Pointe Acquisition Corp., GPAQ Acquisition Holdings, Inc., GPAQ Acquiror Merger Sub, Inc., GPAQ Company Merger Sub, LLC, HOF Village, LLC and HOF Village Newco, LLC (incorporated by reference to Exhibit 2.1 to Gordon Pointe Acquisition Corp.’s Current Report on Form 8-K (File No. 001-38363) filed with the Commission on March 16, 2020)
2.4 Third Amendment to Agreement and Plan of Merger, dated as of May 22, 2020, by and among Gordon Pointe Acquisition Corp., GPAQ Acquisition Holdings, Inc., GPAQ Acquiror Merger Sub, Inc., GPAQ Company Merger Sub, LLC, HOF Village, LLC and HOF Village Newco, LLC (incorporated by reference to Exhibit 2.1 to Gordon Pointe Acquisition Corp.’s Current Report on Form 8-K (File No. 001-38363) filed with the Commission on May 28, 2020)
3.1 Amended and Restated Certificate of Incorporation of theHall 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)
3.5Certificate 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)
3.6Certificate 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)
3.7Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.23.1 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)August 12, 2021)
4.1Specimen 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)
4.7Second 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)
4.8Second 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 December 30, 2020)March 22, 2023)
4.74.9Amended 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)
4.10Amended 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)
4.11Amended 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)
4.12Amended 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)
4.13Amended 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* Description of Registered Securities*Securities
10.1 Form of Lock-Up Agreement (incorporated by reference to Exhibit 10.1 to GPAQ Acquisition Holdings, Inc.’s Registration Statement on Form S-4 (File No. 333-234655) filed with the Commission on November 12, 2019)
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 Form of Release Agreement (incorporated by reference to Exhibit 10.3 to GPAQ Acquisition Holdings, Inc.’s Registration Statement on Form S-4 (File No. 333-234655) filed with the Commission on November 12, 2019)
10.4 Hall of Fame Resort & Entertainment Company Amended 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 99.110.1 of the Company’s Registration Statement on Form S-88-K (File No. 333-248851)001-38363), filed with the Commission on September 16, 2020)June 4, 2021)
10.5 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)
10.6 Restricted Stock Unit Award Agreement, by and between theHall of Fame Resort & Entertainment Company and Tara Charnes, dated as of September 16, 2020 (incorporated by reference to Exhibit 99.3 of the Company’s Registration Statement on Form S-8 (File No. 333-248851) filed with the Commission on September 16, 2020)
10.7 Restricted Stock Unit Award Agreement, by and between the Company and Erica Muhleman, dated as of September 16, 2020 (incorporated by reference to Exhibit 99.4 of the Company’s Registration Statement on Form S-8 (File No. 333-248851) filed with the Commission on September 16, 2020)


10.8Form 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)
10.910.8 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)


10.9Restricted Stock Unit Award Agreement, by and between Hall of Fame Resort & Entertainment Company and Olivia Steier, dated as of November 13, 2020 (incorporated by reference to Exhibit 99.2 of the Company’s Registration Statement on Form S-8 (File No. 333-259202), filed with the Commission on August 31, 2021)
10.10 Amended and Restated Employment Agreement, dated July 1, 2020,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)
10.11Employment Agreement, dated February 14, 2022, by and between Michael Crawford, HOFVBenjamin Lee, HOF Village Newco, LLC and Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 10.510.1 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)March 10, 2022)
10.1110.12 Employment Agreement, dated June 22, 2020, by and between Michael Levy and HOF Village, LLC (incorporated by reference to Exhibit 10.6 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)
10.12Employment Agreement, dated September 16, 2019, by and between Jason Krom and HOF Village, LLC (incorporated by reference to Exhibit 10.7 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 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)
10.14 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)
10.15 Employment Agreement dated September 14, 2020, between Erica Muhleman and Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 10.10 of the Company’s Amendment No. 2 to Form S-3 on Form S-1 (File No. 333-240045), filed with the Commission on September 22, 2020)
10.16Amendment No. 1, dated December 22, 2020, to Employment Agreement between Michael Crawford, HOFV Newco, LLC and Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-1 (File No. 333-252807) filed with the Commission on February 5, 2021)
10.17Amendment No. 1, dated December 22, 2020, to Employment Agreement between Michael Levy and HOF Village, LLC (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form S-1 (File No. 333-252807) filed with the Commission on February 5, 2021)
10.1810.16 Amendment No. 1, dated December 22, 2020, to Employment Agreement between Jason Krom and HOF Village, LLC (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-1 (File No. 333-252807) filed with the Commission on February 5, 2021)
10.19Amendment 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)
10.2010.17 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)
10.21Amendment No. 1, dated December 22, 2020, to Employment Agreement between Erica Muhleman and Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form S-1 (File No. 333-252807) filed with the Commission on February 5, 2021)
10.22+10.18+ 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)
10.2310.19 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)
10.2410.20 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)
10.25+10.21+ Amended and Restated Sponsorship and Naming Rights Agreement, dated July 2, 2020, by and among HOF Village, LLC, National Football Museum, Inc. and Johnson Controls, Inc. (incorporated by reference to Exhibit 10.10 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)
10.2610.22 Joinder and Second Amendment to Promissory Note, dated June 24, 2020,March 1, 2022, by and among HOF Village Newco, LLC, and HOF Village Hotel II, LLC, in favoras the makers, Hall of Fame Resort & Entertainment Company, and JKP Financial, LLC, as holder (incorporated by reference to Exhibit 10.1110.4 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)March 2, 2022)
10.2710.23Backup 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)


10.24 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)
10.28IRG Master Holdings, LLC Guaranty dated November 16, 2019 in favor of GACP Finance Co., LLC (incorporated by reference to Exhibit 10.17 to Amendment No. 1 to GPAQ Acquisition Holdings, Inc.’s Registration Statement on Form S-4 (File No. 333-234655) filed with the Commission on January 23, 2020)
10.29+10.25+ 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)
10.30First Amended and Restated License Agreement, dated September 16, 2019, between the National Football Museum, Inc. and HOF Village, LLC (incorporated by reference to Exhibit 10.5 to Amendment No. 1 to GPAQ Acquisition Holdings, Inc.’s Registration Statement on Form S-4 (File No. 333-234655) filed with the Commission on January 23, 2020)


10.31+Amended and Restated Media License Agreement, dated July 1, 2020, among National Football Museum, Inc., HOF Village Media Group, LLC and HOF Village, LLC (incorporated by reference to Exhibit 10.30 of the Company’s Amendment No. 1 to Form S-1 (File No. 333-249133), filed with the Commission on October 19, 2020)
10.32+10.26+ Technology as a Service Agreement, dated October 9, 2020, by and between HOF Village NEWCO, LLC and Johnson Controls, Inc. (incorporated by reference to Exhibit 10.9 of the Company’s Form 10-Q (001-38363), filed with the Commission on November 5, 2020)
10.33+10.27+ 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)
10.3410.28 GuarantyAmendment Number 1 to Term Loan Agreement, dated DecemberJanuary 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)
10.29Amendment 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)
10.30Amendment 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, 2020, by IRG Master Holding, Inc.2021)
10.31Amendment 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)
10.32Amendment Number 5 to Term Loan Agreement, dated as of December 3, 2020)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)
10.33Assignment 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)
10.34Amendment 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)
10.35 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)
10.36Amendment 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 S-3 Registration Statement (File No. 333-266750), filed with the Commission on August 10, 2022)
10.37Letter 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)
10.3610.38 Securities Purchase Agreement, dated December 29, 2020,May 13, 2021, between Hall of Fame Resort & Entertainment Company Industrial Realtyand IRG, LLC  (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (001-38363), filed with the Commission on May 14, 2021)


10.39Equity 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)
10.40Joinder 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)
10.41Joinder 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)
10.42Loan 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)
10.43Promissory 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)
10.44Guaranty 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)
10.45Energy 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)
10.46Securities Exchange Agreement, dated March 28, 2022, between Hall of Fame Resort & Entertainment Company and 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 December 30, 2020)March 29, 2022)
10.3710.47 Securities 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)
10.48Promissory 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)
10.49Backup 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)
10.50Joinder 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)
10.51Business 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)
10.52Energy 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)
10.53Business 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)
10.54Business 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)
10.55Loan 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)
10.56Promissory 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)


10.57Ground 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)
10.58Guaranty 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)
10.59Payment 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)
10.60Loan 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)
10.61Intercreditor 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)
10.62Purchase Term Sheet,and Sale Agreement, dated January 28, 2021,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)
10.63Ground 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)
10.64Limited 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)
10.65Pledge 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)
10.66Post-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)
10.67Purchase 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)
10.68Hotel 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)
10.69IRG 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 10.3810.8 of the Company’s Form 8-K (001-38363), filed with the Commission on November 9, 2022)
10.70Form 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)
10.71*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


10.72*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
10.73*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
10.74*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
10.75Hall of Fame Resort & Entertainment Company 2023 Inducement Plan (incorporated by reference to Exhibit 99.1 of the Company’s Registration Statement on Form S-1S-8 (File No. 333-252807) filed with the Commission on February 5, 2021) and IRG, LLC
21.1Subsidiaries (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K333-270572) filed with the Commission on March 10, 2021)15, 2023)
10.76Form 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)
21.1*Subsidiaries
23.123.1* Consent of independent registered public accountant.*
31.131.1* Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)*
31.231.2* Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)*
3232* Certification of the Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350*1350
101.INS101.INS* Inline XBRL Instance Document*Document.
101.SCH101.SCH* Inline XBRL Taxonomy Extension Schema*Schema Document.
101.CAL101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document*Document.
101.DEF101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document*Document.
101.LAB101.LAB* Inline XBRL Taxonomy Extension LabelsLabel Linkbase Document*Document.
101.PRE101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document*Document.
104*Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101).

 

*Filed herewith.
+Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request.

 

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 27, 2023  
May 11, 2021By:/s/ Michael Crawford
  Michael Crawford
  President and Chief Executive Officer (Principal Executive 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.

SignatureTitleDate
/s/ Michael CrawfordChief Executive Officer and DirectorMarch 27, 2023
Michael Crawford(Principal Executive Officer)
/s/ Benjamin LeeChief Financial OfficerMarch 27, 2023
Benjamin Lee(Principal Financial Officer)
/s/ Anthony J. BuzzelliDirectorMarch 27, 2023
Anthony J. Buzzelli
/s/ David DennisDirectorMarch 27, 2023
David Dennis
/s/ James J. DolanDirectorMarch 27, 2023
James J. Dolan
/s/ Karl L. HolzDirectorMarch 27, 2023
Karl L. Holz
/s/ Stuart LichterDirectorMarch 27, 2023
Stuart Lichter
/s/ Marcus AllenDirectorMarch 27, 2023
Marcus Allen
/s/ Mary OwenDirectorMarch 27, 2023
Mary Owen
/s/ Kimberly K. SchaeferDirectorMarch 27, 2023
Kimberly K. Schaefer

  


 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Consolidated Financial Statements

For the Years Ended December 31, 2020 (Restated)2022 and 20192021

 

Table of Contents

  Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 688) F-2
   
Consolidated Balance Sheets as of December 31, 2020 (Restated)2022 and 20192021 F-3
   
Consolidated Statements of Operations for the years endedYears Ended December 31, 2020 (Restated)2022 and 20192021 F-4
   
Consolidated Statements of Changes in Stockholders’ Equity for the years endedYears Ended December 31, 2020 (Restated)2022 and 20192021 F-5
   
Consolidated Statements of Cash Flows for the years endedYears Ended December 31, 2020 (Restated)2022 and 20192021 F-6
   
Notes to the Consolidated Financial Statements F-8

 


 

 

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 sheets of Hall of Fame Resort & Entertainment Company (the “Company”) as of December 31, 20202022 and 2019,2021, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2020,2022, 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, 20202022 and 2019,2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020,2022, in conformity with accounting principles generally accepted in the United States of America.

Restatement of Previously Issued Financial Statements

As disclosed in Notes 2 and 15 to the financial statements, the accompanying consolidated financial statements as of December 31, 2020 and for the year then ended have been restated to correct an error.

 

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 audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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 audits 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.

 

/s/ Marcum LLP

 

Marcum LLP

 

We have served as the Company’s auditor since 2019.

 

New York, NY
March 10, 2021, except for the effects of the restatement disclosed in Notes 2 and 15 to the consolidated financial statements as to which the date is May 11, 202127, 2023

 


 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

  As of December 31,
  2020 2019
  (Restated)  
Assets    
Cash $7,145,661  $2,818,194 
Restricted cash  32,907,800   5,796,398 
Accounts receivable, net  1,545,089   1,355,369 
Prepaid expenses and other assets  6,920,851   2,292,859 
Property and equipment, net  154,355,763   134,910,887 
Project development costs  107,969,139   88,587,699 
Total assets $310,844,303  $235,761,406 
         
Liabilities and stockholders’ equity        
Liabilities        
Notes payable, net $98,899,367  $164,922,714 
Accounts payable and accrued expenses  20,538,190   12,871,487 
Due to affiliate  1,723,556   19,333,590 
Warrant liability  19,112,000   - 
Other liabilities  5,489,469   3,684,276 
Total liabilities  145,762,582   200,812,067 
         
Commitments and contingencies (Note 7 and 8)        
         
Stockholders’ equity        
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; No shares issued or outstanding at December 31, 2020 and December 31, 2019  -   - 
Common stock, $0.0001 par value; 300,000,000 shares authorized; 64,091,266 and 5,436,000 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively  6,410   544 
Additional paid-in capital  172,112,688   - 
(Accumulated deficit) retained earnings  (6,840,871)  34,948,795 
Total equity attributable to HOFRE  165,278,227   34,949,339 
Non-controlling interest  (196,506)  - 
Total equity  165,081,721   - 
Total liabilities and stockholders’ equity $310,844,303  $235,761,406 

 

The accompanying notes are an integral part of these consolidated financial statements.

  As of December 31, 
  2022  2021 
Assets      
Cash $26,016,547  $10,282,983 
Restricted cash  7,499,835   7,105,057 
Investments held to maturity  17,033,515   - 
Investments available for sale  4,067,754   - 
Accounts receivable, net  1,811,143   2,367,225 
Prepaid expenses and other assets  3,340,342   8,350,604 
Property and equipment, net  248,826,853   180,460,562 
Right-of-use lease assets  7,562,048   - 
Project development costs  140,138,924   128,721,480 
Total assets $456,296,961  $337,287,911 
         
Liabilities and stockholders’ equity        
Liabilities        
Notes payable, net $171,315,860  $101,360,196 
Accounts payable and accrued expenses  17,575,683   12,120,891 
Due to affiliate  855,485   1,818,955 
Warrant liability  911,000   13,669,000 
Financing liability  60,087,907   - 
Derivative liability - interest rate swap  200,000   - 
Operating lease liability  3,413,210   - 
Other liabilities  10,679,704   3,740,625 
Total liabilities  265,038,849   132,709,667 
         
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, 2022 and 2021  -   - 
Series B convertible preferred stock, $0.0001 par value; 15,200 shares designated; 200 and 15,200 shares issued and outstanding at December 31, 2022 and 2021, respectively; liquidation preference of $222,011 as of December 31, 2022  -   2 
Series C convertible preferred stock, $0.0001 par value; 15,000 shares designated; 15,000 and  0 shares issued and outstanding at December 31, 2022 and 2021, respectively; liquidation preference of $15,707,500 as of December 31, 2022  2   - 
Common stock, $0.0001 par value; 300,000,000 shares authorized; 5,604,869 and 4,434,662 shares issued and outstanding at December 31, 2022 and 2021, respectively  560   443 
Additional paid-in capital  339,038,466   305,126,404 
Accumulated deficit  (146,898,343)  (99,951,839)
Total equity attributable to HOFRE  192,140,685   205,175,010 
Non-controlling interest  (882,573)  (596,766)
Total equity  191,258,112   204,578,244 
Total liabilities and stockholders’ equity $456,296,961  $337,287,911 

 


 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

  For the Years Ended
December 31,
  2020 2019
  (Restated)  
Revenues    
Sponsorships, net of activation costs $6,424,201  $6,720,298 
Rents and cost recoveries  474,020   1,064,569 
Event revenues  38,750   76,464 
Hotel revenues  162,183   - 
Total revenues $7,099,154  $7,861,331 
         
Operating expenses        
Property operating expenses  26,631,821   16,707,537 
Hotel operating expenses  419,595   - 
Commission expense  1,671,964   1,003,226 
Depreciation expense  11,085,230   10,915,839 
Loss on abandonment of project development costs  -   12,194,783 
Total operating expenses  39,808,610   40,821,385 
         
Loss from operations  (32,709,456)  (32,960,054)
         
Other expense        
Interest expense  (5,718,473)  (9,416,099)
Amortization of discount on note payable  (10,570,974)  (13,274,793)
Change in fair value of warrant liability  26,733,116    - 
Loss on extinguishment of debt  (4,282,220)  - 
Loss in joint venture  -   (252,934)
Business combination costs  (19,137,165)  - 
Total other expense $(12,975,716) $(22,943,826)
         
Net loss before income taxes $(45,685,172) $(55,903,880)
         
(Benefit from) provision for income taxes  -   - 
         
Net loss $(45,685,172) $(55,903,880)
         
Non-controlling interest  (196,506)  - 
         
Net loss attributable to HOFRE stockholders $(45,488,666) $(55,903,880)
         
Net loss per share - basic and diluted $(1.71) $(10.28)
         
Weighted average shares outstanding, basic and diluted  26,644,449   5,436,000 

The accompanying notes are an integral part of these consolidated financial statements.

  For the Years Ended
December 31,
 
  2022  2021 
Revenues      
Sponsorships, net of activation costs $2,697,487  $6,023,863 
Event, rents and cost recoveries  7,116,594��  986,710 
Hotel revenues  6,165,291   3,759,811 
Total revenues  15,979,372   10,770,384 
         
Operating expenses        
Operating expenses  35,982,464   28,801,125 
Hotel operating expenses  5,949,839   4,408,691 
Impairment expense  -   1,748,448 
Depreciation expense  12,037,374   12,199,148 
Total operating expenses  53,969,677   47,157,412 
         
Loss from operations  (37,990,305)  (36,387,028)
         
Other income (expense)        
Interest expense, net  (5,377,146)  (3,580,840)
Amortization of discount on note payable  (6,250,721)  (5,160,242)
Other income  604,912   - 
Change in fair value of interest rate swap  (200,000)  - 
Change in fair value of warrant liability  9,422,000   (48,075,943)
(Loss) gain on forgiveness of debt  (6,377,051)  390,400 
Total other expense  (8,178,006)  (56,426,625)
         
Net loss $(46,168,311) $(92,813,653)
         
Preferred stock dividends  (1,064,000)  (697,575)
Loss attributable to non-controlling interest  285,807   400,260 
         
Net loss attributable to HOFRE stockholders $(46,946,504) $(93,110,968)
         
Net loss per share, basic and diluted $(9.01) $(22.69)
         
Weighted average shares outstanding, basic and diluted  5,208,054   4,104,358 

 


 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

  Common Stock  Additional
Paid-In
  (Accumulated
Deficit)
Retained
  Total Equity
Attributable to
HOFRE
  Non-controlling  Total
Stockholders’
 
  Shares  Amount  Capital  Earnings  Stockholders  Interest  Equity 
                      
Balance as of January 1, 2019  5,436,000  $544  $-  $90,852,675  $90,853,219  $-  $90,853,219 
                             
Net loss  -   -   -   (55,903,880)  (55,903,880)  -   (55,903,880)
                             
Balance as of December 31, 2019  5,436,000  $544  $-  $34,948,795  $34,949,339  $-  $34,949,339 
                             
Contribution from shareholders  -   -   -   3,699,000   3,699,000   -   3,699,000 
Conversion of the preferred equity loan  12,277,428   1,228   58,438,397   -   58,439,625   -   58,439,625 
Shares of common stock issued for accounts payable and due to affiliates  2,292,624   229   23,425,932   -   23,426,161   -   23,426,161 
Business combination with GPAQ on July 1, 2020 (Restated)  6,538,201   653   494,179   -   494,781   -   494,781 
Shares of common stock issued in exchange of debt  16,093,857   1,609   54,516,767   -   54,518,376   -   54,518,376 
Stock-based compensation on restricted stock awards  715,929   72   2,772,733   -   2,772,805   -   2,772,805 
Stock-based compensation on restricted stock units  -   -   1,554,968   -   1,554,968   -   1,554,968 
Vesting of restricted stock units  176,514   18   (18)  -   -   -   - 
Stock-based compensation - common stock awards  25,000   3   195,997   -   196,000   -   196,000 
Contingent beneficial conversion feature on PIPE Notes  -   -   14,166,339   -   14,166,339   -   14,166,339 
November 18, 2020 capital raise, net of offering costs (Restated)  17,857,142   1,786   14,476,624   -   14,478,410   -   14,478,410 
December 4, 2020 capital raise, net of offering costs (Restated)  2,678,571   268   2,070,821   -   2,071,089   -   2,071,089 
Net loss (Restated)  -   -   -   (45,488,666)  (45,488,666)  (196,506)  (45,685,172)
                             
Balance as of December 31, 2020 (Restated)  64,091,266  $6,410  $172,112,688  $(6,840,871) $165,278,227  $(196,506) $165,081,721 

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

The accompanying notes are an integral part of these consolidated financial statements.

  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  -  $-   -  $-   2,913,181  $291  $172,118,807  $(6,840,871) $165,278,227  $(196,506) $165,081,721 
                                             
Stock-based compensation on RSU and restricted stock awards  -   -   -   -   -   -   5,510,134   -   5,510,134   -   5,510,134 
Stock-based compensation - common stock awards  -   -   -   -   1,136   -   72,500   -   72,500   -   72,500 
February 12, 2021 Capital Raise, net of offering costs  -   -   -   -   556,586   56   27,561,942   -   27,561,998   -   27,561,998 
February 18, 2021 Overallotment, net of offering costs  -   -   -   -   83,488   8   4,184,990   -   4,184,998   -   4,184,998 
Issuance of vested RSUs  -   -   -   -   1,092   -   -   -   -   -   - 
Issuance of vested restricted stock awards  -   -   -   -   3,021   -   -   -   -   -   - 
Sale of Series B preferred stock and warrants  15,200   2   -   -   -   -   15,199,998   -   15,200,000   -   15,200,000 
Vesting of restricted stock units, net of tax  -   -   -   -   38,237   4   (4)  -   -   -   - 
Exercise of Warrants  -   -   -   -   762,507   76   77,004,066   -   77,004,142   -   77,004,142 
Sale of common stock under at the market offering  -   -   -   -   75,414   8   3,473,971   -   3,473,979   -   3,473,979 
Series B preferred stock dividends  -   -   -   -   -   -   -   (697,575)  (697,575)  -   (697,575)
Net loss  -   -   -   -   -   -   -   (92,413,393)  (92,413,393)  (400,260)  (92,813,653)
                                             
Balance as of December 31, 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   4   803,057   -   803,061   -   803,061 
Warrants issued in connection with modification of notes payable  -   -   -   -   -   -   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   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 

 


 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

  For the Years Ended
December 31,
 
  2020  2019 
  (Restated)    
Cash Flows From Operating Activities      
Net loss $(45,685,172) $(55,903,880)
Adjustments to reconcile net loss to cash flows (used in) provided by operating activities        
Depreciation expense  11,085,230   10,915,839 
Amortization of note discounts  10,570,974   13,274,793 
Change in fair value of warrant liability  (26,733,116)    
Bad debt expense  -   788,689 
Loss on abandonment of project development costs  -   12,194,783 
Loss from equity method investment  -   252,576 
Interest paid in kind  4,066,691   5,722,638 
Loss on extinguishment of debt  4,282,220   - 
Stock-based compensation expense  4,523,773   - 
Changes in operating assets and liabilities:        
Accounts receivable  (189,720)  360,677 
Prepaid expenses and other assets  (4,627,992)  (1,631,829)
Accounts payable and accrued expenses  29,264,412   3,650,041 
Due to affiliates  (9,644,241)  9,459,293 
Other liabilities  4,721,670   1,849,398 
Net cash (used in) provided by operating activities  (18,365,271)  933,018 
         
Cash Flows From Investing Activities        
Additions to project development costs and property equipment  (48,614,331)  (16,723,883)
Proceeds from business combination  31,034,781   - 
Net cash used in investing activities  (17,579,550)  (16,723,883)
         
Cash Flows From Financing Activities        
Proceeds from notes payable  106,976,651   23,588,122 
Repayments of notes payable  (62,593,562)  (7,023,874)
Payment of financing costs  (3,227,898)  (576,741)
Proceeds from equity raises  26,228,499   - 
Net cash provided by financing activities  67,383,690   15,987,507 
         
Net increase in cash and restricted cash  31,438,869   196,642 
         
Cash and restricted cash, beginning of year  8,614,592   8,417,950 
         
Cash and restricted cash, end of year $40,053,461  $8,614,592 
         
Cash $7,145,661  $2,818,194 
Restricted Cash  32,907,800   5,796,398 
Total cash and restricted cash $40,053,461  $8,614,592 

The accompanying notes are an integral part of these consolidated financial statements.

  For the Years Ended
December 31,
 
  2022  2021 
Cash Flows From Operating Activities      
Net loss $(46,168,311) $(92,813,653)
Adjustments to reconcile net loss to cash flows used in operating activities        
Depreciation expense  12,037,374   12,199,148 
Amortization of note discounts  6,250,721   5,160,242 
Amortization of financing liability  1,156,362   - 
Bad debt expense  

807,877

   - 
Impairment expense  -   1,748,448 
Interest income on investments held to maturity  (72,917)  - 
Interest paid in kind  3,969,093   2,091,990 
Loss (gain) on extinguishment of debt  6,377,051   (390,400)
Change in fair value of warrant liability  (9,422,000)  48,075,943 
Change in fair value of interest rate swap  200,000   - 
Stock-based compensation expense  3,925,303   5,582,634 
Non-cash lease expense  179,898   - 
Change in fair value of securities available for sale  (67,754)  - 
Changes in operating assets and liabilities:        
Accounts receivable  

(251,795

)  (1,054,178)
Prepaid expenses and other assets  289,396   (680,999)
Accounts payable and accrued expenses  9,924,830   1,113,976 
Operating Leases  17,753   - 
Due to affiliates  3,015,292   95,399 
Other liabilities  2,939,079   (1,891,179)
Net cash used in operating activities  (4,892,748)  (20,762,629)
         
Cash Flows From Investing Activities        
Additions to project development costs and property and equipment  (95,167,689)  (70,734,055)
Investment in securities held to maturity  (16,960,598)  - 
Net cash used in investing activities  (112,128,287)  (70,734,055)
         
Cash Flows From Financing Activities        
Proceeds from notes payable  79,196,400   37,004,153 
Payment for fractional shares  (118,344)    
Repayments of notes payable  (19,256,319)  (39,941,576)
Payment of financing costs  (11,559,606)  (1,569,779)
Payment of dividends  (750,000)  (193,333)
Proceeds from sale of common stock under ATM  20,777,893   3,099,602 
Proceeds from sale of Series B preferred stock and warrants  -   15,200,000 
Proceeds from equity raises, net of offering costs  -   31,746,996 
Proceeds from failed sale leaseback  65,588,519   - 
Payment on sale leaseback  (729,166)  - 
Proceeds from exercise of warrants  -   23,485,200 
Net cash provided by financing activities  133,149,377   68,831,263 
         
Net increase (decrease) in cash and restricted cash  16,128,342   (22,665,421)
         
Cash and restricted cash, beginning of year  17,388,040   40,053,461 
         
Cash and restricted cash, end of year $33,516,382  $17,388,040 
         
Cash $26,016,547  $10,282,983 
Restricted Cash  7,499,835   7,105,057 
Total cash and restricted cash $33,516,382  $17,388,040 

 


 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  For the Years Ended
December 31,
 
  2020  2019 
  (Restated)    
Supplemental disclosure of cash flow information      
Cash paid during the year for interest $5,962,918  $1,198,888 
Cash paid for income taxes $-  $- 
         
Non-cash investing and financing activities        
Project development cost acquired through accounts payable and accrued expenses, net $(1,297,215) $(3,329,800)
Conversion of the preferred equity loan to common equity $58,439,625  $- 
Shares of common stock issued for accounts payable and due to affiliate $23,426,161  $- 
Non-cash contribution from PFHOF in shared services agreement $3,699,000  $- 
Shares of common stock issued in exchange of debt $54,518,376  $- 
Conversion of GPAQ Sponsor Loan into convertible PIPE debt $500,000  $- 
Deferred financing costs in accounts payable and accrued expenses, net $610,810  $620,576 
Contingent beneficial conversion feature on PIPE Notes $14,166,339  $- 
Initial value of warrants issued accounted for as liabilities $

45,845,116

  $- 
Reclassify amounts from capitalized development costs to property and equipment $27,373,715  $- 

The accompanying notes are an integral part of these consolidated financial statements.

  For the Years Ended
December 31,
 
  2022  2021 
Supplemental disclosure of cash flow information      
Cash paid during the year for interest $7,377,808  $3,068,627 
Cash paid for income taxes $-  $- 
         
Non-cash investing and financing activities        
Project development cost acquired through accounts payable and accrued expenses, net $3,346,580  $5,929,913 
Settlement of warrant liability $-  $53,518,943 
Reclassify amounts from capitalized development costs to property and equipment $53,752,242  $34,938,544 
Amendment of Series C warrant liability for equity classification $3,336,000  $- 
Amendment of Series C and D warrants $400,000  $- 
Accrued dividends $314,000  $504,242 
ATM proceeds receivable $-  $374,377 
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  $- 

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 1: Organization, and 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 in this Form 10-K/A as the “Business Combination.”

Upon the consummation of the Business Combination: (i) Acquiror Merger Sub merged with and into GPAQ, with GPAQ continuing as the surviving entity (the “Acquiror Merger”) and (ii) Company Merger Sub merged with and into Newco, with Newco continuing as the surviving entity (the “Company Merger”)Combination”. In advance of the Company Merger, HOF Village transferred all of its assets, liabilities and obligations to Newco pursuant to a contribution agreement. In connection with the closing of the Business Combination, the Company changed its name from “GPAQ Acquisition Holdings, Inc.” to “Hall of Fame Resort & Entertainment Company.” As a result of the Business Combination, GPAQ and Newco continue as the Company’s wholly owned subsidiaries. Upon consummation of the Business Combination and, in connection therewith, HOFRE became a successor issuer to GPAQ by operation of Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Business Combination is, in substance, a reverse merger recapitalization and accordingly, the historical financials prior to the date of the Business Combination in these consolidated financial statements are those of HOF Village LLC and its subsidiaries. The Business Combination is further described in Note 11.

 

The Company is a resort and entertainment company leveraging the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (“PFHOF”). Headquartered in Canton, Ohio, the Company owns the Hall of Fame Village, powered by Johnson Controls, a multi-use sports, entertainment, and media destination centered around the PFHOF’s campus. The Company is creatingpursuing a diversified setdifferentiation strategy across three pillars, including destination-based assets, HOF Village Media Group, LLC (“Hall of revenue streams through developing themed attractions, premier entertainment programming, sponsorshipsFame Village Media”), and media.gaming. The Company is located in the only tourism development district in the state of Ohio.

 

The Company has entered into severalmultiple agreements with PFHOF, an affiliate of HOFRE, 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 powered by Johnson Controls sits, portions of which are owned by the Company and portions of which are net leased to the Company by the government and quasi-governmental entities (see Note 7)9 for additional information). Under these agreements, the PFHOF and the governmentlessor entities are entitled to use portions of the Hall of Fame Village powered by Johnson Controls 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)

COVID-19

Since 2020, the world has been impacted by the novel coronavirus (“COVID-19”) pandemic. The COVID-19 pandemic and measures to prevent its spread have impacted the Company’s business in a number of ways, most significantly with regard to a reduction in the number of events and attendance at events at Tom Benson Hall of Fame Stadium and ForeverLawn Sports Complex, which has also negatively impacted the Company’s ability to sell sponsorships. Further, the COVID-19 pandemic has caused a number of supply chain disruptions, which have negatively impacted the Company’s ability to obtain the materials needed to complete construction as well as increases in the costs of materials and labor. The continued impact of these disruptions and the ultimate extent of their adverse impact on the Company’s financial and operating results will continue to be dictated by the length of time that such disruptions continue, which will, in turn, depend on the currently unpredictable duration and severity of the impacts of the COVID-19 pandemic, and among other things, the impact of governmental actions imposed in response to the COVID-19 pandemic as well as individuals’ and companies’ risk tolerance regarding health matters going forward and developing strain mutations.

Liquidity

The Company has sustained recurring losses through December 31, 2022. Since inception, the Company’s operations have been funded principally through the issuance of debt and equity. As of December 31, 2022, the Company had approximately $26 million of unrestricted cash, $7.5 million of restricted cash, and $17 million of liquid investments held to maturity, consisting primarily of U.S. treasury securities. The Company has approximately $16.9 million of debt coming due through March 27, 2024.

The Company has entered into the following financing transactions. See Notes 4, 12 and 15, for more information on these transactions.

On March 1, 2022, the Company and ErieBank agreed to extend the MKG DoubleTree Loan (as defined in Note 4) in principal amount of $15,300,000 to September 13, 2023.

On March 1, 2022, the Company executed a series of transactions with affiliates of Industrial Realty Group, LLC, a Nevada limited liability company that is controlled by the Company’s director Stuart Lichter (“IRG”), and JKP Financial LLC (“JKP”), whereby the IRG affiliates and JKP extended certain of the Company’s debt in aggregate principal amount of $22,853,831 to March 31, 2024.

On June 16, 2022, the Company entered into a loan agreement with CH Capital Lending LLC, which is an affiliate of the Company’s director Stuart Lichter (“CH Capital Lending”), whereby CH Capital Lending agreed to lend the Company $10,500,000.

On June 16, 2022, the Company entered into a loan agreement with Stark Community Foundation, whereby Stark Community Foundation agreed to lend to the Company $5,000,000. Through December 31, 2022, the total of $5,000,000 has been provided to the Company.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 1: Organization, and Nature of Business, and Liquidity (continued)

 

Organization and Nature of BusinessLiquidity (continued)

 

On December 11, 2018,July 1, 2022, the HOF VillageCompany entered into the Master Transactionan Energy Project Cooperative Agreement (the “Master Transaction“EPC Agreement”) with Canton Regional Energy Special Improvement District, Inc., whereby, among other things, it amendedSPH Canton St, LLC, an affiliate of Stonehill Strategic Capital, LLC and City of Canton, Ohio. Under the HOF Village LLCEPC Agreement, (see Note 4)the Company was provided $33,387,844 in Property Assessed Clean Energy (“PACE”) financing.

On August 31, 2022, the Company entered into a Business Loan Agreement (the “Business Loan Agreement”) with Stark County Port Authority (“Stark Port Authority”), pursuant to which the Company borrowed $5,000,000 (the “SCPA Loan”).

 

COVID-19On September 15, 2022, the Company entered into a Business Loan Agreement with the City of Canton, Ohio (“City of Canton”), pursuant to which the Company borrowed $5,000,000 (the “Canton Loan”).

On September 27, 2022, the Company entered into a loan agreement with The Huntington National Bank, pursuant to which the lender agreed to loan up to $10,000,000, which may be drawn upon the retail center project achieving certain debt service coverage ratios. To date the Company has not received any funding from this loan agreement.

On September 27, 2022, the Company received approximately $14.7 million in proceeds from a failed sale-leaseback, net of financing costs and amounts held by the Landlord for future debt service. The Company recorded this transaction as a financing liability on the accompanying consolidated balance sheet.

On October 19, 2022, HOF Village Center for Performance, LLC and HOF Village Newco, LLC, subsidiaries of the Company, entered an Ohio Enterprise Bond Fund transaction (“OEBF”) with the State of Ohio and Stark County Port Authority. The OEBF issued $7,500,000 of Series 2022-3 bonds, the proceeds of which were loaned to the Stark County Port Authority and used to purchase Series 2022-A bonds.

On November 7, 2022, the Company received approximately $49 million in net proceeds from a failed sale-leaseback, net of financing costs.

On December 7, 2022, the Company announced it received a $15.8 million Transformational Mixed-Use Development (TMUD) tax credit award from the Ohio Tax Credit Authority and the Ohio Department of Development for construction of the waterpark and Hilton Tapestry hotel.

 

In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread to multiple countries, including the United States. As the COVID-19 continues to spread in the United States,January 2023, the Company may experience disruptions that could severely impact the Company. The global outbreaksold 2,400 shares of COVID-19 continues to rapidly evolve. The extent to which COVID-19 may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread7.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share for an aggregate purchase price of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States to contain and treat the disease. The Company has had to cancel events due to COVID-19 and is in process of monitoring COVID-19’s potential impact on the Company’s operations. The Company has taken several steps to minimize COVID-19’s impact on the Company’s business by furloughing some of its employees, deferring payments from certain of its vendors and lenders, and re-negotiating various agreements with third parties.

Liquidity

The Company has sustained recurring losses and negative cash flows from operations through December 31, 2020. In addition, the Company has significant debt obligations maturing in the twelve-month period subsequent to the date these consolidated financial statements are issued. Since inception, the Company’s operations have been funded principally through the issuance of debt and equity. As of December 31, 2020, the Company had approximately $7 million of cash and cash equivalents and $33 million of restricted cash, respectively. $2,400,000.

 

On January 28, 2021, the Company executed a binding term sheet with IRG pursuant to which the Company agreed to issue and sell to IRG in a private placement of preferred stock and warrants to purchase common stock for a purchase price of $15 million. The private placement is expected to close in the first quarter of 2021. In addition, during February 2020,2, 2023, the Company received approximately $34.5 millionproceeds from the issuance by Stark County Port Authority of shares of its common stock, net of offering costs. See Note 14. We will deposit up to $25 million of the net proceeds from the private placement and the underwritten public offering in the Proceeds Account required under the Term Loan. We must have the lender’s prior written approval to withdraw any amounts from the Proceeds Account, pursuant to a budget and schedule agreed upon by the parties.$18,000,000 principal amount Tax Increment Financing Revenue Bonds, Series 2023.

 


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 1: Organization, Nature of Business, and Liquidity (continued)

Liquidity (continued)

The Company believes that, as a result of thesethe Company’s demonstrated historical ability to finance and refinance debt, the transactions described above and its current ongoing negotiations, it currently haswill have sufficient cash and future financing commitments to meet its funding requirements over the next year.12 months from the issuance of these consolidated financial statements. Notwithstanding, the Company expects that it will need to raise additional financing to accomplish its development plan over the next several years. The Company is seeking to obtain additional funding through debt, construction lending, and equity financing. There are no assurances that the Company will be able to raise capital on terms acceptable to the Company or at all, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If the Company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its financial condition and operating results.

 

Note 2: Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements of the Company for the years ended December 31, 20202022 and 20192021 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 Company acquired 60% of the equity interests in Mountaineer for a purchase price of $100 from one of its related parties. See Note 9 for additional information on the terms of the agreement. The portion of Mountaineer’s net lossincome (loss) that is not attributable to the Company is included in non-controlling interest.

 

Reclassification

Certain financial statement line items of the Company’s historical presentation have been reclassified to conform to the corresponding financial statement line items in 2022. These reclassifications have no material impact on the historical operating loss, net loss, total assets, total liabilities, or Stockholders’ equity previously reported.


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Restatement of Previously Issued Financial Statements

The Company has restated its consolidated financial statements as of and for the year ended December 31, 2020, as well as the unaudited condensed consolidated financial statements for the three and nine month periods ended September 30, 2020 and 2019, to correct misstatements in those prior periods primarily related to misstatements identified in improperly applying accounting guidance on certain warrants, recognizing them as equity instead of a warrant liability, under the guidance of Accounting Standards Codification (“ASC”) 815-40, Contracts in Entity’s Own Equity.

See Note 15, Restatement of Previously Issued Financial Statements for additional information regarding the errors identified and the restatement adjustments made to the consolidated financial statements.

Emerging Growth Company

 

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it. It may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. The Company will cease to be an emerging growth company on December 31, 2023.

 

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act)Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such an extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

 

Use of Estimates

 

The preparation of the 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 bad debt, depreciation, costs capitalized to project development costs, useful lives of long-lived assets, potential impairment, accounting for debt modifications and extinguishments, evaluating the Company’s sale-leaseback transactions, stock-based compensation, and fair value of financial instruments and estimates and assumptions used to measure impairment.(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.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Warrant Liability

The Company accounts for warrants for shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”) that are not indexed to its own stock as liabilities at fair value on the balance sheet under U.S. GAAP. Such warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other expense on the statement 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 are 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 powered by Johnson Controls.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 tofor 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. As

Impairment of December 31, 2020, the second two phases of the project remained subject to such capitalization.Long-Lived Assets

 

The Company reviews its property and equipment 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 assets and software development costs, 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. On January 18, 2019,In August 2021, management determined that previously capitalized costs for the developmentconstruction of a hotelthe Center for Performance should be written off because of significant changes to the plans for this particular hotel and site location have been abandoned and will not benefitthe project that render certain of the current planscapitalized costs no longer of use for another hotel elsewhere on the site.Center for Performance. Management reviewed its capitalized costs and identified the costs that had no future benefit. TheAs a result, in the third quarter of 2021, the Company recorded a $12,194,783$1,748,448 charge as a loss on abandonmentan impairment of project development costs within the accompanying statement of operations.

 

The Company experienced no triggering events, nor had an impairments of long-lived assets during the year ended December 31, 2022.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 2: Summary of Significant Accounting Policies (continued)

Cash and Restricted Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased, to be cash equivalents. There were no cash equivalents atas of December 31, 20202022 and 2019,2021, 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 atas of December 31, 20202022 and 20192021 were $32,907,800$7,499,835 and $5,796,398,$7,105,057, respectively.

 


Investments

 

HallThe 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 Fame Resort & EntertainmentDecember 31, 2022, the Company and Subsidiaries

Notesheld $17,033,515 in securities to Consolidated Financial Statementsbe 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.

 

Note 2: SummaryAs of Significant Accounting Policies (continued)December 31, 2022, the Company also had $4,067,754 in securities available for sale, which are marked to market value at each reporting period.

Accounts Receivable

 

Accounts receivable are generally amounts due under sponsorship and other agreements. Accounts receivable are reviewed for delinquencies on a case by casecase-by-case basis and are considered delinquent when the sponsor or debtor 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. AtAs of December 31, 20202022 and 2019,2021, the Company hadhas recorded an allowance for doubtful accounts of $5,575,700 and $0, and $1,306,047, respectively, which related to the Company’s receivable from Youth Sports Management, LLC (“Youth Sports”). Seerespectively. (See Note 7 for additional information on Youth Sports.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“Notes Payable, net” on the accompanying consolidated balance sheet.

 

Investment in Joint Venture

The Company previously used the equity method to record the activitiesUpon an extinguishment of its 50% owned joint venture in Youth Sports. The equity method of accounting requireddebt (or a modification that the Company recognize its initial capital investment at cost and subsequently, its share of the earnings or losses in the joint venture. The joint venture agreement was structured whereby the Company was not at risk for losses above its original capital investment. Therefore, the Company did not record a deficit that would have resulted in the equity being negative from the investment in joint venture.

The maximum exposure to loss represented the potential loss of assets which may have been recognized by the Company relating to its investment in the joint venture. On May 29, 2020, the Company acquiredis treated as an extinguishment), the remaining 50% in Youth Sports for the accounts receivable amounts due from them, which was fully reserved asdeferred financing costs are expensed against “Gain/Loss on Extinguishment of the date of the transaction. The results of this non-cash transaction increased the Company’s interest to 100%Debt”. Upon acquisition, the Company consolidated the Youth Sports joint venture, an inactive voting interest entity. The Company accounted for the transaction as an asset acquisition under a cost accumulation model, and no gain on the change of control of interest was recognized in the consolidation, resulting in no consolidated assets or liabilities.

 


 

 

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, cost recoveries, events, hotel operation, Hall of Fantasy League, and through the sale of non-fungible tokens. 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.


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, 20202022 and 2019,2021, 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 general and administrative expense. There were no amounts accruedincurred for penalties and interest for the years ended December 31, 20202022 and 2019.2021. 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 20162018 through 20192021 remain subject to examination.

Warrant Liabilities (Restated)

The Company accounts for warrants to purchase shares of the Company’s common stock that are not indexed to its own stock as liabilities at fair value on the balance sheet in accordance with ASC 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 expense on the statement of operations. The Company 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.

Net Loss Per Common Share (Restated)

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.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Net Loss Per Common Share (Restated) (continued)

At December 31, 2020 and 2019, 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 year
ended
December 31,
2020
For the year
ended
December 31,
2019
Warrants to purchase shares of common stock55,303,832-
Restricted stock awards to purchase shares of common stock715,929-
Restricted stock units to purchase shares of common stock1,672,177-
Total potentially dilutive securities57,691,938-

Revenue Recognition

The Company follows ASC 606, Revenue with Contracts with Customers, 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, cost recoveries and events. 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, recognized revenue on a straight-line basis over the time period specified in the contract. 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.

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.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 2: Summary of Significant Accounting Policies (continued)

Revenue Recognition (continued)

The Company’s owned hotel revenues primarily consist of hotel room sales, revenue from accommodations sold in conjunction with other services (e.g. packages 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 prices of each component.

Advertising

The Company expenses all advertising and marketing costs as they are incurred. Total advertising and marketing costs for the years ended December 31, 2020 and 2019 were $484,978 and $383,104, respectively, which are recorded as property operating expenses on the Company’s consolidated statements of operations.

The Company received a grant of $100,000 from Visit Canton on April 3, 2020, which grant is to be used to generate visitors to the Canton area through the Company’s events. This grant will be used to offset future marketing and tourism expenses. The grant is recorded in other liabilities on the Company’s balance sheet.

Ground Rent Expense

Ground rent expense is recognized on a straight-line basis over the life of the related operating lease.

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 and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock units 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.

 

Segments

 

The Company has evaluated its business to determine whether it has multiple operating segments. The Company has concluded that, as of December 31, 2020,2022 and 2021, 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, 2022 and 2021 were $484,468 and $611,843, respectively.

 

Software Development Costs

 

The Company recognizes all costs incurred to establish technological feasibility of a computer software product to be sold, leased, or otherwise marketed areas research and development costs. Prior to the point of reaching technological feasibility, all costs shall be charged to expenseexpensed when incurred. Once the development of the product establishes technological feasibility, the Company will begin capitalizing these costs. TechnologicalManagement exercises its judgement in determining when technological feasibility is established based on when a product design and working model have been completed and the completeness of the working model and its consistency with the product design have been confirmed through testing. AsSoftware development costs are included in “Capitalized Development Costs” within the Company’s consolidated balance sheet.


Hall of December 31, 2020,Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 2: Summary of Significant Accounting Policies (continued)

Film and Media Costs

The Company capitalizes all costs to develop films and related media as an asset, included in “project development costs” on the Company’s consolidated balance sheet. The costs for each film or media will be expensed over the expected release period.

Interest Rate Swap

To estimate fair value for the Company’s interest rate swap agreements, the Company did not have any software development projectsutilizes a present value of future cash flows, leveraging a model-derived valuation that had reached technological feasibility.uses Level 2 observable inputs such as interest rate yield curves. The changes in fair value of the Company’s interest rate swap is recorded within other income and expense on the Company’s consolidated statement of operations.

 

Accounting for Real Estate Investments

 

Upon the acquisition of real estate properties, a determination is made as to whether the acquisition meets the criteria to be accounted for as an asset or business combination. The determination is primarily based on whether the assets acquired and liabilities assumed meet the definition of a business. The determination of whether the assets acquired and liabilities assumed meet the definition of a business include a single or similar asset threshold. In applying the single or similar asset threshold, if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the assets acquired and liabilities assumed are not considered a business. Most of the Company’s acquisitions meet the single or similar asset threshold due to the fact that substantially all the fair value of the gross assets acquired is attributable to the real estate acquired.

 


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 2: Summary of Significant Accounting Policies (continued)

Accounting for Real Estate Investments (continued)

Acquired real estate properties accounted for as asset acquisitions are recorded at cost, including acquisition and closing costs. The Company allocates the cost of real estate properties to the tangible and intangible assets and liabilities acquired based on their estimated relative fair values. The Company determines the fair value of tangible assets, such as land, building, furniture, fixtures, and equipment, using a combination of internal valuation techniques that consider comparable market transactions, replacement costs, and other available information and fair value estimates provided by third partythird-party valuation specialists, depending upon the circumstances of the acquisition. The Company determines the fair value of identified intangible assets or liabilities, which typically relate to in-place leases, using a combination of internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and fair value estimates provided by third partythird-party valuation specialists, depending upon the circumstances of the acquisition.

 

If a transaction is determined to be a business combination, the assets acquired, liabilities assumed, and any identified intangibles are recorded at their estimated fair values on the transaction date, and transaction costs are expensed in the period incurred.

 


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 2: Summary of Significant Accounting Policies (continued)

Fair Value Measurement  (Restated)

The Company follows Accounting Standards Codification (“ASC”)FASB’s ASC 820–10, “FairFair Value Measurement” of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards CodificationMeasurement, to measure the fair value of its 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 (3) broad levels.

The three (3) levels of fair value hierarchy defined by ASC 820–1010-20 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 3Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these instruments.

The Company uses Levels 1 and 3 of the fair value hierarchy to measure the fair value of its warrant liabilities. The Company revalues such liabilities at every reporting period and recognizes gains or losses as revenue and cost of revenue respectively in the consolidated statements of operations that are attributable to the change in the fair value of the warrant liabilities.

The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheet as of December 31, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

 

  Level  December 31, 2020 
Warrant liabilities – Public Warrants  1  $4,130,000 
Warrant liabilities – Private Warrants  3   420,000 
Warrant liabilities – November Warrants  3   9,781,000 
Warrant liabilities – December Warrants  3   4,781,000 

The Company had no assets or liabilities measured at fair value at December 31, 2019.

The Public 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 Private Warrants, November Warrants, and December Warrants, for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Fair Value Measurement (Restated) (continued)

 

Initial Measurement

The Company establisheduses Levels 1 and 3 of the initialfair value hierarchy to measure the fair value of its warrant liabilities, investments available for sale and interest rate swaps. The Company revalues such liabilities at every reporting period and recognizes gains or losses on the respective dates of issuance. In the casechange in fair value of the Public Warrants,warrant liabilities as “change in fair value of warrant liabilities” in the Company valued the warrants using the quoted market price on the dateconsolidated statements of issuance. In the case of the Private Warrants, November Warrants and December Warrants, the Company used a Black Scholes valuation model in order to determine their value. The key inputs into the Black Scholes valuation model for the initial valuations are below:operations.

 

  Private Warrants  November Warrants  December Warrants 
  July 1, 2020  November 18, 2020  December 29, 2020 
Term (years)  5.0   5.0   5.0 
Stock price $8.44  $1.22  $1.29 
Exercise price $11.50  $1.40  $1.40 
Dividend yield  0.0%  0.0%  0.0%
Expected volatility  13.3%  49.4%  49.5%
Risk free interest rate  0.3%  0.4%  0.4%
             
Number of shares  1,480,000   20,535,713   10,036,925 
Value (per share) $1.74  $0.52  $0.52 

The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheet as of December 31, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

 

     December 31, 
  Level  2022  2021 
Warrant liabilities – Public Series A Warrants 1  $748,000  $4,617,000 
Warrant liabilities – Private Series A Warrants 3   -   110,000 
Warrant liabilities – Series B Warrants 3   163,000   2,416,000 
Warrant liabilities – Series C Warrants 3   -   6,526,000 
Fair value of aggregate warrant liabilities    $911,000  $13,669,000 
            
Fair value of interest rate swap liability 2  $200,000  $- 
            
Investments available for sale 3  $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”), the Series B Warrants issued in the Company’s November 2020 follow-on public offering, and the Series C Warrants issued in the Company’s December 2020 private placement (“Series C Warrants”), 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.


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)

Subsequent measurement

The following table presents the changes in fair value of the warrant liabilities:

 

  Public Warrants  Private Warrants  November Warrants  December Warrants  Total Warrant Liability 
Fair value as of January 1, 2020 $-  $-  $-  $-  $- 
                     
Initial measurement  27,460,000   2,580,000   10,609,000   5,196,116   45,845,116 
Change in fair value  (23,330,000)  (2,160,000)  (828,000)  (415,116)  (26,733,116)
                     
Fair value as of December 31, 2020 $4,130,000  $420,000  $9,781,000  $4,781,000  $19,112,000 
  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 

 

On March 1, 2022, the Company and CH Capital Lending amended the Series C Warrants. The amendments, among other things, remove certain provisions that previously caused the Series C Warrants to be accounted for as a liability.


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)

Subsequent measurement (continued)

The key inputs into the Black Scholes valuation model for the Level 3 valuations as of December 31, 20202022 and 2021 are below:as follows:

  December 31, 2022  March 1, 2022  December 31, 2021 
  Private Series A Warrants  Series B Warrants  Series C Warrants  Private Series A Warrants  Series B Warrants  Series C Warrants 
Term (years)  2.5   2.9   3.8   3.5   3.9   4.0 
Stock price $8.06  $8.06  $22.22  $33.44  $33.44  $33.44 
Exercise price $253.11  $30.81  $30.81  $253.11  $30.81  $30.81 
Dividend yield  0.0%  0.0%  0.0%  0.0%  0.0%  0.0%
Expected volatility  52.27%  63.86%  54.7%  50.6%  50.6%  50.6%
Risk free interest rate  4.22%  4.22%  1.5%  1.3%  1.3%  1.3%
Number of shares  95,576   170,862   455,867   95,576   170,862   455,867 

The valuation of the investments available for sale were based on sales of similar equity instruments in the time periods near to the measurement dates.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 2: Summary of Significant Accounting Policies (continued)

Net Income (Loss) Per Common Share

 

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the periods.

  Private Warrants  November Warrants  December Warrants 
Term (years)  4.5   4.9   5.0 
Stock price $1.23  $1.23  $1.23 
Exercise price $11.50  $1.40  $1.40 
Dividend yield  0.0%  0.0%  0.0%
Expected volatility  70.7%  49.5%  49.5%
Risk free interest rate  0.3%  0.3%  0.3%
             
Number of shares  1,480,000   20,535,713   10,036,925 
Value (per share) $0.28  $0.48  $0.48 

Diluted net income (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, 2022 and 2021, the Company was in a loss position and therefore all potentially dilutive securities would be anti-dilutive and the calculations are presented on the accompanying consolidated statements of operations.

As of December 31, 2022 and 2021, 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,
 
  2022  2021 
Warrants to purchase shares of Common Stock  2,003,649   1,861,715 
Unvested restricted stock awards  -   10,848 
Unvested restricted stock units to be settled in shares of Common Stock  134,799   100,323 
Shares of Common Stock issuable upon conversion of convertible notes  3,245,847   158,496 
Shares of Common Stock issuable upon conversion of Series B Preferred Stock  2,971   225,787 
Shares of Common Stock issuable upon conversion of Series C Preferred Stock  454,545   - 
Total potentially dilutive securities  5,841,811   2,357,169 

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Recent Accounting PronouncementsStandards

 

In February 2016, FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as modified by subsequently issued ASU Nos. 2018-01, 2018-10, 2018-11, 2018-20, and 2019-01 (collectively “ASU 2016-02”). This ASU is effective for private companies beginning after December 15, 2021. ASU 2016-02 requires recognition of right-of-use assets and lease liabilities on the balance sheet. In June 2020, FASB issued ASU 2020-05, further extending the effective date by one year making it effective for the Company for annual periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. Most prominent among the changes in ASU 2016-02 is the lessees’ recognition of a right-of-use asset and a lease liability for operating leases. The right-of-use asset and lease liability are initially measured based on the present value of committed lease payments. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition. Expenses related to operating leases are recognized on a straight-line basis, while those related to financing leases are recognized under a front-loaded approach in which interest expense and amortization of the right-of-use asset are presented separately in the statement of operations. As the Company is an emerging growth company and following private company deadlines, the Company has an additional deferral under this ASU to adopt beginning after December 15, 2021. Similarly, lessors are required to classify leases as sales-type, finance, or operating with classification affecting the pattern of income recognition. As the Company is an emerging growth company and following private company deadlines, the Company implemented this ASU beginning on January 1, 2022.

 

Classification for both lessees and lessors is based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. ASU 2016-02 also requires qualitative and quantitative disclosures to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company is currently evaluating the impact of the pending adoption of this new standard on its consolidated financial statements.

In August 2018, FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” This update clarifies the accounting treatment for fees paid by a customer in a cloud computing arrangement by providing guidance for determining when the arrangement includes a software license. This guidance is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The amendments must be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this guidance on a prospective basis in the first quarter of 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also simplifies aspects of accounting for franchise taxes and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for annual and interim financial statement periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of the pending adoption of this new standard on its consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint-Ventures (Topic 323), and Derivatives and Hedging (Topic 815), clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This ASU is effective for private companies beginning after December 15, 2021. Early application is permitted, including early adoption in an interim period for public business entities for periods for which financial statements have not yet been issued. An entity should apply ASU No. 2020-01 prospectively at the beginning of the interim period that includes the adoption date. This ASU among other things clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments—Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The new ASU clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. The Company is currently evaluating the impact of the pending adoption of this new standard on its consolidated financial statements.

 

In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842): Codification Improvements, which requires an entity (a lessee or lessor) to provide transition disclosures under Topic 250 upon adoption of Topic 842. In February 2020, the FASB issued ASU 2020-02, Financial Instruments – Credit Losses (Topic 326): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases. The ASU adds and amends SEC paragraphs in the ASC to reflect the issuance of SEC Staff Accounting Bulletin No. 119 related to the new credit losses standard and comments by the SEC staff related to the revised effective date of the new leases standard. This new standard is effective for fiscal years beginning after December 15, 2021, including interim periods within fiscal years beginning after December 15, 2022. EarlyUpon the adoption of ASC 842 on January 1, 2022, the Company recognized a right of use asset of approximately $7.7 million and corresponding lease liability of approximately $3.4 million. The initial recognition of the ROU asset included the reclassification of approximately $4.4 million of prepaid rent as of January 1, 2022. See Note 11 for additional disclosure regarding the Company’s right of use assets and lease liabilities.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years, which is fiscal 2023 for us, with early adoption permitted. The Company is currently evaluatingadopted this ASU on January 1, 2022, which did not have a significant impact on the impact of the pending adoption of this new standard on its consolidatedCompany’s financial statements.

 

Subsequent Events

Subsequent events have been evaluated through March 10, 2021, the date the consolidated financial statements were issued. Other than what has been disclosed in the consolidated financial statements in Note 14, no other events have been identified requiring disclosure or recording.


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 2: Summary of Significant Accounting Policies (continued)

Recent Accounting Standards (continued)

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which amends the accounting standards for convertible debt instruments that may be settled entirely or partially in cash upon conversion. ASU No. 2020-06 eliminates requirements to separately account for liability and equity components of such convertible debt instruments and eliminates the ability to use the treasury stock method for calculating diluted earnings per share for convertible instruments whose principal amount may be settled using shares. Instead, ASU No. 2020-06 requires (i) the entire amount of the security to be presented as a liability on the balance sheet and (ii) application of the “if-converted” method for calculating diluted earnings per share. The required use of the “if-converted” method will not impact the Company’s diluted earnings per share as long as the Company is in a net loss position. The guidance in ASU No. 2020-06 is required for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2021, for public business entities. Early adoption is permitted, but no earlier than annual reporting periods beginning after December 15, 2020, including interim periods within those annual reporting periods. The Company early adopted this guidance for the fiscal year beginning January 1, 2022, and did so on a modified retrospective basis, without requiring any adjustments.

Subsequent Events

Subsequent events have been evaluated through March 27, 2023, the date the consolidated financial statements were issued. Except for as disclosed in Notes 1 and 15, no other events have been identified requiring disclosure or recording.

Note 3: Property and Equipment and Project Development Costs

 

Property and equipment consists of the following:

 

 Useful Life December 31,
2020
 December 31,
2019
  Useful Life December 31,
2022
 December 31,
2021
 
Land   $535,954  $278,556    $12,414,473  $4,186,090 
Land improvements 25 years  31,078,211   31,078,211  25 years  51,808,296   31,194,623 
Building and improvements 15 to 39 years  158,020,145   128,599,831  15 to 39 years  239,068,974   192,384,530 
Equipment 5 to 10 years  2,165,882   1,313,488  5 to 10 years  7,212,246   2,338,894 
Property and equipment, gross    191,800,192   161,270,086     310,503,989   230,104,137 
                    
Less: accumulated depreciation    (37,444,429)  (26,359,199)    (61,677,136)  (49,643,575)
Property and equipment, net   $154,355,763  $134,910,887    $248,826,853  $180,460,562 
                    
Project development costs   $107,969,139  $88,587,699    $140,138,924  $128,721,480 

 

For the years ended December 31, 20202022 and 2019,2021, the Company recorded depreciation expense of $11,085,230$12,037,374 and $10,915,839,$12,199,148, respectively. Additionally, the Company recorded a charge of $12,194,783 for the year ended December 31, 2019 for a loss on abandonment of project development costs for previously capitalized development costs within the accompanying consolidated statement of operations. For the years ended December 31, 20202022 and 2019,2021, the Company incurred $19,381,440$65,221,191 and $7,403,848$58,581,466 of capitalized project development costs, respectively. During 2019,

For the years ended December 31, 2022 and 2021, the Company acquired the McKinley Grand hotel property for a purchase price of $3,800,000 including external acquisition-related costs. The fair value of the assets acquired consisted of landtransferred $53,803,747 and building$36,080,677 from Construction in the amounts of $241,100Progress to Property and $3,558,900, respectively, which were capitalized and includedEquipment, respectively.

Included in project development costs. During November 2020, the Company place the hotel property into service.costs are film development costs of $982,000 and $464,000 as of December 31, 2022 and 2021, 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, 2020:2022(1):

 

  Gross  Discount  Net 
TIF loan $9,654,000  $(1,666,725) $7,987,275 
Syndicated unsecured term loan  170,090   -   170,090 
Preferred equity loan  1,800,000   -   1,800,000 
Naming rights securitization loan  1,821,559   (113,762)  1,707,797 
City of Canton Loan  3,500,000   (7,681)  3,492,319 
New Market/SCF  2,999,989   -   2,999,989 
Constellation EME  9,900,000   -   9,900,000 
Paycheck protection plan loan  390,400   -   390,400 
JKP Capital loan  6,953,831   (13,887)  6,939,944 
MKG DoubleTree Loan  15,300,000 �� (443,435)  14,856,565 
Convertible PIPE Notes, plus PIK accrual  21,797,670   (13,475,202)  8,322,468 
Canton Cooperative Agreement  2,670,000   (181,177)  2,488,823 
Aquarian Mortgage Loan  40,000,000   (2,156,303)  37,843,697 
Total $116,957,539  $(18,058,172) $98,899,367 
           Interest Rate  Maturity
  Gross  Discount  Net  Stated  Effective  Date
Preferred equity loan(2) $3,600,000  $-  $3,600,000   7.00%  7.00% Various
City of Canton Loan(3)  3,450,000   (5,333)  3,444,667   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)  9,158,711   -   9,158,711   12.50%  12.50% 3/31/2024
MKG DoubleTree Loan(7)  15,300,000   -   15,300,000   9.25%  9.25% 9/13/2023
Convertible PIPE Notes  26,525,360   (8,097,564)  18,427,796   10.00%  24.40% 3/31/2025
Canton Cooperative Agreement  2,620,000   (168,254)  2,451,746   3.85%  5.35% 5/15/2040
CH Capital Loan(5)(6)(8)  8,846,106   -   8,846,106   12.50%  12.50% 3/31/2024
Constellation EME #2(4)  3,536,738   -   3,536,738   5.93%  5.93% 4/30/2026
IRG Split Note(5)(6)(9)  4,302,437   -   4,302,437   12.50%  12.50% 3/31/2024
JKP Split Note(5)(6)(9)  4,302,437   -   4,302,437   12.50%  12.50% 3/31/2024
ErieBank Loan  19,465,282   (536,106)  18,929,176   8.50%  8.74% 12/15/2034
PACE Equity Loan  8,250,966   (273,031)  7,977,935   6.05%  6.18% 7/31/2047
PACE Equity CFP  2,437,578   (27,586)  2,409,992   6.05%  6.10% 7/31/2046
CFP Loan(6)(10)  4,027,045   -   4,027,045   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)  10,485,079   -   10,485,079   12.50%  12.50% 3/31/2024
Stadium PACE Loan  33,387,844   (4,091,382)  29,296,462   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   (11,572)  4,988,428   6.00%  6.04% 6/30/2029
TDD Bonds  7,500,000   (668,884)  6,831,116   5.41%  5.78% 12/1/2046
Total $185,195,572  $(13,879,712) $171,315,860           

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 4: Notes Payable, net (continued)

 

Notes payable, net consisted of the following at December 31, 2019:2021:

 

  Gross  Discount  Net 
Bridge loan $65,000,000  $(361,655) $64,638,345 
TIF loan  9,847,000   (1,721,761)  8,125,239 
Syndicated unsecured term loan  6,803,530   (2,838,067)  3,965,463 
Preferred equity loan  99,603,847   (53,365,911)  46,237,936 
Land loan with affiliate  1,273,888   -   1,273,888 
Naming rights securitization loan  9,235,845   (566,096)  8,669,749 
McKinley Grand Mortgage  1,900,000   (51,787)  1,848,213 
CH capital lending  1,807,339   -   1,807,339 
Convertible notes  17,310,252   (471,965)  16,838,287 
IRG November Note  11,585,792   (67,537)  11,518,255 
Total $224,367,493  $(59,444,779) $164,922,714 
  Gross  Discount  Net 
TIF loan(11) $9,451,000  $(1,611,476) $7,839,524 
Preferred equity loan(2)  3,600,000   -   3,600,000 
City of Canton Loan(3)  3,500,000   (6,509)  3,493,491 
New Market/SCF  2,999,989   -   2,999,989 
Constellation EME  5,227,639   -   5,227,639 
JKP Capital loan  6,953,831   -   6,953,831 
MKG DoubleTree Loan  15,300,000   (83,939)  15,216,061 
Convertible PIPE Notes  24,059,749   (11,168,630)  12,891,119 
Canton Cooperative Agreement  2,670,000   (174,843)  2,495,157 
Aquarian Mortgage Loan(8)  7,400,000   (439,418)  6,960,582 
Constellation EME #2(4)  4,455,346   -   4,455,346 
IRG Note(9)  8,500,000   -   8,500,000 
ErieBank Loan  13,353,186   (598,966)  12,754,220 
PACE Equity Loan  8,250,966   (277,729)  7,973,237 
Total $115,721,706  $(14,361,510) $101,360,196 

 

During the years ended December 31, 20202022 and 2019,2021, the Company recorded amortization of note discounts of $10,570,974$6,250,721 and $13,274,793,$5,160,242, respectively.

 

Accrued Interest on Notes PayableDuring years ended December 31, 2022 and 2021, the Company recorded paid-in-kind interest of $3,969,092 and $2,091,990, respectively.

 

As of December 31, 2020 and 2019, accrued interest onSee below footnotes for the Company’s notes payable, were as follows:payable:

 

  December 31,
2020
  December 31,
2019
 
Bridge loan $-  $2,084,711 
Preferred equity loan  27,125   717,286 
Land loan with affiliate  -   101,662 
Constellation EME  248,832   - 
Paycheck protection plan loan  2,706   - 
Naming rights securitization loan  -   30,786 
City of Canton Loan  4,472   - 
Mortgage McKinley Grand  -   41,821 
JKP Capital Note  416,836   - 
Convertible notes  -   269,271 
MKG Doubletree loan  67,716   - 
Canton Cooperative Agreement  20,593   - 
Aquarian Mortgage Loan  333,333   - 
Total $1,121,613  $3,245,537 
(1)The Company’s notes payable are subject to certain customary financial and non-financial covenants. As of December 31, 2022 and 2021 the Company was in compliance with all of its notes payable covenants. Many of the Company’s notes payable are secured by the Company’s developed and undeveloped land and other assets.
(2)The Company had 3,600 and 1,800 shares of Series A Preferred Stock outstanding and 52,800 and 52,800 shares of Series A Preferred Stock authorized as of December 31, 2022 and 2021, respectively. The Series A Preferred Stock is required to be redeemed for cash after five years from the date of issuance.
(3)The Company has the option to extend the loan’s maturity date for three years, to July 1, 2030, if the Company meets certain criteria in terms of the hotel occupancy level and maintaining certain financial ratios.
(4)The Company also has a sponsorship agreement with Constellation New Energy, Inc., the lender of the Constellation EME #2 note.
(5)On March 1, 2022, the Company entered into amendments to certain of its IRG and IRG-affiliated notes payable. See discussion below for the accounting and assumptions used in the transactions.
(6)On November 7, 2022, the Company entered into amendments to certain of its IRG and IRG-affiliated notes payable. See discussion below for the accounting and assumptions used in the transactions.

 

The amounts above were included in accounts payable and accrued expenses and other liabilities on the Company’s consolidated balance sheet, as follows:

  December 31,
2020
  December 31,
2019
 
Accounts payable and accrued expenses $1,094,488  $2,528,251 
Other liabilities  27,125   717,286 
  $1,121,613  $3,245,537 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 4: Notes Payable, net (continued)

 

(7)On March 1, 2022, HOF Village Hotel II, LLC, a subsidiary of the Company, entered into an amendment to the MKG DoubleTree Loan with the Company’s director, Stuart Lichter, as guarantor, and ErieBank, a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender, which extended the maturity to September 13, 2023. The Company accounted for this amendment as a modification, and expensed approximately $38,000 in loan modification costs.
(8)On March 1, 2022, CH Capital Lending purchased and acquired, the Company’s $7.4 million Aquarian Mortgage Loan (as thereafter amended and acquired by CH Capital Lending, the “CH Capital Loan”).
(9)On March 1, 2022, pursuant to an Assignment of Promissory Note, dated March 1, 2022, IRG assigned (a) a one-half (½) interest in the IRG Note to IRG (the “IRG Split Note”) and (b) a one-half (½) interest in the IRG Note to JKP (the “JKP Split Note”). See “IRG Split Note” and “JKP Split Note”, below.
(10)See “CFP Loan”, below, for a description of the loan along with the valuation assumptions used to value the warrants issued in connection with the loan.
(11)See “TIF Loan”, below, for a description of the loan.

Bridge LoanAccrued Interest on Notes Payable

 

As of December 31, 2022 and 2021, accrued interest on notes payable, were as follows:

  December 31,
2022
  December 31,
2021
 
TIF loan $-  $22,208 
Preferred equity loan  64,575   203,350 
CFP Loan  5,245   89,682 
City of Canton Loan  1,555   5,979 
JKP Capital Note  -   1,251,395 
MKG DoubleTree Loan  121,656   - 
Canton Cooperative Agreement  48,708   39,416 
CH Capital Loan  55,328   - 
IRG Split Note  28,490   - 
JKP Split Note  35,138   - 
ErieBank Loan  140,394   26,706 
PACE Equity Loan  213,842   30,824 
CH Capital Bridge Loan  70,659   - 
Stadium PACE Loan  166,939   - 
TDD Bonds  13,533   - 
Total $966,062  $1,669,560 

The amounts above were included in “accounts payable and accrued expenses” on the Company’s consolidated balance sheets.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 4: Notes Payable, net (continued)

March 1, 2022 Refinancing Transactions

On June 30, 2020,March 1, 2022, the Company entered into an amendmentamended certain of its IRG and IRG-affiliate held loans. This included the IRG Split Note, the JKP Split Note, the CH Capital Loan, and the JKP Capital Loan. The amendments (i) revised the outstanding principal balance of the loans to include interest that has accrued and has not been paid as of March 1, 2022 in the $65 million bridge loan (the “Bridge Loan”) dated March 20, 2018, that the Company had originally utilized to build the Tom Benson Stadium, among the Company, various lenders party thereto (“Lenders”) and GACP Finance Co., LLC (“GACP”), as administrative agent (the “Term Loan Agreement”), which further extended the maturity date to November 30, 2020, updated certain defined terms to align with the final transaction structure resulting from the Business Combination, specified theaggregate amount of proceeds from the Business Combination$1,437,459, and Private Placement (defined below) that were required to be paid towards amounts outstanding under the Term Loan Agreement (the “Gordon Pointe Transaction Prepayment Amount”), added a fee payable to certain Lenders relative to the amounts owed after giving effect to the Gordon Pointe Transaction Prepayment Amount, amended various provisions related to mandatory prepayments of outstanding amounts owed under the Term Loan Agreement (including, but not limited to, prepayments due in connection with future equity and debt raises), and other minor amendments regarding HOF Village Hotel II, LLC (“HOF Village Hotel II”) and Mountaineer to facilitate their planned operations. The Bridge Loan has an exit fee of 1% on the balance due at(ii) extends the maturity of the loan, whichloans to March 31, 2024, and (iii) amends the Companyloans to be convertible into shares of Common Stock at a conversion price of $30.80 per share ($23.98 per share for the JKP Split Note and JKP Capital Loan), subject to adjustment. The conversion price is accreting over the term of the Bridge Loan.subject to a weighted-average antidilution adjustment.

 

At the dateAs part of the Business Combination, on July 1, 2020,consideration for the amendments, the Company used proceeds fromissued an aggregate of 39,091 shares of common stock, amended the Business CombinationSeries C Warrants and Series D Warrants (See Note 6), and issued Series E Warrants and Series F Warrants.

The Company accounted for these transactions as an extinguishment, given that a substantive conversion feature was added to pay $15,500,000 on the Bridge Loan, while an additional $15,000,000 converted into equity innotes. The Company recorded the newly formed HOFRE. The remaining balance following the Business Combination was approximately $34,500,000. The maturity date on the remaining balance had been extended one month to November 30, 2020. During the fourth quarter of 2020, the Company paid off the remaining $34,500,000 outstanding balance owed previously using a portionrelative fair value of the proceeds fromshares of Common Stock and warrants as a discount against the November 2020 Public Offering andnotes. The following assumptions were used to calculate the Aquarian Mortgage Loan.fair value of warrants:

Term (years)  5.0 
Stock price $22.22 
Exercise price$23.98-30.80 
Dividend yield  0.0%
Expected volatility  51.2%
Risk free interest rate  1.6%

The Company recorded an aggregate loss on this refinancing transaction of $148,472.

 

TIF Loan

 

For the Company, the Development Finance Authority of Summit County (“DFA Summit”) offered a private placement of $10,030,000 in taxable development revenue bonds, Series 2018. The bond proceeds are to reimburse the developer for costs of certain public improvements at the Hall of Fame Village, powered by Johnson Controls, which are eligible uses of tax-incremental funding (“TIF”) proceeds.

 

Under the cooperative agreement entered into by the Company, two subsidiaries, the City of Canton, DFA Summit, Stark County Port Authority, and the bank trustee, the Company and certain subsidiaries have been exempted from certain real estate taxes. However, the Company must make real estate tax payments on the TIF parcels sufficient to cover future required payments on the bond debt service until the 2018 bonds are no longer outstanding. This is a significant commitment made by the Company and is guaranteed by an individual’s trust, an individual, and two subsidiaries of the Company.

Since the bond debt service is fixed and determinable, a liability has been recorded as of December 31, 2020 and 2019, representing the present value of the future bond debt service payments. The term of the TIF requires the Company to make installment payments through July 31, 2048. The current imputed interest rate is 5.2%, which runs through July 31, 2028. The imputed interest rate then increases to 6.6% through July 31, 2038 and finally increases to 7.7% through the remainder of the TIF. The Company is required to make payments on the TIF semi-annually in June and December each year. During the years ended

On December 31, 2020 and 2019,27, 2022, the Company made principal paymentspaid $9.7 million to reacquire the TIF bonds related to the Stadium PACE agreement. In January 2023, the DFA Summit issued new bonds as TIF proceeds. See Note 15, subsequent events.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 4: Notes Payable, net (continued)

November 7, 2022 Refinancing Transactions

On November 7, 2022, the Company and IRG a entered into a letter agreement (the “IRG Letter Agreement”) whereby IRG agreed that IRG’s affiliates and related parties (“IRG Affiliate Lenders”) will provide the Company and its subsidiaries with certain financial support described below in exchange for certain consideration described below. The financial support provided under the IRG Letter Agreement consists of the following (“IRG Financial Support”):

(a)Extend the CH Capital Bridge Loan maturity to 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
(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

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 (defined below). In addition, the provisions of the IRG Letter Agreement are limited by Nasdaq Listing Rule 5635(c).

The Company accounted for these transactions as an extinguishment, given that a substantive conversion feature was added to the notes or the fair value of the existing conversion features increased by greater than 10%. The Company recorded the relative fair value of the shares of warrants as a discount against the notes. The following assumptions were used to calculate the fair value of warrants:

Term (years)  3.1- 4.5 
Stock price $14.41 
Exercise price $23.98-30.80 
Dividend yield  0.0%
Expected volatility  63.9%
Risk free interest rate  4.8%

The Company recorded an aggregate loss on this loan totaling $193,000 and $183,000, respectively.refinancing transaction of $6,228,579.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 4: Notes Payable, net (continued)

 

Syndicated Unsecured Term Loan and Preferred EquityCFP Loan

 

On January 1, 2016, as amended and restated on October 15, 2017, the Company entered into a financing agreement with a syndicate of lenders, including affiliates of IRG Canton Village Member,April 27, 2022, Midwest Lender Fund, LLC, a member oflimited liability company wholly owned by our director Stuart Lichter (“MLF”), loaned $4,000,000 (the “CFP Loan”) to HOF Village (the “IRG Member”), for a loan amount up to $150,000,000 as an unsecured promissory note (the “Syndicated Unsecured Term Loan”Center For Performance, LLC (“HOF Village CFP”). The Syndicated Unsecured Term Loan may not be prepaid either in whole or in part untilInterest accrues on the initial maturity date without the express consentoutstanding balance of the lender. Proceeds fromCFP Loan at 6.5% per annum, compounded monthly. The CFP Loan matures on April 30, 2023 or if HOF Village CFP exercises its extension option, April 30, 2024. The CFP Loan is secured by a mortgage encumbering the Syndicated Unsecured Term Loan are intended to cover working capital and the construction costs for venues including the Tom Benson Hall of Fame Stadium, youth fields, and campus infrastructure projects. The maturity date is February 26, 2021, and the Syndicated Unsecured Term Loan accrues interest at a rate of 12% per annum.Center For Performance.

 

 On December 11, 2018, the Company and various parties signed the Master Transaction Agreement setting forth various terms and conditions for the development of the Hall of Fame Village powered by Johnson Controls. As part of the Master Transaction Agreement, American Capital Center, LLCconsideration 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 (“ACC”Series G Warrants”), an affiliate. The exercise price of the Company, exchanged $106,450,000Series 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 Company’s debt and $24,470,142 of accrued interest and origination fees, as well as $336,579 of amounts dueSeries G Warrants will be subject to PFHOF, by converting it to preferred equity instruments with a face value of $95,500,000 and an amended subordinated debt agreement with a face value of $6,450,000. In accordance with the Extinguishment of Liabilities subtopic of the FASB ASC 470-50, given that ACC was a related party, the Company treated the Master Transaction Agreement as a capital transaction and recapitalized the debt to equity in the amount of $96,076,120, net of discounts and unamortized deferred financing costs.weighted-average antidilution adjustment.

 

The subordinated debt accrues interest at a rate of 5% andCompany recorded the balance is due February 26, 2021. The remaining subordinated debt is subordinate to the Bridge Loan. Additionally, the subordinated debt contains a payment-in-kind (“PIK”) interest provision, which represents contractually deferred interest added to the subordinated debt outstanding balance that is due at maturity. For the years ended December 31, 2020 and 2019, the Company incurred PIK interest of $256,441 and $353,530, respectively. As partrelative fair value of the Business Combination, on July 1, 2020, the entire balance of the Preferred Equity Loan’s and all but $170,089 of the Syndicated Unsecured Term Loan outstanding were converted into an aggregate of 13,762,039 shares of common stock.Common Stock and Series G Warrants as a discount against the CFP Loan. The following assumptions were used to calculate the fair value of Series G Warrants:

 

Land Loan with Affiliate

Term (years)  5.0 
Stock price $13.64 
Exercise price $33.00 
Dividend yield  0.0%
Expected volatility  52.4%
Risk free interest rate  3.0%
Number of shares  5,681 

 

On July 10, 2017,November 7, 2022, the Company entered into a promissory note withfurther amended the PFHOF,CFP Loan in order to add an affiliate of HOFRE,extension option that the Company may exercise at any time in order to extend the CFP Loan to March 31, 2025. In exchange for purpose of the acquisition of land at the Hall of Fame Village powered by Johnson Controls. The promissory note had an outstanding balance of $1,273,888 at June 30, 2020 and December 31, 2019, which bore interest at a rate of 1.22% per annum. The loan may be prepaid in whole or in part without penalty. For any unpaid balance after December 31, 2017,amendment, the interest rate of the CFP Loan was increased by 5%. The loan was subordinate to the Bridge Loan and had a maturity date of February 26, 2023. On July 2, 2020, the Company issued 580,000 shares in exchange of (a) full satisfaction of the promissory note in the amount of $1,273,888, (b) accrued interest in the amount of $50,158, and (c) other amounts due to PFHOF in the amount of $4,266,793. The Company determined that the issuance of shares for full satisfaction of the note resulted in a loss on extinguishment of debt of $209,160.12.5% per annum.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 4: Notes Payable, net (continued)

 

Naming Rights SecuritizationHuntington Loan

 

On November 9, 2017,September 27, 2022, HOF Village Retail I, LLC and HOF Village Retail II, LLC, subsidiaries of the Company, through a subsidiary, JCIHOFV Financing, LLC, entered into a secured loan with a financial institution for $22,800,000, collateralized by the entire payment stream of the Johnson Controls Naming Rights Agreement, dated November 17, 2016 (see Note 6). Monthly payments include principal and interest at 4% per annum with the remaining principal balance due on March 31, 2021. The loan may not be prepaid, in whole or in part, without paying the prepayment premium, which is equal to the present value of the remaining interest payments.

City of Canton Loan

On December 30, 2019, the Companyas borrowers (the “Subsidiary Borrowers”), entered into a loan facilityagreement with The Huntington National Bank, pursuant to which the City of Canton, OH, whereby it may borrowlender agreed to loan up to $3,500,000. The loan accrues$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 of one-half percent (0.5%)equal to the Term SOFR (as defined in the Note) plus a margin ranging from 2.60% to 3.50% per annum. Upon an event of default, the interest rate will increase to five percent (5%) per annum on the outstanding balance at the time of default. The loan shall mature on July 1, 2027. During the year ended December 31, 2020, the Company borrowed the maximum amount of $3,500,000 on the loan. The Company has the option to extend the loan’s maturity date for three years, to July 1, 2030 if the Company meets certain criteria in terms of the hotel occupancy level and maintaining certain financial ratios.

New Market/SCF

On December 30, 2019, the Company entered into a loan facility with New Market Project, Inc., whereby it may borrow up to $3,000,000, of which the proceeds are to be used for the development of McKinley Grand Hotel, as described below. During the year ended December 31, 2020 the Company borrowed $2,999,989 on this facility. The loan has a maturity date of December 30, 2024 and accrues interest at a rate of 4% per annum. In the event of default, including failure to pay upon final maturity, the interest rate shall increase by adding a 5% fee that applies to each succeeding interest rate change that would have applied had there been no default.

McKinley Grand Mortgage

On October 22, 2019, the Company purchased the McKinley Grand Hotel in Canton, Ohio for $3.9 million, which was partially financed by separate notes payable of $1,900,000 and $1,807,339.

 

The $1,807,339 note payable, in favor of CH Capital Lending, LLCLoan matures on September 27, 2024 (the “CH Capital Note”“Initial Maturity Date”), accrued interest at a fixed rate equal. However, Subsidiary Borrowers have the option (the “Extension Option”) to 10% per annum. The Company was required to make payments commencing on or prior to December 30, 2019. The maturity date ofextend the CH Capital Note was April 30, 2020 and interest was payable quarterly. The Company was previously in default on the CH Capital Note, however the CH Capital Note was paid in full on June 24, 2020.

The $1,900,000 note payable had a maturity date of October 22, 2021. Interest accrued at a rate equal to the greater of (i) 3.75% or (ii) the sum of the LIBOR rate plus 2.75%. The Company was required to make interest payments commencing on November 1, 2019, and on the first day of each successive month until the note was repaid. In September 2020, the Company paid off the full outstanding $1,900,000 principal and interest owed, using proceeds from the MKG Double Tree Loan (defined below).


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 4: Notes Payable, net (continued)

Constellation EME

On December 30, 2019, the Company entered into a loan facility with Constellation NewEnergy, Inc. (“Constellation”) whereby it may borrow up to $9,900,000 (the “Constellation Loan Facility”). The proceeds of the Constellation Loan Facility are to be held in escrow by a custodian to fund future development costs. The proceeds will be released from escrow as development costs are incurred. The Constellation Loan Facility was amended on April 13, 2020 to modify the payment schedule and maturity date, reflecting current project timetables. The maturity date is December 31, 2022 and payments are due in 29 monthly installments totaling $11,075,000, withInitial Maturity Date for an effective interest rate of 6.1%. Beginning in August 2020 through December 2020, the monthly installment amount is $55,000, which increases in January 2021 to $450,000 through December 2022. During the years ended December 31, 2020, the Company borrowed the full amount under the Constellation Loan Facility.additional thirty six (36) months.

 

As of December 31, 2020, $5,318,820 of such funds had been released from the custodial accounts to2022, the Company has not drawn under the Constellation Loan Facility.loan agreement.

 

The Company also has a sponsorship agreementAdditionally, in connection with Constellation. Refer to Note 6 for additional information.

Convertible Notes

On December 24, 2018, the Company issued a series of convertible notes totaling $7,750,000 (the “Convertible Notes”). The notes accrued interest at a rate of 10%, with payments due semi-annually in arrears. The principal and all accrued interest amounts were due November 5, 2025. The Company was able to redeem the Convertible Notes after December 24, 2023, subject to terms defined in the individual notes. Convertible Notes redeemed between December 24, 2023 and December 24, 2024 would have been redeemed at 105% of face value. Convertible Notes redeemed after December 24, 2024 would have been redeemed at 102.5% of face value. Additionally, the Convertible Notes contained a PIK interest provision, which represented contractually deferred interest added to the Convertible Notes outstanding balance that was due at maturity. For the years ended December 31, 2020 and 2019, the Company incurred PIK interest of $875,129 and $1,180,252, respectively. On July 1, 2020, upon consummation of the Business Combination, all outstanding Convertible Notes were exchanged for PIPE Notes (defined below).

IRG November Note

On February 7, 2020, as effectiveHuntington Loan, on NovemberSeptember 27, 2019, HOF Village, as borrower, entered into a subordinated promissory note with Industrial Realty Group, as lender, in an amount up to $30,000,000 (the “IRG November Note”). As of December 31, 2019, the aggregate principal amounts, excluding PIK interest, borrowed under the IRG November Note was $11,585,792. The IRG November Note accrues interest at a rate of 12% per annum and had a maturity date of November 1, 2020. Additionally, the IRG November Note contained a PIK interest provision, which represents contractually deferred interest added to the IRG November Note outstanding balance that is due at maturity. For the years ended December 31, 2020 and 2019, the Company incurred $1,858,744 and $85,009 of PIK interest, respectively. On July 1, 2020, upon consummation of the Business Combination, Industrial Realty Group exchanged $9,000,000 of the outstanding balance under the IRG November Note for PIPE Notes.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 4: Notes Payable, net (continued)

IRG November Note (continued)

On December 29, 2020,2022, the Company entered into a securities purchasean interest rate swap agreement with Industrial Realty Group, LLC, a Nevada limited liability company (“IRG”), and CH Capital Lending, LLC,notional amount of $10 million to hedge a Delaware limited liability company affiliated with IRG (the “Purchaser”), pursuant to which the Company sold Purchaser 10,813,774 sharesportion of the Company’s common stock, par value $0.0001 per share, and warrants to purchase 10,036,925 shares of common stock for an aggregate purchase price of $15,239,653. The Purchase Price was paid in the form of the cancellation in full of certain financial obligations owed by the Company and its affiliates to IRG and its affiliates in the amount of the Purchase Price, including the IRG November Note. The Company determined that the issuance of shares and warrants for full satisfaction of the note resulted in a loss on extinguishment ofoutstanding Secured Overnight Financing Rate (“SOFR”) debt of $3,404,244. The Company valued the warrants using the following assumptions:

  Warrants 
Stock Price $1.29 
Exercise Price $1.40 
Dividend Yield  N/A 
Expected Volatility  49.45%
Risk-Free Interest Rate  0.37%
Number of Shares  10,036,925 
Value (USD) $5,196,116 
Term (in years)  5.00 

Paycheck Protection Program Loan

On April 22, 2020, the Company obtained a Paycheck Protection Program Loan (“PPP Loan”) for $390,400. The PPP Loan haswith a fixed interest rate of 1%, requires the Company to make 18 monthly payments beginning on November 22, 2020, with a maturity4.0%. The effective date of April 22, 2022, subject to debt forgiveness provisions from the Small Business Association. On February 1, 2021, the Company obtained notice from the Small Business Association that the full outstanding amount of the PPP Loan was forgiven.

JKP Capital Loan

On June 24, 2020, HOF Village and HOFV Hotel II executed a loan evidenced by a promissory note (the “JKP Capital Loan”) in favor of JKP Financial, LLC for the principal sum of $7,000,000. The JKP Capital Loan bears interest at a rate of 12% per annum and matures on December 2, 2021, on which date all unpaid principal and accrued and unpaid interest is due. The JKP Capital Loan is secured by the membership interests in HOFV Hotel II held by HOF Village.

SCF Subordinated Note

On June 22, 2020, the Company entered into a loan facility with Stark Community Foundation (the “SCF Subordinated Note”) for $1,000,000. The SCF Subordinated Note has a fixed interest rate of 5% per annum, has a PIK interest provision that was payable semi-annually in arrears on each July 22 and January 22 commencing July 22, 2020, and with a maturity date of June 22, 2023. On July 1, 2020, the SCF Subordinated Note was exchanged for PIPE Notes, described in greater detail below, under “Convertible P Notes”.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 4: Notes Payable, net (continued)

Convertible PIPE Notes

On July 1, 2020, concurrently with the closing of the Business Combination, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with certain funds managed by Magnetar Financial, LLC and other purchasers (together, the “Purchasers”), pursuant to which the Company agreed to issue and sell to the Purchasers in a private placement (the “Private Placement”) $20,721,293 in aggregate principal amount of the Company’s 8.00% Convertible Notes due 2025 (the “PIPE Notes”). Pursuant to the terms of the Note Purchase Agreement, the PIPE Notes may be converted into shares of Common Stock at a conversion price initially equal to $11.50 per share, subject to customary adjustment. Accordingly, the aggregate amount of PIPE Notes issued and sold in the Private Placementswap is convertible into 1,801,851 shares of Common Stock based on the conversion rate applicable on July 1, 2020. The conversion rate will convert at a conversion price of $11.50 per share. There are also Note Redemption Warrants that may be issued pursuant to the Note Purchase Agreement that will be exercisable for a number of shares of common stock to be determined at the time any such warrant is issued. The exercise price per share of common stock of any warrant will be set at the time such warrant is issued pursuant to the Note Purchase Agreement.

The PIPE Notes provide for a conversion price reset such that, if the last reported sale price of the common stock is less than or equal to $6.00 for any ten trading days within any 30 trading day period preceding the maturity date, then the conversion price is adjusted down $6.90 per share. On July 28, 2020, the conversion price reset was triggered. On this date, the Company recorded a beneficial conversion feature of $14,166,339, which will be amortized over the remaining term of the PIPE Notes using the effective interest method. The Company recorded $268,758 on amortization of debt discount related to the contingent beneficial conversion feature for the year ended December 31, 2020 in the Company’s consolidated statements of operations.

Industrial Realty Group exchanged $9.0 million of the amount outstanding under the IRG November Note for PIPE Notes in the principal amount of $9.0 million. Gordon Pointe Management, LLC exchanged $500,000 of the principal component of the indebtedness owed to such Purchaser by GPAQ under loan agreements and related promissory notes for PIPE Notes in the principal amount of $500,000. Seven other Purchasers exchanged a total of $4,221,293 in GPAQ founder notes held by such Purchasers for PIPE Notes in the aggregate principal amount of $4,221,293. Consequently, the Company received cash proceeds from the issuance and sale of the PIPE Notes of approximately $7 million. The Company used proceeds of the Private Placement to fund the Company’s obligations related to the Merger Agreement and to pay transaction fees and expenses and used the remaining proceeds of the Private Placement to satisfy the Company’s working capital obligations. The PIPE Notes began to accrue interest on October 1, 2020, but2024 and the Company has elected to apply the PIK interest provision, thereby increasing the outstanding balance of the PIPE Notes by the amount of accrued interest each month.

The Convertible PIPE Notes contain a PIK interest provision, which represents contractually deferred interest added to the subordinated debt outstanding balance that is due at maturity. For the year ended December 31, 2020, the Company incurred PIK interest of $1,076,378.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 4: Notes Payable, net (continued)

MKG DoubleTree Loan

On September 14, 2020, the Company entered into a construction loan agreement with Erie Bank, a wholly owned subsidiary of CNB Financial Corporation, a Pennsylvania corporation, as lender. The Company has applied and been approved for a first mortgage loan for $15.3 million (“MKG DoubleTree Loan”) with a variable interest rate of 1.75% plus the prime commercial rate, at which no time can it drop below 5%, for the purpose of renovating the McKinley Grand Hotel in the City of Canton, Ohio. The initial maturitytermination date is 18 months after the exercised loan date, March 13, 2022, and the agreement includes an extended maturity date of September 13, 2022, should HOFRE need more time with an extension fee of 0.1% of the then outstanding principal balance. The Company intends to use the proceeds of the MKG DoubleTree Loan for building acquisition costs and costs incurred for material and labor in connection with the improvements, which make up just under 75% of the MKG DoubleTree Loan. The remaining portion of the MKG DoubleTree Loan will be used for administrative, legal, operational, and environmental costs. A bank account has been created with Erie Bank and the balance must be maintained between $1 and $2 million within the account as collateral, which will promptly be refunded to the Company upon complete payment of the MKG DoubleTree Loan on the maturity date. The MKG DoubleTree Loan has certain financial covenants whereby the Company must maintain a minimum tangible net worth of $5,000,000 and minimum liquidity of not less than $2,000,000. These covenants are to be tested annually based upon the financial statements at the end of each fiscal year. As of December 31, 2020, the amount of restricted cash related to the MKG DoubleTree Loan was $199,645.

Canton Cooperative Agreement

On September 1, 2020, HOFRE entered into a Cooperative Agreement with DFA Summit, the City of Canton, Ohio (“Canton”), the Canton Regional Energy Special Improvement District, Inc. (the “District”), and U.S Bank National Association for the construction of the Series 2020C Project. The Series 2020C Project constitutes a port authority facility and a special energy improvement project under the Special Improvement District Act. HOFRE applied and received approval from the District and Canton for the aforementioned project. The loan amount is $2,670,000, with a discount of $182,723, which will be amortized over the life of the loan using the effective interest method.

In order to pay for the costs of the Series 2020C Project, the District and HOFRE have requested and been approved by DFA Summit, to issue and sell the Series 2020C Bonds pursuant to an Indenture and make a portion of the proceeds of the Series 2020C Bonds available to the developer to undertake the provision of the Series 2020C Project.

While the Series 2020C Bonds are outstanding, HOFRE shall pay the special assessment and the service payments semi-annually to the Canton County Treasurer pursuant to and in accordance with the Assessing Ordinance, the TIF Act, and the TIF Ordinance. The service payments shall be in the same amount as the real property taxes that would have been charged and payable against the Improvements had the TIF Exemption not been granted. The special assessment payments will be made on January 31st and July 31st over the course of 17 years, commencing on January 31, 2022 with a maturity date of January 31, 2039. For the first eight years, each payment will consist of $188,188 and decrease to $161,567 in 2030.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 4: Notes Payable, net (continued)

Aquarian Mortgage Loan

On December 1, 2020, the Company entered into a mortgage loan with Aquarian Credit Funding, LLC (“Aquarian”) for $40,000,000 of gross proceeds. The Aquarian Mortgage Loan bears interest at 10% per annum and the principal payments are due monthly, which began in December 2020. Upon the occurrence and during the continuance of an event of default, Aquarian may, at its option, take such action, without notice or demand that Aquarian deems advisable to protect and enforce its rights against the Company, including declaring the debt to become immediately due and payable.

Issuance of 7.00% Series A Cumulative Redeemable Preferred Stock

During October, 2020, the Company issued to American Capital Center, LLC (the “Preferred Investor”) an aggregate of 1,800 shares of 7.00% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”) at $1,000 per share for an aggregate purchase price of $1,800,000. The Company paid the Preferred Investor an origination fee of 2%. The issuance and sale of the Series A Preferred Stock to the Preferred Investor was exempt from registration pursuant to Section 4(a)(2) of the Securities Act. HOFRE used half of the proceeds from the sale of the Series A Preferred Stock to pay down outstanding amounts under its Bridge Loan. The Series A Preferred Stock is required to be redeemed in cash after five years and is recorded in notes payable, net on the Company’s consolidated balance sheet.27, 2027.

 

Future Minimum Principal Payments

 

The minimum required principal payments on notes payable outstanding as of December 31, 20202022 are as follows:

 

For the year ended December 31, Amount 
2021 $54,058,060 
2022  21,044,819 
2023  455,000 
2024  3,521,989 
2025  24,071,671 
Thereafter  13,806,000 
Total Gross Principal Payments $116,957,539 
     
Less: Discount  (18,058,172)
     
Total Net Principal Payments $98,899,367 

For the years ending December 31, Amount 
2023 $16,744,801 
2024  46,404,272 
2025  30,877,498 
2026  3,655,408 
2027  4,281,371 
Thereafter  83,232,222 
Total Gross Principal Payments $185,195,572 
     
Less: Discount  (13,879,712)
     
Total Net Principal Payments $171,315,860 

 


 

 

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”).

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.

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 stockCommon 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 stockCommon Stock and to issue and designate its rights, of, 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 (the “Certificatewith the Secretary of Designations”)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 sheet within Notes Payable, net.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 5: Stockholders’ Equity (continued)

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 A Cumulative RedeemableB Preferred Stock (“Series A Preferred Stock”)(as defined below). The number of authorized shares of Series AB Preferred Stock is 52,800.15,200.

 

The Company had 200 and 15,200 shares of 7.00% Series B Convertible Preferred Stock (“Series B Preferred Stock”) outstanding and 15,200 shares authorized as of December 31, 2022 and December 31, 2021, respectively. 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, in connection with the closing of the Business Combination, the Company’s omnibus incentive plan (the “2020 Omnibus Incentive Plan”) became effective immediately upon the closing of the Business Combination. 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 stockCommon Stock authorized for issuance under the 2020 Omnibus Incentive Plan is 1,812,728was 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, resulting in a maximum of 264,215 shares that can be issued under the amended 2020 Omnibus Inventive Plan. The amendment to the 2020 Omnibus Incentive Plan was previously approved by the Board of Directors of the Company, and the amended 2020 Omnibus Incentive Plan became effective on June 2, 2021. As of December 31, 2020, 561,2902022, 90,643 shares remained available for issuance under the 2020 Omnibus Incentive Plan.

 

Equity Distribution Agreement

On September 30, 2021, the Company entered into an Equity Distribution Agreement with Wedbush Securities Inc. and Maxim Group LLC with respect to an at-the-market offering program under which the Company may, from time to time, offer and sell shares of the Company’s Common Stock having an aggregate offering price of up to $50 million. From January 1 through December 31, 2022, approximately 988,007 shares were sold resulting in net proceeds to the Company totaling approximately $20.4 million. The remaining availability under the Equity Distribution Agreement as of December 31, 2022 was approximately $25.9 million.

Issuance of Restricted Stock Awards

  

On July 2, 2020, the Company granted 715,929 shares of the Company’s restricted stock to the Company’s Chief Executive Officer under the 2020 Omnibus Incentive Plan. The shares will vest at three separate dates, 238,643 on July 2, 2020, 238,643 on July 2, 2021, and fully vest on July 2, 2022 with a final installment of 238,643. In connection with vesting of 238,643 shares on July 2, 2020, the Company withheld 106,840 shares for tax withholding.

The Company’s activity in restricted common stockCommon Stock was as follows for yearsthe year ended December 31, 2020:2022:

 

 Number of
shares
 Weighted
average
grant date
fair
value
  Number of
shares
 Weighted
average
grant date
fair value
 
Non–vested at January 1, 2020  -  $- 
Non–vested at January 1, 2022  10,848  $204.60 
Granted  715,929  $9.30   19,943  $19.00 
Vested  (238,643) $9.30   (30,791) $84.39 
Non–vested at December 31, 2020  477,286  $9.30 
Non–vested at December 31, 2022  -  $ 

 


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 5: Stockholders’ Equity (continued)

Issuance of Restricted Stock Awards (continued)

For the years ended December 31, 20202022 and 2019, the Company recorded $3,327,280 and $0, in employee and director2021, stock-based compensation expense. Of this amount, $2,218,187 isrelated to restricted stock awards was $1,746,799 and $2,436,091, respectively. Stock-based compensation related to restricted stock awards was included as a component of business combination costs on“Operating expenses” in the Company’s consolidated statement of operations, as the initial vesting of the restricted stock award was directly related to the completion of the Company’s Business Combination. The remaining stock-based compensation expense is included as a component of property operating expenses.operations. As of December 31, 2020,2022, unamortized stock-based compensation costs related to restricted share arrangements was $3,327,280 and will be recognized over a weighted average period of 1.5 years.

Issuance of Restricted Stock Units

On August 31, 2020, the Company granted 138,568 restricted stock units (“RSUs”) to an employee as an inducement grant not under the 2020 Omnibus Incentive Plan. The RSUs will vest at three separate dates, 46,189 on August 31, 2021, 46,189 on August 31, 2022, and fully vest on August 31, 2023 with a final installment of 46,190.

On September 1, 2020, the Company granted 64,240 RSUs to an employee as an inducement grant not under the 2020 Omnibus Incentive Plan. The RSUs will vest at three separate dates, 21,413 on September 1, 2021, 21,413 on September 1, 2022, and fully vest on September 1, 2023 with a final installment of 21,414.

On September 16, 2020, the Company granted 148,883 RSUs to an employee as an inducement grant not under the 2020 Omnibus Incentive Plan. The RSUs will vest at three separate dates, 49,628 on September 14, 2021, 49,628 on September 14, 2022, and fully vest on September 14, 2023 with a final installment of 49,627.

On September 22, 2020, the Company granted an aggregate of 529,543 RSUs to employees under the 2020 Omnibus Incentive Plan. The RSUs will vest at three separate dates, one third on September 22, 2020, one third on July 1, 2021, and fully vest on July 1, 2022.

On September 22, 2020, the Company granted an aggregate of 45,000 RSUs to independent directors under the 2020 Omnibus Incentive Plan. The RSUs will fully vest on September 22, 2021.

On November 16, 2020, the Company granted 131,694 RSUs to an employee under the 2020 Omnibus Incentive Plan as an inducement grant not under the 2020 Omnibus Incentive Plan. The RSUs will vest at three separate dates, 43,898 on November 16, 2021, 43,898 on November 16, 2022, and fully vest on November 16, 2023 with a final installment of 43,898.

On December 22, 2020, the Company granted an aggregate of 477,778 RSUs to the Chief Executive Officer under the 2020 Omnibus Incentive Plan. The RSUs vest contingent upon shareholder approval to increase the number of authorized shares under the Omnibus Incentive Plan in the 2021 Annual Meeting of Stockholders.

On December 22, 2020, the Company granted an aggregate of 140,741 RSUs to employees under the 2020 Omnibus Incentive Plan. The RSUs vest in full on December 22, 2021.were $0.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 5: Stockholders’ Equity (continued)

 

Issuance of Restricted Stock Units (continued)

During the year ended December 31, 2022, the Company granted an aggregate of 96,209 Restricted Stock Units (“RSUs”) to its employees and directors, of which 29,039 were granted under the 2020 Omnibus Incentive Plan and 67,170 were granted as inducement awards. The RSUs were valued at the value of the Company’s Common Stock on the date of grant, which was a range of $12.00 to $23.54 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 restricted stock unitsRSUs was as follows for yearsthe year ended December 31, 2020:2022:

 

 Number of
shares
  Weighted
average
grant date
fair
value
  Number of
shares
 Weighted average
grant date
fair value
 
Non–vested at January 1, 2020  -  $- 
Non–vested at January 1, 2022  100,323  $50.85 
Granted  1,676,447  $2.52   96,209  $20.07 
Vested  (176,514) $2.80   (31,717) $50.93 
Forfeited  -   -   (30,016) $51.40 
Non–vested at December 31, 2020  1,499,933  $2.49 
Non–vested at December 31, 2022  134,799  $28.74 

 

For the years ended December 31, 20202022 and 2019,2021, the Company recorded $1,003,255$2,150,004 and $0,$3,074,043, respectively, in employee and director stock-based compensation expense. Employee and director stock-based compensation expense which is a component of property operating expenses“Operating expenses” in the consolidated statement of operations. As of December 31, 2020,2022, unamortized stock-based compensation costs related to restricted stock units was $3,228,092were $2,227,151 and will be recognized over a weighted average period of 1.621.56 years.

Warrants

The Company’s warrant activity was as follows for the year ended December 31, 2022:

  Number of
Shares
  Weighted
Average
Exercise
Price (USD)
  Weighted
Average
Contractual
Life (years)
  Intrinsic
Value (USD)
 
Outstanding - January 1, 2022  1,861,715  $159.48   3.59             
Granted  141,934  $12.77         
Outstanding – December 31, 2022  2,003,649  $149.09   2.86  $- 
Exercisable – December 31, 2022  1,929,843  $154.30   2.81  $- 

 


 

 

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 (Restated)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’s warrant activity wasCompany accounted for this modification as follows fora cost of the years ended December 31, 2020:

  Number of
Shares
  Weighted
Average
Exercise
Price (USD)
  Weighted
Average
Contractual
Life (years)
  Intrinsic
Value (USD)
 
Outstanding - January 1, 2020  -  $-         
Issued in connection with Business Combination  24,731,194  $11.50   4.50     
Issued in connection with November 2020 Public Offering  17,857,142  $1.40   4.88     
Issued in connection with November 2020 overallotment  2,678,571  $1.40   4.88     
Issued in connection with IRG November Note Conversion  10,036,925  $1.40   4.99     
Outstanding – December 31, 2020  55,303,832  $5.92   4.73  $- 
Exercisable – December 31, 2020  45,266,907  $6.92   4.67  $- 

Shared Services Agreement

On June 30, 2020, HOF Village entered into a Shared Services Agreement with PFHOF (the “Shared Services Agreement”). Under the agreement, PFHOF and HOF Village mutually reduced certain outstanding amounts owed between the parties, with PFHOF forgiving $5.15 million owed by HOF Village and HOF Village forgiving $1.2 million owed by PFHOF, which effectively resulted in no outstanding amounts owed between the parties as of March 31, 2020. Additionally,IRG Split Note, whereby the Company wrote-offcalculated the Tom Benson statue, which was valued asincremental fair value of the date of the Shared Services Agreement at $251,000 while the Company had valued it at $300,000. As this is a related party transaction, the CompanySeries C Warrants and recorded the resulting difference of $3,699,000them as a contribution from one of its members indiscount against the Company’s consolidated balance sheet.

November 2020 Public OfferingIRG Split Note.

 

On November 18, 2020, we closed our previously announced offering (the “November 2020 Offering”) of 17,857,142 units (the “November 2020 Units”) at a7, 2022, the Company further amended the Series C Warrants to reduce the exercise price of $1.40to $12.77 per November 2020 Unit, each consisting of one share of our Common Stock, and one warrant to purchase one share of Common Stock (each, a “Series B Warrant”) pursuant to the termsas part of the underwriting agreement between the Company and Maxim Group LLC (for purposes of the November 2020 Offering, the “November 2020 Underwriter”), entered into on November 16, 2020 (the “November 2020 Underwriting Agreement”). The Series B Warrants are exercisable at a price of $1.40 per share of Common Stock and expire five years from the date of issuance. In addition, the November 2020 Underwriter exercised in full its option to purchase up to an additional 2,678,571 shares of Common Stock and an additional 2,678,571 Warrants at the public offering price less discounts and commissions. Under the terms of the November 2020 Underwriting Agreement, each of our executive officers, directors and stockholders ofIRG Letter Agreement. See Note 4 for more than 5% of the outstanding Common Stock signed lock-up agreements pursuant to which each agreed, subject to certain exceptions, not to sell the Common Stock for a period of 90 days following November 16, 2020. The Company received approximately $26.2 million, net of offering costs in connect with these transactions.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 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 5: Stockholders’ Equity (continued)

 

November 2020 Public Offering (continued)

In connection with the November 2020 Offering, on November 18, 2020, we entered into a Warrant Agency Agreement (the “Series B Warrant Agreement”) with Continental Stock Transfer & Trust Company (“Continental”), pursuantAmended and Restated Series D Warrants issue to which Continental agreed to act as warrant agent with respect to the Series B Warrants.

December 2020 Private Placement of Common Stock and Series C WarrantsCH Capital Lending

 

On December 29, 2020, we entered into a Securities Purchase Agreement (the “Purchase Agreement”)March 1, 2022, in connection with IRG andthe amendment to the CH Capital Loan (as described in Note 4), the Company amended the Series D Warrants issued to CH Capital Lending LLC,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 Delaware limited liability company (the “Purchaser”), pursuant to which we sold toweighted-average antidilution adjustment.

On November 7, 2022, the Purchaser in a private placement (the “December 2020 Private Placement”) 10,813,774 shares (the “Shares”) of Common Stock and warrants to purchase 10,036,925 shares of Common Stock (the “Series C Warrants”).  The aggregate purchase price forCompany further amended the Shares and Series C Warrants was $15,239,653 (the “Purchase Price”), which was paid into reduce the formexercise price to $12.77 per share as part of the cancellationIRG Letter Agreement. See Note 4 for more information.

The following assumptions were used to calculate the fair value of Series D Warrants in full of certain financial obligations owed by us and affiliates to IRG and its affiliates. The Series C Warrants are exercisable for, inconnection with the aggregate, 10,036,925 shares of Common Stock at an exercise price of $1.40 per share of Common Stock (subject to customary adjustments). The Series C Warrants may be exercised from and after June 29, 2021, subject to certain terms and conditions set forth in the Series C Warrants. Unexercised Series C Warrants will expire on the fifth anniversary of the date of issuance (see Note 2).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 

 

Note 6: Sponsorship Revenue and Associated Commitments

 

Johnson Controls, Inc.

 

On July 2, 2020, Newcothe Company entered into an Amended and Restated Sponsorship and Naming Rights Agreement (the “Amended Sponsorship“Naming Rights Agreement”) among Newco, PFHOF and Johnson Controls, Inc. (“JCI” or “Johnson Controls”), that amended and restated the Sponsorship and Naming Rights Agreement, dated as of November 17, 2016 (the “Original Sponsorship Agreement”). Among other things, the Amended Sponsorship Agreement: (i) reduced the total amount of fees payable to Newco during the term of the Amended Sponsorship Agreement from $135 million to $99 million; (ii) restricted the activation proceeds from rolling over from year to year with a maximum amount of activation proceeds in one agreement year to be $750,000; and (iii) renamed the “Johnson Controls Hall of Fame Village” to “Hall of Fame Village powered by Johnson Controls”Village”. This is a prospective change, which the Company reflected beginning in the third quarter of 2020.

 

JCI has thea right to terminate the agreementNaming Rights Agreement if the Company does not provide evidence to JCI by October 31, 2021 that it has secured sufficient debt and equity financing to complete Phase II, or if Phase II is not substantially completeopen for business by January 2, 2024, in each case subject to day-for-day extension due to force majeure and a notice and cure period.In addition, under the Naming Rights Agreement JCI’s obligation to make sponsorship payments to the Company may be suspended commencing on December 31, 2020, if the Company has not provided evidence reasonably satisfactory to JCI on or before December 31, 2020, subject to day-for-day extension due to force majeure, that the Company has secured sufficient debt and equity financing to complete Phase II.


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)

Additionally, on October 9, 2020, Newco, entered into a Technology as a Service Agreement (the “TAAS Agreement”) with JCI. Pursuant to the TAAS Agreement, JCI will provide certain services related to the construction and development of the Hall of Fame Village (the “Project”), including, but not limited to, (i) design assist consulting, equipment sales and turn-key installation services in respect of specified systems to be constructed as part of Phase 2 and Phase 3 of the Project and (ii) maintenance and lifecycle services in respect of certain systems constructed as part of Phase 1, and to be constructed as part of Phase 2 and Phase 3, of the Project. Under the terms of the TAAS Agreement, Newco has agreed to pay JCI up to an aggregate of approximately $217 million for services rendered by JCI over the term of the TAAS Agreement. As of December 31, 2022 and December 31, 2021, approximately $195 million and $199 million, respectively, was remaining under the TAAS Agreement.

 

As amended, as of December 31, 2020,2022, scheduled future cash to be received and required activation spend under the non-cancellable period of the agreement areNaming Rights Agreement is as follows:

 

 Unrestricted Activation Total  Unrestricted Activation Total 
2021 $3,968,750  $750,000  $4,718,750 
2022 (past due) $4,000,000  $750,000  $4,750,000 
2023  4,000,000   750,000   4,750,000 
2024  4,250,000   750,000   5,000,000 
2025  4,250,000   750,000   5,000,000 
2026  4,250,000   750,000   5,000,000 
Thereafter  35,531,251   6,000,000   41,531,251 
Total $3,968,750  $750,000  $4,718,750  $56,281,251  $9,750,000  $66,031,251 

As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the Amended Sponsorship Agreement. During the year ended December 31, 2021, the Company recognized $4,497,864, of net sponsorship revenue related to the Naming Rights 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 states that termination of the TAAS Agreement by JCI is due to Newco’s alleged breach of its payment obligations. Additionally, JCI in the TAAS Notice demands the amount which is the sum of: (i) all past due payments and any other amounts owed by Newco under the TAAS Agreement; (ii) all commercially reasonable and documented subcontractor breakage and demobilization costs; and (iii) all commercially reasonable and documented direct losses incurred by JCI directly resulting from the alleged default by the Company and the exercise of JCI’s rights and remedies in respect thereof, including reasonable attorney fees.

 


 

 

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)

 

As services are provided,Also on May 10, 2022, the Company is recognizing revenue onreceived from JCI a straight-line basis over the expected termnotice of termination (“Naming Rights Notice”) of the Amended SponsorshipName Rights Agreement, effective immediately. The Naming Rights Notice states that the termination of the Naming Rights Agreement by JCI is due to JCI’s concurrent termination of the TAAS Agreement. During the years ended December 31, 2020 and 2019,The Naming Rights Notice further states that the Company recognized $4,742,111must pay JCI, within 30 days following the date of the Naming Rights Notice, $4,750,000. The Company has not made such payment to date. The Naming Rights Notice states that Newco is also in breach of its covenants and $4,962,985 of net sponsorship revenue relatedagreements, which require Newco to this deal, respectively. Accounts receivable fromprovide evidence reasonably satisfactory to JCI totaled $0on or before October 31, 2021, subject to day-for-day extension due to force majeure, that Newco has secured sufficient debt and $91,932 at December 31, 2020 and 2019, respectively.equity financing to complete Phase II.

 

Aultman Health Foundation

In 2016,The Company disputes that it is in default under either the TAAS Agreement or the Naming Rights Agreement. The Company and PFHOF entered into a 10-year licensing agreement with Aultman Health Foundation (“Aultman”) allowing Aultman usebelieves JCI is in breach of the HOF VillageNaming Rights Agreement and PFHOF marksthe TAAS Agreement due to their failure to make certain payments in accordance with the Naming Rights Agreement, and, logos. Underon May 16, 2022, provided notice to JCI of these breaches. The Company is pursuing dispute resolution pursuant to the terms of the agreement,Naming Rights Agreement to simultaneously defend against JCI’s allegations and pursue its own claims. The ultimate outcome of this dispute cannot presently be determined. However, in management’s opinion, the Company will receive $2.5 millionlikelihood of a material adverse outcome is remote. Accordingly, adjustments, if any, that might result from the resolution of this matter have not been reflected in cash sponsorship funds. Of those funds, the Company is contractually obligated to spend $700,000 as activation expenses for the benefit of Aultman.

As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the agreement. accompanying consolidated financial statements. During the yearsyear ended December 31, 2020 and 2019,2022, the Company recognized $180,394suspended its revenue recognition until the dispute is resolved and $179,901 of net sponsorship revenue related to this deal, respectively. Accounts receivable from Aultman totaled $0 and $165,115 at December 31, 2020 and 2019, respectively.

Duringhas recorded an allowance against the first quarter of 2021, the Company terminated the Aultman sponsorship agreement. See Note 14.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 6: Sponsorship Revenue and Associated Commitments (continued)

First Data Merchant Services LLC

In December 2018, the Company and PFHOF entered into an 8-year licensing agreement with First Data Merchant Services LLC (“First Data”) and Santander Bank. Asamounts due as of December 31, 2020, scheduled future cash to be received2022 in the amount of $4,812,500. The balances due under the agreement areNaming Rights Agreement as follows:

Year ending December 31:

2021 $150,000 
2022  150,000 
2023  150,000 
2024  150,000 
2025  150,000 
Thereafter  150,000 
     
Total $900,000 

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, 2020 and 2019, the Company recognized $148,982 and $148,575 of net sponsorship revenue related to this deal, respectively. As of December 31, 20202022 and 2019, accounts receivable from First Data totaled $58,141 and $0, respectively.

Constellation NewEnergy, Inc.

On December 19, 2018 the Company and PFHOF entered into a sponsorship and services agreement with Constellation (the “Constellation Sponsorship Agreement”) whereby Constellation and its affiliates will provide the gas and electric needs of the Company in exchange for certain sponsorship rights. The original term of the Constellation Sponsorship Agreement was through December 31, 2028, however, in June 2020, the Company entered into an amended contract with Constellation which extended the term of the Constellation Sponsorship Agreement through December 31, 2029.2021 amounted to $6,635,417 and $1,885,417, respectively.

 

The ConstellationCompany and JCI are currently undergoing the process of binding arbitration.The ultimate outcome of this dispute cannot presently be determined.

Other Sponsorship Agreement providesRevenue

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 certaina single or multi-year term. These agreements provide sponsors various rights to Constellationsuch as venue naming rights, signage within our venues, and its employees, to benefit from the relationship with the Company from discounted pricing, marketing efforts,advertising on our website and other benefits as detailed in the agreement. The Constellation Sponsorship Agreement also provides for Constellation to pay sponsorship income and to provide activation fee funds. Activation fee funds are to be used in the year received and do not roll forward for future years as unspent funds. The amounts are due by March 31 of the year to which they apply, which is represented in the chart below.

The Constellation Sponsorship Agreement includes certain contingencies reducing the sponsorship fee amount owed by Constellation if construction is not on pace with the timeframe noted in the Constellation Sponsorship Agreement.

The Company also has a note payable with Constellation. Refer to Note 4 for additional information.agreements.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 6: Sponsorship Revenue and Associated Commitments (continued)

 

Constellation NewEnergy, Inc.Other Sponsorship Revenue (continued)

 

As of December 31, 2020,2022, scheduled future cash to be received and required activation spend under the agreement areagreements, excluding the Johnson Controls Naming Rights Agreement, is as follows:

 

  Unrestricted  Activation  Total 
2021 $1,300,000  $187,193  $1,487,193 
2022  1,396,000   200,000   1,596,000 
2023  1,423,220   200,000   1,623,220 
2024  1,257,265   166,000   1,423,265 
2025  1,257,265   166,000   1,423,265 
Thereafter  5,029,057   664,000   5,693,057 
             
Total $11,662,807  $1,583,193  $13,246,000 

Year ending December 31,

 

As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the Constellation Sponsorship Agreement. During the years ended December 31, 2020 and 2019, the Company recognized $1,244,655 and $1,310,536 of net sponsorship revenue related to this deal, respectively. Accounts receivable from Constellation totaled $1,101,867 and $857,213 at December 31, 2020 and 2019, respectively.

Turf Nation, Inc.

During October 2018, the Company entered into a 5-year sponsorship agreement with Turf Nation, Inc. (“Turf Nation”). Under the terms of the agreement, the Company will receive payments over the term based on the sale of Turf Nation products based on rates defined in the sponsorship agreement. The minimum guaranteed fee per year beginning in 2020 is $50,000 per year.

2023 $2,929,720 
2024  2,406,265 
2025  2,317,265 
2026  2,167,265 
2027  1,757,265 
Thereafter  4,514,529 
Total $16,092,309 

 

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, 20202022 and 2019,2021, the Company recognized $15,115$2,697,487 and $6,023,863 of net sponsorship revenue, related to this deal. During the years ended December 31, 2020 and 2019, the Company recognized $60,131 and $59,967 of net sponsorship revenue related to this deal, respectively. Accounts receivable from Turf Nation totaled $132,092 and $171,961 at December 31, 2020 and 2019, respectively.

 

Note 7: Other Commitments

 

Canton City School DistrictLessor Commitments

 

The Company has entered into cooperative agreements with certain governmental entities that support the developmentAs of the project overall, where the Company is an active participant in the agreement activity, and the Company would benefit from the success of the activity.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 7: Other Commitments (continued)

Canton City School District (continued)

The Company had a commitment to the Canton City School District (“CCSD”) to provide a replacement for their Football Operations Center (“FOC”) and to construct a Heritage Project (“Heritage”). The commitment was defined in the Operations and Use Agreement for HOF Village Complex dated as of February 26, 2016.

On March 20, 2018, a Letter of Representations was entered into by both parties whereby the Company has agreed to put money into escrow. The escrow balance at December 31, 2020 and 2019 of $0 and $2,604,318, respectively, is included in restricted cash on2022, the Company’s consolidated balance sheets.

ProjectConstellation Center for Excellence and Ground Leases

Three wholly owned subsidiaries ofretail facilities were partially leased including leases by the Company have project leases with the Stark County Port Authority to lease project improvements and ground leased property at the Tom Benson Hall of Fame Stadium, youth fields, and parking areas. On November 25, 2020, the Company entered into an amendment to its Stark County Port Authority lease, whereby the lease term was extended from January 31, 2056 to September 30, 2114.Company’s subsidiaries. The future minimum lease commitments under non-cancellable operatingthese leases, described below reflectexcluding leases of the amendment that was entered into on November 25, 2020, excluding the amounts yet to be paid from escrow for the FOC noted above,Company’s subsidiaries, are as follows:

 

For the year endedYear ending December 31, 2020:

2021 $321,900 
2022  321,900 
2023  321,900 
2024  321,900 
2025  321,900 
Thereafter  41,320,800 
     
Total $42,930,300 

Rent expense on operating leases totaled $418,862 and $331,916 during the years ended December 31, 2020 and 2019, and is recorded as a component of property operating expenses on the Company’s consolidated statement of operations.

QREM Management Agreement31:

 

On August 15, 2018, the Company entered into an Interim Services Agreement with Q Real Estate Management (“QREM”) to manage the Tom Benson Hall of Fame Stadium operations. Under that agreement, the Company incurs a monthly management fee to QREM. The interim agreement ended March 1, 2019 and the agreement was not renewed between the parties.

2023 $552,620 
2024  586,190 
2025  589,245 
2026  587,681 
2027  563,543 
Thereafter  2,654,701 
Total $5,533,980 

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 7: Other Commitments (continued)

 

SMG Management Agreement

On September 1, 2019, the Company entered into a Service Agreement with SMG to manage the Tom Benson Hall of Fame Stadium operations. Under that agreement, the Company incurs an annual management fee of $200,000. Management fee expense for the years ended December 31, 2020 and 2019 was $200,000 and $66,667, respectively, which is included in property operating expenses on the Company’s consolidated statements of operations. The agreement term shall end on December 31, 2022.

Employment Agreements

The Company has employment agreements with many of its key executive officers that usually have terms between one year and three years.

DoubleTree Canton Downtown Hotel

On January 2, 2020, the Company entered into a franchise agreement with Hilton Franchise Holding, LLC (“Hilton”) in order to obtain a license to use the Hilton brand in the operation of the DoubleTree Canton Downtown Hotel in Canton, Ohio. The Company will be responsible for operating the hotel full-time, complying with industry and brand standards, and using the reservation service provided by Hilton. While possessing exclusive control of day to day operations, the Company is required to display and maintain signage displaying Hilton’s brand name. The Company is also required to publish and make available to the traveling public, a directory that includes the Hilton brand. The monthly fee will be used for advertising, promotions, publicity, public relations, market research, and other marketing programs. The hotel opened in November 2020.

Management Agreement with Crestline Hotels & Resorts

 

On October 22, 2019, the Company entered into a management agreement with Crestline Hotels & Resorts (“Crestline”). The Company appointed and engaged Crestline as the Company’s exclusive agent to supervise, direct, and control management and operation of the DoubleTree Canton Downtown Hotel. In consideration of the services performed by Crestline, the Company agreed to the greater of: 2% of gross revenues or $10,000 per month in base management fees and other operating expenses. The agreement will be terminated on the fifth anniversary of the commencement date, or October 22, 2024. For the yearyears ended December 31, 2020,2022 and 2021, the Company paid and incurred $73,225$154,131 and $120,000, 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 provide $2,000,000 to an escrow account held by Constellation, representing adequate assurance of future performance. Constellation will invoice the Company in 60 monthly installments, which began in April 2021 for $103,095. Additionally, the Company has two notes payable with Constellation. See Note 4 for more information.

Online Sports Betting Agreement

On July 14, 2022, Newco entered into an Online Market Access Agreement with Instabet, Inc. doing business as betr (“BETR”), pursuant to which BETR will serve as a Mobile Management Services Provider (as defined under applicable Ohio gaming law) wherein BETR will host, operate and support a branded online sports betting service in Ohio, subject to procurement of all necessary licenses. The initial term of the Online Market Access Agreement is ten years.

As part of this agreement, Newco will receive a limited equity interest in BETR and certain revenue sharing, along with the opportunity for sponsorship and cross-marketing. The limited equity interest was in the form of penny warrants valued at $4,000,000. The grant date value of these warrants were recorded as deferred revenue (within Other Liabilities on the Consolidated Balance Sheet) and will be amortized over the life of the sports betting agreement.

On November 2, 2022, the Company took the next step toward live sports betting by securing conditional approval from the state for mobile and retail sports books.

The Ohio Casino Control Commission provided the required authorization for HOFV to gain licensing for a physical sports operation – called a sportsbook – as well as an online betting platform, under Ohio’s sports betting law HB29. As of January 1, 2023, sports betting is legal in Ohio, for anyone in the state that is of legal betting age.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 7: Other Commitments (continued)

 

TAAS AgreementOther Liabilities

 

On October 9, 2020, Newco, entered into a Technology as a Service Agreement (the “TAAS Agreement”) with Johnson Controls, Inc. (“JCI”). Pursuant to the TAAS Agreement, JCI will provide certain services related to the construction and developmentOther liabilities consisted of the Hall of Fame Village powered by JCI (the “Project”), including, but not limited to, (i) design assist consulting, equipment salesfollowing at December 31, 2022 and turn-key installation services2021:

  December 31,
2022
  December 31,
2021
 
Activation fund reserves $3,511,185  $3,537,347 
Deferred revenue  6,867,970   203,278 
Deposits and other liabilities  300,549   - 
Total $10,679,704  $3,740,625 

Other Commitments

The Company has other commitments, as disclosed in respect of specified systems to be constructed as part of Phase 2Notes 6, 8 and Phase 3 of the Project and (ii) maintenance and lifecycle services in respect of certain systems constructed as part of Phase 1, and to be constructed as part of Phase 2 and Phase 3, of the Project. Under the terms of the TAAS Agreement, Newco has agreed to pay JCI up to an aggregate $217,934,637 for services rendered by JCI over the term of the TAAS Agreement.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’s wholly owned subsidiary, HOF Village Stadium, LLC, was a defendant in a lawsuit “National Football Museum, Inc. dba Pro Football Hall of Fame v. Welty Building Company Ltd., et al;” fileddoes not have any pending litigation that, separately or in the Stark County Courtaggregate, would, in the opinion of Common Pleas. PFHOF, an affiliate, filed this suit for monetary damages asmanagement, have a resultmaterial adverse effect on its results of the cancellation of the 2016 Hall of Fame Game. Plaintiff alleged that the game was cancelled as a result of negligent acts of subcontractors who were hired to perform field painting services.

The Plaintiff alleged that HOF Village Stadium, LLC was contractually liable for damages Plaintiff sustained because it guaranteed the performance of Defendant Welty Building Company Ltd. (“Welty”) for the Tom Benson Hall of Fame Stadium renovation.

Potential damages claimed by Plaintiff included the refunds of ticket sales, lost commissions on food and beverage sales, and lost profits on merchandise sales. The parties reached a global settlement and the matter has been dismissed with prejudice.operations, financial condition, or cash flows.

 

Note 9: Related-Party Transactions

 

Due to Affiliates

 

Due to affiliates consisted of the following at December 31, 20202022 and 2019:2021:

 

 December 31,
2020
 December 31,
2019
  December 31,
2022
 December 31,
2021
 
Due to IRG Member $1,456,521  $6,257,840  $228,353  $1,041,847 
Due to IRG Affiliate  140,180   145,445   116,900   116,900 
Due to M. Klein  -   500,000 
Due to Related Party Advances  -   5,800,000 
Due to PFHOF  126,855   6,630,305   510,232   660,208 
Total $1,723,556  $19,333,590  $855,485  $1,818,955 

 


HallIRG Canton Village Member, LLC, a member of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 9: Related-Party Transactions (continued)

Due to Affiliates (continued)

The IRG MemberHOF Village, LLC controlled by our director Stuart Lichter (the “IRG Member”) and an affiliate, provideprovides 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, powered by Johnson Controls, 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.

 

For the years ended December 31, 2020 and 2019, costs incurred under these arrangements were $1,360,944 and $1,276,885, respectively, which were included in Project Development Costs.

The IRG Member also provides certain general administrative support to the Company. For the years ended December 31, 2020 and 2019, expenses of $275 and $344,426, respectively, were included in Property Operating Expenses.

The amounts due to the IRG Member above are for development fees, human resources support, and the Company’s engagement with them to identify and obtain naming rights sponsorships and other entitlement partners for the Company. The Company and IRG Member have an arrangement whereby the Company pays IRG Member $15,000 per month plus commissions. For both the years ended December 31, 2020 and 2019 the Company incurred $120,000 in costs to this affiliate, respectively.

The amounts above due to M. Klein as of December 31, 2019 relate to advisory services provided to the Company. The Company engages a company owned by an investor for advisory services. The Company has not incurred any advisory costs under this arrangement in any of the reported periods presented.

The amounts above due to related party advancesamounts in the table above are non-interest bearing advances from an affiliate of IRG Member due on demand. The Company is currently in discussions with this affiliate to establish repayment terms of these advances, however, there could be no assurance thatDuring the year ended December 31, 2022, the Company androlled $3,127,304 in amounts due to IRG Member will come to terms acceptable to both parties.

On January 13, 2020,into the Company secured $9.9 million in financing from Constellation through its Efficiency Made Easy (“EME”) program to implement energy efficient measures and to finance the construction of the Constellation Center for Excellence and other enhancements, as part of Phase II development. The Hanover Insurance Company provided a guarantee bond to guarantee the Company’s payment obligations under the financing, and Stuart Lichter and two trusts affiliated with Mr. Lichter have agreed to indemnify The Hanover Insurance Company for payments made under the guarantee bond.CH Capital Bridge Loan.

 

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.

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 9: Related-Party Transactions (continued)

 

License Agreement

 

On March 10, 2016, the Company entered into a license agreement with PFHOF, whereby the Company has the ability to license and use certain intellectual property from PFHOF in exchange for the Company paying a fee based on certain sponsorship revenuerevenues and expenses. On December 11, 2018, the license agreement was amended to change the calculation of the fee to be 20% of eligible sponsorship revenue. The license agreement was further amended in a First Amended and Restated License Agreement, dated September 16, 2019. The license agreement expires on December 31, 2033. During the years ended December 31, 2020 and 2019,On April 12, 2022, the Company recognized expenses of $2,476,946 and $1,706,290, respectively, which are included in property operating expenses onPFHOF terminated the Company’s consolidated statements of operations.Media License Agreement and entered into the Global License Agreement (described below).

 

Media License Agreement

 

On November 11, 2019, the Company entered into a Media License Agreement with PFHOF. On July 1, 2020, the Company entered into an Amended and Restated Media License Agreement that terminates on December 31, 2034. In consideration of a license to use certain intellectual property of PFHOF, the Company agreed to pay to PFHOF minimum guaranteed license fees of $1,250,000 each year during the term. After the first five years of the agreement, the minimum guarantee shall increase by 3% on a year-over-year basis. The first annual minimum payment iswas due July 1, 2021, subject to potential acceleration in the event of earlier use. There were no license fees incurred during the years endedwhich was not paid by December 31, 20202021. On April 12, 2022, the Company and 2019 underPFHOF terminated the Media License Agreement and entered into the Global License Agreement.

 

Purchase of Real Property from PFHOF Shared Services Agreement

 

On June 30, 2020,February 3, 2021, the HOFCompany purchased certain parcels of real property from PFHOF, located at the site of the Hall of Fame Village, entered intofor $1.75 million. In connection with the purchase, the Company granted certain easements to PFHOF to ensure accessibility to the PFHOF museum.

Shared Services Agreement with PFHOF. Under the agreement, PFHOF and HOF Village mutually reduced certain outstanding amounts owed between the parties, with PFHOF forgiving $5.15 million owed by HOF Village and HOF Village forgiving $1.2 million owed by PFHOF, which effectively resulted in no outstanding amounts owed between the parties as of March 31, 2020. Additionally, the Company wrote-off the Tom Benson statue, which was valued as of the date of the Shared Services Agreement at $251,000 while the Company had valued it at $300,000. As this is a related party transaction, the Company recorded the resulting difference of $3,699,000 as a contribution from one of its members in the Company’s consolidated balance sheet.

On March 9, 2021, the Company and PFHOF entered into an additional Shared Services Agreement with PFHOF, which supplements the existing Shared Services Agreement by, among other things, providing for the sharing of costs for activities relating to shared services.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 9: Related-Party Transactions (continued)

Global License Agreement

Effective April 8, 2022, Newco and PFHOF, entered into a Global License Agreement (the “Global License Agreement”). The Global License Agreement consolidates and replaces the First Amended and Restated License Agreement, the Amended and Restated Media License Agreement, and the Branding Agreement the parties had previously entered into. The Global License Agreement sets forth the terms under which PFHOF licenses certain marks and works to Newco and its affiliates to exploit existing PFHOF works and to create new works. The Global License Agreement grants Newco and its affiliates an exclusive right and license to use the PFHOF marks in conjunction with theme-based entertainment and attractions within the City of Canton, Ohio; youth sports programs, subject to certain exclusions; e-gaming and video games; and sports betting. The Global License Agreement also grants Newco and its affiliates a non-exclusive license to use the PFHOF marks and works in other areas of use, with a right of first refusal, subject to specified exclusions. The Global License Agreement acknowledges the existence of agreements in effect between PFHOF and certain third parties that provide for certain restrictions on the rights of PFHOF, which affects the rights that can be granted to Newco and its affiliates. These restrictions include, but are not limited to, such third parties having co-exclusive rights to exploit content based on the PFHOF enshrinement ceremonies and other enshrinement events. The Global License Agreement requires Newco to pay PFHOF an annual license fee of $900,000 in the first contract year, inclusive of calendar years 2021 and 2022; an annual license fee of $600,000 in each of contract years two through six; and an annual license fee of $750,000 per year starting in contract year seven through the end of the initial term. The Global License Agreement also provides for an additional license royalty payment by Newco to PFHOF for certain usage above specified financial thresholds, as described in Note 14.well as a commitment to support PFHOF museum attendance through Newco’s and its affiliates’ ticket sales for certain concerts and youth sports tournaments. The Global License Agreement has an initial term through December 31, 2036, subject to automatic renewal for successive five-year terms, unless timely notice of non-renewal is provided by either party.

 

Other LiabilitiesThe future minimum payments under this agreement as of December 31, 2022 are as follows:

 

Other liabilities consisted of the following at December 31, 2020 and 2019:

For the years ending December 31, Amount 
2023 $600,000 
2024  600,000 
2025  600,000 
2026  600,000 
2027  600,000 
Thereafter  6,750,000 
Total Gross Principal Payments $9,750,000 

 

  December 31,
2020
  December 31,
2019
 
Activation fund reserves $3,780,343  $2,876,149 
Deferred revenue  1,709,126   90,841 
Preferred stock dividend payable  -   717,286 
     Total $5,489,469  $3,684,276 

During the years ended December 31, 2022 and 2021, the Company paid $900,000 and $0 of the annual license fee, respectively.

 


 

 

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 is subject to certain conditions, including the execution and delivery of definitive documentation with respect to the Hotel Construction Loan.

The Hotel Construction Loan will have a two-year term with one option to extend for twelve months, subject to standard extension conditions. The collateral for the Hotel Construction Loan will include, without limitation: (a) a first priority perfected mortgage encumbering the Hotel Property; (b) a first priority perfected assignment of leases and rents with respect to the Hotel Property; (c) a first priority perfected assignment of all permits, licenses, entitlements, approvals, and contracts with respect to the Hotel Property; (d) UCC-1 financing statements (all personal property, fixture filing and accounts and reserves); (e) equity pledge; and (f) all other agreements and assurances customary in similar financings by IRGInc. The Hotel Construction Loan will bear interest at a variable rate per annum equal to the one-month Term SOFR plus 6%, subject to a SOFR floor equal to the greater of (i) 4% and (ii) prevailing SOFR at closing of the Hotel Construction Loan. Payments of interest only will be made during the initial two-year term, with a payments of principal and interest based on a 25-year amortization during the extension term, if applicable. Hotel will pay 1% of the Hotel Construction Loan amount as an origination fee, payable in full at closing. The Hotel Construction Loan definitive documentation will have representations, warranties and events of default usual and customary for such type of loan.

IRG Financial Support and Consideration

On November 7, 2022, the Company entered into a letter agreement (the “IRG Letter Agreement”) with IRGLLC, pursuant to which IRGLLC agreed that IRGLLC and IRGLLC’s affiliates and related parties will provide the Company and its subsidiaries with certain financial support described below in exchange for certain consideration described below.

The financial support provided under the IRG Letter Agreement consists of the following (the “IRG Financial Support”):

Waterpark Construction Financing Facilitation. IRGLLC agreed that its affiliate CH Capital Lending, LLC (“CHCL”), would help facilitate the closing of financing with Oak Street with regard to construction of the Waterpark Project, by among other things, releasing CHCL’s first mortgage lien on the Stadium Leasehold Interests and pledge of membership interests in HOFV Stadium. In addition, IRGLLC agreed to provide a completion guaranty to facilitate other needed financing for the Waterpark Project, as required.


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.


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 consideration of the IRG Financial Support to be received by the Company and its subsidiaries, the Company agreed in the IRG Letter Agreement to provide the following consideration to IRGLLC and the IRG Affiliate Lenders:

The Company agreed to make a payment of $4,500,000 as a fee for providing the completion guaranty and other IRG Financial Support described above, payable to CHCL to be held in trust for the IRG Affiliate Lenders, to be allocated as the IRG Affiliate Lenders shall determine. The Company also agreed to issue 90,909 shares of common stock, par value $0.0001 per share (“Common Stock”) to the IRG Affiliate Lenders, to be allocated as the IRG Affiliate Lenders shall determine, in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering. 

The Company agreed to modify the IRG Affiliate Lender loans as follows: (i) all IRG Affiliate Lender loans will bear interest at 12.5% per annum, compounded monthly, with payment required monthly at 8% per annum, and with the remaining interest accrued and deferred until maturity; (ii) the price at which the principal and accumulated and unpaid interest under the IRG Affiliated Lender loans is convertible into shares of Common Stock will be reset to a price equal to $12.77 per share; (iii) the Company and its subsidiaries will record a blanket junior mortgage on all real estate owned or leased by the Company and its subsidiaries, whether fee or leasehold estates, other than those parcels for which existing lenders prohibit junior financing; (iv) the Company agreed to acknowledge an existing pledge of the Company’s 100% membership interest in HOFV Newco and reflect that such pledge secures all amounts due under the IRG Affiliate Lender Loans; (v) all IRG Affiliate Lender loans will be cross-collateralized and cross-defaulted; (vi) the Company and its subsidiaries will covenant not to assign, pledge, mortgage, encumber or hypothecate any of the underlying assets, membership interests in affiliated entities or IP rights without IRGLLC’s written consent; (vii) prior development fees owed by the Company to IRGLLC will be accrued and added to the Bridge Loan, and future development fees owed by the Company to IRGLLC will be paid as when due; and (viii) the Company will pay to IRGLLC 25% of all contractual dispute cash settlements collected by the Company with regard to existing contractual disputes in settlement discussions, which shall be applied to outstanding IRG Affiliate Lender loans, first against accrued interest and other charges and then against principal.

The Company agreed to modify the Series C through Series G warrants held by IRG Affiliate Lenders as follows: (i) the exercise price of the Series C through Series G warrants held by IRG Affiliate Lenders will be reset to Market Price; and (ii) the warrant expiration dates of the Series C through Series G warrants held by IRG Affiliate Lenders will be extended by two years from their current expiration dates.


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 (defined below). In addition, the provisions of the IRG Letter Agreement are limited by Nasdaq Listing Rule 5635(c). If the number of shares of Common Stock issued to IRGLLC and its affiliated and related parties pursuant to the IRG Letter Agreement and the agreements modified thereunder exceeds the Nasdaq 19.99% Cap, then the Company will use reasonable efforts to obtain stockholder approval of the issuance of shares in excess of the Nasdaq 19.99% Cap, no later than the next stockholder meeting (the “Approval”).

Note 10: Concentrations

 

For the year ended December 31, 2020, 22022, two customers represented approximately 74%43.5% and 19%18.5% of the Company’s sponsorship revenue. For the year ended December 31, 2019, 22021, two customers represented approximately 63%75% and 17%19% of the Company’s sponsorship revenue. At

As of December 31, 2020, 2 customers2022, one customer represented approximately 71% and 15%94.4% of the Company’s sponsorship accounts receivable. AtAs of December 31, 2019, 2 customers2021, one customer represented approximately 43% and 33%88% of the Company’s sponsorship accounts receivable.

 

At any point in time, the Company can have funds in their operating accounts and restricted cash accounts that are with third partythird-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 could be subject to other adverse conditions in the financial markets.markets occurs.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 11: Business CombinationROU Assets and Lease Liabilities

 

The Company has entered into operating leases as the lessee primarily for ground leases under its stadium, sports complex, and parking facilities. On JulyJanuary 1, 2020,2022 (“Effective Date”), the Company (formerly knownadopted FASB Accounting Standards Codification, or ASC, Topic 842, Leases (“ASC 842”), which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as GPAQ Acquisition Holdings, Inc.lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use (“ROU”) consummatedassets and related operating and finance lease liabilities on the previously announced Business Combination with HOF Village, pursuant tobalance sheet. The Company adopted the Merger Agreement, bynew guidance using the modified retrospective approach on January 1, 2022. As a result, the consolidated balance sheet as of December 31, 2021 was not restated and among GPAQ, Acquiror Merger Sub, Company Merger Sub, HOF Village and Newco.is not comparative.

 

UponThe adoption of ASC 842 resulted in the consummationrecognition of operating ROU assets of $7,741,946 and operating lease liabilities of $3,383,807 on the Company’s consolidated balance sheet as of January 1, 2022. The initial recognition of the Business Combination: (i) Acquiror Merger Sub merged with and into GPAQ, with GPAQ continuingROU asset included the reclassification of $4,358,139 of prepaid rent as the surviving entity (the “Acquiror Merger”) and (ii) Company Merger Sub merged with and into Newco, with Newco continuing as the surviving entity (the “Company Merger”). In advance of the Company Merger, HOF Village transferred all of its assets, liabilities and obligations to Newco pursuant to a contribution agreement. In connection with the closing of the Business Combination, the Company changed its name from “GPAQ Acquisition Holdings, Inc.” to “Hall of Fame Resort & Entertainment Company.” As a result of the Business Combination, GPAQ and Newco continue as our wholly owned subsidiaries.January 1, 2022.

 

In connectionThe Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the consummationdefinition of initial direct costs. Also, the Business CombinationCompany elected the expedient allowing an entity to use hindsight to determine the lease term and pursuantimpairment of ROU assets and the expedient to allow the Merger Agreement, (a) each issuedCompany to not have to separate lease and outstanding unitnon-lease components. The Company has also elected the short-term lease accounting policy under which the Company would not recognize a lease liability or ROU asset for any lease that at the commencement date has a lease term of GPAQ, iftwelve months or less and does not already detached, was detached and each holderinclude a purchase option that the Company is more than reasonably certain to exercise.

For contracts entered into on or after the Effective Date, at the inception of such a unit was deemed to hold one sharecontract the Company will assess whether the contract is, or contains, a lease. The Company’s assessment is based on: (i) whether the contract involves the use of GPAQ Class A common stock and one GPAQ warrant (“GPAQ Warrant”), (b) each issued and outstanding share of GPAQ Class A common stock (excluding any shares held by a GPAQ stockholder that elected to have its shares redeemed pursuant to GPAQ’s organizational documents) was converted automatically intodistinct identified asset, (ii) whether the Company obtained the right to receive 1.421333 sharessubstantially all the economic benefit from the use of our common stock, following which all shares of GPAQ Class A common stock ceased to be outstandingthe asset throughout the period, and were automatically canceled and cease to exist; (c) each issued and outstanding share of GPAQ Class F common stock was converted automatically into(iii) whether the Company has the right to receive one share of our common stock, following which all shares of GPAQ Class F common stock ceased to be outstanding and were automatically canceled and cease to exist; (d) each issued and outstanding GPAQ Warrant (including GPAQ private placement warrants) was automatically converted into one warrant to purchase 1.421333 shares of our common stock per warrant, following which all GPAQ Warrants ceased to be outstanding and were automatically canceled and retired and cease to exist; and (e) each issued and outstanding membership interest in Newco converted automatically intodirect the right to receive a pro rata portionuse of the Company Merger Consideration (as definedasset. 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 Merger Agreement),same manner and date as for operating leases, and is subsequently presented at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was payable in sharesdetermined using a portfolio approach based on the rate of our common stock. Our common stockinterest 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 tradedreasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed periodically for impairment.

Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on The Nasdaq Capital Market,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 Nasdaq, underits useful life and interest expense determined on an amortized cost basis, with the symbol “HOFV”lease payments allocated between a reduction of the lease liability and our outstanding series of warrants (the “Existing Warrants”) are traded on Nasdaq under the symbol “HOFVW”.interest expense. 

 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 11: Business CombinationROU Assets and Lease Liabilities (continued)

 

The rightsCompany’s operating leases are comprised primarily of holders of the Company’s common stockground leases and Existing Warrants are governed by its amended and restated certificate of incorporation (the “Certificate of Incorporation”), its amended and restated bylaws (the “Bylaws’) and the Delaware General Corporation Law (the “DGCL”), and in the case of the Existing Warrants, the Warrant Agreement, datedequipment leases. Balance sheet information related to our leases is present below (ASC 842 was adopted on January 24, 2018, between GPAQ and the Continental Stock Transfer & Trust Company.1, 2022):

 

  December 31,  December 31, 
  2022  2021 
Operating leases:      
Right-of-use assets $7,562,048  $        - 
Lease liability  3,413,210   - 
Finance leases:        
Right-of-use assets  -   - 
Lease liability  -   - 

The Company’s net assets acquired through

Other information related to leases is presented below:

Year Ended December 31, 2022   
Operating lease cost $470,171 
Other information:    
Operating cash flows from operating leases  318,298 
Weighted-average remaining lease term – operating leases (in years)  91.5 
Weighted-average discount rate – operating leases  10.0%

As of December 31, 2022, the consummationannual minimum lease payments of the Business Combination (restated) consisted of:our operating lease liabilities were as follows:

 

Cash $31,034,781 
Sponsor loan  (500,000)
Warrant liability  (30,040,000)
Net assets acquired $494,781 
For The Years Ending December 31,   
2023 $333,004 
2024  311,900 
2025  311,900 
2026  311,900 
2027  311,900 
Thereafter  41,125,000 
Total future minimum lease payments, undiscounted  42,705,604 
Less: imputed interest  (39,292,394)
Present value of future minimum lease payments $3,413,210 

 


Immediately following the acquisition, the sponsor loan above was converted into the PIPE Notes. At the date of the Business Combination, on July 1, 2020, the Company used proceeds from the Business Combination to pay $15,500,000 on the Bridge Loan, while an additional $15,000,000 converted into equity in the newly formed

Hall of Fame Resort & Entertainment & Resort entity. The remaining balance following the Business Combination was approximately $34,500,000. The maturity date on the remaining balance has been extended one monthCompany and Subsidiaries

Notes to November 30, 2020. Should the Company be unable to pay off the principal balance at maturity, Industrial Realty Group agreed to advance funds to the Company to pay off the Bridge Loan, under the terms of the guarantee. As a result, Industrial Realty Group would become a lender to the Company with a maturity date of August 2021.Consolidated Financial Statements

Note 12: Failed Sale-Leaseback Financing Obligation

 

On July 1, 2020, concurrentlySeptember 27, 2022 the Company sold the land under the Company’s Fan Engagement Zone. Simultaneously, the Company entered into a lease agreement with the closingbuyer of the Business Combination,property (the sale of the Company completedproperty and simultaneous leaseback is referred to as the Private Placement of $20,721,293 in aggregate principal amount of PIPE Notes with certain funds managed by Magnetar Financial, LLC and the Purchasers. Pursuant to“Sale-Leaseback”). The Sale-Leaseback is repayable over a 99-year term. Under the terms of the Note Purchase Agreement, atlease agreement, the optionCompany’s initial base rent is approximately $307,125 per quarter, with annual increases of approximately 2% each year of the holders thereof the PIPE Notes may be converted into shares of Common Stock at a conversion price initially equal to $11.50 per share, subject to formula-based adjustment based on specified events. Accordingly, the aggregate amount of PIPE Notes issued and sold in the Private Placement is convertible into 1,801,851 shares of Common Stock based on the conversion rate applicable on July 1, 2020.term.

 

On July 1, 2020, in connection withNovember 7, 2022, HOFV Waterpark sold the closing ofland under the Business Combination, holders of Newco’s membership interests as of immediately prior toCompany’s future waterpark. Simultaneously, the closing dateCompany entered into a lock-uplease agreement (the “Lock-Up Agreement”).with the buyer of the property. The Sale-Leaseback for the waterpark is repayable over a 99-year term. Under the Lock-Upterms of the lease 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 each party thereto agreed not(the “Purchase Option Agreement”), pursuant to sell, offer to sell, contract or agree to sell, hypothecate, pledge, sell anywhich HOFV Waterpark is granted an option or contract to purchase grant any option, right or warrant, make any short sale or otherwise transfer or dispose of or lend its portion of any shares of common stock for athe Waterpark Property back from Oak Street that can be exercised during the period after closingbeginning on December 1, 2027 and ending on the date that is the later of (i) 180 days after July 1, 2020 and (ii) the expiration of the Founder Shares Lock-Up Period under, dated January 24, 2018 among GPAQ, its officers and directors and initial shareholders.November 30, 2034 (the “Option Period”).

 

The Company incurred $19,137,165accounted for the Sale-Leaseback transactions with Twain and Oak Street as financing transactions with the purchaser of the property in costsaccordance with ASC 842 as the lease agreement was determined to be a finance lease. 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 lease 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.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 12: Failed Sale-Leaseback Financing Obligation (continued)

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 $2,143,992,368. The monthly lease payments are split between a reduction of principal and interest expense using the effective interest rate method. No gain or loss was recognized related to the Business Combination. Of these costs, $16,718,978 were legalSale-Leaseback for the year ended December 31, 2022.

Under the terms of the Ground Lease, TWAIN withheld $2,631,481, representing 24 months’ worth of rent under the ground lease.

Further, the Company has a right to re-purchase the land from TWAIN at any time on or after September 27, 2025 at a fixed price according to the lease. Oak Street and professional fees, $2,218,187 wasHOFV Waterpark also entered into a purchase option agreement, pursuant to which HOFV Waterpark is granted an option to purchase the waterpark property back from Oak Street that can be exercised during the period beginning on December 1, 2027 and ending on November 30, 2034.

Under the Oak Street leaseback, the Company recorded $4,120,000 paid to IRG (See Note 4) and $940,166 paid to third parties as a cost of the Oak Street financing obligation and recorded them as a discount.

Remaining future cash payments related to a restricted stock awardthe financing liability, for the fiscal years ending December 31 are as follows:

2023 $4,019,531 
2024  4,672,544 
2025  5,865,396 
2026  6,005,734 
2027  6,149,455 
Thereafter  2,177,367,616 
Total Minimum Liability Payments  2,204,080,276 
Imputed Interest  (2,143,992,369)
Total $60,087,907 


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to the Company’s Chief Executive Officer, and $200,000 was related to a cash bonus to the Company’s Chief Executive Officer.Consolidated Financial Statements

 

Note 13: Income Taxes

Significant components of deferred tax assets were as follows:

  As of December 31, 
  2022  2021 
U.S. federal tax loss carry–forward $33,046,546  $12,785,012 
U.S. local tax loss carry–forward  3,109,971   1,204,422 
Equity based compensation-RSUs  1,709,988   1,122,020 
Property and equipment  (768,657)  (1,251,926)
Allowance for bad debt  175,345   - 
Unrealized gains and losses on investments  15,566   - 
Right of use assets  (1,737,381)  - 
Lease liabilities  784,185     
Prepaid rent     (998,606)
Total deferred tax assets  36,335,563   12,860,922 
Less: valuation allowance  (36,335,563)  (12,860,922)
Net deferred tax asset $  $ 

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 of December 31, 2021, the Company had the following tax attributes:

  Amount  Begins to
expire
 
U.S. federal net operating loss carry–forwards $60,881,008   Indefinite 
U.S. local net operating loss carry–forwards  60,983,412   2026 


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

 

Note 12:13: Income Tax (Restated)Taxes (continued)

 

Significant components of deferred tax assets were as follows:

  As of December 31, 
  2020  2019 
U.S. federal tax loss carry–forward $4,143,828  $                 - 
U.S. local tax loss carry–forward  389,717   - 
Equity based compensation – RSUs  416,157     
Property and equipment  (1,741,690)  - 
Prepaid rent  (1,040,888)  - 
Total deferred tax assets  2,167,124   - 
Less: valuation allowance  (2,167,124)  - 
Net deferred tax asset $  $ 

As of December 31, 2020, the Company had the following tax attributes:

  Amount  Begins to
expire
U.S. federal net operating loss carry–forwards $19,732,513  Indefinite
U.S. local net operating loss carry–forwards  19,732,513  Fiscal 2025

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, 2022, 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 yearyears ended December 31, 2020,2022 and 2021, the valuation allowance increased by $2,167,124.$23,474,643 and $10,693,798, 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,
 
  2020  2019 
  (Restated)    
Expected Federal Tax  (21.0)%  -%
Local Tax (Net of Federal Tax Benefits)  (2.0)  - 
Business Combination Expenses  22.0   - 
Change in FV of warrant liability  (27.1)    
Note Extinguishment  4.3   - 
Deferred Tax Liabilities Resulting from Business Combination  13.2   - 
Other permanent differences  1.0     
Change in valuation allowance  9.6   - 
Effective rate of income tax  -%  -%

  For the Years Ended
December 31,
 
  2022  2021 
Expected Federal Tax  (21.0)%  (21.0)%
Local Tax (Net of Federal Benefit)  (2.0)  (2.0)
Business Combination Expenses  -   (0.3)
Non-controlling interest  (0.1)  (0.1)
Extinguishment of Debt  1.8   (0.1)
Compensation limitation   0.7    - 
Change in fair value of warrant liabilities  (4.7)  11.9 
True up of prior year deferred tax assets  (25.6)  - 
Change in valuation allowance  50.9   11.6 
Effective rate of income tax  -%  -%

 

The Company files income tax returns in the U.S. federal jurisdiction and local (City of Canton) jurisdictions. As a result of the July 1, 2020 business combination and resulting conversion from a limited liability company to a corporate taxable entity, deferred tax liabilities of $2,995,870 were recognized from accrual and tax timing differences of property and equipment and prepaid rent existing at the time of the merger. Prior to the July 1, 2020 business combination the Company was a pass through entity and was not subject to income tax. The deferred tax liabilities were subsequently offset by the deferred tax assets created primarily from net operating losses incurred during the period from the merger date through the end of the year. See Note 15 for a discussion on the restatement of the Company’s financial statements.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statementsjurisdiction.

 

Note 13: Defined Contribution Plan14: 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, 20202022 and 2019,2021, the Company expensed matching contributions of $67,817$192,271 and $15,729, respectively$178,621, respectively.

 


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 14:15: Subsequent Events

 

Proposed Private Placement of7.00% Series A Cumulative Redeemable Preferred Stock and Warrants to Purchase Common Stock

On January 28, 2021, the Company executed a binding term sheet with IRG, LLC pursuant to which the Company agreed to issue and sell to IRG in a private placement for a purchase price of $15,000,000 (i) shares of a new series of preferred stock, which are convertible into shares of the Company’s Common Stock (the “New Private Placement Preferred Stock”), having an aggregate liquidation preference of $15,000,000, and (ii) a number of warrants, convertible into shares of the Company’s Common Stock at an exercise price of $6.90 per share (the “New Private Placement Warrants”), equal to 50% of the liquidation preference of the preferred stock to be sold divided by the closing price of the Common Stock on a specified date (the “New Private Placement”). The New Private Placement is expected to close in the first quarter of 2021. If the Company consummates the New Private Placement, the Company intends to deposit the net proceeds as necessary into the Proceeds Account (as defined herein), and use the net proceeds for general corporate purposes. The Company cannot give any assurance that the New Private Placement will be completed on the terms described herein, on a timely basis or at all.

Termination of Sponsorship Agreement with Aultman

 

On January 12, 2021,2023, the Company notified Aultmanissued 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 (the “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 Company terminated asshares are being acquired for investment purposes and not with a view to, itself, effective as of January 26, 2021, the Sponsorship Agreement, dated December 6, 2016, among Aultman, PFHOF and the Company. As such, the Company will no longer be receiving future sponsorship payments from Aultman.or for sale in connection with, any distribution thereof.

 

Constellation EME Express Equipment Services ProgramCompliance with Nasdaq Minimum Bid Requirement

As previously reported, on May 24, 2022, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that for the last 30 consecutive business days the bid price for the Company’s common stock, par value $0.0001 per share (“Common Stock”), had closed below the minimum requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).

 

On February 1, 2021,January 11, 2023, the Company entered into a contract with Constellation whereby Constellation will sell and/or deliver materials and equipment purchased byreceived written notice from the Company. The Company is required to provide $2,000,000 to an escrow account held by Constellation, representing adequate assuranceStaff of future performance. Constellation will invoiceNasdaq informing the Company in 60 monthly installments beginning in April 2021that it has regained compliance with the Minimum Bid Requirement because Nasdaq has determined that for $103,095.10 consecutive business days, the closing bid price of the Company’s Common Stock was at or above the Minimum Bid Requirement. Accordingly, Nasdaq has advised that the matter is now closed.

 

PPP Loan ForgivenessHall of Fame Resort & Entertainment Company 2023 Inducement Plan

 

On February 1, 2021,January 24, 2023, the Company’s board of directors adopted the Hall of Fame Resort & Entertainment Company obtained notice from2023 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 Small Business Association thatPlan (including existing inducement awards amended to be subject to the full outstanding amount ofInducement Plan) is 110,000.  Awards covered by the PPP Loan was forgiven.Inducement Plan include only inducement grants under Nasdaq Listing Rule 5635(c)(4).


 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 14:15: Subsequent Events (continued)

Follow-On Public Offering$18,100,000 principal amount Tax Increment Financing (“TIF”) Revenue Bonds

 

On February 12, 2021,2, 2023, the Company closed its public offeringreceived proceeds from the issuance on such date by Stark County Port Authority (“Port Authority”) of 12,244,897 shares of Common Stock at$18,100,000 principal amount Tax Increment Financing (“TIF”) Revenue Bonds, Series 2023 (“2023 Bonds”). Of the $18,100,000 principal amount, approximately $6,767,543 was used to reimburse the Company for a public offering price of $2.45 per share pursuant to the termsportion of the underwriting agreement between the Company and Maxim Group LLC, entered into on February 9, 2021 (the “Underwriting Agreement”). On February 18, 2021, the Company closed the salecost of an additional 1,836,734 shares of Common Stock at $2.45 per share pursuant to the exercise of the underwriters’ over-allotment option in connection with its public offering that closed on February 12, 2021. Under the terms of the Underwriting Agreement, each of the Company’s executive officers, directors and stockholders of more than 5% of the outstanding Common Stock signed lock-up agreements pursuant to which each agreed, subject to certain exceptions, not to transact in the Common Stock for a period of 90 days following February 12, 2021. Gross proceeds including the over-allotment, before underwriting discounts and commissions and estimated offering expenses, are approximately $34.5 million.

Purchase of Real Property from PFHOF

On February 3, 2021, the Company purchased for $1.75 million certain parcels of real property from PFHOF located at the site ofroadway improvements within the Hall of Fame Village poweredgrounds, approximately $8,628,502 was used to pay off the Development Finance Authority of Summit County (“DFA”) Revenue Bonds, Series 2018 ( “2018 Bonds”) that had been acquired by Johnson Controls. In connection with the purchase, the Company granted certain easementsin December 2022 pursuant to PFHOFa previously disclosed arrangement (such that the Company received the payoff of the 2018 Bonds), approximately $1,169,916 was used to ensure accessibilitypay costs of issuance of the 2023 Bonds, and approximately $905,000 was used to fund a debt service reserve held by The Huntington National Bank (“2023 Bond Trustee”), as trustee for the PFHOF museum.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.

 

Shared ServicesIn connection with the issuance of the 2023 Bonds by the Port Authority, the Company transferred ownership of a portion of the roadway and related improvements within Hall of Fame Village grounds to the Port Authority. The Company maintains management rights and maintenance obligations with regard to such roadway pursuant to a Maintenance and Management Agreement among the Port Authority, the Company and the Company’s subsidiary, Newco.

The 2023 Bonds will be repaid by the Port Authority from statutory service payments in lieu of taxes paid by the Company in connection with PFHOFthe 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 Youth Fields. Net statutory service payments are assigned by the City of Canton to the Port Authority for payment of the 2023 Bonds pursuant to a Cooperative Agreement among the Port Authority, City of Canton, the Company and Newco, and then pledged by the Port Authority to the 2023 Bond Trustee for payment of the 2023 Bonds pursuant to a Trust Indenture between the Port Authority and the 2023 Bond Trustee. Minimum service payments are a lien on the parcels under certain TIF declarations and supplements thereto, and are paid by the Company to the 2023 Bond Trustee.

Industrial Realty Group, LLC Affiliate Lenders Transactions

 

On March 9, 2021,17, 2023, pursuant to the Company entered into an additional Shared ServicesIRG Letter Agreement with PFHOF, which supplements the existing Shared Services Agreement by, among other things, providing for the sharing of costs for activities relating to shared services.

Note 15: Restatement of Previously Issued Audit and Unaudited Financial Statements

As(see “November 7, 2022 Refinancing Transactions” discussed in Note 2,4 above) the Company has restated previously issued financial statements regarding the accounting and reporting for warrants.

The errors that caused the Company to conclude that its financial statements should be restated are the result of a misapplication of the guidance on accounting for certain of its issuedsubsidiaries signed amendments to (a) certain IRG Affiliate Lender credit arrangements (and entered into backup notes for two credit arrangements) and (b) warrants which came to light when the staff of the SEC issued a public Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) dated April 12, 2021 (the “SEC Statement”). The SEC Statement addresses certain accounting and reporting considerations related to warrants of a kind similar to those issued by the Company at the time of its business combination with GPAQ on July 1, 2020. Based on ASC 815-40, Contracts in Entity’s Own Equity, warrant instruments that do not meet the criteria to be considered indexed to an entity’s own stock shall be initially classified as liabilities at their estimated fair values. In periods subsequent to issuance, changes in the estimated fair value of the derivative instruments should be reported in the statement of operations.

The following presents a reconciliation of the balance sheets, statements of operations, changes in stockholders’ equity and cash flows from the prior periods as previously reported to the restated amountsheld by IRG Affiliate Lenders, effective as of andNovember 7, 2022 (unless otherwise noted in Note 4 above), as consideration for the year ended December 31, 2020, as well as the unaudited condensed financial statements for the three and nine month periods ended September 30, 2020.

Additionally, the Company has restated the table of warrants within Note 5 to reflect that each of the Series A Warrants issued in connection with the Business Combination are exercisable for 1.421333 shares of common stock.


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to ConsolidatedIRG Financial StatementsSupport.

Note 15: Restatement of Previously Issued Audit and Unaudited Financial Statements (continued)

Consolidated Balance Sheet as of December 31, 2020

  As Filed  Restatement
Adjustments
  Restated 
Warrant liability $-  $19,112,000  $19,112,000 
Total liabilities  126,650,582   19,112,000   145,762,582 
             
Additional paid-in capital  217,027,804   (44,915,116)  172,112,688 
Accumulated deficit  (32,643,987)  25,803,116   (6,840,871)
Total equity attributable to HOFRE  184,390,227   (19,112,000)  165,278,227 
Total equity  184,193,721   (19,112,000)  165,081,721 

Consolidated Statement of Operations for the Year Ended December 31, 2020

  As Filed  Restatement
Adjustments
  Restated 
Property operating expenses $25,701,821  $930,000  $26,631,821 
Total operating expenses  38,878,610   930,000   39,808,610 
Loss from operations  (31,779,456)  930,000   (32,709,456)
Change in fair value of warrant liability  -   26,733,116   26,733,116 
Total other expense  (39,708,832)  26,733,116   (12,975,716)
Net loss before income taxes  (71,488,288)  25,803,116   (45,685,172)
Net loss  (71,488,288)  25,803,116   (45,685,172)
Net loss attributable to HOFRE stockholders  (71,291,782)  25,803,116   (45,488,666)
Net loss per share – basic and diluted $(2.68) $0.97  $(1.71)

Consolidated Statement of Changes in Stockholders’ Equity for the Year Ended December 31, 2020

  As Filed  Restatement
Adjustments
  Restated 
Business combination with GPAQ on July 1, 2020 $30,534,781  $(30,040,000) $494,781 
Warrants issued in connection with IRG debt settlement  5,196,116   (5,196,116)  - 
November 18, 2020 capital raise, net of offering costs  22,945,410   (8,467,000)  14,478,410 
December 4, 2020 capital raise, net of offering costs  3,283,089   (1,212,000)  2,071,089 
Net loss  (71,488,288)  25,803,116   (45,685,172)

Consolidated Statement of Cash Flows for the Year Ended December 31, 2020

  As Filed  Restatement Adjustments  Restated 
Net loss $(71,488,288) $25,803,116  $(45,685,172)
Change in fair value of warrant liability  -   (26,733,116)  (26,733,116)
Accounts payable and accrued expenses  28,334,412   930,000   29,264,412 


Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Consolidated Financial Statements

Note 15: Restatement of Previously Issued Audit and Unaudited Financial Statements (continued)

Condensed Consolidated Balance Sheet as of September 30, 2020 (unaudited)

  As Filed  Restatement
Adjustments
  Restated 
Warrant liability $-  $4,530,000  $4,530,000 
Total liabilities  130,780,485   4,530,000   135,310,485 
             
Additional paid-in capital  168,134,414   (30,040,000)  138,094,414 
(Accumulated deficit) retained earnings  (18,089,195)  25,510,000   7,420,805 
Total equity attributable to HOFRE  150,048,494   (4,530,000)  145,518,494 
Total equity  150,012,494   (4,530,000)  145,482,494 

Condensed Consolidated Statement of Operations for the Three Months Ended September 30, 2020 (unaudited)

  As Filed  Restatement
Adjustments
  Restated 
Change in fair value of warrant liability $-  $25,510,000  $25,510,000 
Total other (expense) income  (23,674,129)  25,510,000   1,835,871 
Net loss before income taxes  (33,936,903)  25,510,000   (8,426,903)
Net loss  (33,936,903)  25,510,000   (8,426,903)
Net loss attributable to HOFRE stockholders  (33,900,903)  25,510,000   (8,390,903)
Net loss per share – basic and diluted $(1.04) $0.78  $(0.26)

Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2020 (unaudited)

  As Filed  Restatement
Adjustments
  Restated 
Change in fair value of warrant liability $-  $25,510,000  $25,510,000 
Total other expense  (34,561,670)  25,510,000   (9,051,670)
Net loss before income taxes  (56,772,990)  25,510,000   (31,262,990)
Net loss  (56,772,990)  25,510,000   (31,262,990)
Net loss attributable to HOFRE stockholders  (56,736,990)  25,510,000   (31,226,990)
Net loss per share – basic and diluted $(3.90) $1.75  $(2.15)

Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2020 (unaudited)

  As Filed  Restatement
Adjustments
  Restated 
Business combination with GPAQ on July 1, 2020 $30,534,781  $(30,040,000) $494,781 
Net loss – three months ended September 30, 2020  (33,936,903)  25,510,000   (8,426,903)

Condensed Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2020 (unaudited)

  As Filed  Restatement
Adjustments
  Restated 
Net loss $(56,772,990) $25,510,000  $(31,262,990)
Change in fair value of warrant liability  -   (25,510,000)  (25,510,000)

 


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