Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2019 | |
Document And Entity Information | |
Entity Registrant Name | Allied Esports Entertainment, Inc. |
Entity Central Index Key | 0001708341 |
Document Type | S-1 |
Document Period End Date | Sep. 30, 2019 |
Amendment Flag | false |
Entity Filer Category | Accelerated Filer |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2019 |
Entity Small Business | true |
Entity Emerging Growth | true |
Entity Ex Transition | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | |||
Cash | $ 9,355,496 | $ 10,471,296 | $ 427,954 |
Restricted cash | 4,950,000 | 0 | 0 |
Accounts receivable | 2,446,427 | 1,533,235 | 0 |
Prepaid expenses and other current assets | 1,706,102 | 711,889 | 33,093 |
Deferred offering costs | 0 | 0 | 18,678 |
Total current assets | 18,458,025 | 12,716,420 | 479,725 |
Property and equipment, net | 19,918,061 | 21,020,097 | 0 |
Goodwill | 4,083,621 | 4,083,621 | 0 |
Intangible assets, net | 15,459,080 | 17,234,992 | 0 |
Deposits | 712,463 | 632,963 | 0 |
Deferred production costs | 11,204,843 | 9,058,844 | 0 |
Investments | 4,638,631 | 500,000 | 0 |
Cash and marketable securities held in Trust Account | 0 | 141,307,307 | 138,980,353 |
Total Assets | 74,474,724 | 65,246,937 | 139,460,078 |
Current liabilities: | |||
Accounts payable | 1,285,149 | 1,072,499 | 0 |
Accounts payable and accrued expenses | 3,474,902 | 2,442,145 | 45,391 |
Accounts payable - related party | 13,340 | 2,940 | |
Deferred Revenue | 3,153,197 | 3,307,843 | 0 |
Convertible debt, net of discount | 12,785,519 | 0 | 0 |
Convertible debt, related party, net of discount | 0 | ||
Accrued interest on convertible debt | 1,462,173 | 0 | 0 |
Due to Former Parent | 0 | 33,019,510 | 0 |
Income taxes payable | 205,121 | 981 | 85,722 |
Deferred income taxes | 0 | 438 | 0 |
Total current liabilities | 23,144,441 | 39,841,997 | 134,053 |
Deferred Rent | 1,558,958 | 1,383,644 | 0 |
Total Liabilities | 24,703,399 | 41,225,641 | 134,053 |
Commitments | |||
Common stock, $.0001 par value, subject to possible redemption, 13,283,086 and 13,348,443 shares at December, 2018 and 2017, respectively, at redemption value | 0 | 135,467,219 | 134,326,020 |
Stockholder's equity: | |||
Preferred stock, $.0001 par value, 1,000,000 shares authorized, none issued and outstanding | 0 | 0 | 0 |
Common stock, $.0001 par value | 2,317 | 1,160 | 435 |
Additional paid in capital | 161,042,278 | 124,361,130 | 4,906,420 |
Retained earnings | (111,398,765) | (100,479,855) | 93,150 |
Accumulated other comprehensive income | 125,495 | 138,861 | 0 |
Total stockholder's equity | 49,771,325 | 24,021,296 | 12,610,375 |
Total liabilities and stockholder's equity | $ 74,474,724 | $ 65,246,937 | $ 139,460,078 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 0 | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 35,000,000 | 35,000,000 | 35,000,000 |
Common stock, issued (in shares) | 23,176,146 | 4,411,914 | 4,346,557 |
Common stock, outstanding (in shares) | 23,176,146 | 4,411,914 | 4,346,557 |
Common stock shares subject to possible redemption | 0 | 13,283,086 | 13,348,443 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |||
Total revenue | $ 6,041,541 | $ 5,480,241 | $ 0 | $ 19,614,935 | $ 15,199,296 | $ 0 | ||
Costs and expense | ||||||||
Costs of product and services (exclusive of depreciation and amortization) | 0 | 0 | ||||||
Online operating expenses | 172,879 | 129,770 | 0 | 489,269 | 1,541,789 | 0 | ||
Selling and marketing expenses | 705,714 | 302,508 | 0 | 2,644,645 | 3,143,563 | 0 | ||
General and administrative expenses | 4,711,692 | 3,871,179 | 130,159 | 13,378,166 | 12,364,722 | 823,779 | ||
Depreciation and amortization | 1,716,103 | 1,892,665 | 0 | 5,133,947 | 5,228,709 | 0 | ||
Impairment expense | 0 | 3,252,545 | 0 | 600,000 | 7,590,205 | 0 | ||
Total costs and expenses | 9,859,144 | 11,897,039 | 0 | 30,031,086 | 37,798,776 | 0 | ||
Loss from operations | (3,817,603) | (6,416,798) | (130,159) | (10,416,151) | (22,599,480) | (823,779) | ||
Other (Expense) Income | ||||||||
Interest income | 0 | 0 | 355,338 | 0 | 0 | 2,474,344 | ||
Unrealized gain (loss) on marketable securities held in Trust Account | 0 | 0 | (64,985) | 0 | 0 | 66,507 | ||
Other income | 15,684 | 102,613 | 0 | 15,684 | 115,508 | 0 | ||
Interest expense | (451,553) | (564,358) | 0 | (518,443) | (1,877,616) | 0 | ||
Foreign currency exchange income (loss) | 0 | 113,916 | 0 | 0 | (15,394) | 0 | ||
Total other expense | (435,869) | (347,829) | 290,353 | (502,759) | (1,777,502) | 2,540,851 | ||
Income before taxes | 0 | 0 | 160,194 | 0 | 0 | 1,717,072 | ||
Provision for income taxes | 0 | 0 | (67,044) | 0 | 0 | (575,873) | ||
Net Loss | (4,253,472) | (6,764,627) | (81,018) | (10,918,910) | (24,376,982) | (657,691) | ||
Net loss attributable to non-controlling interest | 0 | (76,525) | 0 | 0 | (403,627) | 0 | ||
Net loss attributable to Allied Esports Entertainment, Inc. | $ (4,253,472) | $ (6,688,102) | $ 93,150 | $ (23,973,355) | $ (10,918,910) | $ 1,141,199 | ||
Basic and diluted net loss per common share | $ (0.24) | $ (0.58) | $ (0.02) | $ (0.79) | $ (2.07) | $ (0.15) | ||
Weighted average shares outstanding, basic and diluted | 18,098,797 | 11,602,754 | 3,452,106 | [1] | 13,791,896 | 11,602,754 | 4,361,619 | [1] |
In-person [Member] | ||||||||
Total revenue | $ 2,586,965 | $ 2,202,443 | $ 8,887,366 | $ 6,068,081 | ||||
Costs and expense | ||||||||
Costs of product and services (exclusive of depreciation and amortization) | 1,196,572 | 975,254 | 2,901,220 | 3,992,607 | ||||
Multiplatform Content [Member] | ||||||||
Total revenue | 1,031,383 | 949,345 | 3,540,373 | 2,121,645 | ||||
Costs and expense | ||||||||
Costs of product and services (exclusive of depreciation and amortization) | 786,706 | 860,332 | 2,907,827 | 2,033,834 | ||||
Interactive Product [Member] | ||||||||
Total revenue | 2,423,193 | 2,328,453 | 7,187,196 | 7,009,570 | ||||
Costs and expense | ||||||||
Costs of product and services (exclusive of depreciation and amortization) | $ 569,478 | $ 612,786 | $ 1,976,012 | $ 1,903,347 | ||||
[1] | Excludes an aggregate of up to 13,283,086 and 13,348,443 shares subject to redemption at December 31, 2018 and 2017, respectively. |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Supplemental Statement) (September 30, 2019) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net Loss | $ 0 | $ 0 | $ 0 | $ 0 |
Other comprehensive (loss) gain: | ||||
Foreign currency translation adjustments | (21,083) | 253,814 | (13,366) | 70,787 |
Total comprehensive loss | (4,274,555) | (6,510,813) | (10,932,276) | (24,306,195) |
Less: Net loss attributable to non-controlling interest | 0 | (76,525) | 0 | (403,627) |
Comprehensive loss attributable to non-controlling interests | $ (4,274,555) | $ (6,434,288) | $ (10,932,276) | $ (23,902,568) |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings | Total |
Beginning balance, shares at May. 08, 2017 | 0 | |||
Beginning balance, value at May. 08, 2017 | $ 0 | $ 0 | $ 0 | $ 0 |
Issuance of common stock to Sponsor, shares | 3,450,000 | |||
Issuance of common stock to Sponsor, value | $ 345 | 24,655 | 25,000 | |
Sale of units in initial public offering, net of offering costs, shares | 13,800,000 | |||
Sale of units in initial public offering, net of offering costs | $ 1,380 | 134,756,395 | 134,757,775 | |
Sale of units to Sponsor in private placement, shares | 445,000 | |||
Sale of units to Sponsor in private placement, value | $ 45 | 4,449,955 | 4,450,000 | |
Sale of unit purchase option to underwriter | 100 | 100 | ||
Common stock subject to possible redemption, shares | (13,348,443) | |||
Common stock subject to possible redemption, value | $ (1,335) | (134,324,685) | (134,326,020) | |
Net income | 93,150 | 93,150 | ||
Ending balance, shares at Dec. 31, 2017 | 4,346,557 | |||
Ending balance, value at Dec. 31, 2017 | $ 1,160 | 82,622,222 | (69,863,757) | 12,610,375 |
Net income | (6,175,136) | (6,311,292) | ||
Ending balance, shares at Mar. 31, 2018 | 11,602,754 | |||
Ending balance, value at Mar. 31, 2018 | $ 1,160 | 81,843,222 | (76,038,893) | 6,006,945 |
Beginning balance, shares at Dec. 31, 2017 | 4,346,557 | |||
Beginning balance, value at Dec. 31, 2017 | $ 1,160 | 82,622,222 | (69,863,757) | 12,610,375 |
Net income | (17,612,354) | |||
Ending balance, shares at Jun. 30, 2018 | 11,602,754 | |||
Ending balance, value at Jun. 30, 2018 | $ 1,160 | 81,843,222 | (87,149,009) | (5,251,152) |
Beginning balance, shares at Dec. 31, 2017 | 4,346,557 | |||
Beginning balance, value at Dec. 31, 2017 | $ 1,160 | 82,622,222 | (69,863,757) | 12,610,375 |
Net income | (10,918,910) | |||
Ending balance, shares at Sep. 30, 2018 | 11,602,754 | |||
Ending balance, value at Sep. 30, 2018 | $ 1,160 | 81,843,222 | (93,837,112) | (12,071,193) |
Beginning balance, shares at Dec. 31, 2017 | 4,346,557 | |||
Beginning balance, value at Dec. 31, 2017 | $ 1,160 | 82,622,222 | (69,863,757) | 12,610,375 |
Sale of units in initial public offering, net of offering costs | $ 5 | 5 | 5 | 5 |
Common stock subject to possible redemption, shares | 65,357 | |||
Common stock subject to possible redemption, value | $ 7 | (1,141,206) | (1,141,199) | |
Net income | 1,141,199 | 1,141,199 | ||
Ending balance, shares at Dec. 31, 2018 | 11,602,754 | |||
Ending balance, value at Dec. 31, 2018 | $ 1,160 | 124,361,130 | (100,479,855) | 24,021,296 |
Beginning balance, shares at Mar. 31, 2018 | 11,602,754 | |||
Beginning balance, value at Mar. 31, 2018 | $ 1,160 | 81,843,222 | (76,038,893) | 6,006,945 |
Net income | (11,110,116) | (11,301,062) | ||
Ending balance, shares at Jun. 30, 2018 | 11,602,754 | |||
Ending balance, value at Jun. 30, 2018 | $ 1,160 | 81,843,222 | (87,149,009) | (5,251,152) |
Net income | (6,688,103) | (6,688,102) | ||
Ending balance, shares at Sep. 30, 2018 | 11,602,754 | |||
Ending balance, value at Sep. 30, 2018 | $ 1,160 | 81,843,222 | (93,837,112) | (12,071,193) |
Beginning balance, shares at Dec. 31, 2018 | 11,602,754 | |||
Beginning balance, value at Dec. 31, 2018 | $ 1,160 | 124,361,130 | (100,479,855) | 24,021,296 |
Net income | (3,854,152) | (3,854,152) | ||
Ending balance, shares at Mar. 31, 2019 | 11,602,754 | |||
Ending balance, value at Mar. 31, 2019 | $ 1,160 | 124,361,130 | (104,334,007) | 20,164,062 |
Beginning balance, shares at Dec. 31, 2018 | 11,602,754 | |||
Beginning balance, value at Dec. 31, 2018 | $ 1,160 | 124,361,130 | (100,479,855) | 24,021,296 |
Net income | (23,973,355) | |||
Ending balance, shares at Sep. 30, 2019 | 23,176,146 | |||
Ending balance, value at Sep. 30, 2019 | $ 2,317 | 161,042,278 | (111,398,765) | 49,771,325 |
Beginning balance, shares at Mar. 31, 2019 | 11,602,754 | |||
Beginning balance, value at Mar. 31, 2019 | $ 1,160 | 124,361,130 | (104,334,007) | 20,164,062 |
Net income | (2,811,286) | (2,811,286) | ||
Ending balance, shares at Jun. 30, 2019 | 11,602,754 | |||
Ending balance, value at Jun. 30, 2019 | $ 1,160 | 124,361,130 | (107,145,293) | 17,363,575 |
Net income | (4,253,472) | (4,253,472) | ||
Ending balance, shares at Sep. 30, 2019 | 23,176,146 | |||
Ending balance, value at Sep. 30, 2019 | $ 2,317 | $ 161,042,278 | $ (111,398,765) | $ 49,771,325 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) (September 30, 2019) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Accumulated Deficit | Total |
Beginning balance, shares at May. 08, 2017 | 0 | |||||
Beginning balance, value at May. 08, 2017 | $ 0 | $ 0 | $ 0 | $ 0 | ||
Net loss | 93,150 | 93,150 | ||||
Ending balance, shares at Dec. 31, 2017 | 4,346,557 | |||||
Ending balance, value at Dec. 31, 2017 | $ 1,160 | 82,622,222 | $ (149,250) | $ 0 | (69,863,757) | 12,610,375 |
Net loss | (136,156) | (6,175,136) | (6,311,292) | |||
Acquisition of ESA | 712,854 | 712,854 | ||||
Other comprehensive income (loss) | (225,992) | (225,992) | ||||
Net contributions from Parents | (779,000) | (779,000) | ||||
Ending balance, shares at Mar. 31, 2018 | 11,602,754 | |||||
Ending balance, value at Mar. 31, 2018 | $ 1,160 | 81,843,222 | (375,242) | (576,698) | (76,038,893) | 6,006,945 |
Beginning balance, shares at Dec. 31, 2017 | 4,346,557 | |||||
Beginning balance, value at Dec. 31, 2017 | $ 1,160 | 82,622,222 | (149,250) | 0 | (69,863,757) | 12,610,375 |
Net loss | (17,612,354) | |||||
Ending balance, shares at Jun. 30, 2018 | 11,602,754 | |||||
Ending balance, value at Jun. 30, 2018 | $ 1,160 | 81,843,222 | (332,277) | 385,752 | (87,149,009) | (5,251,152) |
Beginning balance, shares at Dec. 31, 2017 | 4,346,557 | |||||
Beginning balance, value at Dec. 31, 2017 | $ 1,160 | 82,622,222 | (149,250) | 0 | (69,863,757) | 12,610,375 |
Net loss | (10,918,910) | |||||
Ending balance, shares at Sep. 30, 2018 | 11,602,754 | |||||
Ending balance, value at Sep. 30, 2018 | $ 1,160 | 81,843,222 | (78,463) | (93,837,112) | (12,071,193) | |
Beginning balance, shares at Dec. 31, 2017 | 4,346,557 | |||||
Beginning balance, value at Dec. 31, 2017 | $ 1,160 | 82,622,222 | (149,250) | 0 | (69,863,757) | 12,610,375 |
Net loss | 1,141,199 | 1,141,199 | ||||
Ending balance, shares at Dec. 31, 2018 | 11,602,754 | |||||
Ending balance, value at Dec. 31, 2018 | $ 1,160 | 124,361,130 | 138,861 | (100,479,855) | 24,021,296 | |
Beginning balance, shares at Mar. 31, 2018 | 11,602,754 | |||||
Beginning balance, value at Mar. 31, 2018 | $ 1,160 | 81,843,222 | (375,242) | (576,698) | (76,038,893) | 6,006,945 |
Net loss | (190,946) | (11,110,116) | (11,301,062) | |||
Other comprehensive income (loss) | 42,965 | 42,965 | ||||
Ending balance, shares at Jun. 30, 2018 | 11,602,754 | |||||
Ending balance, value at Jun. 30, 2018 | $ 1,160 | 81,843,222 | (332,277) | 385,752 | (87,149,009) | (5,251,152) |
Net loss | (76,525) | (6,688,103) | (6,688,102) | |||
Other comprehensive income (loss) | 253,814 | 253,814 | ||||
Deconsolidation of ESA | $ (309,227) | (309,227) | ||||
Ending balance, shares at Sep. 30, 2018 | 11,602,754 | |||||
Ending balance, value at Sep. 30, 2018 | $ 1,160 | 81,843,222 | (78,463) | (93,837,112) | (12,071,193) | |
Beginning balance, shares at Dec. 31, 2018 | 11,602,754 | |||||
Beginning balance, value at Dec. 31, 2018 | $ 1,160 | 124,361,130 | 138,861 | (100,479,855) | 24,021,296 | |
Net loss | (3,854,152) | (3,854,152) | ||||
Other comprehensive income (loss) | (3,082) | (3,082) | ||||
Ending balance, shares at Mar. 31, 2019 | 11,602,754 | |||||
Ending balance, value at Mar. 31, 2019 | $ 1,160 | 124,361,130 | 135,779 | (104,334,007) | 20,164,062 | |
Beginning balance, shares at Dec. 31, 2018 | 11,602,754 | |||||
Beginning balance, value at Dec. 31, 2018 | $ 1,160 | 124,361,130 | 138,861 | (100,479,855) | 24,021,296 | |
Net loss | (23,973,355) | |||||
Ending balance, shares at Sep. 30, 2019 | 23,176,146 | |||||
Ending balance, value at Sep. 30, 2019 | $ 2,317 | 161,042,278 | 125,495 | (111,398,765) | 49,771,325 | |
Beginning balance, shares at Mar. 31, 2019 | 11,602,754 | |||||
Beginning balance, value at Mar. 31, 2019 | $ 1,160 | 124,361,130 | 135,779 | (104,334,007) | 20,164,062 | |
Net loss | (2,811,286) | (2,811,286) | ||||
Other comprehensive income (loss) | 10,799 | 10,799 | ||||
Ending balance, shares at Jun. 30, 2019 | 11,602,754 | |||||
Ending balance, value at Jun. 30, 2019 | $ 1,160 | 124,361,130 | 146,578 | (107,145,293) | 17,363,575 | |
Net loss | (4,253,472) | (4,253,472) | ||||
Other comprehensive income (loss) | (21,083) | (21,083) | ||||
Effect of reverse merger, shares | 11,492,999 | |||||
Effect of reverse merger, value | $ 1,149 | 36,395,355 | 36,396,504 | |||
Warrants issued to convertible debt holders | 114,804 | 114,804 | ||||
Contingent consideration for convertible debt holders | 152,590 | 152,590 | ||||
Restricted Stock, shares | 80,393 | |||||
Restricted Stock, value | $ 8 | (8) | ||||
Stock-based compensation, stock options | 5,940 | 5,940 | ||||
Stock-based compensation, restricted stock | 12,467 | 12,467 | ||||
Ending balance, shares at Sep. 30, 2019 | 23,176,146 | |||||
Ending balance, value at Sep. 30, 2019 | $ 2,317 | $ 161,042,278 | $ 125,495 | $ (111,398,765) | $ 49,771,325 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 8 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | $ 93,150 | $ (23,973,355) | $ (10,918,910) | $ 1,141,199 |
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Stock-based compensation | 0 | 18,407 | (779,000) | 0 |
Amortization of debt discount | 0 | 36,414 | 0 | 0 |
Bad debt expense | 0 | 115,726 | 79,414 | 0 |
Depreciation and amortization | 0 | 5,133,947 | 5,228,709 | 0 |
Realized loss on equity method investment | 0 | 0 | 151,881 | 0 |
Subsidary impairment/loss during consolidation period | 0 | 0 | 1,838,739 | 0 |
Impairment / loss on deconsolidation of subsidary | 0 | 0 | 7,438,324 | 0 |
Impairment expense | 0 | 600,000 | 0 | 0 |
Write-off of capitalized software costs | 0 | 0 | 648,563 | 0 |
Deferred Rent | 0 | 175,314 | (147,605) | 0 |
Interest income | (355,338) | 0 | 0 | (2,474,344) |
Unrealized (loss) gain on marketable securities held in Trust Account | 64,985 | 0 | 0 | (66,507) |
Deferred income taxes | (18,678) | 0 | 0 | 19,116 |
Changes in operating assets and liabilities: | ||||
Accounts receivable | 0 | (1,029,096) | (593,675) | 0 |
Deposits | 0 | (79,500) | 19,397 | 0 |
Deferred Production costs | 0 | (2,145,999) | (4,108,748) | 0 |
Prepaid expenses and other current assets | (33,093) | (227,324) | (179,247) | 21,843 |
Accounts payable | 0 | (642,686) | 367,956 | 0 |
Accrued expenses | 0 | 898,157 | 576,731 | 0 |
Accrued interest on convertible debt | 0 | 469,296 | 0 | 0 |
Accrued interest on notes payable to Former Parent | 0 | 0 | 1,787,527 | 0 |
Deferred Revenue | 0 | (154,646) | 815,568 | 0 |
Accounts payable and accrued expenses | 45,391 | 0 | 0 | 103,123 |
Accounts payable - related party | 2,940 | 0 | 0 | 10,400 |
Income taxes payable | 85,722 | 0 | 0 | 387,048 |
Total adjustments | 0 | 3,168,010 | 13,144,534 | 0 |
Net cash used in operating activities | (114,921) | (7,750,900) | (11,232,448) | (858,122) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Net cash acquired in Merger | 0 | 14,941,683 | 0 | 0 |
Investment in TV Azteca | 0 | (3,500,000) | 0 | 0 |
Investment in ESA | 0 | (1,238,631) | (5,851,858) | 0 |
Purchases of property and equipment | 0 | (2,173,200) | (16,834,824) | 0 |
Purchases of intangible assets | 0 | (99,822) | (38,334) | 0 |
Principal deposited in trust account | (138,690,000) | 0 | 0 | 0 |
Withdrawal from Trust Account to pay for taxes and franchise fees | 0 | 0 | 0 | 213,897 |
Net cash provided by (used in) investing activities | (138,690,000) | 7,930,030 | (22,725,016) | 213,897 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from line of credit | 0 | 5,000,000 | ||
Proceeds from convertible debt | 3,000,000 | 0 | ||
Proceeds from convertible debt, related party | 1,000,000 | 0 | ||
Proceeds from notes payable to Parent | 0 | 11,174,913 | ||
Due to Former Parent | (346,804) | 14,269,373 | ||
Repayment of promissory note - related party | (125,000) | 0 | 0 | 0 |
Proceeds from issuance of common stock to Sponsor | 25,000 | 0 | 0 | 0 |
Proceeds from initial public offering, net of offering costs | 134,820,275 | 0 | 0 | 0 |
Proceeds from private placement to Sponsor | 4,450,000 | 0 | 0 | 0 |
Proceeds from sale of unit option to underwriter | 100 | 0 | 0 | 0 |
Net cash provided by financing activities | 139,232,875 | 3,653,196 | 30,444,286 | 350,000 |
Effect of exchange rate changes on cash | 1,874 | (36,872) | ||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 427,954 | 3,834,200 | (3,550,050) | (294,225) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 0 | 10,471,296 | 13,610,138 | 13,610,138 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 13,610,138 | 14,305,496 | 10,060,088 | 10,471,296 |
SUPPLEMENTAL INFORMATION: | ||||
Income taxes paid | 0 | 0 | 0 | 169,709 |
Cash paid during period for interest | 0 | 0 | 46,466 | 0 |
NON-CASH INVESTING AND FINANCE ACTIVITIES: | ||||
Payment of offering costs through promissory note - related party | 62,500 | 0 | 0 | 0 |
Initial value of common stock subject to possible exemption | 134,231,177 | 0 | 0 | 0 |
Change in value of common stock subject to possible redemption | 94,843 | 0 | 0 | 1,141,199 |
Non cash investment in ESA | 0 | 0 | 5,610,085 | 0 |
Due to Former Parent satisfied by issuance of common stock in connection with Merger | 0 | 18,179,745 | 0 | 0 |
Convertible debt and related interest assumed in Merger | 0 | 10,992,877 | 0 | 0 |
Warrants granted to convertible debt holders in connection with Merger | 0 | 114,804 | 0 | 0 |
Contingent consideration for convertible debt holders in connection with Merger | $ 0 | $ 152,590 | $ 0 | $ 0 |
CASH RECONCILIATION (September
CASH RECONCILIATION (September 30, 2019) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Cash | $ 9,355,496 | $ 10,060,088 |
Restricted cash | 4,950,000 | 0 |
Total cash and restricted cash | $ 14,305,496 | $ 10,060,088 |
1. Organization and Plan of Bus
1. Organization and Plan of Business Operations | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Organization and Plan of Business Operations | Note 1 – Background and Basis of Presentation Allied Esports Entertainment Inc., (“AESE” and formerly known as Black Ridge Acquisition Corp, or “BRAC”) was incorporated in Delaware on May 9, 2017 as a blank check company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). Allied Esports Media, Inc. (“AEM”), a Delaware corporation, was formed in November 2018 to act as a holding company for Allied Esports International Inc. (“Allied Esports”) and immediately prior to close of the Merger (see below) to also include Noble Link Global Limited (“Noble Link”). Allied Esports, together with its subsidiaries described below owns and operates the esports-related businesses of AESE. Noble Link (prior to the AEM Merger) and its wholly owned subsidiaries Peerless Media Limited, Club Services, Inc. and WPT Enterprises, Inc. operate the poker-related business of AESE and are collectively referred to herein as “World Poker Tour” or “WPT”. Prior to the Merger, as described below, Noble Link and Allied Esports were subsidiaries of Ourgame International Holdings Limited (the “Former Parent”). On December 19, 2018, BRAC, Noble Link and AEM executed an Agreement and Plan of Reorganization (as amended from time to time, the “Merger Agreement”). On August 9, 2019 (the “Closing Date”), Noble Link was merged with and into AEM, with AEM being the surviving entity, which was accounted for as a common control merger (the “AEM Merger”). Further, on August 9, 2019, a subsidiary of AESE merged with AEM pursuant to the Merger Agreement with AEM being the surviving entity (the “Merger”). The Merger was accounted for as a reverse recapitalization, and AEM is deemed to be the accounting acquirer. Consequently, the assets and liabilities and the historical operations that are reflected in these condensed consolidated financial statements prior to the Merger are those of Allied Esports and WPT. The preferred stock, common stock, additional paid in capital and earnings per share amount in these condensed consolidated financial statements for the period prior to the Merger have been restated to reflect the recapitalization in accordance with the shares issued to the Former Parent as a result of the Merger. References herein to the “Company” are to the combination of AEM and WPT during the period prior to the AEM Merger and are to AESE and subsidiaries after the Merger. Allied Esports operates through its wholly owned subsidiaries Allied Esports International, Inc., (“AEII”), Esports Arena Las Vegas, LLC (“ESALV”) and ELC Gaming GMBH (“ELC Gaming”). AEII operates global competitive esports properties designed to connect players and fans via a network of connected arenas. ESALV operates a flagship gaming arena located at the Luxor Hotel in Las Vegas, Nevada. ELC Gaming operates a mobile esports truck that serves as both a battleground and content generation hub and also operates a studio for recording and streaming gaming events. World Poker Tour is an internationally televised gaming and entertainment company with brand presence in land-based tournaments, television, online and mobile applications. WPT has been involved in the sport of poker since 2002 and created a television show based on a series of high-stakes poker tournaments. WPT has broadcasted globally in more than 150 countries and territories and its shows are sponsored by established brands in many areas, including watches, crystal, playing cards and online social poker operators. WPT also operates ClubWPT.com, a subscription-based site that offers its members inside access to the WPT content database, as well as sweepstakes-based poker product that allows members to play for real cash and prizes in 36 states and territories across the United States and 4 foreign countries. WPT also participates in strategic brand licensing, partnership, and sponsorship opportunities. | Note 1 – Organization and Plan of Business Operations Black Ridge Acquisition Corp. (“BRAC” or the “Company”, “we”, “us” and ”our”) was incorporated in Delaware on May 9, 2017 as a blank check company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business were focused on businesses in the energy or energy-related industries with an emphasis on opportunities in the upstream oil and gas industry in North America, but are not limited to a particular industry or geographic region. As of December 31, 2018, the Company had not yet commenced operations. All activity through December 31, 2018 relates to the Company’s formation and its Initial Public Offering, described below, identifying a target company for a Business Combination and costs is connection with the Proposed Business Combination, discussed below. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. The registration statement for the Company’s initial public offering (“Initial Public Offering”) was declared effective on October 4, 2017. The registration statement was initially declared effective for 10,000,000 units (“Units” and, with respect to the common stock included in the Units being offered, the “Public Shares”), but the offering was increased to 12,000,000 Units pursuant to Rule 462(b) under the Securities Act of 1933, as amended. On October 10, 2017, the Company consummated the Initial Public Offering of 12,000,000 units, generating gross proceeds of $120,000,000, which is described in Note 3. Simultaneous with the closing of the Initial Public Offering, the Company consummated the sale of 400,000 units (the “Placement Units”) at a price of $10.00 per Unit in a private placement to the Company’s sponsor and sole stockholder prior to the Initial Public Offering, Black Ridge Oil & Gas, Inc. (the “Sponsor”), generating gross proceeds of $4,000,000, which is described in Note 3. Transaction costs amounted to $2,882,226, consisting of $2,400,000 of underwriting fees and $482,226 of Initial Public Offering costs. Following the closing of the Initial Public Offering on October 10, 2017, an amount of $120,600,000 ($10.05 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Placement Units was placed in a trust account (“Trust Account”) and will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account, as described below. On October 18, 2017, in connection with the underwriters’ exercise of their over-allotment option in full, the Company consummated the sale of an additional 1,800,000 Units, and the sale of an additional 45,000 Placement Units at $10.00 per Unit, generating total proceeds of $18,450,000. Transaction costs for underwriting fees on the sale of the over-allotment units were $360,000. Following the closing, an additional $18,090,000 of the net proceeds (10.05 per Unit) was placed in the Trust Account, bringing the total aggregate proceeds held in the Trust Account to $138,690,000 (10.05 per Unit). The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and private placement, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. Upon the closing of the Initial Public Offering, $10.05 per Unit sold in the Initial Public Offering, including the proceeds of the Private Placements was deposited in a Trust Account to be held until the earlier of (i) the consummation of its initial Business Combination or (ii) the Company’s failure to consummate a Business Combination within 21 months from the consummation of the Initial Public Offering (the “Combination Period”). Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Trust Account is maintained by a third party trustee. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, the interest earned on the Trust Account balance may be released to the Company for any amounts that are necessary to pay the Company’s income and other tax obligations and up to $50,000 that may be used to pay for the costs of liquidating the Company. The Sponsor has agreed that it will be liable to ensure that the proceeds in the Trust Account are not reduced below $10.05 per share by the claims of target businesses or claims of vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold to the Company, but there is no assurance that the Sponsor will be able to satisfy its indemnification obligations if it is required to do so. Additionally, the agreement entered into by the Sponsor specifically provides for two exceptions to the indemnity it has given: it will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, or (2) as to any claims for indemnification by the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended. Initial Business Combination Pursuant to the Nasdaq Capital Markets listing rules, the Company’s initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the Trust Account at the time of the execution of a definitive agreement for such Business Combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined by the Company’s board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target business or businesses that the Company acquires may have a collective fair market value substantially in excess of 80% of the Trust Account balance. In order to consummate such a Business Combination, the Company may issue a significant amount of its debt or equity securities to the sellers of such business and/or seek to raise additional funds through a private offering of debt or equity securities. If the Company’s securities are not listed on NASDAQ after the Initial Public Offering, the Company would not be required to satisfy the 80% requirement. However, the Company intends to satisfy the 80% requirement even if the Company’s securities are not listed on NASDAQ at the time of the initial Business Combination. The Company will provide the public stockholders, who are the holders of the Common stock which was sold as part of the Units in the Initial Public Offering, whether they are purchased in the Initial Public Offering or in the aftermarket, or “Public Shares”, including the Sponsor to the extent that they purchase such Public Shares (“Public Stockholders”), with an opportunity to redeem all or a portion of their Public Shares of the Company’s Common stock, irrespective of whether they vote for or against the proposed transaction or if the Company conducts a tender offer, upon the completion of the initial Business Combination either (1) in connection with a stockholder meeting called to approve the Business Combination, or (ii) by means of a tender offer, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest (net of franchise and income taxes payable, divided by the number of then outstanding Public Shares. The amount in the Trust Account, net of franchise and income taxes payable, amounts to approximately $10.20 per Public Share as of December 31, 2018. The common stock subject to redemption will be recorded at a redemption value and classified a temporary equity upon the completion of the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity”. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and in the case of a stockholder vote, a majority of the outstanding shares voted are voted in favor of the Business Combination. The decision as to whether the Company will seek stockholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require it to seek stockholder approval under the law or stock exchange listing requirement. If a stockholder vote is not required and the Company decides not to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to the proposed amended and restated certificate of incorporation, (i) conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and (ii) file tender offer documents with the SEC prior to completing the initial Business Combination which contain substantially the same financial and other information about the initial Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. The Sponsor has agreed to vote its Founder Shares (as described in Note 6), shares underlying the Placement units and any Public Shares purchased during or after the Initial Public Offering in favor of the initial Business Combination, and the Company’s executive officers and directors have also agreed to vote any Public Shares purchased during or after the Initial Public Offering in favor of the Initial Business Combination. The Sponsor entered into a letter agreement, pursuant to which it agreed to waive its redemption rights with respect to the Founder Shares, shares included in the Placement Units and Public Shares in connection with the completion of the initial Business Combination. In addition, the Sponsor has agreed to waive its rights to liquidating distributions from the Trust Account with respect to the Founder Shares and shares included in the Placement Units if the Company fails to complete the initial Business Combination within the prescribed time frame. However, if the Sponsor (or any of the Company’s executive officers, directors or affiliates) acquires Public Shares in or after the Initial Public Offering, it will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares in the event the Company does not complete the initial Business Combination within such applicable time period. Proposed Business Combination On December 19, 2018, the Company entered into a business combination agreement (the “Business Combination Agreement”) with Allied Esports Entertainment, Inc. (“Allied Esports”), Ourgame International Holdings Ltd. (“Ourgame”), Noble Link Global Limited, a wholly-owned subsidiary of Ourgame (“Noble”), and Primo Vital Ltd., also a wholly-owned subsidiary of Ourgame (“Primo”), pursuant to which the Company will acquire two of Ourgame’s global esports and entertainment assets, Allied Esports and WPT Enterprises, Inc. (“WPT”) . See Note 7. Failure to Consummate a Business Combination If the Company is unable to complete the initial Business Combination within the Combination Period, the Company must: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of franchise and income taxes payable and up to $50,000 to pay for our liquidation and dissolution expenses.) divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s Board of Directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. |
2. Going Concern and Management
2. Going Concern and Management's Plans (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern and Management's Plans | Note 2 - Going Concern and Management’s Plans As of September 30, 2019, we had cash and a working capital deficit of approximately $9.4 million (not including approximately $5.0 million of restricted cash) and $4.7 million, respectively. For the nine months ended September 30, 2019 and 2018, the Company incurred net losses of approximately $10.9 million and $24.4 million, respectively, and used cash in operations of approximately $7.8 million and $11.2 million, respectively. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of these condensed consolidated financial statements. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation is dependent upon attaining and maintaining profitable operations and, until that time, raising additional capital as needed, but there can be no assurance that it will be able to close on sufficient financing. The Company’s ability to generate positive cash flow from operations is dependent upon generating sufficient revenues. To date, the Company’s operations have been funded by the Former Parent and through the issuance of debt. The Company cannot provide any assurances that it will be able to secure additional funding, either from equity offerings or debt financings on terms acceptable to the Company, if at all. If the Company is unable to obtain the requisite amount of financing needed to fund its planned operations, it would have a material adverse effect on its business and ability to continue as a going concern, and it may have to curtail, or even cease, certain operations. |
2. Basis of Presentation and Si
2. Basis of Presentation and Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Basis of Presentation and Significant Accounting Policies | Note 3 - Significant Accounting Policies There are no material changes from the significant accounting policies set forth in Note 3 – Significant Accounting Policies of the Company’s accompanying notes to the audited combined financial statements of Allied Esports and WPT for the year ended December 31, 2018, as presented in the Company’s Form 8k filed on August 15, 2019, except for the following accounting policies. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual combined financial statements. For additional information, these condensed consolidated financial statements should be read in conjunction with the audited combined financial statements of Allied Esports and WPT for the years ended December 31, 2018 and 2017, included in the Report on Form 8-K filed with the SEC on August 15, 2019. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of September 30, 2019 and for the nine months ended September 30, 2019 and 2018. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the operating results for the full year ending December 31, 2019 or any other period. These unaudited condensed consolidated financial statements have been derived from the accounting records of AESE, WPT and Allied Esports and should be read in conjunction with the accompanying notes thereto. Intangible Assets and Goodwill Intangible assets are comprised of goodwill, intellectual property, customer relationships, trademarks, and trade names. Intangible assets with definite lives are amortized on a straight-line basis over the shorter of their estimate useful lives, ranging from two to ten years, or their contract periods, if applicable. Intangible assets with indefinite lives are not amortized but are evaluated at least annually for impairment and more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable. Net Loss per Common Share Basic loss per common share is computed by dividing net loss attributable to AESE common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: Three and Nine Months Ended 2019 2018 Options 400,000 – Warrants 18,637,003 3,800,000 Convertible Debt 1,647,058 – Equity Purchase Options 600,000 600,000 21,284,061 4,400,000 Revenue Recognition On January 1, 2019, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required. The Company recognizes revenue primarily from the following sources: In-person revenue The Company’s in-person revenue is comprised of event revenue, merchandising revenue and other revenue. Event revenue is generated through World Poker Tour events – TV, non-TV, and DeepStacks Entertainment, LLC and DeepStacks Poker Tour, LLC (collectively “DeepStacks”) events – held at the Company’s partner casinos as well as Allied Esports events held at the Company’s esports properties. Event revenue is generated from the use of the WPT brand by partner casinos, from naming rights for the HyperX Esports Arena Las Vegas and from sponsorship arrangements for Allied Esports events held at the Las Vegas arena. In-person revenue also includes revenue from ticket sales, admission fees and food and beverage sales for events held at the Company’s esports properties. The Company recognizes event revenue related to the use of the WPT brand by partner casinos at the time of the WPT-branded event. Event revenues from naming rights of the Company’s esports arena are recognized on a straight-line basis over the contractual term of the naming rights agreement. Event revenues from sponsorship arrangements for Allied Esports events are recognized on a straight-line basis over the duration of the event, usually three to four days. Ticket revenue is recognized at the completion of the applicable event. Point of sale revenues, such as food and beverage, gaming and merchandising revenues, are recognized when control of the related goods are transferred to the customer. The Company records deferred revenue to the extent that payment has been received for services that have yet to be performed. In-person revenue was comprised of the following for the three and nine months ended September 30, 2019 and 2018: In-person revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Event revenue $ 2,064,618 $ 1,551,861 $ 7,322,466 $ 4,603,071 Food and beverage revenue 289,261 292,306 972,352 619,647 Ticket and gaming revenue 182,136 290,518 447,156 695,227 Merchandising revenue 50,950 67,758 145,273 149,399 Other revenue – – 119 737 Total in-person revenue $ 2,586,965 $ 2,202,443 $ 8,887,366 $ 6,068,081 To determine the proper revenue recognition method, the Company evaluates each of its contractual arrangements to identify its performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The majority of the Company’s contracts have a single performance obligation because the promise to transfer the individual good or service is not separately identifiable from other promises within the contract and is therefore not distinct. Some of the Company’s contracts have multiple performance obligations, primarily related to the provision of multiple goods or services. For contracts with more than one performance obligation, the Company allocates the total transaction price in an amount based on the estimated relative standalone selling prices underlying each performance obligation. Multiplatform content revenue The Company’s multiplatform content revenue is comprised of distribution revenue, sponsorship revenue, music royalty revenue and online advertising revenue. Distribution revenue is generated primarily through the distribution of content from World Poker Tour’s library. World Poker Tour provides video content to global television networks, who then have the right to air the content over the related license period. Revenue from the distribution of video content to television networks is received pursuant to the contract payment terms and is recognized over the license period on a pro rata basis. Occasionally, WPT will bundle third-party content with its own content in a distribution arrangement and will share the revenue with the third party. However, the revenues related to third party content are de minimis. The Company also distributes video content to online channels. Both the global television networks and the online channels place ads within the WPT content and any advertising revenue earned by the global TV network or online channel is shared with WPT. Advertising revenue is received on a lag, based upon the number of times an advertisement is aired during the previous month, and is recognized during the period that the ad aired on the network or online channel. Sponsorship revenue is generated through the sponsorship of the Company’s TV content, online events and online streams. Online advertising revenue is generated from third-party advertisements placed on the Company’s website. Music royalty revenue is generated when the Company’s music is played in the Company’s TV series both on TV networks and online. The Company recognizes distribution revenue and sponsorship revenue pursuant to the terms of each individual contract with the customer and records deferred revenue to the extent the Company has received a payment for services that have yet to be performed or products that have yet to be delivered. Music royalty revenue is recognized at the point in time when the music is played. Multiplatform content revenue was comprised of the following for the three and nine months ended September 30, 2019 and 2018: Multiplatform content revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Distribution revenue $ 282,508 280,708 $ 1,069,328 $ 516,874 Sponsorship revenue 544,541 320,624 1,252,131 776,327 Music royalty revenue 200,787 339,547 1,214,286 808,537 Online advertising revenue 3,547 8,466 4,628 19,907 Total multiplatform content revenue $ 1,031,383 $ 949,345 $ 3,540,373 $ 2,121,645 Interactive revenue The Company’s interactive revenue is primarily comprised of subscription revenue, licensing, social gaming and virtual product revenue. Subscription revenue is generated through fixed rate (monthly, quarterly, annual) subscriptions which offer the opportunity for subscribers to play unlimited poker and access benefits not available to non-subscribers. The Company recognizes subscription revenue on a straight-line basis and records deferred revenue to the extent the Company receives payments for services that have yet to be provided. The Company recognizes social gaming revenue and virtual product revenue at the point when the product has been delivered. The Company generates licensing revenue by licensing the right to use the Company’s brand on products to third parties. Licensing revenue is recognized pursuant to the terms of each individual contract with the customer and deferred revenue is recorded to the extent the Company has received a payment for products that have yet to be delivered. Interactive revenue was comprised of the following for the three and nine months ended September 30, 2019 and 2018: Interactive revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Subscription revenue $ 1,313,217 $ 1,272,077 $ 3,745,622 $ 3,751,379 Virtual product revenue 925,411 1,056,376 2,773,769 2,473,043 Social gaming revenue 152,317 – 397,065 661,863 Licensing revenue 16,872 – 198,481 50,398 Other revenue 15,376 – 72,259 72,887 Total interactive revenue $ 2,423,193 $ 2,328,453 $ 7,187,196 $ 7,009,570 The following table summarizes our revenue recognized under ASC 606 in our condensed consolidated statements of operations: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenues Recognized at a Point in Time: Event revenue $ 2,064,618 $ 1,551,861 $ 7,322,466 $ 4,603,071 Food and beverage revenue 289,261 292,306 972,352 619,647 Ticket and gaming revenue 182,136 290,518 447,156 695,227 Merchandising revenue 50,950 67,758 145,273 149,399 Sponsorship revenue 544,541 320,624 1,252,131 776,327 Music royalty revenue 200,787 339,547 1,214,286 808,537 Online advertising revenue 3,547 8,466 4,628 19,907 Virtual product revenue 925,411 1,056,376 2,773,769 2,473,043 Social gaming revenue 152,317 – 397,065 661,863 Distribution revenue 282,508 280,708 1,069,328 516,874 Other revenue 15,376 – 72,378 73,624 Total Revenues Recognized at a Point in Time 4,711,452 4,208,164 15,670,832 11,397,519 Revenues Recognized Over a Period of Time: Licensing revenue 16,872 – 198,481 50,398 Subscription revenue 1,313,217 1,272,077 3,745,622 3,751,379 Total Revenues Recognized Over a Period of Time 1,330,089 1,272,077 3,944,103 3,801,777 Total Revenues $ 6,041,541 $ 5,480,241 $ 19,614,935 $ 15,199,296 The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. As of September 30, 2019, there remained $38,245 of contract liabilities which were included within deferred revenue on the combined balance sheet as of December 31, 2018, and for which performance obligations had not yet been satisfied as of September 30, 2019. The Company expects to satisfy its remaining performance obligations within the next twelve months. During the three and nine months ended September 30, 2019, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. Reclassification Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842).” ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This amendment will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” in July 2018, and ASU No. 2018-20 “Leases (Topic 842) - Narrow Scope Improvements for Lessors” in December 2018. ASU 2018-10 and ASU 2018-20 provide certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively Topic 326). Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This replaces the existing incurred loss model with an expected loss model and requires the use of forward-looking information to calculate credit loss estimates. The Company will be required to adopt the provisions of this ASU on January 1, 2020, with early adoption permitted for certain amendments. Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings. The Company is currently evaluating Topic 326, including its potential impact to its process and controls. In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard for private companies and emerging growth public companies is effective for fiscal years beginning after December 15, 2018. The Company will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The adoption of ASU 2016-15 is not expected to have a material impact on the Company’s condensed consolidated financial statements or disclosures. In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). These amendments provide clarifications and corrections to certain ASC subtopics including the following: Income Statement - Reporting Comprehensive Income – Overall (Topic 220-10), Debt - Modifications and Extinguishments (Topic 470-50), Distinguishing Liabilities from Equity – Overall (Topic 480-10), Compensation - Stock Compensation - Income Taxes (Topic 718-740), Business Combinations - Income Taxes (Topic 805-740), Derivatives and Hedging – Overall (Topic 815-10), and Fair Value Measurement – Overall (Topic 820-10). The majority of the amendments in ASU 2018-09 will be effective in annual periods beginning after December 15, 2019. The Company is currently evaluating and assessing the impact this guidance will have on its consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”). The amendments in ASU 2018-10 provide additional clarification and implementation guidance on certain aspects of the previously issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) and have the same effective and transition requirements as ASU 2016-02. Upon the effective date, ASU 2018-10 will supersede the current lease guidance in ASC Topic 840, Leases. Under the new guidance, lessees will be required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Concurrently, lessees will be required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2018-10 is effective for private companies and emerging growth public companies for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The guidance is required to be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements. The Company is currently assessing the impact this guidance will have on its combined financial statements. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements,” (“ASU 2018-11”). The amendments in ASU 2018-11 related to transition relief on comparative reporting at adoption affect all entities with lease contracts that choose the additional transition method and separating components of a contract affect only lessors whose lease contracts qualify for the practical expedient. The amendments in ASU 2018-11 are effective for private companies and emerging growth public companies for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently assessing the impact this guidance will have on its combined financial statements. In March 2019, the FASB issued ASU 2019-02, which aligns the accounting for production costs of episodic television series with the accounting for production costs of films. In addition, ASU 2019-02 modifies certain aspects of the capitalization, impairment, presentation and disclosure requirements in Accounting Standards Codification (“ASC”) 926-20 and the impairment, presentation and disclosure requirements in ASC 920-350. This ASU must be adopted on a prospective basis and is effective for annual periods beginning after December 15, 2020, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact that this pronouncement will have on its consolidated financial statements. | Note 2 – Basis of Presentation and Significant Accounting Policies Consolidation Policy The accompanying consolidated financial statements include the accounts of the following legal entities: Name of entity State of Incorporation Relationship Black Ridge Acquisition Corp. Delaware Parent Black Ridge Merger Sub Corp. Delaware Subsidiary (1) (1) Wholly owned subsidiary formed on December 19, 2018 to facilitate a Business Combination. The parent company, Black Ridge Acquisition Corp., and Black Ridge Merger Sub Corp. will collectively be referred to herein as “the Company” or “Black Ridge”. All significant intercompany transactions have been eliminated in the preparation of these financial statements. Basis of presentation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Going concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2018, the Company had working capital of $78,000 (excluding income taxes and franchise fees which may be paid out of the Trust Account and the note payable to our sponsor). Further, the Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. The Company’s plans to consummate an initial Business Combination may not be successful. Based on the foregoing, the Company may not have sufficient funds available to operate its business for at least one year from the date the financial statements are issued or until it closes an initial business combination and may need to obtain additional financing form its sponsor or other sources in order to meet its obligations. The Company cannot be certain that additional funding will be available on acceptable terms, or at all. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 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 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 shareholder 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 Securities Act registration statement 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 election to opt out is irrevocable. The Company has 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, 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 accountant standards used. Cash and cash equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2018 and 2017. Cash and securities held in Trust Account As of December 31, 2018 and 2017, $2,312 and $39,742, respectively, of cash and $141,304,995 and $138,940,611, respectively, of marketable securities were held in the Trust Account. Common Stock subject to possible redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. Offering costs Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Offering costs totaling to $3,242,226 were charged to stockholders’ equity upon the completion of the Initial Public Offering and subsequent sale of Units in connection with the underwriters’ exercise of their over-allotment option. Income taxes The Company accounts for income taxes under ASC Topic 740 “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2018. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company may be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. The Company’s policy for recording interest and penalties associated with income tax audits is to record such expense as a component of interest tax expense. There were no amounts accrued for penalties or interest as of December 31, 2018 or 2017. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. On December 22, 2017 the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was signed into law. As a result of Tax Reform, the U.S. statutory rate was lowered from 35% to 21% effective January 1, 2018, among other changes. ASC Topic 740 requires companies to recognize the effect of tax law changes in the period of enactment; therefore, the Company was required to value its deferred tax assets and liabilities at December 31, 2017 at the new rate. The impact on the financial statements was not material. Concentration of credit risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. As of December 31, 2018, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Use of estimates The preparation of the balance sheet 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 as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair value of financial instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures”, approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. Net income (loss) per share Net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. An aggregate of 13,283,086 and 13,348,443 shares of common stock subject to possible redemption as of December 31, 2018 and 2017, respectively, have been excluded from the calculation of basic income (loss) per share since such shares, if redeemed, only participate in their pro rata share of the trust earnings. The Company's net income (loss) is also shown adjusted for the portion of income attributable to shares subject to redemption, as these shares only participate in the income of the trust account and not the operating losses of the Company. Accordingly, basic and diluted net income (loss) per share attributable to shares not subject to redemption is as follows: Year Ended Period from May 9, 2017 (Inception) through Net income $ 1,141,199 $ 93,150 Less income attributable to shares subject to redemption (1,798,890 ) (174,168 ) Adjusted net loss (657,691 ) (81,018 ) Weighted average shares outstanding, basic and diluted 4,361,619 3,452,106 Basic and diluted net loss per common share attributable to remaining shares $ (0.15 ) $ (0.02 ) The Company has not considered the effect of 1) warrants to purchase 14,845,000 shares of common stock, 2) rights that convert to 1,484,500 shares and 3) 600,000 shares included in the underwriters’ unit option sold in Public Offering, Private Placement or underlying the unit option sold to the underwriter in the calculation of diluted loss per share, since the exercise of the warrants, receipt of rights and ability exercise the unit option underlying the shares is contingent on the occurrence of future events. Additionally, the Company has not considered the effect of any conversion into units of the convertible note payable as that conversion is also contingent on future events. Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. |
3. Initial Public Offering and
3. Initial Public Offering and Private Placement | 12 Months Ended |
Dec. 31, 2018 | |
Initial Public Offering And Private Placement | |
Initial Public Offering and Private Placement | Note 3 — Initial Public Offering and Private Placement Initial Public Offering Pursuant to the Initial Public Offering and including the subsequent over-allotment option exercised by the underwriter, the Company sold 13,800,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one share of common stock, one right (“Public Right”) and one warrant (“Public Warrant”). Each Public Right will convert into one-tenth (1/10) of one share of common stock upon consummation of a Business Combination (see Note 6). Each Public Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 (see Note 6). Private Placement Simultaneous with the Initial Public Offering and over-allotment option exercise, the Sponsor purchased an aggregate of 445,000 Placement Units at a price of $10.00 per Unit (or an aggregate purchase price of $4,450,000). Each Placement Unit consists of one share of common stock (“Placement Share”), one right (“Placement Right”) and one warrant (each, a “Placement Warrant”) to purchase one share of the common stock at an exercise price of $11.50 per share. The proceeds from the Placement Units were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Placement Rights and Placement Warrants will expire worthless. The Placement Units are identical to the Units sold in the Initial Public Offering except that the Placement Warrants (i) are not redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, so long as they are held by the Sponsor or any of its permitted transferees. In addition, the Placement Units and their component securities may not be transferable, assignable or salable until after the consummation of a Business Combination, subject to certain limited exceptions. |
4. Reverse Merger and Recapital
4. Reverse Merger and Recapitalization (September 30, 2019) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
Reverse Merger and Recapitalization | Note 4 – Reverse Merger and Recapitalization As described in Note 1 – Background and Basis of Presentation above, on the Closing Date, the AEM Merger and the Merger took place. All of AEM capital stock outstanding immediately prior to the merger was exchanged for (i) 11,602,754 shares of AESE common stock, (ii) warrants for the purchase of 3,800,003 shares of AESE common stock with an exercise price of $11.50 per share, and (iii) 3,846,153 contingent shares to be issued if the last exchange-reported sales price of AESE common stock equals or exceeds $13.00 per share for any thirty consecutive days during the five year period commencing on the Closing Date. On the Closing Date, pursuant to the Merger Agreement, in order to extinguish amounts owed to the Former Parent by WPT and Allied Esports in the aggregate amount of $32,672,622, AESE (i) repaid $3,500,000 of the amount due to the Former Parent in cash, (ii) assumed $10,000,000 principal of the convertible debt obligations of the Former Parent plus $992,877 of related accrued interest, (iii) issued 2,928,679 shares of the Company’s common stock to the Former Parent with no limitations or encumbrances on sale and (iii) transferred 600,000 shares of the Company’s common stock to the Former Parent which will be subject to a lockup period for one year from the Closing Date. In connection with the Merger, the Company issued an aggregate of 11,492,999 shares of common stock, including 3,528,679 shares issued in satisfaction of amount owed to the Former Parent as described above, and 7,964,320 shares of common stock issued to BRAC shareholders prior to the Merger, but which are deemed to be issued by the Company on the Closing Date as a result of the reverse recapitalization. | Note 7 – Proposed Business Combination Business Combination Agreement On December 19, 2018, the Company entered into an Agreement and Plan of Reorganization (the “Agreement”) by and among the Company, Black Ridge Merger Sub, Corp., a Delaware corporation and wholly-owned subsidiary of the Company formed on December 19, 2018 (“Merger Sub”), Allied Esports Entertainment, Inc. (the “Allied Esports”), Ourgame International Holdings Ltd. (“Ourgame”), Noble Link Global Limited, a wholly-owned subsidiary of Ourgame (“Noble”), and Primo Vital Ltd., also a wholly-owned subsidiary of Ourgame (“Primo”). Subject to the Agreement, (i) Noble will merge with and into Allied Esports (the “Redomestication Merger”) with Allied Esports being the surviving entity in such merger and (ii) immediately after the Redomestication Merger, Merger Sub will merge with and into Allied Esports with Allied Esports being the surviving entity of such merger (the “Transaction Merger” and together with the Redomestication Merger, the “Mergers”). The Mergers will result in the Company acquiring two of Ourgame’s global esports and entertainment assets, Allied Esports International, Inc. (“Allied Esports”) and WPT Enterprises, Inc. (“WPT”). Allied Esports is a premier esports entertainment company with a global network of dedicated esports properties and content production facilities. WPT is the creator of the World Poker Tour® (WPT®) – the premier name in internationally televised gaming and entertainment with brand presence in land-based tournaments, television, online and mobile. The proposed transaction will seek to strategically combine the globally recognized Allied Esports brand with the three-pronged business model of the iconic World Poker Tour, featuring in-person experiences, multiplatform content and interactive services, to leverage the high-growth opportunities in the global esports industry. Upon consummation of the Mergers (the “Closing”), the Company will issue to the former owners of Allied Esports and WPT (i) an aggregate of 11,602,754 shares of common stock, par value $0.0001 per share, of the Company’s common stock and (ii) an aggregate of 3,800,003 warrants to purchase shares of common stock of the Company. In addition to the consideration described above, the former owners of Allied Esports and WPT will be entitled to receive their pro rata portion of an aggregate of an additional 3,846,153 shares of the Company’s common stock if the last sales price of the Company’s common stock equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for thirty (30) consecutive days at any time during the five (5) year period commencing on the date of the Closing (the “Closing Date”). Proposed Changes to the Capital Structure The Company is seeking shareholder approval to amend its charter to increase the authorized shares of the Company’s common stock to 65,000,000 shares. Conditions to Consummation of the Business Combination Consummation of the transactions contemplated by the Agreement is subject to certain closing conditions including, among others, (i) approval by the stockholders of the Company and Ourgame, and (ii) that the Company have available cash in an amount not less than $80,000,000 after payment to stockholders who elect to redeem their shares of common stock in accordance with the provisions of the Company’s Charter Documents. Termination The Agreement may be terminated at any time prior to the consummation of the Agreement (whether before or after the Company’s shareholder vote has been obtained) by mutual written consent of the Company and Ourgame, Noble and the Acquired Company and in certain other limited circumstances, including if the Proposed Business Combination has not been consummated by July, 10, 2019. |
4. Related Party Transactions
4. Related Party Transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Note 10 – Related Parties Notes Payable to Former Parent During the nine months ended September 30, 2018, the Company received proceeds of $11,174,913 from the issuance of notes payable to the Former Parent. During November and December 2018, as part of a corporate restructuring, all outstanding notes payable to Former Parent were converted to Former Parent’s equity, and all accrued interest related to the notes payable to Former Parent was forgiven and recorded as a contribution to capital. Due to Former Parent As of December 31, 2018, amounts due to the Former Parent of $33,019,510 consisted of payments of certain operating expenses, investing activities and financing activities made on behalf of the Company by the Former Parent. There was no stated interest rate or definitive repayment terms related to this liability. The weighted average balance of advances owed to the Former Parent was $20,143,485 during the nine months ended September 30, 2018 and was $32,788,017 for the period from January 1, 2019 through August 9, 2019. On August 9, 2019, all obligations to the Former Parent in the aggregate amount of $32,672,622 were satisfied in connection with the Merger. See Note 4 – Reverse Merger and Recapitalization, for additional details. | Note 4 — Related Party Transactions Founder Shares In connection with the organization of the Company, a total of 2,875,000 shares of common stock were sold to the Sponsor at a price of approximately $0.0087 per share for an aggregate of $25,000 (“Founder Shares”). On October 4, 2017, the Company effected a stock dividend of 0.2 shares for each of the then outstanding shares, resulting in 3,450,000 Founders Shares including an aggregate of up to 450,000 shares of common stock that would have been subject to forfeiture to the extent that the over-allotment option was not exercised by the underwriters in full or in part (the underwriters exercised their over-allotment option in full). All share and per share amounts have been retroactively restated to reflect the effect of the stock dividend. Subject to certain limited exceptions, 50% of the Founder Shares will not be transferred, assigned, sold until the earlier of: (i) one year after the date of the consummation of the initial Business Combination or (ii) the date on which the closing price of the Company’s common stock equals or exceeds $12.50 per share (as adjusted) for any 20 trading days within any 30-trading day period commencing 150 days after the initial Business Combination, and the remaining 50% of the Founder Shares will not be transferred, assigned, sold until one year after the date of the consummation of the initial Business Combination, or earlier, in either case, if, subsequent to the Company’s initial Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange, reorganization or other similar transaction which results in all of shareholders having the right to exchange their common stock for cash, securities or other property. Related Party Loans Prior to the closing of the Initial Public Offering, the Company’s Sponsor advanced the Company an aggregate of $125,000. The advances were non-interest bearing, unsecured and due on demand. The advances were repaid upon the consummation of the Initial Public Offering on October 10, 2017. In order to finance transaction costs in connection with an intended initial business combination, our sponsor, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we consummate an initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units of the post business combination entity at a price of $10.00 per unit at the option of the lender. The units would be identical to the Placement Units. As of December 31, 2018, the Sponsor has loaned the Company, in the form of a convertible promissory note, an aggregate of $350,000 to cover expenses related to a proposed business combination. This note, issued on December 10, 2018, is unsecured, non-interest bearing and is payable at the consummation by the Company of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the Sponsor’s option, to units at a price of $10.00 per unit. The terms of the units are identical to the units issued by the Company in its private placement. If the Sponsor converts the entire principal balance of the convertible promissory note, it would receive 35,000 units. If a Business Combination is not consummated, the note will not be repaid by the Company and all amounts owed thereunder by the Company will be forgiven except to the extent that the Company has funds available to it outside of its trust account established in connection with the initial public offering. The issuance of the note to the Sponsor was exempt pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. Administrative Services Agreement Commencing on the effective date of the Initial Public Offering through the earlier of our consummation of our initial business combination or our liquidation, the Sponsor will make available to us certain general and administrative services, including office space, utilities and administrative support, as we may require from time to time. The Company agreed to pay the Sponsor $10,000 per month for these services . Accounts payable – related party Accounts payable – related party represents balances due to the Sponsor for administrative services and out of pocket expenses paid by the Sponsor on behalf of the Company. |
5. Investments (September 30, 2
5. Investments (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
Investments | Note 5 – Investments The Company’s investments consist of the following: September 30, December 31, (unaudited) Investment in ESA $ 1,138,631 $ 500,000 TV Azteca Investment 3,500,000 – $ 4,638,631 $ 500,000 As of September 30, 2019, the Company owns a 25% non-voting membership interest in Esports Arena, LLC (“ESA”) and ESA’s wholly owned subsidiary. The investment is accounted for as a cost method investment, since the Company does not have the ability to exercise significant influence over the operating and financial policies of ESA. During January 2019, the Company contributed $1,238,631 to ESA, in order to fulfill the remainder of its funding commitment to ESA. The Company recognized an immediate impairment of $600,000 related to this funding. In August 2019, the Company paid $3,500,000 to TV Azteca, S.A.B. DE C.V., a Grupo Salinas company (“TV Azteca”), in connection with a Strategic Investment Agreement with TV Azteca in order to expand the Allied Esports brand into Mexico. See Note 11 – Commitments and Contingencies, Investment Agreements for additional details. |
5. Commitments
5. Commitments | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments | Note 11 – Commitments and Contingencies Litigations, Claims, and Assessments The Company is involved in various disputes, claims, liens and litigation matters arising out of the normal course of business. While the outcome of these disputes, claims, liens and litigation matters cannot be predicted with certainty, after consulting with legal counsel, management does not believe that the outcome of these matters will have a material adverse effect on the Company's combined financial position, results of operations or cash flows. Employment Agreement On November 5, 2019, the Company entered into an employment agreement (the “CEO Agreement”) with the Company’s Chief Executive Officer (“CEO”). The CEO Agreement is effective as of September 20, 2019. The CEO Agreement provides for a base salary of $300,000 per annum as well as annual incentive bonuses as determined by the Board of Directors, subject to the attainment of certain objectives. The CEO Agreement provides for severance equal to the twelve months of the CEO’s base salary. In connection with the CEO agreement, the CEO also received 17,668 of the Company’s restricted common stock, with a grant date value of $100,000, which vests one year from date of issuance (See Note 12 – Equity, Restricted Stock). The employment agreement expires on August 9, 2022 and may be extended for a period up to one year upon mutual written agreement by the CEO and the Company at least thirty days prior to expiration. Consulting Agreement On August 9, 2019 the Company entered into a consulting services agreement with a related party, Black Ridge Oil & Gas, the Company’s prior sponsor (“BROG”), pursuant to which BROG will provide administration and accounting services to the Company through December 31, 2019, in exchange for consulting fees in the aggregate of $348,853. Operating Leases On March 29, 2019, AEM entered into a 167-month operating lease for approximately 25,000 square feet of space located in Irvine, California (the “New Irvine Lease”) with respect to its operations. On June 15, 2019, the New Irvine Lease was amended to reduce the leased space to approximately 15,000 square feet. On August 9, 2019 the lease was assigned to WPT. The initial base rent pursuant to the leases, as amended, is $39,832 per month, increasing to $58,495 per month over the term of the lease. The New Irvine Lease also provides for a tenant improvement allowance of up to $1,352,790. The Company’s aggregate rent expense incurred during the three and nine months ended September 30, 2019 amounted to $711,302 and $2,079,800, respectively, of which $96,278 and $288,835, respectively was capitalized into deferred production costs, $448,861 and $1,073,864, respectively, was included within in-person cost of revenues, and $166,163 and $717,102, respectively, was included within general administrative expenses on the condensed consolidated statements of operations. The Company’s aggregate rent expense incurred during the three and nine months ended September 30, 2018 amounted to $706,160 and $2,420,717, respectively, of which $96,278 and $288,835, respectively was capitalized into deferred production costs, $370,993 and $1,395,203, respectively, was included within in-person cost of revenues, and $238,889 and $736,679, respectively, was included within general administrative expenses on the condensed consolidated statements of operations. Investment Agreements In June 2019, the Company entered into an exclusive ten-year strategic investment and revenue sharing agreement (the “TV Azteca Agreement”) with TV Azteca, in order to expand the Allied Esports brand into Mexico. Pursuant to the terms of the TV Azteca Agreement, as amended, TV Azteca purchased 742,692 shares of AESE common stock for $5,000,000. In connection with the TV Azteca Agreement, AESE will provide $7,000,000 to be used for various strategic initiatives including digital channel development, facility and flagship construction in Mexico, co-production of Spanish language content, platform localization, and marketing initiatives. The Company will be entitled to various revenues generated from the investment. Currently, the Company has paid $3,500,000 with the rest of the payments as follows: · $1,500,000 payable on March 1, 2020; · $1,000,000 payable on March 1, 2021, and · $1,000,000 payable on March 1, 2022. In June 2019, the Company entered into an agreement (the “Simon Agreement”) with Simon Equity Development, LLC (“Simon”), a shareholder of the Company, pursuant to which Allied Esports will conduct a series of mobile esports gaming tournaments and events at selected Simon shopping malls and online called the Simon Cup, and will also develop esports and gaming venues at certain Simon shopping malls in the U.S. The Simon Cup will be staged in each of 2019, 2020 and 2021. In connection with the Simon Agreement, AESE placed $5,000,000 of cash into an escrow account to be utilized for various strategic initiatives including the build-out of branded esports facilities at Simon malls, and esports event programs. As of September 30, 2019, the balance in the escrow account is $4,950,000, which is shown as restricted cash on the accompanying condensed consolidated balance sheet. (See Note 13 – Subsequent Events). | Note 5 — Commitments Agreements with underwriters and investment advisors The Company engaged the underwriters as advisors in connection with our Initial Business Combination to assist us in holding meetings with our shareholders to discuss the potential business combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing our securities, assist us in obtaining shareholder approval for the business combination and assist us with our press releases and public filings in connection with the business combination. The Company will pay the underwriters a cash fee for such services upon the consummation of our initial business combination in an amount of approximately $4,080,000 (exclusive of any applicable finders’ fees which might become payable). We have engaged an investment advisor to assist us in connection with due diligence, financial analysis and positioning the Company in the capital markets (the “Capital Markets Fee”) related to the Proposed Business Combination. The Company will pay the investment advisor a cash fee of approximately $2,000,000 for due diligence and advisory services upon the consummation of the Proposed Business Combination. The Company will also pay the Capital Markets Fee of 3% of the cash or securities available for the closing of the Proposed Business Combination including the proceeds received from the trust account net of cash reserved to fulfill redemption requests upon the consummation of the Proposed Business Combination. Registration Rights The holders of our founders’ shares issued and outstanding on the date of the Initial Public Offering, as well as the holders of the private units and any units our sponsor, officers, directors or their affiliates may be issued in payment of working capital loans made to us (and all underlying securities), are entitled to registration rights pursuant to a registration rights agreement dated October 4, 2017. The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the founders’ shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the private units and units issued to our sponsor, officers, directors or their affiliates in payment of working capital loans made to us (or underlying securities) can elect to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We will bear the expenses incurred in connection with the filing of any such registration statements. |
6. Deferred Production Costs (S
6. Deferred Production Costs (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Production Costs | |
Deferred Production Costs | Note 6 – Deferred Production Costs Deferred production costs consist of the following: September 30, December 31, 2019 2018 Deferred production costs $ 27,975,552 23,604,111 Less: accumulated amortization (16,770,709 ) (14,545,267 ) Deferred production costs, net $ 11,204,843 $ 9,058,844 Weighted average remaining amortization period at September 30, 2019 (in years) 3.80 During the nine months ended September 30, 2019 and 2018, production costs of $2,225,442 and $1,307,069 respectively, were expensed and are reflected in multiplatform content costs in the condensed consolidated statements of operations. |
6. Stockholders' Equity
6. Stockholders' Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Stockholder's equity: | ||
Stockholders' Equity | Note 12 – Stockholder’s Equity Share Purchase Agreements On November 5, 2018, Allied Esports Media Inc. sold 1,199,191 shares of restricted common stock (the “Employee Shares”), to certain employees and stakeholders of the Company, for consideration of $0.001 per share, which were exchanged for AESE common stock and warrants in connection with the recapitalization (See Note 4 - Reverse Merger and Recapitalization). Equity Incentive Plan On August 9, 2019, the Company’s Equity Incentive Plan (the “Incentive Plan”) was approved by the Company’s stockholders. The Incentive Plan is administered by the Board of Directors or a committee designated by the Board of Directors to do so. The effective date of the Incentive Plan is December 19, 2018. The Incentive Plan provides the grant of incentive stock options (“ISOs”), nonstatutory stock options, stock appreciation rights, restricted common stock awards, restricted common stock unit awards, as well as other stock-based awards that are deemed to be consistent with the purposes of the plan. There are 5,000,000 shares of common stock reserved under the Incentive Plan, of which 4,519,607 shares remain available to be issued as of September 30, 2019. Stock Options On September 20, 2019 the Company issued ten-year options for the purchase of 400,000 shares of AESE common stock, with an exercise price of $5.66 per share, pursuant to the Incentive Plan. The options have a 4-year vesting term, and vest 25% on each anniversary of the date of grant. The options had an aggregate grant date fair value of $867,120, calculated using the Black-Scholes option pricing model, with the following assumptions used: Risk free interest rate 1.74% Expected term (years) 6.25 years Expected volatility 36% Expected dividends 0.0 The expected term used for options is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. The Company recorded stock-based compensation expense of $5,940 for the three and nine months ended September 30, 2019 related to stock options issued as compensation, which is included in general and administrative expense on the accompanying condensed consolidated statements of operations. As of September 30, 2019, there was $861,180 of unrecognized stock-based compensation expense related to the stock options that will be recognized over the remaining vesting period of 3.97 years. A summary of the option activity during the nine months ended September 30, 2019 is presented below: Weighted Weighted Average Average Number of Exercise Remaining Intrinsic Options Price Term (Yrs) Value Outstanding, January 1, 2019 – – Granted 400,000 $ 5.66 Exercised – – Expired – – Forfeited – – Outstanding, September 30, 2019 400,000 $ 5.66 9.97 $ – Exercisable, September 30, 2019 – $ – – $ – Warrants Prior to the Closing Date, BRAC issued 14,305,000 warrants (the “BRAC Warrants”) for the purchase of the Company’s common stock at $11.50 per share in connection with BRAC’s initial public offering. These previously issued BRAC Warrants are deemed to be issued in connection with the Merger, as a result of the reverse recapitalization. As of result of the Merger, the Company issued to the former owners of Allied Esports and WPT five-year warrants to purchase an aggregate of 3,800,003 shares of common stock at a price of $11.50 per share and issued five-year warrants for the purchase of an aggregate of 532,000 shares of common stock to the Noteholders. A summary of warrant activity during the nine months ended September 30, 2019 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life in Years Intrinsic Value Outstanding, December 31, 2018 3,800,003 $ 11.50 Issued 14,837,000 $ 11.50 Exercised – – Cancelled – – Outstanding, September 30, 2019 18,637,003 $ 11.50 4.9 $ – Exercisable, September 30, 2019 18,637,003 $ 11.50 4.9 $ – Restricted Stock On September 20, 2019 the Company issued am aggregate of 80,393 shares of restricted common stock, pursuant to the Incentive Plan, to certain members of the Board of Directors and Executives. The restricted common stock had an aggregate grant date fair value of $455,000, and vest on the one-year anniversary of the date of grant. The shares were valued at the trading price of the Company’s stock on the date of grant. The Company recorded stock-based compensation expense of $12,467 for the three and nine months ended September 30, 2019 related to restricted common stock issued as compensation, which is recorded in general and administrative expenses on the accompanying condensed consolidated statements of operations. As of September 30, 2019, there was $442,533 of unrecognized stock-based compensation expense related to the restricted stock that will be recognized over the remaining vesting period of 0.97 years. Equity Purchase Option Prior to the Closing Date, BRAC sold an option to purchase of to 600,000 units, exercisable at $11.50 per Unit, in connection with BRAC’s initial public offering (the “Equity Purchase Option”). Each Unit consisted of one and one-tenth shares of common stock and a warrant to purchase one share of common stock at $11.50 per share. Effective upon the closing of the Merger, the units converted by their terms into the shares and warrants, and the option now represents the ability to buy such securities directly (and not units). The Equity Purchase Option may be exercised on either a cash or a cashless basis, at the holder’s option, and expires on October 4, 2022. These previously issued BRAC Shares and Warrant Purchase Options are deemed to be issued in connection with the Merger, as a result of the reverse recapitalization. A summary of the Equity Purchase Option activity during the nine months ended September 30, 2019 is presented below: Number of Weighted Weighted Equity Average Average Purchase Exercise Remaining Intrinsic Options Price Term (Yrs) Value Outstanding, January 1, 2019 – – Granted 600,000 $ 11.50 Exercised – – Expired – – Forfeited – – Outstanding, September 30, 2019 600,000 $ 11.50 3.0 $ – Exercisable, September 30, 2019 600,000 $ 11.50 3.0 $ – | Note 6 — Stockholders’ Equity Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of December 31, 2018 and 2017, no preferred stock is issued or outstanding. Common Stock The Company is authorized to issue 35,000,000 shares of common stock, par value $0.0001 per share. As of December 31, 2018 and 2017, the Company has issued an aggregate of 17,695,000 shares of common stock, inclusive of 13,283,086 and 13,348,443 shares of common stock as of December 31, 2018 and 2017, respectively, subject to possible redemption classified as temporary equity in the accompanying Balance Sheets. Rights Each holder of a right will receive one-tenth (1/10) of one share of common stock upon consummation of a Business Combination, even if a holder of such right converted all ordinary shares held by it in connection with a Business Combination. No fractional shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the shares of common stock will receive in the transaction on an as-converted into shares of common stock basis and each holder of rights will be required to affirmatively covert its rights in order to receive 1/10 of a share of common stock underlying each right (without paying additional consideration). The shares of common stock issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company). If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless. The rights included in the Private Units sold in the Private Placement are identical to the rights included in the Units sold in the Initial Public Offering, except that, among others, the rights including the shares issuable upon exchange of such rights, are being purchased pursuant to an exemption from the registration requirements of the Securities Act and will become tradable only after certain conditions are met or the resale of such rights (including underlying securities) is registered under the Securities Act. Warrants Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Warrants. The Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) October 10, 2018. No Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the Warrants and a current prospectus relating to such shares. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon the exercise of the Warrants is not effective within 30 days from the consummation of a Business Combination, the holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise the Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise their Warrants on a cashless basis. The Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation. The Private Warrants will be identical to the Warrants underlying the Units being sold in the Initial Public Offering, except the Private Warrants will be exercisable for cash (even if a registration statement covering the shares of common stock issuable upon exercise of such Private Warrants is not effective) or on a cashless basis, at the holder’s option, and will not be redeemable by the Company, in each case so long as they are still held by the Sponsor or its affiliates. The Company may call the Warrants for redemption (excluding the Private Warrants but including any outstanding Warrants issued upon exercise of the unit purchase option issued to EarlyBirdCapital), in whole and not in part, at a price of $0.01 per Warrant: · at any time while the Warrants are exercisable, · upon not less than 30 days’ prior written notice of redemption to each Warrant holder, · if, and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share, for any 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to Warrant holders, and · if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such Warrants at the time of redemption and for the entire 30-day redemption period and continuing each day thereafter until the date of redemption. If the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the Warrants will not be adjusted for issuances of shares of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Warrants will not receive any of such funds with respect to their Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Warrants. Accordingly, the Warrants may expire worthless. Unit Purchase Option On October 10, 2017, the Company sold to the underwriter (and/or its designees), for $100, an option to purchase up to 600,000 Units exercisable at $11.50 per Unit (or an aggregate exercise price of $6,900,000) commencing on the later of the first anniversary of the effective date of the registration statement related to the Initial Public Offering and the consummation of a Business Combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from the effective date of the registration statement related to the Initial Public Offering. The Units issuable upon exercise of this option are identical to those offered in the Initial Public Offering. The Company accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Initial Public Offering resulting in a charge directly to stockholders’ equity. The Company estimated the fair value of this unit purchase option to be approximately $1,778,978 (or $2.97 per Unit) using the Black-Scholes option-pricing model. The fair value of the unit purchase option granted to the underwriters was estimated as of the date of grant using the following assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 1.94% and (3) expected life of five years. The option and such units purchased pursuant to the option, as well as the common stock underlying such units, the rights included in such units, the common stock that is issuable for the rights included in such units, the warrants included in such units, and the shares underlying such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA’s NASDAQ Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners. The option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date of the registration statement with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of ordinary shares at a price below its exercise price. |
7. Accrued Expenses and Other C
7. Accrued Expenses and Other Current Liabilities (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Note 7 – Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: September 30, December 31, 2019 2018 Compensation expense $ 1,087,557 $ 1,218,455 Taxes 205,121 981 Rent 53,561 58,781 Revenue sharing obligations 380,677 122,928 Event costs 107,753 61,740 Production costs 143,707 15,329 Unclaimed player prizes 420,993 380,120 Other accrued expenses 1,025,223 395,441 Other current liabilities 50,310 188,370 $ 3,474,902 $ 2,442,145 |
7. Proposed Business Combinatio
7. Proposed Business Combination | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
Proposed Business Combination | Note 4 – Reverse Merger and Recapitalization As described in Note 1 – Background and Basis of Presentation above, on the Closing Date, the AEM Merger and the Merger took place. All of AEM capital stock outstanding immediately prior to the merger was exchanged for (i) 11,602,754 shares of AESE common stock, (ii) warrants for the purchase of 3,800,003 shares of AESE common stock with an exercise price of $11.50 per share, and (iii) 3,846,153 contingent shares to be issued if the last exchange-reported sales price of AESE common stock equals or exceeds $13.00 per share for any thirty consecutive days during the five year period commencing on the Closing Date. On the Closing Date, pursuant to the Merger Agreement, in order to extinguish amounts owed to the Former Parent by WPT and Allied Esports in the aggregate amount of $32,672,622, AESE (i) repaid $3,500,000 of the amount due to the Former Parent in cash, (ii) assumed $10,000,000 principal of the convertible debt obligations of the Former Parent plus $992,877 of related accrued interest, (iii) issued 2,928,679 shares of the Company’s common stock to the Former Parent with no limitations or encumbrances on sale and (iii) transferred 600,000 shares of the Company’s common stock to the Former Parent which will be subject to a lockup period for one year from the Closing Date. In connection with the Merger, the Company issued an aggregate of 11,492,999 shares of common stock, including 3,528,679 shares issued in satisfaction of amount owed to the Former Parent as described above, and 7,964,320 shares of common stock issued to BRAC shareholders prior to the Merger, but which are deemed to be issued by the Company on the Closing Date as a result of the reverse recapitalization. | Note 7 – Proposed Business Combination Business Combination Agreement On December 19, 2018, the Company entered into an Agreement and Plan of Reorganization (the “Agreement”) by and among the Company, Black Ridge Merger Sub, Corp., a Delaware corporation and wholly-owned subsidiary of the Company formed on December 19, 2018 (“Merger Sub”), Allied Esports Entertainment, Inc. (the “Allied Esports”), Ourgame International Holdings Ltd. (“Ourgame”), Noble Link Global Limited, a wholly-owned subsidiary of Ourgame (“Noble”), and Primo Vital Ltd., also a wholly-owned subsidiary of Ourgame (“Primo”). Subject to the Agreement, (i) Noble will merge with and into Allied Esports (the “Redomestication Merger”) with Allied Esports being the surviving entity in such merger and (ii) immediately after the Redomestication Merger, Merger Sub will merge with and into Allied Esports with Allied Esports being the surviving entity of such merger (the “Transaction Merger” and together with the Redomestication Merger, the “Mergers”). The Mergers will result in the Company acquiring two of Ourgame’s global esports and entertainment assets, Allied Esports International, Inc. (“Allied Esports”) and WPT Enterprises, Inc. (“WPT”). Allied Esports is a premier esports entertainment company with a global network of dedicated esports properties and content production facilities. WPT is the creator of the World Poker Tour® (WPT®) – the premier name in internationally televised gaming and entertainment with brand presence in land-based tournaments, television, online and mobile. The proposed transaction will seek to strategically combine the globally recognized Allied Esports brand with the three-pronged business model of the iconic World Poker Tour, featuring in-person experiences, multiplatform content and interactive services, to leverage the high-growth opportunities in the global esports industry. Upon consummation of the Mergers (the “Closing”), the Company will issue to the former owners of Allied Esports and WPT (i) an aggregate of 11,602,754 shares of common stock, par value $0.0001 per share, of the Company’s common stock and (ii) an aggregate of 3,800,003 warrants to purchase shares of common stock of the Company. In addition to the consideration described above, the former owners of Allied Esports and WPT will be entitled to receive their pro rata portion of an aggregate of an additional 3,846,153 shares of the Company’s common stock if the last sales price of the Company’s common stock equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for thirty (30) consecutive days at any time during the five (5) year period commencing on the date of the Closing (the “Closing Date”). Proposed Changes to the Capital Structure The Company is seeking shareholder approval to amend its charter to increase the authorized shares of the Company’s common stock to 65,000,000 shares. Conditions to Consummation of the Business Combination Consummation of the transactions contemplated by the Agreement is subject to certain closing conditions including, among others, (i) approval by the stockholders of the Company and Ourgame, and (ii) that the Company have available cash in an amount not less than $80,000,000 after payment to stockholders who elect to redeem their shares of common stock in accordance with the provisions of the Company’s Charter Documents. Termination The Agreement may be terminated at any time prior to the consummation of the Agreement (whether before or after the Company’s shareholder vote has been obtained) by mutual written consent of the Company and Ourgame, Noble and the Acquired Company and in certain other limited circumstances, including if the Proposed Business Combination has not been consummated by July, 10, 2019. |
8. Convertible Debt and Convert
8. Convertible Debt and Convertible Debt, Related Party (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Debt and Convertible Debt, Related Party | Note 8 – Convertible Debt and Convertible Debt, Related Party On May 15, 2019, Noble Link issued a series of secured convertible promissory notes (the “Noble Link Notes”) whereby investors provided Noble Link with $4 million to be used for the operations of Allied Esports and WPT, of which one Noble Link Note in the amount of $1 million was issued to the wife of a related party who formerly served as co-CEO of the Former Parent and a Director of Noble Link. Pursuant to the original terms of the Noble Link Notes, the Noble Link Notes accrued annual interest at 12%; provided that no interest would payable in the event the Noble Link Notes were converted into AESE common stock, as described below. The Noble Link Notes were due and payable on the first to occur of (i) the one-year anniversary of the issuance date, or (ii) the date on which a demand for payment was made during the time period beginning on the Closing Date and ending on the date that was three (3) months after the Closing Date. As security for purchasing the Noble Link Notes, the investors received a security interest in Allied Esports’ assets (second to any liens held by the landlord of the Las Vegas arena for property located in that arena), as well as a pledge of the equity of all of the entities comprising WPT, and a guarantee of the Former Parent and BRAC. Upon the closing of the Merger, the Noble Link Notes were convertible, at the option of the holder, into shares of AESE common stock at $8.50 per share. On August 5, 2019, the Noble Link Notes were amended pursuant to an Amendment and Acknowledgement Agreement as described below. Pursuant to the Merger Agreement, on the Closing Date, in addition to the $4 million of Noble Link Notes, AESE assumed $10,000,000 of the convertible debt obligations of the Former Parent (the “Former Parent Notes”; see Note 4 - Reverse Merger and Recapitalization), such that the aggregate indebtedness of the Company pursuant to the Noble Link Notes and Bridge Notes (collectively, the “Notes”) is $14 million. The Notes bear interest at 12% per annum. Pursuant to the Amendment and Acknowledgement agreement discussed below, the Former Parent Notes are secured by all property and assets owned by AESE and its subsidiaries. Pursuant to an Amendment and Acknowledgement Agreement dated August 5, 2019 (the “Amendment and Acknowledgement Agreement”), the Notes were amended such that the Notes mature one year and two weeks after the closing of the Merger (the “Maturity Date”). The Notes are convertible into shares of AESE common stock at any time between the Closing Date and the Maturity Date at a conversion price of $8.50 per share. Further, the minimum interest to be paid under each Note shall be the greater of (a) 18 months of accrued interest at 12% per annum; or (b) the sum of the actual interest accrued plus 6 months of additional interest at 12% per annum. The Company recorded interest expense of $411,433 and $469,296, respectively, related to the Notes during the three and nine months ended September 30, 2019. Pursuant to the note purchase agreements entered into by the purchase of the Notes (the “Noteholders” and such agreements, the “Note Purchase Agreements”), upon the consummation of the Merger, each Noteholder received a five-year warrant to purchase their proportionate share of 532,000 shares of AESE common stock. In addition, pursuant to the Note Purchase Agreements, Noteholders are each entitled to their proportionate share of 3,846,153 shares of AESE common stock if such Noteholder’s Note is converted into AESE common stock and, at any time within five years after the date of the closing of the Mergers, the last exchange-reported sale price of AESE common stock is at or above $13.00 for thirty (30) consecutive calendar days (the “Contingent Consideration”). The relative fair value of the warrants and the Contingent Consideration of $114,804 and $152,590, respectively, was recorded as debt discount and additional paid in capital. The Company recorded amortization of debt discount of $36,414 during the three and nine months ended September 30, 2019, which is included in interest expense on the accompanying condensed consolidated statements of operations. Unamortized debt discount is $230,980 at September 30, 2019. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8 – Income Taxes We account for income taxes under the provisions of ASC Topic 740, Income Taxes, which provides for an asset and liability approach for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted laws, attributable to temporary differences between the carrying value amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The Company’s net deferred tax assets are as follows: As of December 31, 2018 2017 Deferred tax assets: Unrealized loss on marketable securities held in Trust Account $ – $ 18,678 Total deferred tax assets – 18,678 Deferred tax liabilities: Unrealized gain on marketable securities held in Trust Account (438 ) $ – Deferred tax assets (liabilities), net (438 ) 18,678 Valuation allowance – – Deferred tax assets (liabilities), net of allowance $ (438 ) $ 18,678 The income tax provision (benefit) consists of the following: Year Ended December 31, For the Period From May 9, 2017 (Inception) to December 31, Federal Current $ 366,374 $ 63,395 Deferred 13,969 (13,647 ) State and Local Current 190,383 22,327 Deferred 5,147 (5,031 ) Income tax provision $ 575,873 $ 67,044 A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: Year Ended December 31, For the Period From May 9, 2017 (Inception) to December 31, Statutory federal income tax rate 21.0% 30.8% State and local taxes, net of federal benefit 7.7% 6.8% Permanent differences 4.8% 0.2% Effect of federal rate change on deferred taxes 0.0% 3.6% Income tax provision 33.5% 41.4% |
9. Segment Data (September 30,
9. Segment Data (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Data | Note 9 – Segment Data Each of the Company’s business segments offer different, but synergistic products and services, and are managed separately, by different chief operating decision makers. The Company’s business consists of three reportable segments: · Poker, gaming and entertainment, provided through WPT, including televised gaming and entertainment, land-based poker tournaments, online and mobile poker applications. · E-sports, provided through Allied Esports, including multiplayer video game competitions. · Corporate The following tables present segment information for each of the three and nine months ended September 30, 2019 and 2018: For the three months ended September 30, 2019 For the nine months ended September 30, 2019 Gaming & E-sports Corporate (1) TOTAL Gaming & E-sports Corporate (1) TOTAL Revenues $ 4,137,091 $ 1,904,450 $ – $ 6,041,541 $ 14,022,841 $ 5,592,094 $ – $ 19,614,935 Loss from Operations $ 172,502 $ 2,984,047 $ 661,054 $ 3,817,603 $ 1,069,712 $ 8,685,384 $ 661,054 $ 10,416,151 For the three months ended September 30, 2018 For the nine months ended September 30, 2018 Gaming & E-sports Corporate (1) TOTAL Gaming & E-sports Corporate (1) TOTAL Revenues $ 4,426,935 $ 1,053,306 $ – $ 5,480,241 $ 12,347,616 $ 2,851,680 $ – $ 15,199,296 Loss from Operations $ 232,220 $ 6,184,578 $ – $ 6,416,798 $ 1,926,092 $ 20,673,388 $ – $ 22,599,480 As of September 30, 2019 As of December 31, 2018 Gaming & E-sports Corporate (2) TOTAL Gaming & E-sports Corporate (2) TOTAL Total Assets $ 37,398,491 $ 22,347,135 $ 14,729,098 $ 74,474,724 $ 37,315,493 $ 27,931,444 $ – $ 65,246,937 __________________________ 1) Unallocated corporate operating losses result from general corporate overhead expenses not directly attributable to any one of the business segments. These expenses are reported separate from the Company’s identified segments and are included in General and Administrative expenses on the accompanying condensed consolidated statements of operations. 2) Unallocated corporate assets not directly attributable to any one of the business segments. |
9. Subsequent Events
9. Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Note 13 – Subsequent Events On October 22, 2019, restricted cash in the amount of $1,300,000 was released from escrow in order to fund expenses incurred in connection with the Simon Cup (see Note 11 – Commitments and Contingencies). | Note 9 – Subsequent Events The Company evaluates events that have occurred after the balance sheet date through the date hereof, which these financial statements were issued. No events occurred of a material nature that would have required adjustments to or disclosure in these financial statements except as follows: On February 20, 2019, the Company issued a $100,000 convertible promissory note to the Sponsor. After issuing the promissory note, the total amount of convertible promissory notes issued to the Sponsor is $450,000. The loan is unsecured, non-interest bearing and is payable at the consummation of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the Sponsor’s option, to units at a price of $10.00 per unit. The terms of the units will be identical to the units issued by the Company in its initial public offering, except the warrants included in such units will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the Sponsor or its permitted transferees. If BROG converts the entire principal balance of the convertible promissory note, it would receive 10,000 units. If a Business Combination is not consummated, the note will not be repaid by the Company and all amounts owed thereunder by the Company will be forgiven except to the extent that the Company has funds available to it outside of its trust account established in connection with the initial public offering. The issuance of the note to the Sponsor was exempt pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. |
14. Correction of Prior Period
14. Correction of Prior Period Net Loss Attributable to Non-Controlling Interest (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Correction of Prior Period Net Loss Attributable to Non-Controlling Interest | Note 14 - Correction of Prior Period Net Loss Attributable to Non-Controlling Interest Subsequent to the issuance of the Company’s Current Report on Form 8-K on August 15, 2019 (the “Report”), the Company determined that there was an error in the allocation of net loss attributable to controlling and non-controlling interests on the Condensed Combined Statements of Operations and Comprehensive Loss for the six months ended June 30, 2018, such that the net income attributable to non-controlling interests was overstated (and net loss attributable to the Parent was understated) by approximately $2.5 million. There was no effect of this error on the Condensed Combined Balance Sheet, on the Condensed Combined Statements of Changes in Parent’s Net Investment, or on the Condensed Combined Statements of Cash Flows contained in the Report. The Company evaluated the effect of this error and determined that the error was not qualitatively significant for the period presented. The following tables summarize the impact of this error on the Condensed Combined Statements or Operations and Comprehensive Loss for the six months ended June 30, 2018: For the Six Months Ended June 30, 2018 As Previously Reported Adjustment As Restated Net Loss $ (17,612,354 ) $ – $ (17,612,354 ) Net loss attributed to non-controlling interest 2,803,922 (2,476,820 ) 327,102 Net Loss Attributable to Parent $ (14,808,432 ) $ (2,476,820 ) $ (17,285,252 ) Comprehensive Loss: Net loss $ (17,612,354 ) $ – $ (17,612,354 ) Other comprehensive loss: Foreign currency translation gain (loss) (183,027 ) – (183,027 ) Total Comprehensive Loss (17,795,381 ) – (17,795,381 ) Less: comprehensive loss attributable to non-controlling interest 2,803,922 (2,476,820 ) 327,102 Comprehensive loss attributable to Parent $ (14,991,459 ) $ (2,476,820 ) $ (17,468,279 ) |
2. Basis of Presentation and _2
2. Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Consolidation Policy | Consolidation Policy The accompanying consolidated financial statements include the accounts of the following legal entities: Name of entity State of Incorporation Relationship Black Ridge Acquisition Corp. Delaware Parent Black Ridge Merger Sub Corp. Delaware Subsidiary (1) (1) Wholly owned subsidiary formed on December 19, 2018 to facilitate a Business Combination. The parent company, Black Ridge Acquisition Corp., and Black Ridge Merger Sub Corp. will collectively be referred to herein as “the Company” or “Black Ridge”. All significant intercompany transactions have been eliminated in the preparation of these financial statements. | |
Basis of Presentation | Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual combined financial statements. For additional information, these condensed consolidated financial statements should be read in conjunction with the audited combined financial statements of Allied Esports and WPT for the years ended December 31, 2018 and 2017, included in the Report on Form 8-K filed with the SEC on August 15, 2019. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of September 30, 2019 and for the nine months ended September 30, 2019 and 2018. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the operating results for the full year ending December 31, 2019 or any other period. These unaudited condensed consolidated financial statements have been derived from the accounting records of AESE, WPT and Allied Esports and should be read in conjunction with the accompanying notes thereto. | Basis of presentation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. |
Going concern | Going concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2018, the Company had working capital of $78,000 (excluding income taxes and franchise fees which may be paid out of the Trust Account and the note payable to our sponsor). Further, the Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. The Company’s plans to consummate an initial Business Combination may not be successful. Based on the foregoing, the Company may not have sufficient funds available to operate its business for at least one year from the date the financial statements are issued or until it closes an initial business combination and may need to obtain additional financing form its sponsor or other sources in order to meet its obligations. The Company cannot be certain that additional funding will be available on acceptable terms, or at all. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | |
Emerging growth company | 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 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 shareholder 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 Securities Act registration statement 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 election to opt out is irrevocable. The Company has 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, 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 accountant standards used. | |
Cash and cash equivalents | Cash and cash equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2018 and 2017. | |
Cash and securities held in Trust Account | Cash and securities held in Trust Account As of December 31, 2018 and 2017, $2,312 and $39,742, respectively, of cash and $141,304,995 and $138,940,611, respectively, of marketable securities were held in the Trust Account. | |
Common Stock subject to possible redemption | Common Stock subject to possible redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. | |
Offering costs | Offering costs Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Offering costs totaling to $3,242,226 were charged to stockholders’ equity upon the completion of the Initial Public Offering and subsequent sale of Units in connection with the underwriters’ exercise of their over-allotment option. | |
Income taxes | Income taxes The Company accounts for income taxes under ASC Topic 740 “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2018. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company may be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. The Company’s policy for recording interest and penalties associated with income tax audits is to record such expense as a component of interest tax expense. There were no amounts accrued for penalties or interest as of December 31, 2018 or 2017. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. On December 22, 2017 the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was signed into law. As a result of Tax Reform, the U.S. statutory rate was lowered from 35% to 21% effective January 1, 2018, among other changes. ASC Topic 740 requires companies to recognize the effect of tax law changes in the period of enactment; therefore, the Company was required to value its deferred tax assets and liabilities at December 31, 2017 at the new rate. The impact on the financial statements was not material. | |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. As of December 31, 2018, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. | |
Use of estimates | Use of estimates The preparation of the balance sheet 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 as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Fair value of financial instruments | Fair value of financial instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures”, approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. | |
Net income (loss) per share | Net Loss per Common Share Basic loss per common share is computed by dividing net loss attributable to AESE common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: Three and Nine Months Ended 2019 2018 Options 400,000 – Warrants 18,637,003 3,800,000 Convertible Debt 1,647,058 – Equity Purchase Options 600,000 600,000 21,284,061 4,400,000 | Net income (loss) per share Net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. An aggregate of 13,283,086 and 13,348,443 shares of common stock subject to possible redemption as of December 31, 2018 and 2017, respectively, have been excluded from the calculation of basic income (loss) per share since such shares, if redeemed, only participate in their pro rata share of the trust earnings. The Company's net income (loss) is also shown adjusted for the portion of income attributable to shares subject to redemption, as these shares only participate in the income of the trust account and not the operating losses of the Company. Accordingly, basic and diluted net income (loss) per share attributable to shares not subject to redemption is as follows: Year Ended Period from May 9, 2017 (Inception) through Net income $ 1,141,199 $ 93,150 Less income attributable to shares subject to redemption (1,798,890 ) (174,168 ) Adjusted net loss (657,691 ) (81,018 ) Weighted average shares outstanding, basic and diluted 4,361,619 3,452,106 Basic and diluted net loss per common share attributable to remaining shares $ (0.15 ) $ (0.02 ) The Company has not considered the effect of 1) warrants to purchase 14,845,000 shares of common stock, 2) rights that convert to 1,484,500 shares and 3) 600,000 shares included in the underwriters’ unit option sold in Public Offering, Private Placement or underlying the unit option sold to the underwriter in the calculation of diluted loss per share, since the exercise of the warrants, receipt of rights and ability exercise the unit option underlying the shares is contingent on the occurrence of future events. Additionally, the Company has not considered the effect of any conversion into units of the convertible note payable as that conversion is also contingent on future events. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842).” ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This amendment will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” in July 2018, and ASU No. 2018-20 “Leases (Topic 842) - Narrow Scope Improvements for Lessors” in December 2018. ASU 2018-10 and ASU 2018-20 provide certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively Topic 326). Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This replaces the existing incurred loss model with an expected loss model and requires the use of forward-looking information to calculate credit loss estimates. The Company will be required to adopt the provisions of this ASU on January 1, 2020, with early adoption permitted for certain amendments. Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings. The Company is currently evaluating Topic 326, including its potential impact to its process and controls. In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard for private companies and emerging growth public companies is effective for fiscal years beginning after December 15, 2018. The Company will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The adoption of ASU 2016-15 is not expected to have a material impact on the Company’s condensed consolidated financial statements or disclosures. In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). These amendments provide clarifications and corrections to certain ASC subtopics including the following: Income Statement - Reporting Comprehensive Income – Overall (Topic 220-10), Debt - Modifications and Extinguishments (Topic 470-50), Distinguishing Liabilities from Equity – Overall (Topic 480-10), Compensation - Stock Compensation - Income Taxes (Topic 718-740), Business Combinations - Income Taxes (Topic 805-740), Derivatives and Hedging – Overall (Topic 815-10), and Fair Value Measurement – Overall (Topic 820-10). The majority of the amendments in ASU 2018-09 will be effective in annual periods beginning after December 15, 2019. The Company is currently evaluating and assessing the impact this guidance will have on its consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”). The amendments in ASU 2018-10 provide additional clarification and implementation guidance on certain aspects of the previously issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) and have the same effective and transition requirements as ASU 2016-02. Upon the effective date, ASU 2018-10 will supersede the current lease guidance in ASC Topic 840, Leases. Under the new guidance, lessees will be required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Concurrently, lessees will be required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2018-10 is effective for private companies and emerging growth public companies for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The guidance is required to be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements. The Company is currently assessing the impact this guidance will have on its combined financial statements. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements,” (“ASU 2018-11”). The amendments in ASU 2018-11 related to transition relief on comparative reporting at adoption affect all entities with lease contracts that choose the additional transition method and separating components of a contract affect only lessors whose lease contracts qualify for the practical expedient. The amendments in ASU 2018-11 are effective for private companies and emerging growth public companies for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently assessing the impact this guidance will have on its combined financial statements. In March 2019, the FASB issued ASU 2019-02, which aligns the accounting for production costs of episodic television series with the accounting for production costs of films. In addition, ASU 2019-02 modifies certain aspects of the capitalization, impairment, presentation and disclosure requirements in Accounting Standards Codification (“ASC”) 926-20 and the impairment, presentation and disclosure requirements in ASC 920-350. This ASU must be adopted on a prospective basis and is effective for annual periods beginning after December 15, 2020, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact that this pronouncement will have on its consolidated financial statements. | Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. |
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible assets are comprised of goodwill, intellectual property, customer relationships, trademarks, and trade names. Intangible assets with definite lives are amortized on a straight-line basis over the shorter of their estimate useful lives, ranging from two to ten years, or their contract periods, if applicable. Intangible assets with indefinite lives are not amortized but are evaluated at least annually for impairment and more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable. | |
Revenue Recognition | Revenue Recognition On January 1, 2019, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required. The Company recognizes revenue primarily from the following sources: In-person revenue The Company’s in-person revenue is comprised of event revenue, merchandising revenue and other revenue. Event revenue is generated through World Poker Tour events – TV, non-TV, and DeepStacks Entertainment, LLC and DeepStacks Poker Tour, LLC (collectively “DeepStacks”) events – held at the Company’s partner casinos as well as Allied Esports events held at the Company’s esports properties. Event revenue is generated from the use of the WPT brand by partner casinos, from naming rights for the HyperX Esports Arena Las Vegas and from sponsorship arrangements for Allied Esports events held at the Las Vegas arena. In-person revenue also includes revenue from ticket sales, admission fees and food and beverage sales for events held at the Company’s esports properties. The Company recognizes event revenue related to the use of the WPT brand by partner casinos at the time of the WPT-branded event. Event revenues from naming rights of the Company’s esports arena are recognized on a straight-line basis over the contractual term of the naming rights agreement. Event revenues from sponsorship arrangements for Allied Esports events are recognized on a straight-line basis over the duration of the event, usually three to four days. Ticket revenue is recognized at the completion of the applicable event. Point of sale revenues, such as food and beverage, gaming and merchandising revenues, are recognized when control of the related goods are transferred to the customer. The Company records deferred revenue to the extent that payment has been received for services that have yet to be performed. In-person revenue was comprised of the following for the three and nine months ended September 30, 2019 and 2018: In-person revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Event revenue $ 2,064,618 $ 1,551,861 $ 7,322,466 $ 4,603,071 Food and beverage revenue 289,261 292,306 972,352 619,647 Ticket and gaming revenue 182,136 290,518 447,156 695,227 Merchandising revenue 50,950 67,758 145,273 149,399 Other revenue – – 119 737 Total in-person revenue $ 2,586,965 $ 2,202,443 $ 8,887,366 $ 6,068,081 To determine the proper revenue recognition method, the Company evaluates each of its contractual arrangements to identify its performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The majority of the Company’s contracts have a single performance obligation because the promise to transfer the individual good or service is not separately identifiable from other promises within the contract and is therefore not distinct. Some of the Company’s contracts have multiple performance obligations, primarily related to the provision of multiple goods or services. For contracts with more than one performance obligation, the Company allocates the total transaction price in an amount based on the estimated relative standalone selling prices underlying each performance obligation. Multiplatform content revenue The Company’s multiplatform content revenue is comprised of distribution revenue, sponsorship revenue, music royalty revenue and online advertising revenue. Distribution revenue is generated primarily through the distribution of content from World Poker Tour’s library. World Poker Tour provides video content to global television networks, who then have the right to air the content over the related license period. Revenue from the distribution of video content to television networks is received pursuant to the contract payment terms and is recognized over the license period on a pro rata basis. Occasionally, WPT will bundle third-party content with its own content in a distribution arrangement and will share the revenue with the third party. However, the revenues related to third party content are de minimis. The Company also distributes video content to online channels. Both the global television networks and the online channels place ads within the WPT content and any advertising revenue earned by the global TV network or online channel is shared with WPT. Advertising revenue is received on a lag, based upon the number of times an advertisement is aired during the previous month, and is recognized during the period that the ad aired on the network or online channel. Sponsorship revenue is generated through the sponsorship of the Company’s TV content, online events and online streams. Online advertising revenue is generated from third-party advertisements placed on the Company’s website. Music royalty revenue is generated when the Company’s music is played in the Company’s TV series both on TV networks and online. The Company recognizes distribution revenue and sponsorship revenue pursuant to the terms of each individual contract with the customer and records deferred revenue to the extent the Company has received a payment for services that have yet to be performed or products that have yet to be delivered. Music royalty revenue is recognized at the point in time when the music is played. Multiplatform content revenue was comprised of the following for the three and nine months ended September 30, 2019 and 2018: Multiplatform content revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Distribution revenue $ 282,508 280,708 $ 1,069,328 $ 516,874 Sponsorship revenue 544,541 320,624 1,252,131 776,327 Music royalty revenue 200,787 339,547 1,214,286 808,537 Online advertising revenue 3,547 8,466 4,628 19,907 Total multiplatform content revenue $ 1,031,383 $ 949,345 $ 3,540,373 $ 2,121,645 Interactive revenue The Company’s interactive revenue is primarily comprised of subscription revenue, licensing, social gaming and virtual product revenue. Subscription revenue is generated through fixed rate (monthly, quarterly, annual) subscriptions which offer the opportunity for subscribers to play unlimited poker and access benefits not available to non-subscribers. The Company recognizes subscription revenue on a straight-line basis and records deferred revenue to the extent the Company receives payments for services that have yet to be provided. The Company recognizes social gaming revenue and virtual product revenue at the point when the product has been delivered. The Company generates licensing revenue by licensing the right to use the Company’s brand on products to third parties. Licensing revenue is recognized pursuant to the terms of each individual contract with the customer and deferred revenue is recorded to the extent the Company has received a payment for products that have yet to be delivered. Interactive revenue was comprised of the following for the three and nine months ended September 30, 2019 and 2018: Interactive revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Subscription revenue $ 1,313,217 $ 1,272,077 $ 3,745,622 $ 3,751,379 Virtual product revenue 925,411 1,056,376 2,773,769 2,473,043 Social gaming revenue 152,317 – 397,065 661,863 Licensing revenue 16,872 – 198,481 50,398 Other revenue 15,376 – 72,259 72,887 Total interactive revenue $ 2,423,193 $ 2,328,453 $ 7,187,196 $ 7,009,570 The following table summarizes our revenue recognized under ASC 606 in our condensed consolidated statements of operations: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenues Recognized at a Point in Time: Event revenue $ 2,064,618 $ 1,551,861 $ 7,322,466 $ 4,603,071 Food and beverage revenue 289,261 292,306 972,352 619,647 Ticket and gaming revenue 182,136 290,518 447,156 695,227 Merchandising revenue 50,950 67,758 145,273 149,399 Sponsorship revenue 544,541 320,624 1,252,131 776,327 Music royalty revenue 200,787 339,547 1,214,286 808,537 Online advertising revenue 3,547 8,466 4,628 19,907 Virtual product revenue 925,411 1,056,376 2,773,769 2,473,043 Social gaming revenue 152,317 – 397,065 661,863 Distribution revenue 282,508 280,708 1,069,328 516,874 Other revenue 15,376 – 72,378 73,624 Total Revenues Recognized at a Point in Time 4,711,452 4,208,164 15,670,832 11,397,519 Revenues Recognized Over a Period of Time: Licensing revenue 16,872 – 198,481 50,398 Subscription revenue 1,313,217 1,272,077 3,745,622 3,751,379 Total Revenues Recognized Over a Period of Time 1,330,089 1,272,077 3,944,103 3,801,777 Total Revenues $ 6,041,541 $ 5,480,241 $ 19,614,935 $ 15,199,296 The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. As of September 30, 2019, there remained $38,245 of contract liabilities which were included within deferred revenue on the combined balance sheet as of December 31, 2018, and for which performance obligations had not yet been satisfied as of September 30, 2019. The Company expects to satisfy its remaining performance obligations within the next twelve months. During the three and nine months ended September 30, 2019, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. | |
Reclassification | Reclassification Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share. |
2. Basis of Presentation and _3
2. Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Schedule of antidiluted shares | Three and Nine Months Ended 2019 2018 Options 400,000 – Warrants 18,637,003 3,800,000 Convertible Debt 1,647,058 – Equity Purchase Options 600,000 600,000 21,284,061 4,400,000 | |
Schedule of legal entities | Name of entity State of Incorporation Relationship Black Ridge Acquisition Corp. Delaware Parent Black Ridge Merger Sub Corp. Delaware Subsidiary (1) (1) Wholly owned subsidiary formed on December 19, 2018 to facilitate a Business Combination. | |
Schedule of net income (loss) per share | Year Ended Period from May 9, 2017 (Inception) through Net income $ 1,141,199 $ 93,150 Less income attributable to shares subject to redemption (1,798,890 ) (174,168 ) Adjusted net loss (657,691 ) (81,018 ) Weighted average shares outstanding, basic and diluted 4,361,619 3,452,106 Basic and diluted net loss per common share attributable to remaining shares $ (0.15 ) $ (0.02 ) | |
Adjustment under 606 [Member] | ||
Revenue Recognition | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenues Recognized at a Point in Time: Event revenue $ 2,064,618 $ 1,551,861 $ 7,322,466 $ 4,603,071 Food and beverage revenue 289,261 292,306 972,352 619,647 Ticket and gaming revenue 182,136 290,518 447,156 695,227 Merchandising revenue 50,950 67,758 145,273 149,399 Sponsorship revenue 544,541 320,624 1,252,131 776,327 Music royalty revenue 200,787 339,547 1,214,286 808,537 Online advertising revenue 3,547 8,466 4,628 19,907 Virtual product revenue 925,411 1,056,376 2,773,769 2,473,043 Social gaming revenue 152,317 – 397,065 661,863 Distribution revenue 282,508 280,708 1,069,328 516,874 Other revenue 15,376 – 72,378 73,624 Total Revenues Recognized at a Point in Time 4,711,452 4,208,164 15,670,832 11,397,519 Revenues Recognized Over a Period of Time: Licensing revenue 16,872 – 198,481 50,398 Subscription revenue 1,313,217 1,272,077 3,745,622 3,751,379 Total Revenues Recognized Over a Period of Time 1,330,089 1,272,077 3,944,103 3,801,777 Total Revenues $ 6,041,541 $ 5,480,241 $ 19,614,935 $ 15,199,296 | |
In-person [Member] | ||
Revenue Recognition | In-person revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Event revenue $ 2,064,618 $ 1,551,861 $ 7,322,466 $ 4,603,071 Food and beverage revenue 289,261 292,306 972,352 619,647 Ticket and gaming revenue 182,136 290,518 447,156 695,227 Merchandising revenue 50,950 67,758 145,273 149,399 Other revenue – – 119 737 Total in-person revenue $ 2,586,965 $ 2,202,443 $ 8,887,366 $ 6,068,081 | |
Multiplatform Content [Member] | ||
Revenue Recognition | Multiplatform content revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Distribution revenue $ 282,508 280,708 $ 1,069,328 $ 516,874 Sponsorship revenue 544,541 320,624 1,252,131 776,327 Music royalty revenue 200,787 339,547 1,214,286 808,537 Online advertising revenue 3,547 8,466 4,628 19,907 Total multiplatform content revenue $ 1,031,383 $ 949,345 $ 3,540,373 $ 2,121,645 | |
Interactive Product [Member] | ||
Revenue Recognition | Interactive revenue For the Three Months Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Subscription revenue $ 1,313,217 $ 1,272,077 $ 3,745,622 $ 3,751,379 Virtual product revenue 925,411 1,056,376 2,773,769 2,473,043 Social gaming revenue 152,317 – 397,065 661,863 Licensing revenue 16,872 – 198,481 50,398 Other revenue 15,376 – 72,259 72,887 Total interactive revenue $ 2,423,193 $ 2,328,453 $ 7,187,196 $ 7,009,570 |
5. Investments (Tables) (Septem
5. Investments (Tables) (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
Schedule of Investments | September 30, December 31, (unaudited) Investment in ESA $ 1,138,631 $ 500,000 TV Azteca Investment 3,500,000 – $ 4,638,631 $ 500,000 |
6. Deferred Production Costs (T
6. Deferred Production Costs (Tables) (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Production Costs | |
Schedule of Deferred Production Costs | September 30, December 31, 2019 2018 Deferred production costs $ 27,975,552 23,604,111 Less: accumulated amortization (16,770,709 ) (14,545,267 ) Deferred production costs, net $ 11,204,843 $ 9,058,844 Weighted average remaining amortization period at September 30, 2019 (in years) 3.80 |
7. Accrued Expenses and Other_2
7. Accrued Expenses and Other Current Liabilities (Tables) (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued expenses and other current liabilities | September 30, December 31, 2019 2018 Compensation expense $ 1,087,557 $ 1,218,455 Taxes 205,121 981 Rent 53,561 58,781 Revenue sharing obligations 380,677 122,928 Event costs 107,753 61,740 Production costs 143,707 15,329 Unclaimed player prizes 420,993 380,120 Other accrued expenses 1,025,223 395,441 Other current liabilities 50,310 188,370 $ 3,474,902 $ 2,442,145 |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets | As of December 31, 2018 2017 Deferred tax assets: Unrealized loss on marketable securities held in Trust Account $ – $ 18,678 Total deferred tax assets – 18,678 Deferred tax liabilities: Unrealized gain on marketable securities held in Trust Account (438 ) $ – Deferred tax assets (liabilities), net (438 ) 18,678 Valuation allowance – – Deferred tax assets (liabilities), net of allowance $ (438 ) $ 18,678 |
Schedule of income tax provision (benefit) | Year Ended December 31, 2018 For the Period From May 9, 2017 (Inception) to December 31, 2017 Federal Current $ 366,374 $ 63,395 Deferred 13,969 (13,647 ) State and Local Current 190,383 22,327 Deferred 5,147 (5,031 ) Income tax provision $ 575,873 $ 67,044 |
Reconciliation of income tax | Year Ended December 31, 2018 For the Period From May 9, 2017 (Inception) to December 31, 2017 Statutory federal income tax rate 21.0% 30.8% State and local taxes, net of federal benefit 7.7% 6.8% Permanent differences 4.8% 0.2% Effect of federal rate change on deferred taxes 0.0% 3.6% Income tax provision 33.5% 41.4% |
9. Segment Data (Tables) (Septe
9. Segment Data (Tables) (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment information | For the three months ended September 30, 2019 For the nine months ended September 30, 2019 Gaming & E-sports Corporate (1) TOTAL Gaming & E-sports Corporate (1) TOTAL Revenues $ 4,137,091 $ 1,904,450 $ – $ 6,041,541 $ 14,022,841 $ 5,592,094 $ – $ 19,614,935 Loss from Operations $ 172,502 $ 2,984,047 $ 661,054 $ 3,817,603 $ 1,069,712 $ 8,685,384 $ 661,054 $ 10,416,151 For the three months ended September 30, 2018 For the nine months ended September 30, 2018 Gaming & E-sports Corporate (1) TOTAL Gaming & E-sports Corporate (1) TOTAL Revenues $ 4,426,935 $ 1,053,306 $ – $ 5,480,241 $ 12,347,616 $ 2,851,680 $ – $ 15,199,296 Loss from Operations $ 232,220 $ 6,184,578 $ – $ 6,416,798 $ 1,926,092 $ 20,673,388 $ – $ 22,599,480 As of September 30, 2019 As of December 31, 2018 Gaming & E-sports Corporate (2) TOTAL Gaming & E-sports Corporate (2) TOTAL Total Assets $ 37,398,491 $ 22,347,135 $ 14,729,098 $ 74,474,724 $ 37,315,493 $ 27,931,444 $ – $ 65,246,937 __________________________ 1) Unallocated corporate operating losses result from general corporate overhead expenses not directly attributable to any one of the business segments. These expenses are reported separate from the Company’s identified segments and are included in General and Administrative expenses on the accompanying condensed consolidated statements of operations. 2) Unallocated corporate assets not directly attributable to any one of the business segments. |
12. Stockholders' Equity (Table
12. Stockholders' Equity (Tables) (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholder's equity: | |
Stock option assumptions | Risk free interest rate 1.74% Expected term (years) 6.25 years Expected volatility 36% Expected dividends 0.0 |
Option activity | Weighted Weighted Average Average Number of Exercise Remaining Intrinsic Options Price Term (Yrs) Value Outstanding, January 1, 2019 – – Granted 400,000 $ 5.66 Exercised – – Expired – – Forfeited – – Outstanding, September 30, 2019 400,000 $ 5.66 9.97 $ – Exercisable, September 30, 2019 – $ – – $ – |
Warrant activity | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life in Years Intrinsic Value Outstanding, December 31, 2018 3,800,003 $ 11.50 Issued 14,837,000 $ 11.50 Exercised – – Cancelled – – Outstanding, September 30, 2019 18,637,003 $ 11.50 4.9 $ – Exercisable, September 30, 2019 18,637,003 $ 11.50 4.9 $ – |
Equity Purchase option activity | Number of Weighted Weighted Equity Average Average Purchase Exercise Remaining Intrinsic Options Price Term (Yrs) Value Outstanding, January 1, 2019 – – Granted 600,000 $ 11.50 Exercised – – Expired – – Forfeited – – Outstanding, September 30, 2019 600,000 $ 11.50 3.0 $ – Exercisable, September 30, 2019 600,000 $ 11.50 3.0 $ – |
14. Correction of Prior Perio_2
14. Correction of Prior Period Net Loss Attributable to Non-Controlling Interest (Tables) (September 30, 2019) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting changes impact of error | For the Six Months Ended June 30, 2018 As Previously Reported Adjustment As Restated Net Loss $ (17,612,354 ) $ – $ (17,612,354 ) Net loss attributed to non-controlling interest 2,803,922 (2,476,820 ) 327,102 Net Loss Attributable to Parent $ (14,808,432 ) $ (2,476,820 ) $ (17,285,252 ) Comprehensive Loss: Net loss $ (17,612,354 ) $ – $ (17,612,354 ) Other comprehensive loss: Foreign currency translation gain (loss) (183,027 ) – (183,027 ) Total Comprehensive Loss (17,795,381 ) – (17,795,381 ) Less: comprehensive loss attributable to non-controlling interest 2,803,922 (2,476,820 ) 327,102 Comprehensive loss attributable to Parent $ (14,991,459 ) $ (2,476,820 ) $ (17,468,279 ) |
1. Organization and Plan Busine
1. Organization and Plan Business Operations (Details Narrative) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 10 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Oct. 10, 2017 | Oct. 18, 2017 | Dec. 31, 2018 | |
IPO initial costs | $ 3,242,226 | |||||||
Principal deposited in trust account | (138,690,000) | $ 0 | $ 0 | $ 0 | ||||
Cash | $ 9,355,496 | $ 10,060,088 | 9,355,496 | 10,060,088 | ||||
Working capital | (4,700,000) | (4,700,000) | 78,000 | |||||
Net loss | $ 0 | $ 0 | 160,194 | 0 | 0 | 1,717,072 | ||
Cash used in operations | $ (114,921) | $ (7,750,900) | $ (11,232,448) | $ (858,122) | ||||
Initial Public Offering [Member] | ||||||||
Units sold | 12,000,000 | |||||||
Proceeds from units sold | $ 120,000,000 | |||||||
Underwriting fees | 2,400,000 | |||||||
IPO initial costs | 482,226 | |||||||
Principal deposited in trust account | $ 120,600,000 | |||||||
Initial Public Offering [Member] | Underwriters [Member] | ||||||||
Units sold | 1,800,000 | |||||||
Proceeds from units sold | $ 18,000,000 | |||||||
IPO initial costs | 360,000 | |||||||
Principal deposited in trust account | $ 18,090,000 | |||||||
Initial Public Offering [Member] | Placement Units [Member] | ||||||||
Units sold | 400,000 | |||||||
Proceeds from units sold | $ 4,000,000 | |||||||
Initial Public Offering [Member] | Placement Units [Member] | Underwriters [Member] | ||||||||
Units sold | 45,000 | |||||||
Proceeds from units sold | $ 450,000 |
2. Basis of Presentation and _4
2. Basis of Presentation and Significant Accounting Policies (Details - Entities) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Name of entities | Allied Esports Entertainment, Inc. | |
Black Ridge Merger Sub Corp [Member] | ||
Name of entities | Black Ridge Merger Sub Corp | |
Place of incorporation | DE | |
Entity percentage owned | 100.00% |
2. Basis of Presentation and _5
2. Basis of Presentation and Significant Accounting Policies (Details - Per Share table) - USD ($) | 3 Months Ended | 6 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |||
Securities excluded from calculation of weighted average dilutive common shares | 21,284,061 | 4,400,000 | |||||||||||
Net income | $ (4,253,472) | $ (2,811,286) | $ (3,854,152) | $ (6,688,102) | $ (11,301,062) | $ (6,311,292) | $ (17,612,354) | $ 93,150 | $ (23,973,355) | $ (10,918,910) | $ 1,141,199 | ||
Less: Income attributable to shares subject to redemption | (174,168) | (1,798,890) | |||||||||||
Adjusted net loss | $ (4,253,472) | $ (6,764,627) | $ (81,018) | $ (10,918,910) | $ (24,376,982) | $ (657,691) | |||||||
Weighted average shares outstanding, basic and diluted | 18,098,797 | 11,602,754 | 3,452,106 | [1] | 13,791,896 | 11,602,754 | 4,361,619 | [1] | |||||
Basic and diluted net loss per share attributable to remaining shares | $ (0.24) | $ (0.58) | $ (0.02) | $ (0.79) | $ (2.07) | $ (0.15) | |||||||
Options [Member] | |||||||||||||
Securities excluded from calculation of weighted average dilutive common shares | 400,000 | 0 | |||||||||||
Warrants [Member] | |||||||||||||
Securities excluded from calculation of weighted average dilutive common shares | 18,637,003 | 3,800,000 | 14,845,000 | ||||||||||
Convertible Debt [Member] | |||||||||||||
Securities excluded from calculation of weighted average dilutive common shares | 1,647,058 | 0 | |||||||||||
Equity Purchase Options [Member] | |||||||||||||
Securities excluded from calculation of weighted average dilutive common shares | 600,000 | 600,000 | |||||||||||
[1] | Excludes an aggregate of up to 13,283,086 and 13,348,443 shares subject to redemption at December 31, 2018 and 2017, respectively. |
2. Basis of Presentation and _6
2. Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 8 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Working capital | $ (4,700,000) | $ 78,000 | ||
Cash equivalents | $ 427,954 | 9,355,496 | 10,471,296 | |
Liabilities | 134,053 | 24,703,399 | 41,225,641 | |
Assets held in trust | 138,980,353 | $ 0 | $ 141,307,307 | |
Offering costs | $ 3,242,226 | |||
Possible antidilutive shares | 21,284,061 | 4,400,000 | ||
Common stock shares subject to possible redemption | 13,348,443 | 0 | 13,283,086 | |
Contract liabilities | $ 38,245 | |||
Revenue recognized from performance obligations | $ 0 | |||
Warrants [Member] | ||||
Possible antidilutive shares | 18,637,003 | 3,800,000 | 14,845,000 | |
Rights [Member] | ||||
Possible antidilutive shares | 1,484,500 | |||
Marketable Securities [Member] | ||||
Assets held in trust | $ 138,940,611 | $ 141,304,995 | ||
Cash [Member] | ||||
Assets held in trust | $ 39,742 | $ 2,312 |
3. Significant Accounting Polic
3. Significant Accounting Policies (Details - In-person Revenue) (September 30, 2019) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Total revenue | $ 6,041,541 | $ 5,480,241 | $ 0 | $ 19,614,935 | $ 15,199,296 | $ 0 |
In-person [Member] | ||||||
Total revenue | 2,586,965 | 2,202,443 | 8,887,366 | 6,068,081 | ||
In-person [Member] | Event Revenue [Member] | ||||||
Total revenue | 2,064,618 | 1,551,861 | 7,322,466 | 4,603,071 | ||
In-person [Member] | Food and Beverage Revenue [Member] | ||||||
Total revenue | 289,261 | 292,306 | 972,352 | 619,647 | ||
In-person [Member] | Ticket and Gaming Revenue [Member] | ||||||
Total revenue | 182,136 | 290,518 | 447,156 | 695,227 | ||
In-person [Member] | Merchandising Revenue [Member] | ||||||
Total revenue | 50,950 | 67,758 | 145,273 | 149,399 | ||
In-person [Member] | Other Revenue [Member] | ||||||
Total revenue | $ 0 | $ 0 | $ 119 | $ 737 |
3. Significant Accounting Pol_2
3. Significant Accounting Policies (Details - Multiplatform content Revenue) (September 30, 2019) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Total revenue | $ 6,041,541 | $ 5,480,241 | $ 0 | $ 19,614,935 | $ 15,199,296 | $ 0 |
Multiplatform Content [Member] | ||||||
Total revenue | 1,031,383 | 949,345 | 3,540,373 | 2,121,645 | ||
Multiplatform Content [Member] | Distribution Revenue [Member] | ||||||
Total revenue | 282,508 | 280,708 | 1,069,328 | 516,874 | ||
Multiplatform Content [Member] | Sponsorship Revenue [Member] | ||||||
Total revenue | 544,541 | 320,624 | 1,252,131 | 776,327 | ||
Multiplatform Content [Member] | Music Royalty Revenue [Member] | ||||||
Total revenue | 200,787 | 339,547 | 1,214,286 | 808,537 | ||
Multiplatform Content [Member] | Online Advertising Revenue [Member] | ||||||
Total revenue | $ 3,547 | $ 8,466 | $ 4,628 | $ 19,907 |
3. Significant Accounting Pol_3
3. Significant Accounting Policies (Details - Interactive Revenue) (September 30, 2019) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Total revenue | $ 6,041,541 | $ 5,480,241 | $ 0 | $ 19,614,935 | $ 15,199,296 | $ 0 |
Interactive Product [Member] | ||||||
Total revenue | 2,423,193 | 2,328,453 | 7,187,196 | 7,009,570 | ||
Interactive Product [Member] | Subscription Revenue [Member] | ||||||
Total revenue | 1,313,217 | 1,272,077 | 3,745,622 | 3,751,379 | ||
Interactive Product [Member] | Virtual Product Revenue [Member] | ||||||
Total revenue | 925,411 | 1,056,376 | 2,773,769 | 2,473,043 | ||
Interactive Product [Member] | Social Gaming Revenue [Member] | ||||||
Total revenue | 152,317 | 0 | 397,065 | 661,863 | ||
Interactive Product [Member] | Licensing Revenue [Member] | ||||||
Total revenue | 16,872 | 0 | 198,481 | 50,398 | ||
Interactive Product [Member] | Other Revenue [Member] | ||||||
Total revenue | $ 15,376 | $ 0 | $ 72,259 | $ 72,887 |
3. Significant Accounting Pol_4
3. Significant Accounting Policies (Details - ASC 606 Revenue) (September 30, 2019) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Total revenue | $ 6,041,541 | $ 5,480,241 | $ 0 | $ 19,614,935 | $ 15,199,296 | $ 0 |
In-person [Member] | ||||||
Total revenue | 2,586,965 | 2,202,443 | 8,887,366 | 6,068,081 | ||
In-person [Member] | Event Revenue [Member] | ||||||
Total revenue | 2,064,618 | 1,551,861 | 7,322,466 | 4,603,071 | ||
In-person [Member] | Food and Beverage Revenue [Member] | ||||||
Total revenue | 289,261 | 292,306 | 972,352 | 619,647 | ||
In-person [Member] | Ticket and Gaming Revenue [Member] | ||||||
Total revenue | 182,136 | 290,518 | 447,156 | 695,227 | ||
In-person [Member] | Merchandising Revenue [Member] | ||||||
Total revenue | 50,950 | 67,758 | 145,273 | 149,399 | ||
In-person [Member] | Other Revenue [Member] | ||||||
Total revenue | 0 | 0 | 119 | 737 | ||
Multiplatform Content [Member] | ||||||
Total revenue | 1,031,383 | 949,345 | 3,540,373 | 2,121,645 | ||
Multiplatform Content [Member] | Sponsorship Revenue [Member] | ||||||
Total revenue | 544,541 | 320,624 | 1,252,131 | 776,327 | ||
Multiplatform Content [Member] | Music Royalty Revenue [Member] | ||||||
Total revenue | 200,787 | 339,547 | 1,214,286 | 808,537 | ||
Multiplatform Content [Member] | Online Advertising Revenue [Member] | ||||||
Total revenue | 3,547 | 8,466 | 4,628 | 19,907 | ||
Multiplatform Content [Member] | Distribution Revenue [Member] | ||||||
Total revenue | 282,508 | 280,708 | 1,069,328 | 516,874 | ||
Interactive Product [Member] | ||||||
Total revenue | 2,423,193 | 2,328,453 | 7,187,196 | 7,009,570 | ||
Interactive Product [Member] | Virtual Product Revenue [Member] | ||||||
Total revenue | 925,411 | 1,056,376 | 2,773,769 | 2,473,043 | ||
Interactive Product [Member] | Social Gaming Revenue [Member] | ||||||
Total revenue | 152,317 | 0 | 397,065 | 661,863 | ||
Interactive Product [Member] | Other Revenue [Member] | ||||||
Total revenue | 15,376 | 0 | 72,259 | 72,887 | ||
Interactive Product [Member] | Licensing Revenue [Member] | ||||||
Total revenue | 16,872 | 0 | 198,481 | 50,398 | ||
Interactive Product [Member] | Subscription Revenue [Member] | ||||||
Total revenue | 1,313,217 | 1,272,077 | 3,745,622 | 3,751,379 | ||
Point in Time [Member] | ||||||
Total revenue | 4,711,452 | 4,208,164 | 15,670,832 | 11,397,519 | ||
Point in Time [Member] | In-person [Member] | Event Revenue [Member] | ||||||
Total revenue | 2,064,618 | 1,551,861 | 7,322,466 | 4,603,071 | ||
Point in Time [Member] | In-person [Member] | Food and Beverage Revenue [Member] | ||||||
Total revenue | 289,261 | 292,306 | 972,352 | 619,647 | ||
Point in Time [Member] | In-person [Member] | Ticket and Gaming Revenue [Member] | ||||||
Total revenue | 182,136 | 290,518 | 447,156 | 695,227 | ||
Point in Time [Member] | In-person [Member] | Merchandising Revenue [Member] | ||||||
Total revenue | 50,950 | 67,758 | 145,273 | 149,399 | ||
Point in Time [Member] | Multiplatform Content [Member] | Sponsorship Revenue [Member] | ||||||
Total revenue | 544,541 | 320,624 | 1,252,131 | 776,327 | ||
Point in Time [Member] | Multiplatform Content [Member] | Music Royalty Revenue [Member] | ||||||
Total revenue | 200,787 | 339,547 | 1,214,286 | 808,537 | ||
Point in Time [Member] | Multiplatform Content [Member] | Online Advertising Revenue [Member] | ||||||
Total revenue | 3,547 | 8,466 | 4,628 | 19,907 | ||
Point in Time [Member] | Multiplatform Content [Member] | Distribution Revenue [Member] | ||||||
Total revenue | 282,508 | 280,708 | 1,069,328 | 516,874 | ||
Point in Time [Member] | Interactive Product [Member] | Virtual Product Revenue [Member] | ||||||
Total revenue | 925,411 | 1,056,376 | 2,773,769 | 2,473,043 | ||
Point in Time [Member] | Interactive Product [Member] | Social Gaming Revenue [Member] | ||||||
Total revenue | 152,317 | 0 | 397,065 | 661,863 | ||
Point in Time [Member] | Interactive Product [Member] | Other Revenue [Member] | ||||||
Total revenue | 15,376 | 0 | 72,378 | 73,624 | ||
Over a Period of Time [Member] | ||||||
Total revenue | 1,330,089 | 1,272,077 | 3,944,103 | 3,801,777 | ||
Over a Period of Time [Member] | Interactive Product [Member] | Licensing Revenue [Member] | ||||||
Total revenue | 16,872 | 0 | 198,481 | 50,398 | ||
Over a Period of Time [Member] | Interactive Product [Member] | Subscription Revenue [Member] | ||||||
Total revenue | $ 1,313,217 | $ 1,272,077 | $ 3,745,622 | $ 3,751,379 |
3. Initial Public Offering an_2
3. Initial Public Offering and Private Placement (Details Narrative) | 5 Months Ended |
Oct. 10, 2017USD ($)shares | |
Sponsor [Member] | |
Issuance of common stock to Sponsor, shares | 445,000 |
Proceeds from sale of units | $ | $ 4,450,000 |
IPO and Over-Allotment [Member] | |
Units sold | 13,800,000 |
Description of each unit offering | Each Placement Unit consists of one share of common stock, one right, and one warrant to purchase one share of the common stock. |
4. Related Party Transactions (
4. Related Party Transactions (Details Narrative) - USD ($) | May 10, 2017 | Dec. 31, 2017 | Oct. 10, 2017 | Oct. 04, 2017 | Aug. 09, 2019 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Issuance of common stock to Sponsor, value | $ 25,000 | ||||||||
Management fee expense | $ 28,710 | $ 120,000 | |||||||
Common stock owned/outstanding | 4,346,557 | 4,346,557 | 23,176,146 | 4,411,914 | |||||
Proceeds from note payable | $ 0 | $ 11,174,913 | |||||||
Amounts due to Former Parent | $ 0 | $ 33,019,510 | |||||||
Weighted average balance of advances | $ 32,788,017 | $ 20,143,485 | |||||||
Repayment to Former Parent in connection with merger | $ 32,672,622 | ||||||||
Sponsor [Member] | |||||||||
Issuance of common stock to Sponsor, shares | 445,000 | ||||||||
Sponsor [Member] | Founder Shares [Member] | |||||||||
Issuance of common stock to Sponsor, shares | 2,875,000 | ||||||||
Issuance of common stock to Sponsor, value | $ 25,000 | ||||||||
Stock dividend, shares issued | 575,000 | ||||||||
Common stock owned/outstanding | 3,450,000 |
4. Reverse Merger and Recapit_2
4. Reverse Merger and Recapitalization (Details Narrative) (September 30, 2019) - Former Parent [Member] | 12 Months Ended |
Dec. 19, 2018USD ($)shares | |
Cash paid for acquisition | $ 3,500,000 |
Debt assumed after merger | 10,000,000 |
Accrued interest assumed after merger | $ 992,887 |
Stock issued for merger | shares | 600,000 |
Stock issued for reverse capitalization | shares | 11,492,999 |
5. Investments (Details) (Septe
5. Investments (Details) (September 30, 2019) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Investments | $ 4,638,631 | $ 500,000 | $ 0 |
ESA [Member] | |||
Investments | 1,138,631 | 500,000 | |
TV Azteca [Member] | |||
Investments | $ 3,500,000 | $ 0 |
5. Investments (Details Narrati
5. Investments (Details Narrative) (September 30, 2019) - USD ($) | 8 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Payment of investment | $ 0 | $ 1,238,631 | $ 5,851,858 | $ 0 |
Impairment of investment | 0 | 600,000 | 0 | 0 |
Payment of investment | $ 0 | $ 3,500,000 | $ 0 | $ 0 |
ESA [Member] | ||||
Investment percentage owned | 25.00% | |||
Payment of investment | $ 1,238,631 | |||
Impairment of investment | 600,000 | |||
TV Azteca [Member] | ||||
Payment of investment | $ 3,500,000 |
5. Commitments (Details Narrati
5. Commitments (Details Narrative) (September 30, 2019) - USD ($) | 7 Months Ended | |
Aug. 05, 2019 | Sep. 30, 2019 | |
Contractual obligation | $ 348,853 | |
Proposed Business Combination [Member] | Underwriters [Member] | ||
Contractual obligation | $ 2,000,000 | |
Stock issued for services, shares | 303,490 | |
Proposed Business Combination [Member] | Investment Advisor [Member] | ||
Contractual obligation | $ 2,000,000 | |
Stock sale price | $ 6.59 | |
Proposed Business Combination [Member] | Financial Advisory Services [Member] | ||
Contractual obligation | $ 1,257,500 | |
Stock sale price | $ 6.59 |
6. Deferred Production Costs (D
6. Deferred Production Costs (Details) (September 30, 2019) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Production Costs | |||
Deferred Production costs | $ 27,975,552 | $ 23,604,111 | |
Less: accumulated amortization | (16,770,709) | (14,545,267) | |
Deferred Production costs, net | $ 11,204,843 | $ 9,058,844 | $ 0 |
6. Deferred Production Costs _2
6. Deferred Production Costs (Details Narrative) (September 30, 2019) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Weighted average remaining amortization period of deferred production costs | 3 years 9 months 18 days | |||||
Production costs | $ 0 | $ 0 | ||||
Multiplatform Content [Member] | ||||||
Production costs | $ 786,706 | $ 860,332 | $ 2,907,827 | $ 2,033,834 | ||
Multiplatform Content [Member] | Production Costs [Member] | ||||||
Production costs | $ 2,225,442 | $ 1,307,069 |
6. Stockholders' Equity (Detail
6. Stockholders' Equity (Details Narrative) - USD ($) | Nov. 05, 2018 | Sep. 30, 2019 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 20, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Oct. 10, 2017 |
Stock based compensation | $ 0 | $ 18,407 | $ (779,000) | $ 0 | ||||
Preferred stock, authorized | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | ||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Preferred stock, issued | 0 | 0 | 0 | 0 | ||||
Preferred stock, outstanding | 0 | 0 | 0 | 0 | ||||
Common stock, authorized | 35,000,000 | 35,000,000 | 35,000,000 | 35,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Total common stock issued | 17,695,000 | 17,695,000 | ||||||
Unit Purchase Option [Member] | ||||||||
Fair value of unit purchase option | $ 1,778,978 | |||||||
Fair value of unit purchase option per share | $ 2.97 | |||||||
Board of Directors and Executives [Member] | ||||||||
Restricted stock issued, shares | 80,393 | |||||||
Restricted stock value | $ 455,000 | |||||||
Options [Member] | ||||||||
Options granted | 400,000 | |||||||
Options granted exercise price | $ 5.66 | $ 5.66 | ||||||
Fair value at date of grant | $ 867,120 | |||||||
Stock based compensation | $ 5,940 | $ 5,940 | ||||||
Unrecognized compensation expense | 861,180 | $ 861,180 | ||||||
Unrecognized compensation expense remaining amortization period | 3 years 11 months 19 days | |||||||
Warrants [Member] | ||||||||
Warrants issued | 14,837,000 | |||||||
Warrants [Member] | Noble Link Notes and Former Parent Notes [Member] | ||||||||
Warrants issued | 532,000 | |||||||
Warrants [Member] | BRAC Warrants [Member] | ||||||||
Warrants issued | 14,305,000 | |||||||
Restricted Stock [Member] | ||||||||
Stock based compensation | $ 12,467 | $ 12,467 | ||||||
Unrecognized compensation expense remaining amortization period | 11 months 19 days | |||||||
Restricted Stock [Member] | Share Purchase Agreement [Member] | ||||||||
Restricted stock issued, shares | 1,199,191 | |||||||
Incentive Plan [Member] | ||||||||
Common stock reserved under the plan | 5,000,000 | 5,000,000 | ||||||
Shares available for issuance | 4,519,607 | 4,519,607 |
7. Accrued Expenses and Other_3
7. Accrued Expenses and Other Current Liabilities (Details) (September 30, 2019) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | |||
Compensation expense | $ 1,087,557 | $ 1,218,455 | |
Taxes | 205,121 | 981 | $ 85,722 |
Rent | 53,561 | 58,781 | |
Revenue Sharing obligations | 380,677 | 122,928 | |
Event costs | 107,753 | 61,740 | |
Production costs | 143,707 | 15,329 | |
Unclaimed player prizes | 420,993 | 380,120 | |
Other accrued expenses | 1,025,223 | 395,441 | |
Other current liabilities | 50,310 | 188,370 | |
Total | $ 3,474,902 | $ 2,442,145 | $ 45,391 |
8. Convertible Debt and Conve_2
8. Convertible Debt and Convertible Debt, Related Party (Details Narrative) (September 30, 2019) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | May 15, 2019 | |
Fair value of warrants | $ 114,804 | |||||
Contingent consideration | 152,590 | |||||
Amortization of debt discount | $ 0 | $ 36,414 | $ 0 | $ 0 | ||
Note Purchase Agreements [Member] | ||||||
Fair value of warrants | 114,804 | |||||
Contingent consideration | 152,590 | |||||
Amortization of debt discount | 36,414 | |||||
Unamortized debt discount | 230,980 | 230,980 | ||||
Noble Link Notes [Member] | ||||||
Debt face amount | $ 4,000,000 | |||||
Interest expense | $ 411,433 | $ 469,296 | ||||
Aggregate Debt Amount | $ 14,000,000 |
8. Income Taxes (Details - Defe
8. Income Taxes (Details - Deferred taxes) - Updated ASC Topic 740 - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Unrealized loss on marketable securities held in Trust Account | $ 0 | $ 18,678 |
Total deferred tax assets | 0 | 18,678 |
Deferred tax liabilities: | ||
Unrealized gain on marketable securities held in Trust Account | (438) | 0 |
Deferred tax assets (liablities), net | (438) | 18,678 |
Valuation allowance | 0 | 0 |
Deferred tax assets (liabilities), net of allowance | $ (438) | $ 18,678 |
8. Income Taxes (Details - Inco
8. Income Taxes (Details - Income tax provision) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Federal | ||||||
Current | $ 63,395 | $ 366,374 | ||||
Deferred | (13,647) | 13,969 | ||||
State and Local | ||||||
Current | 22,327 | 190,383 | ||||
Deferred | (5,031) | 5,147 | ||||
Income tax provision | $ 0 | $ 0 | $ 67,044 | $ 0 | $ 0 | $ 575,873 |
8. Income Taxes (Details - Reco
8. Income Taxes (Details - Reconciliation) | 8 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | 30.80% | 21.00% |
State and local taxes, net of federal benefit | 6.80% | 7.70% |
Permanent differences | 0.20% | 4.80% |
Effect of federal rate change on deferred taxes | 3.60% | 0.00% |
Income tax provision | 41.40% | 33.50% |
9. Segment Data (Details) (Sept
9. Segment Data (Details) (September 30, 2019) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Revenues | $ 6,041,541 | $ 5,480,241 | $ 0 | $ 19,614,935 | $ 15,199,296 | $ 0 |
Loss from operations | 3,817,603 | 6,416,798 | 130,159 | 10,416,151 | 22,599,480 | 823,779 |
Total assets | 74,474,724 | $ 139,460,078 | 74,474,724 | 65,246,937 | ||
Gaming and Entertainment | ||||||
Revenues | 4,137,091 | 4,426,935 | 14,022,841 | 12,347,616 | ||
Loss from operations | 172,502 | 232,220 | 1,069,712 | 1,926,092 | ||
Total assets | 37,398,491 | 37,398,491 | 37,315,493 | |||
E-Sports Member | ||||||
Revenues | 1,904,450 | 1,053,306 | 5,592,094 | 2,851,680 | ||
Loss from operations | 2,984,047 | 6,184,578 | 8,685,384 | 20,673,388 | ||
Total assets | 22,347,135 | 22,347,135 | 27,931,444 | |||
Corporate | ||||||
Revenues | 0 | 0 | 0 | 0 | ||
Loss from operations | 661,054 | $ 0 | 661,054 | $ 0 | ||
Total assets | $ 14,729,098 | $ 14,729,098 | $ 0 |
11. Commitments and Contingenci
11. Commitments and Contingencies (Details Narrative) (September 30, 2019) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 20, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Consulting fee commitment | $ 348,853 | $ 348,853 | |||||
Operating lease tenant improvement allowance | 1,352,790 | 1,352,790 | |||||
Operating lease expense | 711,302 | $ 706,160 | 2,079,800 | $ 2,420,717 | |||
Payment for investment | $ 0 | 3,500,000 | 0 | $ 0 | |||
Balance in escrow account | 4,950,000 | 0 | $ 0 | 4,950,000 | 0 | $ 0 | |
Chief Executive Officer [Member] | |||||||
Restricted stock granted, shares | 17,668 | ||||||
Restricted stock granted, value | $ 100,000 | ||||||
Simon Agreement [Member] | |||||||
Balance in escrow account | 4,950,000 | 4,950,000 | |||||
TV Azteca [Member] | |||||||
Payment for investment | 3,500,000 | ||||||
Obligation to be paid March 1, 2020 | 1,500,000 | 1,500,000 | |||||
Obligation to be paid March 1, 2021 | 1,000,000 | 1,000,000 | |||||
Obligation to be paid March 1, 2022 | 1,000,000 | 1,000,000 | |||||
General and Administrative Expense [Member] | |||||||
Operating lease expense | 166,163 | 238,889 | 717,102 | 736,679 | |||
In-person [Member] | Cost of Revenues [Member] | |||||||
Operating lease expense | 448,861 | 370,993 | 1,073,864 | 1,395,203 | |||
Deferred Production Costs [Member] | |||||||
Operating lease expense | $ 96,278 | $ 96,278 | $ 288,835 | $ 288,835 |
12. Stockholders' Equity (Detai
12. Stockholders' Equity (Details - Assumptions) (September 30, 2019) - Options [Member] | 9 Months Ended |
Sep. 20, 2019USD ($) | |
Risk free interest rate | 1.74% |
Expected term (years) | 6 years 3 months |
Expected volatility | 36.00% |
Expected dividends | $ 0 |
12. Stockholders' Equity (Det_2
12. Stockholders' Equity (Details - Options Activity) (September 30, 2019) - Options [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 20, 2019 | |
Number of Options | ||
Number of options - beginning balance | 0 | 0 |
Number of options - granted | 400,000 | |
Number of options - exercised | 0 | |
Number of options - expired | 0 | |
Number of options - forfeited | 0 | |
Number of options - ending balance | 400,000 | |
Number of options - exercisable | 0 | |
Weighted Average Price Per Share | ||
Weighted average price per share - granted | $ 5.66 | $ 5.66 |
Weighted average price per share - ending balance | $ 5.66 | |
Intrinsic value exercisable | $ 0 | |
Weighted average remaining term years | 9 years 11 months 19 days | |
Intrinsic value oustanding | $ 0 |
12. Stockholders' Equity (Det_3
12. Stockholders' Equity (Details - Warrant Activity) (September 30, 2019) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Number of Warrants | |
Number of warrants - beginning balance | 3,800,003 |
Number of warrants - issued | 14,837,000 |
Number of warrants - exercised | 0 |
Number of warrants - cancelled | 0 |
Number of warrants - ending balance | 18,637,003 |
Number of warrants - exercisable | 18,637,003 |
Weighted average price per share - beginning balance | $ / shares | $ 11.540 |
Weighted average price per share - issued | $ / shares | 11.50 |
Weighted average price per share - ending balance | $ / shares | 11.50 |
Weighted average price per share - exercisable | $ / shares | $ 11.50 |
Weighted average remaining term years outstanding | P4Y10M25D |
Weighted average remaining term years exercisable | P4Y10M25D |
Intrinsic value oustanding | $ | $ 0 |
Intrinsic value exercisable | $ | $ 0 |
12. Stockholders' Equity (Det_4
12. Stockholders' Equity (Details - EPO Activity) (September 30, 2019) - Equity Purchase Option [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of EPO shares - beginning balance | 0 | |
Number of EPO shares - granted | 600,000 | |
Number of EPO shares - exercised | 0 | |
Number of EPO shares - expired | 0 | |
Number of EPO shares - forfeited | 0 | |
Number of EPO shares - ending balance | 600,000 | |
Number of EPO shares - exercisable | 600,000 | |
Weighted average price per share EPO- granted | $ 11.50 | |
Weighted average price per share EPO- ending balance | $ 11.50 | |
Weighted average price per share EPO- exercisable | $ 1.50 | |
Weighted average remaining term years EPO | 3 years | |
Weighted average remaining term years EPO exercisable | 3 years | |
Intrinsic value oustanding EPO | $ 0 | |
Intrinsic value exercisable EPO | $ 0 |
14. Correction of Prior Perio_3
14. Correction of Prior Period Net Loss Attributable to Non-Controlling Interest (Details) (September 30, 2019) - USD ($) | 3 Months Ended | 6 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Net Loss | $ (4,253,472) | $ (2,811,286) | $ (3,854,152) | $ (6,688,102) | $ (11,301,062) | $ (6,311,292) | $ (17,612,354) | $ 93,150 | $ (23,973,355) | $ (10,918,910) | $ 1,141,199 |
Net loss attributed to non-controlling interest | 0 | (76,525) | 327,102 | 0 | 0 | (403,627) | 0 | ||||
Net Loss Attributable to Parent | (17,285,252) | ||||||||||
Comprehensive Loss: | |||||||||||
Net loss | (4,253,472) | $ (2,811,286) | $ (3,854,152) | (6,688,102) | $ (11,301,062) | $ (6,311,292) | (17,612,354) | $ 93,150 | (23,973,355) | (10,918,910) | $ 1,141,199 |
Other comprehensive loss: | |||||||||||
Foreign currency translation gain (loss) | (183,027) | ||||||||||
Total Comprehensive Loss | (17,795,381) | ||||||||||
Less: comprehensive loss attributable to non-controlling interest | 0 | (76,525) | 327,102 | 0 | (403,627) | ||||||
Comprehensive loss attributable to Parent | $ (4,274,555) | $ (6,434,288) | (17,468,279) | $ (10,932,276) | $ (23,902,568) | ||||||
Previously Reported [Member] | |||||||||||
Net Loss | (17,612,354) | ||||||||||
Net loss attributed to non-controlling interest | 2,803,922 | ||||||||||
Net Loss Attributable to Parent | (14,808,432) | ||||||||||
Comprehensive Loss: | |||||||||||
Net loss | (17,612,354) | ||||||||||
Other comprehensive loss: | |||||||||||
Foreign currency translation gain (loss) | (183,027) | ||||||||||
Total Comprehensive Loss | (17,795,381) | ||||||||||
Less: comprehensive loss attributable to non-controlling interest | 2,803,922 | ||||||||||
Comprehensive loss attributable to Parent | (14,991,459) | ||||||||||
Scenario Adjustment [Member] | |||||||||||
Net Loss | 0 | ||||||||||
Net loss attributed to non-controlling interest | (2,476,820) | ||||||||||
Net Loss Attributable to Parent | (2,476,820) | ||||||||||
Comprehensive Loss: | |||||||||||
Net loss | 0 | ||||||||||
Other comprehensive loss: | |||||||||||
Foreign currency translation gain (loss) | 0 | ||||||||||
Total Comprehensive Loss | 0 | ||||||||||
Less: comprehensive loss attributable to non-controlling interest | (2,476,820) | ||||||||||
Comprehensive loss attributable to Parent | $ (2,476,820) |