UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________________________

SCHEDULE 14A

_________________________________

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant		☒
Filed by a Party other than the Registrant		☐

Check the appropriate box:

☐		Preliminary Proxy Statement
☐		Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to §240.14a-12

ALLIED ESPORTS ENTERTAINMENT, INC.

(Name of Registrant as Specified In Its Charter)

_________________________________________________________________________________________________

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☐	No fee required.
☐	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
	(1)	Title of each class of securities to which transaction applies:

	(2)	Aggregate number of securities to which transaction applies:

	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

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☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1)	Amount Previously Paid:

	(2)	Form, Schedule or Registration Statement No.:

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ALLIED ESPORTS ENTERTAINMENT, INC.

17877 Von Karman Avenue, Suite 300

Irvine, California 92614

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 28, 2021

TO THE STOCKHOLDERS OF ALLIED ESPORTS ENTERTAINMENT, INC.:

You are cordially invited to attend a special meeting of stockholders (the “special meeting”) of Allied Esports Entertainment, Inc. (the “Company”), which, due to the public health concerns regarding the ongoing coronavirus pandemic (COVID-19), will be held virtually and exclusively online via live audio-only webcast, on June 28, 2021, at 4:00 p.m. Eastern time (1:00 p.m Pacific time), or at any adjournment or adjournments thereof, for the following purposes:

1. to consider and vote on a proposal to approve and adopt the Amended and Restated Stock Purchase Agreement dated as of March 19, 2021, as amended on March 29, 2021 (as so amended, and as it may be further amended, modified or supplemented from time to time, the “Stock Purchase Agreement”) by and among the Company and its direct and indirect wholly-owned subsidiaries, Allied Esports Media, Inc. (“Esports Media,” and together with the Company, the “Selling Parties”) and Club Services, Inc. (“CSI”), and Element Partners, LLC (“Element”), pursuant to which the Company will sell 100% of the outstanding capital stock of CSI to Element; and

2. to consider and vote on a proposal to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the Stock Purchase Agreement if there are insufficient votes at the time of the special meeting to approve and adopt the Stock Purchase Agreement.

The record date for the special meeting is May 27, 2021. Only stockholders of record at the close of business on that date may vote at the special meeting or any adjournment or postponement thereof.

CSI is an indirect wholly-owned subsidiary of the Company that directly or indirectly owns 100% of the outstanding capital stock of each of the legal entities that collectively operate or engage in the Company’s poker-related business and assets (the “WPT Business”). We refer to this transaction throughout as the “Sale Transaction.” The Sale Transaction may constitute the sale of substantially all of our assets under Delaware law and, accordingly, it cannot be completed unless it is approved by the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock.

The Sale Transaction, including the Stock Purchase Agreement, is described in greater detail in the accompanying proxy statement and the copy of Stock Purchase Agreement attached as Annex A to the accompanying proxy statement. You may also obtain additional information about the Company from documents filed with the Securities and Exchange Commission.

After careful consideration, our Board of Directors has unanimously approved the Stock Purchase Agreement and the Sale Transaction, and determined that the Sale Transaction is in the best interests of the Company and its stockholders.

You will be able to attend the special meeting online, submit your questions online during the special meeting and vote your shares electronically during the special meeting by visiting https://www.cstproxy.com/alliedesportsent/sm2021. Because the special meeting is being conducted electronically, you will not be able to attend the special meeting in person.

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Your vote is important. Whether or not you attend the special meeting virtually, it is important that your shares be represented. You may vote your proxy through the Internet or by mail, by completing and returning the proxy card mailed to you. Voting instructions are printed on your proxy card and included in the proxy statement. If you participate virtually in the special meeting, you may vote at that time, even if you previously submitted your vote. Even if you plan to participate in the special meeting, we urge you to vote as soon as possible over the Internet or by mail as described in the proxy statement.

If you have any questions about the Sale Transaction or how to submit your proxy, or if you need additional copies of the proxy statement or the enclosed proxy card or voting instructions, please contact our proxy solicitor, Regan & Associates, Inc., by telephone (toll-free within North America) at 1-800-737-3426.

		By Order of the Board of Directors,
		/s/ Frank Ng
		Frank Ng
		Chief Executive Officer

June 1, 2021

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TABLE OF CONTENTS

		Page
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS		i
SUMMARY TERM SHEET		1
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION		7
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE SALE TRANSACTION		8
RISK FACTORS		17
Risks Related to the Sale Transaction		17
Risks Related to the Company if the Sale Transaction is Completed		19
Risks Related to the Current Business		20
PROPOSAL NO. 1: APPROVAL AND ADOPTION OF THE STOCK PURCHASE AGREEMENT		41
PROPOSAL NO. 2: AUTHORITY TO ADJOURN SPECIAL MEETING		42
THE SALE TRANSACTION		43
Parties to the Sale Transaction		43
Background of the Sale Transaction		43
Terms of the Stock Purchase Agreement		48
Reasons for the Sale Transaction; Recommendation of the Company’s Board of Directors		49
Opinion of the Company’s Financial Advisor		49
Operations of the Company After the Sale Transaction		49
Required Approvals		50
Closing of the Sale Transaction		50
Interests of Our Directors and Executive Officers in the Sale Transaction		50
Material U.S. Federal Income Tax Consequences of the Sale Transaction		51
Anticipated Accounting Treatment		51
Appraisal Rights		52
THE STOCK PURCHASE AGREEMENT		53
Sale of the WPT Business		53
Purchase Price		53
Representations and Warranties		53
No Solicitation of Competing Proposal		55
Covenants and Agreements		57
Conditions to the Completion of the Sale Transaction		58
Termination		59
Effect of Termination		60
Expense Reimbursement and Termination Fees		60
WPT Brand License		61
Indemnification		61
Amendment		62
Governing Law		62
DESCRIPTION OF ALLIED ESPORTS ENTERTAINMENT, INC.		63
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — ALLIED ESPORTS ENTERTAINMENT, INC.		73
UNAUDITED CARVE-OUT FINANCIAL STATEMENTS — THE WORLD POKER TOUR BUSINESS		82
MARKET PRICE AND DIVIDEND INFORMATION		114
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS		115
PROPOSALS OF STOCKHOLDERS		117
EXPENSES AND SOLICITATION		117
WHERE YOU CAN FIND MORE INFORMATION		118
HOUSEHOLDING OF MATERIALS		118
CONSOLIDATED FINANCIAL STATEMENTS — ALLIED ESPORTS ENTERTAINMENT, INC.		F-1

iii

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		Page
Annex A — Stock Purchase Agreement		A-1
Annex B — Opinion of Financial Advisor		B-1
Annex C — Proxy Card		C-1

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SUMMARY TERM SHEET

This proxy statement is being furnished to the stockholders of the Company in connection with the solicitation of proxies of our stockholders to approve and adopt the Stock Purchase Agreement and the Sale Transaction and to approve the other related proposal to be voted on at the special meeting.

The summary that follows highlights the material terms and provisions of the Sale Transaction and selected information contained elsewhere in this proxy statement. It may not contain all of the information that is important to you. To fully understand the Sale Transaction, and for a more complete description of the Sale Transaction and related matters, you should carefully read this proxy statement in its entirety, including the Stock Purchase Agreement included as Annex A.

Parties to the Sale Transaction (See page 43)

Allied Esports Entertainment, Inc.

Allied Esports Entertainment, Inc. is a global leader in esports entertainment, providing innovative infrastructure, transformative live experiences, multiplatform content and interactive services to audiences worldwide through its strategic fusion of two powerful brands: Allied Esports and the World Poker Tour®, or WPT®. See “Description of Allied Esports Entertainment, Inc.” beginning on page 63 of this proxy statement for a more fulsome description of our company and our businesses.

Element Partners, LLC

Element Partners, LLC, sometimes referred to in this proxy statement as “Element Partners,” “Element” or “Buyer,” is a Delaware limited liability company formed for the purpose of acquiring the WPT Business in the Sale Transaction. Element Partners is owned by an investment fund.

The Sale Transaction (See page 43)

Our Board of Directors approved a sale of CSI (and, therefore, the WPT Business) on December 30, 2020 and we entered into the original stock purchase agreement with Element to govern that sale on January 19, 2021. That agreement provided for the sale of 100% of the outstanding capital stock of CSI to Element for a base purchase price of $68.25 million to be paid at closing of the transaction, and additional payments totaling $10.0 million to be received over the subsequent three year period. Subsequently, and in response to our receipt of unsolicited proposals from Bally’s Corporation to purchase 100% of the outstanding capital stock of CSI, we entered into an amended and restated stock purchase agreement with Element on March 19, 2021, which was subsequently amended on March 29, 2021. Throughout this proxy statement, we refer to this agreement, as so amended (and as may be further amended, modified or supplemented from time to time), as the “Stock Purchase Agreement.”

Pursuant to the Stock Purchase Agreement, we intend to sell, and Element intends to purchase, 100% of the outstanding capital stock of CSI for a purchase price of $105.0 million. This purchase price will be adjusted to reflect the amount of CSI’s cash, indebtedness and accrued and unpaid transaction expenses as of the closing of the Sale Transaction. Element has remitted a $10.0 million advance payment of the purchase price and is required to pay the balance of the purchase price at the closing of the Sale Transaction. The requirement to make future payments over three years following the closing of the Sale Transaction has been eliminated.

Terms of the Stock Purchase Agreement (See pages 48 and 53, and Annex A)

The terms and conditions of the Sale Transaction are set forth in the Stock Purchase Agreement, the terms of which are described under the captions “Terms of the Stock Purchase Agreement” beginning on page 48, and “The Stock Purchase Agreement” beginning on page 53. A copy of the Stock Purchase Agreement, excluding the schedules thereto, is included as Annex A to this proxy statement.

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Reasons for the Sale Transaction (See page 49)

In reaching its decision to approve and adopt the Stock Purchase Agreement and the Sale Transaction, our Board of Directors, in consultation with management as well as its financial and legal advisors, considered a number of factors that our Board of Directors believed supported its decision.

The WPT Business has been valued for potential sales in connection with unsolicited offers over the years. These offers were in general in the range of $48.5 million to $50.5 million.

The Board of Directors noted that the historical operations of the WPT Business and the COVID-19 pandemic adds risk to its long-term viability. Although the net profit of the WPT Business was approximately $725,508 for the year ended December 31, 2020, the Board of Directors is concerned that such profit may not be sustainable in light of the present global economic conditions. The Board of Directors considered a number of risks and uncertainties about continuing to operate the WPT Business, including the risks involved in any expansion of the current WPT Business into new jurisdictions or markets, the need for additional capital to expand the WPT Business, and the adverse impacts that COVID-19 has had on the WPT Business’ ability to host in-person events and the delays in the production of its television shows.

The Board of Directors also considered the results of the opinion delivered by the Company’s Financial Advisor (described below), that determined that, in its opinion, the purchase price exceeds the fair value of the WPT Business based on each valuation approach (public trading multiples, discounted cash flow, investor returns, sum-of-the-parts, and selected transaction analyses) utilized by our advisor.

Such opinion noted that, using publicly available information for comparable transactions, an appropriate multiple of the WPT Business’ estimated EBITDA for twelve months ended as of June 30, 2021, which was assumed to be an average of preliminary fiscal year 2020 EBITDA and the fiscal year 2021 forecasted EBITDA, ranges from 11.0x – 15.0x, and based on these multiples, the WPT Business has an implied valuation range of $57.5 million to $78.3 million, which is significantly less than the total purchase price of $105 million in the Sale Transaction.

Our Board of Directors concluded that it would be in our best interest and the best interest of our stockholders to sell the WPT Business, and that the Sale Transaction reflects the highest value for the WPT Business reasonably attainable for our stockholders.

Approval and Recommendation of our Board of Directors (See page 49)

Our Board of Directors has approved, and deemed expedient and in the best interests of the Company and its stockholders, the Stock Purchase Agreement and the Sale Transaction. OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE AT THE SPECIAL MEETING “FOR” THE PROPOSAL TO APPROVE AND ADOPT THE STOCK PURCHASE AGREEMENT.

Opinion of the Company’s Financial Advisor (See page 49)

In connection with the Sale Transaction, our Board of Directors received a written opinion, dated April 15, 2021, from our financial advisor, Shot Tower Securities LLC, or “Shot Tower,” as to the fairness, from a financial point of view as of the date of such opinion, of the consideration to be received by us from the Sale Transaction. The full text of Shot Tower’s written opinion, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement and is incorporated herein by reference. Shot Tower’s opinion was provided for the use and benefit of our Board of Directors (solely in its capacity as such) in its evaluation of the Sale Transaction. Shot Tower’s opinion is limited solely to the fairness as of the date of such opinion, from a financial point of view, of the consideration to be received by us from the Sale Transaction pursuant to the Stock Purchase Agreement, and does not address our underlying business decision to effect the Sale Transaction or the relative merits of the Sale Transaction as compared to any alternative business strategies or transactions that might be available with respect to us. Shot Tower’s opinion does not constitute a recommendation to any of our stockholders as to how such stockholder should vote or act with respect to the Sale Transaction or any other matter. Shot Tower is a leading investment banking boutique providing advisory and capital raising services in the media and consumer products sectors.

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Operations of the Company After the Sale Transaction (See page 49)

The Company’s Board has considered a number of alternatives with respect to the use of the Company’s assets following the completion of the Sale Transaction. We intend to retain our cash and investments and the other assets and liabilities that are not part of the Sale Transaction.

The rapid growth and popularity of gaming and esports during the COVID-19 pandemic has driven interest in the Company’s esports business, Allied Esports, and the Company’s Board of Directors has agreed to explore strategic options for the esports business, including a possible sale. The Company has engaged investment bank Lake Street Capital Markets to assist with the process.

Upon completion of the Sale Transaction, and assuming the realization and completion of a sale of the esports business, we would proceed, under a new corporate name, as a publicly traded holding company focused on using our cash resources to explore opportunities in online entertainment, including but not limited to, real money gaming and other gaming sectors. The Company does not have any specific merger, asset acquisition, reorganization or other business combination under consideration or contemplation. We have not, nor has anyone on our behalf, had substantive discussions, formal or otherwise, with respect to such a transaction. The Company does not plan to limit itself to any particular industry or geographic location in its efforts to identify prospective target businesses.

We will continue to be a public company and our common stock will continue to trade on the Nasdaq Capital Market following completion of the Sale Transaction. The Company does not intend to go private or terminate reporting obligations under the Securities Exchange Act of 1934, or the “Exchange Act.”

Risk Factors Related to the Sale Transaction (See page 17)

The Sale Transaction, including the possibility that the Sale Transaction may not be completed, involves a number of risks to us and our stockholders, including the following:

• the announcement and pendency of the Sale Transaction, whether or not completed, may adversely affect our businesses;

• if we fail to complete the Sale Transaction, our business and financial performance may be adversely affected;

• we will incur significant expenses in connection with the Sale Transaction whether or not it is consummated, and under certain circumstances we may be forced to pay to the Buyer a $3.45 million termination fee or up to $1.0 million towards Buyer’s out of pocket expenses, in each case reducing our cash;

• you will not receive any of the proceeds from the Sale Transaction;

• the Stock Purchase Agreement limits our ability to pursue alternatives to the Sale Transaction;

• if the Sale Transaction is completed, we will no longer be engaged in the WPT Business and our future results of operations will differ materially from our previous results;

• if the Sale Transaction and the sale of our esports business are completed, we would proceed (likely under a new corporate name) as a publicly traded holding company focused on using our cash resources to explore business opportunities that we have not yet identified, and there is no assurance regarding when and whether we will pursue such opportunities or whether we will be successful in doing so;

• the Sale Transaction is subject to customary closing conditions and may not occur;

• we will continue to incur the expenses of complying with public company reporting requirements following the closing of the Sale Transaction notwithstanding the decrease in the size of our operations following the Sale Transaction; and

• following the closing of the Sale Transaction, we will be subject to five-year non-competition and non-solicitation covenants, which will limit our ability to pursue future opportunities in poker-related fields.

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Use of Proceeds

At the closing of the Sale Transaction, we will have received total cash consideration of $105.0 million ($10.0 million of which has already been advanced to us), adjusted to reflect CSI’s cash, indebtedness and accrued and unpaid transaction expenses as of the closing date. We anticipate that from the closing date proceeds, approximately $3.7 million will be used to repay existing indebtedness, and no closing proceeds will be used to pay transaction expenses (as those expenses are being paid by us on a monthly basis). We will use the remaining closing date proceeds for general corporate purposes, and intend to focus on using our cash resources to explore opportunities in online entertainment, including but not limited to, real money gaming and other gaming sectors. However, the Company does not plan to limit itself to any particular industry or geographic location in its efforts to identify prospective target businesses. Currently, the Company does not have any specific merger, asset acquisition, reorganization or other business combination under consideration or contemplation. We have not, nor has anyone on our behalf, had substantive discussions, formal or otherwise, with respect to such a transaction.

Required Approvals (See page 50)

Corporate approval of the Sale Transaction requires the affirmative vote of the holders of a majority of the Company’s outstanding common stock in favor of the Sale Transaction.

In connection with the execution of the Stock Purchase Agreement, Buyer and certain of our key stockholders, including certain of our directors and executive officers, entered into stockholder support agreements pursuant to which they have agreed to vote their shares of Company common stock in favor of approval of the Sale Transaction and against the approval or adoption of any alternative transactions. These stockholders also granted to Buyer a proxy to vote their shares of Company common stock in favor of approval of the Sale Transaction and agreed not to transfer their shares of Company common stock prior to the expiration of the stockholder support agreements. These key stockholders collectively own or control an aggregate of approximately 17.3% of the Company’s outstanding common stock. In addition, the Company has agreed to use its reasonable efforts to cooperate with Buyer to obtain executed copies of a stockholder support agreement from Primo Vital Limited, the holder of 30.6% of the Company’s outstanding common stock, and a Deed of Irrevocable Undertaking containing covenants to support the Sale Transaction from stockholders of Ourgame International Holdings Limited, the parent company of Primo Vital Limited, as promptly as possible after the date of the Stock Purchase Agreement. The forms of stockholder support agreements and Deed of Irrevocable Undertaking are attached as Exhibits A, C and D to the Stock Purchase Agreement.

The Sale Transaction is subject to, among other things, the absence of any action commenced by or before any governmental authority challenging the Sale Transaction.

Except for compliance with the applicable regulations of the Securities and Exchange Commission (“SEC”) in connection with the proxy statement and with the Delaware General Corporation Law, or “DGCL,” in connection with the Sale Transaction, we are not required to comply with any federal or state regulatory requirements, and no federal or state regulatory approvals are required in connection with the Sale Transaction.

Closing of the Sale Transaction (See page 50)

We intend to consummate the Sale Transaction shortly after obtaining stockholder approval for the Sale Transaction, assuming all other conditions to the completion of the Sale Transaction have been satisfied or waived. Pursuant to the Stock Purchase Agreement, the “Outside Date” for closing the Sale Transaction is September 30, 2021, after which either we or Buyer may terminate the Stock Purchase Agreement.

Termination of the Stock Purchase Agreement (See page 59)

The parties to the Stock Purchase Agreement may mutually agree to terminate the Stock Purchase Agreement at any time.

We, on the one hand, or Buyer, on the other hand, may terminate the Stock Purchase Agreement if:

• any governmental entity that must grant a regulatory approval for the Sale Transaction denies approval of the Sale Transaction, or any governmental entity issues a final and nonappealable order, injunction or decree permanently prohibiting the consummation of the Sale Transaction;

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• the Sale Transaction is not consummated on or before the Outside Date; or

• there shall have been a breach of any of the covenants or agreements or any of the representations or warranties set forth in the Stock Purchase Agreement by us, in the case of a termination by Buyer, or Buyer, in the case of a termination by us.

Buyer, may terminate the Stock Purchase Agreement if, prior to receipt of stockholder approval, our Board of Directors changes its recommendation that our stockholders approve the Sale Transaction, or if we materially breach our covenant not to solicit a competing acquisition proposal.

We may terminate the Stock Purchase Agreement if we receive a competing acquisition proposal from a third party that our Board of Directors determines is more favorable to our stockholders than the Sale Transaction, our Board of Directors authorizes our entry into a definitive agreement to consummate the transaction contemplated by such competing proposal, and we pay a $3.45 million termination fee to the Buyer, reimburse the $10.0 million advance payment of purchase price to the Buyer, and we enter into such definitive agreement, all concurrently with the termination of the Stock Purchase Agreement.

Depending on the circumstances surrounding a termination of the Stock Purchase Agreement, Buyer may be required to pay a $10.0 million non-performance fee to us, or we may be required to pay a $3.45 million termination or non-performance fee to the Buyer and return to Buyer the $10.0 million advance payment of purchase price and reimburse Buyer for up to $1.0 million of its documented out of pocket expenses incurred in connection with the authorization, preparation, negotiation, execution and performance of the Stock Purchase Agreement and the Sale Transaction.

Interests of Our Directors and Executive Officers in the Sale Transaction (See page 50)

Certain of our directors and executive officers may have interests in the Sale Transaction that are different from, or in addition to, those of our stockholders generally. These interests may create potential conflicts of interest. Our Board of Directors was aware that these interests existed when it approved the Stock Purchase Agreement. Directors without potential conflicts of interest constitute a majority of our Board of Directors.

Material U.S. Federal Income Tax Consequences of the Sale Transaction (See page 51)

The Company does not expect that the Sale Transaction will result in any federal income tax consequences for its stockholders because they will not receive any of the proceeds from the Sale Transaction.

Anticipated Accounting Treatment (See page 51)

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convertible debt or bridge notes, (b) the payment of our transaction expenses, and (c) the impact of the acceleration of vesting of stock-based compensation awards held by employees of the WPT Business. We will record a gain on the sale of the WPT Business in our consolidated statement of operations equal to the difference between the purchase price received or expected to be received and the book value of the assets and liabilities sold. Furthermore, any financial statements that are issued in the future, relating to periods prior to the closing of the Sale Transaction, will present the assets and liabilities of the WPT business on a condensed basis as “held for sale” and the revenues and operating results of the WPT business will be condensed and presented as “income (loss) from discontinued operations”.

Interests of our Stockholders

Following the Sale Transaction, our current stockholders will continue to own 100% of our outstanding common stock.

Appraisal Rights (See page 52)

Holders of the Company common stock are not entitled to appraisal rights in connection with the Sale Transaction.

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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This proxy statement contains certain forward-looking statements under federal securities laws. Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plans, including product and service developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other comparable terminology. For example, when we discuss the impacts of the Sale Transaction, the satisfaction of the closing conditions to the Sale Transaction, the timing of the completion of the Sale Transaction and our plans following the Sale Transaction, we are using forward-looking statements. These statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. These factors include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the termination of the Stock Purchase Agreement for the Sale Transaction or could otherwise cause the Sale Transaction to fail to close; the outcome of any legal proceedings that may be instituted against us following the announcement of the Sale Transaction; the inability to complete the Sale Transaction, including due to failure to obtain approval of our stockholders or other conditions to closing; and the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the Sale Transaction. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. The business and operations of the Company are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this proxy statement. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under “Item 1A. Risk Factors” in our amended Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission, or SEC, on April 13, 2021. Readers are also urged to carefully review and consider the various disclosures we have made in this proxy statement and in such Annual Report on Form 10-K.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
AND THE SALE TRANSACTION

The following questions and answers are intended to briefly address some commonly asked questions regarding the special meeting and the Sale Transaction. These questions and answers do not address all questions that may be important to you as a Company stockholder. Please refer to the more detailed information contained elsewhere in this proxy statement and the Annexes to this proxy statement.

Why am I receiving these materials?

We are providing you with these proxy materials in connection with the solicitation of proxies by the Board of Directors in favor of the proposal to approve and adopt the Stock Purchase Agreement and to approve the other related proposal to be voted on at the special meeting. The special meeting will be held on June 28, 2021, at 4:00 p.m. Eastern time (1:00 p.m. Pacific time), virtually and exclusively online via live audio-only webcast at https://www.cstproxy.com/alliedesportsent/sm2021.

Why are you holding a virtual special meeting?

As part of our effort to maintain a safe and healthy environment for our directors, members of management and stockholders who wish to attend the special meeting, in light of the novel coronavirus disease, COVID-19, we believe that hosting a virtual meeting is in the best interest of the Company and its stockholders and enables increased stockholder attendance and participation because stockholders can participate from any location around the world. Stockholders will have the same rights and opportunities to participate as they would have at an in-person meeting.

How do I attend the special meeting?

You cannot attend the special meeting physically. You can attend the special meeting by visiting https://www.cstproxy.com/alliedesportsent/sm2021, where you will be able to listen to the annual meeting live, submit questions and vote online.

The special meeting will start at 4:00 p.m. Eastern time (1:00 p.m. Pacific time), on June 28, 2021. We encourage you to access the special meeting prior to the start time to allow time for online check-in. We have worked to offer the same participation opportunities as would be provided at an in-person meeting while further enhancing the online experience available to all stockholders regardless of their location. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers. If you experience technical difficulties during the annual meeting, you should call the technical support phone number provided when you log in to the special meeting.

In order to enter the special meeting virtually, you will need the unique 16-digit control number, which is printed on your proxy card, or included with your voting instruction card and voting instructions received from your broker, bank, trustee, or nominee if you are the beneficial owner of the shares held in “street name.”

What if I cannot virtually attend the special meeting?

You may vote your shares before the meeting by internet or mail, by proxy as described below. You do not need to access the annual meeting audio-only webcast to vote if you submitted your vote via proxy, by internet or by mail in advance of the annual meeting.

Who can vote at the special meeting?

Only stockholders of record at the close of business on May 27, 2021 will be entitled to vote at the special meeting. On the record date, there were 39,139,502 shares of common stock outstanding and entitled to vote. A list of such holders will be open to the examination of any stockholder for any purpose germane to the special meeting at Allied Esports Entertainment, Inc., 17877 Von Karman Avenue, Suite 300, Irvine, California 92614 for a period of ten (10) days prior to the special meeting. Please contact the Secretary of the Company of the Company to make arrangements to inspect the list.

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Stockholder of Record — Shares Registered in Your Name: If on May 27, 2021, your shares were registered directly in your name with our transfer agent, Continental Stock Transfer & Trust, then you are a stockholder of record. As a stockholder of record, you may vote at the special meeting virtually or vote by proxy prior to the special meeting. Whether or not you plan to attend the special meeting, we urge you to vote by proxy through the internet or mail using a proxy card that you may request as instructed below, to ensure your vote is counted.

Beneficial Owner — Shares Registered in the Name of a Broker or Bank: If on May 27, 2021, your shares were not registered in your name, but instead are held in an account at a brokerage firm, bank, dealer or similar organization, then you are the beneficial owner of shares held in “street name” and proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the special meeting. As a beneficial owner, you have the right to direct your broker, bank or other agent regarding how to vote the shares in your account. You are also invited to attend the special meeting. Since you are not the stockholder of record, however, you may not vote your shares at the special meeting even if you participate virtually, unless you request and obtain a valid proxy from your broker, bank or other agent.

What proposals will be considered at the special meeting?

At the special meeting, you will be asked to consider and vote on:

1. a proposal to approve and adopt the Stock Purchase Agreement; and

2. a proposal to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to approve and adopt the Stock Purchase Agreement if there are insufficient votes at the time of the special meeting to approve adopt the Stock Purchase Agreement.

What vote is required to approve each of the proposals?

The proposal to approve and adopt the Stock Purchase Agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Company common stock entitled to vote on such matter. Abstentions and failures to vote (including a failure to instruct your broker, bank or other nominee to vote shares held on your behalf) will have the same effect as a vote “AGAINST” the proposal to approve and adopt the Stock Purchase Agreement.

The approval of the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of holders of a majority of the shares of Company common stock present in person (in this case, virtually) or represented by proxy at the special meeting entitled to vote on such matter. In addition, even if a quorum is not present at the special meeting, the affirmative vote of holders of a majority of the shares of Company common stock present in person (in this case, virtually) or represented by proxy at the special meeting entitled to vote on such matter may adjourn the meeting to another place, date or time. In each case, an abstention from voting will have the same effect as a vote “AGAINST” the proposal.

How does the Board of Directors recommend that I vote on the proposals?

After careful consideration, our Board of Directors has unanimously approved the Stock Purchase Agreement and the Sale Transaction, determined that the Sale Transaction is in the best interests of the Company and its stockholders, and unanimously recommends that you vote “FOR” the proposal to approve and adopt the Stock Purchase Agreement and “FOR” the proposal to adjourn the special meeting if necessary or appropriate.

Have any of the Company’s stockholders already agreed to approve the Stock Purchase Agreement?

Buyer and certain of our key stockholders, including certain of our directors and executive officers, entered into stockholder support agreements pursuant to which they have agreed to vote their shares of Company common stock in favor of approval of the Sale Transaction and against the approval or adoption of any alternative transactions. These stockholders also granted to Buyer a proxy to vote their shares of Company common stock in favor of approval of the Sale Transaction and agreed not to transfer their respective shares of Company common stock prior to the expiration of the stockholder support agreements. These key stockholders collectively own or control an aggregate of approximately 17.3% of the Company’s outstanding common stock. In addition, the Company has agreed to use its reasonable efforts to cooperate with Buyer to obtain executed copies of a stockholder support agreement from Primo

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Vital Limited, the holder of 30.6% of the Company’s outstanding common stock, as promptly as possible after entering into the Stock Purchase Agreement, and to obtain a Deed of Irrevocable Undertaking containing covenants to support the Sale Transaction from stockholders of Ourgame International Holdings Limited, the parent company of Primo Vital Limited. The forms of stockholder support agreements and Deed of Irrevocable Undertaking are attached as Exhibits A, C and D to the Stock Purchase Agreement.

Do I need to attend the special meeting in person?

No. Due to the COVID-19 pandemic, the Company is not hosting the special meeting in person. It is being held virtually and exclusively online via live audio-only webcast at https://www.cstproxy.com/alliedesportsent/sm2021. You may vote by mail or through the Internet, as described in more detail below.

How many shares are needed to constitute a quorum?

The presence at the special meeting, in person (in this case, virtually) or by proxy, of the holders of one-half of the issued and outstanding shares of Company common stock entitled to vote constitutes a quorum for the purpose of considering the proposals. As of the close of business on the record date, there were 39,139,502 shares of Company common stock outstanding. If you are a Company stockholder as of the close of business on the record date and you vote by mail, through the Internet or in person (in this case, virtually) at the special meeting, you will be considered part of the quorum. If you are a “street name” holder of shares of Company common stock (i.e., you hold your shares in the name of a bank, broker, trust or other nominee) and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.

All shares of Company common stock held by the Company stockholders that are present in person (in this case, virtually), or represented by proxy, and entitled to vote at the special meeting, regardless of how such shares are voted or whether such stockholders have indicated on their proxy that they are abstaining from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned.

What do I need to do now?

After carefully reading and considering the information contained in this proxy statement and the Annexes attached to this proxy statement, please vote your shares of Company common stock in one of the ways described below as soon as possible. You will be entitled to one vote for each share of Company common stock that you owned on the record date.

How do I vote?

With respect to both proposals, you may vote “For” or “Against,” or you may abstain from voting. If you abstain from voting for a proposal, note that such abstention will be considered a vote “Against” the applicable proposal.

Stockholder of Record — Shares Registered in Your Name: If you are a stockholder of record, you may vote at the special meeting (in this case, virtually), vote by proxy using the enclosed proxy card, vote by proxy via facsimile, email or on the Internet. Whether or not you plan to attend the virtual meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the virtual meeting and vote your shares even if you have already voted by proxy:

• To vote using the proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the special meeting, we will vote your shares as you direct.

• To vote online before the special meeting, go to www.cstproxyvote.com and transmit your voting instructions up until 11:59 p.m. Eastern Time on June 27, 2021. Have your proxy card in hand when you access the web site and follow the instructions to vote your shares.

• To vote online during the special meeting, visit https://www.cstproxy.com/alliedesportsent/sm2021, be sure to have your proxy card available and follow the instructions given on the secure website. You will need the 12-digit control number that is printed on your proxy card to vote online at the special meeting.

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Beneficial Owner — Shares Registered in the Name of a Broker or Bank: If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should receive a proxy card and voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail the proxy card to ensure that your vote is submitted to your broker or bank. Alternatively, you may vote over the Internet as instructed by your broker or bank. To vote in real time at the special meeting, you must obtain a valid legal proxy from your broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a proxy form.

We provide Internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers.

What if I fail to instruct my bank, broker, trust or other nominee how to vote?

Your bank, broker, trust or other nominee will NOT be able to vote your shares of Company common stock unless you have properly instructed your bank, broker, trust or other nominee on how to vote. Because the proposal to approve and adopt the Stock Purchase Agreement requires the affirmative vote of a majority of the outstanding shares of Company common stock, the failure to provide your nominee with voting instructions will have the same effect as a vote “AGAINST” the proposal to approve and adopt the Stock Purchase Agreement. Furthermore, your shares will not be included in the calculation of the number of shares of Company common stock present at the special meeting for purposes of determining whether a quorum is present.

What if I return a proxy card but do not make specific choices?

If you return a signed and dated proxy card without marking any voting selections, your shares will be voted “For” Proposals 1 and 2.

What does it mean if I receive more than one proxy card?

If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.

May I change my vote after submitting my proxy?

Yes. You can revoke your proxy at any time before the final vote at the special meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

• You may submit another properly completed proxy card with a later date (which automatically revokes the earlier proxy).

• You may grant a subsequent proxy through the internet.

• You may send a timely written notice that you are revoking your proxy to our Secretary at our principal executive offices at 17877 Von Karman Avenue, Suite 300, Irvine, California 92614.

• You may attend the special meeting (in this case, virtually) and vote online by following the instructions posted at https://www.cstproxy.com/alliedesportsent/sm2021. Simply attending the special meeting will not, by itself, revoke your proxy. Even if you plan to attend the special meeting virtually, we recommend that you also submit your proxy or voting instructions or vote through the Internet so that your vote will be counted if you later decide not to attend the special meeting.

Your most current proxy card or internet proxy is the one that is counted.

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

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How will proxies be solicited?

The costs of solicitation of consents, including printing and mailing costs, will be borne by us. We have engaged Regan & Associates, Inc. to provide consulting and analytic services and to assist with the solicitation. In addition to the solicitation of consents by mail and by Regan & Associates, Inc., consents may also be solicited personally by our directors, officers and employees, without additional compensation to these individuals. We may request banks, brokers and other firms holding shares in their names that are beneficially owned by others to send consent materials and obtain consents from such beneficial owners, and will reimburse such banks, brokers and other firms for their reasonable out-of-pocket costs.

Do the Company’s stockholders have any appraisal rights in connection with the Sale Transaction?

No. The Company’s stockholders do not have appraisal rights in connection with the Sale Transaction.

How can I find out the results of the voting at the special meeting?

Preliminary voting results will be announced at the special meeting. Final voting results will be published in a Current Report on Form 8-K, which we will file within four business days after the special meeting.

How do these proxy materials relate to the Consent Solicitation Statement that we previously filed with the SEC and sent to our stockholders?

On February 2, 2021, we filed a Notice of Consent Solicitation and accompanying Consent Solicitation Statement consent card (the “Consent Solicitation Materials”) with the SEC and mailed the Consent Solicitation Materials to our stockholders of record on January 28, 2021. Pursuant to the Consent Solicitation Materials, the Company sought to obtain the written consent of our stockholders for the transactions contemplated by our original stock purchase agreement with Element dated January 19, 2021. Because that original agreement has been superseded by the Stock Purchase Agreement, we are no longer seeking stockholder consent for the original and we have abandoned our prior consent solicitation process. Instead, we are seeking approval for the current Sale Transaction pursuant to this proxy statement from our stockholders of record at the close of business on May 27, 2021. Based on discussions with our advisors, including our proxy solicitor, we believe that seeking such stockholder approval at the special meeting will be more efficient and effective than doing so through a consent solicitation process.

Consent cards related to the original transaction are no longer valid, and will not be taken into account in determining whether the Stock Purchase Agreement is approved and adopted at the special meeting. As a result, stockholders as of the record date who wish to have their shares represented at the special meeting should vote their shares even if they previously submitted a consent card related to the original transaction.

Why are we proposing to sell the WPT Business?

After considering the risks and challenges facing the WPT Business in the future as compared to the opportunities available to WPT Business in the future, as well as the availability of strategic alternatives, the Board of Directors has concluded that the Sale Transaction is the best alternative for seeking to maximize value to stockholders.

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What are the terms of the Stock Purchase Agreement?

Pursuant to the Stock Purchase Agreement, we intend to sell, and Buyer intends to purchase, 100% of the outstanding capital stock of CSI for a purchase price of $105.0 million. This purchase price will be adjusted to reflect the amount of CSI’s cash, indebtedness and accrued and unpaid transaction expenses as of the closing of the Sale Transaction. Buyer has remitted a $10.0 million advance payment of the purchase price and is required to pay the balance of the purchase price at the closing of the Sale Transaction.

The Stock Purchase Agreement is described in greater detail in this proxy statement under the caption “The Stock Purchase Agreement” beginning on page 53. A copy of the Stock Purchase Agreement, excluding the schedules thereto, is included as Annex A to this proxy statement.

Will Company stockholders receive any distributions from the Sale Transaction?

The Company does not currently intend to distribute any of the proceeds from the Sale Transaction to the Company’s stockholders.

What will happen to the Company after the Sale Transaction?

After completion of the Sale Transaction, the Company will continue to be a public reporting company and our common stock will continue to trade on the Nasdaq Capital Market. The Company’s assets will consist primarily of cash and the assets utilized in the operation of the Company’s esports business, Allied Esports.

The rapid growth and popularity of gaming and esports during the COVID-19 pandemic has driven interest in the Company’s esports business, Allied Esports. The Company recently announced that its Board of Directors has decided to explore strategic options for the esports business in order to maximize value to its stockholders, including a possible sale, and the Company has engaged a financial advisor to assist with the process. If the Company pursues and ultimately completes a sale of the esports business in addition to the sale of the WPT Business in the Sale Transaction, we expect to proceed (likely under a new name) as a publicly traded holding company focused on using our cash resources to explore opportunities in online entertainment, including but not limited to, real money gaming and other gaming sectors. However, the Company does not plan to limit itself to any particular industry or geographic location in its efforts to identify prospective target businesses. Currently, the Company does not have any specific merger, asset acquisition, reorganization or other business combination under consideration or contemplation. We have not, nor has anyone on our behalf, had substantive discussions, formal or otherwise, with respect to such a transaction.

We will continue to be a public company and our common stock will continue to trade on the Nasdaq Capital Market following completion of the Sale Transaction. We do not intend to go private or terminate our public reporting obligations under the Exchange Act.

Are there any risks associated with the Sale Transaction?

Yes. You should carefully review the section of this proxy statement entitled “Risk Factors,” which presents risks and uncertainties related to the Sale Transaction, in the event the Stock Purchase Agreement is terminated prior to completion of the Sale Transaction, and our operations following the completion of the Sale Transaction.

What factors were considered by management and our Board of Directors in deciding to enter into the Stock Purchase Agreement?

In reaching its decision to adopt and approve the Stock Purchase Agreement and the Sale Transaction, our Board of Directors, in consultation with management as well as its financial and legal advisors, considered a number of factors, such as the price to be paid including the future participation in the revenues earned by Buyer, the strategic alternative evaluation process and fairness opinion of Shot Tower Securities LLC that led to entering into the Stock Purchase Agreement, the prospects of the WPT Business and the terms and conditions of the Stock Purchase Agreement.

The Board also considered, and balanced against the potential benefits of the Sale Transaction, certain adverse factors. The Board of Directors noted that the historical operations of the WPT Business and the COVID-19 pandemic adds risk to its long-term viability. Although the net profit of the WPT Business was approximately $725,508 for the year ended December 31, 2020, the Board of Directors is concerned that such profit may not be sustainable in light of the present global economic conditions. The Board of Directors considered a number of risks and uncertainties about

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continuing to operate the WPT Business, including the risks involved in any expansion of the current WPT Business into new jurisdictions or markets, the need for additional capital to expand the WPT Business, and the adverse impacts that COVID-19 has had on the WPT Business’ ability to host in-person events and the delays in the production of its television shows.

Based on the available strategic and alternatives, and considering the factors identified above, our Board of Directors concluded that it would be in the best interest of the Company and its stockholders to sell the WPT Business, and that the Sale Transaction and the Stock Purchase Agreement reflect the highest value for the WPT Business reasonably attainable for our stockholders.

How is the purchase price for the Sale Transaction being financed by Buyer?

Buyer has advised the Company that the total amount of funds required to be delivered to the Company at closing will be funded from Buyer’s cash on hand.

What are the conditions of the Sale Transaction?

The following list includes what our Board of Directors and our management believe are the material conditions to the Sale Transaction, all of which must be satisfied or waived at the time of the closing. In view of the fact that interpretations of “materiality” can be subjective, the list is qualified by reference to the Stock Purchase Agreement, which is attached as Annex A to this proxy statement. You are urged to carefully read this entire document including the Stock Purchase Agreement.

• Our stockholders must approve and adopt the Stock Purchase Agreement;

• No legal process preventing or making illegal the consummation of the Sale Transaction shall be in effect.

• The respective representations and warranties of the parties to each other must be true in all material respects;

• Each party must have performed in all material respects all obligations required to be performed by it under the Stock Purchase Agreement at or prior to the closing;

• No “Material Adverse Effect” (as defined in the Stock Purchase Agreement) with respect to the Company, Seller or CSI shall have occurred;

• Buyer shall have received copies of certain identified third party consents and approvals for the Sale Transaction; and

• The parties shall have delivered to each other the various closing deliverables outlined in the Stock Purchase Agreement.

When is the closing of the Sale Transaction expected to occur?

We intend to consummate the Sale Transaction shortly after obtaining stockholder approval for the Sale Transaction, assuming all other conditions to the completion of the Sale Transaction have been satisfied or waived. Pursuant to the Stock Purchase Agreement, the Outside Date for closing the Sale Transaction is September 30, 2021, after which either we or Buyer may terminate the Stock Purchase Agreement.

How may the Stock Purchase Agreement be terminated?

The parties to the Stock Purchase Agreement may mutually agree to terminate the Stock Purchase Agreement at any time.

We, on the one hand, or Buyer, on the other hand, may terminate the Stock Purchase Agreement if:

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• the Sale Transaction is not consummated on or before the Outside Date, which is September 30, 2021; or

We may terminate the Stock Purchase Agreement if we receive a competing acquisition proposal from a third party that our Board of Directors determines is more favorable to our stockholders than the Sale Transaction, our Board of Directors authorizes our entry into a definitive agreement to consummate the transaction contemplated by such competing proposal, and we enter into such definitive agreement and pay to Buyer a $3.45 million termination concurrently with the termination of the Stock Purchase Agreement.

What will happen if the Stock Purchase Agreement is not approved by our stockholders or the Sale Transaction is not completed for any other reason?

Depending on the circumstances surrounding a termination of the Stock Purchase Agreement, Buyer may be required to pay a $10.0 million non-performance fee to us, or we may be required to pay a $3.45 million termination or non-performance fee to Buyer, and we may be required to return to Buyer the $10.0 million advance payment of purchase price and reimburse Buyer for up to $1.0 million of its documented out of pocket expenses incurred in connection with the authorization, preparation, negotiation, execution and performance of the Stock Purchase Agreement and the Sale Transaction.

If the Sale Transaction is not completed, we may explore other potential transactions, including a sale of the WPT Business to another party on such terms as our Board of Directors may approve. The terms of an alternative transaction may be more or less favorable to us than the terms of the Sale Transaction and there can be no assurance that we will be able to reach agreement with or complete an alternative transaction with another party. We may also decide to retain the WPT Business and continue to operate it. If we receive a competing acquisition proposal prior to termination of the Stock Purchase Agreement, enter into a definitive agreement within 12 months after termination of the Stock Purchase Agreement to sell the WPT Business and consummate such sale, we must pay to Buyer the $3.45 million termination fee.

What are the federal income tax consequences of the Sale Transaction?

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How will the Sale Transaction be accounted for?

Upon completion of the Sale Transaction, we will remove from our consolidated balance sheet all of the assets and liabilities associated with the WPT Business sold to Buyer and will reflect therein the effect of the receipt and the use of the proceeds of the Sale Transaction and other related transactions, including (a) the repayment of any remaining convertible debt or bridge notes, (b) the payment of our transaction expenses, and (c) the impact of the acceleration of vesting of stock-based compensation awards held by employees of the WPT Business. We will record a gain on the sale of the WPT Business in our consolidated statement of operations equal to the difference between the purchase price received or expected to be received and the book value of the assets and liabilities sold. Furthermore, any financial statements that are issued in the future, relating to periods prior to the closing of the Sale Transaction, will present the assets and liabilities of the WPT business on a condensed basis as “held for sale” and the revenues and operating results of the WPT business will be condensed and presented as “income (loss) from discontinued operations”.

Are any government approvals required in connection with the Sale Transaction?

Except for compliance with the applicable regulations of the SEC in connection with this proxy statement and with the DGCL in connection with the Sale Transaction, we are not required to comply with any federal or state regulatory requirements, and no federal or state regulatory approvals are required in connection with Sale Transaction.

Who can help answer my questions?

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RISK FACTORS

In addition to the other information included in this proxy statement, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Information,” you should carefully consider each of the risks described below before deciding whether to vote for approval and adoption of the Stock Purchase Agreement. You should also read and consider the other information in this proxy statement. See the section entitled “Where You Can Find More Information.”

Risks Related to the Sale Transaction

If the Company fails to complete the Sale Transaction, it may not be able to successfully complete another strategic transaction.

The consummation of the proposed Sale Transaction is subject to a number of closing conditions, including that the Company’s stockholders approve the Sale Transaction. The obligation of Buyer to complete the Sale Transaction is also subject to the absence of a change in circumstances that are materially adverse to the Company’s financial condition, assets, business or results of operations. If the closing conditions for the Sale Transaction are not satisfied, then the Stock Purchase Agreement can be terminated.

If the Company does not complete the Sale Transaction, it will review all options for continuing operations, possibly including seeking to identify and effect an alternative business combination, sale of assets or another similar strategic transaction or transactions. However, the Company may not be able to consummate such an alternative transaction on favorable terms, if at all, and a third party may not offer to purchase the Company’s assets for a price equal to or greater than the price proposed to be paid by Buyer. If the Company is unable to successfully consummate one or more alternative strategic transactions relating to its business, the Company will continue to execute on its current business plan. The Company intends to continue exploring strategic options for its esports business, including the possible sale of such business.

If we fail to complete the Sale Transaction, the Company’s business may be harmed.

The Company cannot predict whether it will succeed in obtaining the approval of its stockholders, or that the other conditions to close the Sale Transaction will be satisfied. As a result, the Company cannot guarantee that the Sale Transaction will be completed.

Following the Company’s public announcement of the Sale Transaction, third parties may be unwilling to enter into material agreements with the Company. New and existing customers and business partners may prefer to enter into agreements with the Company’s competitors because such customers and partners perceive that its relationships are likely to be more stable. If the Company fails to complete the Sale Transaction, the failure to maintain existing relationships with our customers, suppliers and employees or enter into new relationships, may harm our business, and the results of operations, financial condition and the market price for our common stock may decline.

In addition, if we are required to pay a termination fee or expense reimbursements in connection with the termination of the Stock Purchase Agreement, we may have difficulty recouping such costs, in addition to the costs incurred in connection with negotiating the Sale Transaction.

Pending the completion of the Sale Transaction, the Company may not make certain changes in the business and may not be able to enter into a business combination with another party.

Covenants in the Stock Purchase Agreement impede the Company’s ability to enter into specified transactions that are not in the ordinary course of business pending completion of the Sale Transaction. Existing and potential customers and vendors of our poker business may delay or cease entering into transactions with our poker business until the ownership and management of the poker business is clarified and employees and other key partners in the poker business may choose to leave the poker business due to uncertainties inherent in the Sale Transaction process.

Moreover, while the Stock Purchase Agreement is in effect and subject to limited exceptions, the Company is prohibited from soliciting, initiating, encouraging, taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to, or entering into discussions or negotiations with regard to, an acquisition proposal with any third party, subject to specified exceptions. Any such acquisition proposal could be favorable to the

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Company’s stockholders. Bally’s Corporation has in the past made unsolicited proposals to acquire the WPT business, and the provisions of the Stock Purchase Agreement prohibit us from continuing or initiating new discussions with Bally’s Corporation, subject to the limited exceptions set forth in the Stock Purchase Agreement.

The Company will incur significant expenses in connection with the Sale Transaction and could be required to make significant payments if the Stock Purchase Agreement is terminated under certain conditions.

Depending on the circumstances surrounding a termination of the Stock Purchase Agreement, the Company may be required to pay a $3.45 termination fee to Buyer, and we may be required to reimburse Buyer for up to $1.0 million of its documented out of pocket expenses incurred in connection with the authorization, preparation, negotiation, execution and performance of the Stock Purchase Agreement and the Sale Transaction. In addition, the Company expects to pay legal fees, accounting fees and financial and other advisory fees and expenses whether or not the Sale Transaction is completed. As a result, we may have difficulty recouping the costs incurred in connection with pursuing the Sale Transaction, and our cash position would be adversely impacted.

The WPT business will be subject to the terms of a license agreement for real money gaming in Asia if the Stock Purchase Agreement is terminated under certain circumstances.

Effective upon any termination of the Stock Purchase Agreement, other than a termination in which Buyer is required to pay a non-performance fee to us, Buyer (or its affiliate) and Peerless Media Limited, an indirect subsidiary of the Company that owns intellectual property related to the WPT Business, will enter into a 3-year brand license for Buyer’s (or its affiliate’s) use of the WPT brand in the territory of Asia for real-money gaming in exchange for revenue-based royalty payments of 20% of qualifying revenues, and minimum annual guaranteed royalty payments of $4.0 million, $6.0 million and $8.0 million for the first, second and third years, respectively. Such license will be subject to further customary terms and conditions, and provide Peerless Media Limited with a $2.0 million buy-out right after the first year. In the event of any termination of the Stock Purchase Agreement under any circumstance in which the Buyer is required to pay a non-performance fee to us, the Company will have the option, but not obligation, to require the Buyer to into such license agreement with Peerless Media Limited. The form of the agreement governing the license is attached as Exhibit B to the Stock Purchase Agreement. The existence of the license will prevent us from pursuing and entering into a similar license in the Asian territory with another third party that may have contained terms that are more advantageous to us. In addition, if we wish to pursue a sale of the WPT Business to another purchaser after termination of the Stock Purchase Agreement, the existence of this license may deter another otherwise interested third party purchaser from pursuing an acquisition of the WPT Business, or reduce the consideration such a party would be will to pay for it.

The announcement and pendency of the Sale Transaction, whether or not completed, may adversely affect us.

The announcement and pendency of the Sale Transaction may adversely affect the trading price of our common stock, our business or our relationships with clients, customers, suppliers and employees. Third parties may be unwilling to enter into material agreements with respect to the WPT Business. Additionally, employees working in the WPT Business may become concerned about the future of the WPT Business, and lose focus or seek other employment. In addition, while the completion of the Sale Transaction is pending, we may be unable to attract and retain key personnel and our management’s focus and attention and employee resources may be diverted from operational matters or the exploration of strategic operations for our esports business, including its possible sale.

The Stock Purchase Agreement limits our ability to pursue alternatives to the Sale Transaction.

The Stock Purchase Agreement contains provisions that may make it more difficult for us to sell our entire company or the WPT Business to any party other than Element Partners, LLC. These provisions include the prohibition on our ability to solicit competing proposals and the requirement that we pay Buyer a termination fee of $3.45 million if we terminate the Stock Purchase Agreement to enter into a definitive agreement with respect to a superior proposal. These provisions could make it less advantageous for a third party that might have an interest in acquiring us or all of or a significant part of the WPT Business to consider or propose an alternative transaction, even if that party were prepared to pay consideration with a higher value than the consideration to be paid by Buyer. Bally’s Corporation has in the past made unsolicited proposals to acquire the WPT Business, and the provisions of the Stock Purchase Agreement prohibit us from continuing or initiating new discussions with Bally’s Corporation, subject to the limited exceptions set forth in the Stock Purchase Agreement.

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Risks Related to us if the Sale Transaction is Completed

Buyer may not honor all of its obligations under the Stock Purchase Agreement.

Effective upon any termination of the Stock Purchase Agreement, other than a termination in which Buyer is required to pay a non-performance fee to us, Buyer (or its affiliate) and Peerless Media Limited, an indirect subsidiary of the Company that owns intellectual property related to the WPT Business, will enter into a 3-year brand license for Buyer’s (or its affiliate’s) use of the WPT brand in the territory of Asia for real-money gaming in exchange for revenue-based royalty payments of 20% of qualifying revenues, and minimum annual guaranteed royalty payments of $4.0 million, $6.0 million and $8.0 million for the first, second and third years, respectively. Such license will be subject to further customary terms and conditions, and provide Peerless Media Limited with a $2.0 million buy-out right after the first year. In the event of any termination of the Stock Purchase Agreement under any circumstance in which the Buyer is required to pay a non-performance fee to us, the Company will have the option, but not obligation, to require the Buyer to into such license agreement with Peerless Media Limited. The form of the agreement governing the license is attached as Exhibit B to the Stock Purchase Agreement. Buyer may not honor all of its obligations under the Stock Purchase Agreement and the licensing agreement.

The Company will become a company with cash, investments, and our esports business, which may prove difficult for investors to evaluate our ability to achieve stated business objectives.

After the Sale Transaction is completed, we will have disposed of substantially all of our operating assets other than cash, investments and our esports business. The Company recently announced that its Board of Directors has decided to explore strategic options for the esports business in order to maximize its value to stockholders, including a possible sale, and the Company has engaged a financial advisor to assist with the process. If the Company pursues and ultimately completes a sale of the esports business, we would then become a development stage company with no historic operating results. In that situation we would expect to proceed (likely under a new name) as a publicly traded holding company focused on using our cash resources to explore opportunities in online entertainment, including but not limited to, real money gaming and other gaming sectors; however we do not plan to limit ourselves to any particular industry or geographic location in its efforts to identify prospective target businesses. Currently, however, we have no specific merger, asset acquisition, reorganization or other business combination under consideration or contemplation. We have not, nor has anyone on our behalf, had substantive discussions, formal or otherwise, with respect to such a transaction. We may be unsuccessful in pursuing acquisition targets, or acquisition targets, if acquired, may not prove to have successful operations.

We have no current plans to pay cash dividends on our common stock with the proceeds of the Sale Transaction; as a result, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We have no current plans to pay dividends on our common stock with the proceeds of the Sale Transaction. Any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, general business conditions and other factors that our board of directors may deem relevant. As a result, you may not receive any return on an investment in our common stock unless you sell your common stock for a price greater than that which you paid for it.

Following the closing of the Sale Transaction, we will be subject to five-year non-solicitation and non-competition covenants under the Stock Purchase Agreement, which will limit our ability to operate in poker related fields.

Following the closing of the Sale Transaction, we will be subject to five-year non-solicitation and non-competition covenants made in the Stock Purchase Agreement. During such five-year period, we will be prohibited from participating or engaging in, in any manner or capacity, the Restricted Business, and from soliciting the customers, suppliers or employees of the WPT Business. For this purpose, the “Restricted Business” means, generally, any business involving variants of the game of poker specified in the Stock Purchase Agreement and any activities ancillary or related to such variants of poker, including, without limitation, (i) organizing, hosting, operating, promoting, and/or conducting events relating to poker, (ii) broadcasting or distributing content relating to such events, (iii) organizing, hosting,

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operating, promoting, and/or conducting clubs or organizations related to poker, and (iv) commercializing products and merchandise relating to poker. While we do not believe these limitations will negatively affect our esports business, these restrictions may adversely impact our future opportunities.

Risks Related to the Current Business

In addition to the other information contained in this proxy statement, you should carefully consider each of the risks described below. Until the close of the Sale Transaction, the Company expects to continue to execute its current business strategy with respect to its esports and poker-related business. Except as specifically described below, the following discussion of risks related to the Company does not reflect changes to the Company’s business that may occur if it consummates the Sale Transaction. Allied Esports International, Inc., together with its subsidiaries, owns and operates the esports-related businesses of AESE, and are collectively referred to as “Allied Esports.”. Peerless Media Limited, CSI and WPT Enterprises, Inc. operate the poker-related business of AESE and are collectively referred to herein as “World Poker Tour” or “WPT.”

Allied Esports Risk Factors

Allied Esports is subject to risks associated with operating in a rapidly developing industry and a relatively new market.

Many elements of Allied Esports’ business are unique, evolving and relatively unproven. Its business and prospects depend on the continuing development of live streaming of competitive esports gaming. The market for esports gaming competition is relatively new and rapidly developing and is subject to significant challenges. Allied Esports’ business relies upon its ability to grow and garner an active gamer community, and successfully monetize this community through tournament fees, live event ticket sales, and advertising and sponsorships. In addition, Allied Esports’ continued growth depends, in part, on its ability to respond to constant changes in the esports gaming industry, including technological evolution, shifts in gamer trends and demands, introductions of new games, game publisher intellectual property right practices, and industry standards and practices. While change in this industry may be inevitable, and Allied Esports will try to adapt its business model as needed to accommodate change and remain on the forefront of its competitors, Allied Esports may be unsuccessful in doing so and does not provide any guarantees or assurances of success as the industry continues to evolve.

Allied Esports may not be able to generate sufficient revenue to achieve profitability.

Allied Esports expects its operating expenses to increase significantly as it continues to expand its marketing efforts and operations in existing and new geographies and vertical markets (including its online esports tournament and gaming subscription platform it intends to develop). In addition, Allied Esports expects to continue to incur significant legal, accounting and other expenses related to being a public company. If its revenue declines or fails to grow at a rate faster than these increases in operating expenses, it will not be able to achieve profitability in future periods. As a result, Allied Esports may generate losses. Allied Esports cannot assure you that it will achieve profitability.

Allied Esports generates a portion of its revenues from advertising and sponsorship. If it fails to attract more advertisers and sponsors to its live events, tournaments or content, or if advertisers or sponsors are less willing to advertise with or sponsor Allied Esports, its revenues may be adversely affected.

Allied Esports generates revenue from advertising and sponsorship, and it expects to further develop and expand its focus on these revenues in the future. These revenues partly depend on the advertisers’ willingness to advertise in the esports gaming industry. If the esports gaming advertising and sponsorship market does not continue to grow, or if Allied Esports is unable to capture and retain a sufficient share of that market, Allied Esports’ ability to achieve profitability may be materially and adversely affected. Furthermore, with unfavorable economic external factors, sponsors and advertisers may not have enough budget allocations for spending in sponsorship and advertising in esports, which would also lead to an adverse impact on Allied Esports’ revenue stream.

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Allied Esports’ business model may not remain effective and it cannot guarantee that its future monetization strategies will be successfully implemented or generate sustainable revenues and profit.

Allied Esports generates revenues from advertising and sponsorship of its live events, its content, the sale of merchandising, and the operation of its esports arenas. Allied Esports has generated, and expects to continue to generate, a substantial portion of revenues using this revenue model in the near term. Although Allied Esports anticipates growth in Allied Esports’ business utilizing this revenue model, there is no guarantee that growth will continue in the future, and the demand for its offerings may change, decrease substantially or dissipate, or it may fail to anticipate and serve esports gamer demands effectively. The COVID-19 outbreak may also continue to cause the demand for our in-person events to reduce and shift demand to online gaming. Allied Esports may determine to enter into new opportunities to expand its business, including online gaming platforms, which may or may not be successful. Any such expansions involve additional risks and costs that could materially and adversely affect its business.

The COVID-19 pandemic has disrupted the long-term growth plans of Allied Esports, and we may not be able to implement and grow our three-pillar objectives for long-term success in the near future, or event at all.

The COVID-19 pandemic has caused disruption in our long-term growth plans for Allied Esports, and although our long-term strategy remains to fully implement the three-pillar strategy, we are currently focused on continuing our in-person experiences at our current arenas and developing multiplatform content. There is no guarantee that we will be able in the near future or at any point to be able to expand our in-person experience to arenas beyond those in which we are currently operating or develop a develop an esports platform.

Allied Esports’ long-term growth strategy depends on the availability of suitable locations for its proprietary and licensed esports arenas and its ability to open new locations and operate them profitably.

A key element of Allied Esports’ long-term growth strategy is to extend its brand by opening additional flagship arenas throughout the world and licensing the Allied Esports brand to third party esports arena operators, which it believes will provide attractive returns on investment. However, desirable locations may not be available at an acceptable cost. Opening these additional locations will depend upon a number of factors, many of which are beyond Allied Esports’ control, including its ability or the ability of the selected licensee to:

• reach acceptable agreements regarding the lease of the locations;

• comply with applicable zoning, licensing, land use and environmental regulations and orders (including those related to social distancing policies during the COVID-19 pandemic);

• raise or have available an adequate amount of cash or currently available financing for construction and opening costs;

• timely hire, train and retain the skilled management and other employees necessary to meet staffing needs;

• negotiate acceptable terms with any unions representing employees;

• obtain, for acceptable cost, required permits and approvals, including liquor licenses; and

• efficiently manage the amount of time and money used to build and open each new location.

If Allied Esports succeeds in opening new arenas on a timely and cost-effective basis, it may nonetheless be unable to attract enough gamers or spectators to the new location (or to existing locations of affiliated arenas) because its entertainment and menu options might not appeal to them. Failure to do so could have a significant adverse effect on Allied Esports’ overall operating results.

Allied Esports has not entered into definitive license agreements with all game publishers that it currently has relationships with, and it may never do so.

Although Allied Esports has relationships with many game publishers for tournament event and content experiences involving their respective intellectual properties and enters into definitive license agreements with such game publishers from time to time, Allied Esports does not have definitive license agreements in place with all of its

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game publishers. No assurances can be given as to when or if it will be able to come to agreeable terms with game publishers for any future license agreements. If Allied Esports is unable to come to mutually agreeable terms and enter into definitive license agreements with game publishers, game publishers may unilaterally choose to discontinue its relationship with Allied Esports, thereby preventing Allied Esports from offering tournament event and content experiences using their game intellectual property. Should game publishers choose not to allow Allied Esports to offer tournament event and content experiences involving their intellectual property to Allied Esports’ customers, the popularity of Allied Esports’ tournaments and content may decline, which could materially and adversely affect its results of operations and financial condition.

Even if Allied Esports is able to license its brand to third party esports operators, there is a risk that those operators could damage its brand by operating esports arenas that are not at Allied Esports’ standards of operation.

As Allied Esports licenses the Allied Esports brand to third party esports arena operators around the world, it will depend on those operators to run those arenas at a quality level similar to Allied Esports’ owned and operated arenas. Allied Esports’ strategy depends on customers associating the third party esports arenas as part of Allied Esports’ network of affiliated arenas, which it believes will expand its brand recognition and increase customers, revenue, and growth. If Allied Esports’ affiliate arenas are poorly operated, or if those operators fail to use Allied Esports’ name and branding in a manner consistent with Allied Esports’ corporate messaging and branding, or if there are safety issues or other negative occurrences at affiliate arenas, Allied Esports’ name and brand could be significantly damaged, which would make its expansion difficult and materially adversely affect its results of operations and financial condition.

Allied Esports’ long-term growth strategy includes deploying additional mobile arenas in the U.S. and Europe to host its tournaments and events and it must operate them profitably.

A key element of Allied Esports’ long-term growth strategy is to extend its brand by increasing and adding to its portfolio of mobile arenas in the U.S. and Europe, as we believe doing so will provide attractive returns on investment. Adding these mobile arenas will depend upon a number of factors, many of which are beyond Allied Esports’ control, including but not limited to our ability, or the ability of our licensees, to:

• reach acceptable agreements regarding the lease or acquisition of the trucks that are the basis of the mobile arenas;

• comply with applicable zoning, licensing, land use and environmental regulations and orders (including those related to social distancing policies during the COVID-19 pandemic) and obtain required permits and approvals;

• raise or have available an adequate amount of cash or currently available financing for construction of the mobile arenas and the related operational costs;

• timely hire, train and retain the skilled management and other employees necessary to operate the mobile arenas;

• efficiently manage the amount of time and money used to build and operate each new mobile arena; and

• manage the risks of road hazards, accidents, traffic violations, etc. that may impede the operations of the mobile arenas.

The nature of hosting esports events exposes Allied Esports to negative publicity or customer complaints, including in relation to, among other things, accidents, injuries or thefts at the arenas, and health and safety concerns.

Allied Esports’ business of hosting esports events inherently exposes it to negative publicity or customer complaints as a result of accidents, injuries or, in extreme cases, deaths arising from incidents occurring at our arenas, including health, safety or security issues, and quality and service standards. Even isolated or sporadic incidents or accidents may have a negative impact on Allied Esports’ brand image and reputation, the arenas’ popularity with gamers and spectators or the ability to host esports events at all.

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Allied Esports’ marketing and advertising efforts may fail to resonate with gamers.

Allied Esports’ live events, tournaments and competitions are marketed through a diverse spectrum of advertising and promotional programs such as online and mobile advertising, marketing through websites, event sponsorship and direct communications with the esports gaming community including via email, blogs and other electronic means. An increasing portion of Allied Esports’ marketing activity is taking place on social media platforms that are either outside, or not totally within, its direct control. Changes to gamer preferences, marketing regulations, privacy and data protection laws, technology changes or service disruptions may negatively impact its ability to reach target gamers. Allied Esports’ ability to market its tournaments and competitions is dependent in part upon the success of these programs.

The esports gaming industry is competitive, and gamers may prefer competitors’ arenas, leagues, competitions or tournaments over those offered by Allied Esports.

The esports gaming industry is competitive. Competitors range from established leagues and championships owned directly, as well as leagues franchised by well-known and capitalized game publishers and developers, interactive entertainment companies, diversified media companies and emerging start-ups. New competitors will likely continue to emerge. Many of these competitors may have greater financial resources than Allied Esports. If Allied Esports’ competitors develop and launch competing arenas, leagues, tournaments or competitions, Allied Esports’ revenue and margins could decline.

Allied Esports may not provide events or tournaments with games or titles for which the esports gaming community is interested.

Allied Esports must attract and retain the popular esports gaming titles in order to maintain and increase the popularity of its live events, leagues, tournaments and competitions. Allied Esports must identify and license popular games that resonate with the esports gamer community on an ongoing basis. Allied Esports cannot assure you that it can attract and license popular esports games from their publishers, and failure to do so would have a material and adverse impact on Allied Esports’ results of operations and financial conditions.

If Allied Esports fails to keep its existing gamers engaged, acquire new gamers and expand interest in its live events, leagues, tournaments and competitions, its business, its ability to achieve profitability and its prospects may be adversely affected.

Allied Esports’ success depends on its ability to maintain and grow the number of gamers attending its live events, tournaments and competitions, and keep its gamers and attendees highly engaged. In order to attract, retain and engage gamers and remain competitive, Allied Esports must continue to develop and expand its live events, leagues, produce engaging tournaments and competitions, and implement new content formats, technologies and strategies to improve its product offerings. There is no assurance it will be able to do so.

A decline in the number of gamers may adversely affect the engagement level of gamers with Allied Esports’ tournament and entertainment platform under development may reduce our revenue opportunities and have a material and adverse effect on our business, financial condition and results of operations.

It is vital to Allied Esports’ operations that its planned online esports tournament and gaming subscriptions platform be responsive to evolving gamer preferences and offer first-tier esports game content and other services that attracts gamers. Allied Esports must also keep providing gamers new features and functions to enable superior content viewing and interaction, or the number of gamers utilizing the platform will likely decline. Any decline in the number of gamers will likely have a material and adverse effect on our operations.

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There is no guarantee that Allied Esports will be able to complete its planned online esports tournament and gaming subscription platform, or that such platform once completed will be or remain popular.

Allied Esports cannot assure you that the online esports tournament and gaming subscription platform it intends to develop will be completed in a timely manner or, if completed, become popular with gamers to offset the costs incurred to operate and expand it. This will require substantial costs and expenses. If such increased costs and expenses do not effectively translate into improved gamer engagement, Allied Esports’ results of operations may be materially and adversely affected.

If Allied Esports fails to maintain and enhance its brands, its business, results of operations and prospects may be materially and adversely affected.

Allied Esports believes that maintaining and enhancing its brands is important for its business to succeed by increasing the number of gamers and engagement by the esports community. Since Allied Esports operates in a highly competitive market, brand maintenance and enhancement directly affects its ability to maintain and enhance its market position. As Allied Esports expands, it may conduct various marketing and brand promotion activities using various methods to continue promoting its brands, but it cannot assure you that these activities will be successful. In addition, negative publicity, regardless of its veracity, could harm Allied Esports’ brands and reputation, which may materially and adversely affect Allied Esports’ business, results of operations and prospects.

If Allied Esports fails to anticipate and successfully implement new esports technologies or adopt new business strategies, technologies or methods, its business may suffer.

Rapid technology changes in the esports gaming market requires Allied Esports to anticipate, sometimes years in advance, which technologies it must develop, implement and take advantage of in order to be and remain competitive in the esports gaming market. Allied Esports has invested, and in the future may invest, in new business strategies including its to-be-developed online esports tournament and entertainment subscription platform, technologies, products, or games to engage a growing number of gamers and deliver the best gaming experiences possible. These endeavors involve significant risks and uncertainties, and no assurance can be given that the technology it adopts and the features it pursues will be successful. If Allied Esports does not successfully implement these new technologies, its reputation may be materially adversely affected and its financial condition and operating results may be impacted.

Allied Esports uses third-party services in connection with its business, and any disruption to these services could result in a disruption to its business, negative publicity and a slowdown in the growth of its users, materially and adversely affecting its business, financial condition and results of operations.

Allied Esports’ business depends on services provided by, and relationships with, various third parties, including cloud hosting, server operators, broadband providers, and computing peripheral suppliers, among others. The failure of any of these parties to perform in compliance with our agreements may negatively impact Allied Esports’ business.

Additionally, if such third parties increase their prices, fail to provide their services effectively, terminate their service or agreements or discontinue their relationships with Allied Esports, Allied Esports could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on its business, financial condition and results of operations.

Allied Esports may not be able to procure the necessary permits and licenses to operate its arenas.

Allied Esports must obtain certain permits and licenses, including liquor licenses, to operate its arenas. Often these processes can be expensive and time consuming. There is no guarantee that Allied Esports will be able to obtain such permits and licenses on a timely or cost-effective basis. Any delays could jeopardize the ability of Allied Esports to operate the arenas and host events. As a result, Allied Esports’ business could suffer.

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Rules and regulations governing sweepstakes, promotions and giveaways vary by state and country and these rules and regulations could restrict or eliminate Allied Esports’ ability to generate revenues on its esports gaming platform it intends to develop, which could materially and adversely impact the viability of this business.

As part of its esports gaming platform to be developed, Allied Esports intends to offer subscribers the chance to win cash and prizes when playing esports games and tournaments on the platform. Awarding cash and prizes would require compliance with the laws or regulations in various states or countries over sweepstakes, promotions and giveaways, which are complex and constantly changing. Any negative finding of law regarding the characterization of the type of online activity carried out on the esports gaming platform could limit or prevent Allied Esports’ ability to obtain subscribers in those jurisdictions, which in turn could significantly impact Allied Esports’ ability to generate revenue. The ability or willingness to work with Allied Esports by payment processors and other service providers necessary to conduct the esports gaming platform business also may be limited due to such changes in laws or any perceived negative consequences of engaging in the business of sweepstakes, promotions and giveaways that will be utilized by the esports gaming platform.

Negotiations with unionized employees could delay opening or operating Allied Esports’ arenas.

Certain of Allied Esports’ employees are represented by one or more unions. Allied Esports will need to engage such unions to seek to employ the services of the employees on mutually acceptable terms. However, Allied Esports cannot guarantee that such negotiations will be timely concluded to avoid interruption in its tournament schedule, or that such negotiations will ultimately result in an agreement. Any failure to timely conclude the negotiations could cause a delay in Allied Esports’ ability to timely open arenas or host events. Either of these events would adversely affect Allied Esports’ ability to achieve profitability.

Allied Esports’ business is subject to regulation, and changes in applicable regulations may negatively impact its business.

Allied Esports is subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet. In addition, laws and regulations relating to user privacy, data collection, retention, electronic commerce, consumer protection, content, advertising, localization, and information security have been adopted or are being considered for adoption by many jurisdictions and countries throughout the world. These laws could harm Allied Esports’ business by limiting the products and services it can offer consumers or the manner in which it offers them. The compliance costs for these laws may increase in the future as a result of changes in interpretation. Furthermore, Allied Esports’ failure to comply with these laws or the application of these laws in an unanticipated manner may harm its business and result in penalties or significant legal liability.

Allied Esports’ ability to attract esports events to its flagship arena may become difficult if the Nevada legislature establishes a Nevada Esports Commission, which could have a material adverse effect on our operations.

The Nevada state legislature is currently in its 81st Session and has introduced Senate Bill 165 relating to the creation of the Nevada Esports Commission, which if passed would be tasked with creating regulations overseeing esports competitions within the State. Such a move is the first of its kind in the U.S. and would promulgate regulations in areas such as integrity of competition, testing for controlled substances, qualifications for tournament organizers and participating players. The Bill’s intention is to make Nevada a more attractive destination for hosting esports tournaments. However, game publishers, tournament organizers and players may not look favorably on additional regulatory requirements that result from the bill, if passed, and it could have a material adverse effect on our ability to attract esports events to Nevada, and on our operations. To date, Senate Bill 165 has not been passed.

Risks Related to Allied Esports’ Intellectual Property

Allied Esports licenses certain brand names under agreements that will expire and may also be subject to claims of infringement of third-party intellectual property rights.

Allied Esports has a three-year license with a third party, ending in July 2021, to use the names “Esports Arena Las Vegas” and “Esports Arena Drive”, which are part of the branding for its Las Vegas flagship esports arena location and its US-based mobile arena, respectively. Once that license expires, there is no assurance that Allied Esports will be

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able to further license those names or purchase them on satisfactory terms. Although Allied Esports intends to market and promote its esports arenas using intellectual property it owns and controls, there are no assurances that those efforts will be fruitful and that it will be able to maintain brand awareness once the license expires.

Furthermore, third parties may claim that Allied Esports has infringed their intellectual property rights. Although Allied Esports takes steps to avoid violating the intellectual property rights of others, it is possible that third parties still may claim infringement. Infringement claims against us, whether valid or not, may be expensive to defend and divert the attention of Allied Esports’ management and employees from business operations. Such claims or litigation could require Allied Esports to pay damages, royalties, legal fees and other costs. Allied Esports also could be required to stop offering, distributing or supporting esports games, its to-be-developed gaming platform or other features or services which incorporate the affected intellectual property rights, redesign products, features or services to avoid infringement, or obtain a license, all of which could be costly and harm its business.

Allied Esports’ technology, content and brands are subject to the threat of piracy, unauthorized copying and other forms of intellectual property infringement.

Allied Esports regards its technology, content and brands as proprietary and takes measures to protect it from infringement. Piracy and other forms of unauthorized copying and use of technology, content and brands are persistent, and policing is difficult. Further, the laws of some countries do not protect intellectual property rights to the same extent as the laws of the United States, or are poorly enforced. Legal protection of Allied Esports’ rights may be ineffective in such countries, which could have a material adverse effect on its business, financial condition and results of operations.

Allied Esports may not be able to prevent others from unauthorized use of its intellectual property, which could harm our business and competitive position.

Allied Esports regards its registered trademark and pending trademarks, service marks, pending patents, domain names, trade secrets, proprietary technologies and similar intellectual property as critical to its success. Allied Esports relies on trademark and patent law, trade secret protection and confidentiality and license agreements with its employees and others to protect its proprietary rights.

Allied Esports has invested significant resources to develop its own intellectual property and acquire licenses to use and distribute the intellectual property of others. Failure to maintain or protect these rights could harm its business. In addition, any unauthorized use of our intellectual property by third parties may adversely affect its current and future revenues.

Allied Esports may not be able to develop compelling intellectual property content or secure media content distributors to promote, sell, and distribute such content, which could harm its business and competitive position.

Allied Esports intends to produce licensable content from the various live events, tournaments, and its own initiatives and brands to sell to viewers worldwide. There is no guarantee that it will be able to develop content that is compelling to its targeted customers. Media and gaming company competitors, many of which are better funded, are also creating content from esports events, and it will be difficult to create content that stands out and attracts customers. Furthermore, to carry out Allied Esports’ worldwide distribution plans, film and media distribution partners will be needed and, in the event, Allied Esports is not able to secure content distributors on terms acceptable to Allied Esports, this will have a significant adverse impact on revenue streams from the sale or licensing of intellectual property.

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Risks Related to WPT’s Current Business

WPT’s broadcast agreement for distribution on Bally Sports Networks sets a minimum level of distribution that is significantly less than the current distribution level. If WPT’s current level of distribution is reduced, the reduction could materially and adversely affect WPT’s results of operations.

Currently, WPT broadcasts certain of its worldwide Main Tour events throughout the United States on Bally Sports Networks (formerly the FOX Sports Regional Networks or “RSNs,” which were purchased by Sinclair Broadcast Group and Entertainment Studios, Inc. (collectively, “Sinclair”)), and they are also available on ClubWPT.com on demand, and on various digital streaming platforms. WPT’s programming agreement to broadcast the television series does not provide for any license fees to be paid to WPT for the broadcast rights, and contains a minimum level of distribution. Currently, WPT’s programming is broadcast significantly more frequently that the minimum threshold under the programming agreement. With no license fee in place for the distribution, WPT benefits from the program’s distribution and promotion of WPT’s online products (ClubWPT) and generates fees from sponsors by integrating sponsor logos and other advertising materials into its programs and around the broadcast of the shows through music royalties and distribution of the shows in other markets. The Season 17 sponsors included Hublot S.A., a luxury watch maker, Rockstar, Inc., an energy drink company, Baccarat, Inc., a manufacturer and retailer of fine crystal, Faded Spade Poker, LLC, a playing card manufacturer, and Zynga Inc., a social gaming operator. If WPT’s level of distribution were reduced by Sinclair, the value of the foregoing would be significantly reduced and it may be difficult for WPT to find sponsors on terms acceptable to WPT, or at all.

WPT’s production costs may increase.

In May 2016, WPT entered into a programming agreement for Fox Sports Net (“FSN”) (now Sinclair) to broadcast Seasons 15 through 18 of the WPT television series through calendar year 2021 on terms that are similar to the prior programming agreement discussed above. WPT may be required to pay the cost to produce these shows for Sinclair and depending on the amount of the related revenues it is able to generate, the lack of license fees could have a material adverse effect on WPT’s financial condition, results of operations and cash flows.

WPT’s production of its television show has been halted, and it is not known when production may resume.

Due to the ongoing COVID-19 pandemic, WPT has been unable to film and produce final tables from some of its previous main tour events. Although WPT anticipates filming those final tables in 2021, there is no way to predict when or if WPT will be able to film those final tables. Furthermore, the casino partners from whose events those final tables derive, as well as the players that are waiting to play such final tables, may decide not to play the final table and split the prize money, or enter into other arrangements that will make it difficult to film such final tables. If WPT cannot film those final tables, and if its production of future final tables remain in jeopardy due to COVID-19 or other factors, WPT may not be able to meet its obligations to the distributors of its content, its sponsors, or its casino partners, which could have a material adverse effect on WPT’s financial condition and future business prospects.

Sinclair’s acquisition of FSN could have negative consequences on World Poker Tour.

The Walt Disney Company (“Disney”) recently acquired 21st Century Fox (“FOX”). Under the terms of the acquisition, FOX’s non-regional news and sports assets, including FSN, were spun off into a new company, Fox Corporation (which is commonly referred to as “New Fox”), which remains owned by the prior FOX shareholders. The Department of Justice required Disney to sell all RSNs obtained as part of the acquisition within 90 days after the closing of the Disney/FOX acquisition. WPT’s programming agreement with FSN’s owner requires FSN to ensure WPT’s programming reaches a certain amount of households, which requires FSN’s owner to ensure we are broadcast on the RSNs. The FSN agreement also has other important broadcast requirements to ensure that WPT’s programming remains “appointment television” and airs at particular times on both the FSN networks and the RSNs. The RSNs (including FSN) were ultimately purchased by a joint venture company owned by Sinclair. Although Sinclair purchased all or substantially all of FOX’s RSNs, it will be difficult to ensure WPT’s programming is carried on all of the RSNs, or at the times and dates WPT finds desirable. Even though WPT’s FSN programming agreement will remain an enforceable obligation against Sinclair, there is no assurance that Sinclair will continue to broadcast WPT’s programming on FSN on terms WPT finds reasonable, if at all. Furthermore, the sale of the RSN’s to Sinclair and the changes to the FOX and the FSN business could negatively affect WPT’s ability to find other traditional television network distribution of the WPT shows in the United States. Any reduction or change of WPT’s distribution footprint has the potential to negatively affect its brand and associated sponsorship, marketing and promotional efforts.

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There is no assurance that Sinclair will broadcast future seasons of the World Poker Tour, which would materially and adversely affect WPT’s results of operations.

In May 2016, WPT entered into an agreement for FSN (now Sinclair) to broadcast Seasons 15 through 18 of the WPT television series through calendar year 2021. If Sinclair elects to discontinue airing either series and WPT cannot replace its programming agreement with an agreement with a comparable U.S. broadcaster, it may be difficult for WPT to obtain sponsorship funds, it will be detrimental to the viability of the WPT brand and, consequently, would have a material adverse effect on WPT’s financial condition, results of operations and cash flows.

Consumers shifting to online video on-demand services like Hulu and Netflix and away from cable could have negative consequences on World Poker Tour.

Historically, WPT has relied on traditional television network distribution in order to build its brand and generate sponsorship revenue. As online video on-demand services such as Hulu and Netflix have become increasingly popular compared to traditional cable subscriptions, WPT has increased its digital distribution. If these “cable-cutting” trends intensify, however, there is no assurance that WPT can maintain or increase its total distribution and if it cannot, it may be difficult for WPT to obtain sponsorship funds, it will be detrimental to the viability of the WPT brand and, consequently, it would have a material adverse effect on WPT’s financial condition, results of operations and cash flows.

The ClubWPT.com business is currently heavily dependent upon television as a major source for the generation of new monthly subscribers and WPT continually seeks cost effective online and traditional marketing to generate new subscribers, which if not achieved could materially and adversely affect its results of operations.

ClubWPT is the official subscription online poker club of the World Poker Tour. VIP users pay a monthly subscription fee for exclusive access to full episodes from every past season of the WPT television show, plus magazine access, coupons, and more. Each month, members can play poker to win a share of cash and prizes, including seats to WPT events. In addition, in January 2019, WPT added free-to-play (also known as “freemium”) social poker and casino gaming on the platform, whereby free chips are offered for play, but additional chips can be purchased (there are no cash prizes offered for freemium play). WPT has produced ClubWPT.com-branded television shows that aired on FSN (such as our “King of the Club” television shows), as well as incorporating significant branding and advertising of ClubWPT into the WPT television shows to build awareness and drive traffic to ClubWPT.com. In order for the ClubWPT business (including its freemium offering) to continue as a viable business, WPT needs to continuously identify cost efficient marketing tools to generate new subscribers for ClubWPT. Traditionally, WPT has marketed by using its large library of content online as a driver to the platform, or through its social media footprint. The number of paid subscribers at ClubWPT grew throughout 2019 as a result of a significant promotion by FSN, while daily active users of our freemium products has increased since we introduced them in January 2019. The number of paid subscribers could decrease in future quarters due to the lack of current spending on marketing for new players. WPT will need to increase its marketing and promotion of ClubWPT through alternative means, such as social media, in person at WPT live events, via cross-promotion with the Allied Esports business, and via other means to ensure ClubWPT remains viable.

WPT’s reliance on Pala Interactive LLC (“Pala”) as a third-party systems provider is subject to system security risks and business viability risks that could disrupt services provided to ClubWPT.com customers, and any such disruption could reduce WPT’s revenue, increase its expenses and harm its reputation.

Experienced computer programmers and hackers may be able to penetrate Pala’s network security and misappropriate confidential information, create system disruptions or cause shutdowns. In addition, computer programmers and hackers may be able to develop and deploy viruses, worms and other malicious software programs that attack their products or otherwise exploit security vulnerabilities in their products. As a result, WPT could lose its existing or potential customers. Pala is a third-party vendor whose business is dependent upon the real money gaming and social gaming business environment. Any business interruption or failure by Pala would directly affect WPT’s online business as WPT would need to find a suitable alternative platform provider.

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Rules and regulations governing sweepstakes, promotions and giveaways vary by state and country and these rules and regulations could restrict or eliminate WPT’s ability to generate revenues at ClubWPT.com, which could materially and adversely impact the viability of this business.

Changes in laws or regulations in various states or countries over sweepstakes, promotions and giveaways or a negative finding of law regarding the characterization of the type of online activity carried out on ClubWPT.com could result in WPT’s inability to obtain subscribers in those jurisdictions, which in turn could significantly impact WPT’s ability to generate revenue. The ability or willingness to work with WPT by payment processors and other service providers necessary to conduct the ClubWPT.com business also may be limited due to such changes in laws or any perceived negative consequences of engaging in the business of sweepstakes, promotions and giveaways that are utilized by ClubWPT.com.

WPT’s success depends in part on our brands and any future brands it may develop, and if the value of its brands were to diminish, its business would be adversely affected. Licensees of WPT’s brands may diminish the value of its brands.

WPT’s success depends on its World Poker Tour and Alpha 8 brands, which consist of a portfolio of trademarks, service marks and copyrighted materials. WPT’s intellectual property portfolio includes, but is not limited to, existing and future episodes of the televised programming produced in connection with its existing and future brands and certain elements of these episodes, trade names and other intellectual property rights. In connection with WPT’s branding and licensing operations, WPT entered into agreements with certain licensors to utilize the WPT brand and intellectual property in connection with mobile, social media and casual games, horse racing, amateur poker leagues, governmental lottery games, and in-person and online education and training poker workshops. While specific contractual provisions require that the licensees maintain the quality of WPT’s licensed brands, WPT cannot be certain that its licensees or their manufacturers and distributors will honor their contractual obligations or that they will not take other actions that will diminish the value of WPT’s brands prior to its ability to detect and prevent any such actions.

WPT may not be able to protect the format of its episodes, its current and future brands and its other proprietary rights.

WPT is susceptible to others imitating its television show format and other products and infringing on its intellectual property rights. Litigation may be necessary to enforce WPT’s intellectual property rights and to determine the validity and scope of its proprietary rights. Any litigation could result in substantial expense, may reduce WPT’s profits and may not adequately protect its intellectual property rights upon which it is substantially dependent. In addition, the laws of certain foreign countries do not always protect intellectual property rights to the same extent as the laws of the U.S. Imitation of WPT’s television show formats and other products or infringement of its intellectual property rights could diminish the value of its brands or otherwise adversely affect its revenues.

Any litigation or claims against WPT based upon its intellectual property or other third-party rights, whether or not successful, could result in substantial costs and harm its reputation. In addition, such litigation or claims could force WPT to do one or more of the following: to cease exploitation of the WPT television series and related products or portions thereof that violate the potentially infringed third party rights or intellectual property, which would adversely affect WPT’s revenue; to negotiate a license from the holder of the intellectual property or other right alleged to have been infringed, which license may not be available on reasonable terms, if at all; or to modify the WPT television series and related products or portions thereof to avoid infringing the intellectual property or other rights of a third party, which may be costly and time-consuming or impossible to accomplish.

Early termination of WPT’s agreements with member casinos or violation by member casinos of the restrictive covenants contained in these agreements could negatively affect the size of telecast audiences and lead to declines in the performance of WPT’s other lines of business.

WPT entered into written agreements with all of the “member casinos” that host WPT tournament stops. However, any member casino may elect to withdraw its tournament from the WPT lineup and terminate the agreement by giving WPT notice by a specified date or, if earlier, a specified length of time before the date of the tournament, which is generally four to six months. While each agreement remains in effect and, in some cases, for varying periods of time thereafter, the member casino is prohibited from televising the tournament itself, permitting any third party to

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televise the tournament or licensing its name, trademarks or likeness to any other party in conjunction with the telecast of a poker tournament. If a significant number of these member casinos were to terminate their agreements and/or allow a competing company to telecast their tournaments after their expiration for the restricted time period, this could result in a decline in WPT’s future telecast audiences, which in turn would lead to declines in the performance and success of WPT’s other lines of business. If one or more member casinos were to breach the exclusivity provisions of their contracts with WPT by letting a competing company telecast their tournaments within the restricted time period, litigation may be necessary to enforce those rights. Any litigation could result in substantial expense.

Refusal of any gaming commission to register WPT as a non-gaming vendor for its branded casino tournaments could jeopardize the ability of WPT to continue holding its events at member casinos.

Some states require WPT to register with the state’s gaming commissions as a non-gaming vendor of the member casino that runs a WPT-branded tournament. If such gaming commissions refuse to provide the necessary vendor license, the member casino may not be able to hold WPT’s tournaments, and WPT’s business could suffer.

Termination or impairment of WPT’s relationships with key licensing and strategic partners could adversely affect its revenues and results of operations.

WPT has developed relationships with key strategic partners in many areas of its business, including poker tournament event sponsorship, merchandise licensing, social poker and casino games, corporate sponsorship and international distribution. WPT hopes to derive significant income from its licensing arrangements and its agreements with its strategic partners are vital to finding these licensing arrangements. If WPT were to fail to manage its existing licensing relationships, this failure could have a material adverse effect on its financial condition and results of operations. WPT would also be materially adversely affected if it were to lose rights under any of its other key contracts or if the counterparty to any of these contracts were to breach its obligations to WPT. WPT relies on a limited number of contracts under which third parties provide it with services vital to WPT’s business.

These agreements include WPT’s agreements with:

• FSN (now Sinclair), pursuant to which Sinclair broadcasts the WPT television series;

• Pala, who hosts and operates the ClubWPT product;

• Partypoker Live Ltd., who licenses the WPT brand in connection with online and land-based poker tournaments in Europe;

• Hugeous Mass Media, who maintains WPT’s database of music and collects music royalty revenue for WPT worldwide;

• CaptivePlay LLC, who licenses the WPT brand in order to operate a social poker product, PlayWPT;

• HongKong Triple Sevens Interactive Co., Ltd, who licenses the Alpha8 brand to operate a social poker product;

• Rogers Network and Game TV, for broadcasting in key international territories such as Canada;

• TV Azteca, pursuant to which WPT is partnering with TV Azteca to create localized WPT-branded content, as well as jointly brand and market a social poker product for the territory of Mexico;

• AMC and Sport 1 & 2, who license rights to broadcast the WPT television series in 10 territories in Eastern Europe; and

• OTT (over-the-top) Platforms, specifically PLUTO TV and Samsung, where WPT earns sizeable revenues.

If WPT’s relationship with any of these or certain other third parties were to be interrupted, or the services provided by any of these third parties were to be delayed or deteriorate for any reason without being adequately replaced, WPT’s business could be materially adversely affected. If WPT is forced to find a replacement for any of these strategic partners, this could create disruption in its business and may result in reduced revenues, increased costs or diversion of management’s attention and resources.

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In addition, while WPT has significant control over its licensed products and advertising, WPT does not have operational and financial control over these third parties, and it has limited influence with respect to the manner in which they conduct their businesses. If any of these strategic partners experiences a significant downturn in its business or were otherwise unable to honor its obligations to WPT, WPT’s business could be materially disrupted.

The loss of the services of Adam Pliska or other key employees or on-air talent, or WPT’s failure to attract key individuals, could adversely affect its business.

WPT is highly dependent on the services of Adam Pliska, who currently serves as Chief Executive Officer and President of WPT, as well as President of the Company.

WPT’s continued success is also dependent upon retention of other key management executives and upon its ability to attract and retain employees and on-air talent to implement its corporate development strategy and its branding and licensing efforts. The loss of some of its senior executives, or an inability to attract or retain other key individuals, could materially adversely affect WPT. Growth in WPT’s business is dependent, to a large degree, on its ability to retain and attract such employees. WPT seeks to compensate and provide incentives to its key executives, as well as other employees, through competitive salaries, stock ownership and bonus plans, but it can make no assurance that these programs will allow WPT to retain key employees or hire new employees. In addition, WPT’s future success may also be affected by the potential need to replace its key on-air talent.

Any disputes with the IATSE 700 Editors Union could delay finishing production of shows needing to be delivered to Sinclair or increase WPT’s costs to produce the shows.

From time to time, certain of WPT’s employees involved in producing the WPT series are members of IATSE 700 Editors Union, and WPT renewed its contract with such union in August 2019 for a three-year term. Although WPT has a current union agreement in place, there is no guarantee that future disagreements with WPT’s unionized employees will not lead to any interruption in services. Any failure to timely negotiate and/or settle any such disagreements could cause a delay in WPT’s ability to timely produce the WPT series for Sinclair, and the costs to do so could increase. Either of these events would adversely affect WPT’s profitability.

WPT’s quarterly results may fluctuate, which may negatively affect the value of the common stock.

Under sponsorship agreements for WPT, revenues are recognized as each episode is aired. Therefore, WPT’s quarterly revenue can fluctuate significantly depending on the number of episodes aired in any one quarter. In addition, the sales of consumer products that utilize WPT’s licensed intellectual property vary greatly, due to holiday seasons, school schedules and other outside factors. As a result, WPT’s financial results can be expected to fluctuate significantly from quarter to quarter, leading to volatility and a possible adverse effect on the market price of the common stock.

Risks Related to WPT’s Current Industry

WPT’s television programming may be unable to maintain a sufficient audience for a variety of reasons, many of which are beyond its control.

Television production is a speculative business because revenues and income derived from television depend primarily upon the continued acceptance of that programming by the public, which is difficult to predict. Public acceptance of particular programming is dependent upon, among other things, the quality of the programming, the strength of networks on which the programming is telecast, the promotion and scheduling of the programming and the quality and acceptance of competing television programming and other sources of entertainment and information. Popularity of programming can also be negatively impacted by excessive telecasting of the programming beyond viewers’ saturation thresholds.

WPT’s ability to create and sponsor its television programming profitably may be negatively affected by adverse trends that apply to the television production business generally.

Television revenues and income may be affected by a number of factors, many of which are not within WPT’s control. These factors include a general decline in television viewers, pricing pressure in the television advertising industry, strength of the stations on which its programming is telecast, general economic conditions, increases in

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production costs and availability of other forms of entertainment and leisure time activities. Furthermore, as the popularity of streaming content over the Internet increases and more consumers “cut the cord” and cease watching traditional broadcast television, the audience for WPT’s programming will be dispersed across multiple platforms and its programming could have less overall impact and watchability. All of these factors, as well as others, may quickly change and these changes cannot be predicted with certainty. WPT’s future sponsorship opportunities may also be adversely affected by these changes. Accordingly, if any of these changes were to occur, the revenues WPT generates from television programming could decline.

A decline in general economic conditions or the popularity of WPT’s brand of televised poker tournaments could adversely impact its business.

Because WPT’s operations are affected by general economic conditions and consumer tastes, its future success is unpredictable. The demand for entertainment and leisure activities tends to be highly sensitive to consumers’ disposable incomes and thus a decline in general economic conditions could, in turn, have a material adverse effect on WPT’s business, operating results and financial condition and the price of the Company’s common stock. An economic decline, including the current economic decline as a result of the global COVID-19 pandemic, could also adversely affect WPT’s corporate sponsorship business, sales of its branded merchandise and other aspects of its business.

The continued popularity of WPT’s type of poker entertainment is vital in maintaining the ability to leverage its brand and develop products or services that appeal to its target audiences, which, in turn, is important to WPT’s long-term results of operations. Public tastes are unpredictable and subject to change and may be affected by changes in the political and social climates of those countries and territories in which WPT operates. A change in public opinion could have a material adverse effect on WPT’s business, operating results and financial condition and, ultimately, the price of the Company’s common stock.

The political or social climate regarding gaming and poker could negatively impact WPT’s ability to negotiate future telecast license arrangements and could negatively impact its chances of renewal.

Although the popularity of poker, in particular, and gaming, in general, has continued to grow in the U.S. and abroad, gaming has historically experienced backlash from various constituencies and communities. Currently, the legal operational status of Internet-based casinos and card rooms remains unclear in some countries. The U.S. government has taken steps to curb activities that it believes constitutes unlawful online gaming through legislation such as the Unlawful Internet Gambling Enforcement Act of 2006 and through arrests of off-shore online gaming operators traveling in the U.S. Also, on November 2, 2018, the U.S. Department of Justice (the “DOJ”) issued an opinion that interprets the federal Wire Act as prohibiting any gambling that crosses state lines, including non-sports related gambling. This opinion expands the prior opinion issued by the DOJ in 2011 that interpreted the Wire Act as prohibiting interstate sports gambling only.

Based on the uncertain regulatory environment surrounding the marketing and promotion of Internet-based casinos and card rooms to viewers in the U.S., Sinclair has final edit rights to the shows that it broadcasts. Sinclair had indicated that it will only display the “dot com” names or logos of Internet-based casinos and card rooms in its telecasts that are explicitly legal in select territories in the United States. However, if Sinclair elects not to allow the display of “dot com” logos on the WPT show, whether because of the recent DOJ opinion or otherwise, WPT may not be able to attract other Internet-based casino sponsors or retain existing online card rooms sponsoring WPT’s tour. Additionally, increased regulatory scrutiny on Internet gambling sites may eliminate these sites as sources of advertising revenue for television networks that exhibit poker-related programming, thereby potentially impacting the value of such programming to these networks. Additionally, many participants in WPT’s tournament events are sponsored by Internet-based casino sponsors and existing online card rooms. If such sponsors’ revenues are reduced, they may not be able to sponsor WPT’s tournament participants at the same level or at all, which could cause WPT’s tournament participation to decline (in terms of numbers and professional players) and the quality and distribution of our WPT series could suffer.

The television entertainment market in which WPT operates is highly competitive and competitors with greater financial resources or marketplace presence may enter this market to WPT’s detriment.

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Based on the popularity of these poker-related televised programs, WPT believes that additional competing televised poker programs may currently be in development or may be developed in the future. WPT’s programming also competes for telecast audiences and advertising revenue with telecasts of mainstream professional and amateur sports, as well as other entertainment and leisure activities. These competing programs and activities, and the brands that they build may decrease the popularity of the WPT television series and dilute the WPT’s brand. This would adversely affect WPT’s operating results and financial condition and, ultimately, the price of the Company’s common stock.

Risks Related to the Businesses of Both Allied Esports and WPT

Allied Esports and WPT have historically operated at a net loss on a consolidated basis, and there is no guarantee that that the consolidated company will be able to be profitable.

The combined historical operations of Allied Esports and the WPT have resulted in net losses of $45,058,830 and $16,738,729 for the years ended December 31, 2020 and 2019, respectively. We do not know with any degree of certainty whether or when the consolidated operations of Allied Esports and the WPT will become profitable. Even if we are able to achieve profitability in future periods, we may not be able to sustain or increase our profitability in successive periods.

We have formulated our business plans and strategies based on certain assumptions regarding the acceptance of our business model and the marketing of our products and services. Nevertheless, our assessments regarding market size, market share, market acceptance of our products and services and a variety of other factors may prove incorrect. Our future success will depend upon many factors, including factors beyond our control and those that cannot be predicted at this time.

Forecasts of our market and market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, there can be no assurance that our business will grow at similar rates, or at all.

Growth forecasts included in SEC filings relating to our market opportunities and the expected growth in those markets are subject to significant uncertainty and are based on assumptions and estimates which may prove to be inaccurate. We also plan to operate in a number of foreign markets, and a downturn in any of those markets could have a significant adverse effect on our businesses. Even if these markets meets our size estimate and experiences the forecasted growth, we may not grow our business at a similar rate, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the forecasts of market growth should not be taken as indicative of our future growth.

Any actual or perceived failure by us to comply with our privacy policies or legal or regulatory requirements in one or multiple jurisdictions could result in proceedings, actions or penalties against us.

Allied Esports and WPT have implemented various features intended to better comply with applicable privacy and security requirements in the collection and use of customer data, but these features do not ensure compliance and may not be effective against all potential privacy and data security concerns. A wide variety of domestic and foreign laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, disposal and other processing of personal data. These data protection and privacy-related laws and regulations are evolving and may result in regulatory and public scrutiny and escalating levels of enforcement and sanctions. Our failure to comply with applicable laws and regulations, or to protect any personal data, could result in enforcement actions against us, including fines, claims for damages by customers and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which could adversely affect our business, operating results, financial performance and prospects.

Evolving and changing definitions of personal data and personal information within the EU, the United States and elsewhere may limit or inhibit our ability to operate or expand our business. In jurisdictions outside of the United States, we may face data protection and privacy requirements that are more stringent than those in place in the United States. We are at risk of enforcement actions taken by certain EU data protection authorities until such point in time that we may be able to ensure that all transfers of personal data to us in the United States from the EU are conducted in compliance with all applicable regulatory obligations, the guidance of data protection authorities and evolving best practices. The European General Data Protection Regulation (“GDPR”) may impose additional obligations, costs and risks upon our business. The GDPR may increase substantially the penalties to which we could

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be subject in the event of any non-compliance. In addition, we may incur substantial expense in complying with the obligations imposed by the GDPR and we may be required to make significant changes in our business operations, all of which may adversely affect our revenues and our business overall.

Loss, retention or misuse of certain information and alleged violations of laws and regulations relating to privacy and data security, and any relevant claims, may expose us to potential liability and may require us to expend significant resources on data security and in responding to and defending such allegations and claims. In addition, future laws, regulations, standards and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations could impair our ability to collect, use or disclose data relating to individuals, which could increase our costs and impair our ability to maintain and grow our customer base and increase our revenue.

Allied Esports and WPT publicly post their privacy policies and practices concerning processing, use and disclosure of the personally identifiable information provided to them by website visitors. Publication of such privacy policies and other statements published that provide promises and assurances about privacy and security can subject us to potential state and federal action if they are found to be deceptive or misrepresentative of actual policies and practices or if actual practices are found to be unfair. Evolving and changing definitions of what constitutes “Personal Information” and “Personal Data” within the EU, the United States and elsewhere, especially relating to classification of IP addresses, machine or device identification numbers, location data and other information, may limit or inhibit our ability to operate or expand our business, including limiting technology alliance relationships that may involve the sharing of data.

Our failure to raise additional capital or generate cash flows necessary to pay debt, expand our operations and invest in new business initiatives in the future could reduce our ability to compete successfully and harm our operating results.

In the future we need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our security holders may experience significant dilution of their ownership interests. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions. If we cannot raise capital on acceptable terms, or at all, we may not be able to, among other things:

• develop and enhance our products and services;

• continue to expand our network of arenas;

• hire, train and retain employees;

• respond to competitive pressures or unanticipated working capital requirements; or

• pursue acquisition opportunities.

Although we have been able to fund our current working capital requirements through operations, debt and equity financing, there is no assurance that we will be able to do so in the future. As a result, our auditors have indicated that the above-mentioned conditions raise substantial doubt about our ability to continue as a going concern.

Our business depends substantially on the continuing efforts of our executive officers, key employees and qualified personnel, and our business operations may be severely disrupted if we lose the services of such personnel.

Our future success depends substantially on the continued efforts of our executive officers and key employees. If one or more of our executive officers or key employees are unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner, or at all. Since the esports gaming and poker industry is characterized by high demand and intense competition for talent, we cannot assure you that we will be able to attract or retain qualified staff or other highly skilled employees. If any of our executive officers or key employees terminate their services with us, our business may be severely disrupted, our financial condition and results of operations may be materially and adversely affected and we may incur additional expenses to recruit, train and retain qualified personnel.

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We may experience security breaches and cyber threats.

We face cyber risks and threats that could damage, disrupt or allow third parties to gain improper access to our networks and platforms, supporting infrastructure, intellectual property and other assets. In addition, we rely on technological infrastructure, including third party cloud hosting and broadband, provided by third party business partners to support the functionality of our platforms and content distribution. These business partners are also subject to cyber risks and threats. Such cyber risks and threats may be difficult to detect. The techniques that may be used to obtain unauthorized access or disable, degrade, exploit or sabotage these networks and gaming platforms change frequently and often are not detected. Our systems and processes and those of our third-party business partners may not be adequate. Any failure to prevent or mitigate security breaches or cyber risks, or respond adequately to a security breach or cyber risk, could result in interruptions to our platforms, degrade the gamer/user experiences, cause gamers/users to lose confidence in our platforms and cease utilizing them, as well as significant legal and financial exposure. This could harm our business and reputation, disrupt our relationships with partners and diminish our competitive position.

Global health threats, such as the current COVID-19 pandemic, may adversely affect the operations of our Allied Esports and WPT businesses, which could have a material adverse effect on our business.

Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of the COVID-19 respiratory illness first identified in Wuhan, Hubei Province, China. A significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and services. Specifically, as a global entertainment company that hosts numerous live events with spectators and participants in destination cities, outbreaks may cause such people to avoid traveling to our destination cities and attending our events. Sponsors of such events may also cancel such events as precautionary measures or based on guidelines from local or federal health agencies. As a result of the COVID-19 pandemic, live events to be hosted by both of our Allied Esports and WPT businesses have been cancelled. Allied Esports and WPT businesses started conducting live events again on a limited basis in June 2020. However, many other previously scheduled live events remain indefinitely postponed or have been cancelled. And at this time, we cannot determine the extent that such outbreak will continue to have on our future operations.

Risks Related to Owning Our Common Stock

The market price of shares of our common stock may be volatile, which could cause the value of your investment to decline.

The market price of our common stock may be highly volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our common stock regardless of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends, if any, to stockholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals, and, in response, the market price of shares of our common stock could decrease significantly. You may be unable to resell your shares of common stock at or above a price you feel is appropriate.

In the past few years, stock markets have experienced extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

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We have no current plans to pay cash dividends on our common stock; as a result, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We have no current plans to pay dividends on our common stock. Any future determination to pay dividends will be made at the discretion of our Board of Directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, general business conditions and other factors that our Board of Directors may deem relevant. In addition, our ability to pay cash dividends is restricted by the terms of our debt financing arrangements, and any future debt financing arrangement likely will contain terms restricting or limiting the amount of dividends that may be declared or paid on our common stock. As a result, you may not receive any return on an investment in our common stock unless you sell your common stock for a price greater than that which you paid for it.

If our operating and financial performance in any given period does not meet the guidance that we provide to the public, the market price of our common stock may decline.

We may, but are not obligated to, provide public guidance on our expected operating and financial results for future periods. Any such guidance will be comprised of forward-looking statements subject to the risks and uncertainties described in our public filings and public statements. Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty. If, in the future, our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our common stock may decline as well. Even if we do issue public guidance, there can be no assurance that we will continue to do so in the future.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled interest payments on or to refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors, some of which are beyond our control. In some cases, we will also be required to obtain the consent our lenders to refinance material portions of our indebtedness. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premiums, and interest, if any, on our indebtedness. Some of our indebtedness is maturing in the near term, and if we are unable to raise sufficient capital or generate cash through our operations, we will be unable to meet our debt obligations at maturity.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, reduce or eliminate the payment of dividends, sell assets, seek additional capital or seek to restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to attempt to meet our debt service and other obligations. We may not be able to consummate those dispositions or consummate dispositions at prices that we believe are fair, and the proceeds that we do receive may not be adequate to meet any debt service obligations then due.

We incur increased costs and are subject to additional regulations and requirements as a result of being a public company, which could lower our profits or make it more difficult to run our business.

As a public company, we incur significant legal, accounting and other expenses that are not incurred by private companies, including costs associated with public company reporting requirements. We also have incurred and will continue to incur costs associated with the Sarbanes-Oxley Act, and related rules implemented by the SEC and the Nasdaq Capital Market. The expenses generally incurred by public companies for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance

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costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations also may make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, on our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock on the Nasdaq market, fines, sanctions and other regulatory action and potentially civil litigation.

Through its wholly-owned subsidiary Primo Vital Limited, Ourgame International Holdings Limited (“Ourgame”) owns a significant percentage of our outstanding common stock, enabling it to exert significant influence over our operations and activities, which may affect the trading price of our common stock.

According to its SEC filings, Ourgame, through Primo Vital Limited, beneficially owns and controls approximately 35.8% of our outstanding common stock. Primo Vital Limited is entitled to full voting rights with respect to the shares of common stock that it owns. This concentrated ownership enables Ourgame to exert significant influence over all matters requiring stockholder votes, including: the election of directors; mergers, consolidations, acquisitions and other strategic transactions; the sale of all or substantially all of our assets and other decisions affecting our capital structure; amendments to our Certificate of Incorporation or our bylaws; and our winding up and dissolution. The interests of Ourgame may not always coincide with our interests or the interests of our other stockholders, and Ourgame’s influence may delay, deter or prevent acts that would be favored by us or our other stockholders. This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of the Company. Also, Ourgame may seek to cause us to take courses of action that, in its judgment, could enhance its investments in us, but which might involve risks to our other stockholders or adversely affect us or our other stockholders. As a result, the market price of our shares could decline. In addition, this concentration of share ownership may adversely affect the trading price of our shares because prospective investors may perceive disadvantages in owning shares in a company such as our company with such a significant stockholder.

We are an “emerging growth company,” and the reduced public company reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We qualify as an “emerging growth company,” as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These provisions include, but are not limited to: being permitted to have only two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations disclosure; an exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act; not being required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; reduced disclosure obligations regarding executive compensation arrangements in our periodic reports, registration statements and proxy statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, the JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We intend to take advantage of the exemptions discussed above. As a result, the information we provide will be different than the information that is available with respect to other public companies. In our SEC filings, we do not include all of the executive compensation-related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and the market price of our common stock may be more volatile.

We will remain an emerging growth company until the earliest of (i) the end of our 2022 fiscal year, (ii) the first fiscal year after our annual gross revenues exceed $1.07 billion, (iii) the date on which we have, during the immediately preceding three-year period, issued more than $1.00 billion in non-convertible debt securities or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year.

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Our failure to achieve and maintain an effective system of disclosure controls and internal control over financial reporting could adversely affect our financial position and lower our stock price.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the applicable listing standards of Nasdaq. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. Effective internal controls are necessary for us to provide reliable financial reports. Nevertheless, all internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management identified the following material weaknesses in internal controls as of December 31, 2019, which persist as of December 31, 2020:

• inadequate internal controls, including inadequate segregation of duties, over the preparation and review of the consolidated financial statements and untimely annual closings of the books;

• inadequate controls and procedures as they relate to completeness of information reported by certain third parties that process transactions related to specific revenue streams; and

• inadequate information technology general controls as it relates to user access and change management.

As a company with limited accounting resources, a significant amount of management’s time and attention has been and will be diverted from our business to work toward compliance with these regulatory requirements. This diversion of management’s time and attention may have a material adverse effect on our business, financial condition and results of operations.

These material weaknesses and any significant deficiencies could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and any annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we may be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to maintain our common stock listing on Nasdaq.

Increases in interest rates may cause the market price of our common stock to decline.

While interest rates are falling and have in recent years been at record low levels, any return to increases in interest rates may cause a corresponding decline in demand for equity investments. Any such increase in interest rates or reduction in demand for our common stock resulting from other relatively more attractive investment opportunities may cause the market price of our common stock to decline.

If securities or industry analysts do not publish research or reports about our business or publish negative reports, the market price of our common stock could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one of more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume of our common stock to decline. Moreover, if one or more of the analysts who cover us downgrades our common stock or if our reporting results do not meet their expectations, the market price of our common stock could decline.

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You will be diluted by the future issuance of common stock, preferred stock, or securities convertible into common or preferred stock, in connection with our incentive plans, acquisitions, capital raises or otherwise.

Our amended and restated certificate of incorporation authorizes us to issue these shares of common stock and options, rights, warrants and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our Board of Directors in its sole discretion, whether in connection with acquisitions or otherwise.

In the future, we expect to obtain financing or to further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Issuing additional shares of our capital stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders or reduce the market price of our common stock or both. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. As a result, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their stockholdings in us.

Additionally, we have reserved an aggregate of 3,463,305 shares of common stock for issuance under our 2019 Equity Incentive Plan (the “2019 Plan”). Any common stock that we issue, including under our 2019 Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by our common stockholders. We have filed an effective registration statement on Form S-8 under the Securities Act to register shares of our common stock or securities convertible into or exchangeable for shares of our common stock issued pursuant to our 2019 Plan. Accordingly, shares registered under such registration statement will be available for sale in the open market upon issuance.

The Company’s amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between the Company and its stockholders, which could limit the Company’s stockholders’ ability to obtain a judicial forum viewed by the stockholders as more favorable for disputes with the Company or the Company’s directors, officers or employees.

The Company’s Certificate of Incorporation, as amended, provides that unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the Certificate of Incorporation, as amended, or the Company’s Bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, another state court located within the State of Delaware, or if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. This exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act. It could apply, however, to a suit that falls within one or more of the categories enumerated in the exclusive forum provision and asserts claims under the Securities Act, inasmuch as Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rule and regulations thereunder. There is uncertainty as to whether a court would enforce such provision with respect to claims under the Securities Act, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.

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If a court were to find the choice of forum provision contained in our Certificate of Incorporation, as amended, to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to the Company’s management.

Our Board of Directors’ ability to issue undesignated preferred stock and the existence of anti-takeover provisions may depress the value of our common stock.

The Company’s authorized capital includes 1,000,000 shares of undesignated preferred stock. Our Board has the power to issue any or all of the shares of preferred stock, including the authority to establish one or more series and to fix the powers, preferences, rights and limitations of such class or series, without seeking stockholder approval, subject to certain limitations on this power under Nasdaq listing requirements. Further, as a Delaware corporation, we are subject to provisions of the Delaware General Corporation Law regarding “business combinations.” We may, in the future, consider adopting additional anti-takeover measures. The authority of our Board to issue undesignated stock and the anti-takeover provisions of Delaware law, as well as any future anti-takeover measures adopted by us, may, in certain circumstances, delay, deter or prevent takeover attempts and other changes in control of our company that are not approved by our Board. As a result, our stockholders may lose opportunities to dispose of their shares at favorable prices generally available in takeover attempts or that may be available under a merger proposal and the market price, voting and other rights of the holders of common stock may also be affected.

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PROPOSAL 1: APPROVAL AND ADOPTION OF THE STOCK PURCHASE AGREEMENT

As discussed elsewhere in this proxy statement, the Company stockholders will consider and vote on a proposal to approve and adopt the Stock Purchase Agreement.

The terms and conditions of the Sale Transaction are set forth in the Stock Purchase Agreement, which is described under the caption “The Stock Purchase Agreement” beginning on page 53. A copy of the Stock Purchase Agreement, excluding the schedules thereto, is included as Annex A to this proxy statement. The description in this proxy statement of the terms and conditions of the Sale Transaction and of the Stock Purchase Agreement is a summary only and may not contain all of the information that is important to you. To fully understand the Sale Transaction and the terms of the Stock Purchase Agreement, you should carefully read in its entirety the copy of the Stock Purchase Agreement.

Our Board of Directors believes that the Sale Transaction is advisable, fair to, and in the best interests of the Company and its stockholders and has unanimously approved the Sale Transaction. Our Board of Directors unanimously recommends that the stockholders vote “FOR” the proposal to approve and adopt the Stock Purchase Agreement.

The approval of the proposal to approve and adopt the Stock Purchase Agreement requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Company common stock entitled to vote on such proposal.

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PROPOSAL 2: AUTHORITY TO ADJOURN THE SPECIAL MEETING

Company stockholders may be asked to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to approve and adopt the Stock Purchase Agreement if there are insufficient votes at the time of the special meeting to approve and adopt the Stock Purchase Agreement. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the special meeting as originally noticed. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.

Our Board of Directors unanimously recommends that stockholders vote “FOR” the proposal to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to approve and adopt the Stock Purchase Agreement if there are insufficient votes at the time of the special meeting to approve and adopt the Stock Purchase Agreement.

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THE SALE TRANSACTION

Parties to the Sale Transaction

Allied Esports Entertainment, Inc.

Allied Esports Entertainment, Inc. is a global leader in esports entertainment, providing innovative infrastructure, transformative live experiences, multiplatform content and interactive services to audiences worldwide through its strategic fusion of two powerful brands: Allied Esports and the World Poker Tour. See “Description of Allied Esports Entertainment, Inc.” beginning on page 63 of this proxy statement for a more fulsome description of our company and our businesses.

Element Partners, LLC

Element Partners, LLC is a Delaware limited liability company formed for the purposes of acquiring the WPT Business in the Sale Transaction. Element Partners, LLC is owned by an investment fund.

Background of the Sale Transaction

Our Board of Directors and the members of our senior management team regularly review our operations and strategy to maximize long-term value to our stockholders. As part of this ongoing review, our Board of Directors and management have considered a variety of strategic alternatives to enhance stockholder value, including potential financings, changes to our offerings, strategic partnerships, and divestitures.

On September 9, 2020, Adam Pliska, the Chief Executive Officer and President of World Poker Tour, was introduced by a mutual friend to a representative of Buyer. After this introduction was made, Buyer’s representative requested an introductory call with Mr. Pliska to discuss the possibility of a partnership or acquisition of the WPT Business directly.

On September 16, 2020, a phone conference was held among Mr. Pliska, the Company’s President, David Polgreen, the Company’s General Counsel and representatives of the Buyer. During the call, Mr. Pliska provided Buyer’s representatives with details about the operations of the WPT Business, and the parties discussed potential acquisition opportunities. Buyer’s representatives expressed an interest in the WPT Business and requested the opportunity to begin a due diligence process with respect to the same. After the conclusion of the call, Mr. Pliska related the substance of the call to the Company’s Chief Executive Officer, Frank Ng, and its Chief Financial Officer, Tony Hung.

On October 12, 2020, a follow-up teleconference was held between Buyer and Company during which the parties further discussed the potential partnership or acquisition deal and the structure of the Company and its related subsidiaries. After this conference, Buyer’s representative sent Mr. Pliska an email reiterating Buyer’s interest in pursuing a license of the intellectual property of the WPT Business or an acquisition of the WPT Business.

On October 29, 2020, the Company’s Board of Directors held a meeting to discuss, among other things, the possibility of a sale of the WPT Business. All directors were present at this meeting, along with Mr. Hung and representatives of Maslon LLP, outside counsel to the Company. After discussion at the meeting, the Board directed the Company’s officers to further investigate with Buyer a potential license of the intellectual property of the WPT Business or a sale of the WPT Business.

On November 4, 2020, Mr. Pliska and Mr. Polgreen held a teleconference with Buyer’s representative, during which Buyer’s representative indicated that Buyer sought to acquire the WPT Business instead of an intellectual property license. Buyer’s representative requested that the Company present Buyer with a proposed sale price for the WPT Business on or before November 9, 2020.

On November 5, 2020, the Company’s Board of Directors held a meeting where Mr. Pliska presented the Board with the substance of his conversations with the representatives of Buyer. Acknowledging that a sale of the WPT Business was not being actively pursued by the Company at that time, the Board discussed Buyer’s general proposal to purchase the WPT Business, taking into account the Company’s operations, financial performance, and independent valuations proposed by prior interested parties and certain investment bankers.

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The Board continued its discussions on November 8, 2020. The Board discussed the relative merits and risks of continuing to operate or selling the WPT Business. Yinghua Chen, a director of the Company, presented Ourgame’s perspective regarding the potential acquisition, and expressed Ourgame’s general preference to sell the WPT business. The Board agreed that rather than proposing a purchase price to Buyer, it would be preferable for Buyer to present a purchase price proposal, and directed Mr. Pliska to communicate the same to Buyer’s representatives. Shortly after the meeting, Mr. Pliska communicated the Board’s preference to Buyer’s representative.

On November 11, 2020, representatives of Buyer called Mr. Pliska to communicate Buyer’s offer to acquire the WPT Business for $48.5 million. Mr. Pliska confirmed that he would present this offer to the Board, but indicated that he believed the proposed purchase price may be significantly lower than what the Board believed was a fair value for the WPT Business. On or about the same day, Mr. Ng had a phone conversation with another representative of Buyer in which Mr. Ng suggested that the Board would be unlikely to approve a sale for less than $70 to $80 million, to which the Buyer’s representative responded that Buyer might be willing to meet such a price. After conferring with Mr. Pliska and learning of Buyer’s offer of $48.5 million, Mr. Ng had another conversation with Buyer’s representative during which Mr. Ng reiterated to Buyer that such offer was likely unacceptable to the Board and management. Buyer’s representative responded that he would speak with his team to amend the proposed sale price. Later the same day, a representative of Buyer phoned Mr. Pliska and informed him that Buyer intended to increase the offered purchase price to approximately $70 million, plus additional consideration structured as post-closing, revenue sharing payments, and indicated that the Buyer would submit to the Company a non-binding proposal.

On November 12, 2020, the Company received a draft non-binding proposal from Buyer reflecting the terms discussed among Mr. Pliska, Mr. Ng, and Buyer’s representative on November 11, 2020.

On November 13, 2020, the Board of Directors held a meeting and reviewed and discussed the terms of the non-binding proposal received from Buyer the day before, and received feedback from Ms. Chen regarding Ourgame’s general support of the proposed sale of the WPT Business. The Board also discussed the fiduciary implications of the proposed sale of the WPT Business, and the need to obtain a fairness opinion to ensure that the contemplated sales price would maximize stockholder value and would be fair from a financial point of view. After due discussion and deliberation, the Board directed management to continue negotiations with Buyer, but expressed a preference for the entire purchase price to be paid at the closing instead of including post-closing revenue sharing in the purchase price. The Board directed Tony Hung, Chief Financial Officer, to seek out options to obtain a fairness opinion.

On November 15, 2020, the Company sent a revised draft of Buyer’s non-binding proposal to Buyer for Buyer’s review and comment.

On November 16, 2020, the Company and Buyer conducted a phone conference to discuss the Company’s proposed revisions to the non-binding proposal. Messrs. Pliska, Ng, Hung, and Polgreen represented the Company. During this call, the parties proposed and discussed timelines for the due diligence and purchase agreement negotiation processes moving forward. The Company’s representatives emphasized the importance of establishing a timeline consistent with the Board’s discharge of its fiduciary duties to the Company’s stockholders. The parties also discussed Buyer’s source of funds for the purchase price and the possibility of including the Buyer’s escrow of the purchase price in advance of any sale transaction. After the call, Mr. Polgreen summarized the call for the Board.

On November 17, 2020, Buyer submitted a revised non-binding proposal to the Company. After Buyer’s representatives reviewed the revised terms contained therein, the Company and Buyer’s representatives held a phone conference to discuss the revisions. The Company was represented by Messrs. Pliska, Ng., Hung, Polgreen, and representatives of Maslon LLP. During the call, the parties discussed the approvals that would be necessary to consummate the proposed acquisition, including the approval of the Company’s stockholders. In addition, the parties discussed the desire for Ourgame to approve the Sale Transaction in its capacity as the beneficial owner of a significant amount of the Company’s common stock, and such approval could only be obtained after Ourgame’s stockholders approved the sale under the rules of the Hong Kong Stock Exchange (“HKSE”) to which Ourgame is subject. Mr. Ng directed Mr. Polgreen and Maslon LLP to discuss necessary Ourgame approvals with Ms. Chen and Yundan Xiao, General Counsel to Ourgame. After the call, Mr. Polgreen provided the Board an update regarding representation and warranty insurance, break-up fees, confirmation of Buyer’s source of funds, and the foregoing regulatory approvals.

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On November 18 and 19, 2020, Mr. Pliska met with representatives of Buyer in Las Vegas, Nevada, where the parties engaged in further negotiations regarding the proposed terms of the Sale Transaction, with a primary focus on diligence of the WPT Business. Mr Pliska provided an overview of the WPT Business’ assets and management, and answered questions and discussed future opportunities available to the WPT Business.

On November 19, 2020, Mr. Polgreen and representatives of Maslon LLP held a call with representatives of the Tong Shang firm, outside counsel to Ourgame, to discuss the process and timing of obtaining the approval of the Sale Transaction by Ourgame stockholders, including the announcement and circular required by the HKSE and the necessity of obtaining the HKSE approval thereof.

On November 20, 2020, the Company received a revised non-binding proposal from Buyer. The non-binding proposal was presented to the Board of Directors.

On November 22, 2020, representatives of Maslon LLP sent to Loeb & Loeb LLP a revised draft of the non-binding proposal reflecting updates to facilitate the necessary filings with the HKSE. The same day, Mr. Polgreen provided the Board of Directors the updated proposal and a summary of open issues for the Board of Director’s review and comment.

On November 23, 2020, Messrs. Pliska, Polgreen, Hung, and Ng, along with representatives from Maslon LLP, and Buyer’s representatives and Loeb & Loeb LLP, held a phone conference to discuss the non-binding proposal. The discussion focused primarily on the stockholder approvals and other consents that would be necessary to consummate the Sale Transaction, the proposed licensing agreement to be included in the acquisition transaction, and the status of Buyer’s efforts to secure representation and warranty insurance. After the call, Maslon LLP sent Loeb & Loeb LLP a draft of the non-binding proposal, revised according to the discussions held during the foregoing call.

On November 24, 2020, Mr. Polgreen and Maslon LLP conducted phone calls with Loeb & Loeb LLP to discuss the substance and mechanics of the licensing agreement, which was proposed to come into effect in the event that the proposed acquisition would not close according to the definitive purchase agreement between the Company and Buyer. Maslon LLP and Ourgame’s counsel also exchanged emails regarding Ourgame’s counsel’s review of the latest iteration of the non-binding proposal to facilitate timely submissions of the announcement and circular required by the HKSE for Ourgame stockholder approval.

That same evening, the Board of Directors held a meeting to discuss the updated non-binding proposal, including the proposed terms of the post-termination licensing agreement and Buyer’s proposal to reimburse a portion of the Company’s legal expenses if the acquisition is not consummated. No formal action was taken by the Board at this meeting.

On November 25, 2020, Maslon LLP sent the Board of Directors a revised draft of the non-binding proposal, incorporating comments from Ourgame’s counsel, and sought the Board’s approval of the execution of the letter of intent. The Board approved execution of the letter of intent, with Mr. Pliska abstaining from such approval.

On November 29, 2020, Mr. Polgreen, Maslon LLP, Buyer’s representative and Loeb & Loeb LLP further negotiated the terms of the letter of intent regarding the post-termination licensing agreement. At the conclusion of these negotiations, Mr. Polgreen sent an email to the Board of Directors summarizing these negotiations and corresponding revisions to the non-binding proposal, and requested the Board to approve the execution of the non-binding proposal, as presented. The Board approved the execution of the letter of intent via email, with Mr. Pliska abstaining from the vote.

On December 3, 2020, the Company and Buyer executed the non-binding proposal.

On December 12, 2020, a phone conference was conducted among Messrs. Pliska, Polgreen, Ng, Hung, and representatives of Maslon LLP, on behalf of the Company, and Buyer to discuss issues identified by the Company and Maslon LLP in the draft stock purchase agreement. Shortly after the foregoing call, Mr. Polgreen contacted Buyer’s representative to further discuss indemnification and purchase price adjustment issues.

On December 13, 2020, the Board of Directors held a meeting with all directors present, as well as Mr. Polgreen, Mr. Hung, and representatives of Maslon LLP. Maslon LLP led the Board through a review of the draft Stock Purchase Agreement, highlighting issues therein and potential resolutions to such issues. Mr. Ng provided the Board with a summary of the status of cash and working capital, and negotiating a purchase price adjustment based on the same.

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The same day, Mr. Polgreen called and emailed Buyer’s representative to provide an update on the Company’s position regarding open negotiation points, including with respect to the survival of representations and warranties and the indemnification basket contained in the draft Stock Purchase Agreement.

On December 14, 2020, Mr. Pliska and Buyer’s representative discussed the current cash and working capital positions of the WPT Business and an agreed upon a purchase price adjustment.

On December 23, 2020, the Board of Directors held a meeting during which Messrs. Pliska, Ng, and Polgreen led the Board in a discussion of the purchase price adjustment and the status of other open negotiating points with respect to the draft Stock Purchase Agreement. No formal action was taken by the Board of Directors.

On December 24, 2020, Mr. Polgreen provided the Board of Directors with Shot Tower Capital’s fairness opinion.

On December 30, 2020, the Board of Directors held a meeting to review the terms of the draft Stock Purchase Agreement and Sale Transaction. Representatives of Maslon LLP led the Board through the resolution of the outstanding items in the draft Stock Purchase Agreement and the Board of Directors discussed the contents of the fairness opinion previously delivered. After discussion, the Board of Directors approved the draft Stock Purchase Agreement and Sale Transaction, with Adam Pliska abstaining.

On January 3, 2020, Frank Ng, Tony Hung, Adam Pliska, David Polgreen and Maslon LLP met with Buyer’s representatives and Loeb & Loeb LLP to discuss any remaining issues in the draft Stock Purchase Agreement and brand license agreement.

On January 8, 2021, representatives of Maslon LLP and Loeb & Loeb LLP discussed the treatment of certain liabilities of the WPT Business that will remain outstanding after the Sale Transaction.

On January 9, 2021, Adam Pliska and a representative of Buyer spoke about the treatment of such liabilities and agreed that the purchase price would be reduced by $750,000 to account for such continuing liabilities.

On January 12, 2021, Shot Tower Capital updated its fairness opinion to account for such adjustment to the purchase price, which was circulated to the Company’s Board of Directors.

On January 19, 2021, the Buyer, the Company, and the Company’s direct and indirect wholly-owned subsidiaries, Allied Esports Media, Inc. (“Esports Media,” and together with the Company, the “Selling Parties”) and Club Services, Inc. (“CSI”), executed a Stock Purchase Agreement (the “Original Agreement”).

On February 28, 2021, Bally’s Corporation (“Bally’s”) emailed Frank Ng a proposal to acquire all of the Company’s equity interests for $90 million, payable, at the Company’s option, in cash, Bally’s capital stock, or a combination of both. Under the proposal, Bally’s would have acquired the Company, including the WPT Business and its esports operations, and paid the $3 million break-up fee owed to Buyer upon the termination of the Original Agreement. The proposal further stated that Bally’s would pay a $3 million reverse break-fee if Bally’s proposal was not completed due to a failure on Bally’s part. The only conditions to closing the transactions contemplated by Bally’s proposal would be termination of the Original Agreement and “customary closing conditions.” The terms of the agreement to consummate the transactions contemplated by Bally’s proposal would have been substantially the same as the Original Agreement, revised only to the extent necessary to accommodate the specific aspects of Bally’s proposal.

On March 1, 2021, the Company notified representatives of Buyer of Bally’s proposal.

On March 1, 2021, the Board of Directors held a meeting to review the terms of Bally’s proposal and concluded that such proposal did not constitute a “superior proposal,” nor was it reasonably likely to lead to a “superior proposal,” under the Original Agreement. Representatives of the Company notified representatives of Buyer of the Board’s determination.

On March 3, 2021, the Company received an updated proposal from Bally’s to sell all of the Company’s equity interests for $100 million, payable, at the Company’s option, in cash, Bally’s capital stock, or a combination of both. The remaining terms of Bally’s proposal were consistent with the terms of Bally’s proposal on February 28, 2021, except for the increase in the purchase price from $90 million to $100 million and an increase in the reverse-break fee from $3 million to $10 million. Representatives of the Company notified representatives of Buyer of Bally’s updated proposal.

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On March 4, 2021, representatives of Buyer delivered to the Company a proposal indicating that Buyer would pay to the Company, upon completion of a sale of the Company’s esports business within two years, the difference between the low-end of a valuation included in a fairness opinion of the Company’s esports business and what is realized by the Company in such sale, up to $5.0 million. In exchange, the Company would pay to Buyer 5.0% of any realized proceeds in such sale that exceed the maximum amount of the valuation included in such fairness opinion.

On March 4, 2021, the Board of Directors held a meeting to review the terms of Bally’s updated proposal and Buyer’s March 4 proposal, and concluded (with Adam Pliska abstaining) that the updated proposal from Bally’s could reasonably be expected to lead to a “Superior Proposal,” as defined under the Original Agreement, and that the failure of the Company to engage in discussions with Bally’s would likely violate its fiduciary duties owed to the Company’s stockholders. The Company notified Buyer of the Board of Director’s determination.

On March 6, 2021, representatives from Bally’s and their counsel from Jones Day met virtually with representatives of the Company and Company counsel from Maslon LLP and Mayer Brown. The parties discussed the structure of a potential transaction based on Bally’s proposal letter dated March 4, 2021. The parties discussed the need to move quickly to determine whether the Bally’s proposal could become a “superior proposal,” as defined in the Original Agreement in light of the likely timing of the closing of the transaction contemplated by the Original Agreement.

On March 7, 2021, Adam Pliska and Soo Kim, Chairman of Bally’s, had a discussion with respect to including the Company’s esports business in the proposed transaction.

On March 8, 2021, Soo Kim and Frank Ng discussed complications over a deal structure that involved the Company’s esports business based on preliminary feedback from Ourgame, including Ourgame’s concern that the HKSE might take an extended period to time to approve a transaction that would result in the disposal of the Company’s esports and WPT businesses, and any such transaction might not be approved by Ourgame’s stockholders given such transaction could result in the delisting of Ourgame’s common stock on the HKSE. Mr. Ng suggested it might be helpful if other alternatives were discussed related to the esports business.

On March 8, 2021, David Polgreen and Bally’s discussed regulatory issues that might exist in connection with an acquisition of the WPT Business by Bally’s.

On March 10, 2021, Adam Pliska and David Polgreen had a call with representatives of Bally’s to discuss and understand the proposed structure of the draft purchase agreement sent by Bally’s to the Company on March 10, 2021. A follow-up call among legal counsel further discussed such structure.

On March 11, 2021, Bally’s sent to the Company an updated draft purchase agreement to acquire the WPT Business for $90 million.

On March 13, 2021, David Polgreen, Tony Hung and Maslon had a call with Bally’s and its counsel about the working capital of the WPT Business, and whether any adjustment to the purchase price would be necessary.

On March 14, 2021, David Polgreen and representatives of Bally’s had a call to discuss the logistics related to the various shareholder support agreements to be included as part of the draft purchase agreement related to Bally’s proposal. David Polgreen, Adam Pliska and representatives of Bally’s had a follow-up call regarding the same.

On March 15, 2021, Maslon, Mayer Brown, Jones Day, representatives from Bally’s, Adam Pliska and David Polgreen had a call to discuss finalization of the terms of the draft purchase agreement and outstanding diligence items. Mayer Brown and Jones Day had various calls to discuss the mechanics of Bally’s irrevocable offer letter to which the draft purchase agreement was to be attached.

On March 15, 2021, the Board of Directors held a meeting to review the terms of Bally’s draft purchase agreement and irrevocable offer to purchase the WPT Business for $90 million, and concluded (with Adam Pliska abstaining), in consultation with its financial and legal advisors, that the proposal from Bally’s constituted a “superior proposal” as defined under the Original Agreement, and that the failure of the Company to engage in discussions with Bally’s would likely violate its fiduciary duties owed to the Company’s stockholders. The Company notified Buyer that it intended to terminate the Original Agreement unless, prior to 5:00 p.m. Pacific Time on March 19, 2021, the Company and Buyer negotiated an amendment to the Original Agreement, such that the Bally’s irrevocable offer no longer constituted a “superior proposal” under the Original Agreement.

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On March 19, 2021, Buyer sent to the Company a proposal to amend and restate the Original Agreement to reflect the terms of the draft purchase agreement proposed by Bally’s, with an increased purchase price of $90.5 million (such agreement, the “Revised Agreement”). Later, on March 19, 2021, the Board of Directors, in consultation with its financial and legal advisors, compared the terms of the Revised Agreement to the terms of the proposal received from Bally’s to acquire the WPT Business for $90.0 million. After such review, the Board of Directors determined that the Bally’s proposal no longer constituted a “Superior Proposal” (as such term was defined in the Original Agreement) compared to the Revised Agreement and the Board of Directors unanimously approved the Revised Agreement (with Adam Pliska abstaining). In connection with approval of the Revised Agreement, the parties executed the Revised Agreement on March 19, 2021.

On March 22, 2021, Bally’s sent to the Company an irrevocable offer to purchase the WPT Business for $100 million. Mr. Pliska informed representatives of Buyer of receipt of the offer. Later, on March 22, 2021, the Board of Directors held a meeting to review the terms of Bally’s updated proposal, and concluded (with Adam Pliska abstaining) that the updated proposal from Bally’s could reasonably be expected to lead to a “Superior Proposal” as defined under the Original Agreement, and that the failure of the Company to engage in discussions with Bally’s would likely violate its fiduciary duties owed to the Company’s stockholders. The Company notified Buyer of the Board of Director’s determination.

On March 23, 2021, the Board of Directors held a meeting and determined that the increased net proceeds (after taxes) in Bally’s offer were not sufficient to justify a longer and less certain path to closing compared to the transaction contemplated by the Revised Agreement. The Board of Directors directed management to speak with Bally’s to see if it was willing to increase the purchase price as part of its offer. Adam Pliska and David Polgreen had a conversation with Bally’s representatives later that day relaying the Board’s concerns. That evening, Bally’s sent to the Company an updated irrevocable offer to purchase the WPT Business for $105 million. The Company notified Buyer of Bally’s updated irrevocable offer.

On March 24, 2021, the Board of Directors held a meeting to review the terms of Bally’s draft purchase agreement and irrevocable offer to purchase the WPT Business for $105 million, and concluded (with Adam Pliska abstaining), in consultation with its financial and legal advisors, that the proposal from Bally’s constituted a “superior proposal” as defined under the Revised Agreement, and that the failure of the Company to engage in discussions with Bally’s would likely violate its fiduciary duties owed to the Company’s stockholders. The Company notified Buyer that it intended to terminate the Revised Agreement unless, prior to 5:00 p.m. Pacific Time on March 29, 2021, the Company and Buyer negotiated an amendment to the Revised Agreement such that the Bally’s irrevocable offer no longer constituted a “superior proposal” under the Revised Agreement.

On March 29, 2021, Buyer delivered to the Company a proposal to amend the Revised Agreement to increase the purchase price to $100 million. Adam Pliska informed representatives of the Buyer that such proposal might not be sufficient in order for the Board of Directors to determine that the Bally’s irrevocable offer to purchase the WPT Business for $105 million no longer constituted a “superior proposal” under the Revised Agreement. Subsequently, on March 29, 2021, Buyer delivered to the Company an updated proposal to amend the Revised Agreement to increase the purchase price to $105 million. Thereafter, the Board of Directors unanimously approved (with Adam Pliska abstaining) an amendment to the Revised Agreement (the “Amendment”) increasing the purchase price under the Revised Agreement to $105 million. In connection with approval of the Amendment, the Board of Directors, in consultation with its financial and legal advisors, compared the terms of the Revised Agreement, as amended by the Amendment, to the terms of Bally’s irrevocable offer to acquire the WPT Business for $105 million. After such review, the Board of Directors determined that the Bally’s irrevocable offer no longer constituted a “superior proposal” (as such term was defined in the Revised Agreement). The parties executed the Amendment.

Terms of the Stock Purchase Agreement

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Reasons for the Sale Transaction; Recommendation of the Company’s Board of Directors

The WPT Business has been valued for potential sales in connection with unsolicited offers over the years. These offers were in general in the range of $48.5 million to $50.5 million.

The Board of Directors noted that the historical operations of the WPT Business and the COVID-19 pandemic adds risk to its long-term viability. Although the net profit of the WPT Business was approximately $725,508for the year ended December 31, 2020, the Board of Directors is concerned that such profit may not be sustainable in light of the present global economic conditions. The Board of Directors considered a number of risks and uncertainties about continuing to operate the WPT Business, including the risks involved in any expansion of the current WPT Business into new jurisdictions or markets, the need for additional capital to expand the WPT Business, and the adverse impacts that COVID-19 has had on the WPT Business’ ability to host in-person events and the delays in the production of its television shows.

After evaluating these factors and consulting with financial consultants and outside legal counsel, our Board of Directors believes that Sale Transaction is advisable, fair to, and in the best interests of the Company and its stockholders and has unanimously approved the Sale Transaction. Our Board of Directors unanimously recommends that our stockholders vote for the approval and adoption of the Stock Purchase Agreement.

Opinion of the Company’s Financial Advisor

Operations of the Company After the Sale Transaction

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Required Approvals

Corporate approval of the Sale Transaction requires the affirmative vote of the holders of a majority of the Company’s outstanding common stock in favor of the Sale Transaction. Not voting, or abstaining from voting on the Sale Transaction, has the same effect as a vote against the Sale Transaction.

In connection with the execution of the Stock Purchase Agreement, Buyer and certain of our key stockholders, including certain of our directors and executive officers, entered into stockholder support agreements pursuant to which they have agreed to vote their shares of Company common stock in favor of approval of the Sale Transaction and against the approval or adoption of any alternative transactions. These stockholders also granted to Buyer a proxy to vote their shares of Company common stock in favor of approval of the Sale Transaction and agreed not to transfer its shares of Company common stock prior to the expiration of the stockholder support agreements. These key stockholders collectively own or control an aggregate of approximately 17.3% of the Company’s outstanding common stock. In addition, the Company has agreed to use its reasonable efforts to cooperate with Buyer to obtain executed copies of a stockholder support agreement from Primo Vital Limited, the holder of 30.6% of the Company’s outstanding common stock, as promptly as possible after entering into the Stock Purchase Agreement, and to obtain a Deed of Irrevocable Undertaking containing covenants to support the Sale Transaction from stockholders of Ourgame International Holdings Limited, the parent company of Primo Vital Limited. The forms of stockholder support agreements and Deed of Irrevocable Undertaking are attached as Exhibits A, C and D to the Stock Purchase Agreement.

The Sale Transaction is subject to the absence of any action commenced by or before any governmental authority challenging the Sale Transaction.

Except for compliance with the applicable regulations of the SEC in connection with this proxy statement and with the Delaware General Corporation Law in connection with the Sale Transaction, we are not required to comply with any federal or state regulatory requirements, and no federal or state regulatory approvals are required in connection with Sale Transaction.

Closing of the Sale Transaction

We intend to consummate the Sale Transaction shortly after obtaining stockholder approval for the approval and adoption of the Stock Purchase Agreement, assuming all other conditions to the completion of the Sale Transaction have been satisfied or waived. Pursuant to the Stock Purchase Agreement, the “Outside Date” for closing the Sale Transaction is September 30, 2021, after which either we or Buyer may terminate the Stock Purchase Agreement.

Interests of Our Directors and Executive Officers in the Sale Transaction

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Board of Directors was aware that these interests existed when it approved the Stock Purchase Agreement. All such interests are described below to the extent material, and except as described below, our directors and executive officers have, to our knowledge, no material interest in the Sale Transaction apart from those of stockholders generally.

On January 19, 2021, we entered into a Restricted Stock Agreement with Frank Ng, who serves as our Chief Executive Officer and as a Director. Pursuant to this agreement, effective upon the closing of the Sale Transaction, Mr. Ng is entitled to receive $1,000,000 upon the earlier of the two-year anniversary of the closing date of the Sale Transaction, or the termination of Mr. Ng’s employment without cause. At the time of payment, the Company may elect to pay the $1,000,000 award in cash or shares of common stock valued at the fair market value of our common stock on the vesting date, or any combination thereof. All issuances of common stock will be issued from our 2019 Equity Incentive Plan.

On December 31, 2020, we entered into a Change in Control Agreement with Adam Pliska, who serves as our President and as a Director, and Chief Executive Officer of the World Poker Tour. Pursuant to this agreement, if Mr. Pliska is and remains employed by the Company on the occurrence of a “Change in Control” (as such term is defined in the agreement), Mr. Pliska will be entitled to a cash bonus in the amount of $420,000 upon the closing of the Change in Control. Under the agreement, a “Change in Control” will occur if a third party becomes a beneficial owner of securities of WPT representing 50% or more of the voting power of all of WPT’s then-outstanding securities; or if our Board of Directors approves of the sale of all, or substantially all, of the business or assets of WPT or the liquidation or dissolution of WPT, and such transaction is consummated. The Sale Transaction will constitute a Change in Control and, as a result, Mr. Pliska will receive a cash bonus of $420,000 upon the closing of the Sale Transaction.

Mr. Pliska holds 11,521 shares of our common stock that remain subject to transfer and forfeiture restrictions and options to purchase 170,000 shares of our common stock that are currently unvested. Upon the closing of the Sale Transaction, the transfer and forfeiture restrictions on such shares of restricted stock will lapse and the vesting of such options will accelerate. Mr. Pliska’s option to purchase 40,000 shares of our common stock in consideration of his services as a director of the Company remain unaffected by the Sale Transaction.

As a condition to the closing of the Sale Transaction, we are required to deliver an amendment to Mr. Pliska’s current employment agreement with the Company in the form attached as Exhibit E to the Stock Purchase Agreement. Mr. Pliska’s amended employment agreement will be assumed by CSI upon the closing of the Sale Transaction, resulting in Mr. Pliska’s services being a part of the WPT Business acquired by Buyer in the Sale Transaction.

Material U.S. Federal Income Tax Consequences of the Sale Transaction

We will treat the Sale Transaction as a taxable stock sale of a U.S. consolidated return subsidiary. The Sale Transaction will be fully taxable to the Company based on the fair market value of the consideration received as compared to the stock basis in CSI (and therefore in the WPT Business) at the closing of the Sale Transaction. Under the U.S. consolidated return regulations, the stock basis of CSI must first be adjusted for items of taxable income incurred for the income tax return filing period reflecting the Sale Transaction. As a result, we will not be certain as of the closing date of the Sale Transaction of our stock basis in CSI and whether or not a capital gain or loss will result. Based on an initial estimated analysis of the Sale Transaction by the Company’s tax advisors, the Company does not expect that the Sale Transaction will result in any U.S. federal income tax consequences exceeding $7.0 million.

As a consequence of the Sale Transaction, the activity of the WPT Business will only be reflected in the Company’s U.S. federal income tax filings for the portion of the year ending on the date of the Sale Transaction. Any historic tax attributes of the WPT Business, such as net operating losses and tax credits, will transfer to Buyer to the extent they are not utilized by taxable income of the Company on the income tax filing reflecting the Sale Transaction.

Anticipated Accounting Treatment

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vesting of stock-based compensation awards held by employees of the WPT Business. We will record a gain on the sale of the WPT Business in our consolidated statement of operations equal to the difference between the purchase price received or expected to be received and the book value of the assets and liabilities sold. Furthermore, any financial statements that are issued in the future, relating to periods prior to the closing of the Sale Transaction, will present the assets and liabilities of the WPT business on a condensed basis as “held for sale” and the revenues and operating results of the WPT business will be condensed and presented as “income (loss) from discontinued operations.”

Appraisal Rights

Holders of Company common stock are not entitled to appraisal rights in connection with the Sale Transaction.

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THE STOCK PURCHASE AGREEMENT

The terms and conditions of the Sale Transaction, which is the sale of 100% of the outstanding capital stock of CSI, our indirect wholly-owned subsidiary that directly or indirectly owns 100% of the outstanding capital stock of each of the legal entities that collectively operate or engage in the WPT Business, are set forth in the Stock Purchase Agreement. A copy of the Stock Purchase Agreement, excluding the schedules thereto, is included as Annex A to this proxy statement. The description in this proxy statement of the terms and conditions of the Sale Transaction and of the Stock Purchase Agreement is a summary only and may not contain all of the information that is important to you. To fully understand the Sale Transaction and the terms of the Stock Purchase Agreement, you should carefully read in its entirety the copy of the Stock Purchase Agreement included as Annex A hereto.

Sale of the WPT Business

Pursuant to the Stock Purchase Agreement, we have agreed to sell 100% of the outstanding capital stock of CSI, to Element Partners, LLC (the “Buyer”). CSI is an indirect wholly-owned subsidiary of the Company that directly or indirectly owns 100% of the outstanding capital stock of each of the legal entities that collectively operate or engage in the WPT Business. By consummating the Sale Transaction, we will be disposing of the WPT Business in its entirety. Allied Esports Media, Inc. (“Esports Media”), a wholly-owned subsidiary of the Company and the direct holder of the outstanding capital stock of CSI, is also a party to the Stock Purchase Agreement.

Purchase Price

In consideration for the WPT Business, Buyer has agreed to pay the Company at closing a purchase price of $105.0 million, subject to certain adjustments. Buyer has remitted a $10.0 million advance payment of the purchase price and is required to pay the balance of the purchase price at the closing of the Sale Transaction. The purchase price will be adjusted upward by the amount of net cash position of CSI (including its subsidiaries) as of the closing date, and adjusted downward (i) the amount of indebtedness of CSIas of the closing date, (ii) accrued and unpaid Sale Transaction expenses of CSI (including its subsidiaries), and (iii) taxes of CSI (including its subsidiaries) attributable to periods prior to the closing date.

Representations and Warranties

The representations and warranties of each party set forth in the Stock Purchase Agreement have been made solely for the benefit of the other parties thereto for the purpose of allocating contractual risk between the parties and not for the purpose of establishing matters as to fact. In particular, the assertions embodied in the representations and warranties contained in the Stock Purchase Agreement (i) may have been qualified, modified, or excepted by confidential disclosures made to the other parties in connection with the Sale Transaction for the purpose of allocation of contractual risk, (ii) are subject to materiality qualifications contained in the Stock Purchase Agreement which may differ from what may be viewed as material by investors and (iii) were made only as of the date of the Stock Purchase Agreement or such other date as is specified in the therein. Accordingly, the representations and warranties in the Stock Purchase Agreement should not be viewed or relied upon as characterizations of the actual state of facts about the parties thereto.

The Stock Purchase Agreement contains representations and warranties made by CSI to Buyer. These representations and warranties relate to, among other things:

• CSI’s corporate organization, good standing, qualification to do business, corporate power and authority;

• CSI’s corporate authorization in relation to the Stock Purchase Agreement, the related transactions and related transaction documents to which it is a party, and the absence of conflict with CSI’s organizational documents and material contracts as a result of the execution and delivery of, and performance under, the Stock Purchase Agreement;

• the applicability of governmental approvals to the Stock Purchase Agreement and related transactions;

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• the absence of conflict with CSI’s organizational documents and material contracts as a result of the execution and delivery of, and performance under, the Stock Purchase Agreement;

• CSI’s capital structure;

• the identification of CSI’s subsidiaries, and the corporate organization, good standing, qualification to do business, corporate power and authority of such subsidiaries;

• the absence of certain changes in CSI’s operating and financial condition since the specified balance sheet date;

• the status and validity of CSI’s accounts receivable;

• tax matters;

• title to and condition of CSI’s real and tangible and intangible property, and the sufficiency of CSI’s assets to conduct the WPT Business;

• intellectual property;

• material contracts;

• employee benefits;

• labor and employment matters;

• the existence and compliance with consents licenses, permits and other authorizations required to be obtained in connection with the conduct of the WPT Business;

• compliance with laws;

• the existence or absence of litigation;

• maintenance of adequate insurance;

• interests of related parties (e.g., CSI officers and directors) in CSI transactions;

• the existence or absence of fees being paid to brokers in connection with the Sale Transaction;

• restrictions on the conduct of the WPT Business;

• the availability of and Buyer’s access to CSI’s books and records;

• customer and supplier relations; and

• the two-year loan (the “PPP Loan”) provided to WPT Enterprises, Inc., a wholly owned subsidiary of CSI, in connection with the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, in the original principal amount of $685,300 (which has been fully forgiven).

The Stock Purchase Agreement also contains representations and warranties made by the Company and Esports Media to Buyer. These representations and warranties relate to, among other things:

• the corporate organization, good standing, qualification to do business, corporate power and authority of the Company and Esports Media;

• the corporate authorization of the Company and Esports Media in relation to the Stock Purchase Agreement, the related transactions and related transaction documents to which each is a party, and the absence of conflict with their respective organizational documents and material contracts as a result of the execution and delivery of, and performance under, the Stock Purchase Agreement;

• requirements to obtain consents and approvals for the Stock Purchase Agreement and related transactions;

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• compliance with securities laws and rules of self-regulatory organizations;

• the accuracy of financial statements the effectiveness of disclosure controls and procedures;

• the absence of proceedings pending by or before governmental entities;

• title to the issued and outstanding capital stock of CSI to be acquired by Buyer in the Sale Transaction;

• the inapplicability of anti-takeover provisions under applicable law or in the Company’s charter documents;

• receipt by the board of directors of the Company of the opinion of Shot Tower Securities LLC to the effect that, subject to certain assumptions, limitations, qualifications and other matters, the purchase price to be paid in the Sale Transaction is fair, from a financial point of view, to Esports Media;

• the accuracy of information contained in this proxy statement and any other applications, notifications or other documents filed with any governmental entity in connection with the Stock Purchase Agreement and the Sale Transaction; and

• tax withholding information made available by or on behalf of CSI to Buyer.

The Stock Purchase Agreement also contains representations and warranties made by Buyer to Esports Media and CSI. These representations and warranties relate to, among other things:

• the entity organization, good standing, company power and authority of Buyer;

• the entity authorization of Buyer in relation to the Stock Purchase Agreement, the related transactions and related transaction documents to which it is a party, and the absence of conflict with its organizational documents and material contracts as a result of the execution and delivery of, and performance under, the Stock Purchase Agreement;

• requirements to obtain consents and approvals for the Stock Purchase Agreement and related transactions;

• the existence or absence of fees being paid to brokers in connection with the Sale Transaction;

• the inapplicability of anti-takeover provisions under applicable law or in Buyer’s charter documents;

• the accuracy of information provided by Buyer for use in this proxy statement and any other applications, notifications or other documents filed with any governmental entity in connection with the Stock Purchase Agreement and the Sale Transaction;

• the absence of proceedings pending by or before governmental entities;

• the sufficiency of funds available to Buyer to enable Buyer to satisfy its payment obligations under the Stock Purchase Agreement;

• the existence or absence of contracts, undertakings, commitments, agreements or obligations or understandings between Buyer and its affiliates, on one hand, and the management or directors of the Company or Esports Media, or any stockholder of the Company, on the other hand, relating to the Sale Transaction or the operations of CSI and its subsidiaries following the closing of the Sale Transaction; and

• Buyer’s status as a “sophisticated” investor and/or an “accredited” investor under application securities laws.

No Solicitation of Competing Proposal

In the Stock Purchase Agreement, the Company has agreed to, and has agreed to cause Esports Media and its subsidiaries to, immediately cease and cause to be terminated any existing solicitation of, or discussions or negotiations with, any third party relating to any competing proposal or any inquiry, discussion, offer or request that could reasonably be expected to lead to a competing proposal. The Stock Purchase Agreement generally defines a “competing proposal” as any inquiry, proposal or offer made by a third party to purchase or otherwise acquire the Company, Esports Media, CSI, any of their respective subsidiaries and/or the WPT Business.

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In addition, until the earlier of the closing of the Sale Transaction or the termination of the Stock Purchase Agreement, the Company has agreed to:

• promptly (and in any event within two business days of receipt) notify Buyer upon receiving any competing proposal, any inquiry or request for nonpublic information that would reasonably be expected to lead to a competing proposal;

• disclose to Buyer the identity of the third party making the competing proposal (or inquiry or request for non-public information) and the material terms and conditions of any such competing proposal;

• deliver to Buyer copies of any draft agreements or other written materials setting forth the terms of such competing proposal, inquiry or request for nonpublic information;

• keep Buyer reasonably informed of discussions, negotiations or developments in respect of and the status and details of any such competing proposal; and

• promptly (and in any event within two business days of receipt) provide Buyer with copies of all correspondence, documents and agreements, including drafts thereof.

Further, until the earlier of the closing of the Sale Transaction or the termination of the Stock Purchase Agreement, the Company and Esports Media have agreed not to, and have agreed to cause their subsidiaries not to:

• initiate, solicit, induce or knowingly encourage the making of any proposal or offer with respect to a competing proposal; or

• engage in negotiations or substantive discussions with, or furnish any information to, or enter into any agreement, arrangement or understanding with, any third party relating to a competing proposal or any inquiry or proposal that could reasonably be expected to lead to a competing proposal.

Despite this provision prohibiting solicitations of a competing proposal, at any time prior to the approval and adoption of the Stock Purchase Agreement by the Company’s stockholders, the Company and Esports Media may, in response to an unsolicited competing proposal from a third party that did not result from a breach of the Company’s non-solicitation obligations under the Stock Purchase Agreement:

• contact such third party to clarify any ambiguous terms and conditions thereof;

• engage in negotiations or substantive discussions with, or furnish any information and other access to, such third party if the board of directors of each of the Company and Esports Media determines in good faith (after consultation with its outside financial advisors and legal counsel) that such competing proposal constitutes a superior proposal (or could reasonably be expected to lead to a superior proposal), pursuant to a confidentiality agreement containing confidentiality terms that are not less favorable to the Company than the confidentiality agreement that the Company entered into with Buyer.

As used in the Stock Purchase Agreement, a “superior proposal” means a bona fide written competing proposal made by a third party that the Board determines in good faith, after consultation with its outside financial advisors and legal advisors, is reasonably likely to be consummated without undue delay relative to the Sale Transaction and is more favorable to the Company’s stockholders from a financial point of view than the Sale Transaction, after consideration of any modifications to the Stock Purchase Agreement proposed by Buyer (as discussed below).

The Stock Purchase Agreement provides that the Company’s Board may propose to or actually withdraw, modify or qualify its recommendation with respect to stockholder approval of the Stock Purchase Agreement or approve or recommend any superior proposal if the Company’s Board determines in good faith, after consultation with its outside financial advisors and legal counsel, that failure to do so would reasonably be expected to be inconsistent with its fiduciary duties under applicable law.

The Company also agreed that prior to the Board changing its recommendation to approve the Stock Purchase Agreement, terminating the Stock Purchase Agreement or entering into transaction documentation with another party, the Company and Esports Media would provide Buyer with notice of their intention to do so at least three business days in advance, which notice must specify the reasons therefor and, if the basis of the proposed action is a superior proposal, disclose the material terms and conditions of any such superior proposal.

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At Buyer’s option, the Company and Esports Media will negotiate in good faith with Buyer during such period to amend the terms and conditions of the Stock Purchase Agreement in such a manner that would result in the competing proposal no longer being deemed a superior proposal under the Stock Purchase Agreement. Any subsequent material amendment to the superior proposal will require the Company and Esports Media to provide Buyer with notice thereof at least three business days prior terminating the Stock Purchase Agreement or entering into transaction documentation for the superior proposal, and at Buyer’s option will again negotiate in good faith regarding further amendments to the terms and conditions of the Stock Purchase Agreement.

Covenants and Agreements

The Stock Purchase Agreement sets forth various additional covenants and agreements among the parties to the Stock Purchase Agreement, including the following:

• Conduct of Business Pending Closing. Until the closing, except as otherwise provided in the Stock Purchase Agreement or consented to in writing by Buyer, CSI and its subsidiaries will use commercially reasonable efforts to operate the their respective businesses in the usual, regular and ordinary course, preserve intact the present business organizations, keep available the services of the present officers, and preserve their relationships with customers, suppliers, distributors, licensors, licensees, and others having business dealings with them. The Company and its subsidiaries have also agreed to refrain from taking certain actions specified in the Stock Purchase Agreement prior to the closing of the Sale Transaction.

• Closing Efforts. Each of the parties to the Stock Purchase Agreement will use commercially reasonable efforts to take all actions necessary, proper or advisable to consummate and make effective the transactions contemplated by the Stock Purchase Agreement;

• Stockholder Approval. We will prepare and file with the SEC this proxy statement to solicit the required vote of our stockholders to approve and adopt the Stock Purchase Agreement. Buyer will reasonably cooperate to furnish all information required by applicable federal securities laws or the SEC for inclusion in this proxy statement, and our Board has agreed to recommend that our stockholders approve the Stock Purchase Agreement.

• Access to information. We have agreed to afford Buyer reasonable access to the properties, books, contracts, commitments, management employees and records of the Company, Esports Media and their subsidiaries, and to make available to Buyer all other information as Buyer may reasonably request.

• Litigation. We have agreed to give Buyer the opportunity to participate in the defense or settlement of any stockholder litigation against the Company, Esports Media or CSI and any other entity that is part of the WPT Business being acquired in the Sale Transaction (including any director or officer thereof), and to not settle or offer to settle any such litigation commenced on or after the date of the Stock Purchase Agreement.

• Post-closing Director and Officer Indemnification and Insurance. From and after the closing, Buyer has agreed to cause CSI and its subsidiaries to indemnify and hold harmless their current and former directors officers from losses, costs or expenses resulting from claims related to their services to CSI or its subsidiaries in such capacities. CSI has agreed, at the election of the Company, to obtain six year non-cancellable “tail” director and officer liability insurance policies for the individuals who are or were prior to the closing of the Sale Transaction covered by the existing director and officer liability insurance policies maintained by the Company, with terms, conditions, retentions and levels of coverage at least as favorable as such existing policies with respect to matters existing or occurring at or prior to the closing. Buyer has agreed to pay 50% of the fees and expenses incurred in connection with obtaining such policies.

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• Non-Competition and Non-Solicitation. Each of the Company and Esports Media has agreed, for a period of five years after the closing of the Sale Transaction, not to (and to cause their affiliates not to) participate or engage in, in any manner or capacity, the Restricted Business, and not to solicit the customers, suppliers or employees of the WPT Business. For this purpose, the “Restricted Business” means, generally, any business involving the game of poker or variants thereof specified in the Stock Purchase Agreement and any activities ancillary or related to such activities, including, without limitation, (i) organizing, hosting, operating, promoting, and/or conducting events relating to poker, (ii) broadcasting or distributing content relating to such events, (iii) organizing, hosting, operating, promoting, and/or conducting clubs or organizations related to poker, and (iv) commercializing products and merchandise relating to poker.

• Intercompany and Related Party Payments. The Company and Esports Media have agreed to settle, discharge or satisfy (or cause to be settled, discharged or satisfied) in full prior to the closing of the Sale Transaction all obligations or amounts due, payable or outstanding between CSI and its subsidiaries, on the one hand, and the Company, Esports Media and any of their subsidiaries or affiliates (excluding CSI and its subsidiaries), on the other hand, as well as any other amount due, payable or outstanding from CSI and its subsidiaries to parties related to the Company.

• Payment of Bonuses and Change of Control Payments. The Company and Esports Media have agreed to settle, discharge or satisfy (or cause to be settled, discharged or satisfied) in full prior to the closing of the Sale Transaction all performance awards or remuneration of any kind with respect to pre-closing services provided by any past or present employee of CSI or its subsidiaries.

Conditions to the Completion of the Sale Transaction

The respective obligations of the Buyer, on one hand, and the Company and Esports Media, on the other, to complete the Sale Transaction is subject to the satisfaction or waiver of several conditions set forth in the Stock Purchase Agreement, including the following:

• Our stockholders must approve the Stock Purchase Agreement;

• Regulatory approval set forth in the Stock Purchase Agreement, if any, shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired;

• No order, injunction or decree issued by any court or agency of competent jurisdiction or other law preventing or making illegal the consummation of the Sale Transactions shall be in effect; and

• There shall be no pending suit, action or proceeding by any governmental authority (A) challenging or seeking to restrain or prohibit the consummation of the Sale Transaction or seeking to obtain material damages from us, or seeking to prohibit the Buyer from effectively controlling the WPT Business.

The obligation of Buyer to complete the Sale Transaction is subject to the satisfaction or waiver of several additional conditions set forth in the Stock Purchase Agreement, including the following:

• The representations and warranties of the Company, Esports Media and CSI set forth in the Stock Purchase Agreement must be true in all material respects;

• Seller must have performed in all material respects all obligations required to be performed by it under the Stock Purchase Agreement at or prior to the closing;

• No “Material Adverse Effect” with respect to the Company, Esports Media or CSI shall have occurred;

• Buyer shall have received copies of certain identified third party consents and approvals for the Sale Transaction;

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• Buyer shall have received the resignation of each person serving as a director of CSI and/or its subsidiaries; and

• The Company and Esports Media shall have delivered the various closing deliverables outlined in the Stock Purchase Agreement.

The obligation of the Company and Esports Media to complete the Sale Transaction is subject to the satisfaction or waiver of several additional conditions set forth in the Stock Purchase Agreement, including the following:

• The representations and warranties of the Buyer set forth in the Stock Purchase Agreement must be true in all material respects;

• Buyer must have performed in all material respects all obligations required to be performed by it under the Stock Purchase Agreement at or prior to the closing; and

• Buyer shall have delivered the various closing deliverables outlined in the Stock Purchase Agreement.

Termination

The Company, Esports Media and Buyer can jointly agree to terminate the Stock Purchase Agreement at any time.

Either the Company and Esports Media, on the one hand, or Buyer, on the other hand, may terminate the Stock Purchase Agreement if:

• any governmental entity that must grant a regulatory approval for the Sale Transaction denies approval of the Sale Transaction and such denial has become final and nonappealable, or any governmental entity issued a final and nonappealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the consummation of the Sale Transaction;

• the Sale Transaction shall not have been consummated on or before the Outside Date (September 30, 2021), provided that the right to terminate the Stock Purchase is not available to any party who is then in material breach of any representation, warranty, covenant or other agreement contained the Stock Purchase Agreement which breach is the reason for the failure of the closing to occur by that date; or

• there shall have been a breach of any of the covenants or agreements or any of the representations or warranties set forth in the Stock Purchase Agreement on the part of the Company, Esports Media or CSI, in the case of a termination by Buyer, or Buyer, in the case of a termination by the Company or Esports Media, which breach would result in the failure to satisfy closing conditions, and which is not cured within 15 days following written notice to the party committing such breach or by its nature or timing cannot be cured within such time period.

Buyer may terminate the Stock Purchase Agreement at any time after the board of directors of the Company and Esports Media shall have effected an “adverse recommendation change” prior to receipt of stockholder approval for the Sale Transaction, or in the event the Company and/or Esports Media materially breaches any of their covenants not to solicit a competing proposal.

Under the Stock Purchase Agreement, an “adverse recommendation change” means (i) the failure to include the Board recommendation to approve the Sale Transaction in this proxy statement, (ii) withholding, withdrawing or modifying or qualifying the Board’s recommendation to approve the Sale Transaction, or propose publicly to do so, (iii) failing to reaffirm the Board’s recommendation to approve the Sale Transaction or failing to publicly state that the Sale Transaction is in the best interests of the Company’s stockholders within ten business days after being requested by Buyer to do so, (iv) failing to publicly announce, within ten business days after a tender offer or exchange relating to the Company’s securities shall have been commenced, an unqualified statement disclosing the rejection of such tender offer or exchange offer by the Company’s board of directors, (v) taking or resolving to take other actions or making other public statements inconsistent with the Board’s recommendation to approval the Sale Transaction, or (vi) approving, determining to be advisable, or recommending any competing proposal, or proposing publicly to do so.

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The Company and Esports Media may terminate the Stock Purchase Agreement if: (i) the Company or Esports Media receives a superior proposal, (ii) the respective boards of directors of the Company or Esports Media shall have authorized the Company and Esports Media to enter into a definitive agreement to consummate the transaction contemplated by such superior proposal, and (iii) concurrently with the termination of the Stock Purchase Agreement, the Company and Esports Media collectively pay Buyer a $3.45 million termination fee and enter into the definitive agreement to consummate the transaction contemplated by such superior proposal.

Effect of Termination

In the event of termination of the Stock Purchase Agreement as described above, the Stock Purchase Agreement will be of no further force or effect, except:

• designated provisions of the Stock Purchase Agreement, including if applicable, the termination fees, non-performance fees and expense reimbursements described below, will survive termination; and

• the Company and Esports Media will not be relieved or released from any liabilities or damages arising out of their knowing and intentional breach of the Stock Purchase Agreement prior to its termination.

Expense Reimbursement and Termination Fees

If (i) the Stock Purchase Agreement is terminated due to the Sale Transaction not being consummated on or before the Outside Date, (ii) the Company and Esports Media shall have failed to obtain, before the time of termination, stockholders support agreements from specified stockholders and their affiliates, and (iii) the Company has failed to obtain the Company’s stockholders approval of the Sale Transaction, and provided that Buyer is not in material breach of its representations, warranties, covenants or agreements under the Stock Purchase Agreement at the time of termination, then the Company and Esports Media will be required to reimburse Buyer for its documented out of pocket expenses incurred in connection with the authorization, preparation, negotiation, execution and performance of the Stock Purchase Agreement and the Sale Transactions, up to a maximum of $1.0 million, and will be required to return to Buyer the $10.0 million advance payment of purchase price.

The Company and Esports Media will collectively be obligated to return to Buyer the $10.0 million advance payment of purchase price and pay Buyer a $3.45 million termination fee in the following circumstances:

• If Buyer terminates the Stock Purchase Agreement due to the breach of covenants, agreements or representations or warranties of the Company, Esports Media or CSI set forth therein, which breach would result in the failure to satisfy closing conditions, and which is not cured within 30 days following written notice to the breaching party (or by its nature or timing cannot be cured within such time period);

• If Buyer terminates the Stock Purchase Agreement at any time after the board of directors of the Company and Esports Media shall have effected an adverse recommendation change prior to receipt of stockholder approval for the Sale Transaction, or in the event the Company and/or Esports Media materially breaches any of their covenants not to solicit a competing proposal;

• If the Company and Esports Media terminate the Stock Purchase Agreement and contemporaneously entering into a definitive agreement for a superior proposal; or

• If (i) the Stock Purchase Agreement is terminated due to the Sale Transaction not being consummated on or before the Outside Date, (ii) prior to such termination, a competing proposal shall have been made to the Company or Esports Media and disclosed to the Company’s stockholders, or a competing proposal shall have been made to the Company’s stockholders, or any party shall have publicly announced an intention to make a competing proposal prior to the date the Stock Purchase Agreement is terminated, (iii) within twelve months after the date of such termination, the Company, Esports Media and/or any of their respective subsidiaries enters into a definitive agreement with respect to a competing proposal (or transaction that would have constituted a competing proposal if made prior to the termination of this Agreement) or consummates a competing proposal (a “Tail Transaction”) and (iv) such Tail Transaction is consummated (any termination fees payable in such circumstance will be reduced, if applicable, by the amount of any Buyer transaction expenses previously reimbursed by the Company as contemplated by the first paragraph under the caption “Expense Reimbursement and Termination Fees” above).

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Buyer will be obligated to pay the Company a $10.0 million non-performance fee (in addition to the Company’s retention of the $10.0 million advance payment of purchase price) if the Company and Esports Media terminate the Stock Purchase Agreement due to Buyer’s breach of covenants, agreements or representations or warranties set forth therein, which breach would result in the failure to satisfy closing conditions, and which is not cured within 30 days following written notice to Buyer (or by its nature or timing cannot be cured within such time period).

WPT Brand License

Indemnification

The representations and warranties in the Stock Purchase Agreement generally survive for 18 months after the closing date of the Sale Transaction. Representations and warranties about organization, standing and power, authority, conflicts with charter documents, capitalization, ownership of CSI, the absence of brokers, the PPP Loan, the accuracy of information in documents filed with governmental entities, tax matters and the amount of CSI’s indebtedness and accrued and unpaid transaction expenses (“fundamental representations”) survive until the three year anniversary of the closing date. All covenants in the Stock Purchase Agreement and all claims related to fraud survive forever unless the covenants have specific terms in Stock Purchase Agreement.

The Company and Esports Media have agreed to jointly and severally indemnify Buyer and (after the closing) CSI and its subsidiaries for any damages suffered or incurred to the extent resulting from (i) any breach of the representations and warranties of the Company, Esports Media or CSI, (ii) any failure by the Company, Esports Media or (prior to the Closing Date) CSI to perform or comply with their respective covenants or agreements, (iii) fraud, (iv) any taxes attributable to the forgiveness, cancellation or reduction of the PPP Loan, (v) any breach or alleged breach by the Company, Esports Media or their affiliates of any CSI service provider benefit or compensatory plan, and (vi) various tax matters.

Buyer and (from and after the closing of the Sale Transaction) CSI agreed to jointly and severally indemnify the Company and Esports Media for any damages suffered or incurred to the extent resulting from any breach of the representations and warranties of Buyer, any failure by Buyer to perform or comply with its covenants or agreements, or fraud.

Indemnifiable damages will be reduced in amount by any insurance proceeds, indemnification payments, contribution payments or reimbursements actually received by the indemnified party, and further reduced by any associated tax benefits to the indemnified party.

We and Buyer will not have indemnification liability for breach of representations and warranties other than fundamental representations unless and until the aggregate amount of our or Buyer’s indemnifiable losses, as the case may be, exceeds a deductible amount of $1.0 million, and then only to the extent the aggregate amount exceeds such deductible. Our maximum aggregate liability, on one hand, and the maximum aggregate liability of Buyer, on the other, for indemnifiable losses resulting from breach of representations and warranties other than fundamental representations is $8.0 million. Our maximum aggregate indemnification obligation under the Stock Purchase Agreement, including for breach of fundamental representations, may not exceed the purchase price, however indemnification claims resulting from fraud are not subject to any indemnification limit.

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Neither the Company nor Esports Media has not obtained any insurance policies covering the matters as to which it will indemnify Buyer.

Amendment

Subject to applicable laws, the Company, Esports Media and Buyer may mutually amend or waive any provision of the Stock Purchase Agreement. The Company does not currently expect to waive any material provision of the Sale Transaction.

Governing Law

The Stock Purchase Agreement is governed by the laws of the State of Delaware.

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DESCRIPTION OF ALLIED ESPORTS ENTERTAINMENT, INC.

Until the close of the proposed Sale Transaction, the Company expects to continue to execute its existing business strategy.

Overview of Business

Unless otherwise stated or the context otherwise requires, the terms “we,” “us,” “our,” “AESE” and the “Company” refer to Allied Esports Entertainment, Inc. and its subsidiaries.

The Company operates a premier public esports and entertainment company, consisting of the Allied Esports and World Poker Tour businesses. For the past 16 years of its 18-year history, WPT’s business model has successfully utilized the following three pillars for its business model in the sport of poker, which the Company believes can be utilized by Allied Esports:

• in-person experiences;

• developing multiplatform content; and

• providing interactive services.

The Allied Esports Business

Gaming is one of the largest and fastest growing markets in the entertainment sector, with an estimated 2.7 billion gamers globally, and esports is the major driver of this growth. Esports, short for “electronic sports,” is a general label that comprises a diverse offering of competitive electronic games that gamers play against each other. Some of the popular esports games currently being played include Fortnite, League of Legends, Dota 2, Counter-Strike, Call of Duty, Overwatch and FIFA. Although you can play games on your own against the computer or console, one of the ways esports is different than the video games of old is the community and spectator nature of esports, whereby competitive play against another person — either one-on-one or in teams — that is viewed by an online and in-person audience, is a central feature of esports. Since players play against each other online, a global network of players and viewers has developed as these players compete against each other worldwide. Additionally, game developers have greatly increased the watchability of games, which has made the spectator aspect of gaming much more prevalent and further drives expansion of the gaming market. The expanded reach of high-speed Internet service and the computer technology advances in the last decade have also greatly accelerated the growth of esports. Esports has now become so popular that many colleges offer scholarships in esports and the best-known esports teams are receiving mainstream sponsorships and are being bought or invested in by celebrities, athletes and professional sports teams. The highest profile esports gamers have significant online audiences as they stream themselves playing against other players online and potentially can generate millions of dollars in sponsorship money and subscription fees from their online streaming channels. It is projected that by 2023, 646 million people will be watching esports globally, and that global esports revenue will grow to approximately $1.5 billion.

WPT successfully implemented a three-pillar strategy for over 16 years of its 18-year history. We believe this model can continue and also be applied to Allied Esports and the esports industry over time. Allied Esports intends to use those same pillars — in-person experiences, multiplatform content, and interactive services — independently and in connection with its strategic partners. The COVID-19 pandemic has caused disruption in our long-term growth plans for Allied Esports, and although our long-term strategy remains to fully implement the three-pillar strategy, we are currently focused on continuing our in-person experiences at our current arenas and developing multiplatform content. The COVID-19 pandemic has caused disruption in our long-term growth plans for Allied Esports, and although our long-term strategy remains to fully implement the three-pillar strategy, we are currently focused on continuing our in-person experiences at our current arenas and developing multiplatform content.

In June 2019, Allied Esports entered into a series of strategic transactions with Simon Equity Development, LLC and its affiliates (collectively, “Simon”), a global leader in the ownership of premier shopping, dining, entertainment, and mixed-use destinations, pursuant to which Allied Esports organized and staged an esports event program called the Simon Cup at certain Simon shopping centers in the U.S. and online. In January 2020, Allied Esports entered into a strategic partnership with Brookfield Property Partners, one of the world’s premier real estate companies, in which

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Allied Esports will develop integrated esports experience venues at mutually agreed upon shopping malls owned and/or operated by Brookfield or its affiliates that will include a dedicated gaming space and production capabilities to attract and to activate esports and other emerging live events. In connection with the foregoing partnership, Brookfield made a $5 million equity investment into the Company. As a result of the adverse effects that the COVID-19 pandemic has had on the short-term operations and plans of Allied Esports, Allied Esports and its strategic partners are delaying further execution on their strategic plans as the COVID-19 pandemic continues.

In-person Experiences

Allied Esports will continue delivering first-in-class live experiences to customers at Allied Esports’ branded properties worldwide. Starting with the flagship esports arena, the HyperX Esports Arena Las Vegas, the AE Studios in Germany, its on-mall esports venues — the first of which that is planned to be open at the Mall of Georgia with construction and opening dates postponed until further assessment can be made following the COVID-19 pandemic, and its affiliate arenas in China and Australia, Allied Esports offers esports fans state-of-the-art facilities to compete against other players in esports competitions, host live events with esports superstars that potentially stream to millions of viewers worldwide, produce and distribute incredible esports content with its on-site production facilities and studios and provide an attractive facility for hosting corporate events, tournaments, game launches or other events. Additionally, Allied Esports has two mobile esports arenas, which are 18-wheel semi-trailers that convert into first class esports arenas and competition stages with full content production capabilities and interactive talent studios. Through this worldwide network of arenas, Allied Esports believes it can offer customers an unmatched ability to participate in simultaneous global esports events and offer sponsors and partners a truly scalable global platform and audience to promote their businesses and products. Allied Esports’ flagship HyperX Esports Arena Las Vegas serves as a marquee destination for esports fans globally, and has become one of the most recognized esports venues in the world.

Flagship Arena. In March 2018, Allied Esports opened its first flagship arena, the HyperX Esports Arena Las Vegas, at the Luxor Casino on the Vegas strip, whose pyramid is one of the most visible landmarks in Las Vegas. This arena has 80 to 100 gaming stations, two bars, food service, private rooms, a production facility, and space for up to 1,000 people for events. The arena is custom-built for esports tournaments and has a broadcast-ready television studio to broadcast live events and produce content. Allied Esports monetizes the arena through renting the space for live events; merchandise sales; daily usage fees from day-to-day gamers using the gaming stations; tournament entry and player venue fees; food and beverage; and sponsorship (i.e., our HyperX naming rights relationship).

Affiliate Arenas. One of Allied Esports’ strategic advantages is its global network of esports arena partners, which enables it to host events and promote competitions around the world, with those competitions culminating in live events held at the flagship arena in Las Vegas. Allied Esports achieves this through its Affiliate Program, which consists of strategic partnerships with third-party esports operators around the globe. Allied Esports generally charges these affiliates an upfront fee and a minimal annual revenue share of gross revenue, starting in the second year of the operation of the venue. Allied Esports’ brand visibility and reputation have already resulted in affiliate arrangements with arenas and gaming centers in China and a multi-year agreement with Fortress Esports Pty Ltd, a new gaming, esports and entertainment venue enterprise in Australia, which opened its first affiliate arena in Melbourne in March 2020 and reopened during the COVID-19 pandemic in December 2020. This network of affiliate arenas allows Allied Esports to scale its brand penetration worldwide on a rapid basis, driving more gamers into the Allied Esports ecosystem, with minimal costs to Allied Esports. Furthermore, the content that can be produced by these affiliate arenas can be on-sold by Allied Esports, with minimal production costs.

Mobile Arenas. The mobile arenas are 18-wheeler trucks that expand out into fully functional esports arenas with event hosting, broadcasting and production capabilities. The mobility of the trucks makes them ideal for sponsors to reach a large audience in multiple locations at an economical cost. The trucks serve as mobile billboards for potential third-party sponsorship, as well as the Allied Esports brand, providing highly visible brand presence wherever they appear. Allied Esports currently has two mobile arena trucks, with the first truck based in Germany and serving the European market, and a second truck based in Las Vegas and serving the U.S. market.

Strategic Investor Events. In addition to Allied Esports utilizing in-person experiences at its flagship, mobile and affiliate arenas, Allied Esports plans to leverage its experience to develop events and content with its strategic investors, Simon Property Group and Brookfield Property Partners.

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Allied Esports plans to collaborate with Brookfield Property Partners to create a new product offering focused on delivering esports experiences through integrated gaming venues and production facilities in select shopping centers around the U.S. that are owned and/or operated by Brookfield. The on-mall venues will be designed to activate esports and other emerging live events through tournament play of all levels and daily use, featuring PC and console gaming, plus full food and beverage options, and experiential retail. The venues will have the capability to be expanded into common areas for larger esports activations and live events.

In addition, on September 30, 2019, Allied Esports and Simon launched The Simon Cup, a co-branded esports competition and gaming tournament series of on-mall regional festivals combining online and in-person play at select Simon centers in the New York and Los Angeles markets, with the winners of the regionals moving on to HyperX Esports Arena Las Vegas, where the first Simon Cup Champion was crowned on November 23, 2019.

As a result of the material adverse effects that the COVID-19 pandemic has had on the short-term operations and plans of Allied Esports, Allied Esports and its strategic partners are delaying further execution on their strategic plans as the COVID-19 pandemic continues.

Multiplatform Content: Leveraging Branded Properties and Strategic Partnerships to Develop Content

Allied Esports’ worldwide network of branded esports properties provides Allied Esports with a platform to potentially develop a significant amount of content to distribute via digital live streams, broadcast and cable, and social media outlets. Allied Esports believes that its arenas will draw top-level esports talent (such as professional streamer Ninja, who was the featured talent at a successful event at Allied Esports’ Las Vegas arena in April 2018) for purposes of hosting events and developing content, which it can distribute live, post-produce into fully-produced episodic content, or repackage for over the top streaming platform and social media distribution. Allied Esports intends to monetize the content in multiple ways, including direct sales of the content, sponsorship revenue, and subscription and/or advertising fees for viewers of the content.

We believe Allied Esports’ ecosystem of esports branded properties gives it the reach, reputation and experience to produce world-class live events, in partnership with some of the most prominent names in the esports industry. These live events provide Allied Esports with the material to produce exciting content that can be distributed via three different formats, each of which has its own revenue generation model: live streaming, post-produced episodic content, and short-form repackaged content.

Live Streaming. Live streaming is the most popular esports content delivery channel today, as it offers the best interactive experiences for the audience. Vast improvements in technology and Internet service and speed have made live streaming with large audiences widely available today. Well-known gamers live stream themselves playing their favorite games on any of the popular streaming services (Twitch, YouTube, Facebook Gaming, etc.) to a worldwide audience. The streamers derive revenue from ad sales, sponsorship, subscription fees and gift payments from spectators. Through Allied Esports’ ecosystem of esports arenas, Allied Esports can offer streamers a large platform to put on live events that can be simultaneously streamed on both the streamer’s channels and on Allied Esports’ channels. An example is a streaming event Allied Esports held with one of the most prominent streamers in esports, Tyler Blevins, AKA Ninja, in April 2018. Famous for his streaming channel where he plays the popular esports game Fortnite, Ninja held a live event at the Las Vegas flagship arena that set records for Twitch live streams, with over 667,000 peak concurrent viewers and 2.4 million unique viewers. To put those audience numbers in perspective, those numbers are significantly higher than viewership of the average regular season NBA game in 2019. Allied Esports was able to sell multiple sponsorships for the event and earned significant revenue from the food and beverage, merchandise sales and usage fees from the gaming stations. Although large audiences can be garnered through these live event streams, there are limitations on the streams, as they have a one-and-done nature; repeat viewing is not popular for these events, which limits the sponsorship opportunities.

Post-Produced Content. Allied Esports intends to develop esports entertainment programming around its live experiences and, using its experienced editing and production teams, create serial, episodic content and segments that tell compelling storylines around its gaming talent, in person experiences, and gaming events around the world. Allied Esports developed this technique through the WPT, who took the slow-paced game of poker and dramatized it and created storylines that made for exciting and compelling viewing. This post-produced content can be valuable real estate for sponsors, as Allied Esports can integrate sponsors seamlessly into the show in a way that feels organic to the viewers. Allied Esports can focus on different storylines, create excitement via editing and music inclusion, and generally elevate the production quality from that achievable in a live stream. Allied Esports can then monetize this

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episodic content via sponsorship, advertising, selling the content itself to third party distributors, or even use it as a marketing tool to drive customers to come to Allied Esports’ branded properties, buy its merchandise or otherwise interact with Allied Esports.

Repackaged Content. The library of content Allied Esports will develop from events can be cut into smaller clips that can be used as marketing and promotion of the Allied Esports brand on social media. Allied Esports can also edit content to create new content, such as “best of” shows, focusing on one particular game as played by multiple well-known streamers, regional shows focusing on talent from a particular country, and so on.

Allied Esports’ global branded esports properties ecosystem will create opportunities for live events which provide material to develop great content, all of which Allied Esports can monetize in multiple ways. The large customer base Allied Esports develops through these in-person experiences, live streams and content distribution will give it a customer base to launch interactive services.

Interactive Services: Developing an Esports Entertainment Platform

Allied Esports intends to develop its own online platform where esports players and fans can watch, play and win with other members of the esports community and top esports personalities. The online platform will enable fans to compete against each other as well as participate in esports programs starring their favorite players. Subscriptions will provide members with exclusive access to numerous unique and proprietary experiences, products and services that are not available outside of Allied Esports’ ecosystem, such as exclusive online content, member-only tournaments, prizes and cash awards, exclusive live event and merchandise access, exclusive opportunities to be part of our entertainment programming, VIP treatment at Allied Esports’ arenas, and much more. Allied Esports intends to use the authenticity and reach driven by its in-person experiences and content viewership to drive platform adoption by esports fans. Allied Esports’ executive team has years of experience developing online platforms — its CEO, Frank Ng, has managed and run online platforms with approximately 700 million registered users in China for over 14 years, and its COO, David Moon, has produced, published and operated numerous game services for over 20 years, including helping build NHN Corporation’s global footprint to over 1 million concurrent users. Furthermore, WPT has developed and operated its subscription platform for poker fans, ClubWPT, since 2010, and developed and operated a social poker product, PlayWPT, starting in 2016. PlayWPT was licensed to a third party in May of 2018.

The WPT Business

The Company owns the World Poker Tour® (WPT®) — a premier name in internationally televised gaming and entertainment with brand presence in land-based poker tournaments, television, online and mobile. A leading innovator in the sport of poker since 2002, WPT helped ignite the global poker boom with the creation of a unique television show based on a series of high-stakes poker tournaments. WPT’s Tour Events are held at locations throughout the world and have awarded more than one billion in prize dollars in its 18-year history. WPT has broadcast globally in more than 150 countries and territories, and is currently producing its 18th season, which airs on Bally Sports Networks (formerly the FOX Sports Regional Networks) in the United States. Season 18 of WPT is sponsored by its online subscription-based poker service, ClubWPT.com. WPT offers a suite of online poker services which it operates by itself and through its partners offering consumers the ability to access gaming content on a year-round 24/7 basis. ClubWPT.com is a unique online membership site that offers inside access to the WPT, as well as a sweepstakes-based poker club available in 43 states and territories across the United States, Australia, Canada, France and the United Kingdom, with innovative features and state-of-the-art creative elements inspired by WPT’s 18 years of experience in gaming entertainment. In June 2020, ClubWPT launched a premium level of ClubWPT membership called ClubWPT Diamond, which allows members to play for larger prize pools, more qualifying seats to official WPT live events, and exclusive line-ups of unique experience packages. In addition, WPT licenses its brand to social gaming sites through partners like CaptivePlay (for PlayWPT social poker) as well as to educational learning platforms such as LearnWPT. These online products are scalable and offer geographic access that might be limited if WPT relied on tour stop participation alone. Additionally, WPT benefits from managing its own distribution business which currently has more than 1,100 hours of broadcast-ready content, and offers demographically similar programming to its poker content, such as esports, golf and MMA. WPT uses this large suite of programming as leverage to seek preferred airtimes on its various distribution channels where it may promote its online products or offer airtime to sponsors in territories they seek to enter. WPT also participates in strategic brand license, partnership, sponsorship opportunities and music licensing. As described below, WPT applies a three-pillar model of in-person experiences, developing multiplatform content and providing interactive services, to the sport of poker.

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In-person Experiences: Worldwide Poker Tournaments

World Poker Tour Events. The WPT is a sports league of affiliated poker tournaments that are held at prestigious casinos and poker rooms around the world. WPT licenses the WPT brand to these casinos and card rooms so that they can brand their poker tournaments as WPT events, and these events are integrated into WPT’s tour. These events form the backbone of WPT’s brand identity and have turned the WPT into one of the most recognizable names in gaming. WPT has developed different types of tours, generally distinguishable by the size of the buy-in for competitors in the applicable tour’s events. The WPT Main Tour events generally have the biggest buy-ins (usually between $3,500 and $10,000), are held at the largest and most prestigious casinos and card rooms and are attended by many of the top professional poker players in the world. The WPT DeepStacks Tour and WPT500 events are smaller than Main Tour events, with buy-ins ranging from $300 to $1,000, and are meant to cater to the lower- to medium-stakes players. In addition, through a third-party licensing arrangement, WPT licenses its name to a third party operating the WPT League, which are small bar-league poker events held at bars and clubs on a social basis. These live events create touchpoints to a large community of poker players to whom WPT can market other WPT live events, advertise and market its sponsor’s products, and push towards its interactive products. Furthermore, the live events create the content WPT uses to monetize its brand, as set forth below. The World Poker Tour live events have been postponed during the recent outbreak of the COVID-19 virus throughout the world, although some WPT-branded live events are now starting to be held both in the U.S. and around the world.

Multiplatform Content: The World Poker Tour Television Shows

The Content. WPT films the final table of six participants from a select group of WPT’s Main Tour stops, where the players compete for some of the poker world’s largest tournament prize pools. We then edit the footage from these tour stops, resulting in a series of one-hour or two-hour episodes which are distributed for telecast to both domestic audiences via our broadcast agreement with Sinclair, and international television audiences via numerous international distribution agreements. WPT has an agreement with Poker Go, a prominent poker-centric online platform, pursuant to which WPT live streams many of its events to Poker Go’s customer base. Many of WPT’s live events that are not broadcast on the Bally Sports Networks are live streamed on Poker Go, which ensures almost all of WPT’s events are broadcast on some format. In addition, WPT films and produces special episodes based on a variety of non-traditional poker tournaments and/or cash games, which it also distributes for telecast along with the episodes based on WPT’s regular tour stops. Furthermore, WPT produced specialized shows meant to promote and market its ClubWPT membership site, such as its “King of the Club” shows in which ClubWPT members won the right, by winning certain tournaments on the ClubWPT platform, to play against each other for cash and prizes in a single-table tournament that was filmed and broadcast on FSN. WPT also filmed and prepared for distribution another series of shows to promote ClubWPT called “Challenge the Champs”, in which ClubWPT members who qualified on the ClubWPT platform received the chance to play against former WPT Main Tour champions for cash and prizes. These episodes premiered on FSN in August and September 2019.

WPT previously produced and broadcasted on FSN a series of shows called WPT Alpha8, based on a series of high-stakes poker tournaments with buy-ins of $100,000. In the Alpha8 events, some of the most elite high-stakes players in the world played in poker tournaments against one another in glamorous casinos and card rooms around the world, with the final eight players of each tournament filmed for production of the television episodes. The inaugural season of WPT Alpha8 began in 2013 and aired for three seasons, ending in 2016 and continues to be distributed internationally. In addition to the strategic advantage of the “World Poker Tour” and WPT-related brands, WPT has created significant efficiencies in its content programming through its affiliation and use of Allied ESports’ HyperX Esports Arena Las Vegas venue to film some of its Main Tour final tables and other special events. This change, which just began for Season 17, has significantly reduced production costs by reducing transportation and set up fees and has allowed for more content to be produced at a significantly more efficient cost. Moreover, by reducing the physical location needs from its casino partners that would otherwise be featured in a WPT televised event, WPT has greatly expanded the number of potential casino customers that can meet the requirements for hosting a WPT televised final table. Finally, WPT creates, owns and publishes its own music for WPT shows. In addition to receiving royalties for the music integrated into these programs, WPT has created a database of over 2,300 musical pieces which may be licensed for itself or for other third-party producers.

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WPT Distribution Footprint. All of the WPT television programs air on Sinclair’s RSNs in the U.S., and in 33 different territories worldwide pursuant to licensing and distribution arrangements with various linear and digital networks. Virtually all of WPT’s 17-season poker library is fully available for distribution, providing hundreds of hours of top-tier broadcast grade poker sports content. WPT has greatly expanded the reach of its content by licensing it for broadcast on many digital platforms as well, such as PlutoTV, Unreel Entertainment, Samsung TV Plus, and many others. WPT does not receive fees from Sinclair for the domestic distribution of our content. Instead, WPT uses the WPT show to heavily promote its ClubWPT product and other online products and partnerships, such as the PlayWPT social poker game. WPT does provide Sinclair with a guaranteed revenue share from ClubWPT’s operations in exchange for significant promotion and distribution of the programs featuring ClubWPT marketing. This arrangement ensures that Sinclair has an incentive to keep WPT’s show on the air and to market and promote the show, as they share in the show’s success to the extent ClubWPT’s revenue increases. Since the ClubWPT customer base and broadcast television viewers are similar in demographics, the symbiotic relationship between Sinclair and WPT works well to keep WPT’s brand widely known and accessible to millions of people in the U.S. The Sinclair agreement also has other important broadcast requirements to ensure that WPT’s programming remains “appointment television” and airs at particular times on both the Sinclair networks and the RSNs. Internationally, some of WPT’s distribution partners pay WPT fees to broadcast content, but usually, WPT’s international revenues are based on distribution deals that pay via advertising time and sponsorship sales, as well as the intrinsic value of spreading WPT’s brand awareness worldwide. The international reach of WPT-related shows has grown meaningfully as a result of our expanding digital distribution footprint. WPT receives additional fees from our digital distribution agreements, but again see these as brand-building exercises and as avenues to get more people exposure for WPT’s online products, sponsors and advertisers. In addition to its World Poker Tour content, WPT also distributes various sports and lifestyle programming through its distribution business. As a result, WPT now controls over 1,100 hours of programming from which it may generate distribution fees, license fees, sponsorship revenue and music licensing revenue, as well as serving as a vehicle to promote its online gaming products worldwide. The ability to “bundle,” or offer large amounts of content, provides WPT distribution leverage in negotiating the amount of airings or preferred airing times of its content.

Sponsorship Revenue. Sponsorship revenue is the prime economic driver of the distribution of WPT content. WPT partners with prestigious brands, such as Dr. Pepper (soft drinks), Hublot (high-end timepieces), Corona (beer), Rockstar (energy drinks), Baccarat (fine crystal), Party Poker (online gaming in Europe), and offers them the ability to become the “Official ________ of the World Poker Tour”. The Season 17 sponsors included Hublot, Rockstar, Baccarat, Faded Spade Poker (a playing card manufacturer), and Zynga Inc. (social gaming operator). WPT is able to seamlessly integrate its sponsors into the WPT television show by displaying sponsors on poker tables, on television sets, and specialized segments that are brought to viewers by the applicable sponsor. By integrating WPT’s sponsors into the show, WPT provides a powerful marketing tool in that viewers are seeing the sponsor as part of the show they are watching, as opposed to an advertisement that they may mute or skip if possible. WPT’s live events also offer WPT sponsors a great advertising platform to market directly to WPT players via signage, product sampling suites, flyers, and similar marketing endeavors.

Interactive Services: Poker Platforms

WPT’s live event global footprint and distribution of its content via broadcast, streaming and social media, allow WPT to generate significant marketing opportunities for both its sponsors and its own products. WPT has taken advantage of this marketing arm to promote several interactive products: ClubWPT, its subscription-based online poker club that WPT owns and operates, which also offers social poker; PlayWPT, a web and mobile social poker product that is operated by a third party utilizing software and branding that WPT licenses to such provider; and HongKong Triple Sevens Interactive Co., Ltd, who licenses WPT’s Alpha8 brand to operate a social poker product they are in the process of developing.

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ClubWPT. WPT’s subscription-based online club, ClubWPT.com, is operated in accordance with the principles of sweepstakes law and is available in 43 states and territories across the United States, Australia, Canada, France and the United Kingdom. A free alternative means of entry is offered for participants who wish to play in the tournaments but do not wish to purchase the other membership benefits. VIP members can play poker to win a share of $100,000 in cash and prizes every month, including seats in live WPT poker tournaments. Other benefits include access to every season of the WPT television series and all related content, discounted tickets to live events through ScoreBig, everyday savings for everyday things via the ClubWPT Entertainment Savers Guide, and other member benefits. In January of 2019, WPT added freemium social poker and casino gaming on the platform. Since that time, daily active revenue has risen steadily, and we anticipate the freemium products on the platform will be a meaningful driver of ClubWPT revenue going forward. The subscription fee for ClubWPT remains the same each month and players are not allowed to wager actual money online. One must be eighteen or older to participate. In June 2020, ClubWPT launched a premium level of ClubWPT membership called ClubWPT Diamond, which allows members to play for larger prize pools, more qualifying seats to official WPT live events, and exclusive line-up of unique experience packages.

PlayWPT and Alpha8 Social Poker. WPT’s 3-year license agreements for PlayWPT and the Alpha8 social poker product that each commenced in 2018 provide WPT with a share of all revenue generated on those respective platforms, with annual minimums of the greater of $500,000 or 20% of revenue generated for PlayWPT, and the greater of $200,000 or 20% of revenue generated for the Alpha8 social poker product. These arrangements offer WPT significant annual payments based on the value and prestige of WPT’s brands and WPT’s ability to market and promote the platforms.

In addition to the three-pillar approach to monetizing the WPT brands as described above, WPT has also been able to combine these approaches in a regional manner to create localized versions of the WPT in other parts of the world. For example, WPT has an agreement with Adda52, one of the largest online poker operators in India, pursuant to which Adda52 utilizes WPT brands to put on WPT-branded tournaments, create and sell WPT merchandise, sponsor and distribute WPT content, and otherwise market and promote their own products using the WPT name. WPT had a similar arrangement for the Asia-Pacific region with its Former Parent, Ourgame, and is negotiating similar arrangements with parties in other parts of the world, such as Latin America. These brand licensing arrangements not only provide WPT with revenue derived from upfront payments and revenue share, but they broaden WPT’s brand reach in localized ways to parts of the world that WPT would be hard-pressed to effectively market to on its own. WPT believes that this increased reach will have long-term benefits to WPT’s brand image and profitability.

Recent Developments.

On January 19, 2021, the Company and its direct and indirect wholly-owned subsidiaries, Allied Esports Media, Inc. (“Esports Media,” and together with the Company, the “Selling Parties”) and Club Services, Inc. (“CSI”), entered into a Stock Purchase Agreement (the “Original Agreement”) with Element Partners, LLC (“Buyer”), pursuant to which the Selling Parties have agreed to sell 100% of the outstanding capital stock of CSI to Buyer. CSI is the Company’s indirect wholly-owned subsidiary that directly or indirectly owns 100% of the outstanding capital stock of each of the legal entities that collectively operate or engage in the Company’s poker-related business and assets (the “WPT Business”). The proposed sale of CSI is referred to herein as the “Sale Transaction.” In connection with the Original Agreement, Buyer agreed to pay Esports Media a total purchase price of $78.25 million for the stock of CSI, including an initial purchase price at closing of $68.25 million and $10.0 million in future payments after the closing of the Sale Transaction. After the execution of the Original Agreement, the Company received multiple unsolicited competing proposals to sell the Company and/or CSI to Bally’s Corporation. As a result of such proposals and further negotiation with Buyer, the Selling Parties, CSI and Buyer entered into an Amended and Restated Stock Purchase Agreement on March 19, 2021, and thereafter amended such agreement on March 29, 2021 (as amended, the “Stock Purchase Agreement”).

Buyer has agreed to pay Esports Media a total purchase price of $105 million for the stock of CSI (the “base purchase price”) at the closing of the Sale Transaction, as further described below. The base purchase price will be adjusted to reflect the amount of CSI’s cash, indebtedness and accrued and unpaid transaction expenses as of the closing of the Sale Transaction. Buyer has remitted a $10.0 million advance payment of the base purchase price and is required to pay the balance of the base purchase price at the closing of the Sale Transaction.

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The Stock Purchase Agreement contains customary representations and warranties, covenants and indemnification provisions. The closing of the Sale Transaction is subject to closing conditions, including the approval of the Sale Transaction by the Company’s stockholders and other customary closing conditions. The Company intends to consummate the Sale Transaction shortly after obtaining stockholder approval, assuming all other conditions to the completion of the Sale Transaction have been satisfied or waived by the appropriate parties.

The Stock Purchase Agreement may be terminated by Buyer or the Company if the closing of the Sale Transaction has not occurred by September 30, 2021, or upon the occurrence of certain customary events as set forth in the Stock Purchase Agreement. Depending on the circumstances surrounding a termination of the Stock Purchase Agreement, the Buyer may be required to pay a $10.0 million non-performance fee to the Company, and the Selling Parties may be required to pay a $3.45 million termination fee to the Buyer, and the Selling Parties may be required to return to Buyer the $10.0 million advance payment of the purchase price and reimburse Buyer for up to $1.0 million of its documented out of pocket expenses incurred in connection with the authorization, preparation, negotiation, execution and performance of the Stock Purchase Agreement and the Sale Transaction.

The rapid growth and popularity of gaming and esports during the COVID-19 pandemic has driven interest in the Company’s esports business, Allied Esports. In January 2021, the Company’s Board of Directors decided to explore strategic options for the esports business in order to maximize value to its stockholders, including a possible sale, and the Company has engaged a financial advisor to assist with the process. If the Company pursues and ultimately completes a sale of the esports business in addition to the sale of the WPT Business in the Sale Transaction, the Company expects to proceed (likely under a new name) as a publicly traded holding company focused on using its cash resources to explore opportunities in online entertainment, including but not limited to, real money gaming and other gaming sectors. However, the Company does not plan to limit itself to any particular industry or geographic location in its efforts to identify prospective target businesses. Currently, the Company does not have any specific merger, asset acquisition, reorganization or other business combination under consideration or contemplation. At this time no potential or particular buyer has been identified to purchase the esports business, and there are no initial or ongoing negotiations in respect of the sale of the esports business.

Corporate Organization

Our principal offices are located at 17877 Von Karman Avenue, Suite 300, Irvine, California, 92614, and our telephone number at that office is (949) 225-2600.

Allied Esports Entertainment Inc., (“AESE”), 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.

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 (as defined 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 (“Ourgame”).

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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 the combined 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 the combined 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 Allied Esports GmbH (“AEGmbH”). 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. AEGmbH 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.

Our fiscal year ends December 31. Neither we nor any of our predecessors have been in bankruptcy, receivership or any similar proceeding.

Regulation

WPT tournaments are conducted by the host casinos and card rooms, and we believe WPT is not subject to government gaming regulation in connection with its affiliation with and telecasts of these events. We continue to monitor the legality of Internet gaming in domestic and international jurisdictions, but cannot be certain that changes in existing regulations will be beneficial to the gaming market. WPT’s subscription-based online club, ClubWPT.com, is operated in accordance with the principles of sweepstakes law. A free alternative means of entry is offered for participants who wish to play in the tournaments but do not wish to purchase the other membership benefits. The subscription fee for ClubWPT remains the same each month and players are not allowed to wager actual money online. One must be eighteen or older to participate. However, the awarding of cash and prizes will require compliance with the laws or regulations in various states or countries over sweepstakes, promotions and giveaways, are complicated and constantly changing.

Allied Esports intends to offer subscribers the chance to win cash and prizes when playing esports games and tournaments on the esports gaming platform it intends to develop. Similar to WPT, Allied Esports will be subject to the complicated laws and regulations in various states or countries over sweepstakes, promotions and giveaways. Any negative finding of law regarding the characterization of the type of online activity carried out on the esports gaming platform could limit or prevent Allied Esports’ ability to obtain subscribers in those jurisdictions. In addition, Allied Esports is subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet. In addition, laws and regulations relating to user privacy, data collection, retention, electronic commerce, consumer protection, content, advertising, localization, and information security have been adopted or are being considered for adoption by many jurisdictions and countries throughout the world.

Intellectual Property

We believe that to maintain a competitive advantage in the marketplace, we must develop and maintain protection of the proprietary aspects of our technology. We rely on a combination of trademarks, patent, trade secret intellectual property rights and other measures to protect our intellectual property.

WPT has filed trademarks for the names of its shows, including the World Poker Tour name and logos. The trademark “World Poker Tour” has been registered with the U.S. Patent and Trademark Office (“USPTO”) on the principal register in connection with entertainment services, clothing, playing cards and poker chips, and housewares and glass; and on the supplemental register in connection with electronic and scientific apparatus. Other registered marks around the world include: “Alpha8” in the U.S., Canada, China, Europe, South Africa and Uruguay; “Battle of Champions” in the U.S.; “Card Design” in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru, Puerto Rico,

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and Venezuela; “Doyle Brunson North American Poker Championship” in the U.S.; “Hollywood Home Game” in the U.S.; “Ladies’ Night” in the U.S.; “Latin American Poker Tour” in Peru and Europe; “Poker Détente” in Europe; “Poker Walk of Fame” in the U.S.; “PPT” in the U.S., Canada and Europe; “PPT & Design” in the U.S. and Canada; “Professional Poker Tour” in the U.S.; “Professional Poker Tour PPT & Design” in the U.S.; “Royal Flush Girls” in the U.S.; “Time Slots” in Canada, Europe and the U.S.; “World Poker Tour” in Argentina, Australia, Brazil, Canada, Chile, Colombia, Costa Rica, Europe, Mexico, Peru, Puerto Rico, South Africa and Venezuela; “World Poker Tour & Design” in the U.S., Canada and Europe; “WPT” in the U.S., Argentina, Australia, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru, Puerto Rico, South Africa, and Venezuela; “WPT8 Design” in U.S., Australia, Canada, China, Europe, South Africa and Uruguay; “WPT Academy” in Europe; “WPT Alpha8 Design” in Australia, Canada, China, Europe, South Africa and Uruguay; “WPT Boot Camp” in the U.S.; “WPT Poker Corner” in the U.S., Canada and Europe; “WPT Spade Card Design” in China; “WPT World Poker Tour & Design” in the U.S., Australia, Canada, Europe and Korea. We have registered approximately 2,100 Internet domain names in 70 regions around the world. We also have proprietary rights to our portfolio of registered and unregistered copyrighted materials, which includes the episodes of the televised programming and music that we produce, subject to licenses related to these episodes provided under our agreements with our distributors and our international telecast license agreements, as well as the WPT Academy database and online videos.

WPT has filed five U.S. and international patent applications. One patent relating to a specially designed game table that uses integral lighting, was issued by the USPTO in 2007. Another patent, relating to systems and methods reducing fraud in electronic games having virtual currency, was issued by the USPTO in April 2020. A third patent relating to systems and methods for securing virtual currencies and enhancing electronic products, was issued by the USPTO in May 2020. A fourth patent, relating to systems and methods to provide multiple commentary streams for the same broadcast content, was issued by the USPTO in March 2021. WPT’s remaining patent application relates to systems and methods to reduce impact of network disruptions.

Allied Esports has one patent in the U.S. related to systems and methods for latency in networked competitive multiplayer gaming that was issued by the UPSTO in July 2020. It has also registered approximately 45 domain names. Allied Esports has filed for trademark protection for the following marks as well: “Allied Esports” has been filed in the U.S., “Allied Esports” bold mark has been filed in China and Europe; The “Allied Esports” logos have been filed in the U.S. and Europe; the “Allied Esports Member Property Network” logo has been filed in China and Europe; the “Big Betty” logos have been registered in Europe; “E-sports Arena” have been registered in China, “Esports Superstars” logo has been filed in the U.S.; “Legend Series” logo has been filed in the U.S. and Europe; and the “Allied Esports” emblem has been filed in China and Europe.

Competition

WPT competes with other poker-related television programming, including ESPN’s coverage of the “World Series of Poker” and its “World Series of Poker” Circuit Events, among others. These and other producers of poker-related programming are well established and may have significantly greater resources than WPT does. Based on the popularity of these poker-related televised programs, WPT believes that additional competing televised poker programs may currently be in development or may be developed in the future. WPT’s programming also competes for telecast audiences and advertising revenue with telecasts of mainstream professional and amateur sports, as well as other entertainment and leisure activities.

The esports gaming industry is also competitive. Competitors range from established leagues and championships owned directly, as well as leagues franchised by well-known and capitalized game publishers and developers, interactive entertainment companies, diversified media companies and emerging start-ups. New competitors will likely continue to emerge, and many of these competitors will have greater financial resources than Allied Esports.

Territories

We sell products and services throughout the world.

Employees

As of May 25, 2021, we had approximately 125 employees, including 26 employees that operated under collective-bargaining agreements.

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ALLIED ESPORTS ENTERTAINMENT, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of financial condition and results of operations together with the Company’s consolidated financial statements and the related notes included in this proxy statement. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. The Company’s actual results could differ materially from those anticipated by the forward-looking statements due to important factors including, but not limited to, those set forth in the “Risk Factors” section of this proxy statement.

The Company

AESE operates a premier public esports and entertainment company, consisting of the Allied Esports and World Poker Tour businesses.

Allied Esports

Gaming is one of the largest and fastest growing markets in the entertainment sector, with an estimated 2.56 billion gamers playing esports globally, and esports is the major driver of this growth. Esports, short for “electronic sports,” is a general label that comprises a diverse offering of competitive electronic games that gamers play against each other. It is projected that by 2023, 646 million people will be watching esports globally, and that global esports revenue will grow to approximately $1.5 billion.

The esports gaming industry is relatively new and is challenging. Competition is rapidly developing. Allied Esports’ business relies upon its ability to grow and garner an active gamer community, and successfully monetize this community through tournament fees, live event ticket sales, and advertising and sponsorships utilizing a three-pillar approach, which includes:

• in-person experiences;

• developing multiplatform content; and

• providing interactive services.

Its growth also depends, in part, on its ability to respond to technological evolution, shifts in gamer trends and demands, introductions of new games, game publisher intellectual property right practices, and industry standards and practices. While change in this industry may be inevitable, Allied Esports will try to adapt its business model as needed to accommodate change and remain on the forefront of its competitors, by collaborating with its strategic investors, including certain affiliates of Simon Property Group, Inc., a global leader in the ownership of premier shopping, dining, entertainment, and mixed-use destinations (“Simon”), and with certain affiliates of Brookfield Property Partners, one of the world’s premier real estate companies.

Allied Esports’ business plan requires significant capital expenditures, and it expects its operating expenses to increase significantly as it continues to expand its marketing efforts and operations in existing and new geographies and vertical markets (including its online esports tournament and gaming subscription platform it intends to develop). A key element of Allied Esports’ growth strategy is to extend its brand by opening additional flagship arenas throughout the world and by licensing the Allied Esports brand to third party esports arena operators, which it believes will provide attractive returns on investment.

World Poker Tour

The World Poker Tour is a premier name in internationally televised gaming and entertainment with brand presence in land-based poker tournaments, television, online and mobile. Leading innovation in the sport of poker since 2002, WPT helped ignite the global poker boom with the creation of a unique television show based on a series of high-stakes poker tournaments. WPT’s Tour Events are held at locations throughout the world and have awarded more than one billion in prize dollars in its 18-year history. WPT has broadcast globally in more than 150 countries and territories, and is currently producing its 18th season, which airs on Bally Sports Network, formerly known FOX Sports Regional Networks in the United States. Season 18 of WPT is currently sponsored by its online subscription-based

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poker service, ClubWPT.com. WPT offers a suite of online poker services which it operates by itself and through its partners offering consumers the ability to access gaming content on a year-round 24/7 basis. ClubWPT.com is a unique online membership site that offers inside access to the WPT, as well as a sweepstakes-based poker club available in 43 states and territories across the United States, Australia, Canada, France, and the United Kingdom, with innovative features and state-of-the-art creative elements inspired by WPT’s 18 years of experience in gaming entertainment. In addition, WPT licenses its brand to social gaming sites through partners like Zynga as well as to educational learning platforms such as LearnWPT. These online products are scalable and offer geographic access that might be limited if WPT relied on tour stop participation alone. Additionally, WPT benefits from managing its own distribution business which currently has more than 1,100 hours of broadcast-ready content, and offers demographically similar programming to its poker content, such as esports, golf and MMA. WPT uses this large suite of programming as leverage to seek preferred airtimes on its various distribution channels where it may promote its online products or offer airtime to sponsors in territories they seek to enter. WPT also participates in strategic brand license, partnership, sponsorship opportunities and music licensing, applying its three-pillar model of in-person experiences, multiplatform content and interactive services, described above, to the sport of poker.

Sale of WPT Business. On January 19, 2021, the Company and its direct and indirect wholly-owned subsidiaries, Allied Esports Media, Inc. (“Esports Media,” and together with the Company, the “Selling Parties”) and Club Services, Inc. (“CSI”), entered into a Stock Purchase Agreement (the “Original Agreement”) with Element Partners, LLC (“Buyer”), pursuant to which the Selling Parties have agreed to sell 100% of the outstanding capital stock of CSI to Buyer. CSI is the Company’s indirect wholly-owned subsidiary that directly or indirectly owns 100% of the outstanding capital stock of each of the legal entities that collectively operate or engage in the Company’s poker-related business and assets (the “WPT Business”). The proposed sale of CSI is referred to herein as the “Sale Transaction.” In connection with the Original Agreement, Buyer agreed to pay Esports Media a total purchase price of $78.25 million for the stock of CSI, including an initial purchase price at closing of $68.25 million and $10.0 million in future payments after the closing of the Sale Transaction. After the execution of the Original Agreement, the Company received multiple unsolicited competing proposals to sell the Company and/or CSI to Bally’s Corporation. As a result of such proposals and further negotiation with Buyer, the Selling Parties, CSI and Buyer entered into an Amended and Restated Stock Purchase Agreement on March 19, 2021, and thereafter amended such agreement on March 29, 2021 (as amended, the “Stock Purchase Agreement”).

Buyer has agreed to pay Esports Media a total purchase price of $105 million for the stock of CSI (the “base purchase price”) at the closing of the Sale Transaction, as further described below. The base purchase price will be adjusted to reflect the amount of CSI’s cash, indebtedness and accrued and unpaid transaction expenses as of the closing of the Sale Transaction. Buyer remitted a $10.0 million advance payment of the base purchase price in connection with the execution of the Stock Purchase Agreement and is required to pay the balance of the base purchase price at the closing of the Sale Transaction.

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revenue-based royalty payments of 20% of qualifying revenues, and minimum annual guaranteed royalty payments of $4.0 million, $6.0 million and $8.0 million for the first, second and third years, respectively. Such license will be subject to further customary terms and conditions and provide Peerless Media Limited with a $2.0 million buy-out right after the first year. In the event of any termination of the Stock Purchase Agreement under any circumstance in which the Buyer is required to pay a termination fee to us, the Company will have the option, but not the obligation, to require the Buyer to enter into such license agreement with Peerless Media Limited.

COVID-19 Pandemic. The recent outbreak of the COVID-19 respiratory illness has had an adverse effect on the Company. As a global entertainment company that hosts numerous live events with spectators and participants in destination cities, such outbreak has caused people to avoid traveling to and attending our events. Allied Esports and WPT businesses have cancelled or postponed live events, and until Allied Esports’ flagship gaming arena located at the Luxor Hotel in Las Vegas, Nevada reopened on June 25, 2020 these businesses were operating online only. The arena is currently running under a modified schedule for daily play and weekly tournaments, and the WPT business continues to operate primarily online, although live events have recently resumed under appropriate health safety protocols. Production of certain content has been temporarily halted. At this time, we cannot determine the full extent of the impact that such outbreak may have on our operations.

Results of Operations

Continuing Operations

Our continuing operations consist of our esports gaming operations, which take place at global competitive esports properties designed to connect players and fans via a network of connected arenas. Through our subsidiary Allied Esports, we offer esports fans state-of-the-art facilities to compete against other players in esports competitions, host live events with esports superstars that potentially stream to millions of viewers worldwide, produce and distribute esports content with at our on-site production facilities and studios. At our flagship arena in Las Vegas, Nevada, we provide an attractive facility for hosting corporate events, tournaments, game launches or other events. Additionally, Allied Esports has two mobile esports arenas, which are 18-wheel semi-trailers that convert into first class esports arenas and competition stages with full content production capabilities and interactive talent studios.

Discontinued Operations

WPT 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 43 states and territories across the United States, Australia, Canada, France and the United Kingdom. WPT also participates in strategic brand licensing, partnership, and sponsorship opportunities.

On January 19, 2021, we entered into a Stock Purchase Agreement (as amended and restated on March 22, 2021 and subsequently amended on March 29, 2021, the “SPA”) to sell the equity interests of our subsidiaries that own and operate the WPT business, subject to shareholder and regulatory approvals, for a base purchase price of $78.25 million, which was subsequently amended to $105 million (the “Sale Transaction”). This base purchase price will be adjusted to reflect the amount of the WPT business cash, indebtedness and accrued and unpaid transaction expenses as of the closing of the Sale Transaction. Prior to December 31, 2020, we have committed to a plan to sell the WPT business. Accordingly, the WPT business has been recast as discontinued operations.

In reaching the decision to enter into the SPA, our Board of Directors, in consultation with management as well as its financial and legal advisors, considered a number of factors, including the risks and challenges facing the WPT business in the future as compared to the opportunities available to the WPT business in the future, and the availability of strategic alternatives. After careful consideration, the Board of Directors unanimously approved the SPA and determined that the Sale Transaction is in our best interest and is in the best interest of our stockholders, and that the Sale Transaction and the SPA reflect the highest value for the WPT business reasonably attainable for our stockholders.

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Results of Operations for the Three Months Ended March 31, 2021 and 2020

	For the Three Months Ended March 31,						Increase (Decrease)
(in thousands, except for percentage of revenue data)	2021			2020			Increase (Decrease)
Revenues:
In-person	$	501		$	1,058		$	(557	)
Total Revenues		501			1,058			(557	)
Costs and Expenses:
In-person (exclusive of depreciation and amortization)		538			987			(449	)
Online operating expenses		40			62			(22	)
Selling and marketing expenses		44			76			(32	)
General and administrative expenses		3,230			3,453			(223	)
Stock-based compensation		643			3,947			(3,304	)
Depreciation and amortization		882			899			(17	)
Loss From Operations		(4,876	)		(8,366	)		(3,490	)
Other income (expense), net		55			(2	)		57
Interest expense		(153	)		(683	)		530
Loss from continuing operations		(4,974	)		(9,051	)		(4,077	)
Income from discontinued operations, net of tax provision		1,637			275			1,362
Net Loss	$	(3,337	)	$	(8,776	)	$	(5,439	)

Revenues

In-person experience revenues decreased by approximately $557 thousand, or 53%, to approximately $501 thousand for the three months ended March 31, 2021 from approximately $1.1 million for the three months ended March 31, 2020. The decrease of in-person experience revenues was driven by a $200 thousand decrease in Esports Arena Las Vegas revenue, a $200 thousand decrease in sponsorship revenue, and a $100 thousand decrease in truck rental revenue. These decreases are a direct result of the COVID-19 pandemic and the resulting limited ability to hold events during the three months ended March 31, 2021.

Costs and expenses

In-person costs (exclusive of depreciation and amortization) decreased by approximately $449 thousand, or 45%, to approximately $538 thousand for the three months ended March 31, 2021 from approximately $987 thousand for the three months ended March 31, 2020. The decrease of in-person costs is primarily related to the decrease of in-person revenues as a result of the postponement or cancellation of events due to the COVID-19 pandemic.

Online operating expenses decreased by approximately $22 thousand, or 35%, to approximately $40 thousand for the three months ended March 31, 2021, from approximately $62 thousand for the three months ended March 31, 2020.

Selling and marketing expenses decreased by approximately $32 thousand, or 42%, to approximately $44 thousand for the three months ended March 31, 2021 from approximately $76 thousand for the three months ended March 31, 2020.

General and administrative expenses decreased by approximately $223 thousand, or 6%, to approximately $3.2 million for the three months ended March 31, 2021, from approximately $3.5 million for the three months ended March 31, 2020. Compensation and other operating expenses in connection with Allied Esports gaming operations decreased during the three months ended March 31, 2021 as a result of the Company’s limited ability to hold events at the Esports Arena Las Vegas due to the COVID-19 pandemic. These decreases were partially offset by increases in legal and professional fees incurred during the period in connection with the sale of WPT.

Stock based compensation was $643 thousand for the three months ended March 31, 2021, compared to $4.0 million for the three months ended March 31, 2020. The decrease included $3.7 million related to the return of cash held in escrow associated with an escrow agreement with Simon (the “Simon Agreement”) that occurred during the three months ended March 31, 2020.

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Depreciation and amortization decreased by approximately $17 thousand, or 2%, to approximately $882 thousand for the three months ended March 31, 2021, from approximately $899 thousand for the three months ended March 31, 2020.

Other income (expense)

Other income (expense) increased by approximately $57 thousand, to approximately $55 thousand for the three months ended March 31, 2021 from approximately $(2) thousand for the three months ended March 31, 2020. The increase was due to an insurance payment received for a claim submitted for damaged equipment.

Interest expense

Interest expense was approximately $153 thousand for the three months ended March 31, 2021 compared to $683 thousand for the three months ended March 31, 2020, a decrease of $530 thousand, or 78%. The decrease is a result of the decrease in the principal balance of notes payable outstanding during the period.

Results of Discontinued Operations

We recognized income from discontinued operations, net of tax, of approximately $1.6 million and $0.3 million during the three months ended March 31, 2021 and 2020 respectively, representing an increase of $1.4 million. The improvement in results from discontinued operations is primarily due to an increase in revenues from our subscription-based poker service and other online products during the period in response to the COVID-19 pandemic.

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

	For the Years Ended December 31,						Increase (Decrease)			Percentage of Revenue
	For the Years Ended December 31,									Years Ended December 31,
(in thousands, except for percentage of revenue data)	2020			2019						2020		2019
Revenues
In-person	$	2,988		$	7,498		$	(4,510	)	93.1	%	99.3	%
Multiplatform content		223			50			173		6.9%		0.7%
Total Revenues		3,211			7,548			(4,337	)	100.0%		100.0%
Costs and expenses
In-person (exclusive of depreciation and amortization)		2,808			4,832			(2,024	)	87.4	%	64.0	%
Multiplatform content (exclusive of depreciation and amortization)		54			231			(177	)	1.7	%	3.1	%
Online operating expenses		187			114			73		5.8	%	1.5	%
Selling and marketing expenses		260			1,564			(1,304	)	8.1	%	20.7	%
General and administrative expenses		11,142			10,439			703		347.0	%	138.3	%
Stock-based compensation		5,142			248			4,894		160.1	%	3.3	%
Depreciation and amortization		3,609			3,549			60		112.4	%	47.0	%
Impairment of investment		6,139			600			5,539		191.2	%	7.9	%
Impairment of property and equipment		5,596			—			5,596		174.3	%	0.0	%
Impairment of intangible assets		—			330			(330	)	0.0%		4.4%
Loss From Operations		(31,726	)		(14,359	)		17,367		(988.0	%)	(190.2	%)
Other income		176			—			176		5.5	%	0.0	%
Conversion inducement expense		(5,247	)		—			5,247		(163.4	%)	0.0	%
Extinguishment loss on acceleration of debt redemption		(3,438	)		—			3,438		(107.1	%)	0.0	%
Interest expense		(5,549	)		(1,081	)		4,468		(172.8	%)	(14.3	%)
Foreign currency exchange loss		—			(15	)		(15	)	0.0	%	(0.2	%)
Loss from continuing operations		(45,784	)		(15,455	)		30,329		(1425.8	%)	(204.8	%)
Income (loss) from discontinued operations, net of tax provision		725			(1,283	)		2,008		22.6%		(17.0	%)
Net Loss	$	(45,059	)	$	(16,738	)	$	28,321		(1403.3	%)	(221.8	%)

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Revenues — Continuing Operations

In-person experience revenues decreased by approximately $4.5 million, or 60%, to approximately $3.0 million for the year ended December 31, 2020 from approximately $7.5 million for the year ended December 31, 2019. The decrease in in-person experience revenues was driven by a $3.9 million decrease in Esports Arena Las Vegas revenue and a $0.5 million decrease in sponsorship and gaming revenue. These decreases are a direct result of the Covid-19 pandemic and the resulting limited ability to hold events throughout 2020.

Multiplatform content revenues increased by approximately $0.1 million, or 346%, to approximately $0.2 million for the year ended December 31, 2020 from approximately $0.1 million for the year ended December 31, 2019. The increase in multiplatform content revenues related primarily to an increase in distribution revenue earned in connection with an esports tournament held during December 2020, partially offset by a decrease in content revenue earned during the period resulting from the COVID-19 pandemic.

Costs and expenses — Continuing Operations

In-person costs (exclusive of depreciation and amortization) decreased by approximately $2.0 million, or 42%, to approximately $2.8 million for the year ended December 31, 2020 from approximately $4.8 million for the year ended December 31, 2019. The decrease is a result of the limited ability to hold events throughout 2020 as a result of the Covid-19 pandemic.

Multiplatform costs (exclusive of depreciation and amortization) decreased by approximately $0.1 million, or 77%, to approximately $0.1 million for the year ended December 31, 2020 from approximately $0.2 million for the year ended December 31, 2019. Multiplatform costs recognized during 2019 were incurred in connection with creating content surrounding the Simon Cup tournament, in order to attract additional sponsors.

Online operating expenses increased by approximately $0.1 million, or 64%, to approximately $0.2 million for the year ended December 31, 2020 from approximately $0.1 million for the year ended December 31,2019.

Selling and marketing expenses decreased by approximately $1.3 million, or 83%, to approximately $0.3 million for the year ended December 31, 2020 from approximately $1.6 million for the year ended December 31, 2019. The decrease in selling and marketing expenses is primarily the result of a reduction in advertising and event marketing as a result of the limited ability to hold events throughout 2020 as a result of the Covid-19 pandemic.

General and administrative expenses increased by approximately $0.7 million, or 7%, to approximately $11.1 million for the year ended December 31, 2020 from approximately $10.4 million for the year ended December 31, 2019. Corporate expenses increased approximately $3.9 million, including approximately $1.4 million of legal and professional fees, $2.2 million of compensation expense, $0.6 million of insurance expense and $0.4 million of facility and tax related expenses. These increases were a result of only 5 months of activity in 2019, which occurred after the merger, while compared to 12 months of activity in 2020, in addition to $0.6 million in corporate bonuses accrued for 2020 (which is payable contingent upon the closing of the sale of WPT) compared to $0.0 million in 2019. The corporate increases were partially offset by an approximate $3.2 million decrease in general and administrative expense at Allied Esports, including a $1.7 million decrease in legal and professional fees, a $1.0 million decrease in compensation expense (partially offset by $0.2 million increase in bonus expense at Allied Esports), and a $0.6 million decrease in travel expenses. These decreases were a result of reduced salaries and workforce in addition to a reduction in professional services as a result of the Covid-19 pandemic.

Stock-based compensation increased by approximately $4.9 million, or 1,973%, to approximately $5.1 million for the year ended December 31, 2020 from approximately $0.2 million for the year ended December 31, 2019. The increase included $3.7 million related to the return of cash held in escrow associated with an escrow agreement with Simon. In addition, stock options granted in September and November of 2019 were amortized for a full year in 2020 as opposed to only a few months in 2019.

Depreciation and amortization remained relatively flat with a small increase of approximately $0.06 million or 2%, for the year ended December 31, 2020 as compared to the year ended December 31, 2019.

Impairment of investments was approximately $6.1 million for the year ended December 31, 2020, of which $5.0 million was the result of the write off of our investment in TV Azteca, for which management determined that the

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future cash flows are not expected to be sufficient to recover the carrying value of this investment, and $1.1 million was related to the impairment of our investment in Esports Arena, LLC (“ESA”). We recorded $0.6 million of impairment losses during the year ended December 31, 2019, related to the impairment of our investment in ESA.

Impairment of property and equipment was approximately $5.6 million for the year ended December 31, 2020 as compared to $0.0 million for the year ended December 31, 2019. The impairment resulted from management’s determination that the projected cash flows from our leasehold improvements and software will not be sufficient to recover the carrying value of those assets.

We recorded approximately $0.3 million of impairment of intangible assets during the year ended December 2019, as the result of management’s determination that the projected cash flows from certain intellectual property would not be sufficient to recover the carrying value of those assets. There was no impairment of intangible assets during the year ended December 31, 2020.

Other income (expense)

Conversion inducement expense of approximately $5.2 million during the year ended December 31, 2020, resulted from the reduction in the conversion price and the increase in interest payable to induce the conversion of certain convertible debt converted during the period. There was no conversion inducement expense recorded for the year ended December 31, 2019.

Extinguishment loss on acceleration of debt redemption of approximately $3.4 million during the year ended December 31, 2020, resulted from the acceleration of monthly payments on the Senior Secured notes that were issued in June 2020. There was no extinguishment loss recorded for the year ended December 31, 2019.

Interest expense was approximately $5.5 million and approximately $1.1 million for the years ended December 31, 2020 and 2019, respectively, representing an increase of $4.4 million, or 413%. Interest expense consisted of interest incurred on convertible debt, including $3.0 million of amortized debt discount. The increase in interest expense is primarily the result of $9.6 million of Senior Secured convertible debt issued during 2020.

Results of Discontinued Operations

We recognized income from discontinued operations, net of tax, of approximately $0.7 million during the year ended December 31, 2020, as compared to a net loss from discontinued operations of approximately $1.3 million during the year ended December 31, 2019. The improvement in results from discontinued operations is primarily due to an increase in revenues from our subscription-based poker service and other online products during the period in response to the COVID pandemic.

Liquidity and Capital Resources

The following table summarizes our total current assets, liabilities and working capital deficit from continuing operations at March 31, 2021 and December 31, 2020, respectively:

(in thousands)	March 31, 2021			December 31, 2020
Current Assets	$	16,224		$	6,605
Current Liabilities	$	29,904		$	16,492
Working Capital Deficit	$	(13,680	)	$	(9,887	)

Our primary sources of liquidity and capital resources are cash on the balance sheet and funds raised through debt or equity financing.

As of March 31, 2021, we had cash of $10.5 million (not including approximately $5.0 million of restricted cash) and a working capital deficit from continuing operations of approximately $13.6 million. For the three months ended March 31, 2021 and 2020, we incurred net losses from continuing operations of approximately $5.0 million and $9.1 million, respectively, and had cash provided by (used in) continuing operations of approximately $0.2 million and $(0.7) million, respectively. Further, convertible debt and bridge note obligations in the aggregate gross principal amount of $3.4 million mature on February 23, 2022 but will be paid upon the closing of the sale of WPT (see Recent Developments).

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In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread throughout the United States. As a global entertainment company that hosts numerous live events with spectators and participants in destination cities, the outbreak has caused people to avoid traveling to and attending these events. Allied Esports’ has cancelled or postponed live events, and is currently running under a modified schedule and limited capacity (up to 80% capacity depending on the event) for daily play and weekly tournaments. We continue to monitor the outbreak of COVID-19 and the related business and travel restrictions, and changes to behavior intended to reduce its spread, and the related impact on our operations, financial position and cash flows, as well as the impact on our employees. The magnitude and duration of the pandemic and its impact on our future operations and liquidity is uncertain as of the date of this report. While there could ultimately be a material impact on our operations and liquidity, at the time of issuance, the extent of the impact cannot be determined.

The aforementioned factors raise substantial doubt about our ability to continue as a going concern within one year after the issuance date of our condensed consolidated financial statements.

Our continuation is dependent upon attaining and maintaining profitable operations and the ability to generate positive cash flow from the various revenue sources we are pursuing. Until that time, we will likely need to raise additional capital to fund operations at adequate levels to achieve our objectives. There can be no assurance that we will be able to close on sufficient financing to meet our needs. To date, in addition to our revenues, we have funded our operations using cash acquired in the Merger, through investments from Ourgame, our former parent, by means of operation support, and through the issuance of debt.

We continue to pursue sources of additional capital through various financing transactions or arrangements, including joint venturing of projects, debt financing or other means, including equity financing in the capital markets now available to us. We may also seek to leverage our strategic partnerships to alter capital requirements or expand our available financing network. Further, we expect to receive cash in connection with the sale of the WPT business, which is expected to close late in the second quarter of 2021 or early in the third quarter of 2021. However, we may not be successful in identifying suitable or reasonably priced funding and/or alternative funding options in a sufficient time period (or at all) and there can be no assurance that the sale of the WPT business will close as planned. If we are unable to obtain the requisite amount of financing needed to fund our planned operations, it would have a material adverse effect on our business and our ability to continue as a going concern, and we may have to curtail, divest, or even cease, certain operations.

Cash Flows from Operating, Investing and Financing Activities

The table below summarizes cash flows from continuing operations for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
(in thousands)	2021		2020
Net cash provided by (used in)
Operating activities	$	171	$	(706	)
Investing activities	$	9,990	$	(5,375	)
Financing activities	$	—	$	5,000

Net Cash Provided By (Used in) Operating Activities

Net cash provided by (used in) operating activities primarily represents the results of operations exclusive of non-cash expenses (including depreciation, amortization, deferred rent, and stock-based compensation) and the impact of changes in operating assets and liabilities.

Net cash provided by (used in) operating activities for the three months ended March 31, 2021 and 2020 was approximately $0.2 million and $(0.7) million, representing an increase of $0.9 million. During the three months ended March 31, 2021 and 2020, the net cash used in operating activities was primarily attributable to the net loss from continuing operations of approximately $5.0 million and $9.0 million, respectively, adjusted for approximately $1.5 million and $4.8 million, respectively, of net non-cash expenses, and approximately $3.7 million and $3.5 million, respectively, of cash provided by changes in the levels of operating assets and liabilities.

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Net Cash Provided By (Used in) Investing Activities

Net cash provided by (used in) investing activities primarily relates to the purchase of property and equipment and other investment activity.

Net cash provided by investing activities during the three months ended March 31, 2021 was approximately $10.0 million, which consisted primarily of a $10 million deposit for the sale of WPT.

Net cash used in investing activities for the three months ended March 31, 2020 was approximately $5.4 million, which consisted primarily of approximately $3.7 million of cash used for the return of the Simon Investment, $1.5 million of cash used for our investment with TV Azteca as part of a Strategic Investment Agreement, and $0.2 million used for the purchases of property and equipment.

Net Cash Provided By Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2021 was $0 for the three months ended March 31, 2021 compared to $5.0 million for the three months ended March 31, 2020. The decrease was a result of $5.0 million of proceeds from the issuance of common stock for the three months ended March 31, 2020.

Cash Flows from Discontinued Operations

Cash held by our WPT business is classified as held for sale and is included in current assets of discontinued operations. No cash was provided to, or used by, discontinued operations from the WPT business.

Capital Expenditures

The Company will require additional investment to facilitate its growth plans. As a result, we plan to pivot our business goals to focus on expanding and strengthening our strategic partnerships and developing other potential avenues of business, which we are in the process of finalizing. We will provide further updates in future filings as we update our business plans.

Off-Balance Sheet Arrangements

The Company does not engage in any off-balance sheet financing activities, nor does the Company have any interest in entities referred to as variable interest entities.

Critical Accounting Policies and Estimates

Refer to our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on April 13, 2021 and Note 3 to the Unaudited Condensed Consolidated Financial Statements included in this proxy statement, for a discussion of our critical accounting policies and use of estimates.

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UNAUDITED CARVE-OUT FINANCIAL STATEMENTS

The World Poker Tour Business

The following unaudited carve-out financial statements of the World Poker Tour business (the “WPT Business”) are presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. The unaudited carve-out financial statements of the WPT Business reflect the assets, liabilities, revenue and expenses directly attributable to the WPT Business, as well as allocations deemed reasonable by management to present the financial statements of the WPT Business on a stand-alone basis. The net results of transactions between the WPT Business and the rest of the Company are either reflected as Due from Affiliates as an asset or as Parent’s Investment within equity in the accompanying unaudited carve-out balance sheets.

The following financial information may not necessarily reflect the financial position and results of operations of the WPT Business in the future or what they would have been had the WPT Business been a separate, stand-alone entity during the periods presented. We have included the following unaudited carve-out financial information solely for the purpose of providing stockholders with information that may be useful for the purposes of considering and evaluating the proposal to approve and adopt the Stock Purchase Agreement. The unaudited carve-out financial information is not necessarily indicative of the results of operations or financial position that might have been achieved for the dates or periods indicated, nor is it indicative of the results of operations or financial position that may occur in the future. The unaudited carve-out financial information is provided for illustrative purposes only and is not necessarily indicative of future operating results.

The following presents the unaudited carve-out balance sheets of the WPT Business as of March 31, 2021, and as of December 31, 2020 and 2019, and the unaudited carve-out statements of operations, changes in parent’s net investment and cash flows for the three months ended March 31, 2021 and 2020, and for the years ended December 31, 2020 and 2019.

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World Poker Tour
Index to Unaudited Carve-Out Financial Statements

Unaudited Condensed Carve-Out Balance Sheets as of March 31, 2021 and December 31, 2020		84
Unaudited Condensed Carve-Out Statements of Operations for the Three Months Ended March 31, 2021 and 2020		85
Unaudited Condensed Carve-Out Statements of Changes in Parent’s Net Investment for the Three Months Ended March 31, 2021 and 2020		86
Unaudited Condensed Carve-Out Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020		87
Notes to Unaudited Condensed Carve-Out Financial Statements		88

Unaudited Carve-Out Balance Sheets as of December 31, 2020 and 2019		95
Unaudited Carve-Out Statements of Operations for the Years Ended December 31, 2020 and 2019		96
Unaudited Carve-Out Statements of Changes in Parent’s Net Investment for the Years Ended December 31, 2020 and 2019		97
Unaudited Carve-Out Statements of Cash Flows for the Years Ended December 31, 2020 and 2019		98
Notes to Unaudited Carve-Out Financial Statements		99

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World Poker Tour
Condensed Carve-Out Balance Sheets
(unaudited)

	March 31, 2021			December 31, 2020
Assets
Current Assets
Cash	$	2,917,217		$	3,633,292
Accounts receivable		2,009,129			1,804,627
Prepaid expenses and other current assets		255,843			289,968
Total Current Assets		5,182,189			5,727,887
Property and equipment, net		1,554,769			1,674,355
Goodwill		4,083,621			4,083,621
Intangible assets, net		11,690,264			12,305,887
Deposits		79,500			79,500
Deferred production costs		12,727,543			12,058,592
Due from affiliates		11,968,377			9,433,975
Total Assets	$	47,286,263		$	45,363,817
Liabilities and Parent’s Net Investment
Current Liabilities
Accounts payable	$	504,801		$	211,228
Accrued expenses and other current liabilities		3,858,076			3,804,301
Accrued interest		—			4,224
Deferred revenue		2,278,172			1,970,668
Total Current Liabilities		6,641,049			5,990,421
Deferred rent		2,607,416			2,493,526
Loan payable		—			685,300
Total Liabilities		9,248,465			9,169,247
Commitments and Contingencies
Parent’s Net Investment
Parent’s investment		103,540,310			103,334,124
Accumulated deficit		(65,502,512	)		(67,139,554	)
Total Parent’s Net Investment		38,037,798			36,194,570
Total Liabilities and Parent’s Net Investment	$	47,286,263		$	45,363,817

The accompanying notes are an integral part of these condensed carve-out financial statements.

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World Poker Tour
Condensed Carve-Out Statements of Operations
(unaudited)

	For the Three Months Ended March 31,
	2021			2020
Revenues:
In-person	$	175,100		$	1,247,181
Multiplatform content		1,821,123			1,216,897
Interactive		3,337,787			2,523,234
Total Revenues		5,334,010			4,987,312
Costs and Expenses:
Multiplatform content (exclusive of depreciation and amortization)		624,177			461,374
Interactive (exclusive of depreciation and amortization)		1,048,466			992,500
Online operating expenses		266,921			263,246
Selling and marketing expenses		213,271			557,003
General and administrative expenses		1,420,673			1,458,726
Stock-based compensation		69,857			57,049
Depreciation and amortization		743,128			925,368
Total Costs and Expenses		4,386,493			4,715,266
Income From Operations		947,517			272,046
Other Income (Expense):
Forgiveness of PPP Loan		685,300			—
Other income		4,607			2,743
Interest expense		(382	)		—
Total Other Income		689,525			2,743
Net Income	$	1,637,042		$	274,789

The accompanying notes are an integral part of these condensed carve-out financial statements.

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World Poker Tour
Condensed Carve-Out Statements of Changes in Parent’s Net Investment
(unaudited)

	For the Three Months Ended March 31, 2021
	Parent’s Investment		Accumulated Deficit			Total Parent’s Net Investment
Balance – January 1, 2021	$	103,334,124	$	(67,139,554	)	$	36,194,570
Stock-based compensation:
Stock options		56,296		—			56,296
Restricted stock		13,561		—			13,561
Parent contributions, net		136,329		—			136,329
Net income		—		1,637,042			1,637,042
Balance – March 31, 2021	$	103,540,310	$	(65,502,512	)	$	38,037,798

	For the Three Months Ended March 31, 2020
	Parent’s Investment		Accumulated Deficit			Total Parent’s Net Investment
Balance – January 1, 2020	$	102,014,119	$	(67,865,062	)	$	34,149,057
Stock-based compensation:
Stock options		50,816		—			50,816
Restricted stock		6,233		—			6,233
Parent contributions, net		110,898		—			110,898
Net income		—		274,789			274,789
Balance – March 31, 2020	$	102,182,066	$	(67,590,273	)	$	34,591,793

The accompanying notes are an integral part of these condensed carve-out financial statements

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World Poker Tour
Condensed Carveout Statements of Statements of Cash Flows
(unaudited)

	For the Three Months Ended March 31,
	2021			2020
Cash Flows From Operating Activities
Net Income	$	1,637,042		$	274,789
Adjustments to reconcile net income to net cash used in operating activities:
Forgiveness of PPP Loan		(685,300	)		—
Stock-based compensation		69,857			57,049
Expenses paid on behalf on WPT		136,329			110,898
Depreciation and amortization		743,128			925,368
Deferred rent		(907,713	)		124,404
Changes in operating assets and liabilities:
Accounts receivable		(204,502	)		(449,173	)
Deferred production costs		(668,951	)		(546,347	)
Prepaid expenses and other current assets		34,125			8,266
Accounts payable		293,572			(466,200	)
Accrued expenses and other current liabilities		53,775			140,512
Accrued interest		(4,224	)		—
Due to affiliates		(2,534,401	)		(1,432,526	)
Deferred revenue		307,505			(1,139,139	)
Total Adjustments		(3,366,800	)		(2,666,888	)
Net Cash Used In Operating Activities		(1,729,758	)		(2,392,099	)

Cash Flows From Investing Activities
Lease incentive reimbursements		1,021,603			756,846
Purchases of property and equipment		—			(560	)
Purchases of intangible assets		(7,920	)		(21,985	)
Net Cash Provided By Investing Activities		1,013,683			734,301

Net Decrease In Cash		(716,075	)		(1,657,798	)
Cash – Beginning of period		3,633,292			5,163,156
Cash – End of period	$	2,917,217		$	3,505,358

The accompanying notes are an integral part of these condensed carve-out financial statements.

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World Poker Tour
Notes to Unaudited Condensed Carve-Out Financial Statements

Note 1 — Background

The World Poker Tour business (“WPT” or the “Company”) is an internationally televised gaming and entertainment company with brand presence in land-based tournaments, television, online and mobile applications that does business under the World Poker Tour brand. 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 43 states and territories across the United States Australia, Canada, France and the United Kingdom, with no purchase necessary. WPT also participates in strategic brand licensing, partnership, and sponsorship opportunities.

On January 19, 2021, WPT’s parent, Allied Esports Entertainment, Inc. (“AESE” or the “Parent”) entered into a stock purchase agreement, as amended on March 19, 2021 and again on March 29, 2021 (the “Stock Purchase Agreement” or “SPA”), to sell 100% of the capital stock of WPT.

Pursuant to the SPA, the Buyer intends to purchase 100% of the outstanding capital stock of WPT for a base purchase price of $105 million, payable to AESE. This base purchase price will be adjusted to reflect the amount of WPT’s cash, indebtedness and accrued and unpaid transaction expenses as of the closing of the Sale Transaction. The Buyer remitted a $10.0 million advance payment of the base purchase price to AESE upon the execution of the SPA and is required to pay the balance of the base purchase price at the closing of the Sale Transaction.

The SPA contains customary representations and warranties, covenants and indemnification provisions. The closing of the Sale Transaction is subject to closing conditions, including the approval of the Sale Transaction by AESE’s stockholders and other customary closing conditions. AESE intends to consummate the Sale Transaction shortly after obtaining stockholder approval, assuming all other conditions to the completion of the Sale Transaction have been satisfied or waived by the appropriate parties.

The SPA may be terminated by the Buyer or AESE if the closing of the Sale Transaction has not occurred by September 30, 2021, or upon the occurrence of certain customary events as set forth in the SPA, subject to certain termination fees payable by AESE, depending on the circumstances surrounding the termination of the SPA.

Note 2 — Liquidity and Management’s Plans

As of March 31, 2021, the Company had cash of approximately $2.9 million and a working capital deficit of approximately $1.5 million. For the three months ended March 31, 2021 and 2020, the Company had net income of approximately $1.6 million and $0.3 million, respectively, and used cash in operations of approximately $1.7 million and $2.4 million, respectively.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread throughout the United States. As a global entertainment company that hosts numerous live events with spectators and participants in destination cities, the outbreak has caused people to avoid traveling to and attending these events. WPT’s businesses have cancelled or postponed live events and were operating online only during the last nine months of 2020. While the WPT has begun to host a limited number of lives events during the first quarter of 202, the Company is continuing to monitor the outbreak of COVID-19 and the related business and travel restrictions, and changes to behavior intended to reduce its spread, and the resulting impact on the Company’s operations, financial position and cash flows, as well as the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic, and its impact on the Company’s future operations and liquidity is uncertain as of the date of this report. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the extent of the impact cannot be determined.

The accompanying condensed carve-out 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.

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World Poker Tour
Notes to Unaudited Condensed Carve-Out Financial Statements

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 unaudited condensed carve-out financial statements for the year ended December 31, 2020 included elsewhere in this filing, except for the following accounting policies and required disclosures.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed carve-out financial statements have been derived from the accounting records of WPT and its Parent and are intended to represent the business being sold. All significant intercompany balances have been eliminated.

The accompanying unaudited condensed carve-out 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 financial statements. For additional information, these unaudited condensed carve-out financial statements should be read in conjunction with the Company’s unaudited carve-out financial statements for the year ended December 31, 2020 and 2019, included elsewhere in this filing.

Management believes the assumptions underlying the unaudited condensed carve-out financial statements are reasonable. Nevertheless, the unaudited condensed carve-out financial statements may not include all of the actual expenses that would have been incurred had WPT operated as a stand-alone company during the periods presented and may not reflect the results of operations, financial position and cash flows had WPT operated as a stand-alone company during the periods presented. Actual costs that would have been incurred if WPT had operated as a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

In the opinion of management, the accompanying unaudited condensed carve-out financial statements include all adjustments which are considered necessary for a fair presentation of the unaudited condensed carve-out financial statements of the Company as of March 31, 2021 and for the three months ended March 31, 2021 and 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full year ending December 31, 2021 or any other period. These unaudited condensed carve-out financial statements should be read in conjunction with the accompanying notes thereto.

Income Taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

The current provision is established based upon the estimated tax liability for the current year. The Company recorded book net income of $1,637,042 for the three months ended March 31, 2021. However, because the Company began the period with cumulative net operating loss carryforwards and a full valuation allowance had been established against the related deferred tax assets, there is no tax provision for the three months ended March 31, 2021.

The Company recognizes the tax benefit from an uncertain income tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement by examining taxing authorities.

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Notes to Unaudited Condensed Carve-Out Financial Statements

The Company’s policy is to recognize interest and penalties accrued on uncertain income tax positions in interest expense in the Company’s statements of operations. As of March 31, 2021 and 2020, the Company had no liability for unrecognized tax benefits. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.

Revenue Recognition

The Company recognizes revenue primarily from the following sources:

In-person revenue

The Company’s in-person revenue is comprised of event 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. Event revenues are recognized at a point in time when the event occurs. The Company recognized event revenue of $175,100 and $1,247,181 for the three months ended March 31, 2021 and 2020.

Multiplatform content revenue

The Company’s multiplatform content revenue is comprised of distribution revenue, sponsorship revenue, music royalty revenue, online advertising revenue and content revenue. Distribution revenue is generated primarily through the distribution of content from WPT’s library. WPT provides video content to global television networks, who then have the right to air the content and place advertisements on the content during 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 at the point in time that advertisements are aired on the WPT content. 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 recognizes distribution 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.

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. The Company recognizes online advertising revenue at the point in time when the advertisements are placed in the video content.

Sponsorship revenue is generated through the sponsorship of the WPT’s TV content, live and 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 WPT’s TV series, both on TV networks and online. The Company recognizes sponsorship revenue pursuant to the terms of each individual contract when the respective performance obligations are satisfied, which could be recognized at a point in time or over the term of the contract.

Multiplatform content revenue was comprised of the following for the three months ended March 31, 2021 and 2020:

	For the Three Months Ended March 31,
	2021		2020
Distribution revenue	$	1,104,553	$	456,919
Sponsorship revenue		345,333		384,284
Music royalty revenue		370,000		373,739
Online advertising revenue		1,237		1,955
Total multiplatform content revenue	$	1,821,123	$	1,216,897

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Notes to Unaudited Condensed Carve-Out Financial Statements

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, and 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. Social gaming revenue arises from the sale of online tokens and other online purchases on the Company’s social gaming website and is recognized at the point the product is delivered. Virtual product revenue is generated from the licensing of the Company’s various brands to be used on the customers’ virtual product and social gaming platforms and is recognized over the term of the contractual agreement. The Company generates licensing revenue by licensing the right to use the Company’s brands on products to third parties. Licensing revenue is recognized pursuant to the terms of each individual contract with the customer and is recognized over the term of the contractual agreement.

Interactive revenue was comprised of the following for the three months ended March 31, 2021 and 2020:

	For the Three Months Ended March 31,
	2021		2020
Subscription revenue	$	2,645,764	$	1,286,789
Virtual product revenue		175,000		924,315
Social gaming revenue		477,190		261,924
Licensing revenue		24,744		39,764
Other revenue		15,089		10,442
Total interactive revenue	$	3,337,787	$	2,523,234

The following table summarizes revenue recognized under ASC 606 in the accompanying unaudited carve-out statements of operations:

	For the Three Months Ended March 31,
	2021		2020
Revenues Recognized at a Point in Time:
Event revenue	$	175,100	$	1,247,181
Distribution revenue		1,104,553		456,919
Social gaming revenue		477,190		261,924
Sponsorship revenue		—		2,502
Music royalty revenue		370,000		373,739
Online advertising revenue		1,237		1,955
Other revenue		15,089		10,442
Total Revenues Recognized at a Point in Time		2,143,169		2,354,662

Revenues Recognized Over a Period of Time:
Subscription revenue		2,645,764		1,286,789
Virtual product revenue		175,000		924,315
Sponsorship revenue		345,333		381,782
Licensing revenue		24,744		39,764
Total Revenues Recognized Over a Period of Time		3,190,841		2,632,650
Total Revenues	$	5,334,010	$	4,987,312

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Notes to Unaudited Condensed Carve-Out Financial Statements

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 March 31, 2021, there remained approximately $1.9 million of contract liabilities which were included within deferred revenue on the unaudited carve-out balance sheet as of December 31, 2020, and for which performance obligations had not yet been satisfied as of March 31, 2021 due to events that have been postponed as a result of the Covid pandemic. The Company expects to satisfy its remaining performance obligations within the next twelve months.

Advertising Costs

The Company expenses advertising and marketing costs as they are incurred. Marketing and advertising expense were $54,261 and $54,464 during the three months ended March 31, 2021 and 2020, respectively.

Recently Adopted Accounting Pronouncements

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. This standard was adopted on January 1, 2021 and did not have a material impact on the Company’s condensed carve-out financial statements or disclosures.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 effective for January 1, 2021 and its adoption did not have a material impact on the Company’s condensed carve-out financial statements and related disclosures.

Note 4 — Deferred Production Costs

Deferred production costs consist of the following:

	March 31, 2021			December 31, 2020
Deferred production costs	$	32,222,193		$	31,206,011
Less: accumulated amortization		(19,494,650	)		(19,147,419	)
Deferred production costs, net	$	12,727,543		$	12,058,592

Production costs of $347,231 and $453,963 for the three months ended March 31, 2021 and 2020, respectively, were expensed and are reflected in multiplatform content costs in the unaudited condensed carve-out statements of operations.

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Notes to Unaudited Condensed Carve-Out Financial Statements

Note 5 — Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

	March 31, 2021		December 31, 2020
Compensation expense	$	2,053,424	$	1,745,828
Rent		35,324		—
Revenue sharing obligations		613,798		671,056
Event costs		125,907		120,912
Legal and professional fees		48,703		143,650
Unclaimed player prizes		482,284		577,999
Other accrued expenses		396,451		312,752
Other current liabilities		102,185		232,104
	$	3,858,076	$	3,804,301

Note 6 — Loan Payable

On January 26, 2021, WPT received notice from its lender that the entirety of the $685,300 of outstanding principal of its PPP Loan was forgiven and the Company recorded a gain on the forgiveness of the PPP Loan of $685,300 which is included in other income on the accompanying condensed carve-out statement of operations. The PPP loan balance is $0 as of March 31, 2021.

The Company recorded interest expense of $382 related to the PPP Loans during the three months ended March 31, 2021.

Note 7 — Related Parties

Due from Affiliates

During the three months ended March 31, 2021 and 2020, the Company advanced $2,534,401 and $1,432,526, respectively, to its affiliates, of which $1,549,131 and $1,149,442, respectively, represented advances to the Parent.

Note 8 — 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 unaudited carve-out financial position, results of operations or cash flows.

Operating Leases

Effective February 1, 2021, the Company entered into an amendment (the “Lease Amendment”) to its lease for space in Los Angeles, California, which is used exclusively for film production. Pursuant to the Lease Amendment, the lease term is extended through November 30, 2031 (the “Extended Term”), with one option to renew for an additional 5-year period. Base rent begins at $462,402 per annum and increases by 3% each year. Further, pursuant to the terms of the Lease Amendment, rent payments are abated for the second month through the eleventh month of the Extended Term.

The Company recorded rent expense of $213,261 and $201,993 during the three months ended March 31, 2021 and 2020, respectively, in connection with its operating leases, of which $115,684 and $96,278, respectively, where capitalized into deferred production costs, and $97,577 and $105,715, respectively, are included in general and administrative expenses on the accompanying condensed carve-out statements of operations.

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Notes to Unaudited Condensed Carve-Out Financial Statements

Note 9 — Stockholders’ Equity

Stock Options

During the three months ended March 31, 2021 and 2020, the Company recorded stock-based compensation expense of $56,296 and $50,816, respectively related to AESE stock options issued as compensation. As of March 31, 2021, there was $620,961 of unrecognized stock-based compensation expense related to the stock options that will be recognized over the weighted average remaining vesting period of 2.7 years.

Restricted Stock

The Company recorded stock-based compensation expense of $13,561 and $6,233, during the three months ended March 31, 2021 and 2020, respectively, related to restricted stock issued as compensation. As of March 31, 2021, there was $19,288 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 0.4 years.

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World Poker Tour
Carve-Out Balance Sheets
(unaudited)

	December 31,
	2020			2019
Assets
Current Assets
Cash	$	3,633,292		$	5,163,156
Accounts receivable		1,804,627			1,491,939
Prepaid expenses and other current assets		289,968			283,143
Total Current Assets		5,727,887			6,938,238
Property and equipment, net		1,674,355			2,470,293
Goodwill		4,083,621			4,083,621
Intangible assets, net		12,305,887			14,755,867
Deposits		79,500			79,500
Deferred production costs		12,058,592			10,962,482
Due from affiliates		9,433,975			3,375,875
Total Assets	$	45,363,817		$	42,665,876

Liabilities and Parent’s Net Investment
Current Liabilities
Accounts payable	$	211,228		$	748,118
Accrued expenses and other current liabilities		3,804,301			2,660,530
Accrued interest		4,224			115,726
Deferred revenue		1,970,668			3,762,221
Total Current Liabilities		5,990,421			7,286,595
Deferred rent		2,493,526			1,230,224
Loans payable		685,300			—
Total Liabilities		9,169,247			8,516,819
Commitments and Contingencies
Parent’s Net Investment
Parent’s investment		103,334,124			102,014,119
Accumulated deficit		(67,139,554	)		(67,865,062	)
Total Parent’s Net Investment		36,194,570			34,149,057
Total Liabilities and Parent’s Net Investment	$	45,363,817		$	42,665,876

The accompanying notes are an integral part of these carve-out financial statements.

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World Poker Tour
Carve-Out Statements of Operations
(unaudited)

	For the Years Ended December 31,
	2020			2019
Revenues:
In-person	$	1,722,358		$	3,635,049
Multiplatform content		4,948,773			5,448,404
Interactive		13,477,911			9,440,179
Total Revenues		20,149,042			18,523,632

Costs and Expenses:
Multiplatform content (exclusive of depreciation and amortization)		2,591,034			3,581,806
Interactive (exclusive of depreciation and amortization)		4,420,041			2,479,040
Online operating expenses		1,117,996			574,183
Selling and marketing expenses		1,036,077			2,012,221
General and administrative expenses		6,606,907			7,814,061
Stock-based compensation		254,404			29,325
Depreciation and amortization		3,399,492			3,218,931
Total Costs and Expenses		19,425,951			19,709,567
Income (Loss) From Operations		723,091			(1,185,935	)

Other Income (Expense):
Other income		6,642			18,259
Interest expense		(4,225	)		(115,726	)
Total Other Income (Expense)		2,417			(97,467	)
Net Income (Loss)	$	725,508		$	(1,283,402	)

The accompanying notes are an integral part of these carve-out financial statements.

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Carve-Out Statements of Changes in Parent’s Net Investment
(unaudited)

	For The Year Ended December 31, 2020
	Parent’s Investment		Accumulated Deficit			Total Parent’s Net Investment
Balance – January 1, 2020	$	102,014,119	$	(67,865,062	)	$	34,149,057
Stock-based compensation:
Stock options		214,239		—			214,239
Restricted stock		40,165		—			40,165
Parent contributions, net		1,065,601		—			1,065,601
Net income		—		725,508			725,508
Balance – December 31, 2020	$	103,334,124	$	(67,139,554	)	$	36,194,570

	For The Year Ended December 31, 2019
	Parent’s Investment		Accumulated Deficit			Total Parent’s Net Investment
Balance – January 1, 2019	$	98,165,781	$	(66,581,660	)	$	31,584,121
Stock based compensation
Stock options		22,339		—			22,339
Restricted stock		6,986		—			6,986
Parent contributions, net		3,819,013		—			3,819,013
Net loss		—		(1,283,402	)		(1,283,402	)
Balance, December 31, 2019	$	102,014,119	$	(67,865,062	)	$	34,149,057

The accompanying notes are an integral part of these carve-out financial statements.

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World Poker Tour
Carve-Out Statements of Cash Flows
(unaudited)

	For the Years Ended December 31,
	2020			2019
Cash Flows From Operating Activities
Net income (loss)	$	725,508		$	(1,283,402	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation		254,404			29,325
Expenses paid by parent		1,065,601			145,060
Depreciation and amortization		3,399,492			3,218,931
Deferred rent		241,701			258,154
Changes in operating assets and liabilities:
Accounts receivable		(312,688	)		(467,770	)
Deposits		—			(79,500	)
Deferred production costs		(1,096,110	)		(1,903,638	)
Prepaid expenses and other current assets		(6,825	)		(13,191	)
Accounts payable		(536,890	)		351,519
Accrued expenses and other current liabilities		1,585,771			(444,197	)
Accrued interest		(111,502	)		115,726
Advances to affiliates		(6,500,101	)		(3,375,875	)
Deferred revenue		(1,791,553	)		495,912
Total Adjustments		(3,808,700	)		(1,669,544	)
Net Cash Provided By Operating Activities		(3,083,192	)		(2,952,946	)

Cash Flows From Investing Activities
Lease incentive reimbursements		1,021,603			—
Purchases of property and equipment		(106,559	)		(473,814	)
Purchases of intangible assets		(47,016	)		(45,762	)
Net Cash Provided By (Used in) Investing Activities		868,028			(519,576	)

Cash Flows From Financing Activities
Proceeds from loans payable		685,300			—
Proceeds from convertible debt, related party		—			1,000,000
Proceeds from convertible debt		—			3,000,000
Distribution to Parent, net		—			(326,047	)
Net Cash (Used In) Provided By Financing Activities		685,300			3,673,953

Net (Decrease) Increase In Cash		(1,529,864	)		201,431
Cash – Beginning of year		5,163,156			4,961,725
Cash – End of year	$	3,633,292		$	5,163,156

Non-Cash Investing and Financing Activities
Convertible debt obligations assumed by Parent as a contribution to capital	$	—		$	4,000,000
Leasehold improvements acquired through lease incentives	$	—		$	899,221
Property and equipment acquired through accrued expenses	$	—		$	269,110
Shares issued in satisfaction of employee bonus obligations	$	442,000		$	—

The accompanying notes are an integral part of these carve-out financial statements.

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World Poker Tour
Notes to Unaudited Carve-Out Financial Statements

Note 1 — Background

On January 19, 2021, WPT’s parent, Allied Esports Entertainment, Inc. (“AESE” or the “Parent”) entered into a stock purchase agreement, as amended on March 19, 2021 and again on March 29, 2021 (the “Stock Purchase Agreement”), to sell 100% of the capital stock of WPT. See Note 13 — Subsequent Events.

Note 2 — Liquidity and Management’s Plans

As of December 31, 2020, the Company had cash of approximately $3.6 million and working capital deficit of approximately $0.3 million. For the years ended December 31, 2020 and 2019, the Company had net income (loss) of approximately $0.7 million and ($1.3 million), respectively, and generated cash from operations of approximately $3.4 million and $0.4 million, respectively.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread throughout the United States. As a global entertainment company that hosts numerous live events with spectators and participants in destination cities, the outbreak has caused people to avoid traveling to and attending these events. WPT’s businesses have cancelled or postponed live events and were operating online only. During the year ended December 31, 2020, the WPT business operated online only, other than a recent live event in Tokyo, Japan. The Company is continuing to monitor the outbreak of COVID-19 and the related business and travel restrictions, and changes to behavior intended to reduce its spread, and the related impact on the Company’s operations, financial position and cash flows, as well as the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic, and its impact on the Company’s future operations and liquidity is uncertain as of the date of this report. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the extent of the impact cannot be determined.

The accompanying carve-out 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.

Note 3 — Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited carve-out financial statements have been derived from the accounting records of WPT and its Parent and are intended to represent the business being sold. All significant intercompany balances have been eliminated. The unaudited carve-out financial statements have been prepared in accordance with U.S. GAAP and pursuant to the accounting rules and regulations of the United States Securities and Exchange Commission (“SEC”).

Management believes the assumptions underlying the unaudited carve-out financial statements are reasonable. Nevertheless, the unaudited carve-out financial statements may not include all of the actual expenses that would have been incurred had WPT operated as a stand-alone company during the periods presented and may not reflect the results of operations, financial position and cash flows had WPT operated as a stand-alone company during the periods presented. Actual costs that would have been incurred if WPT had operated as a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

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World Poker Tour
Notes to Unaudited Carve-Out Financial Statements

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these unaudited carve-out financial statements include, but are not limited to, the valuation and carrying amount of goodwill and other intangible assets, accounts receivable reserves, the valuation of stock-based compensation and deferred tax assets and the recoverability and useful lives of long-lived assets, including intangible assets, property and equipment and deferred production costs. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.

Cash and Cash Equivalents

All short-term investments of the Company that have a maturity of three months or less when purchased are considered to be cash equivalents. There were no cash equivalents as of December 31, 2020 or 2019.

Accounts Receivable

Accounts receivable are carried at their contractual amounts. Management establishes an allowance for doubtful accounts based on its historic loss experience and current economic conditions. Losses are charged to the allowance when management deems further collection efforts will not produce additional recoveries. As of December 31, 2020 and 2019, there was no bad debt allowance.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation using the straight-line method over their estimated useful lives, once the asset is placed in service. Leasehold improvements are amortized over the lesser of (a) the useful life of the asset; or (b) the remaining lease term (including renewal periods that are reasonably assured). Expenditures for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures which extend the economic life are capitalized. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal is recognized in the statement of operations for the respective period.

The estimated useful lives of property and equipment are as follows:

Equipment		3 – 5 years
Computer equipment		3 – 5 years
Furniture and fixtures		3 – 5 years
Software		3 – 5 years
Leasehold improvements		14 years

Intangible Assets and Goodwill

Intangible assets are comprised of goodwill, 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.

When testing goodwill for impairment, the Company may assess qualitative factors for some or all of our reporting units to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. Alternatively, the Company may bypass this qualitative assessment for some or all of our reporting units and perform a detailed quantitative test of impairment (step 1). If the Company performs the detailed quantitative impairment test and the carrying amount of

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the reporting unit exceeds its fair value, the Company will perform an analysis (step 2) to measure such impairment. At December 31, 2020 and 2019, the Company performed a qualitative assessment to identify and evaluate events and circumstances to conclude whether it is more likely than not that the fair value of the Company’s reporting units is less than their carrying amounts. Based on the Company’s qualitative assessments, the Company concluded that a positive assertion can be made that it is more likely than not that the fair value of the reporting units exceeded their carrying values and no impairment of goodwill was identified at December 31, 2020 and 2019.

Impairment of Long-Lived Assets

The Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized for the amount by which the carrying value of the asset exceeds its fair value. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.

During the years ended December 31, 2020 and 2019, no impairments were recorded.

Deferred Production Costs

Capitalized production costs represent the costs incurred to develop and produce the Company’s proprietary shows. These costs primarily consist of labor, equipment, production overhead costs and travel expenses. Capitalized production overhead costs include rent incurred in connection with our leased space in Los Angeles, California, which is used exclusively for film production. Capitalized production costs are stated at the lower of cost, less accumulated amortization and tax credits, if applicable, or fair value. Production costs in an amount up to the amount of ultimate revenue expected to be earned from the related production are capitalized in accordance with FASB ASC Topic 926-20, “Other Assets — Film Costs”. Amortization of capitalized film costs begins when the related film is released and begins to recognize revenue. Capitalized film costs are expensed over the expected revenue period (not to exceed ten years) using a ratio of revenue earned during the period to estimated ultimate revenues for the related production. Costs incurred in excess of expected ultimate revenue are expensed as incurred and included in multiplatform costs in the accompanying unaudited carve-out statements of operations. Unamortized capitalized production costs are evaluated for impairment at each reporting period on a season-by-season basis. If estimated remaining revenue is not sufficient to recover the unamortized capitalized production costs for that season, the unamortized capitalized production costs will be written down to fair value.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”).

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities.

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

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The carrying amounts of the Company’s financial instruments, such as accounts receivable, loans payable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. The Company’s convertible debt approximates fair value due to its short-term nature and market rate of interest.

Income Taxes

The Company’s policy is to recognize interest and penalties accrued on uncertain income tax positions in interest expense in the Company’s statements of operations. As of December 31, 2020, and 2019, the Company had no liability for unrecognized tax benefits. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

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 unaudited carve-out financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required.

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The Company recognizes revenue primarily from the following sources:

In-person revenue

The Company’s in-person revenue is comprised of event 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. Event revenues are recognized at a point in time when the event occurs. The Company recognized event revenue of $1,722,358 and $3,635,049 for the years ended December 31, 2020 and 2019:

Multiplatform content revenue

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 years ended December 31, 2020 and 2019:

	For the Years Ended December 31,
	2020		2019
Distribution revenue	$	2,425,178	$	1,694,429
Sponsorship revenue		1,687,241		2,173,286
Music royalty revenue		825,577		1,573,247
Online advertising revenue		10,777		7,442
Total multiplatform content revenue	$	4,948,773	$	5,448,404

Interactive revenue

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Interactive revenue was comprised of the following for the years ended December 31, 2020 and 2019:

	For the Years Ended December 31,
	2020		2019
Subscription revenue	$	8,076,694	$	4,823,510
Virtual product revenue		3,768,766		3,699,180
Social gaming revenue		1,492,040		555,643
Licensing revenue		92,202		290,164
Other revenue		48,209		71,682
Total interactive revenue	$	13,477,911	$	9,440,179

The following table summarizes revenue recognized under ASC 606 in the accompanying unaudited carve-out statements of operations:

	For the Years Ended December 31,
	2020		2019
Revenues Recognized at a Point in Time:
Event revenue	$	1,722,358	$	3,635,049
Distribution revenue		2,425,178		1,694,429
Sponsorship revenue		77,006		575,067
Music royalty revenue		825,577		1,573,247
Online advertising revenue		10,777		7,442
Social gaming revenue		1,492,040		555,643
Other revenue		48,209		71,682
Total Revenues Recognized at a Point in Time		6,601,145		8,112,559

Revenues Recognized Over a Period of Time:
Subscription revenue		8,076,694		4,823,510
Sponsorship revenue		1,610,235		1,598,219
Virtual product revenue		3,768,766		3,699,180
Licensing revenue		92,202		290,164
Total Revenues Recognized Over a Period of Time		13,547,897		10,411,073
Total Revenues	$	20,149,042	$	18,523,632

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As of December 31, 2020, there remained approximately $594,000 of contract liabilities which were included within deferred revenue on the unaudited carve-out balance sheet as of December 31, 2019, and for which performance obligations had not yet been satisfied as of December 31, 2020 due to events that have been postponed as a result of the Covid pandemic. The Company expects to satisfy its remaining performance obligations within the next twelve months.

Advertising Costs

The Company expenses advertising and marketing costs as they are incurred. Marketing and advertising expense were $109,463 during the year ended December 31, 2020 and $94,313 during the year ended December 31, 2019, respectively.

CARES Act

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The CARES Act, amongst other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Pursuant to Accounting Standards Codification Topic (“ASC 740”), the Company recognizes the tax effects of new tax legislation upon enactment. Accordingly, the CARES Act is effective beginning in the quarter ended March 31, 2020. The new tax provisions outlined in the CARES Act did not have a material impact on the Company’s unaudited carve-out financial statements.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). 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 private companies and emerging growth companies for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. 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 (“ASU 2018-10” and “ASU 2018-11”), and ASU No. 2018-20 “Leases (Topic 842) — Narrow Scope Improvements for Lessors” in December 2018 (“ASU 2018-20”). 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 unaudited carve-out financial statements.

In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments — Credit Losses (Topic 326) and Leases (Topic 842) — Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date (“ASU 2020-02”) which provides clarifying guidance and minor updates to ASU No. 2016-13 — Financial Instruments — Credit Loss (Topic 326) (“ASU 2016-13”) and related to ASU No. 2016-02 — Leases (Topic 842). ASU 2020-02 amends the effective date of ASU 2016-13, such that ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s unaudited carve-out financial statements or disclosures.

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In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to clarify the accounting for certain financial instruments with characteristics of liabilities and equity. The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible preferred stock by removing the cash conversion model and the beneficial conversion feature model. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in-capital. In addition, this ASU improves disclosure requirements for convertible instruments and earnings-per-share guidance. The ASU also revises the derivative scope exception guidance to reduce form-over-substance-based accounting conclusions driven by remote contingent events. The amendments in this update are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption will be permitted, but no earlier than for fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact that this guidance will have on its unaudited carve-out financial statements.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance simplifies the accounting for goodwill impairment by eliminating Step 2 of the goodwill impairment test. Under current guidance, Step 2 of the goodwill impairment test requires entities to calculate the implied fair value of goodwill in the same manner as the amount of goodwill recognized in a business combination by assigning the fair value of a reporting unit to all of the assets and liabilities of the reporting unit. The carrying value in excess of the implied fair value is recognized as goodwill impairment. Under the new standard, goodwill impairment is recognized based on Step 1 of the current guidance, which calculates the carrying value in excess of the reporting unit’s fair value. This standard was adopted on January 1, 2020 and did not have a material impact on the Company’s unaudited carve-out 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. This standard was adopted on January 1, 2020 and did not have a material impact on the Company’s unaudited carve-out financial statements or disclosures.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). The amendments in ASU 2018-13 modify the disclosure requirements associated with fair value measurements based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. This standard was adopted on January 1, 2020 and did not have a material impact on the Company’s unaudited carve-out financial statements or disclosures.

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Note 4 — Property and Equipment, net

Property and equipment consist of the following:

	As of December 31,
	2020			2019
Software	$	4,087,654		$	3,982,656
Equipment		1,215,600			1,215,599
Computer equipment		912,331			912,331
Furniture and fixtures		447,375			447,374
Leasehold improvements		2,002,559			2,001,000
		8,665,519			8,558,960
Less: accumulated depreciation and amortization		(6,991,164	)		(6,088,667	)
Property and equipment, net	$	1,674,355		$	2,470,293

During the years ended December 31, 2020 and 2019, depreciation and amortization expense amounted to $902,496 and $723,717 respectively. During the years ended December 31, 2020 and 2019, the Company disposed of an aggregate of $0 and $550,736, respectively, of fully depreciated property and equipment.

Note 5 — Intangible Assets, net

Intangible assets consist of the following:

	Indefinite-Lived Trade Names		Trademarks		Customer Relationships		Accumulated Amortization			Total
Balance as of January 1, 2019	$	1,000,000	$	24,914,316	$	3,457,724	$	(12,166,721	)	$	17,205,319
Purchases of intangibles		—		45,762		—		—			45,762
Amortization expense		—		—		—		(2,495,214	)		(2,495,214	)
Balance as of December 31, 2019		1,000,000		24,960,078		3,457,724		(14,661,935	)		14,755,867
Purchases of intangibles		—		47,016		—		—			47,016
Amortization expense		—		—		—		(2,496,996	)		(2,496,996	)
Balance as of December 31, 2020	$	1,000,000	$	25,007,094	$	3,457,724	$	(17,158,931	)	$	12,305,887
Weighted average remaining amortization period at December 31, 2020 (in years)		n/a		4.7		n/a

Intangible assets are amortized on a straight-line basis over the shorter of their license periods or estimated useful lives ranging from two to ten years. Amortization of intangible assets consists of the following:

	Indefinite-Lived Trade Names		Trademarks		Customer Relationships		Total Accumulated Amortization
Balance as of January 1, 2019	$	—	$	8,708,997	$	3,457,724	$	12,166,721
Amortization expense		—		2,495,214		—		2,495,214
Balance as of December 31, 2019		—		11,204,211		3,457,724		14,661,935
Amortization expense		—		2,496,996		—		2,496,996
Balance as of December 31, 2020	$	—	$	13,701,207	$	3,457,724	$	17,158,931

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Estimated future amortization expense is as follows:

Years Ending December 31,
2021		2,498,676
2022		2,498,676
2023		2,498,676
2024		2,498,676
2025		2,311,183
	$	12,305,887

Note 6 — Deferred Production Costs

Deferred production costs consist of the following:

	As of December 31,
	2020			2019
Deferred production costs	$	31,206,011		$	28,290,200
Less: accumulated amortization		(19,147,419	)		(17,327,718	)
Deferred production costs, net	$	12,058,592		$	10,962,482
Weighted average remaining amortization period at December 31, 2020 (in years)		3.15

Production costs of $1,819,701 and $2,782,451 for the years ended December 31, 2020 and 2019, respectively, were expensed and are reflected in multiplatform content costs in the unaudited carve-out statements of operations.

Note 7 — Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

	As of December 31,
	2020		2019
Compensation expense	$	1,745,828	$	1,077,298
Rent		—		56,787
Revenue sharing obligations		671,056		319,833
Event costs		120,912		73,210
Legal and professional fees		143,650		146,614
Production costs		—		55,679
Unclaimed player prizes		577,999		337,936
Other accrued expenses		312,752		216,617
Other current liabilities		232,104		107,446
Accrued leasehold improvement costs		—		269,110
	$	3,804,301	$	2,660,530

Note 8 — Loans Payable

During May 2020, WPT received aggregate cash proceeds of $685,300 pursuant to loans (the “PPP Loan”) provided in connection with the Paycheck Protection Program (“PPP”) under the CARES Act which bear interest at 1.00% per annum. Monthly amortized principal and interest payments are deferred for six months after the date of disbursement. While the PPP Loans currently have two-year maturities, the amended law permits the borrower to request five-year maturities from its lenders.

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020, the Company is eligible to apply for and receive forgiveness for all or a portion of the PPP Loans. Such forgiveness will be determined, subject to limitations, based on the use of PPP loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility

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costs (collectively, “Qualifying Expenses”), and on the maintenance of employee and compensation levels during the twenty-four week period following the funding of the PPP Loan. The PPP Loan was forgiven by the Small Business Administration in 2021 (see Note 13 — Subsequent Events). As a result, the entire principal balance is included in non-current liabilities at December 31, 2020.

The Company recorded interest expense of $4,283 related to the PPP Loans during the year ended December 31, 2020.

Note 9 — Related Parties

Due from Affiliates

During the years ended December 31, 2020 and 2019, the Company advanced $6,532,101 and $3,375,875, respectively, to its affiliates.

Distributions to Parent

During the year ended December 31, 2019 the Company made net distributions of $326,047 to its Parent.

Note 10 — Income Taxes

The Company and its subsidiaries files income tax returns in the United States (federal and California) and Germany.

The U.S. and foreign components of loss before income taxes from continuing operations were as follows:

	For the Years Ended December 31,
	2020			2019
United States	$	1,915,526		$	(163,026	)
Foreign		(1,190,018	)		(1,120,376	)
Income (Loss) before income taxes	$	725,508		$	(1,283,402	)

The income tax provision (benefit) for the years ended December 31, 2020 and 2019 consists of the following:

	For the Years Ended December 31,
	2020			2019
Federal
Current	$	—		$	—
Deferred		37,467			10,529,684
State and local:
Current		—			—
Deferred		20,596			1,002,827
Foreign
Current		—			—
Deferred		—			—
		58,063			11,532,511
Change in valuation allowance		(58,063	)		(11,532,511	)
Income tax provision (benefit)	$	—		$	—

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The reconciliation of the expected tax expense (benefit) based on the U.S. federal statutory rates for 2020 and 2019, respectively, with the actual expense is as follows:

	For the Years Ended December 31,
	2020		2019
U.S. federal statutory rate	21.0	%	21.0	%
State taxes, net of federal benefit	6.3	%	2.0	%
Permanent differences	20.4	%	(4.9	%)
Statutory rate differential – domestic. vs. foreign	44.8	%	(20.0	%)
Change in tax rates	(104.8	%)	0.0	%
Other	25.0	%	1.9	%
Adjustment in deferred taxes	(4.7	%)	(898.6	%)
Change in valuation allowance	(8.0	%)	898.6	%
Income tax provision (benefit)	0.0	%	0.0	%

The tax effects of temporary differences that give rise to deferred tax assets are presented below:

	For the Years Ended December 31,
	2020			2019
Deferred Tax Assets:
Net operating loss carryforwards	$	—		$	406,929
Production costs		1,015,738			1,698,455
Investment		—			—
Stock-based compensation		—			47,261
Capitalized start-up costs		—			—
Property and equipment		189,187			106,147
Accruals and other		1,346,564			350,759
Gross deferred tax assets		2,551,489			2,609,551
Property and equipment		—			—
Net deferred tax assets		2,551,489			2,609,551
Valuation allowance		(2,551,489	)		(2,609,551	)
Deferred tax assets, net of valuation allowance	$	—		$	—

The federal and state NOL carryovers are subject to annual limitations under Section 382 of the U.S. Internal Revenue Code when there is a greater than 50% ownership change, as determined under the regulations. The Company has determined that all of its net operating losses are limited under Section 382. As a result, no deferred tax asset exists as of 12/31/20.

Management assesses the likelihood that deferred tax assets will be realized. ASC 740, “Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets and has, therefore, established a full valuation allowance as of December 31, 2020 and 2019.

ASC 740 requires the Company to recognize in the unaudited carve-out financial statements the impact of a tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. After assessing its income tax positions, the Company has determined that there are no significant uncertain tax positions to record as of December 31, 2020 and 2019.

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WPT’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. WPT had no accrual for interest or penalties at December 31, 2020 and December 31, 2019, respectively, and has not recognized interest and/or penalties during the years then ended as there are no material unrecognized tax benefits. Management does not anticipate any material changes to the amount of unrecognized tax benefits within in the next 12 months.

Company’s tax returns remain subject to examination by various taxing authorities beginning with the tax year ended December 31, 2016. No tax audits were commenced or were in process during the years ended December 31, 2020 and 2019.

Note 11 — Commitments and Contingencies

Litigations, Claims, and Assessments

Operating Leases

On March 29, 2019, a WPT affiliate entered into a 167-month operating lease for approximately 25,000 square feet of space located in Irvine, California (the “Irvine Lease”) with respect to its operations. On June 15, 2019, the 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 lease, as amended, is $39,832 per month, increasing to $58,495 per month over the term of the lease. Lease payments under the New Irvine Lease began on November 1, 2019. The Irvine Lease also provides for a tenant improvement allowance of up to $1,352,790. The New Irvine lease contains two five-year options to renew.

WPT leases space which is used exclusively for film production in Los Angeles, California, pursuant to a lease, as amended (the “LA Lease”), which expired on January 31, 2021. Rent payments under the LA lease are $36,915 per month. See Note 13 — Subsequent Events.

The Company’s aggregate rent expense incurred was $916,955 and $1,074,360 during the years ended December 31, 2020 and 2019, respectively. Of the aggregate rent incurred during the years ended December 31, 2020 and 2019, $382,113 and $385,113, respectively, was capitalized into deferred production costs and $534,882 and $689,247, respectively, was included within general administrative expenses in the unaudited carve-out statements of operations.

The schedule future minimum lease payments under the Company’s leases are as follows:

Years Ending December 31,
2021	$	531,702
2022		509,631
2023		524,920
2024		540,667
2025		556,887
Thereafter		5,902,365
	$	8,566,172

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World Poker Tour
Notes to Unaudited Carve-Out Financial Statements

Amendments to Employment Agreements

On April 24, 2020, the employment agreement between the Company and the Chief Executive Officer of WPT (the “WPT CEO”) was amended such that effective as of May 1, 2020, the WPT CEO annual salary will be reduced by 10% to approximately $377,000 for a six-month period, and thereafter his full annual salary will be restored.

2020 Cash Bonus Payments

On December 30, 2020, AESE’s Board of Directors authorized the payment of an aggregate of approximately $674,000 in cash bonus payments to the employees of WPT for services provided during the year 2020, contingent upon the closing of the sale of WPT.

Change of Control Agreements

On December 30, 2020, AESE’s Board of Directors authorized WPT to enter into agreements with the WPT CEO and WPT’s general counsel which, upon the closing of a transaction that resulted in a change-in-control of WPT, as defined, would obligate WPT to pay the WPT CEO and WPT’s general counsel aggregate lump-sum severance payments of $522,827.

On December 30, 2020, AESE’s Board of Directors approved, subject to a change-in-control of WPT which accelerates the vesting of AESE option grants held by WPT employees, the extension of the exercise period of the options as follows: (i) the options to purchase an aggregate of 340,000 shares of AESE common stock held by the WPT CEO and WPT’s general counsel may be exercised until the 10-year anniversary of the issuance date, and (ii) the remaining options to purchase an aggregate of 300,000 shares of AESE common stock may be exercised until the one-year anniversary of the change-in-control.

Note 12 — Stockholders’ Equity

The equity awards described below were issued from the Incentive Plan of AESE.

Stock Options

On August 6, 2020, ten-year options for the purchase of 120,000 shares of AESE common stock with a grant date value of $97,947 were granted to the Company’s general counsel. The options are exercisable at $2.17 per share and have a four-year vesting term, with 25% vesting on each anniversary of the date of grant.

During the years ended December 31, 2020 and 2019, the Company recorded stock-based compensation expense of $214,239 and $22,339, respectively related to AESE stock options issued as compensation. As of December 31, 2020, there was $677,257 of unrecognized stock-based compensation expense related to the stock options that will be recognized over the weighted average remaining vesting period of 3.0 years.

Restricted Stock

On August 7, 2020, 203,101 shares of AESE common stock with an aggregate grant date value of $442,000 were issued to certain officers and employees of WPT, in satisfaction of bonus obligations incurred in previous years, which were included in accrued expenses as of December 31, 2019.

On August 7, 2020, 25,346 shares of AESE restricted common stock with an aggregate grant date value of $55,000 were granted to certain WPT employees. The restricted common stock remains subject to transfer and forfeiture restrictions until the shares vest on the one-year anniversary of the date of grant.

The Company recorded stock-based compensation expense of $40,165 and $6,986, during the years ended December 31, 2020 and 2019, respectively, related to restricted stock issued as compensation. As of December 31, 2020, there was $32,849 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 0.60 years.

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World Poker Tour
Notes to Unaudited Carve-Out Financial Statements

Note 13 — Subsequent Events

Lease Amendment

Effective February 1, 2021, the Company entered into an amendment (the “Lease Amendment”) to the LA lease (see Note 11 — Commitments and Contingencies), whereby the lease term is extended through November 30, 2031 (the “Extended Term”), with one option to renew for an additional 5-year period. Base rent begins at $462,402 per annum and increases by 3% each year. Pursuant to the terms of the Lease Amendment, rent payments are abated for the second month through the eleventh month of the Extended Term.

Forgiveness of PPP Loan

On January 26, 2021, WPT received notice from its lender that the entirety of the $685,300 of outstanding principal of its PPP Loan, which is included in loans on the accompanying unaudited carve-out balance sheets, was forgiven (see Note 8 — Loans Payable).

Sale of WPT

During 2021, AESE entered into the Stock Purchase Agreement (or “SPA”) whereby the WPT business would be sold to Element Partners, LLC (the “Buyer”), a Delaware limited liability company formed for the purposes of acquiring the WPT business (the “Sale Transaction”). The Buyer is owned by an investment fund (See Note 1 — Background).

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MARKET PRICE AND DIVIDEND INFORMATION

The Company’s common stock trades on the NASDAQ Capital Market under the symbol “AESE.”

We do not currently intend to distribute any of the proceeds from the Sale Transaction to our stockholders. We anticipate that we will retain all available funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying cash dividends in the foreseeable future. In addition, our credit facilities materially restrict, and future debt instruments may materially restrict, our ability to pay dividends on our common stock. Payment of future cash dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements of our current or then-existing debt instruments and other factors our Board of Directors deems relevant.

On May 19, 2021, there were 30 holders of record of the Company’s common stock.

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OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
MANAGEMENT AND DIRECTORS

The table below sets forth information known to us regarding the beneficial ownership of our common stock as of May 27, 2021, for:

• each person we believe beneficially holds more than 5% of our outstanding common shares (based solely on our review of SEC filings);

• each of our “named executive officers” as identified in the summary compensation table; and

• all of our current directors and executive officers as a group.

The number of shares beneficially owned by a person includes shares issuable under options, warrants and other securities convertible into common stock held by that person and that are currently exercisable or that become exercisable within 60 days of date set forth above. Percentage calculations assume, for each person and group, that all shares that may be acquired by such person or group pursuant to options, warrants and other convertible securities currently exercisable or that become exercisable within 60 days of the date set forth above are outstanding. Nevertheless, shares of common stock that are issuable upon exercise of presently unexercised options, warrants and other convertible securities are not deemed to be outstanding for purposes of calculating the “Percentage of Shares Beneficially Owned” by any other person or any other group.

Except as otherwise indicated in the table or its footnotes, the persons in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable, and the address of such persons is 17877 Von Karman Avenue, Suite 300, Irvine, California 92614.

Information in the table below that purports to be as of the date set forth above is based on our issued and outstanding shares and beneficial ownership information as of such date. As of such date, we had 39,139,502 shares of common stock issued and outstanding.

Name and Address of Beneficial Owners(1)	Shares Beneficially Owned	Percentage of Shares Beneficially Owned
Five Percent Stockholders:
Roy Choi(2)	5,072,048	12.9	%
Primo Vital Limited(3)	15,112,163	35.8	%
Directors and Named Executive Officers:
Bradley Berman(4)	72,325	*
Lyle Berman(5)	1,105,459	2.8	%
Yinghua Chen(6)	25,302	*
Kenneth DeCubellis(7)	—	—
Jud Hannigan(8)	248,246	*
Anthony Hung(9)	128,215	*
Tae Hyung Steve Kim(6)	25,302	*
Joseph Lahti(4)	72,325	*
Jerry Lewin	—	—
Yangyang Li(10)	15,112,163	35.8	%
Jingsheng Lu(11)	15,112,163	35.8	%
Frank Ng(12)	469,736	1.2	%
Benjamin S. Oehler(4)	72,325	*
Adam Pliska(13)	299,950	*
Libing (Claire) Wu	50	*
All directors and executive officers, as a group (15 individuals)(14)	17,631,348	42.3	%

____________

* Less than 1%

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(1) Unless otherwise noted, the business address of each of the following entities or individuals is 17877 Von Karman Avenue, Suite 300, Irvine, California, 92614. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

(2) Based on a joint Schedule 13G filed on January 29, 2021 by Knighted Pastures LLC and Roy Choi. Includes 190,000 five-year warrants to purchase shares of Company common stock at a price per share of $11.50 that are currently exercisable.

(3) Based on a joint Schedule 13D filed on September 18, 2019. Includes warrants to purchase 3,125,640 shares of common stock that are currently exercisable.

(4) Includes (i) 3,534 shares of common stock that are subject to transfer and forfeiture restrictions, and (ii) options to purchase 10,000 shares of common stock that are exercisable within 60 days after May 27, 2021.

(5) Shares include options to purchase 10,000 shares of common stock issued to Mr. Berman that are exercisable within 60 days after May 27, 2021.

(6) Shares include 9,479 shares of common stock that are subject to transfer and forfeiture restrictions until July 1, 2021.

(7) Mr. DeCubellis previously served as Chief Executive Officer of BRAC. He resigned as a director and Chief Financial Officer of the Company on September 24, 2019.

(8) Shares include (i) 90,350 five-year warrants to purchase shares of Company common stock at a price per share of $11.50 issued in the merger with Allied Esports Media, Inc. on August 9, 2019 (the “Merger”), (ii) 23,042 shares of common stock that are subject to transfer and forfeiture restrictions, which lapse on August 18, 2021, and (iii) options to purchase 42,500 shares of common stock that are exercisable within 60 days after May 27, 2021.

(9) Shares include (i) 50,000 shares of common stock that are subject to transfer and forfeiture restrictions, which lapse on 25,000 shares on each of 8/18/2021 and 8/18/2022, (ii) 35,715 shares of common stock subject to transfer and forfeiture restrictions, which lapse on 8/18/2021, and (iii) options to purchase 42,500 shares of common stock that are exercisable within 60 days after May 27, 2021.

(10) Mr. Li is the current Chairman, and an Executive Director of Ourgame International Holdings Limited (“Ourgame”), the beneficial owner of Primo Vital Limited (“Primo”). Mr. Li may exercise voting and dispositive power over the shares beneficially owned by Primo, and disclaims any beneficial ownership in such shares except to the extent of his pecuniary interest.

(11) Mr. Lu is the current Chief Executive Officer of Ourgame, the beneficial owner of Primo. Mr. Lu may exercise voting and dispositive power over the shares beneficially owned by Primo, and disclaims any beneficial ownership in such shares except to the extent of his pecuniary interest.

(12) Shares include (i) warrants to purchase 106,233 shares of common stock that are currently exercisable; (ii) 117,648 shares issuable to Mr. Ng’s spouse upon conversion of a convertible promissory note issued to her by the Company; (iii) 46,083 shares of common stock that are subject to transfer and forfeiture restrictions issued to Mr. Ng pursuant to restricted stock grants, which restrictions lapse on August 18, 2021; and (iv) options to purchase 85,000 shares of common stock that are exercisable within 60 days after May 27, 2021.

(13) Shares include (i) 95,000 shares issuable upon the exercise of warrants to purchase common stock at a price per share of $11.50 issued on August 9, 2019 to Mr. Pliska that are currently exercisable; (ii) 7,024 five-year warrants to purchase shares of Company common stock at a price per share of $11.50 issued on August 9, 2019 that are currently exercisable; (iii) 38,000 warrants issued to The Lipscomb/Viscoli Children’s Trust (the “Trust”), of which Mr. Pliska is trustee, to purchase shares of Company common stock at a price per share of $11.50 that are currently exercisable; (iv) 11,521 shares of restricted common stock issued to Mr. Pliska on account of his services as a director and officer of the Company, which restrictions lapse on August 18, 2021 or the earlier closing of the Sale Transaction; and (v) options to purchase 52,500 shares of common stock that are exercisable within 60 days after May 27, 2021. Mr. Pliska is the President of the Company and WPT Enterprises, Inc., serves as a director of the Company and disclaims any pecuniary interest in the warrants set forth in item (iii).

(14) Consists of shares beneficially owned by our current directors and current executive officers.

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PROPOSALS OF STOCKHOLDERS

Proposals by stockholders (other than director nominations) that are submitted for inclusion in our proxy statement for our 2021 annual stockholders’ meeting must follow the procedures set forth in Rule 14a-8 under the Securities Exchange Act of 1934 and our Bylaws. To be timely under Rule 14a-8, a stockholder proposal must be received by our Secretary at 17877 Von Karman Avenue, Suite 300, Irvine, California, 92614, by July 8, 2021. However, if the date of our 2021 annual stockholders’ meeting is changed by more than 30 days from the date of the Annual Meeting, then the deadline for submitting a stockholder proposal will be a reasonable time before we begin to print and send our proxy materials for our 2021 annual stockholders’ meeting, which deadline will be disclosed prior to such in one of our SEC filings.

Under our Bylaws, if a stockholder does not submit a proposal for inclusion in our proxy statement but does wish to propose an item of business to be considered at our annual stockholders’ meeting (including director nominations), that stockholder must have given timely notice of the proposal in writing to the Secretary of the Company. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days’ notice or prior public disclosure of the date of the annual meeting is given or made to stockholders, notice by a stockholder, to be timely, must be received no later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made, whichever first occurs.

Notices of stockholder proposals and stockholder nominations for directors must comply with the informational and other requirements set forth in our Bylaws as well as applicable statutes and regulations. Due to the complexity of the respective rights of the stockholders and our Company in this area, any stockholder desiring to propose actions or nominate directors is advised to consult with his or her legal counsel with respect to such rights. We suggest that any such proposal be submitted by certified mail return receipt requested.

EXPENSES AND SOLICITATION

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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC, including us. The address of the SEC website is www.sec.gov.

No persons have been authorized to give any information or to make any representations other than those contained in this proxy statement and, if given or made, such information or representations must not be relied upon as having been authorized by us or any other person. This proxy statement is dated June 1, 2021. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date, and the mailing of this proxy statement to stockholders shall not create any implication to the contrary.

This proxy statement contains a description of representations and warranties made in the Stock Purchase Agreement. Representations and warranties are also set forth in contracts and other documents, including the Stock Purchase Agreement, which are attached or filed as annexes to this proxy statement. The assertions embodied in those representations and warranties were made solely for purposes of such contracts or other documents and solely for the benefit of the parties to such contracts or other documents as of specific dates, may be subject to important qualifications and limitations agreed to by the contacting parties in connection with negotiating the terms of such contracts and documents and may not be complete. Moreover, these representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to stockholders, or may have been used for the purposes of allocating contractual risk between the parties to such contract or other document instead of establishing these matters as facts, and may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of this proxy statement. Accordingly, you should not rely upon the descriptions of representations and warranties contained in this proxy statement or the actual representations and warranties contained in such contracts and other documents as statements of factual information.

HOUSEHOLDING OF MATERIALS

Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of this proxy statement may have been sent to multiple Company stockholders in each household unless otherwise instructed by such Company stockholders. We will deliver promptly a separate copy of this proxy statement to any Company stockholder upon written or oral request to our Corporate Secretary, at Allied Esports International, Inc., 17877 Von Karman Avenue, Suite 300, Irvine, California, 92614, telephone: (949) 225-2600. Any Company stockholder wishing to receive separate copies of our proxy statement or annual report to Company stockholders in the future, or any Company stockholder who is receiving multiple copies and would like to receive only one copy per household, should contact the Company stockholder’s bank, broker, or other nominee record holder, or the Company stockholder may contact us at the above address and phone number.

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ALLIED ESPORTS ENTERTAINMENT, INC.

Index to Condensed Consolidated Financial Statements

		Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2020 and 2019		F-3
Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2020 and 2019		F-4
Consolidated Statements of Changes in Stockholders’ Equity for the Year Ended December 31, 2020		F-5
Consolidated Statements of Changes in Stockholders’ Equity for the Year Ended December 31, 2019		F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019		F-7
Notes to Consolidated Financial Statements		F-9

Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020		F-41
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020		F-42
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020		F-43
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020		F-44
Notes to Unaudited Condensed Consolidated Financial Statements		F-45

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of
Allied Esports Entertainment, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Allied Esports Entertainment, Inc., and Subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph — Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a working capital deficiency from continuing operations, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Marcum llp

/s/ Marcum LLP

We have served as the Company’s auditor since 2018.

Melville, New York
April 12, 2021

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Allied Esports Entertainment, Inc. and Subsidiaries
Consolidated Balance Sheets

	December 31,
	2020			2019
Assets
Current Assets
Cash	$	424,223		$	3,277,417
Restricted cash		5,000,000			3,650,000
Accounts receivable		271,142			629,387
Prepaid expenses and other current assets		909,766			1,084,652
Current assets held for sale		45,363,817			6,938,238
Total Current Assets		51,968,948			15,579,694
Property and equipment, net		9,275,729			18,084,014
Intangible assets, net		30,818			34,009
Deposits		625,000			632,963
Other assets		—			4,638,631
Non-current assets held for sale		—			35,727,638
Total Assets	$	61,900,495		$	74,696,949

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	901,353		$	208,753
Accrued expenses and other current liabilities		1,987,017			1,231,941
Accrued interest, current portion		152,899			1,973,268
Due to affiliates		9,433,975			3,375,875
Deferred revenue		57,018			93,238
Bridge note payable		1,421,096			—
Convertible debt, net of discount, current portion		1,000,000			12,845,501
Convertible debt, related party, net of discount, current portion		1,000,000			988,115
Loans payable, current portion		539,055			—
Current liabilities held for sale		9,169,247			7,286,595
Total Current Liabilities		25,661,660			28,003,286
Deferred rent		1,693,066			1,242,613
Accrued interest, non-current portion		193,939			—
Convertible debt, net of discount, non-current portion		578,172			—
Loans payable, non-current portion		368,074			—
Non-current liabilities held for sale		—			1,230,224
Total Liabilities		28,494,911			30,476,123

Commitments and Contingencies

Stockholders’ Equity
Preferred stock, $0.0001 par value, 1,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.0001 par value; 100,000,000 shares authorized, 38,506,844 and 23,176,146 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively		3,851			2,317
Additional paid in capital		195,488,181			161,300,916
Accumulated deficit		(162,277,414	)		(117,218,584	)
Accumulated other comprehensive income		190,966			136,177
Total Stockholders’ Equity		33,405,584			44,220,826
Total Liabilities and Stockholders’ Equity	$	61,900,495		$	74,696,949

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

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Allied Esports Entertainment, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss

	For the Years Ended December 31,
	2020			2019
Revenues:
In-person	$	2,988,363		$	7,498,363
Multiplatform content		222,442			50,000
Total Revenues		3,210,805			7,548,363

Costs and Expenses:
In-person (exclusive of depreciation and amortization)		2,808,648			4,832,897
Multiplatform content (exclusive of depreciation and amortization)		54,256			231,310
Online operating expenses		186,702			113,862
Selling and marketing expenses		259,892			1,563,682
General and administrative expenses		11,141,628			10,438,894
Stock-based compensation		5,141,989			247,720
Depreciation and amortization		3,609,480			3,548,810
Impairment of investments		6,138,631			600,000
Impairment of property and equipment		5,595,557			—
Impairment of deferred production costs and intangible assets		—			330,340
Total Costs and Expenses		34,936,783			21,907,515
Loss From Operations		(31,725,978	)		(14,359,152	)

Other Income (Expense):
Other income		176,015			167
Conversion inducement expense		(5,247,531	)		—
Extinguishment loss on acceleration of debt redemption		(3,438,261	)		—
Interest expense		(5,548,583	)		(1,081,401	)
Foreign currency exchange loss		—			(14,941	)
Total Other Expense		(14,058,360	)		(1,096,175	)
Loss from continuing operations		(45,784,338	)		(15,455,327	)

Income (loss) from discontinued operations, net of tax provision		725,508			(1,283,402	)

Net loss	$	(45,058,830	)	$	(16,738,729	)

Basic and Diluted Net (Loss) Income per Common Share
Continuing operations	$	(1.60	)	$	(0.96	)
Discontinued operations, net of tax	$	0.03		$	(0.08	)

Weighted Average Number of Common Shares Outstanding:
Basic and Diluted		28,687,361			16,159,444

Comprehensive Loss
Net Loss		(45,058,830	)		(16,738,729	)
Other comprehensive income:
Foreign currency translation adjustments		54,789			(2,684	)
Total Comprehensive Loss	$	(45,004,041	)	$	(16,741,413	)

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

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Allied Esports Entertainment, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
For The Year Ended December 31, 2020

	Common Stock			Common Stock Subscribed			Additional Paid-in Capital		Subscription Receivable		Accumulated Other Comprehensive Income		Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Subscription Receivable		Accumulated Other Comprehensive Income		Accumulated Deficit			Total Stockholders’ Equity
Balance – January 1, 2020	23,176,146	$	2,317	—	$	—	$	161,300,916	$	—	$	136,177	$	(117,218,584	)	$	44,220,826
Common stock issued for cash	758,725		76	—		—		4,999,924		—		—		—			5,000,000
Stock-based compensation:
Stock options	—		—	—		—		1,158,173		—		—		—			1,158,173
Common stock	64,286		7	—		—		128,993		—		—		—			129,000
Restricted stock	199,143		20	—		—		459,200		—		—		—			459,220
Shares issued upon exercise of Put Option	1,018,848		102					1,999,898				—		—			2,000,000
Shares issued upon conversion of debt	3,392,857		339	—		—		9,998,506		—		—		—			9,998,845
Beneficial conversion feature associated with convertible debt	—		—	—		—		523,636		—		—		—			523,636
Warrants issued with convertible debt	—		—	—		—		1,205,959		—		—		—			1,205,959
Shares issued for redemption of debt and accrued interest	9,678,840		968	—		—		13,217,123		—		—		—			13,218,091
Shares issued in satisfaction of employee bonus obligations	217,999		22	—		—		473,978		—		—		—			474,000
Disgorgement of short swing profits	—		—	—		—		21,875		—		—		—			21,875
Net loss	—		—	—		—		—		—		—		(45,058,830	)		(45,058,830	)
Other comprehensive income	—		—	—		—		—		—		54,789		—			54,789
Balance – December 31, 2020	38,506,844	$	3,851	—	$	—	$	195,488,181	$	—	$	190,966	$	(162,277,414	)	$	33,405,584

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

F-5

Table of Contents

Allied Esports Entertainment, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
For The Year Ended December 31, 2019

	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders’ Equity
Balance – January 1, 2019	11,602,754	$	1,160	$	124,361,130	$	138,861		$	(100,479,855	)	$	24,021,296
Effect of reverse merger	11,492,999		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
Stock-based compensation:
Stock options	—		—		149,893		—			—			149,893
Restricted stock	80,393		8		127,144		—			—			127,152
Net loss	—		—		—		—			(16,738,729	)		(16,738,729	)
Other comprehensive loss	—		—		—		(2,684	)		—			(2,684	)
Balance – December 31, 2019	23,176,146	$	2,317	$	161,300,916	$	136,177		$	(117,218,584	)	$	44,220,826

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

F-6

Table of Contents

Allied Esports Entertainment, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

	For the Years Ended December 31,
	2020			2019
Cash Flows From Operating Activities
Net loss	$	(45,058,830	)	$	(16,738,729	)
Adjustments to reconcile net loss to net cash used in operating activities:
(Income) loss from discontinued operations, net of tax provision		(725,508	)		1,283,402
Stock-based compensation		5,141,988			247,720
Conversion inducement expense		5,247,531			—
Extinguishment loss on acceleration of debt redemption		3,438,261			—
Amortization of debt discount		3,021,033			101,012
Non-cash interest expense		1,193,849			—
Depreciation and amortization		3,609,480			3,548,810
Impairment of deferred production costs		—			330,340
Impairment of investments		6,138,631			600,000
Impairment of property and equipment		5,595,557			—
Deferred rent		531,190			(68,182	)
Changes in operating assets and liabilities:
Accounts receivable		361,927			(218,207	)
Deposits		7,963			—
Deferred production costs		—			(330,340	)
Prepaid expenses and other current assets		185,668			137,297
Accounts payable		687,625			(1,333,672	)
Accrued expenses and other current liabilities		667,263			646,912
Accrued interest		(647,959	)		980,391
Due to affiliates		5,466,500			3,210,058
Deferred revenue		(36,220	)		51,704
Total Adjustments		39,884,779			9,187,245
Net Cash Used In Operating Activities		(5,174,051	)		(7,551,484	)