Allied Gaming & Entertainment Inc. Q3 FY2021 earnings call

Recent leadership changes: Lyle Berman assumed additional duties as President and heads Investor Relations, Yinghua Chen named Chief Investment Officer, and Roy Anderson joined as CFO. Operational highlights: Esports business had strong growth with 110 events in Q3, 31% increase vs last quarter; proprietary events like Lockdown and Saturday Night Speedway saw 24% increase in player interest; Multiplatform Content pillar made strides with 24-hour content strategy on Twitch having 3.2 million live views in Q3; AE Studios produced events like CelebriTee Showdown and UNO Championship Series Invitational; recognized as a finalist in Tempest Esports Business Awards for innovative use of technology.

Total revenues for the third quarter increased to $1.7 million, up 182% compared to the third quarter of last year. In-person revenues for the third quarter increased 144% to $1.5 million compared to $600,000 in the prior year period. Multiplatform Content revenues for the third quarter totaled $200,000.

Accelerated exploration of strategic options for Esports business, entered non-binding Letter of Intent to sell Esports assets, continuing to identify opportunities to invest cash from WPT sale, reviewing potential targets for acquisition/merger, and actively interviewing investment banks to assist in the process.

Q: Hey, everyone. Thanks for taking my questions. So it sounds like you guys did sign an LOI. Just curious what sort of drove you guys to sell that business. Any additional color there would be great. And then just given your exiting in Esports business, I think you've talked about potentially buying another business in that area. Why would you exit? And then are you still looking for an asset in that area? Or should we sort of read that as you're targeting a non-Esports business as an acquisition target? If there's any additional detail you can give me on some specific sub-sectors within entertainment you're targeting? Any additional color there would be great.

A: Hi. Good afternoon, Derek. Thanks for the question. There are several reasons why we made this strategic decision, and I will quickly address why and pass it on to Lyle to add more color to that. One of the reasons for us to make the decision is because of the increased interest to the whole Esports industry and Esports business, especially after pandemic. We have been approached by potential buyers, including the . And with that being said, I’m going to pass it to Lyle to further address this question. [...] Q: Got it. You did talk about cash burn a little bit. I'm just curious what that would look like if you did divest the remaining Esports business. What would the corporate structure look like? And then just otherwise, what should we expect in terms of cash burn from here if you do not divest that remaining business?

A: Yes, I'll take that. This is Roy. So on a combined basis, if you add corporate and AEI operations on a quarterly basis, we're right around $2 million at the moment. Corporate by itself post-sale is probably about $1 million, which includes payroll and payroll-related costs, insurance along with audit tax, legal SEC filings and so on. So it's roughly a $2 million burn, of which, one is corporate and one is AEI pre-sale. But the AEI amount continues to decline as the revenues continue to grow and margins continue to increase. So that'll continue to decline.