Allied Gaming & Entertainment Announces Closing of Strategic Investment to Become Largest Shareholder of Beijing Lianzhong Zhihe Technology Co.
November 02 2023 - 3:05PM
Business Wire
Allied Gaming & Entertainment, Inc. (NASDAQ: AGAE) (the
“Company” or “AGAE”), a global experiential entertainment company,
announced today the closing of the previously announced strategic
investment in Beijing Lianzhong Zhihe Technology Co. (“Zhihe”). As
of October 31, 2023, AGAE has assumed a controlling interest in the
Board for purpose of financial statement consolidation and became
the largest shareholder of Zhihe, a prominent developer and
operator of casual mobile games.
Founded in Beijing in April, 2022, Zhihe has rapidly become a
trailblazing mobile games developer and operator, specializing in
the innovation, research, development and operation of premium card
and Mahjong casual games. Leveraging advanced in-game advertising
strategies, Zhihe has efficiently generated significant revenue
streams since inception. Within a relatively short timeframe, Zhihe
has established a premier leisure entertainment platform and
community, which further solidifies its connection with customers,
enhancing engagement and fostering enduring relationships.
“We are delighted to finalize our strategic investment,
establishing AGAE as the majority shareholder in Zhihe. This step
strengthens our position immediately to grow our business in one of
the most revenue-generating segments of the global games industry,”
stated Yinghua Chen, Allied Gaming & Entertainment’s Chief
Executive Officer. “We expect to consolidate Zhihe’s financials
into AGAE’s which will be immediately accretive to both the top and
bottom lines. Zhihe has demonstrated impressive growth in the 18
months since founding and we look forward to capitalizing on our
synergies and expertise to fuel the growth of both companies.”
In just nine months of operations in the fiscal year of 2022,
Zhihe generated revenue of approximately $10 million (USD), with
positive results in key financial areas, including EBITDA,
operating cash flow and net income. Unaudited interim results for
the first eight months of 2023 indicate an upward trajectory in all
key financial areas, including revenues.
Terms of Deal
On October 31, 2023, AGAE closed on its acquisition of 40% of
the equity interests of Beijing Lianzhong Zhihe Technology Co.,
indirectly held by Ourgame International Holdings Limited, a major
stockholder of AGAE, for approximately $7 million (USD), in cash.
For financial reporting purposes, the Company expects to
consolidate the post-acquisition financial statements of Zhihe,
which the Company believes will strengthen its financial
performance measures and enhance value for its stockholders.
About Allied Gaming & Entertainment
Allied Gaming & Entertainment Inc. (Nasdaq: AGAE) is a
global experiential entertainment company focused on providing a
growing world of gamers with unique experiences through renowned
assets, products and services. For more information, visit
alliedgaming.gg.
Forward Looking Statements
This communication 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,” “intend” or “continue,” the negative of such terms, or
other comparable terminology. 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
forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside our control, that could cause
actual results or outcomes to differ materially from those
discussed in these forward-looking statements. The inclusion of
such information should not be regarded as a representation by the
Company, or any person, that the objectives of the Company will be
achieved. Important factors, among others, that may affect actual
results or outcomes include: risks associated with our ability to
execute on our business and strategic plans; the substantial
uncertainties inherent in the acceptance of existing and future
products and services; our ability to acquire and integrate new
businesses and assets, the ability to retain key personnel; general
economic and market conditions impacting demand for our services;;
our inability to enter into one or more future acquisition or
strategic transactions using our cash reserve; and our ability, or
a decision not to pursue strategic options for the esports
business. 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 AGAE are subject to
substantial risks, which increase the uncertainty inherent in the
forward-looking statements contained in this communication. 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 and results is described under “Item 1A. Risk Factors” in
our Annual Report on Form 10-K for the year ended December 31,
2022, as filed with the SEC on March 24, 2023, as well as
subsequent reports we file with the SEC. Readers are also urged to
carefully review and consider the various disclosures we made in
such Annual Report on Form 10-K and in subsequent reports with the
SEC.
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version on businesswire.com: https://www.businesswire.com/news/home/20231101427384/en/
Investor Contact: Tyler Drew Addo Investor Relations
ir@alliedgaming.gg
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