Frank Ng - Chief Executive Officer Tony Hung - Chief Financial Officer Adam Pliska - President, WPT-CEO Jud Hannigan - Esports Operations Lasse Glassen - Managing Director, Investor Relations.

Greetings! Welcome to Allied Esports Entertainment, Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded.

I will now turn the conference to your host, Lasse Glassen, Managing Director Investor Relations. Thank you. You may begin..

Thank you, operator. Good afternoon and welcome to the Allied Esports Entertainment's 2020 fourth quarter and full year results conference call.

Speaking on the call today is Allied Esports Entertainment's Chief Executive Officer, Frank Ng; and Chief Financial Officer, Tony Hung; the Company's President and long-time WPT-CEO, Adam Pliska; and Jud Hannigan, who is leading the Allied Esports Operations are also available for the question-and-answer session..

Thank you, Lasse, and thank you everyone for joining us this afternoon. My remarks today will focus on an overview of the key highlights from this past quarter and year, and our ongoing efforts to grow our business amidst the current COVID-19 pandemic.

Tony Hung, our Chief Financial Officer, will follow with additional details on our financial performance. Before proceeding, I have some housekeeping items. The financials we are reporting today pertain to our continuing operations, which includes our Allied Esports business and the corporate TopCo AESE expenses.

World Poker Tour or WPT had a very solid quarter, but since it is in the process of being sold to Element Partners under our existing stock purchase agreement WPT's results are now being presented as discontinued operations for the fourth quarter full year 2020 and our comparable periods for the prior year.

I will discuss the pending WPT transaction in more detail shortly and Tony will go through WPT's financial results and operational highlights in his remarks. .

Thank you, Frank. Good afternoon everyone and thank you for joining us today. Our fourth quarter performance demonstrates our ability to rapidly pivot our strategic focus within our business model amidst this dynamic and challenging operating environment.

While our in-person pillar continues to be impacted by the travel restrictions and health and safety protocols as a result of the pandemic, we continue to make progress on the development of our multi-platform content pillar, reduced our operating expenses, as well as strengthen our liquidity position and improved capital structure.

As Frank highlighted, the World Poker Tour segment of our business is being treated as discontinued operations for accounting and disclosure purposes. Therefore our results presented today relate to the continuing operations of Allied Esports and our parent company AESE and excludes the World Poker Tour.

Now, turning to our fourth quarter results from continuing operations, total revenues for the fourth quarter were $0.9 million, down 52% year-over-year, primarily due to lower in person revenues, which were partially offset by higher revenues from our multi-platform content pillar.

Looking at these results in greater detail, in-person revenues for the fourth quarter totaled $0.7 million, compared to $1.9 million in the prior year period. The decrease of 62.5% year-over-year was a result of the continuation of postponed events, reduced operating hours and social distancing measures as a result of the pandemic.

Multi-platform content revenues totaled $0.2 million compared to $50,000 in the prior year period.

The growth in our multi-platform content pillar was driven by our accelerated focus on this part of the business to mitigate the effect of the pandemic and included the licensing of video and data rights related to Esports betting and our partnership with Trovo. Finally, all interactive services revenues have historically been derived from WPT.

Allied Esports has not generated revenues in this pillar yet and as such they are not a part of our results today. Total costs and expenses for the fourth quarter were $16.6 million up 135% from $7.1 million in the prior year period.

The increase is primarily due to an impairment of investment of $5 million, along with an impairment of $5.6 million related to fixed Esports assets.

Excluding the impairment, costs and expenses for the fourth quarter were down 11.2%, reflecting our continued prioritization to manage expenses during the quarter and actively reduce all nonessential spending. We significantly reduced expenses in our in-person pillar by 65%, online expenses by 38% and selling and marketing expenses by 82%.

Compared to the prior year period, the reduction in costs and expenses were partially offset by higher G&A and stock based compensation expenses of 19.8% and 79.3% respectively. Adjusted EBITDA for the fourth quarter improved to a loss of $3.5 million compared to a loss of $3.7 million in the prior year period.

Total net loss for the fourth quarter was $19.7 million compared to a net loss of $5.8 million in the fourth quarter of 2019.

Total net loss for the fourth quarter of 2020 was negatively impacted by the impairment charges I mentioned previously, as well as the non-cash extinguishment loss on acceleration of debt redemption of $1.7 million that was not incurred in the prior year period.

This resulted from the acceleration of monthly payments on the senior secured convertible debt during the period. Interest expense also increased $1.8 million compared to the prior year period.

Before I turn to a discussion of our balance sheet, I'd like to briefly touch on the World Poker Tour’s results, which are being presented as discontinued operations.

WPT revenue for the fourth quarter of 2020 was $5.9 million, up 30.7% compared to the prior year period, and WPTs net income for the fourth quarter was $0.9 million versus a net loss of $0.1 million compared to the prior year period.

While restrictions on hosting events since the start of the pandemic have been stricter in the United States than certain places around the world during the fourth quarter, WPT was able to hold both live and online events in other countries, including WPT Online India on Adda52, the inaugural India ringfence series of events in November.

In a span of 18 days, 154 events were hosted, attracting over 60,000 total entries and a total prize pool of in excess of $2 million. Live events also returned to the WPT DeepStacks calendar in Johannesburg, South Africa, and the first ever WPT DeepStacks in Taiwan.

Within the multi-platform content pillar this has been one of the fastest growing areas for WPT and not only provides high margin and good monetization for the business, but also creates strategic touch points and promotional advertising for both linear and OTT platforms.

Allied Esports has also utilized the strategic blueprint with OTT platforms by creating our 24 hour cross channel content strategy.

Finally, within interactive services, ClubWPT successfully completed the largest online cash tournament in the club's history with the $100,000 ClubWPT Diamond Championship, which further supports the value of the diamond membership level and will continue to be a growth area in the online business. Now, moving to our balance sheet.

At December 31, 2020 our cash position totaled $9.1 million, including $5 million of restricted cash and an additional $3.6 million of cash held in connection with the WPT business that is included in current assets of discontinued operations and which continues to fund the Allied Esports business until the close of the transaction.

This compared to $12.1 million at December 31, 2019, which included $3.7 million of restricted cash and $5.1 million held at WPT. As of December 31, 2020 we had convertible debt and bridge loans totaling $3.4 million in gross principle which matures on February 23, 2022.

We also had convertible debt in the gross principal amount of $0.6 million, which is payable in monthly installments through June 2022 and can also be accelerated at the option of the lender.

In total we reduced the outstanding principal of our convertible debt balance by $5.1 million in the prior quarter and subsequent to quarter end, we paid out the remaining $0.6 million of convertible debt that was subject to monthly installments.

In summary, we are proud of the progress we made throughout the year, with the successful pivot towards our multiplatform content pillar, while strengthening our liquidity position and capital structure.

Furthermore, the significant cash infusions we expect to receive from the sale of WPT puts us in a strong position to continue to strategically grow our Esports business.

In the near term we remain focused on maintaining safety for our employees and customers as the pandemic subside and restrictions loosen, while continuing to execute against our strategy and position ourselves for long term growth. With that, we will now open the line for Q&A. Operator. .

Okay. Thank you for your support everyone and for joining us on today's call. We look forward to speaking with you again when we record our 2021 first quarter in May. Thank you again for your time and attention this afternoon and please stay safe and healthy. .

Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation..