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Commitments and Contingencies

9 Months Ended

Sep. 30, 2025

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 12 – Commitments and Contingencies

Litigations, Claims, and Assessments

The Company is periodically 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 consolidated financial position, results of operations or cash flows.

Knighted Pastures, LLC

On March 7, 2024, Knighted Pastures, LLC (“Knighted”), an AGAE stockholder, filed a complaint in the Court of Chancery of the State of Delaware (the “Court”) against the Company (as a nominal defendant), the members of its Board of Directors, and certain additional defendants (the “Knighted Action”). The complaint alleged, among other things, that the members of the Company’s Board of Directors breached their fiduciary duty in connection with (1) the approval of a Share Purchase Agreement that AGAE entered into on or around December 28, 2023, (2) the approval and adoption of certain amendments to AGAE’s Bylaws on or around January 5, 2024, and (3) the approval and adoption of a rights agreement on or around February 9, 2024. The Knighted Action sought both injunctive reliefs and money damages.

On June 20, 2024, following expedited discovery and entry of resolutions by the Board of Directors addressing issues raised by the Knighted Action, the Court entered an Order granting in part the Company and Board of Directors’ motion to dismiss the Knighted Action as moot. The Court therefore cancelled the trial in the Knighted Action. The Court ordered the parties to submit further filings on Knighted’s claim for attorneys’ fees and costs and any other issues required to bring the Knighted Action to a final conclusion. On August 2, 2024, Knighted filed a motion for an attorney’s fee award based on the purported corporate benefit its case provided to the Company and its other shareholders.

On August 28, 2024, the Court granted Knighted an attorney’s fee award of $3.0 million which was paid on September 11, 2024. On October 4, 2024 and October 30, 2024, the Company received reimbursements of $0.6 million and $3.1 million, respectively, from its directors’ and officers’ insurance carrier representing the attorney fee award and its defense costs in excess of the policy’s retention amount. On October 10, 2024, the Court issued an order closing the case.

On November 12, 2024, Knighted filed a complaint in the Court against the Company, the members of the Board of Directors, and certain additional defendants (the “Second Knighted Action”). Knighted filed the Second Knighted Action alleging breach of fiduciary duty in connection with approving the recent strategic investment with Yellow River Capital group (“Yellow River”) and the Securities Purchase Agreement with Blue Planet New Energy Technology Ltd, an affiliate of Yellow River. The Second Knighted Action seeks both injunctive relief and money damages. The Company believes the claims in the Second Knighted Action lack merit and intends to defend against them vigorously.

On April 25, 2025, the Board of Directors approved resolutions addressing issues raised by the Second Knighted Action. On that date, the Company and the director defendants filed a motion to dismiss the complaint as moot, or in the alternative stay the action pending the outcome of the Company’s combined 2024/2025 annual meeting of stockholders. On April 29, 2025, the Court granted the motion with modifications, continued the trial without rescheduling any date, and staying the case pending the outcome of the combined 2024/2025 annual meeting of stockholders. On May 22, 2025, the Court entered an order staying the case and preserving the status quo pending the outcome of the combined 2024/2025 annual meeting of stockholders. On October 24, 2025, Knighted filed a motion seeking its fees and costs in the amount of approximately $5.9 million. The Company and its board of directors’ opposition motion is due on November 25, 2025.

Based on management’s assessment, a loss is considered probable and reasonably estimable. Accordingly, the Company has recorded an accrual of $1.5 million as of September 30, 2025. It is reasonably possible that the final resolution could differ from the amount accrued. However, the Company is unable to provide a more precise estimate of any additional loss at this time.

Timothy G. Schuebel

On September 25, 2024, Timothy G. Schuebel, an AGAE stockholder, filed a complaint captioned Timothy G. Schubel v. Allied Gaming & Entertainment, Inc. et al., C.A. No. 2024-0996-JTL, seeking to represent a class of AGAE stockholders and alleging that the Shareholder Rights Plan of the Company, dated February 9, 2024 (the “Rights Plan”), contained provision(s) that were contrary to Delaware law. The Company’s board of directors evaluated the claims related to the Rights Plan, and the Company and its board of directors’ legal rights. On May 30, 2025, the Board approved an amendment to certain provisions in the Rights Plan governing liabilities and fiduciary duties of directors under applicable Delaware law.

On September 8, 2025, the Court entered into an order closing the Action. The Company agreed to pay $85,000 in attorneys’ fees and reimbursement of expenses to resolve the matter which was paid by the Company on September 16, 2025.

Operating Leases

The Company’s aggregate lease expense incurred during the three months ended September 30, 2025 and 2024 amounted to $437,550 and $463,620, respectively, of which $349,605 and $349,605, respectively, is included within in-person costs and $87,945 and $114,015, respectively, is included in general and administrative expenses on the accompanying condensed consolidated statements of operations.

The Company’s aggregate operating lease expense incurred during the nine months ended September 30, 2025 and 2024 amounted to $1,312,337 and $1,368,725, respectively, of which $1,048,745 and $1,048,815, respectively, is included within in-person costs and $263,592 and $319,910, respectively, is included in general and administrative expenses on the accompanying condensed consolidated statements of operations

A summary of the Company’s right-of-use assets and liabilities is as follows:

		For the Nine Months Ended
		September 30,
		2025				2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating activities		$	1,185,198			$	1,138,342

Right-of-use assets obtained in exchange for lease obligations
Operating leases		$	-			$	85,095

Weighted Average Remaining Lease Term (Years)
Operating leases			2.61				3.60

Weighted Average Discount Rate
Operating leases			5.04	%			5.00% - 5.75	%

A summary of the Company’s remaining operating lease liabilities as of September 30, 2025 is as follows:

For the Years Ending December 31,		Amount
2025			469,126
2026			1,851,366
2027			1,736,542
2028			712,500
Total lease payments			4,769,534
Less: amount representing imputed interest			(350,315	)
Present value of lease liability			4,419,220
Less: current portion			(1,655,533	)
Lease liability, non-current portion		$	2,763,687