v3.26.1
Subsequent Events
3 Months Ended
Mar. 31, 2026
Subsequent Events [Abstract]  
Subsequent Events

Note 11 – Subsequent Events

 

Global Resolution

 

On April 10, 2026, the Company and Yangyang Li, its Chief Executive Officer and Chairman, in his personal capacity entered into a binding Term Sheet for Global Resolution (the “Term Sheet”) with Knighted and Roy Choi, the founder and managing partner of Knighted, in his personal capacity. The Term Sheet summarizes the principal terms of the global resolution between the parties regarding (i) the action initiated by Knighted against the Company and its directors in the Delaware Court of Chancery on November 12, 2024, Knighted Pastures, LLC v. Yangyang Li, et. al, C.A. No. 2024-1158-JTL (the “Delaware Litigation”), and (ii) the action initiated by the Company against Knighted and other defendants in the United States District Court for the Central District of California on June 11, 2025, Allied Gaming & Entertainment, Inc. v. Knighted Pastures, LLC, 2:25-CV-05312 (C.D. Cal.).

 

Pursuant to the Term Sheet, the Company agreed to pay Knighted’s fees and expenses in the Delaware Litigation totaling $5,936,738 (the “Fee Award”) as previously ordered by the Delaware Court of Chancery on March 10, 2026, according to the following payment schedule: (i) $1,000,000 due on May 7, 2026, (ii) $2,000,000 due on June 30, 2026, and (iii) $2,936,738 due on July 31, 2026. Interest will accrue monthly on the outstanding balance of the Fee Award beginning on April 8, 2026 at a rate of 8.75% per annum. If any payment is not made in full by the applicable due date, additional interest will accrue on the full outstanding amount at a rate of 10% per annum, compounded daily until such payment is made.

 

In connection with the execution of the Term Sheet, the Company and Mr. Li, as guarantors, entered into a Guaranty, dated as of April 10, 2026, pursuant to which the Company and Mr. Li jointly and severally guaranteed the payment of the Fee Award, together with all accrued interest thereon. The Term Sheet also provides that, within five business days of the effective date of the Term Sheet, the Company will file a Notice of Dismissal With Prejudice of the Federal Litigation. The parties further agreed that neither party will file any fee application in the Federal Litigation or pursue any appeal related to either the Federal Litigation or the Delaware Litigation.

 

Acquisition

 

On May 22, 2026, the Company entered into a package of definitive agreements to acquire, in aggregate, a 57.67% controlling interest in HyalRoute Fiber-Optic Communication Group for approximately $2.3 billion, payable entirely through the issuance of newly issued shares of AIFA’s common stock. This acquisition marks a major milestone in AGAE’s transformation into a global technology operating platform with “optics-centered” AI infrastructure.

 

Reverse Stock Split

 

On June 12, 2026, the Company effected a 1-for-6 reverse stock split of its issued and outstanding shares of common stock (the “Reverse Stock Split”). Pursuant to the Reverse Stock Split, every six shares of the Company’s issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share.

 

No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive a fractional share were entitled to receive cash in lieu thereof (or, if applicable, fractional interests were rounded in accordance with the terms approved by the Board of Directors and the Company’s stockholders).

 

The Reverse Stock Split proportionately reduced the number of shares of common stock outstanding and proportionately adjusted the number of shares available for issuance under the Company’s equity incentive plans, as well as the exercise prices and number of shares underlying outstanding stock options, warrants and other equity-based awards, in accordance with their respective terms.

 

All share and per-share amounts presented in the accompanying condensed consolidated financial statements and related notes have been retrospectively adjusted, where applicable, to give effect to the Reverse Stock Split for all periods presented.