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
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