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Super League Enterprise, Inc.

Super League Enterprise, Inc.SLEEarnings & Financial Report

Nasdaq · Information Technology · Services-Computer Integrated Systems Design

Super League Enterprise, Inc. is a global gaming and esports entertainment firm that creates interactive live events, original content, and community experiences for casual and core gaming audiences. It runs competitive gaming leagues, brand partnership activations, and digital media platforms, serving North America, Europe, and key Asia-Pacific markets.

What changed in Super League Enterprise, Inc.'s 10-K — 2023 vs 2024

Top changes in Super League Enterprise, Inc.'s 2024 10-K

519 paragraphs added · 383 removed · 236 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Because we have successfully built our own metaverse gaming worlds and content network over the course of several years, we deeply understand the ecosystem of players and creators and what it takes to help brands and advertisers navigate this this new digital social channel in an authentic and engaging way.
Because we have successfully built our own metaverse gaming worlds and content network over the course of several years, we deeply understand the ecosystem of players and creators and what it takes to help brands and advertisers navigate this new digital social channel in an authentic and engaging way.
In addition, our platform, and our capability to produce compelling gaming-centric video and livestream broadcasts drives viewership to our experiences and our brand partner’s digital channels for further amplification. 2 Table of Contents Specifically, Super League’s digital experience and media products provide a wide range of solutions for brands and advertisers.
In addition, our platform, and our capability to produce compelling gaming-centric video and livestream broadcasts drives viewership to our experiences and our brand partner’s digital channels for further amplification. Specifically, Super League’s digital experience and media products provide a wide range of solutions for brands and advertisers.
Our corporate brand values are: ● We fearlessly pioneer. ● We excite creativity. ● We ignite connections. ● We live where we play. Seasonality Our revenue fluctuates quarterly and is generally higher in the second half of our fiscal year, with the fourth quarter typically representing our highest revenue quarter each year.
Our corporate brand values are: ● We fearlessly pioneer. ● We excite creativity. ● We ignite connections. ● We live where we play. 6 Table of Contents Seasonality Our revenue fluctuates quarterly and is generally higher in the second half of our fiscal year, with the fourth quarter typically representing our highest revenue quarter each year.
In addition to Super League’s original owned and operated consumer reach, including, but not limited to, Minehut, and our Roblox partner game worlds, advertisers are able to reach tens of millions of monthly metaverse players in-game through our distributed game world network and hundreds of millions of viewers through our amplified programs with influencers distributed across social media channels including YouTube, TikTok and Instagram.
In addition to Super League’s original owned and operated consumer reach, including, but not limited to, Minehut (refer to “Sale of Minehut” below), and our Roblox partner game worlds, advertisers are able to reach tens of millions of monthly metaverse players in-game through our distributed game world network and hundreds of millions of viewers through our amplified programs with influencers distributed across social media channels including YouTube, TikTok and Instagram.
We believe that this seasonality in advertising spending affects our quarterly results, which generally reflect relatively higher advertising revenue in the second half of each year, compared to the first half of the year. Employees and Labor Relations As of December 31, 2023, we had 91 full-time and full-time equivalent employees.
We believe that this seasonality in advertising spending affects our quarterly results, which generally reflect relatively higher advertising revenue in the second half of each year, compared to the first half of the year. Employees and Labor Relations As of December 31, 2024, we had 75 full-time and full-time equivalent employees.
We generate revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) direct to consumer offers, including in-game items, e-commerce, game passes and ticketing and digital collectibles, and (iii) content and technology through the production and distribution of our own, advertiser and third-party content.
We generate revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) direct to consumer offers, including in-game items, e-commerce, and virtual collectibles, and (iii) content and technology through the production and distribution of our own, advertiser and third-party interactive and video content.
Our dynamic media technology, both in the size of monetizable ad products and the creator tool suite, was materially expanded with the acquisitions of Bloxbiz Co. ( doing business as, and hereinafter referred to as “Super Biz” ) during the year ended December 31, 2021 (“Fiscal Year 2021”).
Our dynamic media technology, both in the size of monetizable ad products and the creator tool suite, was materially expanded with the acquisitions of Bloxbiz Co. (doing business as, and hereinafter referred to as “Super Biz”) during Fiscal Year 2021.
Industry According to Statista (2022), there are over 3 billion gamers on the planet and more than 500 million monthly active players in metaverse, open-world game platforms, namely Roblox, Minecraft and Fortnite.
Industry According to Statista (2024), there are over 3 billion gamers on the planet and more than 600 million monthly active users in metaverse (2025), open-world game platforms, namely Roblox, Minecraft and Fortnite.
Not only has there been a massive audience shift, but it is also taking a disproportionate amount of this next generation consumer’s time with the Roblox users averaging 156 minutes per day of play vs. the next closest social media channel, Tik Tok, averaging 95 minutes per day of usage. 4 Table of Contents Other notable trends that amplify these statistics: ● The rise of metaverse, open-world gaming as preferred social channels that go way beyond the traditional concept of gaming; ● The democratization of content creation, launching self-produced social content platforms and new creator economies; ● The further disaggregation of content and increasing underperformance of traditional digital advertising channels forcing advertisers to find new solutions; ● With smarter screens, an increasing consumer expectation for more personalized, customized and interactive web experiences; ● Cross-generational reach of gaming as a lifestyle trend placing it at the intersection of pop culture, cutting broadly across dimensions; ● Younger generations live a blended life where digital and physical personas are viewed as one, driving cross-over consumer preference, and ● Use of Artificial Intelligence (“AI”) to accelerate the company’s development cycles and product road maps for faster-to-market, turnkey solutions that enable scale and margin growth.
Other notable trends that amplify these statistics: ● The rise of metaverse, open-world gaming as preferred social channels that go way beyond the traditional concept of gaming; ● The democratization of content creation, launching self-produced social content platforms and new creator economies; ● The further disaggregation of content and increasing underperformance of traditional digital advertising channels forcing advertisers to find new solutions; ● With smarter screens, an increasing consumer expectation for more personalized, customized and interactive web experiences; ● Cross-generational reach of gaming as a lifestyle trend placing it at the intersection of pop culture, cutting broadly across dimensions; ● Younger generations live a blended life where digital and physical personas are viewed as one, driving cross-over consumer preference, and ● Use of Artificial Intelligence (“AI”) to accelerate the company’s development cycles and product road maps for faster-to-market, turnkey solutions that enable scale and margin growth.
None of our employees are represented by labor unions. Governmental Regulation Our online gaming platforms, which target individuals ranging from elementary school age children to adults, are subject to laws and regulations relating to privacy and child protection.
We believe that we maintain a good working relationship with our employees, and we have not experienced any labor disputes. None of our employees are represented by labor unions. Governmental Regulation Our online gaming platforms, which target individuals ranging from elementary school age children to adults, are subject to laws and regulations relating to privacy and child protection.
Cost of Compliance with Environmental Laws We have not incurred any costs associated with compliance with environmental regulations, nor do we anticipate any future costs associated with environmental compliance; however, no assurances can be given that we will not incur such costs in the future.
We believe that we are in compliance with any applicable law or regulation when we run these experiences. 7 Table of Contents Cost of Compliance with Environmental Laws We have not incurred any costs associated with compliance with environmental regulations, nor do we anticipate any future costs associated with environmental compliance; however, no assurances can be given that we will not incur such costs in the future.
While our roots are in open gaming platforms where interactive worlds were first spawned, we believe our success is in the creation, growth, and monetization of digital experiences across the wider immersive web landscape.
With strong roots in open gaming platforms where interactive worlds were first spawned, we believe our success is in the creation, growth, and monetization of playable digital advertising content and interactive experiences across mobile games and immersive platforms.
Built on a powerful foundation of unmatched capabilities and software platforms that have driven consistent success for innovative brand experiences, creator growth and monetization, and significant consumer engagement, our scalable, vertically-integrated solution offers: ● Successful owned and third-party publishing worlds, experiences and destinations; ● Innovative product and marketing solutions for brands and developers; and ● Valued tools and analytics for brands and developers.
Super League’s vision is to be the most comprehensive provider of products and creative, tech-driven solutions that deliver superior levels of consumer engagement and measurable business outcomes for brands within the playable media category. 2 Table of Contents Built on a powerful foundation of unmatched capabilities and software platforms that have driven consistent success for innovative brand experiences, creator growth and monetization, and significant consumer engagement, our scalable, vertically-integrated solution offers: ● Successful owned and third-party publishing worlds, experiences and destinations; ● Innovative product and marketing solutions for brands and developers; and ● Valued tools and analytics for brands and developers.
Our brand partner and creator facing digital properties include: Super League Game Studio: One of the preeminent game creation resources in virtual world game platforms, our Super Games publishing capability provides bespoke game development and custom game experiences within our owned and affiliate game worlds and is a power source connecting our developer network to our brand partners.
In-Game Digital Goods: While nascent in development, the company has the capability to develop 1 st party and 3 rd party branded digital consumer goods inside virtual world platforms currently being piloted in their owned and operated game worlds, as well as with a small set of brand partners. 3 Table of Contents Our brand partner and creator facing digital properties include: Super League Game Studio: One of the preeminent game creation resources in virtual world game platforms, our Super Games publishing capability provides bespoke game development and custom game experiences within our owned and affiliate game worlds and is a power source connecting our developer network to our brand partners.
Content & Technology As part of our strategy to provide an end-to-end solution for advertiser objectives, Super League’s creative services team, powered for broadcasting by Super View, augment our advertiser offer to take a greater share of campaign dollars.
As a component of our revenue diversification strategy, consumer monetization includes in-game items, e-commerce, game passes and ticketing, and digital collectibles. 4 Table of Contents Content & Technology As part of our strategy to provide an end-to-end solution for advertiser objectives, Super League’s creative services team, powered for broadcasting by Super View, augment our advertiser offer to take a greater share of campaign dollars.
Whether for the creation and broadcast of premium content, or monitoring productions from remote locations, Super Studios and Super View are an innovative, affordable solution to deliver compelling content to meet advertiser objectives and generate additional sources of revenue. 3 Table of Contents Monetization Innovative Brand & Media Integrations The highly sought-after Generation Z and Alpha audience is increasingly difficult for brands to reach due to the fragmentation of content distribution channels, ad-blocking technology and a sentiment against overt marketing and promotion.
Monetization Innovative Brand & Media Integrations The highly sought-after Generation Z and Alpha audience is increasingly difficult for brands to reach due to the fragmentation of content distribution channels, ad-blocking technology and a sentiment against overt marketing and promotion.
We operate in one reportable segment to reflect the way management and our chief operating decision maker review and assess the performance of the business. Our Strategy We believe that virtual world platforms are where the next generation lives and are a launchpad of unlimited new interactive worlds and content.
We operate in one reportable segment to reflect the way management and our chief operating decision maker review and assess the performance of the business.
For example, we ensure viewability with advanced technology that observes if ads are on screen, unobstructed, meet a screen coverage threshold, and other requirements set by Interactive Advertising Bureau (“IAB”) which translates into our premium CPM business model.
For example, we ensure viewability with advanced technology that observes if ads are on screen, unobstructed, meet a screen coverage threshold, and other requirements set by Interactive Advertising Bureau (“IAB”) which translates into our premium CPM business model. 5 Table of Contents Additionally, a core differentiator for Super League is our deep insight and capability to deliver contagious custom Roblox game worlds and integrated experiences along with tailored off-platform entertainment content to drive exposure and on-platform engagement.
Since COVID-19, we have augmented our virtual control room with remote monitoring and communications and enhanced broadcast-level graphics, for an end-to-end, cloud-based production system built around Super View’s proprietary workflow, primarily used for branded broadcasting requests. 5 Table of Contents Our Growth Strategy Our core strategy is to further monetize the audience reach we have built on existing metaverse, or “open-world” game platforms and continue applying that smart backbone to other virtual world engines for extended reach and diversification of revenues.
Since COVID-19, we have augmented our virtual control room with remote monitoring and communications and enhanced broadcast-level graphics, for an end-to-end, cloud-based production system built around Super View’s proprietary workflow, primarily used for branded broadcasting requests.
Direct to Consumer Direct to consumer revenues are comprised of revenues generated from the growing number of Minecraft and Roblox virtual gaming worlds we operate. As a component of our revenue diversification strategy, consumer monetization includes in-game items, e-commerce, game passes and ticketing, and digital collectibles.
Direct to Consumer Direct to consumer revenues are comprised of revenues generated from the growing number of Minecraft and Roblox virtual gaming worlds we operate.
As of December 31, 2023, four of our full-time employees were subject to fixed-term employment agreements with us, and all other employees served at-will pursuant to the terms set forth in their offer letters. 6 Table of Contents We believe that we maintain a good working relationship with our employees, and we have not experienced any labor disputes.
Additionally, we may enter into service agreements with independent contractors, on an as-needed basis, to perform certain services. As of December 31, 2024, three of our full-time employees were subject to fixed-term employment agreements with us, and all other employees served at-will pursuant to the terms set forth in their offer letters.
Item 1. Business Overview Super League Enterprise, Inc. (Nasdaq: SLE) (“Super League,” the “Company,” “we,” “us” or “our”) is a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms.
Item 1. Business Overview Super League Enterprise, Inc. (Nasdaq: SLE) (“Super League,” the “Company,” “we,” “us” or “our”) is redefining how brands connect with consumers through the power of playable media.
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From open gaming powerhouses such as Roblox, Minecraft and Fortnite Creative, to bespoke worlds built using the most advanced 3D creation tools, Super League’s innovative solutions provide incomparable access to massive audiences who gather in immersive digital spaces to socialize, play, explore, collaborate, shop, learn and create.
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Through solutions within mobile games and the world’s largest immersive gaming platforms, Super League provides global brands with ads, content, and experiences that are not only seen – they are played, felt, and remembered.
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As a true end-to-end activation partner for dozens of global brands, Super League offers a complete range of development, distribution, monetization and optimization capabilities designed to engage users through dynamic, energized programs.
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Boasting an award-winning development studio, a vast network of native creators, and proprietary engagement technology, Super League is a one-of-a-kind partner for brands looking to stand out in culture, spark loyalty, and drive meaningful impact. In a world where attention is earned, Super League makes brands relevant - by making them playable.
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As an originator of new experiences fueled by a network of top developers, a comprehensive set of proprietary creator tools and a future-forward team of creative professionals, Super League accelerates intellectual property (“IP”) and audience success within the fastest growing sector of the media industry.
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Our Strategy We believe that video gaming and virtual world platforms are where consumers will continue to spend material amounts of time, making it increasingly important for global brands and intellectual property owners to prioritize in-game and in-world marketing and advertising programs.
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In a world of blended physical-to-digital lives and smarter, more immersive screens, consumer expectations are increasing for more customized and personalized digital experiences, changing the way consumers will socialize, play, create, collaborate, shop, learn and work.
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In an attention economy dominated by the continued blending of physical-and-digital lives and smarter, more immersive screens, consumers are increasingly responsive to more customized and personalized advertising content that fits naturally with the activities they most enjoy. For brands, the next generation of consumer engagement will achieved be through targeted solutions that meet this consumer expectation.
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Super League’s vision is to build the most comprehensive immersive web publishing and products engine to deliver the future of digital advertising and brand and IP monetization through the newer immersive, 3D engagement marketing channels.
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Whether for the creation and broadcast of premium content, or monitoring productions from remote locations, Super Studios and Super View are an innovative, affordable solution to deliver compelling content to meet advertiser objectives and generate additional sources of revenue.
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In-Game Digital Goods: While nascent in development, the company has the capability to develop 1 st party and 3 rd party branded digital consumer goods inside virtual world platforms currently being piloted in their owned and operated game worlds, as well as with a small set of brand partners.
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Not only has there been a massive audience shift, but it is also taking a disproportionate amount of this next generation consumer’s time with the Roblox users averaging 144 minutes per day of play vs. the next closest social media channel, Tik Tok, averaging 95 minutes per day of usage.
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Additionally, a core differentiator for Super League is our deep insight and capability to deliver contagious custom Roblox game worlds and integrated experiences along with tailored off-platform entertainment content to drive exposure and on-platform engagement.
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Our Growth Strategy Our core strategy is to further monetize the audience reach we have built on existing metaverse, or “open-world” game platforms and continue applying that smart backbone to other virtual world engines for extended reach and diversification of revenues.
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Additionally, we occasionally enter into service agreements with independent contractors, on an as-needed basis, to perform certain services.
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We believe that we are in compliance with any applicable law or regulation when we run these experiences.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Our business and prospects depend on the continuing development of leading position as a creator and publisher of content experiences and media solutions across the world’s largest immersive platforms. The market for gaming-related content has grown significantly in recent years and continues to rapidly develop, which may present significant challenges.
Our business and prospects depend on the continuing development of a leading position as a creator and publisher of content experiences and media solutions across the world’s largest immersive platforms. The market for gaming-related content has grown significantly in recent years and continues to rapidly develop, which may present significant challenges.
While we intend for these efforts to generate increased recurring revenues from our existing user base, they may cause users to decrease their overall spend on our platform. Our ability to continue to attract and retain users of our paid subscription services will depend in part on our ability to consistently provide our subscribers with a quality experience.
While we intend for these efforts to generate increased recurring revenues from our existing user base, they may cause users to decrease their overall spend on our platform. Our ability to attract and retain users of paid subscription services will depend in part on our ability to consistently provide subscribers with a quality experience.
Therefore, it is possible that our valuation of an acquisition may change and result in unanticipated write-offs or charges, impairment of our goodwill, or a material change to the fair value of the assets and liabilities associated with a particular acquisition, any of which would affect our balance sheet and could significantly harm our business.
Therefore, it is possible that our valuation of an acquisition may change and result in unanticipated write-offs or charges, impairment of our goodwill, or a material change to the fair value of the assets and liabilities associated with a particular acquisition, any of which would affect our consolidated balance sheet and could significantly harm our business.
Any future growth would add complexity to our organization and require effective coordination across our organization, and an inability to do so would adversely affect our business, financial conditions and results of operations. We provide access to offerings within our platform that are subscription-based.
Any future growth would add complexity to our organization and require effective coordination across our organization, and an inability to do so would adversely affect our business, financial conditions and results of operations. We may provide access to offerings within our platform that are subscription-based.
We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations or that may be available from future issuance(s) of common stock or debt financings, to fund our planned operations. 33 Table of Contents Accordingly, our results of operations and the implementation of our long-term business strategy could be adversely affected by general conditions in the global economy, including conditions that are outside of our control, such as the historically high levels of inflation recently experienced by the United States, Europe and other key global markets.
We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations or that may be available from future issuance(s) of common stock or debt financings, to fund our planned operations. 36 Table of Contents Accordingly, our results of operations and the implementation of our long-term business strategy could be adversely affected by general conditions in the global economy, including conditions that are outside of our control, such as the historically high levels of inflation recently experienced by the United States, Europe and other key global markets.
For example, while our KPIs have grown sequentially on a quarterly basis for the last several years, there have been months where they have not or have grown at a slower pace, often due to seasonal or other factors.
For example, while our KPIs have grown on a quarterly basis for the last several years, there have been months where they have not or have grown at a slower pace, often due to seasonal or other factors.
We expect to continue to expend substantial financial and other resources on, among other things: ● investments to expand and enhance our technology platform and technology infrastructure, make improvements to the scalability, availability and security of our platform, and develop new offerings; ● sales and marketing, including expanding our customer acquisition and sales organization and marketing programs, and expanding our programs directed at increasing our brand awareness among current and new customers; ● investments in bandwidth to support our video streaming functionality; ● contract labor costs and other costs to host our leagues and tournaments; 9 Table of Contents ● costs to retain and attract users and creators and license first tier game titles, grow our online user community and generally expand our business operations; ● hiring additional employees; ● expansion of our operations and infrastructure, both domestically and internationally; and ● general administration, including legal, accounting and other costs related to being a public company.
We expect to continue to expend substantial financial and other resources on, among other things: ● investments to expand and enhance our technology platform and technology infrastructure, make improvements to the scalability, availability and security of our platform, and develop new offerings; ● sales and marketing, including expanding our customer acquisition and sales organization and marketing programs, and expanding our programs directed at increasing our brand awareness among current and new customers; ● investments in bandwidth to support our video streaming functionality; ● contract labor costs and other costs to host our leagues and tournaments; ● costs to retain and attract users and creators and license first tier game titles, grow our online user community and generally expand our business operations; ● hiring additional employees; ● expansion of our operations and infrastructure, both domestically and internationally; and ● general administration, including legal, accounting and other costs related to being a public company.
Conditions in our market could change rapidly and significantly as a result of technological advancements, the emergence of new entrants into the market, partnering or acquisitions by our competitors, continuing market consolidation, or changing developer, creator and user preferences, which can be difficult to predict or prepare for. 11 Table of Contents Our competitors vary in size, and some may have substantially broader and more diverse offerings or may be able to adopt more lucrative payment policies or structures for developers.
Conditions in our market could change rapidly and significantly as a result of technological advancements, the emergence of new entrants into the market, partnering or acquisitions by our competitors, continuing market consolidation, or changing developer, creator and user preferences, which can be difficult to predict or prepare for. 12 Table of Contents Our competitors vary in size, and some may have substantially broader and more diverse offerings or may be able to adopt more lucrative payment policies or structures for developers.
However, this philosophy of putting our users and creators first may also negatively impact our relationships with advertisers, sponsors or other third parties, and may not result in the long-term benefits that we expect, in which case the success of our business and operating results could be harmed. 12 Table of Contents Our revenue model may not remain effective and we cannot guarantee that our future monetization strategies will be successfully implemented or generate sustainable revenues and profit.
However, this philosophy of putting our users and creators first may also negatively impact our relationships with advertisers, sponsors or other third parties, and may not result in the long-term benefits that we expect, in which case the success of our business and operating results could be harmed. 13 Table of Contents Our revenue model may not remain effective and we cannot guarantee that our future monetization strategies will be successfully implemented or generate sustainable revenues and profit.
If we develop a reputation for being a difficult acquirer or having an unfavorable work environment, or if target companies view our common stock unfavorably, we may be unable to consummate key acquisition transactions essential to our corporate strategy and our business may be significantly harmed. 21 Table of Contents We may pay substantial amounts of cash or incur debt to pay for acquisitions or other strategic transactions, which has occurred in the past and could adversely affect our liquidity.
If we develop a reputation for being a difficult acquirer or having an unfavorable work environment, or if target companies view our common stock unfavorably, we may be unable to consummate key acquisition transactions essential to our corporate strategy and our business may be significantly harmed. 22 Table of Contents We may pay substantial amounts of cash or incur debt to pay for acquisitions or other strategic transactions, which has occurred in the past and could adversely affect our liquidity.
Failure to adequately identify and adapt to these competitive pricing pressures could negatively impact our business. We may not be able to sustain our rapid growth, effectively manage our anticipated future growth or implement our business strategies.
Failure to adequately identify and adapt to these competitive pricing pressures could negatively impact our business. We may not be able to sustain our growth, effectively manage our anticipated future growth or implement our business strategies.
A data security breach of one of our vendors or business partners could cause reputational harm to them and/or negatively impact our ability to maintain the credibility of our user community. 16 Table of Contents Data privacy, data protection, localization, security and consumer-protection laws are evolving, and the interpretation and application of these laws in the United States, Europe (including compliance with the European Union’s General Data Protection Regulation (“GDPA”), and elsewhere often are uncertain, contradictory and changing.
A data security breach of one of our vendors or business partners could cause reputational harm to them and/or negatively impact our ability to maintain the credibility of our user community. 17 Table of Contents Data privacy, data protection, localization, security and consumer-protection laws are evolving, and the interpretation and application of these laws in the United States, Europe (including compliance with the European Union’s General Data Protection Regulation (“GDPA”), and elsewhere often are uncertain, contradictory and changing.
Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: 1. had a public float of less than $250 million; or 2. had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available and either had no public float or a public float of less than $700 million.
Rule 12b-2 defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: 1. had a public float of less than $250 million; or 2. had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available and either had no public float or a public float of less than $700 million.
We believe that our continued growth will depend on many factors, including our ability to develop new sources of revenues, diversify monetization methods including our direct to consumer offerings, attract and retain competitive gamers and creators, increase engagement, continue developing innovative technologies, and experiences in response to shifting demand in open world gaming, increase brand awareness, and expand into new markets.
We believe that our future growth will depend on many factors, including our ability to develop new sources of revenues, diversify monetization methods including our direct to consumer offerings, attract and retain competitive gamers and creators, increase engagement, continue developing innovative technologies, and experiences in response to shifting demand in open world gaming, increase brand awareness, and expand into new markets.
If our new or enhanced services fail to engage users, marketers, or developers, or if our business plans are unsuccessful, we may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify our investments, and our business may be adversely affected. 15 Table of Contents We may not be successful in our metaverse gaming strategy and investments, which could adversely affect our business, reputation, or financial results.
If our new or enhanced services fail to engage users, marketers, or developers, or if our business plans are unsuccessful, we may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify our investments, and our business may be adversely affected. 16 Table of Contents We may not be successful in our metaverse gaming strategy and investments, which could adversely affect our business, reputation, or financial results.
Despite our efforts, no assurances can be given that such measures will be sufficient to completely avoid exposure and COPPA violations, any of which could expose us to significant liability, penalties, reputational harm and loss of revenue, among other things. 24 Table of Contents The laws and regulations concerning data privacy are continually evolving.
Despite our efforts, no assurances can be given that such measures will be sufficient to completely avoid exposure and COPPA violations, any of which could expose us to significant liability, penalties, reputational harm and loss of revenue, among other things. 25 Table of Contents The laws and regulations concerning data privacy are continually evolving.
In the event a significant defect in our platform and associated systems and controls is realized, we could be required to offer refunds, suspend the availability of our service offerings, or expend significant resources to cure the defect, each of which could significantly harm our business and operating results. 17 Table of Contents We may experience system failures, outages and/or disruptions of the functionality of our platform.
In the event a significant defect in our platform and associated systems and controls is realized, we could be required to offer refunds, suspend the availability of our service offerings, or expend significant resources to cure the defect, each of which could significantly harm our business and operating results. 18 Table of Contents We may experience system failures, outages and/or disruptions of the functionality of our platform.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to an understanding of our consolidated financial statements and our business. 23 Table of Contents We are currently dependent on certain game publishers and online game platforms for a substantial portion of our revenue.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to an understanding of our consolidated financial statements and our business. 24 Table of Contents We are currently dependent on certain game publishers and online game platforms for a substantial portion of our revenue.
We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect we expect. 14 Table of Contents In addition, any negative publicity in relation to our service offerings, or operations, regardless of its veracity, could harm our brands and reputation.
We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect we expect. 15 Table of Contents In addition, any negative publicity in relation to our service offerings, or operations, regardless of its veracity, could harm our brands and reputation.
Further, many lending institutions will not permit the use of low-priced shares of common stock as collateral for any loans. 28 Table of Contents Our stock price may be volatile, and you could lose all or part of your investment.
Further, many lending institutions will not permit the use of low-priced shares of common stock as collateral for any loans. 31 Table of Contents Our stock price may be volatile, and you could lose all or part of your investment.
If we fail to license multiple additional “hit” games or any of our existing licensed game publishers with which we currently have a license decide to breach the license agreement or choose not to continue with us once the term of the license agreement expires, or if platforms on which we operate modify or restrict our access, the popularity of our experiences and content generated across platforms may decline and the number of our users and creators may decrease, which could materially and adversely affect our results of operations and financial condition. 13 Table of Contents We have not entered into definitive license agreements with certain game publishers or platforms that we currently have relationships with, and we may never do so.
If we fail to license “hit” games or any of our existing licensed game publishers with which we currently have a license decide to breach the license agreement or choose not to continue with us once the term of the license agreement expires, or if platforms on which we operate modify or restrict our access, the popularity of our experiences and content generated across platforms may decline and the number of our users and creators may decrease, which could materially and adversely affect our results of operations and financial condition. 14 Table of Contents We have not entered into definitive license agreements with certain game publishers or platforms that we currently have relationships with, and we may never do so.
WithumSmith+Brown, PC, our independent registered public accounting firm for the fiscal year ended December 31, 2023, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2023, indicating that our recurring losses from operations and negative cash flows from operations raises substantial doubt about our ability to continue as a going concern.
WithumSmith+Brown, PC, our independent registered public accounting firm for the fiscal years ended December 31, 2024 and 2023, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023, indicating that our recurring losses from operations and negative cash flows from operations raises substantial doubt about our ability to continue as a going concern.
Regulatory and Legal ● complex and evolving U.S. and foreign laws and regulations; ● changes in tax laws or regulations regarding us or our customers; ● decreased levels of traffic due to intensified government regulation of the Internet industry; 8 Table of Contents ● liability in the event of a violation of privacy regulations, data privacy laws, and/or child protection laws; ● lawsuits or liability arising as a result of the Company providing its products and/or services; and ● lawsuits or liability as a result of content published through our products and services.
Regulatory and Legal ● complex and evolving U.S. and foreign laws and regulations; ● changes in tax laws or regulations regarding us or our customers; ● decreased levels of traffic due to intensified government regulation of the Internet industry; ● liability in the event of a violation of privacy regulations, data privacy laws, and/or child protection laws; ● lawsuits or liability arising as a result of the Company providing its products and/or services; and ● lawsuits or liability as a result of content published through our products and services.
We generate a growing portion of our revenues from advertising on existing digital platforms and within our owned and operated platforms, which we expect to further develop and expand in the near future as online viewership across platforms continues to expand.
We generate a significant portion of our revenues from advertising on existing digital platforms and within our owned and operated platforms, which we expect to further develop and expand in the near future as online viewership across platforms continues to expand.
Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments. If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our common stock could be negatively affected.
Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments. 32 Table of Contents If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our common stock could be negatively affected.
Our developers, creators and partners may also be less willing to allocate their budgets or resources to our service offerings, which could seriously harm our business. Growth and engagement of our user community depends upon effective interoperability with mobile operating systems, networks, mobile devices and standards that we do not control.
Our developers, creators and partners may also be less willing to allocate their budgets or resources to our service offerings, which could seriously harm our business. 21 Table of Contents Growth and engagement of our user community depends upon effective interoperability with mobile operating systems, networks, mobile devices and standards that we do not control.
If the amount of capital we are able to raise from financing activities, together with our revenues and profits from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to curtail or cease operations. 10 Table of Contents Our business is highly competitive and subject to rapid changes.
If the amount of capital we are able to raise from financing activities, together with our revenues and profits from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to curtail or cease operations. Our business is highly competitive and subject to rapid changes.
In addition, if popular game publishers cease to license their games to us, or our live streams fail to attract gamers and creators, we may experience a decline in gamer traffic, direct to consumer opportunities and engagement, which may have a material and adverse impact on our results of operations and financial conditions.
In addition, if popular game publishers cease to license their games to us, or our activities fail to attract gamers and creators, we may experience a decline in gamer traffic, direct to consumer opportunities and engagement, which may have a material and adverse impact on our results of operations and financial conditions.
If we fail to successfully integrate the companies we acquire, we may not realize the benefits expected from the transaction and our business may be harmed. 22 Table of Contents We may encounter significant difficulties integrating acquired businesses. The integration of any businesses is a complex, costly and time-consuming process.
If we fail to successfully integrate the companies we acquire, we may not realize the benefits expected from the transaction and our business may be harmed. We may encounter significant difficulties integrating acquired businesses. The integration of any businesses is a complex, costly and time-consuming process.
If our efforts to attract and retain subscribers are not successful, our business, operating results, and financial condition may be adversely impacted. We have seen the growth rate of our users fluctuate and expect it to continue to change over time.
If our efforts to attract and retain subscribers are not successful, our business, operating results, and financial condition may be adversely impacted. 20 Table of Contents We have seen the growth rate of our users fluctuate and expect it to continue to change over time.
Our service offerings are marketed through a diverse spectrum of advertising and promotional programs such as online and mobile advertising, marketing through websites, event sponsorship and direct communications with our user community including via email, blogs and other electronic means.
Our service offerings are or may be marketed through a diverse spectrum of advertising and promotional programs such as online and mobile advertising, marketing through websites, event sponsorship and direct communications with our user community including via email, blogs and other electronic means.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. 7 Table of Contents Risk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, financial condition or operating results to be harmed, including risks regarding the following: Risks Related to Our Business and Industry ● our significant past operating losses and any inability to maintain profitability or accurately predict fluctuations in the future; ● a rapidly developing and relatively new market; ● inability to sustain or manage our growth, or otherwise implement our business strategies; ● loss of advertising revenue; ● inability to maintain an effective revenue model; ● reduction in activity by material clients and/or vendors; ● ineffective marketing and/or advertising efforts; ● our ability to maintain and promote our company culture; ● competition in our industry; ● ability to attract, maintain, and retain licenses for popular games on our platforms; ● ability to enter into definitive license agreements with certain game publishers; ● ability to maintain and acquire new users and creators; ● our ability to maintain, enhance, and promote our brand; ● negative perceptions about our brand, platform, content, leagues, tournaments, and/or competitions; ● anticipating and adopting changes to new technologies, business strategies, and/or methods; ● actual or perceived security breaches, as well as errors, vulnerabilities or defects in our software and/or products, and in software and/or products of third-party providers; ● reliance on server functionality; ● the interoperability of our products and services across third-party services and systems; ● security breaches and cyber threats; ● system failures, outages, and/or disruption due to certain events and interruptions by human-caused problems; ● our ability to hire, retain and motivate highly skilled personnel; and ● our reliance on assumptions and estimates to calculate certain key metrics.
Risk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, financial condition or operating results to be harmed, including risks regarding the following: Risks Related to Our Business and Industry ● our significant past operating losses and any inability to maintain profitability or accurately predict fluctuations in the future; ● a rapidly developing and relatively new market; ● inability to sustain or manage our growth, or otherwise implement our business strategies; ● loss of advertising revenue; ● inability to maintain an effective revenue model; ● reduction in activity by material clients and/or vendors; ● ineffective marketing and/or advertising efforts; ● our ability to maintain and promote our company culture; ● competition in our industry; ● ability to attract, maintain, and retain licenses for popular games on our platforms; ● ability to enter into definitive license agreements with certain game publishers; ● ability to maintain and acquire new users and creators; ● our ability to maintain, enhance, and promote our brand; ● negative perceptions about our brand, platform, content, leagues, tournaments, and/or competitions; ● anticipating and adopting changes to new technologies, business strategies, and/or methods; 8 Table of Contents ● actual or perceived security breaches, as well as errors, vulnerabilities or defects in our software and/or products, and in software and/or products of third-party providers; ● reliance on server functionality; ● the interoperability of our products and services across third-party services and systems; ● security breaches and cyber threats; ● system failures, outages, and/or disruption due to certain events and interruptions by human-caused problems; ● our ability to hire, retain and motivate highly skilled personnel; and ● our reliance on assumptions and estimates to calculate certain key metrics.
We are an “ emerging growth company, ” and a “ smaller reporting company ” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies or smaller reporting companies will make an investment in us less attractive to investors.
We are a “ smaller reporting company ” and we cannot be certain if the reduced reporting requirements applicable to smaller reporting companies will make an investment in us less attractive to investors.
Existing and prospective developers may not be successful in creating content that leads to and maintains user engagement (including maintaining the quality of experiences) or they may fail to expand the types of experiences that our developers can build for users, and other global entertainment companies, online content platforms, and social platforms may entice our users and potential users away from, or to spend less time with, our platform, each of which could adversely affect users’ interest in our platform and lead to a loss of revenue opportunities and harm our results of operations. 18 Table of Contents Additionally, we may not succeed in further monetizing our platform and user base.
Existing and prospective developers may not be successful in creating content that leads to and maintains user engagement (including maintaining the quality of experiences) or they may fail to expand the types of experiences that our developers can build for users, and other global entertainment companies, online content platforms, and social platforms may entice our users and potential users away from, or to spend less time with, our platform, each of which could adversely affect users’ interest in our platform and lead to a loss of revenue opportunities and harm our results of operations.
The loss of or a substantial reduction in activity by one or more of our largest customers and/or vendors could materially and adversely affect our business, financial condition and results of operations. For Fiscal Years 2023 and 2022, one customer accounted for 14% and one customer accounted for 8% of revenue, respectively.
The loss of or a substantial reduction in activity by one or more of our largest customers and/or vendors could materially and adversely affect our business, financial condition and results of operations. For Fiscal Years 2024 and 2023, two customers accounted for 20% and one customer accounted for 14% of revenue, respectively.
For Fiscal Year 2023 and Fiscal Year 2022, we recorded share-based compensation expense of $2.7 million and $4.3 million, respectively, primarily related to issuances and vesting of awards under the 2014 Plan.
For Fiscal Year 2024 and Fiscal Year 2023, we recorded share-based compensation expense of $1.3 million and $2.7 million, respectively, primarily related to issuances and vesting of awards under the 2014 Plan.
Our board of directors have the authority to cause us to issue, without any further vote or action by the stockholders, up to an additional 9,960,875 shares of preferred stock in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series.
Our Board has the authority to cause us to issue, without any further vote or action by the stockholders, up to an additional 9,958,018 shares of preferred stock in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series.
The holders of Series A Preferred Stock are entitled to vote on an as-converted to common stock basis and have rights to approve certain actions. From November 2022 to December 2023, we issued an aggregate of 39,125 shares of our Preferred Stock to a group of accredited investors (collectively, the “Investors”), pursuant to certain placement agency agreements.
The holders of Preferred Stock are entitled to vote on an as-converted basis to common stock basis and have rights to approve certain actions. From November 2022 to December 2024, we issued an aggregate of 41,982 shares of our Preferred Stock to a group of accredited investors (collectively, the “Investors”), pursuant to certain placement agency agreements.
We have a limited operating history as a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms and have experienced substantial growth during the periods presented herein due, in large part, to the acquisitions we completed during Fiscal Year 2023 and the year ending December 31, 2021 (“Fiscal Year 2021”).
We have a limited operating history as a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms and have experienced growth during certain of the periods presented herein due, in large part, to the acquisitions we completed during Fiscal Year 2023 and Fiscal Year 2021.
Fiscal Years 2023 and 2022 included noncash stock compensation, amortization and impairment charges totaling $17.3 million and $60.1 million, respectively. As of December 31, 2023, we had an accumulated deficit of $249.0 million. We cannot predict if we will achieve profitability soon or at all.
Fiscal Years 2024 and 2023 included noncash stock compensation, amortization and impairment charges totaling $3.8 million and $17.3 million, respectively. As of December 31, 2024, we had an accumulated deficit of $270.0 million. We cannot predict if we will achieve profitability soon or at all.
Therefore, we will need to raise additional capital in the future to continue our operations. We anticipate that our principal sources of liquidity will not be sufficient to fund our activities to obtain long-term, sustainable profitability.
Revenues generated from our operations are not presently sufficient to sustain our operations. Therefore, we will need to raise additional capital in the future to continue our operations. We anticipate that our principal sources of liquidity will not be sufficient to fund our activities to obtain long-term, sustainable profitability.
Policing unauthorized use of proprietary technology is difficult and expensive. We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. Further, we require every employee and consultant to execute proprietary information and invention agreements prior to commencing work.
We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. Further, we require every employee and consultant to execute proprietary information and invention agreements prior to commencing work.
The Internet industry is increasingly subject to strict scrutiny. New laws and regulations may be adopted from time to time to address new issues that come to the authorities’ attention. We may not timely obtain or maintain all the required licenses or approvals or make all the necessary filings in the future.
New laws and regulations may be adopted from time to time to address new issues that come to the authorities’ attention. We may not timely obtain or maintain all the required licenses or approvals or make all the necessary filings in the future.
Our future success depends substantially on the continued efforts of our executive officers and key employees. If one or more of our executive officers or key employees were unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner, or at all.
If one or more of our executive officers or key employees were unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner, or at all.
Acquisitions or other strategic transactions may also result in our recording of significant additional expenses to our results of operations and recording of substantial finite-lived intangible assets on our balance sheet upon closing. Any of these factors may adversely affect our financial condition or results of operations.
Acquisitions or other strategic transactions may also result in our recording of significant additional expenses to our results of operations and recording of substantial finite-lived intangible assets on our consolidated balance sheet upon closing.
Our success also depends on our ability to accurately predict which channels and platforms will be successful with the online gaming community, our ability to develop commercially successful content and distribute via SLG.TV, which is presently available on Twitch, amateur tournaments and competition for these channels and gaming platforms and our ability to effectively manage the transition of our users and creators from one generation or demographic to the next.
Our success also depends on our ability to accurately predict which channels and platforms will be successful with the online gaming community, our ability to develop commercially successful content and distribute such content, and our ability to effectively manage the transition of our users and creators from one generation or demographic to the next.
If such third parties increase their prices, fail to provide their services effectively, terminate their service or agreements or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations.
If such third parties increase their prices, fail to provide their services effectively, terminate their service or agreements or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations. 19 Table of Contents If we are unable to successfully grow our user base, compete effectively with other platforms, and further monetize our platform, our business will suffer.
Governance Risks and Risks Related to our Common Stock We received a notice from Nasdaq that our common stock may be delisted from trading on the Nasdaq Capital Market if we fail to comply with the continued listing requirements, including the minimum bid price requirement.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.” Governance Risks and Risks Related to our Common Stock We received a notice from Nasdaq that our common stock may be delisted from trading on the Nasdaq Capital Market if we fail to comply with the continued listing requirements, including the minimum bid price requirement and annual meeting requirement.
In particular, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We are an “emerging growth company” as defined in the JOBS Act.
In particular, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We are a “smaller reporting company” as defined in in Rule 12b-2 under the Exchange Act (“Rules 12b-2”).
As further set forth below, we anticipate that we will need significant additional capital, or we may be required to curtail or cease operations. In order to continue as a going concern, we will require significant additional capital, which we may be unable to obtain. Revenues generated from our operations are not presently sufficient to sustain our operations.
As further set forth below, we anticipate that we will need significant additional capital, or we may be required to curtail or cease operations. 11 Table of Contents In order to continue as a going concern, we will require significant additional capital, which we may be unable to obtain.
Any dilution or potential dilution may cause our stockholders to sell their shares, which may contribute to a downward movement in the stock price of our common stock. 30 Table of Contents Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which would rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock .
Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which would rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock .
If we are unable to prevent such unauthorized use, competitors and other third parties may continue to drive potential users and creators away from our platform to competing, irrelevant or potentially offensive platforms, which could harm our reputation and cause us to lose revenue. 26 Table of Contents We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.
Preventing such unauthorized use is inherently difficult. If we are unable to prevent such unauthorized use, competitors and other third parties may continue to drive potential users and creators away from our platform to competing, irrelevant or potentially offensive platforms, which could harm our reputation and cause us to lose revenue.
At December 31, 2023, three customers accounted for 55% of accounts receivable. At December 31, 2022, three customers accounted for 33% of accounts receivable. At December 31, 2023, two vendors accounted for 37% of accounts payable. At December 31, 2022, one vendor accounted for 10% of accounts payable.
At December 31, 2024, three customers accounted for 45% of accounts receivable. At December 31, 2023, three customers accounted for 55% of accounts receivable. At December 31, 2024, two vendors accounted for 21% of accounts payable. At December 31, 2023, two vendors accounted for 37% of accounts payable.
Game publishers on our platform, including those who have entered into license agreements with us, may leave us for other gaming platforms which may offer better competition, and terms and conditions than we do.
Game publishers on our platform, including those who have entered into license agreements with us, may leave us for other gaming platforms which may offer better competition, and terms and conditions than we do. Furthermore, we may lose our licenses with certain game publishers if we fail to generate the number of gamers and creators expected by such publishers.
On October 4, 2022, we received a letter (the “Notice”) from the Listing Qualifications Staff of Nasdaq, indicating that, based upon the closing bid price of our common stock for the prior 30 consecutive business days, were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).
If we fail to maintain compliance with any of those requirements, our common shares could be delisted from Nasdaq. 30 Table of Contents On January 2, 2025, we received a letter (the “ Bid Price Letter ”) from the Listing Qualifications Staff of Nasdaq indicating that, based upon the closing bid price of the Company’s Common Stock, for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).
Risks Related to Our Business and Industry We have incurred significant losses since our inception, and we may continue to experience losses in the future.
Risks Related to Our Business and Industry We have incurred significant losses since our inception, and we may continue to experience losses in the future. The Company incurred net losses as disclosed in the accompanying consolidated statements of operations for the periods presented.
In addition, although we take steps to enforce and police our rights, factors such as the proliferation of technology designed to circumvent the protection measures used by our business partners or by us, the availability of broadband access to the Internet, the refusal of Internet service providers or platform holders to remove infringing content in certain instances, and the proliferation of online channels through which infringing product is distributed all have contributed to an expansion in unauthorized copying of our technology, content and brands.
In addition, although we take steps to enforce and police our rights, factors such as the proliferation of technology designed to circumvent the protection measures used by our business partners or by us, the availability of broadband access to the Internet, the refusal of Internet service providers or platform holders to remove infringing content in certain instances, and the proliferation of online channels through which infringing product is distributed all have contributed to an expansion in unauthorized copying of our technology, content and brands. 27 Table of Contents Third parties may register trademarks or domain names or purchase internet search engine keywords that are similar to our registered trademark or pending trademarks, brands or websites, or misappropriate our data and copy our platform, all of which could cause confusion, divert users and creators away from our platform and service offerings, or harm our reputation.
As a result, appreciation, if any, in the market price of our common stock will be your sole source of gain for the foreseeable future. Our issuance of additional shares of preferred stock could adversely affect the market value of our common stock, dilute the voting power of common stockholders and delay or prevent a change of control.
Our issuance of additional shares of preferred stock could adversely affect the market value of our common stock, dilute the voting power of common stockholders and delay or prevent a change of control.
The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant.
The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our Board may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.
Moreover, the costs of compliance may continue to increase when more content is made available on our platform as a result of our growing base of users and creators, which may adversely affect our results of operations. 25 Table of Contents Intensified government regulation of the Internet industry could restrict our ability to maintain or increase the level of traffic to our platform as well as our ability to capture other market opportunities.
Moreover, the costs of compliance may continue to increase when more content is made available on our platform as a result of our growing base of users and creators, which may adversely affect our results of operations.
We have invested significant resources to develop our own intellectual property and acquire licenses to use and distribute the intellectual property of others on our platform. Failure to maintain or protect these rights could harm our business. In addition, any unauthorized use of our intellectual property by third parties may adversely affect our current and future revenues and our reputation.
Failure to maintain or protect these rights could harm our business. In addition, any unauthorized use of our intellectual property by third parties may adversely affect our current and future revenues and our reputation. Policing unauthorized use of proprietary technology is difficult and expensive.
In the event that it is difficult for our users to access and use our services, particularly on their mobile devices, our user growth and user engagement could be harmed, and our business and operating results could be adversely affected. 20 Table of Contents Our business depends substantially on the continuing efforts of our executive officers, key employees and qualified personnel, and our business operations may be severely disrupted if we lose their services.
In the event that it is difficult for our users to access and use our services, particularly on their mobile devices, our user growth and user engagement could be harmed, and our business and operating results could be adversely affected.
In addition, given the breadth and depth of changes in data protection obligations, ongoing compliance with evolving interpretation of the GDPR and other regulatory requirements requires time and resources and a review of the technology and systems currently in use against the requirements of GDPR and other regulations.
In addition, given the breadth and depth of changes in data protection obligations, ongoing compliance with evolving interpretation of the GDPR and other regulatory requirements requires time and resources and a review of the technology and systems currently in use against the requirements of GDPR and other regulations. 26 Table of Contents We may be held liable for information or content displayed on, retrieved from or linked to our platform, or distributed to our users.
Governance Risks and Risks Related to Our Common Stock ● provisions of Delaware law and our certificate of incorporation and bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us; ● low trading volume of our common stock; ● the volatility of the trading price of our common stock; ● our policy of not paying cash dividends on our common stock; ● lessened disclosure requirements due to our status as an emerging growth company; and ● increased share-based compensation expense due to granted equity awards.
Governance Risks and Risks Related to Our Common Stock ● Pursuant to notices received by Nasdaq, our common stock may be delisted from the Nasdaq Capital Market, and if our Common Stock is delisted, such event is likely to reduce the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing; ● provisions of Delaware law and our certificate of incorporation and bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us; ● low trading volume of our common stock; ● the volatility of the trading price of our common stock; ● our policy of not paying cash dividends on our common stock; ● lessened disclosure requirements due to our status as an smaller reporting company; and ● ineffective internal controls could have a material adverse effect on our business, financial conditions, and results of operations; and ● increased share-based compensation expense due to granted equity awards.
As of March 14, 2024, we had the following shares of Preferred Stock outstanding: (i) 440 shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred”); (ii) 463 shares of Series A-2 Convertible Preferred Stock, par value $0.001 per share (the “Series A-2 Preferred”); (iii) 315 shares of Series A-3 Convertible Preferred Stock, par value $0.001 per share (the “Series A-3 Preferred”); (iv) 476 shares of Series A-4 Convertible Preferred Stock, par value $0.001 per share (the “Series A-4 Preferred”); (v) 780 shares of Series A-5 Convertible Preferred Stock, par value $0.001 per share (the “Series A-5 Preferred”), (vi) 4,491 shares of Series AA Convertible Preferred Stock, par value $0.001 per share (the “Series AA Preferred”); (vii) zero shares of Series AA-2 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-2 Preferred”); (viii) 391 shares of Series AA-3 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-3 Preferred”); (ix) 515 shares of Series AA-4 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-4 Preferred”); (x) 550 shares of Series AA-5 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-5 Preferred”), (xi) 8,423 shares of Series AAA Convertible Preferred Stock, par value $0.001 per share (the “Series AAA Preferred”); and (xii) 5,234 shares of Series AAA-2 Convertible Preferred Stock, par value $0.001 per share (the “Series AAA-2 Preferred”); and, collectively with the Series A Preferred, Series A-2 Preferred, Series A-3 Preferred, Series A-4 Preferred, Series A-5 Preferred, Series AA Preferred, Series AA-2 Preferred, Series AA-3 Preferred, Series AA-4 Preferred, Series AA-5 Preferred, Series AAA Preferred, and Series AAA-2 Preferred (the “Preferred Stock”).
As of March 28, 2025, we had the following shares of Preferred Stock outstanding: (i) zero shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred”); (ii) zero shares of Series A-2 Convertible Preferred Stock, par value $0.001 per share (the “Series A-2 Preferred”); (iii) zero shares of Series A-3 Convertible Preferred Stock, par value $0.001 per share (the “Series A-3 Preferred”); (iv) zero shares of Series A-4 Convertible Preferred Stock, par value $0.001 per share (the “Series A-4 Preferred”); (v) zero shares of Series A-5 Convertible Preferred Stock, par value $0.001 per share (the “Series A-5 Preferred”), (vi) 3,699 shares of Series AA Convertible Preferred Stock, par value $0.001 per share (the “Series AA Preferred”); (vii) zero shares of Series AA-2 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-2 Preferred”); (viii) 25 shares of Series AA-3 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-3 Preferred”); (ix) 500 shares of Series AA-4 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-4 Preferred”); (x) 50 shares of Series AA-5 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-5 Preferred”), (xi) 7,345 shares of Series AAA Convertible Preferred Stock, par value $0.001 per share (the “Series AAA Preferred”); and (xii) 3,148 shares of Series AAA-2 Convertible Preferred Stock, par value $0.001 per share (the “Series AAA-2 Preferred”); (xiii) 365 shares of Series AAA Junior Convertible Preferred Stock, par value $.001 per share (the “Series AAA JR Preferred”); (xiv) 441 shares of Series AAA-2 Junior Convertible Preferred Stock, par value $.001 per share (the “Series AAA-2 JR Preferred”); (xv) 697 shares of Series AAA-3 Junior Convertible Preferred Stock, par value $.001 per share (the “Series AAA-3 JR Preferred”); and (xvi) 399 shares of Series AAA-4 Junior Convertible Preferred Stock, par value $0.001 per share (the “Series AAA-4 JR Preferred”, and, collectively with the Series A Preferred, Series A-2 Preferred, Series A-3 Preferred, Series A-4 Preferred, Series A-5 Preferred, Series AA Preferred, Series AA-2 Preferred, Series AA-3 Preferred, Series AA-4 Preferred, Series AA-5 Preferred, Series AAA Preferred, Series AAA-2 Preferred, Series AAA JR Preferred, Series AAA-2 JR Preferred, Series AAA-3 JR Preferred, and Series AAA-4 JR Preferred (the “Preferred Stock”).
If we are unable to successfully grow our user base, compete effectively with other platforms, and further monetize our platform, our business will suffer. We have made, and are continuing to make, investments to enable our developers to design and build compelling content and deliver it to our users on our platform.
We have made, and are continuing to make, investments to enable our developers to design and build compelling content and deliver it to our users on our platform.
We may not be able to successfully integrate our acquisitions and we may incur significant costs to integrate and support the companies we acquire.
Any of these factors may adversely affect our financial condition or results of operations. 23 Table of Contents We may not be able to successfully integrate our acquisitions and we may incur significant costs to integrate and support the companies we acquire.
We may be held liable for information or content displayed on, retrieved from or linked to our platform, or distributed to our users. Our interactive live streaming platform enables users and creators to exchange information and engage in various other online activities.
Our interactive live streaming platform enables users and creators to exchange information and engage in various other online activities.
If our KPI growth rate slows or becomes stagnant, or we have a decline in KPIs, or we fail to effectively monetize users in certain geographic markets, our financial performance will increasingly depend on our ability to elevate user activity or increase the monetization of our users. 19 Table of Contents Our business plan assumes that the demand for interactive entertainment offerings, specifically, the adoption of a metaverse with users interacting together by playing, communicating, connecting, making friends, learning, or simply hanging out, all in 3D environments, will increase for the foreseeable future.
Our business plan assumes that the demand for interactive entertainment offerings, specifically, the adoption of a metaverse with users interacting together by playing, communicating, connecting, making friends, learning, or simply hanging out, all in 3D environments, will increase for the foreseeable future.
To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for 10 consecutive business days (the “Minimum Bid Price Requirement”) during the 180-day period from October 4, 2022 to April 3, 2023.
The Company intends to monitor the closing bid price of its Common Stock. To regain compliance with Nasdaq Listing Rule 5550(a)(2), the closing bid price of the Company's Common Stock must be at least $1.00 per share for 10 consecutive business days during the 180-day period from January 2, 2025 to July 1, 2025.
For example, our revenue for the quarters ending September 30, 2023 and December 31, 2023 represented approximately 29% and 38% of our bookings for Fiscal Year 2023, respectively. We may also experience fluctuations due to factors that may be outside of our control that affect user, developer, or creator engagement with our Platform.
We may also experience fluctuations due to factors that may be outside of our control that affect user, developer, or creator engagement with our Platform.
The conversion of the outstanding shares of our Series A Stock into common stock would be substantially dilutive to existing stockholders.
The conversion of the outstanding shares of our Preferred Stock into common stock would be substantially dilutive to existing stockholders. Any dilution or potential dilution may cause our stockholders to sell their shares, which may contribute to a downward movement in the stock price of our common stock.
Similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings, and have certain other decreased disclosure obligations in their SEC filings, including, among other things, being required to provide only two years of audited financial statements in annual reports.
“Smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.
If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates. 29 Table of Contents Since we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, stock price appreciation, if any, will be your sole source of gain.
Since we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, stock price appreciation, if any, will be your sole source of gain. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business.
We regard our registered trademark and pending trademarks, service marks, pending patents, domain names, trade secrets, proprietary technologies and similar intellectual property as critical to our success. We rely on trademark and patent law, trade secret protection and confidentiality and license agreements with our employees and others to protect our proprietary rights.
We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position. We regard our registered trademark and pending trademarks, service marks, pending patents, domain names, trade secrets, proprietary technologies and similar intellectual property as critical to our success.
Although we believe the assumptions we used in testing for impairment are reasonable, significant changes in any one of our assumptions could produce a significantly different result. General Risk Factors Catastrophic events may disrupt our business.
Although we believe the assumptions we used in testing for impairment are reasonable, significant changes in any one of our assumptions could produce a significantly different result. Risks Related to Artificial Intelligence and Machine Learning Integration of artificial intelligence into our operations could result in reputational or competitive harm, legal liability, and other adverse effects on our business.
To the extent we take advantage of some or all of the reduced reporting requirements applicable to emerging growth companies or smaller reporting companies, an investment in our company may be less attractive to investors. 31 Table of Contents We have identified a material weakness in our internal controls over financial reporting as of December 31, 2023, related solely to the accounting for the noncash value of the effect of a down round feature that was triggered on preferred stock during the three months ended September 30, 2023.
To the extent we take advantage of some or all of the reduced reporting requirements applicable to smaller reporting companies, an investment in our company may be less attractive to investors. Ineffective internal controls could have a material adverse effect on our business, financial conditions, and results of operations .
As a result, the holders of Preferred Stock may in the future have the ability to influence the outcome of certain matters affecting our governance and capitalization.
As a result, the holders of Preferred Stock may in the future have the ability to influence the outcome of certain matters affecting our governance and capitalization. 33 Table of Contents As of March 28, 2025, there were approximately 16,669 shares of our Preferred Stock outstanding, which are convertible without payment of additional consideration, into approximately 10.0 million shares of our common stock, subject to certain ownership limitations.
General Risk Factors ● actual or threatened epidemics, pandemics, outbreaks, or other public health crises; ● changes in the state of the U.S. economy and a return to volatile or recessionary conditions; and ● risks generally associated with the entertainment industry.
Risks Related to Artificial Intelligence and Machine Learning ● Integration of artificial intelligence (“AI”) into our operations could adversely affect our business; ● issues in the use of AI or machine learning (“ML”) in our operations may result in reputational harm or liability; ● we currently do not incorporate AI or ML into our products, although some of our competitors do, which could adversely affect our business and profitability; and ● issues relating to the use of AI and/or ML may result in increased regulation and costs to comply with such regulations. 10 Table of Contents General Risk Factors ● actual or threatened epidemics, pandemics, outbreaks, or other public health crises; ● changes in the state of the U.S. economy and a return to volatile or recessionary conditions; and ● risks generally associated with the entertainment industry.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends.
In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, appreciation, if any, in the market price of our common stock will be your sole source of gain for the foreseeable future.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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For more information on our cybersecurity risks and their potential impact to our business, see Item 1A, “ Risk Factors-Risks related to Our Business and Industry - We may experience security breaches and cyber threats ” and Item 1A, “ Risk Factors-Risks related to Our Business and Industry - Our business could be adversely affected if our data privacy and security practices are not adequate, or perceived as being inadequate, to prevent data breaches, or by the application of data privacy and security laws generally .” Governance Our board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the “ Committee ”) oversight of cybersecurity and other information technology risks.
For more information on our cybersecurity risks and their potential impact to our business, see Item 1A , “ Risk Factors-Risks related to Our Business and Industry - We may experience security breaches and cyber threats ” and Item 1A, “ Risk Factors-Risks related to Our Business and Industry - Our business could be adversely affected if our data privacy and security practices are not adequate, or perceived as being inadequate, to prevent data breaches, or by the application of data privacy and security laws generally .” 37 Table of Contents Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the “ Committee ”) oversight of cybersecurity and other information technology risks.
In addition to the IT Department, the VP of Devops may call upon other business and legal stakeholders across our company to help manage cybersecurity threats and incidents. Our Audit Committee is responsible for oversight of our programs, policies, procedures, and risk management activities related to information security and data protection.
The Ops Engineer may call upon other business and legal stakeholders across our company to help manage cybersecurity threats and incidents. Our Audit Committee is responsible for oversight of our programs, policies, procedures, and risk management activities related to information security and data protection.
The Audit Committee meets periodically with the Chief Platform Officer to discuss threats, risks, and ongoing efforts to enhance cyber resiliency, as well as changes to the broader cybersecurity landscape. Our Board also periodically participates in presentations on cybersecurity and information technology from internal leadership.
The Audit Committee meets periodically with our Corporate Counsel and executive management to discuss threats, risks, and ongoing efforts to enhance cyber resiliency, as well as changes to the broader cybersecurity landscape. Our Board periodically participates in presentations on cybersecurity and information technology from internal leadership.
Depending on its nature and scope, a cybersecurity threat may be managed within our IT Department, responsible for day-to-day management of cybersecurity risks, and escalated to our executive management team, the Board, and the Audit Committee, as appropriate. 34 Table of Contents We have not historically been materially impacted by risks from cybersecurity threats and, as of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity risks that are reasonably likely to materially affect our business.
We have not historically been materially impacted by risks from cybersecurity threats and, as of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity risks that are reasonably likely to materially affect our business.
This approach ensures that cybersecurity risks are appropriately prioritized and managed throughout the organization. Our Chief Platform Officer has 25 years of experience in information technology, including cybersecurity, and is supplemented by our VP of Devops, who also has over 15 years of experience in audit, compliance, and cybersecurity, and maintains IT and Ops professional certifications.
This approach ensures that cybersecurity risks are appropriately prioritized and managed throughout the organization. Our Corporate Counsel has 20 years of experience in information technology, including cybersecurity, audit, compliance, and cybersecurity. In addition, we have an Enterprise IT Operations Engineer (“Ops Engineer”) with requisite knowledge and experience in information technology and cybersecurity, and maintains IT and Ops professional certifications.
Added
Depending on its nature and scope, a cybersecurity threat may be managed within our IT Department, responsible for day-to-day management of cybersecurity risks, and escalated to our executive management team, the Board, and the Audit Committee, as appropriate.

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES As of December 31, 2023 we maintain approximately 3,200 square feet of office space, 1,650 square feet of which is on a month-to-month basis, and 1,550 square feet of which is subject to a two-year lease, commencing on August 1, 2021, at a combined rate of approximately $12,000 per month.
ITEM 2. PROPERTIES As of December 31, 2024 we maintain approximately 1,550 square feet of office space which is leased on a month-to-month basis at a rate of approximately $7,000 per month.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Any future determination to pay cash dividends will be at the discretion of our Board and will depend upon our results of operations, financial condition, capital requirements, general business conditions, and other factors that our board of directors deems relevant.
Any future determination to pay cash dividends will be at the discretion of our Board and will depend upon our results of operations, financial condition, capital requirements, general business conditions, and other factors that our Board deems relevant.
Recent Sales of Unregistered Equity Securities No unregistered securities were issued during the years ended December 31, 2023 and 2022 that were not previously reported. Performance Graph As a smaller reporting company, we are not required to provide the performance graph required by Item 201(e) of Regulation S-K.
Recent Sales of Unregistered Equity Securities No unregistered securities were issued during the years ended December 31, 2024 and 2023 that were not previously reported. Performance Graph As a smaller reporting company, we are not required to provide the performance graph required by Item 201(e) of Regulation S-K.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is listed on the Nasdaq Capital Market under the ticker symbol “SLE.” As of April 1, 2024, we had 274 holders of record of our common stock based upon the records of our transfer agent, which do not include beneficial owners of common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is listed on the Nasdaq Capital Market under the ticker symbol “SLE.” As of March 31, 2025, we had 365 holders of record of our common stock based upon the records of our transfer agent, which do not include beneficial owners of common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.
Removed
Issuance of Common Stock as Dividends During the fourth quarter of 2023, the Company paid dividends to the holders of the Company’s Series A Convertible Preferred Stock, in the form of 232,981 shares of common stock, as further described in Note 7.
Added
Issuance of Common Stock as Dividends During the years ended December 31, 2024 and 2023, we paid common stock dividends on outstanding preferred stock as disclosed at Note 7 to the financial statements contained elsewhere herein.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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In connection with the Facility, the Company agreed to, among other things, (i) pay a finance fee equal to 2% of the Maximum Amount, payable in 24 equal monthly installments on the last day of each month of the Term until paid in full, (ii) pay a servicing fee equal to 0.30% multiplied by the actual average daily amount of Advances outstanding at the time of determination (the “Outstanding Amount”) for the applicable month, on the last day of each calendar month during the Term (or so long as any obligations arising under the SLR Agreement are outstanding); (iii) be charged a monthly financing fee (the “Financing Fee”), due upon receipt of full payment of a Financed Account by Lender, equal to 1/12 of (a) the prime rate plus 2% (the “Facility Rate”), multiplied by (b) the amount of the Outstanding Amount; and (iv) utilize the facility such that the monthly average aggregate Advances outstanding is at $400,000 (the “Minimum Utilization”).
In connection with the Facility, the Company agreed to, among other things, (i) pay a finance fee equal to 2% of the Maximum Amount, payable in 24 equal monthly installments on the last day of each month of the SLR Term until paid in full, (ii) pay a servicing fee equal to 0.30% multiplied by the actual average daily amount of Advances outstanding at the time of determination (the “Outstanding Amount”) for the applicable month, on the last day of each calendar month during the SLR Term (or so long as any obligations arising under the SLR Agreement are outstanding); (iii) be charged a monthly financing fee (the “Financing Fee”), due upon receipt of full payment of a Financed Account by Lender, equal to 1/12 of (a) the prime rate plus 2% (the “Facility Rate”), multiplied by (b) the amount of the Outstanding Amount; and (iv) utilize the facility such that the monthly average aggregate Advances outstanding is at $400,000 (the “Minimum Utilization”).
Additionally, pursuant to the Purchase Agreement, the Company entered into employment agreements with two former key Melon employees (“Key Melon Employees”), pursuant to which the Key Melon Employees were granted inducement awards consisting of restricted stock unit awards (“RSUs”) to acquire an aggregate of 103,780 shares of its common stock as described at Note 5.
Additionally, pursuant to the Melon Purchase Agreement, the Company entered into employment agreements with two former key Melon employees (“Key Melon Employees”), pursuant to which the Key Melon Employees were granted inducement awards consisting of restricted stock unit awards (“RSUs”) to acquire an aggregate of 103,780 shares of its common stock as described at Note 5.
On March 12, 2024, the Company and the Note Holders (the “Parties”) executed a Mutual General Release and Settlement Agreement (the “Settlement Agreement”) settling all claims between the Parties with respect to the SPA. In consideration for the Settlement Agreement, the Company agreed to issue the Parties an aggregate amount of 500,000 shares of common stock (the “Settlement Payment”).
On March 12, 2024, the Company and the Note Holders (the “Parties”) executed a Mutual General Release and Settlement Agreement (the “Settlement Agreement”) settling all claims between the Parties with respect to the SPA. In consideration for the Settlement Agreement, the Company agreed to issue an aggregate amount of 500,000 shares of common stock (the “Settlement Payment”).
The Melon Contingent Consideration is payable in the form of cash and common stock, with $600,000 of the aggregate Melon Contingent Consideration being payable in the form of cash, and $1,750,000 payable in the form of common stock, valued at the greater of (a) the Closing Share Price, and (b) the VWAP for the five trading days immediately preceding the end of each respective Earnout Period.
The Contingent Consideration is payable in the form of cash and common stock, with $600,000 of the aggregate Melon Contingent Consideration being payable in the form of cash, and $1,750,000 payable in the form of common stock, valued at the greater of (a) the Melon Closing Share Price, and (b) the VWAP for the five trading days immediately preceding the end of each respective Earnout Period.
Loss on intangible asset disposal In June 2023 , the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere.
Loss on intangible asset disposal In June 2023 , the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere.
The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
Factors we consider important, which could trigger an impairment review, include significant underperformance relative to expected historical or projected future operating results, and significant changes in the manner of our use of the acquired assets or the strategy in the context of our overall business.
Factors we consider important, which could trigger an impairment review, include significant underperformance relative to expected historical or projected future operating results, and significant changes in the manner of our use of the acquired assets or the strategy in the context of our overall business.
At the Closing, the Company paid an aggregate total of $900,000 to Melon, of which $150,000 was paid in cash, and the remaining $750,000 was paid in the form of shares of the Company’s common stock, valued at the Closing Share Price, as described above. Capitalized Internal Use Software Costs .
At the Closing, the Company paid an aggregate total of $900,000 to Melon, of which $150,000 was paid in cash, and the remaining $750,000 was paid in the form of shares of the Company’s common stock, valued at the Melon Closing Share Price, as described above. Capitalized Internal Use Software Costs .
On August 23, 2023, the Company issued the Firm Securities and closed the Offering at a public price of $2.60 per share, and $2.58 per share underlying each Pre-Funded Warrant, for net proceeds to the Company of approximately $1.8 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.
On August 23, 2023, the Company issued the Firm Securities and closed the Offering at a public price of $2.60 per share, and $2.58 per share underlying each Pre-Funded Warrant, for net proceeds to the Company of approximately $1.8 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.
In the fourth quarter of Fiscal Year 2023 we recorded a non-cash impairment charge related to our partner relationship related intangible assets, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets originally acquired in connection with the acquisition of Mobcrush, Inc. in June 2021.
In the fourth quarter of Fiscal Year 2023 we recorded a non-cash impairment charge related to our partner relationship related intangible assets, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets originally acquired in connection with the acquisition of Mobcrush, Inc. in June 2021.
The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
Factors we consider important, which could trigger an impairment review, include significant underperformance relative to expected historical or projected future operating results, and significant changes in the manner of our use of the acquired assets or the strategy in the context of our overall business.
Factors we consider important, which could trigger an impairment review, include significant underperformance relative to expected historical or projected future operating results, and significant changes in the manner of our use of the acquired assets or the strategy in the context of our overall business.
The fair value was determined using a discounted cash flow approach, with cash flow projections over the remaining life of the intangible assets of five years and a discount rate of 16% based on the Company’s estimated cost of capital.
The fair value was determined using a discounted cash flow approach, with cash flow projections over the remaining life of the intangible assets of five years and a discount rate of 16% based on the Company’s estimated cost of capital.
Pursuant to the SLR Agreement, Lender may, from time to time and in its sole discretion, make certain cash advances to the Company (each an “Advance”, and collectively, “Advances”), against the face amounts of certain uncollected accounts receivable of the Borrowers on an account-by-account basis (each, a “Financed Account”, and collectively, the “Accounts”), at a rate of 85% multiplied by the face value of such Account (the “Advance Rate”), less any reserved funds and any other amounts due to Lender from Borrowers, up to a maximum aggregate Advance amount of $4,000,000 (the “Maximum Amount”)(the Advances on the Accounts is hereinafter, the “Facility”).
Pursuant to the SLR Agreement, Lender may, from time to time and in its sole discretion, make certain cash advances to the Company (each an “Advance”, and collectively, “Advances”), against the face amounts of certain uncollected accounts receivable of the Company on an account-by-account basis (each, a “Financed Account”, and collectively, the “Accounts”), at a rate of 85% multiplied by the face value of such Account (the “Advance Rate”), less any reserved funds and any other amounts due to Lender from the Company, up to a maximum aggregate Advance amount of $4,000,000 (the “Maximum Amount”)(the Advances on the Accounts is hereinafter, the “Facility”).
We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations or that may be available from future issuance(s) of common stock or debt financings, to fund our planned operations.
We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations.
Through the Roblox Partner Program, Super League is evolving its offering by repurposing its previous ad network to solely focus on Roblox’s Immersive Ads product to enable brands to reach audiences at scale.
Through the Roblox Partner Program, Super League is evolving its offering by repurposing its previous ad network to focus on Roblox’s Immersive Ads product to enable brands to reach audiences at scale.
Due to underperformance relative to historical and projected future operating results and a decision to deploy resources in other areas of the business, we performed an impairment analysis and determined that the sum of the expected undiscounted future cash flows resulting from the use of the assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $7.1 million, which is recorded in the accompanying consolidated statement of operations for Fiscal Year 2023.
Due to underperformance relative to historical and projected future operating results and a decision to deploy resources in other areas of the business, we performed an impairment analysis and determined that the sum of the expected undiscounted future cash flows resulting from the use of the assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $7.1 million, which is recorded in the accompanying consolidated statements of operations for Fiscal Year 2023.
Due to underperformance relative to historical and projected future operating results and a decision to deploy resources in other areas of the business, we performed an impairment analysis and determined that the sum of the expected undiscounted future cash flows resulting from the use of the assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $7.1 million, which is recorded in the accompanying consolidated statement of operations for Fiscal Year 2023.
Due to underperformance relative to historical and projected future operating results and a decision to deploy resources in other areas of the business, we performed an impairment analysis and determined that the sum of the expected undiscounted future cash flows resulting from the use of the assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $7.1 million, which is recorded in the accompanying consolidated statements of operations for Fiscal Year 2023.
At the Closing, the Company paid an aggregate total of $900,000 to Melon (the “Closing Consideration”), of which $150,000 was paid in cash, and the remaining $750,000 was paid in the form of shares of the Company’s common stock (with a closing date fair value of $722,000), valued at $9.64 (the “Closing Share Price”), the volume weighted average price (“VWAP”) of the Company’s common stock for the five trading days immediately preceding the Melon Closing Date, as quoted on the Nasdaq Capital Market.
At the Closing, the Company paid an aggregate total of $900,000 to Melon (the “Melon Closing Consideration”), of which $150,000 was paid in cash, and the remaining $750,000 was paid in the form of shares of the Company’s common stock (with a closing date fair value of $722,000), valued at $9.64 (the “Melon Closing Share Price”), the volume weighted average price (“VWAP”) of the Company’s common stock for the five trading days immediately preceding the Melon Closing Date, as quoted on the Nasdaq Capital Market.
Sale of Minehut On February 29, 2024, the Company sold its Minehut business unit (“Minehut”) to GamerSafer, Inc., a Delaware corporation (“GamerSafer”), in a transaction approved by the Board of Directors of the Company.
Sale of Minehut On February 29, 2024, the Company sold its Minehut business unit (“Minehut”) to GamerSafer, Inc., a Delaware corporation (“GamerSafer”), in a transaction approved by the Board.
In connection with the Series A Offerings, Series AA Offerings, and Series AAA Offerings (collectively, the “Preferred Offerings”), the Company filed Certificates of Designation of Preferences, Rights and Limitations of the respective series stock with the State of Delaware.
In connection with the Series A Offerings, Series AA Offerings, Series AAA Offerings and Series AAA Junior Offerings (collectively, the “Preferred Offerings”), the Company filed Certificates of Designation of Preferences, Rights and Limitations of the respective series stock with the State of Delaware.
Results of Operations for the Fiscal Years Ended December 31, 2023 and 2022 We derived the financial data as of and for the Fiscal Years 2023 and 2022, set forth below, from our audited consolidated financial statements included elsewhere herein, and should be read in conjunction with those audited consolidated financial statements and related notes thereto, as well as the information found under this section.
Results of Operations for the Fiscal Years Ended December 31, 2024 and 2023 We derived the financial data as of and for the Fiscal Years 2024 and 2023, set forth below, from our audited consolidated financial statements included elsewhere herein, and should be read in conjunction with those audited consolidated financial statements and related notes thereto, as well as the information found under this section.
Contractual Obligations and Off-Balance Sheet Commitments and Arrangements As of December 31, 2023, other than as described herein, we had no significant commitments for capital expenditures, nor do we have any committed lines of credit, other committed funding or long-term debt, and no guarantees.
Contractual Obligations and Off-Balance Sheet Commitments and Arrangements As of December 31, 2024, other than as described herein, we had no significant commitments for capital expenditures, nor do we have any committed lines of credit, other committed funding or long-term debt, and no guarantees.
On May 4, 2023 (the “Melon Closing Date”), we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Melon, Inc., a Delaware corporation (“Melon”), pursuant to which the Company acquired substantially all of the assets of Melon (the “Melon Assets”) (the “Melon Acquisition”).
Acquisition of Melon, Inc. On May 4, 2023 (the “Melon Closing Date”), we entered into an Asset Purchase Agreement (the “Melon Purchase Agreement”) with Melon, Inc., a Delaware corporation (“Melon”), pursuant to which the Company acquired substantially all of the assets of Melon (the “Melon Assets”) (the “Melon Acquisition”).
In exchange for the cancelled options and warrants, certain executives and employees were granted options to purchase an aggregate of 305,000 shares of common stock under the 2014 Plan, at an exercise price of $9.80 (the closing price of the Company’s common stock as listed on the Nasdaq Capital Market on April 28, 2023, the last trading day before the approval of the awards), with one-third of the options vesting on the April 30, 2023, the grant date, with the remainder vesting monthly over the thirty-six month period thereafter, subject to continued service (“Executive Grant Modifications”).
In exchange for the cancelled options and warrants, certain executives and employees were granted options to purchase an aggregate of 305,000 shares of common stock under the 2014 Plan, at an exercise price of $9.80 (the closing price of the Company’s common stock as listed on the Nasdaq Capital Market on April 28, 2023, the last trading day before the approval of the awards), with one-third of the options vesting on the April 30, 2023, the grant date, with the remainder vesting monthly over the thirty-six month period thereafter, subject to continued service (“Executive Grant Modifications”) (collectively, “Modified Executive Grants”).
Upon receipt of any Advance, Borrowers will have assigned all of its rights in such receivables and all proceeds thereof. The proceeds received from the Facility are, and will be, used to fund general working capital needs.
Upon receipt of any Advance, the Company will have assigned all of its rights in such receivables and all proceeds thereof. The proceeds received from the Facility are, and will be, used to fund general working capital needs.
Given the existence of multiple classes of voting stock for the Company, as described herein, the Fundamental transaction provisions in the warrant agreements could result in a 50% or more change in ownership of outstanding common stock, without a 50% change in voting interests.
Given the existence of multiple classes of voting stock for the Company, as described above, the Fundamental Transaction provisions in the warrant agreements could result in a 50% or more change in ownership of outstanding common stock, without a 50% change in voting interests.
Increase in Authorized Common Stock On May 30, 2023, the Company filed a Certificate of Amendment to its Charter (the “May Amendment”), increasing the number of authorized shares of common stock from 100,000,000 to 400,000,000.
Increase in Authorized Common Stock On May 30, 2023, the Company filed a certificate of amendment to its Charter increasing the number of authorized shares of common stock from 100,000,000 to 400,000,000.
In the event that Borrower’s monthly utilization is less than the applicable Minimum Utilization for any month, the Financing Fee for such month shall be calculated as if the applicable Minimum Utilization has been satisfied.
In the event that the Company’s monthly utilization is less than the applicable Minimum Utilization for any month, the Financing Fee for such month shall be calculated as if the applicable Minimum Utilization has been satisfied.
The consummation of the Melon Acquisition (the “Closing”) occurred simultaneously with the execution of the Purchase Agreement. Melon is a development studio building innovative virtual worlds in partnership with powerful consumer brands across music, film, TV, sports, fashion and youth culture.
The consummation of the Melon Acquisition (the “Melon Closing”) occurred simultaneously with the execution of the Melon Purchase Agreement. Melon is a development studio building innovative virtual worlds in partnership with powerful consumer brands across music, film, TV, sports, fashion and youth culture.
Pursuant to the Asset Purchase Agreement entered into by and between GamerSafer and the Company on February 26, 2024 (the “GS Agreement”), the Company will receive $1,000,000 of purchase consideration for Minehut, which amount will be paid by GamerSafer in revenue and royalty sharing over a period of two years, as described in the GS Agreement.
Pursuant to the Asset Purchase Agreement entered into by and between GamerSafer and the Company on February 26, 2024 (the “GS Agreement”), the Company will receive $1.0 million of purchase consideration for the sale of Minehut, which amount will be paid by GamerSafer in revenue and royalty sharing over a period of two years, as described in the GS Agreement.
Engineering, technology and development related operating expenses include the costs described below, incurred in connection with our audience acquisition and viewership expansion activities.
Engineering, technology and development related operating expense include the costs described below, incurred in connection with our audience acquisition and viewership expansion activities.
In addition, the Board approved the cancellation of certain warrants to purchase an aggregate of 26,100 shares of the Company’s common stock previously granted to certain executives and employees, with an average exercise price of approximately $199.80 (“Executive Grant Modification”).
In addition, the Board approved the cancellation of certain warrants to purchase an aggregate of 26,100 shares of the Company’s common stock previously granted to certain executives and employees, with an average exercise price of approximately $199.80.
Pursuant to the terms and subject to the conditions of the Purchase Agreement, up to an aggregate of $2,350,000 (the “Contingent Consideration”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the Closing until December 31, 2023 (the “First Earnout Period”) in the amount of $1,000,000, and for the year ending December 31, 2024 (the “Second Earnout Period) in the amount of $1,350,000 (the “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”).
Pursuant to the terms and subject to the conditions of the Melon Purchase Agreement, up to an aggregate of $2,350,000 (the “Melon Contingent Consideration”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the Closing until December 31, 2023 (the “Melon First Earnout Period”) in the amount of $1,000,000, and for the year ending December 31, 2024 (the “Melon Second Earnout Period) in the amount of $1,350,000 (the “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”).
Excluding the noncash impairment charges, the decrease in total operating expense reflects decreases in cloud services and other technology platform costs and decreases in personnel, marketing and other corporate costs, resulting from ongoing cost reduction and optimization activities.
Excluding the noncash impairment charges and net contingent consideration charges, the decrease in total operating expense reflects decreases in cloud services and other technology platform costs and decreases in personnel, marketing and other corporate costs, resulting from ongoing cost reduction and optimization activities.
Due to underperformance relative to historical and projected future operating results and a decision to deploy resources in other areas of the business, we performed an impairment analysis and determined that the sum of the expected undiscounted future cash flows resulting from the use of the assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $7.1 million, which is recorded in the accompanying consolidated statement of operations for the year ended December 31, 2023.
Due to underperformance relative to historical and projected future operating results and a decision to deploy resources in other areas of the business, we performed an impairment analysis and determined that the sum of the expected undiscounted future cash flows resulting from the use of the assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $7.1 million, which is recorded in the accompanying consolidated statements of operations for Fiscal Year 2023.
The Name Change and the Reverse Split were approved by the Company’s Board of Directors (the “Board”) on July 5, 2023, and approved by the stockholders of the Company on September 7, 2023. Refer to Note 7 for additional information regarding the Reverse Split.
The Name Change and the Reverse Split were approved by the Board on July 5, 2023, and approved by the stockholders of the Company on September 7, 2023. Refer to Note 7 for additional information regarding the Reverse Split.
Total incremental compensation cost related to the Employee Grant Modifications totaled $449,000, $101,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $348,000 related to unvested awards which is recognized prospectively over the remaining service period of 4 years.
Total incremental compensation cost related to the Modified Employee Grants totaled $449,000, $101,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $348,000 related to unvested awards which is recognized prospectively over the remaining service period of 4 years.
The calculation of net loss per share for Fiscal Year 2023 included noncash common stock dividend and deemed dividend related direct charges to accumulated deficit totaling $7.9 million, as described at Note 2.
The calculation of net loss per share for Fiscal Year 2024 and 2023 included noncash common stock dividend and deemed dividend (Fiscal Year 2023 only) related direct charges to accumulated deficit totaling $4.4 million and $7.9 million, respectively, as described at Note 2.
As such, the Placement Agent Warrants are not eligible for the scope exception under ASC 815, “Derivatives and Hedging,” (“ASC 815”), and therefore, the fair value of the Placement Agent Warrants are recorded as a liability at fair value on the consolidated balance sheet and re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.
As such, the Placement Agent Warrants are not eligible for the scope exception under ASC 815, and therefore, the fair value of the Placement Agent Warrants are recorded as a liability on the consolidated balance sheet and re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.
Engineering, Technology and Development Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community.
Engineering, Technology and Development For the periods presented, components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community.
For Fiscal Years 2023 and 2022, net cash used in operating activities totaled $15.5 million and $19.8 million, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings.
For Fiscal Years 2024 and 2023, net cash used in operating activities totaled $11.5 million and $15.5 million, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings.
Excluding the impact of the noncash common stock dividend and deemed dividend related direct charges to accumulated deficit, net loss per share for Fiscal Year 2023 was $(10.84).
Excluding the impact of the noncash common stock dividend and deemed dividend related direct charges to accumulated deficit, net loss per share for Fiscal Year 2024 and 2023 was $(1.86) and $(10.84), respectively.
As a result, the Company recorded a disposal of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000, which is included in “Loss on intangible asset disposal” in the accompanying consolidated statement of operations for the year ended December 31, 2023. Intangible Asset Impairment Impairment Charges.
As a result, the Company recorded a disposal of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000, which is included in “Loss on intangible asset disposal” in the accompanying consolidated statements of operations for Fiscal Year 2023. Intangible Asset Impairment Impairment Charges.
The SLR Agreement is effective for 24 months from the Effective Date (the “Term”), automatically extends for successive Terms (each, a “Renewal Term”), and the Borrowers’ are obligated to pay the Lender an early termination fee in the event the SLR Agreement is terminated under certain circumstances prior to the end of any Term or Renewal Term, as more specifically set forth in the SLR Agreement.
The SLR Agreement is effective for 24 months from the SLR Effective Date (the “SLR Term”), automatically extends for successive SLR Terms (each, an “SLR Renewal Term”), and the Company is obligated to pay the Lender an early termination fee in the event the SLR Agreement is terminated under certain circumstances prior to the end of any SLR Term or SLR Renewal Term, as more specifically set forth in the SLR Agreement.
Liquidity and Capital Resources General Cash and cash equivalents totaled approximately $7.6 million and $2.5 million at December 31, 2023 and 2022, respectively. The change in cash and cash equivalents for the periods presented reflects the impact of operating, investing and financing cash flow related activities, as described below.
Liquidity and Capital Resources General Cash and cash equivalents totaled approximately $1.3 million and $7.6 million at December 31, 2024 and 2023, respectively. The change in cash and cash equivalents for the periods presented reflects the impact of operating, investing and financing cash flow related activities, as described below.
Total incremental compensation cost related to the PSU Modification totaled $540,000 which is recognized over the remaining implied service period, ranging from .69 years to 1.5 years, calculated in connection with the Monte Carlo simulation model used to determine the fair value of the PSUs immediately before and after the modification.
Total incremental compensation cost related to the Modified PSUs totaled $540,000 which is recognized prospectively over the implied service period, ranging from .69 years to 1.5 years, calculated in connection with the Monte Carlo simulation model used to determine the fair value of the equity awards immediately before and after the modifications.
The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the lingering effects of COVID-19 and threats of other outbreaks, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate.
The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the threat of other outbreaks or pandemics, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate.
As a result of the disposal of the Bannerfy intangible assets, the Company fully amortized the related remaining net deferred tax liability, resulting in a $313,000 tax benefit reflected in the consolidated statement of operations for the year ended December 31, 2023.
As a result of the disposal of the Bannerfy intangible assets, the Company fully amortized the related remaining net deferred tax liability, resulting in a $313,000 tax benefit reflected in the consolidated statements of operations for Fiscal Year 2023.
As a result, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2.3 million, which is included in “Loss on intangible asset disposal” in the accompanying consolidated statement of operations for the year ended December 31, 2023. Impairment of Goodwill.
As a result, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2.3 million, which is included in “Loss on intangible asset disposal” in the accompanying consolidated statements of operations for Fiscal Year 2023.
Excluding noncash stock compensation expense, amortization expense, intangible asset impairment charges, legal settlement charges and mark to market related fair value adjustments, operating expense for Fiscal Year 2023 was $25.1 million, reflecting a 25% reduction in operating expense, compared to the comparable prior year period. 37 Table of Contents Net loss for Fiscal Year 2023, which includes the impact of significant mark to market related credits as described below, and noncash stock compensation, amortization and intangible asset impairment charges, as summarized below, was $30.3 million or $(13.67) per share, compared to a net loss of $85.5 million, or $(45.95) per share, in the comparable prior year period.
Excluding noncash stock compensation expense, amortization expense, intangible asset impairment charges, legal settlement charges and mark to market related fair value adjustments, operating expense for Fiscal Year 2024 was $18.2 million, compared to $25.1 million, reflecting a 27% reduction in operating expense, compared to Fiscal Year 2023. 41 Table of Contents Net loss for Fiscal Year 2024, which includes the impact of significant mark to market related credits as described below, and noncash stock compensation, and amortization, as summarized below, was $16.6 million or $(2.35) per share, compared to a net loss of $30.3 million, or $(13.67) per share, in the comparable prior year period.
Use of net proceeds from the Series AAA Offerings for the periods presented included working capital and general corporate purposes, including sales and marketing activities and product development.
Use of net proceeds from the Common Stock Offering for the periods presented included working capital and general corporate purposes, including sales and marketing activities and product development.
Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course and the payment of the cash portion of the Super Biz Contingent Consideration, as described above.
Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course and the payment of the cash portion of the Super Biz Contingent Consideration, as described above. 60 Table of Contents Cash Flows from Investing Activities.
The exercise of the options under these awards was contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan, which was obtained in connection with the Company’s 2023 annual shareholder meeting.
The grant and exercise of the Modified Executive Grants was contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan, which was obtained in connection with the Company’s 2023 annual shareholder meeting in September 2023.
The proceeds received from the Facility will be used to fund general working capital needs.
The proceeds received from the Agile II Note will be used to fund general working capital needs.
Other Income (Expense) Change in Fair Value of Warrant Liability The Placement Agent Warrants issued in connection with the Preferred Offerings include provisions that are triggered in the event of the occurrence of a Fundamental Transaction, as defined in the underlying warrant agreement, which contemplates the potential for certain transactions that result in a third-party acquiring more than 50% of the outstanding shares of common stock of the Company for cash or other assets.
Placement Agent Warrants The Placement Agent Warrants issued in connection with the Series A Preferred Stock, Series AA Preferred Stock and Series AAA Preferred Stock (including the Exchange), described above, include provisions that are triggered in the event of the occurrence of a Fundamental Transaction, as defined in the underlying warrant agreement, which contemplates the potential for certain transactions that result in a third-party acquiring more than 50% of the outstanding shares of common stock of the Company for cash or other assets.
The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments.
Some accounting policies have a significant impact on amounts reported in our financial statements. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments.
Equity Financings Convertible Preferred Stock Issuances ● Series AAA Convertible Preferred Financing On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 8,355 shares of newly designated Series AAA and AAA-2 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AAA Preferred,” and the individual offerings of Series AAA Preferred stock, hereinafter collectively referred to as the “Series AAA Offerings”, raising gross proceeds of $8.4 million, before fees. ● Series AA Convertible Preferred Financing On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 11,781 shares of newly designated Series AA, AA-2, AA-3, AA-4 and AA-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AA Preferred,” and the individual offerings of Series AA Preferred stock hereinafter collectively referred to as the “Series AA Offerings”, raising gross proceeds of $11.8 million, before fees. ● Series A Convertible Preferred Financing On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 12,622 shares of newly designated Series A, A-2, A-3, A-4 and A-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series A Preferred,” and the individual offerings of Series A Preferred stock, hereinafter, collectively referred to as the “Series A Offerings”, raising gross proceeds of $12.6 million, before fees.
Immediate benefits of being part of the program include access to educational resources and training, along with comprehensive tools, collateral, and insights for brand onboarding and education. 43 Table of Contents Equity Financings Convertible Preferred Stock Issuances ● Series AAA Junior Convertible Preferred Financing On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 2,857 shares of newly designated Series AAA Junior, AAA-2 Junior, AAA-3 Junior and AAA-4 Junior Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AAA Junior Preferred,” and the individual offerings of Series AAA Junior Preferred stock, hereinafter collectively referred to as the “Series AAA Junior Offerings”, raising gross proceeds of $2.9 million, before fees. ● Series AAA Convertible Preferred Financing On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 8,355 shares of newly designated Series AAA and AAA-2 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AAA Preferred,” and the individual offerings of Series AAA Preferred stock, hereinafter collectively referred to as the “Series AAA Offerings”, raising gross proceeds of $8.4 million, before fees. ● Series AA Convertible Preferred Financing On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 11,781 shares of newly designated Series AA, AA-2, AA-3, AA-4 and AA-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AA Preferred,” and the individual offerings of Series AA Preferred stock hereinafter collectively referred to as the “Series AA Offerings”, raising gross proceeds of $11.8 million, before fees. ● Series A Convertible Preferred Financing On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 12,622 shares of newly designated Series A, A-2, A-3, A-4 and A-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series A Preferred,” and the individual offerings of Series A Preferred stock, hereinafter, collectively referred to as the “Series A Offerings”, raising gross proceeds of $12.6 million, before fees.
Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course. Cash Flows from Investing Activities.
Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course.
(2) In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 49,399 shares of our common stock valued at $548,000.
In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 49,399 shares of our common stock valued at $548,000. (3) Reflected in the consolidated statements of operations for the applicable period. 53 Table of Contents Issuance of Promissory Note .
Reverse Stock Split and Name Change On September 7, 2023, the Company filed a Certificate of Amendment (the “Amendment”) to the Company’s Second Amended and Restated Certificate of Incorporation, as Amended (the “Charter”), which became effective September 11, 2023, to change the name of the Company from Super League Gaming, Inc. to Super League Enterprise, Inc.
The change to the quorum requirement was made to improve the Company’s ability to hold Meetings when called. 40 Table of Contents Reverse Stock Split and Name Change On September 7, 2023, the Company filed a certificate of amendment to the Company’s Second Amended and Restated Certificate of Incorporation, as Amended (the “Charter”), which became effective September 11, 2023, to change the name of the Company from Super League Gaming, Inc. to Super League Enterprise, Inc.
Refer to “Liquidity and Capital Resources” and Note 7 below for additional information.
Refer to Liquidity and Capital Resources, below, and Note 7 for additional information.
Cost of Revenues Cost of revenue includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including internal and third-party engineering, creative, content, broadcast and other personnel, talent and influencers, internal and third-party game developers, content capture and production services, direct marketing, cloud services, software, prizing, and revenue sharing fees.
Minehut direct to consumer related revenues for Fiscal year 2024 and 2023 totaled $140,000 and $576,000, respectively. 49 Table of Contents Cost of Revenues Cost of revenue includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including internal and third-party engineering, creative, content, broadcast and other personnel, talent and influencers, internal and third-party game developers, content capture and production services, direct marketing, cloud services, software, prizing, and revenue sharing fees.
Use of net proceeds from the Common Stock Offering for the periods presented included working capital and general corporate purposes, including sales and marketing activities and product development. 40 Table of Contents The Firm Securities were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus filed with the Securities and Exchange Commission (the “SEC”) pursuant to an effective shelf registration statement filed with the SEC on Form S-3 (File No. 333-259347) (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), as supplemented by a prospectus supplement, dated August 23, 2023, relating to the Securities (together with the accompanying base prospectus, dated September 7, 2021, the “Prospectus Supplement”), filed with the SEC pursuant to Rule 424(b) of the Securities Act on August 23, 2023.
The Firm Securities were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus filed with the Securities and Exchange Commission (the “SEC”) pursuant to an effective shelf registration statement filed with the SEC on Form S-3 (File No. 333-259347) (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), as supplemented by a prospectus supplement, dated August 23, 2023, relating to the Securities (together with the accompanying base prospectus, dated September 7, 2021, the “Prospectus Supplement”), filed with the SEC pursuant to Rule 424(b) of the Securities Act on August 23, 2023.
Cash flows from investing activities were comprised of the following for the periods presented: Fiscal Year Ended December 31, 2023 2022 Cash paid in connection with the acquisition of Melon, net $ (150,000 ) $ - Purchase of property and equipment (8,000 ) (149,000 ) Purchase of third-party game properties - (500,000 ) Capitalization of software development costs (650,000 ) (923,000 ) Acquisition of other intangible and other assets (17,000 ) (118,000 ) Net cash used in investing activities $ (825,000 ) $ (1,690,000 ) Melon Acquisition.
Cash flows from investing activities were comprised of the following for the periods presented: Fiscal Year Ended December 31, 2024 2023 Cash paid in connection with the acquisition of Melon, net $ - $ (150,000 ) Proceeds from sale of Minehut Assets 192,000 - Purchase of property and equipment (23,000 ) (8,000 ) Capitalization of software development costs (452,000 ) (650,000 ) Acquisition of other intangible and other assets - (17,000 ) Net cash used in investing activities $ (283,000 ) $ (825,000 ) Sale of Minehut Assets.
The SLR Agreement also provides for customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default. 38 Table of Contents Acquisition of Melon, Inc.
The Agile Loan Agreement also provides for standard Events of Default, customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default.
See Note 6 for additional information. 49 Table of Contents Cash Flows for the Fiscal Years Ended December 31, 2023 and 2022 The following table summarizes the change in cash and cash equivalents for the periods presented: Fiscal Year Ended December 31, 2023 2022 Net cash used in operating activities $ (15,489,000 ) $ (19,826,000 ) Net cash used in investing activities (825,000 ) (1,690,000 ) Net cash provided by financing activities 21,441,000 9,465,000 Increase (decrease) in cash and cash equivalents 5,127,000 (12,051,000 ) Cash and cash equivalents, at beginning of period 2,482,000 14,533,000 Cash and cash equivalents, at end of period $ 7,609,000 $ 2,482,000 Cash Flows from Operating Activities.
Cash Flows for the Fiscal Years Ended December 31, 2024 and 2023 The following table summarizes the change in cash and cash equivalents for the periods presented: Fiscal Year Ended December 31, 2024 2023 Net cash used in operating activities $ (11,462,000 ) $ (15,489,000 ) Net cash used in investing activities (283,000 ) (825,000 ) Net cash provided by financing activities 5,446,000 21,441,000 Increase (decrease) in cash and cash equivalents (6,299,000 ) 5,127,000 Cash and cash equivalents, at beginning of period 7,609,000 2,482,000 Cash and cash equivalents, at end of period $ 1,310,000 $ 7,609,000 Cash Flows from Operating Activities.
The Company accrued the fair value of the Settlement Payment as of December 31, 2023, resulting in a settlement expense of $760,000 which is included in general and administrative expense in the consolidated statement of operations. Contingent Consideration Super Biz Acquisition The Company hired the Founders of Super Biz Co.
The Company accrued the fair value of the Settlement Payment as of December 31, 2023, resulting in a noncash settlement charge of $760,000 which is included in general and administrative expense in the consolidated statements of operations.
In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below. 54 Table of Contents Significant judgements and estimates may be required in connection with determining the number of reporting units; determining intangible asset groupings; if, and in what period a triggering event has occurred requiring and impairment review; determining the nature timing and extent of undiscounted cash flows, including revenue forecasts and related growth rates and applicable costs; residual values if any; and discount rates and other inputs used in connection with the calculation of the fair values of applicable asset groups.
Significant judgements and estimates may be required in connection with determining the number of reporting units; determining intangible asset groupings; if, and in what period a triggering event has occurred requiring and impairment review; determining the nature timing and extent of undiscounted cash flows, including revenue forecasts and related growth rates and applicable costs; residual values if any; and discount rates and other inputs used in connection with the calculation of the fair values of applicable asset groups.
In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by FASB ASC 205-40, “Going Concern,” (“ASC 205”).
In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by FASB ASC 205-40, “Presentation of Financial Statements - Going Concern,” (“ASC 205”). Management ’ s Plans Entry into Loan Agreements Agile II.
We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements included elsewhere herein.
We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements included elsewhere herein.
Total incremental compensation cost related to the Executive Grant Modifications totaled $347,000, $112,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $235,000 related to unvested awards which is recognized prospectively over the remaining service period of 3 years. 43 Table of Contents On May 1, 2023, the Board approved the cancellation of options to purchase an aggregate of 29,224 shares of the Company’s common stock previously granted to its employees under the 2014 Plan, in exchange for newly issued options to purchase an aggregate of 63,900 shares of the Company’s common stock under the 2014 Plan, at an exercise price equal to the closing trading price on May 1, 2023, or $9.81, with a range of zero to one-third of the options vesting on the May 1, 2023, the grant date, dependent upon the tenure of the employee, and the remainder vesting monthly over the forty-eight month period thereafter, subject to continued service (“Employee Grant Modifications”).
Net noncash stock compensation expense related to the Modified Executive Grants totaled $221,000 and $573,000 for the years ended December 31, 2024 and 2023, respectively. ● On May 1, 2023, the Board approved the cancellation of options to purchase an aggregate of 29,224 shares of the Company’s common stock previously granted to its employees (68 plan participants in total) under the 2014 Plan, in exchange for newly issued options to purchase an aggregate of 63,900 shares of the Company’s common stock under the 2014 Plan, at an exercise price equal to the closing trading price on May 1, 2023, or $9.81, with a range of zero to one-third of the options vesting on the May 1, 2023, the grant date, dependent upon the tenure of the employee, and the remainder vesting monthly over the forty-eight month period thereafter, subject to continued service (“Employee Grant Modifications”)(collectively, “Modified Employee Grants”).
(2) The conversion price for Series AA Preferred outstanding as of August 23, 2023, totaling 10,706 shares of Series AA Preferred, was adjusted to $2.60 as a result of the Series AA Down Round Feature described at Note 7.
See below for placement agent warrants exchanged in connection with the Exchange. (2) The Conversion price for Series AA Preferred Stock outstanding as of August 23, 2023, totaling 10,706 shares of Series AA Preferred Stock, was adjusted to $2.60 as a result of the Series AA Down Round Feature described below.
The following accounting policies were identified during the periods presented, based on activities occurring during the periods presented, as critical and requiring significant judgments and estimates. 53 Table of Contents Revenue Recognition The Company generates revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) content and technology through the production and distribution of our own, advertiser and third-party content, and (iii) direct to consumer offers, including in-game items, e-commerce, game passes and digital collectibles.
Revenue Recognition The Company generates revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) content and technology through the production and distribution of our own, advertiser and third-party content, and (iii) direct to consumer offers, including in-game items, e-commerce, game passes and digital collectibles.
For so long as we remain an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies,” including but not limited to: ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● taking advantage of extensions of time to comply with certain new or revised financial accounting standards; ● being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and ● being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. 56 Table of Contents We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies,” and our stockholders could receive less information than they might expect to receive from more mature public companies.
Upon the completion of our initial public offering in February 2019, we elected to report as an “emerging growth company” (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act, which allowed us to take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies,” including but not limited to: ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● taking advantage of extensions of time to comply with certain new or revised financial accounting standards; ● being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and ● being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in the audited financial statements and notes thereto included elsewhere herein.
A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in the audited financial statements and notes thereto included elsewhere herein. The following accounting policies were identified during the periods presented, based on activities occurring during the periods presented, as critical and requiring significant judgments and estimates.
The estimated fair value of the Melon Contingent Consideration was $538,000 at December 31, 2023. The fair value of the Melon Contingent Consideration on the respective valuation dates was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs, as described at Note 2.
The fair value of the Melon Contingent Consideration on the valuation date was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs.
The Conversion price for Series AA Preferred outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred, was adjusted as described at Note 7, as a result of the Series AA Down Round Feature described at Note 7.
(3) The Conversion prices for the Series AA Preferred Stock outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred Stock, were adjusted to the conversion prices shown in the table above, as a result of the Series AA Down Round Feature described below.
The Company incurred net losses of $30.3 million and $85.5 million for Fiscal Year 2023 and 2022, respectively, and had an accumulated deficit of $249.0 million as of December 31, 2023. Noncash stock compensation, amortization and impairment charges for Fiscal Year 2023 and 2022 totaled $17.3 million and $60.1 million, respectively.
The Company incurred net losses as disclosed in the consolidated statements of operations for the periods presented herein, and had an accumulated deficit of $270.0 million as of December 31, 2024. Noncash stock compensation, amortization and impairment charges for Fiscal Year 2024 and 2023 totaled $3.9 million and $17.4 million, respectively.
All references to “ Note, ” followed by a number reference from one to twelve herein, refer to the applicable corresponding numbered footnotes to the consolidated financial statements contained elsewhere herein. General Super League Enterprise, Inc. is a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms.
All references to “ Note, ” followed by a number reference from one to twelve herein, refer to the applicable corresponding numbered footnotes to the consolidated financial statements contained elsewhere herein. General Super League Enterprise, Inc. is redefining how brands connect with consumers through the power of playable media.

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