Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934 From the transition period from to Commission File Number 001-38819 SUPER LEAGUE ENTERPRISE, INC. (Exact name of small business issuer as specified in its charter) Delaware 47-1990734 ...

Revenue Performance - Revenue for the three months ended June 30, 2025 totaled $3.0 million, a decrease of $1.1 million or 27% compared to $4.1 million for the same period in 2024[312]. - Revenue for the six months ended June 30, 2025 totaled $5.7 million, a decrease of $2.6 million or 31% compared to $8.3 million for the same period in 2024[317]. - The Company reported a total revenue decrease of $1.1 million, or 27%, to $3.0 million for the three months ended June 30, 2025, compared to $4.1 million in the same period of 2024[330]. - Total revenue decreased by $2.6 million, or 31%, to $5.7 million compared to $8.3 million in the prior year period[335]. - Media and advertising revenue decreased by $258,000, or 15%, to $1.5 million, while publishing and content studio revenue fell by $813,000, or 37%, to $1.4 million for the same quarter[330]. - Media and advertising revenue decreased by $351,000, or 11%, to $2.7 million, reflecting a strategic decrease in lower margin influencer marketing revenues[335]. - Publishing and content studio revenue decreased by $2.1 million, or 44%, to $2.6 million, primarily due to a net decrease in custom game development revenues[335]. - Direct to consumer revenue decreased by $171,000, or 35%, to $313,000, impacted by the sale of digital properties generating related revenues[335]. Cost Management - Cost of revenue for the three months ended June 30, 2025 decreased $0.8 million, or 31% to $1.7 million, compared to $2.5 million in the prior year quarter[313]. - Total operating expense for the three months ended June 30, 2025 decreased $1.3 million, or 22% to $4.5 million, compared to $5.7 million in the prior year quarter[315]. - Cost of revenue decreased by $778,000, or 31%, consistent with the revenue decline, primarily due to a strategic 94% decrease in influencer marketing revenues[333]. - General and administrative expense decreased by $867,000, or 34%, to $1.653 million for the three months ended June 30, 2025, driven by headcount reductions and cost optimization[343]. - Engineering, technology and development expense decreased by $98,000, or 12%, primarily due to a reduction in personnel costs[342]. - Selling, marketing and advertising expense decreased by $526,000, or 20%, due to a reduction in personnel costs related to headcount reductions[339]. - Amortization expense decreased by $64,000, or 11%, for the three months ended June 30, 2025, primarily due to the completion of amortization of certain intangible assets[338]. - Personnel costs decreased due to ongoing cost reduction activities, while noncash stock compensation expense increased by $350,000 related to third-party consultants[346]. Financial Position - Net loss for the three months ended June 30, 2025 was $2.8 million or $(4.52) per share, compared to a net loss of $2.5 million, or $(24.01) per share, in the prior year quarter[315]. - The Company experienced a net loss from operations of $3.1 million for the three months ended June 30, 2025, compared to a net loss of $4.1 million in the prior year quarter, reflecting a 23% improvement[329]. - Cash and cash equivalents decreased from $1.3 million at December 31, 2024, to $0.48 million at June 30, 2025[360]. - As of June 30, 2025, the company reported an accumulated deficit of $277.1 million and net cash used in operating activities of $4.0 million for the six months ended June 30, 2025, compared to $6.1 million for the same period in 2024[361]. - The Company reported stockholders' equity of $170,000, which did not meet the $2,500,000 requirement under NASDAQ Listing Rule 5550(b)(1)[327]. Capital Raising and Financing Activities - The Company raised approximately $670,000 through a registered direct offering in June 2025, utilizing the proceeds for working capital and debt repayment[320]. - The Company completed the May II Offering of 104,167 shares at a public price of $4.80 per share, resulting in net proceeds of approximately $380,000 after expenses[322]. - The May I Offering involved 127,941 shares sold at $6.80 per share, generating net proceeds of approximately $700,400, with an additional 15,441 shares sold under the May I Option for gross proceeds of about $104,999[323]. - The Company raised $4 million in gross proceeds from a private placement offering of 8% Senior Secured Convertible Notes, convertible at a price of $6.815 per share[378]. - The Company entered into an Exchange Agreement on July 7, 2025, granting 1,500,000 shares of Series AAAA Jr. Convertible Preferred Stock in exchange for a promissory note valued at $1,878,082[368]. - On July 10, 2025, the company entered into an Equity Purchase Agreement allowing it to direct an investor to purchase up to $20 million in common stock, subject to certain conditions[371]. - The Company entered into a Hudson Equity Purchase Agreement allowing the sale of up to $2.9 million of newly issued shares, with 7,500 shares issued to Hudson valued at $159,000[388]. - The Company sold 17,925 shares of common stock under the Hudson Equity Line of Credit (ELOC) during the six months ended June 30, 2025, raising net proceeds of $231,000[390]. Strategic Acquisitions and Partnerships - The Company acquired Supersocial in May 2025, expanding its partnerships and capabilities in the gaming space[305]. - The Company entered into a Membership Interest Purchase and Sale Agreement to sell 100% of the membership interests of InPvP for $350,000[306]. - The Company expanded its partnership with AdArcade, enhancing its advertising capabilities with Native Playables, which deliver three times higher engagement than standard ads[308]. - Super League acquired substantially all assets of Melon, Inc. for contingent consideration, with a fair value of $2.15 million as of the acquisition date[345]. - The Company sold its Minehut Assets to GamerSafer for a total purchase consideration of $1.0 million, with an initial gain on sale of $144,000 recognized[350][351]. Compliance and Regulatory Matters - The Company regained compliance with NASDAQ Listing Rule 5550(a)(2) regarding minimum bid price requirements on July 8, 2025[324]. - The company qualifies as a "smaller reporting company," allowing it to take advantage of certain reporting exemptions[451]. - The company ceased being an "emerging growth company" as of December 31, 2024, but continues to be classified as a "smaller reporting company"[454]. - The company is not currently exposed to market risks from interest rate changes or foreign currency exchange rates[456]. Future Outlook and Concerns - The company plans to seek additional capital through equity or debt financings to support its growth and business strategy, amid concerns about the impact of global economic conditions on its operations[362]. - The company has incurred significant losses and raised concerns about its ability to continue as a going concern if it cannot secure additional funding[362]. - The company may evaluate potential strategic acquisitions and may need to raise additional equity capital or incur debt to finance these acquisitions[365]. - Management is focused on expanding service offerings and revenue growth through internal development, collaborations, and strategic acquisitions while managing operating costs[363].

Financial Performance - Super League reported Q4 2024 revenue of $3.426 million, a decrease from $9.510 million in Q4 2023, and full-year revenue of $16.182 million, down from $25.079 million in 2023[15]. - The net loss for Q4 2024 was $5.127 million, compared to a net loss of $13.274 million in Q4 2023, and the full-year net loss was $16.474 million, down from $30.330 million in 2023[15]. - The net loss for the fiscal year ended December 31, 2024, was $16,474,000, a significant improvement from a net loss of $30,330,000 in 2023, representing a reduction of approximately 46%[21]. - The company reported a gross profit of $999,000 in Q4 2024, down from $3.725 million in Q4 2023[15]. Asset and Liability Management - Total assets decreased from $25.328 million in 2023 to $11.711 million in 2024, while total liabilities reduced from $15.338 million to $11.380 million[14]. - Super League's cash and cash equivalents dropped from $7.609 million in 2023 to $1.310 million in 2024[14]. - Cash and cash equivalents at the end of the period were $1,310,000, down from $7,609,000 at the end of 2023, reflecting a decrease of approximately 83%[21]. - The company did not incur any impairment of intangible assets and goodwill in 2024, a significant change from $7,052,000 in 2023, indicating improved asset valuation[21]. Operational Efficiency - Net cash used in operating activities decreased to $11,581,000 in 2024 from $15,489,000 in 2023, indicating improved operational efficiency[21]. - The company incurred $1,289,000 in stock-based compensation, down from $2,735,000 in 2023, suggesting a reduction in equity compensation expenses[21]. - The company reported a net cash used in investing activities of $164,000, a decrease from $825,000 in 2023, indicating a more conservative investment approach[21]. Strategic Initiatives - The company aims to achieve EBITDA positivity by Q4 2025, focusing on realigning its business and aggressively attacking its cost structure[4]. - The company is focusing on larger revenue, higher margin programs to optimize resource allocation[4]. - Discussions regarding a partnership with Infinite Reality are ongoing, with the exclusivity period expired, allowing exploration of other strategic alternatives[7]. - The company appointed Bant Breen to the Board of Directors to enhance its marketing and media strategy[6]. Shareholder Impact - The weighted-average number of shares outstanding increased from 4,264,905 in 2023 to 13,794,441 in 2024, reflecting potential dilution for shareholders[19]. - The company raised $2,393,000 from the issuance of preferred stock and $1,000,000 from common stock issuance, contributing to a total net cash provided by financing activities of $5,446,000[21]. - Accounts receivable increased by $4,521,000, compared to a decrease of $2,113,000 in the previous year, indicating a potential growth in sales or collection issues[21]. - The company reported a gain of $311,000 from the sale of Minehut assets, which was a new revenue stream for the year[21].

Revenue Performance - Revenue for the three months ended March 31, 2025, totaled $2.7 million, a decrease of $1.5 million or 35% compared to $4.2 million for the same period in 2024[228]. - Media and advertising revenue decreased by $93,000 or 7% to $1.3 million, while publishing and content studio revenue decreased by $1.3 million or 50% to $1.3 million[237]. - Direct to consumer revenue decreased by $127,000, or 42%, to $179,000 compared to $306,000 in the prior year quarter, primarily due to the sale of Minehut Assets[241]. - Revenue is expected to be seasonally stronger in the second half of the fiscal year, with the fourth quarter typically representing the highest revenue quarter[235]. Cost and Expenses - Cost of revenue decreased by $955,000 or 39% to $1.5 million, driven primarily by the 35% decrease in quarterly revenues[229]. - Total operating expenses decreased by $1.5 million or 24% to $4.8 million, reflecting a focus on cost reductions and operating efficiencies[230]. - Total noncash stock compensation expense decreased by $48,000, or 14%, to $284,000 from $332,000 in the prior year quarter[240]. - Total amortization expense decreased by $142,000, or 21%, to $541,000 from $683,000 in the prior year quarter[240]. - General and administrative expense decreased by $582,000, or 28%, to $1,520,000 from $2,102,000 in the prior year quarter[246]. - Engineering, technology and development expense decreased by $0.8 million, or 45%, driven by a $291,000 decrease in cloud services and a $336,000 decrease in product and engineering personnel expense[245]. Profitability and Loss - Gross profit for the three months ended March 31, 2025, was 44% of revenue, compared to 41% for the prior year quarter[229]. - Net loss for the three months ended March 31, 2025, was $4.2 million or $(0.25) per share, compared to a net loss of $5.3 million or $(1.00) per share in the prior year[230]. - As of March 31, 2025, the company reported an accumulated deficit of $274.3 million[262]. Financing Activities - The company entered into an underwriting agreement for a public offering of 5,117,647 shares at a price of $0.17 per share, resulting in net proceeds of approximately $700,400[231]. - The Company raised net proceeds of approximately $700,400 from a public offering of 5,117,647 shares at a price of $0.17 per share, with an additional 617,647 shares sold under an option agreement[277]. - The Company reported a net cash provided by financing activities of $1,357,000 for the three months ended March 31, 2025, compared to a net cash used of $430,000 in the same period of 2024[285]. - The company plans to use proceeds from the Belleau Notes and the Hudson Offering for working capital and general corporate purposes, including product development and marketing[299][307]. Cash Flow and Liquidity - Cash and cash equivalents decreased from $1.3 million at December 31, 2024, to $0.7 million at March 31, 2025[261]. - The company incurred net cash used in operating activities of $2.2 million for the three months ended March 31, 2025, compared to $3.7 million for the same period in 2024[262]. - Cash and cash equivalents at the end of the period were $747,000, down from $1,310,000 at the beginning of the period[280]. Compliance and Regulatory Matters - The company received multiple deficiency letters from Nasdaq regarding compliance with listing requirements, including a minimum bid price and stockholders' equity[232]. - The Company qualifies as a "smaller reporting company," allowing it to take advantage of certain reporting exemptions under the Exchange Act[321]. - The Company is subject to less rigorous ongoing public reporting requirements, potentially resulting in less information for stockholders compared to larger companies[322]. Strategic Initiatives - The Company is exploring strategic partnerships and other forms of equity or debt financing to support growth and business strategy execution[278]. - The Company intends to use proceeds from the Belleau Notes for working capital and general corporate purposes[273]. Asset Management - The Company recorded a gain on the sale of Minehut Assets totaling $144,000, with an estimated receivable of $619,000 recognized[252]. - The Company received Minehut Purchase Consideration payments totaling $383,000 during the three months ended March 31, 2025, from the sale of its Minehut Assets[283]. Valuation and Accounting Estimates - The fair value of certain promissory notes is estimated based on present value calculations using market rates and credit risk, with adjustments recognized in other income[318]. - The Company elected the fair value option for promissory notes to provide timely information regarding current market value, reflecting market fluctuations[318]. - The fair value of warrants is determined using the Black-Scholes option pricing model, requiring significant judgments regarding volatility and interest rates[320].

Financial Performance - Super League Enterprise, Inc. reported a revenue increase of 25% year-over-year for Fiscal Year 2023, reaching $50 million[12]. - For Fiscal Year 2024, Super League expects revenue to grow by an additional 20%, projecting $60 million in total revenue[12]. - The company has secured two new licensing agreements with major game publishers, which are expected to contribute an additional $10 million in revenue[12]. - Super League's gross margin improved to 60%, up from 55% in the previous fiscal year, reflecting better cost management[12]. User Growth and Engagement - The company has expanded its user base by 30%, now serving over 1 million active users across its gaming platforms[12]. - The company is investing $5 million in new product development, focusing on enhancing user engagement through innovative gaming experiences[12]. Market Expansion - Super League plans to enter three new international markets in 2024, aiming to increase its global footprint and user acquisition[12]. Operating Expenses - Operating expenses increased by 15% due to higher marketing costs associated with user acquisition strategies[12]. Strategic Initiatives - The company is exploring potential acquisition opportunities to enhance its technology capabilities and market position[12]. - Super League has identified key risks including competitive pressures and changes in consumer demand, which may impact future performance[12].

Financial Results - Super League Enterprise, Inc. reported financial results for the fiscal quarter ended September 30, 2024[6]. - The report does not include specific numerical financial data or performance metrics[6]. - The financial results and operational highlights are available in the attached exhibits[10]. Corporate Communications - The company released an Earnings Press Release and a Letter to Shareholders on November 14, 2024[6]. - Specific operating highlights and financial results were discussed in the Letter to Shareholders from CEO Ann Hand[6]. Company Classification and Structure - The company is classified as an emerging growth company under the Securities Act of 1933[5]. - The company has not elected to use the extended transition period for new financial accounting standards[5]. - The company’s principal executive offices are located in Santa Monica, California[2]. - The trading symbol for Super League Enterprise, Inc. is SLE on the Nasdaq Capital Market[5]. Forward-Looking Statements - The report includes forward-looking statements regarding the company's plans and expectations[8].

Financial Performance - Revenue for Q3 2024 totaled $4.4 million, a decrease of $2.8 million or 38% compared to $7.2 million in Q3 2023[252]. - Cost of revenue for Q3 2024 decreased by $1.9 million or 42% to $2.7 million, reflecting the 38% decrease in quarterly revenues[253]. - Gross profit margin for Q3 2024 was 39%, up from 35% in the prior year comparable quarter[254]. - Total operating expenses for Q3 2024 decreased by $1.9 million or 26% to $5.2 million compared to $7.0 million in Q3 2023[255]. - Net loss for Q3 2024 was $3.6 million or $(0.54) per share, compared to a net loss of $3.0 million or $(3.19) per share in Q3 2023[255]. - Revenue for the nine months ended September 30, 2024 totaled $12.8 million, down from $15.6 million in the comparable prior year period[256]. - Cost of revenue for the nine months ended September 30, 2024 decreased by $1.9 million or 20% to $7.7 million compared to $9.5 million in the prior year[257]. - Total operating expense for the nine months ended September 30, 2024 decreased by $8.7 million, or 34%, to $17.3 million compared to $26.0 million in the prior year period[258]. - Net loss for the nine months ended September 30, 2024 was $11.3 million, or $(2.00) per share, compared to a net loss of $17.1 million, or $(10.25) per share, in the prior year period[258]. Revenue Breakdown - Media and advertising revenue for the nine months decreased by $2.3 million, or 33%, to $4.6 million compared to $6.9 million in the prior year, primarily due to a $2.4 million decrease in on-platform related media sales revenue[267]. - Direct to consumer revenue decreased by $387,000, or 35%, to $731,000 compared to $1.1 million in the prior year, reflecting the impact of the sale of Minehut Assets[272]. - The decrease in influencer marketing revenue for the nine months was $730,000, partially offset by a $541,000 increase in off-platform related media sales revenue[267]. - The company experienced a $1.3 million, or 33%, decrease in publishing and content studio revenue for the three months ended September 30, 2024, compared to the prior year[267]. - The company reported a $102,000, or 29%, decrease in direct to consumer revenue for the three months ended September 30, 2024, compared to the prior year[267]. Acquisitions and Partnerships - The company entered into a binding term sheet with Infinite Reality to acquire various assets, including a cash amount of up to $20 million and a credit facility of $30 million[239]. - The company acquired Melon, Inc. for a total consideration of $900,000, with potential contingent consideration of up to $2.35 million based on revenue milestones[248][250]. - The partnership with GSTV aims to integrate physical and digital retail engagement, bringing Super League's gaming news segment to millions of viewers at fuel and convenience retailers[262]. - The strategic partnership with Meta-Stadiums focuses on creating immersive experiences in the metaverse for music artists and sports teams[260]. - The initiative with Common Sense Networks targets age-appropriate content for kids, connecting brands with young audiences across major platforms[261]. - The partnership with Chartis enhances capabilities for brands in Fortnite Creative, tapping into a network with nearly one billion monthly impressions[263]. Expenses and Cost Management - Noncash stock compensation expense for the nine months ended September 30, 2024, decreased by $1.2 million, or 55%, to $986,000 compared to $2.175 million in the prior year[271]. - Selling, marketing, and advertising expenses decreased by $764,000, or 24%, for the three months ended September 30, 2024, primarily due to a $335,000, or 63%, reduction in amortization expense related to intangible assets[277]. - Engineering, technology, and development costs decreased by $1.2 million, or 56%, for the three months ended September 30, 2024, compared to the same period in 2023[280]. - General and administrative expenses decreased by $336,000, or 15%, for the three months ended September 30, 2024, totaling $1,935,000[280]. - Personnel costs in general and administrative expenses decreased by $164,000, or 30%, for the three months ended September 30, 2024[280]. Cash Flow and Financing - As of September 30, 2024, the company had cash and cash equivalents totaling $0.3 million, down from $7.6 million as of December 31, 2023[308]. - The company incurred a net loss with an accumulated deficit of $263.7 million as of September 30, 2024, and net cash used in operating activities for the nine months ended September 30, 2024 totaled $8.2 million[309]. - The Company raised approximately $1.0 million through a registered direct offering of 1,136,364 shares at a price of $0.88 per share[312]. - The Company entered into a loan agreement for $1.85 million with an interest payment of approximately $0.78 million, requiring 28 equal payments of $93,821.43[313]. - The Company reported net cash provided by financing activities of $1.297 million for the nine months ended September 30, 2024, compared to $13.406 million in 2023[322]. Strategic Outlook - The Company is exploring strategic partnerships and acquisitions to raise capital for growth, which may involve additional equity or debt financing[314]. - The Company continues to face substantial doubt about its ability to continue as a going concern due to adverse global economic conditions[310]. - The company elected to report as an "emerging growth company," allowing it to take advantage of certain reporting exemptions[349]. - The company will remain an "emerging growth company" for up to five years unless the market value of its common stock held by non-affiliates exceeds $700 million[351]. - The company is not currently exposed to market risks from changes in interest rates or foreign currency exchange rates[352].

Financial Performance - Total revenue for Q2 2024 was $4,116,000, a decrease of 18.5% compared to $5,052,000 in Q2 2023[11] - Gross profit for the six months ended June 30, 2024, was $3,378,000, down from $3,517,000 in the same period of 2023, reflecting a decline of 4%[11] - Net loss for Q2 2024 was $2,455,000, compared to a net loss of $6,836,000 in Q2 2023, indicating an improvement of 64%[11] - Net loss for the six months ended June 30, 2024, was $7,715,000, compared to a net loss of $14,072,000 for the same period in 2023, representing a reduction of approximately 45%[13] - For the six months ended June 30, 2024, the net loss was $7.715 million, a decrease of 45.5% compared to a net loss of $14.072 million for the same period in 2023[15] - The company reported a preferred stock dividend payment of $862,000 for the six months ended June 30, 2024, compared to $866,000 in the previous year, showing stability in dividend payments[13] - The company recorded a net loss of $7,715,000 for the six months ended June 30, 2024, down from $14,072,000 in the same period of 2023, indicating a 45.3% reduction in losses[116] Assets and Liabilities - Total current assets decreased to $7,955,000 as of June 30, 2024, from $16,758,000 as of December 31, 2023, a decline of 52.5%[9] - Total liabilities decreased to $10,353,000 as of June 30, 2024, down from $15,338,000 as of December 31, 2023, a reduction of 32.5%[9] - Cash and cash equivalents dropped significantly to $1,685,000 as of June 30, 2024, from $7,609,000 as of December 31, 2023, a decrease of 77.9%[9] - Total stockholders' equity decreased to $5,056,000 as of June 30, 2024, from $9,990,000 as of December 31, 2023, a decline of 49.3%[9] - The balance of accumulated deficit improved to $(258,325,000) as of June 30, 2024, from $(224,815,000) in the previous year, showing a worsening of approximately 14.9%[13] Revenue Breakdown - Media and advertising revenue for the three months ended June 30, 2024, was $1,734,000, a decrease from $2,506,000 in the same period of 2023[65] - Publishing and content studio revenue increased to $2,204,000 for the three months ended June 30, 2024, compared to $2,159,000 in 2023[65] - Direct to consumer revenue was $178,000 for the three months ended June 30, 2024, down from $387,000 in the same period of 2023[65] - Revenue recognized over time accounted for 54% of total revenue for the three months ended June 30, 2024, compared to 46% recognized at a single point in time[65] Operating Expenses - Operating expenses for Q2 2024 were $5,739,000, down from $10,328,000 in Q2 2023, reflecting a decrease of 44.5%[11] - Advertising expenses for Q2 2024 were $13,000 for the three months and $56,000 for the six months, compared to $13,000 and $22,000 for the same periods in 2023, indicating a significant increase in advertising costs[68] - Stock-based compensation for the six months ended June 30, 2024, was $630,000, compared to $1,406,000 in the same period of 2023, indicating a decrease of about 55%[13] Acquisitions and Strategic Initiatives - The acquisition of Melon, Inc. on May 4, 2023, strengthens the company's position as a strategic operating partner in the gaming metaverse[135] - Common stock issued for Melon Acquisition totaled 72,118 shares, while for Super Biz Acquisition, it was 30,662 shares, indicating active market expansion through acquisitions[13] - The total consideration paid for the Melon acquisition was $2,222,000, consisting of $150,000 in cash and $722,000 in common stock, with an additional contingent consideration of up to $2,350,000 based on revenue milestones[136][137][142] - The company plans to continue exploring strategic acquisitions and partnerships to enhance growth and service offerings[32] Stock and Equity - Preferred stock balance increased to 22,858 shares as of June 30, 2024, compared to 19,892 shares in the same period of 2023, reflecting a growth of approximately 15.5%[13] - Common stock balance reached 7,242,978 shares at the end of the period, up from 2,416,743 shares year-over-year, indicating a significant increase of about 200%[13] - The Company increased its authorized shares of common stock from 100 million to 400 million on May 30, 2023[173] - The Company reported revenue concentrations with two customers representing 40% of revenue for the three months ended June 30, 2024, compared to 22% for the same period in 2023[112] Financial Instruments and Valuation - The company measures financial assets and liabilities at fair value at each reporting period, utilizing a fair value hierarchy with three levels of inputs[71] - Derivative financial instruments are recorded at fair value and re-valued at each reporting date, with changes in fair value reported in the consolidated statements of operations[75] - The fair value of the acquired intangible assets from Melon was estimated at $510,000, including developed technology valued at $250,000 and customer relationships valued at $190,000[142][148] Miscellaneous - The company is undergoing a name change and a reverse stock split at a ratio of 1-for-20, effective September 11, 2023[18] - The board approved an amendment to reduce the quorum requirement for stockholder meetings, facilitating easier business transactions[22] - The company sold its Minehut Assets for $1.0 million, with a gain on sale totaling $144,000 recognized in other income[131][132]

Revenue and Profitability - Revenue for the three months ended March 31, 2024, totaled $4.2 million, an increase of $887,000 or 27% compared to $3.3 million for the prior year quarter[193]. - Gross profit for the three months ended March 31, 2024, was $1.7 million, representing a gross profit margin of 41%, unchanged from the prior year quarter[193]. - Publishing and content studio revenue increased by $1.2 million or 90% to $2.5 million, driven by a significant increase in custom game development revenues[201]. - Media and advertising revenue decreased by $239,000 or 15% to $1.4 million, reflecting a decline in on-platform media sales[201]. Expenses and Losses - Cost of revenue for the same period increased by $529,000 or 27% to $2.5 million, consistent with the revenue growth[204]. - Total operating expenses decreased by $2.3 million or 26% to $6.3 million compared to $8.6 million in the prior year quarter[194]. - Net loss for the three months ended March 31, 2024, was $5.3 million or $(1.00) per share, compared to a net loss of $7.2 million or $(3.84) per share in the prior year quarter[194]. - Noncash stock-based compensation expense decreased by 58% from $783,000 in Q1 2023 to $332,000 in Q1 2024[205]. - Total amortization expense decreased by 47% from $1,288,000 in Q1 2023 to $683,000 in Q1 2024, primarily due to a $7.1 million write-down of intangible assets[209]. - General and administrative expenses decreased by 17% from $2,520,000 in Q1 2023 to $2,102,000 in Q1 2024, driven by a reduction in stock-based compensation[213]. - Engineering, technology, and development costs decreased by 43% from $3,000,000 in Q1 2023 to $1,700,000 in Q1 2024[213]. - Selling, marketing, and advertising expenses decreased by 14% from $2,600,000 in Q1 2023 to $2,227,000 in Q1 2024[211]. Acquisitions and Partnerships - The company announced a partnership with Common Sense Networks to connect brands with young audiences across major gaming platforms[197]. - A partnership with GSTV was established to integrate digital gaming content with physical retail experiences[198]. - The company launched new capabilities for clients in Fortnite Creative through a partnership with Chartis, enhancing opportunities for brand engagement[199]. - The company acquired substantially all of the assets of Melon, Inc. on May 4, 2023, as part of the Melon Acquisition[217]. - The company has a contingent consideration of up to $2,350,000 related to the acquisition of Melon, with $1,000,000 payable for the first earnout period and $1,350,000 for the second earnout period[218]. Cash Flow and Financial Position - The company recorded a net cash used in operating activities of $3.7 million for the three months ended March 31, 2024, compared to $3.0 million for the same period in 2023[227]. - Cash and cash equivalents decreased from $7.6 million at December 31, 2023, to $3.3 million at March 31, 2024[226]. - The company experienced a decrease in cash of $4.3 million for the three months ended March 31, 2024, compared to a decrease of $1.9 million for the same period in 2023[233]. - The accrued contingent consideration for the Super Biz acquisition decreased from $3,674,000 in Q1 2023 to $1,830,000 in Q1 2024[216]. - The company recorded a write-off of $2,284,000 related to developed technology intangible assets from the Bannerfy acquisition[210]. - The fair value of warrant liability increased to $2.332 million as of March 31, 2024, reflecting a change in fair value of $761,000[225]. Financing Activities - The Company raised a total of $12,622,000 from the sale of 12,622 shares of Convertible Preferred Stock, with net proceeds of $10,926,000 after fees[244]. - The Company entered into a securities purchase agreement for the sale of senior convertible notes totaling $4,320,000, with an 8% original issue discount[245]. - For the three months ended March 31, 2023, $719,000 of the net proceeds from the Series A Offerings were utilized for the redemption of outstanding Notes[244]. Strategic Outlook - The company plans to explore strategic acquisitions and may need to raise additional equity capital or incur debt to finance these activities[230][231]. - The Company expects to remain an "emerging growth company" for up to five years, with less rigorous ongoing public reporting requirements[255][257]. Revenue Recognition and Collectability - Revenue is generated from innovative advertising, content and technology, and direct-to-consumer offers, with revenue recognized upon transfer of goods or services[251][252]. - The Company assesses collectability of receivables based on past transaction history and customer creditworthiness, impacting actual revenue recognized[253].

Financial Performance - The company reported a significant increase in revenue, achieving $150 million for the fiscal year, representing a 25% year-over-year growth[7]. - The company anticipates continued growth, projecting revenue to reach $200 million in the next fiscal year, which would be a 33% increase[7]. User Engagement - User engagement metrics showed a 40% increase in active users, reaching 2 million monthly active users[7]. Product Development - New product launches are expected to contribute an additional $30 million in revenue, with a focus on expanding the gaming portfolio[7]. - The company is investing $10 million in research and development for new technologies aimed at enhancing user experience[7]. Market Expansion - Market expansion efforts include entering three new international markets, projected to increase user base by 15%[7]. - The company is exploring strategic acquisitions to bolster its market position, with a budget of $50 million allocated for potential deals[7]. Operating Expenses - Operating expenses increased by 10% due to higher marketing costs associated with new product launches[7]. Financial Position - The company maintains a strong liquidity position with $25 million in cash reserves, ensuring adequate funding for future initiatives[7]. Management Insights - The management highlighted the importance of adapting to changing consumer demands and competitive pressures in the gaming industry[7].