Revenue Performance - Revenue for the three and nine months ended September 30, 2023 totaled $7.2 million and $15.6 million, reflecting increases of 60% and 24%, respectively, compared to the prior year periods[159]. - Total revenue for the three months ended September 30, 2023, increased by $2.7 million or 60% to $7.2 million, compared to $4.5 million in the same period of 2022[184]. - Media and advertising revenue for the three months ended September 30, 2023, increased by 24% to $2.9 million, driven by a 46% increase in Roblox immersive advertising media product sales[185][186]. - Publishing and content studio revenue for the three months ended September 30, 2023, increased by $2.2 million or 124%, primarily due to a 184% increase in custom game development and immersive experience revenues[192]. - Total revenue for the nine months ended September 30, 2023, increased by $3.0 million or 24% to $15.6 million, compared to $12.6 million in the same period of 2022[192]. Profitability and Loss - Gross profit for the three and nine months ended September 30, 2023 was 35% and 39%, respectively, compared to 40% and 44% for the prior year comparable periods[160]. - Net loss for the three months ended September 30, 2023 was $3.0 million or $(1.01) per share, compared to a net loss of $52.6 million or $(28.14) per share in the prior year period[162]. - The company experienced a net loss from operations of $4.5 million for the three months ended September 30, 2023, a decrease of 91% compared to the prior year[184]. - The company incurred net losses totaling $14.1 million for the nine months ended September 30, 2023, compared to $16.0 million for the same period in 2022[216]. - The company has an accumulated deficit of $227.8 million as of September 30, 2023[216]. Operating Expenses - Total operating expense for the three and nine months ended September 30, 2023 decreased to $7.0 million and $26.0 million, compared to $53.9 million and $74.3 million in the prior year periods[161]. - The total operating expense for the three months ended September 30, 2023, was $7.0 million, a decrease of 87% compared to the same period in 2022[184]. - Noncash stock-based compensation expense for Q3 2023 was $643,000, a decrease of $543,000 or 46% compared to Q3 2022[193]. - General and administrative expenses for Q3 2023 totaled $2,271,000, a decrease of $978,000 or 30% compared to Q3 2022[203]. - Selling, marketing, and advertising expenses increased by $203,000 or 7% in Q3 2023, driven by higher sales and account management personnel costs[200]. Strategic Partnerships and Acquisitions - The Company formed a strategic partnership with LandVault in April 2023 to provide scalable solutions in the metaverse[165]. - The Company acquired Melon, Inc. on May 4, 2023, paying a total of $900,000, with potential contingent consideration of up to $2.35 million based on revenue milestones[166][168]. - Super League joined the Roblox Partner Program on August 2, 2023, enhancing its offerings with the official Roblox advertising system[171]. - The Melon Acquisition on May 4, 2023, included a contingent consideration of up to $2,350,000 based on revenue milestones for the periods ending December 31, 2023, and December 31, 2024[209]. Cash Flow and Financing - Cash and cash equivalents totaled approximately $1.1 million at September 30, 2023, down from $2.5 million at December 31, 2022[215]. - The company reported a net cash provided by financing activities of $13,406,000 for the nine months ended September 30, 2023, compared to $4,160,000 in 2022[227]. - The company raised approximately $12,060,000 from the issuance of preferred stock, net of issuance costs, during the nine months ended September 30, 2023[227]. - The Series A Convertible Preferred Financing resulted in gross proceeds of $12,622,000, with net proceeds of $10,926,000 after fees[232]. - The company raised a total of $11,781,000 through the issuance of Series AA preferred stock, with net proceeds amounting to $10,348,000 after fees[240]. Compliance and Regulatory Matters - The company regained compliance with NASDAQ Listing Rule 5550(a)(2) on September 25, 2023, after receiving a notice from Nasdaq[179]. - The company received a 180-day extension from Nasdaq until October 2, 2023, to regain compliance with the minimum bid price requirement[182]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain reporting exemptions for up to five years[265]. Future Plans and Considerations - Management plans to seek additional capital through equity or debt financings to support growth and operations[217]. - The company is evaluating potential strategic acquisitions and may need to raise additional equity capital or incur debt to finance these acquisitions[220]. - Management continues to explore strategic partnerships and financing alternatives to facilitate growth and execute business strategies[218].

Financial Performance - Revenue for the three and six months ended June 30, 2023 totaled $5.1 million and $8.4 million, reflecting increases of 18% and 4%, respectively, compared to the prior year periods[150]. - Gross profit for the three and six months ended June 30, 2023 was 42% for both periods, compared to 43% and 46% for the prior year comparable periods[150]. - Total operating expense for the three and six months ended June 30, 2023 decreased to $10.3 million and $18.9 million, respectively, reflecting a 3% and 7% reduction compared to the prior year periods[151]. - Net loss for the three months ended June 30, 2023 was $6.8 million or $(0.17) per share, compared to a net loss of $8.7 million or $(0.24) per share in the prior year period[152]. - Total revenue for the three months ended June 30, 2023, increased by $773,000 or 18% to $5.1 million compared to $4.3 million in the same period of 2022[172]. - Media and advertising revenue for the three months ended June 30, 2023, increased by 3% to $3.6 million, compared to $3.5 million in the same period of 2022[172]. - For the six months ended June 30, 2023, total revenue increased by $327,000 or 4% to $8.4 million compared to $8.0 million in the same period of 2022[179]. - Net loss from operations for the three months ended June 30, 2023, was $8.2 million, a decrease of $556,000 or 6% compared to the net loss of $8.7 million in the same period of 2022[171]. - The company incurred net losses of $14.1 million for the six months ended June 30, 2023, compared to $16.6 million for the same period in 2022, with an accumulated deficit of $224.8 million as of June 30, 2023[200]. Strategic Partnerships and Acquisitions - The company formed a strategic partnership with LandVault in April 2023 to provide scalable solutions in the metaverse[155]. - The acquisition of Melon, Inc. was completed on May 4, 2023, for a total consideration of $900,000, enhancing the company's capabilities in building innovative virtual worlds[156][157]. - Up to $2.35 million in contingent consideration will be payable to Melon based on revenue milestones achieved through December 31, 2024[158]. - Super League joined the Roblox Partner Program on August 2, 2023, allowing access to the official Roblox advertising system with Immersive Ads[161]. Stock and Financing Activities - The company increased its authorized common stock from 100 million to 400 million shares on May 30, 2023[164]. - The company raised $12.1 million from the issuance of preferred stock during the six months ended June 30, 2023[211]. - A total of 12,622 shares of Series A Convertible Preferred Stock were sold, generating gross proceeds of $12,622,000, with net proceeds of $10,926,000 after fees[212]. - The Series A offerings included multiple sales, with the largest single sale on November 22, 2022, of 5,359 shares at a conversion price of $0.6200, raising $5,359,000[212]. - The Series AA Convertible Preferred Stock offerings totaled 11,781 shares, generating gross proceeds of $11,781,000 and net proceeds of $10,348,000[214]. - The largest Series AA sale occurred on April 19, 2023, with 7,680 shares sold at a conversion price of $0.4715, raising $7,680,000[214]. - The company experienced a net cash inflow of $11.5 million from financing activities for the six months ended June 30, 2023, compared to $4.0 million for the same period in 2022[205]. Expenses and Cost Management - Cost of revenue for the three months ended June 30, 2023, increased by $453,000 or 18%, consistent with the revenue increase[177]. - Total operating expenses for the three months ended June 30, 2023, decreased by $236,000 or 2% compared to the same period in 2022[171]. - Noncash stock-based compensation expense for the three months ended June 30, 2023, was $749,000, a decrease of $251,000 or 25% compared to the same period in 2022[180]. - General and administrative expenses decreased by $691,000, or 23%, for the three months ended June 30, 2023, compared to the same period in 2022[189]. - Selling, marketing, and advertising expenses decreased by $45,000, or 1%, driven by lower third-party sales consultant costs[186]. - The Company reported a decrease in professional fees by $143,000, or 44%, due to reduced legal and audit-related costs[191]. - Engineering, technology, and development costs decreased by $2,324,000, or 51%, primarily due to a reduction in cloud services and personnel costs[188]. - The Company’s engineering, technology, and development costs decreased by $3,578,000, or 41%, for the six months ended June 30, 2023, compared to the same period in 2022[188]. Cash Flow and Liquidity - Cash and cash equivalents totaled approximately $2.6 million as of June 30, 2023, compared to $2.5 million at December 31, 2022[199]. - Net cash used in operating activities was $10.8 million for the six months ended June 30, 2023, compared to $10.2 million for the same period in 2022[200]. - Cash flows used in investing activities totaled $652,000 for the six months ended June 30, 2023, compared to $1.2 million for the same period in 2022[208]. - As of June 30, 2023, the company had no significant commitments for capital expenditures or long-term debt[217]. Revenue Recognition and Accounting Policies - Revenue is generated from advertising, content distribution, and direct-to-consumer offers, including digital subscriptions and in-game purchases[227]. - Revenue from digital goods sold on the platform is recognized when Microsoft collects the revenue, with payments made monthly based on reconciled sales[236]. - The company assesses collectability of receivables based on past transaction history and customer creditworthiness, impacting revenue recognition timing[237]. - Significant judgments and estimates are required to determine performance obligations and the timing of revenue recognition, which can materially affect financial results[238]. - Acquisitions meeting the definition of a business are accounted for using the acquisition method, with assets and liabilities recorded at fair value[239]. - Non-business acquisitions are accounted for as asset acquisitions, with costs allocated based on relative fair values, and goodwill is not recognized[240]. - Contingent consideration is recognized when probable and reasonably estimable, affecting the initial cost of acquired assets[241]. - Contingent consideration linked to future services is recorded as compensation cost in the post-combination period[242]. Company Status and Market Risks - The company is classified as an "emerging growth company," allowing it to take advantage of relaxed reporting requirements[243]. - The company expects to utilize reporting exemptions for up to five years, unless the market value of common stock held by non-affiliates exceeds $700 million[245]. - The company is not currently exposed to market risks from interest rates or foreign currency exchange rates[246].

Financial Performance - Revenue for the three months ended March 31, 2023, totaled $3.3 million, a decrease of 12% compared to $3.8 million for the same period in 2022[133]. - Gross profit for the three months ended March 31, 2023, was $1.4 million, representing a gross margin of 41%, down from 49% in the prior year quarter[133]. - Total operating expenses for the three months ended March 31, 2023, were $8.6 million, a decrease of 12% from $9.8 million in the comparable prior year quarter[134]. - Net loss for the three months ended March 31, 2023, was $7.2 million, or $(0.19) per share, compared to a net loss of $7.9 million, or $(0.21) per share, in the same period last year[135]. - Total revenue decreased by $446,000 or 12% to $3.3 million compared to $3.8 million in the prior year quarter, but excluding certain revenues, total revenue increased by $473,000 or 17%[150]. - Media and advertising revenue decreased by 10% to $1.7 million, while direct-to-consumer revenue fell by 25% to $382,000[148]. - The company incurred net losses of $7.2 million for the three months ended March 31, 2023, compared to $7.9 million in the prior year, with an accumulated deficit of $218.0 million[164]. Customer and Revenue Sources - The number of customers contributing more than 10% of revenue decreased from three (45% of revenue) in the prior year to three (37% of revenue) in the current year[148]. - Media and advertising revenue decreased by 10%, primarily due to a 36% decrease in average revenue per customer, although reseller media and advertising revenues increased by $467,000 or 212%[150]. - Publishing and content studio revenue increased by $786,000 or 162%, driven by a 278% increase in average sales revenue per customer[150]. - Direct to consumer revenue decreased by $125,000 or 25%, mainly from the Minehut digital property and related services[150]. - The company generates revenue from three primary sources: advertising, content, and direct-to-consumer offers, including digital subscriptions and in-game digital goods[190]. - Media and advertising revenue includes direct and reseller sales of in-game media and analytics products, influencer marketing, and programmatic advertising, with contract terms typically ranging from several days to weeks[192]. - Direct-to-consumer revenue primarily consists of digital subscription fees, in-game digital goods, and gameplay access fees, recognized in the period services are rendered[197]. - Revenue from digital goods sold on the platform is recognized when Microsoft collects the revenue, with payments made to the company monthly based on reconciled sales revenue[199]. - The company assesses collectability of receivables based on past transaction history and customer creditworthiness, impacting actual revenue recognized each period[200]. Expenses and Cost Management - Cost of revenue for the three months ended March 31, 2023, was relatively flat compared to the prior year, while total revenues and cost of revenues increased by 17% and 21%, respectively, when excluding certain revenues[152]. - General and administrative expenses decreased by $356,000 or 12%, with professional fees down by $125,000 or 30%[159]. - Engineering, technology, and development costs decreased by $1,254,000 or 30%, primarily due to a 47% reduction in cloud services and other technology platform costs[158]. - Noncash stock compensation charges for the three months ended March 31, 2023, were $783,000, compared to $1,099,000 in the same period of 2022[173]. Cash Flow and Financing - Cash and cash equivalents totaled approximately $0.6 million as of March 31, 2023, down from $2.5 million at December 31, 2022[163]. - The company raised net proceeds of $2,000,000 from the sale of Series A-5 Convertible Preferred Stock on January 31, 2023[167]. - The company raised a total of $11,231,000 from the sale of 11,231 shares of Series AA Preferred Stock, with net proceeds of $9,869,000 after fees[168]. - Net cash used in operating activities for the three months ended March 31, 2023, was $2,978,000, a decrease from $6,287,000 in the same period of 2022[172]. - Cash and cash equivalents at the end of the period were $590,000, down from $7,784,000 at the end of March 2022[172]. - The company reported net cash provided by financing activities of $1,380,000 for the three months ended March 31, 2023, compared to no financing activities in the same period of 2022[177]. - The company may need to raise additional equity capital or incur debt to finance potential strategic acquisitions, which may not be available on favorable terms[171]. - The company has the right to sell up to $10,000,000 of newly issued shares of common stock to an institutional investor, subject to certain conditions[168]. - Cash flows from investing activities for the three months ended March 31, 2023, were $294,000, a decrease from $462,000 in the same period of 2022[175]. Compliance and Market Position - The company received a 180-day extension from Nasdaq to regain compliance with the minimum bid price requirement of $1.00 per share[142]. - The company has no significant commitments for capital expenditures or long-term debt as of March 31, 2023[181]. - The company has not entered into any off-balance sheet financial guarantees or derivative contracts that are not reflected in its consolidated financial statements[182]. - The company has elected to report as an "emerging growth company," allowing it to take advantage of certain exemptions from rigorous reporting requirements[203]. - 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[205]. - The company is not currently exposed to market risks from changes in interest rates or foreign currency exchange rates[207]. Acquisition Activity - The company acquired Melon, Inc. for a total consideration of $900,000, which included $750,000 in common stock and $150,000 in working capital advances[138]. - Up to $2.35 million in contingent consideration will be payable to Melon based on achieving certain revenue milestones through December 31, 2024[139].

Financial Performance - The company reported a significant increase in revenue, achieving $50 million for the fiscal year, representing a 25% year-over-year growth[10] - The company anticipates a revenue growth of 30% for the next fiscal year, projecting revenues to reach $65 million[10] User Engagement - User engagement metrics showed a 40% increase in active users, reaching 1.2 million monthly active users[10] Product Development - New product launches are expected to contribute an additional $10 million in revenue, with a focus on expanding the esports tournament offerings[10] - The company is investing $5 million in research and development for new gaming technologies aimed at enhancing user experience[10] Market Expansion - Market expansion efforts include entering three new international markets, projected to increase user base by 15%[10] Strategic Acquisitions - The company has completed a strategic acquisition of a smaller gaming studio for $15 million, expected to enhance content offerings[10] Operating Expenses - Operating expenses increased by 10% due to higher marketing costs associated with new product launches[10] Financial Position - The company maintains a strong liquidity position with $20 million in cash reserves, ensuring adequate funding for future initiatives[10] Risks and Challenges - The management highlighted ongoing risks related to competitive pressures and regulatory changes in the gaming industry[10]