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].
SUPER LEAGUE GAM(SLGG) - 2023 Q2 - Quarterly Report