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].
SUPER LEAGUE GAM(SLGG) - 2024 Q1 - Quarterly Report