Super League Enterprise(US:SLE)2023-08-14 21:10Financial 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[155]. - Cost of revenue for the three and six months ended June 30, 2023 was $2.9 million and $4.9 million, respectively, compared to $2.5 million and $4.4 million in the prior year periods[156]. - 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[157]. - 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[178]. - 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[178]. - 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[178]. - 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[205]. - 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[205]. Strategic Partnerships and Acquisitions - The company formed a strategic partnership with LandVault in April 2023 to provide scalable solutions in the metaverse, focusing on virtual tourism in the UAE[160]. - 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[161][162]. - Up to $2.35 million in contingent consideration will be payable to Melon based on revenue milestones achieved through 2024[163]. - The company completed the Melon Acquisition on May 4, 2023, for a total of $900,000, which included cash and shares of common stock[214]. Cost Management - The company continues to focus on cost reductions, achieving a 28% and 20% reduction in operating expenses for the three and six months ended June 30, 2023, respectively[156]. - Total operating expenses for the three months ended June 30, 2023, were $10.3 million, a decrease of $236,000 or 2% compared to $10.6 million in the same period of 2022[178]. - Engineering, technology, and development costs decreased by $2,324,000, or 51%, driven by a reduction in cloud services and personnel costs, reflecting ongoing cost reduction efforts[193]. - General and administrative expenses decreased by $691,000, or 23%, for the three months ended June 30, 2023, with significant reductions in professional fees and stock-based compensation[194]. - 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 $1 million in the same period of 2022[185]. Stock and Financing Activities - The company increased its authorized common stock from 100 million to 400 million shares on May 30, 2023[169]. - The company raised $12.1 million from the issuance of preferred stock during the six months ended June 30, 2023[217]. - 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 in 2022[211]. - The company expects to seek additional capital through equity or debt financing to fund its growth and operations[206]. - The company raised a total of $12,622,000 from the Series A Convertible Preferred Stock offerings, with 12,622 shares sold at a purchase price of $1,000 each[218]. - The Series A offerings included 10,323 shares sold by December 31, 2022, generating net proceeds of $8,926,000 after fees[218]. - In the first quarter of 2023, the company sold 2,299 shares of Series A Convertible Preferred Stock, raising an additional $2,000,000[218]. - The Series AA Convertible Preferred Stock offerings raised a total of $11,781,000, with 11,781 shares sold at a purchase price of $1,000 each[220]. - The net proceeds from the Series AA offerings were allocated for working capital and general corporate purposes, including sales and marketing activities and product development[221]. Revenue Recognition and Accounting Policies - Revenue is recognized when goods or services are transferred to customers, reflecting the consideration expected in exchange[231]. - The company generates revenue from advertising, content distribution, and direct-to-consumer offers, including digital subscriptions and in-game digital goods[234]. - The company assesses collectability of receivables based on past transaction history and customer creditworthiness, impacting revenue recognition timing[244]. - Significant judgments and estimates are required to determine performance obligations and the timing of revenue recognition, which can materially affect financial results[245]. - Acquisitions meeting the definition of a business are accounted for using the acquisition method, with assets and liabilities recorded at fair value at acquisition date[246]. - For asset acquisitions not meeting the business definition, costs are recognized at the acquisition date, and goodwill is not recorded[247]. - Contingent consideration is recognized when probable and reasonably estimable, affecting the initial cost of acquired assets[248]. - Contingent consideration linked to future services is recorded as compensation cost in the post-combination period[249]. Corporate Governance and Compliance - The company elected to report as an "emerging growth company," allowing for less rigorous ongoing reporting requirements[250]. - 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[252]. - The company is not currently exposed to market risks from interest rates or foreign currency exchange rates[253].