10-Q

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 March 31, 2024

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
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

2912 Colorado Ave., Suite #203

Santa Monica, California 90404

(Address of principal executive offices)

Company: (213) 421-1920; Investor Relations: 203-741-8811

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically on its corporate web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SLE	NASDAQ Capital Market

As of May 13, 2024, there were 6,632,707 shares of the registrant’s common stock, $0.001 par value, issued and outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45

PART I

FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUPER LEAGUE ENTERPRISE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Rounded to the nearest thousands, except share and per share data)

	March 31,			December 31,
	2024			2023
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	3,311,000		$	7,609,000
Accounts receivable		6,240,000			8,287,000
Prepaid expense and other current assets		1,134,000			862,000
Total current assets		10,685,000			16,758,000
Property and equipment, net		53,000			70,000
Intangible assets, net		5,603,000			6,636,000
Goodwill		1,864,000			1,864,000
Other receivable – noncurrent		395,000			-
Total assets	$	18,600,000		$	25,328,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	7,110,000		$	10,420,000
Accrued contingent consideration		2,017,000			1,812,000
Contract liabilities		334,000			339,000
Secured loan – SLR Facility		370,000			800,000
Total current liabilities		9,831,000			13,371,000
Accrued contingent consideration – noncurrent		449,000			396,000
Warrant liability		2,332,000			1,571,000
Total liabilities		12,612,000			15,338,000
Commitments and Contingencies
Stockholders’ Equity
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; 22,078 and 23,656 and shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.		-			-
Common stock, par value $0.001 per share; 400,000,000 shares authorized; 5,982,912 and 4,774,116 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.		83,000			81,000
Additional paid-in capital		260,183,000			258,923,000
Accumulated deficit		(254,278,000	)		(249,014,000	)
Total stockholders’ equity		5,988,000			9,990,000
Total liabilities and stockholders’ equity	$	18,600,000		$	25,328,000

See accompanying notes to condensed consolidated financial statements

-1-

SUPER LEAGUE ENTERPRISE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Rounded to the nearest thousands, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2024			2023
REVENUE	$	4,209,000		$	3,322,000
COST OF REVENUE		2,477,000			1,948,000
GROSS PROFIT		1,732,000			1,374,000
OPERATING EXPENSE
Selling, marketing and advertising		2,277,000			2,650,000
Engineering, technology and development		1,699,000			2,956,000
General and administrative		2,102,000			2,520,000
Contingent consideration		259,000			468,000
Total operating expense		6,337,000			8,594,000
NET OPERATING LOSS		(4,605,000	)		(7,220,000	)
OTHER INCOME (EXPENSE)
Gain on sale of intangible assets		144,000			-
Change in fair value of warrant liability		(761,000	)		-
Interest expense		(18,000	)		(40,000	)
Other		(20,000	)		24,000
Total other income (expense)		(655,000	)		(16,000	)
Loss before provision for income taxes		(5,260,000	)		(7,236,000	)
Provision for income taxes		-			-
NET LOSS	$	(5,260,000	)	$	(7,236,000	)
Net loss attributable to common stockholders - basic and diluted
Basic and diluted net loss per common share	$	(1.00	)	$	(3.84	)
Weighted-average number of shares outstanding, basic and diluted		5,240,755			1,885,797

See accompanying notes to condensed consolidated financial statements

-2-

SUPER LEAGUE ENTERPRISE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Rounded to the nearest thousands, except share and per share data)

(Unaudited)

	Three Months
	Ended March 31,
	2024			2023
Preferred stock (Shares):
Balance, beginning of period		23,656			10,323
Issuance of Series A-5 preferred stock at $1,000 per share		-			2,299
Conversions of Series A Preferred stock to common stock		(475	)		-
Conversions of Series AA Preferred stock to common stock		(263	)		-
Conversions of Series AAA Preferred stock to common stock		(840	)		-
Balance, end of period		22,078			12,622
Preferred stock (Amount, at Par Value):
Balance, beginning of period	$	-		$	-
Issuance of Series A-5 preferred stock, $0.001 par value, at $1,000 per share		-			-
Conversions of Series A Preferred stock		-			-
Conversions of Series AA Preferred stock		-			-
Conversions of Series AAA Preferred stock		-			-
Balance, end of period	$	-		$	-
Common stock (Shares):
Balance, beginning of period		4,774,116			1,880,298
Conversion of Series A preferred stock		45,587			-
Conversion of Series AA preferred stock		139,452			-
Conversion of Series AAA preferred stock		501,803			-
Stock-based compensation		19,788			9,455
Issuance of common stock in settlement of legal matter		500,000			-
Preferred stock dividends paid – common stock		2,166			-
Balance, end of period		5,982,912			1,889,753
Common stock (Amount):
Balance, beginning of period	$	81,000		$	47,000
Conversion of Series A, AA and AAA preferred stock		1,000			-
Stock-based compensation		-			-
Issuance of common stock in settlement of legal matter		1,000			-
Preferred stock dividends paid – common stock		-			-
Balance, end of period	$	83,000		$	47,000
Additional paid-in-capital:
Balance, beginning of period	$	258,923,000		$	229,900,000
Issuance of Series A-5 preferred stock at $1,000 per share, net of issuance costs		-			1,919,000
Stock-based compensation		332,000			720,000
Issuance of common stock in settlement of legal matter		924,000			-
Preferred stock dividends paid – common stock		4,000			-
Balance, end of period	$	260,183,000		$	232,539,000
Accumulated Deficit:
Balance, beginning of period	$	(249,014,000	)	$	(210,743,000	)
Preferred stock dividends paid – common stock		(4,000	)		-
Net Loss		(5,260,000	)		(7,236,000	)
Balance, end of period	$	(254,278,000	)	$	(217,979,000	)
Total stockholders’ equity	$	5,988,000		$	14,607,000

See accompanying notes to condensed consolidated financial statements

-3-

SUPER LEAGUE ENTERPRISE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Rounded to the nearest thousands)

(Unaudited)

	Three Months Ended March 31,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(5,260,000	)	$	(7,236,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		700,000			1,337,000
Stock-based compensation		332,000			783,000
Change in fair value of warrant liability		761,000			-
Change in fair value of contingent consideration		116,000			-
Amortization of convertible notes discount		-			40,000
Gain on sale of intangible assets		(144,000	)		-
Change in fair value of noncash legal settlement		164,000			-
Changes in assets and liabilities:
Accounts receivable		2,048,000			2,671,000
Prepaid expense and other current assets		(48,000	)		140,000
Accounts payable and accrued expense		(2,548,000	)		(919,000	)
Accrued contingent consideration		142,000			468,000
Contract liabilities		(6,000	)		(82,000	)
Accrued interest on note payable		-			(180,000	)
Net cash used in operating activities		(3,743,000	)		(2,978,000	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		-			(6,000	)
Capitalization of software development costs		(125,000	)		(281,000	)
Acquisition of other intangible assets		-			(7,000	)
Net cash used in investing activities		(125,000	)		(294,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock, net of issuance costs		-			1,919,000
Payments on convertible notes		-			(539,000	)
Accounts receivable facility advances		371,000			-
Payments on accounts receivable facility		(801,000	)		-
Net cash (used in) provided by financing activities		(430,000	)		1,380,000
DECREASE IN CASH		(4,298,000	)		(1,892,000	)
Cash and Cash Equivalents – beginning of period		7,609,000			2,482,000
Cash and Cash Equivalents – end of period	$	3,311,000		$	590,000
SUPPLEMENTAL NONCASH INVESTING ACTIVITIES
Issuance of common stock in connection with legal settlement	$	924,000			-

See accompanying notes to condensed consolidated financial statements

-4-

SUPER LEAGUE ENTERPRISE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

Super League Enterprise, Inc. (Nasdaq: SLE), (“Super League,” the “Company,” “we,” “us” or “our”) is a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms. From open gaming powerhouses such as Roblox, Minecraft and Fortnite Creative, to bespoke worlds built using the most advanced 3D creation tools, Super League’s innovative solutions provide incomparable access to massive audiences who gather in immersive digital spaces to socialize, play, explore, collaborate, shop, learn and create. As a true end-to-end activation partner for dozens of global brands, Super League offers a complete range of development, distribution, monetization and optimization capabilities designed to engage users through dynamic, energized programs. As an originator of new experiences fueled by a network of top developers, a comprehensive set of proprietary creator tools and a future-forward team of creative professionals, Super League accelerates intellectual property (“IP”) and audience success within the fastest growing sector of the media industry.

Super League was incorporated on October 1, 2014 as Nth Games, Inc. under the laws of the State of Delaware and changed its name to Super League Gaming, Inc. on June 15, 2015, and to Super League Enterprise, Inc. on September 11, 2023. We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012, as amended.

On September 7, 2023, the Company filed a Certificate of Amendment (the “2023 Second Amendment”) to the Charter, which Second Amendment became effective as of September 11, 2023, to change the name of the Company from Super League Gaming, Inc. to Super League Enterprise, Inc. (the “Name Change”) and to effect a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-20 (the “Reverse Split”). The Name Change and the Reverse Split were approved by the Company’s Board on July 5, 2023, and approved by the stockholders of the Company on September 7, 2023. Refer to Note 7 below for additional information regarding the Reverse Split. In connection with the Name Change, the Company also changed its Nasdaq ticker symbol to “SLE” from “SLGG.”

All references to common stock, warrants to purchase common stock, options to purchase common stock, restricted stock, share data, per share data and related information contained in the condensed consolidated financial statements (hereinafter, “consolidated financial statements”) have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented.

All references to “Note,” followed by a number reference from one to seven herein, refer to the applicable corresponding numbered footnotes to these consolidated financial statements.

Sale of Minehut

On February 29, 2024, the Company sold its Minehut related assets (“Minehut Assets”) to GamerSafer, Inc. (“GamerSafer”), in a transaction approved by the Board of Directors of the Company. Pursuant to the Asset Purchase Agreement entered into by and between GamerSafer and the Company on February 26, 2024 (the “GS Agreement”), the Company will receive $1.0 million of purchase consideration (“Purchase Consideration”) for the Minehut Assets, which amount will be paid by GamerSafer in revenue and royalty sharing over a multiple year period, as described in the GS Agreement (the “Minehut Sale”). Other than with respect to the GS Agreement, there is no relationship between the Company or its affiliates with GamerSafer or its affiliates.

The transaction allows Super League to streamline its position in partnering with major brands to build, market, and operate 3D experiences across multiple immersive platforms, including open gaming powerhouses like Minecraft, and aligns with the Company’s cost improvement initiatives. Super League and GamerSafer will maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners. 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and footnotes required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 15, 2023.

-5-

The December 31, 2023 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated interim financial statements of Super League include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Super League’s financial position as of March 31, 2024, and results of its operations and its cash flows for the interim periods presented. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year, or any future period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications to operating expense line items have been made to prior year amounts for consistency and comparability with the current year’s consolidated financial statement presentation. These reclassifications had no effect on the reported total revenue, operating expense, total assets, total liabilities, total stockholder’s equity, or net loss for the prior period presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, impairment of intangibles, stock-based compensation expense, capitalized internal-use-software costs, accounting for business combinations and related contingent consideration, derecognition of assets, accounting for convertible debt, including estimates and assumptions used to calculate the fair value of debt instruments, accounting for convertible preferred stock, including modifications and exchanges of equity and equity-linked instruments, accounting for warrant liabilities and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective, or complex judgments.

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company incurred net losses of $5.3 million and $7.2 million for the three months ended March 31, 2024 and 2023, respectively, and had an accumulated deficit of $254.3 million as of March 31, 2024. For the three months ended March 31, 2024 and 2023, net cash used in operating activities totaled $3.7 million and $3.0 million, respectively.

The Company had cash and cash equivalents of $3.3 million and $7.6 million as of March 31, 2024 and December 31, 2023, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations. Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control. The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the threat of other outbreaks or pandemics, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets. In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 205-40, “Going Concern,” (“ASC 205”).

Management’s Plans

The Company experienced growth during the periods presented through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter increases in recognized revenue across our primary revenue streams. During the prior fiscal year and the quarter ended March 31, 2024, we continued our focus on the expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through opportunistic strategic acquisitions, as well as management and reduction of operating costs. Management continues to explore alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings. 

-6-

The Company considers historical operating results, costs, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period. Management’s considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements, and the Company will be able to raise additional equity and / or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of the Company’s business activities, sales of material assets, default on its obligations, or forced insolvency. The accompanying consolidated financial statements do not contain any adjustments which might be necessary if the Company were unable to continue as a going concern. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.

We may continue to evaluate potential strategic acquisitions. To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future. If we fail to obtain additional financing when needed, we may not be able to execute our business plans which, in turn, would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies.

Revenue Recognition

Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services and when the customer obtains control of the good or service. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

-7-

Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material.

The Company generates revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) content and technology through the production and distribution of our own, advertiser and third-party content, and (iii) direct to consumer offers, including in-game items, e-commerce and digital collectibles.

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the goods or services prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its media and advertising, publishing and content studio and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to media and advertising sales arrangements.

In the event a customer pays us consideration, or we have a right to an amount of consideration that is unconditional, prior to our transfer of a good or service to the customer, we reflect the contract as a contract liability when the payment is made or the payment is due, whichever is earlier. In the event we perform by transferring goods or services to a customer before the customer pays consideration or before payment is due, we reflect the contract as a contract asset, excluding any amounts reflected as a receivable.

Media and Advertising

Media and advertising revenue primarily consists of direct and reseller sales of our on-platform media and analytics products, and influencer marketing campaign sales to third-party brands and agencies (hereinafter, “Brands”).

On Platform Media

On platform media revenue is generated from third party Brands advertising in-game on Roblox or other digital platforms, and prior to the Minehut Sale, on our Minehut Minecraft platform. Media assets include static billboards, video billboards, portals, 3D characters, Pop Ups and other media products. We work with Brands to determine the specific campaign media to deploy, target ad units and target demographics. We customize the media advertising campaign and media products with applicable branding, images and design and place the media on the various digital platforms. Media is delivered via our Super Biz Roblox platform, the Roblox Immersive Ads platform, other platforms, and prior to the Minehut Sale, on our owned and operated Minehut platform. Media placement can be based on a cost per thousand, other cost per measure, or a flat fee. Media and advertising arrangements typically include contract terms for time periods ranging from one week to two or three months in length.

For on-platform media campaigns, we typically insert media products on-platform (in-game) to deliver to the Brand a predetermined number of impressions identified in the underlying contract. The benefit accrues to the Brand at the time that we deliver the impression on the platform, and the media product is viewed or interacted with by the on-platform user. The performance obligation for on-platform media campaigns is each impression that is guaranteed or required to be delivered per the underlying contract.

Each impression is considered a good or service that is distinct under the revenue standard, and the performance obligation under our on-platform media contracts is the delivery of a series of impressions. Each impression required to be delivered in the series that we promise to transfer to the Brand meets the criteria to be a performance obligation satisfied over time, due to the fact that (1) our performance does not create an asset with an alternative use to the Company, and (2) we have an enforceable right to payment for performance completed to date per the terms of the contract. Further, the same method is used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct impression, as in the transfer of the series of impressions to the customer, which is based on actual delivery of impressions. As such, we account for the specified series of impressions as a single performance obligation.

The delivery of the impression on platform represents the change in control of the good or service, and therefore, the Company satisfies its performance obligations and recognizes revenue based on the delivery of impressions under the contract.

Influencer Marketing

Influencer marketing revenue is generated in connection with the development, management and execution of influencer marketing campaigns on behalf of Brands, primarily on You Tube, Instagram and Tik Tok. Influencer marketing campaigns are collaborations between Super League, popular social-media influencers, and Brands, to promote a Brands’ products or services. Influencers are paid a flat rate per post to feature a Brand’s product or service on their respective social media outlets.

-8-

For influencer marketing campaigns that include multiple influencers, the customer can benefit from the influencer posts either on its own or together with other resources that are readily available to the customer. Our influencer marketing campaigns for Brands (1) incorporate a significant service of integrating the goods or services with other goods or services promised in the contract (typically additional influencer posts) into a bundle of goods or services that represent the combined output that the customer has contracted for, and (2) the goods or services are interdependent in that each of the goods or services is affected by one or more of the other goods or services in the contract which combined, create an influencer marketing campaign to satisfy the Brand’s specific campaign objectives. The interdependency of the performance obligations is supported by an understanding of what a customer expects to receive as a final product with respect to an influencer marketing campaign, which is an integrated influencer marketing advertising campaign that the influencer posts create when they are combined into an overall integrated campaign.

Our customers receive and consume the benefits of each influencer’s post as the content is posted on the influencers respective social media outlet. In addition, the influencer marketing campaigns and videos created by influencers are highly customized advertising engagements, where Brand specific assets and collateral are created for the customer based on specific and customized specifications, and therefore, does not create an asset with an alternative use. Further, based on contract terms, we typically have an enforceable right to payment for performance to date during the term of the arrangement.

We recognize revenues for influencer marketing campaigns based on input methods which recognize revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. As such, revenues are recognized over the term of the campaign, as the influencer videos are posted, based on costs incurred to date relative to total costs for the influencer marketing campaign.

Publishing and Content Studio

Publishing and content studio revenue consists of revenue generated from immersive game development and custom game experiences within our owned and affiliate game worlds, and revenue generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels.

Publishing

Custom builds are highly customized branded game experiences created and built by Super League for customers on existing digital platforms such as Roblox, Fortnite, Decentraland and others. Custom builds often include the creation of highly customized and branded gaming experiences and other campaign specific media or products to create an overall customized immersive world campaign.

Custom integrations are highly customized advertising campaigns that are integrated into and run on existing affiliate Roblox gaming experiences. Custom integrations will often include the creation of highly customized and branded game integration elements to be integrated into the existing Roblox gaming experience to the customers specifications and other campaign specific media or products. Prior to the Minehut Sale, we also created custom integrations on the digital property “Minehut” for Brands.

Our custom builds and custom integration (hereinafter, “Custom Programs”) campaign revenue arrangements typically include multiple promises and performance obligations, including requirements to design, create and launch a platform game, customize and enhance an existing game, deploy media products, and related performance measurement. Custom Programs offer a strategically integrated advertising campaign with multiple integrated components, and we provide a significant service of integrating the goods or services with other goods or services promised in the contract into a bundle of goods or services that represent the combined output or outputs that the customer has contracted for. As such, Custom Program revenue arrangements are combined into a single performance unit, as our performance does not create an asset with an alternative use to the entity and we typically have an enforceable right to payment for performance to date during the term of the arrangement.

We recognize revenues for Custom Programs based on input methods, that recognize revenue based upon estimates of progress toward complete satisfaction of the contract performance obligations, utilizing primarily costs or direct labor hours incurred to date to estimate progress towards completion.

Content Production

Content production revenue is generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. We distribute three primary types of content for syndication and licensing, including: (1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology.

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Content production arrangements typically involve promises to provide a distinct set of videos, creative, content creation and or other live or remote production services. These services can be one-off in nature (relatively short services periods of one day to one week) or can be specified as monthly services over a multi-month period.

One-off and monthly content production services are distinct in that the customer can benefit from the service either on its own or together with other resources that are readily available to the customer. Further, promises to provide one-off or monthly content production services are typically separately identifiable as the nature of the promises, within the context of the contract, is to transfer each of those goods or services individually. Each month’s content production services are separate and not integrated with a prior month’s or subsequent months services and do not represent a combined output; each months content production services do not modify any other prior period content production services, and the monthly services are not interdependent or highly interrelated.

As a result, each one-off or monthly promise to provide content production services is a distinct good or service that we promise to transfer and are therefore performance obligations. In general, content production contracts do not meet the criteria for recognition of revenues over time as the customer typically does not simultaneously receive and consume the benefits provided by our performance as we perform, our performance does not typically create or enhance an asset that the customer controls, and while our performance does not create an asset with an alternative use, we typically have a right to payment upon completion of each distinct performance obligation.

A performance obligation is satisfied at a point in time if none of the criteria for satisfying a performance obligation over time are met. For content production arrangements, we have a right to payment and the customer has control of the good or service at the time of completion and delivery of the one-off or monthly content production services in accordance with the terms of the underlying contract. As such, revenue is recognized at the time of completion of the one-off or monthly content production services.

Direct to Consumer

Direct to consumer revenue primarily consists of monthly digital subscription fees, and sales of in-game digital goods. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale.

InPvP Platform Generated Sales Transactions

Through a relationship with Microsoft, the owner of Minecraft, we operate a Minecraft server world for players playing the game on consoles and tablets. We are one of seven partner servers with Microsoft that, while “free to play,” monetize the players through in-game micro transactions. We generate in-game platform sales revenue from the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

InPvP revenues are generated from single transactions for various distinct digital goods sold to users in-game. Microsoft processes sales transactions and remits the applicable revenue share to us pursuant to the terms of the Microsoft agreement.

Revenue for digital goods sold on the platform is recognized when Microsoft (our partner) collects the revenue and facilitates the transaction, including delivery of digital goods, on the platform. Revenue for such arrangements includes all revenue generated, make goods, and refunds of all transactions managed via the platform by Microsoft. Payments are made to the Company monthly based on the sales revenue generated on the platform.

Revenue was comprised of the following for the three months ended March 31:

	2024		2023
	(Unaudited)
Media and advertising	$	1,365,000	$	1,604,000
Publishing and content studio		2,538,000		1,336,000
Direct to consumer		306,000		382,000
	$	4,209,000	$	3,322,000

For the three months ended March 31, 2024, 31% of revenues were recognized at a single point in time, and 69% of revenues were recognized over time, respectively. For the three months ended March 31, 2023, 29% of revenue was recognized at a single point in time, and 71% of revenue was recognized over time, respectively.

Contract assets totaled $1,075,000 at March 31, 2024, $546,000 at December 31, 2023, and $1,013,000 at December 31, 2022. Contract liabilities totaled $334,000 at March 31, 2024, $339,000 at December 31, 2023, and $111,000 at December 31, 2022. Revenue recognized during the three months ended March 31, 2024 relating to contract liabilities as of December 31, 2023 totaled $171,000. Revenue recognized during the three months ended March 31, 2023 relating to contract liabilities as of December 31, 2022 totaled $82,000.

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In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts with customers, these reporting requirements are not applicable as per ASC 606-10-50-14 as the performance obligation is part of a contract that has an original duration of one year or less.

Cost of Revenue

Cost of revenue includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including internal and third-party engineering, creative, content, broadcast and other personnel, talent and influencers, internal and third-party game developers, content capture and production services, direct marketing, cloud services, software, prizing, and revenue sharing fees.

Advertising

Advertising costs include the cost of ad production, social media, print media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising costs are included in selling, marketing and advertising expense in the condensed consolidated statements of operations. Advertising expense for the three months ended March 31, 2024 and 2023 was $43,000 and $9,000, respectively.

Engineering, Technology and Development Costs

Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense includes the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support.

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3. Unobservable inputs which are supported by little or no market activity and which are significant to the fair value of the assets or liabilities.

Certain assets and liabilities are required to be recorded at fair value on a recurring basis, including derivative financial instruments, contingent consideration and warrant liabilities recorded in accordance with FASB ASC Topic 480, “Distinguishing liabilities from equity,” (“ASC 480”), and convertible notes payable recorded at fair value. As described in the notes below, contingent consideration, convertible notes payable and warrant liabilities outstanding during the periods presented are recorded at fair value. Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers to/from Levels 1, 2, and 3 during the periods presented.

Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair value for other assets and liabilities such as cash, restricted cash, accounts receivable, other receivables, prepaid expense and other current assets, accounts payable and accrued expense, and liabilities to customers have been determined to approximate carrying amounts due to the short maturities of these instruments.

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Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in the statement of operations.

Equity-linked instruments that are deemed to be freestanding instruments issued in conjunction with preferred stock are accounted for separately. For equity linked instruments classified as equity, the proceeds are allocated based on the relative fair values of the preferred stock and the equity-linked instrument following the guidance in FASB ASC Topic 470, “Debt,” (“ASC 470”).

Acquisitions

Acquisition Method. Acquisitions that meet the definition of a business under FASB ASC Topic 805, “Business Combinations,” (“ASC 805”) are accounted for using the acquisition method of accounting. Under the acquisition method of accounting, assets acquired, liabilities assumed, contractual contingencies, and contingent consideration, when applicable, are recorded at fair value at the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The application of the acquisition method of accounting requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in connection with the allocation of the purchase price consideration to the assets acquired and liabilities assumed. Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expense in the consolidated statements of operations.

Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable. Contingent consideration recognized is included in the initial cost of the assets acquired, with subsequent changes in the recorded amount of contingent consideration recognized as an adjustment to the cost basis of the acquired assets. Subsequent changes are allocated to the acquired assets based on their relative fair value. Depreciation and/or amortization of adjusted assets are recognized as a cumulative catch-up adjustment, as if the additional amount of consideration that is no longer contingent had been accrued from the outset of the arrangement.

Contingent consideration that is paid to sellers that remain employed by the acquirer and linked to future services is generally considered compensation cost and recorded in the statement of operations in the post-combination period.

Intangible Assets

Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights, (iv) developed technology acquired, (v) partner, customer, creator and influencer related intangible assets acquired and (vi) other intangible assets, which are recorded at cost (or in accordance with the acquisition method or cost accumulation methods described above) and amortized using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 10 years.

Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life.

Transfer or Sale of Intangible Assets

Upon the sale of an intangible asset, or group of intangible assets (hereinafter, “nonfinancial assets”), the Company initially evaluates whether the Company has a controlling financial interest in the legal entity that holds the nonfinancial assets by applying the guidance on consolidation. Any nonfinancial assets transferred that are held in a legal entity in which the Company does not have (or ceases to have) a controlling financial interest is further evaluated to determine whether the underlying transaction contract meets all of the criteria for accounting for contract under the revenue standard. Once a contract meets all of the criteria, the Company identifies each distinct nonfinancial asset promised to a counterparty and derecognizes each distinct nonfinancial asset when the Company transfers control of the nonfinancial asset to the counterparty. The Company evaluates the point in time at which a counterparty obtains control of the nonfinancial assets, including whether or not the counterparty can direct the use of, and obtain substantially all of the benefits from, each distinct nonfinancial asset.

If the consideration promised in a contract is variable or includes a variable amount, the Company estimates the amount of consideration to which the Company will be entitled in exchange for transferring the promised assets to a counterparty. Purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. The Company determines the total transaction price, including an estimate of any variable consideration, at contract inception and reassesses this estimate at each reporting date. The Company estimates the transaction price utilizing the expected value method. The expected value is the sum of probability-weighted amounts in a range of possible consideration amounts.

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The accounting for an arrangement with a put option depends on the amount the Company must pay to the counterparty in the event the counterparty exercises the put option, and whether the counterparty has a significant economic incentive to exercise its right. The accounting for put options requires the Company to assess at contract inception, whether the counterparty has a significant economic incentive to exercise its right, including how the repurchase price compares to the expected market value of the nonfinancial assets at the date of repurchase and the amount of time until the right expires. A customer has a significant economic incentive to exercise a put option when the repurchase price is expected to significantly exceed the market value of the good at the time of repurchase. The Company accounts for a put option as a sale of an asset or group of assets with a right of return, if the repurchase price is less than the original sales price and the customer does not have a significant economic incentive to exercise its right.

Impairment of Long-Lived Assets

The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of our use of the acquired assets or the strategy for our overall business; significant negative industry or economic trends; significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments; and significant decline in our stock price for a sustained period. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded.

Other assets of a reporting unit that are held and used may be required to be tested for impairment when certain events trigger interim goodwill impairment tests. In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below. For the periods presented herein, management believes that there was no impairment of long-lived assets. There can be no assurance, however, that market conditions or demand for the Company’s products or services will not change, which could result in long-lived asset impairment charges in the future.

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We consider our market capitalization and the carrying value of our assets and liabilities, including goodwill, when performing our goodwill impairment tests. We operate in one reporting segment.

If a potential impairment exists, a calculation is performed to determine the fair value of existing goodwill. This calculation can be based on quoted market prices and / or valuation models, which consider the estimated future undiscounted cash flows resulting from the reporting unit, and a discount rate commensurate with the risks involved. Third-party appraised values may also be used in determining whether impairment potentially exists. In assessing goodwill impairment, significant judgment is required in connection with estimates of market values, estimates of the amount and timing of future cash flows, and estimates of other factors that are used to determine the fair value of our reporting unit. If these estimates or related projections change in future periods, future goodwill impairment tests may result in charges to earnings.

When conducting the Company’s annual or interim goodwill impairment assessment, we have the option to initially perform a qualitative evaluation of whether it is more likely than not that goodwill is impaired. The Company is also permitted to bypass the qualitative assessment and proceed directly to the quantitative test. In evaluating whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we consider the guidance set forth in ASC 350, which requires an entity to assess relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, financial performance and other relevant events or circumstances.

Stock-Based Compensation

Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Estimates of expected volatility of the underlying common stock for the expected term of the stock option used in the Black-Scholes-Merton option pricing model are determined by reference to historical volatilities of the Company’s common stock and historical volatilities of similar companies.

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Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued.

A condition affecting the exercisability or other pertinent factors used in determining the fair value of an award that is based on an entity achieving a specified share price constitutes a market condition pursuant to FASB ASC Topic 718, “Stock based Compensation,” (“ASC 718”). A market condition is reflected in the grant-date fair value of an award, and therefore, a Monte Carlo simulation model is utilized to determine the estimated fair value of the equity-based award. Compensation cost is recognized for awards with a market condition, provided the requisite service period is satisfied, regardless of whether the market condition is ever satisfied.

Cancellation of an existing equity-classified award along with a concurrent grant of a replacement award is accounted for as a modification under ASC 718. Total compensation cost to be recognized in connection with a modification and concurrent grant of a replacement award is equal to the original grant date fair value plus any incremental fair value, calculated as the excess of the fair value of the replacement award over the fair value of the original awards on the cancellation date. Any incremental compensation cost related to vested awards is recognized immediately on the modification date. Any incremental compensation cost related to unvested awards is recognized prospectively over the remaining service period, in addition to the remaining unrecognized grant date fair value.

On March 19, 2024, the Board approved that an equity pool consisting of (i) 1,692,606 shares of common stock, collectively, which amount is equivalent to ten percent of the then existing and outstanding common stock of the Company on an as-converted basis, be issued to executives of the Company in the following form, amounts and vesting conditions: (a) stock options to purchase 846,303 shares of common stock, with vesting at the rate of 1/36^th per month in arrears, and exercisable at a price per share of $1.85 (collectively, the “2024 Options”); and (b) restricted stock units consisting of 846,303 shares of common stock with vesting of (i) fifty percent in equal one-third increments on the first, second and third anniversaries of the restricted stock unit grant issuances, and (ii) fifty percent to be allocated equally between (a) achievement of a profitable fiscal quarter, on a net income basis, in accordance with U.S. GAAP, (b) achievement of 85% of earnings before interest, taxes, depreciation and amortization (“EBITDA”) target for fiscal year 2024, and (c) achievement of 85% of EBITDA target for fiscal year 2025 (with such fiscal year 2025 target to be approved by the Board as part of the fiscal year 2025 financial plan)(collectively, the “2024 RSUs”). The issuance of the 2024 Options and 2024 RSUs, as described above, is contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan at the Company’s 2024 annual meeting of stockholders, and will be subject to cancellation in the event stockholder approval is not obtained.

Total noncash stock-based compensation expense for the periods presented was included in the following financial statement line items: 

	Three Months
	Ended March 31,
	2024		2023
	(Unaudited)
Sales, marketing and advertising	$	122,000	$	164,000
Engineering, technology and development		11,000		89,000
General and administrative		199,000		530,000
Total noncash stock compensation expense	$	332,000	$	783,000

Financing Costs

Specific incremental costs directly attributable to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the equity financing. In the event that the proposed or actual equity financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred equity financing costs, if any, are included in other current assets in the accompanying condensed consolidated balance sheet. Deferred financing costs totaled $323,000 and $282,000 as of March 31, 2024 and December 31, 2023, respectively.

Convertible Debt

The Company evaluates convertible notes outstanding to determine if those contracts or embedded components of those contracts qualify as derivatives under FASB ASC Topic 815, “Derivatives and Hedging,” (“ASC 815”). ASC 815 requires conversion, redemption options, call options and other features (hereinafter, “Embedded Instruments”) contained in the Company’s convertible debt instruments that meet certain criteria to be bifurcated and separately accounted for as an embedded derivative. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

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In the event that the fair value option election is not made, as described below, the Company evaluates the balance sheet classification for convertible debt instruments issued to determine whether the instrument should be classified as debt or equity, and whether the Embedded Instruments should be accounted for separately from the host instrument. Embedded Instruments of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the feature, were it a standalone instrument, meets the definition of an “embedded derivative.” Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it is required to be separated from the host instrument and classified as a derivative liability carried on the balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations.

Fair Value Option (“FVO”) Election. The Company accounted for certain convertible notes issued, as described at Note 5, under the fair value option election pursuant to FASB ASC Topic 825, “Financial Instruments,” (“ASC 825”) as discussed below. The convertible notes accounted for under the FVO election are each debt host financial instruments containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825 provides for the “fair value option” election, to the extent not otherwise prohibited by ASC 825, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment, as required by ASC 825, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) in the accompanying consolidated statement of operations. With respect to the note described at Note 5, as provided for by ASC 825, the estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying consolidated statements of operations, since the change in fair value of the convertible notes payable was not attributable to instrument specific credit risk. The estimated fair value adjustment is included in interest expense in the accompanying consolidated statement of operations.

Transfers of Financial Assets

The Company accounts for transfers of financial assets as sales when it has surrendered control over the related assets. Whether control has been relinquished requires, among other things, an evaluation of relevant legal considerations and an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred. Gains and losses stemming from transfers reported as sales, if any, are included in the statements of income. Assets obtained and liabilities incurred in connection with transfers reported as sales are initially recognized in the balance sheet at fair value.

Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Accordingly, the related assets remain on the Company’s balance sheet and continue to be reported and accounted for as if the transfer had not occurred. Cash proceeds from these transfers are reported as liabilities, with attributable interest expense recognized over the life of the related transactions. Commitment fees charged irrespective of drawdown activity are recognized as expense on a straight line basis over the commitment period and included in other income (expense) in the consolidated statements of operations. Refer to Note 5 for additional information.

Reportable Segments

The Company utilizes the management approach to identify the Company’s operating segments and measure the financial information disclosed, based on information reported internally to the Chief Operating Decision Maker (“CODM”) to make resource allocation and performance assessment decisions. An operating segment of a public entity has all the following characteristics: (1) it engages in business activities from which it may earn revenue and incur expense; (2) its operating results are regularly reviewed by the public entity’s CODM to make decisions about resources to be allocated to the segment and assess its performance: and (3) its discrete financial information is available. Based on the applicable criteria under the standard, the components of the Company’s operations are its: (1) media and advertising component, including its publishing and content studio component; and (2) the Company’s direct-to-consumer component.

A reportable segment is an identified operating segment that also exceeds the quantitative thresholds described in the applicable standard. Based on the applicable criteria under the standard, including quantitative thresholds, management has determined that the Company has one reportable segment that operated primarily in domestic markets during the periods presented herein.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents, investments and accounts receivable. The Company places its cash equivalents and investments primarily in highly rated money market funds. Cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

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Risks and Uncertainties

Concentrations. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, and vendors whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable, as follows:

	Three Months Ended March 31,
	2024					2023
	(Unaudited)
Number of customers > 10% of revenue / percent of revenue		Three	/	36	%	Three	/	37	%

Revenue concentrations were comprised of the following revenue categories:

	Three Months
	Ended March 31,
	2024			2023
	(Unaudited)
Media and advertising		12	%		19	%
Publishing and content studio		24	%		18	%

	March 31, 2024				December 31, 2023
	(Unaudited)
Number of customers > 10% of accounts receivable / percent of accounts receivable	Two	/	41	%	Three	/	55	%
Number of vendors > 10% of accounts payable / percent of accounts payable	Two	/	41	%	Two	/	37	%

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period. Diluted earnings per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period, including the dilutive effect of common stock equivalents. Potentially dilutive common stock equivalents primarily consist of common stock potentially issuable in connection with the conversion of outstanding preferred stock, convertible notes payable, employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings.

Common stock underlying all outstanding stock options, restricted stock units and warrants, totaling 2,178,000 and 346,000 at March 31, 2024 and 2023, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive. Common stock potentially issuable in connection with the conversion of outstanding preferred stock totaling 11,442,000 and 1,121,000 at March 31, 2024 and 2023, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive.

A reconciliation of net loss to net loss attributable to common stockholders is as follows for the three months ended March 31:

	2024			2023
	(Unaudited)
Net loss	$	(5,260,000	)	$	(7,236,000	)
Preferred Dividends paid in shares of common stock		(4,000	)		-
Net loss attributable to common stockholders	$	(5,264,000	)	$	(7,236,000	)

Dividends

Dividends on preferred stock paid in another class of stock are recorded at the fair value of the shares issued as a charge to retained earnings. Dividends declared on preferred stock that are payable in the Company’s common shares are deducted from earnings available to common shareholders when computing earnings per share.

Certain of the Company’s outstanding preferred stock contain a conversion price down round feature subject to a contractual floor pursuant to the underlying rights in the applicable certificate of designation. Upon the occurrence of a triggering event that results in a reduction of the conversion price for an equity-classified convertible preferred stock, the Company measures the value of the effect of the feature as the difference between the fair value of the financial instrument without the down round feature, with a conversion price corresponding to the currently stated conversion price of the issued instrument, and the fair value of the financial instrument without the down round feature with a conversion price corresponding to the reduced conversion price upon the down round feature being triggered. The value of the effect of a down round feature that is triggered is recognized as a charge to retained earnings and a reduction to income available to common stockholders in the computation of earnings per share.

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Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets.

Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the periods presented.

Contingencies

Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Recent Accounting Guidance

Recent Accounting Pronouncements – Not Yet Adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) which updates required disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment's profit or loss. This standard also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The standard is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, though early adoption is permitted. Adoption of ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the presentational impact of ASU 2023-07 and expects to adopt in the year ended December 31, 2024.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”) which enhances the transparency and usefulness of income tax disclosures. The updates are effective for annual periods beginning after December 15, 2024 on a prospective or retrospective basis, though early adoption is permitted. The Company is currently evaluating the presentational impact of ASU 2023-09 and expects to adopt in the year ended December 31, 2025.

Recent Accounting Pronouncements – Recently Adopted.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers, in order to align the recognition of a contract liability with the definition of a performance obligation. ASU 2021-08 became effective for the Company and was adopted beginning in the first quarter of fiscal year 2023. The adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.

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3. INTANGIBLE AND OTHER ASSETS

Intangible and other assets consisted of the following:

	March 31, 2024			December 31, 2023			Weighted Average Amortization Period (Years)
	(Unaudited)
Partner and customer relationships	$	7,645,000		$	7,645,000			6.5
Capitalized software development costs		4,446,000			5,912,000			3.0
Capitalized third-party game property costs		500,000			500,000			5.0
Developed technology		3,931,000			3,931,000			5.0
Influencers/content creators		2,559,000			2,559,000			4.5
Trade name		209,000			209,000			5.0
Domain		68,000			68,000			10.0
Copyrights and other		745,000			825,000			5.5
		20,103,000			21,649,000			5.0
Less: accumulated amortization		(14,500,000	)		(15,013,000	)
Intangible assets, net	$	5,603,000		$	6,636,000

Amortization expense included in operating expense for the three months ended March 31, 2024 and 2023 totaled $683,000 and $1,288,000, respectively. Amortization expense included in cost of revenue for the three months ended March 31, 2024 and 2023 totaled $0 and $26,000, respectively.

The Company expects to record amortization of intangible assets for the year ending December 31, 2024 and future fiscal years as follows:

For the years ending December 31,
2024 remaining	$	1,728,000
2025		2,026,000
2026		1,143,000
2027		456,000
2028		237,000
Thereafter		13,000
	$	5,603,000

Sale of Minehut

On February 29, 2024, the Company sold its Minehut Assets to GamerSafer in a transaction approved by the board of directors of the Company. Pursuant to the GS Agreement entered into by and between GamerSafer, the Company will receive $1.0 million of purchase consideration for the Minehut Assets, which amount will be paid by GamerSafer in revenue and royalty sharing over a multiple year period, as described in the GS Agreement. Other than with respect to the GS Agreement, there is no relationship between the Company or its affiliates with GamerSafer or its affiliates. The transaction allows Super League to streamline its position in partnering with major brands to build, market, and operate 3D experiences across multiple immersive platforms, including open gaming powerhouses like Minecraft, and aligns with the Company’s cost improvement initiatives. Super League and GamerSafer will maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners. The carrying value of Minehut related assets totaled $475,000 as of February 26, 2024, comprised of total carrying costs of $1,671,000, net of accumulated amortization of $1,196,000, and historically were included in intangible assets, net in the condensed consolidated balance sheet.

The Company recorded a receivable for the total estimated consideration totaling $619,000, of which $224,000 is included in prepaid expense and other current assets and $395,000 is included in other receivables in noncurrent assets, and recognized a gain on sale of the Minehut Assets totaling $144,000, which is included in other income in the condensed consolidated statement of operations. The Purchase Consideration in the GS Agreement is variable pursuant to the guidance set forth in ASC 606. Under ASC 606, purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. As such, the Company estimated the amount of consideration to which the Company will be entitled, in exchange for transferring the Minehut Assets to GamerSafer, utilizing the expected value method which is the sum of probability-weighted amounts in a range of possible consideration outcomes over the applicable contractual payment period, resulting in an estimated receivable of $619,000. Amounts collected over and above the estimated amount at contract inception, if any, will be recognized as additional gains on the sale of Minehut Assets when realized in future periods, up to the $1.0 million stated contractual amount of purchase consideration.

In the event GamerSafer does not make royalty or shortfall payments in the amount of $1.0 million by December 31, 2028 (“Payment Deadline”), GamerSafer shall assign and transfer all of the purchased assets back to the Company. In the event that GamerSafer determines in good faith that the acquisition of the assets and the operation of GamerSafer’s related Minehut business becomes operationally unsustainable for any reason, GamerSafer reserves the right, at its sole discretion, to terminate operations (the “Termination”). In the event a Termination occurs prior to the Purchase Consideration being paid in full, then in such event GamerSafer shall promptly assign all Minehut Assets and back to the Company.

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4. ACQUISITIONS

Acquisition of Super Biz – Contingent Consideration

On October 4, 2021 (“Super Biz Closing Date”), the Company entered into an Asset Purchase Agreement (the “Super Biz Purchase Agreement”) with Super Biz Co. and the founders of Super Biz (the “Founders”), pursuant to which the Company acquired (i) substantially all of the assets of Super Biz (the “Super Biz Assets”), and (ii) the personal goodwill of the Founders regarding Super Biz’s business, (the “Super Biz Acquisition”). The consummation of the Super Biz Acquisition (the “Super Biz Closing”) occurred simultaneously with the execution of the Super Biz Purchase Agreement on the Super Biz Closing Date.

Pursuant to the terms and subject to the conditions of the Super Biz Purchase Agreement, up to an aggregate amount $11.5 million will be payable to Super Biz and the Founders in connection with the achievement of certain revenue milestones for the period from the Super Biz Closing Date until December 31, 2022 (“Initial Earn Out Period”) and for the fiscal year ending December 31, 2023 (the “Super Biz Contingent Consideration”) (“Super Biz Earn Out Periods”). The Super Biz Contingent Consideration is payable in the form of both cash and shares of the Company’s common stock, in equal amounts, as more specifically set forth in the Super Biz Purchase Agreement.

The Company hired the Founders of Super Biz in connection with the Super Biz Acquisition. Pursuant to the provisions of the Super Biz Purchase Agreement, in the event that a Founder ceases to be an employee during any of the Super Biz Earn Out Periods, as a consequence of his resignation without good cause, or termination for cause, the Super Biz Contingent Consideration will be reduced by one-half (50%) for the respective Super Biz Earn Out Periods, if and when earned. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such, the Super Biz Contingent Consideration, is accounted for as post-combination services and expensed in the period that payment of any amounts of contingent consideration is determined to be probable and reasonably estimable. During the year ended December 31, 2022, the Company determined that it was probable that the contingency associated with the Super Biz Earn Out Periods would be met in accordance with the terms of the Super Biz Purchase Agreement, and the applicable amounts were reasonably estimable. Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

The change in accrued Super Biz Contingent Consideration and the related income statement impact for the periods presented was comprised of the following:

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	1,670,000	$	3,206,000
Change in fair value(2)		18,000		217,000
Current period accrued contingent consideration(2)		142,000		251,000
Accrued contingent consideration (1)	$	1,830,000	$	3,674,000

⁽¹⁾ As of March 31, 2024, included 30,330 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024. As of March 31, 2023, included 53,050 shares of common stock valued at $11.10, the closing price of our common stock as of March 31, 2023.

⁽²⁾ Reflected in the condensed consolidated statement of operations for the applicable period

In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 49,399 shares of our common stock valued at $548,000.

Melon Acquisition

On May 4, 2023 (“Melon Acquisition Date”), Super League entered into an Asset Purchase Agreement (the “Melon Purchase Agreement”) with Melon, Inc., a Delaware corporation (“Melon”), pursuant to which the Company acquired substantially all of the assets of Melon (the “Melon Assets”) (the “Melon Acquisition”).

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Pursuant to the terms and subject to the conditions of the Purchase Agreement, up to an aggregate of $2,350,000 (the “Melon Contingent Consideration”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the Melon Closing until December 31, 2023 (the “First Earnout Period”) in the amount of $1,000,000, and for the year ending December 31, 2024 (the “Second Earnout Period) in the amount of $1,350,000 (the “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”). The Melon Contingent Consideration is payable in the form of cash and common stock, with $600,000 of the aggregate Melon Contingent Consideration being payable in the form of cash, and $1,750,000 payable in the form of common stock, valued at the greater of (a) the Closing Share Price, and (b) the Volume Weighted Average Price (“VWAP”) for the five trading days immediately preceding the end of each respective Earnout Period.

Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The fair value of the Melon Contingent Consideration on the valuation date was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs. Assumptions utilized in connection with utilization of the Monte Carlo simulation model as of March 31, 2024 included a risk free interest rate of 4.79%, a volatility rate of 70%, a closing stock price of $2.15 and a discount rate of 30%.

The change in fair value, which is included in contingent consideration expense in the condensed consolidated statement of operations for the applicable periods present was comprised of the following: 

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	538,000	$	-
Change in fair value		98,000		-
Accrued contingent consideration(1)	$	636,000	$	-

⁽¹⁾ As of March 31, 2024, included 156,329 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024.

5. DEBT

Accounts Receivable Financing Facility

Super League Enterprise, Inc. and certain of its subsidiaries (collectively with the Company, the “Borrowers”), entered into a Financing and Security Agreement (the “SLR Agreement”) with SLR Digital Finance, LLC (“Lender”), effective December 17, 2023 (the “Facility Effective Date”). Pursuant to the SLR Agreement, Lender may, from time to time and in its sole discretion, make certain cash advances to the Company (each an “Advance”, and collectively, “Advances”), against the face amounts of certain uncollected accounts receivable of the Borrowers on an account-by-account basis (each, a “Financed Account”, and collectively, the “Accounts”), at a rate of 85% multiplied by the face value of such Account (the “Advance Rate”), less any reserved funds and any other amounts due to Lender from Borrowers, up to a maximum aggregate Advance amount of $4,000,000 (the “Maximum Amount”)(collectively, the “AR Facility”). Upon receipt of any Advance, Borrowers will have assigned all of its rights in such receivables and all proceeds thereof. The proceeds received from the Facility will be used to fund general working capital needs.

The SLR Agreement is effective for 24 months from the Effective Date (the “Term”), automatically extends for successive Terms (each, a “Renewal Term”), and the Borrowers’ are obligated to pay the Lender an early termination fee in the event the SLR Agreement is terminated under certain circumstances prior to the end of any Term or Renewal Term, as more specifically set forth in the SLR Agreement.

In connection with the AR Facility, the Company agreed to, among other things, (i) pay a finance fee equal to 2% of the Maximum Amount, payable in 24 equal monthly installments on the last day of each month of the Term until paid in full, (ii) pay a servicing fee equal to 0.30% multiplied by the actual average daily amount of Advances outstanding at the time of determination (the “Outstanding Amount”) for the applicable month, on the last day of each calendar month during the Term (or so long as any obligations arising under the SLR Agreement are outstanding); (iii) be charged a monthly financing fee (the “Financing Fee”), due upon receipt of full payment of a Financed Account by Lender, equal to 1/12 of (a) the prime rate plus 2% (the “Facility Rate”), multiplied by (b) the amount of the Outstanding Amount; and (iv) utilize the facility such that the monthly average aggregate Advances outstanding is at $400,000 (the “Minimum Utilization”). In the event that Borrower’s monthly utilization is less than the applicable Minimum Utilization for any month, the Financing Fee for such month shall be calculated as if the applicable Minimum Utilization has been satisfied.

The SLR Agreement imposes various restrictions on the activities of the Borrowers, including a prohibition on fundamental changes to the Company or its subsidiaries (including certain consolidations, mergers and sales and transfers of assets, and limitations on the ability of the Borrowers to grant liens upon their property or assets). The SLR Agreement includes standard Events of Default (as defined in the SLR Agreement), and provide that, upon the occurrence of certain events of default, Lender may, among other things, immediately collect any obligation owing to Lender under the SLR Agreement, cease advancing money to the Borrowers, take possession of any collateral, and/or charge interest at a rate equal to the lesser of (i) 6% above the Facility Rate, and (ii) the highest default rate permitted by applicable law.

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As security for the full and prompt payment and performance of any obligations arising under the SLR Agreement, the Borrowers granted to Lender a continuing first priority security interest in all the assets of the Borrowers. The SLR Agreement also provides for customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default.

Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Financing and servicing fees calculated with reference to amounts advanced under the AR Facility are included in interest expense. The commitment fee, based on the maximum facility amount and payable irrespective of drawdowns, is expensed on a straight line basis over the term of the AR Facility and included in other income (expense) in the consolidated statement of operations. Total amounts advanced under the AR Facility for the three months ended March 31, 2024 totaled $371,000. Total repayments of advances under the AR Facility for the three months ended March 31, 2024 totaled $801,000. Interest expense and commitment fee expense for the three months ended March 31, 2024 totaled $19,000 and $10,000, respectively.

Convertible Notes Payable at Fair Value

On May 16, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with three institutional investors (collectively, the “Note Holders”) providing for the sale and issuance of a series of senior convertible notes in the aggregate original principal amount of $4,320,000, of which 8% is an original issue discount (“OID”) (each, a “Note,” and, collectively, the “Notes,” and such financing, the “Note Offering”). The Notes accrued interest at a guaranteed annual rate of 9% per annum, were set to mature 12 months from the date of issuance, and were convertible at the option of the Note Holders into that number of shares of the Company’s common stock, equal to the sum of the outstanding principal balance, accrued and unpaid interest, and accrued and unpaid late charges (the “Conversion Amount”), divided by $80.00 (the “Conversion Price”), subject to adjustment upon the occurrence of certain events as more specifically set forth in the Note, as amended. In the event of the occurrence of an event of default, the Note Holders may, at the Note Holder’s option, convert all, or any part of, the Conversion Amount into shares of common stock at 90% of the lowest volume weighted average price of the ten trading days preceding the date for which the price is being calculated.

In addition, the Company was required to redeem all or a portion of the Notes under certain circumstances, and, in the event (A) the Company sold Company common stock pursuant to the March 25, 2022 Purchase Agreement, described below, or (B) consummated a subsequent equity financing, then the Note Holders had the right, but not the obligation, to require the Company to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Conversion Amount then remaining under the Notes, in cash, at a price equal to the Conversion Amount being redeemed.

The Notes were issued with an original issue discount of $320,000, or 8%, which was recorded as an adjustment to the carrying amount of the Notes. The original issue discount was amortized using the interest method over the contractual term of the Notes and reflected as interest expense in the statement of operations. At December 31, 2022, the balance of the original issue discount was $40,000, which is included in “Convertible note payable and accrued interest” in the accompanying consolidated balance sheet. Amortization of original issue discount for the three months ended March 31, 2023 totaled $40,000 and $280,000, respectively.

Interest paid during the three months ended March 31, 2023 totaled $180,000. At December 31, 2022, the remaining principal balance of the Notes totaled $539,000, and accrued interest totaled $180,000, both of which were paid in full during the three months ended March 31, 2023. As of March 31, 2023, all amounts of principal and interest under the Notes were fully paid, resulting in a Convertible note payable and accrued interest balance of $0.

6. STOCKHOLDERS’ EQUITY AND EQUITY-LINKED INSTRUMENTS

Reverse Stock Split

On September 7, 2023, the Company filed the 2023 Second Amendment to the Company’s Charter, to effect a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-20 (the “Reverse Split”). The Reverse Split was approved by the Company’s Board of Directors on July 5, 2023, and approved by the stockholders of the Company on September 7, 2023. The 2023 Second Amendment became effective on September 11, 2023. The Company’s shares began trading on a Reverse Split-adjusted basis on the Nasdaq Capital Market on September 11, 2023.

As a result of the Reverse Split, every 20 shares of the Company’s issued and outstanding common stock was automatically combined and converted into one issued and outstanding share of common stock. No fractional shares of common stock were issued as a result of the Reverse Split. Instead, in lieu of any fractional shares to which a stockholder of record would otherwise be entitled as a result of the Reverse Split, the Company paid cash (without interest) equal to the value of such fractional share. The Reverse Split did not modify the rights or preferences of the common stock.

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All references to common stock, warrants to purchase common stock, options to purchase common stock, restricted stock, share data, per share data and related information contained in the financial statements have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented.

Preferred Stock

The Company’s initial certificate of incorporation authorized 5,000,000 shares of preferred stock, par value $0.001 per share. In October 2016, the Company’s Board of Directors and a majority of the holders of the Company’s common stock approved an amendment and restatement of the certificate of incorporation which, in part, eliminated the authorized preferred stock. In August 2018, the Board of Directors approved a second amendment and restatement of the Company’s amended and restated certificate of incorporation (the “Amended and Restated Charter”) to, in part, increase the Company’s authorized capital to a total of 110.0 million shares, including 10.0 million shares of newly created preferred stock, par value $0.001 per share (“Preferred Stock”), authorize the Board of Directors to fix the designation and number of each series of Preferred Stock, and to determine or change the designation, relative rights, preferences, and limitations of any series of Preferred Stock. The Amended and Restated Charter was approved by a majority of the Company’s stockholders in September 2018, and was filed with the State of Delaware in November 2018. All references in the accompanying consolidated financial statements to Preferred Stock have been restated to reflect the Amended and Restated Charter.

Common Stock

The Amended and Restated Charter also increased the Company’s authorized capital to include 100.0 million shares of common stock, par value $0.001, and removed the deemed liquidation provision, as such term is defined in the Amended and Restated Charter. Each holder of common stock is entitled to one vote for each share of common stock held at all meetings of stockholders.

On May 30, 2023, the Company filed the 2023 First Amendment to its Charter, increasing the number of authorized shares of common stock from 100,000,000 to 400,000,000. The Company’s Board of Directors approved the 2023 First Amendment on March 17, 2023, and the Company obtained the approval of the 2023 First Amendment by written consent of its stockholders holding greater than 50% of the voting securities of the Company on April 5, 2023.

Equity Financings

Convertible Preferred Stock Issuances

Series AAA Convertible Preferred Financing

On the dates set forth in the table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 8,355 shares of newly designated Series AAA and AAA-2 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AAA Preferred,” and the individual offerings of Series AAA Preferred stock, hereinafter collectively referred to as the Series AAA Offerings, as follows:

Date	Series Design- ation	Conversion Price – At Issuance		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares – At Issuance		Placement Agent Warrants (1)
November 30, 2023	Series AAA	$	1.674		5,377	$	5,377,000	$	645,000	$	4,732,000		3,212,000		466,000
December 22, 2023	Series AAA-2	$	1.71		2,978		2,978,000		357,000		2,621,000		1,742,000		253,000
Total					8,355	$	8,355,000	$	1,002,000	$	7,353,000		4,954,000		719,000

⁽¹⁾ Issued upon final closing of the Series AAA Preferred Stock offering, effective as of the respective closing dates.

In connection with the Series AAA Offerings, the Company filed Certificates of Designation of Preferences, Rights and Limitations of the Series AAA Preferred Stock and Series AAA-1 Preferred Stock (collectively, the “Series AAA Certificates of Designation”) with the State of Delaware. Use of net proceeds from the Series AAA Offerings for the periods presented included working capital and general corporate purposes, including sales and marketing activities and product development.

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Each share of Series AAA Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in the Series AAA Certificates of Designation, into such number of shares of the Company’s common stock equal to the number of Series AAA Preferred to be converted, multiplied by the stated value of $1,000 (the “AAA Stated Value”), divided by the conversion price in effect at the time of the conversion, subject to adjustment in the event of stock splits, stock dividends, certain fundamental transactions and future issuances of equity securities as described below. In addition, subject to beneficial ownership and primary market limitations, on the one year anniversary of the respective filing date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series AAA Preferred into the Company’s common stock if the VWAP of such common stock over the previous 10 days as reported on the NASDAQ Capital Market equals at least 250% of the conversion price, or (z) 100% of the outstanding shares of Series AAA Preferred into the Company’s common stock if the VWAP equals at least 300% of the conversion price.

The Series AAA Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series AAA Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series AAA Certificates of Designation in a manner that adversely affects the powers, preferences or rights of the Series AAA Preferred, (b) increasing the number of authorized shares of Series AAA Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series AAA Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind outside of certain loans not to exceed $5,000,000 and accounts payable in the ordinary course of business, or (e) entering into any agreement with respect to the foregoing. In addition, no holder of Series AAA Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series AAA Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series AAA Preferred (together with any Parity Securities (as defined in the Series AAA Certificate of Designations) will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

Holders of the Series AAA Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series AAA Preferred then held by such holder on each of the 12- and 24-month anniversaries of the Filing Date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series AAA Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of Common Stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and/or primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and/or primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

Subject to the approval by a majority of the voting securities of the Company (the “Stockholder Approval”), pursuant to the Subscription Agreements, Series AAA Preferred holders shall have the right to purchase shares of a newly designated series of Preferred Stock of the Company containing comparable terms (except for adjustments to the Conversion Price based on future equity issuances) as the Series AAA Preferred (the “Series AAA Additional Investment Right”) from the date the SEC declares the related registration statement to be filed with the SEC pursuant to the applicable Registration Rights Agreement (as defined below) effective, to the date that is 18 months thereafter, for an additional dollar amount equal to the applicable initial investment amount at $1,000 per share (the “Original Issue Price”), with a conversion price equal to the original conversion price of the Series AAA Preferred. No further additional investment rights shall be granted to investors that exercise the Series AAA Additional Investment Rights.

Further, subject to the effectiveness of the Stockholder Approval, for twenty-four (24) months after the Filing Date, and subject to certain carveouts as described in the Series AAA Certificates of Designation, if the Company conducts an offering at a price per share less than the then effective conversion price (the “Future Offering Price”) consisting of common stock, convertible or derivative instruments, then in such event the conversion price of the Series AAA Preferred shall be adjusted to the Future Offering Price, but not less than the Conversion Price Floor (as defined in the Series AAA Certificate of Designations).

Exchange Agreements

In connection with the closing of the Series AAA Preferred rounds described above, the Company entered into certain Series A Exchange Agreements (the “Series A Agreements”) and Series AA Exchange Agreements (the “Series AA Agreements”, and collectively with the Series A Agreements, the “Exchange Agreements”), with certain holders (the “Holders”) of the Company’s Series A Preferred Stock, and Series AA Preferred Stock, pursuant to which the Holders exchanged an aggregate of 6,367 shares of Series A Preferred and/or Series AA Preferred, for an aggregate of 6,367 shares of Series AAA Preferred (the “Exchange”). The Exchange closed concurrently with the closing of the Series AAA Preferred Offerings.

The Company and the investors in the Series AAA Preferred Offering and the Exchange also executed a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company agreed to use its best efforts to file a registration statement covering the resale of the shares of common stock issuable upon conversion of the Series AAA Preferred within 45 days, but in no event later than 60 days, following the final closing of the Series AAA Preferred Offering and to use its best efforts to cause such registration statement to become effective within 90 days of the filing date.

-23-

The Company sold and/or exchanged the shares of Series AAA Preferred pursuant to a Placement Agency Agreement (the “Series AAA Placement Agency Agreement”) with Aegis Capital Corporation, a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Series AAA Placement Agent”) for the Offering and the Exchange. Pursuant to the terms of the Placement Agency Agreement, in connection with the Series AAA Preferred Offerings and the Exchange, the Company paid the Placement Agent an aggregate cash fee and non-accountable expense allowance as described in the table above, and will issue to the Placement Agent or its designees warrants (the “Placement Agent Warrants”) to purchase common stock at the conversion prices disclosed in the table above. The Company also granted the Placement Agent the right of first refusal, for a period of six (6) months after the final closing of the Offering, to serve as the Company’s lead or co-placement agent for any private placement of the Company’s securities (equity or debt) that is proposed to be consummated with the assistance of a registered broker dealer. In addition, with respect to shares of Series AAA Preferred Stock issued in the Exchange, the Placement Agent exchanged previously issued placement agent warrants to purchase 88,403 shares of common stock of the Company that were issued in connection with the Series A and Series AA Preferred Stock financings of the Company, at exercise prices ranging from $7.60 to $13.41 per share, for new placement agent warrants to purchase a total of 347,428 shares of common stock at an exercise price of $1.674 per share and 199,778 shares of common stock at an exercise price of $1.71 per share.

Series AAA Preferred stock outstanding as of March 31, 2024 and December 31, 2023 was comprised of the following: 

Series Designation	Conversion Price		Issued		Conversions Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Sales:
Series AAA	$	1.674		5,377		-			5,377		-			5,377
Series AAA-2	$	1.71		2,978		-			2,978		-			2,978
Subtotal				8,355		-			8,355					8,355
Exchanges:
Series AAA	$	1.674		4,011		(125	)		3,886		(840	)		3,046
Series AAA-2	$	1.71		2,356		(100	)		2,256		-			2,256
Subtotal				6,367		(225	)		6,142		(840	)		5,302
Total				14,722		(225	)		14,497		(840	)		13,657

-24-

As of March 31, 2024 and December 31, 2023, Series AAA Preferred stock outstanding was convertible into shares of the Company’s common stock as follows:

Series Designation	Conversion Price		Original Conversion Shares		Conversions Year Ended December 31, 2023			Conversion Shares As of December 31, 2023		Conversions Three Months Ended March 31, 2024			Conversion Shares As of March 31, 2024
Sales:
Series AAA	$	1.674		3,212,000		-			3,212,000		-			3,212,000
Series AAA-2	$	1.71		1,742,000		-			1,742,000		-			1,742,000
Subtotal				4,954,000					4,954,000					4,954,000
Exchanges:
Series AAA	$	1.674		2,396,000		(75,000	)		2,321,000		(502,000	)		1,819,000
Series AAA-2	$	1.71		1,378,000		(58,000	)		1,320,000		-			1,320,000
Subtotal				3,774,000		(133,000	)		3,641,000		(502,000	)		3,139,000
Total				8,728,000		(133,000	)		8,595,000		(502,000	)		8,093,000

Series AA Convertible Preferred Financing

On the dates set forth in the table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 11,781 shares of newly designated Series AA, AA-2, AA-3, AA-4 and AA-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AA Preferred,” and the individual offerings of Series AA Preferred stock hereinafter collectively referred to as the Series AA Offerings, as follows:

Date	Series Design- ation	Original Conversion Price – At Issuance(2)		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares – At Issuance		Placement Agent Warrants (1)
April 19, 2023	Series AA	$	9.43		7,680	$	7,680,000	$	966,000	$	6,714,000		814,000		114,000
April 20, 2023	Series AA-2	$	10.43		1,500		1,500,000		130,000		1,370,000		144,000		13,000
April 28, 2023	Series AA-3	$	9.50		1,025		1,025,000		133,000		892,000		108,000		15,000
May 5, 2023	Series AA-4	$	9.28		1,026		1,026,000		133,000		893,000		111,000		16,000
May 26, 2023	Series AA-5	$	10.60		550		550,000		72,000		478,000		52,000		7,000
Total					11,781	$	11,781,000	$	1,434,000	$	10,347,000		1,229,000		165,000

⁽¹⁾ Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series AA Preferred Stock offering.

⁽²⁾ The Conversion price for Series AA Preferred stock outstanding as of August 23, 2023, totaling 10,706 shares of Series AA Preferred stock, was adjusted to $2.60 as a result of the Series AA Down Round Feature described below. The Conversion price for Series AA Preferred stock outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred stock, was adjusted as described in the table below as a result of the Series AA Down Round Feature described below.

-25-

Series AA Preferred stock outstanding as of March 31, 2024 and December 31, 2023 was comprised of the following:

Series Designation	Conversion Price As Adjusted(1)		Issued		Converted / Exchanged - Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Series AA	$	1.89		7,680		(2,926	)		4,754		(263	)		4,491
Series AA-2	$	2.09		1,500		(1,500	)		-		-			-
Series AA-3	$	1.90		1,025		(634	)		391		-			391
Series AA-4	$	1.86		1,026		(511	)		515		-			515
Series AA-5	$	2.12		550		-			550		-			550
Total				11,781		(5,571	)		6,210		(263	)		5,947

⁽¹⁾ The Conversion prices for the Series AA Preferred stock outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred stock, were adjusted to the conversion prices shown in the table above, as a result of the Series AA Down Round Feature described below. The original conversion prices for the Series AA Preferred, as of the respective issuance dates, were as follows: Series AA - $9.43; Series AA-2 - $10.43; Series AA-3 - $9.50; Series AA-4 - $9.28; Series AA-5 - $10.60.

As of March 31, 2024 and December 31, 2023, Series AA Preferred stock outstanding was convertible into shares of the Company’s common stock as follows:

Series Designation	Conversion Price As Adjusted		Issued		Converted / Exchanged - Year Ended December 31, 2023			Additional Conversion Shares - Adjusted Conversion Price(1)		Conversion Shares As of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Conversion Shares As of March 31, 2024
Series AA	$	1.89		814,000		(1,336,000	)		3,043,000		2,521,000		(139,000	)	2,382,000
Series AA-2	$	2.09		144,000		(274,000	)		130,000		-		-		-
Series AA-3	$	1.90		108,000		(334,000	)		432,000		206,000		-		206,000
Series AA-4	$	1.86		109,000		(275,000	)		443,000		277,000		-		277,000
Series AA-5	$	2.12		58,000		-			201,000		259,000		-		259,000
Total				1,233,000		(2,219,000	)		4,249,000		3,263,000		(139,000	)	3,124,000

In connection with the Series AA Offerings, the Company filed Certificates of Designation of Preferences, Rights and Limitations of the Series AA Preferred Stock (the “Series AA Certificates of Designation”) with the State of Delaware. Use of net proceeds from the Series AA Offerings for the periods presented included working capital and general corporate purposes, including sales and marketing activities and product development.

Each share of Series AA Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in each Series AA Certificates of Designation, into such number of shares of the Company’s common stock equal to the number of Series AA Preferred to be converted, multiplied by the stated value of $1,000 (the “AA Stated Value”), divided by the applicable conversion price (refer to table above), subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1)). In addition, subject to beneficial ownership and primary market limitations, on the one year anniversary of the respective filing date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series AA Preferred if the VWAP of the Company’s common stock over the previous ten days as reported on the NASDAQ Capital Market (the “Series AA VWAP”), equals at least 250% of the Conversion Price, or (z) 100% of the outstanding shares of Series AA Preferred if the Series AA VWAP equals at least 300% of the respective conversion price.

The Series AA Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series AA Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series AA Certificates of Designation in a manner that adversely affects the powers, preferences or rights of the Series AA Preferred, (b) increasing the number of authorized shares of Series AA Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series AA Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind outside of accounts payable in the ordinary course of business, (e) entering into any agreement with respect to the foregoing; or (f) approving the issuance of common stock below the Conversion Price Floor (as defined in the AA Certificate of Designations). In addition, no holder of Series AA Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series AA Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series AA Preferred (together with any Parity Securities (as defined in the Series AA Certificate of Designations)) will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the AA Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

-26-

Holders of the Series AA Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series AA Preferred then held by such holder on the 12 and 24 month anniversaries of the respective filing date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series AA Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

Pursuant to the Subscription Agreements, purchasers that (a) previously held shares of the Company’s Series A Preferred Stock, par value $0.001 per share, or (b) purchased at least $3.5 million in shares of Series AA Preferred (subject to the acceptance of such lesser amounts in the Company’s sole discretion), shall have the right to purchase shares of a newly designated series of Preferred Stock of the Company containing comparable terms as the Series AA Preferred (the “Series AA Additional Investment Right”) from the date of each respective closing through the date that is 18 months thereafter as follows: (i) such investor may purchase an additional dollar amount equal to its initial investment amount at $1,000 per share (the “AA Original Issue Price”), with a conversion price equal to the conversion price in effect on the date of original purchase; and (ii) such investor may purchase an additional dollar amount equal to its initial investment amount at the AA Original Issue Price, with a conversion price equal to 125% of the respective conversion price in effect on the date of original purchase.

Pursuant to the Series AA Certificate of Designations: (i) for as long as Series AA Preferred remains outstanding and subject to certain carveouts as described in the Series AA Certificates of Designations, if the Company conducts an offering at a price per share less than the then current conversion price (the “Future Offering Price”) consisting of common stock, convertible or derivative instruments, and undertaken in an arms-length third party transaction, then in such event the conversion price of the Series AA Preferred shall be adjusted to the greater of: (a) the Future Offering Price and (b) the Conversion Price Floor (“ Series AA Down Round Feature”); and (ii) if as of the 24-month anniversary date of April 19, 2023, the VWAP for the five trading days immediately prior to such 24-month anniversary date is below the then current conversion price, the holder will receive a corresponding adjustment to the then conversion price, such adjustment not to exceed the Conversion Price Floor.

The Company and the investors in the Offering also executed a registration rights agreement, pursuant to which the Company filed a registration statement on Form S-3 (File No. 333-273282), covering the resale of the shares of common stock issuable upon conversion of the Series AA Preferred, which was declared effective on August 1, 2023.

The Company sold the shares of Series AA Preferred pursuant to a placement agency agreement (the “Series AA Placement Agency Agreement”) with a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Series AA Placement Agent”) for the Offering. Pursuant to the terms of the Series AA Placement Agency Agreement, in connection with the closings of the Series AA Offerings, the Company paid the Series AA Placement Agent aggregate cash fees, and non-accountable expense allowances as disclosed in the table above, and will issue to the Series AA Placement Agent or its designees warrants (the “Series AA Placement Agent Warrants”) to purchase shares of common stock as disclosed in the table above at the conversion prices disclosed above. The Series AA Placement Agent shall also earn fees and be issued additional Series AA Placement Agent Warrants with respect to any securities issued pursuant to the Additional Investment Rights. The Company also granted the Series AA Placement Agent the right of first refusal, for a twelve (12) month period after the final closing of the Offering, to serve as the Company’s lead or co-placement agent for any private placement of the Company’s securities (equity or debt) that is proposed to be consummated with the assistance of a registered broker dealer.

The triggering of the Down Round Feature for the Series AA Preferred stock resulted in a deemed dividend totaling $7,567,000, which was charged to retained earnings in the consolidated balance sheet. The amount was calculated based upon the difference between the fair value of the financial instrument without the down round feature, with a conversion price corresponding to the stated conversion price of the issued instrument immediately prior to the triggering event, and the fair value of the financial instrument without the down round feature with a conversion price corresponding to the reduced conversion price upon the down round feature being triggered.

-27-

Series A Convertible Preferred Financing

On the dates set forth in the table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 12,622 shares of newly designated Series A, A-2, A-3, A-4 and A-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series A Preferred,” and the individual offerings of Series A Preferred stock, hereinafter, collectively referred to as the Series A Offerings, as follows:

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
November 22, 2022	Series A	$	12.40		5,359	$	5,359,000	$	752,000	$	4,607,000		432,000		62,000
November 28, 2022	Series A-2	$	13.29		1,297		1,297,000		169,000		1,128,000		98,000		14,000
November 30, 2022	Series A-3	$	13.41		1,733		1,733,000		225,000		1,508,000		129,000		18,000
December 22, 2022	Series A-4	$	7.60		1,934		1,934,000		251,000		1,683,000		254,000		36,000
January 31, 2023	Series A-5	$	11.09		2,299		2,299,000		299,000		2,000,000		207,000		30,000
Total					12,622	$	12,622,000	$	1,696,000	$	10,926,000		1,120,000		160,000

⁽¹⁾ Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series A Preferred Stock offering

Use of net proceeds from the Series A Offerings for the periods presented include the repayment of certain indebtedness and working capital and general corporate purposes, including sales and marketing activities and product development. As disclosed at Note 5, in the event the Company consummated a subsequent equity financing during the term of the Notes, the Company was required, at the option of the Note Holders, to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Notes outstanding upon closing of such equity financing. For the three months ended March 31, 2023, $719,000 of the net proceeds from the Series A Offerings were utilized in connection with the redemption of the Notes and related accrued interest.

On the respective effective dates, the Company filed Certificates of Designation of Preferences, Rights and Limitations (collectively, the “Certificate of Designations”) of the Series A Preferred with the State of Delaware, respectively.

Each share of Series A Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in each of the Series A Certificates of Designation, into such number of shares of the Company’s common stock, equal to the number of Series A Preferred to be converted, multiplied by the stated value of $1,000 (the “Stated Value”), divided by the applicable conversion price (refer to the table above), subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1)) on the date of closing. In addition, subject to beneficial ownership and primary market limitations: (1) the Series A Preferred will automatically convert into shares of common stock at the Conversion Price upon the earlier of (a) the 24-month anniversary of the Effective Date or (b) the consent to conversion by holders of at least 51% of the outstanding shares of Series A Preferred; and (2) on the one year anniversary of the Effective Date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series A Preferred if the VWAP of the Company’s common stock over the previous 10 days as reported on the NASDAQ Capital Market (the “Series A VWAP”), equals at least 250% of the Conversion Price, or (z) 100% of the outstanding shares of Series A Preferred if and only if the Series A VWAP equals at least 300% of the Conversion Price.

Series A Preferred stock outstanding was comprised of the following as of March 31, 2024 and December 31, 2023:

Series Designation	Conversion Price		Issued		Converted / Exchanged - Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Series A	$	12.40		5,359		(4,551	)		808		(368	)		440
Series A-2	$	13.29		1,297		(834	)		463		-			463
Series A-3	$	13.41		1,733		(1,418	)		315		-			315
Series A-4	$	7.60		1,934		(1,383	)		551		(75	)		476
Series A-5	$	11.09		2,299		(1,487	)		812		(32	)		780
Total				12,622		(9,673	)		2,949		(475	)		2,474

-28-

As of March 31, 2024 and December 31, 2023, Series A Preferred stock outstanding was convertible into shares of the Company’s common stock as follows:

Series Designation	Conversion Price		Issued		Converted / Exchanged - Year Ended December 31, 2023			Conversion Shares as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Conversion Shares as of March 31, 2024
Series A	$	12.40		432,000		(367,000	)		65,000		(30,000	)		35,000
Series A-2	$	13.29		98,000		(63,000	)		35,000		-			35,000
Series A-3	$	13.41		129,000		(106,000	)		23,000		-			23,000
Series A-4	$	7.60		254,000		(182,000	)		72,000		(10,000	)		62,000
Series A-5	$	11.09		207,000		(134,000	)		73,000		(3,000	)		70,000
Total				1,120,000		(852,000	)		268,000		(43,000	)		225,000

The Series A Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series A Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series A Certificates of Designation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred, (b) increasing the number of authorized shares of Series A Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series A Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind in excess of $5 million, or I entering into any agreement with respect to the foregoing. In addition, no holder of Series A Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series A Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series A Preferred will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

Holders of the Series A Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series A Preferred then held by such holder on the 12 and 24-month anniversaries of the respective filing date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series A Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

The Company and the investors in the Series A Offerings also executed a registration rights agreement, pursuant to which the Company filed registration statement on Form S-3 (File No. 333-271424), covering the resale of the shares of common stock issuable upon conversion of the Series A Preferred, which was declared on June 5, 2023.

The Company sold the shares of Series A Preferred pursuant to a Placement Agency Agreement (the “Placement Agency Agreement”) with a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Placement Agent”) for the Series A Offerings. Pursuant to the terms of the Placement Agency Agreement, the Company agreed to pay to the Placement Agent at each Closing a cash fee equal to 10% of the gross proceeds raised in the Series A Offerings and (ii) a non-accountable expense allowance equal to 3% of the gross proceeds of the Series A Offerings. In addition, we agreed to issue to the Placement Agent or its designees for nominal consideration and following the final closing under the Series A Offerings, five-year warrants to purchase 14.5% of the shares of common stock issuable upon conversion of the Series A Preferred shares sold in the Series A Offerings, at an exercise price equal to the applicable conversion price. The Placement Agent Warrants provide for a cashless exercise feature and are exercisable for a period of five years from the Effective Date. In addition, the Company agreed to grant the Placement Agent the right to appoint, subject to the Company’s approval, one representative to serve as a member of the Company’s Board of Directors upon the closing of at least $10 million in aggregate in connection with the Series A Offerings.

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Placement Agent Warrants

The Placement Agent Warrants issued in connection with the Series A Preferred, Series AA Preferred and Series AAA Preferred (including the Exchange), described above, include provisions that are triggered in the event of the occurrence of a Fundamental Transaction, as defined in the underlying warrant agreement, which contemplates the potential for certain transactions that result in a third-party acquiring more than 50% of the outstanding shares of common stock of the Company for cash or other assets. Given the existence of multiple classes of voting stock for the Company, as described above, the Fundamental Transaction provisions in the warrant agreements could result in a 50% or more change in ownership of outstanding common stock, without a 50% change in voting interests. As such, the Placement Agent Warrants are not eligible for the scope exception under ASC 815, and therefore, the fair value of the Placement Agent Warrants are recorded as a liability at fair value on the consolidated balance sheet and re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.

The fair value and change in the fair value of the warrant liability, measured using Level 3 inputs, and the related income statement impact was comprised of the following for the applicable periods presented:

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	1,571	$	-
Change in fair value		761		-
Fair value of warrant liability	$	2,332	$	-

The fair value of the Placement Agent Warrants was estimated using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions for the applicable dates: 

	May 26,			December 22,	December 31,			March 31,
	2023			2023	2023			2024
Expected Volatility	95%			98%	98%			98%
Risk–free interest rate	3.88%			3.87%	3.84%			4.21
Dividend yield	-%			-%	-%			-%
Expected life of options (in years)	5	-	5.19	5	4.5	-	5	4.14	-	4.72

Preferred Stock Dividends

During the three months ended March 31, 2024, the Company paid common stock dividends on outstanding preferred stock, as follows:

Series Designation	Dividend Shares		Fair Value of Shares Issued (1)
Series A-5		2,166	$	4,000
Total		2,166	$	4,000

⁽¹⁾ Fair valued at $2.03 per share, the closing price of the Company’s common stock on January 31, 2024

7. COMMITMENTS AND CONTINGENCIES

Settlement of Pending or Threatened Claims

As described above, the Note Holders made a series of investments in the Company during the period commencing January 2021 and culminating in the issuance of the Notes, which were paid in full in the first quarter of 2023. During the fourth quarter of 2023, the Note Holders made certain claims arising from an interpretation of certain rights that the Note Holders had pursuant to the terms of SPA. On March 12, 2024, the Company and the Note Holders (the “Parties”) executed a Mutual General Release and Settlement Agreement (the “Settlement Agreement”) settling all claims between the Parties with respect to the SPA. In consideration for the Settlement Agreement, the Company agreed to issue the Parties an aggregate amount of 500,000 shares of common stock (the “Settlement Payment”). The Company accrued the fair value of the Settlement Payment as of December 31, 2023 (based on the closing price of the Company’s common stock on December 31, 2023) resulting in a settlement expense of $760,000 which was included in general and administrative expense in the consolidated statement of operations for the year ended December 31, 2023. The Company issued the 500,000 shares of common stock on March 19, 2024, which were valued at $1.85 per share (the closing price of the Company’s common stock on March 19, 2024), or $924,000, resulting in additional noncash settlement expense of $164,000, which was included in the general and administrative expense in the condensed consolidated statement of operations for the three months ended March 31, 2024.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this Quarterly Report on Form 10-Q to “Super League Enterprise, Inc.” “Company,” “we,” “us,” “our,” or similar references mean Super League Enterprise, Inc. References to the “SEC” refer to the U.S. Securities and Exchange Commission. All references to “Note,” followed by a number reference from one to seven herein, refer to the applicable corresponding numbered footnotes to the condensed consolidated financial statements contained elsewhere herein.

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this interim report. Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” included Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, as amended, as well as in Item II, Part 1A of this Quarterly Report on Form 10-Q (this “Report”). Readers are cautioned not to place undue reliance on these forward-looking statements.

Overview

Super League Enterprise, Inc. is a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms. From open gaming powerhouses such as Roblox, Minecraft and Fortnite Creative, to bespoke worlds built using the most advanced 3D creation tools, Super League’s innovative solutions provide incomparable access to massive audiences who gather in immersive digital spaces to socialize, play, explore, collaborate, shop, learn and create. As a true end-to-end activation partner for dozens of global brands, Super League offers a complete range of development, distribution, monetization and optimization capabilities designed to engage users through dynamic, energized programs. As an originator of new experiences fueled by a network of top developers, a comprehensive set of proprietary creator tools and a future-forward team of creative professionals, Super League accelerates IP and audience success within the fastest growing sector of the media industry.

We generate revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) direct to consumer offers, including in-game items, e-commerce, and digital collectibles, and (iii) content and technology through the production and distribution of our own, advertiser and third-party content. We operate in one reportable segment to reflect the way management and our chief operating decision maker review and assess the performance of the business.

Reverse Stock Split

On September 7, 2023, the Company filed a Certificate of Amendment (the “Amendment”) to the Company’s Second Amended and Restated Certificate of Incorporation, as Amended (the “Charter”), which became effective September 11, 2023, to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.001 per share, at a ratio of 1-for-20 (the “Reverse Split”). All references to common stock, warrants to purchase common stock, options to purchase common stock, restricted stock, share data, per share data and related information contained in the financial statements have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented.

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Executive Summary

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 comparable prior year quarter. Cost of revenue for the three months ended March 31, 2024 increased $529,000 or 27% to $2.5 million, compared to $1.9 million in the comparable prior year quarter, driven primarily by the increase in quarterly revenues for the same periods. As a percent of revenue, gross profit for the three months ended March 31, 2024 was 41%, compared to 41% for the prior year comparable quarter.

Total operating expense for the three months ended March 31, 2024 decreased $2.3 million, or 26% to $6.3 million, compared to $8.6 million in the comparable prior year quarter. Excluding noncash stock compensation expense, intangible asset amortization expense, and mark to market related fair value adjustments, operating expense for the three months ended March 31, 2024 and 2023 was $5.0 million and $6.3 million, respectively. Net loss for the three months ended March 31, 2024, which includes the impact of noncash mark to market related charges, as described below, and noncash stock compensation and amortization charges, as summarized below, 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 comparable prior year quarter. Net loss for the three months ended March 31, 2024 included a gain on the sale of Minehut related assets totaling $144,000.

During the first quarter of 2024, we continued to deliver top line revenue growth, including a 27% increase in quarterly revenues compared to the prior year quarter. During the quarter we continued to demonstrate the effectiveness of our overall strategy, providing us with increasing opportunities to take a greater share of advertisers’ wallet, as demonstrated by larger average deal sizes and continued high repeat customer percentages, and our focus on cost reductions and optimization has positively impacted operating leverage.

Seasonality

Our revenue fluctuates quarterly and is generally higher in the second half of our fiscal year, with the fourth quarter typically representing our highest revenue quarter each year. Advertising spending is traditionally seasonally strong in the second half of each year, reflecting the impact of seasonal back to school, game release and holiday season advertising spending by brands and advertisers. We believe that this seasonality in advertising spending affects our quarterly results, which generally reflect relatively higher advertising revenue in the second half of each year, compared to the first half of the year.

Common Sense Networks Initiative

In March 2024, we announced an initiative with Common Sense Networks, the award winning, singular leader in age appropriate content moderation standards and owner of Sensical, the groundbreaking streaming and FAST channel service for kids 2-12, that enables brands to connect with young audiences on a global scale in safe and suitable ways across major gaming and video platforms, including Roblox, Fortnite Creative, Minecraft, YouTube, TikTok, and beyond.

GSTV Partnership

In March 2024, we announced a partnership with GSTV, the national on-the-go video network engaging and entertaining targeted audiences at scale across tens of thousands of fuel retailers. The partnership will unite the physical journey of consumers with the expansive digital world of gaming. Initially, the partnership brings Super League’s popular Metaburst gaming news segment to GSTV, keeping millions of viewers at fuel and convenience retailers across the country updated on the latest trends and advancements in the 3D web, virtual worlds and platforms like Roblox and Fortnite. GSTV and Super League are also collaborating on other integration opportunities that unite physical and digital retail engagement to provide brands with innovative and exciting ways to reach a broad base of consumers. In addition to extending in-game content to GSTV screens, the Super League Loyalty & Reward platform will power custom omnichannel programs that reward Roblox users with seamless real world benefits from GTSV partners, and create opportunities for GSTV audience family members to enjoy special rewards within Roblox.

Chartis Partnership

In March 2024, we announced new capabilities for our entertainment and consumer brand clients in Fortnite Creative via a partnership with Chartis. Chartis is a platform focused on Unreal Editor for Fortnite (UEFN), offering a rapidly-growing suite of tools to make it easier and more intuitive for creators to build original games and experiences within Fortnite Creative, where an increasing segment of the blockbuster game’s 70 million monthly players spend their time. The partnership with Chartis enables Super League and its prominent global brand partners to tap into the Chartis Network, a coalition of independent Fortnite Creative developers with more than 157 million monthly plays and nearly one billion monthly impressions. Together, the companies will provide unparalleled opportunities for brands to launch new Fortnite Creative Islands and custom integrations.

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Condensed Consolidated Results of Operations

The following table sets forth a summary of our results of operations for the three months ended March 31, 2024 and 2023 (dollars in thousands):

	Three Months
	Ended March 31,						Change
	2024			2023			$			%
	(Unaudited)
REVENUE	$	4,209		$	3,322		$	887			27	%
COST OF REVENUE		(2,477	)		(1,948	)		529			27	%
GROSS PROFIT		1,732			1,374			358			26	%
OPERATING EXPENSE
Selling, marketing and advertising		2,277			2,650			(373	)		(14	)%
Engineering, technology and development		1,699			2,956			(1,257	)		(43	)%
General and administrative		2,102			2,520			(418	)		(17	)%
Contingent consideration		259			468			(209	)		(45	)%
Total operating expense		6,337			8,594			(2,257	)		(26	)%
NET LOSS FROM OPERATIONS		(4,605	)		(7,220	)		2,615			(36	)%
OTHER INCOME (EXPENSE), NET		(655	)		(16	)		(639	)		*	%
Loss before provision for income taxes		(5,260	)		(7,236	)		(1,976	)		(27	)%
Provision for income taxes		-			-			-			-
NET LOSS	$	(5,260	)	$	(7,236	)	$	(1,976	)		(27	)%

^{* Percentage exceeds 300%}

Comparison of the Results of Operations for the Three Months Ended March 31, 2024 and 2023

Revenue (dollars in thousands)

	Three Months Ended March 31,				Change
	2024		2023		$			%
	(Unaudited)
Media and advertising	$	1,365	$	1,604	$	(239	)		(15	)%
Publishing and content studio		2,538		1,336		1,202			90	%
Direct to consumer		306		382		(76	)		(20	)%
	$	4,209	$	3,322	$	887			27	%

	Three Months Ended March 31,
	2024			2023
	(Unaudited)
Number of customers > 10% of revenue / percent of revenue	Three	/	36%	Three	/	37%
By revenue category:
Media and advertising	Two	/	12%	Two	/	19%
Publishing and content studio	Three	/	24%	One	/	18%

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

● Total revenue increased $887,000, or 27% to $4.2 million, compared to $3.3 million in the comparable prior year quarter.

● Media and advertising revenue decreased $239,000, or 15%, to $1.4 million, compared to $1.6 million in the comparable prior year quarter. The change reflected a $554,000 decrease in on-platform related media sales revenue, partially offset by a $243,000 increase in off-platform related media sales revenue.

● Publishing and content studio revenue increased $1.2 million, or 90%, to $2.5 million, compared to $1.3 million in the comparable prior year quarter, driven primarily by a $1.4 million, or 161% increase in custom game development and immersive experience related revenues, including revenues for immersive experiences for Kraft Lunchables, Sketchers, Lego and Universal Pictures during the three months ended March 31, 2024.

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Cost of Revenue

Cost of revenue includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including internal and third-party engineering, creative, content, broadcast and other personnel, talent and influencers, internal and third-party game developers, content capture and production services, direct marketing, cloud services, software, prizing, and revenue sharing fees. Cost of revenue fluctuates period to period based on the specific programs and revenue streams contributing to revenue each period and the related cost profile of our physical and digital experiences, media and advertising campaigns and publishing and content studio sales activities occurring each period.

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

● Cost of revenue increased $529,000, or 27%, relatively consistent with the 27% increase in related revenues for the quarterly periods presented.

Operating Expense

Refer to the table summarizing our results of operations for the three months ended March 31, 2024 and 2023 above.

Noncash stock-based compensation. Noncash stock-based compensation expense for the periods presented was included in the following operating expense line items (dollars in thousands):

	Three Months Ended March 31,				Change
	2024		2023		$			%
	(Unaudited)
Sales, marketing and advertising	$	122	$	164	$	(42	)		(26	)%
Engineering, technology and development		12		89		(77	)		(87	)%
General and administrative		198		530		(332	)		(63	)%
Total noncash stock compensation expense	$	332	$	783	$	(451	)		(58	)%

The decrease in noncash stock compensation expense was due to the following:

● Reduction in headcount since the end of the prior year quarter, resulting in a $94,000, or 12% decrease in related employee noncash stock compensation expense.

● April 2023 Modification of Outstanding PSUs. On January 1, 2022, the Company issued 67,500 performance stock units (“Original PSUs”) under the Company’s 2014 Amended and Restated Stock Option and Incentive Plan (the “2014 Plan”), which vested in five equal increments of 13,500 PSUs, based on satisfaction of market based vesting conditions.

On April 30, 2023, the Board approved the cancellation of the 67,500 Original PSUs previously granted to certain executives under the 2014 Plan (as described above). In exchange for the cancelled Original PSUs, the executives were granted an aggregate of 67,500 modified PSUs (“Modified PSUs”), which vest, over a five-year term, upon the Company’s common stock achieving certain VWAP goals as follows: (i) 20% upon achieving a 60-day VWAP of $16.00 per share, (ii) 20% upon achieving a 60-day VWAP of $20.00 per share; (iii) 20% upon achieving a 60-day VWAP of $24.00 per share; (iv) 20% upon achieving a 60-day VWAP of $28.00 per share; and (v) 20% upon achieving a 60-day VWAP of $32.00 per share, in each case, as quoted on the Nasdaq Capital Market (“PSU Modification”). Total incremental compensation cost related to the Modified PSUs totaled $540,000 which will be recognized over the implied service period, on an accelerated basis, ranging from .69 years to 1.5 years, calculated in connection with the Monte Carlo simulation model used to determine the fair value of the Modified PSUs immediately before and after the PSU Modification.

Noncash stock compensation expense related to the Original PSUs totaled $0 and $250,000 for the three months ended March 31, 2024 and 2023, respectively. Noncash stock compensation expense related to the Modified PSUs totaled $42,000 and $0 for the three months ended March 31, 2024 and 2023, respectively. The decrease in PSU related noncash stock compensation primarily reflects the decrease in stock price on the respective grant dates for the equity awards.

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● April 2023 Stock Option Exchange.  On April 30, 2023, the Board approved the cancellation of certain stock options to purchase an aggregate of 58,951 shares of the Company’s common stock previously granted to certain executives and employees under the 2014 Plan, with an average exercise price of approximately $56.40. In addition, the Board approved the cancellation of certain warrants to purchase an aggregate of 26,100 shares of the Company’s common stock previously granted to certain executives and employees, with an average exercise price of approximately $199.80 (together the “Original Executive Grants”). In exchange for the cancelled options and warrants, certain executives and employees were granted options to purchase an aggregate of 305,000 shares of common stock under the 2014 Plan, at an exercise price of $9.80 (the closing price of the Company’s common stock as listed on the Nasdaq Capital Market on April 28, 2023, the last trading day before the approval of the awards), with one-third of the options vesting on the April 30, 2023, the grant date, with the remainder vesting monthly over the thirty-six month period thereafter, subject to continued service (“Executive Grant Modifications”). The exercise of the options under these awards was contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan, which was obtained in connection with the Company’s 2023 annual shareholder meeting. Total incremental compensation cost related to the Executive Grant Modifications totaled $347,000, $112,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $235,000 related to unvested awards which will be recognized prospectively over the remaining service period of 3 years.

Noncash stock compensation expense related to the Original Executive Grants totaled $0 and $148,000 for the three months ended March 31, 2024 and 2023, respectively. Noncash stock compensation expense related to the Executive Grant Modifications totaled $54,000 and $0 for the three months ended March 31, 2024 and 2023, respectively. The decrease in related noncash stock compensation primarily reflects the decrease in stock price on the respective grant dates for the equity awards.

Amortization of intangible assets. Amortization expense for the periods presented was included in the following operating expense line items (dollars in thousands):

	Three Months Ended March 31,				Change
	2024		2023		$			%
	(Unaudited)
Sales, marketing and advertising	$	199	$	526	$	(327	)		(62	)%
Engineering, technology and development		291		576		(285	)		(49	)%
General and administrative		193		186		7			4	%
Total amortization expense	$	683	$	1,288	$	(605	)		(47	)%

Amortization expense for the three months ended March 31, 2024 decreased primarily due to a $7.1 million write-down of our partner relationship related intangible assets in the fourth quarter of the year ended December 31, 2023, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets originally acquired in connection with the acquisition of Mobcrush, Inc. in June 2021. The write-down resulted in a $7.1 million decrease in the carrying value of the related intangible assets as of December 31, 2023, and a corresponding decrease in scheduled future quarterly and annual amortization expense for the remaining carrying value of the applicable intangible assets, commencing in the first quarter of 2024 (remaining carrying value totaled $860,000 as of December 31, 2023). Amortization expense related to our partner relationship related intangible assets, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets, for the three months ended March 31, 2024 and 2023 totaled $50,000 and $502,000, respectively.

In June 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere. As a result, in the second quarter of 2023, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000. Amortization expense for the disposed Bannerfy related intangible assets for the three months ended March 31, 2024 and 2023, totaled $0 and $110,000, respectively.

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Selling, Marketing and Advertising

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

Selling, marketing and advertising expense decreased $373,000, or 14% due primarily to a reduction in amortization expense related to the write-down of our partner relationship related intangible assets as described above.

Engineering, Technology and Development 

Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense include the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support. Capitalized internal use software development costs are amortized on a straight-line basis over the software’s estimated useful life. 

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

Engineering, technology and development costs decreased $1.3 million, or 43%, driven primarily by the following: 

● Decrease in cloud services and other technology platform costs totaling $574,000, or 58%, and a decrease in product and engineering personnel and noncash stock compensation expense totaling $367,000, or 30%, and $78,000, and 87%, respectively, reflecting the impact of related ongoing personnel and other cost reduction activities.

● Decrease in developed technology related intangible asset amortization expense totaling $285,000, or 49% resulting from the write-down and disposal of the Microsoft Minecraft Server, InPvP developed technology and Bannerfy technology related intangible assets, respectively, as of December 31, 2023, as described above.

General and Administrative

General and administrative expense for the periods presented was comprised of the following (dollars in thousands):

	Three Months Ended March 31,				Change
	2024		2023		$			%
	(Unaudited)
Personnel costs	$	527	$	590	$	(63	)		(11	)%
Office and facilities		47		56		(9	)		(16	)%
Professional fees		297		298		(1	)		(-	)%
Stock-based compensation		198		530		(332	)		(63	)%
Depreciation and amortization		210		209		1			-	%
Other		823		837		(14	)		(2	)%
Total general and administrative expense	$	2,102	$	2,520	$	(418	)		(17	)%

A summary of the main drivers of the change in general and administrative expense for the periods presented is as follows:

For the Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

Noncash stock compensation expense included in general and administrative expense decreased primarily due to a $124,000 net reduction in noncash stock compensation expense in connection with performance-based stock units originally granted on January 1, 2022, and modified in April 2023, in connection with the PSU Modification described above, and a $84,000 net reduction in noncash stock compensation expense in connection with the April 2023 Stock Option Exchange, described above. The decrease primarily reflects the impact of the reduction in the grant date fair market value of the underlying Company common stock, as compared to the original grant date fair market value, which is an input to the Monte Carlo simulation and Black Sholes models, respectively, utilized to determine the estimated fair value of the equity-based awards on the modification date. The decrease also reflects an $86,000 net reduction in third-party consultant related noncash stock compensation expense, resulting from the full vesting of certain consultant related equity grants in prior periods.  

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Contingent Consideration

Super Biz Acquisition

The Company hired the Founders of Super Biz Co. (“Super Biz”) in connection with the acquisition of (i) substantially all of the assets of Super Biz (the “Super Biz Assets”), and (ii) the personal goodwill of the founders of Super Biz (the “Founders”) regarding Super Biz’s business (collectively, the “Super Biz Acquisition”). Pursuant to the provisions of the Asset Purchase Agreement entered into for the Super Biz Acquisition (the “Super Biz Purchase Agreement”), in the event that a Founder ceases to be an employee during the period from the October 4, 2021 (the “Super Biz Closing Date”) until December 31, 2022 and for the fiscal year ending December 31, 2023 (the “Super Biz Earnout Periods”), as a consequence of his resignation without good cause, or termination for cause, the Super Biz Contingent Consideration will be reduced by one-half (50%) for the respective Super Biz Earn Out Period, if and when earned. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such, the Contingent Consideration, is accounted for as post-combination services and expensed in the period that payment of any amounts of Contingent Consideration is determined to be probable and reasonably estimable. Contingent Consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

The change in accrued Super Biz Contingent Consideration and the related income statement impact for the periods presented was comprised of the following:

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	1,670	$	3,206
Change in fair value(2)		18		217
Current period accrued contingent consideration(2)		142		251
Accrued contingent consideration (1)	$	1,830	$	3,674

⁽¹⁾ As of March 31, 2024, included 30,330 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024. As of March 31, 2023, included 53,050 shares of common stock valued at $11.10, the closing price of our common stock as of March 31, 2023.

⁽²⁾ Reflected in the condensed consolidated statement of operations for the applicable period

Melon Acquisition

On May 4, 2023 (“Melon Acquisition Date”), Super League entered into an Asset Purchase Agreement (the “Melon Purchase Agreement”) with Melon, Inc., a Delaware corporation (“Melon”), pursuant to which the Company acquired substantially all of the assets of Melon (the “Melon Assets”) (the “Melon Acquisition”).

Pursuant to the terms and subject to the conditions of the Purchase Agreement, up to an aggregate of $2,350,000 (the “Melon Contingent Consideration”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the Melon Closing until December 31, 2023 (the “First Earnout Period”) in the amount of $1,000,000, and for the year ending December 31, 2024 (the “Second Earnout Period) in the amount of $1,350,000 (the “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”). The Melon Contingent Consideration is payable in the form of cash and common stock, with $600,000 of the aggregate Melon Contingent Consideration being payable in the form of cash, and $1,750,000 payable in the form of common stock, valued at the greater of (a) the Closing Share Price, and (b) the VWAP for the five trading days immediately preceding the end of each respective Earnout Period.

Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The fair value of the Melon Contingent Consideration on the valuation date was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs. Assumptions utilized in connection with utilization of the Monte Carlo simulation model as of March 31, 2024 included a risk free interest rate of 4.79%, a volatility rate of 70%, a closing stock price of $2.15 and a discount rate of 30%.

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The change in fair value, which is included in contingent consideration expense in the condensed consolidated statement of operations for the applicable periods present was comprised of the following: 

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	538	$	-
Change in fair value		98		-
Accrued contingent consideration(1)	$	636	$	-

⁽¹⁾ As of March 31, 2024, included 156,329 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024.

Other Income (Expense), Net

Gain on Sale of Minehut Assets

On February 29, 2024, the Company sold its Minehut related assets (“Minehut Assets”) to GamerSafer, Inc. (“GamerSafer”), in a transaction approved by the Board of Directors of the Company. Pursuant to the Asset Purchase Agreement entered into by and between GamerSafer and the Company on February 26, 2024 (the “GS Agreement”), the Company will receive $1.0 million of purchase consideration (“Purchase Consideration”) for the Minehut Assets, which amount will be paid by GamerSafer in revenue and royalty sharing over a multiple year period, as described in the GS Agreement. Other than with respect to the GS Agreement, there is no relationship between the Company or its affiliates with GamerSafer or its affiliates. The transaction allows Super League to streamline its position in partnering with major brands to build, market, and operate 3D experiences across multiple immersive platforms, including open gaming powerhouses like Minecraft, and aligns with the Company’s cost improvement initiatives. Super League and GamerSafer will maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners. The carrying value of Minehut related assets totaled $475,000 as of February 26, 2024, comprised of total carrying costs of $1,671,000, net of accumulated amortization of $1,196,000, and historically were included in intangible assets, net in the condensed consolidated balance sheet.

The Company recorded a receivable for the total estimated consideration totaling $619,000, of which $224,000 is included in prepaid expense and other current assets and $395,000 is included in other receivables in noncurrent assets, and recognized a gain on sale of the Minehut Assets totaling $144,000, which is included in other income in the condensed consolidated statement of operations. The Purchase Consideration in the GS Agreement is variable pursuant to the guidance set forth in ASC 606. Under ASC 606, purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. As such, the Company estimated the amount of consideration to which the Company will be entitled, in exchange for transferring the Minehut Assets to GamerSafer, utilizing the expected value method which is the sum of probability-weighted amounts in a range of possible consideration outcomes over the applicable contractual payment period, resulting in an estimated receivable of $619,000. Amounts collected over and above the estimated amount at contract inception, if any, will be recognized as additional gains on the sale of Minehut Assets when realized in future periods, up to the $1.0 million stated contractual amount of purchase consideration.

Change in Fair Value of Warrant Liability

The Placement Agent Warrants issued in connection with the Series A Preferred, Series AA Preferred and Series AAA Preferred (including the Exchange) described at Note 6, include provisions that are triggered in the event of the occurrence of a Fundamental Transaction, as defined in the underlying warrant agreement, which contemplates the potential for certain transactions that result in a third-party acquiring more than 50% of the outstanding shares of common stock of the Company for cash or other assets. Given the existence of multiple classes of voting stock for the Company, as described herein, the Fundamental transaction provisions in the warrant agreements could result in a 50% or more change in ownership of outstanding common stock, without a 50% change in voting interests. As such, the Placement Agent Warrants are not eligible for the scope exception under ASC 480, and therefore, the fair value of the Placement Agent Warrants are recorded as a liability at fair value on the condensed consolidated balance sheet and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

The change in warrant liability, which is reflected in the condensed consolidated statement of operations for the applicable period, was comprised of the following:

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	1,571	$	-
Change in fair value		761		-
Fair value of warrant liability	$	2,332	$	-

Liquidity and Capital Resources

General

Cash and cash equivalents totaled $3.3 million and $7.6 million at March 31, 2024 and December 31, 2023, respectively. The change in cash and cash equivalents for the periods presented reflects the impact of operating, investing and financing cash flow related activities as described below.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company incurred net losses, including significant noncash charges, as reflected in the summary condensed consolidated results of operation above, and had an accumulated deficit of $254.3 million as of March 31, 2024. For the Three Months Ended March 31, 2024 and 2023, net cash used in operating activities totaled $3.7 million and $3.0 million, respectively.

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To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations. Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control. The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the threat of other outbreaks or pandemics, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets. In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by FASB ASC 205-40, “Going Concern,” (“ASC 205”).

Management’s Plans

The Company experienced growth during the periods presented through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter increases in recognized revenue across our primary revenue streams. In the year ended December 31, 2023, we acquired Melon, as described above, and focused on the continued expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through opportunistic strategic acquisitions, as well as management and reduction of costs. Management continues to explore alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings.

We may continue to evaluate potential strategic acquisitions. To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future. If we fail to obtain additional financing when needed, we may not be able to execute our business plans which, in turn, would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies.

We may continue to evaluate potential strategic acquisitions. To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future. If we fail to obtain additional financing when needed, we may not be able to execute our business plans which, in turn, would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies.

Cash Flows for the Three Months Ended March 31, 2024 and 2023

The following table summarizes the change in cash balances for the periods presented (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
	(Unaudited)
Net cash used in operating activities	$	(3,743	)	$	(2,978	)
Net cash used in investing activities		(125	)		(294	)
Net cash (used in) provided by financing activities		(430	)		1,380
Decrease in cash		(4,298	)		(1,892	)
Cash and cash equivalents, at beginning of period		7,609			2,482
Cash and cash equivalents, at end of period	$	3,311		$	590

Cash Flows from Operating Activities.

Net cash used in operating activities during the three months ended March 31, 2024, primarily reflected our GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $332,000, depreciation and amortization charges of $700,000, gain on disposal of intangible assets of $(144,000), net changes in fair value of certain liabilities of $1,041,000 and net changes in working capital of $(412,000). Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course.

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Net cash used in operating activities during the three months ended March 31, 2023, primarily reflected our GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $783,000, depreciation and amortization charges of $1,377,000 and net changes in working capital of $2,098,000. Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course.

Cash Flows from Investing Activities.

Cash flows from investing activities were comprised of the following for the periods presented (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
	(Unaudited)
Purchase of property and equipment	$	-		$	(6	)
Capitalization of software development costs		(125	)		(281	)
Other intangible assets		-			(7	)
Net cash used in investing activities	$	(125	)	$	(294	)

Capitalized Internal Use Software Costs. Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life.

Cash Flows from Financing Activities.

Cash flows from financing activities were comprised of the following for the periods presented (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
	(Unaudited)
Proceeds from issuance of preferred stock, net of issuance costs	$	-		$	1,919
Payments on convertible notes		-			(539	)
Advances from accounts receivable facility		371			-
Payments on accounts receivable facility		(801	)		-
Net cash (used) provided by financing activities	$	(430	)	$	1,380

Account Receivable Financing Facility

The Company and its subsidiaries (collectively with the Company, the “Borrowers”), entered into a Financing and Security Agreement (the “SLR Agreement”) with SLR Digital Finance, LLC (“Lender”), effective December 17, 2023 (the “Effective Date”). Pursuant to the SLR Agreement, Lender may, from time to time and in its sole discretion, make certain cash advances to the Company (each an “Advance”, and collectively, “Advances”), against the face amounts of certain uncollected accounts receivable of the Borrowers on an account-by-account basis (each, a “Financed Account”, and collectively, the “Accounts”), at a rate of 85% multiplied by the face value of such Account (the “Advance Rate”), less any reserved funds and any other amounts due to Lender from Borrowers, up to a maximum aggregate Advance amount of $4,000,000 (the “Maximum Amount”)(the Advances on the Accounts is hereinafter, the “Facility”). Upon receipt of any Advance, Borrowers will have assigned all of its rights in such receivables and all proceeds thereof. The proceeds received from the Facility are, and will be, used to fund general working capital needs.

The SLR Agreement is effective for 24 months from the Effective Date (the “Term”), automatically extends for successive Terms (each, a “Renewal Term”), and the Borrowers’ are obligated to pay the Lender an early termination fee in the event the SLR Agreement is terminated under certain circumstances prior to the end of any Term or Renewal Term, as more specifically set forth in the SLR Agreement.

In connection with the Facility, the Company agreed to, among other things, (i) pay a finance fee equal to 2% of the Maximum Amount, payable in 24 equal monthly installments on the last day of each month of the Term until paid in full, (ii) pay a servicing fee equal to 0.30% multiplied by the actual average daily amount of Advances outstanding at the time of determination (the “Outstanding Amount”) for the applicable month, on the last day of each calendar month during the Term (or so long as any obligations arising under the SLR Agreement are outstanding); (iii) be charged a monthly financing fee (the “Financing Fee”), due upon receipt of full payment of a Financed Account by Lender, equal to 1/12 of (a) the prime rate plus 2% (the “Facility Rate”), multiplied by (b) the amount of the Outstanding Amount; and (iv) utilize the facility such that the monthly average aggregate Advances outstanding is at $400,000 (the “Minimum Utilization”). In the event that Borrower’s monthly utilization is less than the applicable Minimum Utilization for any month, the Financing Fee for such month shall be calculated as if the applicable Minimum Utilization has been satisfied.

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Furthermore, the SLR Agreement imposes various restrictions on the activities of the Borrowers, including a prohibition on fundamental changes to the Company or its subsidiaries (including certain consolidations, mergers and sales and transfers of assets, and limitations on the ability of the Borrowers to grant liens upon their property or assets). The SLR Agreement includes standard Events of Default (as defined in the SLR Agreement), and provide that, upon the occurrence of certain events of default, Lender may, among other things, immediately collect any obligation owing to Lender under the SLR Agreement, cease advancing money to the Borrowers, take possession of any collateral, and/or charge interest at a rate equal to the lesser of (i) 6% above the Facility Rate, and (ii) the highest default rate permitted by applicable law.

As security for the full and prompt payment and performance of any obligations arising under the SLR Agreement, the Borrowers granted to Lender a continuing first priority security interest in all the assets of the Borrowers. The SLR Agreement also provides for customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default.

Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Financing and servicing fees calculated with reference to amounts advanced under the AR Facility are included in interest expense. The commitment fee, based on the maximum facility amount and payable irrespective of drawdowns, is expensed on a straight line basis over the term of the AR Facility. Total amounts advanced under the AR Facility for the three months ended March 31, 2024 totaled $371,000. Total repayments of advances under the AR Facility for the three months ended March 31, 2024 totaled $801,000. Interest expense and commitment fee expense for the three months ended March 31, 2024 totaled $19,000 and $10,000, respectively.

Convertible Preferred Stock

During the fourth quarter of 2022 and first quarter of 2023, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 12,622 shares of newly designated Series A, A-2, A-3, A-4 and A-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series A Preferred,” and the individual offerings of Series A Preferred stock hereinafter collectively referred to as the Series A Offerings, as follows:

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
November 22, 2022	Series A	$	12.40		5,359	$	5,359,000	$	752,000	$	4,607,000		432,000		62,000
November 28, 2022	Series A-2	$	13.29		1,297		1,297,000		169,000		1,128,000		98,000		14,000
November 30, 2022	Series A-3	$	13.41		1,733		1,733,000		225,000		1,508,000		129,000		18,000
December 22, 2022	Series A-4	$	7.60		1,934		1,934,000		251,000		1,683,000		254,000		36,000
January 31, 2023	Series A-5	$	11.09		2,299		2,299,000		299,000		2,000,000		207,000		30,000
Total					12,622	$	12,622,000	$	1,696,000	$	10,926,000		1,120,000		160,000

⁽¹⁾ Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series A Preferred Stock offering

Use of net proceeds from the Series A Offering include the repayment of certain indebtedness and working capital and general corporate purposes, including sales and marketing activities and product development. As disclosed at Note 5, in the event the Company consummated a subsequent equity financing during the term of the Notes, the Company was required, at the option of the Note Holders, to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Notes outstanding upon closing of such equity financing. For the three months ended March 31, 2023 $719,000 of the net proceeds from the Series A Offerings were utilized in connection with the redemption of the Notes.

Convertible Debt. On May 16, 2022, as summarized above and further described at Note 5, the Company entered into a securities purchase agreement with three institutional investors, providing for the sale and issuance of a new series of senior convertible notes in the aggregate original principal amount of $4,320,000, of which 8% is an original issue discount. As of December 31, 2022, the outstanding balance of the Notes and related accrued interest totaled $719,000, which was subsequently paid in full during the three months ended March 31, 2023.

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Contractual Obligations and Off-Balance Sheet Commitments and Arrangements

As of March 31, 2024, we had no significant commitments for capital expenditures, nor do we have any committed lines of credit, other committed funding or long-term debt, and no guarantees. As of March 31, 2024 we maintain approximately 3,200 square feet of office space, 1,650 square feet of which is on a month-to-month basis, and 1,550 square feet of which is subject to a two-year lease, commencing on August 1, 2021.

We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our condensed consolidated financial statements included elsewhere herein. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

Contingencies

Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Recent Accounting Pronouncements

Refer to Note 2 to the accompany condensed consolidated financial statements contained elsewhere in this Report. 

Critical Accounting Estimates

Our unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these condensed consolidated statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these condensed consolidated financial statements. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 31, 2023, as amended. In addition, refer to Note 2 to the condensed consolidated financial statements included in this Report. The following accounting policies were identified during the current period, based on activities occurring during the current period, as critical and requiring significant judgments and estimates.

Revenue Recognition

The Company generates revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) content and technology through the production and distribution of our own, advertiser and third-party content, and (iii) direct to consumer offers, including in-game items, e-commerce, game passes and digital collectibles.

Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services and when the customer obtains control of the good or service. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

We make estimates and judgments when determining whether we will collect substantially all of the consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer. We assess the collectability of receivables based on several factors, including past transaction history and the creditworthiness of our customers. If it is determined that collection is not reasonably assured, amounts due are recognized when collectability becomes reasonably assured, assuming all other revenue recognition criteria have been met, which is generally upon receipt of cash for transactions where collectability may have been an issue. Management’s estimates regarding collectability impact the actual revenue recognized each period and the timing of the recognition of revenue. Our assumptions and judgments regarding future collectability could differ from actual events and thus materially impact our financial position and results of operations. 

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Depending on the complexity of the underlying revenue arrangement and related terms and conditions, significant judgments, assumptions and estimates may be required to determine each parties rights regarding the goods or services to be transferred, each parties performance obligations, whether performance obligations are satisfied at a point in time or over time, estimates of completion methodologies, the timing of satisfaction of performance obligations, whether we are a principal or agent in the arrangement and the appropriate period or periods in which, or during which, the completion of the earnings process and transfer of control occurs. Depending on the magnitude of specific revenue arrangements, if different judgments, assumptions and estimates are made regarding revenue arrangements in any specific period, our periodic financial results may be materially affected.

Relaxed Ongoing Reporting Requirements

Upon the completion of our initial public offering, we elected to report as an “emerging growth company” (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies,” including but not limited to:

● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

● taking advantage of extensions of time to comply with certain new or revised financial accounting standards;

● being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

● being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies,” and our stockholders could receive less information than they might expect to receive from more mature public companies.

We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an “emerging growth company” for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company” as of the following December 31.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

In the ordinary course of our business, we are not currently exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, our CEO and our CFO each concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act, (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to our management, including our CEO and our CFO, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Control Over Financial Reporting

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, we identified a material weakness in our internal control over financial reporting as of December 31, 2023, related to the accounting for the triggering of a down round feature related to preferred stock, in connection with the preparation of our consolidated interim financial statements for the three and nine months ended September 30, 2023. Subsequently, we executed our remediation plan for such material weakness, as disclosed in our 2023 Annual Report on Form 10-K, by, among other things, ensuring that financial statement preparation checklists utilized by the Company to identify non-standard and complex transactions disclosure requirements are completed and reviewed by resources with requisite knowledge in a timely manner for interim financial reporting purposes, to improve disclosure controls and procedures and internal control over financial reporting in these complex non-standard technical areas. As a result, we believe that the material weakness described above was remediated as of May 15, 2024, the filing date of our first quarter 2024 Quarterly Report on Form 10-Q.

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than completion of the actions taken to remediate the material weakness which existed as of December 31, 2023, as described above.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Management is not aware of any material changes to the risk factors discussed in Part 1, Item 1A, of the Annual Report on Form 10-K for the year ended December 31, 2023. In addition to other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part 1, Item 1A, of the Annual Report on Form 10-K for the year ended December 31, 2023, as amended, and subsequent reports filed pursuant to the Exchange Act which could materially and adversely affect the Company’s business, financial condition, results of operations, and stock price. The risks described in the Annual Report on Form 10-K and subsequent reports filed pursuant to the Exchange Act are not the only risks facing the Company. Additional risks and uncertainties not presently known to management, or that management presently believes not to be material, may also result in material and adverse effects on our business, financial condition, and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

No unregistered securities were issued during the three months ended March 31, 2024 that were not previously reported.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(b) Exhibits

Exhibit No.	Description	Incorporation by Reference
10.1	Mutual General Release and Settlement Agreement by and between 3i, LP, Nomis Bay Ltd. and BPY Limited and Super League Enterprise, Inc., dated March 12, 2024.	Exhibit 10.1 to the Current Report on Form 8-K, filed on March 15, 2024.
10.2	Asset Purchase Agreement by and between Super League Enterprise, Inc. and GamerSafer, Inc.	Exhibit 10.55 to the Annual Report on Form 10-K, filed on April 15, 2024
31.1	Certification of the Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

** Certain portions of this exhibit (indicated by “[*****]”) have been omitted as the Company has determined (i) the omitted information is not material and (ii) the omitted information would likely cause harm to the Company if publicly disclosed.

-45-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SUPER LEAGUE ENTERPRISE, INC.
By	/s/ Ann Hand
	Ann Hand Chief Executive Officer (Principal Executive Officer)

	By	/s/ Clayton Haynes
		Clayton Haynes Chief Financial Officer (Principal Financial and Accounting Officer)
Date: May 15, 2024

-46-

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ann Hand, Chief Executive Officer of Super League Enterprise, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Super League Enterprise, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Ann Hand
Date: May 15, 2024	Ann Hand Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Clayton Haynes, Chief Financial Officer of Super League Enterprise, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Super League Enterprise, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Clayton Haynes
Date: May 15, 2024	Clayton Haynes Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Super League Enterprise, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ann Hand, Chief Executive Officer of the Company, and Clayton Haynes, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2024	/s/ Ann Hand
	Ann Hand
	Chief Executive Officer (Principal Executive Officer)
	/s/ Clayton Haynes
	Clayton Haynes Chief Financial Officer (Principal Financial and Accounting Officer)

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2024	May 13, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-38819
Entity Registrant Name	SUPER LEAGUE ENTERPRISE, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1990734
Entity Address, Address Line One	2912 Colorado Ave., Suite #203
Entity Address, City or Town	Santa Monica
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90404
City Area Code	213
Local Phone Number	421-1920
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	SLE
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding (in shares)		6,632,707
Entity Central Index Key	0001621672
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Cash and cash equivalents	$ 3,311,000	$ 7,609,000
Accounts receivable	6,240,000	8,287,000
Prepaid expense and other current assets	1,134,000	862,000
Total current assets	10,685,000	16,758,000
Property and Equipment, net	53,000	70,000
Intangible assets, net	5,603,000	6,636,000
Goodwill	1,864,000	1,864,000
Other receivable, noncurrent	395,000	0
Total assets	18,600,000	25,328,000
Accounts payable	7,110,000	10,420,000
Accrued contingent consideration	2,017,000	1,812,000
Contract liabilities	334,000	339,000
Secured loan – SLR Facility	370,000	800,000
Total current liabilities	9,831,000	13,371,000
Accrued contingent consideration – long term	449,000	396,000
Warrant liability	2,332,000	1,571,000
Total liabilities	12,612,000	15,338,000
Commitments and Contingencies
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; 22,078 and 23,656 and shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.	0	0
Common stock, par value $0.001 per share; 400,000,000 shares authorized; 5,982,912 and 4,774,116 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.	83,000	81,000
Additional paid-in capital	260,183,000	258,923,000
Accumulated deficit	(254,278,000)	(249,014,000)
Total stockholders’ equity	5,988,000	9,990,000
Total liabilities and stockholders’ equity	$ 18,600,000	$ 25,328,000

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized (in shares)	10,000,000	10,000,000
Preferred Stock, Shares Outstanding (in shares)	22,078	23,656
Preferred Stock, Shares Issued (in shares)	22,078	23,656
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Common Stock, Shares Authorized (in shares)	400,000,000	400,000,000
Common Stock, Shares, Outstanding (in shares)	5,982,912	4,774,116
Common Stock, Shares, Issued (in shares)	5,982,912	4,774,116

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
REVENUE	$ 4,209,000	$ 3,322,000
COST OF REVENUE	2,477,000	1,948,000
GROSS PROFIT	1,732,000	1,374,000
Operating Expenses [Abstract]
Selling, marketing and advertising	2,277,000	2,650,000
Engineering, technology and development	1,699,000	2,956,000
General and administrative	2,102,000	2,520,000
Contingent consideration	259,000	468,000
Total operating expense	6,337,000	8,594,000
NET OPERATING LOSS	(4,605,000)	(7,220,000)
Nonoperating Income (Expense) [Abstract]
Gain on sale of intangible assets	144,000	0
Change in fair value of warrant liability	(761,000)	0
Interest expense	(18,000)	(40,000)
Other	(20,000)	24,000
Total other income (expense)	(655,000)	(16,000)
Loss before benefit from income taxes	(5,260,000)	(7,236,000)
Benefit from income taxes	0	0
NET LOSS	$ (5,260,000)	$ (7,236,000)
Earnings Per Share [Abstract]
Basic and diluted net loss per common share (in dollars per share)	$ (1)	$ (3.84)
Weighted-average number of shares outstanding, basic and diluted (in shares)	5,240,755	1,885,797

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member] Series A Preferred Offerings [Member]	Preferred Stock [Member] Series A A Preferred Stock [Member]	Preferred Stock [Member] Series AAA and AAA-2 Preferred Stock Exchanges [Member]	Preferred Stock [Member]	Common Stock [Member] Series A Preferred Offerings [Member]	Common Stock [Member] Series A A Preferred Stock [Member]	Common Stock [Member] Series AAA and AAA-2 Preferred Stock Exchanges [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Total stockholders’ equity				$ 0				$ 47,000	$ 229,900,000	$ (210,743,000)
Balance (in shares) at Dec. 31, 2022				10,323				1,880,298
Issuance of Series A preferred stock at $1,000 per share (in shares)				2,299
Conversion of Series A preferred stock (in shares)	0	0	0		0	0
Balance (in shares) at Mar. 31, 2023				12,622				1,889,753
Balance at Dec. 31, 2022				$ 0				$ 47,000	229,900,000	(210,743,000)
Issuance of Series A preferred stock at $1,000 per share				0					1,919,000
Conversion of Series A preferred stock	$ 0	$ 0	$ 0					0
Balance at Mar. 31, 2023				$ 0				$ 47,000	232,539,000	(217,979,000)	$ 14,607,000
Stock-based compensation (in shares)								9,455
Issuance of common stock in settlement of legal matter (in shares)								0
Preferred stock dividends paid – common stock (in shares)								0
Stock-based compensation								$ 0	720,000
Issuance of common stock in settlement of legal matter								$ 0	0
Preferred stock dividends paid – common stock									0	0
Net Loss										(7,236,000)	(7,236,000)
Balance (in shares) at Dec. 31, 2022				10,323				1,880,298
Balance (in shares) at Dec. 31, 2023				23,656				4,774,116
Balance at Dec. 31, 2022				$ 0				$ 47,000	229,900,000	(210,743,000)
Balance at Dec. 31, 2023				0				81,000	258,923,000	(249,014,000)	9,990,000
Total stockholders’ equity				0				47,000	232,539,000	(217,979,000)	14,607,000
Total stockholders’ equity				$ 0				$ 81,000	258,923,000	(249,014,000)	9,990,000
Issuance of Series A preferred stock at $1,000 per share (in shares)				0
Conversion of Series A preferred stock (in shares)	(475)	(263)	(840)		45,587	139,452	501,803
Balance (in shares) at Mar. 31, 2024				22,078				5,982,912
Issuance of Series A preferred stock at $1,000 per share				$ 0					0
Conversion of Series A preferred stock	$ 0	$ 0	$ 0					$ 1,000
Balance at Mar. 31, 2024				0				$ 83,000	260,183,000	(254,278,000)	5,988,000
Stock-based compensation (in shares)								19,788
Issuance of common stock in settlement of legal matter (in shares)								500,000
Preferred stock dividends paid – common stock (in shares)								2,166
Stock-based compensation								$ 0	332,000
Issuance of common stock in settlement of legal matter								1,000	924,000
Preferred stock dividends paid – common stock									4,000	(4,000)
Net Loss										(5,260,000)	(5,260,000)
Total stockholders’ equity				$ 0				$ 83,000	$ 260,183,000	$ (254,278,000)	$ 5,988,000

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Net Cash Provided by (Used in) Operating Activities [Abstract]
Net Loss	$ (5,260,000)	$ (7,236,000)
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
Depreciation and amortization	700,000	1,337,000
Stock-based compensation	332,000	783,000
Change in fair value of warrant liability	761,000	(0)
Change in fair value of contingent consideration	116,000	0
Amortization of convertible notes discount	0	40,000
Gain on sale of Minehut Assets	144,000	(0)
Change in fair value of noncash legal settlement	(164,000)	(0)
Changes in assets and liabilities:
Accounts receivable	2,048,000	2,671,000
Prepaid expense and other current assets	(48,000)	140,000
Accounts payable and accrued expense	(2,548,000)	(919,000)
Accrued contingent consideration	(142,000)	(468,000)
Contract liabilities	(6,000)	(82,000)
Accrued interest on note payable	0	(180,000)
Net cash used in operating activities	(3,743,000)	(2,978,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	0	(6,000)
Capitalization of software development costs	(125,000)	(281,000)
Acquisition of other intangible assets	0	(7,000)
Net cash used in investing activities	(125,000)	(294,000)
CASH FLOWS FROM FINANCING ACTIVITIES	371,000	0
Payments on convertible notes	0	(539,000)
Payments on accounts receivable facility	801,000	(0)
Net cash provided by financing activities	(430,000)	1,380,000
INCREASE/(DECREASE) IN CASH	(4,298,000)	(1,892,000)
Cash and Cash Equivalents - beginning of period	7,609,000	2,482,000
Cash and Cash Equivalents - end of period	3,311,000	590,000
Melon Acquisition [Member]
Noncash Investing and Financing Items [Abstract]
Issuance of common stock in connection with legal settlement	924,000	0
Preferred Stock [Member]
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from issuance of preferred stock, net of issuance costs (Note 6)	$ 0	$ 1,919,000

XML

Note 1 - Description of Business

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Nature of Operations [Text Block]

1. DESCRIPTION OF BUSINESS

Super League Enterprise, Inc. (Nasdaq: SLE), (“Super League,” the “Company,” “we,” “us” or “our”) is a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms. From open gaming powerhouses such as Roblox, Minecraft and Fortnite Creative, to bespoke worlds built using the most advanced 3D creation tools, Super League’s innovative solutions provide incomparable access to massive audiences who gather in immersive digital spaces to socialize, play, explore, collaborate, shop, learn and create. As a true end-to-end activation partner for dozens of global brands, Super League offers a complete range of development, distribution, monetization and optimization capabilities designed to engage users through dynamic, energized programs. As an originator of new experiences fueled by a network of top developers, a comprehensive set of proprietary creator tools and a future-forward team of creative professionals, Super League accelerates intellectual property (“IP”) and audience success within the fastest growing sector of the media industry.

Super League was incorporated on October 1, 2014 as Nth Games, Inc. under the laws of the State of Delaware and changed its name to Super League Gaming, Inc. on June 15, 2015, and to Super League Enterprise, Inc. on September 11, 2023. We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012, as amended.

On September 7, 2023, the Company filed a Certificate of Amendment (the “2023 Second Amendment”) to the Charter, which Second Amendment became effective as of September 11, 2023, to change the name of the Company from Super League Gaming, Inc. to Super League Enterprise, Inc. (the “Name Change”) and to effect a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-20 (the “Reverse Split”). The Name Change and the Reverse Split were approved by the Company’s Board on July 5, 2023, and approved by the stockholders of the Company on September 7, 2023. Refer to Note 7 below for additional information regarding the Reverse Split. In connection with the Name Change, the Company also changed its Nasdaq ticker symbol to “SLE” from “SLGG.”

All references to common stock, warrants to purchase common stock, options to purchase common stock, restricted stock, share data, per share data and related information contained in the condensed consolidated financial statements (hereinafter, “consolidated financial statements”) have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented.

All references to “Note,” followed by a number reference from one to seven herein, refer to the applicable corresponding numbered footnotes to these consolidated financial statements.

Sale of Minehut

On February 29, 2024, the Company sold its Minehut related assets (“Minehut Assets”) to GamerSafer, Inc. (“GamerSafer”), in a transaction approved by the Board of Directors of the Company. Pursuant to the Asset Purchase Agreement entered into by and between GamerSafer and the Company on February 26, 2024 (the “GS Agreement”), the Company will receive $1.0 million of purchase consideration (“Purchase Consideration”) for the Minehut Assets, which amount will be paid by GamerSafer in revenue and royalty sharing over a multiple year period, as described in the GS Agreement (the “Minehut Sale”). Other than with respect to the GS Agreement, there is no relationship between the Company or its affiliates with GamerSafer or its affiliates.

The transaction allows Super League to streamline its position in partnering with major brands to build, market, and operate 3D experiences across multiple immersive platforms, including open gaming powerhouses like Minecraft, and aligns with the Company’s cost improvement initiatives. Super League and GamerSafer will maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners. 

XML

Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and footnotes required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 15, 2023.

The December 31, 2023 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated interim financial statements of Super League include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Super League’s financial position as of March 31, 2024, and results of its operations and its cash flows for the interim periods presented. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year, or any future period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications to operating expense line items have been made to prior year amounts for consistency and comparability with the current year’s consolidated financial statement presentation. These reclassifications had no effect on the reported total revenue, operating expense, total assets, total liabilities, total stockholder’s equity, or net loss for the prior period presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, impairment of intangibles, stock-based compensation expense, capitalized internal-use-software costs, accounting for business combinations and related contingent consideration, derecognition of assets, accounting for convertible debt, including estimates and assumptions used to calculate the fair value of debt instruments, accounting for convertible preferred stock, including modifications and exchanges of equity and equity-linked instruments, accounting for warrant liabilities and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective, or complex judgments.

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company incurred net losses of $5.3 million and $7.2 million for the three months ended March 31, 2024 and 2023, respectively, and had an accumulated deficit of $254.3 million as of March 31, 2024. For the three months ended March 31, 2024 and 2023, net cash used in operating activities totaled $3.7 million and $3.0 million, respectively.

The Company had cash and cash equivalents of $3.3 million and $7.6 million as of March 31, 2024 and December 31, 2023, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations. Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control. The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the threat of other outbreaks or pandemics, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets. In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 205-40, “Going Concern,” (“ASC 205”).

Management’s Plans

The Company experienced growth during the periods presented through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter increases in recognized revenue across our primary revenue streams. During the prior fiscal year and the quarter ended March 31, 2024, we continued our focus on the expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through opportunistic strategic acquisitions, as well as management and reduction of operating costs. Management continues to explore alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings. 

The Company considers historical operating results, costs, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period. Management’s considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements, and the Company will be able to raise additional equity and / or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of the Company’s business activities, sales of material assets, default on its obligations, or forced insolvency. The accompanying consolidated financial statements do not contain any adjustments which might be necessary if the Company were unable to continue as a going concern. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.

We may continue to evaluate potential strategic acquisitions. To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future. If we fail to obtain additional financing when needed, we may not be able to execute our business plans which, in turn, would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies.

Revenue Recognition

Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services and when the customer obtains control of the good or service. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material.

The Company generates revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) content and technology through the production and distribution of our own, advertiser and third-party content, and (iii) direct to consumer offers, including in-game items, e-commerce and digital collectibles.

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the goods or services prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its media and advertising, publishing and content studio and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to media and advertising sales arrangements.

In the event a customer pays us consideration, or we have a right to an amount of consideration that is unconditional, prior to our transfer of a good or service to the customer, we reflect the contract as a contract liability when the payment is made or the payment is due, whichever is earlier. In the event we perform by transferring goods or services to a customer before the customer pays consideration or before payment is due, we reflect the contract as a contract asset, excluding any amounts reflected as a receivable.

Media and Advertising

Media and advertising revenue primarily consists of direct and reseller sales of our on-platform media and analytics products, and influencer marketing campaign sales to third-party brands and agencies (hereinafter, “Brands”).

On Platform Media

On platform media revenue is generated from third party Brands advertising in-game on Roblox or other digital platforms, and prior to the Minehut Sale, on our Minehut Minecraft platform. Media assets include static billboards, video billboards, portals, 3D characters, Pop Ups and other media products. We work with Brands to determine the specific campaign media to deploy, target ad units and target demographics. We customize the media advertising campaign and media products with applicable branding, images and design and place the media on the various digital platforms. Media is delivered via our Super Biz Roblox platform, the Roblox Immersive Ads platform, other platforms, and prior to the Minehut Sale, on our owned and operated Minehut platform. Media placement can be based on a cost per thousand, other cost per measure, or a flat fee. Media and advertising arrangements typically include contract terms for time periods ranging from one week to two or three months in length.

For on-platform media campaigns, we typically insert media products on-platform (in-game) to deliver to the Brand a predetermined number of impressions identified in the underlying contract. The benefit accrues to the Brand at the time that we deliver the impression on the platform, and the media product is viewed or interacted with by the on-platform user. The performance obligation for on-platform media campaigns is each impression that is guaranteed or required to be delivered per the underlying contract.

Each impression is considered a good or service that is distinct under the revenue standard, and the performance obligation under our on-platform media contracts is the delivery of a series of impressions. Each impression required to be delivered in the series that we promise to transfer to the Brand meets the criteria to be a performance obligation satisfied over time, due to the fact that (1) our performance does not create an asset with an alternative use to the Company, and (2) we have an enforceable right to payment for performance completed to date per the terms of the contract. Further, the same method is used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct impression, as in the transfer of the series of impressions to the customer, which is based on actual delivery of impressions. As such, we account for the specified series of impressions as a single performance obligation.

The delivery of the impression on platform represents the change in control of the good or service, and therefore, the Company satisfies its performance obligations and recognizes revenue based on the delivery of impressions under the contract.

Influencer Marketing

Influencer marketing revenue is generated in connection with the development, management and execution of influencer marketing campaigns on behalf of Brands, primarily on You Tube, Instagram and Tik Tok. Influencer marketing campaigns are collaborations between Super League, popular social-media influencers, and Brands, to promote a Brands’ products or services. Influencers are paid a flat rate per post to feature a Brand’s product or service on their respective social media outlets.

For influencer marketing campaigns that include multiple influencers, the customer can benefit from the influencer posts either on its own or together with other resources that are readily available to the customer. Our influencer marketing campaigns for Brands (1) incorporate a significant service of integrating the goods or services with other goods or services promised in the contract (typically additional influencer posts) into a bundle of goods or services that represent the combined output that the customer has contracted for, and (2) the goods or services are interdependent in that each of the goods or services is affected by one or more of the other goods or services in the contract which combined, create an influencer marketing campaign to satisfy the Brand’s specific campaign objectives. The interdependency of the performance obligations is supported by an understanding of what a customer expects to receive as a final product with respect to an influencer marketing campaign, which is an integrated influencer marketing advertising campaign that the influencer posts create when they are combined into an overall integrated campaign.

Our customers receive and consume the benefits of each influencer’s post as the content is posted on the influencers respective social media outlet. In addition, the influencer marketing campaigns and videos created by influencers are highly customized advertising engagements, where Brand specific assets and collateral are created for the customer based on specific and customized specifications, and therefore, does not create an asset with an alternative use. Further, based on contract terms, we typically have an enforceable right to payment for performance to date during the term of the arrangement.

We recognize revenues for influencer marketing campaigns based on input methods which recognize revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. As such, revenues are recognized over the term of the campaign, as the influencer videos are posted, based on costs incurred to date relative to total costs for the influencer marketing campaign.

Publishing and Content Studio

Publishing and content studio revenue consists of revenue generated from immersive game development and custom game experiences within our owned and affiliate game worlds, and revenue generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels.

Publishing

Custom builds are highly customized branded game experiences created and built by Super League for customers on existing digital platforms such as Roblox, Fortnite, Decentraland and others. Custom builds often include the creation of highly customized and branded gaming experiences and other campaign specific media or products to create an overall customized immersive world campaign.

Custom integrations are highly customized advertising campaigns that are integrated into and run on existing affiliate Roblox gaming experiences. Custom integrations will often include the creation of highly customized and branded game integration elements to be integrated into the existing Roblox gaming experience to the customers specifications and other campaign specific media or products. Prior to the Minehut Sale, we also created custom integrations on the digital property “Minehut” for Brands.

Our custom builds and custom integration (hereinafter, “Custom Programs”) campaign revenue arrangements typically include multiple promises and performance obligations, including requirements to design, create and launch a platform game, customize and enhance an existing game, deploy media products, and related performance measurement. Custom Programs offer a strategically integrated advertising campaign with multiple integrated components, and we provide a significant service of integrating the goods or services with other goods or services promised in the contract into a bundle of goods or services that represent the combined output or outputs that the customer has contracted for. As such, Custom Program revenue arrangements are combined into a single performance unit, as our performance does not create an asset with an alternative use to the entity and we typically have an enforceable right to payment for performance to date during the term of the arrangement.

We recognize revenues for Custom Programs based on input methods, that recognize revenue based upon estimates of progress toward complete satisfaction of the contract performance obligations, utilizing primarily costs or direct labor hours incurred to date to estimate progress towards completion.

Content Production

Content production revenue is generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. We distribute three primary types of content for syndication and licensing, including: (1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology.

Content production arrangements typically involve promises to provide a distinct set of videos, creative, content creation and or other live or remote production services. These services can be one-off in nature (relatively short services periods of one day to one week) or can be specified as monthly services over a multi-month period.

One-off and monthly content production services are distinct in that the customer can benefit from the service either on its own or together with other resources that are readily available to the customer. Further, promises to provide one-off or monthly content production services are typically separately identifiable as the nature of the promises, within the context of the contract, is to transfer each of those goods or services individually. Each month’s content production services are separate and not integrated with a prior month’s or subsequent months services and do not represent a combined output; each months content production services do not modify any other prior period content production services, and the monthly services are not interdependent or highly interrelated.

As a result, each one-off or monthly promise to provide content production services is a distinct good or service that we promise to transfer and are therefore performance obligations. In general, content production contracts do not meet the criteria for recognition of revenues over time as the customer typically does not simultaneously receive and consume the benefits provided by our performance as we perform, our performance does not typically create or enhance an asset that the customer controls, and while our performance does not create an asset with an alternative use, we typically have a right to payment upon completion of each distinct performance obligation.

A performance obligation is satisfied at a point in time if none of the criteria for satisfying a performance obligation over time are met. For content production arrangements, we have a right to payment and the customer has control of the good or service at the time of completion and delivery of the one-off or monthly content production services in accordance with the terms of the underlying contract. As such, revenue is recognized at the time of completion of the one-off or monthly content production services.

Direct to Consumer

Direct to consumer revenue primarily consists of monthly digital subscription fees, and sales of in-game digital goods. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale.

InPvP Platform Generated Sales Transactions

Through a relationship with Microsoft, the owner of Minecraft, we operate a Minecraft server world for players playing the game on consoles and tablets. We are one of seven partner servers with Microsoft that, while “free to play,” monetize the players through in-game micro transactions. We generate in-game platform sales revenue from the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

InPvP revenues are generated from single transactions for various distinct digital goods sold to users in-game. Microsoft processes sales transactions and remits the applicable revenue share to us pursuant to the terms of the Microsoft agreement.

Revenue for digital goods sold on the platform is recognized when Microsoft (our partner) collects the revenue and facilitates the transaction, including delivery of digital goods, on the platform. Revenue for such arrangements includes all revenue generated, make goods, and refunds of all transactions managed via the platform by Microsoft. Payments are made to the Company monthly based on the sales revenue generated on the platform.

Revenue was comprised of the following for the three months ended March 31:

	2024		2023
	(Unaudited)
Media and advertising	$	1,365,000	$	1,604,000
Publishing and content studio		2,538,000		1,336,000
Direct to consumer		306,000		382,000
	$	4,209,000	$	3,322,000

For the three months ended March 31, 2024, 31% of revenues were recognized at a single point in time, and 69% of revenues were recognized over time, respectively. For the three months ended March 31, 2023, 29% of revenue was recognized at a single point in time, and 71% of revenue was recognized over time, respectively.

Contract assets totaled $1,075,000 at March 31, 2024, $546,000 at December 31, 2023, and $1,013,000 at December 31, 2022. Contract liabilities totaled $334,000 at March 31, 2024, $339,000 at December 31, 2023, and $111,000 at December 31, 2022. Revenue recognized during the three months ended March 31, 2024 relating to contract liabilities as of December 31, 2023 totaled $171,000. Revenue recognized during the three months ended March 31, 2023 relating to contract liabilities as of December 31, 2022 totaled $82,000.

In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts with customers, these reporting requirements are not applicable as per ASC 606-10-50-14 as the performance obligation is part of a contract that has an original duration of one year or less.

Cost of Revenue

Cost of revenue includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including internal and third-party engineering, creative, content, broadcast and other personnel, talent and influencers, internal and third-party game developers, content capture and production services, direct marketing, cloud services, software, prizing, and revenue sharing fees.

Advertising

Advertising costs include the cost of ad production, social media, print media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising costs are included in selling, marketing and advertising expense in the condensed consolidated statements of operations. Advertising expense for the three months ended March 31, 2024 and 2023 was $43,000 and $9,000, respectively.

Engineering, Technology and Development Costs

Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense includes the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support.

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3. Unobservable inputs which are supported by little or no market activity and which are significant to the fair value of the assets or liabilities.

Certain assets and liabilities are required to be recorded at fair value on a recurring basis, including derivative financial instruments, contingent consideration and warrant liabilities recorded in accordance with FASB ASC Topic 480, “Distinguishing liabilities from equity,” (“ASC 480”), and convertible notes payable recorded at fair value. As described in the notes below, contingent consideration, convertible notes payable and warrant liabilities outstanding during the periods presented are recorded at fair value. Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers to/from Levels 1, 2, and 3 during the periods presented.

Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair value for other assets and liabilities such as cash, restricted cash, accounts receivable, other receivables, prepaid expense and other current assets, accounts payable and accrued expense, and liabilities to customers have been determined to approximate carrying amounts due to the short maturities of these instruments.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in the statement of operations.

Equity-linked instruments that are deemed to be freestanding instruments issued in conjunction with preferred stock are accounted for separately. For equity linked instruments classified as equity, the proceeds are allocated based on the relative fair values of the preferred stock and the equity-linked instrument following the guidance in FASB ASC Topic 470, “Debt,” (“ASC 470”).

Acquisitions

Acquisition Method. Acquisitions that meet the definition of a business under FASB ASC Topic 805, “Business Combinations,” (“ASC 805”) are accounted for using the acquisition method of accounting. Under the acquisition method of accounting, assets acquired, liabilities assumed, contractual contingencies, and contingent consideration, when applicable, are recorded at fair value at the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The application of the acquisition method of accounting requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in connection with the allocation of the purchase price consideration to the assets acquired and liabilities assumed. Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expense in the consolidated statements of operations.

Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable. Contingent consideration recognized is included in the initial cost of the assets acquired, with subsequent changes in the recorded amount of contingent consideration recognized as an adjustment to the cost basis of the acquired assets. Subsequent changes are allocated to the acquired assets based on their relative fair value. Depreciation and/or amortization of adjusted assets are recognized as a cumulative catch-up adjustment, as if the additional amount of consideration that is no longer contingent had been accrued from the outset of the arrangement.

Contingent consideration that is paid to sellers that remain employed by the acquirer and linked to future services is generally considered compensation cost and recorded in the statement of operations in the post-combination period.

Intangible Assets

Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights, (iv) developed technology acquired, (v) partner, customer, creator and influencer related intangible assets acquired and (vi) other intangible assets, which are recorded at cost (or in accordance with the acquisition method or cost accumulation methods described above) and amortized using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 10 years.

Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life.

Transfer or Sale of Intangible Assets

Upon the sale of an intangible asset, or group of intangible assets (hereinafter, “nonfinancial assets”), the Company initially evaluates whether the Company has a controlling financial interest in the legal entity that holds the nonfinancial assets by applying the guidance on consolidation. Any nonfinancial assets transferred that are held in a legal entity in which the Company does not have (or ceases to have) a controlling financial interest is further evaluated to determine whether the underlying transaction contract meets all of the criteria for accounting for contract under the revenue standard. Once a contract meets all of the criteria, the Company identifies each distinct nonfinancial asset promised to a counterparty and derecognizes each distinct nonfinancial asset when the Company transfers control of the nonfinancial asset to the counterparty. The Company evaluates the point in time at which a counterparty obtains control of the nonfinancial assets, including whether or not the counterparty can direct the use of, and obtain substantially all of the benefits from, each distinct nonfinancial asset.

If the consideration promised in a contract is variable or includes a variable amount, the Company estimates the amount of consideration to which the Company will be entitled in exchange for transferring the promised assets to a counterparty. Purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. The Company determines the total transaction price, including an estimate of any variable consideration, at contract inception and reassesses this estimate at each reporting date. The Company estimates the transaction price utilizing the expected value method. The expected value is the sum of probability-weighted amounts in a range of possible consideration amounts.

The accounting for an arrangement with a put option depends on the amount the Company must pay to the counterparty in the event the counterparty exercises the put option, and whether the counterparty has a significant economic incentive to exercise its right. The accounting for put options requires the Company to assess at contract inception, whether the counterparty has a significant economic incentive to exercise its right, including how the repurchase price compares to the expected market value of the nonfinancial assets at the date of repurchase and the amount of time until the right expires. A customer has a significant economic incentive to exercise a put option when the repurchase price is expected to significantly exceed the market value of the good at the time of repurchase. The Company accounts for a put option as a sale of an asset or group of assets with a right of return, if the repurchase price is less than the original sales price and the customer does not have a significant economic incentive to exercise its right.

Impairment of Long-Lived Assets

The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of our use of the acquired assets or the strategy for our overall business; significant negative industry or economic trends; significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments; and significant decline in our stock price for a sustained period. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded.

Other assets of a reporting unit that are held and used may be required to be tested for impairment when certain events trigger interim goodwill impairment tests. In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below. For the periods presented herein, management believes that there was no impairment of long-lived assets. There can be no assurance, however, that market conditions or demand for the Company’s products or services will not change, which could result in long-lived asset impairment charges in the future.

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We consider our market capitalization and the carrying value of our assets and liabilities, including goodwill, when performing our goodwill impairment tests. We operate in one reporting segment.

If a potential impairment exists, a calculation is performed to determine the fair value of existing goodwill. This calculation can be based on quoted market prices and / or valuation models, which consider the estimated future undiscounted cash flows resulting from the reporting unit, and a discount rate commensurate with the risks involved. Third-party appraised values may also be used in determining whether impairment potentially exists. In assessing goodwill impairment, significant judgment is required in connection with estimates of market values, estimates of the amount and timing of future cash flows, and estimates of other factors that are used to determine the fair value of our reporting unit. If these estimates or related projections change in future periods, future goodwill impairment tests may result in charges to earnings.

When conducting the Company’s annual or interim goodwill impairment assessment, we have the option to initially perform a qualitative evaluation of whether it is more likely than not that goodwill is impaired. The Company is also permitted to bypass the qualitative assessment and proceed directly to the quantitative test. In evaluating whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we consider the guidance set forth in ASC 350, which requires an entity to assess relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, financial performance and other relevant events or circumstances.

Stock-Based Compensation

Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Estimates of expected volatility of the underlying common stock for the expected term of the stock option used in the Black-Scholes-Merton option pricing model are determined by reference to historical volatilities of the Company’s common stock and historical volatilities of similar companies.

Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued.

A condition affecting the exercisability or other pertinent factors used in determining the fair value of an award that is based on an entity achieving a specified share price constitutes a market condition pursuant to FASB ASC Topic 718, “Stock based Compensation,” (“ASC 718”). A market condition is reflected in the grant-date fair value of an award, and therefore, a Monte Carlo simulation model is utilized to determine the estimated fair value of the equity-based award. Compensation cost is recognized for awards with a market condition, provided the requisite service period is satisfied, regardless of whether the market condition is ever satisfied.

Cancellation of an existing equity-classified award along with a concurrent grant of a replacement award is accounted for as a modification under ASC 718. Total compensation cost to be recognized in connection with a modification and concurrent grant of a replacement award is equal to the original grant date fair value plus any incremental fair value, calculated as the excess of the fair value of the replacement award over the fair value of the original awards on the cancellation date. Any incremental compensation cost related to vested awards is recognized immediately on the modification date. Any incremental compensation cost related to unvested awards is recognized prospectively over the remaining service period, in addition to the remaining unrecognized grant date fair value.

On March 19, 2024, the Board approved that an equity pool consisting of (i) 1,692,606 shares of common stock, collectively, which amount is equivalent to ten percent of the then existing and outstanding common stock of the Company on an as-converted basis, be issued to executives of the Company in the following form, amounts and vesting conditions: (a) stock options to purchase 846,303 shares of common stock, with vesting at the rate of 1/36^th per month in arrears, and exercisable at a price per share of $1.85 (collectively, the “2024 Options”); and (b) restricted stock units consisting of 846,303 shares of common stock with vesting of (i) fifty percent in equal one-third increments on the first, second and third anniversaries of the restricted stock unit grant issuances, and (ii) fifty percent to be allocated equally between (a) achievement of a profitable fiscal quarter, on a net income basis, in accordance with U.S. GAAP, (b) achievement of 85% of earnings before interest, taxes, depreciation and amortization (“EBITDA”) target for fiscal year 2024, and (c) achievement of 85% of EBITDA target for fiscal year 2025 (with such fiscal year 2025 target to be approved by the Board as part of the fiscal year 2025 financial plan)(collectively, the “2024 RSUs”). The issuance of the 2024 Options and 2024 RSUs, as described above, is contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan at the Company’s 2024 annual meeting of stockholders, and will be subject to cancellation in the event stockholder approval is not obtained.

Total noncash stock-based compensation expense for the periods presented was included in the following financial statement line items: 

	Three Months
	Ended March 31,
	2024		2023
	(Unaudited)
Sales, marketing and advertising	$	122,000	$	164,000
Engineering, technology and development		11,000		89,000
General and administrative		199,000		530,000
Total noncash stock compensation expense	$	332,000	$	783,000

Financing Costs

Specific incremental costs directly attributable to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the equity financing. In the event that the proposed or actual equity financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred equity financing costs, if any, are included in other current assets in the accompanying condensed consolidated balance sheet. Deferred financing costs totaled $323,000 and $282,000 as of March 31, 2024 and December 31, 2023, respectively.

Convertible Debt

The Company evaluates convertible notes outstanding to determine if those contracts or embedded components of those contracts qualify as derivatives under FASB ASC Topic 815, “Derivatives and Hedging,” (“ASC 815”). ASC 815 requires conversion, redemption options, call options and other features (hereinafter, “Embedded Instruments”) contained in the Company’s convertible debt instruments that meet certain criteria to be bifurcated and separately accounted for as an embedded derivative. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

In the event that the fair value option election is not made, as described below, the Company evaluates the balance sheet classification for convertible debt instruments issued to determine whether the instrument should be classified as debt or equity, and whether the Embedded Instruments should be accounted for separately from the host instrument. Embedded Instruments of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the feature, were it a standalone instrument, meets the definition of an “embedded derivative.” Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it is required to be separated from the host instrument and classified as a derivative liability carried on the balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations.

Fair Value Option (“FVO”) Election. The Company accounted for certain convertible notes issued, as described at Note 5, under the fair value option election pursuant to FASB ASC Topic 825, “Financial Instruments,” (“ASC 825”) as discussed below. The convertible notes accounted for under the FVO election are each debt host financial instruments containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825 provides for the “fair value option” election, to the extent not otherwise prohibited by ASC 825, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment, as required by ASC 825, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) in the accompanying consolidated statement of operations. With respect to the note described at Note 5, as provided for by ASC 825, the estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying consolidated statements of operations, since the change in fair value of the convertible notes payable was not attributable to instrument specific credit risk. The estimated fair value adjustment is included in interest expense in the accompanying consolidated statement of operations.

Transfers of Financial Assets

The Company accounts for transfers of financial assets as sales when it has surrendered control over the related assets. Whether control has been relinquished requires, among other things, an evaluation of relevant legal considerations and an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred. Gains and losses stemming from transfers reported as sales, if any, are included in the statements of income. Assets obtained and liabilities incurred in connection with transfers reported as sales are initially recognized in the balance sheet at fair value.

Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Accordingly, the related assets remain on the Company’s balance sheet and continue to be reported and accounted for as if the transfer had not occurred. Cash proceeds from these transfers are reported as liabilities, with attributable interest expense recognized over the life of the related transactions. Commitment fees charged irrespective of drawdown activity are recognized as expense on a straight line basis over the commitment period and included in other income (expense) in the consolidated statements of operations. Refer to Note 5 for additional information.

Reportable Segments

The Company utilizes the management approach to identify the Company’s operating segments and measure the financial information disclosed, based on information reported internally to the Chief Operating Decision Maker (“CODM”) to make resource allocation and performance assessment decisions. An operating segment of a public entity has all the following characteristics: (1) it engages in business activities from which it may earn revenue and incur expense; (2) its operating results are regularly reviewed by the public entity’s CODM to make decisions about resources to be allocated to the segment and assess its performance: and (3) its discrete financial information is available. Based on the applicable criteria under the standard, the components of the Company’s operations are its: (1) media and advertising component, including its publishing and content studio component; and (2) the Company’s direct-to-consumer component.

A reportable segment is an identified operating segment that also exceeds the quantitative thresholds described in the applicable standard. Based on the applicable criteria under the standard, including quantitative thresholds, management has determined that the Company has one reportable segment that operated primarily in domestic markets during the periods presented herein.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents, investments and accounts receivable. The Company places its cash equivalents and investments primarily in highly rated money market funds. Cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

Risks and Uncertainties

Concentrations. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, and vendors whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable, as follows:

	Three Months Ended March 31,
	2024					2023
	(Unaudited)
Number of customers > 10% of revenue / percent of revenue		Three	/	36	%	Three	/	37	%

Revenue concentrations were comprised of the following revenue categories:

	Three Months
	Ended March 31,
	2024			2023
	(Unaudited)
Media and advertising		12	%		19	%
Publishing and content studio		24	%		18	%

	March 31, 2024				December 31, 2023
	(Unaudited)
Number of customers > 10% of accounts receivable / percent of accounts receivable	Two	/	41	%	Three	/	55	%
Number of vendors > 10% of accounts payable / percent of accounts payable	Two	/	41	%	Two	/	37	%

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period. Diluted earnings per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period, including the dilutive effect of common stock equivalents. Potentially dilutive common stock equivalents primarily consist of common stock potentially issuable in connection with the conversion of outstanding preferred stock, convertible notes payable, employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings.

Common stock underlying all outstanding stock options, restricted stock units and warrants, totaling 2,178,000 and 346,000 at March 31, 2024 and 2023, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive. Common stock potentially issuable in connection with the conversion of outstanding preferred stock totaling 11,442,000 and 1,121,000 at March 31, 2024 and 2023, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive.

A reconciliation of net loss to net loss attributable to common stockholders is as follows for the three months ended March 31:

	2024			2023
	(Unaudited)
Net loss	$	(5,260,000	)	$	(7,236,000	)
Preferred Dividends paid in shares of common stock		(4,000	)		-
Net loss attributable to common stockholders	$	(5,264,000	)	$	(7,236,000	)

Dividends

Dividends on preferred stock paid in another class of stock are recorded at the fair value of the shares issued as a charge to retained earnings. Dividends declared on preferred stock that are payable in the Company’s common shares are deducted from earnings available to common shareholders when computing earnings per share.

Certain of the Company’s outstanding preferred stock contain a conversion price down round feature subject to a contractual floor pursuant to the underlying rights in the applicable certificate of designation. Upon the occurrence of a triggering event that results in a reduction of the conversion price for an equity-classified convertible preferred stock, the Company measures the value of the effect of the feature as the difference between the fair value of the financial instrument without the down round feature, with a conversion price corresponding to the currently stated conversion price of the issued instrument, and the fair value of the financial instrument without the down round feature with a conversion price corresponding to the reduced conversion price upon the down round feature being triggered. The value of the effect of a down round feature that is triggered is recognized as a charge to retained earnings and a reduction to income available to common stockholders in the computation of earnings per share.

Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets.

Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the periods presented.

Contingencies

Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Recent Accounting Guidance

Recent Accounting Pronouncements – Not Yet Adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) which updates required disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment's profit or loss. This standard also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The standard is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, though early adoption is permitted. Adoption of ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the presentational impact of ASU 2023-07 and expects to adopt in the year ended December 31, 2024.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”) which enhances the transparency and usefulness of income tax disclosures. The updates are effective for annual periods beginning after December 15, 2024 on a prospective or retrospective basis, though early adoption is permitted. The Company is currently evaluating the presentational impact of ASU 2023-09 and expects to adopt in the year ended December 31, 2025.

Recent Accounting Pronouncements – Recently Adopted.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers, in order to align the recognition of a contract liability with the definition of a performance obligation. ASU 2021-08 became effective for the Company and was adopted beginning in the first quarter of fiscal year 2023. The adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.

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Note 3 - Intangible and Other Assets

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

3. INTANGIBLE AND OTHER ASSETS

Intangible and other assets consisted of the following:

	March 31, 2024			December 31, 2023			Weighted Average Amortization Period (Years)
	(Unaudited)
Partner and customer relationships	$	7,645,000		$	7,645,000			6.5
Capitalized software development costs		4,446,000			5,912,000			3.0
Capitalized third-party game property costs		500,000			500,000			5.0
Developed technology		3,931,000			3,931,000			5.0
Influencers/content creators		2,559,000			2,559,000			4.5
Trade name		209,000			209,000			5.0
Domain		68,000			68,000			10.0
Copyrights and other		745,000			825,000			5.5
		20,103,000			21,649,000			5.0
Less: accumulated amortization		(14,500,000	)		(15,013,000	)
Intangible assets, net	$	5,603,000		$	6,636,000

Amortization expense included in operating expense for the three months ended March 31, 2024 and 2023 totaled $683,000 and $1,288,000, respectively. Amortization expense included in cost of revenue for the three months ended March 31, 2024 and 2023 totaled $0 and $26,000, respectively.

The Company expects to record amortization of intangible assets for the year ending December 31, 2024 and future fiscal years as follows:

For the years ending December 31,
2024 remaining	$	1,728,000
2025		2,026,000
2026		1,143,000
2027		456,000
2028		237,000
Thereafter		13,000
	$	5,603,000

Sale of Minehut

On February 29, 2024, the Company sold its Minehut Assets to GamerSafer in a transaction approved by the board of directors of the Company. Pursuant to the GS Agreement entered into by and between GamerSafer, the Company will receive $1.0 million of purchase consideration for the Minehut Assets, which amount will be paid by GamerSafer in revenue and royalty sharing over a multiple year period, as described in the GS Agreement. Other than with respect to the GS Agreement, there is no relationship between the Company or its affiliates with GamerSafer or its affiliates. The transaction allows Super League to streamline its position in partnering with major brands to build, market, and operate 3D experiences across multiple immersive platforms, including open gaming powerhouses like Minecraft, and aligns with the Company’s cost improvement initiatives. Super League and GamerSafer will maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners. The carrying value of Minehut related assets totaled $475,000 as of February 26, 2024, comprised of total carrying costs of $1,671,000, net of accumulated amortization of $1,196,000, and historically were included in intangible assets, net in the condensed consolidated balance sheet.

The Company recorded a receivable for the total estimated consideration totaling $619,000, of which $224,000 is included in prepaid expense and other current assets and $395,000 is included in other receivables in noncurrent assets, and recognized a gain on sale of the Minehut Assets totaling $144,000, which is included in other income in the condensed consolidated statement of operations. The Purchase Consideration in the GS Agreement is variable pursuant to the guidance set forth in ASC 606. Under ASC 606, purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. As such, the Company estimated the amount of consideration to which the Company will be entitled, in exchange for transferring the Minehut Assets to GamerSafer, utilizing the expected value method which is the sum of probability-weighted amounts in a range of possible consideration outcomes over the applicable contractual payment period, resulting in an estimated receivable of $619,000. Amounts collected over and above the estimated amount at contract inception, if any, will be recognized as additional gains on the sale of Minehut Assets when realized in future periods, up to the $1.0 million stated contractual amount of purchase consideration.

In the event GamerSafer does not make royalty or shortfall payments in the amount of $1.0 million by December 31, 2028 (“Payment Deadline”), GamerSafer shall assign and transfer all of the purchased assets back to the Company. In the event that GamerSafer determines in good faith that the acquisition of the assets and the operation of GamerSafer’s related Minehut business becomes operationally unsustainable for any reason, GamerSafer reserves the right, at its sole discretion, to terminate operations (the “Termination”). In the event a Termination occurs prior to the Purchase Consideration being paid in full, then in such event GamerSafer shall promptly assign all Minehut Assets and back to the Company.

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Note 4 - Acquisitions

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Business Combination Disclosure [Text Block]

4. ACQUISITIONS

Acquisition of Super Biz – Contingent Consideration

On October 4, 2021 (“Super Biz Closing Date”), the Company entered into an Asset Purchase Agreement (the “Super Biz Purchase Agreement”) with Super Biz Co. and the founders of Super Biz (the “Founders”), pursuant to which the Company acquired (i) substantially all of the assets of Super Biz (the “Super Biz Assets”), and (ii) the personal goodwill of the Founders regarding Super Biz’s business, (the “Super Biz Acquisition”). The consummation of the Super Biz Acquisition (the “Super Biz Closing”) occurred simultaneously with the execution of the Super Biz Purchase Agreement on the Super Biz Closing Date.

Pursuant to the terms and subject to the conditions of the Super Biz Purchase Agreement, up to an aggregate amount $11.5 million will be payable to Super Biz and the Founders in connection with the achievement of certain revenue milestones for the period from the Super Biz Closing Date until December 31, 2022 (“Initial Earn Out Period”) and for the fiscal year ending December 31, 2023 (the “Super Biz Contingent Consideration”) (“Super Biz Earn Out Periods”). The Super Biz Contingent Consideration is payable in the form of both cash and shares of the Company’s common stock, in equal amounts, as more specifically set forth in the Super Biz Purchase Agreement.

The Company hired the Founders of Super Biz in connection with the Super Biz Acquisition. Pursuant to the provisions of the Super Biz Purchase Agreement, in the event that a Founder ceases to be an employee during any of the Super Biz Earn Out Periods, as a consequence of his resignation without good cause, or termination for cause, the Super Biz Contingent Consideration will be reduced by one-half (50%) for the respective Super Biz Earn Out Periods, if and when earned. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such, the Super Biz Contingent Consideration, is accounted for as post-combination services and expensed in the period that payment of any amounts of contingent consideration is determined to be probable and reasonably estimable. During the year ended December 31, 2022, the Company determined that it was probable that the contingency associated with the Super Biz Earn Out Periods would be met in accordance with the terms of the Super Biz Purchase Agreement, and the applicable amounts were reasonably estimable. Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

The change in accrued Super Biz Contingent Consideration and the related income statement impact for the periods presented was comprised of the following:

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	1,670,000	$	3,206,000
Change in fair value(2)		18,000		217,000
Current period accrued contingent consideration(2)		142,000		251,000
Accrued contingent consideration (1)	$	1,830,000	$	3,674,000

⁽¹⁾ As of March 31, 2024, included 30,330 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024. As of March 31, 2023, included 53,050 shares of common stock valued at $11.10, the closing price of our common stock as of March 31, 2023.

⁽²⁾ Reflected in the condensed consolidated statement of operations for the applicable period

In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 49,399 shares of our common stock valued at $548,000.

Melon Acquisition

On May 4, 2023 (“Melon Acquisition Date”), Super League entered into an Asset Purchase Agreement (the “Melon Purchase Agreement”) with Melon, Inc., a Delaware corporation (“Melon”), pursuant to which the Company acquired substantially all of the assets of Melon (the “Melon Assets”) (the “Melon Acquisition”).

Pursuant to the terms and subject to the conditions of the Purchase Agreement, up to an aggregate of $2,350,000 (the “Melon Contingent Consideration”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the Melon Closing until December 31, 2023 (the “First Earnout Period”) in the amount of $1,000,000, and for the year ending December 31, 2024 (the “Second Earnout Period) in the amount of $1,350,000 (the “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”). The Melon Contingent Consideration is payable in the form of cash and common stock, with $600,000 of the aggregate Melon Contingent Consideration being payable in the form of cash, and $1,750,000 payable in the form of common stock, valued at the greater of (a) the Closing Share Price, and (b) the Volume Weighted Average Price (“VWAP”) for the five trading days immediately preceding the end of each respective Earnout Period.

Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The fair value of the Melon Contingent Consideration on the valuation date was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs. Assumptions utilized in connection with utilization of the Monte Carlo simulation model as of March 31, 2024 included a risk free interest rate of 4.79%, a volatility rate of 70%, a closing stock price of $2.15 and a discount rate of 30%.

The change in fair value, which is included in contingent consideration expense in the condensed consolidated statement of operations for the applicable periods present was comprised of the following: 

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	538,000	$	-
Change in fair value		98,000		-
Accrued contingent consideration(1)	$	636,000	$	-

⁽¹⁾ As of March 31, 2024, included 156,329 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024.

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Note 5 - Debt

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

5. DEBT

Accounts Receivable Financing Facility

Super League Enterprise, Inc. and certain of its subsidiaries (collectively with the Company, the “Borrowers”), entered into a Financing and Security Agreement (the “SLR Agreement”) with SLR Digital Finance, LLC (“Lender”), effective December 17, 2023 (the “Facility Effective Date”). Pursuant to the SLR Agreement, Lender may, from time to time and in its sole discretion, make certain cash advances to the Company (each an “Advance”, and collectively, “Advances”), against the face amounts of certain uncollected accounts receivable of the Borrowers on an account-by-account basis (each, a “Financed Account”, and collectively, the “Accounts”), at a rate of 85% multiplied by the face value of such Account (the “Advance Rate”), less any reserved funds and any other amounts due to Lender from Borrowers, up to a maximum aggregate Advance amount of $4,000,000 (the “Maximum Amount”)(collectively, the “AR Facility”). Upon receipt of any Advance, Borrowers will have assigned all of its rights in such receivables and all proceeds thereof. The proceeds received from the Facility will be used to fund general working capital needs.

The SLR Agreement is effective for 24 months from the Effective Date (the “Term”), automatically extends for successive Terms (each, a “Renewal Term”), and the Borrowers’ are obligated to pay the Lender an early termination fee in the event the SLR Agreement is terminated under certain circumstances prior to the end of any Term or Renewal Term, as more specifically set forth in the SLR Agreement.

In connection with the AR Facility, the Company agreed to, among other things, (i) pay a finance fee equal to 2% of the Maximum Amount, payable in 24 equal monthly installments on the last day of each month of the Term until paid in full, (ii) pay a servicing fee equal to 0.30% multiplied by the actual average daily amount of Advances outstanding at the time of determination (the “Outstanding Amount”) for the applicable month, on the last day of each calendar month during the Term (or so long as any obligations arising under the SLR Agreement are outstanding); (iii) be charged a monthly financing fee (the “Financing Fee”), due upon receipt of full payment of a Financed Account by Lender, equal to 1/12 of (a) the prime rate plus 2% (the “Facility Rate”), multiplied by (b) the amount of the Outstanding Amount; and (iv) utilize the facility such that the monthly average aggregate Advances outstanding is at $400,000 (the “Minimum Utilization”). In the event that Borrower’s monthly utilization is less than the applicable Minimum Utilization for any month, the Financing Fee for such month shall be calculated as if the applicable Minimum Utilization has been satisfied.

The SLR Agreement imposes various restrictions on the activities of the Borrowers, including a prohibition on fundamental changes to the Company or its subsidiaries (including certain consolidations, mergers and sales and transfers of assets, and limitations on the ability of the Borrowers to grant liens upon their property or assets). The SLR Agreement includes standard Events of Default (as defined in the SLR Agreement), and provide that, upon the occurrence of certain events of default, Lender may, among other things, immediately collect any obligation owing to Lender under the SLR Agreement, cease advancing money to the Borrowers, take possession of any collateral, and/or charge interest at a rate equal to the lesser of (i) 6% above the Facility Rate, and (ii) the highest default rate permitted by applicable law.

As security for the full and prompt payment and performance of any obligations arising under the SLR Agreement, the Borrowers granted to Lender a continuing first priority security interest in all the assets of the Borrowers. The SLR Agreement also provides for customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default.

Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Financing and servicing fees calculated with reference to amounts advanced under the AR Facility are included in interest expense. The commitment fee, based on the maximum facility amount and payable irrespective of drawdowns, is expensed on a straight line basis over the term of the AR Facility and included in other income (expense) in the consolidated statement of operations. Total amounts advanced under the AR Facility for the three months ended March 31, 2024 totaled $371,000. Total repayments of advances under the AR Facility for the three months ended March 31, 2024 totaled $801,000. Interest expense and commitment fee expense for the three months ended March 31, 2024 totaled $19,000 and $10,000, respectively.

Convertible Notes Payable at Fair Value

On May 16, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with three institutional investors (collectively, the “Note Holders”) providing for the sale and issuance of a series of senior convertible notes in the aggregate original principal amount of $4,320,000, of which 8% is an original issue discount (“OID”) (each, a “Note,” and, collectively, the “Notes,” and such financing, the “Note Offering”). The Notes accrued interest at a guaranteed annual rate of 9% per annum, were set to mature 12 months from the date of issuance, and were convertible at the option of the Note Holders into that number of shares of the Company’s common stock, equal to the sum of the outstanding principal balance, accrued and unpaid interest, and accrued and unpaid late charges (the “Conversion Amount”), divided by $80.00 (the “Conversion Price”), subject to adjustment upon the occurrence of certain events as more specifically set forth in the Note, as amended. In the event of the occurrence of an event of default, the Note Holders may, at the Note Holder’s option, convert all, or any part of, the Conversion Amount into shares of common stock at 90% of the lowest volume weighted average price of the ten trading days preceding the date for which the price is being calculated.

In addition, the Company was required to redeem all or a portion of the Notes under certain circumstances, and, in the event (A) the Company sold Company common stock pursuant to the March 25, 2022 Purchase Agreement, described below, or (B) consummated a subsequent equity financing, then the Note Holders had the right, but not the obligation, to require the Company to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Conversion Amount then remaining under the Notes, in cash, at a price equal to the Conversion Amount being redeemed.

The Notes were issued with an original issue discount of $320,000, or 8%, which was recorded as an adjustment to the carrying amount of the Notes. The original issue discount was amortized using the interest method over the contractual term of the Notes and reflected as interest expense in the statement of operations. At December 31, 2022, the balance of the original issue discount was $40,000, which is included in “Convertible note payable and accrued interest” in the accompanying consolidated balance sheet. Amortization of original issue discount for the three months ended March 31, 2023 totaled $40,000 and $280,000, respectively.

Interest paid during the three months ended March 31, 2023 totaled $180,000. At December 31, 2022, the remaining principal balance of the Notes totaled $539,000, and accrued interest totaled $180,000, both of which were paid in full during the three months ended March 31, 2023. As of March 31, 2023, all amounts of principal and interest under the Notes were fully paid, resulting in a Convertible note payable and accrued interest balance of $0.

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Note 6 - Stockholders' Equity and Equity-linked Instruments

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Equity [Text Block]

6. STOCKHOLDERS’ EQUITY AND EQUITY-LINKED INSTRUMENTS

Reverse Stock Split

On September 7, 2023, the Company filed the 2023 Second Amendment to the Company’s Charter, to effect a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-20 (the “Reverse Split”). The Reverse Split was approved by the Company’s Board of Directors on July 5, 2023, and approved by the stockholders of the Company on September 7, 2023. The 2023 Second Amendment became effective on September 11, 2023. The Company’s shares began trading on a Reverse Split-adjusted basis on the Nasdaq Capital Market on September 11, 2023.

As a result of the Reverse Split, every 20 shares of the Company’s issued and outstanding common stock was automatically combined and converted into one issued and outstanding share of common stock. No fractional shares of common stock were issued as a result of the Reverse Split. Instead, in lieu of any fractional shares to which a stockholder of record would otherwise be entitled as a result of the Reverse Split, the Company paid cash (without interest) equal to the value of such fractional share. The Reverse Split did not modify the rights or preferences of the common stock.

All references to common stock, warrants to purchase common stock, options to purchase common stock, restricted stock, share data, per share data and related information contained in the financial statements have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented.

Preferred Stock

The Company’s initial certificate of incorporation authorized 5,000,000 shares of preferred stock, par value $0.001 per share. In October 2016, the Company’s Board of Directors and a majority of the holders of the Company’s common stock approved an amendment and restatement of the certificate of incorporation which, in part, eliminated the authorized preferred stock. In August 2018, the Board of Directors approved a second amendment and restatement of the Company’s amended and restated certificate of incorporation (the “Amended and Restated Charter”) to, in part, increase the Company’s authorized capital to a total of 110.0 million shares, including 10.0 million shares of newly created preferred stock, par value $0.001 per share (“Preferred Stock”), authorize the Board of Directors to fix the designation and number of each series of Preferred Stock, and to determine or change the designation, relative rights, preferences, and limitations of any series of Preferred Stock. The Amended and Restated Charter was approved by a majority of the Company’s stockholders in September 2018, and was filed with the State of Delaware in November 2018. All references in the accompanying consolidated financial statements to Preferred Stock have been restated to reflect the Amended and Restated Charter.

Common Stock

The Amended and Restated Charter also increased the Company’s authorized capital to include 100.0 million shares of common stock, par value $0.001, and removed the deemed liquidation provision, as such term is defined in the Amended and Restated Charter. Each holder of common stock is entitled to one vote for each share of common stock held at all meetings of stockholders.

On May 30, 2023, the Company filed the 2023 First Amendment to its Charter, increasing the number of authorized shares of common stock from 100,000,000 to 400,000,000. The Company’s Board of Directors approved the 2023 First Amendment on March 17, 2023, and the Company obtained the approval of the 2023 First Amendment by written consent of its stockholders holding greater than 50% of the voting securities of the Company on April 5, 2023.

Equity Financings

Convertible Preferred Stock Issuances

Series AAA Convertible Preferred Financing

On the dates set forth in the table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 8,355 shares of newly designated Series AAA and AAA-2 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AAA Preferred,” and the individual offerings of Series AAA Preferred stock, hereinafter collectively referred to as the Series AAA Offerings, as follows:

Date	Series Design- ation	Conversion Price – At Issuance		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares – At Issuance		Placement Agent Warrants (1)
November 30, 2023	Series AAA	$	1.674		5,377	$	5,377,000	$	645,000	$	4,732,000		3,212,000		466,000
December 22, 2023	Series AAA-2	$	1.71		2,978		2,978,000		357,000		2,621,000		1,742,000		253,000
Total					8,355	$	8,355,000	$	1,002,000	$	7,353,000		4,954,000		719,000

⁽¹⁾ Issued upon final closing of the Series AAA Preferred Stock offering, effective as of the respective closing dates.

In connection with the Series AAA Offerings, the Company filed Certificates of Designation of Preferences, Rights and Limitations of the Series AAA Preferred Stock and Series AAA-1 Preferred Stock (collectively, the “Series AAA Certificates of Designation”) with the State of Delaware. Use of net proceeds from the Series AAA Offerings for the periods presented included working capital and general corporate purposes, including sales and marketing activities and product development.

Each share of Series AAA Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in the Series AAA Certificates of Designation, into such number of shares of the Company’s common stock equal to the number of Series AAA Preferred to be converted, multiplied by the stated value of $1,000 (the “AAA Stated Value”), divided by the conversion price in effect at the time of the conversion, subject to adjustment in the event of stock splits, stock dividends, certain fundamental transactions and future issuances of equity securities as described below. In addition, subject to beneficial ownership and primary market limitations, on the one year anniversary of the respective filing date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series AAA Preferred into the Company’s common stock if the VWAP of such common stock over the previous 10 days as reported on the NASDAQ Capital Market equals at least 250% of the conversion price, or (z) 100% of the outstanding shares of Series AAA Preferred into the Company’s common stock if the VWAP equals at least 300% of the conversion price.

The Series AAA Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series AAA Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series AAA Certificates of Designation in a manner that adversely affects the powers, preferences or rights of the Series AAA Preferred, (b) increasing the number of authorized shares of Series AAA Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series AAA Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind outside of certain loans not to exceed $5,000,000 and accounts payable in the ordinary course of business, or (e) entering into any agreement with respect to the foregoing. In addition, no holder of Series AAA Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series AAA Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series AAA Preferred (together with any Parity Securities (as defined in the Series AAA Certificate of Designations) will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

Holders of the Series AAA Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series AAA Preferred then held by such holder on each of the 12- and 24-month anniversaries of the Filing Date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series AAA Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of Common Stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and/or primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and/or primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

Subject to the approval by a majority of the voting securities of the Company (the “Stockholder Approval”), pursuant to the Subscription Agreements, Series AAA Preferred holders shall have the right to purchase shares of a newly designated series of Preferred Stock of the Company containing comparable terms (except for adjustments to the Conversion Price based on future equity issuances) as the Series AAA Preferred (the “Series AAA Additional Investment Right”) from the date the SEC declares the related registration statement to be filed with the SEC pursuant to the applicable Registration Rights Agreement (as defined below) effective, to the date that is 18 months thereafter, for an additional dollar amount equal to the applicable initial investment amount at $1,000 per share (the “Original Issue Price”), with a conversion price equal to the original conversion price of the Series AAA Preferred. No further additional investment rights shall be granted to investors that exercise the Series AAA Additional Investment Rights.

Further, subject to the effectiveness of the Stockholder Approval, for twenty-four (24) months after the Filing Date, and subject to certain carveouts as described in the Series AAA Certificates of Designation, if the Company conducts an offering at a price per share less than the then effective conversion price (the “Future Offering Price”) consisting of common stock, convertible or derivative instruments, then in such event the conversion price of the Series AAA Preferred shall be adjusted to the Future Offering Price, but not less than the Conversion Price Floor (as defined in the Series AAA Certificate of Designations).

Exchange Agreements

In connection with the closing of the Series AAA Preferred rounds described above, the Company entered into certain Series A Exchange Agreements (the “Series A Agreements”) and Series AA Exchange Agreements (the “Series AA Agreements”, and collectively with the Series A Agreements, the “Exchange Agreements”), with certain holders (the “Holders”) of the Company’s Series A Preferred Stock, and Series AA Preferred Stock, pursuant to which the Holders exchanged an aggregate of 6,367 shares of Series A Preferred and/or Series AA Preferred, for an aggregate of 6,367 shares of Series AAA Preferred (the “Exchange”). The Exchange closed concurrently with the closing of the Series AAA Preferred Offerings.

The Company and the investors in the Series AAA Preferred Offering and the Exchange also executed a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company agreed to use its best efforts to file a registration statement covering the resale of the shares of common stock issuable upon conversion of the Series AAA Preferred within 45 days, but in no event later than 60 days, following the final closing of the Series AAA Preferred Offering and to use its best efforts to cause such registration statement to become effective within 90 days of the filing date.

The Company sold and/or exchanged the shares of Series AAA Preferred pursuant to a Placement Agency Agreement (the “Series AAA Placement Agency Agreement”) with Aegis Capital Corporation, a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Series AAA Placement Agent”) for the Offering and the Exchange. Pursuant to the terms of the Placement Agency Agreement, in connection with the Series AAA Preferred Offerings and the Exchange, the Company paid the Placement Agent an aggregate cash fee and non-accountable expense allowance as described in the table above, and will issue to the Placement Agent or its designees warrants (the “Placement Agent Warrants”) to purchase common stock at the conversion prices disclosed in the table above. The Company also granted the Placement Agent the right of first refusal, for a period of six (6) months after the final closing of the Offering, to serve as the Company’s lead or co-placement agent for any private placement of the Company’s securities (equity or debt) that is proposed to be consummated with the assistance of a registered broker dealer. In addition, with respect to shares of Series AAA Preferred Stock issued in the Exchange, the Placement Agent exchanged previously issued placement agent warrants to purchase 88,403 shares of common stock of the Company that were issued in connection with the Series A and Series AA Preferred Stock financings of the Company, at exercise prices ranging from $7.60 to $13.41 per share, for new placement agent warrants to purchase a total of 347,428 shares of common stock at an exercise price of $1.674 per share and 199,778 shares of common stock at an exercise price of $1.71 per share.

Series AAA Preferred stock outstanding as of March 31, 2024 and December 31, 2023 was comprised of the following: 

Series Designation	Conversion Price		Issued		Conversions Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Sales:
Series AAA	$	1.674		5,377		-			5,377		-			5,377
Series AAA-2	$	1.71		2,978		-			2,978		-			2,978
Subtotal				8,355		-			8,355					8,355
Exchanges:
Series AAA	$	1.674		4,011		(125	)		3,886		(840	)		3,046
Series AAA-2	$	1.71		2,356		(100	)		2,256		-			2,256
Subtotal				6,367		(225	)		6,142		(840	)		5,302
Total				14,722		(225	)		14,497		(840	)		13,657

As of March 31, 2024 and December 31, 2023, Series AAA Preferred stock outstanding was convertible into shares of the Company’s common stock as follows:

Series Designation	Conversion Price		Original Conversion Shares		Conversions Year Ended December 31, 2023			Conversion Shares As of December 31, 2023		Conversions Three Months Ended March 31, 2024			Conversion Shares As of March 31, 2024
Sales:
Series AAA	$	1.674		3,212,000		-			3,212,000		-			3,212,000
Series AAA-2	$	1.71		1,742,000		-			1,742,000		-			1,742,000
Subtotal				4,954,000					4,954,000					4,954,000
Exchanges:
Series AAA	$	1.674		2,396,000		(75,000	)		2,321,000		(502,000	)		1,819,000
Series AAA-2	$	1.71		1,378,000		(58,000	)		1,320,000		-			1,320,000
Subtotal				3,774,000		(133,000	)		3,641,000		(502,000	)		3,139,000
Total				8,728,000		(133,000	)		8,595,000		(502,000	)		8,093,000

Series AA Convertible Preferred Financing

On the dates set forth in the table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 11,781 shares of newly designated Series AA, AA-2, AA-3, AA-4 and AA-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AA Preferred,” and the individual offerings of Series AA Preferred stock hereinafter collectively referred to as the Series AA Offerings, as follows:

Date	Series Design- ation	Original Conversion Price – At Issuance(2)		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares – At Issuance		Placement Agent Warrants (1)
April 19, 2023	Series AA	$	9.43		7,680	$	7,680,000	$	966,000	$	6,714,000		814,000		114,000
April 20, 2023	Series AA-2	$	10.43		1,500		1,500,000		130,000		1,370,000		144,000		13,000
April 28, 2023	Series AA-3	$	9.50		1,025		1,025,000		133,000		892,000		108,000		15,000
May 5, 2023	Series AA-4	$	9.28		1,026		1,026,000		133,000		893,000		111,000		16,000
May 26, 2023	Series AA-5	$	10.60		550		550,000		72,000		478,000		52,000		7,000
Total					11,781	$	11,781,000	$	1,434,000	$	10,347,000		1,229,000		165,000

⁽¹⁾ Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series AA Preferred Stock offering.

⁽²⁾ The Conversion price for Series AA Preferred stock outstanding as of August 23, 2023, totaling 10,706 shares of Series AA Preferred stock, was adjusted to $2.60 as a result of the Series AA Down Round Feature described below. The Conversion price for Series AA Preferred stock outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred stock, was adjusted as described in the table below as a result of the Series AA Down Round Feature described below.

Series AA Preferred stock outstanding as of March 31, 2024 and December 31, 2023 was comprised of the following:

Series Designation	Conversion Price As Adjusted(1)		Issued		Converted / Exchanged - Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Series AA	$	1.89		7,680		(2,926	)		4,754		(263	)		4,491
Series AA-2	$	2.09		1,500		(1,500	)		-		-			-
Series AA-3	$	1.90		1,025		(634	)		391		-			391
Series AA-4	$	1.86		1,026		(511	)		515		-			515
Series AA-5	$	2.12		550		-			550		-			550
Total				11,781		(5,571	)		6,210		(263	)		5,947

⁽¹⁾ The Conversion prices for the Series AA Preferred stock outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred stock, were adjusted to the conversion prices shown in the table above, as a result of the Series AA Down Round Feature described below. The original conversion prices for the Series AA Preferred, as of the respective issuance dates, were as follows: Series AA - $9.43; Series AA-2 - $10.43; Series AA-3 - $9.50; Series AA-4 - $9.28; Series AA-5 - $10.60.

As of March 31, 2024 and December 31, 2023, Series AA Preferred stock outstanding was convertible into shares of the Company’s common stock as follows:

Series Designation	Conversion Price As Adjusted		Issued		Converted / Exchanged - Year Ended December 31, 2023			Additional Conversion Shares - Adjusted Conversion Price(1)		Conversion Shares As of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Conversion Shares As of March 31, 2024
Series AA	$	1.89		814,000		(1,336,000	)		3,043,000		2,521,000		(139,000	)	2,382,000
Series AA-2	$	2.09		144,000		(274,000	)		130,000		-		-		-
Series AA-3	$	1.90		108,000		(334,000	)		432,000		206,000		-		206,000
Series AA-4	$	1.86		109,000		(275,000	)		443,000		277,000		-		277,000
Series AA-5	$	2.12		58,000		-			201,000		259,000		-		259,000
Total				1,233,000		(2,219,000	)		4,249,000		3,263,000		(139,000	)	3,124,000

In connection with the Series AA Offerings, the Company filed Certificates of Designation of Preferences, Rights and Limitations of the Series AA Preferred Stock (the “Series AA Certificates of Designation”) with the State of Delaware. Use of net proceeds from the Series AA Offerings for the periods presented included working capital and general corporate purposes, including sales and marketing activities and product development.

Each share of Series AA Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in each Series AA Certificates of Designation, into such number of shares of the Company’s common stock equal to the number of Series AA Preferred to be converted, multiplied by the stated value of $1,000 (the “AA Stated Value”), divided by the applicable conversion price (refer to table above), subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1)). In addition, subject to beneficial ownership and primary market limitations, on the one year anniversary of the respective filing date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series AA Preferred if the VWAP of the Company’s common stock over the previous ten days as reported on the NASDAQ Capital Market (the “Series AA VWAP”), equals at least 250% of the Conversion Price, or (z) 100% of the outstanding shares of Series AA Preferred if the Series AA VWAP equals at least 300% of the respective conversion price.

The Series AA Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series AA Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series AA Certificates of Designation in a manner that adversely affects the powers, preferences or rights of the Series AA Preferred, (b) increasing the number of authorized shares of Series AA Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series AA Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind outside of accounts payable in the ordinary course of business, (e) entering into any agreement with respect to the foregoing; or (f) approving the issuance of common stock below the Conversion Price Floor (as defined in the AA Certificate of Designations). In addition, no holder of Series AA Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series AA Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series AA Preferred (together with any Parity Securities (as defined in the Series AA Certificate of Designations)) will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the AA Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

Holders of the Series AA Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series AA Preferred then held by such holder on the 12 and 24 month anniversaries of the respective filing date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series AA Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

Pursuant to the Subscription Agreements, purchasers that (a) previously held shares of the Company’s Series A Preferred Stock, par value $0.001 per share, or (b) purchased at least $3.5 million in shares of Series AA Preferred (subject to the acceptance of such lesser amounts in the Company’s sole discretion), shall have the right to purchase shares of a newly designated series of Preferred Stock of the Company containing comparable terms as the Series AA Preferred (the “Series AA Additional Investment Right”) from the date of each respective closing through the date that is 18 months thereafter as follows: (i) such investor may purchase an additional dollar amount equal to its initial investment amount at $1,000 per share (the “AA Original Issue Price”), with a conversion price equal to the conversion price in effect on the date of original purchase; and (ii) such investor may purchase an additional dollar amount equal to its initial investment amount at the AA Original Issue Price, with a conversion price equal to 125% of the respective conversion price in effect on the date of original purchase.

Pursuant to the Series AA Certificate of Designations: (i) for as long as Series AA Preferred remains outstanding and subject to certain carveouts as described in the Series AA Certificates of Designations, if the Company conducts an offering at a price per share less than the then current conversion price (the “Future Offering Price”) consisting of common stock, convertible or derivative instruments, and undertaken in an arms-length third party transaction, then in such event the conversion price of the Series AA Preferred shall be adjusted to the greater of: (a) the Future Offering Price and (b) the Conversion Price Floor (“ Series AA Down Round Feature”); and (ii) if as of the 24-month anniversary date of April 19, 2023, the VWAP for the five trading days immediately prior to such 24-month anniversary date is below the then current conversion price, the holder will receive a corresponding adjustment to the then conversion price, such adjustment not to exceed the Conversion Price Floor.

The Company and the investors in the Offering also executed a registration rights agreement, pursuant to which the Company filed a registration statement on Form S-3 (File No. 333-273282), covering the resale of the shares of common stock issuable upon conversion of the Series AA Preferred, which was declared effective on August 1, 2023.

The Company sold the shares of Series AA Preferred pursuant to a placement agency agreement (the “Series AA Placement Agency Agreement”) with a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Series AA Placement Agent”) for the Offering. Pursuant to the terms of the Series AA Placement Agency Agreement, in connection with the closings of the Series AA Offerings, the Company paid the Series AA Placement Agent aggregate cash fees, and non-accountable expense allowances as disclosed in the table above, and will issue to the Series AA Placement Agent or its designees warrants (the “Series AA Placement Agent Warrants”) to purchase shares of common stock as disclosed in the table above at the conversion prices disclosed above. The Series AA Placement Agent shall also earn fees and be issued additional Series AA Placement Agent Warrants with respect to any securities issued pursuant to the Additional Investment Rights. The Company also granted the Series AA Placement Agent the right of first refusal, for a twelve (12) month period after the final closing of the Offering, to serve as the Company’s lead or co-placement agent for any private placement of the Company’s securities (equity or debt) that is proposed to be consummated with the assistance of a registered broker dealer.

The triggering of the Down Round Feature for the Series AA Preferred stock resulted in a deemed dividend totaling $7,567,000, which was charged to retained earnings in the consolidated balance sheet. The amount was calculated based upon the difference between the fair value of the financial instrument without the down round feature, with a conversion price corresponding to the stated conversion price of the issued instrument immediately prior to the triggering event, and the fair value of the financial instrument without the down round feature with a conversion price corresponding to the reduced conversion price upon the down round feature being triggered.

Series A Convertible Preferred Financing

On the dates set forth in the table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 12,622 shares of newly designated Series A, A-2, A-3, A-4 and A-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series A Preferred,” and the individual offerings of Series A Preferred stock, hereinafter, collectively referred to as the Series A Offerings, as follows:

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
November 22, 2022	Series A	$	12.40		5,359	$	5,359,000	$	752,000	$	4,607,000		432,000		62,000
November 28, 2022	Series A-2	$	13.29		1,297		1,297,000		169,000		1,128,000		98,000		14,000
November 30, 2022	Series A-3	$	13.41		1,733		1,733,000		225,000		1,508,000		129,000		18,000
December 22, 2022	Series A-4	$	7.60		1,934		1,934,000		251,000		1,683,000		254,000		36,000
January 31, 2023	Series A-5	$	11.09		2,299		2,299,000		299,000		2,000,000		207,000		30,000
Total					12,622	$	12,622,000	$	1,696,000	$	10,926,000		1,120,000		160,000

⁽¹⁾ Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series A Preferred Stock offering

Use of net proceeds from the Series A Offerings for the periods presented include the repayment of certain indebtedness and working capital and general corporate purposes, including sales and marketing activities and product development. As disclosed at Note 5, in the event the Company consummated a subsequent equity financing during the term of the Notes, the Company was required, at the option of the Note Holders, to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Notes outstanding upon closing of such equity financing. For the three months ended March 31, 2023, $719,000 of the net proceeds from the Series A Offerings were utilized in connection with the redemption of the Notes and related accrued interest.

On the respective effective dates, the Company filed Certificates of Designation of Preferences, Rights and Limitations (collectively, the “Certificate of Designations”) of the Series A Preferred with the State of Delaware, respectively.

Each share of Series A Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in each of the Series A Certificates of Designation, into such number of shares of the Company’s common stock, equal to the number of Series A Preferred to be converted, multiplied by the stated value of $1,000 (the “Stated Value”), divided by the applicable conversion price (refer to the table above), subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1)) on the date of closing. In addition, subject to beneficial ownership and primary market limitations: (1) the Series A Preferred will automatically convert into shares of common stock at the Conversion Price upon the earlier of (a) the 24-month anniversary of the Effective Date or (b) the consent to conversion by holders of at least 51% of the outstanding shares of Series A Preferred; and (2) on the one year anniversary of the Effective Date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series A Preferred if the VWAP of the Company’s common stock over the previous 10 days as reported on the NASDAQ Capital Market (the “Series A VWAP”), equals at least 250% of the Conversion Price, or (z) 100% of the outstanding shares of Series A Preferred if and only if the Series A VWAP equals at least 300% of the Conversion Price.

Series A Preferred stock outstanding was comprised of the following as of March 31, 2024 and December 31, 2023:

Series Designation	Conversion Price		Issued		Converted / Exchanged - Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Series A	$	12.40		5,359		(4,551	)		808		(368	)		440
Series A-2	$	13.29		1,297		(834	)		463		-			463
Series A-3	$	13.41		1,733		(1,418	)		315		-			315
Series A-4	$	7.60		1,934		(1,383	)		551		(75	)		476
Series A-5	$	11.09		2,299		(1,487	)		812		(32	)		780
Total				12,622		(9,673	)		2,949		(475	)		2,474

As of March 31, 2024 and December 31, 2023, Series A Preferred stock outstanding was convertible into shares of the Company’s common stock as follows:

Series Designation	Conversion Price		Issued		Converted / Exchanged - Year Ended December 31, 2023			Conversion Shares as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Conversion Shares as of March 31, 2024
Series A	$	12.40		432,000		(367,000	)		65,000		(30,000	)		35,000
Series A-2	$	13.29		98,000		(63,000	)		35,000		-			35,000
Series A-3	$	13.41		129,000		(106,000	)		23,000		-			23,000
Series A-4	$	7.60		254,000		(182,000	)		72,000		(10,000	)		62,000
Series A-5	$	11.09		207,000		(134,000	)		73,000		(3,000	)		70,000
Total				1,120,000		(852,000	)		268,000		(43,000	)		225,000

The Series A Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series A Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series A Certificates of Designation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred, (b) increasing the number of authorized shares of Series A Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series A Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind in excess of $5 million, or I entering into any agreement with respect to the foregoing. In addition, no holder of Series A Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series A Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series A Preferred will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

Holders of the Series A Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series A Preferred then held by such holder on the 12 and 24-month anniversaries of the respective filing date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series A Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

The Company and the investors in the Series A Offerings also executed a registration rights agreement, pursuant to which the Company filed registration statement on Form S-3 (File No. 333-271424), covering the resale of the shares of common stock issuable upon conversion of the Series A Preferred, which was declared on June 5, 2023.

The Company sold the shares of Series A Preferred pursuant to a Placement Agency Agreement (the “Placement Agency Agreement”) with a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Placement Agent”) for the Series A Offerings. Pursuant to the terms of the Placement Agency Agreement, the Company agreed to pay to the Placement Agent at each Closing a cash fee equal to 10% of the gross proceeds raised in the Series A Offerings and (ii) a non-accountable expense allowance equal to 3% of the gross proceeds of the Series A Offerings. In addition, we agreed to issue to the Placement Agent or its designees for nominal consideration and following the final closing under the Series A Offerings, five-year warrants to purchase 14.5% of the shares of common stock issuable upon conversion of the Series A Preferred shares sold in the Series A Offerings, at an exercise price equal to the applicable conversion price. The Placement Agent Warrants provide for a cashless exercise feature and are exercisable for a period of five years from the Effective Date. In addition, the Company agreed to grant the Placement Agent the right to appoint, subject to the Company’s approval, one representative to serve as a member of the Company’s Board of Directors upon the closing of at least $10 million in aggregate in connection with the Series A Offerings.

Placement Agent Warrants

The Placement Agent Warrants issued in connection with the Series A Preferred, Series AA Preferred and Series AAA Preferred (including the Exchange), described above, include provisions that are triggered in the event of the occurrence of a Fundamental Transaction, as defined in the underlying warrant agreement, which contemplates the potential for certain transactions that result in a third-party acquiring more than 50% of the outstanding shares of common stock of the Company for cash or other assets. Given the existence of multiple classes of voting stock for the Company, as described above, the Fundamental Transaction provisions in the warrant agreements could result in a 50% or more change in ownership of outstanding common stock, without a 50% change in voting interests. As such, the Placement Agent Warrants are not eligible for the scope exception under ASC 815, and therefore, the fair value of the Placement Agent Warrants are recorded as a liability at fair value on the consolidated balance sheet and re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.

The fair value and change in the fair value of the warrant liability, measured using Level 3 inputs, and the related income statement impact was comprised of the following for the applicable periods presented:

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	1,571	$	-
Change in fair value		761		-
Fair value of warrant liability	$	2,332	$	-

The fair value of the Placement Agent Warrants was estimated using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions for the applicable dates: 

	May 26,			December 22,	December 31,			March 31,
	2023			2023	2023			2024
Expected Volatility	95%			98%	98%			98%
Risk–free interest rate	3.88%			3.87%	3.84%			4.21
Dividend yield	-%			-%	-%			-%
Expected life of options (in years)	5	-	5.19	5	4.5	-	5	4.14	-	4.72

Preferred Stock Dividends

During the three months ended March 31, 2024, the Company paid common stock dividends on outstanding preferred stock, as follows:

Series Designation	Dividend Shares		Fair Value of Shares Issued (1)
Series A-5		2,166	$	4,000
Total		2,166	$	4,000

⁽¹⁾ Fair valued at $2.03 per share, the closing price of the Company’s common stock on January 31, 2024

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Note 7 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

7. COMMITMENTS AND CONTINGENCIES

Settlement of Pending or Threatened Claims

As described above, the Note Holders made a series of investments in the Company during the period commencing January 2021 and culminating in the issuance of the Notes, which were paid in full in the first quarter of 2023. During the fourth quarter of 2023, the Note Holders made certain claims arising from an interpretation of certain rights that the Note Holders had pursuant to the terms of SPA. On March 12, 2024, the Company and the Note Holders (the “Parties”) executed a Mutual General Release and Settlement Agreement (the “Settlement Agreement”) settling all claims between the Parties with respect to the SPA. In consideration for the Settlement Agreement, the Company agreed to issue the Parties an aggregate amount of 500,000 shares of common stock (the “Settlement Payment”). The Company accrued the fair value of the Settlement Payment as of December 31, 2023 (based on the closing price of the Company’s common stock on December 31, 2023) resulting in a settlement expense of $760,000 which was included in general and administrative expense in the consolidated statement of operations for the year ended December 31, 2023. The Company issued the 500,000 shares of common stock on March 19, 2024, which were valued at $1.85 per share (the closing price of the Company’s common stock on March 19, 2024), or $924,000, resulting in additional noncash settlement expense of $164,000, which was included in the general and administrative expense in the condensed consolidated statement of operations for the three months ended March 31, 2024.

XML

Insider Trading Arrangements

3 Months Ended

Mar. 31, 2024

Insider Trading Arr Line Items

Material Terms of Trading Arrangement [Text Block]

ITEM 5. OTHER INFORMATION

None.

Rule 10b5-1 Arrangement Adopted [Flag]

false

Non-Rule 10b5-1 Arrangement Adopted [Flag]

false

Rule 10b5-1 Arrangement Terminated [Flag]

false

Non-Rule 10b5-1 Arrangement Terminated [Flag]

false

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and footnotes required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 15, 2023.

The December 31, 2023 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated interim financial statements of Super League include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Super League’s financial position as of March 31, 2024, and results of its operations and its cash flows for the interim periods presented. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year, or any future period.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassifications

Certain reclassifications to operating expense line items have been made to prior year amounts for consistency and comparability with the current year’s consolidated financial statement presentation. These reclassifications had no effect on the reported total revenue, operating expense, total assets, total liabilities, total stockholder’s equity, or net loss for the prior period presented.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, impairment of intangibles, stock-based compensation expense, capitalized internal-use-software costs, accounting for business combinations and related contingent consideration, derecognition of assets, accounting for convertible debt, including estimates and assumptions used to calculate the fair value of debt instruments, accounting for convertible preferred stock, including modifications and exchanges of equity and equity-linked instruments, accounting for warrant liabilities and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective, or complex judgments.

Going Concern [Policy Text Block]

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company incurred net losses of $5.3 million and $7.2 million for the three months ended March 31, 2024 and 2023, respectively, and had an accumulated deficit of $254.3 million as of March 31, 2024. For the three months ended March 31, 2024 and 2023, net cash used in operating activities totaled $3.7 million and $3.0 million, respectively.

The Company had cash and cash equivalents of $3.3 million and $7.6 million as of March 31, 2024 and December 31, 2023, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations. Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control. The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the threat of other outbreaks or pandemics, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets. In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 205-40, “Going Concern,” (“ASC 205”).

Management’s Plans

The Company experienced growth during the periods presented through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter increases in recognized revenue across our primary revenue streams. During the prior fiscal year and the quarter ended March 31, 2024, we continued our focus on the expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through opportunistic strategic acquisitions, as well as management and reduction of operating costs. Management continues to explore alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings. 

The Company considers historical operating results, costs, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period. Management’s considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements, and the Company will be able to raise additional equity and / or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of the Company’s business activities, sales of material assets, default on its obligations, or forced insolvency. The accompanying consolidated financial statements do not contain any adjustments which might be necessary if the Company were unable to continue as a going concern. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.

We may continue to evaluate potential strategic acquisitions. To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future. If we fail to obtain additional financing when needed, we may not be able to execute our business plans which, in turn, would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services and when the customer obtains control of the good or service. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material.

The Company generates revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) content and technology through the production and distribution of our own, advertiser and third-party content, and (iii) direct to consumer offers, including in-game items, e-commerce and digital collectibles.

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the goods or services prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its media and advertising, publishing and content studio and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to media and advertising sales arrangements.

In the event a customer pays us consideration, or we have a right to an amount of consideration that is unconditional, prior to our transfer of a good or service to the customer, we reflect the contract as a contract liability when the payment is made or the payment is due, whichever is earlier. In the event we perform by transferring goods or services to a customer before the customer pays consideration or before payment is due, we reflect the contract as a contract asset, excluding any amounts reflected as a receivable.

Media and Advertising

Media and advertising revenue primarily consists of direct and reseller sales of our on-platform media and analytics products, and influencer marketing campaign sales to third-party brands and agencies (hereinafter, “Brands”).

On Platform Media

On platform media revenue is generated from third party Brands advertising in-game on Roblox or other digital platforms, and prior to the Minehut Sale, on our Minehut Minecraft platform. Media assets include static billboards, video billboards, portals, 3D characters, Pop Ups and other media products. We work with Brands to determine the specific campaign media to deploy, target ad units and target demographics. We customize the media advertising campaign and media products with applicable branding, images and design and place the media on the various digital platforms. Media is delivered via our Super Biz Roblox platform, the Roblox Immersive Ads platform, other platforms, and prior to the Minehut Sale, on our owned and operated Minehut platform. Media placement can be based on a cost per thousand, other cost per measure, or a flat fee. Media and advertising arrangements typically include contract terms for time periods ranging from one week to two or three months in length.

For on-platform media campaigns, we typically insert media products on-platform (in-game) to deliver to the Brand a predetermined number of impressions identified in the underlying contract. The benefit accrues to the Brand at the time that we deliver the impression on the platform, and the media product is viewed or interacted with by the on-platform user. The performance obligation for on-platform media campaigns is each impression that is guaranteed or required to be delivered per the underlying contract.

Each impression is considered a good or service that is distinct under the revenue standard, and the performance obligation under our on-platform media contracts is the delivery of a series of impressions. Each impression required to be delivered in the series that we promise to transfer to the Brand meets the criteria to be a performance obligation satisfied over time, due to the fact that (1) our performance does not create an asset with an alternative use to the Company, and (2) we have an enforceable right to payment for performance completed to date per the terms of the contract. Further, the same method is used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct impression, as in the transfer of the series of impressions to the customer, which is based on actual delivery of impressions. As such, we account for the specified series of impressions as a single performance obligation.

The delivery of the impression on platform represents the change in control of the good or service, and therefore, the Company satisfies its performance obligations and recognizes revenue based on the delivery of impressions under the contract.

Influencer Marketing

Influencer marketing revenue is generated in connection with the development, management and execution of influencer marketing campaigns on behalf of Brands, primarily on You Tube, Instagram and Tik Tok. Influencer marketing campaigns are collaborations between Super League, popular social-media influencers, and Brands, to promote a Brands’ products or services. Influencers are paid a flat rate per post to feature a Brand’s product or service on their respective social media outlets.

For influencer marketing campaigns that include multiple influencers, the customer can benefit from the influencer posts either on its own or together with other resources that are readily available to the customer. Our influencer marketing campaigns for Brands (1) incorporate a significant service of integrating the goods or services with other goods or services promised in the contract (typically additional influencer posts) into a bundle of goods or services that represent the combined output that the customer has contracted for, and (2) the goods or services are interdependent in that each of the goods or services is affected by one or more of the other goods or services in the contract which combined, create an influencer marketing campaign to satisfy the Brand’s specific campaign objectives. The interdependency of the performance obligations is supported by an understanding of what a customer expects to receive as a final product with respect to an influencer marketing campaign, which is an integrated influencer marketing advertising campaign that the influencer posts create when they are combined into an overall integrated campaign.

Our customers receive and consume the benefits of each influencer’s post as the content is posted on the influencers respective social media outlet. In addition, the influencer marketing campaigns and videos created by influencers are highly customized advertising engagements, where Brand specific assets and collateral are created for the customer based on specific and customized specifications, and therefore, does not create an asset with an alternative use. Further, based on contract terms, we typically have an enforceable right to payment for performance to date during the term of the arrangement.

We recognize revenues for influencer marketing campaigns based on input methods which recognize revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. As such, revenues are recognized over the term of the campaign, as the influencer videos are posted, based on costs incurred to date relative to total costs for the influencer marketing campaign.

Publishing and Content Studio

Publishing and content studio revenue consists of revenue generated from immersive game development and custom game experiences within our owned and affiliate game worlds, and revenue generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels.

Publishing

Custom builds are highly customized branded game experiences created and built by Super League for customers on existing digital platforms such as Roblox, Fortnite, Decentraland and others. Custom builds often include the creation of highly customized and branded gaming experiences and other campaign specific media or products to create an overall customized immersive world campaign.

Custom integrations are highly customized advertising campaigns that are integrated into and run on existing affiliate Roblox gaming experiences. Custom integrations will often include the creation of highly customized and branded game integration elements to be integrated into the existing Roblox gaming experience to the customers specifications and other campaign specific media or products. Prior to the Minehut Sale, we also created custom integrations on the digital property “Minehut” for Brands.

Our custom builds and custom integration (hereinafter, “Custom Programs”) campaign revenue arrangements typically include multiple promises and performance obligations, including requirements to design, create and launch a platform game, customize and enhance an existing game, deploy media products, and related performance measurement. Custom Programs offer a strategically integrated advertising campaign with multiple integrated components, and we provide a significant service of integrating the goods or services with other goods or services promised in the contract into a bundle of goods or services that represent the combined output or outputs that the customer has contracted for. As such, Custom Program revenue arrangements are combined into a single performance unit, as our performance does not create an asset with an alternative use to the entity and we typically have an enforceable right to payment for performance to date during the term of the arrangement.

We recognize revenues for Custom Programs based on input methods, that recognize revenue based upon estimates of progress toward complete satisfaction of the contract performance obligations, utilizing primarily costs or direct labor hours incurred to date to estimate progress towards completion.

Content Production

Content production revenue is generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. We distribute three primary types of content for syndication and licensing, including: (1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology.

Content production arrangements typically involve promises to provide a distinct set of videos, creative, content creation and or other live or remote production services. These services can be one-off in nature (relatively short services periods of one day to one week) or can be specified as monthly services over a multi-month period.

One-off and monthly content production services are distinct in that the customer can benefit from the service either on its own or together with other resources that are readily available to the customer. Further, promises to provide one-off or monthly content production services are typically separately identifiable as the nature of the promises, within the context of the contract, is to transfer each of those goods or services individually. Each month’s content production services are separate and not integrated with a prior month’s or subsequent months services and do not represent a combined output; each months content production services do not modify any other prior period content production services, and the monthly services are not interdependent or highly interrelated.

As a result, each one-off or monthly promise to provide content production services is a distinct good or service that we promise to transfer and are therefore performance obligations. In general, content production contracts do not meet the criteria for recognition of revenues over time as the customer typically does not simultaneously receive and consume the benefits provided by our performance as we perform, our performance does not typically create or enhance an asset that the customer controls, and while our performance does not create an asset with an alternative use, we typically have a right to payment upon completion of each distinct performance obligation.

A performance obligation is satisfied at a point in time if none of the criteria for satisfying a performance obligation over time are met. For content production arrangements, we have a right to payment and the customer has control of the good or service at the time of completion and delivery of the one-off or monthly content production services in accordance with the terms of the underlying contract. As such, revenue is recognized at the time of completion of the one-off or monthly content production services.

Direct to Consumer

Direct to consumer revenue primarily consists of monthly digital subscription fees, and sales of in-game digital goods. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale.

InPvP Platform Generated Sales Transactions

Through a relationship with Microsoft, the owner of Minecraft, we operate a Minecraft server world for players playing the game on consoles and tablets. We are one of seven partner servers with Microsoft that, while “free to play,” monetize the players through in-game micro transactions. We generate in-game platform sales revenue from the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

InPvP revenues are generated from single transactions for various distinct digital goods sold to users in-game. Microsoft processes sales transactions and remits the applicable revenue share to us pursuant to the terms of the Microsoft agreement.

Revenue for digital goods sold on the platform is recognized when Microsoft (our partner) collects the revenue and facilitates the transaction, including delivery of digital goods, on the platform. Revenue for such arrangements includes all revenue generated, make goods, and refunds of all transactions managed via the platform by Microsoft. Payments are made to the Company monthly based on the sales revenue generated on the platform.

Revenue was comprised of the following for the three months ended March 31:

	2024		2023
	(Unaudited)
Media and advertising	$	1,365,000	$	1,604,000
Publishing and content studio		2,538,000		1,336,000
Direct to consumer		306,000		382,000
	$	4,209,000	$	3,322,000

For the three months ended March 31, 2024, 31% of revenues were recognized at a single point in time, and 69% of revenues were recognized over time, respectively. For the three months ended March 31, 2023, 29% of revenue was recognized at a single point in time, and 71% of revenue was recognized over time, respectively.

Contract assets totaled $1,075,000 at March 31, 2024, $546,000 at December 31, 2023, and $1,013,000 at December 31, 2022. Contract liabilities totaled $334,000 at March 31, 2024, $339,000 at December 31, 2023, and $111,000 at December 31, 2022. Revenue recognized during the three months ended March 31, 2024 relating to contract liabilities as of December 31, 2023 totaled $171,000. Revenue recognized during the three months ended March 31, 2023 relating to contract liabilities as of December 31, 2022 totaled $82,000.

In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts with customers, these reporting requirements are not applicable as per ASC 606-10-50-14 as the performance obligation is part of a contract that has an original duration of one year or less.

Cost of Goods and Service [Policy Text Block]

Cost of Revenue

Cost of revenue includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including internal and third-party engineering, creative, content, broadcast and other personnel, talent and influencers, internal and third-party game developers, content capture and production services, direct marketing, cloud services, software, prizing, and revenue sharing fees.

Advertising Cost [Policy Text Block]

Advertising

Advertising costs include the cost of ad production, social media, print media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising costs are included in selling, marketing and advertising expense in the condensed consolidated statements of operations. Advertising expense for the three months ended March 31, 2024 and 2023 was $43,000 and $9,000, respectively.

Research, Development, and Computer Software, Policy [Policy Text Block]

Engineering, Technology and Development Costs

Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense includes the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3. Unobservable inputs which are supported by little or no market activity and which are significant to the fair value of the assets or liabilities.

Certain assets and liabilities are required to be recorded at fair value on a recurring basis, including derivative financial instruments, contingent consideration and warrant liabilities recorded in accordance with FASB ASC Topic 480, “Distinguishing liabilities from equity,” (“ASC 480”), and convertible notes payable recorded at fair value. As described in the notes below, contingent consideration, convertible notes payable and warrant liabilities outstanding during the periods presented are recorded at fair value. Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers to/from Levels 1, 2, and 3 during the periods presented.

Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair value for other assets and liabilities such as cash, restricted cash, accounts receivable, other receivables, prepaid expense and other current assets, accounts payable and accrued expense, and liabilities to customers have been determined to approximate carrying amounts due to the short maturities of these instruments.

Derivatives, Policy [Policy Text Block]

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in the statement of operations.

Equity-linked instruments that are deemed to be freestanding instruments issued in conjunction with preferred stock are accounted for separately. For equity linked instruments classified as equity, the proceeds are allocated based on the relative fair values of the preferred stock and the equity-linked instrument following the guidance in FASB ASC Topic 470, “Debt,” (“ASC 470”).

Business Combinations Policy [Policy Text Block]

Acquisitions

Acquisition Method. Acquisitions that meet the definition of a business under FASB ASC Topic 805, “Business Combinations,” (“ASC 805”) are accounted for using the acquisition method of accounting. Under the acquisition method of accounting, assets acquired, liabilities assumed, contractual contingencies, and contingent consideration, when applicable, are recorded at fair value at the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The application of the acquisition method of accounting requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in connection with the allocation of the purchase price consideration to the assets acquired and liabilities assumed. Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expense in the consolidated statements of operations.

Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable. Contingent consideration recognized is included in the initial cost of the assets acquired, with subsequent changes in the recorded amount of contingent consideration recognized as an adjustment to the cost basis of the acquired assets. Subsequent changes are allocated to the acquired assets based on their relative fair value. Depreciation and/or amortization of adjusted assets are recognized as a cumulative catch-up adjustment, as if the additional amount of consideration that is no longer contingent had been accrued from the outset of the arrangement.

Contingent consideration that is paid to sellers that remain employed by the acquirer and linked to future services is generally considered compensation cost and recorded in the statement of operations in the post-combination period.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Intangible Assets

Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights, (iv) developed technology acquired, (v) partner, customer, creator and influencer related intangible assets acquired and (vi) other intangible assets, which are recorded at cost (or in accordance with the acquisition method or cost accumulation methods described above) and amortized using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 10 years.

Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life.

Transfer or Sale of Intangible Assets

Upon the sale of an intangible asset, or group of intangible assets (hereinafter, “nonfinancial assets”), the Company initially evaluates whether the Company has a controlling financial interest in the legal entity that holds the nonfinancial assets by applying the guidance on consolidation. Any nonfinancial assets transferred that are held in a legal entity in which the Company does not have (or ceases to have) a controlling financial interest is further evaluated to determine whether the underlying transaction contract meets all of the criteria for accounting for contract under the revenue standard. Once a contract meets all of the criteria, the Company identifies each distinct nonfinancial asset promised to a counterparty and derecognizes each distinct nonfinancial asset when the Company transfers control of the nonfinancial asset to the counterparty. The Company evaluates the point in time at which a counterparty obtains control of the nonfinancial assets, including whether or not the counterparty can direct the use of, and obtain substantially all of the benefits from, each distinct nonfinancial asset.

If the consideration promised in a contract is variable or includes a variable amount, the Company estimates the amount of consideration to which the Company will be entitled in exchange for transferring the promised assets to a counterparty. Purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. The Company determines the total transaction price, including an estimate of any variable consideration, at contract inception and reassesses this estimate at each reporting date. The Company estimates the transaction price utilizing the expected value method. The expected value is the sum of probability-weighted amounts in a range of possible consideration amounts.

The accounting for an arrangement with a put option depends on the amount the Company must pay to the counterparty in the event the counterparty exercises the put option, and whether the counterparty has a significant economic incentive to exercise its right. The accounting for put options requires the Company to assess at contract inception, whether the counterparty has a significant economic incentive to exercise its right, including how the repurchase price compares to the expected market value of the nonfinancial assets at the date of repurchase and the amount of time until the right expires. A customer has a significant economic incentive to exercise a put option when the repurchase price is expected to significantly exceed the market value of the good at the time of repurchase. The Company accounts for a put option as a sale of an asset or group of assets with a right of return, if the repurchase price is less than the original sales price and the customer does not have a significant economic incentive to exercise its right.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of our use of the acquired assets or the strategy for our overall business; significant negative industry or economic trends; significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments; and significant decline in our stock price for a sustained period. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded.

Other assets of a reporting unit that are held and used may be required to be tested for impairment when certain events trigger interim goodwill impairment tests. In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below. For the periods presented herein, management believes that there was no impairment of long-lived assets. There can be no assurance, however, that market conditions or demand for the Company’s products or services will not change, which could result in long-lived asset impairment charges in the future.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We consider our market capitalization and the carrying value of our assets and liabilities, including goodwill, when performing our goodwill impairment tests. We operate in one reporting segment.

If a potential impairment exists, a calculation is performed to determine the fair value of existing goodwill. This calculation can be based on quoted market prices and / or valuation models, which consider the estimated future undiscounted cash flows resulting from the reporting unit, and a discount rate commensurate with the risks involved. Third-party appraised values may also be used in determining whether impairment potentially exists. In assessing goodwill impairment, significant judgment is required in connection with estimates of market values, estimates of the amount and timing of future cash flows, and estimates of other factors that are used to determine the fair value of our reporting unit. If these estimates or related projections change in future periods, future goodwill impairment tests may result in charges to earnings.

When conducting the Company’s annual or interim goodwill impairment assessment, we have the option to initially perform a qualitative evaluation of whether it is more likely than not that goodwill is impaired. The Company is also permitted to bypass the qualitative assessment and proceed directly to the quantitative test. In evaluating whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we consider the guidance set forth in ASC 350, which requires an entity to assess relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, financial performance and other relevant events or circumstances.

Compensation Related Costs, Policy [Policy Text Block]

Stock-Based Compensation

Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Estimates of expected volatility of the underlying common stock for the expected term of the stock option used in the Black-Scholes-Merton option pricing model are determined by reference to historical volatilities of the Company’s common stock and historical volatilities of similar companies.

Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued.

A condition affecting the exercisability or other pertinent factors used in determining the fair value of an award that is based on an entity achieving a specified share price constitutes a market condition pursuant to FASB ASC Topic 718, “Stock based Compensation,” (“ASC 718”). A market condition is reflected in the grant-date fair value of an award, and therefore, a Monte Carlo simulation model is utilized to determine the estimated fair value of the equity-based award. Compensation cost is recognized for awards with a market condition, provided the requisite service period is satisfied, regardless of whether the market condition is ever satisfied.

Cancellation of an existing equity-classified award along with a concurrent grant of a replacement award is accounted for as a modification under ASC 718. Total compensation cost to be recognized in connection with a modification and concurrent grant of a replacement award is equal to the original grant date fair value plus any incremental fair value, calculated as the excess of the fair value of the replacement award over the fair value of the original awards on the cancellation date. Any incremental compensation cost related to vested awards is recognized immediately on the modification date. Any incremental compensation cost related to unvested awards is recognized prospectively over the remaining service period, in addition to the remaining unrecognized grant date fair value.

On March 19, 2024, the Board approved that an equity pool consisting of (i) 1,692,606 shares of common stock, collectively, which amount is equivalent to ten percent of the then existing and outstanding common stock of the Company on an as-converted basis, be issued to executives of the Company in the following form, amounts and vesting conditions: (a) stock options to purchase 846,303 shares of common stock, with vesting at the rate of 1/36^th per month in arrears, and exercisable at a price per share of $1.85 (collectively, the “2024 Options”); and (b) restricted stock units consisting of 846,303 shares of common stock with vesting of (i) fifty percent in equal one-third increments on the first, second and third anniversaries of the restricted stock unit grant issuances, and (ii) fifty percent to be allocated equally between (a) achievement of a profitable fiscal quarter, on a net income basis, in accordance with U.S. GAAP, (b) achievement of 85% of earnings before interest, taxes, depreciation and amortization (“EBITDA”) target for fiscal year 2024, and (c) achievement of 85% of EBITDA target for fiscal year 2025 (with such fiscal year 2025 target to be approved by the Board as part of the fiscal year 2025 financial plan)(collectively, the “2024 RSUs”). The issuance of the 2024 Options and 2024 RSUs, as described above, is contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan at the Company’s 2024 annual meeting of stockholders, and will be subject to cancellation in the event stockholder approval is not obtained.

Total noncash stock-based compensation expense for the periods presented was included in the following financial statement line items: 

	Three Months
	Ended March 31,
	2024		2023
	(Unaudited)
Sales, marketing and advertising	$	122,000	$	164,000
Engineering, technology and development		11,000		89,000
General and administrative		199,000		530,000
Total noncash stock compensation expense	$	332,000	$	783,000

Stockholders' Equity, Policy [Policy Text Block]

Financing Costs

Specific incremental costs directly attributable to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the equity financing. In the event that the proposed or actual equity financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred equity financing costs, if any, are included in other current assets in the accompanying condensed consolidated balance sheet. Deferred financing costs totaled $323,000 and $282,000 as of March 31, 2024 and December 31, 2023, respectively.

Debt, Policy [Policy Text Block]

Convertible Debt

The Company evaluates convertible notes outstanding to determine if those contracts or embedded components of those contracts qualify as derivatives under FASB ASC Topic 815, “Derivatives and Hedging,” (“ASC 815”). ASC 815 requires conversion, redemption options, call options and other features (hereinafter, “Embedded Instruments”) contained in the Company’s convertible debt instruments that meet certain criteria to be bifurcated and separately accounted for as an embedded derivative. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

In the event that the fair value option election is not made, as described below, the Company evaluates the balance sheet classification for convertible debt instruments issued to determine whether the instrument should be classified as debt or equity, and whether the Embedded Instruments should be accounted for separately from the host instrument. Embedded Instruments of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the feature, were it a standalone instrument, meets the definition of an “embedded derivative.” Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it is required to be separated from the host instrument and classified as a derivative liability carried on the balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations.

Fair Value Option (“FVO”) Election. The Company accounted for certain convertible notes issued, as described at Note 5, under the fair value option election pursuant to FASB ASC Topic 825, “Financial Instruments,” (“ASC 825”) as discussed below. The convertible notes accounted for under the FVO election are each debt host financial instruments containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825 provides for the “fair value option” election, to the extent not otherwise prohibited by ASC 825, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment, as required by ASC 825, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) in the accompanying consolidated statement of operations. With respect to the note described at Note 5, as provided for by ASC 825, the estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying consolidated statements of operations, since the change in fair value of the convertible notes payable was not attributable to instrument specific credit risk. The estimated fair value adjustment is included in interest expense in the accompanying consolidated statement of operations.

Transfers and Servicing of Financial Assets, Transfers of Financial Assets, Policy [Policy Text Block]

Transfers of Financial Assets

The Company accounts for transfers of financial assets as sales when it has surrendered control over the related assets. Whether control has been relinquished requires, among other things, an evaluation of relevant legal considerations and an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred. Gains and losses stemming from transfers reported as sales, if any, are included in the statements of income. Assets obtained and liabilities incurred in connection with transfers reported as sales are initially recognized in the balance sheet at fair value.

Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Accordingly, the related assets remain on the Company’s balance sheet and continue to be reported and accounted for as if the transfer had not occurred. Cash proceeds from these transfers are reported as liabilities, with attributable interest expense recognized over the life of the related transactions. Commitment fees charged irrespective of drawdown activity are recognized as expense on a straight line basis over the commitment period and included in other income (expense) in the consolidated statements of operations. Refer to Note 5 for additional information.

Segment Reporting, Policy [Policy Text Block]

Reportable Segments

The Company utilizes the management approach to identify the Company’s operating segments and measure the financial information disclosed, based on information reported internally to the Chief Operating Decision Maker (“CODM”) to make resource allocation and performance assessment decisions. An operating segment of a public entity has all the following characteristics: (1) it engages in business activities from which it may earn revenue and incur expense; (2) its operating results are regularly reviewed by the public entity’s CODM to make decisions about resources to be allocated to the segment and assess its performance: and (3) its discrete financial information is available. Based on the applicable criteria under the standard, the components of the Company’s operations are its: (1) media and advertising component, including its publishing and content studio component; and (2) the Company’s direct-to-consumer component.

A reportable segment is an identified operating segment that also exceeds the quantitative thresholds described in the applicable standard. Based on the applicable criteria under the standard, including quantitative thresholds, management has determined that the Company has one reportable segment that operated primarily in domestic markets during the periods presented herein.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents, investments and accounts receivable. The Company places its cash equivalents and investments primarily in highly rated money market funds. Cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

Risks and Uncertainties [Policy Text Block]

Risks and Uncertainties

Concentrations. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, and vendors whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable, as follows:

	Three Months Ended March 31,
	2024					2023
	(Unaudited)
Number of customers > 10% of revenue / percent of revenue		Three	/	36	%	Three	/	37	%

Revenue concentrations were comprised of the following revenue categories:

	Three Months
	Ended March 31,
	2024			2023
	(Unaudited)
Media and advertising		12	%		19	%
Publishing and content studio		24	%		18	%

	March 31, 2024				December 31, 2023
	(Unaudited)
Number of customers > 10% of accounts receivable / percent of accounts receivable	Two	/	41	%	Three	/	55	%
Number of vendors > 10% of accounts payable / percent of accounts payable	Two	/	41	%	Two	/	37	%

Earnings Per Share, Policy [Policy Text Block]

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period. Diluted earnings per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period, including the dilutive effect of common stock equivalents. Potentially dilutive common stock equivalents primarily consist of common stock potentially issuable in connection with the conversion of outstanding preferred stock, convertible notes payable, employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings.

Common stock underlying all outstanding stock options, restricted stock units and warrants, totaling 2,178,000 and 346,000 at March 31, 2024 and 2023, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive. Common stock potentially issuable in connection with the conversion of outstanding preferred stock totaling 11,442,000 and 1,121,000 at March 31, 2024 and 2023, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive.

A reconciliation of net loss to net loss attributable to common stockholders is as follows for the three months ended March 31:

	2024			2023
	(Unaudited)
Net loss	$	(5,260,000	)	$	(7,236,000	)
Preferred Dividends paid in shares of common stock		(4,000	)		-
Net loss attributable to common stockholders	$	(5,264,000	)	$	(7,236,000	)

Dividend [Policy Text Block]

Dividends

Dividends on preferred stock paid in another class of stock are recorded at the fair value of the shares issued as a charge to retained earnings. Dividends declared on preferred stock that are payable in the Company’s common shares are deducted from earnings available to common shareholders when computing earnings per share.

Certain of the Company’s outstanding preferred stock contain a conversion price down round feature subject to a contractual floor pursuant to the underlying rights in the applicable certificate of designation. Upon the occurrence of a triggering event that results in a reduction of the conversion price for an equity-classified convertible preferred stock, the Company measures the value of the effect of the feature as the difference between the fair value of the financial instrument without the down round feature, with a conversion price corresponding to the currently stated conversion price of the issued instrument, and the fair value of the financial instrument without the down round feature with a conversion price corresponding to the reduced conversion price upon the down round feature being triggered. The value of the effect of a down round feature that is triggered is recognized as a charge to retained earnings and a reduction to income available to common stockholders in the computation of earnings per share.

Income Tax, Policy [Policy Text Block]

Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets.

Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the periods presented.

Commitments and Contingencies, Policy [Policy Text Block]

Contingencies

Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Guidance

Recent Accounting Pronouncements – Not Yet Adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) which updates required disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment's profit or loss. This standard also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The standard is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, though early adoption is permitted. Adoption of ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the presentational impact of ASU 2023-07 and expects to adopt in the year ended December 31, 2024.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”) which enhances the transparency and usefulness of income tax disclosures. The updates are effective for annual periods beginning after December 15, 2024 on a prospective or retrospective basis, though early adoption is permitted. The Company is currently evaluating the presentational impact of ASU 2023-09 and expects to adopt in the year ended December 31, 2025.

Recent Accounting Pronouncements – Recently Adopted.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers, in order to align the recognition of a contract liability with the definition of a performance obligation. ASU 2021-08 became effective for the Company and was adopted beginning in the first quarter of fiscal year 2023. The adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.

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Note 2 - Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2024

Notes Tables

Disaggregation of Revenue [Table Text Block]

	2024		2023
	(Unaudited)
Media and advertising	$	1,365,000	$	1,604,000
Publishing and content studio		2,538,000		1,336,000
Direct to consumer		306,000		382,000
	$	4,209,000	$	3,322,000

Disclosure of Share-Based Compensation Arrangements by Share-Based Payment Award [Table Text Block]

	Three Months
	Ended March 31,
	2024		2023
	(Unaudited)
Sales, marketing and advertising	$	122,000	$	164,000
Engineering, technology and development		11,000		89,000
General and administrative		199,000		530,000
Total noncash stock compensation expense	$	332,000	$	783,000

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended March 31,
	2024					2023
	(Unaudited)
Number of customers > 10% of revenue / percent of revenue		Three	/	36	%	Three	/	37	%

	Three Months
	Ended March 31,
	2024			2023
	(Unaudited)
Media and advertising		12	%		19	%
Publishing and content studio		24	%		18	%

	March 31, 2024				December 31, 2023
	(Unaudited)
Number of customers > 10% of accounts receivable / percent of accounts receivable	Two	/	41	%	Three	/	55	%
Number of vendors > 10% of accounts payable / percent of accounts payable	Two	/	41	%	Two	/	37	%

Schedule of Earnings Per Share, Basic, by Common Class, Including Two Class Method [Table Text Block]

	2024			2023
	(Unaudited)
Net loss	$	(5,260,000	)	$	(7,236,000	)
Preferred Dividends paid in shares of common stock		(4,000	)		-
Net loss attributable to common stockholders	$	(5,264,000	)	$	(7,236,000	)

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Note 3 - Intangible and Other Assets (Tables)

3 Months Ended

Mar. 31, 2024

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	March 31, 2024			December 31, 2023			Weighted Average Amortization Period (Years)
	(Unaudited)
Partner and customer relationships	$	7,645,000		$	7,645,000			6.5
Capitalized software development costs		4,446,000			5,912,000			3.0
Capitalized third-party game property costs		500,000			500,000			5.0
Developed technology		3,931,000			3,931,000			5.0
Influencers/content creators		2,559,000			2,559,000			4.5
Trade name		209,000			209,000			5.0
Domain		68,000			68,000			10.0
Copyrights and other		745,000			825,000			5.5
		20,103,000			21,649,000			5.0
Less: accumulated amortization		(14,500,000	)		(15,013,000	)
Intangible assets, net	$	5,603,000		$	6,636,000

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

For the years ending December 31,
2024 remaining	$	1,728,000
2025		2,026,000
2026		1,143,000
2027		456,000
2028		237,000
Thereafter		13,000
	$	5,603,000

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Note 4 - Acquisitions (Tables)

3 Months Ended

Mar. 31, 2024

Notes Tables

Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block]

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	1,670,000	$	3,206,000
Change in fair value(2)		18,000		217,000
Current period accrued contingent consideration(2)		142,000		251,000
Accrued contingent consideration (1)	$	1,830,000	$	3,674,000

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	538,000	$	-
Change in fair value		98,000		-
Accrued contingent consideration(1)	$	636,000	$	-

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Note 6 - Stockholders' Equity and Equity-linked Instruments (Tables)

3 Months Ended

Mar. 31, 2024

Notes Tables

Schedule of Stock by Class [Table Text Block]

Date	Series Design- ation	Conversion Price – At Issuance		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares – At Issuance		Placement Agent Warrants (1)
November 30, 2023	Series AAA	$	1.674		5,377	$	5,377,000	$	645,000	$	4,732,000		3,212,000		466,000
December 22, 2023	Series AAA-2	$	1.71		2,978		2,978,000		357,000		2,621,000		1,742,000		253,000
Total					8,355	$	8,355,000	$	1,002,000	$	7,353,000		4,954,000		719,000

Series Designation	Conversion Price		Issued		Conversions Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Sales:
Series AAA	$	1.674		5,377		-			5,377		-			5,377
Series AAA-2	$	1.71		2,978		-			2,978		-			2,978
Subtotal				8,355		-			8,355					8,355
Exchanges:
Series AAA	$	1.674		4,011		(125	)		3,886		(840	)		3,046
Series AAA-2	$	1.71		2,356		(100	)		2,256		-			2,256
Subtotal				6,367		(225	)		6,142		(840	)		5,302
Total				14,722		(225	)		14,497		(840	)		13,657

Series Designation	Conversion Price		Original Conversion Shares		Conversions Year Ended December 31, 2023			Conversion Shares As of December 31, 2023		Conversions Three Months Ended March 31, 2024			Conversion Shares As of March 31, 2024
Sales:
Series AAA	$	1.674		3,212,000		-			3,212,000		-			3,212,000
Series AAA-2	$	1.71		1,742,000		-			1,742,000		-			1,742,000
Subtotal				4,954,000					4,954,000					4,954,000
Exchanges:
Series AAA	$	1.674		2,396,000		(75,000	)		2,321,000		(502,000	)		1,819,000
Series AAA-2	$	1.71		1,378,000		(58,000	)		1,320,000		-			1,320,000
Subtotal				3,774,000		(133,000	)		3,641,000		(502,000	)		3,139,000
Total				8,728,000		(133,000	)		8,595,000		(502,000	)		8,093,000

Date	Series Design- ation	Original Conversion Price – At Issuance(2)		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares – At Issuance		Placement Agent Warrants (1)
April 19, 2023	Series AA	$	9.43		7,680	$	7,680,000	$	966,000	$	6,714,000		814,000		114,000
April 20, 2023	Series AA-2	$	10.43		1,500		1,500,000		130,000		1,370,000		144,000		13,000
April 28, 2023	Series AA-3	$	9.50		1,025		1,025,000		133,000		892,000		108,000		15,000
May 5, 2023	Series AA-4	$	9.28		1,026		1,026,000		133,000		893,000		111,000		16,000
May 26, 2023	Series AA-5	$	10.60		550		550,000		72,000		478,000		52,000		7,000
Total					11,781	$	11,781,000	$	1,434,000	$	10,347,000		1,229,000		165,000

Series Designation	Conversion Price As Adjusted(1)		Issued		Converted / Exchanged - Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Series AA	$	1.89		7,680		(2,926	)		4,754		(263	)		4,491
Series AA-2	$	2.09		1,500		(1,500	)		-		-			-
Series AA-3	$	1.90		1,025		(634	)		391		-			391
Series AA-4	$	1.86		1,026		(511	)		515		-			515
Series AA-5	$	2.12		550		-			550		-			550
Total				11,781		(5,571	)		6,210		(263	)		5,947

Series Designation	Conversion Price As Adjusted		Issued		Converted / Exchanged - Year Ended December 31, 2023			Additional Conversion Shares - Adjusted Conversion Price(1)		Conversion Shares As of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Conversion Shares As of March 31, 2024
Series AA	$	1.89		814,000		(1,336,000	)		3,043,000		2,521,000		(139,000	)	2,382,000
Series AA-2	$	2.09		144,000		(274,000	)		130,000		-		-		-
Series AA-3	$	1.90		108,000		(334,000	)		432,000		206,000		-		206,000
Series AA-4	$	1.86		109,000		(275,000	)		443,000		277,000		-		277,000
Series AA-5	$	2.12		58,000		-			201,000		259,000		-		259,000
Total				1,233,000		(2,219,000	)		4,249,000		3,263,000		(139,000	)	3,124,000

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
November 22, 2022	Series A	$	12.40		5,359	$	5,359,000	$	752,000	$	4,607,000		432,000		62,000
November 28, 2022	Series A-2	$	13.29		1,297		1,297,000		169,000		1,128,000		98,000		14,000
November 30, 2022	Series A-3	$	13.41		1,733		1,733,000		225,000		1,508,000		129,000		18,000
December 22, 2022	Series A-4	$	7.60		1,934		1,934,000		251,000		1,683,000		254,000		36,000
January 31, 2023	Series A-5	$	11.09		2,299		2,299,000		299,000		2,000,000		207,000		30,000
Total					12,622	$	12,622,000	$	1,696,000	$	10,926,000		1,120,000		160,000

Series Designation	Conversion Price		Issued		Converted / Exchanged - Year Ended December 31, 2023			Outstanding as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Outstanding as of March 31, 2024
Series A	$	12.40		5,359		(4,551	)		808		(368	)		440
Series A-2	$	13.29		1,297		(834	)		463		-			463
Series A-3	$	13.41		1,733		(1,418	)		315		-			315
Series A-4	$	7.60		1,934		(1,383	)		551		(75	)		476
Series A-5	$	11.09		2,299		(1,487	)		812		(32	)		780
Total				12,622		(9,673	)		2,949		(475	)		2,474

Series Designation	Conversion Price		Issued		Converted / Exchanged - Year Ended December 31, 2023			Conversion Shares as of December 31, 2023		Conversions - Three Months Ended March 31, 2024			Conversion Shares as of March 31, 2024
Series A	$	12.40		432,000		(367,000	)		65,000		(30,000	)		35,000
Series A-2	$	13.29		98,000		(63,000	)		35,000		-			35,000
Series A-3	$	13.41		129,000		(106,000	)		23,000		-			23,000
Series A-4	$	7.60		254,000		(182,000	)		72,000		(10,000	)		62,000
Series A-5	$	11.09		207,000		(134,000	)		73,000		(3,000	)		70,000
Total				1,120,000		(852,000	)		268,000		(43,000	)		225,000

Share-based Payment Arrangement, Warrants, Activity [Table Text Block]

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Beginning balance	$	1,571	$	-
Change in fair value		761		-
Fair value of warrant liability	$	2,332	$	-

Schedule of Warrants, Valuation Assumptions [Table Text Block]

	May 26,			December 22,	December 31,			March 31,
	2023			2023	2023			2024
Expected Volatility	95%			98%	98%			98%
Risk–free interest rate	3.88%			3.87%	3.84%			4.21
Dividend yield	-%			-%	-%			-%
Expected life of options (in years)	5	-	5.19	5	4.5	-	5	4.14	-	4.72

Dividends Declared [Table Text Block]

Series Designation	Dividend Shares		Fair Value of Shares Issued (1)
Series A-5		2,166	$	4,000
Total		2,166	$	4,000

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Note 1 - Description of Business (Details Textual)	Sep. 07, 2023	Mar. 31, 2024 USD ($)	Feb. 29, 2024 USD ($)
Minehut [Member]
Disposal Group, Including Discontinued Operation, Consideration		$ 1,000,000	$ 619,000
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio	20

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Note 2 - Summary of Significant Accounting Policies (Details Textual)		3 Months Ended
	Mar. 19, 2024 $ / shares shares	Mar. 31, 2024 USD ($) shares	Mar. 31, 2023 USD ($) shares	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Net Income (Loss) Attributable to Parent		$ (5,260,000)	$ (7,236,000)
Retained Earnings (Accumulated Deficit)		(254,278,000)		$ (249,014,000)
Net Cash Provided by (Used in) Operating Activities		(3,743,000)	(2,978,000)
Cash and Cash Equivalents, at Carrying Value		3,311,000		7,609,000
Contract with Customer, Asset, after Allowance for Credit Loss		1,075,000		546,000	$ 1,013,000
Contract with Customer, Liability		334,000		339,000	$ 111,000
Contract with Customer, Liability, Revenue Recognized		171,000	82,000
Advertising Expense		$ 43,000	$ 9,000
Finite-Lived Intangible Asset, Useful Life (Year)		5 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Contingent to be Issued (in shares) | shares	1,692,606
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares to be Issued, Percentage of Outstanding Common Stock	10.00%
Deferred Costs, Current		$ 323,000		$ 282,000
Number of Reportable Segments		1
Common Stock Underlying All Outstanding Stock Option, Restricted Stock Units and Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares		2,178,000	346,000
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares		11,442,000	1,121,000
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Contingent to be Issued (in shares) | shares	846,303
Share-Based Compensation Arrangement by Share-Based Payment Award, Shares Contingent to be Issued, Exercisable Price (in dollars per share) | $ / shares	$ 1.85
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Contingent to be Issued (in shares) | shares	846,303
Restricted Stock Units (RSUs) [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	50.00%
Restricted Stock Units (RSUs) [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	50.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage of EBITDA for Next Year	85.00%
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)		3 years
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)		10 years
Transferred at Point in Time [Member]
Percentage of Revenue		31.00%	29.00%
Transferred over Time [Member]
Percentage of Revenue		69.00%	71.00%

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Note 2 - Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
REVENUE	$ 4,209,000	$ 3,322,000
Advertising and Sponsorships [Member]
REVENUE	1,365,000	1,604,000
Content Sales [Member]
REVENUE	2,538,000	1,336,000
Direct to Consumer [Member]
REVENUE	$ 306,000	$ 382,000

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Note 2 - Summary of Significant Accounting Policies - Noncash Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Noncash stock compensation expense	$ 332,000	$ 783,000
Selling and Marketing Expense [Member]
Noncash stock compensation expense	122,000	164,000
Research and Development Expense [Member]
Noncash stock compensation expense	11,000	89,000
General and Administrative Expense [Member]
Noncash stock compensation expense	$ 199,000	$ 530,000

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Note 2 - Summary of Significant Accounting Policies - Schedule of Concentration Risks (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Number of customers	0	3
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Customers [Member]
Concentration risk	36.00%
Concentration risk	36.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Customers [Member]
Concentration risk		37.00%
Concentration risk		37.00%
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Advertising and Sponsorships [Member]
Concentration risk	12.00%	19.00%
Concentration risk	12.00%	19.00%
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Publishing and Content Studio [Member]
Concentration risk	24.00%	18.00%
Concentration risk	24.00%	18.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Number of customers	1		3
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Three Vendors [Member]
Concentration risk	41.00%		55.00%
Concentration risk	41.00%		55.00%
Accounts Payable [Member] | Supplier Concentration Risk [Member]
Number of customers	1		2
Accounts Payable [Member] | Supplier Concentration Risk [Member] | One Vendor [Member]
Concentration risk	41.00%
Concentration risk	41.00%
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Two Vendors [Member]
Concentration risk			37.00%
Concentration risk			37.00%

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Note 2 - Summary of Significant Accounting Policies - Schedule of Earnings Per Share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Net Loss	$ (5,260,000)	$ (7,236,000)
Preferred Dividends paid in shares of common stock	4,000	(0)
Net loss attributable to common stockholders	$ (5,264,000)	$ (7,236,000)

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Note 3 - Intangible and Other Assets (Details Textual) - USD ($)		3 Months Ended				9 Months Ended
	Feb. 29, 2024	Mar. 31, 2024	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2023
Amortization of Intangible Assets			$ 683,000		$ 0	$ 1,288,000	$ 26,000
Intangible Assets, Net (Excluding Goodwill)		$ 5,603,000						$ 6,636,000
Finite-Lived Intangible Assets, Gross		20,103,000						21,649,000
Finite-Lived Intangible Assets, Accumulated Amortization		14,500,000						$ 15,013,000
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal		144,000		$ (0)
Minehut [Member]
Intangible Assets, Net (Excluding Goodwill)	$ 475,000
Finite-Lived Intangible Assets, Gross	1,671,000
Finite-Lived Intangible Assets, Accumulated Amortization	1,196,000
Minehut [Member]
Disposal Group, Including Discontinued Operation, Consideration	619,000	$ 1,000,000
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal	144,000
Minehut [Member] | Prepaid Expenses and Other Current Assets [Member]
Disposal Group, Including Discontinued Operation, Consideration	224,000
Minehut [Member] | Other Noncurrent Assets [Member]
Disposal Group, Including Discontinued Operation, Consideration	$ 395,000

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Note 3 - Intangible and Other Assets - Intangible and Other Assets (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Intangible assets, gross	$ 20,103,000	$ 21,649,000
Weighted Average Amortization Period (Year)	5 years
Less: accumulated amortization	$ (14,500,000)	(15,013,000)
Intangible and other assets, net	5,603,000	6,636,000
Customer Relationships [Member]
Intangible assets, gross	$ 7,645,000	7,645,000
Weighted Average Amortization Period (Year)	6 years 6 months
Capitalized Software Development Costs [Member]
Intangible assets, gross	$ 4,446,000	5,912,000
Weighted Average Amortization Period (Year)	3 years
Anime Battlegrounds X [member]
Intangible assets, gross	$ 500,000	500,000
Weighted Average Amortization Period (Year)	5 years
Developed Technology Rights [Member]
Intangible assets, gross	$ 3,931,000	3,931,000
Weighted Average Amortization Period (Year)	5 years
Influencers Content Creators [Member]
Intangible assets, gross	$ 2,559,000	2,559,000
Weighted Average Amortization Period (Year)	4 years 6 months
Trade Names [Member]
Intangible assets, gross	$ 209,000	209,000
Weighted Average Amortization Period (Year)	5 years
Internet Domain Names [Member]
Intangible assets, gross	$ 68,000	68,000
Weighted Average Amortization Period (Year)	10 years
Copyrights [Member]
Intangible assets, gross	$ 745,000	$ 825,000
Weighted Average Amortization Period (Year)	5 years 6 months

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Note 3 - Intangible and Other Assets - Schedule of Intangible Assets Future Amortization Expenses (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
2023 Remaining	$ 1,728,000
2025	2,026,000
2026	1,143,000
2027	456,000
Finite-Lived Intangible Asset, Expected Amortization, Year Four	237,000
Thereafter	13,000
Intangible and other assets, net	$ 5,603,000	$ 6,636,000

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Note 4 - Acquisitions (Details Textual)	1 Months Ended	3 Months Ended
	Apr. 30, 2023 USD ($) shares	Mar. 31, 2024 USD ($) $ / shares shares		Mar. 31, 2023 USD ($) $ / shares shares		Dec. 31, 2023 USD ($)	May 04, 2023 USD ($)	Dec. 31, 2022 USD ($)	Oct. 04, 2021 USD ($)
Superbiz [Member]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High									$ 11,500,000
Business Combination, Contingent Consideration, Percentage Reduction if Founder No Longer Employee									50.00%
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares) | shares		30,330		53,050
Business Acquisition, Share Price (in dollars per share) | $ / shares		$ 2.15		$ 11.1
Stock Issued During Period, Shares, Acquisitions (in shares) | shares	49,399
Stock Issued During Period, Value, Acquisitions	$ 548,000
Business Combination, Contingent Consideration, Liability		$ 1,830,000	[1]	$ 3,674,000	[1]	$ 1,670,000		$ 3,206,000
Superbiz [Member] | First Earnout Period [Member]
Payment for Contingent Consideration Liability, Financing Activities	$ 2,900,000
Melon Acquisition [Member]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares) | shares		156,329
Business Combination, Contingent Consideration, Liability							$ 2,350,000
Melon Acquisition [Member] | Measurement Input, Risk Free Interest Rate [Member]
Business Combination, Contingent Consideration, Liability, Measurement Input		0.0479
Melon Acquisition [Member] | Measurement Input, Price Volatility [Member] | Minimum [Member]
Business Combination, Contingent Consideration, Liability, Measurement Input		0.70
Melon Acquisition [Member] | Measurement Input, Share Price [Member]
Business Combination, Contingent Consideration, Liability, Measurement Input		2.15
Melon Acquisition [Member] | Measurement Input, Discount Rate [Member]
Business Combination, Contingent Consideration, Liability, Measurement Input		0.30
Melon Acquisition [Member] | First Earnout Period [Member]
Business Combination, Contingent Consideration, Liability							1,000,000
Melon Acquisition [Member] | Second Earnout Period [Member]
Business Combination, Contingent Consideration, Liability							1,350,000
Melon Acquisition [Member] | Second Earnout Period, Cash Payments [Member]
Business Combination, Contingent Consideration, Liability							600,000
Melon Acquisition [Member] | Second Earnout Period, Stock Payments [Member]
Business Combination, Contingent Consideration, Liability							$ 1,750,000

[1] As of March 31, 2024, included 30,330 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024. As of March 31, 2023, included 53,050 shares of common stock valued at $11.10, the closing price of our common stock as of March 31, 2023.

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Note 4- Acquisitions - Schedule of Contingent Consideration (Details) - USD ($)		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Change in fair value of contingent consideration		$ 116,000	$ 0
Superbiz [Member]
Beginning balance		1,670,000	3,206,000
Change in fair value of contingent consideration	[1]	18,000	217,000
Current period accrued contingent consideration	[1]	142,000	251,000
Accrued contingent consideration	[2]	1,830,000	3,674,000
Superbiz Acquisition [Member]
Beginning balance		538,000	0
Change in fair value of contingent consideration		98,000	0
Accrued contingent consideration	[3]	$ 636,000	$ 0

[1] Reflected in the condensed consolidated statement of operations for the applicable period

[2] As of March 31, 2024, included 30,330 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024. As of March 31, 2023, included 53,050 shares of common stock valued at $11.10, the closing price of our common stock as of March 31, 2023.

[3] As of March 31, 2024, included 156,329 shares of common stock valued at $2.15, the closing price of our common stock as of March 31, 2024.

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Note 5 - Debt (Details Textual) - USD ($)			3 Months Ended		12 Months Ended
	Dec. 17, 2023	May 16, 2022	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2022
SLR Agreement [Member]
Debt Instrument, Multiplication of Face Value of Account	85.00%
Debt Instrument, Face Amount	$ 4,000,000
Debt Instrument, Term	24 months
Debt Instrument, Finance Fee, Percentage	2.00%
Debt Instrument, Service Fee Rate	0.30%
Debt Instrument, Minimum Utilization	$ 400,000
Long-Term Debt, Gross			$ 371,000
Repayments of Debt			801,000
Interest Paid, Excluding Capitalized Interest, Operating Activities			19,000
Commitment Fee Expense			10,000
SLR Agreement [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	2.00%
SLR Agreement [Member] | Facility Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	6.00%
Securities Purchase Agreement [Member] | Note Holders [Member]
Debt Instrument, Face Amount		$ 4,320,000
Debt Instrument, Term		12 months
Repayments of Debt					$ 539,000
Interest Paid, Excluding Capitalized Interest, Operating Activities				$ 180,000	180,000
Debt Instrument, Discount, Percent		8.00%
Debt Instrument, Interest Rate, Stated Percentage		9.00%
Debt Instrument, Convertible, Conversion Price		$ 80
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger		90.00%
Debt Instrument, Unamortized Discount		$ 320,000			$ 40,000
Amortization of Debt Discount (Premium)			$ 40,000	280,000
Convertible Notes Payable				$ 0

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Note 6 - Stockholders' Equity and Equity-linked Instruments (Details Textual)									1 Months Ended		2 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2024 USD ($) $ / shares shares	Dec. 31, 2023 $ / shares shares	Sep. 07, 2023	May 26, 2023 shares	May 05, 2023 shares	Apr. 28, 2023 shares	Apr. 20, 2023 shares	Apr. 19, 2023 shares	Dec. 22, 2023 shares	May 26, 2023 shares	Jan. 31, 2023 $ / shares shares	Mar. 31, 2024 USD ($) $ / shares shares	Dec. 31, 2023 $ / shares shares	Jan. 31, 2024 $ / shares	Nov. 30, 2023 $ / shares shares	Aug. 23, 2023 $ / shares shares	May 30, 2023 shares	May 29, 2023 shares
Preferred Stock, Shares Authorized (in shares)	10,000,000	10,000,000										10,000,000	10,000,000					5,000,000
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares	$ 0.001	$ 0.001										$ 0.001	$ 0.001
Total Capital, Shares Authorized	110,000,000											110,000,000
Common Stock, Shares Authorized (in shares)	400,000,000	400,000,000										400,000,000	400,000,000				400,000,000	100,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares	$ 0.001	$ 0.001										$ 0.001	$ 0.001
Series AAA (in shares)	22,078	23,656										22,078	23,656
Share Price (in dollars per share) | $ / shares														$ 2.03
Placement Agent Warrants With Series A-2 Preferred Stock [Member]
Shares Issued, Price Per Share | $ / shares	$ 1.71											$ 1.71
Class of Warrant or Right, Exchanged During Period (in shares)												88,403
Class of Warrant or Right, Issued During Period (in shares)												347,428
Class of Warrant or Right, Issued During Period, Exercise Price (in dollars per share) | $ / shares												$ 1.674
Stock Issued During Period, Shares, Warrant Exchange (in shares)												199,778
Placement Agent Warrants With Series A-2 Preferred Stock [Member] | Minimum [Member]
Class of Warrant or Right, Exchanged During Period, Exercise Price (in dollars per share) | $ / shares												$ 7.6
Placement Agent Warrants With Series A-2 Preferred Stock [Member] | Maximum [Member]
Class of Warrant or Right, Exchanged During Period, Exercise Price (in dollars per share) | $ / shares												$ 13.41
Warrants Issued With Placement Agent Agreement [Member]
Class of Warrants and Rights, Number of Securities Called by Warrants or Rights, Percentage of Total Common Stock Issuable Upon Conversion of Preferred Shares	14.50%											14.50%
Series AA Into Series AAA Preferred Stock [Member]
Conversion of Stock, Shares Converted (in shares)												6,367
Conversion of Stock, Shares Issued (in shares)												6,367
Subscription Agreements [Member] | Securities Purchase Agreement [Member]
Percentage of Proceeds from Issuance of Equity to Redeem Debt Outstanding												50.00%
Proceeds from Issuance of Preferred Stock Used in Connection With Redemption of Debt | $												$ 719,000
Series AAA and AAA-2 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues									8,355
Series AAA (in shares)	8,355	8,355										8,355	8,355
Series AAA (in shares)	4,954,000											4,954,000
Series AAA and AAA-2 Convertible Preferred Stock [Member] | Subscription Agreements [Member]
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares	$ 0.001											$ 0.001
Stock Issued During Period, Shares, New Issues												8,355
Series AAA and AAA-2 Preferred Stock Exchanges [Member]
Series AAA (in shares)	5,302	6,142										5,302	6,142
Series AAA (in shares)	3,774,000											3,774,000
Series AAA and AAA-2 Preferred Stock Exchanges [Member] | Subscription Agreements [Member]
Shares Issued, Price Per Share | $ / shares	$ 1,000											$ 1,000
Series A Preferred Offerings [Member]
Stock Issued During Period, Shares, New Issues											12,622	12,622
Conversion of Stock, Shares Converted (in shares)												43,000	852,000
Series AAA (in shares)	225,000	268,000										225,000	268,000
Series AAA (in shares)											1,120,000
Series A Preferred Offerings [Member] | Subscription Agreements [Member]
Preferred Stock, Stated Value (in dollars per share) | $ / shares	$ 1,000											$ 1,000
Preferred Stock, Beneficial Ownership Limitations, Percentage of Outstanding Shares Required to be Converted When Common Stock Volume-weighted Average Price Over Previous 10 Days as Reported Equals More Than 250% of Conversion Price	50.00%											50.00%
Preferred Stock, Beneficial Ownership Limitations, Percentage of Outstanding Shares Required to be Converted When Common Stock Volume-weighted Average Price Over Previous 10 Days as Reported Equals More Than 300% of Conversion Price	100.00%											100.00%
Preferred Stock, Maximum Loans | $	$ 5,000,000											$ 5,000,000
Preferred Stock Dividends, Percentage of Common Shares	20.00%											20.00%
Preferred Stock, Beneficial Ownership Limitation, Minimum Percentage of Outstanding Preferred Stock Shares Required	51.00%											51.00%
Preferred Stock Voting Exceptions, Minimum Amount of Indebtedness Required | $	$ 5,000,000											$ 5,000,000
Series A Preferred Offerings [Member] | Placement Agency Agreement [Member]
Placement Fee, Percentage of Proceeds from Issuance of Equity												10.00%
Nonaccountable Expense, Percentage of Proceeds from Issuance of Equity												3.00%
Series AA, AA-2, AA-3, and AA-4 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues										11,781
Conversion of Stock, Shares Converted (in shares)	263	5,571											4,249,000
Series AAA (in shares)	5,947	6,210										5,947	6,210
Series AA, AA-2, AA-3, and AA-4 Convertible Preferred Stock [Member] | Subscription Agreements [Member]
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares	$ 0.001										$ 0.001	$ 0.001
Stock Issued During Period, Shares, New Issues										11,781	12,622
Shares Issued, Price Per Share | $ / shares	1,000										$ 1,000	$ 1,000
Series A A Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues								7,680
Series AAA (in shares)															7,322	10,706
Preferred Stock, Convertible, Conversion Price (in dollars per share) | $ / shares															$ 9.43	$ 2.6
Deemed Dividend on Preferred Stock | $												$ 7,567,000
Series A A Preferred Stock [Member] | Subscription Agreements [Member]
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares	$ 1,000											$ 1,000
Preferred Stock, Beneficial Ownership Limitations, Percentage of Outstanding Shares Required to be Converted When Common Stock Volume-weighted Average Price Over Previous 10 Days as Reported Equals More Than 250% of Conversion Price	50.00%											50.00%
Preferred Stock, Beneficial Ownership Limitations, Percentage of Outstanding Shares Required to be Converted When Common Stock Volume-weighted Average Price Over Previous 10 Days as Reported Equals More Than 300% of Conversion Price	100.00%											100.00%
Preferred Stock Dividends, Percentage of Common Shares	20.00%											20.00%
Series AAA (in shares)	3,500,000											3,500,000
Preferred Stock, Convertible, Conversion Percentage	125.00%											125.00%
Series AA-2 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues							1,500
Conversion of Stock, Shares Converted (in shares)	(0)	1,500											130,000
Series AAA (in shares)	0	0										0	0
Preferred Stock, Convertible, Conversion Price (in dollars per share) | $ / shares																10.43
Series AA-3 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues						1,025
Conversion of Stock, Shares Converted (in shares)	(0)	634											432,000
Series AAA (in shares)	391	391										391	391
Preferred Stock, Convertible, Conversion Price (in dollars per share) | $ / shares																9.5
Series AA-4 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues					1,026
Conversion of Stock, Shares Converted (in shares)	(0)	511											443,000
Series AAA (in shares)	515	515										515	515
Preferred Stock, Convertible, Conversion Price (in dollars per share) | $ / shares																9.28
Series AA-5 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues				550
Conversion of Stock, Shares Converted (in shares)	(0)	(0)											201,000
Series AAA (in shares)	550	550										550	550
Preferred Stock, Convertible, Conversion Price (in dollars per share) | $ / shares																$ 10.6
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio			20

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Note 6 - Stockholders' Equity and Equity-linked Instruments - Schedule of Preferred Stock (Details) - USD ($)																	1 Months Ended		2 Months Ended	3 Months Ended	12 Months Ended
		Mar. 31, 2024	Dec. 31, 2023		Dec. 22, 2023	Nov. 30, 2023	May 26, 2023	May 05, 2023	Apr. 28, 2023	Apr. 20, 2023	Apr. 19, 2023	Jan. 31, 2023	Dec. 22, 2022	Nov. 30, 2022	Nov. 28, 2022	Nov. 22, 2022	Dec. 22, 2023	May 26, 2023	Jan. 31, 2023	Mar. 31, 2024	Dec. 31, 2023		Aug. 23, 2023
Series AAA (in shares)		22,078	23,656																	22,078	23,656
Series AAA (in shares)		22,078	23,656																	22,078	23,656
Series AAA Convertible Preferred Stock [Member]
Conversion Price – At Issuance (in dollars per share)						$ 1.674
Series AAA (in dollars per share)		$ 1.674																		$ 1.674
Stock Issued During Period, Shares, New Issues						5,377
Series AAA (in shares)		5,377																		5,377
Series AAA (in shares)		3,212,000																		3,212,000
Gross Proceeds						$ 5,377,000
Series AAA (in shares)		0	0																	0	0
Series AAA																				$ 0	$ 0
Fees						645,000
Series AAA (in shares)		5,377	5,377																	5,377	5,377
Series AAA (in shares)		3,212,000	3,212,000																	3,212,000	3,212,000
Net Proceeds						$ 4,732,000
Conversion Shares – At Issuance (in shares)						3,212,000
Placement Agent Warrants (in shares)	[1]					466,000
Series A A Preferred Stock [Member]
Conversion Price – At Issuance (in dollars per share)	[2]										$ 9.43
Preferred Stock, Convertible, Conversion Price (in dollars per share)						$ 9.43																	$ 2.6
Stock Issued During Period, Shares, New Issues											7,680
Gross Proceeds											$ 7,680,000
Fees											966,000
Series AAA (in shares)						7,322																	10,706
Net Proceeds											$ 6,714,000
Conversion Shares – At Issuance (in shares)											814,000
Placement Agent Warrants (in shares)	[3]										114,000
Series AA Convertible Preferred Stock [Member]
Series AAA (in dollars per share)		$ 1.89	$ 1.89	[4]																$ 1.89	$ 1.89	[4]
Series AAA (in shares)		814,000	7,680																	814,000	7,680
Series AAA (in shares)		(139,000)	(1,336,000)																	(139,000)	(1,336,000)
Series AA (in shares)		(263)	(2,926)																		(3,043,000)
Series AAA (in shares)		4,491	4,754																	4,491	4,754
Series AAA (in shares)		2,382,000	2,521,000																	2,382,000	2,521,000
Conversion of Stock, Shares Converted (in shares)		263	2,926																		3,043,000
Series A Preferred Stock [Member]
Conversion Price (in dollars per share)																$ 12.4
Preferred Stock, Convertible, Conversion Price (in dollars per share)		$ 12.4																		$ 12.4
Stock Issued During Period, Shares, New Issues																5,359				5,359
Series AAA (in shares)		432,000																		432,000
Series AAA (in shares)																432,000
Gross Proceeds																$ 5,359,000
Series AAA (in shares)		(368)	(4,551)																	(368)	(4,551)
Series AA (in shares)																				(30,000)	(367,000)
Fees																752,000
Series AAA (in shares)		35,000	65,000																	35,000	65,000
Conversion of Stock, Shares Converted (in shares)																				30,000	367,000
Outstanding (in shares)																				440	808
Net Proceeds																$ 4,607,000
Outstanding (in shares)																				440	808
Placement Agent Warrants (in shares)	[5]															62,000
Series AAA-2 Convertible Preferred Stock [Member]
Conversion Price – At Issuance (in dollars per share)					$ 1.71												$ 1.71
Series AAA (in dollars per share)		$ 1.71																		$ 1.71
Stock Issued During Period, Shares, New Issues					2,978
Series AAA (in shares)		2,978																		2,978
Series AAA (in shares)		1,742,000																		1,742,000
Gross Proceeds					$ 2,978,000
Series AAA (in shares)		0	0																	0	0
Series AAA																				$ 0	$ 0
Fees					357,000
Series AAA (in shares)		2,978	2,978																	2,978	2,978
Series AAA (in shares)		1,742,000	1,742,000																	1,742,000	1,742,000
Net Proceeds					$ 2,621,000
Conversion Shares – At Issuance (in shares)					1,742,000												1,742,000
Placement Agent Warrants (in shares)	[1]				253,000
Series AA-2 Convertible Preferred Stock [Member]
Conversion Price – At Issuance (in dollars per share)	[2]									$ 10.43
Series AAA (in dollars per share)		$ 2.09	$ 2.09	[4]																$ 2.09	$ 2.09	[4]
Preferred Stock, Convertible, Conversion Price (in dollars per share)																							$ 10.43
Stock Issued During Period, Shares, New Issues										1,500
Series AAA (in shares)		144,000	1,500																	144,000	1,500
Gross Proceeds										$ 1,500,000
Series AAA (in shares)		0	(274,000)																	0	(274,000)
Series AA (in shares)		0	(1,500)																		(130,000)
Fees										130,000
Series AAA (in shares)		0	0																	0	0
Series AAA (in shares)		0	0																	0	0
Conversion of Stock, Shares Converted (in shares)		(0)	1,500																		130,000
Net Proceeds										$ 1,370,000
Conversion Shares – At Issuance (in shares)										144,000
Placement Agent Warrants (in shares)	[3]									13,000
Series A-2 Preferred Stock [Member]
Conversion Price (in dollars per share)															$ 13.29
Preferred Stock, Convertible, Conversion Price (in dollars per share)		$ 13.29																		$ 13.29
Stock Issued During Period, Shares, New Issues															1,297					1,297
Series AAA (in shares)		98,000																		98,000
Series AAA (in shares)															98,000
Gross Proceeds															$ 1,297,000
Series AAA (in shares)		0	(834)																	0	(834)
Series AA (in shares)																				0	(63,000)
Fees															169,000
Series AAA (in shares)		35,000	35,000																	35,000	35,000
Conversion of Stock, Shares Converted (in shares)																				(0)	63,000
Outstanding (in shares)																				463	463
Net Proceeds															$ 1,128,000
Outstanding (in shares)																				463	463
Placement Agent Warrants (in shares)	[5]														14,000
Series AAA and AAA-2 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues																	8,355
Series AAA (in shares)		8,355																		8,355
Series AAA (in shares)		4,954,000																		4,954,000
Gross Proceeds																	$ 8,355,000
Series AAA (in shares)			0																		0
Fees																	1,002,000
Series AAA (in shares)		8,355	8,355																	8,355	8,355
Series AAA (in shares)		4,954,000	4,954,000																	4,954,000	4,954,000
Net Proceeds																	$ 7,353,000
Conversion Shares – At Issuance (in shares)					4,954,000												4,954,000
Placement Agent Warrants (in shares)	[1]																719,000
Series AA-3 Convertible Preferred Stock [Member]
Conversion Price – At Issuance (in dollars per share)	[2]								$ 9.5
Series AAA (in dollars per share)		$ 1.9	$ 1.9	[4]																$ 1.9	$ 1.9	[4]
Preferred Stock, Convertible, Conversion Price (in dollars per share)																							9.5
Stock Issued During Period, Shares, New Issues									1,025
Series AAA (in shares)		108,000	1,025																	108,000	1,025
Gross Proceeds									$ 1,025,000
Series AAA (in shares)		0	(334,000)																	0	(334,000)
Series AA (in shares)		0	(634)																		(432,000)
Fees									133,000
Series AAA (in shares)		391	391																	391	391
Series AAA (in shares)		206,000	206,000																	206,000	206,000
Conversion of Stock, Shares Converted (in shares)		(0)	634																		432,000
Net Proceeds									$ 892,000
Conversion Shares – At Issuance (in shares)									108,000
Placement Agent Warrants (in shares)	[3]								15,000
Series A-3 Preferred Stock [Member]
Conversion Price (in dollars per share)														$ 13.41
Preferred Stock, Convertible, Conversion Price (in dollars per share)		$ 13.41																		$ 13.41
Stock Issued During Period, Shares, New Issues														1,733						1,733
Series AAA (in shares)		129,000																		129,000
Series AAA (in shares)														129,000
Gross Proceeds														$ 1,733,000
Series AAA (in shares)		0	(1,418)																	0	(1,418)
Series AA (in shares)																				0	(106,000)
Fees														225,000
Series AAA (in shares)		23,000	23,000																	23,000	23,000
Conversion of Stock, Shares Converted (in shares)																				(0)	106,000
Outstanding (in shares)																				315	315
Net Proceeds														$ 1,508,000
Outstanding (in shares)																				315	315
Placement Agent Warrants (in shares)	[5]													18,000
Series AAA Preferred Stock Exchanges [Member]
Series AAA (in dollars per share)		$ 1.674																		$ 1.674
Series AAA (in shares)		4,011																		4,011
Series AAA (in shares)		2,396,000																		2,396,000
Series AAA (in shares)		(840)	(125)																	(840)	(125)
Series AAA																				$ (502,000)	$ (75,000)
Series AAA (in shares)		3,046	3,886																	3,046	3,886
Series AAA (in shares)		1,819,000	2,321,000																	1,819,000	2,321,000
Series AA-4 Convertible Preferred Stock [Member]
Conversion Price – At Issuance (in dollars per share)	[2]							$ 9.28
Series AAA (in dollars per share)		$ 1.86	$ 1.86	[4]																$ 1.86	$ 1.86	[4]
Preferred Stock, Convertible, Conversion Price (in dollars per share)																							9.28
Stock Issued During Period, Shares, New Issues								1,026
Series AAA (in shares)		109,000	1,026																	109,000	1,026
Gross Proceeds								$ 1,026,000
Series AAA (in shares)		0	(275,000)																	0	(275,000)
Series AA (in shares)		0	(511)																		(443,000)
Fees								133,000
Series AAA (in shares)		515	515																	515	515
Series AAA (in shares)		277,000	277,000																	277,000	277,000
Conversion of Stock, Shares Converted (in shares)		(0)	511																		443,000
Net Proceeds								$ 893,000
Conversion Shares – At Issuance (in shares)								111,000
Placement Agent Warrants (in shares)	[3]							16,000
Series A-4 Preferred Stock [Member]
Conversion Price (in dollars per share)													$ 7.6
Preferred Stock, Convertible, Conversion Price (in dollars per share)		$ 7.6																		$ 7.6
Stock Issued During Period, Shares, New Issues													1,934							1,934
Series AAA (in shares)		254,000																		254,000
Series AAA (in shares)													254,000
Gross Proceeds													$ 1,934,000
Series AAA (in shares)		(75)	(1,383)																	(75)	(1,383)
Series AA (in shares)																				(10,000)	(182,000)
Fees													251,000
Series AAA (in shares)		62,000	72,000																	62,000	72,000
Conversion of Stock, Shares Converted (in shares)																				10,000	182,000
Outstanding (in shares)																				476	551
Net Proceeds													$ 1,683,000
Outstanding (in shares)																				476	551
Placement Agent Warrants (in shares)	[5]												36,000
Series AAA-2 Preferred Stock Exchanges [Member]
Series AAA (in dollars per share)		$ 1.71																		$ 1.71
Series AAA (in shares)		2,356																		2,356
Series AAA (in shares)		1,378,000																		1,378,000
Series AAA (in shares)		0	(100)																	0	(100)
Series AAA																				$ 0	$ (58,000)
Series AAA (in shares)		2,256	2,256																	2,256	2,256
Series AAA (in shares)		1,320,000	1,320,000																	1,320,000	1,320,000
Series AA-5 Convertible Preferred Stock [Member]
Conversion Price – At Issuance (in dollars per share)	[2]						$ 10.6											$ 10.6
Series AAA (in dollars per share)		$ 2.12	$ 2.12	[4]																$ 2.12	$ 2.12	[4]
Preferred Stock, Convertible, Conversion Price (in dollars per share)																							$ 10.6
Stock Issued During Period, Shares, New Issues							550
Series AAA (in shares)		58,000	550																	58,000	550
Gross Proceeds							$ 550,000
Series AAA (in shares)		0	0																	0	0
Series AA (in shares)		0	0																		(201,000)
Fees							72,000
Series AAA (in shares)		550	550																	550	550
Series AAA (in shares)		259,000	259,000																	259,000	259,000
Conversion of Stock, Shares Converted (in shares)		(0)	(0)																		201,000
Net Proceeds							$ 478,000
Conversion Shares – At Issuance (in shares)							52,000											52,000
Placement Agent Warrants (in shares)	[3]						7,000
Series A-5 Preferred Stock [Member]
Conversion Price (in dollars per share)												$ 11.09
Preferred Stock, Convertible, Conversion Price (in dollars per share)		$ 11.09																		$ 11.09
Stock Issued During Period, Shares, New Issues												2,299								2,299
Series AAA (in shares)		207,000																		207,000
Series AAA (in shares)												207,000							207,000
Gross Proceeds												$ 2,299,000
Series AAA (in shares)		(32)	(1,487)																	(32)	(1,487)
Series AA (in shares)																				(3,000)	(134,000)
Fees												299,000
Series AAA (in shares)		70,000	73,000																	70,000	73,000
Conversion of Stock, Shares Converted (in shares)																				3,000	134,000
Outstanding (in shares)																				780	812
Net Proceeds												$ 2,000,000
Outstanding (in shares)																				780	812
Placement Agent Warrants (in shares)	[5]											30,000
Series AAA and AAA-2 Preferred Stock Exchanges [Member]
Series AAA (in shares)		6,367																		6,367
Series AAA (in shares)		3,774,000																		3,774,000
Series AAA (in shares)		(840)	(225)																	(840)	(225)
Series AAA																				$ (502,000)	$ (133,000)
Series AAA (in shares)		5,302	6,142																	5,302	6,142
Series AAA (in shares)		3,139,000	3,641,000																	3,139,000	3,641,000
Series AA, AA-2, AA-3, and AA-4 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues																		11,781
Series AAA (in shares)		1,233,000	11,781																	1,233,000	11,781
Gross Proceeds																		$ 11,781,000
Series AAA (in shares)		(139,000)	(2,219,000)																	(139,000)	(2,219,000)
Series AA (in shares)		(263)	(5,571)																		(4,249,000)
Fees																		1,434,000
Series AAA (in shares)		5,947	6,210																	5,947	6,210
Series AAA (in shares)		3,124,000	3,263,000																	3,124,000	3,263,000
Conversion of Stock, Shares Converted (in shares)		263	5,571																		4,249,000
Net Proceeds																		$ 10,347,000
Conversion Shares – At Issuance (in shares)							1,229,000											1,229,000
Placement Agent Warrants (in shares)	[3]																	165,000
Series A Preferred Offerings [Member]
Stock Issued During Period, Shares, New Issues																			12,622	12,622
Series AAA (in shares)		1,120,000																		1,120,000
Series AAA (in shares)												1,120,000							1,120,000
Gross Proceeds																			$ 12,622,000
Series AAA (in shares)		(475)	(9,673)																	(475)	(9,673)
Series AA (in shares)																				(43,000)	(852,000)
Fees																			1,696,000
Series AAA (in shares)		225,000	268,000																	225,000	268,000
Conversion of Stock, Shares Converted (in shares)																				43,000	852,000
Outstanding (in shares)																				2,474	2,949
Net Proceeds																			$ 10,926,000
Outstanding (in shares)																				2,474	2,949
Placement Agent Warrants (in shares)	[5]																		160,000
Series Preferred AAA [Member]
Series AAA (in shares)		14,722																		14,722
Series AAA (in shares)		8,728,000																		8,728,000
Series AAA (in shares)		(840)	(225)																	(840)	(225)
Series AAA																				$ (502,000)	$ (133,000)
Series AAA (in shares)		13,657	14,497																	13,657	14,497
Series AAA (in shares)		8,093,000	8,595,000																	8,093,000	8,595,000

[1] Issued upon final closing of the Series AAA Preferred Stock offering, effective as of the respective closing dates.

[2] The Conversion price for Series AA Preferred stock outstanding as of August 23, 2023, totaling 10,706 shares of Series AA Preferred stock, was adjusted to $2.60 as a result of the Series AA Down Round Feature described below. The Conversion price for Series AA Preferred stock outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred stock, was adjusted as described in the table below as a result of the Series AA Down Round Feature described below.

[3] Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series AA Preferred Stock offering.

[4] The Conversion prices for the Series AA Preferred stock outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred stock, were adjusted to the conversion prices shown in the table above, as a result of the Series AA Down Round Feature described below. The original conversion prices for the Series AA Preferred, as of the respective issuance dates, were as follows: Series AA - $9.43; Series AA-2 - $10.43; Series AA-3 - $9.50; Series AA-4 - $9.28; Series AA-5 - $10.60.

[5] Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series A Preferred Stock offering

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Note 6 - Stockholders' Equity and Equity-linked Instruments - Schedule of Warrant Activity (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Change in fair value	$ 761,000	$ (0)
Warrants Issued With Placement Agent Agreement [Member]
Beginning balance	1,571	0
Change in fair value	761	0
Fair value of warrant liability	$ 2,332	$ 0

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Note 6 - Stockholders' Equity and Equity-linked Instruments - Schedule of Warrant Valuation Assumptions (Details) - Warrants Issued With Placement Agent Agreement [Member]	Mar. 31, 2024	Dec. 31, 2023	Dec. 22, 2023	May 26, 2023
Measurement Input, Price Volatility [Member]
Warrants, measurement input	0.98	0.98	0.98	0.95
Measurement Input, Risk Free Interest Rate [Member]
Warrants, measurement input	0.0421	0.0384	0.0387	0.0388
Measurement Input, Expected Term [Member]
Warrants, measurement input			5
Measurement Input, Expected Term [Member] | Minimum [Member]
Warrants, measurement input	4.14	4.5		5
Measurement Input, Expected Term [Member] | Maximum [Member]
Warrants, measurement input	4.72	5		5.19

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Note 6 - Stockholders' Equity and Equity-linked Instruments - Schedule of Dividends (Details)	3 Months Ended
	Mar. 31, 2024 USD ($) shares
Dividend Shares (in shares) | shares	2,166
Fair Value of Shares Issued | $	$ 4,000	[1]
Series A-5 Preferred Stock [Member]
Dividend Shares (in shares) | shares	2,166
Fair Value of Shares Issued | $	$ 4,000	[1]

[1] Fair valued at $2.03 per share, the closing price of the Company’s common stock on January 31, 2024

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Note 7 - Commitments and Contingencies (Details Textual) - Certain Claims Arising From an Interpretation of Certain Rights of SPA [Member] - USD ($)			3 Months Ended	12 Months Ended
	Mar. 19, 2024	Mar. 12, 2024	Mar. 31, 2024	Dec. 31, 2023
Stock Issued During Period, Shares, New Issues	500,000	500,000
Litigation Settlement, Fee Expense			$ 164,000	$ 760,000
Shares Issued, Price Per Share	$ 1.85
Stock Issued During Period, Value, New Issues	$ 924,000