What changed in this filing

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Item 9A. Controls and Procedures

2025-03-31 compared with 2024-04-15 · 863 added, 554 removed, 1200 unchanged (54% of the section changed)

3 unchanged sentences

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

As a result of a material weakness in our internal control over financial reporting in connection with the preparation of our consolidated interim financial statements for the three and nine months ended September 30, 2023, related to the accounting for the triggering of a down round feature related to preferred stock, our management has reassessed the effectiveness of our disclosure controls and procedures and has determined that our disclosure controls and procedures were not effective as of the Evaluation Date.

Restatement of Consolidated Interim Financial Statements for the three and nine months ended September 30, 2023.

On March 26, 2024, the Audit Committee of the Board of Directors of the Company (the “Audit Committee”), based upon the recommendation of management, concluded that the Company’s previously filed Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (the “Third Quarter 10-Q”), as filed with the Securities and Exchange Commission (the “SEC”) on November 14, 2023, should no longer be relied upon.

The determination resulted from an error made in the Company's unaudited consolidated financial statements for the three and nine months ended September 30, 2023, as previously filed in the Third Quarter 10-Q, arising from the exclusion of the calculated noncash value of the effect of the down round feature triggered in August of 2023, on the Company’s Series AA Convertible Preferred Stock, which should have been recorded as a noncash charge directly to accumulated deficit and a noncash reduction to income available to common stockholders in the computation of earnings per share.

In connection with the Company’s year-end 2023 closing procedures, management reassessed the guidance set forth in ASC 260, “Earnings Per Share” and determined that the value of the effect of a down round feature that is triggered on preferred stock should be recognized as a noncash charge to accumulated deficit and a noncash reduction to income available to common stockholders in the computation of earnings per share in the period that the down round feature is triggered.

(i) management has noted an error affecting additional paid in capital and accumulated deficit, with no impact on total equity, and a noncash error with respect to the computation of loss per share as reported in the Third Quarter 10-Q;

and (ii) in connection with the Company’s 2023 year-end closing procedures, on March 26, 2024, due to the materiality of the error to loss per share originally reported in the Third Quarter 10-Q, the Company’s management and the Audit Committee determined that the Company's Third Quarter 10-Q should be restated to reflect the modifications described above.

None of the above changes had any impact on total assets, total liabilities, total equity, revenues, cost of revenues, operating expense or net loss as reported for the three and nine months ended September 30, 2023 in the Company’s Third Quarter 10-Q.

No financial statements or disclosures prior to the financial statements for the quarterly periods ended September 30, 2023 were affected by the issue described above.

Notwithstanding the material weakness described above, management believes the consolidated financial statements presented in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for all periods presented herein, in conformity with generally accepted accounting principles.

Remediation Plan .

Since the date we identified this material weakness, we have taken steps to ensure 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.

While we had procedures and processes to apply accounting and disclosure standards to non-standard and complex transactions, we did not have adequate resources to provide for the timely identification of the required treatment of the value of a down round feature in the period in which it is triggered.

This material weakness prevented us from properly including the noncash impact of the down round feature as a noncash reduction to accumulated deficit and a noncash reduction of income available to common stockholders in the computation of earnings per share for the third quarter of 2023, and we have included the restated financial information for the third quarter in Note 12 to our Annual Report on Form 10-K as of and for the year ended December 31, 2023.

Management will continue to review and make necessary changes to the overall design of our internal control environment, as well as to implement policies and procedures to improve the overall effectiveness of internal control over financial reporting.

Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2024.

Limitations on Effectiveness of Controls and Procedures

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Also, projections of any evaluation of the internal control over financial reporting to future periods are subject to risk that the internal control may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Previously Reported Material Weakness

In our Annual Report on Form 10-K for the year ended December 31, 2023, we disclosed a material weakness related to the identification of non-standard and complex transaction disclosure requirements, specifically regarding the exclusion of the calculated noncash value of the effect of the down round feature triggered in August of 2023, on the Company’s Series AA Convertible Preferred Stock, which should have been recorded as a noncash charge directly to accumulated deficit and a noncash reduction to income available to common stockholders in the computation of earnings per share for the third quarter of 2023.

Remediation Actions Taken

Since the date we identified the material weakness in the fourth quarter of 2023, we took steps to ensure 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 financial reporting purposes, to improve disclosure controls and procedures and internal control over financial reporting in these complex non-standard technical areas.

The remediation steps described above were effective in the fourth quarter of 2023 and in place and operating as of December 31, 2023 and throughout Fiscal Year 2024.

As a result, as previously disclosed in our Fiscal Year 2023 10-K, notwithstanding the material weakness described above, management believes the consolidated financial statements presented in its Fiscal Year 2023 10-K fairly presented, in all material respects, our financial position, results of operations and cash flows for all periods presented therein, in conformity with generally accepted accounting principles.

Based on our assessments as of December 31, 2024 and 2023, we concluded that the previously reported material weakness related to the identification of non-standard and complex transaction disclosure requirements, specifically regarding exclusion of the calculated noncash value of the effect of the down round feature triggered in August of 2023 on the Company’s Series AA Convertible Preferred Stock, has been remediated.

Management ’ s Assessment of the Effectiveness of our Internal Control Over Financial Reporting

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In conducting its evaluation, management used the framework set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on our evaluation under such framework, our management has concluded that our internal control over financial reporting were not effective as of December 31, 2023, as described above.

Based on our evaluation under such framework, our management has concluded that our internal control over financial reporting was effective as of December 31, 2024.

Report of Independent Registered Public Accounting Firm

We are an “emerging growth company,” as defined in Rule 405 of the Securities Act and, accordingly, we are not required to provide the attestation report of our independent registered public accounting firm on our internal control over financial reporting required by Item 308(b) of Regulation S-K.

We are an “smaller reporting company,” as defined in Rule 405 of the Securities Act and, accordingly, we are not required to provide the attestation report of our independent registered public accounting firm on our internal control over financial reporting required by Item 308(b) of Regulation S-K.

Changes in Internal Control over Financial Reporting

47 unchanged sentences

Certificate of Designation of Preferences, Rights and Limitations of the Series AA-2 Preferred Stock

Filed herewith

Exhibit 3.11 to the Annual Report on Form 10-K, filed April 15, 2024

Certificate of Designation of Preferences, Rights and Limitations of the Series AA-3 Preferred Stock

12 unchanged sentences

Exhibit 3.1 to the Current Report on Form 8-K, filed on December 22, 2023

Amendment to the Second Amended and Restated Bylaws of Super League Enterprise, Inc.

Exhibit 3.1 to the Current Report on Form 8-K, filed on June 10, 2024.

Certificate of Designation of Preferences Rights and Limitations of the Series AAA Junior Preferred Stock

Exhibit 3.1 to the Current Report on Form 8-K, filed on July 2, 2024.

Certificate of Designation of Preferences, Rights and Limitations of the Series AAA-2 Junior Convertible Preferred Stock

Exhibit 3.1 to the Current Report on Form 8-K, filed on July 16, 2024

Certificate of Designation of Preferences, Rights and Limitations of the Series AAA-3 Junior Preferred Stock

Exhibit 3.1 to the Current Report on Form 8-K, filed on September 23, 2024

Certificate of Correction to Certificate of Designation of Preferences, Rights and Limitations of the Series AAA Junior Preferred Stock

Exhibit 3.2 to the Current Report on Form 8-K, filed on September 23, 2024

Certificate of Correction to Certificate of Designation of Preferences, Rights and Limitations of the Series AAA-2 Junior Preferred Stock

Exhibit 3.3 to the Current Report on Form 8-K, filed on September 23, 2024

Certificate of Designation of Preferences, Rights and Limitations of the Series AAA-4 Junior Preferred Stock

Exhibit 3.1 to the Current Report on Form 8-K, filed October 1, 2024

Form of Common Stock Certificate.

23 unchanged sentences

Exhibit 10.5 to the Current Report on Form 8-K filed on December 6, 2023

Unsecured Promissory Note, dated August 1, 2024, issued to Sam Drozdov by Super League Enterprise, Inc.

Exhibit 10.14 to the Quarterly Report on Form 10-Q filed on November 14, 2024

Unsecured Promissory Note, dated August 1, 2024, issued to Bloxbiz Co.

by Super League Enterprise, Inc.

Exhibit 10.15 to the Quarterly Report on Form 10-Q filed on November 14, 2024

Unsecured Promissory Note, dated August 1, 2024, issued to Ben Khakshoor by Super League Enterprise, Inc.

Exhibit 10.16 to the Quarterly Report on Form 10-Q filed on November 14, 2024

Form of Unsecured Promissory Note, dated November 19, 2024

Exhibit 4.1 to the Current Report on Form 8-K filed on February 14, 2025

Confessed Judgment Secured Promissory Note, dated February 10, 2025, issued to Agile Capital Funding, LLC, by Super League Enterprise, Inc.

Exhibit 4.1 to the Current Report on Form 8-K filed on November 21, 2024

Form of 2025 Unsecured Convertible Promissory Note to be issued to Belleau Wood Capital, LP, or its assigns

Filed herewith

Convertible Promissory Note, dated March 26, 2025, issued by Super League Enterprise, Inc., to 1800 Diagonal Lending LLC, or its registered assigns

Filed herewith

Super League Enterprise, Inc.

138 unchanged sentences

and GamerSafer, Inc.

Exhibit 10.55 to the Annual Report on Form 10-K filed on April 15, 2024

Form of Series AAA Junior Subscription Agreement

Exhibit 10.1 to the Current Report on Form 8-K filed on July 2, 2024.

Form of Registration Rights Agreement++

Exhibit 10.2 to the Current Report on Form 8-K filed on July 2, 2024.

Placement Agency Agreement, dated June 3, 2024, by and between Super League Enterprise, Inc., and Aegis Capital Corporation

Exhibit 10.1 to the Current Report on Form 8-K filed on July 16, 2024.

Form of Placement Agent Warrant

Exhibit 10.2 to the Current Report on Form 8-K filed on July 16, 2024

Form of Series AAA-4 Junior Subscription Agreement ++

Exhibit 10.1 to the Current Report on Form 8-K filed on September 23, 2024.

Form of Registration Rights Agreement ++

Exhibit 10.2 to the Current Report on Form 8-K filed on September 23, 2024.

Form of Investor Warrant ++

Exhibit 10.3 to the Current Report on Form 8-K filed on September 23, 2024.

Form of Placement Agent Warrant

Exhibit 10.4 to the Current Report on Form 8-K filed on September 23, 2024.

Binding Term Sheet, dated September 30, 2024, between Super League Enterprise, Inc., and Infinite Reality, Inc.

Exhibit 10.1 to the Current Report on Form 8-K filed on October 4, 2024.

Equity Exchange Agreement, dated September 30, 2024, by and between Super League Enterprise, Inc., and Infinite Reality, Inc.

Exhibit 10.2 to the Current Report on Form 8-K filed on October 4, 2024.

Form of Securities Purchase Agreement, dated October 24, 2024

Exhibit 10.1 to the Current Report on Form 8-K filed on October 25, 2024.

Amended and Restated Equity Exchange Agreement, dated October 29, 2024

Exhibit 10.1 to the Current Report on Form 8-K filed on October 29, 2024.

Form of Indemnification Agreement

Exhibit 10.2 to the Current Report on Form 8-K filed on October 29, 2024.

Form of Note Purchase Agreement, dated November 19, 2024

Exhibit 10.1 to the Current Report on Form 8-K filed on November 21, 2024

Business Loan and Security Agreement, dated February 10, 2025, between Super League Enterprise, Inc.

and Agile Capital Funding, LLC++

Exhibit 10.1 to the Current Report on Form 8-K filed on February 14, 2025

Equity Purchase Agreement, dated February 14, 2025, between Super League Enterprise, Inc.

and Hudson Global Ventures, LLC

Exhibit 10.2 to the Current Report on Form 8-K filed on February 14, 2025

Registration Rights Agreement, dated February 14, 2025, between Super League Enterprise, Inc., and Hudson Global Ventures, LLC

Exhibit 10.3 to the Current Report on Form 8-K filed on February 14, 2025

Securities Purchase Agreement, dated March 26, 2025, by and between Super League Enterprise, Inc., and 1800 Diagonal Lending, LLC

Filed herewith.

Note Purchase Agreement, dated March 28, 2025, by and between Super League Enterprise, Inc.

and Belleau Wood Capital, LP++

Filed herewith.

Consulting Agreement, dated June 13, 2023, between Super League Enterprise, Inc., and Diamond Shoals, LLC

Filed herewith.

Amended and Restated Consulting Agreement, effective as of October 6, 2023, by and between Super League Enterprise, Inc., and Diamond Shoals, LLC

Filed herewith.

Amended Consulting Agreement, dated August 1, 2024, by and between Super League Enterprise, Inc., and Diamond Shoals, LLC

Filed herewith.

Amended and Restated Consulting Agreement, dated March 28, 2025, by and between Super League Enterprise, Inc., and Diamond Shoals, LLC

Filed herewith.

Super League Enterprise, Inc.

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Exhibit 14.1 to the Registration Statement, filed on January 4, 2019.

Super League Enterprise, Inc.

Insider Trading Policy

Filed herewith.

Subsidiaries of Registrant

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Consent of Independent Registered Public Accounting Firm – WithumSmith+Brown, PC

Consent of Independent Registered Public Accounting Firm – Baker Tilly US, LLP

Filed herewith.

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.

Filed herewith.

Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.

Furnished herewith.

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act.

Furnished herewith.

Super League Enterprise, Inc.

Clawback Policy

Filed herewith.

Exhibit 97.1 to the Annual Report on Form 10-K filed on April 15, 2024

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

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Whippany, New Jersey;

Report of Independent Registered Public Accounting Firm (Baker Tilly US, LLP;

Los Angeles, California;

Consolidated Financial Statements for the Years Ended December 31, 2024 and 2023

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Super League Enterprise, Inc.

To the Stockholders and Board of Directors of

Super League Enterprise, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Super League Enterprise, Inc.

and subsidiaries (the “Company”) as of December 31, 2023, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the entity will continue as a going concern.

We have audited the accompanying consolidated balance sheets of Super League Enterprise, Inc.

and subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company ’ s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the entity will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the entity has recurring and expected future losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Emphasis of the Matter – Restatement of Unaudited Interim Financial Statements

As discussed in Note 12 to the financial statements, the unaudited interim financial statements as of and for the three and nine months ended September 30, 2023 have been restated to correct certain misstatements.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition- Fixed Fee Revenue

Description of the Matter

As disclosed in Note 2 to the consolidated financial statements, the Company continues to generate 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.

A portion of the Company’s contracts with customers are recognized over time on a percentage of completion basis.

In the case of a contract not being completed by year-end, the Company estimates the percentage of contract completion at year-end.

The Company did so by using the input method, measuring the hours incurred against the total hours expected to be incurred throughout the entire contract to be able to calculate the revenue to be recognized in the current period.

We identified the sufficiency of audit evidence over the accounting for revenue recognition as a critical audit matter.

Subjective auditor judgment and an increased extent of effort was required to evaluate the sufficiency of audit evidence over accounting for revenue recognition due to the complexity involved in testing the Company’s total hours expected to be incurred throughout the contract.

Audit Response

Our audit procedures to test the estimates and assumptions surrounding the fixed fee revenue recognition included obtaining a report downloaded directly from the Company’s time-tracking software, that detailed the hours incurred on a specific job.

We performed a walkthrough of Company’s time-tracking software to gain reasonable assurance over the completeness and accuracy of the software’s reports and tested the completeness and accuracy of the hours incurred to date.

We tested the estimated hours used by management to determine revenue recognition and retrospectively reviewed past fixed fee contracts to ensure total estimated hours were materially accurate.

We obtained total hours incurred, then compared this against the total hours expected to be incurred throughout the contract to recalculate the revenue recognized.

We also tested for proper revenue recognition cut-off.

Modification of Additional Investment Rights ( “ AIRs ” )

Description of the Matter

In connection with the Company’s Junior AAA preferred round closed in June 2024, certain AIRs right holders received modifications to their AIR rights, as disclosed in Note 7 to the consolidated financial statements.

As of the AIR modification date, the Company utilized the Black Scholes option pricing model for the calculation of the fair value of the AIRs immediately before and after the modifications described above, using Level 3 inputs.

We identified the sufficiency of audit evidence over the accounting for the modification to the AIR rights as a critical audit matter.

Subjective auditor judgment and an increased extent of effort was required to evaluate the sufficiency of audit evidence over accounting for modification to the AIR rights due to the complexity involved.

Any changes in the estimates and assumptions used could have a material impact in the amount of change in fair value.

Audit Response

We obtained and analyzed the technical memo from the Company to ensure it complied with accounting principles generally accepted in the United States of America.

We utilized the knowledge, experience and expertise of our internal valuation specialist to execute the planned audit procedures related to the valuation by assessing the reasonableness of the methodologies employed to value the AIRs.

We tested the underlying assumptions presented in the black-scholes option pricing models.

/s/ WithumSmith+Brown, PC

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Whippany, New Jersey

April 12, 2024

PCAOB ID Number 100

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Super League Enterprise, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Super League Enterprise, Inc.

(formerly, “Super League Gaming, Inc.”)(the “Company”) as of December 31, 2022, the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.

As noted in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations.

This raises substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also included in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Baker Tilly US, LLP

We have served as the Company’s auditor from 2016 to 2023.

Los Angeles, California

March 31, 2025

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DECEMBER 31, 2024 AND 2023

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

dollars, rounded to the nearest thousands, except share and per share data)

Current Assets

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Accrued contingent consideration

Promissory note - contingent consideration

Contract liabilities

Secured loan – SLR Facility

Convertible note payable and accrued interest

Promissory notes payable and accrued interest

Promissory notes payable and accrued interest – related party

Total current liabilities

Deferred taxes

Accrued contingent consideration – long term

Warrant liability

Deferred taxes

Total liabilities

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FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

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

dollars, rounded to the nearest thousands, except share and per share data)

COST OF REVENUES

OPERATING EXPENSE

OPERATING EXPENSE (INCOME)

Selling, marketing and advertising

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Impairment of intangible assets

Impairment of goodwill

Total operating expense

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OTHER INCOME (EXPENSE)

Interest expense

Gain on sale of intangible assets

Interest expense, including change in fair value of promissory notes carried at fair value

Loss on extinguishment of liability - contingent consideration

Loss on exchange of preferred instruments

1 unchanged sentence

Total other income

LOSS BEFORE BENEFIT FROM INCOME TAXES

Benefit from income taxes

LOSS BEFORE (PROVISION FOR) BENEFIT FROM INCOME TAXES

(Provision for) benefit from income taxes

Net loss per share attributable to common stockholders – basic and diluted

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FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

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

dollars, rounded to the nearest thousands, except share and per share data)

Preferred stock (Shares):

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Issuance of Series AAA-2 preferred stock at $1,000 per share

Issuance of Series AAA Junior preferred stock at $1,000 per share

Issuance of Series AAA-2 Junior preferred stock at $1,000 per share

Issuance of Series AAA-3 Junior preferred stock at $1,000 per share

Issuance of Series AAA-4 Junior preferred stock at $1,000 per share

Series AAA-1 Issued in Exchange for Series A & AA Preferred

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Conversions of Series AAA Preferred stock to common stock

Conversions of Series AAA Junior Preferred stock to common stock

Balance, end of period

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Issuance of common stock at $ 0.88 per share, net of issuance costs

Issuance of common stock at $ 2.60 per share, net of issuance costs

Exercise of prefunded common stock warrants at $ 2.60 per share, net of issuance costs

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Conversion of Series AAA preferred stock

Conversion of Series AAA Junior preferred stock

Preferred stock dividends paid – common stock

3 unchanged sentences

Issuance of common stock at $ 0.88 per share, net of issuance costs

Issuance of common stock at $ 2.60 per share, net of issuance costs

Exercise of prefunded common stock warrants at $ 2.60 per share, net of issuance costs

Conversion of Series A, AA and AAA preferred stock

Preferred stock dividends paid

Conversion of Series A, AA, AAA and AAA Junior preferred stock

Stock-based compensation

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Issuance of Series AAA-2 preferred stock at $1,000 per share, net of issuance costs

Issuance of Series AAA Junior preferred stock at $1,000 per share, net of issuance costs

Series AAA Junior preferred stock noncash issuance costs – incremental fair value in connection with modifications to certain existing AIRs

Issuance of Series AAA-2 Junior preferred stock at $1,000 per share, net of issuance costs

Issuance of Series AAA-3 Junior preferred stock at $1,000 per share, net of issuance costs

Issuance of Series AAA-4 Junior preferred stock at $1,000 per share, net of issuance costs

Common stock purchase warrants issued – Series AAA-3 and Series AAA-4 Junior preferred stock

Issuance of common stock at $ 0.88 per share, net of issuance costs

Issuance of common stock at $ 2.60 per share, net of issuance costs

Exercise of prefunded common stock warrants at $ 2.60 per share, net of issuance costs

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Stock-based compensation

Issuance of common stock and incremental fair value in connection with modifications to certain existing AIRs in settlement of legal matters

Prepaid consulting fees

Balance, end of period

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FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

(Rounded to the nearest thousands)

dollars, rounded to the nearest thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Change in fair value of contingent consideration

Change in fair value of debt at fair value

Gain on sale of intangible assets

Loss on extinguishment of liability – contingent consideration

Loss on exchange of placement agent warrants

Impairment of intangible assets and goodwill

Write-off of intangible assets

Fair value of noncash legal settlement and other noncash charges

Loss on intangible asset disposal

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Cash paid in connection with Melon Acquisition, net

Proceeds from sale of Minehut Assets

Purchase of property and equipment

Purchase of third-party game properties

Capitalization of software development costs

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Proceeds from issuance of common stock, net of issuance costs

Proceeds from note payable

Proceeds from notes payable, net of debt issuance costs

Payments on notes payable

Payments on convertible notes

Proceeds from accounts receivable facility

Payments on accounts receivable facility

Contingent consideration payments – Melon Acquisition

Net cash provided by financing activities

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SUPPLEMENTAL NONCASH INVESTING ACTIVITIES

Issuance of common stock in connection with legal settlement

Issuance of common stock in connection with Melon Acquisition

Issuance of common stock in connection with the payment of Super Biz Contingent Consideration

Issuance of common stock in connection with Bannerfy disposition

Series AAA Junior preferred stock noncash issuance costs – incremental fair value in connection with modifications to certain AIRs

Issuance of common stock in connection with Bannerfy Acquisition

Issuance of Super Biz Note in connection with extinguishment of accrued contingent consideration liability

The accompanying notes are an integral part of these consolidated financial statements.

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Super League Enterprise, Inc.

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.

SLE) (“Super League,” the “Company,” “we,” “us” or “our”) is redefining how brands connect with consumers through the power of playable media.

Through solutions within mobile games and the world’s largest immersive gaming platforms, Super League provides global brands with ads, content, and experiences that are not only seen – they are played, felt, and remembered.

Boasting an award-winning development studio, a vast network of native creators, and proprietary engagement technology, Super League is a one-of-a-kind partner for brands looking to stand out in culture, spark loyalty, and drive meaningful impact.

In a world where attention is earned, Super League makes brands relevant - by making them playable.

Super League was incorporated on October 1, 2014 as Nth Games, Inc.

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on September 11, 2023.

We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012, as amended.

On May 30, 2023, the Company filed a Certificate of Amendment (the “2023 First Amendment”) to its Second Amended and Restated Certificate of Incorporation, as amended (the “Charter”), increasing the number of authorized shares of common stock, par value $ 0.001 per share (“common stock”) from 100,000,000 to 400,000,000 .

The Company’s Board of Directors (the “Board”) previously approved the Amendment on March 17, 2023, and the Company obtained the approval of the First Amendment by written consent of its stockholders holding greater than 50% of the voting securities of the Company on April 5, 2023.

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.

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(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.

The Name Change and the Reverse Split were approved by the Company’s Board of Directors (the “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.

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 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 twelve herein, refer to the applicable corresponding numbered footnotes to these consolidated financial statements.

In connection with the Name Change, the Company also changed its Nasdaq ticker symbol to “SLE” from “SLGG.”

Refer to Note 12.

“Restatement of Quarterly Financial Information (unaudited), for information about the restatement of the Company’s financial statements as of and for the three and nine months ended September 30, 2023, arising from the exclusion of the calculated noncash value of the effect of the down round feature on the Company’s Series AA Preferred stock, triggered in August 2023, which should have been recorded as a noncash charge directly to accumulated deficit and a noncash reduction to income available to common stockholders in the computation of earnings per share.

All references to common stock, warrants to purchase common stock and other rights, options to purchase common stock, restricted stock, share data, per share data and related information contained in the consolidated financial statements (hereinafter, “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 twelve 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.

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 (“Minehut 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.

Smaller Reporting Company Status and Disclosure of Critical Accounting Matters In the Auditors Opinion

We are a “smaller reporting company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.

Upon the completion of our initial public offering in February 2019, 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, which allowed us to 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;

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 were eligible to remain an “emerging growth company” for five years from the date of our initial public offering, and as such, ceased being an “emerging growth company” as of Fiscal Year 2024.

However, as described above we continue to be a “smaller reporting company.”

As a result of no longer qualifying for “emerging growth company” status, our independent auditors, commencing with their audit of our consolidated financial statements as of and for the year ended December 31, 2024, are required by the Public Company Accounting Oversight Board (“PCAOB”) to include a description of Critical Accounting Matters (“CAMs”) as a component of their audit opinion commencing with the audit of our consolidated financial statements for Fiscal Year 2024.

A CAM is defined as any matter arising from the audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee, as a component of typical and customary matters required to be communicated to the audit committee each year and that:

Relates to accounts or disclosures that are material to the financial statements;

Involved especially challenging, subjective, or complex auditor judgment.

The PCAOB requires auditors to communicate with the company's audit committee regarding certain matters related to the conduct of their audit, including information about the overall audit strategy, timing of the audit and the significant risks identified during the auditor's risk assessment procedures.

As described by the PCAOB, CAMs are intended to enhance the auditor’s report to provide audit-specific information that is meaningful to investors and other financial statement users.

Further, the purpose of CAMs is to shed light on certain matters in an audit that involved especially challenging, subjective, or complex auditor judgment.

Our auditors have included descriptions of CAMs surrounding their audit strategy and procedures for their audit of revenue recognition and their audit of the modification of certain AIRs related to preferred stock outstanding during Fiscal Year 2024.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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, 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.

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, accounting for business combinations and related contingent consideration, derecognition of assets, accounting for debt, including estimates and assumptions used to calculate the fair value of debt instruments, accounting for derivatives, including estimates and assumptions used to calculate the fair value of derivative 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 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 $ 30.3 million and $ 85.5 million for the years ended December 31, 2023 and 2022, respectively, and had an accumulated deficit of $ 249.0 million as of December 31, 2023.

The Company incurred net losses as reported in the accompanying consolidated statements of operations for the periods presented, and had an accumulated deficit of $ 270.0 million as of December 31, 2024.

Noncash stock compensation, amortization and impairment charges for the years ended December 31, 2024 and 2023 totaled $ 3.9 million and $ 17.3 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 lingering effects of COVID-19 and the threat of other outbreaks, 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.

The Company has and will continue to use significant capital for the growth and development of its business, and, as such, expects 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 planned operations.

Accordingly, the Company's results of operations and the implementation of its 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 the Company's 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 the Company 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 ASC 205-40, “Going Concern,” (“ASC 205”).

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, “Presentation of Financial Statements - Going Concern,” (“ASC 205”).

Management ’ s Plans

The Company experienced significant growth in fiscal year 2023, 2022 and 2021 through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter and year over year increases in recognized revenue across our primary revenue streams.

In fiscal year 2023, we acquired Melon, as described below, 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 operating costs.

Management continues to consider 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.

Refer to Note 7 for recent equity financing activities.

During the current and prior fiscal year, the Company continued its focus on the expansion of its 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 the Company's 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.

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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.

The Company may continue to evaluate potential strategic acquisitions.

To finance such strategic acquisitions, it may be 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.

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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.

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.

If the Company fails to obtain additional financing when needed, the Company may not be able to execute its business plans which, in turn, would have a material adverse impact on the Company's financial condition, ability to meet our obligations, and ability to pursue our business strategies.

Entry into Financing Agreements

Agile II Promissory Note .

On February 10, 2025, the Company entered into a Business Loan and Security Agreement, with Agile Capital Funding, LLC as collateral agent, and Agile Lending, LLC (“Agile”), pursuant to which the Company issued to Agile a Confessed Judgment Secured Promissory Note for an aggregate value of $ 2.5 million (the “Agile II Note”) as described at Note 12.

$ 1.5 million of the Agile II Note was used to repay the remaining balance under the Agile Note (as defined below), with net proceeds to the Company of approximately $ 875,000 .

Refer to Note 12 below.

1800 Diagonal Lending, LLC Securities Purchase Agreement .

On March 26, 2025, the Company and 1800 Diagonal Lending, LLC, a Virginia limited liability company, or registered assigns (“Diagonal”) entered into a Securities Purchase Agreement (the “Diagonal Agreement”), pursuant to which the Company issued a Convertible Promissory Note (the “Diagonal Note”) in the principal amount of $ 300,000 (the “Diagonal Principal”), for which the Diagonal Note, among other things, (a) matures on December 30, 2025, (b) accrues interest at a rate of 10 % per annum on the unpaid principal balance from the date the Diagonal Note was issued until the principal and interest becomes due and payable, and (c) interest begins to accrue on the Diagonal Issuance Date but shall not be payable until the Diagonal Note becomes payable.

Refer to Note 12 below.

Belleau Note Purchase Agreement .

On March 28, 2025, we entered into a note purchase agreement with Belleau Wood Capital, LP, or its assigns (“Belleau”).

Pursuant to the note purchase agreement, the Company will issue to Belleau a total of three Unsecured Promissory Notes (each, a “Belleau Note” and collectively, the “Belleau Notes”) with an aggregate principal amount of $ 1,500,000 .

The consummation of the sale of the initial Belleau Note was consummated on March 27, 2025, with gross proceeds to the Company of $ 300,000 .

The consummation of the sale of the two remaining Belleau Notes will occur in the amounts and on the dates as follows:

(a) $ 600,000 on April 14, 2025;

and (b) $ 600,000 on April 28, 2025.

Each of the Belleau Notes:

(x) matures on the date that is 12 months from the date of the issuance of each respective Belleau Note;

(y) may be prepaid in part or in full at any time by the Company without penalty;

and (z) accrues interest at a rate of 20 % simple interest per annum.

Refer to Note 12 below.

Entry into Equity Purchase Agreement

On February 14, 2025, the Company entered into an equity purchase agreement with Hudson Global Ventures, LLC.

Pursuant to the Equity Purchase Agreement, the Company has the right, but not the obligation, to sell to Hudson, and Hudson is obligated to purchase, up to $ 2.9 million of newly issued shares of the Company’s common stock, from time to time during the term of the equity purchase agreement, subject to certain limitations and conditions (the “Hudson Offering”), as described at Note 12.

The Company intends to use the net proceeds, if any, from the Hudson Offering for working capital and general corporate purposes, including sales and marketing activities, product development and capital expenditures.

Revenue Recognition

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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, game passes 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.

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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.

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.

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”).

Media and advertising revenue primarily consists of direct and reseller sales of our on-platform media (including off-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, on our Minehut Minecraft platform, or other digital platforms.

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.

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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, our owned and operated Minehut platform and others.

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.

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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.

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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.

We also create custom integrations on our owned and operated digital property “Minehut” for Brands.

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.

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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.

each month’s 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.

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Payments are made to the Company monthly based on the sales revenue generated on the platform.

Our Minehut digital property provides various Minecraft server hosting services on primarily a monthly subscription basis, and other digital goods to the Minecraft gaming community.

Minehut users purchase additional server space and other digital goods to enhance their Minehut/Minecraft playing experience.

Users log on to Minehut and are able to play for free.

Users are able to purchase expanded server space to enhance their game play experience for a fee.

Minehut revenues are generated from single transactions for the sale of distinct digital goods on the platform.

Subscription revenue is recognized generally over the short period of time over which the services are rendered.

Digital goods revenue is recognized when delivery occurs and all other revenue recognition criteria are satisfied, which is typically at the point of sale.

Payments are typically due from customers, and delivery of purchased digital goods occurs at the point of sale.

Revenue was comprised of the following for the years ended December 31:

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Cost of Revenues

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 costs include the cost of social digital media, marketing, and promotions.

Cost of revenues 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 costs include the cost of ad production, social media, print media, marketing, promotions, and merchandising.

The Company expenses advertising costs as incurred.

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Accounts receivable are recorded at the invoice amount, less allowances for credit losses, if any, and do not bear interest.

The Company provides an allowance for potential credit losses based on its evaluation of the collectability and the customers’ creditworthiness.

At each balance sheet date, the Company provides an allowance for potential credit losses based on its evaluation of the collectability and the customers’ creditworthiness.

The Company regularly reviews the allowance by considering factors such as the age of the receivable balances, historical experience, credit quality, current economic conditions, and reasonable forecasts of future economic conditions that may affect a customer’s ability to pay.

Accounts receivable are written off when they are determined to be uncollectible.

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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 ASC 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.

Certain liabilities are required, or elected, to be recorded at fair value on a recurring basis in accordance with applicable guidance.

As described in the notes below, certain promissory notes, contingent consideration, warrant liabilities and contingent interest derivatives 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.

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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.

Derivative instrument liabilities are classified in the consolidated balance sheets 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 ASC 470, “Debt,” (“ASC 470”).

Property and Equipment

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Maintenance and repairs are charged against the results of operations as incurred.

When these assets are sold or otherwise disposed of, the asset and related depreciation are relieved, and any gain or loss is included in the statements of operations for the period of sale or disposal.

When these assets are sold or otherwise disposed of, the asset and related depreciation are relieved, and any gain or loss is included in the consolidated statements of operations for the period of sale or disposal.

Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets, typically over a three to five-year period.

Acquisition Method.

Acquisitions that meet the definition of a business under ASC 805 , “Business Combinations,” (“ASC 805”) are accounted for using the acquisition method of accounting.

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.

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Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expense in the consolidated statements of operations.

Cost Accumulation Model.

Acquisitions that do not meet the definition of a business under ASC 805 are accounted for as an asset acquisition, utilizing a cost accumulation model.

Assets acquired and liabilities assumed are recognized at cost, which is the consideration the acquirer transfers to the seller, including direct transaction costs, on the acquisition date.

The cost of the acquisition is then allocated to the assets acquired based on their relative fair values.

Goodwill is not recognized in an asset acquisition.

Direct transaction costs include those third-party costs that can be directly attributable to the asset acquisition and would not have been incurred absent the acquisition transaction.

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.

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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.

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 consolidated statements of operations in the post-combination period.

Intangible Assets

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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

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Acquisitions (See Note 5)

Impairment charges (cumulative goodwill impairment losses to date)

Ending Balance

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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.

For the year ended December 31, 2023:

December 31, 2023 Goodwill Impairment Testing:

At December 31, 2023, the Company bypassed the optional qualitative assessment and performed a quantitative goodwill impairment test.

We utilized the market capitalization of the Company as of December 31, 2023, a Level 1 input, to estimate the fair value of the Company’s single reporting unit.

Based on the analysis, the estimated fair value of our reporting unit was $ 29.1 million, compared to a carrying value of our single reporting unit of $ 10.0 million as of December 31, 2023.

Based on the analysis, the fair value of our single reporting unit exceeded its carrying value as of December 31, 2023, and therefore, the Company concluded that goodwill was not “more likely than not” impaired as of December 31, 2023.

For the year ended December 31, 2022:

As of January 1, 2022, goodwill totaled $ 50,263,000 .

During the year ended December 31, 2022, goodwill impairment charges totaled $ 50,263,000 , and were comprised of the following:

September 30, 2022 Goodwill Impairment Testing

At September 30, 2022, prior to the completion of our goodwill impairment testing, the goodwill balance totaled $ 50,263,000 .

At September 30, 2022, from a qualitative standpoint, we considered the Company’s history of reported losses and negative cash flows from operating activities, and also considered the sustained downturn in industry and macroeconomic conditions, including inflationary pressures and potential reductions in advertising spending and the sustained downturn of the broader mid-cap and micro-cap equity markets in the third quarter of 2022.

We also considered that the Company experienced significant inorganic and organic growth in fiscal 2021, including the impact of the acquisitions of Mobcrush, Bannerfy and Super Biz on our premium advertising inventory, product offerings to advertisers, applicable current period revenue recognized and future revenue generating opportunities.

However, the Company’s stock price had been volatile, and the volatility continued during the three months ended September 30, 2022, declining 34 % to $ 13.60 as of September 30, 2022, reflecting a market capitalization that was approximately 38 % of the Company’s September 30, 2022 net book value.

To assess whether the decline in our market capitalization was an indicator requiring an interim goodwill impairment test, we considered the significance of the decline and the length of time our common stock had been trading at a depressed value along with the macro factors described above.

The significance of the decline was consistent with the broader microcap market.

As of September 30, 2022 the decline in our stock price and other factors were deemed to be sustained, and therefore a triggering event requiring a goodwill impairment test as of September 30, 2022 was deemed to have occurred.

We utilized the market capitalization of the Company as of September 30, 2022, a Level 1 input as described above, to estimate the fair value of the Company’s single reporting unit.

The estimated market capitalization was determined by multiplying our September 30, 2022 stock price and the common shares outstanding as of September 30, 2022.

The market capitalization approach was utilized to estimate the fair value of our single reporting unit as of September 30, 2022, due to the significance of the decline in stock price as of September 30, 2022, resulting in a market capitalization that was 38 % of the net book value of our single reporting unit.

Based on the analysis, the estimated fair value of our reporting unit was $ 25.2 million, compared to a carrying value of our single reporting unit of $ 67.3 million as of September 30, 2022.

As such, the fair value of our single reporting unit was deemed to be below its carrying value as of September 30, 2022, resulting in a goodwill impairment charge of $ 42,000,000 in the third quarter of 2022, which is reflected in the consolidated statement of operations for the year ended December 31, 2022.

December 31, 2022 Goodwill Impairment Testing

At December 31, 2022, prior to the completion of our goodwill impairment testing, the goodwill balance totaled $ 8,263,000 .

At December 31, 2022, from a qualitative standpoint, we considered the factors described above under “September 30, 2022 Goodwill Impairment Testing,” including the applicable current period reported loss and negative cash flows from operating activities, and the sustained downturn in industry and macroeconomic conditions, including inflationary pressures and potential reductions in advertising spending and the sustained downturn of the broader mid-cap and micro-cap equity markets in the fourth quarter of 2022.

Similarly, given the Company’s significant growth, management did not believe that the December 2022 market capitalization of the Company was indicative of any material fundamental change in the Company’s underlying business or future prospects as of the December 31, 2022 measurement date.

The Company's stock price had been volatile, and the volatility continued during the three months ended December 31, 2022, declining approximately 50 % from the September 30, 2022 closing price to $ 6.72 as of December 31, 2022, reflecting a market capitalization that was approximately 46 % of the Company’s December 31, 2022 net book value.

As of December 31, 2022 the decline in our stock price and other factors were deemed to be sustained, and therefore a triggering event requiring a goodwill impairment test as of December 31, 2022 was deemed to have occurred.

We utilized the market capitalization of the Company as of December 31, 2022, a Level 1 input, to estimate the fair value of the Company’s single reporting unit.

Based on the analysis, the estimated fair value of our reporting unit was $ 12.6 million, compared to a carrying value of our single reporting unit of $ 27.5 million as of December 31, 2022.

As such, the fair value of our single reporting unit was deemed to be below its carrying value as of December 31, 2022, resulting in an additional goodwill impairment charge of $ 8,263,000 for the year ended December 31, 2022, reflecting the write down of the remaining balance of goodwill for our single reporting unit.

At December 31, 2024 and 2023, the Company bypassed the optional qualitative assessment and performed a quantitative goodwill impairment test.

We utilized the market capitalization of the Company as of December 31, 2024 and 2023, a Level 1 input, to estimate the fair value of the Company’s single reporting unit.

Based on the analysis, the estimated fair value of our reporting unit at December 31, 2024 and 2023 was approximately $ 27.0 million and $ 29.1 million, respectively, compared to a carrying value of our single reporting unit of approximately $ 0.17 million and $ 10.0 million as of December 31, 2024 and 2023, respectively.

Based on the analysis, the fair value of our single reporting unit exceeded its carrying value as of December 31, 2024 and 2023, and therefore, the Company concluded that goodwill was not “more likely than not” impaired as of December 31, 2024 and 2023, respectively.

Stock-Based Compensation

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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 ASC 718, “Stock based Compensation,” (“ASC 718”).

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.

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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 consolidated balance sheet.

Deferred equity financing costs, if any, are included in other current assets in the accompanying consolidated balance sheets.

For the years ended December 31, 2024 and 2023, financing costs charged against gross proceeds in connection with equity financings totaled $ 343,000 and $ 2,735,000 , respectively.

Deferred financing cost, included in prepaid expense and other current assets, at December 31, 2023 and 2022, totaled $ 282,000 and $ 374,000 , respectively.

Specific incremental costs directly attributable to a proposed or actual debt offering are reported in the balance sheet as a direct deduction from the face amount of the debt instrument.

Deferred financing costs, included in prepaid expense and other current assets, at December 31, 2024 and 2023, totaled $ 64,000 and $ 282,000 , respectively.

Specific incremental costs directly attributable to a proposed or actual debt offering are reported in the consolidated balance sheets as a direct deduction from the face amount of the debt instrument.

In the event that the proposed or actual debt financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made.

In the event that the Company elects to use the fair value option to account for debt instruments, all costs directly attributable to the debt offering are expensed as incurred in the statement of operations.

For the years ended December 31, 2024 and 2023, debt financing costs expensed as incurred in connection with debt financings totaled $ 180,000 and $ 0 , respectively.

Convertible Debt

The Company evaluates convertible notes outstanding to determine if those contracts or embedded components of those contracts qualify as derivatives under ASC 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 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 6, under the fair value option election pursuant to ASC 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.

The Company accounted for certain promissory notes issued, as described at Note 6, under the fair value option election pursuant to ASC 825, “Financial Instruments,” (“ASC 825”) as discussed below.

The promissory 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 6, 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.

The estimated fair value adjustments, subsequent to the issuance date, as required by ASC 825, are 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 statements of operations.

With respect to the promissory notes described at Note 6, as provided for by ASC 825, the estimated fair value adjustments are 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 statements of operations.

The fair value of the promissory notes described at Note 6 was estimated based on a calculation of the present value of the related cash flows (i.e.

payments of principal and interest based on contractual agreement terms) using a discount rate that reflected market rates and related credit risk.

The FVO was elected for the promissory notes described at Note 6 due to the short term nature of the promissory notes and to provide relevant and timely information regarding the current market value of the debt, which is marked to market at each balance sheet date reflecting the effects of market fluctuations and other factors.

Debt Modifications

Modifications to debt obligations are initially analyzed to determine whether the modification qualifies as a troubled debt restricting (TDR).

A modification is a troubled debt restructuring if both (1) the borrower is experiencing financial difficulty, and (2) the lender grants the borrower a concession.

In determining if a company is experiencing financial difficulties for a TDR, as contemplated by the applicable standard, several factors are considered including whether the company is currently in payment default on any debt, if there is a high probability of future default without modification, bankruptcy considerations, or if there is substantial doubt about the company’s ability to continue as a going concern.

A lender is granting a concession when the effective borrowing rate on the restructured debt is less than the effective borrowing rate on the original debt.

The recognition and measurement of the impact of a TDR on the financial statements depends on whether the future undiscounted cash flows specified by the new terms are greater (gain is recorded in the consolidated statements of operations for the difference) or less (no gain is recorded in the consolidated statements of operations for the difference) than the carrying value of the debt.

For an exchange of debt instruments or a modification of a debt instrument by a debtor and a creditor in a nontroubled debt situation, the Company initially evaluates whether the modified debt terms are "substantially different" from the original debt.

An exchange of debt instruments or a modification of a debt instrument by a debtor and a creditor is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument.

If the terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is less than 10 percent, the debt instruments are not considered to be substantially different.

If the modification is not deemed to be substantially different, the modification is accounted for as an adjustment to the carrying amount of the debt, with a recalculated effective interest rate.

If the modification is deemed to be substantially different, then the modification is accounted for as an extinguishment of the original debt and issuance of new debt, requiring the recognition of a gain or loss on the extinguishment in the consolidated statements of operations.

Transfers of Financial Assets

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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.

Gains and losses stemming from transfers reported as sales, if any, are included in the consolidated statements of operations.

Assets obtained and liabilities incurred in connection with transfers reported as sales are initially recognized in the consolidated balance sheets 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.

Accordingly, the related assets remain on the Company’s consolidated balance sheets 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.

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Refer to Note 6 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 revenues 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) advertising and sponsorship component, including content sales 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.

Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents and accounts receivable.

The Company places its cash equivalents 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.

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Number of vendors > 10% of accounts payable / percent of accounts payable

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.

Net Loss Per Share

Basic net 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.

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Common stock potentially issuable in connection with the conversion of outstanding preferred stock totaling 10,117,000 and 12,127,000 at December 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 convertible notes payable totaling zero and 7,000 at December 31, 2023 and 2022, 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 exercise of outstanding additional investment rights, as described at Note 7, totaling 8,414,000 and 1,682,000 at December 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 as of December 31:

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Preferred Stock Instruments

For preferred stock instruments classified as liabilities under ASC 480 (see placement agent warrants described at Note 7), the Company follows the accounting models for the modification or extinguishment of debt, which require that modifications or exchanges of preferred stock instruments classified as liabilities are considered extinguishments, with gains or losses recognized in current earnings if the terms of the new instrument and original instrument are substantially different.

For preferred stock instruments classified as liabilities under ASC 480 (see placement agent and AAA Junior Preferred related warrants described at Note 7), the Company follows the accounting models for the modification or extinguishment of debt, which require that modifications or exchanges of preferred stock instruments classified as liabilities are considered extinguishments, with gains or losses recognized in current earnings if the terms of the new instrument and/original instrument are substantially different.

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.

Dividends on preferred stock that are due, but unpaid, are reflected in accrued liabilities in the consolidated balance sheets until paid.

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.

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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.

For the year ended December 31, 2023, total charges to retained earnings as a result of the triggering of down round features related to Series AA Preferred stock totaled $ 7,567,000 .

For the years ended December 31, 2024 and 2023, total charges to retained earnings as a result of the triggering of down round features related to Series AA Preferred stock totaled $ 0 and $ 7,567,000 , respectively.

Refer to Note 7 for additional information.

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Recent Accounting Guidance

Recent Accounting Pronouncements – 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 , which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with 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.

This standard 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.

On August 5, 2020, the FASB issued ASU No.

2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity ’ s Own Equity (Subtopic 815-40) .

The guidance in this update eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation.

The guidance was required to be applied retrospectively with the cumulative effect recognized as of the date of adoption.

The guidance became effective for the Company and was adopted at the beginning of the first quarter of the fiscal year ending December 31, 2023.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments—Credit Losses, ASC 326, Measuring Credit Losses on Financial Instruments.” The standard provides guidance on the measurement and recognition of credit losses on most financial assets.

For trade receivables, loans, and held-to-maturity debt securities, the current probable loss recognition methodology was replaced by an expected credit loss model.

For available-for-sale debt securities, the recognition model on credit losses is generally unchanged, except the losses are required to be presented as an adjustable allowance.

The guidance will be applied retrospectively with the cumulative effect recognized as of the date of adoption.

The guidance became effective for the Company and was adopted at the beginning of the first quarter of the fiscal year ended December 31, 2023.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements.

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

(ASU 2023-07)

This ASU requires that an entity report segment information in accordance with Topic 280, Segment Reporting.

The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Refer to Note 11 for related disclosures.

December 31, 2024

Recently Issued Accounting Pronouncements.

Accounting standards updates ("ASU") applicable to the Company that were recently issued are summarized below.

Effective Date

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

(ASU 2023-09)

This ASU requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid.

The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures.

Early adoption is permitted.

The Company is currently evaluating the impact this standard will have on our Consolidated Financial Statements and related disclosures.

Fiscal years beginning after December 15, 2024

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

(ASU 2024-03)

This ASU requires that an entity disaggregate relevant expense captions presented on the face of the income statement into natural expense categories within the footnotes of the financial statements.

In addition, a separate disclosure of selling expenses is required to be presented.

The ASU is intended to allow stakeholders to better understand the components of an entity's expenses.

Early adoption is permitted.

The Company is evaluating the impact this standard will have on its Consolidated Financial Statements and related disclosures.

Fiscal years beginning after December 15, 2026

PROPERTY AND EQUIPMENT

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Intangible and other assets consisted of the following as of December 31:

Weighted Average

Period (Years)

Partner and customer relationships

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Intangible and other assets, net

Intangible assets as of December 31, 2023 reflected in the table above include the intangible assets acquired in connection with the Melon Acquisition totaling $ 510,000 , as described at Note 5 below.

Total amortization expense included in operating expense for the fiscal years ended December 31, 2024 and 2023 totaled $ 2,544,000 and $ 5,238,000 , respectively.

Amortization expense included in cost of revenues for the fiscal years ended December 31, 2024 and 2023 totaled $ 0 and $ 53,000 , respectively.

Sale of Minehut

On February 29, 2024, the Company sold its Minehut Assets to GamerSafer in a transaction approved by the Board.

Pursuant to the GS Agreement entered into by and between Super League and 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.

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 consolidated balance sheets.

The Company recorded a receivable for the total estimated Minehut Purchase Consideration totaling $ 619,000 and recognized an initial gain on sale of the Minehut Assets totaling $ 144,000 , which is included in other income in the consolidated statements of operations.

The Minehut 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 in excess of the estimated purchase consideration recorded at contract inception, up to the $ 1.0 million stated contractual amount of purchase consideration, are recognized as additional gains on the sale of Minehut Assets when realized.

Additional gains on the sale of the Minehut Assets subsequent to the initial accounting for the transaction through December 31, 2024, totaled $ 39,000 .

For the year ended December 31, 2024, the Company calculated royalties due from GamerSafer, applied against the Minehut Purchase Consideration receivable pursuant to the GS Agreement, totaling $ 658,000 .

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 Minehut Purchase Consideration being paid in full, then in such event GamerSafer shall promptly assign all Minehut Assets back to the Company.

Impairment Charges

In the fourth quarter of 2023 we recorded a non-cash impairment charge related to our partner relationship related intangible assets, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets originally acquired in connection with the acquisition of Mobcrush, Inc.

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Factors we consider important, which could trigger an impairment review, include significant underperformance relative to expected historical or projected future operating results, and significant changes in the manner of our use of the acquired assets or the strategy in the context of our overall business.

Due to underperformance relative to historical and projected future operating results and a decision to deploy resources in other areas of the business, we performed an impairment analysis and determined that the sum of the expected undiscounted future cash flows resulting from the use of the intangible assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $ 7,052,000 , which is recorded in the consolidated statement of operations for the year ended December 31, 2023.

Due to underperformance relative to historical and projected future operating results and a decision to deploy resources in other areas of the business, we performed an impairment analysis and determined that the sum of the expected undiscounted future cash flows resulting from the use of the intangible assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $ 7,052,000 , which is recorded in the consolidated statements of operations for the year ended December 31, 2023.

The fair value was determined using a discounted cash flow approach (using Level 3 inputs), with cash flow projections over the remaining life of the intangible assets of 5 years and a discount rate of 16 % based on the Company’s estimated cost of capital.

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The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere.

As a result, the Company recorded a disposal of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $ 2,284,000 , which is included in “Loss on intangible asset disposal” in the accompanying consolidated statement of operations for the year ended December 31, 2023.

As a result, the Company recorded a disposal of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $ 2,284,000 , which is included in “ Loss on intangible asset disposal ” in the accompanying consolidated statements of operations for the year ended December 31, 2023.

Developed technology related intangibles asset acquisition costs were reduced $ 3,069,000 , and related accumulated depreciation was reduced $ 785,000 , in connection with the disposal of the intangible asset.

In June 2022, we purchased “ Anime Battlegrounds X ”, a highly rated game on Roblox, from a third-party game developer.

The total purchase price of $ 500,000 was capitalized and is being amortized over the estimated useful life of 5 years.

During the third quarter of 2022 , the Company rebranded certain products acquired in connection with the acquisition of Mobcrush.

As a result, the Company recorded a write down of trademark related intangible assets acquired in connection with the acquisition of Mobcrush totaling $ 423,000 , which is included as a component of amortization expense in general and administrative expense in the accompanying consolidated statement of operations for the year ended December 31, 2023.

The Company expects to record aggregate amortization expense for each of the five succeeding fiscal years as follows:

For the years ending December 31,

Intangible asset amortization expense for the periods presented was included in the following operating expense line items:

Fiscal Year Ended

Sales, marketing and advertising

Engineering, technology and development

General and administrative

Total amortization expense

Acquisition of Melon, Inc.

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”).

The consummation of the Acquisition (the “Melon Closing”) occurred simultaneously with the execution of the Purchase Agreement.

The consummation of the Acquisition (the “Melon Closing”) occurred simultaneously with the execution of the Melon Purchase Agreement.

Melon is a development studio building innovative virtual worlds in partnership with powerful consumer brands across music, film, TV, sports, fashion and youth culture.

The acquisition of Melon further strengthens the Company’s position as a one-stop solutions provider and strategic operating partner for brands and businesses seeking to expand and activate communities throughout the gaming metaverse.

At the Melon Closing, the Company paid an aggregate total of $ 900,000 to Melon (the “Melon Closing Consideration”), of which $ 150,000 was paid in cash, and the remaining $ 750,000 was paid in the form of shares of the Company’s common stock (with a closing date fair value of $ 722,000 ), valued at $ 9.64 (the “Closing Share Price”), the VWAP, as quoted on the Nasdaq Capital Market, for the five (5) trading days immediately preceding May 4, 2023.

At the Melon Closing, the Company paid an aggregate total of $ 900,000 to Melon (the “Melon Closing Consideration”), of which $ 150,000 was paid in cash, and the remaining $ 750,000 was paid in the form of shares of the Company’s common stock (with a closing date fair value of $ 722,000 ), valued at $ 9.64 (the “Melon Closing Share Price”), the VWAP, as quoted on the Nasdaq Capital Market, for the five (5) trading days immediately preceding May 4, 2023.

Refer to the table below for calculation of the fair value of consideration paid.

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.

Pursuant to the terms and subject to the conditions of the Melon Purchase Agreement, up to an aggregate of $ 2,350,000 (the “Melon Contingent Consideration”) was payable to Melon in connection with the achievement of certain revenue milestones for the period from the Melon Closing until December 31, 2023 (the “Melon First Earnout Period”) in the amount of $ 1,000,000 , and for the year ending December 31, 2024 (the “Melon Second Earnout Period) in the amount of $ 1,350,000 (the “Melon Second Earnout Period” and the “Melon First Earnout Period” are collectively referred to as the “Melon 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 Melon Closing Share Price, and (b) the VWAP for the five trading days immediately preceding the end of each respective Melon Earnout Period.

Additionally, pursuant to the Melon Purchase Agreement, the Company entered into employment agreements with two former key Melon employees (“Key Melon Employees”), pursuant to which the Key Melon Employees were granted inducement awards consisting of restricted stock unit awards (“RSUs”) to acquire an aggregate of 103,780 shares of the Company’s common stock.

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Contingent consideration is recorded as a liability in the accompanying 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 consolidated statements of operations.

The estimated fair value of the Melon Contingent Consideration was $ 538,000 at December 31, 2023.

The fair value of the Melon Contingent Consideration on the respective valuation dates was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs, as described at Note 2.

Assumptions utilized in connection with utilization of the Monte Carlo simulation model for the periods presented included risk free interest rates ranging from 4.04 % to 5.35 %, volatility rates ranging from 70 % to 85 %, and discount rate of 30 %.

The change in fair value, which is included in contingent consideration expense in the statement of operations for the year ended December 31, 2023, was comprised of the following:

The change in accrued Melon Contingent Consideration, which is included in contingent consideration expense in the consolidated statements of operations for the years ended December 31, 2024 and 2023, was comprised of the following:

Beginning balance

Contingent Consideration – Initial accrual – May 2023

Change in fair value (4)

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Post closing adjustments (2)

Contingent consideration payments (3)

Accrued contingent consideration (1)

Includes total contingent consideration for the First Earn Out Period totaling $ 333,000 , including 72,118 shares of common stock valued at $ 1.52 , the closing price of our common stock as of the applicable period end date.

As of December 31, 2024, the accrual for the Melon Second Earn Out Period included 35,775 shares of common stock valued at $ 0.62 , the closing price of our common stock as of December 31, 2024.

As of December 31, 2023, the accrual for the Melon First Earn Out Period totaling $ 333,000 , included 72,118 shares of common stock valued at $ 1.52 , the closing price of our common stock as of December 31, 2023.

The Melon Purchase Agreement provided for adjustments to the calculated Melon Contingent Consideration amounts to account for advanced payments made to Melon from customers prior to the Melon Acquisition Date, for which the corresponding work was not performed as of the Melon Acquisition Date.

Aggregated amortization expense for the period from the Melon Acquisition Date to December 31, 2023, related to intangible assets acquired in connection with the Melon Acquisition, totaled $ 90,000 .

In May 2024, the Company paid accrued Melon Contingent Consideration related to the Melon First Earn Out Period, comprised of $ 32,000 of cash payments and payment of 72,118 shares of our common stock valued at $ 90,000 on the date of issuance.

Reflected in the consolidated statements of operations for the applicable period.

Aggregated amortization expense for the years ended December 31, 2024 and 2023, related to intangible assets acquired in connection with the Melon Acquisition, totaled $ 107,000 and $ 90,000 , respectively.

Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired.

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Management considered a number of factors, including reference to a preliminary independent analysis of estimated fair values solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed.

The analysis included a preliminary discounted cash flow analysis which estimated the future net cash flows expected to result from the respective assets acquired as of the Melon Closing Date.

The analysis included a discounted cash flow analysis which estimated the future net cash flows expected to result from the respective assets acquired as of the Melon Closing Date.

A discount rate consistent with the risks associated with achieving the estimated net cash flows was used to estimate the present value of future estimated net cash flows.

The Company is in the process of finalizing the estimates and assumptions developed in connection with the independent analysis of estimated fair values of intangible assets acquired solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed.

Any adjustments to the fair values of intangible assets acquired, or estimates of economic useful lives of the intangible assets acquired, could impact the carrying value of those assets and related goodwill, as well as the estimates of periodic amortization of intangible assets acquired to be reflected in the statement of operations.

The fair values of the acquired intangible assets, as described above, was determined using the following methods:

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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 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 consolidated statements of operations.

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Contingent consideration payments (2)

Issuance of Super Biz Note (as described below) (1)

Accrued contingent consideration (1)

As of December 31, 2023, included 27,968 shares of common stock valued at $ 1.52 , the closing price of our common stock as of December 31, 2023.

As of December 31, 2024, reflects the cash portion of the Super Biz Second Earn Out Period related contingent consideration payable.

As of December 31, 2023, included 27,968 shares of common stock valued at $ 1.52 , the closing price of our common stock as of December 31, 2023.

In May 2024, the Company paid accrued contingent consideration related to the Super Biz Second Earn Out Period, comprised of 30,330 shares of our common stock valued at $ 38,000 .

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 .

In September 2022, the Company released a holdback amount related to a fiscal year 2021 acquisition as follows:

(i) $ 55,000 payable in the form of cash, and (ii) approximately $ 220,000 in the form of shares of the Company’s common stock, at a price per share of $ 82.00 .

Account Receivable Financing Facility

Reflected in the consolidated statements of operations for the applicable period

Issuance of Promissory Note.

In August 2024, the Company issued an unsecured promissory note to the Founders in connection with the remaining Super Biz Second Earn Out Period accrued contingent consideration outstanding, with a principal amount totaling approximately $ 1.8 million, whereby the Company is obligated to pay the outstanding contingent consideration on the following repayment terms (“Super Biz Note”):

upon receipt of new equity funding in the aggregate amount of $ 3.0 million or more subsequent to the date of the Super Biz Note, in one transaction or series of transactions, the Super Biz Note shall be repaid with interest in four (4) equal monthly installments commencing on the initial closing date of such equity funding;

upon receipt of new equity funding in the aggregate amount of $ 5.0 million or more subsequent to the date of the Super Biz Note, in one transaction or series of transactions, the Super Biz Note shall be repaid with interest in three (3) equal monthly installments commencing on the initial closing date of such equity funding;

upon new equity funding received by the Company in the aggregate amount of $ 7.0 million or more subsequent to the date of the Super Biz Note, in one transaction or series of transactions, the Super Biz Note shall be repaid with interest in two (2) equal monthly installments commencing on the initial closing date of such equity funding;

in the event none of subsections 2(i)-(iii) occur, then the Super Biz Note shall be repaid in full on June 1, 2025 (the “Maturity Date”).

Interest accrues on the outstanding principal at the rate of 8.5 % per annum, and accrues until the earlier of (i) repayment of the Super Biz Note in full, or (ii) the Maturity Date;

provided, however, during the existence of an event of default, as defined in the Super Biz Note, interest shall accrue on all outstanding principal at the contractual default rate, as defined in the Super Biz Note.

Super Biz Note related interest expense for the year ended December 31, 2024 totaled $ 64,000 .

All outstanding principal and accrued interest may be prepaid by the Company prior to the Maturity Date at the election of the Company.

Upon the occurrence of any event of default, as defined in the Super Biz Note, the Founders may at any time declare all unpaid obligations to be immediately due and payable.

Restricted Common Stock Issuance.

In addition, in connection with the issuance of the Super Biz Note, in January 2025, the Company issued 262,501 shares of the Company’s common stock to the Founders.

The issuance of the Super Biz Note in exchange for the related accrued contingent consideration balance was accounted for as an extinguishment of the original liability due to the fact that the present value of the cash flows under the terms of Super Biz Note was determined to be at least 10 percent different from the present value of the remaining cash flows under the terms of the original obligation.

As a result, a loss on extinguishment totaling $ 336,000 was recorded in the consolidated statements of operations, and credited to additional paid-in capital (included in “Other” in the consolidated statements of stockholder’s equity), for the year ended December 31, 2024, primarily comprised of the fair value of the 262,501 shares of restricted stock (based on closing price of our common stock on the date of issuance of the Super Biz Note) to be issued, as described above.

The default interest provision included in the Super Biz Note represents an embedded derivative with an initial fair value of $ 171,000 as of August 1, 2024, the date of issuance of the Super Biz Note.

The fair value of the derivative liability is included in the December 31, 2024 consolidated balance sheets under the caption “Promissory note – contingent consideration,” and is required to be marked to market at each balance sheets.

As of December 31, 2024 the fair value of the default interest provision derivative liability was $ 77,000 .

The change in fair value of the default interest provision derivative liability for the year ended December 31, 2024 totaled $ 94,000 , and is included in other income (expense) in the consolidated statements of operations.

Promissory Notes Accounted for at Fair Value

Agile Capital - Debt Financing

On November 8, 2024 (the “Agile Effective Date”), the Company entered into a loan agreement with Agile Capital Funding, LLC, as collateral agent (“Agile”)(“ the Agile Loan Agreement”), pursuant to which the Company issued to Agile a Confessed Judgment Secured Promissory Note for an aggregate value of $ 1.85 million (the “Agile Note”).

Pursuant to the Agile Loan Agreement:

(i) the Agile Note matures 28 weeks from the Agile Effective Date;

(ii) carries an aggregate total interest payment of approximately $ 0.78 million (the “Applicable Rate”), and (iii) immediately upon the occurrence and during the continuance of an Event of Default (as defined in the Agile Loan Agreement), interest shall accrue at a fixed per annum rate equal to the Applicable Rate plus five percent.

The Company is required to repay all the obligations due under the Agile Loan Agreement and the Agile Note in 28 equal payments of $ 93,821 with the first payment being made to Agile on November 14, 2024, and every seven days thereafter until the Maturity Date.

The proceeds received from the Agile Note were used to fund general working capital needs.

Pursuant to the Agile Loan Agreement, upon the occurrence of certain events, including (a) a change in the Company’s business other than the business engaged in by the Company on the Agile Effective Date, (b) cause or permit, voluntarily or involuntarily, any Key Person to cease being actively engaged in the management of the Company without prior notice to Agile, (c) a change in control of the Company (expressly excluding the pending transactions with Infinite Reality, Inc.) or otherwise approve the liquidation or dissolution of the Company or its Subsidiary (collectively, a “Change in Business, Management, or Ownership”), or (d) the Term Loan is accelerated upon the occurrence of an Event of Default, the Company shall be required to immediately pay to Agile an amount equal to the sum of:

(i) all outstanding principal of the Agile Note plus accrued and unpaid interest thereon through the prepayment date, (ii) a fee equal to the aggregate and actual amount of interest (at the contract rate of interest) that would be paid through the Maturity Date (the “Prepayment Fee”), plus (iii) all other obligations that are due and payable, including, without limitation, interest at the Default Rate with respect to any past due amounts.

The Company is allowed to make a full or partial prepayment of any or all of the obligations arising under the Agile Loan Agreement and the Agile Note, provided, the Company shall be obligated to pay a contractual prepayment fee.

The Agile Loan Agreement imposes various restrictions on the activities of the Company, including, subject to certain exceptions set forth in the Agile Loan Agreement (including, without limitation, the pending transactions with Infinite Reality, Inc.), a prohibition on:

(i) creating, incurring, assuming, or being liable for any indebtedness, or allow the Subsidiary to do so (expressly excluding up to $ 3,000,000 of unsecured loans through one or more third parties);

(ii) any Change in Business, Management, or Ownership;

(iii) fundamental changes to the Company or its subsidiaries (including certain consolidations, mergers and sales/transfers of assets outside the ordinary course of business, and limitations on the ability of the Company and its Subsidiary to grant liens upon their property or assets);

(iv) pay any dividends (other than dividends payable solely in capital stock) or make any distribution or payment in respect of or redeem, retire or purchase any capital stock;

(v) enter into certain transactions with the Company’s affiliates;

(vi) make or permit any payment on any debt that is subordinate to the obligations under the Agile Loan Agreement and the Agile Note (expressly excluding up to $ 3,000,000 of unsecured loans through one or more third parties);

and (vi) other than in the ordinary course of business, entering into any material agreement, or terminating or materially amending a material agreement.

As security for the full and prompt payment and performance of any obligations arising under the Agile Loan Agreement and the Agile Note, the Company and its Subsidiary granted to Agile a continuing first priority security interest in all the assets of the Company and its Subsidiary;

provided, however, the filing of a financing statement and/or the taking of any action required to perfect Agile’s security interest in the collateral may only occur upon an event of default.

The Agile Loan Agreement also provides for standard Events of Default, customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default.

In connection with entering into the Agile Loan Agreement, the Company was required to pay an administrative fee of $ 92,500 to the Collateral Agent, which was paid at the closing out of proceeds of the issuance of the Agile Note.

Related Party Promissory Note

On November 19, 2024 (the “RP Effective Date”), we entered into a Note Purchase Agreement (the “RP Purchase Agreement”) with a non-employee member of the Board (the “Purchaser”).

Pursuant to the RP Purchase Agreement, the Company issued to the Purchaser an Unsecured Promissory Note (the “RP Note”) in the amount of $ 1,500,000 (the “RP Principal”), for which the RP Note (i) matures on the date that is 12 months from the RP Effective Date (the “RP Maturity Date”), (ii) may be pre-paid at any time by the Company without penalty, and (iii) accrues interest on the RP Principal at a rate of 40 % simple interest per annum (the “RP Interest”).

The RP Interest is payable on the RP Maturity Date.

In the event of a prepayment of the RP Note by the Company, the RP Interest will be pro-rated for the period the RP Note is outstanding.

The Company intends on using the proceeds for working capital and general corporate purposes.

The RP Note also provides for:

(i) standard events of default, including (a) any default in the payment of the RP Principal or RP Interest on their respective due dates, (b) the occurrence of a Bankruptcy Event (as defined in the Note), or (c) the Company commits any material breach or default of any material provision of the Note, if not cured within 20 days following the written notice from the Purchaser specifying in reasonable detail such breach or default (sections (a) through (c), the “Events of Default”);

and (ii) customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default.

Upon the occurrence of an Event of Default, the RP Note will bear interest at the default interest rate of 45 % per annum, and upon Purchaser’s written notice to the Company, all payments of RP Principal and RP Interest will become immediately due and payable.

The Agile Note and the RP Note are accounted for at fair value as described in Note 2, measured using Level 3 inputs with the following impact on the consolidated financial statements as of and for the year ended December 31, 2024:

Gross Proceeds

Fair Value at issuance date

Difference between proceeds and fair value at issuance (2)

Note balance – December 31, 2024

Fair value – December 31, 2024

Interest paid during the period

Accrued interest at period end

Change in fair value subsequent to issuance (2)

Debt issue costs expensed immediately in the consolidated statements of operations (1)

Interest Rate (Discount rate used in present value calculation)

Debt issue costs incurred in connection with the Agile Loan included administrative fee of $ 92,500 to the collateral agent and advisor fees.

Reflected in interest expense in the consolidated statements of operations.

Accounts Receivable Financing Facility

Super League Enterprise, Inc.

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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.

The SLR Agreement is effective for 24 months from the Facility 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);

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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 from the Facility Effective Date to December 31, 2023 totaled $ 800,000 .

Interest expense and commitment fee expense for the year ended December 31, 2023 totaled $ 3,000 and $ 3,000 , respectively.

Total amounts advanced and repaid under the AR Facility for the years ended December 31, 2024 and 2023 are reflected in financing activities in the consolidated statements of cash flows.

Interest expense for the years ended December 31, 2024 and 2023 totaled $ 63,000 and $ 3,000 respectively.

Commitment fee expense for the years ended December 31, 2024 and 2023 totaled $ 40,000 and $ 3,000 , respectively.

Convertible Notes Payable at Fair Value

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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 years ended December 31, 2024 and 2023 totaled $ 0 and $ 40,000 , respectively.

The Company elected to utilize the FVO to account for the Notes, which are included in current liabilities at December 31, 2022.

Interest paid during the years ended December 31, 2024 and 2023 totaled $ 0 and $ 180,000 , respectively.

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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 Reverse Split was approved by the Board 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.

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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.

Bylaw Amendment

On June 4, 2024, the Board approved an amendment (the “2024 Amendment”) to the Company’s Second Amended and Restated Bylaws, effective June 4, 2024, to reduce the number of shares that are required to be present at a meeting of the Company’s stockholders (a “ Meeting ”) for purposes of establishing a quorum.

Prior to the 2024 Amendment, the presence, in person or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock was required to establish a quorum for the transaction of business at a Meeting.

As approved in the 2024 Amendment, the presence, in person or by proxy duly authorized, of the holders of not less than one-third ( 1/3 ) of the outstanding shares of stock entitled to vote will constitute a quorum for the transaction of business at a Meeting.

The Board adopted the 2024 Amendment to more practically obtain a quorum and conduct business at a Meeting.

The Board based its decision on the increasing prevalence of brokerage firms opting to forgo discretionary or proportionate voting of the shares held by them in street name, which is making it increasingly difficult for companies with a large retail stockholder base to obtain a quorum of the majority.

The change to the quorum requirement was made to improve the Company’s ability to hold Meetings when called.

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.

In October 2016, the Board 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 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 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.

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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.

The Board previously approved the 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:

Convertible Preferred Stock

On the dates set forth in the table below, we entered into subscription agreements with accredited investors in connection with the sale of newly designated Series of Convertible Preferred Stock, each series having a $ 0.001 par value and a $ 1,000 purchase price (“Stated Value”), hereinafter collectively referred to as “Convertible Preferred Stock, and the individual offerings of preferred stock referred to by the combination of “Series” and the specific letter designation of each series (i.e.

“Series A Preferred Stock Offering” refers to the Series A preferred stock offering, and “Series A Preferred Stock” refers to Series A convertible preferred stock), and each series of Convertible Preferred Stock issued, collectively referred to as “Preferred Stock Offerings,” as follows (rounded to the nearest thousands, except preferred share and conversion price data):

Preferred Stock

Conversion Shares - Common Stock

Prices (2)(3)(4)

Outstanding -

/ Exchanges (5)

November 22, 2022

November 28, 2022

November 30, 2022

December 22, 2022

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 a Certificate of Designation of Preferences, Rights and Limitations of the Series AAA Preferred Stock (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 volume-weighted average price of such common stock over the previous 10 days as reported on the NASDAQ Capital Market (the “ VWAP ”), 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 Designations, 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.

At December 31, 2023, Series AAA Preferred stock outstanding was comprised of the following, including Series AAA Preferred stock issued in connection with the Exchange Agreements and conversions of Series AAA Preferred stock into shares of the Company’s common stock for the applicable periods presented:

Preferred Shares

Conversion Shares

Series Preferred AAA

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:

January 31, 2023

April 19, 2023

$ 9.43 /$ 1.89

April 20, 2023

$ 10.43 /$ 2.09

April 28, 2023

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

$ 9.50 /$ 1.90

$ 9.28 /$ 1.86

$ 10.60 /$ 2.12

November 30, 2023

December 22, 2023

June 26, 2024

AAA-Junior - 2

July 10, 2024

AAA-Junior - 3

September 20, 2024

AAA-Junior – 4

September 30, 2024

Pursuant to the terms of the Placement Agent Agreements, we agreed to issue to the Placement Agent, following the final closing under the individual Preferred Stock Offerings (effective as of the respective individual series closing dates), five -year warrants to purchase 14.5 % of the shares of common stock issuable upon conversion of the respective series of Convertible Preferred Stock sold in the respective Preferred Stock Offering, at an exercise price equal to the applicable Preferred Stock Offering conversion price.

See below for placement agent warrants exchanged in connection with the Exchange.

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.

At December 31, 2023, Series AA Preferred stock outstanding was comprised of the following, including conversions of Series AA Preferred stock into shares of the Company’s common stock for the applicable periods presented:

Preferred Shares

Series Preferred AA

Conversion Shares

Series Preferred AA

Additional Conversion

Outstanding as of December 31, 2023

Original Conversion Shares

Conversions During the

Adjusted Conversion

Shares as of December 31, 2023

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 .

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.

The triggering of the Down Round Feature for the Series AA Preferred Stock, occurring in August 2023, resulted in a deemed dividend totaling $ 6,446,000 , which was charged to retained earnings in the September 30, 2023 consolidated balance sheet.

As adjusted to reflect reduction in conversion prices as a result of the Series AA Down Round Feature, described below.

Series AAA and Series AAA-2 totals include 4,011 and 2,356 preferred shares, respectively, issued in connection with the Exchange Agreements described below.

Convertible Preferred Stock Preferences, Rights and Limitations – General

Certificates of Designation.

In connection with each of the Preferred Stock Offerings, the Company filed Certificates of Designation of Preferences, Rights and Limitations of each series with the State of Delaware.

Use of net proceeds included working capital, general corporate purposes, and certain indebtedness (Series A Preferred only), including sales and marketing activities and product development.

Conversion Feature.

Each share of preferred stock is convertible into such number of shares of the Company’s common stock equal to the number of preferred shares to be converted, multiplied by the 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 herein.

In addition, on the one -year anniversary of the respective filing date, the Company may, in its discretion, convert (y) 50 % of the outstanding shares of 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 conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1), on the Preferred Stock Offering closing date.

In addition, Series A Preferred Stock outstanding 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.

Voting Rights.

Each individual series of preferred stock 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 each individual series of preferred stock shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the respective series’ Certificate of Designation in a manner that adversely affects the powers, preferences or rights of the series, (b) increasing the number of authorized shares of the series, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the existing series with respect to the distribution of assets on liquidation, or (d) entering into any agreement with respect to the foregoing.

In addition, no holder of a series of preferred stock shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s series of preferred stock into an amount in excess of the primary market limitations.

Holders of preferred stock, excluding holders of the Series AAA, AAA-2, AAA-3 and AAA-4 Junior preferred stock (collectively, “Series AAA Junior Preferred Stock”), 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 preferred stock then held by such holder on the 12 and 24 month anniversaries of the respective filing date.

Holders of the Series AAA Junior Preferred Stock 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 Junior Preferred Stock then held by such holder on the 30 -day, 60 -day, and 90 -day anniversaries of the filing Date.

In addition, subject to the beneficial ownership and primary market limitations, holders of preferred stock 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:

Liquidation Preferences.

Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of preferred stock (together with any Parity Securities (as defined in the respective Certificates of Designations) will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the preferred stock 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).

Registration Rights.

The Company and the investors in the Preferred Stock Offerings (including the Exchange) also executed separate registration rights agreements, pursuant to which the Company filed or will file the applicable registration statements on Form S-3.

Placement Agent Fees.

The Company sold and/or exchanged the shares of preferred stock pursuant to placement agency agreements (the “Placement Agency Agreements”) with Aegis Capital Corporation, a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Placement Agent”) for each series of the Preferred Stock Offerings and the Exchange (as described below).

Pursuant to the terms of the Placement Agency Agreements, in connection with the Preferred Stock 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 by series, and have or will issue to the Placement Agent or its designees warrants (the “Placement Agent Warrants”) to purchase common stock at the amounts and conversion prices disclosed in the table above.

With respect to shares of Series AAA Preferred Stock issued in connection with 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 offerings, 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.

The Company also granted the Placement Agent the right of first refusal, in connection with the Series AA and Series AAA offerings, 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, which expired in July 2024.

The Placement Agent shall also earn fees and be issued additional Placement Agent Warrants with respect to any securities issued pursuant to the Additional Investment Rights described herein.

No further additional investment rights shall be granted to investors that exercise the Additional Investment Rights.

The following additional terms vary across the applicable series of Convertible Preferred Stock as follows:

Series AAA and AAA Junior Preferred

Series AA Preferred

Series A Preferred

Voting Rights – Certain Indebtedness

Holders shall vote as a separate class with respect to 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 entering into any agreement with respect to the foregoing.

Holders shall vote as a separate class with respect to 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, or entering into any agreement with respect to the foregoing.

Holders shall vote as a separate class with respect to authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind in excess of $ 5 million, or entering into any agreement with respect to the foregoing.

Additional Investment Rights (“AIRs”)

Subject to the approval by a majority of the voting securities of the Company (the “Stockholder Approval”), pursuant to the Subscription Agreements, Series AAA and AAA Junior Preferred Stock 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 applicable series of preferred stock (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 applicable series of preferred stock.

No further additional investment rights shall be granted to investors that exercise the Series AAA Additional Investment Rights.

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 Stock (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 Stock (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:

As of December 31, 2024, there were AIRs outstanding to purchase 17,832 shares of preferred stock with underlying conversion shares totaling 8,414,537 , with a weighted average conversion price of $ 2.12 .

Not applicable

Down Round Feature

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 Stock 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).

For as long as Series AA Preferred Stock 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 Stock 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 (as defined in the Series AA Certificates of Designation) 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 (the “AA 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:

November 22, 2022

November 28, 2022

November 30, 2022

December 22, 2022

January 31, 2023

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 6, 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 years ended December 31, 2023 and 2022, $ 719,000 and $ 3,621,000 of the net proceeds from the Series A Offerings were utilized in connection with the redemption of the Notes and related accrued interest, respectively.

On the respective effective dates, the Company filed certificates of designation of preferences, rights and limitations 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 Series A Certificate 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.

During the applicable periods presented, conversions of Series A Preferred stock into shares of the Company’s common stock were comprised of the following:

Preferred Shares

Conversion Shares

Series Preferred A

Series Designation

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 Certificate 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 (the “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.

Common Stock Issuances

On August 21, 2023, we entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp.

(the “Underwriter”), relating to the Company’s public offering (the “Common Stock Offering”) of 778,653 shares of its common stock, and pre-funded warrants to purchase 67,500 shares of the Company’s common stock, in lieu of the Company’s common stock (the “Pre-Funded Warrants”, and collectively with the Shares, the “Firm Securities”) to certain investors.

Pursuant to the Underwriting Agreement, the Company also granted the Underwriters a 45-day option (“Option”) to purchase an additional 126,923 shares of the Company’s common stock and/or Pre-Funded Warrants (the “Option Securities”, and together with the Firm Securities, the “Securities”).

On September 12, 2023, the Underwriter partially exercised its Option and purchased an additional 32,616 shares of common stock at a price of $ 2.60 per share.

The issuance by the Company of the Option Securities resulted in total gross proceeds of approximately $ 84,800 , before deducting underwriting discounts, commissions, and other offering expenses payable by the Company.

On August 23, 2023, the Company issued the Firm Securities and closed the Offering at a public price of $ 2.60 per share, and $ 2.58 per share underlying each Pre-Funded Warrant, for net proceeds to the Company of approximately $ 1.8 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

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 Pre-Funded Warrant had an exercise price per share of common stock equal to $ 0.001 per share.

The exercise price and the number of shares of common stock issuable upon exercise of each Pre-Funded Warrant was subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock.

Under the Pre-Funded Warrants, a holder would not be entitled to exercise any portion of any Pre-Funded Warrant that, upon giving effect to such exercise, would cause:

(i) the aggregate number of shares of common stock beneficially owned by such holder (together with its affiliates) to exceed 4.99 % of the number of shares of common stock outstanding immediately after giving effect to the exercise;

or (ii) the combined voting power of the Company’s securities beneficially owned by such holder (together with its affiliates) to exceed 4.99 % of the combined voting power of all of the Company’s securities outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded Warrant, which percentage may be changed at the holder’s election to a higher or lower percentage not in excess of 9.99 % upon 61 days’ notice to the Company.

In addition, in certain circumstances, upon a fundamental transaction, a holder of Pre-Funded Warrants would be entitled to receive, upon exercise of the Pre-Funded Warrants, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Pre-Funded Warrants immediately prior to the fundamental transaction.

The Pre-Funded Warrants were fully exercised as of August 29, 2023.

The Firm Securities were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus filed with the Securities and Exchange Commission (the “SEC”) pursuant to an effective shelf registration statement filed with the SEC on Form S-3 (File No.

333-259347) (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), as supplemented by a prospectus supplement, dated August 23, 2023, relating to the Securities (together with the accompanying base prospectus, dated September 7, 2021, the “Prospectus Supplement”), filed with the SEC pursuant to Rule 424(b) of the Securities Act on August 23, 2023.

The Underwriting Agreement includes customary representations, warranties, and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriter, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.

The representations, warranties and covenants contained in the Underwriting Agreement were made only for purposes of the Underwriting Agreement and as of the specific applicable dates contained in the Underwriting Agreement, were solely for the benefit of the parties to the Underwriting Agreement and were subject to limitations agreed upon by the contracting parties.

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.

Not applicable

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 “Series 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 Stock Offerings.

Common Stock Purchase Warrants

Series AAA Junior-3 and Series AAA Junior-4 Warrants.

The Series AAA Junior-3 and Series AAA Junior-4 subscription agreements entered into in September 2024, included the sale of an aggregate of 1,096 units (the “Units”), each Unit consisting of (i) one share of newly designated Series AAA-3 Junior Convertible Preferred Stock or Series AAA-4 Junior Convertible Preferred Stock, as reflected in the table above, and (ii) a warrant to purchase 1,000 shares of the Company’s common stock (the “September 2024 Series AAA Junior Investor Warrants”), at a purchase price of $ 1,000 per Unit, for aggregate gross proceeds to the Company of approximately $ 1,096,000 .

The Investor Warrants are exercisable at $ 1.00 per share at the option of the holder, subject to adjustment, are exercisable immediately upon issuance and expire three years from the respective issue dates of the Units, subject to certain beneficial ownership limitations.

The Investor Warrants contain customary adjustments in the event of stock splits, stock dividends and other corporate events, and contain price-based anti-dilution protections.

Any price-based anti-dilution adjustments are conditioned on, and subject to, stockholder approval.

The September 2024 Series AAA Junior Investor Warrant agreements also contain a provision that states that, upon exercise of the warrant by an investor, if for any reason the company fails to deliver the shares by the settlement date, the investor can require the company to make a cash payment (“Buy-In Provision”).

The cash payment would be based on the amount (if any) that the investor lost by having to purchase shares in the open market because of the company’s failure to deliver the shares.

As a result of the Buy-In Provision, the ability to deliver shares upon exercise of the Investor Warrants in every circumstance is generally not within the control of the Company as contemplated by the accounting standards, and thus, a partial cash settlement may be required outside of the Company’s control.

As such, the September 2024 Series AAA Junior Investor Warrants do not meet the requirements for equity classification, and therefore, the fair value of the September 2024 Series AAA Junior Investor Warrants are recorded as a liability on the consolidated balance sheets and re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.

Refer to the table below.

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.

The Placement Agent Warrants issued in connection with the Series A Preferred Stock, Series AA Preferred Stock and Series AAA Preferred Stock (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 as of December 31, 2023:

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 on the consolidated balance sheets and re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.

Refer to the table below.

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:

Series AAA Junior-3 and Series AAA Junior-4 Warrants:

Beginning balance

Initial fair value of Series A and AA Preferred warrant liability – grant date

Initial fair value of Series AAA Preferred (including warrants issued in connection with the Exchange) warrant liability – grant date

Initial fair value of warrant liability – grant date (1)

Change in fair value

Fair value of warrant liability

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:

Subtotal - Fair value of warrant liability - Series AAA Junior -3 and Series AAA Junior – 4 Warrants

Placement Agent Warrants:

Beginning balance

Initial fair value of warrant liability – grant date (1)

Change in fair value

Subtotal - Fair value of warrant liability – Placement Agent Warrants

Total fair value of warrant liability

Estimated fair value on the respective dates of issuance.

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

Expected Volatility

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Expected life of options (in years)

In December 2023, as described above, 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.

The terms of the new placement agent warrants and the original placement agent warrants were determined to be substantially different based on an analysis of the fair value of each instrument immediately before and after the modification, resulting in a loss on extinguishment recognized in current earnings totaling $ 681,000 .

Preferred Stock Dividends

During the fourth quarter of 2023, the Company paid dividends on Series A Preferred stock, in the form of shares of common stock, as follows:

The Company paid common stock dividends on outstanding preferred stock for periods presented, as follows:

Fiscal Year Ended December 31, 2024:

Series Designation

Dividend Shares

November 28, 2024

November 30, 2024

December 22, 2024

January 31, 2024

April 19, 2024

July 23, 2024

April 29, 2024

July 23, 2024

December 16, 2024

July 23, 2024

December 22, 2024

Series AAA-Junior

July 26, 2024

August 26, 2024

September 24, 2024

Series AAA-Junior - 2

August 9, 2024

September 9, 2024

October 10, 2024

Series AAA-Junior - 3

October 23, 2024

November 19, 2024

December 19, 2024

Series AAA-Junior - 4

October 30, 2024

November 29, 2024

December 30, 2024

Fiscal Year Ended December 31, 2023:

Series Designation

Dividend Shares

Fair Value of

Shares Issued (1)

December 26, 2023

December 29, 2023

December 26, 2023

December 29, 2023

December 26, 2023

December 29, 2023

December 22, 2023

December 29, 2023

December 26, 2023

Fair valued based on the closing price of the Company’s common stock on the respective common stock dividend payment date.

Dividend Acceleration.

In June and July 2024, certain existing holders of Series A, AA and AAA Preferred Stock executed Series AAA Junior Preferred Stock Offering related dividend acceleration agreements (“2024 Dividend Acceleration Agreements”) pursuant to which, in exchange for participation in the Series AAA Junior Preferred Stock Offering at or above a predefined threshold, all applicable remaining common stock dividends related to their existing Series A, AA and / or AAA Preferred Stock holdings were accelerated.

A total of 1,168,493 shares of common stock dividends (included in the table above) were paid in July 2024 pursuant to the 2024 Dividend Acceleration Agreements, with a fair value of $ 1,589,000 , based on the closing price of the Company’s common stock on the date of issuance, which is reflected as a charge to accumulated deficit for the year ended December 31, 2024.

In December 2023, certain Series A Preferred stockholder year two dividends, as described above, were accelerated and paid in shares of the Company’s common stock, pursuant to consent related dividend acceleration agreements executed during the period.

A total of 114,452 shares of common stock (included in the table above) were paid on an accelerated basis with a fair value of $ 174,000 (included in the table above), which is reflected in accumulated deficit.

Common Stock Purchase Agreement

On March 25, 2022, we entered into a common stock purchase agreement (the “Purchase Agreement”) with Tumim Stone Capital, LLC (“Tumim”).

Pursuant to the Purchase Agreement, the Company had the right, but not the obligation, to sell to Tumim, and Tumim was obligated to purchase, up to $ 10,000,000 of newly issued shares (the “Total Commitment”) of the Company’s common stock from time to time during the term of the Purchase Agreement (the “Tumim Offering”), subject to certain limitations and conditions.

As consideration for Tumim’s commitment to purchase shares of common stock under the Purchase Agreement, the Company issued to Tumim 2,500 shares of common stock, valued at $ 100,000 , following the execution of the Purchase Agreement (the “Commitment Shares”).

During the year ended December 31, 2022, we issued 371 shares of common stock at an average price of $ 22.20 , raising net proceeds of approximately $ 8,000 , under the Purchase Agreement.

The Purchase Agreement initially precluded the Company from issuing and selling more than 368,091 shares of its common stock, including the Commitment Shares, which number equals 19.99 % of the common stock issued and outstanding as of March 25, 2022, unless the Company obtains stockholder approval to issue additional shares, or unless certain exceptions apply.

In addition, a beneficial ownership limitation in the agreement initially limited the Company from directing Tumim to purchase shares of common stock if such purchases would result in Tumim beneficially owning more than 4.99 % of the then-outstanding shares of common stock (subject to an increase to 9.99 % at Tumim’s option upon at least 61 calendar days’ notice).

From and after the initial satisfaction of the conditions to the Company’s right to commence sales of common stock to Tumim (such event, the “Commencement,” and the date of initial satisfaction of all such conditions, the “Commencement Date”), the Company was able to direct Tumim to purchase shares of common stock at a purchase price per share equal to 95 % of the average daily dollar volume-weighted average price for the common stock during the three consecutive trading day period immediately following the date on which the Company delivers to Tumim a notice for such purchase.

The Company controlled the timing and amount of any such sales of common stock to Tumim.

Actual sales of shares of common stock to Tumim depended on a variety of factors to be determined by the Company from time to time, including, among other things, market conditions, the trading price of the common stock, and determinations by the Company as to the appropriate sources of funding for the Company and its operations.

The Commencement Date of the Tumim Offering was March 25, 2022.

Unless earlier terminated, the Purchase Agreement automatically terminated upon the earliest of (i) the expiration of the 18-month period following the Commencement Date, (ii) Tumim’s purchase or receipt of the Total Commitment worth of common stock, or (iii) the occurrence of certain other events set forth in the Purchase Agreement.

The Tumim Offering expired in September 2023.

Equity Distribution Agreement

On September 3, 2021, the Company entered into an Equity Distribution Agreement (the “Sales Agreement”) with two investment banks (the “Agents”), pursuant to which the Company could offer and sell, from time to time, through the Agents (the “ATM Offering”), up to $ 75 million of its shares of common stock (the “Shares”).

Any Shares offered and sold in the Offering were issued pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on September 3, 2021 (the “Form S-3”) and the prospectus relating to the Offering that forms a part of the Form S-3, following such time as the Form S-3 is declared effective by the SEC.

During the year ended December 31, 2022, the Company issued 16,182 shares of common stock, at an average price of $ 19.80 , raising net proceeds of $ 312,000 , under the Sales Agreement.

Subject to the terms and conditions of the Sales Agreement, the Agents used their commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions.

Under the Sales Agreement, the Agents sold the Shares by any method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Company’s common stock or to or through a market maker.

The Company had no obligation to sell any of the Shares and could at any time suspend offers under the Sales Agreement.

The Offering terminated upon the earlier of (a) the sale of all of the Shares, (b) the termination by the mutual written agreement of the managing agent and the Company, or (c) one year from the date that the Form S-3 is declared effective by the SEC, or November 16, 2022.

Under the terms of the Sales Agreement, the Agents were entitled to an aggregate commission at a fixed rate of 3.0 % of the gross sales price of Shares sold under the Sales Agreement.

Use of proceeds from “at-the-market” offerings included working capital and general corporate purposes, including sales and marketing activities, product development and capital and acquisition related expenditures.

Modifications to Series AA and AAA Additional Investment Rights

In June 2024, certain holders of Series AA Preferred Stock with outstanding Additional Investment Rights arising from the Series AA Preferred Stock Offering (“Series AA AIRs”), in exchange for certain Series AAA Junior Preferred Stock Offering related approvals, received (i) a six ( 6 ) month extension of the exercise period of such Series AA AIRs;

and (ii) an adjustment to the conversion prices for such Series AA AIRs, to the existing conversion price floors for each respective subseries of Series AA Preferred Stock, as described in the table above.

In addition, a three -month extension to the term of the Additional Investment Rights issued to holders of Series AAA Preferred Stock (“Series AAA AIRs”)(the issuance of such Series AAA AIRs being subject to approval of stockholders), such that the Series AAA AIRs shall expire 21 -months from the final closing of Series AAA Preferred Stock Offering.

In connection with the modifications to the Series AA AIRs described above, Series AA AIRs with initial underlying common shares totaling 642,962 , were modified as described above, resulting in an incremental increase in fair value totaling $ 294,000 which was charged to additional paid-in capital as a Series AAA Junior Preferred Stock Offering financing costs in June 2024.

As a result of the reduction of the Series AA AIRs conversion price, total common shares underlying the modified Series AA AIRs increased to 3,215,232 shares.

In September 2024, remaining holders of Series AA Preferred Stock with outstanding Additional Investment Rights arising from the Series AA Preferred Stock Offering (“Remaining Series AA AIRs”), received (i) a six ( 6 ) month extension of the exercise period of such Remaining Series AA AIRs;

In addition, a three -month extension to the term of the Additional Investment Rights issued to holders of Series AAA Preferred Stock (“Remaining Series AAA AIRs”)(the issuance of such Series AAA AIRs being subject to approval of stockholders), such that the Remaining Series AAA AIRs shall expire 21 -months from the final closing of Series AAA Preferred Stock Offering.

In connection with the modifications to the Remaining Series AA AIRs described above, Remaining Series AA AIRs with initial underlying common shares totaling 667,289 , were modified as described above, resulting in an incremental increase in fair value totaling $ 70,000 which was charged to other expense in the consolidated statements of operations for the year ended December 31, 2024.

As a result of the reduction of the Remaining Series AA AIRs conversion price, total common shares underlying the modified Remaining Series AA AIRs increased to 3,336,293 shares.

As of each of the applicable AIR modification dates the Company utilized an option pricing model, employing the back solve method for purposes of determining the implied common stock value of the Company for input into a Black Scholes option pricing model to determine the fair value of the AIRs immediately before and after the modifications described above, using Level 3 inputs.

Weighted average assumptions utilized in the Black Scholes option pricing model included implied (derived) common stock prices from $ 0.72 to $ 0.86 , conversion prices ranging from $ 1.856 to $ 13.25 (based on the applicable original and modified preferred stock conversion prices), risk free interest rates ranging from 4.64 % to 5.36 %, terms ranging from .24 years to .92 years and volatility assumptions ranging from 68 % to 91 %.

Common Stock Issuances

Fiscal Year Ended December 31, 2024

On October 24, 2024, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with a certain accredited investor for the registered direct offering of an aggregate of 1,136,364 shares of the Company’s common stock, par value $ 0.001 per share (the “Shares”), at a purchase price of $ 0.88 per Share (the “Registered Direct Offering”).

The Registered Direct Offering closed on October 25, 2024, resulting in gross proceeds to the Company of approximately $ 1.0 million.

Fiscal Year Ended December 31, 2023

On August 21, 2023, we entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp.

Pursuant to the Underwriting Agreement, the Company also granted the Underwriters a 45 -day option (“Option”) to purchase an additional 126,923 shares of the Company’s common stock and/or Pre-Funded Warrants (the “Option Securities”, and together with the Firm Securities, the “Securities”).

On September 12, 2023, the Underwriter partially exercised its Option and purchased an additional 32,616 shares of common stock at a price of $ 2.60 per share.

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 Pre-Funded Warrant had an exercise price per share of common stock equal to $ 0.001 per share.

The Pre-Funded Warrants were fully exercised as of August 29, 2023.

STOCK-BASED INCENTIVE PLANS

The Super League 2014 Stock Option and Incentive Plan (the “Plan”) was approved by the Board of Directors and the stockholders of Super League in October 2014.

The Plan was subsequently amended in May 2015, and as further described below.

The Super League 2014 Stock Option and Incentive Plan (the “Plan”) was approved by the Board and the stockholders of Super League in October 2014.

The Plan was subsequently amended as further described below.

The Plan allows grants of stock options, stock awards and performance shares with respect to common stock of the Company to eligible individuals, which generally includes directors, officers, employees, advisors and consultants.

1 unchanged sentence

Options granted under the Plan include non-statutory options as well as incentive options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended.

The Board of Directors administers the Plan and determines which eligible individuals are to receive option grants or stock issuances under the Plan, the times when the grants or issuances are to be made, the number of shares of common stock subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant or stock issuance and the maximum term for which any granted option is to remain outstanding.

The Board administers the Plan and determines which eligible individuals are to receive option grants or stock issuances under the Plan, the times when the grants or issuances are to be made, the number of shares of common stock subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant or stock issuance and the maximum term for which any granted option is to remain outstanding.

The exercise price of options is generally equal to the fair market value of common stock of the Company on the date of grant.

Options generally begin to be exercisable six months to one year after grant and typically expire 10 years after grant.

Stock options and restricted shares generally vest over two to four years (generally representing the requisite service period).

Options generally begin to be exercisable one month after grant and typically expire 10 years after grant.

Stock options and restricted shares generally vest on a straight line basis over four years (generally representing the requisite service period).

The Plan terminates automatically on July 1, 2027.

1 unchanged sentence

Option Grants

Under the discretionary option grant program, the Company’s compensation committee of the Board of Directors may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Super League or its affiliates (including employees, non-employee members of the Board of Directors and consultants) at an exercise price not less than 85 % of the fair market value of such shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100 % of the fair market value of such shares on the grant date (not less than 110 % of fair market value if such employee actually or constructively owns more than 10% of Super League’s voting stock or the voting stock of any of its subsidiaries).

Under the discretionary option grant program, the Company’s compensation committee of the Board may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Super League or its affiliates (including employees, non-employee members of the Board and consultants) at an exercise price not less than 85 % of the fair market value of such shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100 % of the fair market value of such shares on the grant date (not less than 110 % of fair market value if such employee actually or constructively owns more than 10% of Super League’s voting stock or the voting stock of any of its subsidiaries).

Stock Awards or Sales

13 unchanged sentences

Super League issues new shares of common stock upon the exercise of stock options, the grant of restricted stock, or the delivery of shares pursuant to vested restricted stock units.

The compensation committee of the Board of Directors may amend or modify the Plan at any time, subject to any required approval by the stockholders of the Company, pursuant to the terms therein.

The compensation committee of the Board may amend or modify the Plan at any time, subject to any required approval by the stockholders of the Company, pursuant to the terms therein.

In the event that any outstanding option or other right for any reason expires or is canceled or otherwise terminated, the shares allocable to the unexercised portion of such option or other right is returned and available for the purposes of this Plan.

21 unchanged sentences

At December 31, 2024

As of December 31, 2023, the total unrecognized compensation expense related to non-vested restricted stock units was $ 743,000 which will be recognized over a weighted-average term of approximately one year.

As of December 31, 2024, the total unrecognized compensation expense related to non-vested restricted stock units was $ 346,000 which will be recognized over a weighted-average term of approximately .7 years.

During the year ended December 31, 2024 and 2023, the Company issued 640,000 and 39,000 , respectively, restricted stock units (included in the table above) to nonemployees for services (“Nonemployee RSUs”).

8 unchanged sentences

Vested and exercisable as of December 31, 2024

The weighted-average grant date fair value of common stock purchase warrants (“Warrants”) granted during the year ended December 31, 2022 was $ 10.00 .

The aggregate fair value of Warrants that vested during the years ended December 31, 2024 and 2023 was $ 0 and $ 249,000 , respectively.

As of December 31, 2023, the total unrecognized compensation expense related to Warrants was $ 0 .

In December 2022, the Company issued 25,000 warrants (included in the table above) to a third-party for nonemployee investor relations services.

The warrants have an exercise price of $ 13.40 , a grant date fair value of $ 10.00 , vest in twelve equal monthly installments commencing on the grant date and expire five years from the grant date.

Compensation expense included in the statement of operations for the year ended December 31, 2023 and 2022 totaled $ 228,000 and $ 20,000 , respectively.

As of December 31, 2024, the total unrecognized compensation expense related to non-vested Warrants was $ 0 .

Noncash Stock Compensation Expense

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and (v) the Company’s stock price equaling $ 180.00 per share based on 60-day VWAP.

The Original PSUs were fully expensed as of June 30, 2023.

Noncash stock compensation expense related to the Original PSUs totaled $ 0 and $ 299,000 for the years ended December 31, 2024 and 2023, respectively.

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(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 PSU Modification totaled $ 540,000 which is recognized prospectively over the implied service period, 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 PSUs immediately before and after the modification.

Noncash stock compensation expense related to the modified PSUs, which is recognized on an accelerated basis over the derived term, included in the consolidated statement of operations for the year ended December 31, 2023, totaled $ 351,000 .

and (v) 20 % upon achieving a 60-day VWAP of $ 32.00 per share, in each case, as quoted on the Nasdaq Capital Market (“Modified PSUs”).

Total incremental compensation cost related to the Modified PSUs totaled $ 540,000 which is recognized prospectively over the implied service period, 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 equity awards immediately before and after the modifications.

Net noncash stock compensation expense related to the Modified PSUs totaled $ 130,000 and $ 351,000 for the years ended December 31, 2024 and 2023, respectively.

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 (six plan participants in total) under the Company’s 2014 Amended and Restated Employee Stock Option and Incentive Plan (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 (“Executive Grant Modification”).

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 is recognized prospectively over the remaining service period of 3 years.

On May 1, 2023, the Board approved the cancellation of options to purchase an aggregate of 29,224 shares of the Company’s common stock previously granted to its employees (68 plan participants in total) under the 2014 Plan, in exchange for newly issued options to purchase an aggregate of 63,900 shares of the Company’s common stock under the 2014 Plan, at an exercise price equal to the closing trading price on May 1, 2023, or $ 9.81 , with a range of zero to one-third of the options vesting on the May 1, 2023, the grant date, dependent upon the tenure of the employee, and the remainder vesting monthly over the forty-eight month period thereafter, subject to continued service (“Employee Grant Modifications”).

The grant and exercise of the Modified Executive Grants 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 in September 2023.

As such, the grant date and the commencement of noncash stock compensation amortization for the Modified Executive Grants was September 7, 2023.

Total incremental compensation cost related to the Modified Executive Grants 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 is recognized prospectively over the remaining service period of 3 years.

Net noncash stock compensation expense related to the Modified Executive Grants totaled $ 221,000 and $ 573,000 for the years ended December 31, 2024 and 2023, respectively.

Unrecognized compensation expense related to the original award as of the date of the Employee Grant Modifications totaled $ 960,000 which is recognized prospectively over the remaining service period of 4 years.

Total incremental compensation cost related to the Employee Grant Modifications totaled $ 449,000 , $ 101,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $ 348,000 related to unvested awards which is recognized prospectively over the remaining service period of 4 years.

Total incremental compensation cost related to the Modified Employee Grants totaled $ 449,000 , $ 101,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $ 348,000 related to unvested awards which is recognized prospectively over the remaining service period of 4 years.

Net noncash stock compensation expense related to the Modified Employee Grants totaled $ 158,000 and $ 300,000 for the years ended December 31, 2024 and 2023, respectively.

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 next annual meeting of stockholders, and will be subject to cancellation in the event stockholder approval is not obtained.

The components of loss before income taxes consisted of the following for the years ended December 31:

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Net operating loss and credits

Intangibles – definite lived

Stock compensation

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Total deferred tax assets

Valuation allowance

Deferred tax liabilities:

Intangibles – indefinite lived

Contract liabilities

Total deferred tax liabilities

Valuation allowance

Total net deferred tax assets (liabilities), net of valuation allowance

7 unchanged sentences

For the years ended December 31, 2024 and 2023, the Company recorded full valuation allowances against its domestic net deferred tax assets due to uncertainty regarding future realizability pursuant to guidance set forth in the FASB’s Accounting Standards Codification Topic No.

740, Income Taxes.

In future periods, if the Company determines it will more likely than not be able to realize these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the statements of operations in the period the determination is made.

740, “Income Taxes.” In future periods, if the Company determines it will more likely than not be able to realize these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the consolidated statements of operations in the period the determination is made.

The Company did not maintain a valuation allowance on the activity in the United Kingdom (“UK”) from its acquisition of Bannerfy Ltd due to the deferred tax liability position.

1 unchanged sentence

As such, a full valuation was recorded against the remaining foreign deferred tax assets.

Components of net loss before income tax attributable to foreign entities totaled $ 187,000 and $ 1.1 million for the years ended December 31, 2023 and 2022, respectively.

Components of net loss before income tax attributable to foreign entities totaled $ 0 and $ 187,000 for the years ended December 31, 2024 and 2023, respectively.

The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard.

5 unchanged sentences

A significant factor in the Company’s assessment is that the Company has been in a three-year historical cumulative loss position as of the end of December 31, 2024.

After a review of the four sources of taxable income (as described above) and after consideration of the Company's continuing cumulative loss position as of December 31, 2023, the Company has recorded a valuation allowance on its deferred tax assets.

As of December 31, 2023, 2022 and 2021, the total valuation allowance was $ 42.9 million, $ 35.7 million and $ 26.5 million, respectively.

After a review of the four sources of taxable income (as described above) and after consideration of the Company's continuing cumulative loss position as of December 31, 2024, the Company has recorded a full valuation allowance on its deferred tax assets as presented in the table above.

The change in the valuation allowance for the years ended December 31, 2024 and 2023 totaled $ 5,496,000 and $ 7,132,000 , respectively.

At December 31, 2024, the Company had U.S.

2 unchanged sentences

Federal net operating loss carryforwards generated in 2018 or after do not expire, however, they can only be used to offset 80% of taxable income in a given year.

Of the state net operating losses, $ 115.8 million will expire from 2034-2043, and $ 1.6 million will carry over indefinitely.

Of the state net operating losses, $ 140.2 million will expire from 2034 to 2044, and $ 1.7 million will carry over indefinitely.

The $ 1.1 million of foreign net operating losses will carry over indefinitely.

1 unchanged sentence

The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation due to the complexity and cost associated with such a study, and the fact that there may be additional such ownership changes in the future.

A provision enacted in the Tax Cuts and Jobs Act of 2017 related to the capitalization for tax purposes of research and experimental expenditures became effective January 1, 2022.

This provision requires us to capitalize research and experimental expenditures and amortize them on the U.S.

tax return over five or fifteen years, depending upon where the research is conducted.

This provision did not have a material impact on our fiscal year 2022 effective tax rate on a net basis or our cash paid for taxes due to our net operating loss position.

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The Topic also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

4 unchanged sentences

There were no uncertain tax positions as of December 31, 2024.

The Company is subject to taxation in the United States, various state and local jurisdictions, as well as foreign jurisdictions (primarily the UK) where the Company conducts business.

The Company is subject to taxation in the United States, various state and local jurisdictions, as well as foreign jurisdictions (primarily the UK) where the Company conducts business (2023 and prior).

As of December 31, 2024, the company had no outstanding tax audits.

7 unchanged sentences

ASC 740, “Income Taxes,” (“ASC 740”) required the use of simultaneous equations to determine the assigned value of the asset and the related deferred tax asset or liability.

As a result of the disposal of the Bannerfy intangible assets, the Company recognized the related remaining net deferred tax liability, resulting in a $ 313,000 tax benefit reflected in the consolidated statement of operations for the year ended December 31, 2023.

As a result of the disposal of the Bannerfy intangible assets, the Company recognized the related remaining net deferred tax liability, resulting in a $ 313,000 tax benefit reflected in the consolidated statements of operations for the year ended December 31, 2023.

COMMITMENTS AND CONTINGENCIES

Operating Leases

As of December 31, 2023 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 expires on August 1, 2023, at a combined rate of approximately $ 12,000 per month.

The adoption of ASC 842, “Leases” (“ASC 842”), did not have a material impact on the Company's consolidated financial statements and related disclosures.

Rent expense for the years ended December 31, 2023 and 2022 was approximately $ 163,000 and $ 168,000 , respectively, and is included in general and administrative expense in the accompanying statements of operations.

Rental payments are expensed in the statements of operations in the period to which they relate.

As of December 31, 2024 we maintain approximately 1,550 square feet of office space, which is on a month-to-month basis, at a rate of approximately $ 7,000 per month.

Rent expense for the years ended December 31, 2024 and 2023 was approximately $ 141,000 and $ 163,000 , respectively, and is included in general and administrative expense in the accompanying consolidated statements of operations.

Rental payments are expensed in the consolidated statements of operations in the period to which they relate.

Scheduled rent increases, if any, are amortized on a straight-line basis over the lease term.

Settlement of Pending or Threatened Claims

Pioneer Capital Anstalt

In May 2024, the Company settled a dispute concerning the interpretation of certain financial terms contained within the Series AA and Series AA-2 Preferred Stock certificates of designation filed in connection with the Series AA and Series AA-2 Preferred Stock Offerings (“Pioneer Settlement”).

Pioneer Capital Anstalt (“Pioneer”) filed a complaint in the United States District Court for the Southern District of New York seeking monetary damages and specific performance concerning the interpretation and calculation of certain financial terms applicable to Pioneer’s additional investment rights agreements acquired in connection with Pioneer’s participation in the Series AA and Series AA-2 Preferred Stock Offerings (“Pioneer AA AIRs”)(“Pioneer Action”).

In order to avoid further expense, costs, and time to litigate the action, the Parties resolved the dispute, resulting in the modification of the conversion price and conversion floor price applicable to the Pioneer AA AIRs from prices ranging from $ 9.43 to $ 13.04 , down to prices ranging from $ 1.886 to $ 2.608 , and the extension of the exercise term for the Pioneer AA AIRs for a period of six ( 6 ) months.

The modifications to the Pioneer AIRs resulted in an incremental increase in fair value totaling $ 213,000 which was included as a noncash legal settlement charge in general and administrative expense in the consolidated statements of operations for the year ended December 31, 2024.

As a result of the reduction of the Pioneer AA AIRs conversion price, total common shares underlying the modified Pioneer AA AIRs increased from 372,610 to 1,863,049 shares.

In addition, in connection with the settlement, the Company issued to Pioneer 550,000 shares of restricted common stock valued at $ 516,000 on the dates of issuance, which was included as a noncash legal settlement charge in general and administrative expense in the consolidated statements of operations for the year ended December 31, 2024.

In connection with the Pioneer Settlement, Pioneer filed a notice of dismissal regarding the Action.

The Company utilized an option pricing model, employing the back solve method for purposes of determining the implied common stock value of the Company for input into a Black Scholes option pricing model to determine the fair value of the Pioneer AA AIRs immediately before and after the modifications described above, using Level 3 inputs.

Weighted average assumptions utilized in the Black Scholes option pricing model included a $ 0.86 implied common stock price, conversion prices ranging from $ 1.886 to $ 13.04 (based on the applicable original and modified preferred stock conversion prices), risk free interest rates ranging from 5.13 % to 5.36 %, terms ranging from .52 years to 1.02 years and volatility assumptions ranging from 80 % to 93 %.

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 is included in general and administrative expense in the consolidated statement of operations.

On March 12, 2024, the Company and the Note Holders (the “Parties”) executed a Mutual General Release and Settlement Agreement (the “Note Holder Settlement Agreement”) settling all claims between the Parties with respect to the SPA.

In consideration for the Note Holder 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 statements 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 general and administrative expense in the consolidated statements of operations for the year ended December 31, 2024.

Related Party Transactions

In May 2018, the Company entered into a consulting agreement with a member of the Board of Directors, pursuant to which the board member provides the Company with strategic advice and planning services for which he receives a cash payment of $ 7,500 per month from the Company.

Note Purchase Agreement.

On November 19, 2024, the Company entered into a note purchase agreement with a non-employee member of the Board, as described at Note 6.

Consulting Agreement.

In May 2018, the Company entered into a consulting agreement with a member of the Board, pursuant to which the board member provides the Company with strategic advice and planning services for which he receives a cash payment of $ 7,500 per month from the Company.

The consulting agreement had an initial term ending December 31, 2019, and was extended for successive one -year periods upon mutual agreement of the board member and the Company through to fiscal year 2024.

Total consulting expense under the agreement totaled $ 90,000 for each of the years ended December 31, 2024 and 2023.

SEGMENT REPORTING

The Company utilizes the management approach to identify the Company’s operating segments, based on information reported internally to the Chief Operating Decision Maker (“CODM”) to make resource allocation and performance assessment decisions.

The Company’s chief operating decision-maker (“CODM”) is the Company’s Chief Executive Officer.

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, the Company determined it has one operating segment and one reportable segment, operated primarily in domestic markets for the periods presented, as the CODM regularly reviews and manages the Company’s operations, business activities and financial performance and allocates resources as a single operating and reportable segment at the consolidated level.

Super League’s single reportable segment derives revenues from customers as summarized at Note 2, “ Revenue Recognition.

” The accounting policies of the Company’s single reporting segment are described in the summary of significant accounting policies herein.

The chief operating decision maker assesses performance, establishes management compensation and decides how to allocate resources for the single reporting segment, primarily by monitoring actual consolidated results versus the annual plan, based on consolidated revenues, net operating income (loss) and net income (loss) as reported in the consolidated statements of operations.

The CODM does not evaluate segment performance using consolidated balance sheet information.

The significant expenses reviewed by the CODM are cost of revenue;

selling, marketing and advertising expense;

engineering, technology and development expense ;

and general and administrative expense, as presented in the consolidated statements of operations.

Selling, marketing and advertising expense, engineering, technology and development expense, and general and administrative expense include noncash amortization expense and noncash stock compensation expense, which is disclosed in Note 4 and Note 8, respectively.

Other segment items consist of contingent consideration, loss on intangible asset disposal, impairment of intangible assets, interest expense, changes in the fair value of derivative instruments and other income (expense) items, as presented in the consolidated statements of operations.

All cost and expense line items reported within the Company’s consolidated Statements of operations, as well as amortization, and stock-based compensation expense are significant.

SUBSEQUENT EVENTS

The Company evaluated subsequent events for their potential impact on the consolidated financial statements and disclosures through April 12, 2024, the date the consolidated financial statements were available to be issued, and determined that, except as set forth below, no subsequent events occurred that were reasonably expected to impact the consolidated financial statements presented herein.

Sale of Minehut

On February 29, 2024, the Company sold its Minehut business unit (“Minehut”) to GamerSafer, Inc., a Delaware corporation (“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 $ 1,000,000 purchase consideration for Minehut, which amount will be paid by GamerSafer in revenue and royalty sharing over a period of two years, 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.

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 $ 644,000 as of December 31, 2023, and are included in intangible assets, net in the consolidated balance sheet.

Equity-Based Compensation

GAAP, (b) achievement of 85 % of 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.

Refer to Note 10 , “ Settlement of Pending or Threatened Claims ”

RESTATEMENT OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following tables contain unaudited quarterly financial information for the quarterly period ended September 30, 2023 that has been updated to reflect the restatement of the Company’s financial statements as of and for the three and nine months ended September 30, 2023, arising from the exclusion of the calculated noncash value of the effect of the down round feature on the Company’s Series AA Preferred stock, triggered in August 2023, which should have been recorded as a noncash charge directly to accumulated deficit and a noncash reduction to income available to common stockholders in the computation of earnings per share.

In connection with the Company’s year-end 2023 closing procedures, management reassessed the guidance set forth in ASC 260, “Earnings Per Share” and determined that the noncash value of the effect of a down round feature that is triggered on preferred stock should be recognized as a noncash charge to accumulated deficit and a noncash reduction to income available to common stockholders in the computation of earnings per share, in the period that the down round feature is triggered.

(i) management has noted an error affecting additional paid in capital and accumulated deficit, with no impact to total equity, and a noncash error with respect to the computation of loss per share as reported in the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023 (“2023 Third Quarter 10-Q”);

and (ii) in connection with the Company’s 2023 year-end closing procedures, on March 26, 2024, due to the material error to loss per share originally reported in the 2023 Third Quarter 10-Q, the Company’s management and the Audit Committee determined that the Company’s consolidated interim financial statements for the three and nine months ended September 30, 2023 should be restated to reflect the modifications described above.

The changes described above did not have any impact on total assets, total liabilities, total equity, revenues, cost of revenues, operating expense, net loss or cash flows as reported for the three and nine months ended September 30, 2023.

No financial statements or disclosures prior to the financial statements for the quarterly periods ended September 30, 2023 were affected by the changes described above.

The Company has not amended its previously filed Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023.

The financial information that has been previously filed or otherwise reported for the quarterly periods ended September 30, 2023 is superseded by the information in this Annual Report, and the consolidated financial statements and related financial information for the quarterly periods ended September 30, 2023 contained in such previously filed report should no longer be relied upon.

The Company filed a current report on form 8-K pursuant to Item 4.02 on May 27, 2024, disclosing the matter described above.

As of September 30, 2023

As Previously

Unaudited Condensed Balance Sheet

Liabilities and shareholders ’ equity (deficit)

Total liabilities

Preferred stock, par value $ 0.001 per share;

Common stock, par value $ 0.001 per share;

Additional paid-in-capital

Accumulated deficit

( 227,799,000

( 234,245,000

Total shareholders ’ equity (deficit)

Total liabilities and shareholders ’ equity (deficit)

Three Months Ended September 30, 2023

As Previously

Unaudited Condensed Statement of Operations

Net loss attributable to common stockholders used in computation of loss per share – basic and diluted

Basic and diluted net loss per common share

Weighted-average number of shares outstanding, basic and diluted

Nine Months Ended September 30, 2023

As Previously

Unaudited Condensed Statement of Operations

Net loss attributable to common stockholders used in computation of loss per share – basic and diluted

Basic and diluted net loss per common share

Weighted-average number of shares outstanding, basic and diluted

Three and Nine Months Ended September 30, 2023

As Previously

Statement of Changes in Shareholders ’ Equity (Deficit)

Additional paid-in-capital:

Accumulated Deficit:

( 227,799,000

( 234,245,000

Represents noncash value of the effect of the down round feature on the Company’s Series AA Preferred stock, triggered in August 2023, and the related adjustments to additional paid in capital and accumulated deficit, with no impact to total equity, and a noncash adjustment to the computation of loss per share as reported in the Company’s 2023 Third Quarter 10-Q.

The adjustments did not have any impact on total assets, total liabilities, total equity, revenues, cost of revenues, operating expense, net loss or cash flows as reported for the three and nine months ended September 30, 2023, as reported in the 2023 Third Quarter 10-Q.

The Company evaluated subsequent events for their potential impact on the consolidated financial statements and disclosures through March 31, 2025, the date the consolidated financial statements were available to be issued, and determined that, except as set forth below, no subsequent events occurred that were reasonably expected to impact the consolidated financial statements presented herein.

Entry into Loan Agreements

On February 10, 2025 (the “Agile II Effective Date”), the Company entered into a Business Loan and Security Agreement (the “Agile II Loan Agreement”), with Agile Capital Funding, LLC as collateral agent (“Collateral Agent”), and Agile Lending, LLC (“Agile”), pursuant to which the Company issued to Agile a Confessed Judgment Secured Promissory Note for an aggregate value of $ 2.5 million (the “Agile II Note”).

Pursuant to the Agile II Loan Agreement:

(i) the Agile II Note matures 32 weeks from the Agile II Effective Date;

(ii) carries an aggregate total interest payment of approximately $ 1.05 million, and (iii) immediately upon the occurrence and during the continuance of an Event of Default (as defined in the Agile Loan Agreement), interest shall accrue at a fixed per annum rate equal to the applicable rate plus five percent.

The Company is required to repay all the obligations due under the Agile II Loan Agreement and the Agile II Note in 32 equal payments of $ 110,937 , with the first payment being made to Agile on February 17, 2025, and every seven days thereafter until the maturity date.

The proceeds received from the Agile II Note will be used to fund general working capital needs.

Pursuant to the Agile II Loan Agreement, upon the occurrence of certain events, including (a) a change in the Company’s business other than the business engaged in by the Company on the Aigle II Effective Date, (b) cause or permit, voluntarily or involuntarily, any Key Person to cease being actively engagement in the management of the Company without prior notice to Agile, (c) a change in control of the Company (expressly excluding pending transactions) or otherwise approve the liquidation or dissolution of the Company (collectively, a “Change in Business, Management, or Ownership”), or (d) the RP Note is accelerated upon the occurrence of an Event of Default, the Company shall be required to immediately pay to Agile an amount equal to the sum of:

(i) all outstanding principal of the Agile II Note plus accrued and unpaid interest thereon through the prepayment date, (ii) a fee equal to the aggregate and actual amount of interest (at the contract rate of interest) that would be paid through the maturity date (the “Prepayment Fee”), plus (iii) all other obligations that are due and payable, including, without limitation, interest at the Default Rate with respect to any past due amounts.

The Company is allowed to make a full or partial prepayment (and receive a discount thereon if repaid in full within sixty days of note issuance) of any or all of the obligations arising under the Agile II Loan Agreement and the Agile II Note, provided the Company shall be obligated to pay the Prepayment Fee.

The Agile Loan Agreement imposes various restrictions on the activities of the Company consistent with the Agile Loan Agreement described above under the heading “ Agile Capital - Debt Financing.

As security for the full and prompt payment and performance of any obligations arising under the Agile II Loan Agreement and the Agile II Note, the Company granted to Agile a continuing first priority security interest in all the assets of the Company;

provided, however, the filing of a financing statement and/or the taking of any action required to perfect Agile’s security interest in the collateral may only occur upon an event of default.

The Agile II Loan Agreement also provides for standard Events of Default, customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default.

In connection with entering into the Agile Loan Agreement, the Company was required to pay an administrative fee of $ 125,000 to the Collateral Agent, which was paid at the closing out of proceeds of the issuance of the Agile II Note.

$ 1.5 million of the Agile II Note was used to repay the remaining balance under the Agile Note, with net proceeds to the Company of approximately $ 875,000 .

1800 Diagonal Lending, LLC

On March 26, 2025 (the “Diagonal Effective Date”), the Company and 1800 Diagonal Lending, LLC, a Virginia limited liability company, or registered assigns (“Diagonal”) entered into a Securities Purchase Agreement (the “Diagonal Agreement”), pursuant to which the Company issued a Convertible Promissory Note (the “Diagonal Note”) in the principal amount of $ 300,000 (the “Diagonal Principal”), for which the Diagonal Note, among other things, (a) matures on December 30, 2025 (unless otherwise accelerated upon an Event of Default (as defined below)) (the “Diagonal Maturity Date”), (b) accrues interest at a rate of 10 % per annum on the unpaid principal balance from the date the Diagonal Note was issued (the “Diagonal Issuance Date”) until the principal and interest becomes due and payable, whether on the Maturity Date or upon acceleration by prepayment or otherwise, (c) interest begins to accrue on the Diagonal Issuance Date but shall not be payable until the Diagonal Note becomes payable, and (d) interest will accrue at a rate of 22 % per annum for any amount of principal or interest which is not paid as required under the Diagonal Note, or during an Event of Default.

Pursuant to the Diagonal Note, Diagonal has the right, from time to time, and at any time, during the period beginning on the date which is 180 days from the Diagonal Effective Date and ending on the earlier of (a) the Diagonal Maturity Date, or (b) the date of payment of the Default Amount, each in respect of the remaining outstanding amount of the Diagonal Note into fully paid and non-assessable shares of Common Stock at a price equal to 75 % multiplied by the Market Price (as defined below) (the “Conversion Price”).

For purposes of the Diagonal Note:

(x) the “Market Price” means the lowest Trading Price for the Company’s Common Stock during the 10 trading ending on the latest complete trading day prior to the Diagonal Conversion Date;

(y) the “Trading Price” means the closing price (or bid, if applicable) of the Company’s Common Stock as listed (or quoted, as applicable) on the principal securities exchange or trading market where it is listed or traded;

and (z) the “Diagonal Conversion Date” means the date specified in the applicable notice of conversion, delivered to the Company by Diagonal in accordance with the Diagonal Note.

Pursuant to the Diagonal Note, the following events, among other things, constitute an Event of Default:

(i) failure to pay principal and interest when due;

(ii) the Company fails to issue shares of Common Stock upon exercise of Diagonal’s conversion rights under the Diagonal Note;

(iii) the Company’s breach of any material covenant or other material term or condition in the Diagonal note or the Diagonal Agreement, and such breach continues for a period of 20 business days after written notice from Diagonal;

(iv) any breach of the representations and warranties set forth in both the Diagonal Agreement and the Diagonal Note;

(v) the Company institutes any assignment for the benefit of creditors, or applies for or consents to the appointment of a receiver or trustee for it or for a substantial part of its property or business;

(vi) the Company institutes, or any proceeding is instated against the Company, relating to any bankruptcy, insolvency, reorganization, or liquidation proceedings;

(vii) the Company fails to maintain the listing of its Common Stock on the Nasdaq Capital Market or on the Over The Counter boards or an equivalent exchange;

(viii) the Company failing to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or ceases to be subject to the reporting requirements of the Exchange Act;

(ix) the Company institutes any dissolution, liquidation, or winding up of the Company or any substantial portion of its business;

(x) the restatement of any financial statements filed by the Company with the Securities and Exchange Commission, if the result of such restatement would have constituted a material adverse effect on the rights of Diagonal;

(xi) the Company proposes to replace its transfer agent and fails to provide a fully executed irrevocable transfer agent instructions signed by the successor transfer agent;

and (xii) a breach or default by the Company of any covenant or other term or condition contained in any other agreement by the Company, after the passage of all applicable notice and cure or grace periods (each individually an “Event of Default”, and collectively, “Events of Default”).

Upon the occurrence and during the continuation of any Event of Default that is enumerated in Section 3.2 of the Diagonal Note, the Diagonal Note shall become immediately due and payable, and the Company shall pay to Diagonal an amount equal to the Default Amount (as defined below), multiplied by two.

For other Events of Default not enumerated in Section 3.2 of the Diagonal Note, the Diagonal Note shall become immediately due and payable in an amount equal to 150 % times the sum of (a) the then outstanding principal amount of the Diagonal Note, plus (b) accrued and unpaid interest on the unpaid principal amount of the Diagonal Note to the date of payment, plus (c) Default Interest, if any, on the amounts referred to in clauses (a) and/or (b), plus (d) any amounts owed to Diagonal pursuant to Sections 1.3 and 1.4(g) of the Diagonal Note (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (b), (c) and (d) shall collectively be known as the “Default Amount”) and all other amounts payable under the Diagonal Note shall immediately become due and payable, together with all costs, including, without limitation, legal fees and expenses, of collection, and Diagonal shall be entitled to exercise all other rights and remedies available at law or in equity.

The Diagonal Note further contains provisions that:

(a) limit Diagonal’s beneficial ownership upon conversion of the Diagonal Note to a maximum of 4.99 % of the Company’s issued and outstanding Common Stock;

(b) prohibit the Company from entering selling, leasing or otherwise disposing of any significant portion of its assets outside the ordinary course of business;

and (c) adjust the Conversion Price (and number of shares deliverable upon conversion) upon (i) the event of merger, consolidation, or similar transactions, and (ii) the Company declaring or making any distribution of assets to holders of its Common Stock as a dividend, stock repurchase, return of capital, or otherwise.

The Diagonal Agreement also provides for customary provisions, including, without limitation, representations, warranties, covenants, conditions to closing, indemnification, waiver of jury trial, and exercise of remedies upon a breach of the Diagonal Agreement.

The Diagonal Note was issued with an Original Issue Discount of 4.75 % (the “OID”), with net proceeds to the Company of approximately $ 279,000 after giving deducting the OID, reimbursement of Diagonal’s expenses in an amount equal to $ 7,000 , and other estimated offering expenses.

The Company intends to use the net proceeds from the offering for working capital and general corporate purposes.

Belleau Note Purchase Agreement

On March 28, 2025 (the “Belleau Effective Date”), we entered into a Note Purchase Agreement (the “Belleau Purchase Agreement”) with Belleau Wood Capital, LP, or its assigns, (“Belleau”).

Pursuant to the Belleau Purchase Agreement, the Company will issue to Belleau a total of three Unsecured Promissory Notes (each, a “Belleau Note” and collectively, the “Belleau Notes”) with an aggregate principal amount of $ 1,500,000 (the “Belleau Principal”).

The consummation of the sale of the initial Belleau Note was consummated on the Belleau Effective Date, with gross proceeds to the Company of $ 300,000 .

The consummation of the sale of the two remaining Belleau Notes will occur in the amounts and on the dates as follows:

(a) $ 600,000 on April 14, 2025;

and (b) $ 600,000 on April 28, 2025.

Each of the Belleau Notes:

(x) matures on the date that is 12 months from the date of the issuance of each respective Belleau Note (collectively, the “Belleau Maturity Date”);

(y) may be prepaid in part or in full at any time by the Company without penalty;

and (z) accrues interest at a rate of 20 % simple interest per annum (the “Belleau Interest Rate”, and the dollar value of the accrued interest, the “Belleau Interest”).

The Belleau Interest that accrues on each respective Belleau Note is payable on each respective Belleau Maturity Date in the form of restricted shares of the Company’s Common Stock equal to 20 % of the Belleau Principal, calculated at a price per share of $ 0.35 .

In the event of a prepayment of any Belleau Note by the Company, the Belleau Interest will be payable in full at the time of such prepayment.

The Belleau Note also provides for:

(i) standard events of default, including (a) any default in the payment of the Belleau Principal or Belleau Interest on their respective due dates, (b) the occurrence of a Bankruptcy Event (as defined in the Belleau Note), or (c) the Company commits any material breach or default of any material provision of the Belleau Note, if not cured within 20 days following the written notice from Belleau specifying in reasonable detail such breach or default (sections (a) through (c), the “Belleau Events of Default”);

and (ii) customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default.

Upon the occurrence of an Event of Default, the Belleau Note will bear interest at the default interest rate of 20 % per annum, payable in cash, and upon Belleau’s written notice to the Company, all payments of Belleau Principal and Belleau Interest will become immediately due and payable.

The Company intends to utilize the proceeds from the sale of the Belleau Notes for working capital and general corporate purposes.

The initial Belleau Note was issued without registration under the Securities Act, based on the exemption from registration afforded by Section 4(a)(2) of the Securities Act.

The two remaining Belleau Notes, along with the shares of the Company’s Common Stock payable as interest pursuant to the Belleau Notes, when issued according to the Belleau Purchase Agreement, will be issued without registration under the Securities Act, based on the exemption from registration afforded by Section 4(a)(2) of the Securities Act.

Belleau represented that it is an accredited investor, as defined in Rule 501(d) of the Securities Act, and that it has, and will continue to, acquire the applicable securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.

Termination of Transactions with Infinite Reality, Inc.

Termination of Binding Term Sheet

On September 30, 2024, the Company entered into a binding term sheet (the “iR Term Sheet”) with Infinite Reality, Inc.

(“Infinite Reality”), whereby, subject to the satisfaction of certain conditions as more specifically set forth in the iR Term Sheet (including receipt of the approval of the Company’s stockholders), and the entry into definitive documentation, the Company will:

acquire from Infinite Reality, (a) a perpetual, royalty free license to name and to create and host events for Drone Racing League, Inc., (b) to be determined esports assets and all related intellectual property, (c) cash in the amount of up to $ 20 million to come from divestiture of certain assets to be determined and/or other sources of capital, (d) TalentX and all related intellectual property, (e) Fearless Media and all related intellectual property, and (f) Thunder Studios and all related intellectual property (each an “Asset” and, collectively, the “Purchased Assets”)(the “Asset Acquisition”), in exchange for the Company issuing that number of shares of a to-be designated class of its preferred stock equal in priority to existing Series A, AA and AAA preferred shares (the “Consideration Shares”), which Consideration Shares will be convertible into 75 % of the then issued and outstanding shares of Super League’s common stock, par value $ 0.001 per share (“Common Stock”), calculated at the time of the consummation of the Asset Acquisition;

issue to Infinite Reality 2,499,090 shares of the Company’s Common Stock, in exchange for 139,592 shares of Infinite Reality’s common stock (the “Share Exchange”), pursuant to an Equity Exchange Agreement, and to appoint a designee of Infinite Reality to the Company’s Board upon the consummation of the Share Exchange (the “Closing”);

receive a credit facility in the amount of $ 30,000,000 from Infinite Reality, to be established in January 2025 (the “Credit Facility”, and the Asset Acquisition, Share Exchange, and Credit Facility are collectively, the “iR Transaction”).

The Term Sheet contemplates that, subject to the satisfaction of the conditions contained therein (including approval of the iR Transaction by the Company’s stockholders), upon the consummation of the iR Transaction, Infinite Reality will beneficially own 84.9 % of the issued and outstanding shares of the Company as of the Closing.

On March 28, 2025, the Company and Infinite Reality mutually agreed to terminate both the Binding Term Sheet and the iR Transactions contemplated thereby in their entirety.

Termination of Equity Exchange Agreement.

On September 30, 2024, in connection with the Term Sheet and the Share Exchange, the Company entered into an Equity Exchange Agreement with Infinite Reality (the “Exchange Agreement”), pursuant to which the Company agreed, subject to the receipt of the approval of the Company’s stockholders and other customary closing conditions, to issue 2,499,090 shares of Common Stock (the “Exchange Shares”) in exchange for 139,592 shares of Infinite Reality common stock of equal value, based on the Company’s Common Stock being valued at $ 1.30 per share.

The Exchange Agreement contains representations, warranties, and covenants of the Company and Infinite Reality that are customary for a transaction of this nature.

The Exchange Shares, once exchanged pursuant to the Exchange Agreement, will be exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated.

On October 29, 2024, the Company entered into an Amended and Restated Equity Exchange Agreement (the “Amended Exchange Agreement”) with Infinite Reality, which amended and restated the Exchange Agreement.

Pursuant to the Amended Exchange Agreement, the Company will issue an aggregate total of 2,499,090 shares of common stock, par value $ 0.001 per share, in exchange for 216,831 shares of Infinite Reality common stock (“Infinite Reality Common Stock” and collectively, the “Exchange”).

The Exchange will be consummated across two closings:

(i) an initial closing of 1,215,279 shares of Common Stock in exchange for 105,445 shares of Infinite Reality Common Stock (the “Initial Closing”);

and (ii) a second closing, subject to the approval of the Company’s stockholders, of 1,283,811 shares of Common Stock for 111,386 shares of Infinite Reality Common Stock.

All other terms of the Exchange Agreement were not modified.

On March 28, 2025, the Company and Infinite Reality mutually agreed to terminate both the Amended Exchange Agreement and the Exchange contemplated thereby in its entirety.

Entry into Equity Purchase Agreement

On February 14, 2025, the Company entered into an equity purchase agreement (the “Equity Purchase Agreement”) with Hudson Global Ventures, LLC, a Nevada limited liability company (“Hudson”).

Pursuant to the Equity Purchase Agreement, the Company has the right, but not the obligation, to sell to Hudson, and Hudson is obligated to purchase, up to $ 2.9 million of newly issued shares (the “Total Commitment”) of the Company’s common stock, from time to time during the term of the Equity Purchase Agreement, subject to certain limitations and conditions (the “Hudson Offering”).

As consideration for Hudson’s commitment to purchase shares of common stock under the Purchase Agreement, the Company issued to Hudson 300,000 shares of common stock, valued at $ 165,000 , following the execution of the Equity Purchase Agreement (the “Commitment Shares”).

The Equity Purchase Agreement initially precludes the Company from issuing and selling more than 3,319,323 shares of our common stock, including the Commitment Shares, which number equals 19.99 % of our common stock issued and outstanding as of February 14, 2025, unless the Company obtains stockholder approval to issue additional shares, or unless certain exceptions apply.

In addition, a beneficial ownership limitation in the agreement initially limits the Company from directing Hudson to purchase shares of common stock if such purchases would result in Hudson beneficially owning more than 4.99 % of the then-outstanding shares of our common stock.

From and after the initial satisfaction of the conditions to our right to commence sales to Hudson under the Equity Purchase Agreement (such event, the “Commencement,” and the date of initial satisfaction of all such conditions, the “Commencement Date”), the Company may direct Hudson to purchase shares of common stock at a purchase price per share equal to the lesser of (i) 92 % of the closing price of the Company’s Common Stock, as listed on Nasdaq, on the trading day immediately preceding the respective Put Date (the “Initial Purchase Price”), or (ii) 92 % of the lowest closing price of the Company’s Common Stock on the Nasdaq Capital Market on any trading day during the period beginning on the Put Date (as defined in the Purchase Agreement) and continuing through the date that is three trading days immediately following the Clearing Date (as defined in the Purchase Agreement) associated with the applicable Put Notice (such three trading day period is the “Valuation Period”, and the price is the “Market Price”), on such date on which the Purchase Price is calculated in accordance with the terms of the Equity Purchase Agreement.

The Company will control the timing and amount of any such sales of common stock to Hudson.

Unless earlier terminated, the Equity Purchase Agreement will automatically terminate upon the earliest of (i) the expiration of the Commitment Period (as defined in the Equity Purchase Agreement), (ii) Hudson’s purchase or receipt of the Total Commitment worth of common stock, or (iii) the occurrence of certain other events set forth in the Equity Purchase Agreement.

The Company has the right to terminate the Equity Purchase Agreement at any time after Commencement, at no cost or penalty, upon prior written notice to Hudson.

The Company may also use a portion of the net proceeds to acquire or invest in complementary businesses, products and technologies.

The Equity Purchase Agreement contains customary representations, warranties and agreements by the Company, as well as customary indemnification obligations of the Company.

In connection with the Equity Purchase Agreement, the Company entered into a Registration Rights Agreement, pursuant to which the Company agreed to register the Commitment Shares and the shares issuable pursuant to the Equity Purchase Agreement.

Amended and Restated Consulting Agreement

On March 28, 2025 (the “March DS Effective Date”), the Company entered into an Amended and Restated Consulting Agreement (the “March DS Agreement”) with Diamond Shoals, LLC (“DS”), which amended and restated that certain Consulting Agreement dated August 1, 2024, between the Company and DS (the “August DS Agreement”), pursuant to which DS will provide the strategic advisory consultancy services set forth in the March DS Agreement, the consideration for which is to be paid in the form of 857,142 restricted shares of the Company’s Common Stock (the “March DS Shares”).

The March DS Shares are payable on the dates and in the amounts as follows:

(i) 171,428 shares on the March DS Effective Date;

(ii) 342,857 shares on April 14, 2025;

and (iii) 342,857 shares on April 28, 2025.

The March DS Agreement will have a term of 12 months, commencing on the March DS Effective Date, and may be renewed upon mutual agreement of the parties.

All other terms and conditions remained the same as the August DS Agreement.

The August DS Agreement was entered into to extend the term of the initial Consulting Agreement between the Company and DS, dated June 13, 2023, as amended and restated on October 6, 2023.

In January 2025, the Company issued 262,501 shares of the Company’s common stock to the Founders in connection with the Super Biz Note, as described at Note 5.

Pursuant to the requirements of Section 13 or 15(d) 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.

April 12, 2024

March 31, 2025

President and Chief Executive Officer

1 unchanged sentence

SUPER LEAGUE ENTERPRISE, INC.

April 12, 2024

March 31, 2025

/s/ Clayton Haynes

4 unchanged sentences

Chief Executive Officer

April 12, 2024

March 31, 2025

and Chair of the Board

2 unchanged sentences

Chief Financial Officer

April 12, 2024

March 31, 2025

Clayton Haynes

(Principal Financial and Accounting Officer)

/s/ David Steigelfest

April 12, 2024

David Steigelfest

/s/ Jeff Gehl

April 12, 2024

March 31, 2025

/s/ Kristin Patrick

April 12, 2024

March 31, 2025

Kristin Patrick

/s/ Mark Jung

April 12, 2024

March 31, 2025

/s/ Michael Keller

April 12, 2024

Michael Keller

March 31, 2025

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures