Super League Enterprise, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024 (“Evaluation Date”). 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. 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 Our disclosure controls and procedures are designed to provide reasonable assurance of achieving the desired control objectives. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. The design of a control system must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. 68 Table of Contents Management ’ s Report on Internal Control over Financial Reporting Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. This process includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. 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. 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 Management has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2024. 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 was effective as of December 31, 2024. 69 Table of Contents Report of Independent Registered Public Accounting Firm 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 Except as described above, there have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting during the fiscal quarter ended December 31, 2024. ITEM 9B. OTHER INFORMATION During the three months ended December 31, 2024, none of our officers (as defined in Rule 16a-1(f) of the Exchange Act) entered into contracts, instructions or written plans (each, a “Rule 10b5-1 Trading Plan” and collectively, the “Rule 10b5-1 Trading Plans”) for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 70 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Except as provided below, in accordance with General Instruction G(3) to Form 10-K, certain information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2024 annual meeting of stockholders to be filed with the SEC no later than April 30, 2025. ITEM 11. EXECUTIVE COMPENSATION. Except as provided below, in accordance with General Instruction G(3) to Form 10-K, certain information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2024 annual meeting of stockholders to be filed with the SEC no later than April 30, 2025. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Except as provided below, in accordance with General Instruction G(3) to Form 10-K, certain information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2024 annual meeting of stockholders to be filed with the SEC no later than April 30, 2025. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Except as provided below, in accordance with General Instruction G(3) to Form 10-K, certain information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2024 annual meeting of stockholders to be filed with the SEC no later than April 30, 2025. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Except as provided below, in accordance with General Instruction G(3) to Form 10-K, certain information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2024 annual meeting of stockholders to be filed with the SEC no later than April 30, 2025. 71 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES Exhibit No. Name Incorporation by Reference 2.1 Agreement and Plan of Merger, dated March 9, 2021, by and among Super League Enterprise, Inc., SLG Merger Sub II, Inc., and Mobcrush, Inc. Exhibit 2.1 to the Current Report on Form 8-K, filed on March 11, 2021. 2.2 Amendment No. 1 to Agreement and Plan of Merger by and between Super League Enterprise, Inc., and Mobcrush Streaming, Inc., dated April 20, 2021. Exhibit 10.1 to the Current Report on Form 8-K, filed on April 21, 2021. 2.3 Asset Purchase Agreement, dated October 4, 2021, among Super League Enterprise, Inc., Bloxbiz Co., Samuel Drozdov, and Benjamin Khakshoor. Exhibit 2.1 to the Current Report on Form 8-K, filed on October 7, 2021. 2.4 Asset Purchase Agreement, by and between Super League Gaming, Inc., and Melon, Inc., dated May 4, 2023 Exhibit 2.3 to the Current Report on Form 8-K, filed on May 9, 2023. 3.1 Second Amended and Restated Certificate of Incorporation of Super League Enterprise, Inc., dated November 19, 2018. Exhibit 3.1 to the Registration Statement, filed on January 4, 2019. 3.2 Second Amended and Restated Bylaws of Super League Enterprise, Inc. Exhibit 3.2 to the Registration Statement, filed on January 4, 2019. 3.3 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Super League Enterprise, Inc., dated February 8, 2019. Exhibit 3.3 to the Amendment No. 2 to the Registration Statement , filed on February 12, 2019. 3.4 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Super League Enterprise, Inc., dated July 24, 2020. Exhibit 3.1 to the Current Report on Form 8-K, filed on July 24, 2020. 3.5 Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock Exhibit 3.5 to the Annual Report on Form 10-K for the year ended December 31, 2022 3.6 Certificate of Designation of Preferences, Rights and Limitations of the Series A-2 Preferred Stock Exhibit 3.6 to the Annual Report on Form 10-K for the year ended December 31, 2022 3.7 Certificate of Designation of Preferences, Rights and Limitations of the Series A-3 Preferred Stock Exhibit 3.7 to the Annual Report on Form 10-K for the year ended December 31, 2022 3.8 Certificate of Designation of Preferences, Rights and Limitations of the Series A-4 Preferred Stock Exhibit 3.8 to the Annual Report on Form 10-K for the year ended December 31, 2022 3.9 Certificate of Designation of Preferences, Rights and Limitations of the Series A-5 Preferred Stock Exhibit 3.9 to the Annual Report on Form 10-K for the year ended December 31, 2022 3.10 Certificate of Designation of Preferences, Rights and Limitations of the Series AA Preferred Stock Exhibit 3.1 to the Current Report on Form 8-K, filed on April 25, 2023 3.11 Certificate of Designation of Preferences, Rights and Limitations of the Series AA-2 Preferred Stock Exhibit 3.11 to the Annual Report on Form 10-K, filed April 15, 2024 3.12 Certificate of Designation of Preferences, Rights and Limitations of the Series AA-3 Preferred Stock Exhibit 3.1 to the Current Report on Form 8-K, filed on May 4, 2023 3.13 Certificate of Designation of Preferences, Rights and Limitations of the Series AA-4 Preferred Stock Exhibit 3.1 to the Current Report on Form 8-K/A, filed on May 9, 2023, as amended on May 10, 2023. 3.14 Certificate of Designation of Preferences, Rights and Limitations of the Series AA-5 Preferred Stock Exhibit 3.1 to the Current Report on Form 8-K, filed on June 2, 2023 3.15 Certificate of Amendment to Super League Gaming, Inc.’s Second Amended and Restated Certificate of Incorporation, as amended Exhibit 3.2 to the Current Report on Form 8-K, filed on June 2, 2023 3.16 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation, as Amended, of Super League Gaming, Inc. Exhibit 3.1 to the Current Report on Form 8-K, filed on September 8, 2023. 3.17 Certificate of Designation of Preferences, Rights and Limitations of the Series AAA Preferred Stock Exhibit 3.1 to the Current Report on Form 8-K, filed on December 6, 2023 72 Table of Contents 3.18 Certificate of Designation of Preferences, Rights and Limitations of the Series AAA-2 Preferred Stock Exhibit 3.1 to the Current Report on Form 8-K, filed on December 22, 2023 3.19 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. 3.20 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. 3.21 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 3.22 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 3.23 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 3.24 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 3.25 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 4.1 Form of Common Stock Certificate. Exhibit 4.1 to the Amendment No. 2 to the Registration Statement, filed on February 12, 2019. 4.2 Form of Registration Rights Agreement, among Super League Enterprise, Inc. and certain accredited investors. Exhibit 4.2 to the Registration Statement on Form S-1 , filed on January 4, 2019. 4.3 Common Stock Purchase Warrant dated June 16, 2017 issued to Ann Hand. Exhibit 4.3 to the Registration Statement on Form S-1, filed on January 4, 2019. 4.4 Form of 9.00% Secured Convertible Promissory Note. Exhibit 4.4 to the Registration Statement on Form S-1, filed on January 4, 2019. 4.5 Form of Callable Common Stock Purchase Warrant, issued to certain accredited investors. Exhibit 4.5 to the Registration Statement on Form S-1, filed on January 4, 2019. 4.6 Form of Representative’s Warrant. Exhibit 4.6 to the Amendment No. 2 to the Registration Statement on Form S-1, filed on February 12, 2019. 4.7 Form of May 2022 Convertible Promissory Note Exhibit 10.2 to the Current Report on Form 8-K, filed May 16, 2022. 4.8 Form of Placement Agent Warrant Exhibit 10.35 to the Annual Report on Form 10-K for the year ended December 31, 2022, filed March 31, 2023 4.9 Form of Placement Agent Warrants Exhibit 10.3 to the Current Report on Form 8-K, filed on April 25, 2023 4.10 Form of Pre-Funded Warrant Exhibit 4.1 to the Current Report on Form 8-K filed on August 24, 2023 4.11 Form of Placement Agent Warrants Exhibit 10.5 to the Current Report on Form 8-K filed on December 6, 2023 4.12 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 4.13 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 4.14 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 4.15 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 4.16 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 4.17* Form of 2025 Unsecured Convertible Promissory Note to be issued to Belleau Wood Capital, LP, or its assigns Filed herewith 4.18* Convertible Promissory Note, dated March 26, 2025, issued by Super League Enterprise, Inc., to 1800 Diagonal Lending LLC, or its registered assigns Filed herewith 10.1 † Super League Enterprise, Inc. Amended and Restated 2014 Stock Option and Incentive Plan. Exhibit 10.1 to the Registration Statement , filed on January 4, 2019. 10.2 † Form of Stock Option Agreement under 2014 Stock Option and Incentive Plan. Exhibit 10.2 to the Registration Statement , filed on January 4, 2019. 10.3 Subscription Agreement, among Nth Games, Inc. and certain accredited investors. Exhibit 10.3 to the Registration Statement , filed on January 4, 2019. 10.4 Subscription Agreement, among Super League Enterprise, Inc. and certain accredited investors. Exhibit 10.4 to the Registration Statement, filed on January 4, 2019. 10.5 Form of Theater Agreement, filed herewith. Exhibit 10.5 to the Registration Statement , filed on January 4, 2019. 10.6 Lease between Super League Enterprise, Inc. and Roberts Business Park Santa Monica LLC, dated June 1, 2016. Exhibit 10.6 to the Registration Statement, filed on January 4, 2019. 10.7+ License Agreement between Super League Enterprise, Inc. and Riot Games, Inc., dated June 22, 2016. Exhibit 10.7 to the Registration Statement , filed on January 4, 2019. 10.8+ Amended and Restated License Agreement between Super League Enterprise, Inc. and Mojang AB, dated August 1, 2016. Exhibit 10.8 to the Registration Statement , filed on January 4, 2019. 10.9+ Master Agreement between Super League Enterprise, Inc. and Viacom Media Networks, dated June 9, 2017. Exhibit 10.9 to the Registration Statement, filed on January 4, 2019. 10.10 Form of Common Stock Purchase Agreement, among Super League Enterprise, Inc. and certain accredited investors. Exhibit 10.10 to the Registration Statement , filed on January 4, 2019. 10.11 Form of Investors’ Rights Agreement, among Super League Enterprise, Inc. and certain accredited investors. Exhibit 10.11 to the Registration Statement, filed on January 4, 2019. 10.12 † Employment Agreement, between Super League Enterprise, Inc. and Ann Hand, dated June 16, 2017. Exhibit 10.12 to the Registration Statement , filed on January 4, 2019. 10.13 † Employment Agreement, between Super League Enterprise, Inc. and David Steigelfest, dated October 31, 2017. Exhibit 10.13 to the Registration Statement, filed on January 4, 2019. 73 Table of Contents 10.14 Riot Games, Inc. Extension Letter, dated November 21, 2017. Exhibit 10.14 to the Registration Statement, filed on January 4, 2019. 10.15 Form of Note Purchase Agreement, among Super League Enterprise, Inc. and certain accredited investors. Exhibit 10.15 to the Registration Statement , filed on January 4, 2019. 10.16 Form of Security Agreement, between Super League Enterprise, Inc. and certain accredited investors. Exhibit 10.16 to the Registration Statement, filed on January 4, 2019. 10.17 Form of Intercreditor and Collateral Agent Agreement, among Super League Enterprise, Inc. and certain accredited investors. Exhibit 10.17 to the Registration Statement , filed on January 4, 2019. 10.18 Form of Investors’ Rights Agreement (9% Secured Convertible Promissory Notes), among Super League Enterprise, Inc. and certain accredited investors. Exhibit 10.18 to the Registration Statement , filed on January 4, 2019. 10.19 Master Service Agreement and Initial Statement of Work between Super League Enterprise, Inc. and Logitech Inc., dated March 1, 2018. Exhibit 10.19 to the Registration Statement , filed on January 4, 2019. 10.20 Asset Purchase Agreement, between Super League Enterprise, Inc. and Minehut, dated June 22, 2018. Exhibit 10.20 to the Registration Statement, filed on January 4, 2019. 10.21 † Amended and Restated Employment Agreement, between Super League Enterprise, Inc. and Ann Hand, dated November 15, 2018. Exhibit 10.21 to the Registration Statement , filed on January 4, 2019. 10.22 † Amended and Restated Employment Agreement, between Super League Enterprise, Inc. and David Steigelfest, dated November 1, 2018. Exhibit 10.22 to the Registration Statement, filed on January 4, 2019. 10.23 † Employment Agreement, between Super League Enterprise, Inc. and Matt Edelman, dated November 1, 2018. Exhibit 10.23 to the Registration Statement, filed on January 4, 2019. 10.24 † Employment Agreement, between Super League Enterprise, Inc. and Clayton Haynes, dated November 1, 2018. Exhibit 10.24 to the Registration Statement , filed on January 4, 2019. 10.25++ Commercial Partnership Agreement between Super League Enterprise, Inc., and ggCircuit, LLC, dated September 23, 2019. Exhibit 10.1 to the Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed November 14, 2019. 10.26 Form of Registration Rights Agreement, dated March 2021. Exhibit 10.1 to the Current Report on Form 8-K, filed on March 11, 2021. 10.27 Form of Voting Agreement, dated March 2021. Exhibit 10.2 to the Current Report on Form 8-K, filed on March 11, 2021. 10.28 Form of Securities Purchase Agreement, dated March 19, 2021. Exhibit 10.1 to the Current Report on Form 8-K, filed on March 23, 2021. 10.29 Equity Distribution Agreement, dated as of September 3, 2021, by and between Super League Enterprise, Inc. and Maxim Group LLC. Exhibit 1.3 to the Company’s Registration Statement on Form S-3 (File No. 333-259347, filed September 7, 2021. 10.30 Share Purchase Agreement, by and between Super League Enterprise, Inc. and Bannerfy Ltd., dated August 11, 2021. Exhibit 10.4 to the Quarterly Report on Form 10-Q for the period ended June 30, 2021, filed August 16, 2021. 10.31 † Executive Employment Agreement between Super League Gaming, Inc., and Ann Hand, dated January 5, 2022 Exhibit 10.1 to the Current Report on Form 8-K filed January 7, 2022. 10.32 † Executive Employment Agreement between Super League Gaming, Inc., and Clayton Haynes, dated January 5, 2022 Exhibit 10.2 to the Current Report on Form 8-K filed January 7, 2022. 10.33 † Executive Employment Agreement between Super League Gaming, Inc., and David Steigelfest, dated January 5, 2022 Exhibit 10.3 to the Current Report on Form 8-K filed January 7, 2022. 10.34 † Executive Employment Agreement between Super League Gaming, Inc., and Matt Edelman, dated January 5, 2022 Exhibit 10.4 to the Current Report on Form 8-K filed January 7, 2022. 10.35 † Executive Employment Agreement between Super League Gaming, Inc., and Michael Wann, dated January 5, 2022 Exhibit 10.5 to the Current Report on Form 8-K filed January 7, 2022. 10.36 Common Stock Purchase Agreement, dated March 25, 2022, by and between Super League Enterprise, Inc. and Tumim Stone Capital LLC Exhibit 10.31 to the Annual Report on Form 10-K for the year ended December 31, 2021, filed March 31, 2022. 10.37 Securities Purchase Agreement between Super League Gaming, Inc., and the investor signatories thereto, dated May 16, 2022 Exhibit 10.1 to the Current Report on Form 8-K, filed May 16, 2022. 10.38 Registration Rights Agreement between Super League Gaming, Inc., and the investor signatories thereto, dated May 16, 2022 Exhibit 10.3 to the Current Report on Form 8-K, filed May 16, 2022. 10.39 † Transition Letter Agreement dated January 13, 2023, between Super League Gaming, Inc. and Mike Wann. Exhibit 10.1 to the Current Report on Form 8-K, filed January 20, 2023. 10.40 Form of Placement Agency Agreement Exhibit 10.32 to the Annual Report on Form 10-K for the year ended December 31, 2022, filed March 31, 2023 10.41 Form of Series A Subscription Agreement Exhibit 10.33 to the Annual Report on Form 10-K for the year ended December 31, 2022, filed March 31, 2023 74 Table of Contents 10.42 Form of Registration Rights Agreement Exhibit 10.34 to the Annual Report on Form 10-K for the year ended December 31, 2022, filed March 31, 2023 10.43 Form of Series AA Subscription Agreement Exhibit 10.1 to the Current Report on Form 8-K, filed on April 25, 2023 10.44 Form of Registration Rights Agreement Exhibit 10.2 to the Current Report on Form 8-K, filed on April 25, 2023 10.45 Placement Agency Agreement by and between Aegis Capital Corp. and Super League Gaming, Inc., dated March 24, 2023. Exhibit 10.1 to the Current Report on Form 8-K, filed on June 2, 2023 10.46 Underwriting Agreement, dated August 21, 2023, between Super League Gaming, Inc. and Aegis Capital Corp. Exhibit 1.1 to the Current Report on Form 8-K filed on August 24, 2023 10.47 Warrant Agency Agreement, dated August 23, 2023, between Super League Gaming, Inc and Direct Transfer, LLC Exhibit 4.2 to the Current Report on Form 8-K filed on August 24, 2023 10.48 Form of Series AAA Subscription Agreement Exhibit 10.1 to the Current Report on Form 8-K filed on December 6, 2023 10.49 Form of Registration Rights Agreement Exhibit 10.2 to the Current Report on Form 8-K filed on December 6, 2023 10.50 Form of Series A Exchange Agreement Exhibit 10.3 to the Current Report on Form 8-K filed on December 6, 2023 10.51 Form of Series AA Exchange Agreement Exhibit 10.4 to the Current Report on Form 8-K filed on December 6, 2023 10.52 Financing and Security Agreement, effective December 17, 2023, by and among Super League Enterprise, Inc., Mobcrush Streaming, Inc., InPVP, LLC and SLR Digital Finance, LLC Exhibit 10.1 to the Current Report on Form 8-K filed on December 22, 2023 10.53 Placement Agency Agreement, dated November 6, 2023, between Super League Enterprise, Inc., and Aegis Capital Corporation Exhibit 10.2 to the Current Report on Form 8-K filed on December 22, 2023 10.54 Mutual General Release and Settlement Agreement by and between 3i, LP, Nomis Bay Ltd. and BPY Limited and Super League Enterprise, Inc., dated March 12, 2024 Exhibit 10.1 to the Current Report on Form 8-K filed on March 15, 2024 10.55 Asset Purchase Agreement by and between Super League Enterprise, Inc. and GamerSafer, Inc. Exhibit 10.55 to the Annual Report on Form 10-K filed on April 15, 2024 10.56 Form of Series AAA Junior Subscription Agreement Exhibit 10.1 to the Current Report on Form 8-K filed on July 2, 2024. 10.57 ++ Form of Registration Rights Agreement++ Exhibit 10.2 to the Current Report on Form 8-K filed on July 2, 2024. 10.58 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. 10.59 Form of Placement Agent Warrant Exhibit 10.2 to the Current Report on Form 8-K filed on July 16, 2024 10.60 ++ Form of Series AAA-4 Junior Subscription Agreement ++ Exhibit 10.1 to the Current Report on Form 8-K filed on September 23, 2024. 10.61 ++ Form of Registration Rights Agreement ++ Exhibit 10.2 to the Current Report on Form 8-K filed on September 23, 2024. 10.62 ++ Form of Investor Warrant ++ Exhibit 10.3 to the Current Report on Form 8-K filed on September 23, 2024. 10.63 Form of Placement Agent Warrant Exhibit 10.4 to the Current Report on Form 8-K filed on September 23, 2024. 10.64 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. 10.65 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. 10.66 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. 10.67 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. 10.68 Form of Indemnification Agreement Exhibit 10.2 to the Current Report on Form 8-K filed on October 29, 2024. 10.69 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 75 Table of Contents 10.70 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 10.71 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 10.72 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 10.73* Securities Purchase Agreement, dated March 26, 2025, by and between Super League Enterprise, Inc., and 1800 Diagonal Lending, LLC Filed herewith. 10.74* Note Purchase Agreement, dated March 28, 2025, by and between Super League Enterprise, Inc. and Belleau Wood Capital, LP++ Filed herewith. 10.75* Consulting Agreement, dated June 13, 2023, between Super League Enterprise, Inc., and Diamond Shoals, LLC Filed herewith. 10.76* Amended and Restated Consulting Agreement, effective as of October 6, 2023, by and between Super League Enterprise, Inc., and Diamond Shoals, LLC Filed herewith. 10.77* Amended Consulting Agreement, dated August 1, 2024, by and between Super League Enterprise, Inc., and Diamond Shoals, LLC Filed herewith. 10.78* Amended and Restated Consulting Agreement, dated March 28, 2025, by and between Super League Enterprise, Inc., and Diamond Shoals, LLC Filed herewith. 14.1 Super League Enterprise, Inc. Code of Business Conduct and Ethics. Exhibit 14.1 to the Registration Statement, filed on January 4, 2019. 19.1* Super League Enterprise, Inc. Insider Trading Policy Filed herewith. 21.1* Subsidiaries of Registrant Filed herewith. 23.1* Consent of Independent Registered Public Accounting Firm – WithumSmith+Brown, PC Filed herewith. 31.1* Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act. Filed herewith. 31.2* * Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act. Furnished herewith. 32.1* * Certification Pursuant to Section 906 of the Sarbanes-Oxley Act. Furnished herewith. 97.1 Super League Enterprise, Inc. Clawback Policy Exhibit 97.1 to the Annual Report on Form 10-K filed on April 15, 2024 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101) * Filed herewith. ** Furnished herewith. † Identifies exhibits that consist of a management contract or compensatory plan or arrangement. + Confidential treatment has been requested for certain confidential portions of this exhibit pursuant to Rule 406 under the Securities Act of 1933, as amended, and Rule 24b-2 under the Securities Exchange Act of 1934, as amended (together, the “Rules”). In accordance with the Rules, these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission. ++ Certain portions of this exhibit (indicated by “[*****]”) have been omitted as the Company has determined (i) the omitted information is not material and (ii) the omitted information would likely cause harm to the Company if publicly disclosed. 76 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS SUPER LEAGUE ENTERPRISE, INC. Page Report of Independent Registered Public Accounting Firm (WithumSmith+Brown, PC; Whippany, New Jersey; PCAOB ID: 100) F-2 Consolidated Financial Statements for the Years Ended December 31, 2024 and 2023 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-4 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 F-5 Consolidated Statements of Stockholders ’ Equity for the years ended December 31, 2024 and 2023 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents Report of Independent Registered Public Accounting Firm 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 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 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 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 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 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 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 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. F-2 Table of Contents 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 We have served as the Company’s auditor since 2023. Whippany, New Jersey March 31, 2025 PCAOB ID Number 100 F-3 Table of Contents SUPER LEAGUE ENTERPRISE, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2024 AND 2023 (In U.S. dollars, rounded to the nearest thousands, except share and per share data) 2024 2023 ASSETS Current Assets Cash and cash equivalents $ 1,310,000 $ 7,609,000 Accounts receivable 3,766,000 8,287,000 Prepaid expense and other current assets 677,000 862,000 Total current assets 5,753,000 16,758,000 Property and equipment, net 24,000 70,000 Intangible and other Assets, net 4,070,000 6,636,000 Goodwill 1,864,000 1,864,000 Total assets $ 11,711,000 $ 25,328,000 LIABILITIES AND STOCKHOLDERS ’ EQUITY Current Liabilities Accounts payable and accrued expenses $ 5,282,000 $ 10,420,000 Accrued contingent consideration 138,000 1,812,000 Promissory note - contingent consideration 1,735,000 - Contract liabilities 50,000 339,000 Secured loan – SLR Facility 24,000 800,000 Promissory notes payable and accrued interest 1,707,000 - Promissory notes payable and accrued interest – related party 1,509,000 - Total current liabilities 10,445,000 13,371,000 Deferred taxes 161,000 - Accrued contingent consideration – long term - 396,000 Warrant liability 935,000 1,571,000 Total liabilities 11,541,000 15,338,000 Commitments and Contingencies (Note 10) Stockholders ’ Equity Preferred stock, par value $ 0.001 per share; 10,000,000 shares authorized; 17,499 and 23,656 shares issued and outstanding as of December 31, 2024 and 2023, respectively - - Common stock, par value $ 0.001 per share; 400,000,000 shares authorized; 16,224,371 and 4,774,116 shares issued and outstanding as of December 31, 2024 and 2023, respectively 94,000 81,000 Additional paid-in capital 270,111,000 258,923,000 Accumulated deficit ( 270,035,000 ) ( 249,014,000 ) Total stockholders’ equity 170,000 9,990,000 Total liabilities and stockholders’ equity $ 11,711,000 $ 25,328,000 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents SUPER LEAGUE ENTERPRISE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In U.S. dollars, rounded to the nearest thousands, except share and per share data) 2024 2023 REVENUES $ 16,182,000 $ 25,079,000 COST OF REVENUES 10,080,000 15,297,000 GROSS PROFIT 6,102,000 9,782,000 OPERATING EXPENSE (INCOME) Selling, marketing and advertising 9,822,000 12,450,000 Engineering, technology and development 4,447,000 9,500,000 General and administrative 8,731,000 10,258,000 Contingent consideration ( 144,000 ) 1,075,000 Loss on intangible asset disposal - 2,284,000 Impairment of intangible assets - 7,052,000 Total operating expense 22,856,000 42,619,000 NET OPERATING LOSS ( 16,754,000 ) ( 32,837,000 ) OTHER INCOME (EXPENSE) Gain on sale of intangible assets 183,000 - Interest expense, including change in fair value of promissory notes carried at fair value ( 559,000 ) ( 50,000 ) Loss on extinguishment of liability - contingent consideration ( 336,000 ) - Loss on exchange of preferred instruments - ( 681,000 ) Change in fair value of warrant liability 1,115,000 2,898,000 Other ( 123,000 ) 27,000 Total other income 280,000 2,194,000 LOSS BEFORE (PROVISION FOR) BENEFIT FROM INCOME TAXES ( 16,474,000 ) ( 30,643,000 ) (Provision for) benefit from income taxes ( 161,000 ) 313,000 NET LOSS $ ( 16,635,000 ) $ ( 30,330,000 ) Net loss per share attributable to common stockholders – basic and diluted Basic and diluted loss per common share (1) $ ( 2.35 ) $ ( 13.67 ) Weighted-average number of common shares outstanding, basic and diluted 8,940,304 2,799,044 (1) Refer to Note 2 for calculation of net loss attributable to common stockholders The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents SUPER LEAGUE ENTERPRISE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In U.S. dollars, rounded to the nearest thousands, except share and per share data) 2024 2023 Preferred stock (Shares): Balance, beginning of period 23,656 10,323 Issuance of Series A preferred stock - - Issuance of Series A-2 preferred stock - - Issuance of Series A-3 preferred stock - - Issuance of Series A-4 preferred stock - - Issuance of Series A-5 preferred stock at $1,000 per share - 2,299 Issuance of Series AA preferred stock at $1,000 per share - 7,680 Issuance of Series AA-2 preferred stock at $1,000 per share - 1,500 Issuance of Series AA-3 preferred stock at $1,000 per share - 1,025 Issuance of Series AA-4 preferred stock at $1,000 per share - 1,026 Issuance of Series AA-5 preferred stock at $1,000 per share - 550 Issuance of Series AAA preferred stock at $1,000 per share - 5,377 Issuance of Series AAA-2 preferred stock at $1,000 per share - 2,978 Issuance of Series AAA Junior preferred stock at $1,000 per share 1,210 - Issuance of Series AAA-2 Junior preferred stock at $1,000 per share 551 - Issuance of Series AAA-3 Junior preferred stock at $1,000 per share 697 - Issuance of Series AAA-4 Junior preferred stock at $1,000 per share 399 - Series AAA-1 Issued in Exchange for Series A & AA Preferred - 4,011 Series AAA-2 Issued in Exchange for Series A & AA Preferred - 2,356 Exchanged Series A and AA Preferred stock - ( 6,367 ) Conversions of Series A Preferred stock to common stock ( 2,169 ) ( 5,761 ) Conversions of Series AA Preferred stock to common stock ( 1,936 ) ( 3,116 ) Conversions of Series AAA Preferred stock to common stock ( 3,954 ) ( 225 ) Conversions of Series AAA Junior Preferred stock to common stock ( 955 ) - Balance, end of period 17,499 23,656 Preferred stock (Amount, at Par Value): Balance, beginning of period $ - $ - Issuance of Series A preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series A-2 preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series A-3 preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series A-4 preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series A-5 preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series AA preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series AA-2 preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series AA-3 preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series AA-4 preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series AA-5 preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series AAA preferred stock, $0.001 par value, at $1,000 per share - - Issuance of Series AAA-2 preferred stock, $0.001 par value, at $1,000 per share - - Series AAA-1 Issued in Exchange for Series A & AA Preferred - - Series AAA-2 Issued in Exchange for Series A & AA Preferred - - Exchanged Series A and AA Preferred stock - - Conversions of Series A Preferred stock - - Conversions of Series AA Preferred stock - - Conversions of Series AAA Preferred stock - - Balance, end of period $ - $ - Common stock (Shares): Balance, beginning of period 4,774,116 1,880,299 Issuance of common stock at $ 0.88 per share, net of issuance costs 1,136,000 - Issuance of common stock at $ 2.60 per share, net of issuance costs - 811,270 Exercise of prefunded common stock warrants at $ 2.60 per share, net of issuance costs - 67,500 Common stock issued for Melon Acquisition 72,118 77,834 Common stock issued for Bannerfy Acquisition - 8,985 Common stock issued for Super Biz Acquisition 30,662 49,400 Stock-based compensation 591,126 69,666 Conversion of Series A preferred stock 201,133 520,931 Conversion of Series AA preferred stock 995,958 922,097 Conversion of Series AAA preferred stock 2,333,125 133,153 Conversion of Series AAA Junior preferred stock 764,000 - Preferred stock dividends paid – common stock 4,276,133 232,981 Other 1,050,000 - Balance, end of period 16,224,371 4,774,116 Common stock (Amount, at Par Value): Balance, beginning of period $ 81,000 $ 47,000 Issuance of common stock at $ 0.88 per share, net of issuance costs 1,000 - Issuance of common stock at $ 2.60 per share, net of issuance costs - 16,000 Exercise of prefunded common stock warrants at $ 2.60 per share, net of issuance costs - 1,000 Preferred stock dividends paid 7,000 - Conversion of Series A, AA, AAA and AAA Junior preferred stock 4,000 15,000 Stock-based compensation - - Common stock issued for Super Biz Acquisition - 1,000 Common stock issued for Melon Acquisition - 1,000 Common stock issued for Bannerfy Acquisition - - Other 1,000 - Balance, end of period $ 94,000 $ 81,000 Additional paid-in-capital: Balance, beginning of period $ 258,923,000 $ 229,900,000 Issuance of Series A preferred stock at $1,000 per share, net of issuance costs - - Issuance of Series A-2 preferred stock at $1,000 per share, net of issuance costs - - Issuance of Series A-3 preferred stock at $1,000 per share, net of issuance costs - - Issuance of Series A-4 preferred stock at $1,000 per share, net of issuance costs - - Issuance of Series A-5 preferred stock at $1,000 per share, net of issuance costs - 1,919,000 Issuance of Series AA preferred stock at $1,000 per share, net of issuance costs - 5,319,000 Issuance of Series AA-2 preferred stock at $1,000 per share, net of issuance costs - 1,278,000 Issuance of Series AA-3 preferred stock at $1,000 per share, net of issuance costs - 690,000 Issuance of Series AA-4 preferred stock at $1,000 per share, net of issuance costs - 681,000 Issuance of Series AA-5 preferred stock at $1,000 per share, net of issuance costs - 379,000 Series AA Preferred additional investment rights - 1,794,000 Issuance of Series AAA preferred stock at $1,000 per share, net of issuance costs - 4,488,000 Issuance of Series AAA-2 preferred stock at $1,000 per share, net of issuance costs - 2,591,000 Issuance of Series AAA Junior preferred stock at $1,000 per share, net of issuance costs 751,000 - Series AAA Junior preferred stock noncash issuance costs – incremental fair value in connection with modifications to certain existing AIRs 294,000 - Issuance of Series AAA-2 Junior preferred stock at $1,000 per share, net of issuance costs 453,000 - Issuance of Series AAA-3 Junior preferred stock at $1,000 per share, net of issuance costs 529,000 - Issuance of Series AAA-4 Junior preferred stock at $1,000 per share, net of issuance costs 366,000 - Common stock purchase warrants issued – Series AAA-3 and Series AAA-4 Junior preferred stock ( 346,000 ) - Issuance of common stock at $ 0.88 per share, net of issuance costs 999,000 - Issuance of common stock at $ 2.60 per share, net of issuance costs - 1,745,000 Exercise of prefunded common stock warrants at $ 2.60 per share, net of issuance costs - 159,000 Conversion of Series A, AA and AAA preferred stock ( 3,000 ) ( 15,000 ) Preferred stock dividends paid – common stock 4,381,000 374,000 Deemed dividend on Series AA Preferred Stock - 7,567,000 Common stock purchase warrants issued to placement agent ( 134,000 ) ( 3,788,000 ) Common stock issued for Melon Acquisition 90,000 721,000 Common stock issued for Bannerfy Acquisition - 70,000 Common stock issued for Super Biz Acquisition 38,000 547,000 Stock-based compensation 1,209,000 2,504,000 Issuance of common stock and incremental fair value in connection with modifications to certain existing AIRs in settlement of legal matters 1,723,000 - Prepaid consulting fees 281,000 - Other 557,000 - Balance, end of period $ 270,111,000 $ 258,923,000 Accumulated Deficit: Balance, beginning of period $ ( 249,014,000 ) $ ( 210,743,000 ) Deemed dividend on Series AA Preferred Stock - ( 7,567,000 ) Preferred stock dividends paid – common stock ( 4,386,000 ) ( 374,000 ) Net loss ( 16,635,000 ) ( 30,330,000 ) Balance, end of period $ ( 270,035,000 ) $ ( 249,014,000 ) Total stockholders ’ equity $ 170,000 $ 9,990,000 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents SUPER LEAGUE ENTERPRISE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In U.S. dollars, rounded to the nearest thousands) 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 16,635,000 ) $ ( 30,330,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,612,000 5,376,000 Stock-based compensation 1,289,000 2,735,000 Change in fair value of warrant liability ( 1,115,000 ) ( 2,898,000 ) Change in fair value of contingent consideration ( 252,000 ) ( 545,000 ) Change in fair value of debt at fair value 163,000 - Gain on sale of intangible assets ( 183,000 ) - Loss on extinguishment of liability – contingent consideration 336,000 - Loss on exchange of placement agent warrants - 681,000 Impairment of intangible assets and goodwill - 7,052,000 Fair value of noncash legal settlement and other noncash charges 959,000 - Loss on intangible asset disposal - 2,284,000 Amortization of convertible notes discount - 40,000 Changes in assets and liabilities: Accounts receivable 4,521,000 ( 2,113,000 ) Prepaid expense and other current assets 821,000 146,000 Accounts payable and accrued expense ( 3,960,000 ) 3,412,000 Accrued contingent consideration ( 20,000 ) ( 1,064,000 ) Contract liabilities ( 289,000 ) 228,000 Deferred taxes 161,000 ( 313,000 ) Accrued interest on notes payable 130,000 ( 180,000 ) Net cash used in operating activities ( 11,462,000 ) ( 15,489,000 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash paid in connection with Melon Acquisition, net - ( 150,000 ) Proceeds from sale of Minehut Assets 192,000 Purchase of property and equipment ( 23,000 ) ( 8,000 ) Capitalization of software development costs ( 452,000 ) ( 650,000 ) Acquisition of other intangible and other assets - ( 17,000 ) Net cash used in investing activities ( 283,000 ) ( 825,000 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of preferred stock, net of issuance costs 2,393,000 19,295,000 Proceeds from issuance of common stock, net of issuance costs 1,000,000 1,885,000 Proceeds from notes payable, net of debt issuance costs 3,257,000 - Payments on notes payable ( 396,000 ) - Payments on convertible notes - ( 539,000 ) Proceeds from accounts receivable facility 1,174,000 800,000 Payments on accounts receivable facility ( 1,950,000 ) - Contingent consideration payments – Melon Acquisition ( 32,000 ) - Net cash provided by financing activities 5,446,000 21,441,000 INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS ( 6,299,000 ) 5,127,000 CASH AND CASH EQUIVALENTS – beginning of year 7,609,000 2,482,000 CASH AND CASH EQUIVALENTS – end of year $ 1,310,000 $ 7,609,000 SUPPLEMENTAL NONCASH INVESTING ACTIVITIES Issuance of common stock in connection with legal settlement $ 1,440,000 $ 760,000 Issuance of common stock in connection with Melon Acquisition 90,000 722,000 Issuance of common stock in connection with the payment of Super Biz Contingent Consideration 38,000 548,000 Series AAA Junior preferred stock noncash issuance costs – incremental fair value in connection with modifications to certain AIRs 294,000 - Issuance of common stock in connection with Bannerfy Acquisition - 70,000 Issuance of Super Biz Note in connection with extinguishment of accrued contingent consideration liability 1,765,000 - The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents SUPER LEAGUE ENTERPRISE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS Super League Enterprise, Inc. (Nasdaq: 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. under the laws of the State of Delaware and changed its name to Super League Gaming, Inc. on June 15, 2015, and to Super League Enterprise, Inc. on September 11, 2023. On September 7, 2023, the Company filed a Certificate of Amendment (the “2023 Second Amendment”) to the Charter, which Second Amendment became effective as of September 11, 2023, to change the name of the Company from Super League Gaming, Inc. to Super League Enterprise, Inc. (the “Name Change”) and to effect a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for- 20 (the “Reverse Split”). The Name Change and the Reverse Split were approved by the Company’s Board 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. In connection with the Name Change, the Company also changed its Nasdaq ticker symbol to “SLE” from “SLGG.” All references to common stock, warrants to purchase common stock 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; and ● being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We 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; and ● 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. F-8 Table of Contents 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, impairment of intangibles, stock-based compensation expense, 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 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. For the years ended December 31, 2024 and 2023, net cash used in operating activities totaled $ 11.5 million and $ 15.5 million, respectively. The Company had cash and cash equivalents of $ 1.3 million and $ 7.6 million as of December 31, 2024 and 2023, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. 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 the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 205-40, “Presentation of Financial Statements - Going Concern,” (“ASC 205”). Management ’ s Plans 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. Management’s considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements, and the Company will be able to raise additional equity and / or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of the Company’s business activities, sales of material assets, default on its obligations, or forced insolvency. The accompanying consolidated financial statements do not contain any adjustments which might be necessary if the Company were unable to continue as a going concern. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. 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. However, additional funding may not be available on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future. If 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. F-9 Table of Contents 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 Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services and when the customer obtains control of the good or service. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material. The Company generates revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) content and technology through the production and distribution of our own, advertiser and third-party content, and (iii) direct to consumer offers, including in-game items, e-commerce and digital collectibles. The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the goods or services prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its media and advertising, publishing and content studio and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to media and advertising sales arrangements. In the event a customer pays us consideration, or we have a right to an amount of consideration that is unconditional, prior to our transfer of a good or service to the customer, we reflect the contract as a contract liability when the payment is made or the payment is due, whichever is earlier. In the event we perform by transferring goods or services to a customer before the customer pays consideration or before payment is due, we reflect the contract as a contract asset, excluding any amounts reflected as a receivable. 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. F-10 Table of Contents Media and Advertising 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 or other digital platforms, and prior to the Minehut Sale, on our Minehut Minecraft platform. Media assets include static billboards, video billboards, portals, 3D characters, Pop Ups and other media products. We work with Brands to determine the specific campaign media to deploy, target ad units and target demographics. We customize the media advertising campaign and media products with applicable branding, images and design and place the media on the various digital platforms. Media is delivered via our Super Biz Roblox platform, the Roblox Immersive Ads platform, other platforms, and prior to the Minehut Sale, on our owned and operated Minehut platform. Media placement can be based on a cost per thousand, other cost per measure, or a flat fee. Media and advertising arrangements typically include contract terms for time periods ranging from one week to two or three months in length. For on-platform media campaigns, we typically insert media products on-platform (in-game) to deliver to the Brand a predetermined number of impressions identified in the underlying contract. The benefit accrues to the Brand at the time that we deliver the impression on the platform, and the media product is viewed or interacted with by the on-platform user. The performance obligation for on-platform media campaigns is each impression that is guaranteed or required to be delivered per the underlying contract. Each impression is considered a good or service that is distinct under the revenue standard, and the performance obligation under our on-platform media contracts is the delivery of a series of impressions. Each impression required to be delivered in the series that we promise to transfer to the Brand meets the criteria to be a performance obligation satisfied over time, due to the fact that (1) our performance does not create an asset with an alternative use to the Company, and (2) we have an enforceable right to payment for performance completed to date per the terms of the contract. Further, the same method is used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct impression, as in the transfer of the series of impressions to the customer, which is based on actual delivery of impressions. As such, we account for the specified series of impressions as a single performance obligation. The delivery of the impression on platform represents the change in control of the good or service, and therefore, the Company satisfies its performance obligations and recognizes revenue based on the delivery of impressions under the contract. Influencer Marketing Influencer marketing revenue is generated in connection with the development, management and execution of influencer marketing campaigns on behalf of Brands, primarily on YouTube, Instagram and TikTok. Influencer marketing campaigns are collaborations between Super League, popular social-media influencers, and Brands, to promote a Brands’ products or services. Influencers are paid a flat rate per post to feature a Brand’s product or service on their respective social media outlets. For influencer marketing campaigns that include multiple influencers, the customer can benefit from the influencer posts either on its own or together with other resources that are readily available to the customer. Our influencer marketing campaigns for Brands (1) incorporate a significant service of integrating the goods or services with other goods or services promised in the contract (typically additional influencer posts) into a bundle of goods or services that represent the combined output that the customer has contracted for, and (2) the goods or services are interdependent in that each of the goods or services is affected by one or more of the other goods or services in the contract which combined, create an influencer marketing campaign to satisfy the Brand’s specific campaign objectives. The interdependency of the performance obligations is supported by an understanding of what a customer expects to receive as a final product with respect to an influencer marketing campaign, which is an integrated influencer marketing advertising campaign that the influencer posts create when they are combined into an overall integrated campaign. Our customers receive and consume the benefits of each influencer’s post as the content is posted on the influencers respective social media outlet. In addition, the influencer marketing campaigns and videos created by influencers are highly customized advertising engagements, where Brand specific assets and collateral are created for the customer based on specific and customized specifications, and therefore, does not create an asset with an alternative use. Further, based on contract terms, we typically have an enforceable right to payment for performance to date during the term of the arrangement. We recognize revenues for influencer marketing campaigns based on input methods which recognize revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. As such, revenues are recognized over the term of the campaign, as the influencer videos are posted, based on costs incurred to date relative to total costs for the influencer marketing campaign. Publishing and Content Studio Publishing and content studio revenue consists of revenue generated from immersive game development and custom game experiences within our owned and affiliate game worlds, and revenue generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. Publishing Custom builds are highly customized branded game experiences created and built by Super League for customers on existing digital platforms such as Roblox, Fortnite, Decentraland and others. Custom builds often include the creation of highly customized and branded gaming experiences and other campaign specific media or products to create an overall customized immersive world campaign. Custom integrations are highly customized advertising campaigns that are integrated into and run on existing affiliate Roblox gaming experiences. Custom integrations will often include the creation of highly customized and branded game integration elements to be integrated into the existing Roblox gaming experience to the customers specifications and other campaign specific media or products. Prior to the Minehut Sale, we also created custom integrations on the digital property “Minehut” for Brands. F-11 Table of Contents Our custom builds and custom integration (hereinafter, “Custom Programs”) campaign revenue arrangements typically include multiple promises and performance obligations, including requirements to design, create and launch a platform game, customize and enhance an existing game, deploy media products, and related performance measurement. Custom Programs offer a strategically integrated advertising campaign with multiple integrated components, and we provide a significant service of integrating the goods or services with other goods or services promised in the contract into a bundle of goods or services that represent the combined output or outputs that the customer has contracted for. As such, Custom Program revenue arrangements are combined into a single performance unit, as our performance does not create an asset with an alternative use to the entity and we typically have an enforceable right to payment for performance to date during the term of the arrangement. We recognize revenues for Custom Programs based on input methods, that recognize revenue based upon estimates of progress toward complete satisfaction of the contract performance obligations, utilizing primarily costs or direct labor hours incurred to date to estimate progress towards completion. Content Production Content production revenue is generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. We distribute three primary types of content for syndication and licensing, including: (1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology. Content production arrangements typically involve promises to provide a distinct set of videos, creative, content creation and/or other live or remote production services. These services can be one-off in nature (relatively short services periods of one day to one week) or can be specified as monthly services over a multi-month period. One-off and monthly content production services are distinct in that the customer can benefit from the service either on its own or together with other resources that are readily available to the customer. Further, promises to provide one-off or monthly content production services are typically separately identifiable as the nature of the promises, within the context of the contract, is to transfer each of those goods or services individually. Each month’s content production services are separate and not integrated with a prior month’s or subsequent months services and do not represent a combined output; each 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. In general, content production contracts do not meet the criteria for recognition of revenues over time as the customer typically does not simultaneously receive and consume the benefits provided by our performance as we perform, our performance does not typically create or enhance an asset that the customer controls, and while our performance does not create an asset with an alternative use, we typically have a right to payment upon completion of each distinct performance obligation. A performance obligation is satisfied at a point in time if none of the criteria for satisfying a performance obligation over time are met. For content production arrangements, we have a right to payment and the customer has control of the good or service at the time of completion and delivery of the one-off or monthly content production services in accordance with the terms of the underlying contract. As such, revenue is recognized at the time of completion of the one-off or monthly content production services. Direct to Consumer Direct to consumer revenue primarily consists of monthly digital subscription fees, and sales of in-game digital goods. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale. InPvP Platform Generated Sales Transactions Through a relationship with Microsoft, the owner of Minecraft, we operate a Minecraft server world for players playing the game on consoles and tablets. We are one of seven partner servers with Microsoft that, while “free to play,” monetize the players through in-game micro transactions. We generate in-game platform sales revenue from the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash. InPvP revenues are generated from single transactions for various distinct digital goods sold to users in-game. Microsoft processes sales transactions and remits the applicable revenue share to us pursuant to the terms of the Microsoft agreement. Revenue for digital goods sold on the platform is recognized when Microsoft (our partner) collects the revenue and facilitates the transaction, including delivery of digital goods, on the platform. Revenue for such arrangements includes all revenue generated, make goods, and refunds of all transactions managed via the platform by Microsoft. Payments are made to the Company monthly based on the sales revenue generated on the platform. F-12 Table of Contents Revenue was comprised of the following for the years ended December 31: 2024 2023 Media and advertising $ 6,696,000 $ 10,919,000 Publishing and content studio 8,607,000 12,732,000 Direct to consumer 879,000 1,428,000 $ 16,182,000 $ 25,079,000 For the fiscal years ended December 31, 2024 and 2023, 47 % and 24 % of revenues were recognized at a single point in time, and 53 % and 76 % of revenues were recognized over time, respectively. Contract assets totaled $ 372,000 at December 31, 2024, $ 546,000 at December 31, 2023, and $ 1,013,000 at December 31, 2022. Contract liabilities totaled $ 50,000 at December 31, 2024, $ 339,000 at December 31, 2023, and $ 111,000 at December 31, 2022. Revenue recognized during the year ended December 31, 2024 relating to contract liabilities as of December 31, 2023 totaled $ 289,000 . Revenue recognized during the year ended December 31, 2023 relating to contract liabilities as of December 31, 2022 totaled $ 111,000 . In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts with customers, these reporting requirements are not applicable as per ASC 606-10-50-14 as the performance obligation is part of a contract that has an original duration of one year or less. Cost of Revenues 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 Advertising costs include the cost of ad production, social media, print media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising costs are included in selling, marketing and advertising expense in the consolidated statements of operations. Advertising expense for the fiscal years ended December 31, 2024 and 2023 was $ 101,000 and $ 134,000 , respectively. Engineering, Technology and Development Costs Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense includes the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support. Cash and Cash Equivalents The Company considers all highly-liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. Accounts Receivable Accounts receivable are recorded at the invoice amount, less allowances for credit losses, if any, and do not bear interest. 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. As of December 31, 2024 and 2023, no allowance for expected credit losses was deemed necessary. F-13 Table of Contents Fair Value Measurements Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: Level 1. Quoted prices in active markets for identical assets or liabilities. Level 2 . Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments. Level 3. Unobservable inputs which are supported by little or no market activity and which are significant to the fair value of the assets or liabilities. Certain 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. There were no transfers to/from Levels 1, 2, and 3 during the periods presented. Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair value for other assets and liabilities such as cash, restricted cash, accounts receivable, other receivables, prepaid expense and other current assets, accounts payable and accrued expense, and liabilities to customers have been determined to approximate carrying amounts due to the short maturities of these instruments. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the 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. Equity-linked instruments that are deemed to be freestanding instruments issued in conjunction with preferred stock are accounted for separately. For equity linked instruments classified as equity, the proceeds are allocated based on the relative fair values of the preferred stock and the equity-linked instrument following the guidance in FASB ASC Topic 470, “Debt,” (“ASC 470”). Property and Equipment Property and equipment are recorded at cost. Major additions and improvements that materially extend useful lives of property and equipment are capitalized. 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 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. Acquisitions Acquisition Method. Acquisitions that meet the definition of a business under FASB ASC Topic 805 , “Business Combinations,” (“ASC 805”) are accounted for using the acquisition method of accounting. Under the acquisition method of accounting, assets acquired, liabilities assumed, contractual contingencies, and contingent consideration, when applicable, are recorded at fair value at the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The application of the acquisition method of accounting requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in connection with the allocation of the purchase price consideration to the assets acquired and liabilities assumed. Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expense in the consolidated statements of operations. F-14 Table of Contents Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable. Contingent consideration recognized is included in the initial cost of the assets acquired, with subsequent changes in the recorded amount of contingent consideration recognized as an adjustment to the cost basis of the acquired assets. Subsequent changes are allocated to the acquired assets based on their relative fair value. Depreciation and/or amortization of adjusted assets are recognized as a cumulative catch-up adjustment, as if the additional amount of consideration that is no longer contingent had been accrued from the outset of the arrangement. Contingent consideration that is paid to sellers that remain employed by the acquirer and linked to future services is generally considered compensation cost and recorded in the consolidated statements of operations in the post-combination period. Intangible Assets Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights, (iv) developed technology acquired, (v) partner, customer, creator and influencer related intangible assets acquired and (vi) other intangible assets, which are recorded at cost (or in accordance with the acquisition method or cost accumulation methods described above) and amortized using the straight-line method over the estimated useful lives of the assets, ranging from three to 10 years. Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life. Transfer or Sale of Intangible Assets Upon the sale of an intangible asset, or group of intangible assets (hereinafter, “nonfinancial assets”), the Company initially evaluates whether the Company has a controlling financial interest in the legal entity that holds the nonfinancial assets by applying the guidance on consolidation. Any nonfinancial assets transferred that are held in a legal entity in which the Company does not have (or ceases to have) a controlling financial interest is further evaluated to determine whether the underlying transaction contract meets all of the criteria for accounting for contract under the revenue standard. Once a contract meets all of the criteria, the Company identifies each distinct nonfinancial asset promised to a counterparty and derecognizes each distinct nonfinancial asset when the Company transfers control of the nonfinancial asset to the counterparty. The Company evaluates the point in time at which a counterparty obtains control of the nonfinancial assets, including whether or not the counterparty can direct the use of, and obtain substantially all of the benefits from, each distinct nonfinancial asset. If the consideration promised in a contract is variable or includes a variable amount, the Company estimates the amount of consideration to which the Company will be entitled in exchange for transferring the promised assets to a counterparty. Purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. The Company determines the total transaction price, including an estimate of any variable consideration, at contract inception and reassesses this estimate at each reporting date. The Company estimates the transaction price utilizing the expected value method. The expected value is the sum of probability-weighted amounts in a range of possible consideration amounts. The accounting for an arrangement with a put option depends on the amount the Company must pay to the counterparty in the event the counterparty exercises the put option, and whether the counterparty has a significant economic incentive to exercise its right. The accounting for put options requires the Company to assess at contract inception, whether the counterparty has a significant economic incentive to exercise its right, including how the repurchase price compares to the expected market value of the nonfinancial assets at the date of repurchase and the amount of time until the right expires. A customer has a significant economic incentive to exercise a put option when the repurchase price is expected to significantly exceed the market value of the good at the time of repurchase. The Company accounts for a put option as a sale of an asset or group of assets with a right of return, if the repurchase price is less than the original sales price and the customer does not have a significant economic incentive to exercise its right. Impairment of Long-Lived Assets The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of our use of the acquired assets or the strategy for our overall business; significant negative industry or economic trends; significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments; and significant decline in our stock price for a sustained period. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. F-15 Table of Contents Other assets of a reporting unit that are held and used may be required to be tested for impairment when certain events trigger interim goodwill impairment tests. In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below. There can be no assurance, however, that market conditions or demand for the Company’s products or services will not change, which could result in long-lived asset impairment charges in the future. Goodwill The Company currently has one reporting unit. The following table presents the changes in the carrying amount of goodwill as of December 31: 2024 2023 Beginning Balance $ 1,864,000 $ - Acquisitions (See Note 5) - 1,864,000 Ending Balance $ 1,864,000 $ 1,864,000 Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We consider our market capitalization and the carrying value of our assets and liabilities, including goodwill, when performing our goodwill impairment tests. We operate in one reporting segment. If a potential impairment exists, a calculation is performed to determine the fair value of existing goodwill. This calculation can be based on quoted market prices and / or valuation models, which consider the estimated future undiscounted cash flows resulting from the reporting unit, and a discount rate commensurate with the risks involved. Third-party appraised values may also be used in determining whether impairment potentially exists. In assessing goodwill impairment, significant judgment is required in connection with estimates of market values, estimates of the amount and timing of future cash flows, and estimates of other factors that are used to determine the fair value of our reporting unit. If these estimates or related projections change in future periods, future goodwill impairment tests may result in charges to earnings. When conducting the Company’s annual or interim goodwill impairment assessment, we have the option to initially perform a qualitative evaluation of whether it is more likely than not that goodwill is impaired. The Company is also permitted to bypass the qualitative assessment and proceed directly to the quantitative test. In evaluating whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we consider the guidance set forth in ASC 350, which requires an entity to assess relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, financial performance and other relevant events or circumstances. 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 Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Estimates of expected volatility of the underlying common stock for the expected term of the stock option used in the Black-Scholes-Merton option pricing model are determined by reference to historical volatilities of the Company’s common stock and historical volatilities of similar companies. Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued. F-16 Table of Contents A condition affecting the exercisability or other pertinent factors used in determining the fair value of an award that is based on an entity achieving a specified share price constitutes a market condition pursuant to FASB ASC Topic 718, “Stock based Compensation,” (“ASC 718”). A market condition is reflected in the grant-date fair value of an award, and therefore, a Monte Carlo simulation model is utilized to determine the estimated fair value of the equity-based award. Compensation cost is recognized for awards with a market condition, provided the requisite service period is satisfied, regardless of whether the market condition is ever satisfied. Cancellation of an existing equity-classified award along with a concurrent grant of a replacement award is accounted for as a modification under ASC 718. Total compensation cost to be recognized in connection with a modification and concurrent grant of a replacement award is equal to the original grant date fair value plus any incremental fair value, calculated as the excess of the fair value of the replacement award over the fair value of the original awards on the cancellation date. Any incremental compensation cost related to vested awards is recognized immediately on the modification date. Any incremental compensation cost related to unvested awards is recognized prospectively over the remaining service period, in addition to the remaining unrecognized grant date fair value. Financing Costs Specific incremental costs directly attributable to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the equity financing. In the event that the proposed or actual equity financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred equity financing costs, if any, are included in other current assets in the accompanying 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 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 consolidated statements 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. Debt Fair Value Option (“ FVO ” ) Election 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 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. F-17 Table of Contents 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 The Company accounts for transfers of financial assets as sales when it has surrendered control over the related assets. Whether control has been relinquished requires, among other things, an evaluation of relevant legal considerations and an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred. Gains and losses stemming from transfers reported as sales, if any, are included in the 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 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. Commitment fees charged irrespective of drawdown activity are recognized as expense on a straight line basis over the commitment period and included in other income (expense) in the consolidated statements of operations. Refer to Note 6 for additional information. Concentration of Credit Risks 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. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows. Risks and Uncertainties Concentrations . The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, and vendors whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable, as follows: Year Ended December 31, 2024 2023 Number of customers > 10% of revenues / percent of revenues Two / 20 % One / 14 % Revenue concentrations were comprised of the following revenue categories: Year Ended December 31, 2024 2023 Advertising and sponsorships 10 % 3 % Publishing and content studio 10 % 11 % 20 % 14 % December 31, 2024 December 31, 2023 Number of customers > 10% of accounts receivable / percent of accounts receivable Three / 45 % Three / 55 % Number of vendors > 10% of accounts payable / percent of accounts payable Two / 21 % Two / 37 % F-18 Table of Contents 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. Potentially dilutive common stock equivalents primarily consist of common stock potentially issuable in connection with the conversion of outstanding preferred stock, convertible notes payable, employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings. Common stock underlying all outstanding stock options, restricted stock units and warrants, totaling 3,652,000 and 2,250,000 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 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 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: 2024 2023 Net loss $ ( 16,635,000 ) $ ( 30,330,000 ) Deemed dividend on Series AA Preferred Stock – down round feature - ( 7,567,000 ) Preferred Dividends paid in shares of common stock ( 4,386,000 ) ( 374,000 ) Net loss attributable to common stockholders $ ( 21,021,000 ) $ ( 38,271,000 ) Modifications and Exchanges of Preferred Stock and Preferred Stock Instruments Preferred Stock Changes to the terms of the Company’s preferred stock or exchanges of shares of the Company’s preferred stock for another, are assessed to determine whether the changes or exchange should be accounted for as either a modification or an extinguishment. This assessment can be done either qualitatively or quantitatively based upon the significance of the change. When preferred stock is modified in a manner that cannot be reliably assessed qualitatively, the Company performs a quantitative test to determine whether the modification or exchange should be accounted for as a modification or an extinguishment. The Company applies the cash flow model used to assess debt modifications in ASC 470-50, Debt – “Modifications and Extinguishments,” to determine whether a modification or exchange of preferred stock should be accounted for as a modification or extinguishment. Under that model, the present value of the contractual cash flows is compared before and after a modification or exchange. If the present value of the contractual cash flows is ten percent or more, the modification or exchange is accounted for as an extinguishment; if the present value of the contractual cash flows differs by less than ten percent, the modification or exchange is accounted for as a modification. If the assessment results in an extinguishment, then the difference between the fair value of the new or modified preferred stock and the carrying value of the original preferred stock is recognized as a reduction of, or increase to, retained earnings, as a deemed dividend. The difference is also recognized as an adjustment to earnings available to common shareholders for purposes of calculating earnings per share. If the assessment results in a modification, the Company measures any transfer of value between preferred shareholders and common shareholders as the difference between the fair value of the preferred stock before and after the modification or exchange, measured on the modification or exchange date. Transfers of value are recorded as a reduction of, or increase to, retained earnings as a deemed dividend. In addition, transfers of value are recognized as an adjustment to earnings available to common shareholders for purposes of calculating earnings per share. In December 2023, 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 Agreement, the “Exchange Agreements”), with certain holders (the “Holders”) of the Company’s Series A Preferred Stock, and Series AA Preferred Stock. The difference between the fair value of the new or modified preferred stock and the carrying value of the original preferred stock totaled $ 0 , resulting in no impact on retained earnings for the periods presented. Refer to Note 7 for additional information. Preferred Stock Instruments 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. F-19 Table of Contents Dividends Dividends on preferred stock paid in another class of stock are recorded at the fair value of the shares issued as a charge to retained earnings. Dividends declared on preferred stock that are payable in the Company’s common shares are deducted from earnings available to common shareholders when computing earnings per share. 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. Upon the occurrence of a triggering event that results in a reduction of the conversion price for an equity-classified convertible preferred stock, the Company measures the value of the effect of the feature as the difference between the fair value of the financial instrument without the down round feature, with a conversion price corresponding to the currently stated conversion price of the issued instrument, and the fair value of the financial instrument without the down round feature with a conversion price corresponding to the reduced conversion price upon the down round feature being triggered. The value of the effect of a down round feature that is triggered is recognized as a charge to retained earnings and a reduction to income available to common stockholders in the computation of earnings per share. 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. Income Taxes Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the years ended December 31, 2024 and 2023. The Company has elected to include interest and penalties related to its tax contingences as a component of income tax expense. There were no accruals for interest and penalties related to uncertain tax positions for the periods presented. Income tax returns remain open for examination by applicable authorities, generally three years from filing for federal and four years for state. The Company is not currently under examination by any taxing authority nor has it been notified of an impending examination. Contingencies Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. F-20 Table of Contents Recent Accounting Guidance Recently Adopted Accounting Pronouncements. ASU Description Date Adopted 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. ASU Description 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 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31: 2024 2023 Computer hardware $ 3,346,000 $ 3,322,000 Furniture and fixtures 356,000 356,000 3,702,000 3,678,000 Less: accumulated depreciation and amortization ( 3,678,000 ) ( 3,608,000 ) $ 24,000 $ 70,000 Depreciation and amortization expense for property and equipment was $ 70,000 and $ 85,000 for the years ended December 31, 2024 and 2023, respectively. F-21 Table of Contents 4. INTANGIBLE AND OTHER ASSETS Intangible and other assets consisted of the following as of December 31: 2024 2023 Weighted Average Amortization Period (Years) Partner and customer relationships $ 7,645,000 $ 7,645,000 6.5 Capitalized software development costs 4,774,000 5,912,000 3.0 Capitalized third-party game property costs 500,000 500,000 5.0 Developed technology 3,931,000 3,931,000 5.0 Influencers/content creators 2,559,000 2,559,000 4.5 Trade name 209,000 209,000 5.0 Domain 68,000 68,000 10.0 Copyrights and other 745,000 825,000 5.5 20,431,000 21,649,000 5.0 Less: accumulated amortization ( 16,361,000 ) ( 15,013,000 ) Intangible and other assets, net $ 4,070,000 $ 6,636,000 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. The transaction allows Super League to streamline its position in partnering with major brands to build, market, and operate 3D experiences across multiple immersive platforms, including open gaming powerhouses like Minecraft, and aligns with the Company’s cost improvement initiatives. Super League and GamerSafer will maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners. The carrying value of Minehut related assets totaled $ 475,000 as of February 26, 2024, comprised of total carrying costs of $ 1,671,000 , net of accumulated amortization of $ 1,196,000 , and historically were included in intangible assets, net in the 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. in June 2021. The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include 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 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. The impairment charge was based on the difference between the calculated fair value of the intangible assets totaling $ 860,000 and the carrying value of the applicable intangible assets which totaled $ 7,912,000 as of December 31, 2023. F-22 Table of Contents Other In June 2023 , the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere. As a result, 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. The Company expects to record aggregate amortization expense for each of the five succeeding fiscal years as follows: For the years ending December 31, 2025 $ 2,092,000 2026 1,208,000 2027 520,000 2028 237,000 2029 13,000 Thereafter - $ 4,070,000 Intangible asset amortization expense for the periods presented was included in the following operating expense line items: Fiscal Year Ended December 31, 2024 2023 Sales, marketing and advertising $ 773,000 $ 2,125,000 Engineering, technology and development 1,070,000 2,331,000 General and administrative 701,000 782,000 Total amortization expense $ 2,544,000 $ 5,238,000 5. ACQUISITIONS 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 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 “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 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. F-23 Table of Contents 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. The awards were granted pursuant to terms and conditions fixed by the Compensation Committee of the Board and as an inducement material to each new employee entering employment with Super League in accordance with Nasdaq Listing Rule 5635I(4). Of the 103,780 RSUs: (A) 41,512 of the RSUs will vest in 25 equal monthly installments beginning on May 4, 2023, and on the first of each calendar month, subject to the applicable employee’s continued service with Super League on each such vesting date; and (B) 62,268 of the RSUs will vest as follows: (i) 25 % will vest upon the achievement of certain net revenue targets for the fiscal year ending December 31, 2024, to be determined by the Board in its discretion; (ii) 25 % upon the achievement of certain net revenue targets for the fiscal year ending December 31, 2025, to be determined by the Board in its sole discretion; (iii) 25 % upon Super League’s common stock maintaining a minimum closing price of at least $ 30.00 over a rolling 30 consecutive trading day period, as quoted on the Nasdaq Capital Market; and (iv) 25 % upon Super League’s common stock maintaining a minimum closing price of at least $ 50.00 over a rolling 30 consecutive trading day period, as quoted on the Nasdaq Capital Market. The vesting of the RSUs will accelerate upon a change of control of the Company. In addition, upon (Y) the Company’s termination of the employment of the respective employee without cause, or (Z) the respective employees resignation for good reason, the RSUs will continue to vest as if (Y) or (Z) had not occurred. The RSUs are subject to the terms and conditions of the RSU agreement covering each grant. The Acquisition was approved by the board of directors of each of the Company and Melon and was approved by the sole stockholder of Melon. In accordance with the acquisition method of accounting, the financial results of Super League presented herein include the financial results of Melon subsequent to the Melon Closing Date. Disclosure of revenue and net loss for Melon on a stand-alone basis for the applicable periods presented is not practical due to the integration of Melon activities, including sales, products, advertising inventory, resource allocation and related operating expense, with those of the consolidated Company upon acquisition, consistent with Super League operating in one reporting segment. The Company determined that the Melon Acquisition constitutes a business acquisition as defined by ASC 805. Accordingly, the assets acquired, and liabilities assumed in the transaction were recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition, totaling approximately $ 47,000 , were expensed as incurred pursuant to the acquisition method of accounting in accordance with ASC 805. Super League’s preliminary purchase price allocation was based on an evaluation of the appropriate fair values of the assets acquired and liabilities assumed and represents management’s best estimate based on available data. Fair values are determined based on the requirements of ASC 820. The following table summarizes the determination of the fair value of the purchase price consideration paid in connection with the Melon Acquisition, as of the Melon Closing Date: Cash consideration $ 150,000 Equity consideration– shares of common stock 77,833 Super League closing stock price per share on the Melon Closing Date $ 9.28 Fair value of equity consideration issued $ 722,000 722,000 Fair value of contingent consideration 1,350,000 Fair value of total consideration paid $ 2,222,000 The purchase price allocation was based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in connection with the Melon Acquisition, as of the Melon Closing Date, as follows: Amount Assets Acquired and Liabilities Assumed: Accounts receivable and other assets $ 36,000 Liabilities assumed ( 188,000 ) Identifiable intangible assets 510,000 Identifiable net assets acquired 358,000 Goodwill 1,864,000 Total purchase price $ 2,222,000 F-24 Table of Contents The following table presents details of the fair values of the acquired intangible assets of Melon: Estimated Useful Life (in years) Amount Developed technology 5 $ 250,000 Developer relationships 2 50,000 Customer relationships 6 190,000 Trade names / trademarks 0.5 20,000 Total intangible assets acquired $ 510,000 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 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 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: 2024 2023 Beginning balance $ 538,000 $ - Contingent Consideration – Initial accrual – May 2023 - 1,350,000 Change in fair value (4) ( 148,000 ) ( 682,000 ) Current period accrued contingent consideration ( 130,000 ) 61,000 Post closing adjustments (2) - ( 191,000 ) Contingent consideration payments (3) ( 122,000 ) - Accrued contingent consideration (1) $ 138,000 $ 538,000 (1) 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. (2) 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. (3) 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. (4) 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. Goodwill recorded in connection with the Melon Acquisition is primarily attributable to expected synergies from combining the operations and assets of Super League and Melon, and also includes residual value attributable to the assembled and trained workforce acquired in the acquisition. Management is primarily responsible for determining the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as of the Melon Closing Date. 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 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. F-25 Table of Contents The fair values of the acquired intangible assets, as described above, was determined using the following methods: Description Valuation Method Applied Valuation Method Description Assumptions Customer relationships Multi-Period Excess Earnings Method “MPEE”) under the Income Approach MPEEM is an application of the DCF Method, whereby revenue derived from the intangible asset is estimated using the overall business revenue, adjusted for attrition, obsolescence, cost of goods sold, operating expense, and taxes. Required returns attributable to other assets employed in the business are subtracted. The “excess” earnings are attributable to the intangible asset and are discounted to present value at a rate of return to estimate the fair value of the intangible asset. Discount rate: 30.0 %; Forecast period: 6.7 years; Attrition Rate: 30.0 %. Trade names / trademarks Relief-from-Royalty Method under the Income Approach Under the Relief-from-Royalty method, the royalty savings is calculated by estimating a reasonable royalty rate that a third-party would negotiate in a licensing agreement. Such royalties are most commonly expressed as a percentage of total revenue involving the technology. Forecast period: 8.0 months; Royalty Rate: 1.0 %; Discount Rate: 30.0 %. Non-Compete agreements Differential Cash Flows The Differential Cash Flows Approach is a version of the income approach that values an intangible asset as the present value of the cash flows that a company would lose if they did not have the asset in place. The differential cash flow is calculated as the difference between the cash flow assuming competition and the cash flow without competition. Competition Probability: 30.0 %; Revenue impact: 20.0 %; Discount Rate: 30.0 %; Term 2.16 years. Developed technology Replacement Cost Method In the Replacement Cost Method, value is estimated by determining the current cost of replacing an asset with one of equivalent economic utility. The premise of the approach is that a prudent investor would pay no more for an asset than the amount for which the utility of the asset could be replaced. Rate of Return: 30.0 %; Discount rate: 30.0 %; Replacement period: 3.0 months. For tax purposes, consistent with the accounting for book purposes, the Melon Closing Consideration was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess purchase price allocated to goodwill. As a result, no deferred tax assets or liabilities were recorded with the acquisition and all of the goodwill is expected to be deductible for tax purposes. The following unaudited pro forma combined results of operations for the periods presented are provided for illustrative purposes only. The unaudited pro forma combined statements of operations assume the acquisition occurred as of January 1, 2022. The unaudited pro forma combined financial results do not purport to be indicative of the results of operations for future periods or the results that actually would have been realized had the entities been a single entity during these periods. 2023 2022 Revenue $ 25,794,000 $ 22,451,000 Net Loss ( 31,178,000 ) ( 88,463,000 ) Pro forma adjustments primarily relate to the amortization of identifiable intangible assets acquired over the estimated economic useful life as described above, the exclusion of nonrecurring transaction costs, the exclusion of depreciation related to tangible and intangible assets of Melon existing immediately prior to the Melon Acquisition Date, and adjustments related to administrative redundancies. Acquisition of Super Biz – Contingent Consideration On October 4, 2021 (“Super Biz Closing Date”), the Company entered into an Asset Purchase Agreement (the “Super Biz Purchase Agreement”) with Super Biz Co. and the founders of Super Biz (the “Founders”), pursuant to which the Company acquired (i) substantially all of the assets of Super Biz (the “Super Biz Assets”), and (ii) the personal goodwill of the Founders regarding Super Biz’s business, (the “Super Biz Acquisition”). The consummation of the Super Biz Acquisition (the “Super Biz Closing”) occurred simultaneously with the execution of the Super Biz Purchase Agreement on the Super Biz Closing Date. Pursuant to the terms and subject to the conditions of the Super Biz Purchase Agreement, up to an aggregate amount $ 11.5 million would be payable to Super Biz and the Founders in connection with the achievement of certain revenue milestones for the period from the Super Biz Closing Date until December 31, 2022 (“Initial Earn Out Period”) and for the fiscal year ending December 31, 2023 (the “Super Biz Contingent Consideration”) (“Super Biz Earn Out Periods”). The Super Biz Contingent Consideration is payable in the form of both cash and shares of the Company’s common stock, in equal amounts, as more specifically set forth in the Super Biz Purchase Agreement. F-26 Table of Contents The Company hired the Founders of Super Biz in connection with the Super Biz Acquisition. Pursuant to the provisions of the Super Biz Purchase Agreement, in the event that a Founder ceases to be an employee during any of the Super Biz Earn Out Periods, as a consequence of his resignation without good cause, or termination for cause, the Super Biz Contingent Consideration will be reduced by one-half ( 50 %) for the respective Super Biz Earn Out Periods, if and when earned. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such, the Super Biz Contingent Consideration is accounted for as post-combination services and expensed in the period that payment of any amounts of contingent consideration is determined to be probable and reasonably estimable. 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 change in accrued Super Biz Contingent Consideration and the related income statement impact was comprised of the following for the years ended December 31: 2024 2023 Beginning balance $ 1,670,000 $ 3,206,000 Change in fair value (3) ( 9,000 ) 137,000 Current period accrued contingent consideration 142,000 1,750,000 Contingent consideration payments (2) ( 38,000 ) ( 3,423,000 ) Issuance of Super Biz Note (as described below) (1) ( 1,765,000 ) - Accrued contingent consideration (1) $ - $ 1,670,000 (1) 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. (2) 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 . (3) 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”): (i) 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; (ii) 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; (iii) 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; or (iv) 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. F-27 Table of Contents 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. 6. DEBT 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. F-28 Table of Contents 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: Agile Note RP Note Gross Proceeds $ 1,850,000 $ 1,500,000 Fair Value at issuance date 2,132,000 1,343,000 Difference between proceeds and fair value at issuance (2) 282,000 157,000 Note balance – December 31, 2024 1,454,000 1,500,000 Fair value – December 31, 2024 1,679,000 1,438,000 Interest paid during the period 167,000 - Accrued interest at period end 28,000 71,000 Change in fair value subsequent to issuance (2) ( 57,000 ) 96,000 Debt issue costs expensed immediately in the consolidated statements of operations (1) 180,000 - Interest Rate (Discount rate used in present value calculation) 42 % 42 % (1) Debt issue costs incurred in connection with the Agile Loan included administrative fee of $ 92,500 to the collateral agent and advisor fees. (2) Reflected in interest expense in the consolidated statements of operations. Accounts Receivable Financing Facility Super League Enterprise, Inc. and certain of its subsidiaries (collectively with the Company, the “Borrowers”), entered into a Financing and Security Agreement (the “SLR Agreement”) with SLR Digital Finance, LLC (“Lender”), effective December 17, 2023 (the “Facility Effective Date”). Pursuant to the SLR Agreement, Lender may, from time to time and in its sole discretion, make certain cash advances to the Company (each an “Advance”, and collectively, “Advances”), against the face amounts of certain uncollected accounts receivable of the Borrowers on an account-by-account basis (each, a “Financed Account”, and collectively, the “Accounts”), at a rate of 85 % multiplied by the face value of such Account (the “Advance Rate”), less any reserved funds and any other amounts due to Lender from Borrowers, up to a maximum aggregate Advance amount of $ 4,000,000 (the “Maximum Amount”)(collectively, the “AR Facility”). Upon receipt of any Advance, Borrowers will have assigned all of its rights in such receivables and all proceeds thereof. The proceeds received from the Facility will be used to fund general working capital needs. The SLR Agreement is effective for 24 months from the 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); (iii) be charged a monthly financing fee (the “Financing Fee”), due upon receipt of full payment of a Financed Account by Lender, equal to 1/12 of (a) the prime rate plus 2 % (the “Facility Rate”), multiplied by (b) the amount of the Outstanding Amount; and (iv) utilize the facility such that the monthly average aggregate Advances outstanding is at $ 400,000 (the “Minimum Utilization”). In the event that Borrower’s monthly utilization is less than the applicable Minimum Utilization for any month, the Financing Fee for such month shall be calculated as if the applicable Minimum Utilization has been satisfied. F-29 Table of Contents The SLR Agreement imposes various restrictions on the activities of the Borrowers, including a prohibition on fundamental changes to the Company or its subsidiaries (including certain consolidations, mergers and sales and transfers of assets, and limitations on the ability of the Borrowers to grant liens upon their property or assets). The SLR Agreement includes standard Events of Default (as defined in the SLR Agreement), and provide that, upon the occurrence of certain events of default, Lender may, among other things, immediately collect any obligation owing to Lender under the SLR Agreement, cease advancing money to the Borrowers, take possession of any collateral, and/or charge interest at a rate equal to the lesser of (i) 6 % above the Facility Rate, and (ii) the highest default rate permitted by applicable law. As security for the full and prompt payment and performance of any obligations arising under the SLR Agreement, the Borrowers granted to Lender a continuing first priority security interest in all the assets of the Borrowers. The SLR Agreement also provides for customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default. Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Financing and servicing fees calculated with reference to amounts advanced under the AR Facility are included in interest expense. The commitment fee, based on the maximum facility amount and payable irrespective of drawdowns, is expensed on a straight line basis over the term of the AR Facility and included in other income (expense) in the consolidated statements of operations. 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 On May 16, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with three institutional investors (collectively, the “Note Holders”) providing for the sale and issuance of a series of senior convertible notes in the aggregate original principal amount of $ 4,320,000 , of which 8 % is an original issue discount (“OID”) (each, a “Note,” and, collectively, the “Notes,” and such financing, the “Note Offering”). The Notes accrued interest at a guaranteed annual rate of 9 % per annum, were set to mature 12 months from the date of issuance, and were convertible at the option of the Note Holders into that number of shares of the Company’s common stock, equal to the sum of the outstanding principal balance, accrued and unpaid interest, and accrued and unpaid late charges (the “Conversion Amount”), divided by $ 80.00 (the “Conversion Price”), subject to adjustment upon the occurrence of certain events as more specifically set forth in the Note, as amended. In the event of the occurrence of an event of default, the Note Holders may, at the Note Holder’s option, convert all, or any part of, the Conversion Amount into shares of common stock at 90 % of the lowest volume weighted average price of the ten trading days preceding the date for which the price is being calculated. Amortization of original issue discount for the years ended December 31, 2024 and 2023 totaled $ 0 and $ 40,000 , respectively. Interest paid during the years ended December 31, 2024 and 2023 totaled $ 0 and $ 180,000 , respectively. At December 31, 2022, the remaining principal balance of the Notes totaled $ 539,000 , and accrued interest totaled $ 180,000 , both of which were paid in full during the three months ended March 31, 2023. As of March 31, 2023, all amounts of principal and interest under the Notes were fully paid, resulting in a Convertible note payable and accrued interest balance of $ 0 . 7. STOCKHOLDERS ’ EQUITY AND EQUITY-LINKED INSTRUMENTS Reverse Stock Split On September 7, 2023, the Company filed the 2023 Second Amendment to the Company’s Charter, to effect a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for- 20 (the “Reverse Split”). The Reverse Split was approved by the 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. The Company’s shares began trading on a Reverse Split-adjusted basis on the Nasdaq Capital Market on September 11, 2023. As a result of the Reverse Split, every 20 shares of the Company’s issued and outstanding common stock was automatically combined and converted into one issued and outstanding share of common stock. No fractional shares of common stock were issued as a result of the Reverse Split. Instead, in lieu of any fractional shares to which a stockholder of record would otherwise be entitled as a result of the Reverse Split, the Company paid cash (without interest) equal to the value of such fractional share. The Reverse Split did not modify the rights or preferences of the common stock. All references to common stock, warrants to purchase common stock, options to purchase common stock, restricted stock, share data, per share data and related information contained in the consolidated financial statements have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented. F-30 Table of Contents 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 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. All references in the accompanying consolidated financial statements to Preferred Stock have been restated to reflect the Amended and Restated Charter. Common Stock The Amended and Restated Charter also increased the Company’s authorized capital to include 100.0 million shares of common stock, par value $ 0.001 , and removed the deemed liquidation provision, as such term is defined in the Amended and Restated Charter. Each holder of common stock is entitled to one vote for each share of common stock held at all meetings of stockholders. On May 30, 2023, the Company filed 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 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. F-31 Table of Contents Equity Financings 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 Proceeds Conversion Shares - Common Stock Other Series Designation Closing Date Conversion Prices (2)(3)(4) Shares Purchased/ Issued in Exchange (6) Conversions / Exchanges Outstanding - December 31, 2024 Gross Proceeds Fees Net Proceeds Original Conversions / Exchanges (5) December 31, 2024 Original Placement Agent Warrants (1) A November 22, 2022 $ 12.40 5,359 ( 5,359 ) - $ 5,359,000 $ 697,000 $ 4,662,000 432,000 ( 432,000 ) - 62,000 A-2 November 28, 2022 $ 13.29 1,297 ( 1,297 ) - 1,297,000 169,000 1,128,000 98,000 ( 98,000 ) - 14,000 A-3 November 30, 2022 $ 13.41 1,733 ( 1,733 ) - 1,733,000 225,000 1,508,000 129,000 ( 129,000 ) - 18,000 A-4 December 22, 2022 $ 7.60 1,934 ( 1,934 ) - 1,934,000 251,000 1,683,000 254,000 ( 254,000 ) - 36,000 A-5 January 31, 2023 $ 11.09 2,299 ( 1,519 ) 780 2,299,000 299,000 2,000,000 207,000 ( 137,000 ) 70,000 30,000 AA April 19, 2023 $ 9.43 /$ 1.89 7,680 ( 3,981 ) 3,699 7,680,000 966,000 6,714,000 4,072,000 ( 2,111,000 ) 1,961,000 112,000 AA-2 April 20, 2023 $ 10.43 /$ 2.09 1,500 ( 1,500 ) - 1,500,000 130,000 1,370,000 719,000 ( 719,000 ) - 17,000 AA-3 April 28, 2023 $ 9.50 /$ 1.90 1,025 ( 1,000 ) 25 1,025,000 133,000 892,000 539,000 ( 526,000 ) 13,000 16,000 AA-4 May 5, 2023 $ 9.28 /$ 1.86 1,026 ( 526 ) 500 1,026,000 133,000 893,000 553,000 ( 283,000 ) 270,000 16,000 AA-5 May 26, 2023 $ 10.60 /$ 2.12 550 ( 500 ) 50 550,000 72,000 478,000 259,000 ( 236,000 ) 23,000 8,000 AAA November 30, 2023 $ 1.67 9,388 ( 1,993 ) 7,395 5,377,000 645,000 4,732,000 5,608,000 ( 1,191,000 ) 4,417,000 466,000 AAA-2 December 22, 2023 $ 1.71 5,334 ( 2,186 ) 3,148 2,978,000 357,000 2,621,000 3,119,000 ( 1,278,000 ) 1,841,000 253,000 AAA-Junior June 26, 2024 $ 1.25 1,210 ( 845 ) 365 1,210,000 145,000 1,065,000 968,000 ( 676,000 ) 292,000 140,000 AAA-Junior - 2 July 10, 2024 $ 1.25 551 ( 110 ) 441 551,000 66,000 485,000 441,000 ( 88,000 ) 353,000 64,000 AAA-Junior - 3 September 20, 2024 $ 1.25 697 - 697 697,000 84,000 613,000 558,000 - 558,000 81,000 AAA-Junior – 4 September 30, 2024 $ 1.25 399 - 399 399,000 48,000 351,000 319,000 - 319,000 46,000 41,982 ( 24,483 ) 17,499 $ 35,615,000 $ 4,420,000 $ 31,195,000 18,275,000 ( 8,158,000 ) 10,117,000 1,379,000 (1) 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. (2) The Conversion price for Series AA Preferred Stock outstanding as of August 23, 2023, totaling 10,706 shares of Series AA Preferred Stock, was adjusted to $ 2.60 as a result of the Series AA Down Round Feature described below. (3) 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. (4) 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. (5) As adjusted to reflect reduction in conversion prices as a result of the Series AA Down Round Feature, described below. (6) 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. F-32 Table of Contents 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. Dividends. 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. 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. F-33 Table of Contents The following additional terms vary across the applicable series of Convertible Preferred Stock as follows: Term 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. 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 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 F-34 Table of Contents 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 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 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: 2024 2023 Series AAA Junior-3 and Series AAA Junior-4 Warrants: Beginning balance $ - $ - Initial fair value of warrant liability – grant date (1) 346,000 - Change in fair value 2,000 - Subtotal - Fair value of warrant liability - Series AAA Junior -3 and Series AAA Junior – 4 Warrants $ 348,000 $ - Placement Agent Warrants: Beginning balance $ 1,571,000 $ - Initial fair value of warrant liability – grant date (1) 133,000 4,469,000 Change in fair value ( 1,117,000 ) ( 2,898,000 ) Subtotal - Fair value of warrant liability – Placement Agent Warrants $ 587,000 $ 1,571,000 Total fair value of warrant liability $ 935,000 $ 1,571,000 (1) Estimated fair value on the respective dates of issuance. F-35 Table of Contents 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: December 31, December 31, 2024 2023 Expected Volatility 101 % 98 % Risk–free interest rate 4.27 % - 4.38 % 3.84 % Dividend yield - % - % Expected life of options (in years) 2.71 – 4.74 4.5 - 5.0 Preferred Stock Dividends The Company paid common stock dividends on outstanding preferred stock for periods presented, as follows: Fiscal Year Ended December 31, 2024: Series Designation Date Dividend Shares Fair Value Shares Issued (1) Series A-2 November 28, 2024 1,430 $ 1,000 Series A-3 November 30, 2024 3,029 2,000 Series A-4 December 22, 2024 5,794 3,000 Series A-5 January 31, 2024 2,166 4,000 Series AA April 19, 2024 476,271 661,000 July 23, 2024 158,860 216,000 Series AA-3 April 29, 2024 41,159 60,000 July 23, 2024 38,527 52,000 Series AA-4 May 6, 2024 55,497 77,000 July 23, 2024 1,616 2,000 Series AA-5 May 30, 2024 51,887 65,000 July 23, 2024 47,170 64,000 Series AAA July 23, 2024 432,025 587,000 December 16, 2024 742,553 415,000 Series AAA-2 July 23, 2024 490,295 666,000 December 22, 2024 356,494 195,000 Series AAA-Junior July 26, 2024 193,600 273,000 August 26, 2024 193,600 240,000 September 24, 2024 193,600 126,000 Series AAA-Junior - 2 August 9, 2024 88,160 97,000 September 9, 2024 88,160 100,000 October 10, 2024 88,160 90,000 Series AAA-Junior - 3 October 23, 2024 111,520 105,000 November 19, 2024 111,520 76,000 December 19, 2024 111,520 68,000 Series AAA-Junior - 4 October 30, 2024 63,840 65,000 November 29, 2024 63,840 36,000 December 30, 2024 63,840 40,000 4,276,133 $ 4,386,000 F-36 Table of Contents Fiscal Year Ended December 31, 2023: Series Designation Date Dividend Shares Fair Value of Shares Issued (1) Series A December 26, 2023 35,717 $ 63,000 December 29, 2023 51,926 79,000 Series A-2 December 26, 2023 13,507 24,000 December 29, 2023 16,183 25,000 Series A-3 December 26, 2023 8,997 16,000 December 29, 2023 7,203 11,000 Series A-4 December 22, 2023 21,771 39,000 December 29, 2023 62,870 95,000 Series A-5 December 26, 2023 14,807 22,000 Total 232,981 $ 374,000 (1) 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. 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; 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 (“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. F-37 Table of Contents 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. (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 Pre-Funded Warrants were fully exercised as of August 29, 2023. 8. STOCK-BASED INCENTIVE PLANS 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. The Plan provides for both the direct award and sale of shares of common stock and for the grant of options to purchase shares of common stock. 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 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 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. The Plan provides for the following programs: ● Option Grants 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). F-38 Table of Contents ● Stock Awards or Sales Under the stock award or sales program, eligible individuals may be issued shares of common stock of the Company directly, upon the attainment of performance milestones or the completion of a specified period of service or as a bonus for past services. Under this program, the purchase price for the shares will not be less than 100 % of the fair market value of the shares on the date of issuance, and payment may be in the form of cash or past services rendered. Eligible individuals will have no stockholder rights with respect to any unvested restricted shares or restricted stock units issued to them under the stock award or sales program; however, eligible individuals will have the right to receive any regular cash dividends paid on such shares. The initial reserve under the Plan was 29,167 shares of common stock, which reserve was subsequently increased to 50,000 shares upon stockholders’ approval in May 2016. In July 2017, the Company amended and restated the Plan to increase the number of shares of common stock reserved thereunder from 50,000 shares to 75,000 shares. In October 2018, the Company amended and restated the Plan to increase the number of shares of common stock reserved thereunder from 75,000 shares to 91,667 shares. In July 2020, the Company’s shareholders approved an amendment to the Plan to increase the number of shares authorized for issuance from 91,667 to 129,167 . In May 2021, the Company’s shareholders approved an amendment to the Plan to increase the number of shares authorized for issuance from 129,167 to 250,000 . In June 2022, the Company’s shareholders approved an amendment to the Plan to increase the number of shares authorized for issuance from 250,000 to 312,500 . In September 2023, the Company’s shareholders approved an amendment to the Plan to increase the number of shares authorized for issuance from 312,500 to 750,000 . As of December 31, 2024, 120,000 shares remained available for issuance under the Plan. All 2014 Plan share reserve and other share amounts reflected herein have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented. 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 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. Stock Options The fair value of stock options granted was estimated on their respective grant dates using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions for the years ended December 31: 2024 2023 Expected Volatility 98 % 95 % Risk–free interest rate 4.08 % 4.18 % Dividend yield - % - % Expected life of options (in years) 6.02 5.35 The expected volatility assumption for purposes of determining the fair value of stock options for the periods presented was estimated based on reference to the historical stock price volatility of the Company and a representative peer group for the applicable estimated term. A summary of stock option activity for the year ended December 31, 2024 is as follows: Weighted-Average Options (#) Exercise Price Per Share ($) Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) Outstanding at December 31, 2023 396,000 $ 15.70 $ - Granted 20,000 1.29 - Exercised - - - Canceled / forfeited ( 50,000 ) 10.29 63,000 Outstanding at December 31, 2024 366,000 $ 15.66 8.05 $ - Vested and exercisable at December 31, 2024 220,000 $ 20.20 7.79 $ - F-39 Table of Contents The weighted-average grant date fair value of stock options granted during the years ended December 31, 2024 and 2023 was $ 1.03 and $ 5.39 , respectively. The aggregate fair value of stock options that vested during the years ended December 31, 2024 and 2023 was $ 418,000 and $ 1,079,000 , respectively. As of December 31, 2024, the total unrecognized compensation expense related to non-vested stock option awards was $ 709,000 , which is expected to be recognized over a weighted-average term of approximately 2.03 years. Restricted Stock Units The following table summarizes non-vested restricted stock unit activity for the year ended December 31, 2024: 2014 Plan Activity Outside of the 2014 Plan Activity Totals Restricted Stock Units (#) Weighted Average Grant Date Fair Value ($) Restricted Stock Units (#) Weighted Average Grant Date Fair Value ($) Restricted Stock Units (#) Weighted Average Grant Date Fair Value ($) At December 31, 2023 186,000 $ 10.87 90,000 $ 7.50 276,000 $ 9.76 Granted 33,000 $ 0.81 625,000 0.84 658,000 0.85 Vested ( 36,000 ) $ 9.51 ( 552,000 ) 1.13 ( 588,000 ) 1.64 Canceled ( 9,000 ) $ 10.00 ( 16,000 ) 18.56 ( 25,000 ) 15.43 At December 31, 2024 174,000 $ 4.44 147,000 $ 3.92 321,000 $ 4.20 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”). The weighted average grant date fair value of the Nonemployee RSUs granted during the year ended December 31, 2024 and 2023 was $ 0.84 and $ 1.67 , respectively. Compensation expense for Nonemployee RSUs for the year ended December 31, 2024 and 2023 totaled $ 256,000 and $ 89,000 , respectively. As of December 31, 2024, the total unrecognized compensation expense related to Nonemployee RSUs was $ 281,000 . Warrants Issued to Employees and Nonemployees for Services A summary of employee and nonemployee warrant activity (outside of the Plan) for the year ended December 31, 2024 is as follows: Weighted-Average Warrants (#) Exercise Price Per Share ($) Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) Outstanding at December 31, 2023 31,000 $ 49.21 - $ - Granted - - - - Expired - - - - Outstanding at December 31, 2024 31,000 $ 49.21 2.70 $ - Vested and exercisable as of December 31, 2024 31,000 $ 49.21 3.70 $ - 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, 2024, the total unrecognized compensation expense related to non-vested Warrants was $ 0 . Noncash Stock Compensation Expense Noncash stock-based compensation expense was comprised of the following as of December 31: 2024 2023 Stock options $ 411,000 $ 1,014,000 Warrants - 228,000 Restricted stock units 878,000 1,493,000 Total noncash stock compensation expense $ 1,289,000 $ 2,735,000 F-40 Table of Contents Noncash stock-based compensation expense was included in the following financial statement line items as of December 31: 2024 2023 Sales, marketing and advertising $ 488,000 $ 879,000 Engineering, technology and development 30,000 219,000 General and administrative 771,000 1,637,000 Total noncash stock compensation expense $ 1,289,000 $ 2,735,000 Modifications to Equity-Based Awards On January 1, 2022, the Company issued 67,500 performance stock units (“Original PSUs”) under the Company’s 2014 Amended and Restated Stock Option and Incentive Plan, which vest in five equal increments of 13,500 PSUs, based on satisfaction of the following vesting conditions during the three-year period commencing on January 1, 2022: (i) the Company’s stock price equaling $ 95.00 per share based on 60-day volume weighted average price (“VWAP”); (ii) the Company’s stock price equaling $ 120.00 per share based on 60-day VWAP; (iii) the Company’s stock price equaling $ 140.00 per share based on 60-day VWAP; (iv) the Company’s stock price equaling $ 160.00 per share based on 60-day VWAP; 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. On April 30, 2023, the Board approved the cancellation of the 67,500 Original PSUs previously granted to certain executives (four plan participants in total) under the 2014 Plan (as described above). In exchange for the cancelled Original PSUs, the executives were granted an aggregate of 67,500 PSUs, which vest, over a five-year term, upon the Company’s common stock achieving certain VWAP goals as follows: (i) 20 % upon achieving a 60-day VWAP of $ 16.00 per share, (ii) 20 % upon achieving a 60-day VWAP of $ 20.00 per share; (iii) 20 % upon achieving a 60-day VWAP of $ 24.00 per share; (iv) 20 % upon achieving a 60-day VWAP of $ 28.00 per share; and (v) 20 % upon achieving a 60-day VWAP of $ 32.00 per share, in each case, as quoted on the Nasdaq Capital Market (“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 . 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”) (collectively, “Modified Executive Grants”). 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. 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”)(collectively, “Modified Employee Grants”). 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 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. F-41 Table of Contents Other 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. 9. INCOME TAXES The components of loss before income taxes consisted of the following for the years ended December 31: 2024 2023 United States $ ( 16,474,000 ) $ ( 30,455,000 ) Foreign - ( 188,000 ) Loss from operations before income taxes $ ( 16,474,000 ) $ ( 30,643,000 ) The Company’s provision for income taxes consisted of the following for the years ended December 31: 2024 2023 Current: Federal taxes $ - $ - State taxes - - Foreign taxes - - Total current $ - $ - Deferred: Federal taxes $ 50,000 $ - State taxes 111,000 - Foreign taxes - ( 313,000 ) Total deferred 161,000 ( 313,000 ) Net provision for income taxes $ 161,000 $ ( 313,000 ) The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following as of December 31: 2024 2023 Deferred tax assets: Net operating loss and credits $ 40,819,000 $ 35,453,000 Intangibles – definite lived 2,791,000 1,899,000 Stock compensation 1,856,000 1,776,000 Accrued liabilities 171,000 1,133,000 State taxes 3,000 12,000 Capitalized research and development costs 2,923,000 2,659,000 Total deferred tax assets 48,563,000 42,932,000 Valuation allowance ( 48,351,000 ) ( 42,855,000 ) Deferred tax liabilities: Fixed assets ( 35,000 ) ( 69,000 ) Intangibles – indefinite lived ( 338,000 ) - Contract liabilities - ( 8,000 ) Total deferred tax liabilities ( 373,000 ) ( 77,000 ) Total net deferred tax assets (liabilities), net of valuation allowance $ ( 161,000 ) $ - F-42 Table of Contents A reconciliation of the federal statutory income tax rate and the effective income tax rate is as follows: 2024 2023 Statutory federal– tax rate - (benefit) expense 21 % 21 % State tax, net 7 5 Non-deductible permanent items ( 1 ) ( 2 ) Change in tax rate 3 % - Foreign taxes - 1 Other 3 ( 2 ) Valuation allowance ( 34 ) ( 22 ) ( 1 )% 1 % 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 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. During the year ended December 31, 2023, Bannerfy Ltd sold all of its asset back to the original sellers and ceased operations as described below. 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 $ 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. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies and (4) future taxable income exclusive of reversing temporary differences and carryforwards. In assessing whether a valuation allowance is required, significant weight is to be given to evidence that can be objectively verified. 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, 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. federal, state income tax, and foreign net operating loss carryforwards of approximately $ 148.5 million, $ 141.8 million, and $ 1.1 million, respectively, expiring through 2044. Of the federal net operating losses, $ 24.5 million will expire from 2034 to 2037, and $ 124.0 million will carry over indefinitely. 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, $ 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. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. 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. 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 on a tax return. The Topic also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Topic requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. In addition, the Topic permits an entity to recognize interest and penalties related to tax uncertainties either as income tax expense or operating expenses. The Company will recognize interest and penalties related to tax uncertainties as income tax expense. There were no uncertain tax positions as of December 31, 2024. F-43 Table of Contents 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. Currently there are no audits in process or pending from Federal, state or foreign tax authorities. Federal and state income tax returns are subject to examination for a period of three to four years after filing. UK income tax returns are subject to examination for a period of four years after filing. In June 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers, as described at Note 4. The Bannerfy Acquisition was treated for tax purposes as a nontaxable transaction and, as such, the historical tax bases of the acquired assets and assumed liabilities, net operating losses, and other tax attributes of Bannerfy carried over, with no step-up to fair value of the underlying tax bases of the acquired net assets. The acquisition method of accounting included the establishment of a net deferred tax liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. When an acquisition of a group of assets is purchased in a transaction that is not accounted for as a business combination under ASC 805, a difference between the book and tax bases of the assets arises. 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 statements of operations for the year ended December 31, 2023. 10. COMMITMENTS AND CONTINGENCIES Operating Leases 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 %. F-44 Table of Contents Other 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 “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 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. 11. 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. 12. SUBSEQUENT EVENTS 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. F-45 Table of Contents Entry into Loan Agreements Agile II 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. F-46 Table of Contents 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. F-47 Table of Contents 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: (i) 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; (ii) 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”); and (iii) 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. F-48 Table of Contents 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 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. 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. Other 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. F-49 Table of Contents SIGNATURES 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. Date: March 31, 2025 By: /s/ Ann Hand Ann Hand President and Chief Executive Officer (Principal Executive Officer) SUPER LEAGUE ENTERPRISE, INC. Date: March 31, 2025 By: /s/ Clayton Haynes Clayton Haynes Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Ann Hand Chief Executive Officer March 31, 2025 Ann Hand and Chair of the Board (Principal Executive Officer) /s/ Clayton Haynes Chief Financial Officer March 31, 2025 Clayton Haynes (Principal Financial and Accounting Officer) /s/ Jeff Gehl Director March 31, 2025 Jeff Gehl /s/ Kristin Patrick Director March 31, 2025 Kristin Patrick /s/ Mark Jung Director March 31, 2025 Mark Jung /s/ Michael Keller Director March 31, 2025 Mark Jung F-50