What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-03-31 compared with 2025-03-31 · 535 added, 657 removed, 219 unchanged (84% of the section changed)

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Our common stock is listed on the Nasdaq Capital Market under the ticker symbol “SLE.”

As of March 31, 2025, we had 365 holders of record of our common stock based upon the records of our transfer agent, which do not include beneficial owners of common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.

As of March 31, 2026, we had approximately 307 holders of record of our common stock based upon the records of our transfer agent, which do not include beneficial owners of common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.

Dividend Policy

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MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of our operations together with our consolidated financial statements and the notes thereto appearing elsewhere in this Report.

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and the notes thereto appearing elsewhere in this Report.

This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties.

Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “ Risk Factors, ” “ Special Note Regarding Forward-Looking Statements ” and elsewhere in this Report.

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

Super League Enterprise, Inc.

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.

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

We operate in one reportable segment to reflect the way management and our chief operating decision maker review and assess the performance of the business.

Announced Infinite Reality Transaction

On September 30, 2024, the Company entered into a binding term sheet (the “iR Term Sheet”) with Infinite Reality, Inc.

(“Infinite Reality”), whereby, subject to the satisfaction of certain conditions as more specifically set forth in the iR Term Sheet (including receipt of the approval of the Company’s stockholders), and the entry into definitive documentation, the Company will:

acquire from Infinite Reality, (a) a perpetual, royalty free license to name and to create and host events for Drone Racing League, Inc., (b) to be determined esports assets and all related intellectual property, (c) cash in the amount of up to $20 million to come from divestiture of certain assets to be determined and/or other sources of capital, (d) TalentX and all related intellectual property, (e) Fearless Media and all related intellectual property, and (f) Thunder Studios and all related intellectual property (each an “Asset” and, collectively, the “Purchased Assets”)(the “Asset Acquisition”), in exchange for the Company issuing that number of shares of a to-be designated class of its preferred stock equal in priority to existing Series A, AA and AAA preferred shares (the “Consideration Shares”), which Consideration Shares will be convertible into 75% of the then issued and outstanding shares of Super League’s common stock, par value $0.001 per share (“Common Stock”), calculated at the time of the consummation of the Asset Acquisition;

issue to Infinite Reality 2,499,090 shares of the Company’s Common Stock, in exchange for 139,592 shares of Infinite Reality’s common stock (the “Share Exchange”), pursuant to an Equity Exchange Agreement, and to appoint a designee of Infinite Reality to the Company’s Board upon the consummation of the Share Exchange (the “Closing”);

receive a credit facility in the amount of $30,000,000 from Infinite Reality, to be established in January 2025 (the “Credit Facility”, and the Asset Acquisition, Share Exchange, and Credit Facility are collectively, the “iR Transaction”).

The Term Sheet contemplates that, subject to the satisfaction of the conditions contained therein (including approval of the iR Transaction by the Company’s stockholders), upon the consummation of the iR Transaction, Infinite Reality will beneficially own 84.9% of the issued and outstanding shares of the Company as of the Closing.

On March 28, 2025, the Company and Infinite Reality mutually agreed to terminate both the Binding Term Sheet and the iR Transactions contemplated thereby in their entirety.

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.

Bylaw Amendment

On June 4, 2024, the Board approved an amendment (the “ 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 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 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 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.

Reverse Stock Split and Name Change

On September 7, 2023, the Company filed a certificate of amendment to the Company’s Second Amended and Restated Certificate of Incorporation, as Amended (the “Charter”), which became effective 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, par value $0.001 per share, at a ratio of 1-for-20 (the “Reverse Split”).

The Name Change and the Reverse Split were approved by the Board on July 5, 2023, and approved by the stockholders of the Company on September 7, 2023.

Refer to Note 7 for additional information regarding the Reverse Split.

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

Increase in Authorized Common Stock

On May 30, 2023, the Company filed a certificate of amendment to its Charter increasing the number of authorized shares of 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 by written consent of its stockholders holding greater than 50% of the voting securities of the Company on April 5, 2023.

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

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

Super League (Nasdaq:

SLE) is an audience intelligence and media activation company operating at the intersection of a 3.5-billion-person global gaming population and a $1.0 trillion global advertising market.

The Company connects brands with consumers who play video games by leveraging an emerging data and activation platform that utilizes behavioral and psychographic signals to drive marketing outcomes.

By combining differentiated insights, scaled media distribution, and interactive ad formats, Super League enables marketers to reach gamers, one of the largest and most influential audiences in modern culture, across gaming environments, digital video, social media, and connected television.

The Company generates revenue from brands and agencies by executing programs targeting U.S.

audiences that include (i) mini-games and experiences within Roblox, Minecraft, and Fortnite, (ii) playable and rewarded video ads in mobile and immersive environments, (iii) in-game ads across mobile and PC, (iv) connected TV gaming applications and sponsorships, (v) custom integrations within games, (vi) interactive characters, and (vii) influencer content across social and digital video platforms.

An additional emerging revenue source includes participation in revenue generated by select game properties.

Entry into Asset Purchase Agreement – Misfits Ads Business

On March 16, 2026, the Company, entered into an Asset Purchase Agreement (the “Misfits Purchase Agreement”) with Esports Now, LLC (“Misfits”), pursuant to which Misfits has agreed to sell certain assets strictly constituting the Misfits Ads Business (the “Misfits Purchased Assets”) to the Company, and the Company has agreed to assume certain liabilities related to the Misfits Purchased Assets (the “Misfits Transaction”).

As consideration for the Misfits Purchased Assets, the Company has agreed to pay to Misfits the following guaranteed consideration for the Misfits Purchased Assets:

(A) at the consummation of the transactions contemplated by the Agreement (the “Misfits Closing”):

(i) a cash payment in the amount of $1.5 million (the “Misfits Closing Cash Consideration”), (ii) 71,490 shares of common stock (the “Misfits Closing Shares”), (iii) a pre-funded common stock purchase warrant to purchase 456,631 shares of common stock (the “Misfits Pre-Funded Warrant”, and the shares issuable upon exercise of the Misfits Pre-Funded Warrant, the “Misfits PFW Shares”), and (iv) a common stock purchase warrant to purchase 528,121 shares of common stock, with an exercise price of $18.00 (the “Misfits Warrant”, and the shares issuable upon exercise of the Misfits Warrant, the “Misfits Warrant Shares”)(the Misfits Closing Shares, the Misfits PFW Shares, and the Misfits Warrant Shares are collectively, the “Misfits Closing Share Consideration”);

and (B) on the one-year anniversary of the Misfits Closing, a cash payment in the amount of $300,000 (the “Delayed Cash Payment”).

Pursuant to the terms and subject to the conditions of the Purchase Agreement, up to an aggregate of (i) $1.2 million in cash (the “Misfits Earnout Cash”), and (ii) 105,571 shares of common stock, or, upon the election of Misfits, Misfits Pre-Funded Warrants to purchase 105,571 shares of common stock (the “Earnout Shares”, and collectively with the Misfits Earnout Cash, the “Misfits Earnout Consideration”).

The Misfits Earnout Consideration will be payable to Misfits in connection with:

(x) the achievement of certain gross profit milestones for the period beginning on the Misfits Closing until the date that is one (1) year from the date of the Misfits Closing;

and (xi) the Company’s market capitalization as of the one and two year anniversary of the date of Misfits Closing.

The Purchase Agreement contains representations, warranties and covenants of each of the parties thereto that are customary for transactions of this type.

Misfits and the Company have, among other things as set forth in the Purchase Agreement, agreed to take all necessary action such that, as soon as reasonably practicable after the Misfits Closing, the Company will cause a vacant seat on the Company’s Board of Directors to be filled by appointment by a designee of Misfits;

provided, that such designee must be qualified to serve on a public company’s board of directors and meet the requirements of an “independent director” pursuant to the rules and regulations of Nasdaq.

The obligations of the Company and Misfits to consummate the Misfits Transaction are subject to certain closing conditions, including, but not limited to, (i) the receipt of the approval by the affirmative vote of a majority of the voting power of the Company’s shares present in person or represented by proxy at a stockholder meeting, to be held by the Company in order to approve the issuance of the Misfits Closing Share Consideration and, if earned, the Earnout Shares, as required by Nasdaq Listing Rule 5635(a), (ii) receipt of any necessary regulatory approvals, (iii) receipt of all necessary consents to the assignment of certain contracts from Misfits to the Company that make up a part of the Misfits Purchased Assets, and (iv) the execution and delivery of the Registration Rights Agreement (as more specifically set forth below).

The Purchase Agreement contains:

(i) representations, warranties and covenants of the Company and Misfits that are customary for a transaction of this nature, including among others, covenants by Misfits regarding the validity of certain material contracts entered into between Misfits and third-parties being assigned to the Company, title to the Misfits Purchased Assets, the condition and sufficiency of the Misfits Purchased Assets, Misfit’s ownership and rights to its intellectual property, and the investment representations of Misfits;

and (ii) customary indemnification provisions whereby Misfits will indemnify the Company for certain losses arising out of inaccuracies in, or breaches of, the representations, warranties and covenants of Misfits and certain other matters, subject to certain caps and thresholds.

Upon issuance of the Misfits Warrant at the Misfits Closing, the Misfits Warrant will entitle the holders to purchase that number of shares of Common Stock equal to the number of shares of Common Stock (or Misfits Pre-Funded Warrants) issued at the Misfits Closing as Misfits Closing Shares and shares underlying the Misfits Pre-Funded Warrant.

The Misfits Warrants are exercisable immediately upon issuance, expire two years from the date of issuance, and have an initial exercise price of $18.00 (the “Initial Exercise Price”), subject to adjustment for any stock splits, stock dividends, recapitalizations, and similar events.

The Misfits Warrants also contain a call feature, whereby, after the Company has registered the Misfits Warrant Shares on an effective registration statement filed with the SEC, the Company has the option, but not the obligation, and in the Company’s sole and absolute discretion, to purchase the Misfits Warrant from the Holder at a price of $0.001 per share of Common Stock underlying the Misfits Warrant (the “Call Option”), in the event the closing price of the Company’s Common Stock, as listed on the Nasdaq Capital Market, is at or above $18.00 per share for 20 consecutive trading days (the “Call Trigger”).

The Company’s right to exercise the Call Option will begin on the day immediately following the Call Trigger until the day that is thirty (30) calendar days thereafter, by way of delivery of a notice to exercise the Call Option to the holders of the Misfits Warrants.

Upon issuance of the Misfits Pre-Funded Warrant at the Misfits Closing, the exercise price per underlying share of common stock will be $0.001.

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

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

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

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

At the closing of the Misfits Transaction, the Company and Misfits will enter into a registration rights agreement pursuant to which, among other matters, Misfits will be granted certain customary mandatory registration rights with respect to the Misfits Closing Shares, the Misfits Warrant Shares, and the Misfits PFW Shares.

Acquisition of Let ’ s Bounce, Inc.

In January 2026 the Company acquired Let’s Bounce, Inc.

(“Bounce”), a marketing technology company focused on enabling scalable, measurable brand engagement inside gaming and UGC environments.

The total purchase price for Bounce, which was structured as an asset acquisition, was $200,000, payable as follows:

(a) $75,000 at closing;

(b) $25,000 on the three-month anniversary of closing;

and (c) $100,000 on the six-month anniversary of closing.

In addition, pursuant to the terms and subject to the conditions of the asset purchase agreement, up to $325,000 is contingently payable in connection with the achievement of certain net revenue milestones for the Bounce assets acquired during the year ended December 31, 2026.

The Bounce acquisition provides the Company with an existing pipeline of opportunities, enabling more efficient in-game marketing programs, the addition of turnkey loyalty solutions to drive advertiser outcomes, and a roadmap to more automated campaign measurement.

NASDAQ Listing Rule 5550(a)(2)

On January 2, 2025, the Company received a letter (the “Bid Price Letter”) from the Listing Qualifications Staff of the Nasdaq Stock Market (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock, for 30 consecutive business days, the Company was not then currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).

On July 8, 2025, the Company received written notice from Nasdaq that the Company regained compliance with the Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market.

Nasdaq Listing Rule 5550(b)(1)

On April 7, 2025, the Company received a letter (the “Stockholder Deficiency Letter”) from Nasdaq, notifying the Company that it is not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing on The Nasdaq Capital Market (the “Stockholders’ Equity Requirement”).

The Stockholder Deficiency Letter also indicated that the Company does not meet the alternative compliance standards of market value of listed securities or net income from continuing operations.

The Company’s failure to comply with the Stockholders’ Equity Requirement was based on the Company’s filing of its Annual Report on Form 10-K for the year ended December 31, 2024, reporting the stockholders’ equity of $170,000.

The Company prepared and submitted a plan of compliance (which was due within 45 calendar days from receipt of the formal notice) to Nasdaq.

On October 8, 2025, the Company received a delisting determination letter (the “Delisting Determination Letter”) in connection with the Stockholders’ Equity Requirement.

The Delisting Determination Letter stated that unless the Company requested a hearing before the Panel to appeal Nasdaq’s delisting determination by October 15, 2025, trading of the common stock would have been suspended at the opening of business on October 17, 2025, and the Company’s common stock would have been delisted from Nasdaq.

As of October 8, 2025, the Company requested a hearing before the Panel, which was scheduled to take place on November 11, 2025, at which the Company planned to request a suspension of delisting pending its return to compliance.

Pursuant to Nasdaq Listing Rule 5815(a)(1)(B), the hearing requested stayed the suspension of trading and delisting of the common stock pending the conclusion of the hearing process.

On October 28, 2025, the Company received a written notice from Nasdaq informing the Company that it regained compliance with Nasdaq Listing Rule 5550(b), and that the Company is in compliance with all applicable continued listing requirements.

Accordingly, the hearing before a Nasdaq Hearing Panel (the “Panel”) scheduled to take place on November 11, 2025 was cancelled.

Matters Affecting Comparability

Impairment Charges.

In the fourth quarter of 2023, we recorded a non-cash impairment charge related to our partner relationship related intangible assets, comprised primarily 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 assets was less than the carrying amount of the assets, resulting in an impairment loss totaling $7.1 million, which is recorded in the accompanying consolidated statements of operations for Fiscal Year 2023.

Loss on intangible asset disposal.

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 write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2.3 million, which is included in “Loss on intangible asset disposal” in the accompanying consolidated statements of operations for Fiscal Year 2023.

Sale of Mineville

On May 19, 2025, the Company entered into a Membership Interest Purchase and Sale Agreement (the “Mineville Purchase Agreement”) with Mineville, LLC a Delaware limited liability company (“Purchaser”), pursuant to which the Company agreed to sell, and Purchaser agreed to purchase, 100% of the membership interests (the “Interests”) of InPvP, LLC (“InPvP”).

Prior to the Mineville Sale, InPvP was a wholly owned subsidiary of the Company that owned and operated the Company’s Mineville digital offering.

The closing of the Mineville Sale occurred simultaneously with the execution of the Mineville Purchase Agreement.

The Purchaser paid cash consideration totaling $350,000 at the Mineville Closing to acquire the Interests.

The parties also agreed upon separate terms for an ongoing commercial relationship whereby the Company was granted the rights to ad sales and brand integration (the “Sales Rights”) to all of Purchaser’s Microsoft servers for a term of two years (the “Sales Term”).

The Company has exclusive Sales Rights for the first year of the Sales Term, and non-exclusive Sales Rights during the second year.

During the Sales Term, the revenue generated from the Sales Rights will be allocated among the Company and Purchaser as follows:

(i) the Company will retain 60% of the net revenue until gross sales revenue exceeds $1.0 million;

(ii) after gross sales revenue exceed $1.0 million, the Company will retain 50% of the net revenue through the remainder of the Sales Term;

and (iii) if gross sales revenue exceeds $1.5 million during the Sales Term, the Sales Term shall renew automatically for one additional year on the same terms as the second year of the Sales Term.

Reverse Common Stock Split

On January 16, 2026, the Company filed an amendment (the “2026 Amendment”) to the Company’s Third Amended Certificate, to effect a reverse stock split of the Company’s issued and outstanding shares of Common Stock at a ratio of 1-for-12 (the “2026 Reverse Split”).

The 2026 Amendment became effective on January 23, 2026.

As a result of the 2026 Reverse Split, every 12 shares of the Company’s issued and outstanding common stock was automatically combined and converted into one issued and outstanding share of common stock.

On June 17, 2025, the Company filed a certificate of amendment (the “June 2025 Amendment”) to its Second Amended and Restated Certificate of Incorporation, which became effective as of June 23, 2025, to effect a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-40 (the “2025 Reverse Split”).

As a result of the 2025 Reverse Split, every 40 shares of the Company’s issued and outstanding common stock was automatically combined and converted into one issued and outstanding share of common stock.

Executive Summary

We believe Fiscal Year 2025 marked a pivotal step forward for Super League as we streamlined our operations, executed key financial transactions resulting in a debt-free balance sheet, launched innovative partnerships, and re-aligned the Company’s focus toward reaching sustainable growth.

We remain focused on the long-term growth opportunity at the intersection of interactive entertainment and playable media, and we continue to position Super League at the forefront of this dynamic space.

During Fiscal Year 2025, we continued our mission of transforming how brands engage with consumers through the power of playable media, delivering ads, content, and immersive experiences that are seen and played, and therefore remembered, across mobile games and the world’s largest immersive gaming platforms.

We continued to execute with respect to our revenue diversification strategy, our focus on significantly lowering our operating cost structure, our focus on turnkey low-friction product solutions, and continued to forge new partnerships that expand our brand partner and client base.

Fiscal Year 2025 and recent corporate and operational highlights included the following:

In Fiscal Year 2025, the Company significantly reduced its costs structure through a 55% workforce reduction, reductions in facilities, corporate costs and other cost optimizations, and restructuring of management compensation.

The measures, effective primarily as of April 14, 2025 and May 1, 2025, respectively, reduced fiscal year operating costs by approximately $5.3 million for Fiscal Year 2025, compared to Fiscal Year 2024.

In the second half of Fiscal Year 2025, as a component of certain corporate restructuring activities, we exchanged approximately $7.4 million of existing debt for equity (common and preferred stock), extinguishing the related higher interest debt and reducing our future debt service obligations with respect to the extinguished debt, as described at Note 6.

In the second half of Fiscal Year 2025, we worked with our various stakeholders to (i) convert the majority of our outstanding preferred stock to common stock, and or (ii) provide a pathway for the conversion of modified classes of preferred stock to common stock in the short term.

Conversion of the previous classes of preferred stock allowed us to simplify our capital structure and provides us with the flexibility to pursue growth initiatives for the business going forward.

Despite macro headwinds largely due to tariff uncertainty, our gross margin improved year over year to 40%, compared to 38% in Fiscal Year 2024.

In October 2025, we closed a $20.0 million gross private placement financing, anchored by a $10.0 million strategic equity investment from Evo Fund, an internationally recognized sponsor of companies pioneering innovative digital-asset-based business models.

The financing provides the Company with a strengthened balance sheet and enhances our overall financial flexibility, creating opportunities to accelerate growth at scale.

Our first-to-market programs in partnership with companies such as Universal Pictures, Panda Express, and The Many on Roblox and Fortnite Creative demonstrate how we’re driving measurable brand engagement through immersive, cross-platform activations.

In July 2025, we expanded our strategic commercial partnership with Meta-Stadiums Corp., a pioneer in mobile-first, gamified virtual entertainment and operator of AI-powered, next-generation creator networks.

This expanded collaboration supports Super League’s revenue diversification strategy and accelerates its monetization roadmap by unlocking new revenue opportunities within the TikTok creator ecosystem across content, commerce, and campaign activations.

In May 2025, we acquired Supersocial, an award-winning production studio and creative agency that has been a pioneer on the Roblox platform since its founding in 2020.

The acquisition expanded our roster of partnerships and reinforces the Company’s mission to connect brands with passionate consumer audiences through the power of play.

Supersocial’s past clients and partners include Gucci, e.l.f.

Cosmetics, NARS Cosmetics, Warner Bros., Walmart, Supermodel Heidi Klum, Universal Music Group, Bandai Namco, Jon Favreau’s Fairview Portals, Innov8 Creative Academy, and Legendary Entertainment.

Through the acquisition, we acquired multiple live branded games and experiences on Roblox.

Super League also will offer all Supersocial partners a broad set of additional opportunities to reach targeted audiences through turnkey playable advertising and playable content, opening up additional ways for brands to connect with focused consumers exactly how they want to be engaged while playing.

In May 2025, we expanded our partnership with AdArcade, creators of Native Playables®, a patented mobile ad format that delivers three times higher engagement than other mobile playable ads.

This exclusive relationship enables Super League to offer consumer brands and media agencies a unique, scalable, full-funnel playable solution with access to 220 million monthly US gamers.

Native Playables are interactive ads that match the gameplay a consumer is already enjoying and are available in more than 25 popular mobile game formats.

Native matching leads to higher ad performance across key metrics, with return on ad spend as high as 13x compared to standard playable ads.

A brand’s video creative can also run in sync with the playable unit, ensuring consumers both watch and interact with a brand’s tested and approved messaging, logos, and iconography.

Continued expansion into mobile games is a key pillar of our revenue diversification.

We believe that this partnership strengthens Super League’s ability to deliver full-funnel value - from awareness to targetable, measurable conversion - through scalable, brand-safe media.

Native Playables reach audiences who play the world’s most downloaded casual and hyper-casual mobile games, further broadening Super League’s solutions for brands and agencies to engage the tens of millions of Millennials and Gen X who play, alongside the Gen Z and Gen Alpha consumers who also play Roblox, Minecraft, and Fortnite.

In October 2025, we announced an exclusive sales partnership with ES3, a leading technology and media solutions company specializing in interactive content experiences for connected TV (CTV) and traditional Pay TV environments.

We will serve as the exclusive third-party sales partner for INGAGE, a gamified content module that is activated through ads on CTV devices and platforms, designed to transform how brands and advertisers connect with streaming audiences.

ES3’s INGAGE interactive experiential ad platform has produced notable programs with Warner Bros.

Discovery’s “Superman”, Game of Thrones, HBO, MGM+ and more.

This partnership combines ES3’s advanced CTV media capabilities with Super League’s track record of delivering successful advertising programs that drive results through gameplay.

Together, the companies will scale access to interactive, measurable ad experiences that merge entertainment, engagement, and commerce.

In January 2026 the Company acquired Let’s Bounce, Inc.

(“Bounce”), a marketing technology company focused on enabling scalable, measurable brand engagement inside gaming and UGC environments.

Summary Financial Results

Revenue for Fiscal Year 2025 and 2024 totaled $11.3 million and $16.2 million, respectively, reflecting a year over year decrease of 30%.

The decrease in revenue for the periods presented reflected a mix of industry softness in ad sales, stemming from macro environmental factors including consumer spending softness, continued market education and adoption of immersive platforms as a marketing channel, structural shifts in platform ad ecosystems, the shift of certain revenues and program start delays to future periods by advertisers, and a reduction in Minehut related media sales revenues in connection with the sale of our Minehut digital property in the first quarter of 2024.

The decrease in revenue for Fiscal Year 2025 reflected a mix of industry softness in ad sales, stemming from macro environmental factors and uncertainties, including uncertainties around the impact of shifting tariff policies, consumer spending softness, continued need for market education and adoption of immersive platforms as a marketing channel, the shift of certain revenues and program start delays to future periods by advertisers, and a reduction in direct to consumer revenues due to the sale of our Minehut digital property in the first quarter of 2024, and the sale of our Mineville digital property in May 2025.

Cost of revenue for Fiscal Year 2025 and 2024 was $6.7 million and $10.1 million, respectively, reflecting a year over year decrease of 33%, driven primarily by the related decrease in Fiscal Year 2025 revenues, compared to the prior year.

As a percent of revenue, gross profit for Fiscal Year 2024 was 38%, relatively consistent with the 39% gross profit percentage for the prior year period.

As a percentage of revenue, gross profit for Fiscal Year 2025 was 40%, compared to a gross profit percentage of 38% for the prior year period.

Total operating expense for Fiscal Year 2025 decreased to $17.6 million, compared to $22.9 million in the comparable prior year period.

Operating expense for Fiscal Year 2023 included aggregate noncash impairment and loss on intangible asset disposal charges totaling $9.3 million, and net contingent consideration charges of $1.1 million.

Excluding the noncash impairment charges and net contingent consideration charges, the decrease in total operating expense reflects decreases in cloud services and other technology platform costs and decreases in personnel, marketing and other corporate costs, resulting from ongoing cost reduction and optimization activities.

Excluding noncash charges, the decrease in total operating expense reflects decreases in cloud services and other technology platform costs and decreases in personnel, marketing and other corporate costs, resulting from ongoing cost reduction and optimization activities.

Excluding noncash stock compensation expense, amortization expense, intangible asset impairment charges, legal settlement charges and mark to market related fair value adjustments, operating expense for Fiscal Year 2025 was $13.1 million, compared to $18.2 million, reflecting a 28% reduction in operating expense, compared to Fiscal Year 2024.

Net loss for Fiscal Year 2025, which includes the impact of significant mark to market related credits as described below, and noncash stock compensation, and amortization, as summarized below, was $20.7 million or $(40.43) per share, compared to a net loss of $16.6 million or $(1,123.63) per share, in the comparable prior year period.

The calculation of net loss per share for Fiscal Year 2024 and 2023 included noncash common stock dividend and deemed dividend (Fiscal Year 2023 only) related direct charges to accumulated deficit totaling $4.4 million and $7.9 million, respectively, as described at Note 2.

The net loss per share amounts for all periods presented retrospectively reflect the impact of the 2026 Reverse Stock Split described elsewhere herein.

Net loss for Fiscal Year 2025 included the impact of significant non-cash debt related fair value mark-to-market and extinguishment charges primarily associated with our debt and capitalization table restructuring, totaling $7.2 million, respectively.

The calculation of net loss per share for Fiscal Year 2025 and 2024 included net noncash common stock dividend and deemed dividend (Fiscal Year 2025) related direct charges to accumulated deficit totaling $790,000 and ($4.4 million), respectively, as described at Note 2.

Excluding the impact of the noncash common stock dividend and deemed dividend related direct charges to accumulated deficit, net loss per share for Fiscal Year 2025 and 2024 was $(42.03) and $(889.19), respectively.

The net loss per share amounts for all periods presented retrospectively reflect the impact of the 2026 Reverse Stock Split described elsewhere herein.

Sale of Minehut

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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 our cost improvement initiative.

The two companies will maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners.

Acquisition of Melon, Inc.

On May 4, 2023 (the “Melon Closing Date”), we 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 Melon 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.

With this acquisition, Super League further strengthens its position as a one-stop solutions provider and strategic operating partner for marquee brands and businesses seeking to expand and activate communities throughout the gaming metaverse.

At the 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 volume weighted average price (“VWAP”) of the Company’s common stock for the five trading days immediately preceding the Melon Closing Date, as quoted on the Nasdaq Capital Market.

Refer to the table at Note 5 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”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the 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 “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”).

The 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 Earnout Period.

Additionally, pursuant to the Melon Purchase Agreement, the Company entered into employment agreements with two former key Melon employees (“Key Melon Employees”), pursuant to which the Key Melon Employees were granted inducement awards consisting of restricted stock unit awards (“RSUs”) to acquire an aggregate of 103,780 shares of its common stock as described at Note 5.

Meta Stadiums Collaboration

In August 2024 , we announced a strategic partnership with Meta-Stadiums, a cutting-edge platform to build, customize, and manage virtual stadiums in the metaverse, to combine capabilities and offer cross-platform immersive experiences and events to music artists, sports teams, entertainment companies, and consumer brands.

The alliance creates a world-class end-to-end provider of metaverse programs and strategies that reaches all corners of the virtual universe, from bespoke 3D spaces to the most popular immersive platforms such as Roblox, Fortnite Creative, The Sandbox, Decentraland, and Minecraft.

Common Sense Networks Initiative

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

GSTV Partnership

In March 2024, we announced a partnership with GSTV, the national on-the-go video network engaging and entertaining targeted audiences at scale across tens of thousands of fuel retailers.

The partnership will unite the physical journey of consumers with the expansive digital world of gaming.

Initially, the partnership brings Super League’s popular Metaburst gaming news segment to GSTV, keeping millions of viewers at fuel and convenience retailers across the country updated on the latest trends and advancements in the 3D web, virtual worlds and platforms like Roblox and Fortnite.

GSTV and Super League are also collaborating on other integration opportunities that unite physical and digital retail engagement to provide brands with innovative and exciting ways to reach a broad base of consumers.

In addition to extending in-game content to GSTV screens, the Super League Loyalty & Reward platform will power custom omnichannel programs that reward Roblox users with seamless real world benefits from GTSV partners, and create opportunities for GSTV audience family members to enjoy special rewards within Roblox.

Chartis Partnership

In March 2024, we announced new capabilities for our entertainment and consumer brand clients in Fortnite Creative via a partnership with Chartis.

Chartis is a platform focused on Unreal Editor for Fortnite (UEFN), offering a rapidly-growing suite of tools to make it easier and more intuitive for creators to build original games and experiences within Fortnite Creative, where an increasing segment of the blockbuster game’s 70 million monthly players spend their time.

The partnership with Chartis enables Super League and its prominent global brand partners to tap into the Chartis Network, a coalition of independent Fortnite Creative developers with more than 157 million monthly plays and nearly one billion monthly impressions.

Together, the companies will provide unparalleled opportunities for brands to launch new Fortnite Creative Islands and custom integrations.

Roblox Partner Program

On August 2, 2023, we announced that Super League joined the Roblox (NYSE:

RBLX) Partner Program.

As an early mover in building and distributing creative and impactful programs for brands, in partnership with hundreds of top Roblox developers, joining the Roblox Partner Program will allow Super League to elevate its offerings to include the official Roblox advertising system with Immersive Ads.

The added capabilities augment Super League’s powerful end-to-end, innovative solutions, enabling brands to reach the highly engaged audience on Roblox, a global immersive platform where over 66 million people connect and communicate daily.

Super League was an early mover in the space, enabling extensive third-party distribution for brands on Roblox by providing hundreds of developers in the community with measurement, monetization, and optimization tools.

Through the Roblox Partner Program, Super League is evolving its offering by repurposing its previous ad network to focus on Roblox’s Immersive Ads product to enable brands to reach audiences at scale.

Super League will be integrating Roblox’s Immersive Ads into its growing suite of cross-platform offerings and capabilities inclusive of experience creation, promotion, distribution, and monetization:

Highly immersive ad formats for the official Roblox advertising system;

Bespoke brand integrations into popular experiences;

Proprietary Pop-Up Shops, interactive characters, and integrated content products;

First-to-market home grown solution to turn digital in-experience codes into real-world physical redemptions;

Robust influencer marketing programs;

In-experience brand lift studies;

Expert video content creation for Tik Tok, YouTube, and more;

Metaverse strategy & innovation consulting.

Super League’s inclusion in the Roblox Partner Program, combined with its longstanding dedication to supporting hundreds of Roblox developers with software to help manage and grow their businesses, creates an unparalleled opportunity to achieve massive reach and powerful results for brands.

Immediate benefits of being part of the program include access to educational resources and training, along with comprehensive tools, collateral, and insights for brand onboarding and education.

The two companies maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners.

Equity Financings.

Convertible Preferred Stock Issuances

Series AAA Junior Convertible Preferred Financing

On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 2,857 shares of newly designated Series AAA Junior, AAA-2 Junior, AAA-3 Junior and AAA-4 Junior Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AAA Junior Preferred,” and the individual offerings of Series AAA Junior Preferred stock, hereinafter collectively referred to as the “Series AAA Junior Offerings”, raising gross proceeds of $2.9 million, before fees.

Series AAA Convertible Preferred Financing

On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 8,355 shares of newly designated Series AAA and AAA-2 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AAA Preferred,” and the individual offerings of Series AAA Preferred stock, hereinafter collectively referred to as the “Series AAA Offerings”, raising gross proceeds of $8.4 million, before fees.

Series AA Convertible Preferred Financing

On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 11,781 shares of newly designated Series AA, AA-2, AA-3, AA-4 and AA-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series AA Preferred,” and the individual offerings of Series AA Preferred stock hereinafter collectively referred to as the “Series AA Offerings”, raising gross proceeds of $11.8 million, before fees.

Series A Convertible Preferred Financing

On the dates set forth in the applicable table below, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 12,622 shares of newly designated Series A, A-2, A-3, A-4 and A-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series A Preferred,” and the individual offerings of Series A Preferred stock, hereinafter, collectively referred to as the “Series A Offerings”, raising gross proceeds of $12.6 million, before fees.

In connection with the Series A Offerings, Series AA Offerings, Series AAA Offerings and Series AAA Junior Offerings (collectively, the “Preferred Offerings”), the Company filed Certificates of Designation of Preferences, Rights and Limitations of the respective series stock with the State of Delaware.

Use of net proceeds from the Preferred Offerings for the periods presented included working capital, repayment of certain indebtedness and general corporate purposes, including sales and marketing activities and product development.

The Company undertook the Preferred Offerings pursuant to certain placement agency agreements (collectively, the “Placement Agency Agreements”) with Aegis Capital Corporation, a New York corporation and registered broker-dealer and member of the Financial Industry Regulatory Authority (the “Placement Agent”), which acted as the Company’s exclusive placement agent for the Offerings.

Pursuant to the terms of the Placement Agency Agreements, in connection with the closings of the Offerings, the Company paid the Placement Agent aggregate cash fees, and non-accountable expense allowances as disclosed in the applicable tables below, and issued to the Placement Agent or its designees warrants to purchase shares of common stock as disclosed in the tables below, at the conversion prices disclosed below.

Refer to Liquidity and Capital Resources, below, and Note 7 for additional information.

Common Stock Issuances

On October 24, 2024, the Company entered into a securities purchase agreement with an 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 closed on October 25, 2024 and resulted in gross proceeds to the Company of approximately $1.0 million.

The Shares were offered by the Company pursuant to a prospectus supplement to the Company’s then effective shelf Registration Statement on Form S-3, which was declared effective by the U.S.

Securities and Exchange Commission on November 16, 2021 (File No.

The Company filed a final prospectus supplement in connection with the Registered Direct Offering on October 25, 2024.

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.

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 Common Stock Offering for the periods presented included working capital and general corporate purposes, including sales and marketing activities and product development.

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

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

Refer to “Liquidity and Capital Resources” and Note 7 below for additional information.

See “Liquidity and Capital Resources” below for equity financing activities for the periods presented.

Debt Financings

Agile Promissory Note

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 utilized 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 engagement 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.

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 the Collateral Agent and 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.

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.

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 utilized 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.

1800 Diagonal Lending, LLC

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

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

For purposes of the Diagonal Note:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(xi) the Company proposes to replace its transfer agent and fails to provide a fully executed irrevocable transfer agent instructions signed by the successor transfer agent;

and (xii) a breach or default by the Company of any covenant or other term or condition contained in any other agreement by the Company, after the passage of all applicable notice and cure or grace periods (each individually an “Event of Default”, and collectively, “Events of Default”).

Upon the occurrence and during the continuation of any Event of Default that is enumerated in Section 3.2 of the Diagonal Note, the Diagonal Note shall become immediately due and payable, and the Company shall pay to Diagonal an amount equal to the Default Amount (as defined below), multiplied by two.

For other Events of Default not enumerated in Section 3.2 of the Diagonal Note, the Diagonal Note shall become immediately due and payable in an amount equal to 150% times the sum of (a) the then outstanding principal amount of the Diagonal Note, plus (b) accrued and unpaid interest on the unpaid principal amount of the Diagonal Note to the date of payment, plus (c) Default Interest, if any, on the amounts referred to in clauses (a) and/or (b), plus (d) any amounts owed to Diagonal pursuant to Sections 1.3 and 1.4(g) of the Diagonal Note (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (b), (c) and (d) shall collectively be known as the “Default Amount”) and all other amounts payable under the Diagonal Note shall immediately become due and payable, together with all costs, including, without limitation, legal fees and expenses, of collection, and Diagonal shall be entitled to exercise all other rights and remedies available at law or in equity.

The Diagonal Note was issued with an Original Issue Discount of 4.75% (the “OID”), with net proceeds to the Company of $278,500 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.

Refer to Note 6 to the consolidated financial statements.

Belleau Note Purchase Agreement

On March 28, 2025 (the “Belleau Effective Date”), we entered into a Note Purchase Agreement (the “Belleau Purchase Agreement”) with Belleau Wood Capital, LP, or its assigns (“Belleau”).

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

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

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

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

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

Each of the Belleau Notes:

(x) matures on the date that is 12 months from the date of the issuance of each respective Belleau Note (collectively, the “Belleau Maturity Date”);

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

and (z) accrues interest at a rate of 20% simple interest per annum (the “Belleau Interest Rate”, and the dollar value of the accrued interest, the “Belleau Interest”).

The Belleau Interest that accrues on each respective Belleau Note is payable on each respective Belleau Maturity Date in the form of restricted shares of the Company’s Common Stock equal to 20% of the Belleau Principal, calculated at a price per share of $0.35.

In the event of a prepayment of any Belleau Note by the Company, the Belleau Interest will be payable in full at the time of such prepayment.

The Belleau Note also provides for:

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

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

Upon the occurrence of an Event of Default, the Belleau Note will bear interest at the default interest rate of 20% per annum, payable in cash, and upon Belleau’s written notice to the Company, all payments of Belleau Principal and Belleau Interest will become immediately due and payable.

The Company intends to utilize the proceeds from the sale of the Belleau Notes for working capital and general corporate purposes.

The initial Belleau Note was issued without registration under the Securities Act, based on the exemption from registration afforded by Section 4(a)(2) of the Securities Act.

The two remaining Belleau Notes, along with the shares of the Company’s Common Stock payable as interest pursuant to the Belleau Notes, when issued according to the Belleau Purchase Agreement, will be issued without registration under the Securities Act, based on the exemption from registration afforded by Section 4(a)(2) of the Securities Act.

Belleau represented that it is an accredited investor, as defined in Rule 501(d) of the Securities Act, and that it has, and will continue to, acquire the applicable securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.

Compliance with NASDAQ Listing Rule 5550(a)(2) and 5620(a)

On January 2, 2025, the Company received a letter (the “ Bid Price Letter ”) from the Listing Qualifications Staff of The Nasdaq Stock Market, LLC (“ Nasdaq ”) indicating that, based upon the closing bid price of the Company’s common stock, par value $0.001 per share (“ Common Stock ”), for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).

On January 3, 2025, the Company received a letter (the “ Annual Meeting Letter ”) from Nasdaq indicating that the Company no longer complies with Listing Rule 5620(a) (the “ Annual Meeting Rule ”) since it did not hold an annual meeting of stockholders within twelve months of the end of the Company’s fiscal year ended December 31, 2023.

The Bid Price Letter and the Annual Meeting Letter have no immediate effect on the listing of the Company's Common Stock on The Nasdaq Capital Market.

The Company intends to monitor the closing bid price of its Common Stock.

To regain compliance with Nasdaq Listing Rule 5550(a)(2), the closing bid price of the Company's Common Stock must be at least $1.00 per share for 10 consecutive business days during the 180-day period from January 2, 2025 to July 1, 2025.

If the Company does not regain compliance with the minimum bid price requirement by July 1, 2025, Nasdaq may grant the Company a second 180-day period to regain compliance.

To qualify for this additional 180-day compliance period, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, other than the minimum bid price requirement.

In addition, the Company would also be required to notify Nasdaq of its intent to cure the minimum bid price deficiency by effecting a reverse stock split, if necessary.

If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Company's Common Stock will be subject to delisting.

The Company would then be entitled to appeal that determination to a Nasdaq hearings panel.

On February 17, 2025, the Company submitted its plan to regain compliance to Nasdaq (the “Plan”).

As of the date of this Report, the Company has not received a response from Nasdaq as to whether the Plan has been approved and there is no guaranty that Nasdaq will accept our Plan.

See Item 1A, “Risk Factors- Governance Risks and Risks Related to our Common Stock - We received a notice from Nasdaq that our common stock may be delisted from trading on the Nasdaq Capital Market if we fail to comply with the continued listing requirements, including the minimum bid price requirement and annual meeting requirement.

A delisting of our common stock is likely to reduce the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing.”

See “Liquidity and Capital Resources” below for debt financing activities for the periods presented.

Our revenue fluctuates quarterly and is generally higher in the second half of our fiscal year, with the fourth quarter typically representing our highest revenue quarter each year.

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We believe that this seasonality in advertising spending affects our quarterly results, which generally reflect relatively higher advertising revenue in the second half of each year, compared to the first half of the year.

Results of Operations for the Fiscal Years Ended December 31, 2024 and 2023

We derived the financial data as of and for the Fiscal Years 2024 and 2023, set forth below, from our audited consolidated financial statements included elsewhere herein, and should be read in conjunction with those audited consolidated financial statements and related notes thereto, as well as the information found under this section.

Results of Operations for Fiscal Years 2025 and 2024

We derived the financial data as of and for the Fiscal Years 2025 and 2024, set forth below, from our audited financial statements included elsewhere herein, and should be read in conjunction with those audited financial statements and related notes thereto, as well as the information found under this section.

Our historical results are not necessarily indicative of the results to be expected in future periods.

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Contingent consideration

Loss on intangible asset disposal

Total operating expense

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Total revenue decreased $4.8 million, or 30% to $11.3 million, compared to $16.2 million in the comparable prior year period.

The decrease in revenue for the periods presented reflected a mix of industry softness in ad sales, stemming from macro environmental factors and uncertainties, including uncertainties around the impact of shifting tariff policies, consumer spending softness, continued need for market education and adoption of immersive platforms as a marketing channel, the shift of certain revenues and program start delays to future periods by advertisers, a strategic decrease in lower margin influencer marketing revenues and a reduction in direct to consumer revenues due to the sale of our Minehut digital property in the first quarter of 2024 and the sale of our Mineville digital property in May 2025.

Media and advertising revenue decreased $1.1 million, or 16%, to $5.6 million, compared to $6.7 million in the comparable prior year period.

The change reflected a $3.2 million decrease in on-platform related media sales revenue and a $1.2 million decrease in influencer marketing revenue, partially offset by a $162,000 increase in off-platform related media sales revenue.

The decrease in on-platform related media revenue reflects the impact of the sale of our Minehut Assets discussed above.

Minehut related media sales for Fiscal year 2024 and 2023 totaled $1.0 million and $1.2 million, respectively.

The change reflected a $1.7 million strategic decrease in lower margin influencer marketing revenue and a $0.8 million decrease in on-platform related media sales revenue, partially offset by a $1.5 million increase in off-platform related media sales revenue.

Revenues for Fiscal Year 2024 included $1.6 million of influencer marketing revenue from our Ubisoft/Xdefiant program.

Off-platform sales revenues as a percentage of total revenue for Fiscal years 2025 and 2024 were 46% and 16%, respectively, reflecting the impact of our strategic focus on diversifying our revenue streams and related opportunities.

Publishing and content studio revenue decreased $3.2 million, or 37%, to $5.4 million, compared to $8.6 million in the comparable prior year period.

Revenue for Fiscal Year 2023 included a significant custom game development project for a customer totaling approximately $2.7 million.

Revenues for Fiscal Year 2025 included revenues from immersive experiences for Lions Gate Ancillary LLC.

(World Crossing/Strangers 2), Second Dinner, Inc./Funnico Inc.

(Nuverse Marvel Snap), Panda Express, Hi-Chew, Bazooka Candy Brands, CMG Strategy Co., LLC (Chipotle / Halsey experience), Heidi Klum Company, USGA, Google, and Logitech Inc.

Publishing and content studio revenue for Fiscal Year 2024 included custom game development and immersive experience related revenues for the International Olympic Committee (“IOC”), Google, Inc., Visa, Inc., Maybelline, Claire’s, Kraft Lunchables, Skechers, The Lego Group, DreamWorks:

The Wild Robot, Avid Technology, Universal Pictures, American Heart Association, American Egg Board, Bandi Namco Entertainment America Inc, Lionsgate Ancillary LLC, Logitech Inc., and Paramount Global/Viacom CBS Inc., among others.

Publishing and content studio revenues for Fiscal Year 2023 included revenues for immersive experiences for Kraft Lunchables, Lego, Dave & Busters, Proctor & Gamble, Yas Island, Hamiliton, Arm & Hammer, Universal Pictures, “Trolls Band Together,” Universal Pictures, “Migration”, Canon and Motorola Solutions.

Direct to consumer revenue decreased $549,000, or 38%, to $879,000, compared to $1.4 million in the comparable prior year period.

The decrease primarily reflects the impact of the sale of our Minehut Assets in the first quarter of 2024, which prior to the sale, generated direct to consumer Minecraft server related subscription revenues for the Company.

Minehut direct to consumer related revenues for Fiscal year 2024 and 2023 totaled $140,000 and $576,000, respectively.

Direct to consumer revenue decreased $566,000, or 64%, to $313,000, compared to $879,000 in the comparable prior year period, primarily reflecting the impact of the sale of our Minehut digital property in the first quarter of 2024 and the sale of our Mineville digital property in May 2025, which prior to the sale, generated direct to consumer Minecraft related digital goods revenues for the Company.

Cost of Revenues

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

Cost of revenue fluctuates period to period based on the specific programs and revenue streams contributing to revenue each period and the related cost profile of our immersive digital experiences, media and advertising campaigns and publishing and content studio sales activities occurring each period.

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

Cost of revenue fluctuates period to period based on the specific programs and revenue streams contributing to revenue each period and the related cost profile of our physical and digital experiences, media and advertising campaigns and publishing and content studio sales activities occurring each period.

Cost of revenue decreased $3.3 million, or 33%, driven primarily by the 30% decrease in related revenues for the fiscal year periods presented.

The greater than proportional change in cost of revenue was primarily due to the impact of the strategic 62% decrease in influencer marketing revenues in the current period, which generally have a higher average direct cost profile and lower margins.

Operating Expense

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Contingent consideration

Loss on intangible asset disposal

Impairment of intangible assets and goodwill

Total operating expense

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Total noncash stock-based compensation expense

The net decrease in noncash stock compensation expense was primarily due to a $495,000 reduction in noncash stock compensation expense due to the Executive Grant Modifications and Employee Grant Modifications described below, including accelerated vesting due to partial vesting of a portion of the replacement grants in the prior year period, a $248,000, decrease due to net reductions in headcount in the current and prior year period, and a $444,000 reduction in connection with the granting of the Modified PSUs, with accelerated amortization in the prior year period, due to the market based vesting conditions and use of a Monte Carlo simulation model and lower grant date fair values reflecting lower stock prices on the applicable grant date, compared to the Original PSUs expensed in the prior year period.

The overall reduction in noncash stock compensation expense also reflects the decrease in the average grant date fair values for equity awards expensed during Fiscal Year 2024, compared to Fiscal Year 2023.

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 certain market based vesting conditions.

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 described at Note 8, elsewhere herein (“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.

The increase in noncash stock compensation expense for the periods presented was primarily due to the following:

Concurrent with the cancellation of the awards outstanding under the 2014 Plan, as described and defined in Note 2, the Board approved the issuance of 7,367 equity awards under the 2025 Plan, comprised of 3,342 stock options and 4,025 RSUs to employees with the following general terms:

1) exercise price of $60.96 per share for stock options, 2) shares of common stock associated with all RSUs valued at $60.96 per share, the closing price of the Company’s common stock on the grant date, and 3) RSU and Option grants to vest at the rate of 1/24th per month in arrears (“2025 Exchanged Awards”).

Unrecognized compensation expense related to the awards cancelled under the 2014 Plan totaled $443,000 which is being recognized prospectively over the remaining modified service period of two years.

Total incremental compensation cost related to the 2025 Exchanged Awards totaled $323,000, $177,000 of which related to vested awards as of the modification date and was recognized as expense immediately in the statement of operations for Fiscal Year 2025, and $146,000 related to unvested awards which is being recognized prospectively over the remaining modified service period of two years.

Refer to “General and Administrative” below for additional information regarding changes in noncash stock compensation expense for the periods presented.

Intangible Asset Amortization Expense

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Total amortization expense

The net decrease in amortization expense was primarily due to a $7.1 million write-down of our partner relationship related intangible assets in the fourth quarter of Fiscal Year 2023, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets originally acquired in connection with the acquisition of Mobcrush, Inc.

in June 2021.

The write-down resulted in a $7.1 million decrease in the carrying value of the related intangible assets as of December 31, 2023, and a corresponding decrease in scheduled future quarterly and annual amortization expense for the remaining carrying value of the applicable intangible assets, commencing in the first quarter of 2024 (remaining carrying value totaled $860,000 as of December 31, 2023).

Amortization expense related to our partner relationship related intangible assets, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets, for the years ended December 31, 2024 and 2023 totaled $200,000 and $2,009,000, respectively.

In addition, as described above, the Company sold its Minehut related assets to GamerSafer, Inc., with a carrying value of $475,000 as of February 26, 2024, the date of sale, resulting in a net decrease in related amortization expense for Fiscal Year 2024.

Minehut asset related amortization expense totaled $86,000 and $682,000 for the years ended December 31, 2024 and 2023, respectively.

In June 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers.

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

As a result, in the second quarter of 2023, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000.

Amortization expense for the disposed Bannerfy related intangible assets for the years ended December 31, 2024 and 2023 totaled $0 and $201,000, respectively.

Amortization expense for Fiscal Year 2025 decreased due primarily to a $211,000 reduction reflecting the completion of amortization (amortization period ended in the fourth quarter of 2024) of intangible assets acquired in connection with the acquisition of Super Biz in October 2021, and a $146,000 reduction in amortization expense related to the sale of our Minehut assets in the first quarter of 2024, as described below.

Fiscal Year 2024 amortization expense also included the acceleration of amortization related to a noncore digital asset totaling $133,000.

Selling, Marketing and Advertising

Selling, marketing and advertising expense decreased $2.6 million or 21%, primarily due a $1.4 million, or 64% reduction in amortization expense related to the write-down of our partner relationship related intangible assets as described above, an $874,000, or 63% decrease in sales commission and performance based compensation primarily due to the related decrease in revenues for the periods presented, and a $391,000, or 44% net decrease in selling and marketing personnel related noncash stock compensation expense as described above.

Selling, marketing and advertising expense decreased $2.3 million or 23%, primarily due to a $3.1 million, or 31% reduction in selling, marketing and advertising personnel costs in connection with the Second Quarter 2025 Headcount Reductions and ongoing cost optimization activities during Fiscal Year 2025, and a $107,000 decrease in amortization expense.

The decrease was partially offset by a $509,000, or 36% reduction in selling, marketing and advertising personnel costs allocated to cost of revenue, consistent with the decrease in revenues for the periods presented, and credits reflected during Fiscal Year 2024 related to influencer marketing expense related estimates recorded in prior periods.

Engineering, Technology and Development

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Capitalized internal use software development costs are amortized on a straight-line basis over the software’s estimated useful life.

Engineering, technology and development costs decreased $5.1 million, or 53%, driven primarily by the following:

Decrease in cloud services and other technology platform costs totaling $1.6 million, or 67%, and a decrease in product and engineering personnel and noncash stock compensation expense totaling $2.0 million, or 48%, and $189,000, or 86%, respectively, reflecting the impact of related personnel and other cost reduction activities, including the sale of our Minehut assets.

Decrease in developed technology related intangible asset amortization expense totaling $1.3 million, or 54% resulting primarily from the write-down of our Microsoft Minecraft Server, InPvP developed technology and Bannerfy technology related intangible assets, respectively, during Fiscal Year 2023, as described above.

Engineering, technology and development costs decreased $1.5 million, or 35%, driven primarily by a reduction in product and engineering personnel expense totaling $1.5 million, or 50%, reflecting the impact of Second Quarter 2025 Headcount Reductions and a decrease in cloud services and other technology platform costs totaling $317,000, or 40%, relating to additional cost reduction activities, including the sale of our Minehut and Mineville digital assets, as described herein.

The decrease was partially offset by a $688,000, or 82% decrease in engineering personnel costs allocated to cost of revenue, due in part to the decrease in revenues for the periods presented, and a reduction in capitalized internal use software cost during Fiscal Year 2025.

General and Administrative

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Total general and administrative expense

The net decrease in general and administrative expense for the periods presented was primarily due to the following:

Personnel costs decreased due to headcount reductions in various corporate, general and administrative functions in connection with ongoing cost reduction and optimization activities.

Professional fees expense increased in Fiscal Year 2024 due to additional audit and third-party valuation fees incurred in connection with various Fiscal Year 2023 complex, nonstandard transactions, including the Melon Acquisition and various technical accounting related aspects associated with preferred stock outstanding, and related freestanding equity instruments.

Noncash stock compensation expense included in general and administrative expense decreased primarily due to a $244,000 net reduction in noncash stock compensation expense in connection with the Executive Grant Modification described above, and a $204,000 net reduction due to reductions in headcount and equity awards granted in prior periods that where fully vested during Fiscal Year 2024 or prior, with higher average grant date fair values than equity awards granted and included in expense subsequent to December 31, 2023.

The decrease also reflects a $359,000 net reduction in noncash stock compensation expense in connection with the Original PSUs, with an estimated average grant date fair value of $36.16, and which were fully expensed as of September 30, 2023, and the Modified PSUs, with an average grant date fair value of $8.00 and are amortized on an accelerated basis over the implied service period due to the utilization of a Monte Carlo simulation model to determine the estimated fair value of the equity-based award.

Other expense for Fiscal Year 2024 included noncash legal settlement expense incurred in connection with the Pioneer Settlement, described at Note 10 to the Financial Statements accompanying this Report, comprised of $516,000 of noncash expense in connection with the issuance of 550,000 shares of common stock to Pioneer;

the noncash incremental fair value totaling $283,000, related to Pioneer and other AA AIRs (see Note 7 to the Financial Statements accompanying this Report), which were modified to include a reduction in exercise price and an extension of the exercise term, as described at Note 7;

and a $164,000 noncash legal settlement charge related to the adjustment of the estimated fair value (i.e.

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

Personnel and facilities costs decreased due to a reduction in various corporate, general and administrative costs in connection with the Second Quarter 2025 Headcount Reductions and ongoing cost reduction and optimization activities.

Noncash stock compensation expense increased primarily due to $63,000 of incremental expense recognized immediately in the statement of operations related to the vested portion of the 2025 Exchanged Awards, as described at Note 2.

In addition, the increase reflects a $753,000 increase in noncash stock compensation expense incurred in connection with the utilization of third-party investor relations and other consultants, partially offset by a net reduction related to headcount reductions and the ending of amortization periods for equity awards granted in prior periods.

Amortization expense decreased due primarily to the completion of amortization, in the fourth quarter of 2024, of developer relationship related intangible assets acquired in connection with the acquisition of Super Biz in October 2021, prior to January 1, 2025.

The decrease in other expense was primarily due to a reduction in information technology, insurance and other corporate costs in connection with ongoing cost reduction activities.

In addition, other expense for Fiscal Year 2024 included a noncash legal settlement charge incurred in connection with the Pioneer Settlement, described above, comprised of $516,000 of noncash expense in connection with the issuance of 1,146 shares of common stock to Pioneer, and a noncash incremental fair value charge totaling $283,000, related to Pioneer AA AIRs, which were modified to include a reduction in conversion price and an extension of the exercise term in May 2024, as described at Note 10.

Other expense for Fiscal Year 2024 also included a $164,000 noncash legal settlement charge related to the adjustment of the estimated fair value (i.e.

mark-to-market), as of the issuance date, for common stock issued pursuant to the 2022 Note Holder Settlement Agreement, as described at Note 10.

The increase was partially offset by a reduction in information technology, insurance and other corporate costs in connection with ongoing cost reduction activities.

Other expense for Fiscal Year 2023 included noncash legal settlement expense incurred in connection with the settlement of matters involving the Note Holders (as defined at Note 6) related to certain claims arising from an interpretation of certain rights that the Note Holders had pursuant to the terms of the SPA (as defined at Note 6).

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

In consideration for the Settlement Agreement, the Company agreed to issue 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, resulting in a noncash settlement charge of $760,000 which is included in general and administrative expense in the consolidated statements of operations.

Contingent Consideration

Super Biz Acquisition

In connection with the Super Biz Acquisition described at Note 5, under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration.

As such, the Contingent Consideration, is accounted for as post-combination services and expensed in the period that payment of any amounts of Contingent Consideration is determined to be probable and reasonably estimable.

Contingent Consideration was originally recorded as a liability in the 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 impact on our consolidated statements of operations for the periods presented was comprised of the following:

Beginning balance

Change in fair value (3)

Current period accrued contingent consideration

Contingent consideration payments (2)

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

Accrued contingent consideration (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, includes 27,968 shares of common stock valued at $1.52, the closing price of our common stock as of the applicable period end date.

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.

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 (as defined at Note 5) in connection with the remaining Super Biz Second Earn Out Period accrued contingent consideration outstanding, with a principal amount totaling approximately $1.8 million, whereby the Company is obligated to pay the outstanding contingent consideration on the following repayment terms (“Super Biz Note”):

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

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

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

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

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

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

Super Biz Note related interest expense for Fiscal Year 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.

Melon Acquisition

On May 4, 2023, Super League entered into the Melon Purchase Agreement with Melon, pursuant to which the Company acquired the Melon Assets.

In connection with the Melon Acquisition described at Note 5, 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 valuation date was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs.

Assumptions utilized in connection with utilization of the Monte Carlo simulation model as of December 31, 2024 included a risk free interest rate of 4.79%, a volatility rate of 70%, a closing stock price of $2.15 and a discount rate of 30%.

The change in fair value, which is included in contingent consideration expense in the accompanying consolidated statements of operations for the periods presented was comprised of the following:

Fiscal Year Ended

Beginning balance

Contingent Consideration – Initial accrual – May 2023

Change in fair value (4)

Current period accrued contingent consideration

Post closing adjustments (2)

Contingent consideration payments (3)

Accrued contingent consideration (1)

As of December 31, 2024, the accrual for the 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 First Earn Out Period totaling $333,000, included 72,118 shares of common stock valued at $1.52, the closing price of our common stock as of December 31, 2023.

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

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

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

Loss on intangible asset disposal

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 Fiscal Year 2023.

Intangible Asset Impairment

Impairment Charges.

In the fourth quarter of Fiscal Year 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.

The fair value was determined using a discounted cash flow approach, with cash flow projections over the remaining life of the intangible assets of five 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.

There were no intangible asset impairment charges recorded for the year ended December 31, 2024.

Other Income (Expense)

Sale of Mineville

On May 19, 2025, the Company entered into the Mineville Purchase Agreement with Mineville, LLC, a Delaware limited liability company, pursuant to which the Company agreed to sell, and Purchaser agreed to purchase 100% of the Interests of InPvP for cash consideration totaling $350,000, as described earlier in this Report.

The net carrying value of Mineville assets sold totaled $350,000 as of May 19, 2025, which historically were included in intangible assets, net in the balance sheets, resulting in no gain or loss in connection with the Mineville Sale.

Gain on Sale of Minehut Assets

On February 29, 2024, the Company sold its Minehut related assets (“Minehut Assets”) to GamerSafer, in a transaction approved by the Board.

Pursuant to 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.

Other than with respect to the GS Agreement, there is no relationship between the Company or its affiliates with GamerSafer or its affiliates.

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 received $1.0 million of purchase consideration for the Minehut Assets, which amount was paid by GamerSafer in revenue and royalty sharing over a multiple-year period, as described in the GS Agreement.

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 sheet.

The Company initially recorded a receivable for the total estimated Minehut Purchase Consideration totaling $619,000, of which $224,000 was included in prepaid expense and other current assets and $395,000 was included in other receivables in noncurrent assets, and recognized a gain on sale of the Minehut Assets totaling $144,000, which was 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.

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 statement of operations for the year ended December 31, 2024.

The Minehut Purchase Consideration in the GS Agreement was variable pursuant to the guidance set forth in Accounting Standards Codification ("ASC") 606.

Under ASC 606, purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed.

As such, the Company estimated the amount of consideration to which the Company will be entitled, in exchange for transferring the Minehut Assets to GamerSafer, utilizing the expected value method which is the sum of probability-weighted amounts in a range of possible consideration outcomes over the applicable contractual payment period, resulting in an estimated receivable of $619,000.

Amounts collected over and above the estimated purchase consideration recorded at contract inception, if any, will be recognized as additional gains on the sale of Minehut Assets when realized in future periods, up to the $1.0 million stated contractual amount of Minehut Purchase Consideration.

Additional gains recorded subsequent to the sale and initial accounting for the transaction totaled $39,000, resulting in a cumulative gain on sale for Fiscal Year 2024 totaling $183,000.

Change in Fair Value of Warrant Liability

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 for Fiscal Year 2025 and 2024 totaled $343,000 and $39,000, respectively.

From the date of sale of the Minehut Assets through December 31, 2025, the Company calculated royalties due from GamerSafer, applied against the Minehut Purchase Consideration receivable pursuant to the GS Agreement, totaling $1,000,000.

Change in Fair Value of Warrant Liabilities

Original YP Warrant

The initial fair value of the Original YP Warrant, totaling $1,935,000, was classified as a liability in the balance sheets, and was remeasured at fair value at each balance date.

The change in fair value of the Original YP Warrant for Fiscal Year 2025 totaled $255,000 which is reflected in other income (expense) in the statements of operations.

The fair value of the Original YP Warrant during the applicable period was estimated using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions:

expected volatility of 40%;

risk free interest rate range of 3.66% - 3.88%;

and expected life range of 3.83 - 4.0 years.

In conjunction with the Company’s October 2025 shareholder meeting, shareholders approved the issuance of the shares underlying the Original YP Warrant as required by Nasdaq Listing Rule 5635(d).

As such, the fair value of the Original YP Warrant on the approval date totaling $1,679,000 was reclassified to equity, and therefore, subsequent to October 20, 2025 the Original YP Warrant was no longer required to be marked to market.

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

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

Ended December 31,

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

Beginning balance

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

Change in fair value

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

As described at Note 7, 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 balance sheet and re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

The change in fair value for the September 2024 Series AAA Junior Investor Warrants for the Fiscal Years 2025 and 2024 totaled ($346,000) and $2,000, respectively.

Placement Agent Warrants

Beginning balance

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

Change in fair value

Subtotal - fair value of warrant liability – Placement Agent Warrants

Total fair value of warrant liability

Estimated fair value on the date of issuance.

Interest Expense

Interest expense for the periods presented was comprised of the following:

As described at Note 7, 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) 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 balance sheet and re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

The change in fair value for the Placement Agent Warrants for the Fiscal Years 2025 and 2024 totaled ($581,000) and ($1.1 million), respectively.

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

Interest expense, including change in fair value of promissory notes carried at fair value, primarily reflects the change in fair value of debt accounted for under the fair value option (“FVO”) as described at Note 2, including the incremental fair value changes recorded in connection with the exchange of debt accounted for under the FVO for equity securities of the Company as described at Note 6, and interest expense incurred on other notes outstanding during the periods presented.

Interest expense, including change in fair value of promissory notes carried at fair value for the periods presented, was comprised of the following:

Fiscal Year Ended

Super Biz Note

Accrued Interest

Interest expense, including accrued interest

Change in fair value

Interest expense, including accrued interest

Change in fair value

SLR Facility:

Interest expense and other fees

Total interest expense

Loss on Extinguishment of Liability

In August 2024, the Company issued the Super Biz Note to the Founders in connection with the remaining Super Biz Second Earn Out Period accrued contingent consideration outstanding, with a principle amount totaling approximately $1.8 million.

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.

In addition, in connection with the issuance of the Super Biz Note, during the period commencing January 2, 2025 and concluding on January 6, 2025, the Company will issue 262,501 shares of the Company’s common stock to the Founders, valued at $336,000, based on the closing price of our common stock on the date of issuance of Super Biz Note.

Agile II Note

1800 Diagonal Notes

Total Interest (expense) income, including change in fair value of promissory notes carried at fair value

Loss on Extinguishment of Liabilities

Super Biz Notes

On July 8, 2025, the Company entered into the SB Exchange Agreements as described at Note 5, pursuant to which the Company and Khakshoor, Drozdov and Firepit (collectively, the “SB Note Holders”) agreed that in exchange for the surrender and forgiveness of the Super Biz Notes, with an aggregate principal and interest balance of $1.9 million, the SB Note Holders were issued 1,896,964 shares of the Company’s Series AAAA Jr.

Convertible Preferred Stock.

The July 8, 2025 exchange of the Super Biz Notes for shares of the Company’s Series AAAA Junior Preferred Stock was accounted for as an extinguishment of the related promissory note, resulting in a loss on extinguishment of liability of $161,000, included in the statements of operations for the year ended December 31, 2025.

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 (“Super Biz Note”).

Interest accrued on the outstanding principal at the rate of 8.5% per annum.

In addition, in connection with the issuance of the Super Biz Note the Company issued 547 shares of the Company’s common stock to the Founders, valued at $336,000, based on the closing price of our common stock on the date of issuance of the promissory note.

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 gain 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 Fiscal Year 2024, primarily comprised of the fair value of the 262,501 shares of restricted stock to be issued, as described above.

The default interest provision included in the Super Biz Note represents an embedded derivative with a 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 sheet under the caption “Promissory note – contingent consideration,” and is required to be marked to market at each balance sheet date.

The change in fair value of the derivative liability totaled ($94,000) for Fiscal Year 2024.

Loss on Exchange of Placement Agent Warrants

In December 2023, as further described in Note 7, with respect to shares of Series AAA Preferred Stock issued in exchange for shares of Series A Preferred and Series AA Preferred, in the Series AAA Offerings (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 Company’s Series A Offerings and Series AA 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 terms of the new Placement Agent Warrants and the original placement agent warrants (recorded as a liability under ASC 815) was determined to be substantially different based on an analysis of the fair value of each instrument immediately before and after the modification, resulting in a loss on extinguishment, recognized in other income (expense) in the consolidated statements of operations for Fiscal Year 2023, totaling $681,000.

As a result, a gain on extinguishment totaling $336,000 was recorded in the statement of operations, and credited to additional paid-in capital (included in “Other” in the statement of stockholder’s equity), for the year ended December 31, 2024, primarily comprised of the fair value of the 547 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.

Agile II Note

On July 10, 2025, the Company entered into an exchange agreement (the “Agile Exchange Agreement”) with Agile, pursuant to which the Company and Agile agreed that in exchange for the surrender and forgiveness of the Agile II Note, dated February 7, 2025, with the remaining amount of principal and interest thereunder being $1,331,250, Agile received (a) 3,678 shares of common stock (the “Agile Exchange Shares”), (b) pre-funded warrants to purchase 14,419 shares of common stock (the “Agile Pre-Funded Warrants”, and collectively with the Agile Exchange Shares, the “Agile Exchange Securities”), with the Agile Exchange Securities valued at a price of $68.04, such amount above the Nasdaq Minimum Price, and (c) four equal cash payments of $25,000 to Agile, totaling $100,000, beginning on July 10, 2025, and every seven days thereafter.

The July 10, 2025 exchange of the balance of the Agile II Note for shares of the Company’s Common Stock was accounted for as an extinguishment of the Agile II Note, resulting in the derecognition of the related liability and the recording of the fair value of the equity securities exchanged on the date of settlement.

The Agile II Note was accounted for under the FVO, and therefore, the carrying amount of the Agile II Note immediately prior to settlement represented its fair value at the settlement date.

The fair value of the common stock and cash payments exceeded the fair value of the Agile II Note on the date of the exchange resulting in a loss on extinguishment of a liability totaling $256,000, which is included in other income (expense) in the statements of operations.

Belleau Wood Note

Effective October 22, 2025, the Company and Belleau Wood Capital, LP (“Belleau”) entered into an exchange agreement (the “Belleau Exchange Agreement”), pursuant to which the Company and Belleau agreed (a) to convert the remaining principal amount of $1.0 million due under the Belleau Note into 83,334 shares of Common Stock, valued at $12.00 per share, simultaneous with the close of the October 2025 PIPE (the “Note Exchange Consideration”), and (b) issue Belleau a common stock purchase warrant to purchase the sum of 10,417 shares of Common Stock, in form similar to the PIPE Warrants (the “Belleau Warrants”), except the warrants will be exercisable for a period of two (2) years.

The exchange of the remaining balance of the Belleau Note for common stock and common stock purchase warrants, as described above, was accounted for as an exchange of debt for equity, resulting in a loss on exchange totaling $1,871,000, reflected in other income (expense) in the statement of operations for the year ended December 31, 2025.

The Belleau Note was accounted for under the FVO, and therefore, the carrying amount of the Belleau Note immediately prior to the exchange represented its fair value at the exchange date.

The fair value of the Belleau Warrants was estimated utilizing Black-Scholes, with inputs including:

term of 2 years, stock price of $31.20, volatility of 93% and risk free interest rate of 3.45%

Related Party Promissory Note

On July 7, 2025, the Company entered into an exchange agreement with the Michael Keller Trust (the “Trust”) (“RP Exchange Agreement”), pursuant to which the Company and the Trust agreed that in exchange for the surrender and forgiveness of RP Note, with the principal and interest thereon being equal to $1,878,082, the Trust would be granted (a) 1,500,000 shares of Series AAAA Jr.

Convertible Preferred Stock, and (b) cash payments totaling $378,000, such payments to be made in equal monthly installments of approximately $63,000, commencing on October 15, 2025, and concluding on March 15, 2026 (the “Trust Agreement”).

The July 7, 2025 exchange of the balance of the RP Note for shares of the Company’s Series AAAA Junior Preferred Stock was accounted for as an extinguishment of the RP Note, resulting in the derecognition of the related liability and the recording of the fair value of the Series AAAA Jr.

Preferred Stock exchanged on the date of settlement.

The RP Note was accounted for under the FVO, and therefore, the carrying amount of the RP Note immediately prior to settlement represented its fair value at the settlement date, resulting in a loss on extinguishment totaling $26,000.

The $378,000 of accrued cash payments were included as a component of the change in fair value of the RP Note for the year ended December 31, 2025, which is included in other income (expense) in the statements of operations.

Yield Point Convertible Note

Effective October 22, 2025, the Company and Yield Point entered into an exchange agreement (the “YP Exchange Agreement”), pursuant to which the Company and Yield Point would, on a date no earlier than ten (10) business days after the effectiveness of the YP Exchange Agreement, exchange up to 100% of unconverted and unpaid principal and interest under the YP Note, for:

(i) that number of shares of the Company’s Series C Preferred Stock;

(ii) common stock purchase warrants to purchase 166,667 shares of Common Stock, on terms substantially similar to the PIPE Warrants, at an initial exercise price of $12.00 per share subject to adjustment as set forth therein (the “YP Exchange Warrant”);

and (iii) the cancellation of all remaining common stock purchase warrants previously issued to Yield Point in connection with the sale to Yield Point of the YP Note, dated July 10, 2025 (“YP Note Exchange”).

In addition, during the 10-day period from the effective date of the YP Exchange Agreement, Yield Point converted $1,953,000 of the outstanding principal balance under the YP Note, resulting in the issuance of 136,834 shares of common stock to Yield Point upon conversion, and the Company repaid in cash and additional $1,500,000 of outstanding principal on the YP Note.

As a result, the remaining balance under the YP Note as of the YP Note Exchange date was $1,153,000.

The exchange of the remaining balance of the YP Note for Series C Preferred stock, as described above, was accounted for as an exchange of debt for equity, resulting in a loss on exchange totaling $196,000, reflected in other income (expense) in the statement of operations for the year ended December 31, 2025.

The exchange of the Original YP Warrant for the YP Exchange Warrant, as described above, was accounted for as a modification of the Original YP Warrant, resulting in a loss on extinguishment totaling $1,459,000 reflected in other income (expense) in the statement of operations for the year ended December 31, 2025.

Debt Issuance Costs

The Company paid debt issuance costs totaling $180,000 in connection with the issuance of the Agile Note as described at Note, which is included in “Other” in Other Income and expense in the consolidated statements of operations for FY 2024.

Other income (expense), net for Fiscal Year 2025 included debt issuance costs paid totaling $554,000, respectively, in connection with the issuance of the YP Note, Agile II Note, Diagonal I Note, and Diagonal II Note, as described at Note 6.

(Provision) Benefit for Income Taxes

Provision for income taxes for Fiscal Year 2024, totaling $161,000, reflects noncash tax expense recorded in connection with the tax treatment of changes in contingent consideration payable as of December 31, 2024.

A corresponding deferred tax liability totaling $161,000 is reflected in the consolidated balance sheet as of December 31, 2024.

In June 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy, Ltd.

(“Bannerfy”)(the “Bannerfy Acquisition”) in 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 FASB ASC Topic 805 – Business Combinations (“ASC 805”), a difference between the book and tax bases of the assets arises.

FASB ASC Topic 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 fully amortized the related remaining net deferred tax liability, resulting in a $313,000 tax benefit reflected in the consolidated statements of operations for Fiscal Year 2023.

Liquidity and Capital Resources

Cash and cash equivalents totaled approximately $14.4 million and $1.3 million at December 31, 2025 and 2024, respectively.

As of December 31, 2025, the Company had working capital and an accumulated deficit balance as reflected on the balance sheet provided herein.

For the years ended December 31, 2025 and 2024, the Company incurred net losses, and cash outflows from operating activities as reflected in the accompanying statements of operations and cash flows, respectively.

The change in cash and cash equivalents for the periods presented reflects the impact of operating, investing and financing cash flow related activities, as described below.

The accompanying 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 disclosed in the consolidated statements of operations for the periods presented herein, and had an accumulated deficit of $270.0 million as of December 31, 2024.

Noncash stock compensation, amortization and impairment charges for Fiscal Year 2024 and 2023 totaled $3.9 million and $17.4 million, respectively.

For Fiscal Years 2024 and 2023, net cash used in operating activities totaled $11.5 million and $15.5 million, respectively.

To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings.

We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations.

Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control.

The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the threat of other outbreaks or pandemics, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate.

A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets.

In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by FASB ASC 205-40, “Presentation of Financial Statements - Going Concern,” (“ASC 205”).

Management ’ s Plans

Entry into Loan Agreements

On the Agile II Effective Date, the Company entered into the Agile II Loan Agreement, with the Collateral Agent and Agile, pursuant to which the Company issued to Agile a 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;

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

$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 the Diagonal Effective Date, the Company and Diagonal) entered into the Diagonal Agreement, pursuant to which the Company issued the Diagonal Note in the principal amount of $300,000, 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 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, 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;

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

(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;

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

(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;

The Diagonal Note was issued with an OID of 4.75%, 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, we entered into the Belleau Purchase Agreement with Belleau.

Pursuant to the Belleau Purchase Agreement, the Company will issue to Belleau 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;

(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.

In the event of a prepayment of any Belleau Note by the Company, the Belleau Interest will be payable in full at the time of such prepayment.

The Belleau Note also provides for:

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.

The Company intends to utilize the proceeds from the sale of the Belleau Notes for working capital and general corporate purposes.

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”).

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.

Management continues to explore alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and/or other forms of equity or debt financings.

We may continue to evaluate potential strategic acquisitions.

To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both.

Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing.

However, additional funding may not be available on favorable terms, or at all.

The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future.

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

We may continue to evaluate potential strategic acquisitions.

To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both.

Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing.

However, additional funding may not be available on favorable terms, or at all.

The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future.

Improved Liquidity Due to Third and Fourth Quarter 2025 Restructuring Activities and Equity Financing

Equity Financing

The Company completed an equity financing, defined below as the October 2025 PIPE, totaling $20.0 million in gross proceeds ($18.5 million in proceeds net of offering costs), as described at Note 7.

The proceeds provide significant working capital and liquidity to fund operations and meet the Company’s obligations as they arise.

The Company intends to use the proceeds from the October 2025 PIPE for repayment of existing indebtedness totaling $1.5 million (refer to Note 6), implementation of a new corporate strategy, general corporate purposes and working capital.

Conversions of Debt to Equity

During the third and fourth quarters of 2025, holders of an aggregate of approximately $7.4 million of the Company’s outstanding promissory notes exchanged or converted such notes into either common stock or preferred stock of the Company pursuant to (i) executed exchange agreements, or (ii) the existing conversion terms set forth in the underlying promissory note agreements.

As a result, the Company eliminated approximately $7.4 million of principal and accrued interest obligations that would otherwise have required cash settlement in future periods, eliminating the Company’s debt obligations and related future cash commitments.

Refer to Notes 5 and Note 6 for additional information regarding the exchange or conversion of debt for equity during the year ended December 31, 2025.

Operating Cost Reductions

Since approximately May 2024, the Company implemented a number of operating expense reduction initiatives designed to decrease future operating cash outflow requirements.

These actions included workforce optimization, vendor contract renegotiations, reduced discretionary spending, and restructuring of non-core activities.

Excluding noncash charges, these operating expense reductions resulted in a decrease in operating expense of approximately 28% for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Considerations as of the Date of Issuance of Financial Statements

In connection with preparing the Company’s financial statements as of and for the years ended December 31, 2025 and 2024, management evaluated whether conditions and events raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued, in accordance with ASC 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”).

Based on, (i) cash and cash equivalents on hand as of the issuance date of these financial statements, (ii) net proceeds from the equity financings completed as of December 31, 2025, (iii) elimination of future cash obligations resulting from the conversion of debt into equity, and (iv) realized reductions in operating expense, management believes that the Company will have sufficient liquidity to meet its obligations as they become due for at least the twelve-month period following the issuance date of these financial statements as contemplated by ASC 205-40.

Cash Flows for the Fiscal Years Ended December 31, 2025 and 2024

2 unchanged sentences

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Increase (decrease) in cash and cash equivalents

Change in cash and cash equivalents

Cash and cash equivalents, at beginning of period

1 unchanged sentence

Cash Flows from Operating Activities.

Net cash used in operating activities during Fiscal Year 2024, primarily reflected our net loss, net of adjustments to reconcile net loss to net cash used in operating activities, which included noncash stock compensation charges of $1,289,000, depreciation and amortization charges of $2,612,000, net changes in fair value of warrant liabilities of ($1,115,000) and net changes in working capital of $1,364,000.

Net cash used in operating activities during the Fiscal Year 2025 primarily reflected our GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $2.3 million, depreciation and amortization charges of $2.2 million, net changes in fair value of certain liabilities of $5.9 million, noncash loss on extinguishment of liability of $161,000, debt issuance costs of $554,000, and net changes in working capital of ($1.1 million).

Changes in working capital primarily reflected the impact of the management and settlement of receivables and payables in the ordinary course.

Net cash used in operating activities during Fiscal Year 2024, primarily reflected our net loss, net of adjustments to reconcile net loss to net cash used in operating activities, which included noncash stock compensation charges of $1.3 million, depreciation and amortization charges of $2.6 million, net changes in fair value of warrant liabilities of ($1.1 million) and net changes in working capital of $1.4 million.

Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course.

Net cash used in operating activities during Fiscal Year 2023, primarily reflected our net loss, net of adjustments to reconcile net loss to net cash used in operating activities, which included noncash stock compensation charges of $2,735,000, depreciation and amortization charges of $5,376,000, intangible asset impairment charges of $7,052,000, disposal of intangible asset charges of $2,284,000, net changes in fair value of warrant liabilities of ($2,898,000) and net changes in working capital of $116,000.

Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course and the payment of the cash portion of the Super Biz Contingent Consideration, as described above.

Cash Flows from Investing Activities.

1 unchanged sentence

Fiscal Year Ended

Cash paid in connection with the acquisition of Melon, net

Proceeds from sale of Mineville Assets

Proceeds from sale of Minehut Assets

2 unchanged sentences

Acquisition of other intangible and other assets

Net cash used in investing activities

Net cash provided by (used in) investing activities

Sale of Mineville Assets.

On May 19, 2025, the Company entered into the Mineville Purchase Agreement with the Purchaser, pursuant to which the Company agreed to sell, and Purchaser agreed to purchase 100% of the Interests of InPvP.

Prior to the Mineville Closing contemplated by the Mineville Sale, InPvP was a wholly owned subsidiary of the Company.

The closing of the Mineville Sale occurred simultaneously with the execution of the Mineville Purchase Agreement.

The Purchaser paid cash consideration totaling $350,000 at the Mineville Closing to acquire the Interests.

Sale of Minehut Assets.

On February 29, 2024, the Company sold its Minehut Assets to GamerSafer as described above.

Pursuant to the GS Agreement, 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.

During Fiscal Year 2024 we received Minehut Purchase Consideration payments totaling $192,000.

Melon Acquisition.

On May 4, 2023, we entered the Melon Purchase Agreement with Melon, pursuant to which the Company acquired the Melon Assets, as described above.

At the Closing, the Company paid an aggregate total of $900,000 to Melon, 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, valued at the Melon Closing Share Price, as described above.

Pursuant to the GS Agreement, the Company received $1.0 million of purchase consideration for the Minehut Assets, which amount was paid by GamerSafer in revenue and royalty sharing over a multiple-year period, as described in the GS Agreement.

During Fiscal Years 2025 and 2024 we received Minehut Purchase Consideration payments totaling $808,000 and $192,000, respectively.

Capitalized Internal Use Software Costs .

8 unchanged sentences

Proceeds from issuance of common stock, net of issuance costs

Proceeds from promissory notes, net

Payments on promissory notes

Payments on convertible notes

Accounts receivable facility advances

Proceeds from notes payable, net of debt issuance costs

Payments on notes payable

Proceeds from accounts receivable facility

Payments on accounts receivable facility

Contingent consideration payments – Melon Acquisition

Proceeds from common stock options and purchase warrant exercises

Net cash provided by financing activities

Equity Financings

Issuances of 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, as follows (rounded to the nearest thousands, except share and per share data):

Equity Financings - Common Stock Issuances - Fiscal Year Ended December 31, 2025

October 2025 PIPE Transaction

On October 22, 2025, October 24, 2025 and October 27, 2025, the Company entered into Securities Purchase Agreements (the “PIPE Purchase Agreement”) with certain accredited investors (the “Purchasers”), relating to the Company’s offering of an aggregate of (a) 332,084 shares (the “PIPE Shares”) of the Company’s Common Stock, at a price per share equal to $12.00 and (b) Pre-Funded Warrants to purchase 1,334,584 shares of Common Stock (the “PIPE Pre-Funded Warrants”) at a price per PIPE Pre-Funded Warrant equal to same price as that for PIPE Shares minus $0.00001, and the remaining exercise price of each PIPE Pre-Funded Warrant will equal $0.00001 per share, for gross proceeds to the Company of approximately $20,000,000, before deducting offering costs and expenses (“October 2025 PIPE”).

For each one PIPE Share or PIPE Pre-Funded Warrant purchased in the Offering, each Purchaser also received Common Stock Purchase Warrants (“PIPE Warrants”), to purchase one share of Common Stock (“PIPE Warrant Shares”), with an exercise price of $144.00 per share.

The PIPE Shares, PIPE Pre-Funded Warrants and PIPE Warrants sold in the Offering are sometimes hereafter referred to as, the “PIPE Securities.” The October 2025 PIPE, which was comprised of three separate closings, had a final close date of October 27, 2025.

The Company intends to use the proceeds from the Offering for repayment of existing indebtedness totaling $1.5 million, implementation of a new corporate strategy, general corporate purposes and working capital.

In connection with the consummation of the October 2025 PIPE, the Company issued additional warrants to purchase an aggregate of 766,667 shares of common stock to certain designees of the Lead Investor (as defined in the PIPE Placement Agreement) (“PIPE Lead Warrants”), as approved by the Company’s stockholders at the Company’s 2025 Annual Meeting of Stockholders.

The Company and the Purchasers also executed a registration rights agreement (the “PIPE RRA”), pursuant to which the Company agreed to file a registration statement covering the resale of the PIPE Shares, the shares of Common Stock underlying the Pre-Funded Warrants (the “PFW Shares”), and the PIPE Warrant Shares within thirty (30) days following the date of the issuance of the PIPE Securities, and to cause the PIPE RRA to be declared effective under the Securities Act of 1933, as amended (the “Securities Act”), no later than 90 days after the date on which the Purchase Agreements were entered.

The PIPE Warrants entitle the holders to purchase that number of shares of Common Stock equal to the number of shares of Common Stock (or PIPE Pre-Funded Warrants) purchased in the Offering.

The PIPE Warrants are exercisable immediately upon issuance, expire five years from the date of issuance, and have an initial exercise price of $12.00 (the “Initial Exercise Price”), subject to adjustment in the event of any Warrant Dilutive Issuance (as defined below), or any stock splits, stock dividends, recapitalizations, and similar events (the Initial Exercise Price as adjusted from time to time pursuant to the terms of the PIPE Warrant is referred to as, the “Exercise Price”).

The anti-dilution adjustments to the Exercise Price set forth that if the Company sells any shares of Common Stock or any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, for effective consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such sale (the foregoing a “Warrant Dilutive Issuance”), then simultaneously with the consummation (or, if earlier, the announcement) of such Warrant Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the higher of (i) the New Issuance Price or (ii) the Warrant Floor Price (as defined below), provided, however, that no Exempt Issuance (as defined in the PIPE Warrants) shall be considered a Warrant Dilutive Issuance.

The “Warrant Floor Price” means $6.84, such amount representing 20% of the Nasdaq Minimum Price of $34.20 on the date the Purchase Agreements were executed (the “PIPE Purchase Date”) (which price shall be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction).

The PIPE Warrants also contain a call feature, whereby, after the Company has registered the PIPE Warrant Shares on an effective registration statement filed with the SEC, the Company has the option, but not the obligation, and in the Company’s sole and absolute discretion, to purchase the PIPE Warrant from the Holder at a price of $0.001 per share of Common Stock underlying the PIPE Warrant (the “Call Option”), in the event the closing price of the Company’s Common Stock, as listed on the Nasdaq Capital Market, is at or above $36.00 per share for 20 consecutive trading days (the “Call Trigger”).

On October 22, 2025, the Company and Aegis Capital Corp.

(“Aegis”), entered into a Placement Agency Agreement (the “PIPE Placement Agreement”), pursuant to which Aegis acted as our exclusive placement agent in connection with the October 2025 PIPE.

Pursuant to the PIPE Placement Agreement, the placement commission will be (I) (a) 2.0% for investments made by the Lead Investor (as defined in the PIPE Placement Agreement), and (b) 9.0% for all PIPE Securities placed by Aegis, excluding Lead Investor;

(II) if investments placed by Aegis equal $5 million or more, the Company will pay Aegis an additional fee of $125,000;

(III) Aegis will also receive a fee of 9.0% of the proceeds from the cash exercise of any warrants purchased by investors, excluding the Lead Investor, in each case payable on exercise;

and (IV) as additional compensation for Aegis’s services, the Company shall issue to Aegis or its designees at the consummation of the October 2025 PIPE, warrants (the “PIPE Placement Agent Warrants”) to purchase that number of shares of Common Stock equal to 5.0% of the aggregate number of PIPE Shares and PIPE Pre-Funded Warrants sold in the Placement other than to the Lead Investor.

The Placement Agent Warrants will be exercisable at any time beginning and from time to time, in whole or in part, during the five (5) years commencing on the commencement of sales in the Placement, at a price per share equal to 100.0% of the offering price per share of the PIPE Securities sold in the October 2025 PIPE and such Placement Agent Warrants shall be exercisable on a cash basis or cashless basis.

The Company allocated the proceeds between the PIPE Securities based on the relative fair values of the PIPE Securities in accordance with ASC 505, “Equity.” The fair value of the common stock was based on the Company’s closing stock price on the respective closing dates, ranging from $22.20 per share to $31.20 per share.

The October 2025 PIPE proceeds, and related offering costs were allocated to the PIPE Securities issued as follows:

Offering Costs

PIPE Shares - Common stock

PIPE Pre-Funded Warrants

PIPE Warrants

Total gross proceeds

The amount allocated to the PIPE Shares was recorded in Common Stock (par value) and Additional Paid-In Capital in the accompanying balance sheet as of December 31, 2025.

The amounts allocated to the PIPE Pre-Funded warrants and PIPE Warrants was recorded in Additional Paid-In Capital as the PIPE Warrants and PIPE Pre-Funded Warrants are equity-classified.

Offering costs, including placement agent fees, legal fees and accountant related expenses were recorded as a reduction to Additional Paid-In Capital in proportion to the allocation of proceeds between the equity instruments issued, as summarized above.

Additional financing costs incurred in connection with the October 2025 PIPE, included the issuance of the following additional common stock purchase warrants:

Classification

PIPE Lead Warrants -

Equity / Additional-paid-in-capital

PIPE Placement Agent Warrants

Equity / Additional-paid-in-capital

The fair value of the PIPE Warrants, PIPE Pre-Funded Warrants, PIPE Lead Warrants and PIPE Placement Agent Warrants was estimated using a Black-Scholes option pricing model with the following assumptions:

Expected Volatility

Risk–free interest rate

Dividend yield

Expected life of warrants (years)

May 2025 Equity Financings

On May 30, 2025, the Company entered into a securities purchase agreement (the “May III Purchase Agreement”) with certain investors, which provided for the sale and issuance by the Company in a registered direct offering (the “May III Offering”) of an aggregate of (i) 6,646 shares of the Company’s common stock, at a purchase price of $57.60 per share (the “May III Shares”), and (ii) pre-funded warrants to purchase up to 4,987 shares of common stock at a purchase price of $57.48 per pre-funded warrant (the “May III Pre-Funded Warrants” and, together with the May III Shares, the “May III Securities”), which represents the per share price for the May III Shares less the exercise price of $0.00001 per share.

The May III Offering closed on June 2, 2025.

The aggregate gross proceeds to the Company from the May III Offering were approximately $670,000, before deducting placement agent commissions and other estimated offering expenses.

The Company utilized the net proceeds of the May III Offering for working capital and general corporate purposes, as well as to repay a portion of the Company’s indebtedness.

On May 30, 2025, the Company also entered into a placement agent agreement (the “May III Placement Agent Agreement”) with Aegis Capital Corp.

(the “Placement Agent”).

Pursuant to the terms of the May III Placement Agent Agreement, the Placement Agent agreed to use its reasonable best efforts to arrange for the sale of the securities in the May III Offering.

The Company agreed to pay the Placement Agent a cash fee equal to 8% of the aggregate gross proceeds from the sale of the May III Securities.

The Company also agreed to reimburse the Placement Agent for certain expenses.

On May 29, 2025, the Company entered into an underwriting agreement (the “May II Underwriting Agreement”) with Aegis Capital Corp., (the “Underwriter”), relating to the Company’s public offering (the “May II Offering”) of 8,681 shares (the “May II Shares”) of its common stock.

Pursuant to the May II Underwriting Agreement, the Company also granted the Underwriter a 45-day option (“May II Option”) to purchase an additional 869 shares of common stock (the “May II Option Securities”, and together with the Shares, the “May II Securities”).

On May 30, 2025, the Company issued the May II Shares and closed the May II Offering at a public price of $57.60 per share, for net proceeds to the Company of approximately $380,000 after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

The Company utilized the net proceeds of the May II Offering for working capital and general corporate purposes, as well as to repay a portion of the Company’s indebtedness.

On May 29, 2025, the Underwriter delivered notice to the Company that it elected to exercise the May II Option with respect to an aggregate of 869 May II Option Securities.

The closing of the sale of the May II Option Shares occurred on May 30, 2025.

On May 9, 2025, the Company entered into an underwriting agreement (the “May I Underwriting Agreement”) with the Underwriter, relating to the Company’s public offering (the “May I Offering”) of 10,662 shares (the “May I Shares”) of its common stock, par value $0.001 per share.

Pursuant to the May I Underwriting Agreement, the Company also granted the Underwriters a 45-day option (“May I Option”) to purchase an additional 1,600 shares of common stock (the “May I Option Securities”, and together with the Shares, the “May I Securities”).

On May 12, 2025, the Company issued the firm May I Securities and closed the May I Offering at a public price of $81.60 per share, for net proceeds to the Company of approximately $700,400 after deducting underwriting discounts, commissions and estimated offering expenses payable by the Company.

On May 14, 2025, the Underwriter partially exercised its May I Option and purchased an additional 1,287 shares of common stock at a price of $81.60 per share, before deducting underwriting discounts.

The issuance by the Company of the May I Option Securities resulted in total gross proceeds of approximately $104,999, before deducting underwriting discounts, commissions, and other offering expenses payable by the Company.

The Company utilized the net proceeds of the May I Offering for working capital and general corporate purposes, as well as to repay a portion of the Company’s indebtedness.

Equity Financings - 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 2,368 shares of the Company’s common stock, par value $0.001 per share (the “Shares”), at a purchase price of $422.40 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.

Yield Point Equity Line of Credit

On July 10, 2025 (the “YP Execution Date”), the Company, entered into an equity purchase agreement (the “YP Equity Purchase Agreement,” or “YP ELOC”) with Yield Point.

Under the YP Equity Purchase Agreement, the Company has the right, but not the obligation, to direct Yield Point to purchase up to $20,000,000 (the “Maximum Commitment Amount”) in shares of common stock of the Company upon satisfaction of certain terms and conditions contained in the YP Equity Purchase Agreement, including, without limitation, an effective registration statement filed with SEC registering the resale of the shares of Put Stock (defined below) and the shares of Commitment Stock (defined below) and additional shares to be sold to Yield Point from time to time under the YP Equity Purchase Agreement.

The term of the YP Equity Purchase Agreement began on the YP Execution Date and ends on the earlier of (i) the date on which Yield Point shall have purchased shares of common stock issued, or that the Company shall be entitled to issue, per any applicable Put Notice in accordance with the terms and conditions of the YP Equity Purchase Agreement (the “Put Stock”) equal to the Maximum Commitment Amount (as defined in the YP Equity Purchase Agreement), (ii) the date that is thirty-six (36) months from the date the registration statement is declared effective, (iii) written notice of termination by the Company to Yield Point (which shall not occur at any time that Yield Point holds any of the shares of Put Stock, or within 30 days of the sale to Yield Point of Put Stock), or (iv) written notice of termination by Yield Point to the Company (the “Commitment Period”).

During the Commitment Period, the Company may direct Yield Point to purchase shares of Put Stock by delivering a notice (a “Put Notice”) to Yield Point.

The Company shall, in its sole discretion, select the number of shares of Put Stock requested by the Company in each Put Notice.

However, such amount may not exceed the Maximum Put Amount (as defined in the YP Equity Purchase Agreement).

The purchase price to be paid by Yield Point for the shares of Put Stock will be ninety-two percent (92%) of the lowest VWAP for a trading day on the Principal Market during the Valuation Period (as defined in the YP Equity Purchase Agreement).

In consideration for Yield Point’s execution and delivery of, and performance under the YP Equity Purchase Agreement, on the Execution Date, the Company issued pre-funded warrants to purchase common stock (the “YP Pre-Funded Warrant”) to Yield Point in a form acceptable to Yield Point in its sole discretion and having an exercise price per share of $0.001 (the “Commitment Stock”) having a value of $600,000 based on closing price of the common stock on July 9, 2025.

All of the shares of Commitment Stock were fully earned as of the Execution Date, and the issuance of the shares of Commitment Stock is not contingent upon any other event or condition, including, without limitation, the effectiveness of the Initial Registration Statement (defined below) or the Company’s submission of a Put Notice to Yield Point and irrespective of any termination of the YP Equity Purchase Agreement.

The fair value of the Commitment Stock was recorded in Deferred Financing costs included in prepaids and other assets in the company balance sheet as of December 31, 2025.

Under the YP Equity Purchase Agreement, the Company was obligated to file with the SEC, on or before August 10, 2025, a registration statement on Form S-1 (the “Initial Registration Statement”) covering only the resale of the shares of Put Stock and Commitment Stock and to use its best efforts to have the Initial Registration declared effective no later than October 10, 2025.

The Company filed the Initial Registration Statement on July 17, 2025, which was declared effective on September 30, 2025.

The YP Equity Purchase Agreement contains customary representations, warranties, agreements, and conditions to completing future sale transactions, indemnification rights and obligations of the parties.

Hudson Equity Line of Credit

On February 14, 2025, the Company entered into an equity purchase agreement (the “Hudson Equity Purchase Agreement”) with Hudson Global Ventures, LLC, a Nevada limited liability company (“Hudson”).

Pursuant to the Hudson Equity Purchase Agreement, the Company had 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 “Hudson Total Commitment”) of the Company’s common stock, from time to time during the term of the Hudson Equity Purchase Agreement, subject to certain limitations and conditions (the “Hudson Offering” or “Hudson ELOC”).

As consideration for Hudson’s commitment to purchase shares of common stock under the Hudson Purchase Agreement, the Company issued to Hudson 625 shares of common stock, valued at $159,000, following the execution of the Hudson Equity Purchase Agreement (the “Hudson Commitment Shares”).

During the year ended December 31, 2025 the Company sold 1,494 shares of common stock, respectively, under the Hudson ELOC at an average per share price of $163.20, raising net proceeds totaling $231,000.

The Hudson Equity Purchase Agreement was terminated effective May 8, 2025.

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

Equity Financings - Issuances of 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 per share par value and a $1,000 per share purchase price (except for Series AAAA Jr.

Preferred Stock and Series C Preferred Stock which has a stated value of $1.00 per share), as follows (rounded to the nearest thousands, except preferred share and conversion price data):

Preferred Stock

Conversion Shares - Common Stock

Prices (2)(3)(4)

Outstanding -

Exchanges (5)

Original Placement

November 22, 2022

November 28, 2022

November 30, 2022

December 31, 2025

January 31, 2023

April 19, 2023

April 20, 2023

April 28, 2023

November 30, 2023

December 22, 2023

June 26, 2024

AAA-Junior - 2

July 10, 2024

AAA-Junior - 3

September 20,

AAA-Junior – 4

September 30,

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

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

The Conversion price for Series AA Preferred Stock outstanding as of August 23, 2023, totaling 10,706 shares of Series AA Preferred Stock, was adjusted to $2.60 as a result of the Series AA Down Round Feature described below.

The Conversion prices for the Series AA Preferred Stock outstanding as of November 30, 2023, totaling 7,322 shares of Series AA Preferred Stock, were adjusted to the conversion prices shown in the table above, as a result of the Series AA Down Round Feature described below.

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

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

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

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.

For the three months ended March 31, 2023, $719,000 of the net proceeds from the Series A Offerings were utilized in connection with the final redemption of the Notes.

Issuances of Common Stock

On October 24, 2024, the Company entered into a securities 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 or about October 25, 2024, subject to the satisfaction of customary closing conditions in the purchase agreement, and resulted in gross proceeds to the Company of approximately $1.0 million.

On August 21, 2023, we entered into the Underwriting Agreement with the Underwriter (as defined above), relating to the Company’s Common Stock Offering of the Firm Securities to certain investors.

Pursuant to the Underwriting Agreement, the Company also granted the Underwriters the Option to purchase the Option 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.

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

The Firm Securities were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus filed with the SEC pursuant to the Registration Statement under the Securities, as supplemented by the Prospectus Supplement, filed with the SEC pursuant to Rule 424(b) of the Securities Act on August 23, 2023.

Debt Financing

Agile Promissory Note

On November 8, 2024 we entered into the Agile Loan Agreement, with Agile 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 Effective 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 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 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:

The Company is allowed to make a full prepayment 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 the Prepayment Fee.

AAAA-Junior (1)

September 29,

November 6, 2025

Series AAAA Junior Preferred Stock was issued in exchange for certain outstanding debt, as described at Note 5.

Series B Preferred Stock was issued in exchange for certain preferred stock outstanding, as described below.

Series C Preferred Stock was issued in conjunction with the YP Note Exchange described at Note 6.

Exchange of Series AA, AAA and AAA Junior Preferred Stock for Series B Preferred Stock

On September 12, 2025, the Company entered into an Amended & Restated Exchange Agreement, Consent and Waiver (the “2025 AB Exchange Agreements”) with certain holders (the “2025 Exchange Preferred Stockholders”) of the Company’s Series AA, AAA and AAA Junior Preferred Stock, par value $0.001 per share (“2025 Exchanged Preferred Stock”), pursuant to which the Company and the 2025 Exchange Preferred Stockholders agreed that in exchange for the shares of 2025 Exchanged Preferred Stock held by the 2025 Exchange Preferred Stockholders, the 2025 Exchange Preferred Stockholders were granted shares of the Company’s newly issued Series B Preferred Stock, par value $0.001 per share (“2025 Exchange”).

Up to an aggregate of 16,426 shares of Series B Preferred were issuable pursuant to the 2025 AB Exchange Agreements.

In connection with the issuance of the Series B Preferred Stock, the 2025 Exchange Preferred Stockholders, among other things:

(i) agreed to terminate their additional investment rights, or AIRs, granted to them in their respective subscription agreements;

(ii) waived any issuances by the Company of securities below the respective prior conversion price floors prior to the Exchange;

(iii) waived any incurrence of indebtedness by the Company prior to the Exchange;

(iv) agreed, for a period of six months following the date of the Exchange Agreements, to attend any annual or special meeting of the Company’s stockholders and vote their shares in accordance with management’s recommendation;

and (v) provided a general release of the Company from any obligations that may exist under the terms of the Preferred Stock.

The 2025 Exchange was accounted for as an extinguishment of the 2025 Exchanged Preferred Stock, and therefore the difference between the fair value of the new / modified preferred stock and the carrying value of the original preferred stock, totaling $7,685,000, was recognized as a decrease to accumulated deficit and a decrease in additional-paid-in capital in the balance sheet, as a deemed dividend.

On October 20, 2025, the Company issued certain common stock purchase warrants to purchase an aggregate of 194,422 shares of Common Stock (the “Series B Warrants”) to the holders of shares of the Company’s Series B Preferred Stock (the “Series B Holders”) (“Series B Preferred Modification”).

Each Series B Warrant has an exercise price per share equal to $12.00 (the “Series B Exercise Price”).

The Series B Warrants will be available for exercise only upon the first trading day following the one year anniversary of the Company’s issuance of the Series B Warrants, unless prior written approval is received from the Company during such one-year period, as may be required by the applicable rules and regulations of the Nasdaq Capital Market (the “Warrant Stockholder Approval” and the first trading day following the one year anniversary of the Company’s receipt of Warrant Stockholder Approval being, the “Series B Warrant Initial Exercise Date”).

Each Series B Warrant offered will become exercisable beginning on the Series B Warrant Initial Exercise Date at the Series B Exercise Price, and will expire on the date that is one year from the Series B Warrant Initial Exercise Date, subject to the right to exercise during such one-year period with the prior written approval of the Company;

provided that holders of the Series B Warrants will have the right to exercise their Series B Warrants during the time beginning on date the Company receives the Warrant Stockholder Approval and the Series B Warrant Initial Exercise Date in the event of a change of Control or other fundamental change (each as defined in the Series B Warrant).

The Series B Preferred Modification was accounted for as an extinguishment of the Series B Preferred Stock outstanding, and therefore the difference between the fair value of the new / modified preferred stock and the carrying value of the original preferred stock, totaling $6,296,000, was recognized as an increase to accumulated deficit and an increase in additional-paid-in capital in the balance sheet, as a deemed dividend.

Direct costs incurred in connection with the Series B Preferred Modification included the issuance of 29,167 common stock purchase warrants to the placement agent, with terms and conditions identical to PIPE Warrants, with a fair value of $945,000, which are recorded as a reduction to additional-paid-in-capital in the accompanying balance sheet as of December 31, 2025.

Debt Financings

On November 8, 2024 (the “Agile I Effective Date”), the Company entered into a loan agreement with Agile Capital Funding, LLC, as collateral agent (“Agile”) (“the Agile I 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 I Note”).

Pursuant to the Agile I Loan Agreement:

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

(ii) carried 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 I Loan Agreement), interest accrued at a fixed per annum rate equal to the Applicable Rate plus five percent, or 42%.

The Company was required to repay all the obligations due under the Agile I Loan Agreement and the Agile I 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 I Note were used to fund general working capital needs.

Refer to Note 6 for additional details.

In connection with entering into the Agile I 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 I Note and expensed in “other expense” in the statements of operations.

On February 10, 2025, in connection with entering into the Agile II Loan Agreement as described below, the Company paid the remaining balance of the Agile I Note, including interest for the remaining term, totaling $1.5 million.

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 (collectively “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 matured 32 weeks from the Agile II Effective Date;

(ii) carried 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 II Loan Agreement), interest accrued at a fixed per annum rate equal to the applicable rate plus five percent, or 42%.

The Company was 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.

Refer to Note 6 for additional details.

In connection with entering into the Agile II 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 and expensed in “other expense” in the statements of operations.

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

The Agile II Note was accounted for under the FVO, and therefore, the carrying amount of the Agile II Note immediately prior to settlement represented its fair value at the settlement date.

1800 Diagonal Lending I

On March 26, 2025 (the “Diagonal Effective Date”), the Company and 1800 Diagonal Lending, LLC, a Virginia limited liability company, or registered assignees (“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) matured on December 30, 2025 (unless otherwise accelerated upon an Event of Default (as defined below)) (the “Diagonal Maturity Date”), (b) accrued 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 became due and payable, whether on the Maturity Date or upon acceleration by prepayment or otherwise, (c) began to accrue interest on the Diagonal Issuance Date but was not payable until the Diagonal Note became payable, and (d) interest accrued 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.

Refer to Note 6 for additional details.

Pursuant to the Diagonal Note, Diagonal had 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.

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 deducting the OID, reimbursement of Diagonal’s expenses in an amount equal to $7,000 (expensed in the statements of operations for the year ended December 31, 2025), and other estimated offering expenses.

The Company used the net proceeds from the offering for working capital and general corporate purposes.

During the year ended December 31, 2025, Diagonal converted an aggregate principal and interest amount under the Diagonal Note of $320,000 into shares of the Company’s Common Stock at an average price of $28.44 per share, resulting in the issuance of 11,334 shares of Common Stock to Diagonal.

As of December 31, 2025 the Diagonal Note was fully extinguished.

1800 Diagonal Lending II

On May 12, 2025 (the “Diagonal II Effective Date”), the Company and Diagonal entered into a Securities Purchase Agreement (the “Diagonal II Agreement”), pursuant to which the Company issued a Convertible Promissory Note (the “Diagonal II Note”) in the principal amount of $145,200 (the “Diagonal II Principal”), for which the Diagonal II Note, among other things, (a) matured on February 15, 2026 (unless otherwise accelerated upon an Event of Default (as defined below)) (the “Diagonal II Maturity Date”), (b) accrued interest at a rate of 10% per annum on the unpaid principal balance from the date the Diagonal II Note was issued (the “Diagonal II Issuance Date”) until the principal and interest became due and payable, whether on the Maturity Date or upon acceleration by prepayment or otherwise, (c) interest began to accrue on the Diagonal II Issuance Date but was not payable until the Diagonal II Note became payable, and (d) interest accrued at a rate of 22% per annum for any amount of principal or interest which is not paid as required under the Diagonal II Note, or during an Event of Default.

Refer to Note 6 for additional details.

The Diagonal II Note was issued with an Original Issue Discount of 4.75% (the “OID”), with net proceeds to the Company of $125,000 after deducting the OID, reimbursement of Diagonal’s expenses in an amount equal to $7,000 (expensed in the statements of operations for the year ended December 31, 2025), and other estimated offering expenses.

The Company used the net proceeds from the offering for working capital and general corporate purposes.

During the year December 31, 2025, Diagonal converted an aggregate principal and interest amount under the Diagonal II Note of $157,000 into shares of the Company’s Common Stock at an average price of $9.72 per share, resulting in the issuance of 13,084 shares of Common Stock to Diagonal.

As of December 31, 2025 the Diagonal II Note was fully extinguished.

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 assignees, (“Belleau”).

Each of the Belleau Notes:

(x) matured on the date that was 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) accrued 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 Company used the proceeds from the sale of the Belleau Notes for working capital and general corporate purposes.

Refer to Note 6 for additional details.

The Belleau Interest that accrued on each respective Belleau Note was 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 $168.00.

In the event of a prepayment of any Belleau Note by the Company, the Belleau Interest would be payable in full at the time of such prepayment.

On August 11, 2025, the Company and Belleau entered into an Amended & Restated Unsecured Promissory Note, pursuant to which the Belleau Principal was reduced to $1,250,000.

During the three months ended September 30, 2025, the Company repaid $250,000 of principal on the Belleau Note.

Refer to Note 6 for additional information.

In September 2025, the Company prepaid $250,000 of principal on the Belleau Note.

The Belleau Note was accounted for under the FVO, and therefore, the carrying amount of the Belleau Note immediately prior to the exchange represented its fair value at the exchange date.

The fair value of the Belleau Warrants was estimated utilizing Black-Scholes, with inputs including:

term of 2 years, stock price of $31.20, volatility of 93% and risk free interest rate of 3.45%.

Related Party Promissory Note

On November 19, 2024 we entered into the RP Purchase Agreement with a non-employee member of the Board, or Purchaser.

Pursuant to the RP Purchase Agreement, the Company issued to the Purchaser the RP Note in the amount of $1,500,000, for which the RP Note (i) matures on 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 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.

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) matured on the date that was 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) accrued interest on the RP Principal at a rate of 40% simple interest per annum (the “RP Interest”).

The RP Interest was payable on the RP Maturity Date.

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

The Company utilized the proceeds for working capital and general corporate purposes.

Refer to Note 6 for additional information.

Account Receivable Financing Facility

We entered into a Financing and Security Agreement (the “SLR Agreement”) with SLR Digital Finance, LLC (“Lender”), effective December 17, 2023 (the “SLR 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 Company 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 the Company, up to a maximum aggregate Advance amount of $4,000,000 (the “Maximum Amount”)(the Advances on the Accounts is hereinafter, the “Facility”).

Upon receipt of any Advance, the Company will have assigned all of its rights in such receivables and all proceeds thereof.

The proceeds received from the Facility are, and will be, used to fund general working capital needs.

The SLR Agreement is effective for 24 months from the SLR Effective Date (the “SLR Term”), automatically extends for successive SLR Terms (each, an “SLR Renewal Term”), and the Company is 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 SLR Term or SLR Renewal Term, as more specifically set forth in the SLR Agreement.

In connection with the Facility, the Company agreed to, among other things, (i) pay a finance fee equal to 2% of the Maximum Amount, payable in 24 equal monthly installments on the last day of each month of the SLR 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 SLR 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 the Company’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.

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.

Refer to Note 6 for additional information.

Refer to Note 6 for additional details.

On June 13, 2025, the Company entered into an amendment to the RP Note (the “RP Amendment”).

Pursuant to the Amendment:

(a) the maturity date of the RP Note was extended to November 19, 2026;

(b) beginning on November 19, 2025, interest no longer accrued on the remaining Principal outstanding;

and (c) the Company agreed to make monthly payments of $175,000, with such payments to start on November 19, 2025, and continue thereafter for twelve months, at which time the RP Note would be paid in full.

On July 7, 2025, the Company entered into an exchange agreement with the Purchaser (“RP Exchange Agreement”), pursuant to which the Company and the Purchaser agreed that in exchange for the surrender and forgiveness of RP Note, with the principal and interest thereon being equal to $1,878,082, the Purchaser would be granted (a) 1,500,000 shares of Series AAAA Jr.

Preferred Stock exchanged on the date of settlement.

Yield Point Convertible Note

On July 10, 2025, the Company and Yield Point NY, LLC (the “Yield Point”), entered into a Securities Purchase Agreement, pursuant to which the Company agreed to sell up to (i) an aggregate principal amount of $4,494,382 in 8% Senior Secured Convertible Notes, maturing eighteen (18) months after the issue date, with original issue discount of 11%, convertible into shares of the Company’s common stock at a conversion price of $81.78 per share, and if not converted then amortized over the final twelve (12) months concluding on the maturity date (“YP Notes”), and (ii) common stock purchase warrants to purchase 54,998 shares of common stock at an exercise price of $64.33 per share (the “Original YP Warrant”) (the “Offering”) (the YP Purchase Agreement”).

The Company received $4,000,000 in gross proceeds from the Offering.

The Company used the proceeds from the YP Notes for working capital and general corporate purposes.

Refer to Note 6 for additional details.

The Original YP Warrant entitled the holders to purchase 54,998 shares of common stock, respectively.

The Original YP Warrant was exercisable immediately and had a term of four years.

The Original YP Warrant had an exercise price of $64.33 per share, subject to adjustment as set forth therein.

The terms of each of the YP Notes and the Original YP Warrant provided for anti-dilution protection for issuances of common stock at a price per share less than the price equal to the conversion price or exercise price, as applicable, subject to approval by the Company’s stockholders.

In connection with the YP Purchase Agreement, the Company and Yield Point entered into the PIPE Registration Rights Agreement, pursuant to which the Company agreed to register the Underlying Shares on the Registration Statement, to be filed with the SEC within 30 days after the date of the issuance of the YP Notes and Original YP Warrant and to cause the Registration Statement to be declared effective under the Securities Act no later than 90 days after the date of the Purchase Agreement.

If certain of the Company’s obligations under the Registration Rights Agreement are not met, the Company is required to pay partial liquidated damages to Yield Point.

The Company also entered into a Security Agreement (the “YP Security Agreement”) with Yield Point and such holders of the YP Notes as may be issued in the future (together with Yield Point, the “Secured Parties”).

Pursuant to the YP Security Agreement, the Secured Parties were granted a security interest in certain of the Company’s personal property to secure the payment and performance of all of the Company’s obligations under the YP Notes, Original YP Warrant, Purchase Agreement, Registration Rights Agreement and Security Agreement.

On September 30, 2025, the Company and Yield Point, entered into Amendment No.

1 to the YP Note (the “YP Note Amendment”), originally issued on July 10, 2025, pursuant to that certain YP Purchase Agreement, dated therewith.

Pursuant to the YP Note Amendment:

(i) the “Conversion Price” was amended to $71.40, subject to adjustment as set forth in the YP Note;

and (ii) the “Floor Price” was amended to $14.28.

All other terms and conditions of the YP Note remain in full force and effect.

The initial fair value of the Original YP Warrant, totaling $1,935,000, was classified as a liability in the balance sheets, and remeasured at fair value at each balance date.

The change in fair value of the Original YP Warrant for the year ended December 31, 2025 totaled $1,070,000 which is reflected in other income (expense) in the statements of operations.

The fair value of the Original YP Warrant was estimated using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions:

expected volatility of 40%;

risk free interest rate range of 3.66% - 3.88%;

and expected life range of 3.83 - 4.0 years.

The fair value of the conversion feature embedded in the YP Note was estimated using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions:

expected volatility of 40%;

risk free interest rate range of 3.66% - 3.97%;

and expected life range of 1.30 - 1.53 years.

In conjunction with the Company’s October 2025 shareholder meeting, shareholders approved the issuance of the shares underlying the Original YP Warrant as required by Nasdaq Listing Rule 5635(d).

As such, the fair value of the Original YP Warrant on the approval date totaling $1,679,000 was reclassified to equity.

(i) that number of shares of the Company’s Series C Preferred Stock;

and (iii) the cancellation of all remaining common stock purchase warrants previously issued to Yield Point in connection with the sale to Yield Point of that certain Convertible Promissory Note, dated July 10, 2025 (“YP Note Exchange”).

As a result, the remaining balance under the YP Note as of the YP Note Exchange date was $1,153,000.

The fair value of the Original YP Warrant and the YP Exchange Warrant, on the date of the exchange was estimated utilizing Black-Scholes, with inputs including, Term of 4 years, stock price of $14.04, volatilities ranging from 40% and 103% and risk free interest rate of 3.58%.

Contractual Obligations and Off-Balance Sheet Commitments and Arrangements

As of December 31, 2025, other than as described herein, we had no significant commitments for capital expenditures, nor do we have any committed lines of credit, other committed funding or long-term debt, and no guarantees.

As of December 31, 2024 we maintain approximately 1,550 square feet of office space which is leased on a month-to-month basis.

As of December 31, 2025 we maintain approximately 200 square feet of office space which is leased on an annual basis at a rate of approximately $3,000 per month.

We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties.

We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements included elsewhere herein.

We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our financial statements included elsewhere herein.

Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.

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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.

Certain conditions may exist as of the date the 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.

Global Leisure Partners, LLC, and Blackwatch Advisors, LLC vs.

Super League Enterprise, Inc.

On January 26, 2026, a complaint was filed against the Company in the United States District Court for the Southern District of New York by Global Leisure Partners, LLC and Blackwatch Advisors, LLC (the “Plaintiff”).

Formal service of process on the complaint occurred on February 12, 2026.

The complaint alleges, among other things, breach of contract and related claims arising from the Company’s completion of a series of financing transactions during the fiscal year.

The Plaintiff seeks unspecified damages, together with interest, attorneys’ fees and other relief.

The Company believes the claims are wholly without merit and intends to vigorously defend the action.

Based on the Company’s assessment of the facts currently known, and after consultation with outside legal counsel, the Company believes that the likelihood of a material loss is remote.

Accordingly, no liability has been recorded in the accompanying financial statements as of December 31, 2025.

Litigation is inherently uncertain, and while the Company believes the claims lack merit, an unfavorable outcome could occur.

However, at this time, the Company does not see the need to, nor can it reasonably estimate any possible loss or range of loss associated with this matter.

Recent Accounting Pronouncements

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

Refer to Note 2 to the accompanying financial statements contained elsewhere in this Report.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Preparation of our financial statements requires management to make judgments and estimates.

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Preparation of our financial statements requires management to make judgements and estimates.

Some accounting policies have a significant impact on amounts reported in our financial statements.

The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments.

A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in the audited financial statements and notes thereto included elsewhere herein.

The following accounting policies were identified during the periods presented, based on activities occurring during the periods presented, as critical and requiring significant judgments and estimates.

Revenue Recognition

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

Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services and when the customer obtains control of the good or service.

In this regard, revenue is recognized when:

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and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

We make estimates and judgments when determining whether we will collect substantially all of the consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer.

We make estimates and judgements when determining whether we will collect substantially all of the consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer.

We assess the collectability of receivables based on several factors, including past transaction history and the creditworthiness of our customers.

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Management’s estimates regarding collectability impact the actual revenue recognized each period and the timing of the recognition of revenue.

Our assumptions and judgments regarding future collectability could differ from actual events and thus materially impact our financial position and results of operations.

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.

Accounting for Business Combinations

We account for our business combinations under the acquisition method of accounting.

Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value.

Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as a liability.

Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities.

Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

In addition, when we have acquisitions where substantially all of the fair value of assets acquired is concentrated in a single asset or group of similar assets, we account for the acquisitions as asset acquisitions.

Impairment of Long-Lived Assets

The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable.

Factors we consider important, which could trigger an impairment review, include the following:

significant underperformance relative to expected historical or projected future operating results;

significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

significant negative industry or economic trends;

significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments;

and significant decline in our stock price for a sustained period.

In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded.

Other assets of a reporting unit that are held and used may be required to be tested for impairment when certain events trigger interim goodwill impairment tests.

In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below.

Significant judgements and estimates may be required in connection with determining the number of reporting units;

determining intangible asset groupings;

if, and in what period a triggering event has occurred requiring and impairment review;

determining the nature timing and extent of undiscounted cash flows, including revenue forecasts and related growth rates and applicable costs;

residual values if any;

and discount rates and other inputs used in connection with the calculation of the fair values of applicable asset groups.

Variations in any of these judgements and estimates could have a material impact on our financial results.

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.

Our assumptions and judgements regarding future collectability could differ from actual events and thus materially impact our financial position and results of operations.

Depending on the complexity of the underlying revenue arrangement and related terms and conditions, significant judgements, assumptions and estimates may be required to determine each party’s rights regarding the goods or services to be transferred, each party’s 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 judgements, assumptions and estimates are made regarding revenue arrangements in any specific period, our periodic financial results may be materially affected.

Fair Value Option ( “ FVO ” ) Election

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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.

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 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 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.

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adjusted for credit risk and market conditions.

In addition, judgements and estimates are required in connection with the determination of the portion of subsequent fair value adjustments relate to instrument-specific credit risk, which are reflected in OCI, and the portion of subsequent fair value adjustments that relate to changes in interests rates or other variables, which are reflected in the consolidated statements of operations.

Variations in any of these judgements and estimates could have a material impact on our financial results.

Determination of Fair Value – Warrants

During the period presented the Company issued certain common stock purchase warrants (“Warrants”) as described at Note 6 and 7 to the financial statements.

The fair value of warrants are determined using a Black Scholes option price model, measured using Level 3 inputs.

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:

Significant judgements and estimates may be required in connection with determining the classification of warrants between liabilities and equity, as well as in connection with the assumptions utilized for the expected volatility, risk free interest rate and term in the Black Scholes calculations used to value warrants outstanding at each balance sheet date, if liability classified.

Variations in any of these judgements and estimates could have a material impact on our financial results.

Modifications to Equity Linked Instruments

During certain of the periods presented herein, holders of our preferred stock with outstanding Additional Investment Rights (“AIRs”) received (i) a six (6) month extension of the exercise period of such AIRs;

and (ii) an adjustment to the conversion prices for such AIRs, to the existing conversion price floors for each respective subseries of preferred stock, as described in Note 6 to the consolidated financial statements.

In connection with the modifications the AIRs with initial aggregate underlying common shares totaling 1.3 million, were modified as described above, resulting in an incremental increase in fair value totaling $364,000, of which $294,000 was charged to additional paid-in capital as a financing costs, and $70,000 which was charged to other expense in the consolidated statements of operations as a legal settlement cost.

and (ii) an adjustment to the conversion prices for such AIRs, to the existing conversion price floors for each respective subseries of preferred stock, as described in Note 7 to the financial statements.

In connection with the modifications, the AIRs with initial aggregate underlying common shares totaling 1.3 million, were modified as described above, resulting in an incremental increase in fair value totaling $364,000, of which $294,000 was charged to additional paid-in capital as a financing cost, and $70,000 which was charged to other expense in the statements of operations as a legal settlement cost.

Accounting standards require that a reporting entity recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction in the same manner as if cash had been paid as consideration.

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Variations in any of these judgements and estimates could have a material impact on our financial results.

Determination of Fair Value – Warrants

During the period presented the Company issued certain common stock purchase warrants (“Warrants”) as described at Note 6 to the consolidated financial statements.

The fair value of warrants are determined using a Black Scholes option price model, measured using Level 3 inputs.

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

Expected Volatility

Risk–free interest rate

Dividend yield

Expected life of options (in years)

Significant judgements and estimates may required in connection with determining the classification of warrants between liabilities and equity, as well as in connection with the assumptions utilized for the expected volatility, risk free interest rate and term in the Black Scholes calculations used to value warrants outstanding at each balance sheet date, if liability classified.

Variations in any of these judgements and estimates could have a material impact on our financial results.

Relaxed Ongoing Reporting Requirements

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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:

As a result of no longer qualifying for “emerging growth company” status, our independent auditors, commencing with their audit of our 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 Audit Matters (“CAMs”) as a component of their audit opinion commencing with the audit of our financial statements for Fiscal Year 2024.

A CAM is defined as any matter arising from the audit of the 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;

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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.

For the periods presented, our auditors have included descriptions of CAMs as described in their audit opinion under “Critical Audit Matters.”

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity