Super League Enterprise, Inc. 10-K

ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is listed on the Nasdaq Capital Market under the ticker symbol “SLE.” 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 We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business. Therefore, we do not currently expect to pay any cash dividends on our common stock for the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our Board and will depend upon our results of operations, financial condition, capital requirements, general business conditions, and other factors that our Board deems relevant. Our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities. Issuance of Common Stock as Dividends During the years ended December 31, 2025 and 2024, we paid common stock dividends on outstanding preferred stock as disclosed at Note 7 to the financial statements contained elsewhere herein. Recent Sales of Unregistered Equity Securities No unregistered securities were issued during the years ended December 31, 2025 and 2024 that were not previously reported. Performance Graph As a smaller reporting company, we are not required to provide the performance graph required by Item 201(e) of Regulation S-K. ITEM 6. [Reserved] 35 Table of Contents ITEM 7. 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 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 financial statements contained elsewhere herein. General 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). 36 Table of Contents 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. 37 Table of Contents Matters Affecting Comparability 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. 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 2026 Reverse Split (and all other reverse splits described herein) for all periods presented. 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. 38 Table of Contents ● 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. 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. 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 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 percentage of revenue, gross profit for Fiscal Year 2025 was 40%, compared to a gross profit percentage of 38% for the prior year period. 39 Table of Contents Total operating expense for Fiscal Year 2025 decreased to $17.6 million, compared to $22.9 million in the comparable prior year period. 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 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. Other Sale of Minehut On February 29, 2024, the Company sold its Minehut business unit (“Minehut”) to GamerSafer, Inc., a Delaware corporation (“GamerSafer”), in a transaction approved by the Board. Pursuant to the Asset Purchase Agreement entered into by and between GamerSafer and the Company on February 26, 2024 (the “GS Agreement”), the Company will receive $1.0 million of purchase consideration for the sale of Minehut, which amount will be paid by GamerSafer in revenue and royalty sharing over a period of two years, as described in the GS Agreement. Other than with respect to the GS Agreement, there is no relationship between the Company or its affiliates with GamerSafer or its affiliates. The two companies maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners. Equity Financings. See “Liquidity and Capital Resources” below for equity financing activities for the periods presented. Debt Financings See “Liquidity and Capital Resources” below for debt financing activities for the periods presented. Seasonality Our revenue fluctuates quarterly and is generally higher in the second half of our fiscal year, with the fourth quarter typically representing our highest revenue quarter each year. Advertising spending is traditionally seasonally strong in the second half of each year, reflecting the impact of seasonal back to school, game release and holiday season advertising spending by brands and advertisers. We believe that this seasonality in advertising spending affects our quarterly results, which generally reflect relatively higher advertising revenue in the second half of each year, compared to the first half of the year. 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. 40 Table of Contents The following table sets forth a summary of our results of operations for Fiscal Years 2025 and 2024: Fiscal Year Ended December 31, Change 2025 2024 $ % REVENUE $ 11,342,000 $ 16,182,000 $ (4,840,000 ) (30 )% COST OF REVENUE 6,749,000 10,080,000 (3,331,000 ) (33 )% GROSS PROFIT 4,593,000 6,102,000 (1,509,000 ) (25 )% OPERATING EXPENSE Selling, marketing and advertising 7,535,000 9,822,000 (2,287,000 ) (23 )% Engineering, technology and development 2,912,000 4,447,000 (1,535,000 ) (35 )% General and administrative 7,213,000 8,731,000 (1,518,000 ) (17 )% Contingent consideration (14,000 ) (144,000 ) 130,000 90 % Total operating expense 17,646,000 22,856,000 (5,210,000 ) (23 )% NET LOSS FROM OPERATIONS (13,053,000 ) (16,754,000 ) (3,701,000 ) (22 )% OTHER INCOME (EXPENSE), NET (7,673,000 ) 280,000 7,953,000 >100 % Loss before (provision for) benefit from income taxes (20,726,000 ) (16,474,000 ) 4,252,000 26 % (Provision for) benefit from income taxes 9,000 (161,000 ) (170,000 ) (106 )% NET LOSS $ (20,717,000 ) $ (16,635,000 ) $ 4,082,000 25 % Comparison of the Results of Operations for the Fiscal Years Ended December 31, 2025 and 2024 Revenue Fiscal Year Ended December 31, Change 2025 2024 $ % Media and advertising $ 5,601,000 $ 6,696,000 $ (1,095,000 ) (16 )% Publishing and content studio 5,428,000 8,607,000 (3,179,000 (37 )% Direct to consumer 313,000 879,000 (566,000 ) (64 )% $ 11,342,000 $ 16,182,000 $ (4,840,000 ) (30 )% Fiscal Year 2025 2024 Number of customers > 10% of revenue / percent of revenue Two / 22% Two / 20% By revenue category: Advertising and sponsorships One / 10% One / 10% Publishing and content studio One / 12% One / 10% ● 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 $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. 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. ● 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. 41 Table of Contents 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, 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 Fiscal Year Ended December 31, Change 2025 2024 $ % Selling, marketing and advertising $ 7,535,000 $ 9,822,000 $ (2,287,000 ) (23 )% Engineering, technology and development 2,912,000 4,447,000 (1,535,000 ) (35 )% General and administrative 7,213,000 8,731,000 (1,518,000 ) (17 )% Contingent consideration (14,000 ) (144,000 ) 130,000 90 % Total operating expense $ 17,646,000 $ 22,856,000 $ (5,210,000 ) (23 )% Noncash Stock-Based Compensation Expense Noncash stock-based compensation expense for the periods presented was included in the following operating expense line items: Fiscal Year Ended December 31, Change 2025 2024 $ % Selling, marketing and advertising $ 460,000 $ 488,000 $ (28,000 ) (6 )% Engineering, technology and development 22,000 30,000 (8,000 ) (27 )% General and administrative 1,829,000 771,000 1,058,000 137 % Total noncash stock-based compensation expense $ 2,311,000 $ 1,289,000 $ 1,022,000 79 % 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. 42 Table of Contents Intangible Asset Amortization Expense Intangible asset amortization expense for the periods presented was included in the following operating expense line items: Fiscal Year Ended December 31, Change 2025 2024 $ % Sales, marketing and advertising $ 666,000 $ 773,000 $ (107,000 ) (14 )% Engineering, technology and development 997,000 1,070,000 (73,000 ) (7 )% General and administrative 513,000 701,000 (188,000 ) (27 )% Total amortization expense $ 2,176,000 $ 2,544,000 $ (368,000 ) (14 )% 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 $2.3 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 For the periods presented, components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense include the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support. Capitalized internal use software development costs are amortized on a straight-line basis over the software’s estimated useful life. 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 General and administrative expense for the periods presented was comprised of the following: Fiscal Year Ended December 31, Change 2025 2024 $ % Personnel costs $ 1,608,000 $ 1,805,000 $ (197,000 ) (11 )% Office and facilities 78,000 179,000 (101,000 ) (56 )% Professional fees 744,000 1,016,000 (272,000 ) (27 )% Stock-based compensation 1,829,000 771,000 1,058,000 137 % Depreciation and amortization 528,000 770,000 (242,000 ) (31 )% Other 2,426,000 4,190,000 (1,764,000 ) (42 )% Total general and administrative expense $ 7,213,000 $ 8,731,000 $ (1,518,000 ) (17 )% 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. 43 Table of Contents ● 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. 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 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. The transaction allows Super League to streamline its position in partnering with major brands to build, market, and operate 3D experiences across multiple immersive platforms, including open gaming powerhouses like Minecraft, and aligns with the Company’s cost improvement initiatives. Super League and GamerSafer will maintain a commercial relationship which ensures that Minehut can remain an ongoing destination available to Super League’s partners. The carrying value of Minehut related assets totaled $475,000 as of February 26, 2024, comprised of total carrying costs of $1,671,000, net of accumulated amortization of $1,196,000, and historically were included in intangible assets, net in the balance sheets. The Company recorded a receivable for the total estimated Minehut Purchase Consideration totaling $619,000 and recognized an initial gain on sale of the Minehut Assets totaling $144,000, which is included in other income in the 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 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. 44 Table of Contents 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. 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 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 December 31, Description: 2025 2024 Super Biz Note $ (51,000 ) $ (64,000 ) Agile I Note (358,000 ) (419,000 ) Agile II Note (1,258,000 ) - RP Note (368,000 ) (9,000 ) Belleau Note (1,927,000 ) - 1800 Diagonal Notes (66,000 ) - YP Note (4,360,000 ) - SLR Facility (45,000 ) (63,000 ) Other (2,000 ) (4,000 ) Total Interest (expense) income, including change in fair value of promissory notes carried at fair value $ (8,435,000 ) $ (559,000 ) 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. 45 Table of Contents 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 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”). 46 Table of Contents 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 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. Liquidity and Capital Resources General 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. 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. 47 Table of Contents 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 The following table summarizes the change in cash and cash equivalents for the periods presented: Fiscal Year Ended December 31, 2025 2024 Net cash used in operating activities $ (10,672,000 ) $ (11,462,000 ) Net cash provided by (used in) investing activities 916,000 (283,000 ) Net cash provided by financing activities 22,836,000 5,446,000 Change in cash and cash equivalents 13,080,000 (6,299,000 ) Cash and cash equivalents, at beginning of period 1,310,000 7,609,000 Cash and cash equivalents, at end of period $ 14,390,000 $ 1,310,000 48 Table of Contents Cash Flows from Operating Activities. 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. Cash Flows from Investing Activities. Cash flows from investing activities were comprised of the following for the periods presented: Fiscal Year Ended December 31, 2025 2024 Proceeds from sale of Mineville Assets 350,000 $ - Proceeds from sale of Minehut Assets 808,000 192,000 Purchase of property and equipment - (23,000 ) Capitalization of software development costs (207,000 ) (452,000 ) Acquisition of other intangible and other assets (35,000 ) - Net cash provided by (used in) investing activities $ 916,000 $ (283,000 ) 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 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 . Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life. Cash Flows from Financing Activities . Cash flows from financing activities were comprised of the following for the periods presented: Fiscal Year Ended December 31, 2025 2024 Proceeds from issuance of preferred stock, net of issuance costs - $ 2,393,000 Proceeds from issuance of common stock, net of issuance costs 20,687,000 1,000,000 Proceeds from notes payable, net of debt issuance costs 7,607,000 3,257,000 Payments on notes payable (5,318,000 ) (396,000 ) Proceeds from accounts receivable facility 429,000 1,174,000 Payments on accounts receivable facility (453,000 ) (1,950,000 ) Contingent consideration payments – Melon Acquisition (116,000 ) (32,000 ) Net cash provided by financing activities $ 22,836,000 $ 5,446,000 49 Table of Contents 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”). 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 PIPE Warrants. 50 Table of Contents 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: Proceeds Offering Costs PIPE Shares - Common stock $ 2,126,000 146,000 PIPE Pre-Funded Warrants 9,415,000 646,000 PIPE Warrants 8,459,000 580,000 Total gross proceeds $ 20,000,000 1,372,000 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: Warrants Fair Value Classification PIPE Lead Warrants - 766,667 $ 17,408,000 Equity / Additional-paid-in-capital PIPE Placement Agent Warrants 41,667 857,000 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 93% - 100% Risk–free interest rate 3.45% - 3.50% Dividend yield -% Expected life of warrants (years) 2 - 3 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. 51 Table of Contents 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. Other 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. 52 Table of Contents 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 Proceeds Series Designation Closing Date Conversion Prices Shares Purchased/ Exchange Conversions /Exchanges Outstanding- December 31, 2025 Gross Proceeds Fees Net Proceeds AAA-Junior June 26, 2024 $ 180.00 1,210 (1,210 ) - 1,210,000 145,000 1,065,000 AAA-Junior-2 July 10, 2024 $ 180.00 551 (551 ) - 551,000 66,000 485,000 AAA-Junior-3 September 20, 2024 $ 180.00 697 (697 ) - 697,000 84,000 613,000 AAA-Junior-4 September 30, 2024 $ 180.00 399 (399 ) - 399,000 48,000 351,000 AAAA-Junior (1) July 14, 2025 $ 58.92 3,394,964 (3,297,551 ) 97,413 - - - B (2) September 29, 2025 $ 84.00 16,321 (16,321 ) - - - - C (3) November 6, 2025 $ 12.00 1,153 - 1,153 - 3,415,295 (3,316,729 ) 98,566 $ 2,857,000 $ 343,000 $ 2,514,000 (1) Series AAAA Junior Preferred Stock was issued in exchange for certain outstanding debt, as described at Note 5. (2) Series B Preferred Stock was issued in exchange for certain preferred stock outstanding, as described below. (3) 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. 53 Table of Contents 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 Agile I 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. 54 Table of Contents Agile II On February 10, 2025 (the “Agile II Effective Date”), the Company entered into a Business Loan and Security Agreement (the “Agile II Loan Agreement”), with Agile Capital Funding, LLC as collateral agent (“Collateral Agent”), and Agile Lending, LLC (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. 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. 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 and other assets 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. 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. 55 Table of Contents 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”). 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”). 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. 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 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 details. 56 Table of Contents 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. 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 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. 57 Table of Contents 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. 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 that certain Convertible Promissory 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. 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, 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 financial statements included elsewhere herein. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. Contingencies Certain conditions may exist as of the date the 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 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. 58 Table of Contents 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 accompanying financial statements contained elsewhere in this Report. Critical Accounting 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 judgements. 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 judgements 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 goods or services. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. We make estimates and 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. If it is determined that collection is not reasonably assured, amounts due are recognized when collectability becomes reasonably assured, assuming all other revenue recognition criteria have been met, which is generally upon receipt of cash for transactions where collectability may have been an issue. Management’s estimates regarding collectability impact the actual revenue recognized each period and the timing of the recognition of revenue. Our assumptions and 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. 59 Table of Contents Fair Value Option ( “ FVO ” ) Election The Company accounted for certain promissory notes issued, as described at Note 6, under the fair value option election pursuant to ASC 825, “Financial Instruments,” (“ASC 825”) as discussed below. The promissory notes accounted for under the FVO election are each debt host financial instruments containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825 provides for the “fair value option” election, to the extent not otherwise prohibited by ASC 825, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustments, subsequent to the issuance date, as required by ASC 825, are recognized as a component of other comprehensive income (“OCI”) with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) in the accompanying 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. payments of principal and interest based on contractual agreement terms) using a discount rate that reflected market rates and related credit risk. The FVO was elected for the promissory notes described at Note 6 due to the short-term nature of the promissory notes and to provide relevant and timely information regarding the current market value of the debt, which is marked to market at each balance sheet date reflecting the effects of market fluctuations and other factors. Significant judgements and estimates may be required in connection with the determination of whether or not to elect the FVO for specific assets and/or liabilities. In addition, significant judgements and estimates may be required in connection with the determination of appropriate discount rates utilized in connection with present value-related valuation techniques. Discount rate assumptions typically reflect the estimated yield to maturity of the debt instrument, incorporating the estimated market-implied rate of return an investor would receive if they held the debt until maturity, and taking into account all future cash flows and the current market price; 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 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 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. As of each of the applicable AIR modification dates the Company utilized an option pricing model, employing the back solve method for purposes of determining the implied common stock value of the Company for input into a Black Scholes option pricing model to determine the fair value of the AIRs immediately before and after the modifications described above, using Level 3 inputs. Weighted average assumptions utilized in the Black Scholes option pricing model included implied (derived) common stock prices from $0.72 to $0.86, conversion prices ranging from $22.20 to $13.25 (based on the applicable original and modified preferred stock conversion prices), risk free interest rates ranging from 4.64% to 5.36%, terms ranging from .24 years to .92 years and volatility assumptions ranging from 68% to 91%. Significant judgements and estimates may be required in connection with the selection of the techniques and methods used in the determination of the implied common stock value of the company, including selection of the back solve method, and significant judgements and estimates may be required in connection with the assumptions utilized in the Black Scholes options pricing model, including assumptions for the remaining term of the applicable instruments, risk free interest rates and volatility. Variations in any of these judgements and estimates could have a material impact on our financial results. 60 Table of Contents Relaxed Ongoing Reporting Requirements We qualify to report as a “smaller reporting company” (as defined in Rule 12b-2) under the reporting rules set forth under the Exchange Act. For so long as we remain an “smaller reporting company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “smaller reporting companies,” including but not limited to not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “smaller reporting company,” and our stockholders could receive less information than they might expect to receive from more mature public companies. We expect to take advantage of these reporting exemptions until we are no longer a smaller reporting company. Upon the completion of our initial public offering in February 2019, we elected to report as an “emerging growth company” (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act, which allowed us to take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies,” including but not limited to: ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● taking advantage of extensions of time to comply with certain new or revised financial accounting standards; ● being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and ● being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We were eligible to remain an “emerging growth company” for five years from the date of our initial public offering, and as such, ceased being an “emerging growth company” as of Fiscal Year 2024. However, as described above we continue to be a “smaller reporting company.” As a result of no longer qualifying for “emerging growth company” status, our independent auditors, commencing with their audit of our 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; and ● Involved especially challenging, subjective, or complex auditor judgment. The PCAOB requires auditors to communicate with the company's audit committee regarding certain matters related to the conduct of their audit, including information about the overall audit strategy, timing of the audit and the significant risks identified during the auditor's risk assessment procedures. As described by the PCAOB, CAMs are intended to enhance the auditor’s report to provide audit-specific information that is meaningful to investors and other financial statement users. Further, the purpose of CAMs is to shed light on certain matters in an audit that involved especially challenging, subjective, or complex auditor judgment. For the periods presented, our auditors have included descriptions of CAMs as described in their audit opinion under “Critical Audit Matters.” 61 Table of Contents