What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-31 compared with 2021-03-19 · 537 added, 3725 removed, 41 unchanged (99% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY

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 “SLGG.”

Shown below is the range of high and low sales prices for our

common stock for the periods indicated as reported by the Nasdaq

Capital Market.

Our common stock began trading on the Nasdaq

Capital Market on February 27, 2019, and the following table

reflects the high and low sales prices for our common stock

subsequent to that date:

Year Ending December 31, 2020

First quarter

ending March 31, 2020

$ 5.45  

$ 1.82  

Second quarter

ending June 30, 2020

$ 6.50  

$ 2.07  

Third quarter

ending September 30, 2020

$ 3.63  

$ 1.76  

Fourth quarter

ending December 31, 2020

$ 3.90  

$ 1.66  

Year Ending December 31, 2019

First quarter

ending March 31, 2019 (beginning February 27, 2019)

$ 9.73  

$ 6.27  

Second quarter

ending June 30, 2019

$ 9.28  

$ 6.05  

Third quarter

ending September 30, 2019

$ 8.75  

$ 3.90  

Fourth quarter

ending December 31, 2019

$ 4.99  

$ 1.85  

As of March 1, 2021, we

had 147 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.

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

As of March 29, 2022, we had 160 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 of directors 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.

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 of directors 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.

Recent Sales of Unregistered Equity Securities

Conversion of Convertible Debt .

On February 27, 2019, we completed our initial

public offering of shares of common stock, as described

Concurrent with the

closing of the initial public

offering on February 27, 2019,

in accordance with the underlying convertible debt agreements, all

outstanding principal and interest of the 9.00% convertible notes

outstanding, totaling $13,793,000, was automatically converted into

1,475,164 shares of the Company’s common stock at a

conversion price of $9.35.

In connection with the issuance of the convertible debt, we

provided each holder with registration rights to register the

shares of common stock issuable upon conversion, subject to certain

In addition, the holders of the notes agreed to

certain lock-up restrictions on the shares of common stock

underlying the notes and the warrants that limited the ability of

each holder to freely trade such shares during the 180-day period

following the completion of the initial public

Restricted Stock Units .

In December 2019, we

issued a total of 4,000 restricted stock units to two individual

accredited investors in consideration for strategic sales and

marketing services rendered to our company.

No underwriters were

involved in the foregoing issuance of securities.

The securities

were issued to an accredited investor in reliance upon the

exemption from the registration requirements of the Securities Act,

as set forth in Section 4(a)(2) under the Securities Act,

relative to transactions by an issuer not involving any public

offering, to the extent an exemption from such registration was

No unregistered securities were issued during the years ended December 31, 2021 and 2020 that were not previously reported.

Use of Proceeds from Sales of Registered Securities

In August 2020, the Company issued 4,540,541 shares of common stock

at a price of $1.85 per share, raising aggregate net proceeds of

approximately $7.6 million, after deducting placement agent fees of

$588,000 and other offering expenses totaling $180,000.

offering was conducted pursuant to the Company’s effective

Registration Statements on Form S-1 (File No.

333-248248), and a

related registration statement filed pursuant to Rule 462(b) under

the Securities Act.

In addition, pursuant to the terms of the

related underwriting agreement, the Company granted to the

underwriter a 30-day over-allotment option to purchase up

to an additional 681,081 Shares at the same public offering price

per share, less discounts and commissions, which was partially

exercised in September 2020, resulting in the issuance of 448,440

shares and net proceeds of $771,000, after deducting placement

agent fees of $58,000.

The net proceeds from this offering were for

working capital and other general corporate

purposes, including sales and marketing activities, product

development and capital expenditures.

Net proceeds from this

offering were also intended to be available for acquisitions of, or

investments in, technologies, solutions or businesses that may

complement our business and or accelerate our growth.

In May 2020, the Company issued 1,825,000 shares of common stock at

a price of $3.50 per share, raising aggregate net proceeds of

approximately $6.0 million, after deducting placement agent fees of

$319,000 and other offering expenses totaling $116,000, pursuant to

a registered direct offering.

The net proceeds from this offering

were for working capital and other general corporate

purposes, including sales and marketing activities, product

development and capital expenditures.

Net proceeds from this

offering were also intended to be available for acquisitions of, or

investments in, technologies, solutions or businesses that may

complement our business and or accelerate our growth.

On February 27, 2019 (the “IPO Closing Date”), Super

League completed its initial public offering (“IPO”) of

shares of its common stock, pursuant to which an aggregate of

2,272,727 shares were offered and sold at a public offering price

of $11.00 per share, resulting in net proceeds of $22,458,000 after

deducting underwriting discounts, commissions and offering costs of

$2,542,000.The principal purposes of the IPO were to obtain

additional capital to support our operations, to create a public

market for our common stock and to facilitate our future access to

the public equity markets.

The net proceeds received from the IPO

were for working capital and general corporate purposes, including

sales and marketing activities, product development and capital

expenditures.

Net proceeds from out IPO were also eligible for use

in connection with the strategic acquisition of, or investment in,

technologies, solutions or businesses that may complement our

business and or accelerate our growth.

The amounts and timing of

our actual expenditures, including expenditure related to sales and

marketing and product development depended on numerous factors,

including the status of our product development efforts, our sales

and marketing activities, expansion internationally, the amount of

cash generated or used by our operations, competitive pressures and

other factors.

There has been no material change in the use of proceeds since our

IPO, as described in our final Prospectus filed with the SEC

pursuant to Rule 424(b) of the Securities Act of 1933, as amended,

and other periodic reports previously filed with the

In January 2021, the Company issued 3,076,924 shares of common stock at a price of $2.60 per share, raising aggregate net proceeds of approximately $8.0 million, after deducting offering expenses totaling $73,000.

In February 2021, the Company issued 2,926,830 shares of common stock at a price of $4.10 per share, raising aggregate net proceeds of approximately $12.0 million, after deducting offering expenses totaling $70,000.

In March 2021, the Company issued 1,512,499 shares of common stock at a price of $9.00 per share, raising aggregate net proceeds of approximately $13.6 million, after deducting offering expenses totaling $72,000.

The offerings described above were made pursuant to an effective shelf Registration Statement on Form S-3, which was originally filed with the Securities and Exchange Commission on April 10, 2020 (File No.

The net proceeds from these offerings were used for working capital and other general corporate purposes, including sales and marketing activities, product development and capital expenditures.

The Company also used a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses.

Equity Distribution Agreement.

On September 3, 2021, the Company entered into an Equity Distribution Agreement (the “Sales Agreement”) with two investment banks (the “Agents”), pursuant to which the Company may offer and sell, from time to time, through the Agents (the “Offering”), up to $75 million of its shares of common stock, par value $0.001 per share (the “Shares”).

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

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

Under the Sales Agreement, the Agents may sell the Shares by any method permitted by law deemed to be an “at-the-market”

offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Company’s common stock or to or through a market maker.

The Agents may also sell Shares in privately negotiated transactions, provided that the Agents receive the Company’s prior written approval.

The Company has no obligation to sell any of the Shares, and may at any time suspend offers under the Sales Agreement.

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

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

The Company intends to use the net proceeds from any “at-the-market”

offering primarily for working capital and general corporate purposes, including sales and marketing activities, product development and capital and acquisition related expenditures.

The Company may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses.

In August 2020, the Company issued 4,540,541 shares of common stock at a price of $1.85 per share, raising aggregate net proceeds of approximately $7.6 million, after deducting placement agent fees of $588,000 and other offering expenses totaling $180,000.

The offering was conducted pursuant to the Company’s effective Registration Statement on Form S-1 (File No.

333-248248), and a related registration statement filed pursuant to Rule 462(b) under the Securities Act.

In addition, pursuant to the terms of the related underwriting agreement, the Company granted to the underwriter a 30-day over-allotment option to purchase up to an additional 681,081 Shares at the same public offering price per share, less discounts and commissions, which was partially exercised in September 2020, resulting in the issuance of 448,440 shares and net proceeds of $771,000, after deducting placement agent fees of $58,000.

The net proceeds from this offering were for working capital and other general corporate purposes, including sales and marketing activities, product development and capital expenditures.

Net proceeds from this offering were also intended to be available for acquisitions of, or investments in, technologies, solutions or businesses that may complement our business and or accelerate our growth.

In May 2020, the Company issued 1,825,000 shares of common stock at a price of $3.50 per share, raising aggregate net proceeds of approximately $6.0 million, after deducting placement agent fees of $319,000 and other offering expenses totaling $116,000, pursuant to a registered direct offering.

The net proceeds from this offering were for working capital and other general corporate purposes, including sales and marketing activities, product development and capital expenditures.

Performance Graph

As a smaller reporting company, we are not required to provide the

performance graph required by Item 201(e) of Regulation

SE L E CTED FINANCIAL

We derived the selected financial data as of and for the years

ended December 31, 2020 (“fiscal year 2020”) and 2019

(“fiscal year 2019”), 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 the sections

titled “Management’s Discussion and Analysis of

Financial Condition and Results of Operations”

elsewhere herein.

Our historical results are not necessarily

indicative of the results to be expected in future

As a smaller reporting company, we are not required to provide the performance graph required by Item 201(e) of Regulation S-K.

SELECTED FINANCIAL DATA

We derived the selected financial data as of and for the years ended December 31, 2021 (“fiscal year 2021”) and 2020 (“fiscal year 2020”), set forth below, from our audited consolidated financial statements included elsewhere herein, and should be read in conjunction with those audited consolidated financial statements and related notes thereto, as well as the information found under the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

included elsewhere herein.

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

All references to “Note,”

followed by a number reference from one to eleven herein, refer to the applicable corresponding numbered footnotes to the consolidated financial statements contained elsewhere herein.

Statement of Operations Data:

 Revenues

$ 2,064,000  

$ 1,084,000  

 Cost of

revenues   

856,000  

513,000  

1,208,000  

571,000  

 Operating

marketing and advertising 

5,403,000  

4,488,000  

 Technology

platform and infrastructure

6,647,000  

4,915,000  

 General and

administrative   

7,901,000  

11,938,000  

operating expense   

19,951,000  

21,341,000  

 Loss from

operations   

(18,743,000 )

(20,770,000 )

(expense), net   

11,000  

 Net loss

$ (18,732,000 )

$ (30,679,000 )

Cost of revenues

Operating expenses:

Sales, marketing and advertising

Engineering, technology and development

General and administrative

Total operating expense

Loss from operations

Other income (expense), net

Loss before benefit from income taxes

Benefit from income taxes

Net loss per share:

Basic and diluted

 Weighted

average common shares used to compute net loss per

diluted(1)   

11,430,057  

7,894,326  

_______________

share and per share data has been retrospectively adjusted to

reflect the one-for-three Reverse Stock Split, which was effected

on February 8, 2019.

December 31, 

Cash and cash

$ 7,942,000  

$ 8,442,000  

588,000  

293,000  

Prepaid expenses

and other current assets

837,000  

924,000  

equipment, net

138,000  

239,000  

Intangible and

other assets, net

1,907,000  

1,984,000  

2,565,000  

Accounts payable,

accrued expenses and deferred revenue

1,829,000  

1,004,000  

Long-term note

1,208,000  

stockholders’

13,977,000  

13,443,000  

____________________________

Weighted average common shares used to compute net loss per share:

Basic and diluted

As of December 31,

Balance Sheet Data:

Cash and cash equivalents

Accounts receivable

Prepaid expenses and other current assets

Property and equipment, net

Intangible and other assets, net

Accounts payable, accrued expenses and deferred revenue

Long-term note payable

Deferred taxes

Total stockholders’

Factors Affecting Comparability:

Long-Term Note Payable.

On May 4, 2020, the Company entered

into a potentially forgivable loan from the U.S.

Small Business

Administration (“SBA”) resulting in net proceeds of

$1,200,047 pursuant to the Paycheck Protection Program enacted by

Congress under the CARES Act administered by the SBA.

Liquidity and Capital

Resources ”

Noncash Stock Compensation

Noncash stock-based

compensation expense for the periods presented was comprised of the

 Sales, marketing and

$ 849,000  

$ 635,000  

 Technology platform and

infrastructure

254,000  

129,000  

 General and

administrative

901,000  

5,453,000  

 Total noncash stock

compensation expense

$ 2,004,000  

$ 6,217,000  

stock compensation expense in fiscal year 2019 included expense

resulting from certain performance-based options and warrants

granted in 2018, which vested upon the achievement of certain

performance-based milestones.

Performance-based milestones included

the completion of our IPO in February 2019 and other operational

performance targets.

During fiscal year 2019, 325,000 of

performance-based stock options and warrants vested, resulting in

noncash stock compensation expense of $2,766,000.

Refer to Note 8

to the financial statements included elsewhere

Convertible Debt

Noncash Interest Expense.

Interest expense for the periods presented

primarily relates to the issuance of 9.00% secured convertible

promissory notes, described below.

As a result of the automatic

conversion of the 2018 Notes (defined below) and the application of

conversion accounting, the Company recorded an immediate charge to

interest expense of $1,384,000, representing the write-off of the

unamortized balance of debt discounts associated with the 2018

warrants and cash commissions and warrants issued to third parties.

Further, as described below, the non-detachable conversion feature

embedded in the 2018 Notes provided for a conversion rate that was

below market value at the commitment date, and therefore,

represented a beneficial conversion feature (defined below).

intrinsic value of the beneficial conversion feature on the IPO

closing date, was approximately $7,067,000, and is reflected as

additional interest expense in the statement of operations for

fiscal year 2019.

MA N AGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

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 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

Super League Gaming is a leading gaming community and content

platform that gives everyday gamers and creators multiple ways to

connect and engage with others while enjoying the video games they

League offers players the ability to create gameplay-driven

experiences they can share with friends, the opportunity to watch

live streaming broadcasts and gameplay highlights across digital

and social channels, and the chance to compete in events and

challenges designed to celebrate victories and achievements across

multiple skill levels.

With gameplay and content offerings

featuring more than a dozen of the top video game titles in the

world, Super League is building a broadly inclusive, global brand

at the intersection of gaming, experiences and entertainment.

Whether to access its expanding direct audience of young gamers,

creators and esports players, or to leverage the company’s

remote video production division, Virtualis Studios, third parties

ranging from consumer brands, video game publishers, professional

esports teams, traditional sports organizations, video content

producers, and more, are turning to Super League to provide

integrated solutions that drive business growth.

On May 4, 2020, the Company entered into a forgivable loan from the U.S.

Small Business Administration (“SBA”) resulting in net proceeds of $1,200,047 pursuant to the Paycheck Protection Program enacted by Congress under the CARES Act administered by the SBA.

In May 2021, the loan and accrued interest was forgiven pursuant to the terms and conditions of the underlying loan agreement.

Upon forgiveness, and legal release, we reduced the liability by the amount forgiven, totaling $1,213,000 and recorded a gain on extinguishment in the accompanying statement of operations for fiscal year 2021.

Refer to “Liquidity and Capital Resources” below.

Amortization Expense.

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

Sales, marketing and advertising

Engineering, technology and development

General and administrative

Total amortization expense

The increase in amortization expense primarily reflects the amortization of intangible assets acquired in connection with the 2021 Acquisitions described below.

Noncash Stock Compensation Expense.

Noncash stock-based compensation expense for the periods presented was comprised of the following:

Sales, marketing and advertising

Engineering, technology and development

General and administrative

Total noncash stock compensation expense

Acquisition of Mobcrush.

On June 1, 2021, we completed the acquisition of Mobcrush, a live streaming technology platform used by gaming influencers who generate and distribute original content to fans and subscribers across the most popular live streaming and social media platforms, including Twitch, YouTube, Facebook, Instagram, Twitter, and more (“Mobcrush Acquisition”).

Mobcrush also operates Mineville and Pixel Paradise, two of seven official Minecraft servers in partnership with Microsoft.

Refer to Note 5 for additional information.

Acquisition of Bannerfy, LTD.

On August 24, 2021, we completed the acquisition of Bannerfy pursuant to which the Company acquired all of the issued and outstanding common shares of Bannerfy.

Bannerfy is an intelligent technology platform that enables digital video and live streaming creators to collaborate with tier one sponsors on their social media channels including YouTube through scalable and custom premium placements.

Refer to Note 5 for additional information.

Acquisition of Bloxbiz Co.

On October 4, 2021, we acquired (i) substantially all of the assets of Bloxbiz and (ii) the personal goodwill of the Founders regarding Bloxbiz’s business.

Bloxbiz is a dynamic ad platform designed specifically for metaverse environments.

Bloxbiz’s initial deployment enables brands to advertise across popular Roblox game titles and helps Roblox creators with monetization and game analytics.

Refer to Note 5 for additional information.

In accordance with the acquisition method of accounting, the financial results of Super League presented herein include the financial results of the acquisitions of Mobcrush, Bannerfy and Bloxbiz (“2021 Acquisitions”) for the period from the respective transaction closing dates to the end of the current period presented herein.

Intangible assets and goodwill recorded in connection with the 2021 Acquisitions totaled $24,315,000 and $47,698,000, respectively.

Intangible asset related amortization expense related to the 2021 Acquisitions during fiscal year 2021 totaled $2,128,000.

The net deferred tax liability resulting from the acquisition of Mobcrush created a source of income to utilize against our existing net deferred tax assets.

Under the acquisition method of accounting, the impact on the acquiring company’s deferred tax assets is recorded outside of acquisition accounting.

Accordingly, the valuation allowance on a portion of the Company’s net deferred tax assets was released, resulting in an income tax benefit of approximately $3,073,000, recorded as a credit to income tax expense for fiscal year 2021.

Refer to Note 5 for additional information.

MANAGEMENT ’

S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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 .

Super League Gaming, Inc.

SLGG) builds and operates networks of games, monetization tools and content channels across open-world gaming platforms that empower developers, energize players, and entertain fans.

Our solutions provide incomparable access to an audience consisting of players in the largest global metaverse environments, fans of hundreds of thousands of gaming influencers, and viewers of gameplay content across major social media and digital video platforms.

Fueled by proprietary and patented technology systems, the company’s platform includes access to vibrant in-game communities, a leading metaverse advertising platform, a network of highly viewed channels and original shows on Instagram, TikTok, Snap, YouTube, and Twitch, cloud-based livestream production tools, and an award-winning esports invitational tournament series.

Super League’s properties deliver powerful opportunities for brands and advertisers to achieve impactful insights and marketing outcomes with gamers of all ages.

We generate revenues from (i) advertising, serving as a marketing channel for brands and advertisers to reach their target audiences of gamers across our network, (ii) content, curating and distributing esports and gaming-centric entertainment content for our own network of digital channels and media and entertainment partner channels and (iii) direct to consumer offers, including digital subscriptions, in-game digital goods, and gameplay access fees.

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

Matters Affecting Comparability

During fiscal year 2021, we completed the acquisitions described below under the heading, “FY 2021 Acquisitions.”

Executive Summary

believe Super League is on the leading edge of the rapidly growing

competitive video gaming industry, which has become an established

and vital part of the entertainment landscape.

We believe there is

a significant opportunity for the world of mainstream competitive

players and creators who want their own esports and entertainment

These players and creators enjoy the competition, the

social interaction and community, and the entertainment value

associated with playing, creating and watching others

Super League is a critically important component in providing the

infrastructure for mainstream competitive video gaming content and

gameplay, that is synergistic and accretive to the greater esports

Over the past five years, we believe we have become the

preeminent brand for gamers by providing a proprietary software

platform that allows them to create, compete, socialize and

spectate gameplay and entertainment, both physically and digitally

Our creator and player platform generates a significant

amount of derivative gameplay content for further syndication

beyond our own digital channels.

The fundamental driver of our business model and monetization

strategy is creating deep community engagement through our highly

personalized experiences that, when coupled with the critical mass

of our large digital audiences, provides the depth and volume for

premium content and offer monetization differentiated from a more

traditional, commoditized advertising model.

The combination of our

physical venue network and digital programming channels, with Super

League’s cloud-based, digital products platform technology at

the hub, creates the opportunity for not just a share of the

player’s wallet, but also the advertiser’s wallet.

do this by offering brand sponsors and advertisers a premium

marketing channel to reach elusive Generation Z and Millennial

gamers and creators and offering players ways to access exclusive

tournaments and programming.

fiscal year 2020, management continued to focus on monetization

with respect to our three primary revenue streams:

(1) advertising

revenues, (2) content revenues, and (3) direct to consumer

In addition to the significant strong KPI performance

described below, we:

(i) continued our focus on our premium

advertising model for future monetization of our rapidly growing

premium advertising inventory, invested in the expansion of our

in-house direct sales team to facilitate delivery, and increased

revenues generated from programmatic display and video advertising

(ii) focused on our swift pivot to accelerate the

monetization of our original and user generated content library and

remote production and broadcast capabilities, which emerged as a

significant component of revenue in 2020;

(iii) continued to focus

on monetization of the gamer and creator through direct-to-consumer

offers, including increases in sales of digital goods, primarily

with our Minehut digital property, and the launch of the early

stages of a micro-transaction marketplace;

and, (iv) began to

unlock new ways that our content production technology can extend

beyond esports into traditional sports and other entertainment

formats representing revenue growth opportunities in future

We expect to continue to grow our adverting pipeline

across various verticals with the capability to provide brands and

advertisers with targeted, high quality integrations that warrant

premium costs per impressions (“CPM”) advertising

League Gaming experienced its strongest period of audience growth

during the challenging time of the COVID-19 pandemic, marked by the

reaching of a key 2020 milestone in July 2020;

reaching one

billion video views and impressions.

This key milestone at the

time, represented more than a 700% increase over the full

fiscal year of 2019, during which we achieved a total of 120

million views.

More importantly, as of the end of 2020 we generated

a total of 2.0 billion views and impressions.

ability to generate over one billion views year to date in July

2020, on our way to over two billion views for fiscal 2020, was a

key proof point of not only the compelling attractiveness of our

content, but also to the variety we are able to offer.

established ourselves as a leading publisher of user generated

gaming highlights on Snapchat and within our Framerate social video

During 2020, we expanded to

nine gameplay highlights channels across Instagram and Tik Tok,

produced three original series on InstagramTV, and produced seven

original shows on Snapchat that, all together, delivered on average

more than 169.0 million video views per month.

the fiscal year 2020, we experienced a significant increase in

registered users, gamer and creator engagement, and gameplay hours

across all of our platforms.

We believe a driver of the increase

was, to a certain extent, the general period of social distancing

and mandatory shelter in place orders stemming from the COVID-19

pandemic, during which passionate video gamers and creators around

the world sought a competitive outlet, seeking to connect with

others around the games they love and turned to esports and

entertainment and other online gaming communities to fill the void.

We also believe that a driver of the increase is the fact that

esports and entertainment is mainstream, which was the case prior

to COVID-19, and we expect this trend to continue subsequent to the

COVID-19 pandemic.

These increases are accelerating our growth

plans, and are increasing our opportunities for

monetization.

video content business is also accelerating on an additional path

through the advancement of our proprietary, cloud-based, live

content capture and broadcast system, which includes patented

technology and fully remote, innovative workflows operated by

SuperLeagueTV, our completely virtual studio.

non-endemic brands and partners have sought out Super League to

provide premium, TV-quality production services across a multitude

of live streamed events.

During 2020, within gaming alone,

broadcasts have spanned an impressive mix of game titles including

Minecraft, APEX Legends, NBA2K, PUBG Mobile, the World Golf Tour

connection with the advancement of our content capture and

broadcast system, in December 2020 we announced the launch

of Virtualis Studios, our fully virtual production studio

providing proprietary, state-of-the-art, scalable solutions for

video, television, and branded content.

We believe that production

companies in need of experienced teams with a deep understanding of

remote production technologies and systems can rely on Virtualis

Studios’

expertise, developed through years of broadcasting

multi-location esports events.

Whether for the creation and

broadcast of premium content, or for monitoring productions from

remote locations, Virtualis Studios supports a broad spectrum of

critical needs in today’s production environment.

cloud-based esports broadcast solutions designed to enable

thousands of simultaneous gameplay and player cam feeds to be live

streamed across dozens of endpoints, Virtualis Studios specializes

in integrating multiple technology solutions to ensure any given

project can be produced and monitored successfully on a partially

or fully-remote basis.

The proprietary infrastructure already

supports multiple, concurrent virtual control rooms that are fully

operational at any given time, with limitless scalability compared

to what is possible within a physical studio and on-site control

response to the COVID-19 pandemic and the related uncertainty,

advertisers and sponsors across the board inevitably paused to

reset their marketing strategies, and as a result, all companies

with business models that include sponsorship and advertising

revenues felt the impact of the pause in advertising spend

industry-wide.

In addition, as a result of COVID-19, we also felt

the impact of the deferral of some of the programs in our pipeline

and related revenues to future periods.

We did not experience any

cancellations of existing programs.

The majority of our gameplay

hours and other engagement occurs digitally, online, so while our

“in real life”

gaming is a premium and important aspect

of our brand, the shift away from retail locations is not expected

to have a significant impact on our overall business model over

time, which is largely digitally focused.

Although we were impacted by the general deferral in advertising

spending by brands and sponsors resulting from the COVID-19

pandemic for a significant portion of fiscal year 2020, we reported

significant quarter over quarter growth in revenues in the second

half of fiscal 2020 and we expect to continue to expand our

advertising revenue and revenue from the sale of our proprietary

and third-party user generated content in future periods, as we

continue to expand our advertising inventory, viewership and

related sales activities.

Key Performance Indicators.

KPIs driving our business model are related to scalable offers

across our digital and physical footprint of gaming-centric offers

and entertainment.

We focus and report on three key performance

indicators (“KPIs”), as outlined below, to assess our

progress and drive revenue growth, which is also a key performance

As December 31, 2020, we

continued to see strong growth in our leading key performance

indicators, as follows:

●    

Views and Impressions:

We generated 2.0 billion views and

impressions during fiscal year 2020, compared to our full-year 2019

views of 120.0 million, representing an approximately 17 times, or

approximately 1600% increase over full year 2019 views.

continued growth in views results in the exponential growth of our

total and monetizable advertising inventory, which can increase the

number of brands and advertisers attracted to our audience and

●    

Registered Users:

During fiscal year 2020, we increased our

registered users by approximately three times, or 200%, to 2.9

million registered users.

We ended fiscal 2019 with approximately

980,000 registered users.

We believe that continuing our trend of

significant year over year increases in registered users introduces

more gamers and creators into our customer funnel, from whom we can

gather higher volumes of quality user generated content and convert

into subscribers and/or upsell into other paid offers.

●     

Engagement Hours:

During fiscal year 2020, including our

live gaming experiences and our expanding digital gameplay

channels, we generated approximately 72.2 million hours of gameplay

and other engagement, as compared to approximately 15.0 million

full year 2019 gameplay and other engagement hours, an increase of

approximately 5 times, or 381%.

We continue to focus on ways we can

repackage and distribute this significant derivative content

library for further monetization.

During fiscal year 2021, management continued to focus on monetization with respect to our three primary revenue streams:

(1) advertising revenues, (2) content revenues, and (3) direct to consumer revenues.

In addition to the strong key performance indicator (“KPI”) performance during the periods presented, as described below, we:

(i) continued our focus on our premium advertising model and the monetization of our rapidly growing premium advertising inventory, and increased revenues generated from direct advertising sales, programmatic display and video advertising units;

(ii) continued to focus on the monetization of our original and user generated content library and remote production and broadcast capabilities, which emerged as a component of revenue in 2020;

(iii) continued to focus on the monetization of the gamer and creator through direct-to-consumer offers, including increases in sales of digital goods with our Minehut, Mineville and Pixel Paradise digital properties, and the continued rollout of our micro-transaction marketplace;

and, (iv) continued to unlock new ways that our content production technology can extend beyond esports, into other entertainment formats representing revenue growth opportunities in the current and future periods.

We expect to continue to grow our advertising pipeline across various verticals with the capability to provide brands and advertisers with targeted, high-quality integrations that warrant premium costs per impressions (“CPM”) advertising rates.

FY 2021 Acquisitions

Fiscal year 2021 acquisitions were comprised of the following:

We acquired Mobcrush, effective June 1, 2021, and in the fourth quarter of 2021, continued with the required integration activities, including integration of our sales, engineering and product teams.

We believe the acquisition of Mobcrush will enable us to provide brands, advertisers, and other consumer facing businesses with significant audience reach across the most important engagement channels in video gaming – competitive events, social media and live streaming content, and in-game experiences.

With the acquisition of Mobcrush we acquired the potential for a U.S.

monthly viewing audience of 85 million, which would create a top 50 U.S.

media property according to measurements used by Nielsen.

In addition, annually, on a combined basis we have the potential to generate 7.7 billion U.S video views, annually, across live streaming platforms, two billion views on social media platforms, and enable 60 million hours of gameplay on owned and operated platforms.

In August 2021, we completed the acquisition of Bannerfy which reinforces our commitment to helping creators monetize their fan base as they seek to turn their passion into their livelihood and provides brands with access to additional premium inventory from creators through Super League, to establish organic connections with their fans and followers.

Based in the United Kingdom, and having already onboarded a strong roster of European gaming creators and brand partners, and as the first international acquisition by Super League, Bannerfy represents another path to expansion of our advertising and sponsorship partner base. 

On October, 4, 2021, we completed the acquisition of Bloxbiz, a dynamic advertising platform designed specifically for metaverse environments.

Bloxbiz’s initial deployment enables brands to advertise across popular Roblox game titles and helps Roblox creators with monetization and game analytics.

Bloxbiz’s advertising platform reaches more than 70 million monthly active Roblox users across a collection of more than 150 curated, brand-safe games.

In-game ads take the form of creative billboards that complement the gaming experience, allowing for natural discovery without interrupting gameplay.

The ads are measured through Bloxbiz’s advanced technology, which verifies viewability in a 3D space and provides aggregated audience geographic, language, and device data.

The acquisition allows us to execute on our strategic plans to extend our existing and expanding presence and reach in the metaverse.

As a result of our organic growth and the impact of our 2021 Acquisitions, we have significantly enhanced our internal direct sales force and partnership leaders, with approximately 30% of our headcount revenue-facing, and we have deepened our product and engineering functions with specific expertise in metaverse game design, advertising technology, creator tool development, and data and analytics.

We believe we are one of the only companies operating at scale in Minehut and Roblox.

In addition, we believe there are significant opportunities to port our products and know-how into other metaverse gaming platforms.

Our consumer-facing reach now includes:   

A library of dozens of our own Minecraft game engines that we leverage across our Minehut, Mineville and Pixel Paradise properties;

Game creator partnerships that provide us with access to 150 popular Roblox game worlds, which we expect to continue to expand as we increase our network participation;

The ability to reach gaming audiences in the hundreds of millions through the combination of our own and our creators’ social media reach, enabled by our content capabilities, ranging from live gameplay and entertainment broadcasts to on-demand clips for social distribution and influencer partnerships.  

Embedded in our consumer properties are a variety of innovative ad products, developer tools and analytics, as well as our technology to support content production and broadcasting and feed our content network and support a brand’s overall campaign objectives.  

We offer a suite of metaverse gaming and content products from custom metaverse integrations inside existing games or the creation of new, bespoke worlds, supported by dynamic, in-game ad units and custom content to drive amplification and attract quality CPMs.

Combined with our livestream and broadcast capabilities, we are able to deliver an end-to-end metaverse solution for advertisers and brands.

Through our organic and inorganic growth in fiscal 2021, our premium advertising inventory and offer to brands has expanded significantly, which allows us to offer premium engagement with advertiser’s and brand’s targeted audiences, in a safe, trusted and measurable way, through deep, multi-faceted campaigns 

leading to growth in the size and scope of our advertising deals to attract a larger share of advertisers’

During the second half of fiscal 2021, we also focused on continuing to forge strategic partnerships to create a global reseller network to augment our direct salesforce efforts.

These partners have breadth and depth across all of the significant industry verticals along with global geographic coverage, which we believe will facilitate the acceleration of the rollout and awareness for our innovative ad products and drive the acceleration of future monetization. 

In August 2021, we announced the launch of Pixel Paradise, the world’s first Minecraft Bedrock Server designed from the ground up to prioritize roleplaying while bringing your imagination to life with your friends.

In Pixel Paradise, players take a vacation from player vs player competition and are whisked away to an island where creativity and resourcefulness are the most critical skills.

Completing tasks will require players to learn how to manage their currency, optimize their resources, and pursue helpful communications with their existing and new friends.

For players seeking a little more action, Pixel Paradise offers mini-games based on popular Minecraft game modes.

Pixel Paradise is the newest release by InPvP, an official Microsoft Minecraft partner enjoyed by more than 22 million players annually.

Registered Direct Offerings .

During the first quarter of fiscal 2021, we offered and sold to certain institutional investors an aggregate total of 7,516,253 shares of common stock in registered direct offerings pursuant to our effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on April 10, 2020 (File No.

We received aggregate net proceeds of approximately $33.6 million, after deducting offering expenses.

Impact of COVID-19 Pandemic

taken around the world to help mitigate the spread of the

coronavirus include restrictions on travel, and quarantines in

certain areas, and forced closures for certain types of public

places and businesses.

The novel coronavirus and actions taken to

mitigate the spread of it have had and are expected to continue to

have an adverse impact on the economies and financial markets of

many countries, including the geographical areas in which the

Company operates.

On March 27, 2020, the Coronavirus Aid,

Relief, and Economic Security Act (“CARES Act”)

was enacted to amongst other provisions, provide emergency

assistance for individuals, families and businesses affected by the

coronavirus pandemic. It is unknown how long the adverse

conditions associated with the coronavirus will last and what the

complete financial effect will be to the Company.

Notwithstanding

the growth in revenues and in user engagement metrics discussed

herein, the broader impact of the ongoing

COVID-19 pandemic on our results of operations and

overall financial performance remains

uncertain. The COVID-19 pandemic may continue

to impact our revenue and revenue growth in future periods, and is

likely to continue to adversely impact certain aspects of our

business and our partners, including advertising demand,

retail expansion plans and our in-person esports

experiences. See “Risk Factors”

discussion of the adverse impacts of the COVID-19

pandemic on our business.

Recent Developments

On March 9, 2021, we entered into an Agreement and Plan of Merger

(the “MC Merger Agreement”) by and among Mobcrush

Streaming, Inc.

(“Mobcrush”), Super League Gaming,

Inc., and SLG Merger Sub II, Inc., a wholly-owned subsidiary of

Super League (“Merger Co”).

The MC Merger Agreement

provides for the acquisition of Mobcrush by us pursuant to the

merger of Merger Co with and into Mobcrush, with Mobcrush as the

surviving corporation (the “Merger”).

Upon completion

of the Merger, Mobcrush will be a wholly-owned subsidiary of Super

League Gaming, Inc.

In accordance with the terms and subject to the conditions of the

MC Merger Agreement:

(A) each outstanding share of Mobcrush common

stock ("Mobcrush Common Stock") and Mobcrush preferred stock

("Mobcrush Preferred Stock", and with the Mobcrush Common Stock,

the "Mobcrush Stock") (other than dissenting shares) will be

canceled and converted into the right to receive (i) 0.528 shares

of Super League’s common stock ("Company Common Stock"), as

determined in the MC Merger Agreement (the “Share Conversion

Ratio”), and (ii) any cash in lieu of fractional shares of

common stock otherwise issuable under the MC Merger Agreement (the

"Merger Consideration");

(B) vested options of Mobcrush will be

assumed by Mobcrush and converted into comparable options that are

exercisable for shares of Company Common Stock, with a value

determined in accordance with the Share Conversion Ratio;

unvested options of Mobcrush will either be (i) assumed by Super

League and converted into comparable options that are exercisable

for shares of Company Common Stock, with a value as determined by

us and Mobcrush prior to the closing of the Merger, or (ii)

terminated and re-issued as options that are exercisable for shares

of Company Common Stock with a value as determined by us and

Mobcrush prior to the closing of the Merger.

Subject to certain

adjustments and other terms and conditions more specifically set

forth in the MC Merger Agreement, we will be issuing 12,582,204

shares of the Company’s Common Stock as the Merger

Consideration.

The MC Merger Agreement contains representations,

warranties and covenants of each of the parties thereto that are

customary for transactions of this type.

The obligations of Super League and Mobcrush to consummate the

Merger are subject to certain closing conditions, including, but

not limited to, (i) the approval of Mobcrush's and our

shareholders, (ii) Mobcrush and our reaching an agreement as to the

treatment of Mobcrush's unvested options exercisable for shares of

Mobcrush Common Stock, (iii) receipt of any necessary regulatory

approvals, (iv) the execution and delivery of the Support

Agreements by the Voting Stockholders, and (v) the execution and

delivery of the Registration Rights Agreement.

Critical Accounting Estimates

Our financial statements have been prepared in accordance with

accounting principles generally accepted in the United States of

Preparation of our financial statements requires

management to make judgments and estimates.

Some accounting

policies have a significant impact on amounts reported in our

financial statements.

The SEC has defined a company’s

critical accounting policies as the ones that are most important to

the portrayal of a company’s financial condition and results

of operations, and which require a company to make its most

difficult and subjective judgments.

A summary of significant

accounting policies and a description of accounting policies that

are considered critical may be found in the audited financial

statements and notes thereto included elsewhere herein.

following accounting policies were identified during the periods

presented, based on activities occurring during the periods

presented, as critical and requiring significant judgments and

Revenue Recognition

Revenue is recognized when we transfer promised goods or services

to customers in an amount that reflects the consideration to which

we expect to be entitled in exchange for those goods and 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;

contract has commercial substance (that is, the risk, timing, or

amount of the entity’s future cash flows is expected to

change as a result of the contract);and (v) it is probable that the

entity will collect substantially all of the consideration to which

it will be entitled in exchange for the goods or services that will

be transferred to the customer.

Transaction prices are based on the amount of consideration to

which we expect to be entitled in exchange for transferring

promised goods or services to a customer, excluding amounts

collected on behalf of third parties, if any.

We consider the

explicit terms of the revenue contract, which are typically written

and executed by the parties, our customary business practices, the

nature, timing, and the amount of consideration promised by a

customer, in connection with determining the transaction price for

our revenue arrangements.

We generate revenues from (i) advertising, serving as a

marketing channel for brands and advertisers to reach their target

audiences of gamers across our network, (ii) content, curating and

distributing esports and entertainment content for our own network

of digital channels and media and entertainment partner channels

and (iii) direct to consumer offers

including digital subscriptions, digital goods, gameplay access

fees and merchandise sales.

billed or collected in advance is recorded as deferred revenue

until the event occurs or until applicable performance obligations

are satisfied.

Advertising and Sponsorships:

revenue primarily consists of direct

sales activity along with sales of programmatic display and video

advertising units to third-party advertisers and exchanges.

Advertising arrangements typically

include contract terms for time periods ranging from several days

to several weeks in length.

advertising arrangements that include performance obligations

satisfied over time, customers typically simultaneously receive and

consume the benefits under the arrangement as we satisfy our

performance obligations, over the applicable contract term.

such, revenue is recognized over the contract term based upon

estimates of progress toward complete satisfaction of the contract

performance obligations (typically utilizing a time, effort or

delivery-based method of estimation).

Revenue from shorter term

advertising arrangements that provide

for a contractual delivery or performance date is recognized when performance is substantially

complete and or delivery occurs.

Payments are typically due from

customers during the term of the arrangement for longer-term

campaigns, and once delivery is complete for shorter-term

Sponsorship revenue arrangements may include:

non-exclusive title sponsorships, marketing benefits, official

product status exclusivity, product visibly and additional

infrastructure placement, social media rights, rights to on-screen

activations and promotions, display material rights, media rights,

hospitality and tickets and merchandising rights.

revenues also include revenues pursuant to arrangements with brand

and media partners, retail venues, game publishers and broadcasters

that allow our partners to run amateur esports experiences, and or

capture specifically curated gameplay content that is customized

for our partners’

distribution channels.

arrangements typically include contract terms for time periods

ranging from several weeks or months to terms of twelve months in

sponsorship arrangements that include performance obligations

satisfied over time, customers typically simultaneously receive and

consume the benefits under the agreement as we satisfy our

performance obligations, over the applicable contract term.

such, revenue is recognized over the contract term based upon

estimates of progress toward complete satisfaction of the contract

performance obligations (typically utilizing a time, effort or

delivery-based method of estimation).

Payments are typically due from customers during

the term of the arrangement.

Revenue from sponsorship arrangements for one-off branded

experiences and/or the development of content tailored specifically

for our partners’

distribution channels that provide for a

contractual delivery or performance date, is recognized at a point

in time, when performance is substantially complete and or delivery

related revenues are generated in connection with our curation and

distribution of esports and entertainment content for our own

network of digital channels and media and entertainment partner

We distribute three primary types of content for

syndication and licensing, including:

(1) our own original

programming content, (2) user generated content

(“UGC”), including online gameplay and gameplay

highlights, and (3) the creation of content for third parties

utilizing our remote production and broadcast

content arrangements that include performance obligations satisfied

over time, customers typically simultaneously receive and consume

the benefits under the arrangement as we satisfy our performance

obligations, over the applicable contract term.

As such, revenue is

recognized over the contract term based upon estimates of progress

toward complete satisfaction of the contract performance

obligations (typically utilizing a time, effort or delivery-based

method of estimation).

Revenue from shorter term content sales

arrangements that provide for a

contractual delivery or performance date is recognized when performance is substantially

complete and or delivery occurs.

Payments are typically due from

customers during the term of the arrangement for longer-term

campaigns, and once delivery is complete for shorter-term

Direct to Consumer:

Direct to consumer revenues primarily consist of digital

subscription fees, digital goods, gameplay access fees and

merchandise sales.

Subscription revenue is recognized in the period

the services are rendered.

Payments are typically due from

customers at the point of sale.

We make estimates and judgments when determining whether we will

collect substantially all of the consideration to which we will be

entitled in exchange for the goods or services that will be

transferred to the customer.

We assess the collectability of

receivables based on several factors, including past transaction

history and the creditworthiness of our customers.

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 revenues recognized each

period and the timing of the recognition of revenues.

assumptions and judgments regarding future collectability could

differ from actual events and thus materially impact our financial

position and results of operations.

Depending on the complexity of the underlying revenue arrangement

and related terms and conditions, significant judgments,

assumptions and estimates may be required to determine each parties

rights regarding the goods or services to be transferred, each

parties performance obligations, whether performance obligations

are satisfied at a point in time or over time, estimates of

completion methodologies, the timing of satisfaction of performance

obligations, and the appropriate period or periods in which, or

during which, the completion of the earnings process occurs.

Depending on the magnitude of specific revenue arrangements, if

different judgments, assumptions and estimates are made regarding

revenue arrangements in any specific period, our periodic financial

results may be materially affected.

Stock-Based Compensation Expense

expense for stock-based awards is measured at the grant date, based

on the estimated fair value of the award, and is recognized as an

expense, typically on a straight-line basis over the

employee’s requisite service period (generally the vesting

period of the equity award), which is generally two to four years.

Compensation expense for awards with

performance conditions that affect vesting is recorded only for

those awards expected to vest or when the performance criteria are

The fair value of restricted stock and restricted stock

unit awards is determined by the product of the number of shares or

units granted and the grant date market price of the underlying

common stock.

The fair value of stock option and common stock

purchase warrant awards is estimated on the date of grant utilizing

the Black-Scholes-Merton option pricing model.

We account for

forfeitures of awards as they occur.

of equity-based awards (including warrants) to non-employees in

exchange for consulting or other services are accounted for using

the grant date fair value of the equity instruments

issued. 

Determining the fair value of stock-based awards at the grant date

requires significant estimates and judgments, including estimating

the market price volatility of our common stock, determination of

grant dates, future employee stock option exercise behavior,

estimates of probabilities of vesting and requisite service

for Business Combinations

In connection with the application of purchase accounting for the

acquisition of Framerate, as described above, we estimated the fair

values of the assets acquired and liabilities assumed. A fair

value measurement is determined as the price we would receive to

sell an asset or pay to transfer a liability in an orderly

transaction between market participants at the measurement date.

the absence of active markets for the identical assets or

liabilities, such measurements involve developing assumptions based

on market observable data and, in the absence of such data,

internal information that is consistent with what market

participants would use in a hypothetical transaction that occurs at

the measurement date.

In the context of purchase accounting, the

determination of fair value often involves significant judgments

and estimates by management, including the selection of valuation

methodologies, estimates of future revenues, costs and cash flows,

discount rates, and selection of comparable

companies.  The estimated fair values reflected in the

purchase accounting rely on management’s judgment and the

expertise of a third-party valuation firm engaged to assist in

concluding on the fair value measurements.

Results of Operations

following table sets forth a summary of our statements of

operations for the years ended December 31, 2020 and

$ 2,064,000  

$ 1,084,000  

The novel coronavirus and actions taken to mitigate the spread of it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates.

It is unknown how long the adverse conditions associated with the coronavirus will last and what the complete financial effect will be to the Company.

Commencing in the first quarter of 2020, in response to the COVID-19 pandemic and the related uncertainty, advertisers and sponsors across the board inevitably paused to reset their marketing strategies, and as a result, all companies with business models that include sponsorship and advertising revenues felt the impact of the pause in advertising spend industry-wide.

In addition, in the first half of 2020, as a result of COVID-19, we felt the impact of the deferral of some of the programs in our pipeline and related revenues to future periods.

The majority of our gameplay hours and other engagement occurs digitally, online, so while our “in real life”

gaming is a premium and important aspect of our brand, the shift away from retail locations did not have a significant impact on our overall business model over time, which is largely digitally focused.

Although we were impacted by the general deferral in advertising spending by brands and sponsors resulting from the COVID-19 pandemic for a significant portion of fiscal year 2020, we reported significant quarter over quarter growth in revenues in the second half of fiscal 2020, and throughout 2021 and we expect to continue to expand our advertising revenue and revenue from the sale of our proprietary and third-party user generated content in future periods, as we continue to expand our advertising inventory, viewership and related sales activities.

Notwithstanding the growth in revenues and in user engagement metrics discussed herein, the broader impact of the ongoing COVID-19 pandemic on our results of operations and overall financial performance remains uncertain. The COVID-19 pandemic may continue to impact our revenue and revenue growth in future periods, and is likely to continue to adversely impact certain aspects of our business and our partners, including advertising demand, retail expansion plans and our in-person esports experiences. 

Results of Operations for the Fiscal Years Ended December 31, 2021 and 2020

The following table sets forth a summary of our results of operations for the fiscal years ended December 31, 2021 and 2020:

COST OF REVENUES

856,000  

513,000  

1,208,000  

571,000  

OPERATING EXPENSES

marketing and advertising

5,403,000  

4,488,000  

platform and infrastructure

6,647,000  

4,915,000  

and administrative

7,901,000  

11,938,000  

operating expenses

19,951,000  

21,341,000  

Selling, marketing and advertising

Engineering, technology and development

General and administrative

Total operating expenses

NET LOSS FROM OPERATIONS

(18,743,000 )

(20,770,000 )

OTHER INCOME (EXPENSE), NET

11,000  

$ (18,732,000 )

$ (30,679,000 )

Comparison of the Results of Operations for Fiscal Years 2020 and

Advertising and

$ 1,170,000  

$ 1,019,000  

$ 151,000  

735,000  

32,000  

703,000  

159,000  

33,000  

126,000  

$ 2,064,000  

$ 1,084,000  

$ 980,000  

for fiscal year 2020 increased $980,000 or 90%, compared to fiscal

For fiscal year 2020

and 2019, four customers accounted for 49% and five customers

accounted for 69% of revenue, respectively.

increase in revenues primarily reflects significant increases in

advertising on our owned and operated digital channels and content

sales revenues, compared to the prior year, reflecting our

continued focus on the monetization of our increasing premium

advertising inventory and esports and entertainment content.

increase was partially offset by a decrease in traditional

sponsorship revenues due to the industry wide pause in sponsorship

spending and resetting of marketing strategies by brand and

sponsors in connection with the uncertainty caused by the COVID-19

pandemic in 2020.

Advertising and sponsorship revenues for fiscal year 2020 increased

$151,000, or 15%, and included revenues from advertising campaigns

with Netflix, Inc., or Netflix, in connection with Netflix’s

“The Sleepover”

movie release, and with Disney+ in

connection with their animated musical comedy series Phineas and

The change reflects an increase in advertising revenues of

$502,000, or approximately seven times the fiscal year 2019 level,

primarily related to direct sales and programmatic display and

video advertising within our Minecraft related digital property,

Traditional sponsorship revenues decreased $351,000, or

37%, due to the impacts of the COVID-19 pandemic described earlier.

The increase in advertising revenues more than offset the decrease

in traditional sponsorship revenues.

Content related revenues increased to $703,000, or greater than

300% in fiscal year 2020, as compared to $32,000 in fiscal year

The increase was primarily driven by an increase in sales of

our proprietary and user generated content, primarily with Snap

Inc., and Cox Media, and live stream broadcast related content

sales activities with Topgolf and GenG during fiscal year

Although we were impacted by the general deferral in advertising

spending by brands and sponsors resulting from the COVID-19

pandemic for a significant portion of fiscal year 2020, we reported

significant quarter over quarter growth in total revenues in the

second half of fiscal 2020 and we expect to continue to expand our

advertising revenue and revenue from the sale of our proprietary

and user generated content in future periods, as we continue to

expand our premium advertising inventory, viewership and related

sales activities.

Direct to consumer revenues were primarily comprised of revenues

generated from our Minehut digital property, which provides various

Minecraft server hosting services on a subscription basis and other

digital goods to the Minecraft gaming community.

LOSS BEFORE BENEFIT FROM INCOME TAXES

Benefit from income taxes

Comparison of the Results of Operations for the Fiscal Years Ended December 31, 2021 and 2020

Revenue  

Advertising and sponsorships

Direct to consumer

revenues for fiscal year 2020 increased $126,000, or greater than

300%, compared to fiscal year 2019.

The increase in direct to

consumer revenues reflects our continued focus on the

acceleration of our direct to consumer monetization.

Revenue for fiscal year 2021 increased $9,608,000 or 466%, compared to fiscal year 2020.

For fiscal year 2021, one customer accounted for 12% (12% advertising and sponsorships) of revenues.

For fiscal year 2020, four customers accounted for 49% (28% advertising and sponsorships;

21% content sales) of revenues.

The increase in revenues for fiscal year 2021 primarily reflects (1) significant increases in direct sales and programmatic advertising revenues, on our owned and operated, and our partner’s digital channels, reflecting increasing monetization of our expanding premium advertising inventory, relative to the prior year comparable period, (2) increases in revenues generated from our live stream, remote production and broadcast related content sales activities, and (3) increases in direct to consumer revenues, primarily driven by digital goods sales revenues from our Mobcrush acquisition related Mineville and Pixel Paradise Microsoft Minecraft server properties.

The increase reflects partial fiscal year 2021 revenues related to our 2021 Acquisitions, from the respective closing dates of the applicable acquisition transactions to December 31, 2021, totaling approximately $5,733,000.

Excluding the impact of 2021 Acquisitions, total revenues for fiscal year 2021 increased approximately $3,874,000, or 188%.

Advertising and sponsorship revenues for fiscal year 2021 increased $6,835,000, or 584%, primarily due to a 95% increase in our direct sales advertising revenue generating advertisers, driven in part by partial fiscal year 2021 revenue from 2021 Acquisition related direct advertising sales, from the respective closing dates of the applicable acquisition transactions to December 31, 2021, and a 250% increase in the average revenue per advertiser recognized during fiscal year 2021, as compared to the prior year.

Advertising and sponsorship revenues for fiscal year 2021 included 2021 Acquisition related advertising and sponsorship revenues totaling approximately $4,207,000.

The increase in advertising and sponsorship revenues for fiscal year 2021 also reflected an increase in programmatic display and video advertising revenues primarily within our Minecraft digital property, Minehut, of $212,000, or 111% compared to the prior year.

Content-related revenues for fiscal year 2021 increased $1,529,000, or 208%.

The change was primarily driven by an increase in our live stream, remote production, broadcast and gameplay related content sales activities during fiscal year 2021, including broadcast and/or gameplay related projects with TikTok, Twitch Interactive, Inc., Endemol Shine North America (a division of Banijay), AVY Entertainment (DBA Tempo Storm), Aftershock Media Group, Topgolf Entertainment Group, Inc., Hitbox, LLC d/b/a Next Generation Esports, and the professional esports organization, Gen.G.

The increase in live stream, remote production, broadcast and gameplay related revenues reflects a 90% increase in the number of related customers and a 206% increase in revenue per customer for fiscal year 2021, compared to the prior year.

Direct to consumer revenues for fiscal year 2021 increased $1,244,000, or 782% compared to the prior year.

Direct to consumer revenues, prior to the acquisition of Mobcrush, were primarily comprised of revenues generated from our Minehut digital property, which provides various Minecraft server hosting services on a subscription basis and other digital goods to the Minecraft gaming community.

Minehut revenues, while in the early stages of development, continue to expand, increasing $204,000, or 128%, in fiscal year 2021, compared to the prior year.

Our Mobcrush subsidiary generates direct to consumer in-game platform sales revenues through the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, within our Mineville and Pixel Paradise gaming servers, which leverage the flexibility of the Microsoft Minecraft Bedrock platform, are powered by our InPvP cloud architecture technology, and represent two of the seven official Microsoft Minecraft partner servers.

Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

Direct to consumer revenues for fiscal year 2021 included Mineville and Pixel Paradise revenues totaling $1,040,000.

Although we were impacted by the general deferral in advertising spending by brands and sponsors resulting from the COVID-19 pandemic throughout fiscal year 2020, we reported significant quarterly revenue growth in the second half of fiscal 2020 and throughout 2021, compared to the comparable prior year periods, and we expect to continue to expand our advertising revenue and revenue from the sale of our proprietary and user generated content in future periods, as we continue to expand our premium advertising inventory, viewership and related direct sales activities.

Cost of Revenues

Cost of revenue

 $ Change

$ 856,000  

$ 513,000  

$ 343,000  

revenue for fiscal year 2020 increased $343,000, or 67% compared to

fiscal year 2019, as compared to the 90% increase in related

revenues for the same periods.

The less than proportionate increase

in cost of revenue was driven by a significant increase in lower

cost advertising and third party content sales revenues in fiscal

In addition, as a result of the various shelter in place

orders in connection with the global response to the COVID-19

pandemic, we reduced our physical / in-person gaming activities

during fiscal year 2020, which typically have higher direct cost

profiles, which to a lesser extent, also contributed to the less

than proportionate increase in cost of revenue for the periods

revenues fluctuate 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, and

advertising and content sales activities occurring each

Operating Expenses

 $ Change

marketing and advertising

$ 5,403,000  

$ 4,488,000  

$ 915,000  

platform and infrastructure

6,647,000  

4,915,000  

1,732,000  

and administrative

7,901,000  

11,938,000  

operating expenses

$ 19,951,000  

$ 21,341,000  

$ (1,390,000 )

Noncash stock-based compensation expense for the periods presented

was included in the following operating expense line

 $ Change

marketing and advertising

$ 849,000  

$ 635,000  

$ 214,000  

platform and infrastructure

254,000  

129,000  

125,000  

and administrative

901,000  

5,453,000  

Cost of revenues for fiscal year 2021 increased $5,691,000, or 665% compared to the $9,608,000, or 466% increase in related revenues, respectively, over the same period.

The increase in cost of revenues was primarily due to the significant increase in related revenues for the periods presented.

The greater-than-proportionate increase in cost of revenues was primarily due to the inclusion of seven months of Mobcrush-related direct sales advertising revenues with higher direct cost profiles during fiscal year 2021.

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

Cost of revenues fluctuate 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, and advertising and content sales activities occurring each period.

Operating Expenses

$ 2,004,000  

$ 6,217,000  

$ (4,213,000 )

Selling, marketing and advertising

The increase in selling,

marketing and advertising expense for fiscal year 2020 was

primarily due to an increase in personnel costs, including noncash

stock compensation, associated with the increase in our in-house

direct sales force focused on the monetization of our increasing

premium advertising inventory and audience across our digital

The increase was partially offset by a reduction in

marketing costs related to our traditional physical / in-person

activities due to the impact of the COVID-19 pandemic on physical /

in-person activities.

Technology Platform and Infrastructure.

Technology platform

and infrastructure costs include (i) allocated personnel costs,

including salaries, noncash stock compensation, taxes and benefits

related to our internal software developers and engineers, employed

by Super League, engaged in the operation, maintenance, management,

administration, testing, development and enhancement of our

proprietary gaming and content technology platform, (ii)

third-party contract software development and engineering resources

engaged in developing and enhancing our proprietary gaming and

content technology platform, (iii) the amortization of capitalized

internal use software costs, and (iv) technology platform related

cloud services, broadband and other technology platform costs.

Capitalized internal use

s oftware development costs are amortized on a straight-line

basis over the software’s estimated useful life.

The increase in technology platform and

infrastructure costs for fiscal year

2020 primarily reflects an increase in cloud services and other

technology platform costs totaling $1,592,000, which

primarily reflects the impact of the surge in engagement across our

digital properties as described earlier, quarterly fees paid to a third party under a

licenses and rights agreement, as amended, totaling $175,000, and

the acceleration of amortization related to the termination of

certain rights and licenses in connection with amendments to our

arrangement with a third party, totaling $413,000, as described at

Note 4 to our financial statements elsewhere herein.

in technology platform and infrastructure costs was partially

offset by a decrease in broadband costs totaling $268,000 for

fiscal year 2020, as compared to fiscal year

Engineering, technology and development

General and administrative

Total operating expenses

Amortization expense for the periods presented was included in the following operating expense line items:

Sales, marketing and advertising

Engineering, technology and development

General and administrative

expense for the periods presented was comprised of the

 $ Change

$ 2,454,000  

$ 2,436,000  

$ 18,000  

and facilities

247,000  

403,000  

704,000  

842,000  

901,000  

5,453,000  

and amortization

229,000  

436,000  

3,366,000  

2,368,000  

998,000  

general and administrative expense

$ 7,901,000  

$ 11,938,000  

$ (4,037,000 )

A summary of the main drivers of the net increase in general

and administrative expenses for the periods presented is as follows:

●            

facilities costs decreased due to the termination of our lease for

approximately 75% of our office space in Santa Monica, California,

and converting to a fully remote work structure, resulting in

significant rent and facilities costs savings commencing in the

third quarter of 2020 and going forward.

●            

Total amortization expense

Noncash stock-based compensation expense for the periods presented was included in the following operating expense line items:

Selling, marketing and advertising

Engineering, technology and development

General and administrative

Total noncash stock-based compensation expense

Selling, Marketing and Advertising .

The increase in selling, marketing and advertising expense for fiscal year 2021 was primarily due to an increase in personnel costs associated with the acquisition of Mobcrush and the integration of a total of 26 former Mobcrush employees, effective June 1, 2021, eleven of which are included in our sales and marketing functions.

In addition to the impact on personnel costs arising from the acquisition of Mobcrush, the change reflects a net increase since the end of the prior year of approximately five net full-time employees in connection with the increase in our in-house direct sales and marketing team, focused on monetization and personnel in our creative and content functions.

The increase in selling, marketing and advertising expense also included the amortization of partner, customer, and advertiser-related intangible assets acquired in connection with the 2021 Acquisitions, totaling $1,180,000.

The change also reflects an increase of $377,000 in digital marketing expense for fiscal year 2021, compared to the prior year, during which lower marketing costs were incurred due to the impact of the COVID-19 pandemic.

Engineering, Technology and Development.

 Components of our platform are available on a “free to use,”

“always on basis,”

and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community.

Engineering, technology and development related operating expenses includes the costs described below, incurred in connection with our audience acquisition and viewership expansion activities.

Engineering, technology and development related operating expenses include (i) allocated internal engineering personnel expenses, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expenses, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expenses, 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. 

The net increase in engineering, technology and development costs for fiscal year 2021 was due to an increase in cloud services and other technology platform costs totaling $1,412,000, which primarily reflects the impact of the surge in engagement across our digital properties occurring subsequent to the first quarter of 2020 and continuing into fiscal year 2021.

The change also reflects an increase in engineering, technology and development costs related to the 2021 Acquisitions totaling $1,244,000, primarily comprised of cloud services and platform consulting services costs.

The change also reflects the impact of the increase in product and engineering personnel, totaling 18 full-time employees, primarily in connection with our 2021 Acquisitions, as described elsewhere herein.

The increase also included the amortization of developed technology-related intangible assets acquired in connection with the 2021 Acquisitions, totaling $631,000.

Fiscal year 2020 engineering, technology and development costs included the acceleration of amortization, totaling $413,000, related to the termination of a license agreement in the first quarter of 2020.

General and Administrative.

General and administrative expense for the periods presented was comprised of the following:

Personnel costs

Office and facilities

Professional fees

expense decreased primarily due to a reduction in IPO and

acquisition related professional fees in fiscal year

●            

Noncash stock compensation expense included in

general and administrative expense decreased 83%, primarily due to

certain performance options and warrants previously granted to

certain executives, which vested upon the achievement of certain

performance-based milestones in fiscal year 2019.

targets included the completion of our IPO in February 2019 and

other 2019 operational performance targets.

During fiscal year

2019, approximately 300,000 of performance-based stock options and

warrants vested with grant date fair values ranging from $8.28 to

$8.50, resulting in noncash stock compensation expense of

The decrease also reflects a reduction of the

average fair value of options and restricted shares expensed in

fiscal year 2020 to approximately $3.34, from approximately $8.34

for fiscal year 2019.

●            

Depreciation and

amortization expense decreased due primarily to a decrease in

scheduled amortization related to fully depreciated assets with

useful lives that expired during fiscal 2020 or prior, and the

acceleration of depreciation related to certain networking and

related equipment disposed of during fiscal 2019.

●            

Other general and

administrative expenses increased primarily due to an increase in

public company related directors and officer's

(“D&O”) insurance premiums and a full fiscal year

of D&O insurance and other public company costs, partially

offset by a decrease in travel related expenses due to the COVID-19

Stock-based compensation

Depreciation and amortization

Total general and administrative expense

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

Office and facilities costs decreased due to the termination of the leases for 75% of our office space in Santa Monica, California, and converting to a fully-remote work structure as of June 2020.

Professional fees costs increased $626,000 or 89%, primarily due to legal, audit, advisory and financial and tax due diligence professional fees, totaling $512,000, incurred in connection with our 2021 Acquisitions, as described elsewhere herein.

In accordance with the acquisition method of accounting, direct acquisition-related costs incurred are expensed as incurred in the period that the services are performed.

Noncash stock compensation expense included in general and administrative expense increased primarily due to the net annual and discretionary grant of incentive equity-based awards to employees during fiscal year 2021, in connection with our board-approved compensation and retention programs.

The increase was partially offset by the completion of the vesting and related expensing of certain previously-granted nonemployee common stock purchase warrants and other fiscal year 2019 acquisition related equity-based compensation in the second quarter of 2020, resulting in a decrease in warrant related stock compensation of $424,000 for fiscal year 2021, compared to the prior fiscal year.

Depreciation and amortization expense increased due primarily to the amortization of trademark, influencer and developer related intangible assets acquired in connection with the acquisitions of Mobcrush and Bloxbiz in fiscal year 2021, totaling $318,000.

Other general and administrative expenses increased $422,000, or 13%, primarily due to an increase in proxy and annual shareholder meeting expenses, including legal, proxy solicitation, printing and mailing costs, totaling $241,000, incurred in connection with our 2021 Annual Shareholders Meeting, which included, among other proposals, our proposal requesting stockholder approval of the issuance of Common Stock to Mobcrush in connection with the acquisition of Mobcrush.

The increase also reflects an increase in general and administrative software costs, including Mobcrush-related general and administrative software costs totaling $224,000.

The increase was partially offset by a slight decrease in D&O insurance premiums for the 2021-2022 policy period.

Other Income (Expense)

income (expense), net, for fiscal year 2020 and 2019, was $11,000

and ($9,909,000), respectively.

Other income and expense, net for

fiscal year 2019 was primarily comprised of interest expense

related to convertible notes outstanding as of the IPO Closing

Date, as follows:

 $ Change

of discount on convertible notes

$ 2,475,000  

$ (2,475,000 )

interest expense on convertible notes

187,000  

of convertible note issuance costs

209,000  

conversion feature

7,067,000  

To tal interest expense

$ 9,938,000  

$ (9,938,000 )

Interest Expense.

Interest expense for fiscal year 2019

primarily relates to the issuance of 9.00% secured convertible

promissory notes, commencing in February 2018 through August 2018,

as described below under Liquidity

and Capital Resources .

Principal and interest as of February

27, 2019, the IPO Closing Date totaled $13,793,000.

Concurrent with the closing of the IPO on February

27, 2019, in accordance with the related agreements, all

outstanding principal and interest for the 9.00% convertible notes

outstanding was automatically converted into 1,475,164 shares of

the Company’s common stock at a conversion price of $9.35.

As a result of the automatic

conversion of the 2018 Notes (defined below) and the application of

conversion accounting, the Company recorded an immediate charge to

interest expense of $1,384,000, representing

the write-off of the unamortized balance of debt

discounts associated with the 2018 warrants and cash commissions

and warrants issued to third parties.

Unamortized debt discounts at

December 31, 2018 totaled $2,684,000,

respectively.

The non-detachable conversion feature embedded in the 2018 Notes

provides for a conversion rate that was below market value at the

commitment date, and therefore, represented a beneficial conversion

feature (“BCF”).

The BCF is generally recognized

separately at issuance by allocating a portion of the debt proceeds

equal to the intrinsic value of the BCF to additional paid-in

The resulting convertible debt discount is recognized as

interest expense using the effective yield method.

conversion feature associated with the 2018 Notes was not

exercisable until the consummation of an initial public offering by

the Company of its common stock, and therefore, was not required to

be recognized in earnings until the IPO related contingency was

resolved, which occurred on the IPO Closing Date.

The commitment

date is the IPO Closing Date and the commitment date stock price

was $11.00 per share.

The intrinsic value of the BCF on the IPO

Closing Date, which was limited to the net proceeds allocated to

the debt on a relative fair value basis, was approximately

$7,067,000, and is reflected as additional interest expense in the

statement of operations for the year ended December 31,

In May 2020, we entered into a forgivable loan from the U.

Small Business Administration (“SBA”) resulting in net proceeds of approximately $1.2 million pursuant to the Paycheck Protection Program (“PPP”) enacted by Congress under the Coronavirus Aid, Relief, and Economic Security Act (15 U.S.C.

636(a)(36)) (the “CARES Act”) administered by the SBA (the “PPP Loan”).

To facilitate the PPP Loan, we entered into a note payable agreement with a third-party lender (the “PPP Loan Agreement”). In May 2021, the PPP loan and accrued interest was forgiven pursuant to the terms and conditions of the PPP Loan Agreement and the provision of the Cares Act.

Benefit for Income Taxes

Release of Valuation Allowance .

Since inception, we have maintained a full valuation allowance against our net deferred tax assets.

The net deferred tax liability resulting from the acquisition of Mobcrush created a source of income to utilize against our existing net deferred tax assets.

Under the acquisition method of accounting, the impact on the acquiring company’s deferred tax assets is recorded outside of acquisition accounting.

The offsetting amounts reduced net deferred tax liabilities, $3,073,000 of which reduced the net deferred tax liability established in connection with the application of the acquisition method of accounting for the acquisition of Mobcrush.

Liquidity and Capital Resources

Cash and cash equivalents totaled $7.9 million and $8.4

million at December 31, 2020 and 2019, respectively.

To date, our principal sources of capital used to fund our

operations have been the net proceeds we received from sales of

equity securities, including our IPO, and proceeds received from

the issuance of convertible debt (2018 and prior), as described

elsewhere herein.

management believes that our cash balances will be sufficient to

meet our cash requirements through at least March 2022.

may, however, encounter unforeseen difficulties that may deplete

our capital resources more rapidly than anticipated, including

those set forth under the heading “Risk Factors”

included in Part I, Item 1A of this Report.

We are focused on expanding our service offerings and revenue

growth opportunities through internal development, collaborations,

and through one or more strategic acquisitions.

We continue to

evaluate potential strategic acquisitions.

To finance such

strategic acquisitions, we may find it necessary to raise

additional equity capital, incur additional debt, or both.

efforts to seek additional funding could be made through issuances

of equity or debt, or other external financing.

However, additional

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

capital and credit markets have experienced extreme volatility and

disruption periodically and such volatility and disruption may

occur in the future.

If we fail to obtain additional financing when

needed, we may not be able to execute our business plans which, in

turn, would have a material adverse impact on our financial

condition, our ability to meet our obligations, and our ability to

pursue our business strategies.

Recent Activities

As described above, on March 9, 2021, we entered into the MC Merger

Agreement by and among Mobcrush, Super League Gaming, Inc., and

The MC Merger Agreement provides for the acquisition of

Mobcrush by us pursuant to the merger of Merger Co with and into

Mobcrush, with Mobcrush as the surviving corporation.

completion of the Merger, Mobcrush will be a wholly-owned

subsidiary of Super League Gaming, Inc.

In accordance with the

terms and subject to the conditions of the MC Merger Agreement,

each outstanding share of Mobcrush Stock will be canceled and

converted into the right to receive 0.528 shares of Super

League’s common stock, as determined in the MC Merger

Subject to certain adjustments and other terms and

conditions more specifically set forth in the MC Merger Agreement,

we will be issuing 12,582,204 shares of our common stock as the

merger consideration.

The obligations of Super League and Mobcrush

to consummate the Merger are subject to certain closing conditions,

including, but not limited to the approval of Mobcrush's and our

shareholders,

February 2021, we entered into securities purchase agreements with

institutional investors for the registered

direct offering of an aggregate of 2,926,830 shares of the

Company’s common stock, par value $0.001 per share, at a

purchase price of $4.10 per share. 

The offering closed on

February 11, 2021, and resulted in gross proceeds to the Company of

$12.0 million.

The shares were offered pursuant to an effective

shelf registration statement on Form S-3, which was originally

filed with the SEC on April 10, 2020 (File No.

January 2021, we entered into securities purchase agreements with

institutional investors for the registered

direct offering of an aggregate of 3,076,924 shares of our

common stock at a purchase price of $2.60 per share. 

offering closed on January 13, 2021, and resulted in gross proceeds

to the Company of $8.0 million.

The offering was conducted pursuant

to an effective shelf registration statement on Form S-3,

which was originally filed with the SEC on April 10, 2020 (File No.

Cash Flows for Fiscal Years 2020 and 2019

The following table summarizes the change in cash balances

for the periods presented:

cash used in operating activities

$ (14,876,000 )

$ (13,646,000 )

cash used in investing activities

cash provided by financing activities

15,566,000  

22,478,000  

increase in cash

5,668,000  

Cash and cash equivalents, at beginning of

8,442,000  

2,774,000  

Cash and cash equivalents, at end of

$ 7,942,000  

$ 8,442,000  

Cash Flows from Operating Activities.

Net cash used in operating activities during

fiscal year 2020 was $14,876,000, which primarily reflected

our net GAAP loss for fiscal year 2020 of $18,732,000, net of

adjustments to reconcile net GAAP loss to net cash used in

operating activities of $3,856,000, which included $2,004,000

of noncash stock compensation charges and depreciation and

amortization of $1,368,000.

Changes in working capital primarily

reflected the impact of the settlement of receivables and payables

in the ordinary course.

Cash and cash equivalents totaled approximately $14.5 million and $7.9 million at December 31, 2021 and 2020, 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.

To date, our principal sources of capital used to fund our operations have been the net proceeds we received from sales of equity securities.

Our management believes that our cash balances and capital raising facilities in place, as described below, will be sufficient to meet our cash requirements through at least March 2023.

We may, however, encounter unforeseen difficulties that may deplete our capital resources more rapidly than anticipated.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company incurred net losses of $20.7 million and $18.7 million during the years ended December 31, 2021 and 2020, respectively, and had an accumulated deficit of $125.3 million as of December 31, 2021.

For the years ended December 31, 2021 and 2020, net cash used in operating activities totaled $22.7 million and $14.9 million, respectively.

As of December 31, 2021, the Company had cash and cash equivalents of approximately $14.5 million.

In addition, as further described below under the heading “Recent Developments,”

as well as Item 9B, “Other Information”

and  at Note 11 to the consolidated financial statements contained elsewhere in this Report, on March 25, 2022, we entered into a common stock purchase agreement (the “Purchase Agreement”) with Tumim Stone Capital, LLC (“Tumim”).

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

The Company has used and will continue to use significant capital for the growth and development of its business.

The Company has grown significantly in fiscal year 2021 through organic and inorganic growth activities, including the expansion of our premium advertising inventory and year over year increases in recognized revenues across our three primary revenue streams, as reflected elsewhere herein.

In 2022, we are focused on the continued expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through potential strategic acquisitions.

The Company considers historical operating results, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period.

Management's considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements and, if necessary, the Company will be able to raise additional equity or debt financing on acceptable terms.

If one or more of these factors do not occur as expected, it could cause a reduction or delay of its business activities, sales of material assets, default on its obligations, or forced insolvency.

The accompanying financial statements do not contain any adjustments which might be necessary if the Company were unable to continue as a going concern.

Excluding the funding facilities described herein, no assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.

We continue to evaluate potential strategic acquisitions.

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

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

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

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

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

Recent Developments

Common Stock Purchase Agreement

On March 25, 2022, we entered into the Purchase Agreement with Tumim, pursuant to which we have the right, but not the obligation, to sell to Tumim, and Tumim is obligated to purchase up to the Total Commitment from time to time during the term of the Purchase Agreement.

As consideration for Tumim’s commitment to purchase shares of common stock under the Purchase Agreement, we issued to Tumim 50,000 shares of common stock, valued at $100,000, following the execution of the Purchase Agreement (the “Commitment Shares”).

The Purchase Agreement initially precludes us from issuing and selling more than 7,361,833 shares of our common stock, including the Commitment Shares, which number equals 19.99% of our common stock issued and outstanding as of March 25, 2022, unless we obtain stockholder approval to issue additional shares, or unless certain exceptions apply.

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

See Item 9B, “Other Information”

below and Note 11 to the consolidated financial statements contained elsewhere in this Report for additional information about the Tumim Offering.

Equity Distribution Agreement

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

Any Shares offered and sold in the ATM Offering will be issued pursuant to our Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on September 7, 2021.

Subject to the terms and conditions of the Sales Agreement, the Agents will use their commercially reasonable efforts to sell the Shares from time to time, based upon our instructions.

Under the Sales Agreement, the Agents may sell the Shares by any method permitted by law deemed to be an “at-the-market”

The Agents may also sell Shares in privately negotiated transactions, provided that the Agents receive our prior written approval.

We have no obligation to sell any of the Shares, and may at any time suspend offers under the Sales Agreement.

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

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

We intent to use the net proceeds from any “at-the-market”

offering, if any, primarily for working capital and general corporate purposes, including sales and marketing activities, product development and capital and acquisition related expenditures.

We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses.

As of the date of this Report, there have been no sales of any Shares in connection with the ATM Offering.

Cash Flows for the Fiscal Years Ended December 31, 2021 and 2020

The following table summarizes the change in cash and cash equivalents for the periods presented:

Net cash used in operating activities

during fiscal year 2019 was $13,646,000, which primarily

reflected our net GAAP loss of $30,679,000, net of adjustments

to reconcile net GAAP loss to net cash used in operating activities

of $17,033,000, which included $6,217,000 of noncash stock

compensation charges, $2,871,000 of noncash accrued interest and

accretion of debt discount, $7,067,0000 of noncash interest expense

related to the recognition of the beneficial conversion feature

upon the automatic conversion of the 2018 Notes upon close of the

IPO, and depreciation and amortization of $862,000.

working capital primarily reflected the impact of the prepayment of

increased directors and officer’s insurance premiums in

connection with the consummation of our IPO and the settlement of

payables in the ordinary course.

Net cash used in investing activities

Net cash provided by financing activities

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, at beginning of period

Cash and cash equivalents, at end of period

Cash Flows from Operating Activities.

Net cash used in operating activities for fiscal year 2021 primarily reflected our net GAAP loss for fiscal year 2021 of $(20,748,000), net of adjustments to reconcile net GAAP loss to net cash used in operating activities of $1,959,000, which included $2,381,000 of noncash stock compensation charges, depreciation and amortization of $3,323,000, a noncash gain totaling $1,213,000 in connection with the forgiveness of our PPP Loan in May 2021 and changes in valuation allowance and deferred income taxes totaling $3,073,000.

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

Net cash used in operating activities for fiscal year 2020 primarily reflected our net GAAP loss for fiscal year 2020 of $(18,732,000), net of adjustments to reconcile net GAAP loss to net cash used in operating activities of $3,856,000, which included $2,004,000 of noncash stock compensation charges and depreciation and amortization of $1,368,000.

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

Cash Flows from Investing Activities.

Cash flows from investing activities were

comprised of the following for the periods

paid for acquisition of Framerate, net

$ (1,506,000 )

of property and equipment

Capitalization

of software development costs

of other intangible and other assets

Cash flows from investing activities were comprised of the following for the periods presented:

Cash acquired in connection with Mobcrush Acquisition, net

Cash paid in connection with Bannerfy Acquisition, net

Cash paid in connection with Bloxbiz Acquisition, net

Purchase of property and equipment

Capitalization of software development costs

Acquisition of other intangible and other assets

Net cash used in investing activities

$ (1,190,000 )

$ (3,164,000 )

Acquisition of Framerate, Inc .

On June 3, 2019, Super League Gaming, Inc.

Merger Sub, Inc., a Delaware corporation and wholly-owned

subsidiary of the Company (“Merger Sub”), entered into

an agreement and plan of merger (the “Merger

Agreement”) with Framerate, Inc., a Delaware corporation

(“Framerate”), pursuant to which Framerate merged with

and into Merger Sub, with Merger Sub continuing as the surviving

corporation (the “Acquisition”).

The Acquisition was

consummated on June 6, 2019 when the certificate of merger of

Merger Sub and Framerate was filed with the Secretary of State of

the State of Delaware (the “Effective Date”).

consideration for the Acquisition, the Company ratably paid and/or

issued to the former shareholders of Framerate an aggregate of (i)

$1.5 million paid in cash and (ii) $1.0 million paid by the

issuance of a total of 134,422 shares of the Company’s common

stock, at a price per share of $7.4395 (the “Closing

Shares”).

The Merger Sub was dissolved subsequent to the

consummation of the Acquisition.

In addition to the issuance of the Closing Shares, the Merger

Agreement provided for the issuance of up to an additional $980,000

worth of shares of the Company’s common stock at the same

price per share as the Closing Shares (the “Earn-Out

Shares”) in the event Framerate achieves certain

performance-based milestones during the two-year period following

the closing of the Acquisition, or June 6, 2021 (the

“Earn-Out”).

One-half of the Earn-Out Shares are

issuable on the one-year anniversary of the Effective Date, and the

remaining one-half are issuable on the second anniversary of the

Effective Date.

In June 2020, we issued an additional 32,936 shares

of our common stock to the former shareholders of Framerate in

connection with the achievement of certain components of the

year-one earn-out related performance milestones.

Agreement with Third Party.

September 2019, the Company and a third party entered into an

expanded commercial partnership agreement (the

“Expanded Agreement”) pursuant to

Super League became

the primary consumer-facing brand within the third

party’s B2B gaming

In consideration for

the rights granted by the third party to Super League, Super League

paid an upfront fee of $340,000.

The upfront fee was included as

"Licenses" in intangible assets and other assets, net, in the

accompanying balance sheet (2019 only) and was being amortized over

the initial term of the Expanded Agreement of five years,

commencing October 1, 2019.

In April 2020, we amended our arrangement with the third party

terminating certain rights and licenses from the prior agreement,

as amended, focused on in-person play in gaming centers, and

securing other rights and licenses from the third party, focused on

online play at home.

As a result of the termination of the rights

and licenses related to the prior arrangement, the Company

accelerated the amortization of the remaining balance related to

the prior rights and licenses included in “Licenses”

above, totaling $306,000, and certain capitalized internal use

software development costs totaling $107,000, which are included in

technology platform and infrastructure expense in the accompanying

statement of operations for the year ended December 31,

Acquisition of Mobcrush.

On June 1, 2021, we completed the acquisition of Mobcrush, in an all-common stock transaction, pursuant to which we acquired all of the issued and outstanding shares of Mobcrush.

At closing, the Company issued to the former stockholders of Mobcrush an aggregate total of 12,067,571 shares of Company common stock and reserved an aggregate total of 514,633 shares of our common stock for issuance pursuant to stock options to be granted to Mobcrush employees retained in connection with the acquisition of Mobcrush, resulting in a total of 12,582,204 shares of Company common stock issued and reserved as consideration for the acquisition of Mobcrush.

Upon completion of the merger, Mobcrush became a wholly-owned subsidiary of the Company.

Refer to Note 5 to the consolidated financial statements herein for additional information.

Acquisition of Bannerfy, LTD.

On August 24, 2021, the Company completed the acquisition of Bannerfy, pursuant to which the Company acquired all of the issued and outstanding common shares of Bannerfy.

Pursuant to the Share Purchase Agreement, dated August 11, 2021 (the “Bannerfy Purchase Agreement”), the Company paid initial  consideration of $2.45 million (the “Bannerfy Closing Consideration”), as follows:

(i) $525,000 in the form of a cash payment, and (ii) $1.925 million in the form of shares of the Company’s common stock at a price per share of $4.10, the closing price of the Company’s common stock on the date of the Bannerfy Purchase Agreement, as reported on the Nasdaq Capital Market. Pursuant to the terms of the Bannerfy Purchase Agreement, $275,000 of the Bannerfy Closing Consideration (the “Holdback Amount”), was withheld from the Bannerfy Closing Consideration to satisfy any indemnifiable Losses incurred by the Company (as defined in the Bannerfy Purchase Agreement) prior to the first anniversary of the Bannerfy Closing Date.

In the event the Company incurs no indemnifiable Losses prior to the first anniversary of the Bannerfy Closing Date, the Company will pay the selling parties the Holdback Amount as follows:

(i) $55,000 payable in the form of cash, and (ii) approximately $220,000 in the form of shares of the Company’s common stock at $4.10 per share.

In accordance with the Bannerfy Purchase Agreement, all remaining portions of the Bannerfy Purchase Price subsequent to the payment of the Bannerfy Closing Consideration, up to approximately $4.55 million, is payable upon the achievement of certain revenue and gross profit thresholds for the remainder of the 2021 fiscal year, and each of the fiscal years ending December 31, 2022, and December 31, 2023. 

Acquisition of Bloxbiz Co.

On October 4, 2021 (“Bloxbiz Closing Date”), the Company entered into an Asset Purchase Agreement (the “Bloxbiz Purchase Agreement”) with Bloxbiz Co.

and the founders of Bloxbiz (the “Founders”), pursuant to which the Company acquired (i) substantially all of the assets of Bloxbiz, and (ii) the personal goodwill of the Founders regarding Bloxbiz’s business, (the “Bloxbiz Acquisition”).

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

At closing, the Company paid an aggregate total of $6.0 million to Bloxbiz and the Founders, of which $3.0 million was paid in the form of cash and $3.0 million was paid in the form of shares of the Company’s common stock, at a per share price of $2.91, the closing price of the Company’s common stock on the Bloxbiz Closing Date, as reported on the Nasdaq Capital Market.

Pursuant to the terms and subject to the conditions of the Bloxbiz Purchase Agreement, up to aggregate amount $11.5 million will be payable to Bloxbiz and the Founders in connection with the achievement of certain revenue milestones for the period from the Bloxbiz Closing Date until December 31, 2022 and for the fiscal year ending December 31, 2023 (the “Bloxbiz Contingent Consideration”).

The Bloxbiz Contingent Consideration is payable in the form of both cash and shares of the Company’s common stock, in equal amounts, as more specifically set forth in the Bloxbiz Purchase Agreement.

Capitalized Internal Use Software Costs .

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.

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

from issuance of common stock, net of issuance costs

$ 14,356,000  

$ 22,458,000  

from notes payable

1,200,000  

from common stock options and purchase warrant

10,000  

20,000  

Cash flows from financing activities were comprised of the following for the periods presented:

Proceeds from issuance of common stock, net of issuance costs

Proceeds from notes payable

Proceeds from common stock options and purchase warrant exercises

Net cash provided by financing activities

$ 15,566,000  

$ 22,478,000  

Equity Financings

In August 2020, the Company issued 4,540,541 shares of common stock

at a price of $1.85 per share, raising aggregate net proceeds of

approximately $7.6 million, after deducting placement agent fees of

$588,000 and other offering expenses totaling $180,000.

offering was conducted pursuant to the Company’s effective

Registration Statements on Form S-1 (File No.

333-248248), and

a related registration statement filed pursuant to Rule 462(b)

under the Securities Act. In addition, pursuant to the terms

of the related underwriting agreement, the Company granted to the

underwriter a 30-day over-allotment option to purchase up

to an additional 681,081 Shares at the same public offering price

per share, less discounts and commissions, which was partially

exercised in September 2020, resulting in the issuance of 448,440

shares and net proceeds of $771,000, after deducting placement

agent fees of $58,000. The net proceeds from this offering

were for working capital and other general corporate

purposes, including sales and marketing activities, product

development and capital expenditures.

Net proceeds from this

offering were also available for use in connection with the

acquisition of, or investment in, technologies, solutions or

businesses that may complement our business and or accelerate our

In May 2020, the Company issued 1,825,000 shares of common stock at

a price of $3.50 per share, raising aggregate net proceeds of

approximately $6.0 million, after deducting placement agent fees of

$319,000 and other offering expenses totaling $116,000, pursuant to

a registered direct offering.

The net proceeds are for working

capital and other general corporate purposes, including sales

and marketing activities, product development and capital

expenditures.

Net proceeds from this offering were also available

for use in connection with the acquisition of, or investment in,

technologies, solutions or businesses that may complement our

business and or accelerate our growth.

On February 27, 2019, we completed our IPO, pursuant to which we

issued and sold an aggregate of 2,272,727 shares of our common

stock at a public offering price of $11.00 per

pursuant to a

registration statement on Form 

S-1, declared effective by the SEC on February 25,

2019 (File No.

We raised net proceeds of approximately

$22,458,000 after underwriting discounts, commissions and other

offering costs of $2,542,000.

Concurrent with the closing of the IPO on February 27, 2019, in

accordance with the underlying agreements, all outstanding

principal and interest for the 9.00% convertible notes outstanding,

totaling $13,793,000, was automatically converted into 1,475,164

shares of the Company’s common stock at a conversion price of

As noted above, on May 4, 2020, we entered into the potentially

forgivable PPP Loan from the SBA, pursuant to the PPP program

enacted under the CARES Act, resulting in net proceeds of

approximately $1.2 million.

To facilitate the PPP Loan, we entered

into the PPP Loan Agreement with a third-party lender.

The PPP Loan matures on May 4, 2022.

However, under the CARES Act

and the PPP Loan Agreement, all payments of both principal and

interest will be deferred until at least December 4, 2020.

Loan accrues interest at a rate of 1.00% per annum, and interest

will continue to accrue throughout the period the PPP Loan is

outstanding, or until it is forgiven.

We are eligible to apply for

forgiveness of all loan proceeds used to pay payroll costs and

other qualifying expenses during the 24-week period following

receipt of the loan, provided that the Company maintains its

employment and compensation within certain parameters during such

Any amounts forgiven will not be included in the

Company’s taxable income.

As specifically intended under the

program, the PPP Loan, together with our cost savings initiatives,

helped us to continue operations without salary reductions, layoffs

or furloughs, during this challenging and uncertain economic

environment created by the COVID-19 pandemic.

The PPP Loan is accounted for as a financial liability in

accordance with FASB ASC 470, “

Debt ”

and interest is accrued in accordance with

the interest method.

Additional interest is not imputed at a market

rate pursuant to a scope exception for interest rates prescribed by

governmental agencies under the applicable

The proceeds from the PPP Loan are recorded as a long-term

liability on the balance sheet until either (1) the loan is, in

part or wholly, forgiven and the company has been “legally

released”

or (2) the Company pays off the loan to the

Once the loan is, in part or wholly, forgiven, and legal

release is received, the Company will reduce the liability by the

amount forgiven and record a gain on extinguishment in the

statement of operations in the period of

extinguishment.

The offerings described above were made pursuant to an effective shelf Registration Statement on Form S-3, which was originally filed with the SEC on April 10, 2020 (File No.

The net proceeds from these offerings are intended to be used for working capital and other general corporate purposes, including sales and marketing activities, product development and capital expenditures.

The Company may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses.

The offering was conducted pursuant to the Company’s effective Registration Statement on Form S-1 (File No.

333-248248), and a related registration statement filed pursuant to Rule 462(b) under the Securities Act. In addition, pursuant to the terms of the related underwriting agreement, the Company granted to the underwriter a 30-day over-allotment option to purchase up to an additional 681,081 shares of common stock at the same public offering price per share, less discounts and commissions, which was partially exercised in September 2020, resulting in the issuance of 448,440 shares and net proceeds of $771,000, after deducting placement agent fees of $58,000. 

On May 4, 2020, we entered into a forgivable loan from the SBA resulting in net proceeds of approximately $1.2 million pursuant to the PPP enacted by Congress under the CARES Act administered by the SBA.

To facilitate the PPP Loan, we entered into a note payable agreement with a third-party lender. In May 2021, the PPP loan was forgiven pursuant to the terms and conditions of the PPP Loan Agreement and the provision of the CARES Act.

Key Performance Indicators.

The primary KPIs used by management on a consolidated basis to assess our progress and drive revenue growth, which is also a key performance indicator, are as follows:

Views and impressions (1)

5.5x Increase

Registered users (2)

1.7x Increase

Engagement hours (3)

105.0 million

1.5x Increase

____________________

Views and impressions represent number of views of our video content which is distributed across multiple platforms.

Registered users represent individuals who have registered on our platform, providing applicable identifying information, that have engaged with our platform at some point.

Engagement hours represent time spent engaging with Super League in the form of participating in our experiences, viewing our content, and/or spending time on our website.

The growth in KPI’s in fiscal year 2021 reflects the impact of the inorganic growth resulting from our 2021 Acquisitions, as well as organic growth associated with our previously existing digital properties.

This continued growth in KPIs results in the growth of our total and monetizable advertising inventory, which we believe will drive an increasing number of brands and advertisers to our audience and platform. 

Contractual Obligations

As of December 31, 2020, except as described below, we had no

significant commitments for capital expenditures, nor do we have

any committed lines of credit, noncancelable operating leases

obligations, other committed funding or long-term debt, and no

As of December 31, 2021, except as described below, 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.

In June 2020, we terminated the lease for the majority of our corporate headquarters (approximately 4,965 square feet).

As of December 31, 2021 we maintain approximately 3,200 square feet of office space, 1,650 square feet of which is on a month-to-month basis, and 1,550 square feet of which is subject to a two-year lease, commencing on August 1, 2021, at a combined rate of approximately $11,800 per month.

Off-Balance Sheet Commitments and Arrangements

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.

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.

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

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

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

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

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

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.

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.

Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.

The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.

If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Recent Accounting Pronouncements

to Note 2 to the financial statements included elsewhere

Relaxed Ongoing Reporting Requirements

the completion of our IPO, 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.

long as we remain an “emerging growth company,”

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:

being required to comply with the auditor attestation requirements

of Section 404 of the Sarbanes-Oxley Act;

advantage of extensions of time to comply with certain new or

revised financial accounting standards;

permitted to comply with reduced disclosure obligations regarding

executive compensation in our periodic reports and proxy

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.

subject to ongoing public reporting requirements that are less

rigorous than Exchange Act rules for companies that are not

“emerging growth companies,”

and our stockholders could

receive less information than they might expect to receive from

more mature public companies.

expect to take advantage of these reporting exemptions until we are

no longer an emerging growth company.

We will remain an

“emerging growth company”

for up to five years,

although if the market value of our Common Stock that is held by

non-affiliates exceeds $700 million as of any June 30 before that

time, we would cease to be an “emerging growth company”

as of the following December 31.

QU ANT I TATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

ordinary course of our business, we are not currently exposed to

market risk of the sort that may arise from changes in interest

rates or foreign currency exchange rates, or that may otherwise

arise from transactions in derivatives.

preparation of financial statements in conformity with GAAP

requires our management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and the

disclosure of contingent assets and liabilities at the date of the

financial statements, and the reported amounts of revenues and

expenses during the reporting period.

Actual results could differ

from those estimates.

The Company’s significant estimates and

assumptions include the fair value of the Company’s common

stock, stock-based compensation, the recoverability and useful

lives of long-lived assets, and the valuation allowance relating to

the Company’s deferred tax assets.

FI N ANCIAL STATEMENTS AND

SUPPLEMENTARY DATA

The financial statements and related financial information required

to be filed hereunder are indexed under Item 15 of this report and

are incorporated herein by reference.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

CO NTROLS AND P ROCEDURES

Evaluation of Disclosure Controls and Procedures

management, with the participation of our Chief Executive Officer

and Chief Financial Officer, have evaluated the effectiveness of

our disclosure controls and procedures as of December 31, 2020.

Disclosure controls and procedures (as defined in Rules 13a-15(e)

and 15d-15(e) under the Exchange Act) are designed to provide

reasonable assurance that information required to be disclosed in

our reports filed or submitted under the Exchange Act is (i)

recorded, processed, summarized and reported within the time

periods specified in the SEC’s rules and forms and (ii)

accumulated and communicated to the company’s management,

including its principal executive officer and principal financial

officer, as appropriate to allow timely decisions regarding

required disclosure.

Based on the evaluation of our disclosure

controls and procedures, our Chief Executive Officer and Chief

Financial Officer have concluded that our disclosure controls and

procedures were effective as of December 31,

Limitations on Effectiveness of Controls and

disclosure controls and procedures are designed to provide

reasonable assurance of achieving the desired control objectives.

Our management, including our Chief Executive Officer and Chief

Financial Officer, does not expect that our disclosure controls or

our internal control over financial reporting will prevent or

detect all errors and all fraud.

Our management recognizes that any

control system, no matter how well designed and operated, is based

upon certain judgments and assumptions and cannot provide absolute

assurance that its objectives will be met.

The design of a control

system must reflect the fact that there are resource constraints

and that management is required to apply judgment in evaluating the

benefits of possible controls and procedures relative to their

Further, because of the inherent limitations in all control

systems, no evaluation of controls can provide absolute assurance

that misstatements due to error or fraud will not occur or that all

control issues and instances of fraud, if any, have been detected.

The design of any system of controls is based in part on certain

assumptions about the likelihood of future events, and there can be

no assurance that any design will succeed in achieving its stated

goals under all potential future conditions.

Management’s Report on Internal Control over Financial

Internal Control Over Financial Reporting

management is responsible for establishing and maintaining adequate

internal control over financial reporting as defined in Rules

13a-15(f) and 15d-15(f) under the Exchange Act.  Our

internal control over financial reporting is designed to provide

reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external

purposes in accordance with generally accepted accounting

principles.  This process includes those policies and

procedures that (i) pertain to the maintenance of records that, in

reasonable detail, accurately and fairly reflect the transactions

and dispositions of our assets;

(ii) provide reasonable

assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally

accepted accounting principles, and that receipts and expenditures

are being made only in accordance with authorizations of our

management and directors;

and (iii) provide reasonable assurance

regarding prevention or timely detection of unauthorized

acquisition, use or disposition of our assets that could have a

material effect on our financial statements.

of its inherent limitations, internal control over financial

reporting may not prevent or detect misstatements.  Also,

projections of any evaluation of the internal control over

financial reporting to future periods are subject to risk that the

internal control may become inadequate because of changes in

conditions, or that the degree of compliance with policies or

procedures may deteriorate.

Management’s Assessment of the Effectiveness of our Internal

Control Over Financial Reporting

has evaluated the effectiveness of our internal control over

financial reporting as of December 31, 2020.

In conducting its

evaluation, management used the framework set forth in Internal

Control —

Integrated Framework (2013) issued by the Committee

of Sponsoring Organizations of the Treadway Commission (COSO).

Based on our evaluation under such framework, our management has

concluded that our internal control over financial reporting was

effective as of December 31, 2020.

Report of Independent Registered Public Accounting

are an “emerging growth company,”

as defined in Rule

405 of the Securities Act and, accordingly, we are not required to

provide the attestation report of our independent registered public

accounting firm on our internal control over financial reporting

required by Item 308(b) of Regulation S-K.

Changes in Internal Control over Financial Reporting

were no changes in our internal control over financial reporting

that occurred during the fiscal quarter ended December 31, 2020

that have materially affected, or are reasonably likely to

materially affect, our internal control over financial

OTH E R INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

Except as provided below, in accordance with General Instruction

G(3) to Form 10-K, certain information required by this Item is

incorporated herein by reference to our definitive proxy statement

for our 2021 annual meeting of stockholders to be filed with the

SEC no later than April 30, 2021.

EXECUTIVE COMPENSATION.

Except as provided below, in accordance with General Instruction

G(3) to Form 10-K, certain information required by this Item is

incorporated herein by reference to our definitive proxy statement

for our 2021 annual meeting of stockholders to be filed with the

SEC no later than April 30, 2021.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Except as provided below, in accordance with General Instruction

G(3) to Form 10-K, certain information required by this Item is

incorporated herein by reference to our definitive proxy statement

for our 2021 annual meeting of stockholders to be filed with the

SEC no later than April 30, 2021.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND

DIRECTOR INDEPENDENCE

Except as provided below, in accordance with General Instruction

G(3) to Form 10-K, certain information required by this Item is

incorporated herein by reference to our definitive proxy statement

for our 2021 annual meeting of stockholders to be filed with the

SEC no later than April 30, 2021.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Except as provided below, in accordance with General Instruction

G(3) to Form 10-K, certain information required by this Item is

incorporated herein by reference to our definitive proxy statement

for our 2021 annual meeting of stockholders to be filed with the

SEC no later than April 30, 2021.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Incorporation by Reference

and Plan of Merger Agreement and Plan of Merger by and among Super

League Gaming, Inc., SLG Merger Sub, Inc.

and Framerate,

2.1 to the Current Report on Form 8-K, filed on June 7,

Amended and Restated Certificate of Incorporation of Super League

Gaming, Inc., dated November 19, 2018.

3.1 to the Registration Statement, filed on January 4,

Amended and Restated Bylaws of Super League Gaming,

3.2 to the Registration Statement, filed on January 4,

of Amendment to the Second Amended and Restated Certificate of

Incorporation of Super League Gaming, Inc., dated February 8,

3.3 to the Amendment No.

2 to the Registration Statement ,

filed on February 12, 2019

Common Stock Certificate.

4.1 to the Amendment No.

2 to the Registration Statement ,

filed on February 12, 2019

Registration Rights Agreement, among Super League Gaming, Inc.

certain accredited investors.

4.2 to the Registration Statement on Form S-1 , filed on

January 4, 2019

Stock Purchase Warrant dated June 16, 2017 issued to Ann

4.3 to the Registration Statement on Form S-1, filed on January 4,

9.00% Secured Convertible Promissory Note.

4.4 to the Registration Statement on Form S-1, filed on January 4,

Callable Common Stock Purchase Warrant, issued to certain

accredited investors.

4.5 to the Registration Statement on Form S-1, filed on January 4,

Representative’s Warrant.

4.6 to the Amendment No.

2 to the Registration Statement on Form

S-1, filed on February 12, 2019

League Gaming, Inc.

Amended and Restated 2014 Stock Option and

Incentive Plan.

10.1 to the Registration Statement , filed on January 4,

Stock Option Agreement under 2014 Stock Option and Incentive

10.2 to the Registration Statement , filed on January 4,

Agreement, among Nth Games, Inc.

and certain accredited

10.3 to the Registration Statement , filed on January 4,

Agreement, among Super League Gaming, Inc.

and certain accredited

10.4 to the Registration Statement, filed on January 4,

Theater Agreement, filed herewith.

10.5 to the Registration Statement , filed on January 4,

between Super League Gaming, Inc.

and Roberts Business Park Santa

Monica LLC, dated June 1, 2016.

10.6 to the Registration Statement, filed on January 4,

Agreement between Super League Gaming, Inc.

and Riot Games, Inc.,

dated June 22, 2016.

10.7 to the Registration Statement , filed on January 4,

and Restated License Agreement between Super League Gaming, Inc.

and Mojang AB, dated August 1, 2016.

10.8 to the Registration Statement , filed on January 4,

Agreement between Super League Gaming, Inc.

and Viacom Media

Networks, dated June 9, 2017.

10.9 to the Registration Statement, filed on January 4,

Common Stock Purchase Agreement, among Super League Gaming, Inc.

and certain accredited investors.

10.10 to the Registration Statement , filed on January 4,

Investors’

Rights Agreement, among Super League Gaming, Inc.

and certain accredited investors.

10.11 to the Registration Statement, filed on January 4,

10.12†

Agreement, between Super League Gaming, Inc.

and Ann Hand, dated

June 16, 2017.

10.12 to the Registration Statement , filed on January 4,

10.13†

Agreement, between Super League Gaming, Inc.

and David Steigelfest,

dated October 31, 2017.

10.13 to the Registration Statement, filed on January 4,

Extension Letter, dated November 21, 2017.

10.14 to the Registration Statement, filed on January 4,

Note Purchase Agreement, among Super League Gaming, Inc.

certain accredited investors.

10.15 to the Registration Statement , filed on January 4,

Security Agreement, between Super League Gaming, Inc.

accredited investors.

10.16 to the Registration Statement, filed on January 4,

Intercreditor and Collateral Agent Agreement, among Super League

and certain accredited investors.

10.17 to the Registration Statement , filed on January 4,

Investors’

Rights Agreement (9% Secured Convertible

Promissory Notes), among Super League Gaming, Inc.

accredited investors.

10.18 to the Registration Statement , filed on January 4,

Service Agreement and Initial Statement of Work between Super

League Gaming, Inc.

and Logitech Inc., dated March 1,

10.19 to the Registration Statement , filed on January 4,

Purchase Agreement, between Super League Gaming, Inc.

dated June 22, 2018.

10.20 to the Registration Statement, filed on January 4,

10.21†

and Restated Employment Agreement, between Super League Gaming,

and Ann Hand, dated November 15, 2018.

10.21 to the Registration Statement , filed on January 4,

10.22†

and Restated Employment Agreement, between Super League Gaming,

and David Steigelfest, dated November 1, 2018.

10.22 to the Registration Statement, filed on January 4,

10.23†

Agreement, between Super League Gaming, Inc.

and Matt Edelman,

dated November 1, 2018.

10.23 to the Registration Statement, filed on January 4,

10.24†

Agreement, between Super League Gaming, Inc.

and Clayton Haynes,

dated November 1, 2018.

10.24 to the Registration Statement , filed on January 4,

Partnership Agreement between Super League Gaming, Inc., and

ggCircuit, LLC, dated September 23, 2019.

10.1 to the Quarterly Report on Form 10-Q for the period ended

September 30, 2019, filed November 14, 2019.

League Gaming, Inc.

Code of Business Conduct and

14.1 to the Registration Statement , filed on January 4,

Certification

of Principal Executive Officer Pursuant to Section 302 of the

Sarbanes-Oxley Act.

Certification

of Principal Financial and Accounting Officer Pursuant to Section

302 of the Sarbanes-Oxley Act.

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act.

XBRL Instance Document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Document.

XBRL Taxonomy Label Linkbase Document.

XBRL Taxonomy Presentation Linkbase Document.

herewith. 

exhibits that consist of a management contract or compensatory plan

or arrangement.

Confidential treatment has been requested for certain confidential

portions of this exhibit pursuant to Rule 406 under the Securities

Act of 1933, as amended, and Rule 24b-2 under the Securities

Exchange Act of 1934, as amended (together, the

“Rules”).

In accordance with the Rules, these

confidential portions have been omitted from this exhibit and filed

separately with the Securities and Exchange

portions of this exhibit (indicated by “[*****]”) have

been omitted as the Company has determined (i) the omitted

information is not material and (ii) the omitted information would

likely cause harm to the Company if publicly

INDEX TO FINANCIAL STATEMENTS

SUPER LEAGUE GAMING, INC.

of Independent Registered Public Accounting Firm

Financial Statements for the Years Ended December 31, 2020 and

Sheets as of December 31, 2020 and 2019

of Operations for the years ended December 31, 2020 and

of Stockholders’

Equity (Deficit) for the years ended

December 31, 2020 and 2019

of Cash Flows for the years ended December 31, 2020 and

to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

Stockholders and Board of Directors

League Gaming, Inc.

Opinion on the Financial Statements

audited the accompanying balance sheets of Super League Gaming,

(the Company) as of December 31, 2020 and 2019, the related

statements of operations, stockholders’

equity and cash flows

for the years then ended, and the related notes to the financial

statements (collectively, the financial statements).

opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of December 31,

2020 and 2019, and the results of its operations and its cash flows

for the years then ended, in conformity with accounting principles

generally accepted in the United States of America.

Basis for Opinion

financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the

Company’s financial statements based on our audits.

public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (PCAOB) and are required

to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the

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

Those standards require that we plan and perform the audits to

obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to

perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting but not for the

purpose of expressing an opinion on the effectiveness of the

Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of

material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the financial

Our audits also included evaluating the accounting

principles used and significant estimates made by management, as

well as evaluating the overall presentation of the financial

We believe that our audits provide a reasonable basis

for our opinion.

Baker Tilly US, LLP

served as the Company’s auditor since 2016.

SUPER LEAGUE GAMING, INC.

BALANCE SHEETS

DECEMBER 31, 2020 and 2019

Cash and cash

$ 7,942,000  

$ 8,442,000  

588,000  

293,000  

Prepaid expenses

and other current assets

837,000  

924,000  

Total current

9,367,000  

9,659,000  

Equipment, net

138,000  

239,000  

Intangible and

Other Assets, net

1,907,000  

1,984,000  

2,565,000  

$ 13,977,000  

$ 14,447,000  

AND STOCKHOLDERS’

Accounts payable

and accrued expenses

$ 1,829,000  

$ 853,000  

151,000  

Total current

1,829,000  

1,004,000  

Long-term note

1,208,000  

3,037,000  

1,004,000  

Commitments and

Contingencies (Note 10)

Stockholders’

Preferred stock,

par value $0.001 per share;

10,000,000 shares authorized;

issued or outstanding 

Common stock, par

value $0.001 per share;

100,000,000 shares authorized;

and 8,573,922 shares issued and outstanding as of December 31, 2020

and 2019, respectively.

25,000  

18,000  

Additional paid-in

115,459,000  

99,237,000  

(104,544,000 )

(85,812,000 )

stockholders’

10,940,000  

13,443,000  

Total liabilities

and stockholders’

$ 13,977,000  

$ 14,447,000  

The accompanying notes are an integral part of these financial

SUPER LEAGUE GAMING, INC.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

$ 2,064,000  

$ 1,084,000  

856,000  

513,000  

1,208,000  

571,000  

Selling, marketing

and advertising

5,403,000  

4,488,000  

Technology platform

and infrastructure

6,647,000  

4,915,000  

administrative

7,901,000  

11,938,000  

Total operating

19,951,000  

21,341,000  

OPERATING LOSS

(18,743,000 )

(20,770,000 )

INCOME (EXPENSE)

19,000  

29,000  

other income (expense)

11,000  

$ (18,732,000 )

$ (30,679,000 )

loss attributable to common stockholders - basic and

Basic and diluted

loss per common share

Weighted-average

number of shares outstanding, basic and diluted

11,430,057  

7,894,326  

The accompanying notes are an integral part of these financial

SUPER LEAGUE GAMING, INC.

STATEMENTS OF STOCKHOLDERS’

FOR THE YEARS ENDED DECEMBER 31,

2020 and 2019

Common stock (Shares):

beginning of period

8,573,922  

4,610,109  

public offering of common stock

2,272,727  

of common stock at $3.50 per share

1,825,000  

of common stock at $1.85per share

4,988,981  

conversion of convertible debt to common stock

1,475,164  

stock issued for Framerate Acquisition (Note 5)

32,936  

134,422  

62,171  

14,833  

66,667  

Balance, end of period

15,483,010  

8,573,922  

Common stock (Amount):

beginning of period

$ 18,000  

$ 14,000  

public offering of common stock, net of issuance costs (Note

of common stock at $3.50 per share, net of issuance costs (Note

of common stock at $1.85 per share, net of issuance costs (Note

conversion of convertible debt to common stock

Balance, end of period

$ 25,000  

$ 18,000  

Additional paid-in-capital:

beginning of period

$ 99,237,000  

$ 48,325,000  

public offering of common stock, net of issuance costs (Note

22,456,000  

of common stock at $3.50 per share, net of issuance costs (Note

5,951,000  

of common stock at $1.85 per share, net of issuance costs (Note

8,398,000  

conversion of convertible debt to common stock

13,791,000  

conversion feature

7,067,000  

stock issued for Framerate Acquisition (Note 5)

1,000,000  

Earn-Out (Note 5)

454,000  

1,863,000  

6,124,000  

option and warrant exercises

10,000  

20,000  

Balance, end of period

$ 115,459,000  

$ 99,237,000  

Accumulated Deficit:

beginning of period

$ (85,812,000 )

$ (55,133,000 )

(18,732,000 )

(30,679,000 )

end of period

(104,544,000 )

(85,812,000 )

Total stockholders’

$ 10,940,000  

$ 13,443,000  

The accompanying notes are an integral part of these financial

SUPER LEAGUE GAMING, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

FLOWS FROM OPERATING ACTIVITIES

$ (18,732,000 )

$ (30,679,000 )

Adjustments to

reconcile net loss to net cash used in operating

Depreciation and

1,368,000  

862,000  

2,004,000  

6,217,000  

Amortization of

discount on convertible notes (Note 6)

2,684,000  

conversion feature (Note 6)

7,067,000  

contribution of services

Changes in assets

and liabilities:

199,000  

Prepaid expenses

and other current assets

Accounts payable

and accrued expenses

977,000  

40,000  

106,000  

Accrued interest on

notes payable

187,000  

cash used in operating activities

(14,876,000 )

(13,646,000 )

FLOWS FROM INVESTING ACTIVITIES

property and equipment

Capitalization of

software development costs

Acquisition of

other intangible and other assets

cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES

Proceeds from

issuance of common stock, net of issuance costs

14,356,000  

22,458,000  

Proceeds from note

payable (Note 6)

1,200,000  

Proceeds from stock

option and warrant exercises

10,000  

20,000  

cash provided by financing activities

15,566,000  

22,478,000  

(DECREASE)INCREASE

IN CASH AND CASH EQUIVALENTS

5,668,000  

CASH AND CASH EQUIVALENTS –

beginning of year

8,442,000  

2,774,000  

CASH EQUIVALENTS –

$ 7,942,000  

$ 8,442,000  

SUPPLEMENTAL NONCASH FINANCING ACTIVITIES

conversion of convertible debt to common stock (Note

$ 13,793,000  

of common stock for Framerate Acquisition (Note 5)

$ 245,000  

$ 1,000,000  

The accompanying notes are an integral part of these financial

SUPER LEAGUE GAMING, INC. 

NOTES TO FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS

Super League Gaming, Inc. (“Super League,”

“Company,”

“we”

“our”) is a leading

gaming community and content platform that gives everyday gamers

and creators multiple ways to connect and engage with others while

enjoying the video games they love.

proprietary technology systems, Super League offers players the

ability to create gameplay-driven experiences they can share with

friends, the opportunity to watch live streaming broadcasts and

gameplay highlights across digital and social channels, and the

chance to compete in events and challenges designed to celebrate

victories and achievements across multiple skill levels.

gameplay and content offerings featuring more than a dozen of the

top video game titles in the world, Super League is building a

broadly inclusive, global brand at the intersection of gaming,

experiences and entertainment.

Whether to access its expanding

direct audience of young gamers, creators and esports players, or

to leverage the company’s remote video production division,

Virtualis Studios, third parties ranging from consumer brands,

video game publishers, professional esports teams, traditional

sports organizations, video content producers, and more, are

turning to Super League to provide integrated solutions that drive

business growth.

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

the laws of the State of Delaware and changed its name to Super

League Gaming, Inc.

on June 15, 2015.

We are an “emerging

growth company”

as defined by the Jumpstart Our Business

Startups Act of 2012, as amended.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

financial statements and accompanying notes have been prepared in

accordance with accounting principles generally accepted in the

United States of America (“U.S.

GAAP”).

Use of Estimates

preparation of financial statements in conformity with U.S.

requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of

contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during

the reporting period.

Actual results could differ from these

The Company believes that, of the significant accounting

policies described herein, the accounting policies associated with

revenue recognition, impairment of goodwill and intangibles,

capitalized internal-use-software costs, the valuation of

convertible notes and related common stock purchase warrants

(hereinafter, “warrants”), stock-based compensation

expense, accounting for business combinations, and accounting for

income taxes and valuation allowances against net deferred tax

assets, require its most difficult, subjective or complex

Reclassifications

Certain reclassifications to operating expense line items have been

made to prior year amounts for consistency and comparability with

the current year’s financial statements presentation.

reclassifications had no effect on the reported total operating

expenses for the periods presented.

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

Critical Accounting Estimates

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

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

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

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

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

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

Revenue Recognition

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.

Revenue is recognized when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services.

In this regard, revenue is recognized when:

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;

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;

contract has commercial substance (that is, the risk, timing, or

amount of the entity’s future cash flows is expected to

change as a result of the contract);and (v) it is probable that the

entity will collect substantially all of the consideration to which

it will be entitled in exchange for the goods or services that will

be transferred to the customer.

Transaction prices are based on the amount of consideration to

which we expect to be entitled in exchange for transferring

promised goods or services to a customer, excluding amounts

collected on behalf of third parties, if any.

We consider the

explicit terms of the revenue contract, which are typically written

and executed by the parties, our customary business practices, the

nature, timing, and the amount of consideration promised by a

customer in connection with determining the transaction price for

our revenue arrangements.

Refunds and sales returns historically

have not been material.

Super League generates revenues from (i) advertising,

serving as a marketing channel for brands and advertisers to reach

their target audiences of gamers across our network, (ii) content,

curating and distributing esports and entertainment content for our

own network of digital channels and media and entertainment partner

channels and (iii) direct to consumer

offers including digital subscriptions, digital goods, gameplay

access fees and merchandise sales.

billed or collected in advance is recorded as deferred revenue

until the event occurs or until applicable performance obligations

are satisfied.

Advertising and

Sponsorships :

revenue primarily consists of direct

sales activity along with sales of programmatic display and video

advertising units to third-party advertisers and exchanges.

Advertising arrangements typically

include contract terms for time periods ranging from several days

to several weeks in length.

advertising arrangements that include performance obligations

satisfied over time, customers typically simultaneously receive and

consume the benefits under the arrangement as we satisfy our

performance obligations, over the applicable contract term.

such, revenue is recognized over the contract term based upon

estimates of progress toward complete satisfaction of the contract

performance obligations (typically utilizing a time, effort or

delivery-based method of estimation).

Revenue from shorter term

advertising arrangements that provide

for a contractual delivery or performance date is recognized when performance is substantially

complete and or delivery occurs.

Payments are typically due from

customers during the term of the arrangement for longer-term

campaigns, and once delivery is complete for shorter-term

(i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations;

(ii) the entity can identify each party’s rights regarding the goods or services to be transferred;

(iii) the entity can identify the payment terms for the goods or services to be transferred;

(iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract);and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any.

We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer, in connection with determining the transaction price for our revenue arrangements.

We report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction and is evaluated on a transaction by transaction basis.

To the extent we act as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable.

The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we control the good or service prior to transfer to the customer.

Where applicable, we have determined that it acts as the principal in all of its advertising and sponsorships, content and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to direct advertising sales arrangements.

We generate revenues from (i) advertising, serving as a marketing channel for brands and advertisers to reach their target audiences of gamers across our network, (ii) content, curating and distributing esports and gaming-centric entertainment content for our own network of digital channels and media and entertainment partner channels and (iii) direct to consumer offers including digital subscriptions, in-game digital goods, and gameplay access fees.

Revenue billed or collected in advance is recorded as deferred revenue until the event occurs or until applicable performance obligations are satisfied.

Advertising and Sponsorships:

Advertising revenue primarily consists of direct sales activity along with sales of programmatic display and video advertising units to third-party advertisers and exchanges.

Advertising arrangements typically include contract terms for time periods ranging from several days to several weeks in length.

For advertising arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the arrangement as we satisfy our performance obligations, over the applicable contract term.

As such, revenue is recognized over the contract term based upon estimates of progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation).

Revenue from shorter term advertising arrangements that provide for a contractual delivery or performance date is recognized when performance is substantially complete and or delivery occurs.

Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns.

Sponsorship revenue arrangements may include:

non-exclusive title sponsorships, marketing benefits, official

product status exclusivity, product visibly and additional

infrastructure placement, social media rights, rights to on-screen

activations and promotions, display material rights, media rights,

hospitality and tickets and merchandising rights.

revenues also include revenues pursuant to arrangements with brand

and media partners, retail venues, game publishers and broadcasters

that allow our partners to run amateur esports experiences, and or

capture specifically curated gameplay content that is customized

for our partners’

exclusive or non-exclusive title sponsorships, marketing benefits, official product status exclusivity, product visibly and additional infrastructure placement, social media rights, rights to on-screen activations and promotions, display material rights, media rights, hospitality and tickets and merchandising rights.

Sponsorship revenues also include revenues pursuant to arrangements with brand and media partners, retail venues, game publishers and broadcasters that allow our partners to run amateur esports experiences, and or capture specifically curated gameplay content that is customized for our partners’

distribution channels.

arrangements typically include contract terms for time periods

ranging from several weeks or months to terms of twelve months in

sponsorship arrangements that include performance obligations

satisfied over time, customers typically simultaneously receive and

consume the benefits under the agreement as we satisfy our

performance obligations, over the applicable contract term.

such, revenue is recognized over the contract term based upon

estimates of progress toward complete satisfaction of the contract

performance obligations (typically utilizing a time, effort or

delivery-based method of estimation).

Payments are typically due from customers during

the term of the arrangement.

Revenue from sponsorship arrangements for one-off branded

experiences and/or the development of content tailored specifically

for our partners’

distribution channels that provide for a

contractual delivery or performance date, is recognized at a point

in time, when performance is substantially complete and or delivery

sales revenue is generated in connection with our curation and

distribution of esports and entertainment content for our own

network of digital channels and media and entertainment partner

We distribute three primary types of content for

syndication and licensing, including:

(1) our own original

programming content, (2) user generated content

(“UGC”), including online gameplay and gameplay

highlights, and (3) the creation of content for third parties

utilizing our remote production and broadcast

content arrangements that include performance obligations satisfied

over time, customers typically simultaneously receive and consume

the benefits under the arrangement as we satisfy our performance

obligations, over the applicable contract term.

As such, revenue is

recognized over the contract term based upon estimates of progress

toward complete satisfaction of the contract performance

obligations (typically utilizing a time, effort or delivery-based

method of estimation).

Revenue from shorter term content sales

arrangements that provide for a

contractual delivery or performance date is recognized when performance is substantially

complete and or delivery occurs.

Payments are typically due from

customers during the term of the arrangement for longer-term

campaigns, and once delivery is complete for shorter-term

Payments are typically due from customers during the term of the

arrangement for longer-term campaigns, and once delivery is

complete for shorter-term campaigns. 

Direct to consumer revenues primarily consist of primarily monthly

digital subscription fees, and sales of digital goods and

Subscription revenue is recognized in the period the

services are rendered.

Payments are typically due from customers at

the point of sale.

was comprised of the following for the periods

and sponsorships

$ 1,170,000,  

$ 1,019,000  

735,000  

32,000  

159,000  

33,000  

$ 2,064,000  

$ 1,084,000  

years ended December 31, 2020 and 2019, 55% and 33% of revenues

were recognized at a single point in time, and 45% and 67% of

revenues were recognized over time, respectively.

Cost of Revenues

revenues includes direct costs incurred in connection with the

satisfaction of performance obligations under our revenue

arrangements including direct labor, creative and broadcast related

contract services, talent and influencers, content capture and

production services, direct marketing, prizing, platform costs and

experience and brand related advertising costs include the cost of

ad production, social media, marketing, promotions, and

merchandising.

The Company expenses advertising costs as incurred.

Advertising expenses for the years ended December 31, 2020 and 2019

were $187,000 and $409,000, respectively, and are included in

selling, marketing and advertising expenses in the accompanying

statements of operations.

Technology Platform and Infrastructure Costs

Technology platform and infrastructure costs include (i) allocated

personnel costs, including salaries, noncash stock compensation,

taxes and benefits related to our internal software developers and

engineers, employed by Super League, engaged in the operation,

maintenance, management, administration, testing and enhancement of

our proprietary gaming and content technology platform, (ii)

third-party contract software development and engineering resources

engaged in developing and enhancing our proprietary gaming and

content technology platform (iii) the amortization of capitalized

internal use software costs, and (iv) technology platform related

cloud services, broadband and other technology platform

Cash and Cash Equivalents

Company considers all highly liquid, short-term investments with

original maturities of three months or less when purchased to be

cash equivalents.

The Company’s cash equivalents consisted of

investments in AAA rated money market funds for the periods

Accounts Receivable

receivable are recorded at the original invoice amount, less an

estimate made for doubtful accounts, if any.

The Company provides

an allowance for doubtful accounts for potential credit losses

based on its evaluation of the collectability and the

customers’

creditworthiness.

Accounts receivable are written

off when they are determined to be uncollectible.

As of December

31, 2020 and 2019, no allowance for doubtful accounts was

considered necessary.

Fair Value Measurements

Fair value is defined as the exchange price that would be received

from selling an asset or paid to transfer a liability in the

principal or most advantageous market for the asset or liability in

an orderly transaction between market participants on the

measurement date.

The Company measures financial assets and

liabilities at fair value at each reporting period using a fair

value hierarchy which requires the Company to maximize the use of

observable inputs and minimize the use of unobservable inputs when

measuring fair value.

A financial instrument’s classification

within the fair value hierarchy is based upon the lowest level of

input that is significant to the fair value measurement.

levels of inputs may be used to measure fair value:

Quoted prices in active markets for identical

assets or liabilities.

Quoted prices for similar assets and

liabilities in active markets or inputs other than quoted prices

which are observable for the assets or liabilities, either directly

or indirectly through market corroboration, for substantially the

full term of the financial instruments.

Level 3.

Unobservable inputs which are

supported by little or no market activity and which are significant

to the fair value of the assets or liabilities.

The Company does not have any instruments that are measured at fair

value on a recurring basis.

However, the Company measured certain

acquired intangible assets and the Earn-Out using Level 3 inputs on

a nonrecurring basis.

Concentration of Credit Risks

Company maintains its cash on deposit with a bank that is insured

by the Federal Deposit Insurance Corporation.

At various times, the

Company maintained balances in excess of insured amounts.

Company has not experienced any significant losses on its cash held

Equity Financing Costs

incremental costs directly attributable to a proposed or actual

offering of securities or debt are deferred and charged against the

gross proceeds of the financing.

In the event that the proposed or

actual financing is not completed, or is deemed not likely to be

completed, such costs are expensed in the period that such

determination is made.

Deferred financing costs, if any, are

included in other current assets in the accompanying balance sheet.

For the years ended December 31, 2020 and 2019, financing costs

charged against gross proceeds in connection with equity financings

totaled $176,000 and $517,000, respectively.

Property and Equipment

and equipment are recorded at cost.

Major additions and

improvements that materially extend useful lives of property and

equipment are capitalized.

Maintenance and repairs are charged

against the results of operations as incurred.

When these assets

are sold or otherwise disposed of, the asset and related

depreciation are relieved, and any gain or loss is included in the

statements of operations for the period of sale or disposal.

Depreciation and amortization are computed on a straight-line basis

over the estimated useful lives of the assets, typically over a

three to five-year period.

Intangible Assets

assets primarily consist of (i) internal-use software development

costs, (ii) domain name, copyright and patent registration costs,

(iii) commercial licenses and branding rights and (iv) other

intangible assets, which are recorded at cost and amortized using

the straight-line method over the estimated useful lives of the

assets, ranging from three to 10 years.

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.

represents the excess of the purchase price of the acquired

business over the acquisition date fair value of the net assets

Goodwill is tested for impairment at the reporting unit

level (operating segment or one level below an operating segment)

on an annual basis (December 31) and between annual tests if an

event occurs or circumstances change that would more likely than

not reduce the fair value of a reporting unit below its carrying

The Company considers its market capitalization and the

carrying value of its assets and liabilities, including goodwill,

when performing its goodwill impairment test.

When conducting its

annual goodwill impairment assessment, the Company initially

performs a qualitative evaluation of whether it is more likely than

not that goodwill is impaired.

If it is determined by a qualitative

evaluation that it is more likely than not that goodwill is

impaired, the Company then applies a two-step impairment test.

two-step impairment test first compares the fair value of the

Company’s reporting unit to its carrying or book value.

the fair value of the reporting unit exceeds its carrying value,

goodwill is not impaired, and the Company is not required to

perform further testing.

If the carrying value of the reporting

unit exceeds its fair value, the Company determines the implied

fair value of the reporting unit’s goodwill and if the

carrying value of the reporting unit’s goodwill exceeds its

implied fair value, then an impairment loss equal to the difference

is recorded in the statement of operations.

The Company operates in

one reporting segment.

Impairment of Long-Lived Assets

Company assesses the recoverability of long-lived assets whenever

events or changes in circumstances indicate that their carrying

value may not be recoverable.

If the cost basis of a long-lived

asset is greater than the projected future undiscounted net cash

flows from such asset, an impairment loss is recognized.

losses are calculated as the difference between the cost basis of

an asset and its estimated fair value.

Management believes that

there was no impairment of long-lived assets for the periods

presented herein.

There can be no assurance, however, that market

conditions or demand for the Company’s products or services

will not change, which could result in long-lived asset impairment

charges in the future.

Stock-Based Compensation

expense for stock-based awards is measured at the grant date, based

on the estimated fair value of the award, and is recognized as an

expense, typically on a straight-line basis over the

employee’s requisite service period (generally the vesting

period of the equity award) which is generally two to four years.

Compensation expense for awards with

performance conditions that affect vesting is recorded only for

those awards expected to vest or when the performance criteria are

The fair value of restricted stock and restricted stock

unit awards is determined by the product of the number of shares or

units granted and the grant date market price of the underlying

common stock.

The fair value of stock option and common stock

purchase warrant awards is estimated on the date of grant utilizing

the Black-Scholes-Merton option pricing model.

The Company utilizes

the simplified method for estimating the expected term for options

granted to employees due to the lack of available or sufficient

historical exercise data for the Company for the applicable options

The Company accounts for forfeitures of awards as they

of equity-based awards (including warrants) to non-employees in

exchange for consulting or other services are accounted for using

the grant date fair value of the equity instruments

Risks and Uncertainties

Concentrations .

The Company had

certain customers whose revenue individually represented 10% or

more of the Company’s total revenue, or whose accounts

receivable balances individually represented 10% or more of the

Company’s total accounts receivable, and vendors whose

accounts payable balances individually represented 10% or more of

the Company’s total accounts payable, as

For the years ended December 31, 2020 and 2019, four customers

accounted for 49% and five customers accounted for 69% of revenue,

respectively.

At December 31, 2020, two customers accounted for 39%

of accounts receivable.

At December 31, 2019, one customer

accounted for 70% of accounts receivable.

At December 31,

2020, three vendors accounted for 52% of accounts payable.

December 31, 2019, one vendor accounted for 21% of accounts

Segment Information

Company operates in one segment.

Earnings (Loss) Per Share

earnings (loss) per share is computed by dividing the income or

loss by the weighted-average number of outstanding shares of common

stock for the applicable period.

Diluted earnings per share is

computed by dividing the income or loss by the weighted-average

number of outstanding shares of common stock for the applicable

period, including the dilutive effect of common stock equivalents.

Potentially dilutive common stock equivalents primarily consist of

employee stock options, warrants issued to employees and

non-employees in exchange for services and warrants issued in

connection with financings.

All outstanding stock options,

restricted stock units and warrants, totaling 4,470,000 and

4,117,000 at December 31, 2020 and 2019, respectively, have been

excluded from the computation of diluted loss per share because the

effect of inclusion would have been anti-dilutive.

taxes are accounted for using an asset and liability approach that

requires the recognition of deferred tax assets and liabilities for

the expected future tax consequences of events that have been

recognized in the Company’s financial statements or income

A valuation allowance is established to reduce

deferred tax assets if all, or some portion, of such assets will

more than likely not be realized, or if it is determined that there

is uncertainty regarding future realization of such

GAAP, a tax position is a position in a previously filed tax

return, or a position expected to be taken in a future tax filing

that is reflected in measuring current or deferred income tax

assets and liabilities.

Tax positions are recognized only when it

is more likely than not, based on technical merits, that the

position will be sustained upon examination.

Tax positions that

meet the more likely than not thresholds are measured using a

probability weighted approach as the largest amount of tax benefit

being realized upon settlement.

The Company considers many factors

when evaluating and estimating its tax positions and tax benefits,

which may require periodic adjustments, and which may not

accurately forecast actual outcomes.

Management believes the

Company has no uncertain tax positions for the years ended December

31, 2020 and 2019.

Company has elected to include interest and penalties related to

its tax contingences as a component of income tax expense.

were no accruals for interest and penalties related to uncertain

tax positions for the periods presented.

Income tax returns remain

open for examination by applicable authorities, generally three

years from filing for federal and four years for state.

is not currently under examination by any taxing authority nor has

it been notified of an impending examination.

Recent Accounting Guidance

Recent Accounting Pronouncements –

February 2016, the FASB issued an ASU that requires lessees to

present right-of-use assets and lease liabilities on the balance

The new guidance is to be applied using a modified

retrospective approach at the beginning of the earliest comparative

periods in the financial statements and is effective for fiscal

years beginning after December 15, 2021 and early adoption is

The Company is evaluating the impact that this guidance

will have on its financial position, results of operations and

financial statement disclosures.

2016, the FASB issued guidance on the measurement and recognition

of credit losses on most financial assets.

For trade receivables,

loans, and held-to-maturity debt securities, the current probable

loss recognition methodology is being replaced by an expected

credit loss model.

For available-for-sale debt securities, the

recognition model on credit losses is generally unchanged, except

the losses will be presented as an adjustable allowance.

guidance will be applied retrospectively with the cumulative effect

recognized as of the date of adoption.

The guidance will become

effective at the beginning of the Company’s first quarter of

the fiscal year ending December 31, 2021 but can be adopted as

early as the beginning of the first quarter of fiscal year ending

December 31, 2020.

The Company is currently assessing the impact

that adopting this new accounting guidance will have on its

financial statements and footnote disclosures. 

PROPERTY AND EQUIPMENT

and equipment consisted of the following at December 31, 2020 and

$ 3,143,000  

$ 3,141,000  

342,000  

334,000  

3,485,000  

3,475,000  

accumulated depreciation and amortization

$ 138,000  

$ 239,000  

and amortization expense for property and equipment was $110,000

and $861,000 for the years ended December 31, 2020 and 2019,

respectively.

INTANGIBLE AND OTHER ASSETS

and other assets consisted of the following at December 31, 2020

software development costs

$ 3,291,000  

$ 2,363,000  

340,000  

Tradename (Note

189,000  

68,000  

Copyrights and

435,000  

289,000  

3,983,000  

3,249,000  

accumulated amortization

$ 1,907,000  

$ 1,984,000  

expense totaled $1,258,000 and $245,000 for the years ended

December 31, 2020 and 2019, respectively.

amortization expense of intangible and other assets is expected to

be as follows:

For the years

ending December 31:

$ 899,000  

584,000  

271,000  

80,000  

38,000  

35,000  

$ 1,907,000  

In September 2019, the Company and a third party entered into

an expanded commercial partnership agreement (the

“Expanded Agreement”) pursuant to

Super League became

the primary consumer-facing brand within the third

party’s B2B gaming

In consideration for

the rights granted by the third party to Super League, Super League

paid an upfront fee of $340,000 and paid quarterly fees over the

term of the Agreement, commencing with the first quarter of 2020,

based on predetermined contractual revenue levels.

The upfront fee

was included as "Licenses" in intangible assets and other assets,

net, in the accompanying balance sheet (2019 only) and was being

amortized over the initial term of the Expanded Agreement of five

years, commencing October 1, 2019.

In April 2020, we amended our arrangement with the third party

terminating certain rights and licenses from the prior agreement,

as amended, focused on in-person play in gaming centers, and

securing other rights and licenses from the third party, focused on

online play at home.

As a result of the termination of the rights

and licenses related to the prior arrangement, the Company

accelerated the amortization of the remaining balance related to

the prior rights and licenses included in “Licenses”

above, totaling $306,000, and certain capitalized internal use

software development costs totaling $107,000, which are included in

technology platform and infrastructure expense in the accompanying

statement of operations for the year ended December 31,

BUSINESS COMBINATION

On June 3, 2019, Super League and SLG Merger Sub, Inc., a Delaware

corporation and wholly-owned subsidiary of the Company

(“Merger Sub”), entered into an agreement and plan of

merger (the “Merger Agreement”) with Framerate, Inc., a

Delaware corporation (“Framerate”), pursuant to which

Framerate merged with and into Merger Sub, with Merger Sub

continuing as the surviving corporation (the

“Acquisition”).

The Acquisition was consummated on June

6, 2019 when the certificate of merger of Merger Sub and Framerate

was filed with the Secretary of State of the State of Delaware (the

“Effective Date”).

As consideration for the

Acquisition, the Company ratably paid and/or issued to the former

shareholders of Framerate an aggregate of (i) $1.5 million paid in

cash and (ii) $1.0 million paid by the issuance of a total of

134,422 shares of the Company’s common stock, at a price per

share of $7.4395 (the “Closing Shares”).

The Merger Sub

was dissolved subsequent to the consummation of the

The Acquisition was approved by the board of directors of each of

the Company and Framerate, and was approved by the stockholders of

Transaction costs incurred relating to this acquisition

were not material.

The acquisition of Framerate expands the

Company’s digital programming footprint and enhances the

Company’s ability to provide value to its gaming and

spectator communities through multiple forms of

In addition to the issuance of the Closing Shares, the Merger

Agreement provides for the issuance of up to an additional $980,000

worth of shares of the Company’s common stock at the same

price per share as the Closing Shares (the “Earn-Out

Shares”) in the event Framerate achieves certain

performance-based milestones during the two-year period following

the closing of the Acquisition, or June 6, 2021 (the

“Earn-Out”).

One-half of the Earn-Out Shares are

issuable on the one-year anniversary of the Effective Date, and the

remaining one-half are issuable on the second anniversary of the

Effective Date.

The fair value of the Earn-Out on the Effective

Date was estimated to be $454,000.

In June 2020, we issued an

additional 32,936 shares of our common stock to the former

shareholders of Framerate in connection with the achievement of

certain components of the year-one earn-out related performance

The Company determined that the Acquisition constitutes a business

acquisition as defined by Accounting Standards Codification

(“ASC”) 805, Business

Combinations .

Accordingly, the

assets acquired and liabilities assumed in the transaction were

recorded at their estimated acquisition date fair values, while

transaction costs associated with the acquisition were expensed as

incurred pursuant to the purchase method of accounting in

accordance with ASC 805. Super League’s preliminary

purchase price allocation was based on an evaluation of the

appropriate fair values and represents management’s best

estimate based on available data.

Fair values are determined based

on the requirements of ASC 820, 

Fair Value Measurements and

Disclosures 

820”).

The Company hired the former Chief Executive of Framerate

(“Framerate Executive”), who was also a selling

shareholder of Framerate.

Pursuant to the provisions of the

Earn-Out included in the Merger Agreement, in the event that the

Framerate Executive is terminated for cause or resigns from his

employment with the Company at any time on or before the second

anniversary of the Effective Date, and any such resignation is

without “Good Reason”

as such term is defined in his

employment agreement, then the maximum amount of any portion of the

Earn-Out that has not yet been earned as of the date of resignation

shall be reduced by 44.0164%.

Under ASC 805, a contingent

consideration arrangement in which the payments are automatically

forfeited if employment terminates is considered to be compensation

for post-combination services, and not acquisition consideration.

As such approximately 44% of the estimated fair value of the

Earn-Out, or $200,000 was accounted for as deferred compensation

expense and being amortized in the statement of operations over the

two-year period ending on the second anniversary of the Effective

The remaining deferred compensation balance, totaling

$90,000, was expensed in July 2020 due to the cessation of

Earn-Out arrangement does not meet the liability classification

criteria outlined in ASC 480, “Distinguishing Liabilities

from Equity,”

and is both (i) indexed to the Company’s

own shares and (ii) classified in shareholders’

equity in the

accompanying balance sheet.

Equity-classified contingent

consideration is measured initially at fair value on the

acquisition date and is not remeasured subsequent to initial

As such, the initial value recognized for the Earn-Out

on the acquisition date is not adjusted for changes in the fair

value of the Earn-Out as of any future settlement date.

differences between the estimated fair value of the Earn-Out

recorded at the acquisition date and the actual amount of Earn-Out

paid based on actual performance will be reflected as a charge or

credit, as applicable, in the statement of operations.

The following table summarizes the fair value of purchase price

consideration paid to acquire Framerate:

consideration at closing

$ 1,515,000  

consideration at closing

1,000,000  

Fair value of

Earn-Out shares

254,000  

$ 2,769,000  

The preliminary purchase price allocation was based upon an

estimate of the fair value of the assets acquired and the

liabilities assumed by the Company in connection with the

acquisition of Framerate, as follows:

$ 15,000  

Intangible assets -

189,000  

2,565,000  

purchase price

$ 2,769,000  

The identifiable intangible asset acquired, totaling $189,000, was

comprised of Framerate’s trade name with an estimated useful

life of approximately five years, and is included in intangible and

other assets, net in the accompanying balance sheet.

The trade name

intangible asset is being amortized over the estimated useful life

on a straight-line basis.

Goodwill recognized primarily reflects

anticipated cost and growth synergies associated with the combined

Management is responsible for determining the fair value of the

identifiable intangible assets acquired as of the Effective Date.

Management considered a number of factors, including reference to

an analysis under ASC 805 solely for the purpose of allocating the

purchase price to the assets acquired.

The fair values of the acquired intangible asset,

as described above, was determined using the following

Valuation Method

Valuation Method Description

Relief-from-Royalty method under the income approach

Under the Relief-from-Royalty method, the royalty savings is

calculated by estimating a reasonable royalty rate that a third

party would negotiate in a licensing agreement.

Such royalties are

most commonly expressed as a percentage of total revenue involving

a trade name.

Royalty Rate:

Discount Rate:

Scenario Based Model

The payoff structure was determined to be linear and the Earn-Out

is payable within two years.

Revenue scenarios were estimated and a

probability for each scenario based on the likelihood of achieving

the forecasted revenues was estimated.

The estimated payments from

the scenarios were then discounted based on the Company's credit

risk and the related risk-free rate.

The value per share was then

adjusted for the time period through the payout date.

methodology employed was the Black-Scholes Option

Term 1 -2 years;

Risk Free Rate 2.21% -

The Acquisition was treated for tax purposes as a nontaxable

transaction and as such, the historical tax bases of the acquired

assets, net operating losses, and other tax attributes of Framerate

will carryover.

As a result, no new goodwill for tax purposes was

be created in connection with the Acquisition as there is no

step-up to fair value of the underlying tax bases of the acquired

The historical balance sheets and statements of operations of

Framerate were not material to the

NOTES PAYABLE

Long-Term Note Payable

4, 2020, the Company entered into a potentially forgivable loan

from the U.S.

Small Business Administration (“SBA”)

resulting in net proceeds of $1,200,047 pursuant to the Paycheck

Protection Program (“PPP”) enacted by Congress under

the CARES Act administered by the SBA (the “PPP Loan”).

To facilitate the PPP Loan, the Company entered into a Note Payable

Agreement with a bank (the “Lender”) (the “PPP

Loan Agreement”).

Loan will mature on May 4, 2022.

However, under the CARES Act and

the PPP Loan Agreement, all payments of both principal and interest

will be deferred until at least December 4, 2020.

accrues interest at a rate of 1.00% per annum, and interest will

continue to accrue throughout the period the PPP Loan is

outstanding, or until it is forgiven.

The Company will be eligible

to apply for forgiveness of all loan proceeds used to pay payroll

costs and other qualifying expenses during the 24-week period

following receipt of the loan, provided that the Company maintained

its employment and compensation within certain parameters during

Any amounts forgiven will not be included in the

Company’s taxable income.

As specifically intended under the

program, the PPP Loan, together with our cost savings initiatives,

helped us to continue operations without salary reductions, layoffs

or furloughs, during the challenging and uncertain economic

environment created by the COVID-19 pandemic.

Loan is accounted for as a financial liability in accordance with

FASB ASC 470, “

Debt ”

and interest is accrued in

accordance with the interest method.

Additional interest is not

imputed at a market rate pursuant to a scope exception for interest

rates prescribed by governmental agencies under the applicable

proceeds from the PPP Loan are recorded as a long-term liability on

the balance sheet until either (1) the loan is, in part or wholly,

forgiven and the company has been “legally released”

(2) the Company pays off the loan to the Lender.

Once the loan is,

in part or wholly, forgiven, and legal release is received, the

Company will reduce the liability by the amount forgiven and record

a gain on extinguishment in the statement of operations in the

period of extinguishment.

Under the CARES Act, for federal tax purposes, the amount of PPP

Loan forgiven is excluded from gross income.

In December 2020, the

Consolidated Appropriations Act was signed into law, which reversed

then existing U.S.

Internal Revenue Service guidance provided in

prior notices, allowing taxpayers to fully deduct any business

expenses, regardless of whether the expense was paid for using

forgiven PPP Loan proceeds.

In September 2020, California

passed tax legislation which conforms to the federal rules for

PPP Loan forgiveness, allowing an exclusion from gross income for

the amount of PPP Loans that are forgiven, while disallowing the

deductions for amounts paid or incurred using the forgiven PPP Loan

Convertible Notes Payable

February through April 2018, the Company issued 9.00% secured

convertible promissory notes with a collective face value of

$3,000,000 (the “Initial 2018 Notes”).

The Initial 2018

Notes (i) accrued simple interest at the rate of 9.00% per annum,

(ii) matured on the earlier of December 31, 2018 or the close of a

$15,000,000 equity financing (“Qualifying Equity

Financing”) by the Company, and (iii) all outstanding

principal and accrued interest was automatically convertible into

equity or equity-linked securities sold in a Qualifying Equity

Financing based upon a conversion rate equal to (x) a 10% discount

to the price per share of a Qualifying Equity Financing, with (y) a

floor of $10.80 per share.

In addition, the holders of the Initial

2018 Notes were collectively issued warrants to purchase

approximately 55,559 shares of common stock, at an exercise price

of $10.80 per share and a term of five years (the “Initial

2018 Warrants”).

through August 2018, the Company issued additional 9.00% secured

convertible promissory notes with a collective face value of

$10,000,000 (the “Additional 2018 Notes”).

all of the Initial 2018 Notes and related accrued interest,

totaling $3,056,000, were converted into the Additional 2018 Notes,

resulting in an aggregate principal amount of $13,056,000

(hereinafter collectively, the “2018 Notes”).

holders of the converted Initial 2018 Notes retained their

respective Initial 2018 Warrants.

2018 Notes (i) accrued simple interest at the rate of 9.00% per

annum, (ii) matured on the earlier of the closing of an initial

public offering of the Company’s common stock on a national

securities exchange or April 30, 2019, and (iii) all outstanding

principal and accrued interest was automatically convertible into

shares of common stock upon the closing of an IPO at the lesser of

(x) $10.80 per share or (y) a 15% discount to the price per share

In addition, the holders of the 2018 Notes were

collectively issued 1,396,420 warrants to purchase common stock

equal to 100% of the aggregate principal amount of the 2018 Notes

divided by $9.35 per share (the “2018 Warrants”).

2018 Warrants are exercisable for a term of five years, commencing

on the close of an IPO, at an exercise price of $9.35 and are

callable at the election of the Company at any time following the

closing of an IPO.

The 2018 Notes were secured by a security

interest in all of the assets, tangible and intangible, of the

proceeds from the sale of the 2018 Notes, the 2018 Warrants and the

Initial 2018 Warrants, were allocated to the instruments based on

the relative fair values of the convertible debt instrument without

the warrants and of the warrants themselves at the time of

The portion of the proceeds, totaling $5,933,000

allocated to the 2018 Warrants, was accounted for as a discount to

the debt, with the offsetting credit to additional paid-in capital.

The remainder of the proceeds were allocated to the convertible

debt instrument portion of the transaction.

The resulting debt

discount is amortized over the period from issuance to April 30,

2019, the stated maturity date of the debt.

issuance costs were comprised of $389,000 of cash commissions and

warrants with a fair value of $223,000, paid and issued,

respectively, to third-parties in connection with the debt

financing, and are reflected as a discount to the debt instrument,

net of accumulated amortization, in the December 31, 2018 balance

Debt issuance costs are amortized over the term of the debt

as interest expense in the statement of operations.

with the closing of the IPO on February 27, 2019, all outstanding

principal and accrued interest outstanding under the 2018 Notes

totaling $13,793,000 was automatically converted into 1,475,164

shares of the Company’s common stock at a conversion price

per share of $9.35.

As a result of the automatic conversion of the

2018 Notes and the application of conversion accounting, the

Company recorded an immediate charge to interest expense of

$1,384,000 for the year ended December 31, 2019, representing

the write-off of the unamortized balance of debt

discounts associated with the 2018 Warrants and cash commissions

and warrants issued to third parties.

Unamortized debt discounts at

December 31, 2019 and 2018 totaled $0 and $2,684,000,

respectively.

non-detachable conversion feature embedded in the 2018 Notes

provides for a conversion rate that is below market value at the

commitment date, and therefore, represents a beneficial conversion

feature (“BCF”).

The BCF is generally recognized

separately at issuance by allocating a portion of the debt proceeds

equal to the intrinsic value of the BCF to additional paid-in

The resulting convertible debt discount is recognized as

interest expense using the effective yield method.

measured using the commitment date stock price.

conversion feature associated with the 2018 Notes was not

exercisable until the consummation of an initial public offering by

the Company of its common stock, and therefore, was not required to

be recognized in earnings until the IPO related contingency was

resolved, which occurred on the IPO Closing Date.

The commitment

date is the IPO Closing Date and the commitment date stock price

was $11.00 per share.

The intrinsic value of the BCF on the IPO

Closing Date, which was limited to the net proceeds allocated to

the debt on a relative fair value basis, was approximately

$7,067,000, and is reflected as additional interest expense in the

statement of operations for the year ended December 31,

weighted-average grant date fair value of 2018 Warrants issued during the year ended

December 31, 2018 was $7.98.

The aggregate fair value of

2018 Warrants that vested

during the year ended December 31, 2018 was $10,296,926.

The weighted-average exercise price

and weighted-average remaining contractual term for the 2018

Warrants was $9.41 and 4.5 years.

At December 31, 2019 the

aggregate intrinsic value of the 2018 Warrants totaled

$(10,230,000).

fair value of Debt Warrants issued was estimated on their

respective issue dates using the Black Scholes-Merton option

pricing model and the following weighted-average

Risk–free

interest rate

Expected life of

options (in years)

Weighted-average

fair value of common stock

$ 9.41  

STOCKHOLDERS’

Preferred Stock

Company’s initial certificate of incorporation authorized

5,000,000 shares of preferred stock, par value $0.001 per share.

preferred stock had been issued and outstanding since inception of

In October 2016, the Company’s Board of

Directors (the “Board of Directors”) and a majority of

the holders of the Company’s common stock approved an

amendment and restatement of the certificate of incorporation

which, in part, eliminated the authorized preferred stock.

August 2018, the Board of Directors approved a second amendment and

restatement of the Company’s amended and restated certificate

of incorporation (the “Amended and Restated Charter”)

to, in part, increase the Company’s authorized capital to a

total of 110.0 million shares, including 10.0 million shares of

newly created preferred stock, par value $0.001 per share

(“Preferred Stock”), authorize the Board of Directors

to fix the designation and number of each series of Preferred

Stock, and to determine or change the designation, relative rights,

preferences, and limitations of any series of Preferred Stock.

Amended and Restated Charter was approved by a majority of the

Company’s stockholders in September 2018, and was filed

with the State of Delaware in November 2018.

All references in the

accompanying financial statements to Preferred Stock have been

restated to reflect the Amended and Restated Charter.

Amended and Restated Charter also increased the Company’s

authorized capital to include 100.0 million shares of common stock,

par value $0.001, and removed the deemed liquidation provision, as

such term is defined in the Amended and Restated Charter.

holder of common stock is entitled to one vote for each share of

common stock held at all meetings of stockholders.

Reverse Stock Split

February 8, 2019, the Company filed an amendment to the

Company’s amended and restated certificate of incorporation

to effect a reverse split of shares of the Company’s common

stock on a one-for-three basis (the “Reverse Stock

Split”).

All references to common stock, warrants to purchase

common stock, options to purchase common stock, early exercised

options, restricted stock, share data, per share data and related

information contained in the financial statements have been

retrospectively adjusted to reflect the effect of the Reverse Stock

Split for all periods presented.

No fractional shares were issued

in connection with the Reverse Stock Split.

Any fractional shares

resulting from the Reverse Stock Split will be rounded down to a

whole share, and any effected stockholders will receive a cash

payment equal to the value of such fractional shares.

Equity Financings

August 2020, the Company issued 4,540,541 shares of common stock at

a price of $1.85 per share, raising aggregate net proceeds of

approximately $7.6 million, after deducting placement agent fees of

$588,000 and other offering expenses totaling $180,000.

offering was conducted pursuant to the Company’s effective

Registration Statements on Form S-1 (File No.

333-248248), and a

related registration statement filed pursuant to Rule 462(b) under

the Securities Act.

In addition, pursuant to the terms of the

related underwriting agreement, the Company granted to the

underwriter a 30-day over-allotment option to purchase up to an

additional 681,081 Shares at the same public offering price per

share, less discounts and commissions, which was partially

exercised in September 2020, resulting in the issuance of 448,440

shares of common stock and net proceeds of $771,000, after

deducting placement agent fees of $58,000.

May 2020, the Company issued 1,825,000 shares of common stock at a

price of $3.50 per share, raising aggregate net proceeds of

approximately $6.0 million, after deducting placement agent fees of

$319,000 and other offering expenses totaling $116,000.

offering was made pursuant to an effective shelf registration

statement on Form S-3 previously filed with the U.S.

Securities and

Exchange Commission.

The net proceeds

from these offerings are intended to be used for working capital

and other general corporate purposes , including

sales and marketing activities, product development and capital

expenditures.

The Company may also use a portion of the net

proceeds for the acquisition of, or investment in, technologies,

solutions or businesses .

On February 27, 2019, Super League completed its IPO of its common

stock, pursuant to which the Company issued and sold an aggregate

of 2,272,727 shares of common stock at $11.00 per share, raising

aggregate net proceeds of $22,458,000 after deducting underwriting

discounts, commissions and offering costs of $2,542,000.

with the closing of the IPO on February 27, 2019 (the “IPO

Closing Date”), in accordance with the related

agreements, all outstanding principal and interest for the

9.00% convertible notes outstanding, totaling $13,793,000, was

automatically converted into 1,475,164 shares of the

Company’s common stock at a conversion price of

The principal purposes of the IPO were to obtain additional capital

to support our operations, to create a public market for our common

stock and to facilitate our future access to the public equity

The net proceeds received from the IPO were used for

working capital and general corporate purposes, including sales and

marketing activities, product development and capital expenditures.

A portion of the net proceeds were also available for any strategic

acquisition of, or investment in, technologies, solutions or

businesses that may have complemented our business and or

accelerated our growth.

The amounts and timing of our actual

expenditures, including expenditure related to sales and marketing

and product development depended on numerous factors, including the

status of our product development efforts, our sales and marketing

activities, expansion internationally, the amount of cash generated

or used by our operations, competitive pressures and other

Upon closing of the IPO, 83,333 options and 125,000 warrants

previously granted to the CEO (with an average grant date fair

value of $8.50) became fully vested.

As a result, the

Company recorded an additional $1,770,000 of stock-based

compensation during the year ended December 31, 2019.

Pursuant to the related underwriting agreement, in connection with

the completion of the IPO, for the purchase price of $50.00, the

Company issued a warrant to purchase shares of our common stock

equal to 3.0% of the shares sold in the IPO, or 68,182 shares, at

an exercise price of $11.00 per share (the

“Underwriters’

Warrants”).

Underwriters’

Warrants are exercisable during the period

commencing from the date of the close of the IPO and ending five

years from the closing date of the IPO.

The Underwriters’

Warrants represent additional noncash offering costs, with an

estimated grant date fair value of $547,000, which was reflected in

additional-paid-in capital when issued and as a corresponding

offering cost in the statement of shareholders equity for the year

ended December 31, 2019.

The fair value of the

Underwriters’

Warrant was estimated on February 27, 2019, the

grant date, using the Black Scholes-Merton option pricing model and

the following weighted-average assumptions:

(i) volatility of 95%,

(ii) risk-free interest rate of 2.5%, and (iii) expected term of

STOCK-BASED INCENTIVE PLANS

Super League 2014 Stock Option and Incentive Plan (the

“Plan”) was approved by the Board of Directors and the

stockholders of Super League in October 2014.

The Plan was subsequently amended in May 2015, May

2016, July 2017 and October 2018.

The Plan allows grants of

stock options, stock awards and performance shares with respect to

common stock of the Company to eligible individuals, which

generally includes directors, officers, employees, advisors and

The Plan provides for both the direct award and sale

of shares of common stock and for the grant of options to purchase

shares of common stock.

Options granted under the Plan include

non-statutory options as well as incentive options intended to

qualify under Section 422 of the Internal Revenue Code of 1986, as

Board of Directors administers the Plan and determines which

eligible individuals are to receive option grants or stock

issuances under the Plan, the times when the grants or issuances

are to be made, the number of shares of common stock subject to

each grant or issuance, the status of any granted option as either

an incentive stock option or a non-statutory stock option under the

federal tax laws, the vesting schedule to be in effect for the

option grant or stock issuance and the maximum term for which any

granted option is to remain outstanding.

The exercise price of

options is generally equal to the fair market value of common stock

of the Company on the date of grant. Options generally begin

to be exercisable six months to one year after grant and typically

expire 10 years after grant. Stock options and restricted

shares generally vest over two to four years (generally

representing the requisite service period).

The Plan terminates

automatically on July 1, 2027.

The Plan provides for the following

Option Grants

the discretionary option grant program, the Company’s

compensation committee of the Board of Directors may grant (1)

non-statutory options to purchase shares of common stock to

eligible individuals in the employ or service of Super League or

its affiliates (including employees, non-employee members of the

Board of Directors and consultants) at an exercise price not less

than 85% of the fair market value of such shares on the grant date,

and (2) incentive stock options to purchase shares of common stock

to eligible employees at an exercise price not less than 100% of

the fair market value of such shares on the grant date (not less

than 110% of fair market value if such employee actually or

constructively owns more than 10% of Super League’s voting

stock or the voting stock of any of its subsidiaries).

Stock Awards or Sales

the stock award or sales program, eligible individuals may be

issued shares of common stock of the Company directly, upon the

attainment of performance milestones or the completion of a

specified period of service or as a bonus for past services.

this program, the purchase price for the shares will not be less

than 100% of the fair market value of the shares on the date of

issuance, and payment may be in the form of cash or past services

Eligible individuals will have no stockholder rights with

respect to any unvested restricted shares or restricted stock units

issued to them under the stock award or sales program;

eligible individuals will have the right to receive any regular

cash dividends paid on such shares.

initial reserve under the Plan was 583,334 shares of common stock,

which reserve was subsequently increased to 1,000,000 shares upon

stockholders’

approval in May 2016.

In July 2017, the Company

amended and restated the Plan to increase the number of shares of

common stock reserved thereunder from1,000,000 shares to 1,500,000

In October 2018, the Company amended and restated the Plan

to increase the number of shares of common stock reserved

thereunder from 1,500,000 shares to 1,833,334 shares.

In July 2020,

the Company’s shareholders approved an amendment to the Plan

to increase the number of shares authorized for issuance from

1,833,334 to 2,583,334.

As of December 31, 2020, 588,423 shares

remained available for issuance under the Plan.

League issues new shares of common stock upon the exercise of stock

options, the grant of restricted stock, or the delivery of shares

pursuant to vested restricted stock units.

The compensation

committee of the Board of Directors may amend or modify the Plan at

any time, subject to any required approval by the stockholders of

the Company, pursuant to the terms therein. 

Stock Options

fair value of stock options granted was estimated on their

respective grant dates using the Black-Scholes-Merton option

pricing model and the following weighted-average assumptions for

the years ended December 31, 2020 and 2019:

Risk–free

interest rate

Expected life of

options (in years)

Weighted-average

fair value of common stock

$ 2.23  

$ 7.45  

summary of stock option activity for the year ended December 31,

2020 is as follows:

Weighted-Average

Price Per Share ($)

Contractual Term (Years)

Intrinsic Value ($)

at December 31, 2019

1,551,000  

$ 8.86  

$ 309,000  

815,000  

$ 2.93  

$ 0.30  

$ 9.42  

at December 31, 2020

1,638,000  

$ 5.59  

$ 308,000  

and exercisable at December 31, 2020

812,000  

$ 7.47  

$ 296,000  

weighted-average grant date fair value of stock options granted

during the years ended December 31, 2020 and 2019 was $2.23 and

$5.76, respectively.

The aggregate fair value of stock options that

vested during the years ended December 31, 2020 and 2019 was

$620,000 and $3,989,000, respectively.

As of December 31, 2020, the

total unrecognized compensation expense related to non-vested stock

option awards was $1,864,000, which is expected to be recognized

over a weighted-average term of approximately 3.14

February 2020, the Board of Directors approved the cancellation of

540,000 stock options in exchange for 243,000 RSUs (the

“Stock Swap”) for seven employees.

The stock options

canceled had a weighted average exercise price of $10.16 and a

weighted average grant date fair value of $8.33.

The RSUs issued

had weighted average grant date fair value of $2.60 and vest over

Cancellation of an existing equity-classified award

along with a concurrent grant of a replacement award is accounted

for as a modification under ASC 718, “Stock-based

Compensation.”

Total compensation cost to be recognized is

equal to the original grant date fair value plus any incremental

fair value calculated as the excess of the fair value of the

replacement RSUs over the fair value of the original stock option

awards on the cancellation date.

Any incremental compensation cost

is recognized prospectively over the remaining service period, in

addition to the remaining unrecognized grant date fair value.

was no incremental compensation cost in connection with the Stock

Total remaining unrecognized grant date fair value for the

Stock Swap was $1,775,000, which is expected to be recognized over

a weighted-average term of approximately two years.

The net impact

of the Stock Swap was to return 297,000 shares to the share reserve

under the Plan for the Company's future employee related incentive

and retention activities.

Restricted Stock Units

following table summarizes non-vested restricted stock unit

activity for the year ended December 31, 2020:

Weighted Average

Fair Value ($)

restricted stock units at December 31, 2019

29,000  

$ 10.40  

382,000  

$ 4.68  

$ 10.40  

restricted stock units at December 31, 2020

382,000  

$ 4.68  

December 31, 2020, the total unrecognized compensation expenses

related to non-vested restricted stock units was $1,003,000 which

will be recognized over a weighted-average term of approximately

Warrants Issued to Employees and Nonemployees for

A summary of employee and nonemployee warrant activity for the year

ended December 31, 2020 is as follows:

Weighted-Average

Price Per Share ($)

Contractual Term (Years)

Intrinsic Value ($)

Outstanding at

December 31, 2019

1,031,000  

$ 9.92  

$ 9.00  

Outstanding at

December 31, 2020

964,000  

$ 10.02  

exercisable as of December 31, 2020

964,000  

$ 10.02  

expense related to common stock purchase warrants was $282,000 and

$2,182,000 for the years ended December 31, 2020 and 2019,

respectively.

No warrants were granted to employees or non-employees in exchange for

services performed during the periods presented herein.

aggregate fair value of warrants that vested during the years ended

December 31, 2020 and 2019 was $206,000 and $2,092,000,

respectively.

As of December 31, 2020, the total unrecognized

compensation expense related to warrants was $0.

Noncash Stock Compensation Expense

Noncash stock-based compensation expense for the periods presented

was comprised of the following:

$ 745,000  

$ 3,573,000  

282,000  

2,182,000  

836,000  

370,000  

Earn-out compensation expense (Note 5)

141,000  

58,000  

34,000  

noncash stock compensation expense

$ 2,004,000  

$ 6,217,000  

Noncash stock-based compensation expense for the periods presented

was included in the following financial statement line

marketing and advertising

$ 849,000  

$ 635,000  

Technology platform

and infrastructure   

254,000  

129,000  

administrative   

901,000  

5,453,000  

noncash stock compensation expense

2,004,000  

$ 6,217,000  

Noncash stock-based compensation expense for the year ended

December 31, 2019 included compensation expense resulting from the

vesting of certain performance-based options and warrants

previously granted to certain

executives, which vested upon the achievement of certain

performance-based milestones, pursuant to vesting conditions in the

underlying equity grant agreements.

Performance targets included

the completion of our IPO in February 2019 and other operational

performance-based milestones.

During fiscal year 2019, 325,000 of

performance-based stock options and warrants vested with grant date

fair values ranging from $8.28 to $8.50, resulting in noncash stock

compensation expense of $2,766,000 during fiscal year 2019.

value of these equity awards was estimated on October 31, 2018,

their original grant date, using the Black Scholes-Merton option

pricing model and the following weighted-average assumptions:

volatility of 93%, (ii) risk-free interest rate of 3.0%,

and (iii) expected term of 6.5 years.

League’s provision for income taxes consisted of the

following for the years ended December 31, 2020 and

$ 2,919,000  

$ 4,098,000  

886,000  

1,374,000  

3,805,000  

5,472,000  

in valuation allowance

for income taxes

effects of temporary differences and carryforwards that give rise

to significant portions of deferred tax assets and liabilities

consist of the following as of December 31, 2020 and 2019.

tax assets (liabilities):

operating loss and credits

$ 20,799,000  

$ 14,456,000  

3,155,000  

3,992,000  

65,000  

interest expense

1,541,000  

assets and intangibles

118,000  

deferred tax assets

23,913,000  

20,107,000  

(23,913,000 )

(20,107,000 )

deferred tax assets, net of valuation allowance

reconciliation of the federal statutory income tax rate and the

effective income tax rate is as follows:

federal tax rate - (benefit) expense

State tax, net

Non-deductible

permanent items

years ended December 31, 2020 and 2019, the Company recorded full

valuation allowances against its net deferred tax assets due to

uncertainty regarding future realizability pursuant to guidance set

forth in the FASB’s Accounting Standards Codification Topic

740, Income Taxes .

future periods, if the Company determines it will more likely than

not be able to realize these amounts, the applicable portion of the

benefit from the release of the valuation allowance will generally

be recognized in the statements of operations in the period the

determination is made.

December 31, 2020, the Company had U.S.

federal and state

income tax net operating loss carryforwards of approximating

$74,592,000 and $73,520,000, respectively, expiring through 2040.

Utilization of the net operating loss carryforwards may be subject

to a substantial annual limitation due to ownership change

limitations that may have occurred or that could occur in the

future, as required by Section 382 of the Internal Revenue

Code of 1986, as amended, as well as similar state provisions.

Company has not completed a study to assess whether an ownership

change has occurred or whether there have been multiple ownership

changes since the Company’s formation due to the complexity

and cost associated with such a study, and the fact that there may

be additional such ownership changes in the future.

10.            

COMMITMENTS AND CONTINGENCIES

Operating Leases

Company leased office space under an operating lease agreement

which expired on May 31, 2017 and was amended to a month-to-month

In June 2020, we terminated the lease for the majority of

our corporate headquarters (approximately 4,965 square feet).

December 31, 2020 we maintain approximately 1650 square feet of

office space on a month-to-month basis.

expense for the years ended December 31, 2020 and 2019 was

approximately $200,000 and $349,000, respectively, and is included

in general and administrative expenses in the accompanying

statements of operations. Rental payments are expensed in the

statements of operations in the period to which they relate.

Scheduled rent increases, if any, are amortized on a straight-line

basis over the lease term.

Related Party Transactions

2018, the Company entered into a consulting agreement with a member

of the Board of Directors, pursuant to which the board member

provides the Company with strategic advice and planning services

for which he receives a cash payment of $7,500 per month from the

The consulting agreement had an initial term ending

December 31, 2019, and could be extended upon mutual agreement of

the board member and the Company.

The consulting agreement was

extended throughout fiscal year 2020, and continues to be active

during fiscal year 2021.

SUBSEQUENT EVENTS

Company evaluated subsequent events for their potential impact on

the financial statements and disclosures through the date the

annual audited financial statements were available to be issued

and determined that no subsequent

events occurred that were reasonably expected to impact the

financial statements presented herein.

Equity Financings

In January 2021, we entered into securities purchase agreements

with institutional investors for the registered

direct offering of an aggregate of 3,076,924 shares of our

common stock at a purchase price of $2.60 per share. 

offering closed on January 13, 2021, and resulted in gross proceeds

to the Company of $8.0 million.

The offering was conducted pursuant

to an effective shelf registration statement on Form S-3,

which was originally filed with the Securities and Exchange

Commission on April 10, 2020 (File No.

In February 2021, we entered into securities purchase agreements

with institutional investors for the registered

direct offering of an aggregate of 2,926,830 shares of the

Company’s common stock, par value $0.001 per share, at a

purchase price of $4.10 per share. 

The offering closed on

February 11, 2021, and resulted in gross proceeds to the Company of

$12.0 million.

The shares were offered pursuant to an effective

shelf registration statement on Form S-3, which was originally

filed with the Securities and Exchange Commission on April 10, 2020

Proposed Acquisition of Mobcrush Streaming, Inc.

On March 9, 2021, Super League Gaming, Inc.

entered into an

Agreement and Plan of Merger (the “MC Merger

Agreement”) by and among Mobcrush Streaming, Inc.

(“Mobcrush”), the Company, and SLG Merger Sub II, Inc.,

a wholly-owned subsidiary of the Company (“Merger Co”).

The MC Merger Agreement provides for the acquisition of Mobcrush by

Super League pursuant to the merger of Merger Co with and into

Mobcrush, with Mobcrush as the surviving corporation (the

“Merger”).

Upon completion of the Merger, Mobcrush will

be a wholly-owned subsidiary of the Super League, Inc.

In accordance with the terms and subject to the conditions of the

MC Merger Agreement:

(A) each outstanding share of Mobcrush common

stock ("Mobcrush Common Stock") and Mobcrush preferred stock

("Mobcrush Preferred Stock", and with the Mobcrush Common Stock,

the "Mobcrush Stock") (other than dissenting shares) will be

canceled and converted into the right to receive (i) 0.528 shares

of the Company's common stock ("Company Common Stock"), as

determined in the MC Merger Agreement (the “Share Conversion

Ratio”), and (ii) any cash in lieu of fractional shares of

Common Stock otherwise issuable under the Merger Agreement (the

"Merger Consideration");

(B) vested options of Mobcrush will be

assumed by Mobcrush and converted into comparable options that are

exercisable for shares of Company Common Stock, with a value

determined in accordance with the Share Conversion Ratio;

unvested options of Mobcrush will either be (i) assumed by the

Company and converted into comparable options that are exercisable

for shares of Company Common Stock, with a value as determined by

the Company and Mobcrush prior to the closing of the Merger, or

(ii) terminated and re-issued as options that are exercisable for

shares of Company Common Stock with a value as determined by the

Company and Mobcrush prior to the closing of the Merger.

certain adjustments and other terms and conditions more

specifically set forth in the MC Merger Agreement, the Company will

be issuing 12,582,204 shares of the Company’s Common Stock as

the Merger Consideration.

The Merger Agreement contains

representations, warranties and covenants of each of the parties

thereto that are customary for transactions of this

The obligations of the Company and Mobcrush to consummate the

Merger are subject to certain closing conditions, including, but

not limited to the approval of Mobcrush's and the Company’s

shareholders.

SI GNA T URES

to the requirements of Section 13 or 15(d) of the Securities

Exchange Act of 1934, the registrant has duly caused this report to

be signed on its behalf by the undersigned, thereunto duly

LEAGUE GAMING, INC.

By:  

and Chief Executive Officer

(Principal Executive Officer)

LEAGUE GAMING, INC.

By:  

Chief Financial Officer

(Principal Financial and Accounting Officer)

to the requirements of the Securities Exchange Act of 1934, this

report has been signed below by the following persons on behalf of

the registrant and in the capacities and on the dates

Executive Officer,

March 19 , 2021

Chair of the Board

Executive Officer)

Clayton Haynes

Financial Officer

March 19 , 2021

Financial and Accounting Officer)

David Steigelfest

March 19 , 2021

Kristin Patrick

March 19 , 2021

/s/ Michael Keller

March 19 , 2021

Sponsorship arrangements typically include contract terms for time periods ranging from several weeks or months to terms of twelve months in length.

For sponsorship arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the agreement as we satisfy our performance obligations, over the applicable contract term.

Payments are typically due from customers during the term of the arrangement.

Revenue from sponsorship arrangements for one-off branded experiences and/or the development of content tailored specifically for our partners’

distribution channels that provide for a contractual delivery or performance date, is recognized at a point in time, when performance is substantially complete and or delivery occurs.

Content-related revenues are generated in connection with our curation and distribution of esports and entertainment content for our own network of digital channels and media and entertainment partner channels.

We distribute three primary types of content for syndication and licensing, including:

(1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology.

For content arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the arrangement as we satisfy our performance obligations, over the applicable contract term.

Revenue from shorter-term content sales arrangements that provide for a contractual delivery or performance date is recognized when performance is substantially complete and or delivery occurs.

Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns.

Direct to Consumer:

Direct to consumer revenues primarily consist of digital subscription fees, in-game digital goods, and gameplay access fees.

Subscription revenue is recognized in the period the services are rendered.

Payments are typically due from customers at the point of sale.

Platform Generated Sales Transactions .

Our Mobcrush subsidiary generates in-game Platform sales revenues via digital goods sold within the platform, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform.

Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

Revenue for digital goods sold on the platform is recognized when Microsoft (our partner) collects the revenue and facilitates the transaction on the platform.

Revenue for such arrangements includes all revenue generated, bad debt, make goods, and refunds of all transactions managed via the platform by Microsoft.

The revenue is recognized on a monthly basis.

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

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

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

If it is determined that collection is not reasonably assured, amounts due are recognized when collectability becomes reasonably assured, assuming all other revenue recognition criteria have been met, which is generally upon receipt of cash for transactions where collectability may have been an issue.

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

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

Depending on the complexity of the underlying revenue arrangement and related terms and conditions, significant judgments, assumptions and estimates may be required to determine each parties rights regarding the goods or services to be transferred, each parties performance obligations, whether performance obligations are satisfied at a point in time or over time, estimates of completion methodologies, the timing of satisfaction of performance obligations, and the appropriate period or periods in which, or during which, the completion of the earnings process occurs.

Depending on the magnitude of specific revenue arrangements, if different judgments, assumptions and estimates are made regarding revenue arrangements in any specific period, our periodic financial results may be materially affected.

Accounting for Business Combinations

Acquisition Method.

 Acquisitions that meet the definition of a business under ASC 805, “Business Combinations,”

(“ASC 805”) are accounted for using the acquisition method of accounting.

Under the acquisition method of accounting, assets acquired, liabilities assumed, contractual contingencies, and contingent consideration, when applicable, are recorded at fair value at the acquisition date.

Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill.

The application of the acquisition method of accounting requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in connection with the allocation of the purchase price consideration to the assets acquired and liabilities assumed.

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

Contingent consideration, if any, is recognized and measured at fair value as of the acquisition date.

Cost Accumulation Model.

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

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

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

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

Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable.

Contingent consideration recognized is included in the initial cost of the assets acquired, with subsequent changes in the recorded amount of contingent consideration recognized as an adjustment to the cost basis of the acquired assets.

Subsequent changes are allocated to the acquired assets based on their relative fair value.

Depreciation and/or amortization of adjusted assets are recognized as a cumulative catch-up adjustment, as if the additional amount of consideration that is no longer contingent had been accrued from the outset of the arrangement.

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

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

Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

We consider our market capitalization and the carrying value of our assets and liabilities, including goodwill, when performing our goodwill impairment tests.

We operate in one reporting segment.

If a potential impairment exists, a calculation is performed to determine the fair value existing goodwill.

This calculation can be based on quoted market prices and / or valuation models, which consider the estimated future undiscounted cash flows resulting from the reporting unit, and a discount rate commensurate with the risks involved.

Third party appraised values may also be used in determining whether impairment potentially exists.

In assessing goodwill impairment, significant judgment is required in connection with estimates of market values, estimates of the amount and timing of future cash flows, and estimates of other factors that are used to determine the fair value of our reporting unit.

If these estimates or related projections change in future periods, future goodwill impairment tests may result in charges to earnings.

When conducting the Company’s annual or interim goodwill impairment assessment, we initially perform a qualitative evaluation of whether it is more likely than not that goodwill is impaired.

In evaluating whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we consider the guidance set forth in ASC-350 “Intangibles Goodwill and Other,”

(“ASC 350”) which requires an entity to assess relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, financial performance and other relevant events or circumstances.

From a qualitative standpoint, we considered the Company’s history of reported losses and negative cash flows from operating activities, along with the downturn in macroeconomic conditions and the broader mid-cap and micro-cap equity markets in late 2021.

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

Given that the Company’s significant growth occurred recently, and the relatively short period of time between the commencement of the downturn in macroeconomic and general equity market conditions as of December 31, 2021, management believes that the reduction in prices of our common stock, consistent with the broader market, is not other-than-temporary and not indicative of any fundamental change in the value or prospects of the underlying business as of the measurement date.

As another data point, the Company also performed a quantitative goodwill impairment analysis, comparing the estimated fair value of the Company’s reporting unit to its carrying or book value as of the current period presented herein.

In performing the quantitative analysis, the Company compared the fair value of the reporting unit to its carrying or book value to determine if the fair value of the reporting unit exceeded its carrying value as of the testing date, in which case the standard indicates that goodwill would not be impaired, and no further testing is required.

The fair value of a reporting unit refers to the price that would be received to sell the reporting unit as a whole in an orderly transaction between market participants at the measurement date.

Quoted market prices in active markets are considered to be the best evidence of fair value and should be used as the basis for fair value measurement, if available.

At December 31, 2021, we reported goodwill of $50.3 million.

We utilized the Company’s market capitalization, based on the 30-day volume weighted average (“30-day VWAP”) closing price of the Company’s common stock as of December 31, 2021, multiplied by the number of shares of the Company’s common stock outstanding as of the measurement date, for purposes of estimating the fair value of the Company at December 31, 2021.

In management’s estimate, the 30-day VWAP of closing stock prices for our common stock was the best estimate of fair value of the company’s single reporting unit available at the date of testing.

Based on the results of the quantitative impairment analysis, the fair value of the Company’s single reporting unit exceeded its carrying value at December 31, 2021 by approximately $11.3 million.

Based on the qualitative analysis and other data points described above,  the Company concluded that goodwill was not “more likely than not”

impaired as of December 31, 2021..

As described above, we have significant intangible assets recorded on our consolidated balance sheets.

We will continue to evaluate the recoverability of the carrying amount of our intangible assets on an ongoing basis. There can be no assurance that the outcome of such reviews in the future will not result in substantial impairment charges.

Impairment assessment inherently involves judgment as to assumptions about expected future cash flows and the impact of market conditions on those assumptions.

Future events and changing market conditions may impact our assumptions as to prices, costs, holding periods or other factors that may result in changes in our estimates of future cash flows. Although we believe the assumptions we used in testing for impairment are reasonable, significant changes in any one of our assumptions could produce a significantly different result.

The 30-day VWAP of closing stock prices for our common stock subsequent to December 31, 2021, consistent with the broader market, have continued to trend downward.

If the decline in our stock price persists throughout the three-month period ending March 31, 2022, we will perform an interim goodwill impairment assessment as of March 31, 2022, consistent with the methodology and approach described above.

Relaxed Ongoing Reporting Requirements

Upon the completion of our initial public offering, we elected to report as an “emerging growth company”

(as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act.

For so long as we remain an “emerging growth company,”

we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies,”

including but not limited to:

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

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

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

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

We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies,”

and our stockholders could receive less information than they might expect to receive from more mature public companies.

We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company.

We will remain an “emerging growth company”

for up to five years, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company”

as of the following December 31.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

The Company’s significant estimates and assumptions include the fair value of the Company’s common stock, stock-based compensation, the recoverability and useful lives of long-lived assets, and the valuation allowance relating to the Company’s deferred tax assets.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity