10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

From the transition period from _________ to _________

Commission File Number 001-38819

SUPER LEAGUE GAMING, INC.

(Exact name of small business issuer as specified in its charter)

Delaware	47-1990734
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

2912 Colorado Ave., Suite #203

Santa Monica, California 90404

(Address of principal executive offices)

Company: (213) 421-1920; Investor Relations: 203-741-8811

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically on its corporate web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SLGG	NASDAQ Capital Market

As of August 10, 2023, there were 50,426,199 shares of the registrant’s common stock, $0.001 par value, issued and outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46

PART I

FINANCIAL INFORMATION

ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUPER LEAGUE GAMING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2023			2022
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	2,569,000		$	2,482,000
Accounts receivable		5,226,000			6,134,000
Prepaid expense and other current assets		1,083,000			1,381,000
Total current assets		8,878,000			9,997,000
Property and Equipment, net		110,000			147,000
Intangible assets, net		16,152,000			20,066,000
Goodwill		1,864,000			-
Total assets	$	27,004,000		$	30,210,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	5,755,000		$	6,697,000
Accrued contingent consideration		1,485,000			3,206,000
Contract liabilities		269,000			111,000
Convertible note payable and accrued interest		-			679,000
Total current liabilities		7,509,000			10,693,000
Accrued contingent consideration – long term		656,000			-
Warrant liability		1,764,000			-
Deferred taxes		-			313,000
Total liabilities		9,929,000			11,006,000
Commitments and Contingencies
Stockholders’ Equity
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; 19,892 and 10,323 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		-			-
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 48,334,818 and 37,605,973 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		57,000			47,000
Additional paid-in capital		241,833,000			229,900,000
Accumulated deficit		(224,815,000	)		(210,743,000	)
Total stockholders’ equity		17,075,000			19,204,000
Total liabilities and stockholders’ equity	$	27,004,000		$	30,210,000

See accompanying notes to condensed consolidated financial statements

-1-

SUPER LEAGUE GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
REVENUE	$	5,052,000		$	4,279,000		$	8,374,000		$	8,047,000
COST OF REVENUE		2,911,000			2,458,000			4,857,000			4,367,000
GROSS PROFIT		2,141,000			1,821,000			3,517,000			3,680,000
OPERATING EXPENSE
Selling, marketing and advertising		2,956,000			3,001,000			5,606,000			5,735,000
Engineering, technology and development		2,246,000			4,570,000			5,202,000			8,780,000
General and administrative		2,302,000			2,993,000			4,823,000			5,869,000
Contingent consideration		540,000			-			1,008,000			-
Loss on intangible asset disposal		2,284,000			-			2,284,000			-
Total operating expense		10,328,000			10,564,000			18,923,000			20,384,000
NET OPERATING LOSS		(8,187,000	)		(8,743,000	)		(15,406,000	)		(16,704,000	)
OTHER INCOME (EXPENSE)
Change in fair value of warrant liability		1,040,000			-			1,040,000			-
Interest expense		(2,000	)		23,000			(43,000	)		21,000
Other		-			-			24,000			1,000
Total other income (expense)		1,038,000			23,000			1,021,000			22,000
Loss before benefit from income taxes		(7,149,000	)		(8,720,000	)		(14,385,000	)		(16,682,000	)
Benefit from income taxes		313,000			-			313,000			46,000
NET LOSS	$	(6,836,000	)	$	(8,720,000	)	$	(14,072,000	)	$	(16,636,000	)
Net loss attributable to common stockholders - basic and diluted
Basic and diluted loss per common share	$	(0.17	)	$	(0.24	)	$	(0.36	)	$	(0.45	)
Weighted-average number of shares outstanding, basic and diluted		40,494,953			36,946,587			39,113,124			36,893,069

See accompanying notes to condensed consolidated financial statements

-2-

SUPER LEAGUE GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2023			2022			2023			2022
Preferred stock (Shares):
Balance, beginning of period		12,622			-			10,323			-
Issuance of Series A-5 preferred stock at $1,000 per share		-			-			2,299			-
Issuance of Series AA preferred stock at $1,000 per share		7,680			-			7,680			-
Issuance of Series AA-2 preferred stock at $1,000 per share		1,500			-			1,500			-
Issuance of Series AA-3 preferred stock at $1,000 per share		1,025			-			1,025			-
Issuance of Series AA-4 preferred stock at $1,000 per share		1,026			-			1,026			-
Issuance of Series AA-5 preferred stock at $1,000 per share		550			-			550			-
Conversion of Series A preferred stock		(4,511	)		-			(4,511	)		-
Balance, end of period		19,892			-			19,892			-
Preferred stock (Amount, at Par Value):
Balance, beginning of period	$	-		$	-		$	-		$	-
Issuance of Series A-5 preferred stock, $0.001 par value, at $1,000 per share		-			-			-			-
Issuance of Series AA preferred stock, $0.001 par value, at $1,000 per share		-			-			-			-
Issuance of Series AA-2 preferred stock, $0.001 par value, at $1,000 per share		-			-			-			-
Issuance of Series AA-3 preferred stock, $0.001 par value, at $1,000 per share		-			-			-			-
Issuance of Series AA-4 preferred stock, $0.001 par value, at $1,000 per share		-			-			-			-
Issuance of Series AA-5 preferred stock, $0.001 par value, at $1,000 per share		-			-			-			-
Conversion of Series A preferred stock		-			-			-			-
Balance, end of period	$	-		$	-		$	-		$	-
Common stock (Shares):
Balance, beginning of period		37,795,077			36,864,957			37,605,973			36,809,187
Common stock issued for Melon Acquisition		1,556,663			-			1,556,663			-
Common stock issued for Super Biz Acquisition		987,973			-			987,973			-
Conversion of Series A preferred stock		7,995,105			-			7,995,105			-
Stock-based compensation		-			121,396			189,104			177,166
Other		-			57,425			-			57,425
Balance, end of period		48,334,818			37,043,778			48,334,818			37,043,778
Common stock (Amount):
Balance, beginning of period	$	47,000		$	46,000		$	47,000		$	46,000
Conversion of Series A preferred stock		8,000			-			8,000			-
Stock-based compensation		-			-			-			-
Common stock issued for Melon Acquisition		1,000			-			1,000			-
Common stock issued for Super Biz Acquisition		1,000			-			1,000			-
Balance, end of period	$	57,000		$	46,000		$	57,000		$	46,000
Additional paid-in-capital:
Balance, beginning of period	$	232,539,000		$	217,042,000		$	229,900,000		$	215,943,000
Issuance of Series A-5 preferred stock at $1,000 per share, net of issuance costs		-			-			1,919,000			-
Issuance of Series AA preferred stock at $1,000 per share, net of issuance costs		6,518,000			-			6,518,000			-
Issuance of Series AA-2 preferred stock at $1,000 per share, net of issuance costs		1,370,000			-			1,370,000			-
Issuance of Series AA-3 preferred stock at $1,000 per share, net of issuance costs		892,000			-			892,000			-
Issuance of Series AA-4 preferred stock at $1,000 per share, net of issuance costs		893,000			-			893,000			-
Issuance of Series AA-5 preferred stock at $1,000 per share, net of issuance costs		479,000			-			479,000			-
Common stock purchase warrants issued to placement agent		(2,804,000	)		-			(2,804,000	)		-
Common stock issued for Melon Acquisition		721,000			-			721,000			-
Common stock issued for Super Biz Acquisition		547,000			-			547,000			-
Stock-based compensation		686,000			1,000,000			1,406,000			2,099,000
Other		(8,000	)		8,000			(8,000	)		8,000
Balance, end of period	$	241,833,000		$	218,050,000		$	241,833,000		$	218,050,000
Accumulated Deficit:
Balance, beginning of period	$	(217,979,000	)	$	(133,208,000	)	$	(210,743,000	)	$	(125,292,000	)
Net Loss		(6,836,000	)		(8,720,000	)		(14,072,000	)		(16,636,000	)
Balance, end of period	$	(224,815,000	)	$	(141,928,000	)	$	(224,815,000	)	$	(141,928,000	)
Total stockholders’ equity	$	17,075,000		$	76,168,000		$	17,075,000		$	76,168,000

See accompanying notes to condensed consolidated financial statements

-3-

SUPER LEAGUE GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(14,072,000	)	$	(16,636,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,679,000			2,701,000
Stock-based compensation		1,532,000			2,099,000
Change in fair value of warrant liability		(1,040,000	)		-
Change in fair value of contingent consideration		286,000			-
Change in fair value of convertible notes		-			(49,000	)
Amortization of convertible notes discount		40,000			39,000
Loss on intangible asset disposal		2,284,000			-
Changes in assets and liabilities:
Accounts receivable		944,000			1,685,000
Prepaid expense and other current assets		174,000			49,000
Accounts payable and accrued expense		(1,131,000	)		(74,000	)
Accrued contingent consideration		(2,153,000	)		-
Contract liabilities		158,000			(47,000	)
Deferred taxes		(313,000	)		(46,000	)
Accrued interest on note payable		(180,000	)		32,000
Net cash used in operating activities		(10,792,000	)		(10,247,000	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid in connection with Melon Acquisition		(150,000	)		-
Purchase of property and equipment		(8,000	)		(153,000	)
Purchase of third-party game properties		-			(500,000	)
Capitalization of software development costs		(483,000	)		(497,000	)
Acquisition of other intangible assets		(11,000	)		(71,000	)
Net cash used in investing activities		(652,000	)		(1,221,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock, net of issuance costs		12,070,000			-
Proceeds from issuance of common stock, net of issuance costs		-			8,000
Proceeds from convertible notes, net		-			4,000,000
Payments on convertible notes		(539,000	)		(4,000	)
Net cash provided by financing activities		11,531,000			4,004,000
INCREASE/(DECREASE) IN CASH		87,000			(7,464,000	)
Cash and Cash Equivalents – beginning of period		2,482,000			14,533,000
Cash and Cash Equivalents – end of period	$	2,569,000		$	7,069,000
SUPPLEMENTAL NONCASH INVESTING
Issuance of common stock in connection with Melon Acquisition	$	722,000			-
Issuance of common stock in connection with the payment of Super Biz Contingent Consideration		548,000			-

See accompanying notes to condensed consolidated financial statements

-4-

SUPER LEAGUE GAMING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

Super League Gaming, Inc. (Nasdaq: SLGG), (“Super League,” the “Company,” “we,” “us” or “our”) is a leading strategically-integrated publisher and creator of games and experiences across the world’s largest immersive digital platforms. From metaverse gaming powerhouses such as Roblox, Minecraft and Fortnite, to the most popular Web3 environments such as Sandbox and Decentraland, to bespoke worlds built using the most advanced 3D creation tools, Super League’s innovative solutions provide incomparable access to massive audiences who gather in immersive digital spaces to socialize, play, explore, collaborate, shop, learn and create. As a true end-to-end activation partner for dozens of global brands, Super League offers a complete range of development, distribution, monetization and optimization capabilities designed to engage users through dynamic, energized programs. As an originator of new experiences fueled by a network of top developers, a comprehensive set of proprietary creator tools and a future-forward team of creative professionals, Super League accelerates IP and audience success within the fastest growing sector of the media industry.

Super League was incorporated on October 1, 2014 as Nth Games, Inc. under the laws of the State of Delaware and changed its name to Super League Gaming, Inc. on June 15, 2015. We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012, as amended.

On May 30, 2023, the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation, as amended (the “Amendment”), increasing the number of authorized shares of Common Stock from 100,000,000 to 400,000,000. The Company’s Board of Directors previously approved the Amendment on March 17, 2023, and the Company obtained the approval of the Amendment by written consent of its stockholders holding greater than 50% of the voting securities of the Company on April 5, 2023.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and footnotes required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023.

The December 31, 2022 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated interim financial statements of Super League include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Super League’s financial position as of June 30, 2023, and results of its operations and its cash flows for the interim periods presented. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year, or any future period.

-5-

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

Reclassifications

Certain reclassifications to operating expense line items have been made to prior period amounts for consistency and comparability with the current periods’ condensed consolidated financial statements presentation. These reclassifications had no effect on the reported total operating expense for the periods presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, impairment of intangibles, stock-based compensation expense, capitalized internal-use-software costs, accounting for business combinations and related contingent consideration, accounting for convertible debt, including estimates and assumptions used to calculate the fair value of debt instruments, accounting for convertible preferred stock, accounting for warrant liabilities and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective, or complex judgments.

Going Concern

The accompanying condensed 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, including noncash charges, of $14.1 million and $16.6 million for the six months ended June 30, 2023 and 2022, respectively, and had an accumulated deficit of $224.8 million as of June 30, 2023. For the six months ended June 30, 2023 and 2022, net cash used in operating activities totaled $10.8 million and $10.2 million, respectively.

The Company had cash and cash equivalents of $2.6 million and $2.5 million as of June 30, 2023 and December 31, 2022, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations. Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control. The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the lingering effects of COVID-19 and the threat of other outbreaks, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets. In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by ASC 205-40, “Going Concern,” (“ASC 205”).

Management’s Plans

The Company experienced significant growth in fiscal year 2023, 2022 and 2021 through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter and year over year increases in recognized revenue across our primary revenue streams. In fiscal year 2023, we focused on the continued expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through opportunistic strategic acquisitions, as well as management and reduction of operating costs. Management continues to consider alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings. Refer to Note 6 for recent equity financing activities.

-6-

As further described at Note 6, on March 25, 2022, we entered into a common stock purchase agreement with an institutional investor. Pursuant to the agreement, the Company has the right, but not the obligation, to sell to the investor, and the investor is obligated to purchase, up to $10,000,000 of newly issued shares of the Company’s common stock, from time to time during the term of the agreement, subject to certain limitations and conditions.

The Company considers historical operating results, costs, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period. Management’s considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements, and the Company will be able to raise additional equity and / or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of 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. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.

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

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. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material.

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

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its media and advertising, publishing and content studio and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to direct media and advertising sales arrangements.

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

-7-

Media and Advertising

Media and advertising revenue primarily consists of direct and reseller sales of our in-game media and analytics products, influencer marketing sales and sales of programmatic display and video advertising units to third-party advertisers and exchanges. Media and advertising arrangements typically include contract terms for time periods ranging from several days to several weeks in length.

For media and 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 media and 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.

Publishing and Content Studio

Publishing and content studio revenue consists of revenue generated from immersive game development and custom game experiences within our owned and affiliate game worlds, and revenue generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. 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 publishing and content studio 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 publishing and content studio 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 or projects, and once delivery is complete for shorter-term campaigns or projects.

Direct to Consumer

Direct to consumer revenue primarily consists of monthly digital subscription fees, and sales of in-game digital goods. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale.

InPvP Platform Generated Sales Transactions. We also generate in-game platform sales revenue from the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

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

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Revenue was comprised of the following for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Media and advertising	$	3,634,000	$	3,518,000	$	5,302,000	$	5,374,000
Publishing and content studio		1,030,000		288,000		2,301,000		1,693,000
Direct to consumer		388,000		473,000		771,000		980,000
	$	5,052,000	$	4,279,000	$	8,374,000	$	8,047,000

For the three and six months ended June 30, 2023, 35% and 32% of revenue was recognized at a single point in time, and 65% and 68% of revenue was recognized over time, respectively. For the three and six months ended June 30, 2022, 43% and 33% of revenue was recognized at a single point in time, and 57% and 67% of revenue was recognized over time, respectively.

Contract liabilities represent payments received in advance of providing services under certain contracts and were $76,000 at December 31, 2021, $111,000 at December 31, 2022 and $269,000 at June 30, 2023. Revenue recognized in the three and six months ended June 30, 2023 relating to contract liabilities as of December 31, 2022 were $0 and $82,000, respectively. Revenue recognized in the three and six months ended June 30, 2022 relating to contract liabilities as of December 31, 2021 were $44,000 and $47,000, respectively.

In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts with customers, these reporting requirements are not applicable as per ASC 606-10-50-14.

Cost of Revenue

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

Advertising

Advertising costs include the cost of ad production, social media, print media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising costs are included in selling, marketing and advertising expense in the condensed consolidated statements of operations. Advertising expense for the three and six months ended June 30, 2023 were 13,000 and $22,000, respectively. Advertising expense for the three and six months ended June 30, 2022 were $134,000 and $284,000, respectively.

Engineering, Technology and Development Costs

Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense includes the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support.

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3. Unobservable inputs which are supported by little or no market activity and which are significant to the fair value of the assets or liabilities.

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Certain assets and liabilities are required to be recorded at fair value on a recurring basis, including derivative financial instruments, contingent consideration and warrant liabilities recorded in accordance with ASC 480, “Distinguishing liabilities from equity,” (“ASC 480”), and convertible notes payable recorded at fair value. As described below, at Note 4, Note 5 and Note 6 contingent consideration, convertible notes payable and warrant liabilities outstanding during the periods presented, respectively, are recorded at fair value. Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers to/from Levels 1, 2, and 3 during the periods presented.

Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair value for other assets and liabilities such as cash, restricted cash, accounts receivable, receivables reserved for users, other receivables, prepaid expense and other current assets, accounts payable and accrued expense, and liabilities to customers have been determined to approximate carrying amounts due to the short maturities of these instruments.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in the statement of operations.

Acquisitions

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 expense in the condensed consolidated statements of operations.

Cost Accumulation Model. Acquisitions that do not meet the definition of a business under ASC 805 are accounted for as an asset acquisition, utilizing a cost accumulation model. Assets acquired and liabilities assumed are recognized at cost, which is the consideration the acquirer transfers to the seller, including direct transaction costs, on the acquisition date. The cost of the acquisition is then allocated to the assets acquired based on their relative fair values. Goodwill is not recognized in an asset acquisition. Direct transaction costs include those third-party costs that can be directly attributable to the asset acquisition and would not have been incurred absent the acquisition transaction.

Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable. 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.

Intangible Assets

Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights, (iv) developed technology acquired, (v) partner, customer, creator and influencer related intangible assets acquired and (vi) other intangible assets, which are recorded at cost (or in accordance with the acquisition method or cost accumulation methods described above) and amortized using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 10 years.

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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.

Impairment of Long-Lived Assets

The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of our use of the acquired assets or the strategy for our overall business; significant negative industry or economic trends; significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments; and significant decline in our stock price for a sustained period. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded.

Other assets of a reporting unit that are held and used may be required to be tested for impairment when certain events trigger interim goodwill impairment tests. In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below. For the periods presented herein, management believes that there was no impairment of long-lived assets. 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

Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Estimates of expected volatility of the underlying common stock for the expected term of the stock option used in the Black-Scholes-Merton option pricing model are determined by reference to historical volatilities of the Company’s common stock and historical volatilities of similar companies.

Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued.

A condition affecting the exercisability or other pertinent factors used in determining the fair value of an award that is based on an entity achieving a specified share price constitutes a market condition pursuant to ASC 718, “Stock based Compensation,” (“ASC 718”). A market condition is reflected in the grant-date fair value of an award, and therefore, a Monte Carlo simulation model is utilized to determine the estimated fair value of the equity-based award. Compensation cost is recognized for awards with a market condition, provided the requisite service period is satisfied, regardless of whether the market condition is ever satisfied.

Cancellation of an existing equity-classified award along with a concurrent grant of a replacement award is accounted for as a modification under ASC 718, “Stock-based Compensation.” Total compensation cost to be recognized in connection with a modification and concurrent grant of a replacement award is equal to the original grant date fair value plus any incremental fair value, calculated as the excess of the fair value of the replacement award over the fair value of the original awards on the cancellation date. Any incremental compensation cost related to vested awards is recognized immediately on the modification date. Any incremental compensation cost related to unvested awards is recognized prospectively over the remaining service period, in addition to the remaining unrecognized grant date fair value.

On January 1, 2022, the Company issued 1,350,000 performance stock units (“PSUs”) under the Company’s 2014 Amended and Restated Stock Option and Incentive Plan, which vest in five equal increments of 270,000 PSUs, based on satisfaction of the following vesting conditions during the three-year period commencing on January 1, 2022: (i) the Company’s stock price equaling $4.75 per share based on 60-day volume weighted average price (“VWAP”); (ii) the Company’s stock price equaling $6.00 per share based on 60-day VWAP; (iii) the Company’s stock price equaling $7.00 per share based on 60-day VWAP; (iv) the Company’s stock price equaling $8.00 per share based on 60-day VWAP; and (v) the Company’s stock price equaling $9.00 per share based on 60-day VWAP. Noncash stock compensation expense related to the PSUs totaled $48,000 and $298,000 for the three and six months ended June 30, 2023, respectively. Noncash stock compensation expense related to the PSUs totaled $564,000 and $1,121,000 for the three and six months ended June 30, 2022, respectively.

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In December 2022, the Company issued 500,000 warrants to a third-party for nonemployee investor relations services. The warrants have an exercise price of $0.67, a grant date fair value of $0.50, vest in twelve equal monthly installments commencing on the grant date and expire five years from the grant date. Compensation expense included in the condensed consolidated statement of operations for the three and six months ended June 30, 2023 totaled $62,000 and $124,000, respectively.

Modifications to Equity-Based Awards

On April 30, 2023, the Board of Directors of the Company (the “Board”) approved the cancellation of the 1,350,000 PSUs previously granted to certain executives under the 2014 Plan (as described above). In exchange for the cancelled PSUs, the executives were granted an aggregate of 1,350,000 PSUs, which vest, over a five-year term, upon the Company’s common stock achieving certain VWAP goals as follows: (i) 20% upon achieving a 60-day VWAP of $0.80 per share, (ii) 20% upon achieving a 60-day VWAP of $1.00 per share; (iii) 20% upon achieving a 60-day VWAP of $1.20 per share; (iv) 20% upon achieving a 60-day VWAP of $1.40 per share; and (v) 20% upon achieving a 60-day VWAP of $1.60 per share, in each case, as quoted on the Nasdaq Capital Market (“PSU Modification”). Total incremental compensation cost related to the PSU Modification totaled $540,000 which will be recognized over the implied service period, ranging from .69 years to 1.5 years, calculated in connection with the Monte Carlo simulation model used to determine the fair value of the PSUs immediately before and after the modification. Incremental noncash stock compensation expense related to the PSU Modification recognized during the three months ended June 30, 2023 totaled $89,000.

On April 30, 2023, the Board approved the cancellation of certain stock options to purchase an aggregate of 1,179,979 shares of the Company’s common stock previously granted to certain executives and employees under the Company’s 2014 Amended and Restated Employee Stock Option and Incentive Plan (the “2014 Plan”), with an average exercise price of approximately $2.82. In addition, the Board approved the cancellation of certain warrants to purchase an aggregate of 522,015 shares of the Company’s common stock previously granted to certain executives and employees, with an average exercise price of approximately $9.99. In exchange for the cancelled options and warrants, certain executives and employees were granted options to purchase an aggregate of 6,100,000 shares of common stock under the 2014 Plan, at an exercise price of $0.49 (the closing price of the Company’s common stock as listed on the Nasdaq Capital Market on April 28, 2023, the last trading day before the approval of the awards), with one-third of the options vesting on the April 30, 2023, the grant date, with the remainder vesting monthly over the thirty-six month period thereafter, subject to continued service (“Executive Grant Modifications”). The exercise of the options under these awards is contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan, and will be subject to cancellation in the event stockholder approval is not obtained. As such, there was no financial statement impact for the periods presented in connection with this equity award exchange.

On May 1, 2023, the Board approved the cancellation of options to purchase an aggregate of 584,438 shares of the Company’s common stock previously granted to its employees under the 2014 Plan, in exchange for newly issued options to purchase an aggregate of 1,356,000 shares of the Company’s common stock under the 2014 Plan, at an exercise price equal to the closing trading price on May 1, 2023, or $0.4905, with a range of zero to one-third of the options vesting on the May 1, 2023, the grant date, dependent upon the tenure of the employee, and the remainder vesting monthly over the forty-eight month period thereafter, subject to continued service (“Employee Grant Modifications”). Unrecognized compensation expense related to the original award as of the date of the Employee Grant Modifications totaled $960,000 which will be recognized prospectively over the remaining service period of 4 years. Total incremental compensation cost related to the Employee Grant Modifications totaled $449,000, $101,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $348,000 related to unvested awards which will be recognized prospectively over the remaining service period of 4 years.

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Total noncash stock-based compensation expense for the periods presented was included in the following financial statement line items:

	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2023		2022		2023		2022
Sales, marketing and advertising	$	236,000	$	251,000	$	400,000		481,000
Engineering, technology and development		102,000		74,000		191,000		263,000
General and administrative		411,000		675,000		941,000		1,355,000
Total noncash stock compensation expense	$	749,000	$	1,000,000	$	1,532,000		2,099,000

Financing Costs

Specific incremental costs directly attributable to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the equity financing. In the event that the proposed or actual equity financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred equity financing costs, if any, are included in other current assets in the accompanying condensed consolidated balance sheet. Deferred financing costs totaled $282,000 and $349,000 as of June 30, 2023 and December 31, 2022, respectively.

Convertible Debt

The Company evaluates convertible notes outstanding to determine if those contracts or embedded components of those contracts qualify as derivatives under ASC 815, “Derivatives and Hedging,” (“ASC 815”). ASC 815 requires conversion, redemption options, call options and other features (hereinafter, “Embedded Instruments”) contained in the Company’s convertible debt instruments that meet certain criteria to be bifurcated and separately accounted for as an embedded derivative. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

In the event that the fair value option election is not made, as described below, the Company evaluates the balance sheet classification for convertible debt instruments issued to determine whether the instrument should be classified as debt or equity, and whether the Embedded Instruments should be accounted for separately from the host instrument. Embedded Instruments of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the feature, were it a standalone instrument, meets the definition of an “embedded derivative.” Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it is required to be separated from the host instrument and classified as a derivative liability carried on the balance sheet at fair value, with any changes in its fair value recognized currently in the condensed consolidated statements of operations.

Fair Value Option (“FVO”) Election. The Company accounts for certain convertible notes issued, as described at Note 5 under the fair value option election pursuant to ASC 825, “Financial Instruments,” (“ASC 825”) as discussed below. The convertible notes accounted for under the FVO election are each debt host financial instruments containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825 provides for the “fair value option” election, to the extent not otherwise prohibited by ASC 825, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment, as required by ASC 825, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) in the accompanying condensed consolidated statement of operations. With respect to the note described at Note 5, as provided for by ASC 825, the estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying condensed consolidated statements of operations, since the change in fair value of the convertible notes payable was not attributable to instrument specific credit risk. The estimated fair value adjustment is included in interest expense in the accompanying condensed consolidated statement of operations.

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Reportable Segments

The Company utilizes the management approach to identify the Company’s operating segments and measure the financial information disclosed, based on information reported internally to the Chief Operating Decision Maker (“CODM”) to make resource allocation and performance assessment decisions. An operating segment of a public entity has all the following characteristics: (1) it engages in business activities from which it may earn revenue and incur expense; (2) its operating results are regularly reviewed by the public entity’s CODM to make decisions about resources to be allocated to the segment and assess its performance: and (3) its discrete financial information is available. Based on the applicable criteria under the standard, the components of the Company’s operations are its: (1) media and advertising component, including its publishing and content studio component; and (2) the Company’s direct-to-consumer component.

A reportable segment is an identified operating segment that also exceeds the quantitative thresholds described in the applicable standard. Based on the applicable criteria under the standard, including quantitative thresholds, management has determined that the Company has one reportable segment that operated primarily in domestic markets during the periods presented herein.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents, investments and accounts receivable. The Company places its cash equivalents and investments primarily in highly rated money market funds. Cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents.

Risks and Uncertainties

Concentrations. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, and vendors whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable, as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Number of customers > 10% of revenue / percent of revenue	Two	/	22%	Two	/	46%	One	/	11%	Three	/	36%

Revenue concentrations were comprised of the following revenue categories:

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2023			2022			2023			2022
Media and advertising		22	%		46	%		11	%		25	%
Publishing and content studio		-	%		-	%		-	%		11	%
		22	%		46	%		11	%		36	%

	June 30, 2023				December 31, 2022
Number of customers > 10% of accounts receivable / percent of accounts receivable	Three	/	36	%	Two	/	25	%
Number of vendors > 10% of accounts payable / percent of accounts payable	One	/	12	%	One	/	10	%

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Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period. Diluted earnings per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period, including the dilutive effect of common stock equivalents. Potentially dilutive common stock equivalents primarily consist of common stock potentially issuable in connection with the conversion of outstanding convertible notes payable, employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings. Common stock underlying all outstanding stock options, restricted stock units and warrants, totaling 15,757,000 and 6,787,000 at June 30, 2023 and 2022, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive. Common stock potentially issuable in connection with the conversion of outstanding convertible preferred stock totaling 38,989,000 at June 30, 2023, have been excluded from the computation of diluted loss per share for the three and six months ended June 30, 2023 because the effect of inclusion would have been anti-dilutive.

Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets.

Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the periods presented.

During the three months ended June 30, 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers, as described at Note 3. The Bannerfy Acquisition was treated for tax purposes as a nontaxable transaction and, as such, the historical tax bases of the acquired assets and assumed liabilities, net operating losses, and other tax attributes of Bannerfy carried over, with no step-up to fair value of the underlying tax bases of the acquired net assets. The acquisition method of accounting included the establishment of a net deferred tax liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. When an acquisition of a group of assets is purchased in a transaction that is not accounted for as a business combination under ASC 805, a difference between the book and tax bases of the assets arises. ASC 740, “Income Taxes,” (“ASC 740”) required the use of simultaneous equations to determine the assigned value of the asset and the related deferred tax asset or liability. As a result of the disposal of the Bannerfy intangible assets, the Company fully amortized the related remaining net deferred tax liability, resulting in a $313,000 tax benefit reflected in the condensed consolidated statement of operations for the three and six months ended June 30, 2023.

Recent Accounting Guidance

Recent Accounting Pronouncements – Adopted. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers, in order to align the recognition of a contract liability with the definition of a performance obligation. This standard is effective for the Company beginning in the first quarter of fiscal year 2023. The adoption of the new accounting standard did not have a material impact on the condensed consolidated balance sheets or statements of operations for the periods presented herein.

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3. INTANGIBLE AND OTHER ASSETS

Intangible and other assets consisted of the following for the periods presented:

	June 30,			December 31,
	2023			2022
Partner and customer relationships	$	13,566,000		$	13,376,000
Capitalized software development costs		5,745,000			5,262,000
Capitalized third-party game property costs		500,000			500,000
Developed technology		5,062,000			7,880,000
Influencers/content creators		2,559,000			2,559,000
Trade name		209,000			189,000
Domain		68,000			68,000
Copyrights and other		820,000			760,000
		28,529,000			30,594,000
Less: accumulated amortization		(12,377,000	)		(10,528,000	)
Intangible and other assets, net	$	16,152,000		$	20,066,000

Intangible assets at June 30, 2023 reflected in the table above includes the intangible assets acquired in connection with the Melon Acquisition totaling $510,000, as described at Note 4 below.

Amortization expense included in operating expense for the three and six months ended June 30, 2023 totaled $1,316,000 and $2,604,000, respectively. Amortization expense included in operating expense for the three and six months ended June 30, 2022 totaled $1,300,000 and $2,601,000, respectively. Amortization expense included in cost of revenue for the three and six months ended June 30, 2023 totaled $5,000 and $31,000, respectively. Amortization expense included in cost of revenue for the three and six months ended June 30, 2022 totaled $27,000 and $31,000, respectively.

During the three months ended June 30, 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere. As a result, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000, which is included in “Loss on intangible asset disposal” in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2023. Developed technology related intangibles asset acquisition costs were reduced $3,069,000, and related accumulated depreciation was reduced $785,000, in connection with the disposal of the intangible asset.

The Company expects to record amortization of intangible assets for the year ending December 31, 2023 and future fiscal years as follows:

For the years ending December 31,
2023 remaining		2,432,000
2024		4,538,000
2025		3,915,000
2026		2,653,000
2027		1,807,000
Thereafter		807,000
	$	16,152,000

4. ACQUISITIONS

Acquisition of Melon, Inc.

On May 4, 2023 (“Melon Acquisition Date”), Super League entered into an Asset Purchase Agreement (the “Melon Purchase Agreement”) with Melon, Inc., a Delaware corporation (“Melon”), pursuant to which the Company acquired substantially all of the assets of Melon (the “Melon Assets”) (the “Melon Acquisition”). The consummation of the Acquisition (the “Melon Closing”) occurred simultaneously with the execution of the Purchase Agreement. Melon is a development studio building innovative virtual worlds in partnership with powerful consumer brands across music, film, TV, sports, fashion and youth culture. The acquisition of Melon further strengthens the Company’s position as a one-stop solutions provider and strategic operating partner for brands and businesses seeking to expand and activate communities throughout the gaming metaverse.

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At the Melon Closing, the Company paid an aggregate total of $900,000 to Melon (the “Melon Closing Consideration”), of which $150,000 was paid in the form of the forgiveness of certain working capital advances paid in the form of cash to Melon between the dates of April 14, 2023 to May 4, 2023 (prior to the Melon Closing) in the equivalent amount, and the remaining $750,000 was paid in the form of shares of the Company’s common stock, valued at $0.4818 (the “Closing Share Price”), the VWAP, as quoted on the Nasdaq Capital Market, for the five (5) trading days immediately preceding May 4, 2023.

Pursuant to the terms and subject to the conditions of the Purchase Agreement, up to an aggregate of $2,350,000 (the “Melon Contingent Consideration”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the Melon Closing until December 31, 2023 (the “First Earnout Period”) in the amount of $1,000,000, and for the year ending December 31, 2024 (the “Second Earnout Period) in the amount of $1,350,000 (the “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”). The Melon Contingent Consideration is payable in the form of cash and common stock, with $600,000 of the aggregate Melon Contingent Consideration being payable in the form of cash, and $1,750,000 payable in the form of common stock, valued at the greater of (a) the Closing Share Price, and (b) the VWAP for the five trading days immediately preceding the end of each respective Earnout Period.

Additionally, pursuant to the Melon Purchase Agreement, the Company entered into employment agreements with two former key Melon employees (“Key Melon Employees”), pursuant to which the Key Melon Employees were granted inducement awards consisting of restricted stock unit awards (“RSUs”) to acquire an aggregate of 2,075,550 shares of the Company’s common stock. The awards were granted pursuant to terms and conditions fixed by the Compensation Committee of the Board and as an inducement material to each new employee entering employment with Super League in accordance with Nasdaq Listing Rule 5635(c)(4). Of the 2,075,550 RSUs: (A) 830,220 of the RSUs will vest in 25 equal monthly installments beginning on May 4, 2023, and on the first of each calendar month, subject to the applicable employee’s continued service with Super League on each such vesting date; and (B) 1,245,330 of the RSUs will vest as follows: (i) 25% will vest upon the achievement of certain net revenue targets for the fiscal year ending December 31, 2024, to be determined by the Board in its discretion; (ii) 25% upon the achievement of certain net revenue targets for the fiscal year ending December 31, 2025, to be determined by the Board in its sole discretion; (iii) 25% upon Super League’s common stock maintaining a minimum closing price of at least $1.50 over a rolling 30 consecutive trading day period, as quoted on the Nasdaq Capital Market; and (iv) 25% upon Super League’s common stock maintaining a minimum closing price of at least $2.50 over a rolling 30 consecutive trading day period, as quoted on the Nasdaq Capital Market. The vesting of the RSUs will accelerate upon a change of control of the Company. In addition, upon (Y) the Company’s termination of the employment of the respective employee without cause, or (Z) the respective employees resignation for good reason, the RSUs will continue to vest as if (Y) or (Z) had not occurred. The RSUs are subject to the terms and conditions of the RSU agreement covering each grant.

The Acquisition was approved by the board of directors of each of the Company and Melon, and was approved by the sole stockholder of Melon.

In accordance with the acquisition method of accounting, the financial results of Super League presented herein include the financial results of Melon subsequent to the Melon Closing Date. Disclosure of revenue and net loss for Melon on a stand-alone basis for the three and six months ended June 30, 2023 is not practical due to the integration of Melon activities, including sales, products, advertising inventory, resource allocation and related operating expense, with those of the consolidated Company upon acquisition, consistent with Super League operating in one reporting segment.

The Company determined that the Melon Acquisition constitutes a business acquisition as defined by ASC 805. Accordingly, the assets acquired and liabilities assumed in the transaction were recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition, totaling approximately $47,000, were expensed as incurred pursuant to the acquisition method of accounting in accordance with ASC 805. Super League’s preliminary purchase price allocation was based on an evaluation of the appropriate fair values of the assets acquired and liabilities assumed and represents management’s best estimate based on available data. Fair values are determined based on the requirements of ASC 820.

The following table summarizes the determination of the fair value of the purchase price consideration paid in connection with the Melon Acquisition:

Cash consideration at closing			$	150,000
Equity consideration at closing – shares of common stock		1,556,663
Super League closing stock price per share on the Melon Closing Date	$	0.4640
Fair value of equity consideration issued at closing	$	722,000		722,000
Fair value of contingent consideration at closing				1,350,000
Fair value of total consideration issued at closing			$	2,222,000

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The purchase price allocation was based upon a preliminary estimate of the fair value of the assets acquired and the liabilities assumed by the Company in connection with the Melon Acquisition, as follows:

	Amount
Assets Acquired and Liabilities Assumed:
Accounts receivable and other assets	$	36,000
Liabilities assumed		(188,000	)
Identifiable intangible assets		510,000
Identifiable net assets acquired		358,000
Goodwill		1,864,000
Total purchase price	$	2,222,000

The following table presents details of the fair values of the acquired intangible assets of Melon:

	Estimated Useful Life (in years)		Amount
Developed technology		5	$	250,000
Developer relationships		2		50,000
Customer relationships		6		190,000
Trade names / trademarks		0.5		20,000
Total intangible assets acquired			$	510,000

Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The estimated fair value of the Melon Contingent Consideration was $1,432,000 at June 30, 2023, resulting in a change in fair value of $82,000, which is included in contingent consideration expense in the accompanying statement of operations for the three and six months ended June 30, 2023. The fair value of the Melon Contingent Consideration on the respective valuation dates was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs, as described at Note 2. Assumptions utilized in connection with utilization of the Monte Carlo simulation model for the periods presented included risk free interest rates of 4.04 % and 5.14%, volatility rate of 85%, and discount rate of 30%.

Aggregated amortization expense for the three months ended June 30, 2023, related to intangible assets acquired in connection with the Melon Acquisition, totaled $23,000. Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired. Goodwill recorded in connection with the Melon Acquisition is primarily attributable to expected synergies from combining the operations and assets of Super League and Melon, and also includes residual value attributable to the assembled and trained workforce acquired in the acquisition.

Management is primarily responsible for determining the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as of the Melon Closing Date. Management considered a number of factors, including reference to a preliminary independent analysis of estimated fair values solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed. The analysis included a preliminary discounted cash flow analysis which estimated the future net cash flows expected to result from the respective assets acquired as of the Melon Closing Date. A discount rate consistent with the risks associated with achieving the estimated net cash flows was used to estimate the present value of future estimated net cash flows. The Company is in the process of finalizing the estimates and assumptions developed in connection with the independent analysis of estimated fair values of intangible assets acquired solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed. Any adjustments to the fair values of intangibles assets acquired, or estimates of economic useful lives of the intangible assets acquired, could impact the carrying value of those assets and related goodwill, as well as the estimates of periodic amortization of intangible assets acquired to be reflected in the statement of operations.

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

Description	Valuation Method Applied	Valuation Method Description	Assumptions
Customer relationships	Multi-Period Excess Earnings Method “MPEE”) under the Income Approach	MPEEM is an application of the DCF Method, whereby revenue derived from the intangible asset is estimated using the overall business revenue, adjusted for attrition, obsolescence, cost of goods sold, operating expense, and taxes. Required returns attributable to other assets employed in the business are subtracted. The “excess” earnings are attributable to the intangible asset, and are discounted to present value at a rate of return to estimate the fair value of the intangible asset.	Discount rate: 30.0%; Forecast period: 6.7 years; Attrition Rate: 30.0%.
Trade names / trademarks	Relief-from-Royalty Method under the Income Approach	Under the Relief-from-Royalty method, the royalty savings is calculated by estimating a reasonable royalty rate that a third-party would negotiate in a licensing agreement. Such royalties are most commonly expressed as a percentage of total revenue involving the technology.	Forecast period: 8.0 months; Royalty Rate: 1.0%; Discount Rate: 30.0%.
Non-Compete agreements	Differential Cash Flows	The Differential Cash Flows Approach is a version of the income approach that values an intangible asset as the present value of the cash flows that a company would lose if they did not have the asset in place. The differential cash flow is calculated as the difference between the cash flow assuming competition and the cash flow without competition.	Competition Probability: 30.0%; Revenue impact: 20.0%; Discount Rate: 30.0%; Term 2.16 years.
Developed technology	Replacement Cost Method	In the Replacement Cost Method, value is estimated by determining the current cost of replacing an asset with one of equivalent economic utility. The premise of the approach is that a prudent investor would pay no more for an asset than the amount for which the utility of the asset could be replaced.	Rate of Return: 30.0%; Discount rate: 30.0%; Replacement period: 3.0 months.

For tax purposes, consistent with the accounting for book purposes, the Melon Closing Consideration was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess purchase price allocated to goodwill. As a result, no deferred tax assets or liabilities were recorded with the acquisition and all of the goodwill is expected to be deductible for tax purposes.

The following unaudited pro forma combined results of operations for the periods presented are provided for illustrative purposes only. The unaudited pro forma combined statements of operations for the three and six months ended June 30, 2023 and 2022, assume the acquisition occurred as of January 1, 2022. The unaudited pro forma combined financial results do not purport to be indicative of the results of operations for future periods or the results that actually would have been realized had the entities been a single entity during these periods.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue	$	5,357,000		$	4,900,000		$	9,089,000		$	9,358,000
Net Loss		(6,808,000	)		(9,752,000	)		(14,866,000	)		(17,925,000	)

Pro forma adjustments primarily relate to the amortization of identifiable intangible assets acquired over the estimated economic useful life as described above, the exclusion of nonrecurring transaction costs, the exclusion of depreciation related to tangible and intangible assets of Melon existing immediately prior to the Melon Acquisition Date, and adjustments related to administrative redundancies.

Acquisition of Super Biz – Contingent Consideration

On October 4, 2021 (“Super Biz Closing Date”), the Company entered into an Asset Purchase Agreement (the “Super Biz Purchase Agreement”) with Super Biz Co. and the founders of Super Biz (the “Founders”), pursuant to which the Company acquired (i) substantially all of the assets of Super Biz (the “Super Biz Assets”), and (ii) the personal goodwill of the Founders regarding Super Biz’s business, (the “Super Biz Acquisition”). The consummation of the Super Biz Acquisition (the “Super Biz Closing”) occurred simultaneously with the execution of the Super Biz Purchase Agreement on the Super Biz Closing Date.

Pursuant to the terms and subject to the conditions of the Super Biz Purchase Agreement, up to an aggregate amount $11.5 million will be payable to Super Biz and the Founders in connection with the achievement of certain revenue milestones for the period from the Super Biz Closing Date until December 31, 2022 (“Initial Earn Out Period”) and for the fiscal year ending December 31, 2023 (the “Super Biz Contingent Consideration”) (“Super Biz Earn Out Periods”). The Super Biz Contingent Consideration is payable in the form of both cash and shares of the Company’s common stock, in equal amounts, as more specifically set forth in the Super Biz Purchase Agreement.

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The Company hired the Founders of Super Biz in connection with the Super Biz Acquisition. Pursuant to the provisions of the Super Biz Purchase Agreement, in the event that a Founder ceases to be an employee during any of the Super Biz Earn Out Periods, as a consequence of his resignation without good cause, or termination for cause, the Super Biz Contingent Consideration will be reduced by one-half (50%) for the respective Super Biz Earn Out Periods, if and when earned. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such, the Super Biz Contingent Consideration, is accounted for as post-combination services and expensed in the period that payment of any amounts of contingent consideration is determined to be probable and reasonably estimable. During the year ended December 31, 2022, the Company determined that it was probable that the contingency associated with the Super Biz Earn Out Periods would be met in accordance with the terms of the Super Biz Purchase Agreement, and the applicable amounts were reasonably estimable. Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

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The change in accrued Super Biz Contingent Consideration, including the change in fair value measured using Level 1 inputs, as described at Note 2, and the related income statement impact for the periods presented was comprised of the following:

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Beginning balance	$	3,674,000		$	-	$	3,206,000		$	-
Change in fair value		(13,000	)		-		204,000			-
Current period accrued contingent consideration		471,000			-		722,000			-
Contingent consideration payments(2)		(3,423,000	)		-		(3,423,000	)		-
Accrued contingent consideration	$	709,000	(1)	$	-	$	709,000	(1)	$	-

(1) Includes approximately 216,000 shares of common stock valued at $0.38, the closing price of our common stock as of the applicable date.

(2) In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 987,973 shares of our common stock valued at $548,000.

5. NOTE PAYABLE

Convertible Notes Payable at Fair Value

On May 16, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with three institutional investors (collectively, the “Note Holders”) providing for the sale and issuance of a series of senior convertible notes in the aggregate original principal amount of $4,320,000, of which 8% is an original issue discount (“OID”) (each, a “Note,” and, collectively, the “Notes,” and such financing, the “Note Offering”). The Notes accrued interest at a guaranteed annual rate of 9% per annum, were set to mature 12 months from the date of issuance, and were convertible at the option of the Note Holders into that number of shares of the Company’s common stock, equal to the sum of the outstanding principal balance, accrued and unpaid interest, and accrued and unpaid late charges (the “Conversion Amount”), divided by $4.00 (the “Conversion Price”), subject to adjustment upon the occurrence of certain events as more specifically set forth in the Note, as amended. In the event of the occurrence of an event of default, the Note Holders may, at the Note Holder’s option, convert all, or any part of, the Conversion Amount into shares of common stock at 90% of the lowest volume weighted average price of the ten trading days preceding the date for which the price is being calculated.

In addition, the Company was required to redeem all or a portion of the Notes under certain circumstances, and, in the event (A) the Company sold Company common stock pursuant to the March 25, 2022 Purchase Agreement, described below, or (B) consummated a subsequent equity financing, then the Note Holders had the right, but not the obligation, to require the Company to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Conversion Amount then remaining under the Notes, in cash, at a price equal to the Conversion Amount being redeemed.

The Notes were issued with an original issue discount of $320,000, or 8%, which was recorded as an adjustment to the carrying amount of the Notes. The original issue discount was amortized using the interest method over the contractual term of the Notes and reflected as interest expense in the statement of operations. At December 31, 2022, the balance of the original issue discount was $40,000, which is included in “Convertible note payable and accrued interest” in the accompanying condensed consolidated balance sheet. Total amortization of original issue discount for the three and six months ended June 30, 2023 was $0 and $40,000, respectively.

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

At December 31, 2022, the remaining principal balance of the Notes totaled $539,000, and accrued interest totaled $180,000, both of which were paid in full during the three months ended March 31, 2023. As of March 31, 2023, all amounts of principal and interest under the Notes were fully paid, resulting in a Convertible note payable and accrued interest balance of $0.

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6. STOCKHOLDERS’ EQUITY AND EQUITY-LINKED INSTRUMENTS

Convertible Preferred Stock Issuances

Series AA Convertible Preferred Financing

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

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
April 19, 2023	Series AA	$	0.4715		7,680	$	7,680,000	$	966,000	$	6,714,000		16,288,000		2,285,000
April 20, 2023	Series AA-2	$	0.5215		1,500		1,500,000		130,000		1,370,000		2,876,000		278,000
April 28, 2023	Series AA-3	$	0.4750		1,025		1,025,000		133,000		892,000		2,158,000		313,000
May 5, 2023	Series AA-4	$	0.4642		1,026		1,026,000		133,000		893,000		2,210,000		320,000
May 26, 2023	Series AA-5	$	0.5300		550		550,000		72,000		479,000		1,038,000		150,000
Total					11,781	$	11,781,000	$	1,434,000	$	10,348,000		24,570,000		3,346,000

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

In connection with the Series AA Offerings, the Company filed Certificates of Designation of Preferences, Rights and Limitations of the Series AA Preferred Stock (the “Series AA Certificates of Designation”) with the State of Delaware.

Each share of Series AA Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in each Series AA Certificates of Designation, into such number of shares of the Company’s common stock equal to the number of Series AA Preferred to be converted, multiplied by the stated value of $1,000 (the “AA Stated Value”), divided by the applicable conversion price (refer to table above), subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1)). In addition, subject to beneficial ownership and primary market limitations, on the one year anniversary of the respective filing date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series AA Preferred if the VWAP of the Company’s common stock over the previous ten days as reported on the NASDAQ Capital Market (the “Series AA VWAP”), equals at least 250% of the Conversion Price, or (z) 100% of the outstanding shares of Series AA Preferred if the Series AA VWAP equals at least 300% of the respective conversion price.

The Series AA Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series AA Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series AA Certificates of Designation in a manner that adversely affects the powers, preferences or rights of the Series AA Preferred, (b) increasing the number of authorized shares of Series AA Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series AA Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind outside of accounts payable in the ordinary course of business, (e) entering into any agreement with respect to the foregoing; or (f) approving the issuance of common stock below the Conversion Price Floor (as defined in the AA Certificate of Designations). In addition, no holder of Series AA Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series AA Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series AA Preferred (together with any Parity Securities (as defined in the Series AA Certificate of Designations)) will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the AA Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

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Holders of the Series AA Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series AA Preferred then held by such holder on the 12 and 24 month anniversaries of the respective filing date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series AA Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

Pursuant to the Subscription Agreements, purchasers that (a) previously held shares of the Company’s Series A Preferred Stock, par value $0.001 per share, or (b) purchased at least $3.5 million in shares of Series AA Preferred (subject to the acceptance of such lesser amounts in the Company’s sole discretion), shall have the right to purchase shares of a newly designated series of Preferred Stock of the Company containing comparable terms as the Series AA Preferred (the “Additional Investment Right”) from the date of each respective closing through the date that is 18 months thereafter as follows: (i) such investor may purchase an additional dollar amount equal to its initial investment amount at $1,000 per share (the “AA Original Issue Price”), with a conversion price equal to the conversion price in effect on the date of original purchase; and (ii) such investor may purchase an additional dollar amount equal to its initial investment amount at the AA Original Issue Price, with a conversion price equal to 125% of the respective conversion price in effect on the date of original purchase.

Pursuant to the Series AA Certificate of Designations: (i) for as long as Series AA Preferred remains outstanding and subject to certain carveouts as described in the Series AA Certificates of Designations, if the Company conducts an offering at a price per share less than the then current conversion price (the “Future Offering Price”) consisting of common stock, convertible or derivative instruments, and undertaken in an arms-length third party transaction, then in such event the conversion price of the Series AA Preferred shall be adjusted to the greater of: (a) the Future Offering Price and (b) the Conversion Price Floor; and (ii) if as of the 24-month anniversary date of April 19, 2023, the VWAP (as defined in the Series AA Certificates of Designation) for the five trading days immediately prior to such 24-month anniversary date is below the then current conversion price, the holder will receive a corresponding adjustment to the then conversion price, such adjustment not to exceed the Conversion Price Floor.

The Company and the investors in the Offering also executed a registration rights agreement (the “AA Registration Rights Agreement”), pursuant to which the Company filed a registration statement on Form S-3 (File No. 333-273282), covering the resale of the shares of common stock issuable upon conversion of the Series AA Preferred, which was declared effective on August 1, 2023.

The Company sold the shares of Series AA Preferred pursuant to a placement agency agreement (the “Series AA Placement Agency Agreement”) with a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Series AA Placement Agent”) for the Offering. Pursuant to the terms of the Series AA Placement Agency Agreement, in connection with the closings of the Series AA Offerings, the Company paid the Series AA Placement Agent aggregate cash fees, and non-accountable expense allowances as disclosed in the table above, and will issue to the Series AA Placement Agent or its designees warrants (the “Series AA Placement Agent Warrants”) to purchase shares of common stock as disclosed in the table above at the conversion prices disclosed above. The Series AA Placement Agent shall also earn fees and be issued additional Series AA Placement Agent Warrants with respect to any securities issued pursuant to the Additional Investment Rights. The Company also granted the Series AA Placement Agent the right of first refusal, for a twelve (12) month period after the final closing of the Offering, to serve as the Company’s lead or co-placement agent for any private placement of the Company’s securities (equity or debt) that is proposed to be consummated with the assistance of a registered broker dealer.

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The securities to be issued in the Offering are exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, the investors are accredited investors, the investors are purchasing the securities for investment and not for resale and the Company took appropriate measures to restrict the transfer of the securities. The securities have not been registered under the Securities Act and may not be sold in the United States absent registration or an exemption from registration.

Series A Convertible Preferred Financing

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

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
November 22, 2022	Series A	$	0.6200		5,359	$	5,359,000	$	752,000	$	4,607,000		8,644,000		1,253,000
November 28, 2022	Series A-2	$	0.6646		1,297		1,297,000		169,000		1,128,000		1,952,000		283,000
November 30, 2022	Series A-3	$	0.6704		1,733		1,733,000		225,000		1,508,000		2,585,000		375,000
December 22, 2022	Series A-4	$	0.3801		1,934		1,934,000		251,000		1,683,000		5,088,000		738,000
January 31, 2023	Series A-5	$	0.5546		2,299		2,299,000		299,000		2,000,000		4,145,000		601,000
Total – as of June 30, 2023					12,622	$	12,622,000	$	1,696,000	$	10,926,000		22,414,000		3,250,000

(1) Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series A Preferred Stock offering

Use of net proceeds from the Series A Offerings for the periods presented include the repayment of certain indebtedness and working capital and general corporate purposes, including sales and marketing activities and product development. As disclosed at Note 5, in the event the Company consummated a subsequent equity financing during the term of the Notes, the Company was required, at the option of the Note Holders, to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Notes outstanding upon closing of such equity financing. For the three and six months ended June 30, 2023, $0 and $719,000 of the net proceeds from the Series A Offerings were utilized in connection with the redemption of the Notes and related accrued interest, respectively.

On the respective effective dates, the Company filed certificates of designation of preferences, rights and limitations of the Series A Preferred with the State of Delaware, respectively.

Each share of Series A Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in each Series A Certificate of Designation, into such number of shares of the Company’s common stock, equal to the number of Series A Preferred to be converted, multiplied by the stated value of $1,000 (the “Stated Value”), divided by the applicable conversion price (refer to the table above), subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1)) on the date of closing. In addition, subject to beneficial ownership and primary market limitations: (1) the Series A Preferred will automatically convert into shares of common stock at the Conversion Price upon the earlier of (a) the 24-month anniversary of the Effective Date or (b) the consent to conversion by holders of at least 51% of the outstanding shares of Series A Preferred; and (2) on the one year anniversary of the Effective Date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series A Preferred if the VWAP of the Company’s common stock over the previous 10 days as reported on the NASDAQ Capital Market (the “Series A VWAP”), equals at least 250% of the Conversion Price, or (z) 100% of the outstanding shares of Series A Preferred if and only if the Series A VWAP equals at least 300% of the Conversion Price.

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

Conversion Date	Series Designation	Conversion Price		Preferred Shares Converted		Conversion Shares – Common Stock
06/13/2023	Series A	$	0.6200		1,771		2,947,746
06/14/2023	Series A-2	$	0.6646		1,160		1,890,644
06/21/2023	Series A-3	$	0.6704		1,200		2,506,437
06/26/2023	Series A-4	$	0.3801		280		488,986
06/29/2023	Series A-5	$	0.5546		100		161,292
Totals					4,511		7,995,105

The Series A Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series A Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series A Certificate of Designation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred, (b) increasing the number of authorized shares of Series A Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series A Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind in excess of $5 million, or I entering into any agreement with respect to the foregoing. In addition, no holder of Series A Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series A Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series A Preferred will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

Holders of the Series A Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series A Preferred then held by such holder on the 12 and 24-month anniversaries of the respective filing date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series A Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

The Company and the investors in the Series A Offerings also executed a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company filed registration statement on Form S-3 (File No. 333-271424), covering the resale of the shares of common stock issuable upon conversion of the Series A Preferred, which was declared on June 5, 2023.

The Company sold the shares of Series A Preferred pursuant to a Placement Agency Agreement (the “Placement Agency Agreement”) with a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Placement Agent”) for the Series A Offerings.

Pursuant to the terms of the Placement Agency Agreement, we agreed to pay to the Placement Agent at each Closing a cash fee equal to 10% of the gross proceeds raised in the Series A Offerings and (ii) a non-accountable expense allowance equal to 3% of the gross proceeds of the Series A Offerings. In addition, we agreed to issue to the Placement Agent or its designees for nominal consideration and following the final closing under the Series A Offerings, five-year warrants to purchase 14.5% of the shares of common stock issuable upon conversion of the Series A Preferred shares sold in the Series A Offerings, at an exercise price equal to the applicable conversion price. The Placement Agent Warrants provide for a cashless exercise feature and are exercisable for a period of five years from the Effective Date. In addition, the Company agreed to grant the Placement Agent the right to appoint, subject to the Company’s approval, one representative to serve as a member of the Company’s Board of Directors upon the closing of at least $10 million in aggregate in connection with the Series A Offerings.

The securities issued in the Series A Offerings are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, the investors were accredited investors, the investors purchased the securities for investment and not for resale and the Company took appropriate measures to restrict the transfer of the securities. The securities have not been registered under the Securities Act and may not be sold in the United States absent registration or an exemption from registration.

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Placement Agent Warrants

The Placement Agent Warrants issued in connection with the Series A Preferred and the Series AA Preferred, described above, include provisions that are triggered in the event of the occurrence of a Fundamental Transaction, as defined in the underlying warrant agreement, which contemplates the potential for certain transactions that result in a third-party acquiring more than 50% of the outstanding shares of common stock of the Company for cash or other assets. Given the existence of multiple classes of voting stock for the Company, as described above, the Fundamental Transaction provisions in the warrant agreements could result in a 50% or more change in ownership of outstanding common stock, without a 50% change in voting interests. As such, the Placement Agent Warrants are not eligible for the scope exception under ASC 815, and therefore, the fair value of the Placement Agent Warrants are recorded as a liability at fair value on the condensed consolidated balance sheet and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

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

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Beginning balance	$	-		$	-	$	-		$	-
Initial fair value of warrant liability – grant date		2,804,000			-		2,804,000			-
Change in fair value		(1,040,000	)		-		(1,040,000	)		-
Fair value of warrant liability at June 30, 2023	$	1,764,000		$	-	$	1,764,000		$	-

The fair value of the Placement Agent Warrants was estimated using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions for the applicable dates presented:

				June 30,
	Grant Date			2023
Expected Volatility		95%			95%
Risk–free interest rate		3.88%			4.13%
Dividend yield		-%			-%
Expected life of options (in years)	5.0	-	5.19	4.99	-	5.18

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Common Stock Purchase Agreement

On March 25, 2022, we entered into a common stock purchase agreement (the “Purchase Agreement”) with Tumim Stone Capital, LLC (“Tumim”). Pursuant to the Purchase Agreement, the Company 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 (the “Tumim Offering”), subject to certain limitations and conditions. As consideration for Tumim’s commitment to purchase shares of common stock under the Purchase Agreement, the Company issued to Tumim 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 the Company from issuing and selling more than 7,361,833 shares of its common stock, including the Commitment Shares, which number equals 19.99% of the common stock issued and outstanding as of March 25, 2022, unless the Company obtains stockholder approval to issue additional shares, or unless certain exceptions apply. In addition, a beneficial ownership limitation in the agreement initially limits the Company from directing Tumim to purchase shares of common stock if such purchases would result in Tumim beneficially owning more than 4.99% of the then-outstanding shares of common stock (subject to an increase to 9.99% at Tumim’s option upon at least 61 calendar days’ notice).

From and after the initial satisfaction of the conditions to the Company’s right to commence sales of common stock to Tumim (such event, the “Commencement,” and the date of initial satisfaction of all such conditions, the “Commencement Date”), the Company may direct Tumim to purchase shares of common stock at a purchase price per share equal to 95% of the average daily dollar volume-weighted average price for the common stock during the three consecutive trading day period immediately following the date on which the Company delivers to Tumim a notice for such purchase. The Company will control the timing and amount of any such sales of common stock to Tumim. Actual sales of shares of common stock to Tumim will depend on a variety of factors to be determined by the Company from time to time, including, among other things, market conditions, the trading price of the common stock, and determinations by the Company as to the appropriate sources of funding for the Company and its operations.

The Commencement Date of the Tumim Offering was March 25, 2022. Unless earlier terminated, the Purchase Agreement will automatically terminate upon the earliest of (i) the expiration of the 18-month period following the Commencement Date, (ii) Tumim’s purchase or receipt of the Total Commitment worth of common stock, or (iii) the occurrence of certain other events set forth in the Purchase Agreement. The Company has the right to terminate the Purchase Agreement at any time after Commencement, at no cost or penalty, upon five trading days’ prior written notice to Tumim. Tumim has the right to terminate the Purchase Agreement upon five trading days’ prior written notice to the Company, but only upon the occurrence of certain events set forth in the Purchase Agreement.

Use of proceeds from any Tumim Offerings includes working capital and general corporate purposes, including sales and marketing activities, product development and capital expenditures. The Company may also use a portion of the net proceeds to acquire or invest in complementary businesses, products and technologies. The Purchase Agreement contains customary representations, warranties and agreements by the Company, as well as customary indemnification obligations of the Company.

7. SUBSEQUENT EVENTS

Roblox Partner Program

On August 2, 2023, we announced that Super League joined the Roblox (NYSE: RBLX) Partner Program. As an early mover in building and distributing creative and impactful programs for brands, in partnership with hundreds of top Roblox developers, joining the Roblox Partner Program will allow Super League to elevate its offerings to include the official Roblox advertising system with Immersive Ads. The added capabilities augment Super League’s powerful end-to-end, innovative solutions, enabling brands to reach the highly engaged audience on Roblox, a global immersive platform where over 66 million people connect and communicate daily.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this Quarterly Report on Form 10-Q to “Super League Gaming, Inc.” “Company,” “we,” “us,” “our,” or similar references mean Super League Gaming, Inc. References to the “SEC” refer to the U.S. Securities and Exchange Commission.

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this interim report. Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” included Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, as well as in Item II, Part 1A of this Quarterly Report on Form 10-Q (this “Report”). Readers are cautioned not to place undue reliance on these forward-looking statements.

Overview

Super League Gaming, Inc. is a leading strategically-integrated publisher and creator of games and experiences across the world’s largest immersive digital platforms. From metaverse gaming powerhouses such as Roblox, Minecraft and Fortnite, to the most popular Web3 environments such as Sandbox and Decentraland, to bespoke worlds built using the most advanced 3D creation tools, Super League’s innovative solutions provide incomparable access to massive audiences who gather in immersive digital spaces to socialize, play, explore, collaborate, shop, learn and create. As a true end-to-end activation partner for dozens of global brands, Super League offers a complete range of development, distribution, monetization and optimization capabilities designed to engage users through dynamic, energized programs. As an originator of new experiences fueled by a network of top developers, a comprehensive set of proprietary creator tools and a future-forward team of creative professionals, Super League accelerates IP and audience success within the fastest growing sector of the media industry.

We generate revenue from (i) innovative advertising including immersive game world and experience publishing and in-game media products, (ii) direct to consumer offers, including in-game items, e-commerce, game passes and ticketing and digital collectibles, and (iii) content and technology through the production and distribution of our own, advertiser and third-party content. We operate in one reportable segment to reflect the way management and our chief operating decision maker review and assess the performance of the business.

Executive Summary

Revenue for the three and six months ended June 30, 2023 totaled $5.1 million and $8.4 million, reflecting increases of 18% and 4%, respectively, compared to the comparable prior year periods. Excluding product design and software development kit related revenue totaling $919,000 recognized during the six months ended June 30, 2022, total revenue for the six months ended June 30, 2023 increased $1.2 million, or 17% compared to the comparable prior year period. Cost of revenue for the three and six months ended June 30, 2023 was $2.9 million and $4.9 million, respectively, compared to $2.5 million and $4.4 million, respectively, in the comparable prior year periods. As a percent of revenue, gross profit for the three and six months ended June 30, 2023 was 42% and 42%, respectively, compared to 43% and 46%, respectively, for the prior year comparable periods, primarily reflecting the impact of lower cost product design and software development kit related revenue recognized during the six months ended June 30, 2022.

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Total operating expense for the three and six months ended June 30, 2023 decreased to $10.3 million and $18.9 million, compared to $10.6 million and $20.4 million, respectively, in the comparable prior year periods, reflecting decreases in cloud services and other technology platform costs and decreases in personnel, marketing and other corporate costs, resulting from ongoing cost reduction and optimization activities. Excluding noncash stock compensation and amortization expense, operating expense for the three and six months ended June 30, 2023 was $6.0 million and $12.5 million, respectively, reflecting a 28% and 20% reduction in operating expense, respectively, compared to the comparable prior year periods.

On a GAAP-basis, which includes the impact of significant noncash amortization and stock compensation charges summarized below, net loss for the three months ended June 30, 2023 was $6.8 million or $(0.17) per share, compared to a net loss of $8.7 million, or $(0.24) per share, in the comparable prior year period. On a GAAP-basis net loss for the six months ended June 30, 2023 was $14.1 million or $(0.36) per share, compared to a net loss of $16.6 million, or $(0.45) per share, in the comparable prior year period.

During the second quarter of 2023, we continued to deliver top line growth, including a 52% increase in sequential quarterly revenues and an 18% increase in revenues compared to the prior year quarter. During the quarter we continued to demonstrate the effectiveness of our overall strategy, providing us with increasing opportunities to take a greater share of advertisers’ wallet, as demonstrated by larger deal sizes and continued high repeat customer percentages, and our focus on cost reductions and optimization has positively impacted operating leverage. In addition, we continued to focus on our direct sales force and continued to see increases in sales force effectiveness, as demonstrated by larger total revenue wins for our direct sellers.

During the second quarter of 2023, we continued to work with signature clients like Hamilton and Yas Island where we are delivering immersive experiences that are not just short-term campaigns, but persistent virtual worlds that will continue to change the magnitude of our future revenues and the distribution of our future revenues, more in-line with a recurring revenue model, more forecastable in nature and less like a traditional advertising model. We are a leading scalable, vertically integrated publishing machine across some of today’s largest digital social platforms and a metaverse innovation engine for the future of the immersive web.

LandVault Strategic Partnership

In April 2023, we formed a strategic partnership with LandVault, the largest construction company in the metaverse. This created a unique powerful metaverse alliance ready to provide brands with scalable solutions and bridge the gap between Web2 and Web3.  Together, we have already launched programs in the UAE specific to virtual tourism and see significant opportunities in this vertical and others across the greater Gulf Cooperation Council (GCC) countries. 

Acquisition of Melon, Inc.

On May 4, 2023, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Melon, Inc., a Delaware corporation (“Melon”), pursuant to which the Company acquired substantially all of the assets of Melon (the “Melon Assets”) (the “Acquisition”). The consummation of the Acquisition (the “Closing”) occurred simultaneously with the execution of the Purchase Agreement. Melon is a development studio building innovative virtual worlds in partnership with powerful consumer brands across music, film, TV, sports, fashion and youth culture. With this acquisition, Super League further strengthens its position as a one-stop solutions provider and strategic operating partner for marquee brands and businesses seeking to expand and activate communities throughout the gaming metaverse.

At the Closing, the Company paid an aggregate total of $900,000 to Melon (the “Closing Consideration”), of which $150,000 was paid in the form of the forgiveness of certain working capital advances paid to Melon in the equivalent amount, and the remaining $750,000 was paid in the form of shares of the Company’s common stock, valued at $0.4818 (the “Closing Share Price”), the VWAP, as quoted on the Nasdaq Capital Market, for the five (5) trading days immediately preceding May 4, 2023.

Pursuant to the terms and subject to the conditions of the Purchase Agreement, up to an aggregate of $2,350,000 (the “Contingent Consideration”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the Closing until December 31, 2023 (the “First Earnout Period”) in the amount of $1,000,000, and for the year ending December 31, 2024 (the “Second Earnout Period) in the amount of $1,350,000 (the “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”). The Contingent Consideration is payable in the form of cash and common stock, with $600,000 of the aggregate Contingent Consideration being payable in the form of cash, and $1,750,000 payable in the form of common stock, valued at the greater of (a) the Closing Share Price, and (b) the volume weighted average price (“VWAP”) for the five trading days immediately preceding the end of each respective Earnout Period.

Additionally, pursuant to the Purchase Agreement, the Company entered into employment agreements with two former key Melon employees (“Key Melon Employees”), pursuant to which the Key Melon Employees were granted inducement awards consisting of restricted stock unit awards (“RSUs”) to acquire an aggregate of 2,075,550 shares of its common stock as described at Note 7 to the condensed consolidated financial statements contained elsewhere herein. 

Refer to Note 4 to the condensed consolidated financial statements elsewhere herein for additional information.

Roblox Partner Program

On August 2, 2023, we announced that Super League joined the Roblox (NYSE: RBLX) Partner Program. As an early mover in building and distributing creative and impactful programs for brands, in partnership with hundreds of top Roblox developers, joining the Roblox Partner Program will allow Super League to elevate its offerings to include the official Roblox advertising system with Immersive Ads. The added capabilities augment Super League’s powerful end-to-end, innovative solutions, enabling brands to reach the highly engaged audience on Roblox, a global immersive platform where over 66 million people connect and communicate daily.

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Super League was an early mover in the space, enabling extensive third-party distribution for brands on Roblox by providing hundreds of developers in the community with measurement, monetization, and optimization tools. Through the Roblox Partner Program, Super League is evolving its offering by repurposing its previous ad network to solely focus on Roblox’s Immersive Ads product to enable brands to reach audiences at scale. Super League will be integrating Roblox’s Immersive Ads into its growing suite of cross-platform offerings and capabilities inclusive of experience creation, promotion, distribution, and monetization: 

● Highly immersive ad formats for the official Roblox advertising system

● Bespoke brand integrations into popular experiences

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

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

● Robust influencer marketing programs

● In-experience brand lift studies

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

● Metaverse strategy & innovation consulting

Super League’s inclusion in the Roblox Partner Program, combined with its longstanding dedication to supporting hundreds of Roblox developers with software to help manage and grow their businesses, creates an unparalleled opportunity to achieve massive reach and powerful results for brands. Immediate benefits of being part of the program include access to educational resources and training, along with comprehensive tools, collateral, and insights for brand onboarding and education.

Increase in Authorized Common Stock

On May 30, 2023, the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation, as amended (the “Amendment”), increasing the number of authorized shares of Common Stock from 100,000,000 to 400,000,000. The Company’s Board of Directors previously approved the Amendment on March 17, 2023, and the Company obtained the approval of the Amendment by written consent of its stockholders holding greater than 50% of the voting securities of the Company on April 5, 2023.

Delisting Notice

On October 4, 2022, we received a letter (the “Letter”) from the Listing Qualifications Staff of The Nasdaq Stock Market, LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock for 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2). The Letter has no immediate effect on the listing of our common stock on the Nasdaq Capital Market.

On April 4, 2023, we received a letter (the “Extension Notice”) from the Listing Qualifications Staff of Nasdaq notifying the Company that Nasdaq has granted the Company a 180-day extension, or until October 2, 2023 (the “Extension Period”), to regain compliance with the requirement for the Company’s common stock, to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). To qualify for this additional 180-day compliance period, the Company met the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, other than the minimum bid price requirement. In addition, the Company was required to notify Nasdaq of its intent to cure the minimum bid price deficiency by effecting a reverse stock split, if necessary.

The Extension Notice has no immediate effect on the continued listing status of the Company’s common stock on the Nasdaq Capital Market. The Company’s listing on the Nasdaq Capital Market remains fully effective. 

The Company will continue to monitor the closing bid price of its common stock and seek to regain compliance with the Minimum Bid Price Requirement within the Extension Period. To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for 10 consecutive business days during the 180-day period from April 5, 2022 to October 2, 2023. If the Company does not regain compliance with the Minimum Bid Price Requirement within the Extension Period, Nasdaq will provide written notification to the Company that its common stock will be subject to delisting, at which time the Company may appeal Nasdaq’s delisting determination to a Nasdaq Hearing Panel (the “Panel”). There can be no assurance that, if the Company does need to appeal a Nasdaq delisting determination to the Panel, that such appeal would be successful.

Seasonality

Our revenue fluctuates quarterly and is generally higher in the second half of our fiscal year, with the fourth quarter typically representing our highest revenue quarter each year. Advertising spending is traditionally seasonally strong in the second half of each year, reflecting the impact of seasonal back to school, game release and holiday season advertising spending by brands and advertisers. We believe that this seasonality in advertising spending affects our quarterly results, which generally reflect relatively higher advertising revenue in the second half of each year, compared to the first half of the year.

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Consolidated Results of Operations

The following table sets forth a summary of our results of operations for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):

	Three Months												Six Months
	Ended June 30,						Change						Ended June 30,						Change
	2023			2022			$			%			2023			2022			$			%
REVENUE	$	5,052		$	4,279		$	773			18	%	$	8,374		$	8,047		$	327			4	%
COST OF REVENUE		2,911			2,458			453			18	%		4,857			4,367			490			11	%
GROSS PROFIT		2,141			1,821			320			18	%		3,517			3,680			(163	)		(4	)%
OPERATING EXPENSE
Selling, marketing and advertising		2,956			3,001			(45	)		(1	)%		5,606			5,735			(129	)		(2	)%
Engineering, technology and development		2,246			4,570			(2,324	)		(51	)%		5,202			8,780			(3,578	)		(41	)%
General and administrative		2,302			2,993			(691	)		(23	)%		4,823			5,869			(1,046	)		(18	)%
Contingent consideration		540			-			540			100	%		1,008			-			1,008			100	%
Loss on intangible asset disposal		2,284			-			2,284			100	%		2,284			-			2,284			100	%
Total operating expense		10,328			10,564			(236	)		(2	)%		18,923			20,384			(1,461	)		(7	)%
NET LOSS FROM OPERATIONS		(8,187	)		(8,743	)		(556	)		(6	)%		(15,406	)		(16,704	)		(1,298	)		(8	)%
OTHER INCOME (EXPENSE), NET		1,038			23			1,015			N/A	%		1,021			22			999			N/A	%
Loss before benefit from income taxes		(7,149	)		(8,720	)		(1,571	)		(18	)%		(14,385	)		(16,682	)		(2,297	)		(14	)%
Benefit from income taxes		313			-			313			100	%		313			46			267			580	%
NET LOSS	$	(6,836	)	$	(8,720	)	$	(1,884	)		(22	)%	$	(14,072	)	$	(16,636	)	$	(2,564	)		(15	)%

Comparison of the Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022

Revenue (dollars in thousands)

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2023		2022			$		%		2023		2022			$		%
Media and advertising	$	3,634	$	3,518	$	116		3	%	$	5,302	$	5,374	$	(72	)	(1	)%
Publishing and content studio		1,030		288		742		258	%		2,301		1,693		608		36	%
Direct to consumer		388		473		(85	)	(18	)%		771		980		(209	)	(21	)%
	$	5,052	$	4,279	$	773		18	%	$	8,374	$	8,047	$	327		4	%

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Number of customers > 10% of revenue / percent of revenue	Two	/	22%	Two	/	46%	One	/	11%	Three	/	36%
By revenue category:
Media and advertising	Two	/	22%	Two	/	46%	One	/	11%	Two	/	25%
Publishing and content studio		-			-			-		One	/	11%

Three Months Ended June 30, 2023, Compared to the Three Months Ended June 30, 2022:

● Total revenue increased $773,000 or 18% to $5.1 million, compared to $4.3 million in the comparable prior year quarter.

● Media and advertising revenue increased 3%, to $3.6 million, compared to $3.5 million in the comparable prior year quarter.

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● Publishing and content studio revenue increased $742,000, or 258%, driven primarily by an increase in game development and immersive experience related revenue, reflecting a 234% increase in average publishing and content studio sales revenue per customer.

● Direct to consumer revenue for the three months ended June 30, 2023 decreased $85,000, or 18%, compared to the comparable prior year quarter. Direct to consumer revenue is primarily comprised of revenue generated from our Minehut digital property, which provides Minecraft server hosting services on a subscription basis and other digital goods to the Minecraft gaming community, and direct to consumer in-game platform sales revenue through the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, within our official Microsoft Minecraft partner gaming servers. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

Six Months Ended June 30, 2023, Compared to the Six Months Ended June 30, 2022:

● Total revenue increased $327,000 or 4% to $8.4 million, compared to $8.0 million in the comparable prior year period. Revenue for the six months ended June 30, 2022 included $919,000 of product design and software development kit related revenue pursuant to a development agreement with a customer. Excluding product design and software development kit related revenue recognized during the six months ended June 30, 2022, total revenue for the six months ended June 30, 2023 increased $1.2 million, or 17% compared to the comparable prior year period.

● Total media and advertising revenue was relatively flat for the year to date periods presented.

● Publishing and content studio revenue, excluding product design and software development kit related revenue recognized during the six months ended June 30, 2022, increased $1.5 million, or 197%, driven primarily by an increase in game development and immersive experience related revenue, resulting in a 325% increase in average publishing and content studio sales revenue per customer. Publishing and content studio sales revenue for the six months ended June 30, 2022 included $919,000 of product design and software development kit related revenue pursuant to a development agreement with a customer.

● Direct to consumer revenue for the six months ended June 30, 2023 decreased $209,000, or 21%, compared to the comparable prior year quarter. Direct to consumer revenue is primarily comprised of revenue generated from our Minehut digital property, which provides Minecraft server hosting services on a subscription basis and other digital goods to the Minecraft gaming community, and direct to consumer in-game platform sales revenue through the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, within our official Microsoft Minecraft partner gaming servers. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

Cost of Revenue

Cost of revenue includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including internal and third-party engineering, creative, content, broadcast and other personnel, talent and influencers, internal and third-party game developers, content capture and production services, direct marketing, cloud services, software, prizing, and revenue sharing fees. Cost of revenue fluctuates period to period based on the specific programs and revenue streams contributing to revenue each period and the related cost profile of our physical and digital experiences, media and advertising campaigns and publishing and content studio sales activities occurring each period.

Three Months Ended June 30, 2023, Compared to the Three Months Ended June 30, 2022:

● Cost of revenue increased $453,000, or 18%, relatively consistent with the 18% increase in related revenues for the quarterly periods presented.

Six Months Ended June 30, 2023, Compared to the Six Months Ended June 30, 2022:

● Cost of revenue increased $490,000, or 11%, compared to the 4% increase in related revenues for the year to date periods presented. The less than proportionate change in cost of revenue was driven by higher margin product design and software development kit related revenue recognized during the six months ended June 30, 2022, as described above. Excluding product design and software development kit related revenue and related cost of revenue recognized during the six months ended June 30, 2022, total revenue and cost of revenue for the six months ended June 30, 2023 increased 17% and 20%, respectively, compared to the prior year comparable period.

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Operating Expense

Refer to the table summarizing our results of operations for the three and six months ended June 30, 2023 and 2022 above.

Noncash stock-based compensation. Noncash stock-based compensation expense for the periods presented was included in the following operating expense line items (dollars in thousands):

	Three Months Ended June 30,				Change						Six Months Ended June 30,				Change
	2023		2022		$			%			2023		2022		$			%
Sales, marketing and advertising	$	236	$	251	$	(15	)		(6	)%	$	400	$	481	$	(81	)		(17	)%
Engineering, technology and development		102		74		28			38	%		191		263		(72	)		(27	)%
General and administrative		411		675		(264	)		(39	)%		941		1,355		(414	)		(31	)%
Total noncash stock compensation expense	$	749	$	1,000	$	(251	)		(25	)%	$	1,532	$	2,099	$	(567	)		(27	)%

On January 1, 2022, the Company issued 1,350,000 performance stock units (“PSUs”) under the Company’s 2014 Amended and Restated Stock Option and Incentive Plan (the “2014 Plan”), which vest in five equal increments of 270,000 PSUs, based on satisfaction of market based vesting conditions as describe at Note 2 to the condensed consolidated financial statements elsewhere herein. Noncash stock compensation expense related to the PSUs totaled $48,000 and $298,000 for the three and six months ended June 30, 2023, respectively. Noncash stock compensation expense related to the PSUs totaled $564,000 and $1,121,000 for the three and six months ended June 30, 2022, respectively.

Modifications to Equity-Based Awards

On April 30, 2023, the Board of Directors of the Company (the “Board”) approved the cancellation of the 1,350,000 PSUs previously granted to certain executives under the 2014 Plan (as described above). In exchange for the cancelled PSUs, the executives were granted an aggregate of 1,350,000 PSUs, which vest, over a five-year term, upon the Company’s common stock achieving certain VWAP goals as follows: (i) 20% upon achieving a 60-day VWAP of $0.80 per share, (ii) 20% upon achieving a 60-day VWAP of $1.00 per share; (iii) 20% upon achieving a 60-day VWAP of $1.20 per share; (iv) 20% upon achieving a 60-day VWAP of $1.40 per share; and (v) 20% upon achieving a 60-day VWAP of $1.60 per share, in each case, as quoted on the Nasdaq Capital Market (“PSU Modification”). Total incremental compensation cost related to the PSU Modification totaled $540,000 which will be recognized over the implied service period, ranging from .69 years to 1.5 years, calculated in connection with the Monte Carlo simulation model used to determine the fair value of the PSUs immediately before and after the modification. Incremental noncash stock compensation expense related to the PSU Modification recognized during the three and six months ended June 30, 2023 totaled $89,000.

On April 30, 2023, the Board approved the cancellation of certain stock options to purchase an aggregate of 1,179,979 shares of the Company’s common stock previously granted to certain executives and employees under the 2014 Plan, with an average exercise price of approximately $2.82. In addition, the Board approved the cancellation of certain warrants to purchase an aggregate of 522,015 shares of the Company’s common stock previously granted to certain executives and employees, with an average exercise price of approximately $9.99. In exchange for the cancelled options and warrants, certain executives and employees were granted options to purchase an aggregate of 6,100,000 shares of common stock under the 2014 Plan, at an exercise price of $0.49 (the closing price of the Company’s common stock as listed on the Nasdaq Capital Market on April 28, 2023, the last trading day before the approval of the awards), with one-third of the options vesting on the April 30, 2023, the grant date, with the remainder vesting monthly over the thirty-six month period thereafter, subject to continued service (“Executive Grant Modifications”). The exercise of the options under these awards is contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan, and will be subject to cancellation in the event stockholder approval is not obtained. As such, there was no financial statement impact for the periods presented in connection with this equity award exchange.

On May 1, 2023, the Board approved the cancellation of options to purchase an aggregate of 584,438 shares of the Company’s common stock previously granted to employees under the 2014 Plan, in exchange for newly issued options to purchase an aggregate of 1,356,000 shares of the Company’s common stock under the 2014 Plan, at an exercise price equal to the closing trading price on May 1, 2023, or $0.4905, with a range of zero to one-third of the options vesting on the May 1, 2023, the grant date, dependent upon the tenure of the employee, and the remainder vesting monthly over the forty-eight month period thereafter, subject to continued service (“Employee Grant Modifications”). Unrecognized compensation expense related to the original awards as of the date of the Employee Grant Modifications totaled $960,000 which will be recognized prospectively over the remaining service period of 4 years. Total incremental compensation cost related to the Employee Grant Modifications totaled $449,000, $101,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $348,000 related to unvested awards which will be recognized prospectively over the remaining service period of 4 years.

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Amortization of intangible assets. Amortization expense for the periods presented was included in the following operating expense line items (dollars in thousands):

	Three Months Ended June 30,				Change						Six Months Ended June 30,				Change
	2023		2022		$			%			2023		2022		$			%
Sales, marketing and advertising	$	531	$	526	$	5			1	%	$	1,057	$	1,052	$	5			-	%
Engineering, technology and development		588		573		15			3	%		1,164		1,147		17			1	%
General and administrative		196		201		(5	)		(2	)%		382		403		(21	)		(5	)%
Intangible asset disposal		2,284		-		2,284			100	%		2,284		-		2,284			100	%
Total amortization expense	$	3,599	$	1,300	$	2,299			177	%	$	4,887	$	2,602	$	2,285			88	%

During the three months ended June 30, 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere. As a result, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000, which is included in “Loss on intangible asset disposal” in the accompanying condensed consolidated statements of operations.

Selling, Marketing and Advertising

Three Months Ended June 30, 2023, Compared to the Three Months Ended June 30, 2022:

● Selling, marketing and advertising expense decreased $45,000, or 1% driven primarily by a decrease in third-party sales consultant and direct and other marketing related costs.

Six Months Ended June 30, 2023, Compared to the Six Months Ended June 30, 2022:

● Selling, marketing and advertising expense decreased $129,000, or 2% driven primarily by a decrease in third-party sales consultant and direct and other marketing related costs.

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 expense include the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support. Capitalized internal use software development costs are amortized on a straight-line basis over the software’s estimated useful life. 

Three Months Ended June 30, 2023, Compared to the Three Months Ended June 30, 2022:

● Engineering, technology and development costs decreased $2,324,000, or 51% driven primarily by a decrease in cloud services and other technology platform costs totaling $1,227,000, or 71%, and a decrease in product and engineering personnel costs totaling $1,020,000, or 53%, reflecting the impact of ongoing cost reduction and optimization activities.

Six Months Ended June 30, 2023, Compared to the Six Months Ended June 30, 2022:

● Engineering, technology and development costs decreased $3,578,000, or 41% driven primarily by a decrease in cloud services and other technology platform costs totaling $2,088,000, or 58%, and a decrease in product and engineering personnel costs totaling $1,218,000, or 36%, reflecting the impact of ongoing cost reduction and optimization activities.

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General and Administrative

General and administrative expense for the periods presented was comprised of the following (dollars in thousands):

	Three Months Ended June 30,				Change						Six Months Ended June 30,				Change
	2023		2022		$			%			2023		2022		$			%
Personnel costs	$	597	$	729	$	(132	)		(18	)%	$	1,187	$	1,304	$	(117	)		(9	)%
Office and facilities		49		63		(14	)		(22	)%		105		130		(25	)		(19	)%
Professional fees		179		322		(143	)		(44	)%		477		745		(268	)		(36	)%
Stock-based compensation		411		676		(265	)		(39	)%		941		1,356		(415	)		(31	)%
Depreciation and amortization		218		227		(9	)		(4	)%		427		457		(30	)		(7	)%
Other		848		976		(128	)		(13	)%		1,686		1,877		(191	)		(10	)%
Total general and administrative expense	$	2,302	$	2,993	$	(691	)		(23	)%	$	4,823	$	5,869	$	(1,046	)		(18	)%

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

For the Three Months Ended June 30, 2023, Compared to the Three Months Ended June 30, 2022:

● Noncash stock compensation expense included in general and administrative expense decreased $265,000, primarily due to a reduction in amortization of noncash stock compensation expense in connection with performance-based stock units granted on January 1, 2022, which vest based on the achievement of certain Company stock price targets, as described at Note 2 to the condensed consolidated financial statements elsewhere herein, and are amortized on an accelerated basis in the earlier periods due to the utilization of a Monte Carlo simulation model to determine the estimated fair value of the equity-based award.

● Professional fees costs decreased $143,000 or 44%, primarily due to legal and audit related professional fees incurred in the prior year period in connection with our June 2022 convertible debt financing which were expensed as incurred and a decrease in external legal fees due to the transitioning of the Company’s corporate legal services function from third-party consultant to inhouse.

● Other general and administrative expense decreased primarily due to a 35% decrease in Director’s and Officer’s insurance premiums for the 2023-2024 policy period, which covers the period from March 2023 to February 2024, as well as a decrease in travel and entertainment and other general corporate expense.

For the Six Months Ended June 30, 2023, Compared to the Six Months Ended June 30, 2022:

● Noncash stock compensation expense included in general and administrative expense decreased $415,000, or 31% primarily due to a reduction in amortization of noncash stock compensation expense in connection with performance-based stock units granted on January 1, 2022, which vest based on the achievement of certain Company stock price targets, as described at Note 2 to the condensed consolidated financial statements elsewhere herein, and are amortized on an accelerated basis in the earlier periods due to the utilization of a Monte Carlo simulation model to determine the estimated fair value of the equity-based award.

● Professional fees costs decreased $268,000 or 36%, primarily due to legal and audit related professional fees incurred in the prior year period in connection with our June 2022 convertible debt financing which were expensed as incurred, a decrease in external legal fees due to the transitioning of the Company’s corporate legal services function from third-party consultant to inhouse, and a reduction in complex transaction related audit fees.

● Other general and administrative expense decreased primarily due to a 35% decrease in Director’s and Officer’s insurance premiums for the 2023-2024 policy period, which covers the period from March 2023 to February 2024, as well as a decrease in travel and entertainment and other general corporate expense.

Contingent Consideration

The Company hired the Founders of Super Biz Co. (“Super Biz”) in connection with the acquisition of (i) substantially all of the assets of Super Biz (the “Super Biz Assets”), and (ii) the personal goodwill of the founders of Super Biz (the “Founders”) regarding Super Biz’s business (collectively, the “Super Biz Acquisition”). Pursuant to the provisions of the Asset Purchase Agreement entered into for the Super Biz Acquisition (the “Super Biz Purchase Agreement”), in the event that a Founder ceases to be an employee during the period from the October 4, 2021 (the “Super Biz Closing Date”) until December 31, 2022 and for the fiscal year ending December 31, 2023 (the “Super Biz Earnout Periods”), as a consequence of his resignation without good cause, or termination for cause, the Super Biz Contingent Consideration (See Note 4) will be reduced by one-half (50%) for the respective Super Biz Earn Out Period, if and when earned. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such, the Contingent Consideration, is accounted for as post-combination services and expensed in the period that payment of any amounts of Contingent Consideration is determined to be probable and reasonably estimable. During the year ended December 31, 2022, the Company determined that it was probable that the contingency for the Super Biz Earn Out Periods would be met in accordance with the terms of the Super Biz Purchase Agreement, and the applicable amounts were reasonably estimable. Contingent Consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

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The change in accrued Super Biz Contingent Consideration and the related income statement impact for the periods presented was comprised of the following (dollars in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Beginning balance	$	3,674		$	-	$	3,206		$	-
Change in fair value(3)		(13	)		-		204			-
Current period accrued contingent consideration(3)		471			-		722			-
Contingent consideration payments(2)		(3,423	)		-		(3,423	)		-
Accrued contingent consideration	$	709	(1)	$	-	$	709	(1)	$	-

(1) Includes approximately 216,000 shares of common stock valued at $0.38, the closing price of our common stock as of the applicable date.

(2) In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 987,973 shares of our common stock valued at $548,000.

(3) Reflected in the condensed consolidated statement of operations for the applicable period.

Other Income (Expense), Net

Change in Fair Value of Warrant Liability

The Placement Agent Warrants issued in connection with the Series A Preferred and the Series AA Preferred include provisions that are triggered in the event of the occurrence of a Fundamental Transaction, as defined in the underlying warrant agreement, which contemplates the potential for certain transactions that result in a third-party acquiring more than 50% of the outstanding shares of common stock of the Company for cash or other assets. Given the existence of multiple classes of voting stock for the Company, as described herein, the Fundamental transaction provisions in the warrant agreements could result in a 50% or more change in ownership of outstanding common stock, without a 50% change in voting interests. As such, the Placement Agent Warrants are not eligible for the scope exception under ASC 480, and therefore, the fair value of the Placement Agent Warrants are recorded as a liability at fair value on the condensed consolidated balance sheet and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

The change in warrant liability and the related income statement impact for the periods presented was comprised of the following:

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Beginning balance	$	-		$	-	$	-		$	-
Initial fair value of warrant liability – grant date		2,804,000			-		2,804,000			-
Change in fair value (1)		(1,040,000	)		-		(1,040,000	)		-
Fair value of warrant liability at June 30, 2023	$	1,764,000		$	-	$	1,764,000		$	-

(1) Reflected in the condensed consolidated statement of operations for the applicable period.

Benefit from Income Taxes

During the three months ended June 30, 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers, as described at Note 3. The Bannerfy Acquisition was treated for tax purposes as a nontaxable transaction and, as such, the historical tax bases of the acquired assets and assumed liabilities, net operating losses, and other tax attributes of Bannerfy carried over, with no step-up to fair value of the underlying tax bases of the acquired net assets. The acquisition method of accounting included the establishment of a net deferred tax liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. When an acquisition of a group of assets is purchased in a transaction that is not accounted for as a business combination under ASC 805, a difference between the book and tax bases of the assets arises. ASC 740 required the use of simultaneous equations to determine the assigned value of the asset and the related deferred tax asset or liability. As a result of the disposal of the Bannerfy intangible assets, the Company fully amortized the related remaining net deferred tax liability, resulting in a $313,000 tax benefit reflected in the condensed consolidated statement of operations for the three and six months ended June 30, 2023.

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Liquidity and Capital Resources

General

Cash and cash equivalents totaled approximately $2.6 million and $2.5 million at June 30, 2023 and December 31, 2022, respectively. The change in cash and cash equivalents for the periods presented reflects the impact of operating, investing and financing cash flow related activities as described below.

The accompanying condensed 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, including noncash charges, of $14.1 million and $16.6 million for the six months ended June 30, 2023 and 2022, respectively, and had an accumulated deficit of $224.8 million as of June 30, 2023. For the six months ended June 30, 2023 and 2022, net cash used in operating activities totaled $10.8 million and $10.2 million, respectively.

To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations or that may be available from future issuance(s) of common stock or debt financings, to fund our planned operations. Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control. The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the lingering effects of COVID-19 and threats of other outbreaks, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets. In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by ASC 205-40.

Management’s Plans

The Company experienced significant growth in fiscal year 2023, 2022 and 2021 through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter and year over year increases in recognized revenue across our primary revenue streams. In fiscal year 2023, we focused on the continued expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through opportunistic strategic acquisitions, as well as management and reduction of operating costs. Management continues to consider alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings. Refer to “Cash Flows from Financing Activities” below for recent financing activities.

The Company considers historical operating results, costs, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period. Management's considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements, and the Company will be able to raise additional equity and / or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of 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. 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.

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We may continue to evaluate potential strategic acquisitions. To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future. If we fail to obtain additional financing when needed, we may not be able to execute our business plans which, in turn, would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies.

Cash Flows for the Six Months Ended June 30, 2023 and 2022

The following table summarizes the change in cash balances for the periods presented (dollars in thousands):

	Six Months Ended June 30,
	2023			2022
Net cash used in operating activities	$	(10,792	)	$	(10,247	)
Net cash used in investing activities		(652	)		(1,221	)
Net cash provided by financing activities		11,531			4,004
Increase/(Decrease) in cash		87			(7,464	)
Cash and cash equivalents, at beginning of period		2,482			14,533
Cash and cash equivalents, at end of period	$	2,569		$	7,069

Cash Flows from Operating Activities.

Net cash used in operating activities during the six months ended June 30, 2023, primarily reflected our net GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $1,532,000, depreciation and amortization charges of $2,679,000, disposal of intangible asset charges of $2,284,000, net changes in fair value of certain liabilities of ($754,000) and net changes in working capital of ($2,501,000). Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course and the payment of the cash portion of the Super Biz Contingent Consideration as described above.

Net cash used in operating activities during the six months ended June 30, 2022, primarily reflected our net GAAP loss for the six months ended June 30, 2022, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included $2,099,000 of noncash stock compensation charges, depreciation and amortization of $2,701,000 and net changes in working capital of $1,599,000. 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 presented (dollars in thousands):

	Six Months Ended June 30,
	2023			2022
Cash paid in connection with Melon Acquisition, net		(150	)		-
Purchase of property and equipment		(8	)		(153	)
Purchase of third-party game properties		-			(500	)
Capitalization of software development costs		(483	)		(497	)
Acquisition of other intangible and other assets		(11	)		(71	)
Net cash used in investing activities	$	(652	)	$	(1,221	)

Melon Acquisition. On May 4, 2023, we entered into an Asset Purchase Agreement with Melon, pursuant to which the Company acquired substantially all of the assets of Melon, as described above. At the Closing, the Company paid an aggregate total of $900,000 to Melon, of which $150,000 was paid in the form of the forgiveness of certain working capital advances paid to Melon in the equivalent amount, and the remaining $750,000 was paid in the form of shares of the Company’s common stock, valued at the Closing Share Price, as described above.

Anime Battlegrounds X. During the three months ended June 30, 2022, the Company purchased Anime Battlegrounds X, one of the highest rated games on Roblox, from a third-party game developer. Total purchase price of $500,000 was capitalized and amortized to cost of revenue over the applicable useful life of 5 years.

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Capitalized Internal Use Software Costs. Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life.

Cash Flows from Financing Activities.

Cash flows from financing activities were comprised of the following for the periods presented (dollars in thousands):

	Six Months Ended June 30,
	2023			2022
Proceeds from issuance of preferred stock, net of issuance costs	$	12,070		$	-
Proceeds from convertible notes		-			4,000
Payments on convertible notes		(539	)		(4	)
Proceeds from issuance of common stock, net		-			8
Net cash provided by financing activities	$	11,531		$	4,004

Convertible Preferred Stock

Series A Convertible Preferred Financing

During the fourth quarter of 2022 and first quarter of 2023, we entered into subscription agreements with accredited investors in connection with the sale of an aggregate of 12,622 shares of newly designated Series A, A-2, A-3, A-4 and A-5 Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, hereinafter collectively referred to as “Series A Preferred,” and the individual offerings of Series A Preferred stock hereinafter collectively referred to as the Series A Offerings, as follows:

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
Fourth Quarter 2022
November 22, 2022	Series A	$	0.6200		5,359	$	5,359,000	$	752,000	$	4,607,000		8,644,000		1,253,000
November 28, 2022	Series A-2	$	0.6646		1,297		1,297,000		169,000		1,128,000		1,952,000		283,000
November 30, 2022	Series A-3	$	0.6704		1,733		1,733,000		225,000		1,508,000		2,585,000		375,000
December 22, 2022	Series A-4	$	0.3801		1,934		1,934,000		251,000		1,683,000		5,088,000		738,000
Total – as of December 31, 2022					10,323		10,323,000		1,397,000		8,926,000		18,269,000		2,649,000
First Quarter 2023
January 31, 2023	Series A-5	$	0.5546		2,299		2,299,000		299,000		2,000,000		4,145,000		601,000
Total					12,622	$	12,622,000	$	1,696,000	$	10,926,000		22,414,000		3,250,000

(1) – Issued on May 26, 2023 upon final closing of the convertible preferred financings.

Use of net proceeds from the Series A Offering include the repayment of certain indebtedness and working capital and general corporate purposes, including sales and marketing activities and product development.

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Series AA Convertible Preferred Financing

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

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
April 19, 2023	Series AA	$	0.4715		7,680	$	7,680,000	$	966,000	$	6,714,000		16,288,000		2,285,000
April 20, 2023	Series AA-2	$	0.5215		1,500		1,500,000		130,000		1,370,000		2,876,000		278,000
April 28, 2023	Series AA-3	$	0.4750		1,025		1,025,000		133,000		892,000		2,158,000		313,000
May 5, 2023	Series AA-4	$	0.4642		1,026		1,026,000		133,000		893,000		2,210,000		320,000
May 26, 2023	Series AA-5	$	0.5300		550		550,000		72,000		479,000		1,038,000		150,000
Total					11,781	$	11,781,000	$	1,434,000	$	10,348,000		24,570,000		3,346,000

(1)  - Issued on May 26, 2023 upon final closing of the convertible preferred financings.

Use of net proceeds from the Series AA Offerings include working capital and general corporate purposes, including sales and marketing activities and product development.

Convertible Debt. On May 16, 2022, as summarized above and further described at Note 5, the Company entered into a securities purchase agreement with three institutional investors, providing for the sale and issuance of a new series of senior convertible notes in the aggregate original principal amount of $4,320,000, of which 8% is an original issue discount. As of December 31, 2022, the outstanding balance of the Notes and related accrued interest totaled $719,000, which was subsequently paid in full during the three months ended March 31, 2023.

Contractual Obligations and Off-Balance Sheet Commitments and Arrangements

As of June 30, 2023, we had no significant commitments for capital expenditures, nor do we have any committed lines of credit, other committed funding or long-term debt, and no guarantees. As of June 30, 2023 we maintain approximately 3,200 square feet of office space, 1,650 square feet of which is on a month-to-month basis, and 1,550 square feet of which is subject to a two-year lease, commencing on August 1, 2021.

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 condensed 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

Certain conditions may exist as of the date the condensed 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 condensed 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

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

Critical Accounting Estimates

Our unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these condensed consolidated statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these condensed consolidated 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 in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023. In addition, refer to Note 2 to the condensed consolidated financial statements included in this Report. The following accounting policies were identified during the current period, based on activities occurring during the current period, as critical and requiring significant judgments and estimates.

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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; (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 media and advertising, publishing and content studio and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to direct advertising sales arrangements.

We generate revenue 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.

Media and Advertising

Media and advertising revenue primarily consists of direct and reseller sales of our in-game media and analytics products, influencer marketing sales and sales of programmatic display and video advertising units to third-party advertisers and exchanges. Media and advertising arrangements typically include contract terms for time periods ranging from several days to several weeks in length.

For media and 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 media and 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.

Publishing and Content Studio

Publishing and content studio revenue consists of revenue generated from immersive game development and custom game experiences within our owned and affiliate game worlds, and revenue generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. 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 publishing and content studio 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 publishing and content studio 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 or projects, and once delivery is complete for shorter-term campaigns or projects.

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Direct to Consumer:

Direct to consumer revenue primarily consists 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. We also generate in-game platform sales revenue from the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

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. 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 revenue recognized each period and the timing of the recognition of revenue. Our assumptions and judgments regarding future collectability could differ from actual events and thus materially impact our financial position and results of operations. 

Depending on the complexity of the underlying revenue arrangement and related terms and conditions, significant judgments, assumptions and estimates may be required to determine each parties rights regarding the goods or services to be transferred, each parties performance obligations, whether performance obligations are satisfied at a point in time or over time, estimates of completion methodologies, the timing of satisfaction of performance obligations, 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 expense in the condensed 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. 

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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; and

● being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

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.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, our CEO and our CFO each concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act, (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to our management, including our CEO and our CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Except as set forth below, management is not aware of any material changes to the risk factors discussed in Part 1, Item 1A, of the Annual Report on Form 10-K for the year ended December 31, 2022. In addition to the following risk factors and other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part 1, Item 1A, of the Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent reports filed pursuant to the Exchange Act which could materially and adversely affect the Company’s business, financial condition, results of operations, and stock price. The risks described in the Annual Report on Form 10-K and subsequent reports filed pursuant to the Exchange Act are not the only risks facing the Company. Additional risks and uncertainties not presently known to management, or that management presently believes not to be material, may also result in material and adverse effects on our business, financial condition, and results of operations.

We may experience difficulties in integrating the operations of Melon into our business and in realizing the expected benefits of the Acquisition of Melon.

The success of the Acquisition will depend in part on our ability to realize the anticipated business opportunities from combining the operations of the Melon Assets with our business in an efficient and effective manner. The integration process could take longer than anticipated and could result in the loss of key employees, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties, or our ability to achieve the anticipated benefits of the Acquisition, and could harm our financial performance. If we are unable to successfully or timely integrate the operations of the Melon Assets with our business, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies and other anticipated benefits resulting from the Acquisition, and our business, results of operations and financial condition could be materially and adversely affected.

The Acquisition will present challenges associated with integrating operations, personnel, and other aspects of the companies and the potential assumption of liabilities that may exist and which may be known or unknown by the Company.

The results of the Company following the Acquisition will depend in part upon the Company’s ability to integrate Melon’s business with the Company’s business in an efficient and effective manner. The Company’s attempt to integrate Melon’s assets into the Company, two companies that have previously operated independently, may result in significant challenges, and the Company may be unable to accomplish the integration smoothly or successfully. In particular, the necessity of coordinating geographically dispersed organizations and addressing possible differences in corporate cultures and management philosophies may increase the difficulties of integration. The integration may require the dedication of significant management resources, which may temporarily distract management’s attention from the day-to-day operations of the businesses of the Company. In addition, the Company may adjust the way in which Melon or the Company has conducted its operations and utilized its assets, which may require retraining and development of new procedures and methodologies. The process of integrating operations and making such adjustments after the Acquisition could cause an interruption of, or loss of momentum in, the activities of one or more of Company’s or Melon’s businesses and the loss of key personnel. Employee uncertainty, lack of focus, or turnover during the integration process may also disrupt the business of Company. Any inability of management to integrate the operations of the Company and Melon successfully could have a material adverse effect on the business and financial condition of the combined company.

In addition, the Acquisition will subject the Company to contractual or other obligations and liabilities of associated with the Melon Assets, some of which may be unknown. Although the Company and its legal and financial advisors have conducted due diligence on Melon and its business, there can be no assurance that the Company is aware of all obligations and liabilities of Melon related to the Melon Assets. These liabilities, and any additional risks and uncertainties related to Melon’s business and to the Acquisition not currently known to the Company or that the Company may currently be aware of, but that prove to be more significant than assessed or estimated by the Company, could negatively impact the business, financial condition, and results of operations of the combined company following consummation of the Acquisition. 

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

No unregistered securities were issued during the three months ended June 30, 2023 that were not previously reported.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(b) Exhibits

Exhibit No.	Description	Incorporation by Reference
3.5	Certificate of Designation of Preferences, Rights and Limitations of the Series AA-5 Preferred Stock	Exhibit 3.1 to the Current Report on Form 8-K, filed on June 2, 2023
3.6	Certificate of Amendment to Super League Gaming, Inc.’s Second Amended and Restated Certificate of Incorporation, as amended	Exhibit 3.2 to the Current Report on Form 8-K, filed on June 2, 2023
10.4	Form of Placement Agency Agreement	Exhibit 10.1 to the Current Report on Form 8-K, filed on June 2, 2023
31.1	Certification of the Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

** Certain portions of this exhibit (indicated by “[*****]”) have been omitted as the Company has determined (i) the omitted information is not material and (ii) the omitted information would likely cause harm to the Company if publicly disclosed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SUPER LEAGUE GAMING, INC.
By	/s/ Ann Hand
	Ann Hand Chief Executive Officer (Principal Executive Officer)

	By	/s/ Clayton Haynes
		Clayton Haynes Chief Financial Officer (Principal Financial and Accounting Officer)
Date: August 14, 2023

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ann Hand, Chief Executive Officer of Super League Gaming, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Super League Gaming, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Ann Hand
Date: August 14, 2023	Ann Hand Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Clayton Haynes, Chief Financial Officer of Super League Gaming, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Super League Gaming, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Clayton Haynes
Date: August 14, 2023	Clayton Haynes Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Super League Gaming, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ann Hand, Chief Executive Officer of the Company, and Clayton Haynes, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2023	/s/ Ann Hand
	Ann Hand
	Chief Executive Officer (Principal Executive Officer)
	/s/ Clayton Haynes
	Clayton Haynes Chief Financial Officer (Principal Financial and Accounting Officer)

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Aug. 10, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-38819
Entity Registrant Name	SUPER LEAGUE GAMING, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1990734
Entity Address, Address Line One	2912 Colorado Ave., Suite #203
Entity Address, City or Town	Santa Monica
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90404
City Area Code	213
Local Phone Number	421-1920
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	SLGG
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding (in shares)		50,426,199
Entity Central Index Key	0001621672
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents	$ 2,569,000	$ 2,482,000
Accounts receivable	5,226,000	6,134,000
Prepaid expense and other current assets	1,083,000	1,381,000
Total current assets	8,878,000	9,997,000
Property and Equipment, net	110,000	147,000
Intangible assets, net	16,152,000	20,066,000
Goodwill	1,864,000	0
Total assets	27,004,000	30,210,000
Current Liabilities
Accounts payable	5,755,000	6,697,000
Accrued contingent consideration	1,485,000	3,206,000
Contract liabilities	269,000	111,000
Convertible note payable and accrued interest	0	679,000
Total current liabilities	7,509,000	10,693,000
Accrued contingent consideration – long term	656,000	0
Warrant liability	1,764,000	0
Deferred taxes	0	313,000
Total liabilities	9,929,000	11,006,000
Commitments and Contingencies
Stockholders’ Equity
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; 19,892 and 10,323 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	0	0
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 48,334,818 and 37,605,973 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	57,000	47,000
Additional paid-in capital	241,833,000	229,900,000
Accumulated deficit	(224,815,000)	(210,743,000)
Total stockholders’ equity	17,075,000	19,204,000
Total liabilities and stockholders’ equity	$ 27,004,000	$ 30,210,000

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized (in shares)	10,000,000	10,000,000
Preferred Stock, Shares Issued (in shares)	19,892	10,323
Preferred Stock, Shares Outstanding (in shares)	19,892	10,323
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Common Stock, Shares Authorized (in shares)	100,000,000	100,000,000
Common Stock, Shares, Issued (in shares)	48,334,818	37,605,973
Common Stock, Shares, Outstanding (in shares)	48,334,818	37,605,973

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
REVENUE	$ 5,052,000	$ 4,279,000	$ 8,374,000	$ 8,047,000
COST OF REVENUE	2,911,000	2,458,000	4,857,000	4,367,000
GROSS PROFIT	2,141,000	1,821,000	3,517,000	3,680,000
Operating Expenses [Abstract]
Selling, marketing and advertising	2,956,000	3,001,000	5,606,000	5,735,000
Engineering, technology and development	2,246,000	4,570,000	5,202,000	8,780,000
General and administrative	2,302,000	2,993,000	4,823,000	5,869,000
Contingent consideration	540,000	0	1,008,000	0
Loss on intangible asset disposal	2,284,000	0	2,284,000	0
Total operating expense	10,328,000	10,564,000	18,923,000	20,384,000
NET OPERATING LOSS	(8,187,000)	(8,743,000)	(15,406,000)	(16,704,000)
Nonoperating Income (Expense) [Abstract]
Change in fair value of warrant liability	(1,040,000)	(0)	(1,040,000)	(0)
Interest expense	(2,000)	23,000	(43,000)	21,000
Other	0	0	24,000	1,000
Total other income (expense)	1,038,000	23,000	1,021,000	22,000
Loss before benefit from income taxes	(7,149,000)	(8,720,000)	(14,385,000)	(16,682,000)
Benefit from income taxes	313,000	0	313,000	46,000
NET LOSS	$ (6,836,000)	$ (8,720,000)	$ (14,072,000)	$ (16,636,000)
Earnings Per Share [Abstract]
Basic and diluted loss per common share (in dollars per share)	$ (0.17)	$ (0.24)	$ (0.36)	$ (0.45)
Weighted-average number of shares outstanding, basic and diluted (in shares)	40,494,953	36,946,587	39,113,124	36,893,069

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member] Series A-5 Preferred Stock [Member]	Preferred Stock [Member] Series AA Convertible Preferred Stock [Member]	Preferred Stock [Member] Series AA-2 Convertible Preferred Stock [Member]	Preferred Stock [Member] Series AA-3 Convertible Preferred Stock [Member]	Preferred Stock [Member] Series AA-4 Convertible Preferred Stock [Member]	Preferred Stock [Member] Series AA-5 Convertible Preferred Stock [Member]	Preferred Stock [Member] Series A Preferred Stock [Member]	Preferred Stock [Member]	Common Stock [Member] Melon Acquisition [Member]	Common Stock [Member] Superbiz Acquisition [Member]	Common Stock [Member]	Additional Paid-in Capital [Member] Series A-5 Preferred Stock [Member]	Additional Paid-in Capital [Member] Series AA Convertible Preferred Stock [Member]	Additional Paid-in Capital [Member] Series AA-2 Convertible Preferred Stock [Member]	Additional Paid-in Capital [Member] Series AA-3 Convertible Preferred Stock [Member]	Additional Paid-in Capital [Member] Series AA-4 Convertible Preferred Stock [Member]	Additional Paid-in Capital [Member] Series AA-5 Convertible Preferred Stock [Member]	Additional Paid-in Capital [Member] Melon Acquisition [Member]	Additional Paid-in Capital [Member] Superbiz Acquisition [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Total stockholders’ equity								$ 0			$ 46,000									$ 215,943,000	$ (125,292,000)
Balance (in shares) at Dec. 31, 2021								0
Issuance of Series A preferred stock at $1,000 per share (in shares)	0	0	0	0	0	0
Conversion of Series A preferred stock (in shares)							0				0
Balance (in shares) at Jun. 30, 2022								0			37,043,778
Balance at Dec. 31, 2021								$ 0			$ 46,000									215,943,000	(125,292,000)
Issuance of Series A preferred stock at $1,000 per share	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0						$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
Conversion of Series A preferred stock							$ 0				0
Balance at Jun. 30, 2022								0			$ 46,000									218,050,000	(141,928,000)	$ 76,168,000
Balance (in shares) at Dec. 31, 2021											36,809,187
Common stock issued for Acquisition (in shares)									0	0
Stock-based compensation (in shares)											177,166
Other (in shares)											57,425
Stock-based compensation											$ 0									2,099,000
Common stock issued for Acquisition									$ 0	$ 0								$ 0	$ 0
Common stock purchase warrants issued to placement agent																				0
Other																				8,000
Net Loss																					(16,636,000)	(16,636,000)
Total stockholders’ equity								$ 0			$ 46,000									217,042,000	(133,208,000)
Balance (in shares) at Apr. 03, 2022								0
Issuance of Series A preferred stock at $1,000 per share (in shares)	0	0	0	0	0	0
Conversion of Series A preferred stock (in shares)							0				0
Balance (in shares) at Jun. 30, 2022								0			37,043,778
Balance at Apr. 03, 2022								$ 0			$ 46,000									217,042,000	(133,208,000)
Issuance of Series A preferred stock at $1,000 per share	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0						0	0	0	0	0	0
Conversion of Series A preferred stock							$ 0				0
Balance at Jun. 30, 2022								0			$ 46,000									218,050,000	(141,928,000)	76,168,000
Balance (in shares) at Apr. 03, 2022											36,864,957
Common stock issued for Acquisition (in shares)									0	0
Stock-based compensation (in shares)											121,396
Other (in shares)											57,425
Stock-based compensation											$ 0									1,000,000
Common stock issued for Acquisition									$ 0	$ 0								0	0
Common stock purchase warrants issued to placement agent																				0
Other																				8,000
Net Loss																					(8,720,000)
Total stockholders’ equity								0			46,000									218,050,000	(141,928,000)	76,168,000
Total stockholders’ equity								$ 0			$ 47,000									229,900,000	(210,743,000)	$ 19,204,000
Balance (in shares) at Dec. 31, 2022								10,323
Issuance of Series A preferred stock at $1,000 per share (in shares)	2,299	7,680	1,500	1,025	1,026	550
Conversion of Series A preferred stock (in shares)							(4,511)				7,995,105
Balance (in shares) at Jun. 30, 2023								19,892			48,334,818											48,334,818
Balance at Dec. 31, 2022								$ 0			$ 47,000									229,900,000	(210,743,000)	$ 19,204,000
Issuance of Series A preferred stock at $1,000 per share	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0						1,919,000	6,518,000	1,370,000	892,000	893,000	479,000
Conversion of Series A preferred stock							$ 0				8,000
Balance at Jun. 30, 2023								0			$ 57,000									241,833,000	(224,815,000)	$ 17,075,000
Balance (in shares) at Dec. 31, 2022											37,605,973											37,605,973
Common stock issued for Acquisition (in shares)									1,556,663	987,973
Stock-based compensation (in shares)											189,104
Other (in shares)											0
Stock-based compensation											$ 0									1,406,000
Common stock issued for Acquisition									$ 1,000	$ 1,000								721,000	547,000
Common stock purchase warrants issued to placement agent																				(2,804,000)
Other																				(8,000)
Net Loss																					(14,072,000)	$ (14,072,000)
Total stockholders’ equity								$ 0			$ 47,000									232,539,000	(217,979,000)
Balance (in shares) at Mar. 31, 2023								12,622
Issuance of Series A preferred stock at $1,000 per share (in shares)	0	7,680	1,500	1,025	1,026	550
Conversion of Series A preferred stock (in shares)							(4,511)				7,995,105
Balance (in shares) at Jun. 30, 2023								19,892			48,334,818											48,334,818
Balance at Mar. 31, 2023								$ 0			$ 47,000									232,539,000	(217,979,000)
Issuance of Series A preferred stock at $1,000 per share	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0						$ 0	$ 6,518,000	$ 1,370,000	$ 892,000	$ 893,000	$ 479,000
Conversion of Series A preferred stock							$ 0				8,000
Balance at Jun. 30, 2023								0			$ 57,000									241,833,000	(224,815,000)	$ 17,075,000
Balance (in shares) at Mar. 31, 2023											37,795,077
Common stock issued for Acquisition (in shares)									1,556,663	987,973
Stock-based compensation (in shares)											0
Other (in shares)											0
Stock-based compensation											$ 0									686,000
Common stock issued for Acquisition									$ 1,000	$ 1,000								$ 721,000	$ 547,000
Common stock purchase warrants issued to placement agent																				(2,804,000)
Other																				(8,000)
Net Loss																					(6,836,000)	(6,836,000)
Total stockholders’ equity								$ 0			$ 57,000									$ 241,833,000	$ (224,815,000)	$ 17,075,000

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Net Cash Provided by (Used in) Operating Activities [Abstract]
Net Loss	$ (14,072,000)	$ (16,636,000)
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
Depreciation and amortization	2,679,000	2,701,000
Stock-based compensation	1,532,000	2,099,000
Change in fair value of warrant liability	(1,040,000)	(0)
Change in fair value of contingent consideration	286,000	0
Change in fair value of convertible notes	0	(49,000)
Amortization of convertible notes discount	40,000	39,000
Loss on intangible asset disposal	2,284,000	0
Increase (Decrease) in Operating Capital [Abstract]
Accounts receivable	944,000	1,685,000
Prepaid expense and other current assets	174,000	49,000
Accounts payable and accrued expense	(1,131,000)	(74,000)
Accrued contingent consideration (Note 4)	2,153,000	(0)
Contract liabilities	158,000	(47,000)
Deferred taxes	(313,000)	(46,000)
Accrued interest on note payable	(180,000)	32,000
Net cash used in operating activities	(10,792,000)	(10,247,000)
Net Cash Provided by (Used in) Investing Activities [Abstract]
Acquisition of Melon Acquisition	150,000	(0)
Purchase of property and equipment	(8,000)	(153,000)
Purchase of third-party game properties	(0)	500,000
Capitalization of software development costs	(483,000)	(497,000)
Acquisition of other intangible assets	(11,000)	(71,000)
Net cash used in investing activities	(652,000)	(1,221,000)
Net Cash Provided by (Used in) Financing Activities [Abstract]
Proceeds from issuance of preferred stock, net of issuance costs (Note 6)	12,070,000	0
Proceeds from issuance of common stock, net of issuance costs	0	8,000
Proceeds from convertible notes, net	0	4,000,000
Payments on convertible notes	(539,000)	(4,000)
Net cash provided by financing activities	11,531,000	4,004,000
INCREASE/(DECREASE) IN CASH	87,000	(7,464,000)
Cash and Cash Equivalents - beginning of period	2,482,000	14,533,000
Cash and Cash Equivalents - end of period	2,569,000	7,069,000
Melon Acquisition [Member]
Noncash Investing and Financing Items [Abstract]
Issuance of common stock in connection with Acquisition	722,000	0
Superbiz Acquisition [Member]
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
Change in fair value of contingent consideration	204,000	0
Noncash Investing and Financing Items [Abstract]
Issuance of common stock in connection with Acquisition	$ 548,000	$ 0

XML

Note 1 - Description of Business

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Nature of Operations [Text Block]

1. DESCRIPTION OF BUSINESS

Super League Gaming, Inc. (Nasdaq: SLGG), (“Super League,” the “Company,” “we,” “us” or “our”) is a leading strategically-integrated publisher and creator of games and experiences across the world’s largest immersive digital platforms. From metaverse gaming powerhouses such as Roblox, Minecraft and Fortnite, to the most popular Web3 environments such as Sandbox and Decentraland, to bespoke worlds built using the most advanced 3D creation tools, Super League’s innovative solutions provide incomparable access to massive audiences who gather in immersive digital spaces to socialize, play, explore, collaborate, shop, learn and create. As a true end-to-end activation partner for dozens of global brands, Super League offers a complete range of development, distribution, monetization and optimization capabilities designed to engage users through dynamic, energized programs. As an originator of new experiences fueled by a network of top developers, a comprehensive set of proprietary creator tools and a future-forward team of creative professionals, Super League accelerates IP and audience success within the fastest growing sector of the media industry.

Super League was incorporated on October 1, 2014 as Nth Games, Inc. under the laws of the State of Delaware and changed its name to Super League Gaming, Inc. on June 15, 2015. We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012, as amended.

On May 30, 2023, the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation, as amended (the “Amendment”), increasing the number of authorized shares of Common Stock from 100,000,000 to 400,000,000. The Company’s Board of Directors previously approved the Amendment on March 17, 2023, and the Company obtained the approval of the Amendment by written consent of its stockholders holding greater than 50% of the voting securities of the Company on April 5, 2023.

XML

Note 2 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and footnotes required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023.

The December 31, 2022 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated interim financial statements of Super League include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Super League’s financial position as of June 30, 2023, and results of its operations and its cash flows for the interim periods presented. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year, or any future period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

Reclassifications

Certain reclassifications to operating expense line items have been made to prior period amounts for consistency and comparability with the current periods’ condensed consolidated financial statements presentation. These reclassifications had no effect on the reported total operating expense for the periods presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, impairment of intangibles, stock-based compensation expense, capitalized internal-use-software costs, accounting for business combinations and related contingent consideration, accounting for convertible debt, including estimates and assumptions used to calculate the fair value of debt instruments, accounting for convertible preferred stock, accounting for warrant liabilities and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective, or complex judgments.

Going Concern

The accompanying condensed 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, including noncash charges, of $14.1 million and $16.6 million for the six months ended June 30, 2023 and 2022, respectively, and had an accumulated deficit of $224.8 million as of June 30, 2023. For the six months ended June 30, 2023 and 2022, net cash used in operating activities totaled $10.8 million and $10.2 million, respectively.

The Company had cash and cash equivalents of $2.6 million and $2.5 million as of June 30, 2023 and December 31, 2022, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations. Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control. The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the lingering effects of COVID-19 and the threat of other outbreaks, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets. In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by ASC 205-40, “Going Concern,” (“ASC 205”).

Management’s Plans

The Company experienced significant growth in fiscal year 2023, 2022 and 2021 through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter and year over year increases in recognized revenue across our primary revenue streams. In fiscal year 2023, we focused on the continued expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through opportunistic strategic acquisitions, as well as management and reduction of operating costs. Management continues to consider alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings. Refer to Note 6 for recent equity financing activities.

As further described at Note 6, on March 25, 2022, we entered into a common stock purchase agreement with an institutional investor. Pursuant to the agreement, the Company has the right, but not the obligation, to sell to the investor, and the investor is obligated to purchase, up to $10,000,000 of newly issued shares of the Company’s common stock, from time to time during the term of the agreement, subject to certain limitations and conditions.

The Company considers historical operating results, costs, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period. Management’s considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements, and the Company will be able to raise additional equity and / or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of 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. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.

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

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. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material.

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

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its media and advertising, publishing and content studio and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to direct media and advertising sales arrangements.

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

Media and Advertising

Media and advertising revenue primarily consists of direct and reseller sales of our in-game media and analytics products, influencer marketing sales and sales of programmatic display and video advertising units to third-party advertisers and exchanges. Media and advertising arrangements typically include contract terms for time periods ranging from several days to several weeks in length.

For media and 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 media and 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.

Publishing and Content Studio

Publishing and content studio revenue consists of revenue generated from immersive game development and custom game experiences within our owned and affiliate game worlds, and revenue generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. 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 publishing and content studio 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 publishing and content studio 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 or projects, and once delivery is complete for shorter-term campaigns or projects.

Direct to Consumer

Direct to consumer revenue primarily consists of monthly digital subscription fees, and sales of in-game digital goods. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale.

InPvP Platform Generated Sales Transactions. We also generate in-game platform sales revenue from the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

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

Revenue was comprised of the following for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Media and advertising	$	3,634,000	$	3,518,000	$	5,302,000	$	5,374,000
Publishing and content studio		1,030,000		288,000		2,301,000		1,693,000
Direct to consumer		388,000		473,000		771,000		980,000
	$	5,052,000	$	4,279,000	$	8,374,000	$	8,047,000

For the three and six months ended June 30, 2023, 35% and 32% of revenue was recognized at a single point in time, and 65% and 68% of revenue was recognized over time, respectively. For the three and six months ended June 30, 2022, 43% and 33% of revenue was recognized at a single point in time, and 57% and 67% of revenue was recognized over time, respectively.

Contract liabilities represent payments received in advance of providing services under certain contracts and were $76,000 at December 31, 2021, $111,000 at December 31, 2022 and $269,000 at June 30, 2023. Revenue recognized in the three and six months ended June 30, 2023 relating to contract liabilities as of December 31, 2022 were $0 and $82,000, respectively. Revenue recognized in the three and six months ended June 30, 2022 relating to contract liabilities as of December 31, 2021 were $44,000 and $47,000, respectively.

In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts with customers, these reporting requirements are not applicable as per ASC 606-10-50-14.

Cost of Revenue

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

Advertising

Advertising costs include the cost of ad production, social media, print media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising costs are included in selling, marketing and advertising expense in the condensed consolidated statements of operations. Advertising expense for the three and six months ended June 30, 2023 were 13,000 and $22,000, respectively. Advertising expense for the three and six months ended June 30, 2022 were $134,000 and $284,000, respectively.

Engineering, Technology and Development Costs

Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense includes the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support.

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3. Unobservable inputs which are supported by little or no market activity and which are significant to the fair value of the assets or liabilities.

Certain assets and liabilities are required to be recorded at fair value on a recurring basis, including derivative financial instruments, contingent consideration and warrant liabilities recorded in accordance with ASC 480, “Distinguishing liabilities from equity,” (“ASC 480”), and convertible notes payable recorded at fair value. As described below, at Note 4, Note 5 and Note 6 contingent consideration, convertible notes payable and warrant liabilities outstanding during the periods presented, respectively, are recorded at fair value. Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers to/from Levels 1, 2, and 3 during the periods presented.

Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair value for other assets and liabilities such as cash, restricted cash, accounts receivable, receivables reserved for users, other receivables, prepaid expense and other current assets, accounts payable and accrued expense, and liabilities to customers have been determined to approximate carrying amounts due to the short maturities of these instruments.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in the statement of operations.

Acquisitions

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 expense in the condensed consolidated statements of operations.

Cost Accumulation Model. Acquisitions that do not meet the definition of a business under ASC 805 are accounted for as an asset acquisition, utilizing a cost accumulation model. Assets acquired and liabilities assumed are recognized at cost, which is the consideration the acquirer transfers to the seller, including direct transaction costs, on the acquisition date. The cost of the acquisition is then allocated to the assets acquired based on their relative fair values. Goodwill is not recognized in an asset acquisition. Direct transaction costs include those third-party costs that can be directly attributable to the asset acquisition and would not have been incurred absent the acquisition transaction.

Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable. 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.

Intangible Assets

Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights, (iv) developed technology acquired, (v) partner, customer, creator and influencer related intangible assets acquired and (vi) other intangible assets, which are recorded at cost (or in accordance with the acquisition method or cost accumulation methods described above) and amortized using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 10 years.

Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life.

Impairment of Long-Lived Assets

The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of our use of the acquired assets or the strategy for our overall business; significant negative industry or economic trends; significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments; and significant decline in our stock price for a sustained period. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded.

Other assets of a reporting unit that are held and used may be required to be tested for impairment when certain events trigger interim goodwill impairment tests. In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below. For the periods presented herein, management believes that there was no impairment of long-lived assets. 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

Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Estimates of expected volatility of the underlying common stock for the expected term of the stock option used in the Black-Scholes-Merton option pricing model are determined by reference to historical volatilities of the Company’s common stock and historical volatilities of similar companies.

Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued.

A condition affecting the exercisability or other pertinent factors used in determining the fair value of an award that is based on an entity achieving a specified share price constitutes a market condition pursuant to ASC 718, “Stock based Compensation,” (“ASC 718”). A market condition is reflected in the grant-date fair value of an award, and therefore, a Monte Carlo simulation model is utilized to determine the estimated fair value of the equity-based award. Compensation cost is recognized for awards with a market condition, provided the requisite service period is satisfied, regardless of whether the market condition is ever satisfied.

Cancellation of an existing equity-classified award along with a concurrent grant of a replacement award is accounted for as a modification under ASC 718, “Stock-based Compensation.” Total compensation cost to be recognized in connection with a modification and concurrent grant of a replacement award is equal to the original grant date fair value plus any incremental fair value, calculated as the excess of the fair value of the replacement award over the fair value of the original awards on the cancellation date. Any incremental compensation cost related to vested awards is recognized immediately on the modification date. Any incremental compensation cost related to unvested awards is recognized prospectively over the remaining service period, in addition to the remaining unrecognized grant date fair value.

On January 1, 2022, the Company issued 1,350,000 performance stock units (“PSUs”) under the Company’s 2014 Amended and Restated Stock Option and Incentive Plan, which vest in five equal increments of 270,000 PSUs, based on satisfaction of the following vesting conditions during the three-year period commencing on January 1, 2022: (i) the Company’s stock price equaling $4.75 per share based on 60-day volume weighted average price (“VWAP”); (ii) the Company’s stock price equaling $6.00 per share based on 60-day VWAP; (iii) the Company’s stock price equaling $7.00 per share based on 60-day VWAP; (iv) the Company’s stock price equaling $8.00 per share based on 60-day VWAP; and (v) the Company’s stock price equaling $9.00 per share based on 60-day VWAP. Noncash stock compensation expense related to the PSUs totaled $48,000 and $298,000 for the three and six months ended June 30, 2023, respectively. Noncash stock compensation expense related to the PSUs totaled $564,000 and $1,121,000 for the three and six months ended June 30, 2022, respectively.

In December 2022, the Company issued 500,000 warrants to a third-party for nonemployee investor relations services. The warrants have an exercise price of $0.67, a grant date fair value of $0.50, vest in twelve equal monthly installments commencing on the grant date and expire five years from the grant date. Compensation expense included in the condensed consolidated statement of operations for the three and six months ended June 30, 2023 totaled $62,000 and $124,000, respectively.

Modifications to Equity-Based Awards

On April 30, 2023, the Board of Directors of the Company (the “Board”) approved the cancellation of the 1,350,000 PSUs previously granted to certain executives under the 2014 Plan (as described above). In exchange for the cancelled PSUs, the executives were granted an aggregate of 1,350,000 PSUs, which vest, over a five-year term, upon the Company’s common stock achieving certain VWAP goals as follows: (i) 20% upon achieving a 60-day VWAP of $0.80 per share, (ii) 20% upon achieving a 60-day VWAP of $1.00 per share; (iii) 20% upon achieving a 60-day VWAP of $1.20 per share; (iv) 20% upon achieving a 60-day VWAP of $1.40 per share; and (v) 20% upon achieving a 60-day VWAP of $1.60 per share, in each case, as quoted on the Nasdaq Capital Market (“PSU Modification”). Total incremental compensation cost related to the PSU Modification totaled $540,000 which will be recognized over the implied service period, ranging from .69 years to 1.5 years, calculated in connection with the Monte Carlo simulation model used to determine the fair value of the PSUs immediately before and after the modification. Incremental noncash stock compensation expense related to the PSU Modification recognized during the three months ended June 30, 2023 totaled $89,000.

On April 30, 2023, the Board approved the cancellation of certain stock options to purchase an aggregate of 1,179,979 shares of the Company’s common stock previously granted to certain executives and employees under the Company’s 2014 Amended and Restated Employee Stock Option and Incentive Plan (the “2014 Plan”), with an average exercise price of approximately $2.82. In addition, the Board approved the cancellation of certain warrants to purchase an aggregate of 522,015 shares of the Company’s common stock previously granted to certain executives and employees, with an average exercise price of approximately $9.99. In exchange for the cancelled options and warrants, certain executives and employees were granted options to purchase an aggregate of 6,100,000 shares of common stock under the 2014 Plan, at an exercise price of $0.49 (the closing price of the Company’s common stock as listed on the Nasdaq Capital Market on April 28, 2023, the last trading day before the approval of the awards), with one-third of the options vesting on the April 30, 2023, the grant date, with the remainder vesting monthly over the thirty-six month period thereafter, subject to continued service (“Executive Grant Modifications”). The exercise of the options under these awards is contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan, and will be subject to cancellation in the event stockholder approval is not obtained. As such, there was no financial statement impact for the periods presented in connection with this equity award exchange.

On May 1, 2023, the Board approved the cancellation of options to purchase an aggregate of 584,438 shares of the Company’s common stock previously granted to its employees under the 2014 Plan, in exchange for newly issued options to purchase an aggregate of 1,356,000 shares of the Company’s common stock under the 2014 Plan, at an exercise price equal to the closing trading price on May 1, 2023, or $0.4905, with a range of zero to one-third of the options vesting on the May 1, 2023, the grant date, dependent upon the tenure of the employee, and the remainder vesting monthly over the forty-eight month period thereafter, subject to continued service (“Employee Grant Modifications”). Unrecognized compensation expense related to the original award as of the date of the Employee Grant Modifications totaled $960,000 which will be recognized prospectively over the remaining service period of 4 years. Total incremental compensation cost related to the Employee Grant Modifications totaled $449,000, $101,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $348,000 related to unvested awards which will be recognized prospectively over the remaining service period of 4 years.

Total noncash stock-based compensation expense for the periods presented was included in the following financial statement line items:

	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2023		2022		2023		2022
Sales, marketing and advertising	$	236,000	$	251,000	$	400,000		481,000
Engineering, technology and development		102,000		74,000		191,000		263,000
General and administrative		411,000		675,000		941,000		1,355,000
Total noncash stock compensation expense	$	749,000	$	1,000,000	$	1,532,000		2,099,000

Financing Costs

Specific incremental costs directly attributable to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the equity financing. In the event that the proposed or actual equity financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred equity financing costs, if any, are included in other current assets in the accompanying condensed consolidated balance sheet. Deferred financing costs totaled $282,000 and $349,000 as of June 30, 2023 and December 31, 2022, respectively.

Convertible Debt

The Company evaluates convertible notes outstanding to determine if those contracts or embedded components of those contracts qualify as derivatives under ASC 815, “Derivatives and Hedging,” (“ASC 815”). ASC 815 requires conversion, redemption options, call options and other features (hereinafter, “Embedded Instruments”) contained in the Company’s convertible debt instruments that meet certain criteria to be bifurcated and separately accounted for as an embedded derivative. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

In the event that the fair value option election is not made, as described below, the Company evaluates the balance sheet classification for convertible debt instruments issued to determine whether the instrument should be classified as debt or equity, and whether the Embedded Instruments should be accounted for separately from the host instrument. Embedded Instruments of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the feature, were it a standalone instrument, meets the definition of an “embedded derivative.” Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it is required to be separated from the host instrument and classified as a derivative liability carried on the balance sheet at fair value, with any changes in its fair value recognized currently in the condensed consolidated statements of operations.

Fair Value Option (“FVO”) Election. The Company accounts for certain convertible notes issued, as described at Note 5 under the fair value option election pursuant to ASC 825, “Financial Instruments,” (“ASC 825”) as discussed below. The convertible notes accounted for under the FVO election are each debt host financial instruments containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825 provides for the “fair value option” election, to the extent not otherwise prohibited by ASC 825, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment, as required by ASC 825, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) in the accompanying condensed consolidated statement of operations. With respect to the note described at Note 5, as provided for by ASC 825, the estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying condensed consolidated statements of operations, since the change in fair value of the convertible notes payable was not attributable to instrument specific credit risk. The estimated fair value adjustment is included in interest expense in the accompanying condensed consolidated statement of operations.

Reportable Segments

The Company utilizes the management approach to identify the Company’s operating segments and measure the financial information disclosed, based on information reported internally to the Chief Operating Decision Maker (“CODM”) to make resource allocation and performance assessment decisions. An operating segment of a public entity has all the following characteristics: (1) it engages in business activities from which it may earn revenue and incur expense; (2) its operating results are regularly reviewed by the public entity’s CODM to make decisions about resources to be allocated to the segment and assess its performance: and (3) its discrete financial information is available. Based on the applicable criteria under the standard, the components of the Company’s operations are its: (1) media and advertising component, including its publishing and content studio component; and (2) the Company’s direct-to-consumer component.

A reportable segment is an identified operating segment that also exceeds the quantitative thresholds described in the applicable standard. Based on the applicable criteria under the standard, including quantitative thresholds, management has determined that the Company has one reportable segment that operated primarily in domestic markets during the periods presented herein.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents, investments and accounts receivable. The Company places its cash equivalents and investments primarily in highly rated money market funds. Cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents.

Risks and Uncertainties

Concentrations. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, and vendors whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable, as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Number of customers > 10% of revenue / percent of revenue	Two	/	22%	Two	/	46%	One	/	11%	Three	/	36%

Revenue concentrations were comprised of the following revenue categories:

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2023			2022			2023			2022
Media and advertising		22	%		46	%		11	%		25	%
Publishing and content studio		-	%		-	%		-	%		11	%
		22	%		46	%		11	%		36	%

	June 30, 2023				December 31, 2022
Number of customers > 10% of accounts receivable / percent of accounts receivable	Three	/	36	%	Two	/	25	%
Number of vendors > 10% of accounts payable / percent of accounts payable	One	/	12	%	One	/	10	%

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period. Diluted earnings per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period, including the dilutive effect of common stock equivalents. Potentially dilutive common stock equivalents primarily consist of common stock potentially issuable in connection with the conversion of outstanding convertible notes payable, employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings. Common stock underlying all outstanding stock options, restricted stock units and warrants, totaling 15,757,000 and 6,787,000 at June 30, 2023 and 2022, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive. Common stock potentially issuable in connection with the conversion of outstanding convertible preferred stock totaling 38,989,000 at June 30, 2023, have been excluded from the computation of diluted loss per share for the three and six months ended June 30, 2023 because the effect of inclusion would have been anti-dilutive.

Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets.

Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the periods presented.

During the three months ended June 30, 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers, as described at Note 3. The Bannerfy Acquisition was treated for tax purposes as a nontaxable transaction and, as such, the historical tax bases of the acquired assets and assumed liabilities, net operating losses, and other tax attributes of Bannerfy carried over, with no step-up to fair value of the underlying tax bases of the acquired net assets. The acquisition method of accounting included the establishment of a net deferred tax liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. When an acquisition of a group of assets is purchased in a transaction that is not accounted for as a business combination under ASC 805, a difference between the book and tax bases of the assets arises. ASC 740, “Income Taxes,” (“ASC 740”) required the use of simultaneous equations to determine the assigned value of the asset and the related deferred tax asset or liability. As a result of the disposal of the Bannerfy intangible assets, the Company fully amortized the related remaining net deferred tax liability, resulting in a $313,000 tax benefit reflected in the condensed consolidated statement of operations for the three and six months ended June 30, 2023.

Recent Accounting Guidance

Recent Accounting Pronouncements – Adopted. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers, in order to align the recognition of a contract liability with the definition of a performance obligation. This standard is effective for the Company beginning in the first quarter of fiscal year 2023. The adoption of the new accounting standard did not have a material impact on the condensed consolidated balance sheets or statements of operations for the periods presented herein.

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Note 3 - Intangible and Other Assets

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

3. INTANGIBLE AND OTHER ASSETS

Intangible and other assets consisted of the following for the periods presented:

	June 30,			December 31,
	2023			2022
Partner and customer relationships	$	13,566,000		$	13,376,000
Capitalized software development costs		5,745,000			5,262,000
Capitalized third-party game property costs		500,000			500,000
Developed technology		5,062,000			7,880,000
Influencers/content creators		2,559,000			2,559,000
Trade name		209,000			189,000
Domain		68,000			68,000
Copyrights and other		820,000			760,000
		28,529,000			30,594,000
Less: accumulated amortization		(12,377,000	)		(10,528,000	)
Intangible and other assets, net	$	16,152,000		$	20,066,000

Intangible assets at June 30, 2023 reflected in the table above includes the intangible assets acquired in connection with the Melon Acquisition totaling $510,000, as described at Note 4 below.

Amortization expense included in operating expense for the three and six months ended June 30, 2023 totaled $1,316,000 and $2,604,000, respectively. Amortization expense included in operating expense for the three and six months ended June 30, 2022 totaled $1,300,000 and $2,601,000, respectively. Amortization expense included in cost of revenue for the three and six months ended June 30, 2023 totaled $5,000 and $31,000, respectively. Amortization expense included in cost of revenue for the three and six months ended June 30, 2022 totaled $27,000 and $31,000, respectively.

During the three months ended June 30, 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere. As a result, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000, which is included in “Loss on intangible asset disposal” in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2023. Developed technology related intangibles asset acquisition costs were reduced $3,069,000, and related accumulated depreciation was reduced $785,000, in connection with the disposal of the intangible asset.

The Company expects to record amortization of intangible assets for the year ending December 31, 2023 and future fiscal years as follows:

For the years ending December 31,
2023 remaining		2,432,000
2024		4,538,000
2025		3,915,000
2026		2,653,000
2027		1,807,000
Thereafter		807,000
	$	16,152,000

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Note 4 - Acquisitions

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Business Combination Disclosure [Text Block]

4. ACQUISITIONS

Acquisition of Melon, Inc.

On May 4, 2023 (“Melon Acquisition Date”), Super League entered into an Asset Purchase Agreement (the “Melon Purchase Agreement”) with Melon, Inc., a Delaware corporation (“Melon”), pursuant to which the Company acquired substantially all of the assets of Melon (the “Melon Assets”) (the “Melon Acquisition”). The consummation of the Acquisition (the “Melon Closing”) occurred simultaneously with the execution of the Purchase Agreement. Melon is a development studio building innovative virtual worlds in partnership with powerful consumer brands across music, film, TV, sports, fashion and youth culture. The acquisition of Melon further strengthens the Company’s position as a one-stop solutions provider and strategic operating partner for brands and businesses seeking to expand and activate communities throughout the gaming metaverse.

At the Melon Closing, the Company paid an aggregate total of $900,000 to Melon (the “Melon Closing Consideration”), of which $150,000 was paid in the form of the forgiveness of certain working capital advances paid in the form of cash to Melon between the dates of April 14, 2023 to May 4, 2023 (prior to the Melon Closing) in the equivalent amount, and the remaining $750,000 was paid in the form of shares of the Company’s common stock, valued at $0.4818 (the “Closing Share Price”), the VWAP, as quoted on the Nasdaq Capital Market, for the five (5) trading days immediately preceding May 4, 2023.

Pursuant to the terms and subject to the conditions of the Purchase Agreement, up to an aggregate of $2,350,000 (the “Melon Contingent Consideration”) will be payable to Melon in connection with the achievement of certain revenue milestones for the period from the Melon Closing until December 31, 2023 (the “First Earnout Period”) in the amount of $1,000,000, and for the year ending December 31, 2024 (the “Second Earnout Period) in the amount of $1,350,000 (the “Second Earnout Period” and the First Earnout Period are collectively referred to as the “Earnout Periods”). The Melon Contingent Consideration is payable in the form of cash and common stock, with $600,000 of the aggregate Melon Contingent Consideration being payable in the form of cash, and $1,750,000 payable in the form of common stock, valued at the greater of (a) the Closing Share Price, and (b) the VWAP for the five trading days immediately preceding the end of each respective Earnout Period.

Additionally, pursuant to the Melon Purchase Agreement, the Company entered into employment agreements with two former key Melon employees (“Key Melon Employees”), pursuant to which the Key Melon Employees were granted inducement awards consisting of restricted stock unit awards (“RSUs”) to acquire an aggregate of 2,075,550 shares of the Company’s common stock. The awards were granted pursuant to terms and conditions fixed by the Compensation Committee of the Board and as an inducement material to each new employee entering employment with Super League in accordance with Nasdaq Listing Rule 5635(c)(4). Of the 2,075,550 RSUs: (A) 830,220 of the RSUs will vest in 25 equal monthly installments beginning on May 4, 2023, and on the first of each calendar month, subject to the applicable employee’s continued service with Super League on each such vesting date; and (B) 1,245,330 of the RSUs will vest as follows: (i) 25% will vest upon the achievement of certain net revenue targets for the fiscal year ending December 31, 2024, to be determined by the Board in its discretion; (ii) 25% upon the achievement of certain net revenue targets for the fiscal year ending December 31, 2025, to be determined by the Board in its sole discretion; (iii) 25% upon Super League’s common stock maintaining a minimum closing price of at least $1.50 over a rolling 30 consecutive trading day period, as quoted on the Nasdaq Capital Market; and (iv) 25% upon Super League’s common stock maintaining a minimum closing price of at least $2.50 over a rolling 30 consecutive trading day period, as quoted on the Nasdaq Capital Market. The vesting of the RSUs will accelerate upon a change of control of the Company. In addition, upon (Y) the Company’s termination of the employment of the respective employee without cause, or (Z) the respective employees resignation for good reason, the RSUs will continue to vest as if (Y) or (Z) had not occurred. The RSUs are subject to the terms and conditions of the RSU agreement covering each grant.

The Acquisition was approved by the board of directors of each of the Company and Melon, and was approved by the sole stockholder of Melon.

In accordance with the acquisition method of accounting, the financial results of Super League presented herein include the financial results of Melon subsequent to the Melon Closing Date. Disclosure of revenue and net loss for Melon on a stand-alone basis for the three and six months ended June 30, 2023 is not practical due to the integration of Melon activities, including sales, products, advertising inventory, resource allocation and related operating expense, with those of the consolidated Company upon acquisition, consistent with Super League operating in one reporting segment.

The Company determined that the Melon Acquisition constitutes a business acquisition as defined by ASC 805. Accordingly, the assets acquired and liabilities assumed in the transaction were recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition, totaling approximately $47,000, were expensed as incurred pursuant to the acquisition method of accounting in accordance with ASC 805. Super League’s preliminary purchase price allocation was based on an evaluation of the appropriate fair values of the assets acquired and liabilities assumed and represents management’s best estimate based on available data. Fair values are determined based on the requirements of ASC 820.

The following table summarizes the determination of the fair value of the purchase price consideration paid in connection with the Melon Acquisition:

Cash consideration at closing			$	150,000
Equity consideration at closing – shares of common stock		1,556,663
Super League closing stock price per share on the Melon Closing Date	$	0.4640
Fair value of equity consideration issued at closing	$	722,000		722,000
Fair value of contingent consideration at closing				1,350,000
Fair value of total consideration issued at closing			$	2,222,000

The purchase price allocation was based upon a preliminary estimate of the fair value of the assets acquired and the liabilities assumed by the Company in connection with the Melon Acquisition, as follows:

	Amount
Assets Acquired and Liabilities Assumed:
Accounts receivable and other assets	$	36,000
Liabilities assumed		(188,000	)
Identifiable intangible assets		510,000
Identifiable net assets acquired		358,000
Goodwill		1,864,000
Total purchase price	$	2,222,000

The following table presents details of the fair values of the acquired intangible assets of Melon:

	Estimated Useful Life (in years)		Amount
Developed technology		5	$	250,000
Developer relationships		2		50,000
Customer relationships		6		190,000
Trade names / trademarks		0.5		20,000
Total intangible assets acquired			$	510,000

Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The estimated fair value of the Melon Contingent Consideration was $1,432,000 at June 30, 2023, resulting in a change in fair value of $82,000, which is included in contingent consideration expense in the accompanying statement of operations for the three and six months ended June 30, 2023. The fair value of the Melon Contingent Consideration on the respective valuation dates was determined utilizing a Monte Carlo simulation model and measured using Level 3 inputs, as described at Note 2. Assumptions utilized in connection with utilization of the Monte Carlo simulation model for the periods presented included risk free interest rates of 4.04 % and 5.14%, volatility rate of 85%, and discount rate of 30%.

Aggregated amortization expense for the three months ended June 30, 2023, related to intangible assets acquired in connection with the Melon Acquisition, totaled $23,000. Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired. Goodwill recorded in connection with the Melon Acquisition is primarily attributable to expected synergies from combining the operations and assets of Super League and Melon, and also includes residual value attributable to the assembled and trained workforce acquired in the acquisition.

Management is primarily responsible for determining the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as of the Melon Closing Date. Management considered a number of factors, including reference to a preliminary independent analysis of estimated fair values solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed. The analysis included a preliminary discounted cash flow analysis which estimated the future net cash flows expected to result from the respective assets acquired as of the Melon Closing Date. A discount rate consistent with the risks associated with achieving the estimated net cash flows was used to estimate the present value of future estimated net cash flows. The Company is in the process of finalizing the estimates and assumptions developed in connection with the independent analysis of estimated fair values of intangible assets acquired solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed. Any adjustments to the fair values of intangibles assets acquired, or estimates of economic useful lives of the intangible assets acquired, could impact the carrying value of those assets and related goodwill, as well as the estimates of periodic amortization of intangible assets acquired to be reflected in the statement of operations.

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

Description	Valuation Method Applied	Valuation Method Description	Assumptions
Customer relationships	Multi-Period Excess Earnings Method “MPEE”) under the Income Approach	MPEEM is an application of the DCF Method, whereby revenue derived from the intangible asset is estimated using the overall business revenue, adjusted for attrition, obsolescence, cost of goods sold, operating expense, and taxes. Required returns attributable to other assets employed in the business are subtracted. The “excess” earnings are attributable to the intangible asset, and are discounted to present value at a rate of return to estimate the fair value of the intangible asset.	Discount rate: 30.0%; Forecast period: 6.7 years; Attrition Rate: 30.0%.
Trade names / trademarks	Relief-from-Royalty Method under the Income Approach	Under the Relief-from-Royalty method, the royalty savings is calculated by estimating a reasonable royalty rate that a third-party would negotiate in a licensing agreement. Such royalties are most commonly expressed as a percentage of total revenue involving the technology.	Forecast period: 8.0 months; Royalty Rate: 1.0%; Discount Rate: 30.0%.
Non-Compete agreements	Differential Cash Flows	The Differential Cash Flows Approach is a version of the income approach that values an intangible asset as the present value of the cash flows that a company would lose if they did not have the asset in place. The differential cash flow is calculated as the difference between the cash flow assuming competition and the cash flow without competition.	Competition Probability: 30.0%; Revenue impact: 20.0%; Discount Rate: 30.0%; Term 2.16 years.
Developed technology	Replacement Cost Method	In the Replacement Cost Method, value is estimated by determining the current cost of replacing an asset with one of equivalent economic utility. The premise of the approach is that a prudent investor would pay no more for an asset than the amount for which the utility of the asset could be replaced.	Rate of Return: 30.0%; Discount rate: 30.0%; Replacement period: 3.0 months.

For tax purposes, consistent with the accounting for book purposes, the Melon Closing Consideration was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess purchase price allocated to goodwill. As a result, no deferred tax assets or liabilities were recorded with the acquisition and all of the goodwill is expected to be deductible for tax purposes.

The following unaudited pro forma combined results of operations for the periods presented are provided for illustrative purposes only. The unaudited pro forma combined statements of operations for the three and six months ended June 30, 2023 and 2022, assume the acquisition occurred as of January 1, 2022. The unaudited pro forma combined financial results do not purport to be indicative of the results of operations for future periods or the results that actually would have been realized had the entities been a single entity during these periods.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue	$	5,357,000		$	4,900,000		$	9,089,000		$	9,358,000
Net Loss		(6,808,000	)		(9,752,000	)		(14,866,000	)		(17,925,000	)

Pro forma adjustments primarily relate to the amortization of identifiable intangible assets acquired over the estimated economic useful life as described above, the exclusion of nonrecurring transaction costs, the exclusion of depreciation related to tangible and intangible assets of Melon existing immediately prior to the Melon Acquisition Date, and adjustments related to administrative redundancies.

Acquisition of Super Biz – Contingent Consideration

On October 4, 2021 (“Super Biz Closing Date”), the Company entered into an Asset Purchase Agreement (the “Super Biz Purchase Agreement”) with Super Biz Co. and the founders of Super Biz (the “Founders”), pursuant to which the Company acquired (i) substantially all of the assets of Super Biz (the “Super Biz Assets”), and (ii) the personal goodwill of the Founders regarding Super Biz’s business, (the “Super Biz Acquisition”). The consummation of the Super Biz Acquisition (the “Super Biz Closing”) occurred simultaneously with the execution of the Super Biz Purchase Agreement on the Super Biz Closing Date.

Pursuant to the terms and subject to the conditions of the Super Biz Purchase Agreement, up to an aggregate amount $11.5 million will be payable to Super Biz and the Founders in connection with the achievement of certain revenue milestones for the period from the Super Biz Closing Date until December 31, 2022 (“Initial Earn Out Period”) and for the fiscal year ending December 31, 2023 (the “Super Biz Contingent Consideration”) (“Super Biz Earn Out Periods”). The Super Biz Contingent Consideration is payable in the form of both cash and shares of the Company’s common stock, in equal amounts, as more specifically set forth in the Super Biz Purchase Agreement.

The Company hired the Founders of Super Biz in connection with the Super Biz Acquisition. Pursuant to the provisions of the Super Biz Purchase Agreement, in the event that a Founder ceases to be an employee during any of the Super Biz Earn Out Periods, as a consequence of his resignation without good cause, or termination for cause, the Super Biz Contingent Consideration will be reduced by one-half (50%) for the respective Super Biz Earn Out Periods, if and when earned. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such, the Super Biz Contingent Consideration, is accounted for as post-combination services and expensed in the period that payment of any amounts of contingent consideration is determined to be probable and reasonably estimable. During the year ended December 31, 2022, the Company determined that it was probable that the contingency associated with the Super Biz Earn Out Periods would be met in accordance with the terms of the Super Biz Purchase Agreement, and the applicable amounts were reasonably estimable. Contingent consideration is recorded as a liability in the accompanying condensed consolidated balance sheets in accordance with ASC 480, which requires freestanding financial instruments where the company must or could settle the obligation by issuing a variable number of its shares, and the obligation's monetary value is based solely or predominantly on variations in something other than the fair value of the company's shares, to be recorded as a liability at fair value and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

The change in accrued Super Biz Contingent Consideration, including the change in fair value measured using Level 1 inputs, as described at Note 2, and the related income statement impact for the periods presented was comprised of the following:

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Beginning balance	$	3,674,000		$	-	$	3,206,000		$	-
Change in fair value		(13,000	)		-		204,000			-
Current period accrued contingent consideration		471,000			-		722,000			-
Contingent consideration payments(2)		(3,423,000	)		-		(3,423,000	)		-
Accrued contingent consideration	$	709,000	(1)	$	-	$	709,000	(1)	$	-

(1) Includes approximately 216,000 shares of common stock valued at $0.38, the closing price of our common stock as of the applicable date.

(2) In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 987,973 shares of our common stock valued at $548,000.

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Note 5 - Note Payable

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

5. NOTE PAYABLE

Convertible Notes Payable at Fair Value

On May 16, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with three institutional investors (collectively, the “Note Holders”) providing for the sale and issuance of a series of senior convertible notes in the aggregate original principal amount of $4,320,000, of which 8% is an original issue discount (“OID”) (each, a “Note,” and, collectively, the “Notes,” and such financing, the “Note Offering”). The Notes accrued interest at a guaranteed annual rate of 9% per annum, were set to mature 12 months from the date of issuance, and were convertible at the option of the Note Holders into that number of shares of the Company’s common stock, equal to the sum of the outstanding principal balance, accrued and unpaid interest, and accrued and unpaid late charges (the “Conversion Amount”), divided by $4.00 (the “Conversion Price”), subject to adjustment upon the occurrence of certain events as more specifically set forth in the Note, as amended. In the event of the occurrence of an event of default, the Note Holders may, at the Note Holder’s option, convert all, or any part of, the Conversion Amount into shares of common stock at 90% of the lowest volume weighted average price of the ten trading days preceding the date for which the price is being calculated.

In addition, the Company was required to redeem all or a portion of the Notes under certain circumstances, and, in the event (A) the Company sold Company common stock pursuant to the March 25, 2022 Purchase Agreement, described below, or (B) consummated a subsequent equity financing, then the Note Holders had the right, but not the obligation, to require the Company to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Conversion Amount then remaining under the Notes, in cash, at a price equal to the Conversion Amount being redeemed.

The Notes were issued with an original issue discount of $320,000, or 8%, which was recorded as an adjustment to the carrying amount of the Notes. The original issue discount was amortized using the interest method over the contractual term of the Notes and reflected as interest expense in the statement of operations. At December 31, 2022, the balance of the original issue discount was $40,000, which is included in “Convertible note payable and accrued interest” in the accompanying condensed consolidated balance sheet. Total amortization of original issue discount for the three and six months ended June 30, 2023 was $0 and $40,000, respectively.

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

At December 31, 2022, the remaining principal balance of the Notes totaled $539,000, and accrued interest totaled $180,000, both of which were paid in full during the three months ended March 31, 2023. As of March 31, 2023, all amounts of principal and interest under the Notes were fully paid, resulting in a Convertible note payable and accrued interest balance of $0.

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Note 6 - Stockholders' Equity and Equity-linked Instruments

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Equity [Text Block]

6. STOCKHOLDERS’ EQUITY AND EQUITY-LINKED INSTRUMENTS

Convertible Preferred Stock Issuances

Series AA Convertible Preferred Financing

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

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
April 19, 2023	Series AA	$	0.4715		7,680	$	7,680,000	$	966,000	$	6,714,000		16,288,000		2,285,000
April 20, 2023	Series AA-2	$	0.5215		1,500		1,500,000		130,000		1,370,000		2,876,000		278,000
April 28, 2023	Series AA-3	$	0.4750		1,025		1,025,000		133,000		892,000		2,158,000		313,000
May 5, 2023	Series AA-4	$	0.4642		1,026		1,026,000		133,000		893,000		2,210,000		320,000
May 26, 2023	Series AA-5	$	0.5300		550		550,000		72,000		479,000		1,038,000		150,000
Total					11,781	$	11,781,000	$	1,434,000	$	10,348,000		24,570,000		3,346,000

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

In connection with the Series AA Offerings, the Company filed Certificates of Designation of Preferences, Rights and Limitations of the Series AA Preferred Stock (the “Series AA Certificates of Designation”) with the State of Delaware.

Each share of Series AA Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in each Series AA Certificates of Designation, into such number of shares of the Company’s common stock equal to the number of Series AA Preferred to be converted, multiplied by the stated value of $1,000 (the “AA Stated Value”), divided by the applicable conversion price (refer to table above), subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1)). In addition, subject to beneficial ownership and primary market limitations, on the one year anniversary of the respective filing date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series AA Preferred if the VWAP of the Company’s common stock over the previous ten days as reported on the NASDAQ Capital Market (the “Series AA VWAP”), equals at least 250% of the Conversion Price, or (z) 100% of the outstanding shares of Series AA Preferred if the Series AA VWAP equals at least 300% of the respective conversion price.

The Series AA Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series AA Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series AA Certificates of Designation in a manner that adversely affects the powers, preferences or rights of the Series AA Preferred, (b) increasing the number of authorized shares of Series AA Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series AA Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind outside of accounts payable in the ordinary course of business, (e) entering into any agreement with respect to the foregoing; or (f) approving the issuance of common stock below the Conversion Price Floor (as defined in the AA Certificate of Designations). In addition, no holder of Series AA Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series AA Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series AA Preferred (together with any Parity Securities (as defined in the Series AA Certificate of Designations)) will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the AA Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

Holders of the Series AA Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series AA Preferred then held by such holder on the 12 and 24 month anniversaries of the respective filing date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series AA Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

Pursuant to the Subscription Agreements, purchasers that (a) previously held shares of the Company’s Series A Preferred Stock, par value $0.001 per share, or (b) purchased at least $3.5 million in shares of Series AA Preferred (subject to the acceptance of such lesser amounts in the Company’s sole discretion), shall have the right to purchase shares of a newly designated series of Preferred Stock of the Company containing comparable terms as the Series AA Preferred (the “Additional Investment Right”) from the date of each respective closing through the date that is 18 months thereafter as follows: (i) such investor may purchase an additional dollar amount equal to its initial investment amount at $1,000 per share (the “AA Original Issue Price”), with a conversion price equal to the conversion price in effect on the date of original purchase; and (ii) such investor may purchase an additional dollar amount equal to its initial investment amount at the AA Original Issue Price, with a conversion price equal to 125% of the respective conversion price in effect on the date of original purchase.

Pursuant to the Series AA Certificate of Designations: (i) for as long as Series AA Preferred remains outstanding and subject to certain carveouts as described in the Series AA Certificates of Designations, if the Company conducts an offering at a price per share less than the then current conversion price (the “Future Offering Price”) consisting of common stock, convertible or derivative instruments, and undertaken in an arms-length third party transaction, then in such event the conversion price of the Series AA Preferred shall be adjusted to the greater of: (a) the Future Offering Price and (b) the Conversion Price Floor; and (ii) if as of the 24-month anniversary date of April 19, 2023, the VWAP (as defined in the Series AA Certificates of Designation) for the five trading days immediately prior to such 24-month anniversary date is below the then current conversion price, the holder will receive a corresponding adjustment to the then conversion price, such adjustment not to exceed the Conversion Price Floor.

The Company and the investors in the Offering also executed a registration rights agreement (the “AA Registration Rights Agreement”), pursuant to which the Company filed a registration statement on Form S-3 (File No. 333-273282), covering the resale of the shares of common stock issuable upon conversion of the Series AA Preferred, which was declared effective on August 1, 2023.

The Company sold the shares of Series AA Preferred pursuant to a placement agency agreement (the “Series AA Placement Agency Agreement”) with a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Series AA Placement Agent”) for the Offering. Pursuant to the terms of the Series AA Placement Agency Agreement, in connection with the closings of the Series AA Offerings, the Company paid the Series AA Placement Agent aggregate cash fees, and non-accountable expense allowances as disclosed in the table above, and will issue to the Series AA Placement Agent or its designees warrants (the “Series AA Placement Agent Warrants”) to purchase shares of common stock as disclosed in the table above at the conversion prices disclosed above. The Series AA Placement Agent shall also earn fees and be issued additional Series AA Placement Agent Warrants with respect to any securities issued pursuant to the Additional Investment Rights. The Company also granted the Series AA Placement Agent the right of first refusal, for a twelve (12) month period after the final closing of the Offering, to serve as the Company’s lead or co-placement agent for any private placement of the Company’s securities (equity or debt) that is proposed to be consummated with the assistance of a registered broker dealer.

The securities to be issued in the Offering are exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, the investors are accredited investors, the investors are purchasing the securities for investment and not for resale and the Company took appropriate measures to restrict the transfer of the securities. The securities have not been registered under the Securities Act and may not be sold in the United States absent registration or an exemption from registration.

Series A Convertible Preferred Financing

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

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
November 22, 2022	Series A	$	0.6200		5,359	$	5,359,000	$	752,000	$	4,607,000		8,644,000		1,253,000
November 28, 2022	Series A-2	$	0.6646		1,297		1,297,000		169,000		1,128,000		1,952,000		283,000
November 30, 2022	Series A-3	$	0.6704		1,733		1,733,000		225,000		1,508,000		2,585,000		375,000
December 22, 2022	Series A-4	$	0.3801		1,934		1,934,000		251,000		1,683,000		5,088,000		738,000
January 31, 2023	Series A-5	$	0.5546		2,299		2,299,000		299,000		2,000,000		4,145,000		601,000
Total – as of June 30, 2023					12,622	$	12,622,000	$	1,696,000	$	10,926,000		22,414,000		3,250,000

(1) Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series A Preferred Stock offering

Use of net proceeds from the Series A Offerings for the periods presented include the repayment of certain indebtedness and working capital and general corporate purposes, including sales and marketing activities and product development. As disclosed at Note 5, in the event the Company consummated a subsequent equity financing during the term of the Notes, the Company was required, at the option of the Note Holders, to use 50% of the gross proceeds raised from such sale to redeem all or any portion of the Notes outstanding upon closing of such equity financing. For the three and six months ended June 30, 2023, $0 and $719,000 of the net proceeds from the Series A Offerings were utilized in connection with the redemption of the Notes and related accrued interest, respectively.

On the respective effective dates, the Company filed certificates of designation of preferences, rights and limitations of the Series A Preferred with the State of Delaware, respectively.

Each share of Series A Preferred is convertible at the option of the holder, subject to certain beneficial ownership limitations and primary market limitations as set forth in each Series A Certificate of Designation, into such number of shares of the Company’s common stock, equal to the number of Series A Preferred to be converted, multiplied by the stated value of $1,000 (the “Stated Value”), divided by the applicable conversion price (refer to the table above), subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The conversion price is equal to the “Minimum Price,” as defined in NASDAQ Rule 5635(d)(1)) on the date of closing. In addition, subject to beneficial ownership and primary market limitations: (1) the Series A Preferred will automatically convert into shares of common stock at the Conversion Price upon the earlier of (a) the 24-month anniversary of the Effective Date or (b) the consent to conversion by holders of at least 51% of the outstanding shares of Series A Preferred; and (2) on the one year anniversary of the Effective Date, the Company may, in its discretion, convert (y) 50% of the outstanding shares of Series A Preferred if the VWAP of the Company’s common stock over the previous 10 days as reported on the NASDAQ Capital Market (the “Series A VWAP”), equals at least 250% of the Conversion Price, or (z) 100% of the outstanding shares of Series A Preferred if and only if the Series A VWAP equals at least 300% of the Conversion Price.

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

Conversion Date	Series Designation	Conversion Price		Preferred Shares Converted		Conversion Shares – Common Stock
06/13/2023	Series A	$	0.6200		1,771		2,947,746
06/14/2023	Series A-2	$	0.6646		1,160		1,890,644
06/21/2023	Series A-3	$	0.6704		1,200		2,506,437
06/26/2023	Series A-4	$	0.3801		280		488,986
06/29/2023	Series A-5	$	0.5546		100		161,292
Totals					4,511		7,995,105

The Series A Preferred shall vote together with the common stock on an as-converted basis, and not as a separate class, subject to the primary market limitations, except that holders of Series A Preferred shall vote as a separate class with respect to (a) amending, altering, or repealing any provision of the Series A Certificate of Designation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred, (b) increasing the number of authorized shares of Series A Preferred, (c) authorizing or issuing an additional class or series of capital stock that ranks senior to or pari passu with the Series A Preferred with respect to the distribution of assets on liquidation, (d) authorizing, creating, incurring, assuming, guaranteeing or suffering to exist any indebtedness for borrowed money of any kind in excess of $5 million, or I entering into any agreement with respect to the foregoing. In addition, no holder of Series A Preferred shall be entitled to vote on any matter presented to the Company’s stockholders relating to approving the conversion of such holder’s Series A Preferred into an amount in excess of the primary market limitations. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series A Preferred will be entitled to first receive distributions out of the Company’s assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock (after the payment to any senior security, if any).

Holders of the Series A Preferred will be entitled to receive dividends, subject to the beneficial ownership and primary market limitations, payable in the form of that number of shares of common stock equal to 20% of the shares of common stock underlying the Series A Preferred then held by such holder on the 12 and 24-month anniversaries of the respective filing date. In addition, subject to the beneficial ownership and primary market limitations, holders of Series A Preferred will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such holder exceeding the beneficial ownership and primary market limitations, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the beneficial ownership and primary market limitations shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the beneficial ownership and primary market limitations.

The Company and the investors in the Series A Offerings also executed a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company filed registration statement on Form S-3 (File No. 333-271424), covering the resale of the shares of common stock issuable upon conversion of the Series A Preferred, which was declared on June 5, 2023.

The Company sold the shares of Series A Preferred pursuant to a Placement Agency Agreement (the “Placement Agency Agreement”) with a registered broker dealer, which acted as the Company’s exclusive placement agent (the “Placement Agent”) for the Series A Offerings.

Pursuant to the terms of the Placement Agency Agreement, we agreed to pay to the Placement Agent at each Closing a cash fee equal to 10% of the gross proceeds raised in the Series A Offerings and (ii) a non-accountable expense allowance equal to 3% of the gross proceeds of the Series A Offerings. In addition, we agreed to issue to the Placement Agent or its designees for nominal consideration and following the final closing under the Series A Offerings, five-year warrants to purchase 14.5% of the shares of common stock issuable upon conversion of the Series A Preferred shares sold in the Series A Offerings, at an exercise price equal to the applicable conversion price. The Placement Agent Warrants provide for a cashless exercise feature and are exercisable for a period of five years from the Effective Date. In addition, the Company agreed to grant the Placement Agent the right to appoint, subject to the Company’s approval, one representative to serve as a member of the Company’s Board of Directors upon the closing of at least $10 million in aggregate in connection with the Series A Offerings.

The securities issued in the Series A Offerings are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, the investors were accredited investors, the investors purchased the securities for investment and not for resale and the Company took appropriate measures to restrict the transfer of the securities. The securities have not been registered under the Securities Act and may not be sold in the United States absent registration or an exemption from registration.

Placement Agent Warrants

The Placement Agent Warrants issued in connection with the Series A Preferred and the Series AA Preferred, described above, include provisions that are triggered in the event of the occurrence of a Fundamental Transaction, as defined in the underlying warrant agreement, which contemplates the potential for certain transactions that result in a third-party acquiring more than 50% of the outstanding shares of common stock of the Company for cash or other assets. Given the existence of multiple classes of voting stock for the Company, as described above, the Fundamental Transaction provisions in the warrant agreements could result in a 50% or more change in ownership of outstanding common stock, without a 50% change in voting interests. As such, the Placement Agent Warrants are not eligible for the scope exception under ASC 815, and therefore, the fair value of the Placement Agent Warrants are recorded as a liability at fair value on the condensed consolidated balance sheet and re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.

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

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Beginning balance	$	-		$	-	$	-		$	-
Initial fair value of warrant liability – grant date		2,804,000			-		2,804,000			-
Change in fair value		(1,040,000	)		-		(1,040,000	)		-
Fair value of warrant liability at June 30, 2023	$	1,764,000		$	-	$	1,764,000		$	-

The fair value of the Placement Agent Warrants was estimated using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions for the applicable dates presented:

				June 30,
	Grant Date			2023
Expected Volatility		95%			95%
Risk–free interest rate		3.88%			4.13%
Dividend yield		-%			-%
Expected life of options (in years)	5.0	-	5.19	4.99	-	5.18

Common Stock Purchase Agreement

On March 25, 2022, we entered into a common stock purchase agreement (the “Purchase Agreement”) with Tumim Stone Capital, LLC (“Tumim”). Pursuant to the Purchase Agreement, the Company 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 (the “Tumim Offering”), subject to certain limitations and conditions. As consideration for Tumim’s commitment to purchase shares of common stock under the Purchase Agreement, the Company issued to Tumim 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 the Company from issuing and selling more than 7,361,833 shares of its common stock, including the Commitment Shares, which number equals 19.99% of the common stock issued and outstanding as of March 25, 2022, unless the Company obtains stockholder approval to issue additional shares, or unless certain exceptions apply. In addition, a beneficial ownership limitation in the agreement initially limits the Company from directing Tumim to purchase shares of common stock if such purchases would result in Tumim beneficially owning more than 4.99% of the then-outstanding shares of common stock (subject to an increase to 9.99% at Tumim’s option upon at least 61 calendar days’ notice).

From and after the initial satisfaction of the conditions to the Company’s right to commence sales of common stock to Tumim (such event, the “Commencement,” and the date of initial satisfaction of all such conditions, the “Commencement Date”), the Company may direct Tumim to purchase shares of common stock at a purchase price per share equal to 95% of the average daily dollar volume-weighted average price for the common stock during the three consecutive trading day period immediately following the date on which the Company delivers to Tumim a notice for such purchase. The Company will control the timing and amount of any such sales of common stock to Tumim. Actual sales of shares of common stock to Tumim will depend on a variety of factors to be determined by the Company from time to time, including, among other things, market conditions, the trading price of the common stock, and determinations by the Company as to the appropriate sources of funding for the Company and its operations.

The Commencement Date of the Tumim Offering was March 25, 2022. Unless earlier terminated, the Purchase Agreement will automatically terminate upon the earliest of (i) the expiration of the 18-month period following the Commencement Date, (ii) Tumim’s purchase or receipt of the Total Commitment worth of common stock, or (iii) the occurrence of certain other events set forth in the Purchase Agreement. The Company has the right to terminate the Purchase Agreement at any time after Commencement, at no cost or penalty, upon five trading days’ prior written notice to Tumim. Tumim has the right to terminate the Purchase Agreement upon five trading days’ prior written notice to the Company, but only upon the occurrence of certain events set forth in the Purchase Agreement.

Use of proceeds from any Tumim Offerings includes working capital and general corporate purposes, including sales and marketing activities, product development and capital expenditures. The Company may also use a portion of the net proceeds to acquire or invest in complementary businesses, products and technologies. The Purchase Agreement contains customary representations, warranties and agreements by the Company, as well as customary indemnification obligations of the Company.

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Note 7 - Subsequent Events

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Subsequent Events [Text Block]

7. SUBSEQUENT EVENTS

Roblox Partner Program

On August 2, 2023, we announced that Super League joined the Roblox (NYSE: RBLX) Partner Program. As an early mover in building and distributing creative and impactful programs for brands, in partnership with hundreds of top Roblox developers, joining the Roblox Partner Program will allow Super League to elevate its offerings to include the official Roblox advertising system with Immersive Ads. The added capabilities augment Super League’s powerful end-to-end, innovative solutions, enabling brands to reach the highly engaged audience on Roblox, a global immersive platform where over 66 million people connect and communicate daily.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and footnotes required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023.

The December 31, 2022 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated interim financial statements of Super League include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Super League’s financial position as of June 30, 2023, and results of its operations and its cash flows for the interim periods presented. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year, or any future period.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassifications

Certain reclassifications to operating expense line items have been made to prior period amounts for consistency and comparability with the current periods’ condensed consolidated financial statements presentation. These reclassifications had no effect on the reported total operating expense for the periods presented.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, impairment of intangibles, stock-based compensation expense, capitalized internal-use-software costs, accounting for business combinations and related contingent consideration, accounting for convertible debt, including estimates and assumptions used to calculate the fair value of debt instruments, accounting for convertible preferred stock, accounting for warrant liabilities and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective, or complex judgments.

Going Concern [Policy Text Block]

Going Concern

The accompanying condensed 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, including noncash charges, of $14.1 million and $16.6 million for the six months ended June 30, 2023 and 2022, respectively, and had an accumulated deficit of $224.8 million as of June 30, 2023. For the six months ended June 30, 2023 and 2022, net cash used in operating activities totaled $10.8 million and $10.2 million, respectively.

The Company had cash and cash equivalents of $2.6 million and $2.5 million as of June 30, 2023 and December 31, 2022, respectively. To date, our principal sources of capital used to fund our operations and growth have been the net proceeds received from equity and debt financings. We have and will continue to use significant capital for the growth and development of our business, and, as such, we expect to seek additional capital either from operations, or that may be available from future issuance(s) of common stock, preferred stock and / or debt financings, to fund our planned operations. Accordingly, our results of operations and the implementation of our long-term business strategies have been and could continue to be adversely affected by general conditions in the global economy, including conditions that are outside of our control. The most recent global financial crisis caused by severe geopolitical conditions, including conflicts abroad, and the lingering effects of COVID-19 and the threat of other outbreaks, have resulted in extreme volatility, disruptions and downward pressure on stock prices and trading volumes across the capital and credit markets in which we traditionally operate. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us, including limiting our ability to obtain additional funding from the capital and credit markets. In management’s judgement, these conditions raise substantial doubt about the ability of the Company to continue as a going concern as contemplated by ASC 205-40, “Going Concern,” (“ASC 205”).

Management’s Plans

The Company experienced significant growth in fiscal year 2023, 2022 and 2021 through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter and year over year increases in recognized revenue across our primary revenue streams. In fiscal year 2023, we focused on the continued expansion of our service offerings and revenue growth opportunities through internal development, collaborations, and through opportunistic strategic acquisitions, as well as management and reduction of operating costs. Management continues to consider alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings. Refer to Note 6 for recent equity financing activities.

As further described at Note 6, on March 25, 2022, we entered into a common stock purchase agreement with an institutional investor. Pursuant to the agreement, the Company has the right, but not the obligation, to sell to the investor, and the investor is obligated to purchase, up to $10,000,000 of newly issued shares of the Company’s common stock, from time to time during the term of the agreement, subject to certain limitations and conditions.

The Company considers historical operating results, costs, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period. Management’s considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements, and the Company will be able to raise additional equity and / or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of 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. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.

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

Revenue from Contract with Customer [Policy Text Block]

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. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material.

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

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its media and advertising, publishing and content studio and direct to consumer revenue streams, except in situations where we utilize a reseller partner with respect to direct media and advertising sales arrangements.

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

Media and Advertising

Media and advertising revenue primarily consists of direct and reseller sales of our in-game media and analytics products, influencer marketing sales and sales of programmatic display and video advertising units to third-party advertisers and exchanges. Media and advertising arrangements typically include contract terms for time periods ranging from several days to several weeks in length.

For media and 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 media and 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.

Publishing and Content Studio

Publishing and content studio revenue consists of revenue generated from immersive game development and custom game experiences within our owned and affiliate game worlds, and revenue generated in connection with our production, curation and distribution of entertainment content for our own network of digital channels and media and entertainment partner channels. 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 publishing and content studio 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 publishing and content studio 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 or projects, and once delivery is complete for shorter-term campaigns or projects.

Direct to Consumer

Direct to consumer revenue primarily consists of monthly digital subscription fees, and sales of in-game digital goods. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale.

InPvP Platform Generated Sales Transactions. We also generate in-game platform sales revenue from the sale of digital goods, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash.

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

Revenue was comprised of the following for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Media and advertising	$	3,634,000	$	3,518,000	$	5,302,000	$	5,374,000
Publishing and content studio		1,030,000		288,000		2,301,000		1,693,000
Direct to consumer		388,000		473,000		771,000		980,000
	$	5,052,000	$	4,279,000	$	8,374,000	$	8,047,000

For the three and six months ended June 30, 2023, 35% and 32% of revenue was recognized at a single point in time, and 65% and 68% of revenue was recognized over time, respectively. For the three and six months ended June 30, 2022, 43% and 33% of revenue was recognized at a single point in time, and 57% and 67% of revenue was recognized over time, respectively.

Contract liabilities represent payments received in advance of providing services under certain contracts and were $76,000 at December 31, 2021, $111,000 at December 31, 2022 and $269,000 at June 30, 2023. Revenue recognized in the three and six months ended June 30, 2023 relating to contract liabilities as of December 31, 2022 were $0 and $82,000, respectively. Revenue recognized in the three and six months ended June 30, 2022 relating to contract liabilities as of December 31, 2021 were $44,000 and $47,000, respectively.

In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts with customers, these reporting requirements are not applicable as per ASC 606-10-50-14.

Cost of Goods and Service [Policy Text Block]

Cost of Revenue

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

Advertising Cost [Policy Text Block]

Advertising

Advertising costs include the cost of ad production, social media, print media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising costs are included in selling, marketing and advertising expense in the condensed consolidated statements of operations. Advertising expense for the three and six months ended June 30, 2023 were 13,000 and $22,000, respectively. Advertising expense for the three and six months ended June 30, 2022 were $134,000 and $284,000, respectively.

Research, Development, and Computer Software, Policy [Policy Text Block]

Engineering, Technology and Development Costs

Components of our platform are available on a “free to use,” “always on basis,” and are utilized and offered as an audience acquisition tool, as a means of growing our audience, engagement, viewership, players and community. Engineering, technology and development related operating expense includes the costs described below, incurred in connection with our audience acquisition and viewership expansion activities. Engineering, technology and development related operating expense includes (i) allocated internal engineering personnel expense, including salaries, noncash stock compensation, taxes and benefits, (ii) third-party contract software development and engineering expense, (iii) internal use software cost amortization expense, and (iv) technology platform related cloud services, broadband and other platform expense, incurred in connection with our audience acquisition and viewership expansion activities, including tools and product offering development, testing, minor upgrades and features, free to use services, corporate information technology and general platform maintenance and support.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3. Unobservable inputs which are supported by little or no market activity and which are significant to the fair value of the assets or liabilities.

Certain assets and liabilities are required to be recorded at fair value on a recurring basis, including derivative financial instruments, contingent consideration and warrant liabilities recorded in accordance with ASC 480, “Distinguishing liabilities from equity,” (“ASC 480”), and convertible notes payable recorded at fair value. As described below, at Note 4, Note 5 and Note 6 contingent consideration, convertible notes payable and warrant liabilities outstanding during the periods presented, respectively, are recorded at fair value. Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers to/from Levels 1, 2, and 3 during the periods presented.

Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair value for other assets and liabilities such as cash, restricted cash, accounts receivable, receivables reserved for users, other receivables, prepaid expense and other current assets, accounts payable and accrued expense, and liabilities to customers have been determined to approximate carrying amounts due to the short maturities of these instruments.

Derivatives, Policy [Policy Text Block]

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in the statement of operations.

Business Combinations Policy [Policy Text Block]

Acquisitions

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 expense in the condensed consolidated statements of operations.

Cost Accumulation Model. Acquisitions that do not meet the definition of a business under ASC 805 are accounted for as an asset acquisition, utilizing a cost accumulation model. Assets acquired and liabilities assumed are recognized at cost, which is the consideration the acquirer transfers to the seller, including direct transaction costs, on the acquisition date. The cost of the acquisition is then allocated to the assets acquired based on their relative fair values. Goodwill is not recognized in an asset acquisition. Direct transaction costs include those third-party costs that can be directly attributable to the asset acquisition and would not have been incurred absent the acquisition transaction.

Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable. 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.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Intangible Assets

Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights, (iv) developed technology acquired, (v) partner, customer, creator and influencer related intangible assets acquired and (vi) other intangible assets, which are recorded at cost (or in accordance with the acquisition method or cost accumulation methods described above) and amortized using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 10 years.

Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of our use of the acquired assets or the strategy for our overall business; significant negative industry or economic trends; significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments; and significant decline in our stock price for a sustained period. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded.

Other assets of a reporting unit that are held and used may be required to be tested for impairment when certain events trigger interim goodwill impairment tests. In such situations, other assets, or asset groups, are tested for impairment under their respective standards and the other assets’ or asset groups’ carrying amounts are adjusted for impairment before testing goodwill for impairment as described below. For the periods presented herein, management believes that there was no impairment of long-lived assets. 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.

Compensation Related Costs, Policy [Policy Text Block]

Stock-Based Compensation

Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Estimates of expected volatility of the underlying common stock for the expected term of the stock option used in the Black-Scholes-Merton option pricing model are determined by reference to historical volatilities of the Company’s common stock and historical volatilities of similar companies.

Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued.

A condition affecting the exercisability or other pertinent factors used in determining the fair value of an award that is based on an entity achieving a specified share price constitutes a market condition pursuant to ASC 718, “Stock based Compensation,” (“ASC 718”). A market condition is reflected in the grant-date fair value of an award, and therefore, a Monte Carlo simulation model is utilized to determine the estimated fair value of the equity-based award. Compensation cost is recognized for awards with a market condition, provided the requisite service period is satisfied, regardless of whether the market condition is ever satisfied.

Cancellation of an existing equity-classified award along with a concurrent grant of a replacement award is accounted for as a modification under ASC 718, “Stock-based Compensation.” Total compensation cost to be recognized in connection with a modification and concurrent grant of a replacement award is equal to the original grant date fair value plus any incremental fair value, calculated as the excess of the fair value of the replacement award over the fair value of the original awards on the cancellation date. Any incremental compensation cost related to vested awards is recognized immediately on the modification date. Any incremental compensation cost related to unvested awards is recognized prospectively over the remaining service period, in addition to the remaining unrecognized grant date fair value.

On January 1, 2022, the Company issued 1,350,000 performance stock units (“PSUs”) under the Company’s 2014 Amended and Restated Stock Option and Incentive Plan, which vest in five equal increments of 270,000 PSUs, based on satisfaction of the following vesting conditions during the three-year period commencing on January 1, 2022: (i) the Company’s stock price equaling $4.75 per share based on 60-day volume weighted average price (“VWAP”); (ii) the Company’s stock price equaling $6.00 per share based on 60-day VWAP; (iii) the Company’s stock price equaling $7.00 per share based on 60-day VWAP; (iv) the Company’s stock price equaling $8.00 per share based on 60-day VWAP; and (v) the Company’s stock price equaling $9.00 per share based on 60-day VWAP. Noncash stock compensation expense related to the PSUs totaled $48,000 and $298,000 for the three and six months ended June 30, 2023, respectively. Noncash stock compensation expense related to the PSUs totaled $564,000 and $1,121,000 for the three and six months ended June 30, 2022, respectively.

In December 2022, the Company issued 500,000 warrants to a third-party for nonemployee investor relations services. The warrants have an exercise price of $0.67, a grant date fair value of $0.50, vest in twelve equal monthly installments commencing on the grant date and expire five years from the grant date. Compensation expense included in the condensed consolidated statement of operations for the three and six months ended June 30, 2023 totaled $62,000 and $124,000, respectively.

Modifications to Equity-Based Awards

On April 30, 2023, the Board of Directors of the Company (the “Board”) approved the cancellation of the 1,350,000 PSUs previously granted to certain executives under the 2014 Plan (as described above). In exchange for the cancelled PSUs, the executives were granted an aggregate of 1,350,000 PSUs, which vest, over a five-year term, upon the Company’s common stock achieving certain VWAP goals as follows: (i) 20% upon achieving a 60-day VWAP of $0.80 per share, (ii) 20% upon achieving a 60-day VWAP of $1.00 per share; (iii) 20% upon achieving a 60-day VWAP of $1.20 per share; (iv) 20% upon achieving a 60-day VWAP of $1.40 per share; and (v) 20% upon achieving a 60-day VWAP of $1.60 per share, in each case, as quoted on the Nasdaq Capital Market (“PSU Modification”). Total incremental compensation cost related to the PSU Modification totaled $540,000 which will be recognized over the implied service period, ranging from .69 years to 1.5 years, calculated in connection with the Monte Carlo simulation model used to determine the fair value of the PSUs immediately before and after the modification. Incremental noncash stock compensation expense related to the PSU Modification recognized during the three months ended June 30, 2023 totaled $89,000.

On April 30, 2023, the Board approved the cancellation of certain stock options to purchase an aggregate of 1,179,979 shares of the Company’s common stock previously granted to certain executives and employees under the Company’s 2014 Amended and Restated Employee Stock Option and Incentive Plan (the “2014 Plan”), with an average exercise price of approximately $2.82. In addition, the Board approved the cancellation of certain warrants to purchase an aggregate of 522,015 shares of the Company’s common stock previously granted to certain executives and employees, with an average exercise price of approximately $9.99. In exchange for the cancelled options and warrants, certain executives and employees were granted options to purchase an aggregate of 6,100,000 shares of common stock under the 2014 Plan, at an exercise price of $0.49 (the closing price of the Company’s common stock as listed on the Nasdaq Capital Market on April 28, 2023, the last trading day before the approval of the awards), with one-third of the options vesting on the April 30, 2023, the grant date, with the remainder vesting monthly over the thirty-six month period thereafter, subject to continued service (“Executive Grant Modifications”). The exercise of the options under these awards is contingent upon the Company receiving approval from its stockholders to increase the number of shares available under the 2014 Plan, and will be subject to cancellation in the event stockholder approval is not obtained. As such, there was no financial statement impact for the periods presented in connection with this equity award exchange.

On May 1, 2023, the Board approved the cancellation of options to purchase an aggregate of 584,438 shares of the Company’s common stock previously granted to its employees under the 2014 Plan, in exchange for newly issued options to purchase an aggregate of 1,356,000 shares of the Company’s common stock under the 2014 Plan, at an exercise price equal to the closing trading price on May 1, 2023, or $0.4905, with a range of zero to one-third of the options vesting on the May 1, 2023, the grant date, dependent upon the tenure of the employee, and the remainder vesting monthly over the forty-eight month period thereafter, subject to continued service (“Employee Grant Modifications”). Unrecognized compensation expense related to the original award as of the date of the Employee Grant Modifications totaled $960,000 which will be recognized prospectively over the remaining service period of 4 years. Total incremental compensation cost related to the Employee Grant Modifications totaled $449,000, $101,000 of which related to vested awards as of the modification date and was recognized as expense immediately, and $348,000 related to unvested awards which will be recognized prospectively over the remaining service period of 4 years.

Total noncash stock-based compensation expense for the periods presented was included in the following financial statement line items:

	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2023		2022		2023		2022
Sales, marketing and advertising	$	236,000	$	251,000	$	400,000		481,000
Engineering, technology and development		102,000		74,000		191,000		263,000
General and administrative		411,000		675,000		941,000		1,355,000
Total noncash stock compensation expense	$	749,000	$	1,000,000	$	1,532,000		2,099,000

Stockholders' Equity, Policy [Policy Text Block]

Financing Costs

Specific incremental costs directly attributable to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the equity financing. In the event that the proposed or actual equity financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred equity financing costs, if any, are included in other current assets in the accompanying condensed consolidated balance sheet. Deferred financing costs totaled $282,000 and $349,000 as of June 30, 2023 and December 31, 2022, respectively.

Derivatives, Embedded Derivatives [Policy Text Block]

Convertible Debt

The Company evaluates convertible notes outstanding to determine if those contracts or embedded components of those contracts qualify as derivatives under ASC 815, “Derivatives and Hedging,” (“ASC 815”). ASC 815 requires conversion, redemption options, call options and other features (hereinafter, “Embedded Instruments”) contained in the Company’s convertible debt instruments that meet certain criteria to be bifurcated and separately accounted for as an embedded derivative. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

In the event that the fair value option election is not made, as described below, the Company evaluates the balance sheet classification for convertible debt instruments issued to determine whether the instrument should be classified as debt or equity, and whether the Embedded Instruments should be accounted for separately from the host instrument. Embedded Instruments of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the feature, were it a standalone instrument, meets the definition of an “embedded derivative.” Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it is required to be separated from the host instrument and classified as a derivative liability carried on the balance sheet at fair value, with any changes in its fair value recognized currently in the condensed consolidated statements of operations.

Fair Value Option (“FVO”) Election. The Company accounts for certain convertible notes issued, as described at Note 5 under the fair value option election pursuant to ASC 825, “Financial Instruments,” (“ASC 825”) as discussed below. The convertible notes accounted for under the FVO election are each debt host financial instruments containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825 provides for the “fair value option” election, to the extent not otherwise prohibited by ASC 825, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment, as required by ASC 825, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) in the accompanying condensed consolidated statement of operations. With respect to the note described at Note 5, as provided for by ASC 825, the estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying condensed consolidated statements of operations, since the change in fair value of the convertible notes payable was not attributable to instrument specific credit risk. The estimated fair value adjustment is included in interest expense in the accompanying condensed consolidated statement of operations.

Segment Reporting, Policy [Policy Text Block]

Reportable Segments

The Company utilizes the management approach to identify the Company’s operating segments and measure the financial information disclosed, based on information reported internally to the Chief Operating Decision Maker (“CODM”) to make resource allocation and performance assessment decisions. An operating segment of a public entity has all the following characteristics: (1) it engages in business activities from which it may earn revenue and incur expense; (2) its operating results are regularly reviewed by the public entity’s CODM to make decisions about resources to be allocated to the segment and assess its performance: and (3) its discrete financial information is available. Based on the applicable criteria under the standard, the components of the Company’s operations are its: (1) media and advertising component, including its publishing and content studio component; and (2) the Company’s direct-to-consumer component.

A reportable segment is an identified operating segment that also exceeds the quantitative thresholds described in the applicable standard. Based on the applicable criteria under the standard, including quantitative thresholds, management has determined that the Company has one reportable segment that operated primarily in domestic markets during the periods presented herein.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents, investments and accounts receivable. The Company places its cash equivalents and investments primarily in highly rated money market funds. Cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents.

Risks and Uncertainties [Policy Text Block]

Risks and Uncertainties

Concentrations. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, and vendors whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable, as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Number of customers > 10% of revenue / percent of revenue	Two	/	22%	Two	/	46%	One	/	11%	Three	/	36%

Revenue concentrations were comprised of the following revenue categories:

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2023			2022			2023			2022
Media and advertising		22	%		46	%		11	%		25	%
Publishing and content studio		-	%		-	%		-	%		11	%
		22	%		46	%		11	%		36	%

	June 30, 2023				December 31, 2022
Number of customers > 10% of accounts receivable / percent of accounts receivable	Three	/	36	%	Two	/	25	%
Number of vendors > 10% of accounts payable / percent of accounts payable	One	/	12	%	One	/	10	%

Earnings Per Share, Policy [Policy Text Block]

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period. Diluted earnings per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period, including the dilutive effect of common stock equivalents. Potentially dilutive common stock equivalents primarily consist of common stock potentially issuable in connection with the conversion of outstanding convertible notes payable, employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings. Common stock underlying all outstanding stock options, restricted stock units and warrants, totaling 15,757,000 and 6,787,000 at June 30, 2023 and 2022, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive. Common stock potentially issuable in connection with the conversion of outstanding convertible preferred stock totaling 38,989,000 at June 30, 2023, have been excluded from the computation of diluted loss per share for the three and six months ended June 30, 2023 because the effect of inclusion would have been anti-dilutive.

Income Tax, Policy [Policy Text Block]

Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets.

Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the periods presented.

During the three months ended June 30, 2023, the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers, as described at Note 3. The Bannerfy Acquisition was treated for tax purposes as a nontaxable transaction and, as such, the historical tax bases of the acquired assets and assumed liabilities, net operating losses, and other tax attributes of Bannerfy carried over, with no step-up to fair value of the underlying tax bases of the acquired net assets. The acquisition method of accounting included the establishment of a net deferred tax liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. When an acquisition of a group of assets is purchased in a transaction that is not accounted for as a business combination under ASC 805, a difference between the book and tax bases of the assets arises. ASC 740, “Income Taxes,” (“ASC 740”) required the use of simultaneous equations to determine the assigned value of the asset and the related deferred tax asset or liability. As a result of the disposal of the Bannerfy intangible assets, the Company fully amortized the related remaining net deferred tax liability, resulting in a $313,000 tax benefit reflected in the condensed consolidated statement of operations for the three and six months ended June 30, 2023.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Guidance

Recent Accounting Pronouncements – Adopted. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers, in order to align the recognition of a contract liability with the definition of a performance obligation. This standard is effective for the Company beginning in the first quarter of fiscal year 2023. The adoption of the new accounting standard did not have a material impact on the condensed consolidated balance sheets or statements of operations for the periods presented herein.

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Note 2 - Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Media and advertising	$	3,634,000	$	3,518,000	$	5,302,000	$	5,374,000
Publishing and content studio		1,030,000		288,000		2,301,000		1,693,000
Direct to consumer		388,000		473,000		771,000		980,000
	$	5,052,000	$	4,279,000	$	8,374,000	$	8,047,000

Disclosure of Share-Based Compensation Arrangements by Share-Based Payment Award [Table Text Block]

	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2023		2022		2023		2022
Sales, marketing and advertising	$	236,000	$	251,000	$	400,000		481,000
Engineering, technology and development		102,000		74,000		191,000		263,000
General and administrative		411,000		675,000		941,000		1,355,000
Total noncash stock compensation expense	$	749,000	$	1,000,000	$	1,532,000		2,099,000

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Number of customers > 10% of revenue / percent of revenue	Two	/	22%	Two	/	46%	One	/	11%	Three	/	36%

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2023			2022			2023			2022
Media and advertising		22	%		46	%		11	%		25	%
Publishing and content studio		-	%		-	%		-	%		11	%
		22	%		46	%		11	%		36	%

	June 30, 2023				December 31, 2022
Number of customers > 10% of accounts receivable / percent of accounts receivable	Three	/	36	%	Two	/	25	%
Number of vendors > 10% of accounts payable / percent of accounts payable	One	/	12	%	One	/	10	%

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Note 3 - Intangible and Other Assets (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	June 30,			December 31,
	2023			2022
Partner and customer relationships	$	13,566,000		$	13,376,000
Capitalized software development costs		5,745,000			5,262,000
Capitalized third-party game property costs		500,000			500,000
Developed technology		5,062,000			7,880,000
Influencers/content creators		2,559,000			2,559,000
Trade name		209,000			189,000
Domain		68,000			68,000
Copyrights and other		820,000			760,000
		28,529,000			30,594,000
Less: accumulated amortization		(12,377,000	)		(10,528,000	)
Intangible and other assets, net	$	16,152,000		$	20,066,000

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

For the years ending December 31,
2023 remaining		2,432,000
2024		4,538,000
2025		3,915,000
2026		2,653,000
2027		1,807,000
Thereafter		807,000
	$	16,152,000

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Note 4 - Acquisitions (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

Cash consideration at closing			$	150,000
Equity consideration at closing – shares of common stock		1,556,663
Super League closing stock price per share on the Melon Closing Date	$	0.4640
Fair value of equity consideration issued at closing	$	722,000		722,000
Fair value of contingent consideration at closing				1,350,000
Fair value of total consideration issued at closing			$	2,222,000

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	Amount
Assets Acquired and Liabilities Assumed:
Accounts receivable and other assets	$	36,000
Liabilities assumed		(188,000	)
Identifiable intangible assets		510,000
Identifiable net assets acquired		358,000
Goodwill		1,864,000
Total purchase price	$	2,222,000

Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block]

	Estimated Useful Life (in years)		Amount
Developed technology		5	$	250,000
Developer relationships		2		50,000
Customer relationships		6		190,000
Trade names / trademarks		0.5		20,000
Total intangible assets acquired			$	510,000

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue	$	5,357,000		$	4,900,000		$	9,089,000		$	9,358,000
Net Loss		(6,808,000	)		(9,752,000	)		(14,866,000	)		(17,925,000	)

Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block]

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Beginning balance	$	3,674,000		$	-	$	3,206,000		$	-
Change in fair value		(13,000	)		-		204,000			-
Current period accrued contingent consideration		471,000			-		722,000			-
Contingent consideration payments(2)		(3,423,000	)		-		(3,423,000	)		-
Accrued contingent consideration	$	709,000	(1)	$	-	$	709,000	(1)	$	-

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Note 6 - Stockholders' Equity and Equity-linked Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Stock by Class [Table Text Block]

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
April 19, 2023	Series AA	$	0.4715		7,680	$	7,680,000	$	966,000	$	6,714,000		16,288,000		2,285,000
April 20, 2023	Series AA-2	$	0.5215		1,500		1,500,000		130,000		1,370,000		2,876,000		278,000
April 28, 2023	Series AA-3	$	0.4750		1,025		1,025,000		133,000		892,000		2,158,000		313,000
May 5, 2023	Series AA-4	$	0.4642		1,026		1,026,000		133,000		893,000		2,210,000		320,000
May 26, 2023	Series AA-5	$	0.5300		550		550,000		72,000		479,000		1,038,000		150,000
Total					11,781	$	11,781,000	$	1,434,000	$	10,348,000		24,570,000		3,346,000

Date	Series Design- ation	Conversion Price		Shares		Gross Proceeds		Fees		Net Proceeds		Conversion Shares		Placement Agent Warrants (1)
November 22, 2022	Series A	$	0.6200		5,359	$	5,359,000	$	752,000	$	4,607,000		8,644,000		1,253,000
November 28, 2022	Series A-2	$	0.6646		1,297		1,297,000		169,000		1,128,000		1,952,000		283,000
November 30, 2022	Series A-3	$	0.6704		1,733		1,733,000		225,000		1,508,000		2,585,000		375,000
December 22, 2022	Series A-4	$	0.3801		1,934		1,934,000		251,000		1,683,000		5,088,000		738,000
January 31, 2023	Series A-5	$	0.5546		2,299		2,299,000		299,000		2,000,000		4,145,000		601,000
Total – as of June 30, 2023					12,622	$	12,622,000	$	1,696,000	$	10,926,000		22,414,000		3,250,000

Schedule of Conversions of Stock [Table Text Block]

Conversion Date	Series Designation	Conversion Price		Preferred Shares Converted		Conversion Shares – Common Stock
06/13/2023	Series A	$	0.6200		1,771		2,947,746
06/14/2023	Series A-2	$	0.6646		1,160		1,890,644
06/21/2023	Series A-3	$	0.6704		1,200		2,506,437
06/26/2023	Series A-4	$	0.3801		280		488,986
06/29/2023	Series A-5	$	0.5546		100		161,292
Totals					4,511		7,995,105

Share-based Payment Arrangement, Warrants, Activity [Table Text Block]

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Beginning balance	$	-		$	-	$	-		$	-
Initial fair value of warrant liability – grant date		2,804,000			-		2,804,000			-
Change in fair value		(1,040,000	)		-		(1,040,000	)		-
Fair value of warrant liability at June 30, 2023	$	1,764,000		$	-	$	1,764,000		$	-

Schedule of Warrants, Valuation Assumptions [Table Text Block]

				June 30,
	Grant Date			2023
Expected Volatility		95%			95%
Risk–free interest rate		3.88%			4.13%
Dividend yield		-%			-%
Expected life of options (in years)	5.0	-	5.19	4.99	-	5.18

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Note 1 - Description of Business (Details Textual) - shares	Jun. 30, 2023	May 30, 2023	May 29, 2023	Dec. 31, 2022
Common Stock, Shares Authorized (in shares)	100,000,000	400,000,000	100,000,000	100,000,000

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Note 2 - Summary of Significant Accounting Policies (Details Textual)				1 Months Ended	3 Months Ended		6 Months Ended		18 Months Ended
	May 01, 2023 USD ($) $ / shares shares	Apr. 30, 2023 $ / shares shares	Jan. 01, 2022 $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Mar. 25, 2022 USD ($)	Dec. 31, 2021 USD ($)
Net Income (Loss) Attributable to Parent					$ (6,836,000)	$ (8,720,000)	$ (14,072,000)	$ (16,636,000)
Retained Earnings (Accumulated Deficit)				$ (210,743,000)	(224,815,000)		(224,815,000)		$ (224,815,000)
Net Cash Provided by (Used in) Operating Activities							(10,792,000)	(10,247,000)
Cash and Cash Equivalents, at Carrying Value				2,482,000	2,569,000		2,569,000		2,569,000
Contract with Customer, Liability				111,000	269,000		269,000		$ 269,000		$ 76,000
Contract with Customer, Liability, Revenue Recognized					0	44,000	82,000	47,000
Advertising Expense					13,000	134,000	22,000	284,000
Share-Based Payment Arrangement, Expense					749,000	1,000,000	$ 1,532,000	2,099,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period | shares		1,179,979
Number of Reportable Segments							1
Income Tax Expense (Benefit)					(313,000)	(0)	$ (313,000)	(46,000)
Common Stock Underlying All Outstanding Stock Option, Restricted Stock Units and Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares							15,757,000		6,787,000
Common Stock Potentially Issuable in Connection With Conversion of Outstanding Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares							38,989,000
Prepaid Expenses and Other Current Assets [Member]
Deferred Costs, Current				$ 349,000	282,000		$ 282,000		$ 282,000
Share-Based Payment Arrangement, Employee [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period | shares	584,438
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | shares	1,356,000	6,100,000
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares	$ 0.4905	$ 0.49
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount	$ 960,000
Performance Stock Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | shares		1,350,000
Share-Based Payment Arrangement, Expense					48,000	$ 564,000	298,000	$ 1,121,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Forfeitures | shares		1,350,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount					540,000		540,000		$ 540,000
Performance Stock Units [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares		$ 0.80
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		20.00%
Performance Stock Units [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares		$ 1.00
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		20.00%
Performance Stock Units [Member] | Share-Based Payment Arrangement, Tranche Three [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares		$ 1.20
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		20.00%
Performance Stock Units [Member] | Share-Based Payment Arrangement, Tranche Four [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares		$ 1.40
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		20.00%
Performance Stock Units [Member] | Share-Based Payment Arrangement, Tranche Five [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares		$ 1.60
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		20.00%
Performance Stock Units [Member] | Super League 2014 Amended and Restated Stock Option and Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | shares			1,350,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting, Number of Increments			5
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting, Number of Shares Required Vested | shares			270,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period			3 years
Performance Stock Units [Member] | Super League 2014 Amended and Restated Stock Option and Incentive Plan [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares			$ 4.75
Performance Stock Units [Member] | Super League 2014 Amended and Restated Stock Option and Incentive Plan [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares			6.00
Performance Stock Units [Member] | Super League 2014 Amended and Restated Stock Option and Incentive Plan [Member] | Share-Based Payment Arrangement, Tranche Three [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares			7.00
Performance Stock Units [Member] | Super League 2014 Amended and Restated Stock Option and Incentive Plan [Member] | Share-Based Payment Arrangement, Tranche Four [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares			8.00
Performance Stock Units [Member] | Super League 2014 Amended and Restated Stock Option and Incentive Plan [Member] | Share-Based Payment Arrangement, Tranche Five [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares			$ 9.00
Stock Warrants [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Forfeitures | shares		522,015
Stock Warrants [Member] | Share-Based Payment Arrangement, Nonemployee [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | shares				500,000
Share-Based Payment Arrangement, Expense					62,000		$ 124,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares				$ 0.67
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares				$ 0.50
Modified Performance Stock Units [Member]
Share-Based Payment Arrangement, Expense					$ 89,000
Share-Based Payment Arrangement, Option [Member] | Share-Based Payment Arrangement, Employee [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	4 years
Modified Stock Options [Member] | Share-Based Payment Arrangement, Employee [Member]
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount	$ 449,000
Vested Modified Stock Options [Member] | Share-Based Payment Arrangement, Employee [Member]
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount	$ 101,000
Unvested Modified Stock Options [Member] | Share-Based Payment Arrangement, Employee [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	4 years
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount	$ 348,000
Computer Software, Intangible Asset [Member]
Finite-Lived Intangible Asset, Useful Life					3 years		3 years		3 years
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life					3 years		3 years		3 years
Minimum [Member] | Performance Stock Units [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition							8 months 8 days
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life					10 years		10 years		10 years
Maximum [Member] | Performance Stock Units [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition							1 year 6 months
Transferred at Point in Time [Member]
Percentage of Revenue					35.00%	43.00%	32.00%	33.00%
Transferred over Time [Member]
Percentage of Revenue					65.00%	57.00%	68.00%	67.00%
Tumim Stone Capital, LLC [Member]
Stock Purchase Agreement, Maximum Obligated Purchase Amount										$ 10,000,000

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Note 2 - Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
REVENUE	$ 5,052,000	$ 4,279,000	$ 8,374,000	$ 8,047,000
Advertising and Sponsorships [Member]
REVENUE	3,634,000	3,518,000	5,302,000	5,374,000
Content Sales [Member]
REVENUE	1,030,000	288,000	2,301,000	1,693,000
Direct to Consumer [Member]
REVENUE	$ 388,000	$ 473,000	$ 771,000	$ 980,000

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Note 2 - Summary of Significant Accounting Policies - Noncash Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-Based Payment Arrangement, Expense	$ 749,000	$ 1,000,000	$ 1,532,000	$ 2,099,000
Selling and Marketing Expense [Member]
Share-Based Payment Arrangement, Expense	236,000	251,000	400,000	481,000
Research and Development Expense [Member]
Share-Based Payment Arrangement, Expense	102,000	74,000	191,000	263,000
General and Administrative Expense [Member]
Share-Based Payment Arrangement, Expense	$ 411,000	$ 675,000	$ 941,000	$ 1,355,000

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Note 2 - Summary of Significant Accounting Policies - Schedule of Concentration Risks (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Number of customers	2	2	1	3
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Customers [Member]
Concentration risk				36.00%
Concentration risk				36.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Customers [Member]
Concentration risk	22.00%	46.00%
Concentration risk	22.00%	46.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Customer [Member]
Concentration risk			11.00%
Concentration risk			11.00%
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Advertising and Sponsorships [Member]
Concentration risk	22.00%	46.00%	11.00%	25.00%
Concentration risk	22.00%	46.00%	11.00%	25.00%
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Publishing and Content Studio [Member]
Concentration risk	0.00%	0.00%	0.00%	11.00%
Concentration risk	0.00%	0.00%	0.00%	11.00%
Revenue Benchmark [Member] | Product Concentration Risk [Member] | All Product and Services [Member]
Concentration risk	22.00%	46.00%	11.00%	36.00%
Concentration risk	22.00%	46.00%	11.00%	36.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Number of customers	3		3		2
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Three Customers [Member]
Concentration risk			36.00%
Concentration risk			36.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customers [Member]
Concentration risk					25.00%
Concentration risk					25.00%
Accounts Payable [Member] | Supplier Concentration Risk [Member]
Number of customers	1		1		1
Accounts Payable [Member] | Supplier Concentration Risk [Member] | One Vendor [Member]
Concentration risk			12.00%		10.00%
Concentration risk			12.00%		10.00%

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Note 3 - Intangible and Other Assets (Details Textual) - USD ($)		3 Months Ended		6 Months Ended
	May 04, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Amortization of Intangible Assets		$ 1,316,000	$ 1,300,000	$ 2,604,000	$ 2,601,000
Less: accumulated amortization		(12,377,000)		(12,377,000)		$ (10,528,000)
Cost of Sales [Member]
Amortization of Intangible Assets		5,000	$ 27,000	31,000	$ 31,000
Melon Acquisition [Member]
Finite-Lived Intangible Assets Acquired	$ 510,000
Amortization of Intangible Assets		23,000
Melon Acquisition [Member] | Developed Technology Rights [Member]
Finite-Lived Intangible Assets Acquired	$ 250,000
Bannerfy Acquisition [Member] | Developed Technology Rights [Member]
Impairment of Intangible Assets, Finite-Lived		2,284,000
Finite-Lived Intangible Assets, Period Increase (Decrease)		3,069,000
Less: accumulated amortization		$ 785,000		$ 785,000

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Note 3 - Intangible and Other Assets - Intangible and Other Assets (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Intangible assets, gross	$ 28,529,000	$ 30,594,000
Less: accumulated amortization	(12,377,000)	(10,528,000)
Intangible and other assets, net	16,152,000	20,066,000
Customer Relationships [Member]
Intangible assets, gross	13,566,000	13,376,000
Capitalized Software Development Costs [Member]
Intangible assets, gross	5,745,000	5,262,000
Anime Battlegrounds X [member]
Intangible assets, gross	500,000	500,000
Developed Technology Rights [Member]
Intangible assets, gross	5,062,000	7,880,000
Influencers Content Creators [Member]
Intangible assets, gross	2,559,000	2,559,000
Trade Names [Member]
Intangible assets, gross	209,000	189,000
Internet Domain Names [Member]
Intangible assets, gross	68,000	68,000
Copyrights [Member]
Intangible assets, gross	$ 820,000	$ 760,000

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Note 3 - Intangible and Other Assets - Schedule of Intangible Assets Future Amortization Expenses (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
2023 Remaining	$ 2,432,000
2024	4,538,000
2025	3,915,000
2026	2,653,000
2027	1,807,000
Thereafter	807,000
Intangible and other assets, net	$ 16,152,000	$ 20,066,000

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Note 4 - Acquisitions (Details Textual)				1 Months Ended	2 Months Ended		3 Months Ended			6 Months Ended
	May 04, 2023 USD ($) $ / shares shares	May 01, 2023 $ / shares shares	Oct. 04, 2021 USD ($) $ / shares shares	Apr. 30, 2023 USD ($) shares	Jun. 30, 2023 USD ($)		Jun. 30, 2023 USD ($)		Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)		Jun. 30, 2022 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability										$ 286,000		$ 0
Amortization of Intangible Assets							$ 1,316,000		$ 1,300,000	2,604,000		2,601,000
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | shares		2,075,550
Restricted Stock Units (RSUs) [Member] | Vesting Monthly [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | shares		830,220
Restricted Stock Units (RSUs) [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | shares		1,245,330
Restricted Stock Units (RSUs) [Member] | Revenue Tranche 1 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		25.00%
Restricted Stock Units (RSUs) [Member] | Revenue Tranche 2 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		25.00%
Restricted Stock Units (RSUs) [Member] | Stock Price Tranche 1 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		25.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares		$ 1.50
Restricted Stock Units (RSUs) [Member] | Stock Price Tranche 2 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage		25.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Requirement, Stock Price | $ / shares		$ 2.50
Melon Acquisition [Member]
Business Combination, Consideration Transferred, Net of Contingent Consideration	$ 900,000
Payments to Acquire Businesses, Gross	150,000
Business Combination, Remaining Consideration Transfer Balance	$ 750,000
Business Acquisition, Share Price | $ / shares	$ 0.4818
Business Combination, Contingent Consideration, Liability	$ 2,350,000				$ 1,432,000		1,432,000			$ 1,432,000
Business Acquisition, Transaction Costs	$ 47,000
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability					$ 82,000
Amortization of Intangible Assets							$ 23,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares	1,556,663
Melon Acquisition [Member] | Measurement Input, Risk Free Interest Rate [Member]
Business Combination, Contingent Consideration, Liability, Measurement Input	0.0404				0.0514		0.0514			0.0514
Melon Acquisition [Member] | Measurement Input, Price Volatility [Member]
Business Combination, Contingent Consideration, Liability, Measurement Input	0.85				0.85		0.85			0.85
Melon Acquisition [Member] | Measurement Input, Discount Rate [Member]
Business Combination, Contingent Consideration, Liability, Measurement Input	0.30				0.30		0.30			0.30
Melon Acquisition [Member] | First Earnout Period [Member]
Business Combination, Contingent Consideration, Liability	$ 1,000,000
Melon Acquisition [Member] | Second Earnout Period [Member]
Business Combination, Contingent Consideration, Liability	1,350,000
Melon Acquisition [Member] | Second Earnout Period, Cash Payments [Member]
Business Combination, Contingent Consideration, Liability	600,000
Melon Acquisition [Member] | Second Earnout Period, Stock Payments [Member]
Business Combination, Contingent Consideration, Liability	$ 1,750,000
Superbiz Acquisition [Member]
Business Acquisition, Share Price | $ / shares			$ 0.38
Business Combination, Contingent Consideration, Liability					$ 709,000	[1]	$ 709,000	[1]	0	$ 709,000	[1]	0	$ 3,674,000	$ 3,206,000	$ 0	$ 0
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability							(13,000)		0	204,000		0
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High			$ 11,500,000
Business Combination, Contingent Consideration, Percentage Reduction if Founder No Longer Employee			(50.00%)
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares			216,000
Payment for Contingent Consideration Liability, Financing Activities				$ 2,900,000			$ 3,423,000	[2]	$ (0)	$ 3,423,000	[2]	$ (0)
Stock Issued During Period, Shares, Acquisitions | shares				987,973
Stock Issued During Period, Value, Acquisitions				$ 548,000

[1] Includes approximately 216,000 shares of common stock valued at $0.38, the closing price of our common stock as of the applicable date.

[2] In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 987,973 shares of our common stock valued at $548,000.

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Note 4 - Acquisition - Purchase Price Allocation (Details) - Melon Acquisition [Member]	May 04, 2023 USD ($) $ / shares shares
Cash consideration at closing	$ 150,000
Equity consideration at closing – shares of common stock (in shares) | shares	1,556,663
Super League closing stock price per share on the Melon Closing Date (in dollars per share) | $ / shares	$ 0.4818
Fair value of equity consideration issued at closing	$ 722,000
Fair value of contingent consideration at closing	1,350,000
Fair value of total consideration issued at closing	$ 2,222,000
Super League [Member]
Super League closing stock price per share on the Melon Closing Date (in dollars per share) | $ / shares	$ 0.4640

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Note 4 - Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($)	Jun. 30, 2023	May 04, 2023	Dec. 31, 2022
Goodwill	$ 1,864,000		$ 0
Melon Acquisition [Member]
Accounts receivable and other assets		$ 36,000
Liabilities assumed		(188,000)
Identifiable intangible assets		510,000
Identifiable net assets acquired		358,000
Goodwill		1,864,000
Total purchase price		$ 2,222,000

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Note 4 - Acquisitions - Schedule of Acquired Intangible Assets (Details) - Melon Acquisition [Member]	May 04, 2023 USD ($)
Finite-Lived Intangible Assets Acquired	$ 510,000
Developed Technology Rights [Member]
Estimated Useful Life (in years) (Year)	5 years
Finite-Lived Intangible Assets Acquired	$ 250,000
Developer Relationships [Member]
Estimated Useful Life (in years) (Year)	2 years
Finite-Lived Intangible Assets Acquired	$ 50,000
Customer Relationships [Member]
Estimated Useful Life (in years) (Year)	6 years
Finite-Lived Intangible Assets Acquired	$ 190,000
Trademarks and Trade Names [Member]
Estimated Useful Life (in years) (Year)	6 months
Finite-Lived Intangible Assets Acquired	$ 20,000

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Note 4- Acquisitions - Schedule of Pro Forma Information (Details) - Melon Acquisition [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue	$ 5,357,000	$ 4,900,000	$ 9,089,000	$ 9,358,000
Net Loss	$ (6,808,000)	$ (9,752,000)	$ (14,866,000)	$ (17,925,000)

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Note 4 - Acquisitions - Schedule of Contingent Consideration (Details) - USD ($)	1 Months Ended	3 Months Ended			6 Months Ended
	Apr. 30, 2023	Jun. 30, 2023		Jun. 30, 2022	Jun. 30, 2023		Jun. 30, 2022
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability					$ 286,000		$ 0
Superbiz Acquisition [Member]
Accrued contingent consideration	$ 3,674,000	$ 3,674,000		$ 0	3,206,000		0
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability		(13,000)		0	204,000		0
Current period accrued contingent consideration		471,000		0	722,000		0
Contingent consideration payments(2)	$ (2,900,000)	(3,423,000)	[1]	0	(3,423,000)	[1]	0
Accrued contingent consideration		$ 709,000	[2]	$ 0	$ 709,000	[2]	$ 0

[1] In April 2023, the Company paid accrued contingent consideration related to the Initial Earn Out Period, comprised of $2.9 million of cash payments and payment of 987,973 shares of our common stock valued at $548,000.

[2] Includes approximately 216,000 shares of common stock valued at $0.38, the closing price of our common stock as of the applicable date.

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Note 5 - Note Payable (Details Textual) - Securities Purchase Agreement [Member] - Note Holders [Member]		3 Months Ended	6 Months Ended	12 Months Ended
	May 16, 2022 USD ($) $ / shares	Jun. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Mar. 31, 2023 USD ($)
Debt Instrument, Face Amount	$ 4,320,000
Debt Instrument, Discount, Percent	8.00%
Debt Instrument, Interest Rate, Stated Percentage	9.00%
Debt Instrument, Term	12 months
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 4.00
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger	90.00%
Debt Instrument, Convertible, Threshold Trading Days	10
Debt Instrument, Redemption Price, Percentage Requirement	50.00%
Debt Instrument, Unamortized Discount	$ 320,000			$ 40,000
Amortization of Debt Discount (Premium)		$ 0	$ 40,000
Convertible Notes Payable				539,000	$ 0
Repayments of Debt				539,000
Interest Payable				180,000	$ 0
Interest Paid, Excluding Capitalized Interest, Operating Activities				$ 180,000

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Note 6 - Stockholders' Equity and Equity-linked Instruments (Details Textual) - USD ($)			3 Months Ended		6 Months Ended		9 Months Ended
	Nov. 22, 2022	Mar. 25, 2022	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
Preferred Stock, Par or Stated Value Per Share (in dollars per share)			$ 0.001		$ 0.001		$ 0.001	$ 0.001
Tumim [Member]
Common Stock, Maximum Shares Sold		10,000,000
Warrants Issued With Placement Agent Agreement [Member]
Warrants and Rights Outstanding, Term			5 years		5 years		5 years
Class of Warrants and Rights, Number of Securities Called by Warrants or Rights, Percentage of Total Common Stock Issuable Upon Conversion of Preferred Shares			14.50%		14.50%		14.50%
Subscription Agreements [Member] | Securities Purchase Agreement [Member]
Percentage of Proceeds from Issuance of Equity to Redeem Debt Outstanding				50.00%
Proceeds from Issuance of Preferred Stock Used in Connection With Redemption of Debt			$ 0		$ 719,000
Placement Agency Agreement [Member]
Aggregate Amount Required in Equity Offering for Agent Having Right to Appoint			$ 10,000,000		$ 10,000,000		$ 10,000,000
Purchase Agreement [Member] | Tumim [Member]
Stock Issued During Period, Shares, New Issues (in shares)		50,000
Stock Issued During Period, Value, New Issues		$ 100,000
Common Stock, Maximum Shares Allowed to Issue and Sell, Initial		7,361,833
Common Stock, Maximum Shares Allowed to Issue and Sell, Percentage of Shares Issued and Outstanding, Initial		19.99%
Beneficial Ownership, Minimum Percentage of Shares Outstanding, Initial		4.99%
Purchase Agreement [Member] | Tumim [Member] | Maximum [Member]
Beneficial Ownership, Minimum Percentage of Shares Outstanding, Initial		9.99%
Series AA, AA-2, AA-3, and AA-4 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues (in shares)			11,781
Conversion Shares (in shares)			24,570,000		24,570,000		24,570,000
Series AA, AA-2, AA-3, and AA-4 Convertible Preferred Stock [Member] | Subscription Agreements [Member]
Stock Issued During Period, Shares, New Issues (in shares)			11,781
Preferred Stock, Par or Stated Value Per Share (in dollars per share)			$ 0.001		$ 0.001		$ 0.001
Shares Issued, Price Per Share (in dollars per share)			$ 1,000		$ 1,000		$ 1,000
Preferred Stock, Beneficial Ownership Limitations, Percentage of Outstanding Shares Required to be Converted When Common Stock Volume-weighted Average Price Over Previous 10 Days as Reported Equals More Than 250% of Conversion Price			50.00%		50.00%		50.00%
Preferred Stock, Beneficial Ownership Limitations, Percentage of Outstanding Shares Required to be Converted When Common Stock Volume-weighted Average Price Over Previous 10 Days as Reported Equals More Than 300% of Conversion Price			100.00%		100.00%		100.00%
Preferred Stock Dividends, Percentage of Common Shares			20.00%		20.00%		20.00%
Series A Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues (in shares)	5,359
Conversion Shares (in shares)	8,644,000			3,500,000		3,500,000
Series A Preferred Offerings [Member]
Stock Issued During Period, Shares, New Issues (in shares)							12,622
Conversion Shares (in shares)			22,414,000		22,414,000		22,414,000
Series A Preferred Offerings [Member] | Subscription Agreements [Member]
Stock Issued During Period, Shares, New Issues (in shares)						12,622
Preferred Stock, Par or Stated Value Per Share (in dollars per share)				$ 0.001		$ 0.001
Shares Issued, Price Per Share (in dollars per share)				$ 1,000		$ 1,000
Preferred Stock, Beneficial Ownership Limitations, Percentage of Outstanding Shares Required to be Converted When Common Stock Volume-weighted Average Price Over Previous 10 Days as Reported Equals More Than 250% of Conversion Price			50.00%		50.00%		50.00%
Preferred Stock, Beneficial Ownership Limitations, Percentage of Outstanding Shares Required to be Converted When Common Stock Volume-weighted Average Price Over Previous 10 Days as Reported Equals More Than 300% of Conversion Price			100.00%		100.00%		100.00%
Preferred Stock Dividends, Percentage of Common Shares			20.00%		20.00%		20.00%
Preferred Stock, Stated Value			$ 1,000		$ 1,000		$ 1,000
Preferred Stock, Beneficial Ownership Limitation, Minimum Percentage of Outstanding Preferred Stock Shares Required				51.00%		51.00%
Preferred Stock Voting Exceptions, Minimum Amount of Indebtedness Required			$ 5,000,000		$ 5,000,000		$ 5,000,000
Series A Preferred Offerings [Member] | Placement Agency Agreement [Member]
Placement Fee, Percentage of Proceeds from Issuance of Equity					10.00%
Nonaccountable Expense, Percentage of Proceeds from Issuance of Equity					3.00%

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Note 6 - Stockholders' Equity and Equity-linked Instruments - Schedule of Preferred Stock (Details) - USD ($)												3 Months Ended	6 Months Ended		9 Months Ended
		May 26, 2023	May 05, 2023	Apr. 28, 2023	Apr. 20, 2023	Apr. 19, 2023	Jan. 31, 2023	Dec. 22, 2022	Nov. 30, 2022	Nov. 28, 2022	Nov. 22, 2022	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 29, 2023	Jun. 26, 2023	Jun. 21, 2023	Jun. 14, 2023	Jun. 13, 2023	Mar. 31, 2023
Net Proceeds													$ 12,070,000	$ 0
Placement Agent Warrants With Series A Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)											1,253,000
Placement Agent Warrants With Series AA Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)						2,285,000
Placement Agent Warrants With Series A-2 Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)	[1]									283,000
Placement Agent Warrants With Series A-3 Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)									375,000
Placement Agent Warrants With Series AA-2 Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)					278,000
Placement Agent Warrants With Series A-4 Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)								738,000
Placement Agent Warrants With Series A5 Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)							601,000
Placement Agent Warrants With Series AA-3 Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)	[2]			313,000
Placement Agent Warrants With Series AA-4 Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)			320,000
Placement Agent Warrants With Series A A5 Preferred Stock [Member]
Placement Agent Warrants (1) (in shares)		150,000
Series AA Convertible Preferred Stock [Member]
Conversion Price (in dollars per share)						$ 0.4715
Stock Issued During Period, Shares, New Issues (in shares)						7,680
Gross Proceeds						$ 7,680,000
Fees						966,000
Net Proceeds						$ 6,714,000
Conversion Shares (in shares)						16,288,000
Series A Preferred Stock [Member]
Conversion Price (in dollars per share)																				$ 0.6200
Conversion Price (in dollars per share)											$ 0.6200
Stock Issued During Period, Shares, New Issues (in shares)											5,359
Gross Proceeds											$ 5,359,000
Fees											752,000
Net Proceeds											$ 4,607,000
Conversion Shares (in shares)											8,644,000										3,500,000
Series A-2 Preferred Stock [Member]
Conversion Price (in dollars per share)																			$ 0.6646
Conversion Price (in dollars per share)	[1]									$ 0.6646
Stock Issued During Period, Shares, New Issues (in shares)	[1]									1,297
Gross Proceeds	[1]									$ 1,297,000
Fees	[1]									169,000
Net Proceeds	[1]									$ 1,128,000
Conversion Shares (in shares)	[1]									1,952,000
Series AA-2 Convertible Preferred Stock [Member]
Conversion Price (in dollars per share)			$ 0.4642		$ 0.5215
Stock Issued During Period, Shares, New Issues (in shares)			1,026		1,500
Gross Proceeds			$ 1,026,000		$ 1,500,000
Fees			133,000		130,000
Net Proceeds			$ 893,000		$ 1,370,000
Conversion Shares (in shares)			2,210,000		2,876,000
Series A-3 Preferred Stock [Member]
Conversion Price (in dollars per share)																		$ 0.6704
Conversion Price (in dollars per share)									$ 0.6704
Stock Issued During Period, Shares, New Issues (in shares)									1,733
Gross Proceeds									$ 1,733,000
Fees									225,000
Net Proceeds									$ 1,508,000
Conversion Shares (in shares)									2,585,000
Series A-4 Preferred Stock [Member]
Conversion Price (in dollars per share)																	$ 0.3801
Conversion Price (in dollars per share)								$ 0.3801
Stock Issued During Period, Shares, New Issues (in shares)								1,934
Gross Proceeds								$ 1,934,000
Fees								251,000
Net Proceeds								$ 1,683,000
Conversion Shares (in shares)								5,088,000
Series AA-3 Convertible Preferred Stock [Member]
Conversion Price (in dollars per share)	[2]			$ 0.4750
Stock Issued During Period, Shares, New Issues (in shares)	[2]			1,025
Gross Proceeds	[2]			$ 1,025,000
Fees	[2]			133,000
Net Proceeds	[2]			$ 892,000
Conversion Shares (in shares)	[2]			2,158,000
Series A-5 Preferred Stock [Member]
Conversion Price (in dollars per share)																$ 0.5546
Conversion Price (in dollars per share)							$ 0.5546
Stock Issued During Period, Shares, New Issues (in shares)							2,299
Gross Proceeds							$ 2,299,000
Fees							299,000
Net Proceeds							$ 2,000,000
Conversion Shares (in shares)							4,145,000
Series A Preferred Offerings [Member]
Stock Issued During Period, Shares, New Issues (in shares)															12,622
Gross Proceeds															$ 12,622,000
Fees															1,696,000
Net Proceeds															$ 10,926,000
Conversion Shares (in shares)												22,414,000	22,414,000		22,414,000
Placement Agent Warrants (1) (in shares)															3,250,000
Series AA-5 Convertible Preferred Stock [Member]
Conversion Price (in dollars per share)		$ 0.5300
Stock Issued During Period, Shares, New Issues (in shares)		550
Gross Proceeds		$ 550,000
Fees		72,000
Net Proceeds		$ 479,000
Conversion Shares (in shares)		1,038,000
Series AA, AA-2, AA-3, and AA-4 Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues (in shares)												11,781
Gross Proceeds												$ 11,781,000
Fees												1,434,000
Net Proceeds												$ 10,348,000
Conversion Shares (in shares)												24,570,000	24,570,000		24,570,000
Placement Agent Warrants (1) (in shares)												3,346,000

[1] Issued on May 26, 2023, effective as of the applicable closing date, upon final closing of the Series A Preferred Stock offering

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

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Note 6 - Stockholders' Equity and Equity-linked Instruments - Schedule of Preferred Stock Conversions (Details) - $ / shares						6 Months Ended
	Jun. 29, 2023	Jun. 26, 2023	Jun. 21, 2023	Jun. 14, 2023	Jun. 13, 2023	Jun. 30, 2023
Preferred Stock [Member]
Conversion of Stock, Shares Converted						4,511
Common Stock [Member]
Conversion of Stock, Shares Issued						7,995,105
Series A Preferred Stock [Member]
Conversion Price (in dollars per share)					$ 0.6200
Series A Preferred Stock [Member] | Preferred Stock [Member]
Conversion of Stock, Shares Converted					1,771
Series A Preferred Stock [Member] | Common Stock [Member]
Conversion of Stock, Shares Issued					2,947,746
Series A-2 Preferred Stock [Member]
Conversion Price (in dollars per share)				$ 0.6646
Series A-2 Preferred Stock [Member] | Preferred Stock [Member]
Conversion of Stock, Shares Converted				1,160
Series A-2 Preferred Stock [Member] | Common Stock [Member]
Conversion of Stock, Shares Issued				1,890,644
Series A-3 Preferred Stock [Member]
Conversion Price (in dollars per share)			$ 0.6704
Series A-3 Preferred Stock [Member] | Preferred Stock [Member]
Conversion of Stock, Shares Converted			1,200
Series A-3 Preferred Stock [Member] | Common Stock [Member]
Conversion of Stock, Shares Issued			2,506,437
Series A-4 Preferred Stock [Member]
Conversion Price (in dollars per share)		$ 0.3801
Series A-4 Preferred Stock [Member] | Preferred Stock [Member]
Conversion of Stock, Shares Converted		280
Series A-4 Preferred Stock [Member] | Common Stock [Member]
Conversion of Stock, Shares Issued		488,986
Series A-5 Preferred Stock [Member]
Conversion Price (in dollars per share)	$ 0.5546
Series A-5 Preferred Stock [Member] | Preferred Stock [Member]
Conversion of Stock, Shares Converted	100
Series A-5 Preferred Stock [Member] | Common Stock [Member]
Conversion of Stock, Shares Issued	161,292

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Note 6 - Stockholders' Equity and Equity-linked Instruments - Schedule of Warrants (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Beginning balance	$ 0	$ 0	$ 0	$ 0
Initial fair value of warrant liability – grant date	2,804,000	0	2,804,000	0
Change in fair value	(1,040,000)	(0)	(1,040,000)	(0)
Fair value of warrant liability at June 30, 2023	$ 1,764,000	$ 0	$ 1,764,000	$ 0

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Note 6 - Stockholders' Equity and Equity-linked Instruments - Summary of Warrant Valuation Assumptions (Details)	Jun. 30, 2023	May 26, 2023
Measurement Input, Price Volatility [Member]
Warrants, measurement input	0.95	0.95
Measurement Input, Risk Free Interest Rate [Member]
Warrants, measurement input	0.0413	0.0388
Measurement Input, Expected Dividend Rate [Member]
Warrants, measurement input	0	0
Measurement Input, Expected Term [Member] | Minimum [Member]
Warrants, measurement input	4.99	5.0
Measurement Input, Expected Term [Member] | Maximum [Member]
Warrants, measurement input	5.18	5.19