Super League Enterprise Inc
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
SLE$4.32+2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001437749-24-017138
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001437749-24-026873
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 111 previous paragraphs and 128 current paragraphs.
71 unchanged; 31 reworded; 25 added; 9 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 31 previous and 50 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
Super League Enterprise, Inc. is redefining the gaming industry as a media channel for global brands. As a leading end-to-end immersive content partner, Super League enables marketers, advertisers, and IP owners to reach massive audiences through creativity, innovation, and gameplay within the world’s largest immersive platforms. Boasting an award-winning development studio, a vast community of native creators, and a proprietary suite of tools that maximize user engagement, Super League is a one-of-a-kind holistic solutions provider. Whether a partner is focused on building a world-class creative experience, achieving lift in brand awareness, inspiring deeper customer loyalty, or finding new sources of revenue, Super League is at the forefront – always pioneering within immersive worlds.
Current report
Bylaw Amendment
Current report
On June 4, 2024, the Board of Directors (the “Board”) of the Company approved an amendment (the “Amendment”) to the Company’s Second Amended and Restated Bylaws, effective June 4, 2024, to reduce the number of shares that are required to be present at a meeting of the Company’s stockholders (a “Meeting”) for purposes of establishing a quorum. Prior to the Amendment, the presence, in person or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock was required to establish a quorum for the transaction of business at a Meeting. As approved in the Amendment, the presence, in person or by proxy duly authorized, of the holders of not less than one-third (1/3) of the outstanding shares of stock entitled to vote will constitute a quorum for the transaction of business at a Meeting.
Current report
The Board adopted the Amendment to more practically obtain a quorum and conduct business at a Meeting. The Board based its decision on the increasing prevalence of brokerage firms opting to forgo discretionary or proportionate voting of the shares held by them in street name, which is making it increasingly difficult for companies with a large retail stockholder base to obtain a quorum of the majority. The change to the quorum requirement was made to improve the Company’s ability to hold Meetings when called.
Current report
Acquisition of Melon, Inc.
Current report
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.
Current report
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.
Current report
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. Refer to Note 4 to the condensed consolidated financial statements elsewhere herein for additional information.
Current report
Three Months Ended June 30, 2024
Current report
Revenue for the three months ended June 30, 2024 totaled $4.1 million, a decrease of $936,000 or 19%, compared to $5.1 million for the comparable prior year quarter. The decrease in revenue for the three months ended June 30, 2024 reflected a mix of industry softness in ad sales, stemming from macro environmental factors including consumer spending softness, and the shift of certain revenues and program start delays to the third quarter of 2023, and a reduction in Minehut related media sales revenues in connection with the sale of our Minehut digital property in the first quarter of 2024.
Current report
As a percentage of revenue, gross profit for the three months ended June 30, 2024 was 40%, compared to 42% for the prior year comparable quarter.
Current report
Six Months Ended June 30, 2024
Current report
Revenue for the six months ended June 30, 2024 totaled $8.3 million compared to $8.4 million for the comparable prior year period. The relatively flat revenues for the six months ended June 30, 2024 compared to the prior year period, reflected a second quarter of 2024 mix of industry softness in ad sales, stemming from macro environmental factors including consumer spending softness, and the shift of certain revenues and program start delays to the third quarter of 2023, and a reduction in Minehut related media sales revenues in connection with the sale of our Minehut digital property in the first quarter of 2024.
Current report
Cost of revenue for the six months ended June 30, 2024 totaled $4.9 million compared to $4.9 million in the comparable prior year period. As a percentage of revenue, gross profit for the six months ended June 30, 2024 was 41%, compared to 42% for the prior year comparable period.
Current report
As a percentage of revenue, gross profit for the six months ended June 30, 2024 was 41%, compared to 42% for the prior year comparable period.
Current report
Total operating expense for the six months ended June 30, 2024 decreased $6.8 million, or 36% to $12.1 million, compared to $18.9 million in the comparable prior year period. Excluding noncash charges and credits totaling $2.6 million, operating expense for the six months ended June 30, 2024 and 2023 was $9.5 million and $12.1 million, respectively, reflecting a $2.6 million, or 21% decrease compared to the prior year period, reflecting the impact of ongoing cost reduction activities. Net loss for the six months ended June 30, 2024, which includes the impact of noncash charges and credits totaling $2.6 million, was $7.7 million or $(1.55) per share, compared to a net loss of $14.1 million, or $(7.20) per share, in the comparable prior year period. The numerator utilized in the calculation of net loss per share included common stock dividends paid and / or due, in connection with outstanding preferred stock, with a total fair value of $1.6 million, which is also included as a charge to accumulated deficit for the six months ended June 30, 2024. Net loss for the six months ended June 30, 2024 included a gain on the sale of Minehut related assets totaling $144,000.
Current report
Meta Stadiums Collaboration
Current report
In August 2024 , we announced a strategic partnership with Meta-Stadiums, a cutting-edge platform to build, customize, and manage virtual stadiums in the metaverse, to combine capabilities and offer cross-platform immersive experiences and events to music artists, sports teams, entertainment companies, and consumer brands. The alliance creates a world-class end-to-end provider of metaverse programs and strategies that reaches all corners of the virtual universe, from bespoke 3D spaces to the most popular immersive platforms such as Roblox, Fortnite Creative, The Sandbox, Decentraland, and Minecraft.
Current report
Revenue (dollars in thousands) (Unaudited)
Current report
Three and Six Months Ended June 30, 2024 Compared to the Three and Six Months Ended June 30, 2023
Current report
Modifications to Equity-Based Awards
Current report
Selling, marketing and advertising expense decreased $697,000, or 12% due primarily to a $660,000 reduction in amortization expense related to the write-down of our partner relationship related intangible assets as described above, and a $146,000 decrease in selling and marketing personnel related noncash stock compensation expense, as described above.
Current report
Engineering, technology and development costs decreased $2.7 million, or 52%, driven primarily by the following:
Current report
For the Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023:
Current report
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*.*
Removed paragraphs (9)
Previous report
Super League Enterprise, Inc. is a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms. From open gaming powerhouses such as Roblox, Minecraft and Fortnite Creative, 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.
Previous report
Percentage exceeds 300%
Previous report
Revenue (dollars in thousands)
Previous report
The decrease in noncash stock compensation expense was due to the following:
Previous report
On April 30, 2023, the Board approved the cancellation of the 67,500 Original PSUs previously granted to certain executives under the 2014 Plan (as described above). In exchange for the cancelled Original PSUs, the executives were granted an aggregate of 67,500 modified PSUs (“Modified PSUs”), which vest, over a five-year term, upon the Company’s common stock achieving certain VWAP goals as follows: (i) 20% upon achieving a 60-day VWAP of $16.00 per share, (ii) 20% upon achieving a 60-day VWAP of $20.00 per share; (iii) 20% upon achieving a 60-day VWAP of $24.00 per share; (iv) 20% upon achieving a 60-day VWAP of $28.00 per share; and (v) 20% upon achieving a 60-day VWAP of $32.00 per share, in each case, as quoted on the Nasdaq Capital Market (“PSU Modification”). Total incremental compensation cost related to the Modified PSUs totaled $540,000 which will be recognized over the implied service period, on an accelerated basis, 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 Modified PSUs immediately before and after the PSU Modification.
Previous report
Noncash stock compensation expense related to the Original PSUs totaled $0 and $250,000 for the three months ended March 31, 2024 and 2023, respectively. Noncash stock compensation expense related to the Modified PSUs totaled $42,000 and $0 for the three months ended March 31, 2024 and 2023, respectively. The decrease in PSU related noncash stock compensation primarily reflects the decrease in stock price on the respective grant dates for the equity awards.
Previous report
Noncash stock compensation expense related to the Original Executive Grants totaled $0 and $148,000 for the three months ended March 31, 2024 and 2023, respectively. Noncash stock compensation expense related to the Executive Grant Modifications totaled $54,000 and $0 for the three months ended March 31, 2024 and 2023, respectively. The decrease in related noncash stock compensation primarily reflects the decrease in stock price on the respective grant dates for the equity awards.
Previous report
Noncash stock compensation expense included in general and administrative expense decreased primarily due to a $124,000 net reduction in noncash stock compensation expense in connection with performance-based stock units originally granted on January 1, 2022, and modified in April 2023, in connection with the PSU Modification described above, and a $84,000 net reduction in noncash stock compensation expense in connection with the April 2023 Stock Option Exchange, described above. The decrease primarily reflects the impact of the reduction in the grant date fair market value of the underlying Company common stock, as compared to the original grant date fair market value, which is an input to the Monte Carlo simulation and Black Sholes models, respectively, utilized to determine the estimated fair value of the equity-based awards on the modification date. The decrease also reflects an $86,000 net reduction in third-party consultant related noncash stock compensation expense, resulting from the full vesting of certain consultant related equity grants in prior periods*.*
Previous report
The Company experienced growth during the periods presented through organic and inorganic growth activities, including the expansion of our premium advertising inventory and quarter over quarter increases in recognized revenue across our primary revenue streams. In the year ended December 31, 2023, we acquired Melon, as described above, and 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 costs. Management continues to explore alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings.
Reworded paragraphs (31)
Previous wording
References in this Quarterly Report on Form 10-Q to“Super League Enterprise, Inc.”* “Company,” “we,” “us,” “our,” or similar references mean Super League Enterprise, Inc. References to the*“SEC”* refer to the U.S. Securities and Exchange Commission. All references to*“Note,”* followed by a number reference from one to seven herein, refer to the applicable corresponding numbered footnotes to the condensed consolidated financial statements contained elsewhere herein.*
Current wording
References in this Quarterly Report on Form 10-Q to“Super League Enterprise, Inc.”* “Company,” “we,” “us,” “our,” or similar references mean Super League Enterprise, Inc. References to the*“SEC”* refer to the U.S. Securities and Exchange Commission. All references to*“Note,”* followed by a number reference herein, refer to the applicable corresponding numbered footnotes to the condensed consolidated financial statements contained elsewhere herein.*
Previous wording
On September 7, 2023, the Company filed a Certificate of Amendment (the “Amendment”) to the Company’s Second Amended and Restated Certificate of Incorporation, as Amended (the “Charter”), which became effective September 11, 2023, to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.001 per share, at a ratio of 1-for-20 (the “Reverse Split”). All references to common stock, warrants to purchase common stock, options to purchase common stock, restricted stock, share data, per share data and related information contained in the financial statements have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented.
Current wording
On September 7, 2023, the Company filed a Certificate of Amendment (the “Amendment”) to the Company’s Second Amended and Restated Certificate of Incorporation, as Amended (the “Charter”), which became effective September 11, 2023, to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.001 per share, at a ratio of 1-for-20 (the “Reverse Split”). All references to common stock, warrants to purchase common stock and other rights, options to purchase common stock, restricted stock, share data, per share data and related information contained in the financial statements have been retroactively adjusted to reflect the effect of the Reverse Split for all periods presented.
Previous wording
During the first quarter of 2024, we continued to deliver top line revenue growth, including a 27% increase in quarterly 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 average deal sizes and continued high repeat customer percentages, and our focus on cost reductions and optimization has positively impacted operating leverage.
Current wording
During the three and six months ended June 30, 2024 we continued to demonstrate the effectiveness of our overall strategy, providing us with increasing opportunities to earn a greater share of advertisers’ wallet, as demonstrated by larger average deal sizes and continued high repeat customer percentages, and our focus on cost reductions and optimization has positively impacted operating leverage.
Previous wording
Revenue for the three months ended March 31, 2024 totaled $4.2 million, an increase of $887,000 or 27%, compared to $3.3 million for the comparable prior year quarter. Cost of revenue for the three months ended March 31, 2024 increased $529,000 or 27% to $2.5 million, compared to $1.9 million in the comparable prior year quarter, driven primarily by the increase in quarterly revenues for the same periods. As a percent of revenue, gross profit for the three months ended March 31, 2024 was 41%, compared to 41% for the prior year comparable quarter.
Current wording
Cost of revenue for the three months ended June 30, 2024 decreased $441,000 or 15% to $2.5 million, compared to $2.9 million in the comparable prior year quarter, driven primarily by the 19% decrease in quarterly revenues for the same periods.
Previous wording
Total operating expense for the three months ended March 31, 2024 decreased $2.3 million, or 26% to $6.3 million, compared to $8.6 million in the comparable prior year quarter. Excluding noncash stock compensation expense, intangible asset amortization expense, and mark to market related fair value adjustments, operating expense for the three months ended March 31, 2024 and 2023 was $5.0 million and $6.3 million, respectively. Net loss for the three months ended March 31, 2024, which includes the impact of noncash mark to market related charges, as described below, and noncash stock compensation and amortization charges, as summarized below, was $5.3 million or $(1.00) per share, compared to a net loss of $7.2 million, or $(3.84) per share, in the comparable prior year quarter. Net loss for the three months ended March 31, 2024 included a gain on the sale of Minehut related assets totaling $144,000.
Current wording
Total operating expense for the three months ended June 30, 2024 decreased $4.6 million, or 44% to $5.7 million, compared to $10.3 million in the comparable prior year quarter. Excluding noncash stock compensation expense, intangible asset amortization expense, loss on intangible asset disposals, mark to market related fair value adjustments, and other noncash charges (collectively, “noncash charges and credits”), totaling $1.3 million, operating expense for the three months ended June 30, 2024 and 2023 was $4.4 million and $5.9 million, reflecting a $1.5 million, or 25% decrease compared to the prior year quarter, reflecting the impact of ongoing cost reduction activities. Net loss for the three months ended June 30, 2024, which includes the impact of noncash charges and credits totaling $1.3 million, was $2.5 million or $(0.60) per share, compared to a net loss of $6.8 million, or $(3.38) per share, in the comparable prior year quarter. The numerator utilized in the calculation of net loss per share included common stock dividends paid and / or due, in connection with outstanding preferred stock, with a total fair value of $1.6 million, which is also included as a charge to accumulated deficit for the three months ended June 30, 2024.
Previous wording
The following table sets forth a summary of our results of operations for the three months ended March 31, 2024 and 2023 (dollars in thousands):
Current wording
The following table sets forth a summary of our results of operations for the three and six months ended June 30, 2024 and 2023 (dollars in thousands) (Unaudited):
Previous wording
Comparison of the Results of Operations for the Three Months Ended March 31, 2024 and 2023
Current wording
Comparison of the Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023
Previous wording
Refer to the table summarizing our results of operations for the three months ended March 31, 2024 and 2023 above.
Current wording
Refer to the table summarizing our results of operations for the three and six months ended June 30, 2024 and 2023 above.
Previous wording
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):
Current wording
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) (Unaudited):
Previous wording
Amortization of intangible assets. Amortization expense for the periods presented was included in the following operating expense line items (dollars in thousands):
Current wording
Amortization of intangible assets. Amortization expense for the periods presented was included in the following operating expense line items (dollars in thousands) (Unaudited):
Previous wording
Amortization expense for the three months ended March 31, 2024 decreased primarily due to a $7.1 million write-down of our partner relationship related intangible assets in the fourth quarter of the year ended December 31, 2023, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets originally acquired in connection with the acquisition of Mobcrush, Inc. in June 2021. The write-down resulted in a $7.1 million decrease in the carrying value of the related intangible assets as of December 31, 2023, and a corresponding decrease in scheduled future quarterly and annual amortization expense for the remaining carrying value of the applicable intangible assets, commencing in the first quarter of 2024 (remaining carrying value totaled $860,000 as of December 31, 2023). Amortization expense related to our partner relationship related intangible assets, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets, for the three months ended March 31, 2024 and 2023 totaled $50,000 and $502,000, respectively.
Current wording
Amortization expense for the three and six months ended June 30, 2024 decreased primarily due to a $7.1 million write-down of our partner relationship related intangible assets in the fourth quarter of the year ended December 31, 2023, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets originally acquired in connection with the acquisition of Mobcrush, Inc. in June 2021. The write-down resulted in a $7.1 million decrease in the carrying value of the related intangible assets as of December 31, 2023, and a corresponding decrease in scheduled future quarterly and annual amortization expense for the remaining carrying value of the applicable intangible assets, commencing in the first quarter of 2024 (remaining carrying value totaled $860,000 as of December 31, 2023). Amortization expense related to our partner relationship related intangible assets, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets, for the three and six months ended June 30, 2024 totaled $50,000 and $100,000, respectively. Amortization expense related to our partner relationship related intangible assets, comprised of our Microsoft Minecraft server and InPvP developed technology intangible assets, for the three and six months ended June 30, 2023 totaled $502,000 and $1,004,000, respectively.
Previous wording
In June 2023*,* the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere. As a result, in the second quarter of 2023, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000. Amortization expense for the disposed Bannerfy related intangible assets for the three months ended March 31, 2024 and 2023, totaled $0 and $110,000, respectively.
Current wording
In June 2023*,* the Company assigned the intangible assets originally acquired in connection with the Company’s acquisition of Bannerfy in fiscal year 2021, to the original sellers. The assets were disposed of in connection with management’s review of operations and decision to allocate resources elsewhere. As a result, in the second quarter of 2023, the Company recorded a write-off of net developed technology related intangible assets acquired in connection with the acquisition of Bannerfy totaling $2,284,000. Amortization expense for the disposed Bannerfy related intangible assets for the three and six months ended June 30, 2023 totaled $91,000 and $201,000, respectively.
Previous wording
Selling, marketing and advertising expense decreased $373,000, or 14% due primarily to a reduction in amortization expense related to the write-down of our partner relationship related intangible assets as described above.
Current wording
Selling, marketing and advertising expense decreased $323,000, or 11% due primarily to a $332,000 reduction in amortization expense related to the write-down of our partner relationship related intangible assets as described above, and a $104,000 decrease in selling and marketing personnel related noncash stock compensation expense, as described above.
Previous wording
Engineering, technology and development costs decreased $1.3 million, or 43%, driven primarily by the following:
Current wording
Engineering, technology and development costs decreased $1.5 million, or 65%, driven primarily by the following:
Previous wording
General and administrative expense for the periods presented was comprised of the following (dollars in thousands):
Current wording
General and administrative expense for the periods presented was comprised of the following (dollars in thousands) (Unaudited):
Previous wording
The change in accrued Super Biz Contingent Consideration and the related income statement impact for the periods presented was comprised of the following:
Current wording
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) (Unaudited):
Previous wording
The change in fair value, which is included in contingent consideration expense in the condensed consolidated statement of operations for the applicable periods present was comprised of the following:
Current wording
The change in fair value, which is included in contingent consideration expense in the condensed consolidated statement of operations for the applicable periods present was comprised of the following (dollars in thousands) (Unaudited):
Previous wording
The Company recorded a receivable for the total estimated consideration totaling $619,000, of which $224,000 is included in prepaid expense and other current assets and $395,000 is included in other receivables in noncurrent assets, and recognized a gain on sale of the Minehut Assets totaling $144,000, which is included in other income in the condensed consolidated statement of operations. The Purchase Consideration in the GS Agreement is variable pursuant to the guidance set forth in ASC 606. Under ASC 606, purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. As such, the Company estimated the amount of consideration to which the Company will be entitled, in exchange for transferring the Minehut Assets to GamerSafer, utilizing the expected value method which is the sum of probability-weighted amounts in a range of possible consideration outcomes over the applicable contractual payment period, resulting in an estimated receivable of $619,000. Amounts collected over and above the estimated amount at contract inception, if any, will be recognized as additional gains on the sale of Minehut Assets when realized in future periods, up to the $1.0 million stated contractual amount of purchase consideration.
Current wording
The Company recorded a receivable for the total estimated purchase consideration totaling $619,000, of which $224,000 is included in prepaid expense and other current assets and $395,000 is included in other receivables in noncurrent assets, and recognized a gain on sale of the Minehut Assets totaling $144,000, which is included in other income in the condensed consolidated statement of operations. The Purchase Consideration in the GS Agreement is variable pursuant to the guidance set forth in ASC 606. Under ASC 606, purchase consideration is variable if the amount the Company will receive is contingent on future events occurring or not occurring, even though the amount itself is fixed. As such, the Company estimated the amount of consideration to which the Company will be entitled, in exchange for transferring the Minehut Assets to GamerSafer, utilizing the expected value method which is the sum of probability-weighted amounts in a range of possible consideration outcomes over the applicable contractual payment period, resulting in an estimated receivable of $619,000. Amounts collected over and above the estimated purchase consideration recorded at contract inception, if any, will be recognized as additional gains on the sale of Minehut Assets when realized in future periods, up to the $1.0 million stated contractual amount of purchase consideration.
Previous wording
The change in warrant liability, which is reflected in the condensed consolidated statement of operations for the applicable period, was comprised of the following:
Current wording
The change in warrant liability, which is reflected in other income (expense) in the condensed consolidated statement of operations for the applicable period, was comprised of the following (dollars in thousands) (Unaudited):
Previous wording
Cash and cash equivalents totaled $3.3 million and $7.6 million at March 31, 2024 and December 31, 2023, 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.
Current wording
Cash and cash equivalents totaled $1.7 million and $7.6 million at June 30, 2024 and December 31, 2023, 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.
Previous wording
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 significant noncash charges, as reflected in the summary condensed consolidated results of operation above, and had an accumulated deficit of $254.3 million as of March 31, 2024. For the Three Months Ended March 31, 2024 and 2023, net cash used in operating activities totaled $3.7 million and $3.0 million, respectively.
Current wording
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 significant noncash charges, as reflected in the summary condensed consolidated results of operation above, and had an accumulated deficit of $258.3 million as of June 30, 2024. Net cash used in operating activities for the six months ended June 30, 2024 totaled $6.1 million.
Previous wording
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.
Current wording
Management continues to explore alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships and or other forms of equity or debt financings. We may continue to evaluate potential strategic acquisitions. To finance such strategic acquisitions, we may find it necessary to raise additional equity capital, incur debt, or both. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption periodically and such volatility and disruption may occur in the future. If we fail to obtain additional financing when needed, we may not be able to execute our business plans which, in turn, would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies.
Previous wording
Cash Flows for the Three Months Ended March 31, 2024 and 2023
Current wording
Cash Flows for the Six Months Ended June 30, 2024 and 2023
Previous wording
The following table summarizes the change in cash balances for the periods presented (dollars in thousands):
Current wording
The following table summarizes the change in cash balances for the periods presented (dollars in thousands) (Unaudited):
Previous wording
Net cash used in operating activities during the three months ended March 31, 2024, primarily reflected our GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $332,000, depreciation and amortization charges of $700,000, gain on disposal of intangible assets of $(144,000), net changes in fair value of certain liabilities of $1,041,000 and net changes in working capital of $(412,000). Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course.
Current wording
Net cash used in operating activities during the six months ended June 30, 2024, primarily reflected our GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $630,000, depreciation and amortization charges of $1,320,000, gain on disposal of intangible assets of $(144,000), net changes in fair value of certain liabilities of ($996,000), noncash legal settlement charges of $724,000 and net changes in working capital of $129,000. Changes in working capital primarily reflected the impact of the management and settlement of receivables and payables in the ordinary course.
Previous wording
Net cash used in operating activities during the three months ended March 31, 2023, primarily reflected our GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $783,000, depreciation and amortization charges of $1,377,000 and net changes in working capital of $2,098,000. Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course.
Current wording
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 management and 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.
Previous wording
Cash flows from investing activities were comprised of the following for the periods presented (dollars in thousands):
Current wording
Cash flows from investing activities were comprised of the following for the periods presented (dollars in thousands) (Unaudited):
Previous wording
Cash flows from financing activities were comprised of the following for the periods presented (dollars in thousands):
Current wording
Cash flows from financing activities were comprised of the following for the periods presented (dollars in thousands) (Unaudited):
Previous wording
Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Financing and servicing fees calculated with reference to amounts advanced under the AR Facility are included in interest expense. The commitment fee, based on the maximum facility amount and payable irrespective of drawdowns, is expensed on a straight line basis over the term of the AR Facility. Total amounts advanced under the AR Facility for the three months ended March 31, 2024 totaled $371,000. Total repayments of advances under the AR Facility for the three months ended March 31, 2024 totaled $801,000. Interest expense and commitment fee expense for the three months ended March 31, 2024 totaled $19,000 and $10,000, respectively.
Current wording
Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Financing and servicing fees calculated with reference to amounts advanced under the AR Facility are included in interest expense. The commitment fee, based on the maximum facility amount and payable irrespective of drawdowns, is expensed on a straight line basis over the term of the AR Facility. Total amounts advanced under the AR Facility for the six months ended June 30, 2024 totaled $672,000. Total repayments of advances under the AR Facility for the six months ended June 30, 2024 totaled $1,273,000. Interest expense for the three and six months ended June 30, 2024 totaled $14,000 and $33,000, respectively. Commitment fee expense for the three and six months ended June 30, 2024 totaled $10,000 and $20,000, respectively.
Previous wording
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:
Current wording
On the dates set forth in the table below, we entered into subscription agreements with accredited investors in connection with the sale of newly designated series of Convertible Preferred Stock, each series having a $0.001 par value and a $1,000 purchase price, as follows (in thousands, except share and per share data) (Unaudited):
Previous wording
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. 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 months ended March 31, 2023 $719,000 of the net proceeds from the Series A Offerings were utilized in connection with the redemption of the Notes.
Current wording
Use of net proceeds included working capital, general corporate purposes, and certain indebtedness (Series A Preferred only), including sales and marketing activities and product development. 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 months ended March 31, 2023, $719,000 of the net proceeds from the Series A Offerings were utilized in connection with the redemption of the Notes.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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.