ex_741919.htm

Table of Contents

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 September 30, 2024

☐ 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 ENTERPRISE, 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.)

2856 Colorado Ave.,

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

SLE

NASDAQ Capital Market

As of November 11, 2024, there were 12,952,601 shares of the registrant’s common stock, $0.001 par value, issued and outstanding.

Table of Contents

	September 30,			December 31,
	2024			2023
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	289,000		$	7,609,000
Accounts receivable		4,515,000			8,287,000
Prepaid expense and other current assets		782,000			862,000
Total current assets		5,586,000			16,758,000
Property and equipment, net		37,000			70,000
Intangible assets, net		4,698,000			6,636,000
Goodwill		1,864,000			1,864,000
Other receivable – noncurrent		395,000			-
Total assets	$	12,580,000		$	25,328,000

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	5,927,000		$	10,420,000
Accrued contingent consideration		268,000			1,812,000
Promissory note - contingent consideration		1,765,000			-
Contract liabilities		154,000			339,000
Secured loan – SLR Facility		-			800,000
Total current liabilities		8,114,000			13,371,000
Accrued contingent consideration – noncurrent		-			396,000
Warrant liability		947,000			1,571,000
Total liabilities		9,061,000			15,338,000

Commitments and Contingencies

Stockholders’ Equity
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; 20,592 and 23,656 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.		-			-
Common stock, par value $0.001 per share; 400,000,000 shares authorized; 11,714,087 and 4,774,116 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.		89,000			81,000
Additional paid-in capital		267,081,000			258,923,000
Accumulated deficit		(263,651,000	)		(249,014,000	)
Total stockholders’ equity		3,519,000			9,990,000
Total liabilities and stockholders’ equity	$	12,580,000		$	25,328,000

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2024			2023			2024			2023

REVENUE	$	4,431,000		$	7,195,000		$	12,756,000		$	15,569,000

COST OF REVENUE		2,706,000			4,655,000			7,653,000			9,512,000

GROSS PROFIT		1,725,000			2,540,000			5,103,000			6,057,000

OPERATING EXPENSE
Selling, marketing and advertising		2,397,000			3,161,000			7,306,000			8,767,000
Engineering, technology and development		914,000			2,066,000			3,405,000			7,268,000
General and administrative		1,935,000			2,271,000			6,558,000			7,094,000
Contingent consideration		(68,000	)		(462,000	)		(15,000	)		546,000
Loss on intangible asset disposal		-			-			-			2,284,000
Total operating expense		5,178,000			7,036,000			17,254,000			25,959,000

NET OPERATING LOSS		(3,453,000	)		(4,496,000	)		(12,151,000	)		(19,902,000	)

OTHER INCOME (EXPENSE)
Gain on sale of intangible assets		-			-			144,000			-
Change in fair value of warrant liability		198,000			1,512,000			1,104,000			2,552,000
Loss on extinguishment of liability		(336,000	)		-			(336,000	)		-
Interest expense		(45,000	)		-			(78,000	)		(43,000	)
Other		4,000			-			(30,000	)		24,000
Total other income (expense)		(179,000	)		1,512,000			804,000			2,533,000

Loss before benefit from income taxes		(3,632,000	)		(2,984,000	)		(11,347,000	)		(17,369,000	)

Benefit from income taxes		-			-			-			313,000

NET LOSS	$	(3,632,000	)	$	(2,984,000	)	$	(11,347,000	)	$	(17,056,000	)

Net loss attributable to common stockholders - basic and diluted
Basic and diluted net loss per common share	$	(0.54	)	$	(3.19	)	$	(2.00	)	$	(10.25	)
Weighted-average number of common shares outstanding, basic and diluted		9,920,278			2,957,271			7,309,509			2,293,191

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2024			2023			2024			2023
Preferred stock (Shares):
Balance, beginning of period		22,858			19,892			23,656			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
Issuance of Series AA-2 preferred stock at $1,000 per share		-			-			-			1,500
Issuance of Series AA-3 preferred stock at $1,000 per share		-			-			-			1,025
Issuance of Series AA-4 preferred stock at $1,000 per share		-			-			-			1,026
Issuance of Series AA-5 preferred stock at $1,000 per share		-			-			-			550
Issuance of Series AAA Junior preferred stock at $1,000 per share		-			-			1,210			-
Issuance of Series AAA-2 Junior preferred stock at $1,000 per share		551			-			551			-
Issuance of Series AAA-3 Junior preferred stock at $1,000 per share		697			-			697			-
Issuance of Series AAA-4 Junior preferred stock at $1,000 per share		399			-			399			-
Conversion of Series A preferred stock to common stock		(96	)		(1,218	)		(571	)		(5,729	)
Conversion of Series AA preferred stock to common stock		(1,573	)		(2,797	)		(1,936	)		(2,797	)
Conversion of Series AAA preferred stock to common stock		(2,244	)		-			(3,414	)		-
Balance, end of period		20,592			15,877			20,592			15,877

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		-			-			-			-
Issuance of Series AAA Junior preferred stock at $1,000 per share		-			-			-			-
Issuance of Series AAA-2 Junior preferred stock at $1,000 per share		-			-			-			-
Issuance of Series AAA-3 Junior preferred stock at $1,000 per share		-			-			-			-
Issuance of Series AAA-4 Junior preferred stock at $1,000 per share		-			-			-			-
Conversion of Series A preferred stock to common stock		-			-			-			-
Conversion of Series AA preferred stock to common stock		-			-			-			-
Conversion of Series AAA preferred stock to common stock		-			-			-			-
Balance, end of period	$	-		$	-		$	-		$	-

Common stock (Shares):
Balance, beginning of period		7,242,978			2,416,741			4,774,116			1,880,299
Issuance of common stock at $2.60 per share, net of issuance costs		-			811,269			-			811,269
Exercise of prefunded common stock warrants at $2.60 per share, net of issuance costs		-			67,500			-			67,500
Common stock issued for Melon Acquisition		-			-			72,118			77,833
Common stock issued for Bannerfy Acquisition		-			8,984			-			8,984
Common stock issued for Super Biz Acquisition		-			-			30,662			49,398
Preferred stock dividends paid – common stock		1,925,613			-			2,552,593			-
Conversion of Series A preferred stock		12,628			99,463			58,215			499,216
Conversion of Series AA preferred stock		803,482			766,128			995,958			766,128
Conversion of Series AAA preferred stock		1,312,743			-			2,010,674			-
Stock-based compensation		416,643			-			444,751			9,458
Issuance of common stock in settlement of legal matter		-			-			775,000			-
Balance, end of period		11,714,087			4,170,085			11,714,087			4,170,085

Common stock (Amount):
Balance, beginning of period	$	85,000		$	57,000		$	81,000		$	47,000
Issuance of common stock at $2.60 per share, net of issuance costs		-			16,000			-			16,000
Exercise of prefunded common stock warrants at $2.60 per share, net of issuance costs		-			1,000			-			1,000
Conversion of Series A, AA and AAA preferred stock		2,000			7,000			4,000			15,000
Preferred stock dividends paid – common stock		2,000			-			3,000			-
Common stock issued for Melon Acquisition		-			-			-			1,000
Common stock issued for Super Biz Acquisition		-			-			-			1,000
Issuance of common stock in settlement of legal matter		-			-			1,000			-
Balance, end of period	$	89,000		$	81,000		$	89,000		$	81,000

Additional paid-in-capital:
Balance, beginning of period	$	263,296,000		$	241,833,000		$	258,923,000		$	229,900,000
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		-			-			-			5,330,000
Issuance of Series AA-2 preferred stock at $1,000 per share, net of issuance costs		-			-			-			1,278,000
Issuance of Series AA-3 preferred stock at $1,000 per share, net of issuance costs		-			-			-			690,000
Issuance of Series AA-4 preferred stock at $1,000 per share, net of issuance costs		-			-			-			681,000
Issuance of Series AA-5 preferred stock at $1,000 per share, net of issuance costs		-			-			-			379,000
Series AA Preferred additional investment rights		-			-			-			1,794,000
Issuance of common stock at $2.60 per share, net of issuance costs		-			1,710,000			-			1,710,000
Exercise of prefunded common stock warrants at $2.60 per share, net of issuance costs		-			158,000			-			158,000
Issuance of Series AAA Junior preferred stock at $1,000 per share, net of cash and noncash issuance costs		-			-			751,000			-
Issuance of Series AAA-2 Junior preferred stock at $1,000 per share, net of cash and noncash issuance costs		453,000			-			453,000			-
Issuance of Series AAA-3 Junior preferred stock at $1,000 per share, net of issuance costs		529,000			-			529,000			-
Issuance of Series AAA-4 Junior preferred stock at $1,000 per share, net of issuance costs, net of receivable from investor		102,000			-			102,000			-
Common stock purchase warrants issued – Series AAA-3 and Series AAA-4 Junior preferred stock		(134,000	)		-			(134,000	)		-
Series AAA Junior preferred stock noncash issuance costs – incremental fair value in connection with modifications to certain existing AIRs		-			-			294,000			-
Preferred stock dividends paid – common stock		2,421,000			-			3,287,000			-
Deemed dividend on Series AA Preferred Stock		-			6,446,000			-			6,446,000
Preferred stock conversions		(2,000	)		-			(2,000	)		-
Common stock purchase warrants issued to placement agent		(346,000	)		-			(346,000	)		(2,804,000	)
Common stock issued for Melon Acquisition		-			-			90,000			721,000
Common stock issued for Super Biz Acquisition		-			-			38,000			547,000
Common stock issued for Bannerfy Acquisition		-			70,000			-			70,000
Stock-based compensation		356,000			580,000			986,000			1,986,000
Issuance of common stock and incremental fair value in connection with modifications to certain existing AIRs in settlement of legal matters		70,000			-			1,553,000			-
Other		336,000			(18,000	)		557,000			(26,000	)
Balance, end of period	$	267,081,000		$	250,779,000		$	267,081,000		$	250,779,000

Accumulated Deficit:
Balance, beginning of period	$	(258,325,000	)	$	(224,815,000	)	$	(249,014,000	)	$	(210,743,000	)
Preferred stock dividends – common stock (Note 2)		(1,694,000	)		(6,446,000	)		(3,290,000	)		(6,446,000	)
Net Loss		(3,632,000	)		(2,984,000	)		(11,347,000	)		(17,056,000	)
Balance, end of period	$	(263,651,000	)	$	(234,245,000	)	$	(263,651,000	)	$	(234,245,000	)
Total stockholders’ equity	$	3,519,000		$	16,615,000		$	3,519,000		$	16,615,000

	Nine Months Ended September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(11,347,000	)	$	(17,056,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,953,000			3,929,000
Stock-based compensation		986,000			2,175,000
Change in fair value of warrant liability		(1,104,000	)		(2,552,000	)
Change in fair value of contingent consideration		(158,000	)		(527,000	)
Amortization of convertible notes discount		-			40,000
Gain on sale of intangible assets		(144,000	)		-
Loss on intangible asset disposal		-			2,284,000
Fair value of noncash legal settlement and other noncash charges		794,000			-
Loss on extinguishment of liability – contingent consideration		336,000			-
Changes in operating assets and liabilities:
Accounts receivable		3,772,000			(1,661,000	)
Prepaid expense and other current assets		263,000			(194,000	)
Accounts payable and accrued expense		(3,309,000	)		1,542,000
Accrued contingent consideration		(17,000	)		(1,802,000	)
Contract liabilities		(185,000	)		225,000
Deferred taxes		-			(313,000	)
Accrued interest on note payable		-			(180,000	)
Net cash used in operating activities		(8,160,000	)		(14,090,000	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid in connection with Melon Acquisition		-			(150,000	)
Purchase of property and equipment		(23,000	)		(8,000	)
Capitalization of software development costs		(434,000	)		(483,000	)
Acquisition of other intangible assets		-			(17,000	)
Net cash used in investing activities		(457,000	)		(658,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock, net of issuance costs		2,129,000			12,060,000
Proceeds from issuance of common stock, net of issuance costs		-			1,885,000
Payments on convertible notes		-			(539,000	)
Accounts receivable facility advances		1,033,000			-
Payments on accounts receivable facility		(1,833,000	)		-
Contingent consideration payments – Melon Acquisition		(32,000	)		-
Net cash provided by financing activities		1,297,000			13,406,000

(DECREASE) INCREASE IN CASH		(7,320,000	)		(1,342,000	)
Cash and Cash Equivalents – beginning of period		7,609,000			2,482,000
Cash and Cash Equivalents – end of period	$	289,000		$	1,140,000

SUPPLEMENTAL NONCASH OPERATING, INVESTING AND FINANCING ACTIVITIES
Issuance of common stock in connection with legal settlement	$	1,270,000		$	-
Issuance of common stock in connection with Melon Acquisition		90,000			722,000
Issuance of common stock in connection with the payment of Super Biz Contingent Consideration		38,000			548,000
Series AAA Junior preferred stock noncash issuance costs – incremental fair value in connection with modifications to certain AIRs		294,000			-
Issuance of common stock in connection with Bannerfy Acquisition		-			70,000
Issuance of Super biz Note in connection with extinguishment of accrued contingent consideration liability		1,765,000			-

		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	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54

Item 4.	Controls and Procedures	54

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	55

Item 1A.	Risk Factors	55

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3.	Defaults Upon Senior Securities	55

Item 4.	Mine Safety Disclosures	55

Item 5.	Other Information	55

Item 6.	Exhibits	55