UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

~~[X]~~

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

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

For the quarterly period ended June 30, ~~2020~~

2021

~~[ ]~~

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

☐ 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~~ 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: (802) 294-2754; Investor Relations: 949-574-3860

(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 ~~[X]~~☒ No ~~[ ]~~

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ~~[X]~~☒ 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	~~[X]~~ ☒
		Emerging growth company	~~[X]~~ ☒

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 ~~[X]~~

☒

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~~	SLGG		NASDAQ Capital Market

As of August ~~11, 2020,~~13, 2021, there were ~~10,460,696~~ 35,340,633 shares of the registrant’s common stock, $0.001 par value, issued and outstanding.

T~~ABLE OF CONTENTS~~

~~Page~~

TABLE OF CONTENTS


	~~Item 5.~~	~~Other Information~~	50 -i-

Table of Contents	~~Item 6.~~	~~Exhibits~~	50

~~Table of Contents~~

PART I

F~~INANCIAL~~

FINANCIAL INFORMATION

ITEM 1.CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

SUPER LEAGUE GAMING, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

June 30,

December 31,

2020

2019

ASSETS

(Unaudited)

Current Assets

Cash and cash equivalents
$6,241,000
$8,442,000
Accounts receivable
  497,000
  293,000
Prepaid expenses and other current assets
  1,361,000
  924,000
Total current assets
  8,099,000
  9,659,000
Property and Equipment, net
  186,000
  239,000
Intangible and Other Assets, net
  1,953,000
  1,984,000
Goodwill
  2,565,000
  2,565,000
Total assets
$12,803,000
$14,447,000



LIABILITIES AND STOCKHOLDERS’ EQUITY





Current Liabilities


Accounts payable and accrued expenses
$850,000
$853,000
Deferred revenue
  -
  151,000
Total current liabilities
  850,000
  1,004,000



Long-term note payable
  1,202,000
  -



Total Liabilities
  2,052,000
  1,004,000



Commitments and Contingencies (Note 7)





Stockholders’ Equity


Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding
  -
  -
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 10,460,696 and 8,573,922 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.
  20,000
  18,000
Additional paid-in capital
  106,237,000
  99,237,000
Accumulated deficit
  (95,506,000)
  (85,812,000)
Total stockholders’ equity
  10,751,000
  13,443,000
Total liabilities and stockholders’ equity
$12,803,000
$14,447,000

	June 30,			December 31,
	2021			2020
ASSETS	(Unaudited)
Current Assets
Cash and cash equivalents	$	31,455,000		$	7,942,000
Accounts receivable		1,721,000			588,000
Prepaid expenses and other current assets		900,000			837,000
Total current assets		34,076,000			9,367,000
Property and equipment, net		122,000			138,000
Intangible and other assets, net		21,221,000			1,907,000
Goodwill		46,084,000			2,565,000
Total assets	$	101,503,000		$	13,977,000

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	2,808,000		$	1,829,000
Deferred revenue		142,000			0
Total current liabilities		2,950,000			1,829,000
Long term note payable		0			1,208,000
Total liabilities		2,950,000			3,037,000

Commitments and contingencies

Stockholders’ Equity
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding		0			0
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 35,340,633 and 15,483,010 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.		45,000			25,000
Additional paid-in capital		209,703,000			115,459,000
Accumulated deficit		(111,195,000	)		(104,544,000	)
Total stockholders’ equity		98,553,000			10,940,000
Total liabilities and stockholders’ equity	$	101,503,000		$	13,977,000

See accompanying notes to consolidated condensed financial ~~statement~~

~~-1-~~

~~Table of Contents~~

statements

-1-

Table of Contents

SUPER LEAGUE GAMING, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months
Ended June 30,

Six Months
Ended June 30,

2020

2019

2020

2019

REVENUES
$324,000
$223,000
$567,000
$472,000





COST OF REVENUES
  116,000
  113,000
  233,000
  187,000





GROSS PROFIT
  208,000
  110,000
  334,000
  285,000





OPERATING EXPENSES




Selling, marketing and advertising
  1,256,000
  1,167,000
  2,529,000
  2,139,000
Technology platform and infrastructure
  1,685,000
  1,291,000
  3,590,000
  2,453,000
General and administrative
  1,826,000
  3,157,000
  3,922,000
  7,334,000
Total operating expenses
  4,767,000
  5,615,000
  10,041,000
  11,926,000





NET OPERATING LOSS
  (4,559,000)
  (5,505,000)
  (9,707,000)
  (11,641,000)





OTHER INCOME (EXPENSE)




Accrued interest expense
  (2,000)
  -
  (2,000)
  (187,000)
Accretion of debt discount
  -
  -
  -
  (2,684,000)
Beneficial conversion feature
  -
  -
  -
  (7,067,000)
Other
  1,000
  -
  15,000
  5,000
Total other income (expense)
  (1,000)
  -
  13,000
  (9,933,000)





NET LOSS
$(4,560,000)
$(5,505,000)
$(9,694,000)
$(21,574,000)





Net loss attributable to common stockholders - basic and diluted




Basic and diluted loss per common share
$(0.48)
$(0.65)
$(1.07)
$(3.00)
Weighted-average number of shares outstanding, basic and diluted
  9,548,000
  8,413,090
  9,066,000
  7,199,829

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020

REVENUES	$	1,084,000		$	324,000		$	1,872,000		$	567,000

COST OF REVENUES		533,000			116,000			875,000			233,000

GROSS PROFIT		551,000			208,000			997,000			334,000

OPERATING EXPENSES
Selling, marketing and advertising		1,934,000			1,256,000			3,417,000			2,529,000
Technology platform and infrastructure		2,497,000			1,685,000			4,100,000			3,590,000
General and administrative		2,433,000			1,826,000			4,419,000			3,922,000
Total operating expenses		6,864,000			4,767,000			11,936,000			10,041,000

NET OPERATING LOSS		(6,313,000	)		(4,559,000	)		(10,939,000	)		(9,707,000	)

OTHER INCOME (EXPENSE)
Accrued interest expense		(2,000	)		(2,000	)		(5,000	)		(2,000	)
Gain on loan forgiveness		1,213,000			0			1,213,000			0
Other		3,000			1,000			7,000			15,000
Total other income (expense)		1,214,000			(1,000	)		1,215,000			13,000

Loss before benefit from income taxes		(5,099,000	)		(4,560,000	)		(9,724,000	)		(9,694,000	)

Benefit from income taxes		3,073,000			0			3,073,000			0

NET LOSS	$	(2,026,000	)	$	(4,560,000	)	$	(6,651,000	)	$	(9,694,000	)

Net loss attributable to common stockholders - basic and diluted
Basic and diluted loss per common share	$	(0.07	)	$	(0.48	)	$	(0.28	)	$	(1.07	)
Weighted-average number of shares outstanding, basic and diluted		27,165,755			9,547,819			23,525,528			9,066,386

See accompanying notes to consolidated condensed financial statements

~~-2-~~

~~Table of Contents~~

-2-

Table of Contents

SUPER LEAGUE GAMING, INC.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Three Months Ended June 30

Six Months Ended June 30

2020

2019

2020

2019

Common stock (Shares)

Balance, beginning of period
  8,595,742
  8,368,833
  8,573,922
  4,610,109
Initial public offering of common stock, net of issuance costs (Note 6)
  -
  -
  -
  2,272,727
Issuance of common stock at $3.50 per share, net of issuance costs (Note 6)
  1,825,000
  -
  1,825,000
  -
Automatic conversion of convertible debt to common stock
  -
  -
  -
  1,475,164
Common stock issued for Framerate Acquisition (Note 4)
  32,936
  134,422
  32,936
  134,422
Stock-based compensation
  7,018
  -
  28,838
  10,833
Warrant Exercises
  -
  66,667
  -
  66,667
Balance, end of period
  10,460,696
  8,569,922
  10,460,696
  8,569,922





Common stock (Amount):




Balance, beginning of period
$18,000
$18,000
$18,000
$14,000
Initial public offering of common stock, net of issuance costs (Note 6)
  -
  -
  -
  2,000
Issuance of common stock at $3.50 per share, net of issuance costs (Note 6)
  2,000
  -
  2,000
  -
Automatic conversion of convertible debt to common stock
  -
  -
  -
  2,000
Balance, end of period
$20,000
$18,000
$20,000
$18,000





Additional paid-in-capital:




Balance, beginning of period
$99,914,000
$94,351,000
$99,237,000
$48,325,000
Initial public offering of common stock, net of issuance costs (Note 6)
  -
  -
  -
  22,456,000
Issuance of common stock at $3.50 per share, net of issuance costs (Note 6)
  5,951,000
  -
  5,951,000
  -
Automatic conversion of convertible debt to common stock
  -
  -
  -
  13,791,000
Beneficial conversion feature
  -
  -
  -
  7,067,000
Common stock issued for Framerate Acquisition (Note 4)
  -
  1,000,000
  -
  1,000,000
Framerate Earn-Out (Note 4)
  -
  454,000
  -
  454,000
Stock-based compensation
  372,000
  1,773,000
  1,049,000
  4,485,000
Warrant Exercises
  -
  20,000
  -
  20,000
Balance, end of period
$106,237,000
$97,598,000
$106,237,000
$97,598,000





Accumulated Deficit:




Balance, beginning of period
$(90,946,000)
$ (71,202,000)
$(85,812,000)
$(55,133,000)
Net Loss
  (4,560,000)
  (5,505,000)
  (9,694,000)
  (21,574,000)
Balance, end of period
  (95,506,000)
  (76,707,000)
  (95,506,000)
  (76,707,000)
Total stockholders’ equity
$10,751,000
$20,909,000
$10,751,000
$20,909,000

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
Common stock (Shares)
Balance, beginning of period		23,133,918			8,595,742			15,483,010			8,573,922
Issuance of common stock at $2.60 per share		-			0			3,076,924			-
Issuance of common stock at $4.10 per share		-			-			2,926,830			-
Issuance of common stock at $9.00 per share		-			-			1,512,499			-
Issuance of common stock at $3.50 per share, net of issuance costs		-			1,825,000			-			1,825,000
Common stock issued for Mobcrush Acquisition (Note 4)		12,067,571			-			12,067,571
Common stock issued for Framerate Acquisition (Note 4)					32,936						32,936
Stock-based compensation		139,144			7,018			273,799			28,838
Balance, end of period		35,340,633			10,460,696			35,340,633			10,460,696

Common stock (Amount):
Balance, beginning of period	$	33,000		$	18,000		$	25,000		$	18,000
Issuance of common stock at $2.60 per share		0			0			3,000			0
Issuance of common stock at $4.10 per share		0			0			3,000			0
Issuance of common stock at $9.00 per share		-						2,000
Issuance of common stock at $3.50 per share, net of issuance costs		-			2,000			0			2,000
Common stock issued for Mobcrush Acquisition (Note 4)		12,000						12,000
Balance, end of period	$	45,000		$	20,000		$	45,000		$	20,000

Additional paid-in-capital:
Balance, beginning of period	$	149,299,000		$	99,914,000		$	115,459,000		$	99,237,000
Issuance of common stock at $2.60 per share, net of issuance costs		0			-			7,924,000			0
Issuance of common stock at $4.10 per share, net of issuance costs		0			0			11,927,000			-
Issuance of common stock at $9.00 per share, net of issuance costs		0			0			13,540,000			0
Issuance of common stock at $3.50 per share, net of issuance costs		0			5,951,000			0			5,951,000
Common stock issued for Mobcrush Acquisition (Note 4)		59,843,000			0			59,843,000			0
Stock-based compensation		561,000			372,000			972,000			1,049,000
Stock option exercises		-			0			38,000			-
Balance, end of period	$	209,703,000		$	106,237,000		$	209,703,000		$	106,237,000

Accumulated deficit:
Balance, beginning of period	$	(109,169,000	)	$	(90,946,000	)	$	(104,544,000	)	$	(85,812,000	)
Net Loss		(2,026,000	)		(4,560,000	)		(6,651,000	)		(9,694,000	)
Balance, end of period		(111,195,000	)		(95,506,000	)		(111,195,000	)		(95,506,000	)
Total stockholders’ equity	$	98,553,000		$	10,751,000		$	98,553,000		$	10,751,000

See accompanying notes to consolidated condensed financial statements

~~-3-~~

~~Table of Contents~~

-3-

Table of Contents

SUPER LEAGUE GAMING, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months
Ended June 30,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss
$(9,694,000)
$(21,574,000)
Adjustments to reconcile net loss to net cash used in operating activities:


Depreciation and amortization
  854,000
  485,000
Stock-based compensation
  1,099,000
  4,529,000
Amortization of discount on convertible notes
  -
  2,684,000
Beneficial conversion feature
  -
  7,067,000
Changes in assets and liabilities:


Accounts receivable
  (204,000)
  33,000
Prepaid expenses and other current assets
  (484,000)
  (598,000)
Accounts payable and accrued expenses
  (5,000)
  284,000
Deferred revenue
  (151,000)
  20,000
Accrued interest on convertible notes
  -
  187,000
Net cash used in operating activities
  (8,585,000)
  (6,883,000)



CASH FLOWS FROM INVESTING ACTIVITIES


Cash paid for acquisition of Framerate (Note 4)
  -
  (1,491,000)
Purchase of property and equipment
  (6,000)
  (33,000)
Capitalization of software development costs
  (691,000)
  (560,000)
Acquisition of other intangible assets
  (72,000)
  (105,000)
Net cash used in investing activities
  (769,000)
  (2,189,000)



CASH FLOWS FROM FINANCING ACTIVITIES


       Proceeds from issuance of common stock, net of issuance costs (Note 6)
  5,953,000
  22,458,000
Proceeds from note payable (Note 5)
  1,200,000
  -
Proceeds from common stock purchase warrant exercises
  -
  20,000
Net cash provided by financing activities
  7,153,000
  22,478,000



(DECREASE) INCREASE IN CASH
  (2,201,000)
  13,406,000
Cash – beginning of period
  8,442,000
  2,774,000
Cash – end of period
$6,241,000
$16,180,000



SUPPLEMENTAL NONCASH FINANCING ACTIVITIES


  Automatic conversion of convertible debt to common stock
$-
$13,793,000
  Issuance of common stock for Framerate Acquisition (Note 4)
$245,000
$1,000,000

	Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(6,651,000	)	$	(9,694,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		801,000			854,000
Stock-based compensation		972,000			1,099,000
Gain on loan forgiveness (Note 5)		(1,213,000	)		-
Change in valuation allowance (Note 4)		(3,073,000	)		0
Changes in assets and liabilities:
Accounts receivable		134,000			(204,000	)
Prepaid expenses and other current assets		79,000			(484,000	)
Accounts payable and accrued expenses		(991,000	)		(5,000	)
Deferred revenue		12,000			(151,000	)
Accrued interest on note payable		5,000			0
Net cash used in operating activities		(9,925,000	)		(8,585,000	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired in connection with Mobcrush Acquisition (Note 4)		586,000
Purchase of property and equipment		(11,000	)		(6,000	)
Capitalization of software development costs		(437,000	)		(691,000	)
Acquisition of other intangible assets		(137,000	)		(72,000	)
Net cash provided by (used in) used in investing activities		1,000			(769,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of issuance costs (Note 6)		33,399,000			5,953,000
Proceeds from note payable (Note 5)		0			1,200,000
Proceeds from common stock option exercises		38,000			0
Net cash provided by financing activities		33,437,000			7,153,000

INCREASE (DECREASE) IN CASH		23,513,000			(2,201,000	)
Cash - beginning of period		7,942,000			8,442,000
Cash - end of period	$	31,455,000		$	6,241,000

SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock in connection with Mobcrush Acquisition	$	59,855,000		$	0
Issuance of common stock in connection with Framerate Acquisition		-			245,000

See accompanying notes to consolidated condensed financial statements

~~-4-~~

~~Table of Contents~~

-4-

Table of Contents

1.	DESCRIPTION OF BUSINESS

Super League Gaming, Inc. (“Super League,” the “Company,” “we” or “our”) is a ~~global leader in the mission to bring live and digital esports~~leading video game entertainment and experiences ~~directly~~company that gives tens of millions of players multiple ways to ~~everyday competitive~~create, connect, compete, and enjoy the video games they love. Fueled by proprietary and patented technology systems, the company’s offerings include gameplay properties in which young gamers ~~around~~form vibrant in-game communities, content creation platforms that power live broadcasts and on-demand video series that generate billions of views annually across the world. Utilizing our proprietary technology platform, Super League operates physical and digital experiences in partnership with publishers of top-tier game titles and owners/operators of a distributed footprint of venues, a network of digital social and viewingworld’s biggest distribution channels, and ~~an association/organization~~competitive gaming tournaments featuring many of ~~city-based amateur gaming clubs~~the most popular global titles. Through partnerships with top consumer brands, in-game player and ~~teams. The Super League Network features multiple forms of content celebrating the love of play via social media, live streaming~~brand monetization, and ~~video-on-demand, along with continuous gameplay and leaderboards. Inside our network is Framerate,~~ a ~~large independent social~~fully virtual cloud-based video ~~esports network powered by user-generated highlight reels, and our exclusive proprietary platform Minehut, providing a social and gameplay forum for the avid Minecraft community.~~production studio, Super League is ~~committed to supporting~~building a broadly inclusive business at the ~~development~~intersection of ~~local, grassroots player communities, while providing a global, scalable infrastructure for esports competition~~content creation, creator monetization, and ~~engagement. We address a wide range of gamers across game titles, ages~~both casual and ~~skill levels, and also a wide range of content-capture beyond~~competitive gameplay. ~~This positions~~

Super League was incorporated on October 1, 2014 as ~~more than a tournament operator; we are a lifestyle~~Nth Games, Inc. under the laws of the State of Delaware and ~~media company focused~~changed its name to Super League Gaming, Inc. on ~~capturing, generating, aggregating and distributing content across the genre of all things esports.~~

June 15, 2015. We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012, as amended.

Acquisition of Mobcrush Streaming, Inc.

On June 1, 2021 (the “Closing Date”), the Company completed the acquisition of Mobcrush Streaming, Inc. (“Mobcrush”) pursuant to which the Company acquired all of the issued and outstanding shares of Mobcrush (the "Merger"). At closing, the Company issued to the former stockholders of Mobcrush an aggregate total of 12,067,571 shares of the Company’s common stock and reserved an aggregate total of 514,633 shares of common stock for future stock option grants, under the Super League 2014 Stock Option and Incentive Plan, to the former Mobcrush employees retained by the Company in connection with the Merger, resulting in a total of 12,582,204 shares of the Company’s common stock issued and reserved as consideration for the Merger (the "Merger Consideration"). Upon completion of the Merger, Mobcrush became a wholly-owned subsidiary of the Company.

Mobcrush is a live streaming technology platform used by gaming influencers who generate and distribute original content to fans and subscribers across the most popular live streaming and social media platforms, including Twitch, YouTube, Facebook, Instagram, Twitter, and more. Mobcrush also operates Mineville, one of six official Minecraft servers in partnership with Microsoft.

In accordance with the acquisition method of accounting, the financial results of Super League presented herein include the financial results of Mobcrush as of the Closing Date, including the results of operations from the closing date to the end of the current period presented herein. Refer to Note 4 for additional information.

-5-

Table of Contents

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated condensed 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 consolidated condensed financial statements should be read in conjunction with our audited financial statements for the year ended December 31, ~~2019~~2020 included in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the SEC on March ~~23, 2020.~~

19, 2021.

The year-end consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

The consolidated condensed 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, ~~2020,~~2021, 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, ~~2020~~2021 are not necessarily indicative of the results to be expected for the entire fiscal year.

Reclassifications

Certain reclassifications to operating expense line items have been made to prior year amounts for consistency and comparability with the current year’s consolidated condensed financial statements presentation. These reclassifications had no effect on the reported total operating expenses 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 revenues and expenses 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, ~~the valuation~~impairment of ~~common stock purchase warrants (hereinafter, “warrants”),~~goodwill and intangibles, stock-based compensation expense, capitalized internal-use-software costs, accounting for business combinations, and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments.

~~-5-~~

~~Table of Contents~~

~~Going Concern~~

The accompanying interim condensed 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. As presented in the financial statements, the Company incurred net losses of $9.7 million and $21.6 million during the six months ended June 30, 2020 and 2019, respectively, and had an accumulated deficit of $95.5 million as of June 30, 2020. Total noncash charges included in accumulated deficit since inception, primarily related to noncash stock compensation, restricted stock units issued in connection with a license agreement, amortization of the discount on convertible debt and in-kind advertising expense, totaled approximately $36.0 million. For the six months ended June 30, 2020 and 2019, noncash expenses (excluding depreciation and amortization of fixed and intangible assets, respectively) included in net loss, primarily comprised of stock-based compensation and noncash interest charges (2019 period only), totaled $1.1 million and $14.5 million, respectively. For the six months ended June 30, 2020 and 2019, net cash used in operating activities totaled $8.6 million and $6.9 million, respectively.

As of June 30, 2020, the Company had cash and cash equivalents of approximately $6.2 million. The Company has used and will continue to use significant capital for the growth and development of its business. The Company’s management expects operating losses to continue in the near term in connection with the pursuit of its strategic objectives. As such, management believes its current cash position, absent receipt of additional capital either from operations or that may be available from future issuance(s) of common stock or debt financings, is not sufficient to fund our planned operations for the twelve months following the issuance of these financial statements. As a result, our current financial condition raises substantial doubt about our ability to continue as a going concern.

We are focused on expanding our service offerings and revenue growth opportunities through internal development, collaborations, and through one or more strategic acquisitions. Management is currently exploring several alternatives for raising capital to facilitate our growth and execute our business strategy, including strategic partnerships or other forms of equity or debt financings.

The Company considers historical operating results, capital resources and financial position, in combination with current projections and estimates, as part of its plan to fund operations over a reasonable period. Management's considerations assume, among other things, that the Company will continue to be successful implementing its business strategy, that there will be no material adverse developments in the business, liquidity or capital requirements and, if necessary, the Company will be able to raise additional equity or debt financing on acceptable terms. If one or more of these factors do not occur as expected, it could cause a reduction or delay of its business activities, sales of material assets, default on its obligations, or forced insolvency. The accompanying financial statements do not contain any adjustments which might be necessary if the Company were unable to continue as a going concern. 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.

~~Recent Financing Activities~~

~~As described at Note 5,~~ on May 4, 2020, the Company entered into a potentially forgivable loan from the U.S. Small Business Administration (“SBA”) resulting in net proceeds of approximately $1.2 million pursuant to the Paycheck Protection Program enacted by Congress under the CARES Act administered by the SBA.

As described at Note 6, in May 2020, the Company issued 1,825,000 shares of common stock at a price of $3.50 per share, raising aggregate net proceeds of approximately $6.0 million, after deducting placement agent fees of $319,000 and other offering expenses totaling $116,000, pursuant to a registered direct offering. The net proceeds are for working capital and other general corporate purposes, including sales and marketing activities, product development and capital expenditures. We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses.

~~-6-~~

~~Table of Contents~~

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~~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.

-6-

Table of Contents

Super League generates revenues ~~and related cash flows~~ from (i) ~~sponsorships~~advertising, serving as a marketing channel for brands and ~~advertising, including~~ ~~third-party~~advertisers to reach their target audiences of gamers across our network, (ii) content, ~~sales~~ curating and ~~(ii)~~distributing esports and entertainment content for our own network of digital channels and media and entertainment partner channels and (iii) direct to consumer offers including ~~tournament fees for participation in our physical and online multiplayer gaming experiences,~~ digital subscriptions, digital goods, gameplay access fees and merchandise sales.

~~Sponsorships~~

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

Advertising and Sponsorships

Advertising:

~~The Company generates sponsorship revenues~~ revenue primarily ~~from~~consists of direct sales activity along with sales of ~~various forms~~programmatic display and video advertising units to third-party advertisers and exchanges. Advertising arrangements typically include contract terms for time periods ranging from several days to several weeks in length.

For advertising arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the arrangement as we satisfy our performance obligations, over the applicable contract term. As such, revenue is recognized over the contract term based upon estimates of ~~sponsorships~~progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation). Revenue from shorter term advertising arrangements that provide for a contractual delivery or performance date is recognized when performance is substantially complete and ~~promotional~~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 ~~its online gameplay and content platforms and from sponsorship at its in-person esports experiences. These~~shorter-term campaigns.

Sponsorship revenue arrangements may include: exclusive or non-exclusive title sponsorships, marketing benefits, official product status exclusivity, product visibly and additional infrastructure placement, social media rights, ~~(including rights to create and post social content and clips),~~ rights to on-screen activations and promotions, display material rights, media rights, hospitality and tickets and merchandising rights.

Sponsorship revenues also include revenues pursuant to arrangements with brand and media partners, retail venues, game publishers and broadcasters that allow our partners to run amateur esports experiences, and or capture specifically curated gameplay content that is customized for our partners’ distribution ~~channels, leveraging the flexibility of, and powered by the Super League gaming and content technology platform.~~

channels. Sponsorship arrangements typically include contract terms for time periods ranging from several weeks or months to ~~multi-year arrangements.~~

We also generate content through digital and physical experiences that offer opportunities for generating advertising revenue on our proprietary digital channels. In addition, we license our content to third parties seeking esports content for their own distribution channels.

terms of twelve months in length.

For sponsorship arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the agreement as ~~the Company satisfies its~~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). Payments are typically due from customers during the term of the arrangement.

Revenue ~~for~~from sponsorship arrangements for one-off branded experiences and/or the development of content tailored specifically for ~~the Company’s~~our partners’ distribution channels that provide for a contractual delivery or performance date, is recognized at a point in time, when performance is substantially complete and or delivery occurs.

~~For advertising~~

Content

Content sales revenue is generated in connection with our curation and ~~third-party~~distribution of esports and entertainment content for our own network of digital channels and media and entertainment partner channels. We distribute three primary types of content for syndication and licensing, including: (1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology.

For content arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the arrangement as we satisfy our performance obligations, over the applicable contract term. As such, revenue is recognized over the contract term based upon estimates of progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation). Revenue from shorter term content sales arrangements that provide for a contractual delivery or performance date is recognized when performance is substantially complete and or delivery occurs. Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns.

~~-7-~~

~~Table~~

Payments are typically due from customers during the term of ~~Contents~~

the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns.

-7-

Table of Contents

Direct to Consumer:

Direct to consumer revenues ~~include online~~primarily consist of primarily monthly digital subscription fees, and ~~physical tournament fees, digital subscriptions,~~sales of digital goods and merchandise. Revenue from single experiences is recognized when the experience occurs. Revenue from multi-week packages is recognized over time as the multi-week experiences occur based on estimates of the progress toward complete satisfaction of the applicable offer and related performance obligations. Subscription revenue is recognized ~~over~~in the ~~applicable subscription term.~~period the services are rendered. Payments are typically due from customers at the point of sale.

Platform Generated Sales Transactions. Our Mobcrush subsidiary generates in-game Platform sales revenues via digital goods sold within the platform, including cosmetic items, durable goods, player ranks and game modes, leveraging the flexibility of the Microsoft Minecraft Bedrock platform, and powered by the InPvP cloud architecture technology platform. Revenue ~~billed~~is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or ~~collected in advance~~cash.

Revenue for digital goods sold on the platform is ~~recorded as deferred~~recognized when Microsoft (our partner) collects the revenue ~~until~~and facilitates the ~~event occurs or until applicable performance obligations~~transaction on the platform. Revenue for such arrangements includes all revenue generated, bad debt, make goods, and refunds of all transactions managed via the platform by Microsoft. The revenue is recognized on a monthly basis. Payments are ~~satisfied, as described above.~~

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,

2020

2019

2020

2019

Sponsorships and advertising
$285,000
$220,000
$513,000
$458,000
Direct to Consumer
  39,000
  3,000
  54,000
  14,000

$324,000
$223,000
$567,000
$472,000

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Advertising and sponsorships	$	485,000	$	49,000	$	928,000	$	56,000
Content sales		365,000		236,000		646,000		457,000
Direct to consumer		234,000		39,000		298,000		54,000
	$	1,084,000	$	324,000	$	1,872,000	$	567,000

For the three and six months ended June 30, 2021, 42% and 39% of revenues were recognized at a single point in time, and 58% and 61% of revenues were recognized over time, respectively. For the three and six months ended June 30, 2020, 46% and 35% of revenues were recognized at a single point in time, and 54% and 65% of revenues were recognized over time, respectively.~~For the three and six months ended June 30, 2019, 35% and 55% of revenues were recognized at a point in time, and 65% and 45% of revenues were recognized over time, respectively.~~

Cost of Revenues

Cost of revenues includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including direct labor, creative and broadcast related contract services, talent and influencers, content capture and production ~~of Super League’s in-person and online gaming and content events and activities, including venue rental, venue entertainment, licenses,~~services, direct marketing, prizing, ~~talent~~platform costs and ~~contract services.~~

revenue sharing fees.

Advertising

Gaming experience and Super League brand related 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 expenses in the accompanying statements of operations. Advertising expenses for the three and six months ended June 30, ~~2020~~2021 were ~~$20,000~~$117,000 and ~~$87,000,~~$251,000, respectively. Advertising expenses for the three and six months ended June 30, ~~2019~~2020 were ~~$54,000~~$20,000 and ~~$84,000,~~$87,000, respectively.

~~-8-~~

~~Table of Contents~~

Technology Platform and Infrastructure Costs

Technology platform and infrastructure costs include (i) allocated personnel costs, including salaries, noncash stock compensation, taxes and benefits related to our internal software developers and engineers, employed by Super League, engaged in the operation, maintenance, management, administration, testing and enhancement of our proprietary gaming and content technology platform, (ii) third-party contract software development and engineering resources engaged in developing and enhancing our proprietary gaming and content technology platform (iii) the amortization of capitalized internal use software costs, and (iv) technology platform related cloud services, broadband and ~~broadband~~other technology platform costs.

Acquisitions

For acquisitions that meet the definition of a business under ASC 805, the Company records the acquisition using the acquisition method of accounting. All of the 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 order to properly allocate purchase price consideration. For acquisitions that do not meet the definition of a business under ASC 805, the Company accounts for the transaction as an asset acquisition.

Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations.

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 and (iv) other intangible assets, which are recorded at cost and amortized using the straight-line method over the estimated useful lives of the assets, ranging from three to 10 years.

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.

-8-

Table of Contents

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. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. Management believes that there was no impairment of long-lived assets for the periods presented herein. There can be no assurance, however, that market conditions or demand for the Company’s products or services will not change, which could result in long-lived asset impairment charges in the future.

Stock-Based Compensation

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.

~~-9-~~

~~Table~~

Grants of ~~Contents~~

~~Noncash stock-based compensation expense~~equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the ~~periods presented was comprised~~grant date fair value of the ~~following:~~

Three Months
Ended June 30,

Six Months
Ended June 30,

2020

2019

2020

2019

Stock options
$122,000
$1,339,000
$435,000
$2,631,000
Warrants
  60,000
  367,000
  282,000
  1,654,000
Restricted stock units
  190,000
  85,000
  333,000
  236,000
Earn-out compensation expense
  25,000
  8,000
  49,000
  8,000
Total noncash stock compensation expense
$397,000
$1,799,000
$1,099,000
$4,529,000

equity instruments issued.

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

Three Months
Ended June 30,

Six Months
Ended June 30,

2020

2019

2020

2019

Sales, marketing and advertising
$197,000
$196,000
$395,000
$328,000
Technology platform and infrastructure
  59,000
  27,000
  148,000
  24,000
General and administrative
  141,000
  1,576,000
  556,000
  4,177,000
Total noncash stock compensation expense
$397,000
$1,799,000
$1,099,000
$4,529,000

~~Noncash stock-based compensation expense for~~

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Sales, marketing and advertising	$	237,000	$	197,000	$	420,000	$	395,000
Technology platform and infrastructure		24,000		59,000		57,000		148,000
General and administrative		300,000		141,000		495,000		556,000
Total noncash stock compensation expense	$	561,000	$	397,000	$	972,000	$	1,099,000

Equity Financing Costs

Specific incremental costs directly attributable to a proposed or actual offering of securities or debt are deferred and charged against the gross proceeds of the financing. In the event that the proposed or actual financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred financing costs, if any, are included in other current assets in the accompanying balance sheet. For each of the three and six months ended June 30, ~~2019 included compensation expense resulting primarily from the vesting~~2021, financing costs charged against gross proceeds in connection with equity financings totaled $215,000. For each of certain performance-based options and warrants previously granted to two of the Company’s executives which vested upon completion of the IPO and the satisfaction of certain other operational performance metrics. During the three and six months ended June 30, ~~2019, 92,000 and 300,000, respectively, of performance-based stock options and warrants vested,~~2020, financing costs charged against gross proceeds in connection with a weighted-average grant date fair value of $8.50 resulting in noncash stock compensation expense of $779,000 and $2,549,000, during the three six months ended June 30, 2019, respectively. The fair value of these equity awards was estimated on October 31, 2018, their original grant date, using the Black Scholes-Merton option pricing model and the following weighted-average assumptions: (i) volatility of 93%, (ii) risk-free interest rate of 3.0%, and (iii) expected term of 6.5 years.

financings totaled $434,000.

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:

~~For the three and six months ended June 30, 2020, six customers accounted for 84% and four customers accounted for 61% of revenues, respectively.For the three and six months ended June 30, 2019, four customers accounted for 98% and 89% of revenues, respectively.~~At June 30, 2020, four customers accounted for 84% of accounts receivable. At December 31, 2019, one customer accounted for 70% of accounts receivable. At June 30, 2020, one vendor accounted for 55% of accounts payable. At December 31, 2019, one vendor accounted for 21% of accounts payable.

~~-10-~~

~~Table of Contents~~

Three Months

EndedJune 30,

Six Months

EndedJune 30,

2021

2020

2021

2020

Number of customers > 10% of revenues / percent of revenues

One / 15%

Six / 84%

Four / 61 %

June 30,

2021

December 31,

2020

Number of customers > 10% of accounts receivable / percent of accounts receivable

One / 13%

Four / 61%

Number of vendors > 10% of accounts payable / percent of accounts payable

One / 11%

One / 55%

-9-

Table of Contents

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 employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings. All outstanding stock options, restricted stock units and warrants, totaling ~~3,886,000~~5,064,000 and ~~4,059,000~~4,470,000 at June 30, ~~2020~~2021 and ~~2019,~~December 31, 2020, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive.

Recent Accounting Guidance

Recent Accounting Pronouncements - ~~Recently Adopted.~~

In January 2017, the FASB issued new guidance that eliminates Step 2 from the goodwill impairment test. Instead, if an entity forgoes a Step 0 test, that entity will be required to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit, as determined in Step 1 from the goodwill impairment test, with its carrying amount and recognize an impairment charge, if any, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company adopted this new standard effective January 1, 2020. The adoption of the new standard did not have a material impact on the Company’s financial position or results of operations for the current or prior periods.

~~Recent Accounting Pronouncements –~~ Not Yet Adopted.

In February 2016, the FASB issued an ASU that requires lessees to present right-of-use assets and lease liabilities on the balance sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative periods in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The Company is evaluating the impact that this guidance will have on its financial position, results of operations and financial statement disclosures.

Recent Accounting Pronouncements - Adopted.In June 2016, the FASB issued guidance on the measurement and recognition of credit losses on most financial assets. For trade receivables, loans, and held-to-maturity debt securities, the current probable loss recognition methodology is being replaced by an expected credit loss model. For available-for-sale debt securities, the recognition model on credit losses is generally unchanged, except the losses will be presented as an adjustable allowance. The guidance will be applied retrospectively with the cumulative effect recognized as of the date of adoption. The guidance ~~will become~~became effective at the beginning of the Company’s first quarter of the fiscal year ending December 31, ~~2021 but can be adopted as early as~~2021. The adoption of this standard did not have a material impact on the ~~beginning of the first quarter of fiscal year ending December 31, 2020. The Company is currently assessing the impact that adopting this new accounting guidance will have on its~~Company's consolidated financial statements and ~~footnote~~related disclosures.

~~-11-~~

~~Table of Contents~~

3.	INTANGIBLE AND OTHER ASSETS

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

June 30,
2020

December 31,
2019

(Unaudited)
Capitalized software development costs
$2,947,000
$2,363,000
Licenses
  -
  340,000
Trade name
  189,000
  189,000
Domain
  68,000
  68,000
Copyrights and other
  361,000
  289,000

  3,565,000
  3,249,000
Less: accumulated amortization
  (1,612,000)
  (1,265,000)
Intangible and other assets, net
$1,953,000
$1,984,000

	June 30, 2021			December 31, 2020
	(Unaudited)
Capitalized software development costs	$	3,712,000		$	3,291,000
Trade name		189,000			189,000
Domain		68,000			68,000
Copyrights and other		572,000			435,000
Intangible assets acquired in connection with Mobcrush Acquisition (Note 4)		19,500,000			0
		24,041,000			3,983,000
Less: accumulated amortization		(2,820,000	)		(2,076,000	)
Intangible and other assets, net	$	21,221,000		$	1,907,000

Amortization expense, excluding the impact of the Merger, for the three and six months ended June 30, 2021 totaled $284,000 and $550,000, respectively. Amortization expense included in cost of revenues for the three and six months ended June 30, 2021 totaled $13,000 and $16,000, respectively. Amortization expense for the three and six months ended June 30, 2020 totaled $302,000 and $795,000, respectively. ~~Amortization~~

-10-

Table of Contents

4.	Business Combinations

Acquisition of Mobcrush

On March 9, 2021, we entered into an Agreement and Plan of Merger, as amended on April 20, 2021, (the “Mobcrush Merger Agreement”) by and among Mobcrush, the Company, and SLG Merger Sub II, Inc., a wholly-owned subsidiary of the Company (“Merger Co”), which provided for the acquisition of Mobcrush by Super League pursuant to the merger of Merger Co with and into Mobcrush, with Mobcrush as the surviving corporation (the “Merger”).

On June 1, 2021 the “Closing Date”), the Company completed the Merger pursuant to which the Company acquired all of the issued and outstanding shares of Mobcrush. In accordance with the terms and subject to the conditions of the Mobcrush Merger Agreement: (A) each outstanding share of Mobcrush common stock, par value $0.001 per share ("Mobcrush Common Stock"), and Mobcrush preferred stock, par value $0.001, (other than dissenting shares) was canceled and converted into the right to receive (i) 0.528 shares of the Company's common stock, as determined in the Mobcrush Merger Agreement, and (ii) any cash in lieu of fractional shares of common stock otherwise issuable under the Mobcrush Merger Agreement (the "Merger Consideration"). At closing, the Company issued to the former stockholders of Mobcrush an aggregate total of 12,067,571 shares of the Company’s common stock and reserved an aggregate total of 514,633 shares of common stock for future stock option grants, under the Super League 2014 Stock Option and Incentive Plan, to the former Mobcrush employees retained by the Company in connection with the Merger, resulting in a total of 12,582,204 shares of common stock issued and reserved as consideration for the Merger. Upon completion of the Merger, Mobcrush became a wholly-owned subsidiary of the Company.

The Merger was approved by the board of directors of each of the Company and Mobcrush, and was approved by the stockholders of Mobcrush. For purposes of complying with Nasdaq Listing Rule 5635, Super League’s stockholders approved the issuance of an aggregate of 12,582,204 shares of Common Stock to be issued in connection with the Merger.

Transaction costs incurred by the Company relating to the Merger totaled $636,000 and were expensed as incurred in accordance with the acquisition method of accounting.

In accordance with the acquisition method of accounting, the financial results of Super League presented herein include the financial results of Mobcrush from the closing date to the end of the current period presented herein (the "Stub Period"). Total revenues and net loss for Mobcrush operations, for the Stub Period, included in the consolidated statements of operations for each of the three and six months ended June 30, 2021 were $275,000 and $135,000, respectively.

The Company determined that the Mobcrush Merger constitutes a business acquisition as defined by Accounting Standards Codification (“ASC”) 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed in the transaction were recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred pursuant to the 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, Fair Value Measurements and Disclosures (“ASC 820”).

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

Equity Consideration at closing		12,067,571
Super League closing stock price per share on the Closing Date	$	4.96
Fair value of common stock issued	$	59,855,000

The fair value of the Company Common Stock used in determining the estimated fair value of the Merger Consideration was $4.96 per share based on the closing price of Company Common Stock on June 1, 2021, as quoted on the Nasdaq Capital Market.

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 Merger, as follows:

	Amount
Assets Acquired and Liabilities Assumed:
Cash	$	586,000
Accounts receivable		1,266,000
Prepaids		141,000
Property and equipment		13,000
Identifiable intangible assets		19,500,000
Accounts payable and accrued expenses		(1,966,000	)
Deferred revenue		(130,000	)
Net deferred income tax liability		(3,073,000	)
Identifiable net assets acquired		16,337,000
Goodwill		43,518,000
Total purchase price	$	59,855,000

-11-

Table of Contents

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

	Estimated Useful Life (in years)		Amount
Preferred partner relationship		7		10,700,000
Developed technology		5		3,900,000
Influencers/content creators		5		2,000,000
Advertiser and agency relationships		5		1,900,000
Trademarks		7		500,000
Customer relationships		5		500,000
Total intangible assets acquired			$	19,500,000

Aggregated amortization expense for each of the three and six months ended June 30, 2021, related to intangible assets acquired in connection with the Merger, totaled $251,000, respectively. 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 Merger is primarily attributable to expected synergies from combining the operations of Super League and Mobcrush, and also includes residual value attributable to the assembled and trained workforce acquired in the Merger.

Pursuant to the terms of the Merger Agreement, immediately prior to the effective time of the Merger, each vested option to acquire shares of Mobcrush common stock held by former Mobcrush employees was exercised so that, at the effective time of the Merger, shares of Mobcrush Common Stock issued upon exercise of these vested options received shares of Company Common Stock issuable as Merger Consideration. Unvested options to acquire shares of Mobcrush common stock that were outstanding immediately prior to the Closing Date were canceled, and a number of options to purchase shares of Company Common Stock were issued to replace the cancelled unvested Mobcrush options in a manner consistent with options historically granted by Super League under the Super League 2014 Stock Option and Incentive Plan (the “Replacement Options”).

Pursuant to the terms of the Mobcrush Merger Agreement, 514,633 shares of the Company's common stock were reserved for Replacement Option grants to the former Mobcrush employees retained by the Company in connection with the Merger. As of June 30, 2021, 415,000 Replacement Options have been granted to former Mobcrush employees retained by the Company, with continued employment required to vest and retain the Replacement Options granted. Under ASC 805, consideration arrangements 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 514,633 shares of the Company's common stock reserved at closing for future stock option grants to former Mobcrush employees retained by the Company are not included as a component of the consideration paid in connection with the Merger, and will be accounted for pursuant to ASC 718, “Stock based Compensation,” upon grant. Noncash stock compensation expense related to stock options granted pursuant to the terms of the Mobcrush Merger Agreement described above, totaled $40,000 for the three and six months ended June 30, 2021.

Management is primarily responsible for determining the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as of the 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 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. In addition, the Company is in the process of finalizing its estimate and analysis of the fair values of certain tax attributes acquired. Any adjustments to the preliminary estimates of tax attributes acquired will increase or decrease the estimated net deferred tax liability recorded in connection with the acquisition method of accounting, with an offsetting adjustment to goodwill.

The Merger 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 Mobcrush will carryover. As a result, no new tax goodwill was created in connection with the Merger as there is no step-up to fair value of the underlying tax bases of the acquired net assets. The acquisition method of accounting includes the establishment of a net deferred tax asset or liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. Acquisition date deferred tax assets primarily relate to certain net operating loss carryforwards of Mobcrush. Acquisition date deferred tax liabilities relate to specifically identified non-goodwill intangibles acquired. The estimated net deferred tax liability was determined as follows:

	Book Basis		Tax Basis		Difference
Intangible assets acquired		19,500,000		2,635,000	$	(16,865,000	)
Tangible assets acquired		13,000				(13,000	)
Estimated net operating loss carryforwards - Mobcrush		-		5,895,000		5,895,000
Net deferred tax liability - pretax						(10,983,000	)
Estimated tax rate						27.98	%
Estimated net deferred tax liability					$	(3,073,000	)

Release of Valuation Allowance. Since inception, the Company maintained a full valuation allowance against its net deferred tax assets. The net deferred tax liability resulting from the Merger created a source of income to utilize against the Company’s existing net deferred tax assets. Under the acquisition method of accounting, the impact on the acquiring company's deferred tax assets is recorded outside of acquisition accounting. Accordingly, the valuation allowance on a portion of the Company's net deferred tax assets was released, resulting in an income tax benefit of approximately $3,073,000, recorded as a credit to income tax expense for the three and six months ended June 30, ~~2019 totaled $107,000 and $192,000, respectively.~~ ~~In April 2020, we amended our arrangement~~2021. The offsetting amounts reduced net deferred tax liabilities, $3,073,000 of which reduced the net deferred tax liability established in connection with ggCircuit, LLC (“ggCircuit”) terminating certain rights and licenses from a prior agreement, as amended, focused on in-person play in gaming centers, and securing other rights and licenses from ggCircuit, focused on online play at home. ggCircuit is an~~esports services company that provides gaming center management software solutions for online play at home, along with access to a global network of gaming centers.As a result~~the application of the ~~termination~~acquisition method of accounting for the rights and licenses related to the prior arrangement, the Company accelerated the amortization of the remaining balance related to the prior rights and licenses included in “Licenses” above, totaling $306,000, and certain capitalized internal use software development costs totaling $107,000, which are included in technology platform and infrastructure expense in the accompanying statementMerger.

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, 2021 and 2020, assume the acquisition occurred as of January 1, 2020.

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.

4.	~~BUSINESS COMBINATIONS~~
-12-

Table of Contents

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020

Revenue	$	2,011,000		$	1,725,000		$	5,176,000		$	3,627,000
Net Loss		(3,203,000	)		(7,469,000	)		(9,155,000	)		(15,295,000	)

Pro forma adjustments primarily relate to the amortization of identifiable intangible assets acquired over the estimated economic useful life as described above, the expensing of stock options issued to former Mobcrush employees acquired in connection with the Merger, the exclusion of interest expense related to convertible debt of Mobcrush not assumed by Super League in connection with the Merger, the exclusion of nonrecurring transaction costs, and the exclusion of amortization and depreciation related to tangible and intangible assets of Mobcrush existing immediately prior to the Merger.

The unaudited pro forma combined statements of operations for the periods presented herein have been adjusted to give effect to pro forma events that are expected to have a continuing impact on the combined results. As such, the income tax benefit related to the release of valuation allowance reflected in the statement of income for the three months ended June 30, 2021, as described above, totaling $3,073,000, is not reflected in the accompanying unaudited pro forma combined statements of income for the periods presented.

Acquisition of Framerate, Inc.

On June 3, 2019, Super League and SLG Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”) with Framerate, Inc., a Delaware corporation (“Framerate”), pursuant to which Framerate merged with and into Merger Sub, with Merger Sub continuing as the surviving corporation (the ~~“Acquisition”~~“Framerate Acquisition”). The Framerate Acquisition was consummated on June 6, 2019 when the certificate of merger of Merger Sub and Framerate was filed with the Secretary of State of the State of Delaware (the “Effective Date”). As consideration for the Framerate Acquisition, the Company ratably paid and/or issued to the former shareholders of Framerate an aggregate of i) $1.5 million paid in cash and ii) $1.0 million paid by the issuance of a total of 134,422 shares of the Company’s common stock, at a price per share of $7.4395 (the “Closing Shares”).

~~-12-~~

~~Table of Contents~~

In addition to the issuance of the Closing Shares, the Merger Agreement provides for the issuance of up to an additional $980,000 worth of shares of the Company’s common stock at the same price per share as the Closing Shares (the “Earn-Out Shares”) in the event Framerate achieves certain performance-based milestones during the two-year period following the closing of the Acquisition, or June 6, 2021 (the “Earn-Out”). One-half of the Earn-Out Shares will be issuable on the one-year anniversary of the Effective Date, and the remaining one-half will be issuable on the second anniversary of the Effective Date. The fair value of the Earn-Out on the Effective Date was estimated to be $454,000. In June 2020, we issued an additional 32,936 shares of our common stock to the former shareholders of Framerate in connection with the achievement of certain components of the year-one earn-out related performance milestones.

~~The Company has determined that the Acquisition constitutes a business acquisition as defined by Accounting Standards Codification (“ASC”) 805,Business Combinations~~. Accordingly, the assets acquired and liabilities assumed in the transaction were recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred pursuant to the purchase method of accounting in accordance with ASC 805. Super League’s preliminary purchase price allocation was based on an evaluation of the appropriate fair values and represents management’s best estimate based on available data. Fair values are determined based on the requirements of ASC 820, ~~Fair Value Measurements and Disclosures~~ ~~(“ASC 820”).~~

The Company hired the former Chief Executive of Framerate (“Framerate Executive”), who was also a selling shareholder of Framerate. Pursuant to the provisions of the Earn-Out included in the Merger Agreement, in the event that the Framerate Executive is terminated for cause or resigns from his employment with the Company at any time on or before the second anniversary of the Effective Date, and any such resignation is without “Good Reason” as such term is defined in his employment agreement, then the maximum amount of any portion of the Earn-Out that has not yet been earned as of the date of resignation shall be reduced by 44.0164%. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such approximately 44% of the estimated fair value of the Earn-Out, or $200,000 iswas accounted for as deferred compensation expense and being amortized in the statement of operations over the two-year period ending on the second anniversary of the Effective date. ~~Expense~~Noncash stock compensation expense related to the ~~portion~~compensation component of the ~~Earn-Out treated as compensation expense~~contingent consideration was $25,000 and $50,000, for the three and six months ended June 30, ~~2019~~2021. The remaining deferred compensation balance as of July 1, 2020 was ~~$8,000. The portion of the Earn-Out included as consideration was $254,000.~~

~~The Earn-Out arrangement does not meet the liability classification criteria outlined~~expensed in ~~ASC 480, “Distinguishing Liabilities from Equity,” and is both (i) indexed~~July 2020 due to the Company’s own shares and (ii) classified in shareholders’ equity in the accompanying condensed balance sheet. Equity-classified contingent consideration is measured initially at fair value on the acquisition date and is not remeasured subsequent to initial recognition. As such, the initial value recognized for the Earn-Out on the acquisition date is not adjusted for changes in the fair valuecessation of the Earn-Out as of any future settlement date. Subsequent differences between the estimated fair value of the Earn-Out recorded at the acquisition date and the actual amount of Earn-Out paid based on actual performance will be reflected as a charge or credit, as applicable, in the statement of operations.

~~The following table summarizes the fair value of purchase price consideration paid to acquire Framerate:~~

services.

5.	~~Amount~~ NOTE PAYABLE
~~Cash consideration at closing~~	$~~1,515,000~~
~~Equity consideration at closing~~	~~1,000,000~~
~~Fair value of Earn-Out shares~~	~~254,000~~
~~Total~~	$~~2,769,000~~

~~The purchase price allocation is based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in connection with the acquisition of Framerate, as follows:~~

	~~Amount~~
~~Accounts receivable~~	$~~15,000~~
~~Intangible Assets - Trade name~~	~~189,000~~
~~Goodwill~~	~~2,565,000~~
~~Total purchase price~~	$~~2,769,000~~

~~-13-~~

~~Table of Contents~~

The Acquisition was treated for tax purposes as a nontaxable transaction and as such, the historical tax bases of the acquired assets, net operating losses, and other tax attributes of Framerate will carryover. As a result, no new goodwill for tax purposes was be created in connection with the Acquisition as there is no step-up to fair value of the underlying tax bases of the acquired net assets.

~~5. NOTE PAYABLE~~

L~~ong-Term~~

Long-Term Note Payable

On May 4, 2020, the Company entered into a ~~potentially~~ forgivable loan from the ~~SBA~~U.S. Small Business Administration (“SBA”) resulting in net proceeds of $1,200,047 pursuant to the Paycheck Protection Program (“PPP”) enacted by Congress under the CARES Act administered by the SBA (the “PPP Loan”). To facilitate the PPP Loan, the Company entered into a Note Payable Agreement with ~~South Porte Bank as the lender~~a bank (the “Lender”) (the “PPP Loan Agreement”).

The PPP Loan ~~provides for working capital to the Company and will mature on~~had an original maturity date of May 4, ~~2022. However, under the CARES Act~~2022, and ~~the PPP Loan Agreement, all payments of both principal and interest will be deferred until at least December 4, 2020. The PPP Loan will accrue~~accrued interest at a rate of 1.00% per annum, ~~and~~with interest ~~will continue to accrue~~accruing throughout the period the PPP Loan iswas outstanding, or until ~~it is~~ forgiven. The Company will be eligible to apply for forgiveness of all loan proceeds used to pay payroll costs and other qualifying expenses during the eight-week period following receipt of the loan, provided that the Company maintained its employment and compensation within certain parameters during such period. Any amounts forgiven will not be included in the Company’s taxable income. As specifically intended under the program, the PPP Loan, together with our cost savings initiatives, helped us to continue operations without salary reductions, layoffs or furloughs, during this challenging and uncertain economic environment created by the COVID-19 pandemic.

The PPP Loan iswas accounted for as a financial liability in accordance with FASB ASC 470, “~~Debt~~Debt.” ~~and interest is accrued in accordance with~~Accordingly, the ~~interest method. Additional interest is not imputed at a market rate pursuant to a scope exception for interest rates prescribed by governmental agencies under the applicable guidance.~~

~~The~~ proceeds from the PPP Loan ~~are~~were recorded as a long-term liability on the balance sheet until either (1) the loan is, in part or wholly, forgiven and the company ~~has~~had been “legally released” or (2) the Company ~~pays~~paid off the loan to the ~~creditor. Once~~Lender. Interest was accrued in accordance with the interest method.

In May 2021, the PPP loan ~~is, in part or wholly,~~was forgiven pursuant to the terms and conditions of the PPP Loan Agreement and the provision of the Cares Act. Upon forgiveness, and legal release, ~~is received,~~ the Company ~~will reduce~~reduced the liability by the amount forgiven, totaling $1,213,000 and ~~record~~recorded a gain on extinguishment in the accompanying statement of ~~operations~~operations.

-13-

Table of Contents

6.	STOCKHOLDERS’ EQUITY

Financing Activities

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

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

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

The offerings described above were made pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on April 10, 2020 (File No. 333-237626). The net proceeds from these offerings are intended to be used for working capital and other general corporate purposes, including sales and marketing activities, product development and capital expenditures. The Company may also use a portion of the net proceeds for the acquisition of, or investment in, ~~the period of extinguishment.~~

~~-14-~~

~~Table of Contents~~

6.	~~STOCKHOLDERS’ EQUITY~~

~~Financing Activities~~

~~Equity Financing~~. technologies, solutions or businesses.

In May 2020, the Company issued 1,825,000 shares of common stock at a price of $3.50 per share, raising aggregate net proceeds of approximately $6.0 million, after deducting placement agent fees of $319,000 and other offering expenses totaling $116,000. The offering was made pursuant to an effective shelf registration statement on Form S-3 previously filed with the U.S. Securities and Exchange Commission. We intend to use the net proceeds from this offering for working capital and other general corporate purposes,, including sales and marketing activities, product development and capital expenditures. We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or ~~businesses~~.

~~Initial Public Offering.~~On February 27, 2019, Super League completed its IPO of its common stock, pursuant to which the Company issued and sold an aggregate of 2,272,727 shares of common stock at $11.00 per share, raising aggregate net proceeds of $22,458,000 after deducting underwriting discounts, commissions and offering costs of $2,542,000.

businesses.

7.	~~COMMITMENTS AND CONTINGENCIES~~

In April 2020, the Company entered into a directors and officers insurance premium finance agreement totaling $2.3 million, with a down payment of $1.0 million due in April 2020, and seven equal installment payments due thereafter. The finance agreement has an interest rate of approximately 4%.

8.	SUBSEQUENT EVENTS

The Company evaluated subsequent events for their potential impact on the consolidated condensed financial statements and disclosures through the date the consolidated condensed financial statements were available to be issued and determined that, except as set forth below, no subsequent events occurred that were reasonably expected to impact the consolidated condensed financial statements presented herein.

~~-15-~~

~~Table~~

Bannerfy Acquisition

the issued and outstanding common shares of Bannerfy, Ltd., a company organized under the laws of England and Wales ("Bannerfy") for a total purchase price of $7.0 million (the "Purchase Price") (the "Bannerfy Acquisition").

Pursuant to the Purchase Agreement, upon the consummation of the Bannerfy Acquisition (the "Closing"), the Company will pay to Sellers an initial payment of $2.45 million (the "Closing Consideration"), payable as follows (i) approximately $0.52 million in the form of a cash payment, and (ii) approximately $1.92 million in the form of shares of the Company's common stock at a price per share of $4.10, the closing price of the Company’s common stock on the date of the Purchase Agreement, as reported on the Nasdaq Capital Market.

In accordance with the Purchase Agreement, all remaining portions of the Purchase Price after the payment of the Closing Consideration, up to approximately $4.55 million (the "Contingent Consideration"), will be payable upon the achievement of certain revenue and gross profit thresholds for the remainder of the 2021 fiscal year, and each of the fiscal years ending December 31, 2022, and December 31, 2023. The Contingent Consideration is payable in the form of both cash and shares of common stock, as more specifically set forth in the Purchase Agreement.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Purchase Agreement, a copy of which is filed as an exhibit to this Report.

-14-

Table of Contents

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 consolidated condensed financial statements and the related notes included elsewhere in this interim report. Our consolidated condensed 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, 2020, 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

~~We are~~

Super League Gaming (Nasdaq: SLGG) is a ~~global leader in the mission to bring live and digital esports~~leading video game entertainment and experiences ~~directly~~company that gives tens of millions of players multiple ways to ~~everyday competitive~~create, connect, compete, and enjoy the video games they love. Fueled by proprietary and patented technology systems, the company’s offerings include gameplay properties in which young gamers ~~around~~form vibrant in-game communities, content creation platforms that power live broadcasts and on-demand video series that generate billions of views annually across the world. Utilizing our proprietary technology platform, Super League operates physical and digital experiences in partnership with publishers of top-tier game titles and owners/operators of a distributed footprint of venues, a network of digital social and viewingworld’s biggest distribution channels, and ~~an association/organization~~competitive gaming tournaments featuring many of ~~city-based amateur gaming clubs~~the most popular global titles. Through partnerships with top consumer brands, in-game player and ~~teams. The Super League Network features multiple forms of content celebrating the love of play via social media, live streaming~~brand monetization, and ~~video-on-demand, along with continuous gameplay and leaderboards. Inside our network is Framerate,~~ a ~~large independent social~~fully virtual cloud-based video ~~esports network powered by user-generated highlight reels, and our exclusive proprietary platform Minehut, providing a social and gameplay forum for the avid Minecraft community.~~production studio, Super League is ~~committed~~building a broadly inclusive business at the intersection of content creation, creator monetization, and both casual and competitive gameplay.

On June 1, 2021 (the “Closing Date”), the Company completed the acquisition of Mobcrush Streaming, Inc. (“Mobcrush”) pursuant to ~~supporting~~which the ~~development~~Company acquired all of ~~local, grassroots player communities, while providing a global, scalable infrastructure~~the issued and outstanding shares of Mobcrush. At closing, the Company issued to the former stockholders of Mobcrush an aggregate total of 12,067,571 shares of the Company’s common stock and reserved an aggregate total of 514,633 shares of common stock for ~~esports competition and engagement. We address a wide range of gamers across game titles, ages and skill levels, and also a wide range of content-capture beyond gameplay. This positions~~future stock option grants, under the Super League 2014 Stock Option and Incentive Plan, to the former Mobcrush employees retained by the Company in connection with the Merger, resulting in a total of 12,582,204 shares of common stock issued and reserved as ~~more than~~consideration for the Merger. Upon completion of the merger, Mobcrush became a ~~tournament operator; we are a lifestyle and media company focused on capturing, generating, aggregating and distributing content across~~wholly-owned subsidiary of the ~~genre~~Company.

In accordance with the acquisition method of ~~all things esports.~~

~~Executive Summary~~

~~We believe~~accounting, the financial results of Super League ~~is on~~presented herein include the ~~leading edge~~financial results of Mobcrush as of the ~~rapidly growing competitive video gaming industry, which has become an established and vital part~~Closing Date, including the results of operations from the Closing Date to the end of the entertainment landscape. We believe there is a significant opportunity for the world of mainstream competitive players who want their own esports experience. These amateur gamers are players who enjoy the competition, the social interaction and community, and the entertainment value associated with playing and watching others play.

Super League is a critically important component in providing the infrastructure for mainstream esports that is synergistic and accretive to the greater esports ecosystem. Over the past five years, we believe we have become the preeminent brand for amateur esports by providing a proprietary software platform that allows our gamers to compete, socialize and spectate premium amateur esports gameplay and entertainment, both physically and digitally online. Not only do we offer premium amateur esports leagues and community, but we are able to leverage our derivative gameplay content to become a comprehensive amateur esports content network.

current period presented herein.

Executive Summary

The fundamental ~~drivers~~driver of our business model and monetization strategy ~~are~~is creating deep community engagement through our highly ~~contextualized, local~~personalized experiences that, when coupled with the critical mass of our large digital audiences, provides the depth and volume for premium content and offer monetization differentiated from a more traditional, commoditized advertising model. The combination of our physical venue network and digital programming channels, with Super League’s cloud-based, digital products platform technology ~~platform~~ at the hub, creates the opportunity for not just a share of the player’s wallet, but also the advertiser’s wallet. We do this by offering brand sponsors and advertisers a premium marketing channel to reach elusive Generation Z and Millennial gamers and creators and offering players ways to access exclusive tournaments ~~rewards~~ and ~~programming through our Super League consumer subscription offer and other consumer offerings.~~

~~-16-~~

~~Table of Contents~~

Inprogramming.

-15-

Table of Contents

During the ~~first half of 2020,~~six months ended June 30, 2021, management continued to focus on monetization with respect to our ~~two~~three primary revenue ~~categories:~~streams: (1) ~~sponsorships and~~ advertising revenues, ~~or the monetization of our~~(2) content revenues, and ~~(2)~~(3) direct to consumer ~~revenues, or gamer monetization.~~revenues. In addition to the ~~significant increase in engagement described below, we~~strong key performance indicator (“KPI”) performance we: (i) continued our focus on our premium advertising model for future monetization of our rapidly growing premium advertising inventory, and ~~expanded our direct sales team to facilitate delivery;~~increased revenues generated from programmatic display and video advertising units; (ii) continued to focus on the monetization of our original and user generated content library and remote production and broadcast capabilities, which emerged as a significant component of revenue in 2020; (iii) continued to focus on the monetization of the gamer and creator through direct-to-consumer offers, including ~~the planned relaunching~~increases in sales of ~~a monthly subscription offer that is purely~~ digital ~~in response, in part, to the impact of the ongoing COVID-19 pandemic~~goods, primarily with our Minehut digital property, and the ~~launch~~continued rollout of ~~the early stages of a~~our micro-transaction marketplace; and, ~~we began~~(iv) continued to unlock new ways that our content production technology can extend beyond esports into traditional sports and other entertainment formats representing ~~potential new~~ revenue growth opportunities in the current and future periods.

~~Super League Gaming~~ ~~has experienced its strongest period~~ We expect to continue to grow our adverting pipeline across various verticals with the capability to provide brands and advertisers with targeted, high-quality integrations that warrant premium costs per impressions (“CPM”) advertising rates.

In addition, as described below, we completed our acquisition of ~~audience growth during the challenging time~~Mobcrush, effective June 30, 2021. Mobcrush, is a live streaming technology platform used by hundreds of ~~the COVID-19 pandemic, marked by the reaching~~thousands of ~~a key 2020 milestone in July 2020; reaching one billion video views~~gaming influencers who generate and ~~impressions year-to-date. This represents~~distribute almost two million hours of original content annually and have accumulated more than ~~a 700% increase over~~4.5 billion fans and subscribers across the ~~full fiscal year~~most popular live streaming and social media platforms, including Twitch, YouTube, Facebook, Instagram, Twitter, and more. Mobcrush also owns Mineville, one of ~~2019, during which we achieved a total of 120~~six exclusive, official Minecraft server partners that is enjoyed by more than 22 million ~~views.~~

~~The ability~~unique players annually. Mineville is highly complementary to ~~generate one billion views in year to date 2020 is a key proof point of not only the compelling attractiveness of~~Minehut, Super League’s ~~content, but also~~owned and operated Minecraft community, strengthening the combined company’s leading position with young gamers. This strategic, all-stock transaction, is anticipated to ~~the variety we are able to offer. We have established ourselves as a leading publisher of user generated gaming highlights within our Framerate social video network,~~be accretive and we produce 11 general and game title-specific channels that, together, deliver tens of millions of video views per month. This includes three original shows on Snapchat, five TikTok channels, and three Instagram channels, with more to come.

During the first half of 2020, we experienced a significant increase in new users, gamer engagement, and gameplay hours across all of our platforms. We believe a driver of the increase was, to a certain extent, the current period of social distancing and mandatory shelter in place orders stemming from the COVID-19 pandemic, during which passionate video gamers around the world are seeking a competitive outlet, seeking to connect with others around the games they love and are turning to esports and other online gaming communities to fill the void. We also believe that a driver of the increase is the fact that esports is mainstream, which was the case prior to COVID-19. These increases are accelerating our growth plans, and are increasing our opportunities for monetization.

Super League’s video content business is also accelerating on an additional path through the advancement of Super League’s proprietary live content capture and broadcast system, which includes patented technology and fully remote, innovative workflows operated by SuperLeagueTV, a completely virtual studio. Endemic and non-endemic brands and partners have sought outwill enable Super League to ~~provide~~take a significant leap forward in providing brands, advertisers, and other consumer facing businesses with massive audience reach across the most important engagement channels in video gaming - competitive events, social media and live streaming content, and in-game experiences.

We believe the combination of Super League and Mobcrush has the potential to represent a new, higher level of increased scale and reach, including the following:

●	The combined companies have the potential to reach more than 25 million players per year, three million players per month, with over 400,000 players per day.

●	In addition, the combination of Super League and Mobcrush has the potential for a U.S. monthly viewing audience of 85 million, which would create a top 50 U.S. media property according to measurements used by Nielsen.

●	Annually, Super League and Mobcrush combined have the potential to generate 7.7 billion annual U.S video views across live streaming platforms, two billion views on social media platforms, and enable 60 million hours of gameplay on owned and operated platforms.

●	Collectively, we believe the combined companies could generate and distribute over 200,000 gameplay highlights across streaming and social channels per month.

-16-

Table of Contents

Other Developments

In August 2021, we announced the launch of Pixel Paradise, the world’s very first Minecraft Bedrock Server designed from the ground up to prioritize roleplaying while bringing your imagination to life with your friends. In Pixel Paradise, players take a vacation from player vs player competition and are whisked away to an island where creativity and resourcefulness are the most critical skills. Completing tasks will require players to learn how to manage their currency, optimize their resources, and pursue helpful communications with their existing and new friends. For players seeking a little more action, Pixel Paradise offers mini-games based on popular Minecraft game modes. Pixel Paradise is the newest release by InPvP, an official Microsoft Minecraft partner enjoyed by more than 22 million players annually.

In July 2021, ThriveFantasy, a daily fantasy sports and esports app for player props, announced that it signed a preferred partnership to become an official daily fantasy esports platform for Super League Gaming. The partnership expands ThriveFantasy’s capabilities as the largest and leading provider of esports fantasy games in the industry.

On August 11, 2021, we entered into a Share Purchase Agreement for the acquisition of Bannerfy, Ltd., an intelligent technology platform that enables digital video and live streaming creators to collaborate with tier one sponsors on their social media channels including YouTube through scalable and custom premium ~~TV-quality production services across~~placements (the "Bannerfy Acquisition"). Please see Item 5, Other Information, for further disclosure regarding the Bannerfy Acquisition.

Registered Direct Offerings. During the quarter ended March 31, 2021, we offered and sold to certain institutional investors an aggregate total of 7,516,253 shares of common stock in registered direct offerings pursuant to our effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on April 10, 2020 (File No. 333-237626). We received aggregate net proceeds of approximately $33.6 million, after deducting offering expenses.

In February 2021, reflecting the shifting focus of video gaming, Super League and innovative esports community aggregator and media distributor, Harena Data, Inc., agreed to a ~~multitude~~partnership to produce and distribute video gaming and esports entertainment and targeted community-driven experiences nationwide, amplified through global content distribution.

In March 2021, we announced the continuation of ~~live streamed events. During 2020, within gaming alone, broadcasts have spanned an impressive mix~~our existing partnership with Topgolf Entertainment Group to broadcast a series of ~~game titles including Minecraft, APEX Legends, NBA2K, PUBG Mobile, the~~ World Golf Tour by Topgolf competitive events. These events, streamed live across digital platforms, bring together avid golf fans, celebrities and ~~more.~~

~~In response to~~professional athletes-connecting everyone through their love for the ~~COVID-19 pandemic and the related uncertainty, advertisers and sponsors across the board inevitably paused to reset their marketing strategies. The impact on Super League in the first half~~game of ~~2020 was the deferral of some of these programs and related revenues to future periods.~~ golf.

Key Performance Indicators.

We did not experience any cancellations of existing programs. For example, our partnership with Tencent and OnePlus, bringing PUBG mobile tournaments to life proceeded as planned, just from the comfort and safety of players’ homes, online, as opposed to in-person. The majority of our gameplay hours and other engagement occurs digitally, online, so while our “in real life” gaming is a premium and important aspect of our brand, the shift away from retail locations is not expected to have a ~~significant impact~~rich portfolio of products and offers with compelling KPIs which provides insight into our depth and reach, enabling unique opportunities to reach and engage young gamers under 18 years of age, as well as opportunities to reach and engage gamers 18-34 years of age, including the following:

Super League’s Young Gamers Network enables unique reach to gamers under 18 and includes:

	·	Minehut, the largest Minecraft server community host in North America with more than 4 million registered users

	·	Mineville, an official Minecraft Bedrock server reaching more than 20 million players annually

	·	Pixel Paradise, the recently launched first-ever official Minecraft Bedrock server to prioritize role playing

	·	Multiple original series on Snapchat, including Taking Shape featuring Minecraft gameplay, and Sticks N Stones featuring Animal Crossing

	·	Partnerships with a growing number of Roblox game developers and media platforms

	·	An expanding presence on Tik Tok highlighted by the Super League Gaming and Minehut channels

Super League’s Core Gamers Network presents opportunities to engage gamers 18-34 and includes:

	·	Mobcrush’s reach across digital live streaming platforms to a Nielsen-verified U.S. audience of 85 million monthly (December 2020) through more than 7.7 billion annual views

	·	Access to more than 200,000 AI-generated gameplay highlights featuring many of the world’s most popular titles

	·	Super League’s esports invitational tournament series, Super League Arena, which has inspired more than 65 million views year-to-date across Twitch, YouTube, and Tik Tok, featuring semi-pro and top amateur players competing in titles such as League of Legends, Valorant, Rocket League, Apex Legends, CS:GO, and more.

	·	The Framerate social media network comprised of eight channels across Instagram and Tik Tok featuring user generated gameplay highlights spanning more than a dozen popular games, delivering more than 30 million social video views per month

	·	The acquisition of Bannerfy will expand our reach and ability to engage with this core gamer demographic

-17-

Table of Contents

The primary KPIs used by management on ~~our overall business model over time, which is largely digitally focused.~~

~~-17-~~

~~Table of Contents~~

~~Key Performance Indicators.~~

~~We focus on three key performance indicators (“KPIs”), as outlined below,~~a consolidated basis to assess our progress and drive revenue growth, which is also a key performance ~~indicator.~~ ~~As of the end of the second quarter of 2020, we significantly outperformed several of the KPI goals we established at the beginning of 2020~~,indicator, are as follows:

●

~~Registered Users: We ended fiscal 2019 with approximately 980,000 registered users.~~

●

Views and Impressions: During the six months ended June 30, ~~2020,~~2021, we ~~increased~~generated 5.8 billion views and impressions (including Mobcrush from January 1, 2021), compared to 808.5 million views and impressions during the six months ended June 30, 2020. This continued growth in views results in the growth of our ~~registered~~total and monetizable advertising inventory, which we believe will drive an increasing number of brands and advertisers to our audience and platform.

●

Monthly Active Users: As of June 30, 2021, we reached monthly active users byof approximately ~~100%,~~3.0 million. We believe that continuing the trend of increasing MAU leads to ~~1.96 million registered users. Registered users represent~~the introduction of more gamers and creators into our customer funnel, from whom we can gather higher volumes of quality user generated content and convert into subscribers and/or upsell into other paid offers.

●	~~Engagement~~
	●	Gameplay Hours: ~~As of~~ During the six months ended June 30, ~~2020,~~2021, including our ~~live~~ gaming experiences and our expanding digital gameplay channels, we generated approximately ~~30.5~~60.0 million hours of gameplay and other engagement, as compared to approximately ~~15.0~~30.5 million ~~full year 2019~~hours of gameplay and other engagement ~~hours.~~during the six months ended June 30, 2020. We continue to focus on ways we can repackage and distribute this significant derivative content library for further monetization.

●

~~Views and Impressions:~~ ~~We generated 808.5 million views and impressions during the~~ six months ended June 30, 2020, compared to our full-year 2019 views of 120.0 million, representing an approximately 600% increase over full year 2019 views. Additionally, as described above we reached a key 2020 milestone in July 2020, reaching one billion video views and impressions as of July 2020. This continued growth in views results in the exponential growth of our monetizable advertising inventory. Additionally, our growth in views continues to be achieved largely via user generated content submitted to us by our community, significantly limiting the production cost and overall investment required to achieve the continued growth in our viewership.

Impact of COVID-19 Pandemic

Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The novel coronavirus and actions taken to mitigate the spread of it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted to amongst other provisions, provide emergency assistance for individuals, families and businesses affected by the coronavirus pandemic. It is unknown how long the adverse conditions associated with the coronavirus will last and what the complete financial effect will be to the Company.

Commencing in the first quarter of 2020, in response to the COVID-19 pandemic and the related uncertainty, advertisers and sponsors across the board inevitably paused to reset their marketing strategies, and as a result, all companies with business models that include sponsorship and advertising revenues felt the impact of the pause in advertising spend industry-wide. In addition, in the first half of 2020, as a result of COVID-19, we felt the impact of the deferral of some of the programs in our pipeline and related revenues to future periods. The majority of our gameplay hours and other engagement occurs digitally, online, so while our “in real life” gaming is a premium and important aspect of our brand, the shift away from retail locations is not expected to have a significant impact on our overall business model over time, which is largely digitally focused.

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

Notwithstanding the growth in revenues and in user engagement metrics discussed herein, the broader impact of the ongoing COVID-19 pandemic on our results of operations and overall financial performance remains uncertain. The COVID-19 pandemic may continue to impact our revenue and revenue growth in future periods, and is likely to continue to adversely impact certain aspects of our business and our partners, including advertising demand, retail expansion plans and our in-person esports experiences. ~~See “Risk Factors” for further~~For a discussion of the ~~adverse impacts of~~risk factors related to COVID-19, please refer to Part II, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the ~~COVID-19 pandemic on our business.~~

year ended December 31, 2020.

Critical Accounting Estimates

Our unaudited interim consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these consolidated condensed statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these consolidated condensed 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, ~~2019,~~2020, filed with the SEC on March ~~23, 2020.~~19, 2021. In addition, refer to Note 2 to the consolidated condensed 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.

~~-18-~~

~~Table of Contents~~

-18-

Table of Contents

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) wethe entity can identify each party’s rights regarding the goods or services to be transferred; (iii) wethe 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 weit will be entitled in exchange for the goods or services that will be transferred to the customer.

~~Super League generates~~

Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer, in connection with determining the transaction price for our revenue arrangements.

We generate revenues ~~and related cash flows~~ from (i) ~~sponsorships~~advertising, serving as a marketing channel for brands and ~~advertising, including~~ ~~third-party~~advertisers to reach their target audiences of gamers across our network, (ii) content, ~~sales~~ curating and ~~(ii)~~distributing esports and entertainment content for our own network of digital channels and media and entertainment partner channels and (iii) direct to consumer offers including ~~tournament fees for participation in our physical and online multiplayer gaming experiences,~~ digital subscriptions, digital goods, gameplay access fees and merchandise sales.

~~Sponsorships~~

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

Advertising and ~~Advertising:~~

~~Sponsorship~~Sponsorships:

Advertising revenue primarily consists of direct sales activity along with sales of programmatic display and video advertising units to third-party advertisers and exchanges. Advertising arrangements typically include contract terms for time periods ranging from several days to several weeks ~~or months to multi-year arrangements.~~

in length.

For ~~sponsorship~~advertising arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the ~~agreement~~arrangement as ~~the Company satisfies its~~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). ~~Payments are typically due~~Revenue from ~~customers during the~~shorter term ~~of the arrangement.~~

~~Revenue for sponsorship~~advertising arrangements ~~for one-off branded experiences and/or the development of content tailored specifically for the Company’s partners’ distribution channels~~ that provide for a contractual delivery or performance date is recognized when performance is substantially complete and or delivery occurs.

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

Sponsorship revenue arrangements may include: exclusive or non-exclusive title sponsorships, marketing benefits, official product status exclusivity, product visibly and additional infrastructure placement, social media rights, rights to on-screen activations and promotions, display material rights, media rights, hospitality and tickets and merchandising rights. Sponsorship revenues also include revenues pursuant to arrangements with brand and media partners, retail venues, game publishers and broadcasters that allow our partners to run amateur esports experiences, and or capture specifically curated gameplay content that is customized for our partners’ distribution channels. Sponsorship arrangements typically include contract terms for time periods ranging from several weeks or months to terms of twelve months in length.

-19-

Table of Contents

For ~~advertising~~sponsorship arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and ~~third-party~~consume the benefits under the agreement 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). Payments are typically due from customers during the term of the arrangement.

Revenue from sponsorship arrangements for one-off branded experiences and/or the development of content tailored specifically for our partners’ distribution channels that provide for a contractual delivery or performance date, is recognized at a point in time, when performance is substantially complete and or delivery occurs.

Content:

Content related revenues are generated in connection with our curation and distribution of esports and entertainment content for our own network of digital channels and media and entertainment partner channels. We distribute three primary types of content for syndication and licensing, including: (1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology.

~~-19-~~

~~Table of Contents~~

Direct to Consumer:

~~Revenue from single experiences is recognized when the experience occurs. Revenue from multi-week packages is recognized over time as the multi-week experiences occur based on estimates~~

Direct to consumer revenues primarily consist of ~~the progress toward complete satisfaction of the applicable offer~~digital subscription fees, digital goods, gameplay access fees and ~~related performance obligations.~~merchandise sales. Subscription revenue is recognized ~~over~~in the ~~applicable subscription term.~~period the services are rendered. Payments are typically due from customers at the point of sale.

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 ~~collectability of accounts receivable is reasonably assured.~~consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer. We assess the collectability of receivables based on several factors, including past transaction history and the creditworthiness of our customers. If it is determined that collection is not reasonably assured, amounts due are recognized when collectability becomes reasonably assured, assuming all other revenue recognition criteria have been met, which is generally upon receipt of cash for transactions where collectability may have been an issue. Management’s estimates regarding collectability impact the actual revenues recognized each period and the timing of the recognition of revenues. Our assumptions and judgments regarding future collectability could differ from actual events and thus materially impact our financial position and results of operations.

Depending on the complexity of the underlying revenue arrangement and related terms and conditions, significant judgments, assumptions and estimates may be required to determine each parties rights regarding the goods or services to be transferred, each parties performance obligations, whether performance obligations are satisfied at a point in time or over time, estimates of completion methodologies, the timing of satisfaction of performance obligations, and the appropriate period or periods in which, or during which, the completion of the earnings process occurs. Depending on the magnitude of specific revenue arrangements, if different judgments, assumptions and estimates are made regarding revenue arrangements in any specific period, our periodic financial results may be materially affected.

~~Stock-Based Compensation Expense~~

~~Compensation expense~~

Accounting for ~~stock-based awards~~Business Combinations

In connection with the application of purchase accounting in connection with the Mobcrush Merger, as described above, we estimated the fair values of the assets acquired and liabilities assumed. A fair value measurement is ~~measured~~determined as the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the ~~grant date,~~measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. In the context of purchase accounting, the determination of fair value often involves significant judgments and estimates by management, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The estimated fair values reflected in the purchase accounting rely on management’s judgment and the expertise of a third-party valuation firm engaged to assist in concluding on the fair value measurements.

Management is primarily responsible for determining the fair value of the ~~award,~~tangible and identifiable intangible assets acquired and liabilities assumed as of the acquisition date. Fair value measurements can be highly subjective, and it is ~~recognized as an expense, typically on~~possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a ~~straight-line basis~~range of alternative estimated amounts. Actual results may vary from projected results.

Goodwill

Goodwill represents the excess of the purchase price of the acquired business 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~~acquisition date fair value of ~~restricted stock~~the net assets acquired. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31) and ~~restricted stock unit awards is determined by the product of the number of shares~~between annual tests if an event occurs 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 accounts for forfeitures of awards as they occur.

~~Determining~~circumstances change that would more likely than not reduce the fair value of ~~stock-based awards at~~a reporting unit below its carrying value. We consider our market capitalization and the ~~grant date requires significant estimates and judgments, including estimating the market price volatility~~carrying value of our ~~common stock, determination~~assets and liabilities, including goodwill, when performing our goodwill impairment tests. When conducting our annual goodwill impairment assessment, we initially perform a qualitative evaluation of ~~grant dates,~~whether it is more likely than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is impaired, we then apply a two-step impairment test. The two-step impairment test first compares the fair value of the Company’s reporting unit to its carrying or book value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired, and we are not required to perform further testing. If the carrying value of the reporting unit exceeds its fair value, we determine the implied fair value of the reporting unit’s goodwill and if the carrying value of the reporting unit’s goodwill exceeds its implied fair value, then an impairment loss equal to the difference is recorded in the statement of operations. We operate in one reporting segment.

If a potential impairment exists, a calculation is performed to determine the fair value existing goodwill. This calculation is based on a valuation model, which considers the estimated future ~~employee stock option exercise behavior~~undiscounted cash flows resulting from the reporting unit, and ~~requisite service periods.~~

~~-20-~~

~~Table~~a discount rate commensurate with the risks involved. Third party appraised values may also be used in determining whether impairment potentially exists. In assessing goodwill impairment, significant judgment is required in connection with estimates of ~~Contents~~

market values, estimates of the amount and timing of future cash flows, and estimates of other factors that are used to determine the fair value of our reporting unit. If these estimates or related projections change in future periods, future goodwill impairment tests may result in charges to earnings.

-20-

Table of Contents

Results of Operations for the Three and Six Months ~~Ended~~ended June 30, ~~2020~~2021 and ~~2019~~

2020

The following table sets forth a summary of our statements of operations for the three and six months ended June 30, ~~2020~~2021 and ~~2019:~~

Three Months



Six Months



Ended June 30,

Change

Ended June 30,

Change

2020

2019

$

%

2020

2019

$

%

(in thousands, except percentage change values)
REVENUES
$324
$223
$101
  45%
$567
$472
$95
  20%
COST OF REVENUES
  116
  113
  3
  3%
  233
  187
  46
  25%
GROSS PROFIT
  208
  110
  98
  89%
  334
  285
  49
  17%
OPERATING EXPENSES








Selling, marketing and advertising
  1,256
  1,167
  89
  8%
  2,529
  2,139
  390
  18%
Technology platform and infrastructure
  1,685
  1,291
  394
  31%
  3,590
  2,453
  1,137
  46%
General and administrative
  1,826
  3,157
  (1,331)
  (42)%
  3,922
  7,334
  (3,412)
  (47)%
Total operating expenses
  4,767
  5,615
  (848)
  (15)%
  10,041
  11,926
  (1,885)
  (16)%
NET LOSS FROM OPERATIONS
  (4,559)
  (5,505)
  (946)
  (17)%
  (9,707)
  (11,641)
  (1,934)
  (17)%
OTHER INCOME (EXPENSE), NET
  (1)
  -
  (1)
  -%
  13
  (9,933)
  (9,946)
  (100)%
NET LOSS
$(4,560)
$(5,505)
$(945)
  (17)%
$(9,694)
$(21,574)
$(11,880)
  (55)%

~~-21-~~

~~Table of Contents~~

2020: (dollars in thousands):

	Three Months												Six Months
	Ended June 30,						Change						Ended June 30,						Change
	2021			2020			$			%			2021			2020			$			%
REVENUES	$	1,084		$	324		$	760			235	%	$	1,872		$	567		$	1,305			230	%
COST OF REVENUES		533			116			417			359	%		875			233			642			276	%
GROSS PROFIT		551			208			343			165	%		997			334			663			199	%
OPERATING EXPENSES
Selling, marketing and advertising		1,934			1,256			678			54	%		3,417			2,529			888			35	%
Technology platform and infrastructure		2,497			1,685			812			48	%		4,100			3,590			510			14	%
General and administrative		2,433			1,826			607			33	%		4,419			3,922			497			13	%
Total operating expenses		6,864			4,767			2,097			44	%		11,936			10,041			1,895			19	%
NET LOSS FROM OPERATIONS		(6,313	)		(4,559	)		(1,754	)		38	%		(10,939	)		(9,707	)		(1,232	)		13	%
OTHER INCOME (EXPENSE), NET		1,214			(1	)		1,215			+300	%		1,215			13			1,202			+300	%
Loss before benefit from income taxes		(5,099	)		(4,560	)		(539	)		12	%		(9,724	)		(9,694	)		(30	)		-	%
Benefit from income taxes		3,073			-			3,073			100	%		3,073			-			3,073			100	%
NET LOSS	$	(2,026	)	$	(4,560	)	$	2,534			(56	)%	$	(6,651	)	$	(9,694	)	$	3,043			(31	)%

-21-

Table of Contents

Comparison of the Results of Operations for the Three and Six Months ~~Ended~~ended June 30, ~~2020~~2021 and ~~2019~~

2020

Revenue

Three Months
Ended June 30,

Change

Six Months
Ended June 30,

Change

2020

2019

$

%

2020

2019

$

%

(in thousands, except percentage change values)
Sponsorships and advertising
$285
$220
$65
  30%
$513
$458
$55
  12%
Direct to Consumer
  39
  3
  36
  +100%
  54
  14
  40
  +100%

$324
$223
$101
  45%
$567
$472
$ 95
  20%

(dollars in thousands)

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2021		2020		$		%			2021		2020		$		%
Advertising and sponsorships	$	485	$	49	$	436		+300	%	$	928	$	56	$	872		+300	%
Content sales		365		236		129		55	%		646		457		189		41	%
Direct to consumer		234		39		195		+300	%		298		54		244		+300	%
	$	1,084	$	324	$	760		235	%	$	1,872	$	567	$	1,305		230	%

Revenue for the three months ended June 30, ~~2020~~2021 increased ~~$101,000~~$760,000 or ~~45%~~235%, compared to the three months ended June 30, ~~2019.~~2020. Revenue for the six months ended June 30, ~~2020~~2021 increased ~~$95,000~~$1,305,000 or ~~20%~~230%, compared to the ~~three~~six months ended June 30, ~~2019.~~ 2020. For the three and six months ended June 30, 2021, one customer accounted for 14% and, no individual customer accounted for more than 10% of revenues, respectively. For the three and six months ended June 30, 2020, six customers accounted for 84% and four customers accounted for 61% of revenues, respectively.

The ~~change~~increase in revenues for the three and six months ended June 30, 2021 primarily reflects a significant increases in direct sales and programmatic advertising on our owned and operated, and our partner’s digital channels, and an increase in ~~advertising revenues and~~ content sales ~~relative~~revenues, compared to the prior year periods, reflecting our continued focus on the monetization of our increasing premium advertising inventory and ~~amateur gameplay~~esports and entertainment content. The increase ~~was partially offset by a decrease in traditional~~also reflects advertising and sponsorship ~~revenue in~~revenues and Mineville revenues for Mobcrush, from the ~~second quarter of 2020, reflecting the continued impact~~closing date of the ~~slow-down in~~Merger through June 30, 2021 totaling $275,000.

Advertising and sponsorship activities by brands and advertisers as the COVID-19 pandemic continued to unfold during the second quarter of 2020. We did not experience any cancellations of existing programs, with the net impact of the pause by advertisers and brands in the first half of 2020 being the deferral of some of these programs and related revenues to future periods. Revenues for the periods presented were comprised of the following:

~~Sponsorships and Advertising:~~

~~Sponsorships.~~ Period to period changes in sponsorship revenues are attributable to fluctuations in sponsorship activities period to period, which is based on the specific partnership arrangements with activities during a particular period, the related performance obligations satisfied during the period and the contractual consideration associated with the activities during the period.

~~Sponsorship~~ revenues for the three months ended June 30, ~~2020 was primarily comprised of revenues for our GenG Hoops at Home NBA2K remote live streamed tournament~~2021 increased $436,000, or +300%, and Penn Relays Minecraft remote live streamed activation, our Tencent Games and OnePlus Mobile PUBG Mobile, premium content, competitive experiences and sponsorship activation, and our World Golf Tour competitive gameplay and content activation with Topgolf. Sponsorship revenues for the three months ended June 30, 2019 was primarily comprised ofincluded revenues from Minehut and Roblox activations with Logitech, in connection with our ~~Red Bull North America, Inc. (“Red Bull”) brand partnership, Red Bull Allstars experience~~MoonJam Festival, Disney+, in ~~April 2019~~connection with Disney+’s Mysterious Benedict Society property, and ~~our Logitech G Challenge online tournament.~~

Sponsorship revenues for the six months ended June 30, 2020 included revenues for our Capcom, Inc., Street Fighter® V: Arcade Edition partnership, our Tencent Games and OnePlus Mobile Player Unknown’s Battlegrounds Mobile, or PUBG Mobile, premium content, competitive experiences and sponsorship activation, World Golf Tour competitive gameplay and content activation with ~~Topgolf and our Logitech G Challenge CS:GO online tournaments, along~~Universal PLC Group in connection with the ~~activities for the three months ended June 30, 2020 described above. Sponsorship revenues for the six months ended June 30, 2019 was primarily comprised of revenues from our~~ Samsung Fortnite event held in New York in March 2019, our Red Bull North America, Inc. master brand partnership, our Logitech G Challenge online tournament, along with the activities for the three months ended June 30, 2019 described above.

~~Advertising~~animated movie Boss Baby 2, and ~~Content Sales~~.~~Advertising and content sales~~animated movie Spirit Untamed. In addition, revenues for the three and six months ended June 30, ~~2020~~2021 included ~~increases~~advertising and sponsorship revenues for Mobcrush, from the closing date through June 30, 2021 totaling $117,000.

The increase in advertising and sponsorship revenues ~~from campaigns launched~~also reflects an increase in direct sales and programmatic display and video advertising revenues within our Minecraft related ~~to our Framerate~~ digital property, Minehut, of $88,000, or 221%, compared to the prior year quarter, during which our programmatic advertising ~~revenues from Snapchat Inc. related content sales~~revenue programs were in the early stages.

Advertising and ~~advertising~~sponsorship revenues ~~generated from our Minehut digital property. Revenues~~ for the six months ended June 30, ~~2019~~2021 increased $872,000, or +300%, and in addition to the revenues described above, included revenues from advertising campaigns with ViacomCBS Digital, in connection with the ~~sale~~promotion of ~~gameplay~~ViacomCBS Digital’s Spongebob property, Logitech, Inc., in connection with our Galentine’s Games and ~~other~~Minehut related Spring Break activations, Square Enix, in connection with the promotion of their platform game, Balan Wonderworld, and Moose Toys, in connection with the promotion of Moose Toys’ Goo Jit Zu and Treasure X products within our Minehut digital property. The change reflects an increase in direct sales and programmatic display and video advertising revenues within our Minecraft related digital property, Minehut, of $188,000, or +300%, compared to the prior year period, during which our programmatic advertising revenue programs were in the early stages.

-22-

Table of Contents

Content related revenues for the three and six months ended June 30, 2021 increased $129,000, or 55%, and $189,000, or 41%, respectively. The increase was primarily driven by an increase in sales of our proprietary and user generated content, ~~generated by us to Nickelodeon to supplement their YouTube channel programming.~~

primarily with Snap Inc., Cox Media, and Samsung Electronics America, Inc., and live stream, remote production and broadcast related content sales activities with Endemol Shine North America, a division of Banijay, AVY Entertainment (DBA Tempo Storm), Aftershock Media Group, Topgolf Entertainment Group, Hitbox, LLC d/b/a Next Generation Esports and GenG during the three and six months ended June 30, 2021.

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

~~Direct to Consumer~~:

Direct to consumer revenues for the three and six months ended June 30, ~~2020~~2021 increased $195,000, or +300%, and ~~2019,~~$244,000 or +300%, respectively, compared to the comparable prior periods.

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

~~-22-~~

~~Table~~

Mobcrush generates direct to consumer in-game Platform sales revenues via digital goods sold within the InPvP Mineville platform, one of ~~Contents~~

~~Cost~~six official Microsoft Minecraft partner servers, enjoyed by more than 22 million unique players annually, 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

Three Months
Ended June 30,

Change

Six Months
Ended June 30,

Change

2020

2019

$

%

2020

2019

$

%

(in thousands, except percentage change values)
Cost of revenue
$116
$113
$3
-%
$233
$187
$46
25%

~~Cost of revenue~~ is generated when transactions are facilitated between Microsoft and the end user, either via in-game currency or cash. Direct to consumer revenues for the three and six months ended June 30, ~~2020 was relatively flat compared to~~2021 included Mineville revenues, from the closing date through June 30, 2021 totaling $158,000.

Cost of Revenue (dollars in thousands)

Three Months
Ended June 30,

Change

Six Months

Ended June 30,

Change

2021

2020

2021

2020

Cost of revenue

533

116

417

359

875

233

642

276

-23-

Table of Contents

Cost of revenues for the three and six months ended June 30, ~~2019, as~~2021 increased $417,000, or 359%, and $642,000, or 276%, compared to the ~~45%~~235% and 230% increase in related revenues, respectively, for the same periods. The ~~less~~greater than proportionate ~~change~~increase in cost of revenue was ~~driven by~~primarily due to lower actual costs ~~associated with our largely digital and online revenue generating activities~~incurred for certain contracted activations in the second quarter of 2020 ~~and an increase~~as we transitioned those projects from offline to online in ~~lower cost advertising and content sales revenues in the second quarter of 2020.~~

~~Cost of revenue for the six months ended June 30, 2020 increased $46,000, or 25% compared~~response to the ~~six months ended June 30, 2019, as compared to~~COVID-19 pandemic and the ~~20% increase in related revenues for the same periods. The less than proportionate change in~~ensuing shutdown.

In addition, cost of revenue was driven by lower costs associated with our largely digital and online revenue generating activities in the first half of 2020 and an increase in lower cost advertising and content sales revenues. The decrease was offset by a higher number of higher cost live events in the first quarter of 2020, compared to the first quarter of 2019.

~~Cost~~ of revenues fluctuate period to period based on the specific programs and revenue streams contributing to revenue each period and the related cost profile of our physical and digital experiences, and advertising and content sales activities occurring each period.

Operating Expenses

Three Months
Ended June 30,
Change

Six Months
Ended June 30,

Change

2020

2019

$

%

2020

2019

$

%

(in thousands, except percentage change values)
Selling, Marketing and Advertising
$1,256
$1,167
$89
  8%
$2,529
$2,139
$390
  18%
Technology Platform and Infrastructure
  1,685
  1,291
  394
  31%
  3,590
  2,453
  1,137
  46%
General and Administrative
  1,826
  3,157
  (1,331)
  (42%)
  3,922
  7,334
  (3,412)
  (47)%
Total operating expenses
$4,767
$5,615
$(848)
  (15)%
$10,041
$11,926
$(1,885)
  (16)%

(dollars in thousands)

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2021		2020		$		%			2021		2020		$		%
Selling, marketing and advertising	$	1,934	$	1,256	$	678		54	%	$	3,417	$	2,529	$	888		35	%
Technology platform and infrastructure		2,497		1,685		812		48	%		4,100		3,590		510		14	%
general and administrative		2,433		1,826		607		33	%		4,419		3,922		497		13	%
Total operating expenses	$	6,864	$	4,767	$	2,097		44	%	$	11,936	$	10,041	$	1,895		19	%

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

Three Months
Ended June 30,
Change

Six Months
Ended June 30,

Change

2020

2019

$

%

2020

2019

$

%

(in thousands, except percentage change values)
Sales, marketing and advertising
$197
$196
$1
  1%
$395
$328
$67
  20%
Technology platform and infrastructure
  59
  27
  32
  119%
  148
  24
  124
  +100%
General and administrative
  141
  1,576
  (1,435)
  (91)%
  556
  4,177
  (3,621)
  (87)%
Total noncash stock compensation expense
$397
$1,799
$(1,402)
  (78)%
$1,099
$4,529
$(3,430)
  (76)%

items (dollars in thousands):

	Three Months Ended June 30,				Change						Six Months Ended June 30,				Change
	2021		2020		$			%			2021		2020		$			%
Sales, marketing and advertising	$	237	$	197	$	40			20	%	$	420	$	395	$	25			6	%
Technology platform and infrastructure		24		59		(35	)		(59	)%		57		148		(91	)		(61	)%
General and administrative		300		141		159			113	%		495		556		(61	)		(11	)%
Total noncash stock compensation expense	$	561	$	397	$	164			41	%	$	972	$	1,099	$	(127	)		(12	)%

Selling, Marketing and ~~Advertising.~~Advertising. The increase in selling, marketing and advertising expense for the three ~~and six~~ months ended June 30, ~~2020~~2021 was primarily due to an increase in personnel costs, including noncash stock compensation, associated with the acquisition of Mobcrush and the integration of a total of 26 former Mobcrush employees, effective June 1, 2021, sixteen of which are included in our commercial and product functions. The change also reflects a net increase since the end of the prior year comparable quarter of approximately five full-time employees (excluding impact of Merger), of marketing personnel associated with the increase in our inhouse direct sales and marketing team, focused on monetization and an increase in personnel in our creative and content functions. The increase also reflects a $96,000 increase in digital marketing expense, compared to the prior year period, which reflected a reduction in marketing costs due to the impact of the COVID-19 pandemic on our marketing activities in first quarter of 2020.

The increase in selling, marketing and advertising expense for the six months ended June 30, 2021 was primarily due to the increase in personnel in connection with the Merger, as described above. The change also reflects an increase since the end of the prior year period of approximately four full-time employees (excluding impact of the Merger), of marketing personnel associated with the increase in our direct sales and marketing team focused on monetization and an increase in personnel in our creative and content functions. The increase also reflects a $196,000 increase in digital marketing expense, compared to the ~~monetization~~prior year period, which reflected a reduction in marketing costs due to the impact of the COVID-19 pandemic on our ~~physical and digital experiences and related audience across our digital properties.~~

marketing activities in first quarter of 2020.

Technology Platform and Infrastructure. Technology platform and infrastructure costs include (i) allocated personnel costs, including salaries, noncash stock compensation, taxes and benefits related to our internal software developers and engineers, employed by Super League, engaged in the operation, maintenance, management, administration, testing, development and enhancement of our proprietary gaming and content technology platform, (ii) third-party contract software development and engineering resources engaged in developing and enhancing our proprietary gaming and content technology platform, (iii) the amortization of capitalized internal use software costs, and (iv) technology platform related cloud services, broadband and ~~broadband~~other technology platform costs. Capitalized internal use s~~oftware~~software development costs are amortized on a straight-line basis over the software’s estimated useful life.

The increase in technology platform and infrastructure costs for the three months ended June 30, 2021 reflects an increase in personnel costs associated with the acquisition of Mobcrush and ~~six~~the integration of a total of 26 former Mobcrush employees, effective June 1, 2021, nine of which are included in our technology and engineering function. Excluding the impact of the Mobcrush acquisition, the increase in technology platform and infrastructure costs for the three months ended June 30, 2021 was due primarily to an increase in cloud services and other technology platform costs totaling $359,000, which primarily reflects the impact of the surge in engagement across our digital properties occurring subsequent to the first quarter of 2020 and continuing into fiscal year 2021. The increase also reflects Mobcrush related technology platform and infrastructure costs for the period from June 1, 2021 to June 30, 2021, totaling $231,000, primarily comprised of cloud services and platform consulting services costs. Technology platform and infrastructure costs for the three months ended June 30, 2020 ~~primarily reflects an~~ increase in technology platform related cloud services costs totaling approximately $445,000 and $734,000, respectively, quarterly fees paid to ggCircuit under the related licenses and rights agreement, as amended, totaling $0 and $150,000, respectively, andincluded the acceleration of amortization related to the termination of certain rights and licenses in connection with amendments to ~~our~~an arrangement with ~~ggCircuit,~~a commercial partner, totaling ~~$107,000,~~$107,000.

The net increase in technology platform and ~~$306,000, respectively,~~infrastructure costs for the six months ended June 30, 2021 was primarily due to an increase in cloud services and other technology platform costs totaling $542,000, which primarily reflects the impact of the surge in engagement across our digital properties occurring subsequent to the first quarter of 2020 and continuing into fiscal year 2021. The increase also reflects the increase in personnel in connection with the Merger with Mobcrush, as described ~~at Note 3~~above. The increase was partially offset by a net reduction in engineering personnel costs (excluding the impact of the Merger) totaling $129,000. In addition, during the six months ended June 30, 2020, technology platform and infrastructure costs included the acceleration of amortization, totaling $306,000, related to the ~~condensed financial statements elsewhere herein~~.

~~-23-~~

~~Table~~termination of ~~Contents~~

the License Agreement in the first quarter of 2020.

-24-

Table of Contents

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

Three Months
Ended June 30,

Change

Six Months
Ended June 30,

Change

2020

2019

$

%

2020

2019

$

%

(in thousands, except percentage change values)
Personnel costs
$501
$627
$(126)
  (20)%
$992
$1,233
$(241)
  (20)%
Office and facilities
  90
  101
  (11)
  (11)%
  189
  205
  (16)
  (8)%
Professional fees
  144
  181
  (37)
  (20)%
  353
  391
  (38)
  (10)%
Stock-based compensation
  141
  1,576
  (1,435)
  (91)%
  556
  4,177
  (3,621)
  (87)%
Depreciation and amortization
  52
  55
  (3)
  (5)%
  123
  305
  (182)
  (60)%
Other
  898
  617
  281
  46%
  1,709
  1,023
  686
  67%
Total general and administrative expense
$1,826
$3,157
$(1,331)
  (42)%
$3,922
$7,334
$ (3,412)
  (47)%

following (dollars in thousands):

	Three Months Ended June 30,				Change						Six Months Ended June 30,				Change
	2021		2020		$			%			2021		2020		$			%
Personnel costs	$	532	$	501	$	31			6	%	$	993	$	992	$	1			-	%
Office and facilities		28		90		(62	)		(69	)%		55		189		(134	)		(71	)%
Professional fees		389		144		245			170	%		846		353		493			140	%
Stock-based compensation		300		141		159			113	%		495		556		(61	)		(11	)%
Depreciation and amortization		89		52		37			71	%		140		123		17			14	%
Other		1,095		898		197			22	%		1,890		1,709		181			11	%
Total general and administrative expense	$	2,433	$	1,826	$	607			33	%	$	4,419	$	3,922	$	497			13	%

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

For the three months ended June 30, ~~2020,~~2021, compared to the three months ended June 30, ~~2019:~~

2020:

●

~~Personnel~~

Office and facilities costs decreased due to the termination of the leases for 75% of our office space in Santa Monica, California, and converting to a fully remote work structure as of June 30, 2020, resulting in significant rent and facilities costs savings for the applicable periods presented and going forward.

●

Professional fees costs increased $245,000, or 170%, primarily due to ~~$105,000~~legal, audit, advisory and financial and tax due diligence professional fees, totaling $159,000, incurred in connection with the Merger described elsewhere in this Report. In accordance with the acquisition method of ~~bonuses~~accounting, acquisition-related costs incurred are expensed as incurred in the period that the services are performed. The increase also reflects Mobcrush related professional fees totaling $23,000 related to outsourced accounting services in the ~~achievement~~applicable period.

●

Noncash stock compensation expense included in general and administrative expense increased primarily due to the annual grant of ~~operational performance targets~~incentive equity-based awards to certain employees during the period, in connection with our board approved compensation and retention programs. The increase was partially offset by a decrease in warrant expense due to the completion of the vesting and related expensing of certain previously granted nonemployee common stock purchase warrants in the second quarter of ~~2019.~~2020.

●

Other general and administrative expenses increased $197,000, or 22% primarily due to an increase in proxy and annual shareholder meeting expenses totaling $258,000, which was comprised of proxy solicitation, printing and mailing costs incurred in connection with our 2021 Annual Shareholders Meeting, which included, among other proposals, our proposal requesting our stockholders to approve of the Mobcrush related common stock issuance in connection with the Merger, in order to comply with Listing Rule 5635 of the Nasdaq Stock Market. The increase was partially offset by a slight decrease in D&O insurance premiums for the 2021-2022 policy period and corporate consulting expenses.

For the six months ended June 30, 2021, compared to the six months ended June 30, 2020

●

●	Professional fees costs increased $493,000, or 140%, primarily due to legal, audit, advisory and financial and tax due diligence professional fees, totaling $378,000, incurred in connection with the proposed acquisition of Mobcrush, described elsewhere herein.

●

Noncash stock compensation expense included in general and administrative expense decreased primarily due to ~~certain performance options~~the completion of the vesting and ~~warrants~~related expensing of certain previously granted ~~to two~~nonemployee common stock purchase warrants in the second quarter of ~~our executives, which vested upon~~2020, resulting in a decrease in warrant related stock compensation of $282,000 for the ~~achievement of certain operational performance targets. During the six~~three months ended June 30, ~~2019, 300,000~~2021. The decrease was partially offset by the annual grant of ~~performance-based stock options~~incentive equity-based awards to certain employees during the period, in connection with our board approved compensation and ~~warrants vested with a weighted-average grant date fair value of $8.50, resulting in noncash stock compensation expense of $2,549,000.~~retention programs.

●

Other general and administrative expenses increased $181,000, or 11% primarily due to an increase in ~~directors~~proxy and ~~officer's insurance premiums~~annual shareholder meeting expenses, including legal, proxy solicitation, printing and ~~public company~~mailing costs, incurred in connection with our 2021 Annual Shareholders Meeting, which included, among other proposals, our proposal requesting our stockholders to approve of the Mobcrush related ~~annual meeting costs, partially offset by a decrease~~common stock issuance in ~~travel related expenses due~~connection with the Merger, in order to comply with Listing Rule 5635 of the ~~COVID-19 pandemic.~~Nasdaq Stock Market.

-25-

Table of Contents

~~For~~

Other Income (Expense)

In May 2020, we entered into a forgivable loan from the U. S. Small Business Administration (“SBA”) resulting in net proceeds of approximately $1.2 million pursuant to the Paycheck Protection Program (“PPP”) enacted by Congress under the Coronavirus Aid, Relief, and Economic Security Act (15 U.S.C. 636(a)(36)) (the “CARES Act”) administered by the SBA (the “PPP Loan”). To facilitate the PPP Loan, we entered into a note payable agreement with a third-party lender (the “PPP Loan Agreement”). In May 2021, the PPP loan and accrued interest was forgiven pursuant to the terms and conditions of the PPP Loan Agreement and the provision of the Cares Act. Upon forgiveness, and legal release, we reduced the liability by the amount forgiven, totaling $1,213,000 and recorded a gain on extinguishment in the accompanying statement of operations for 2021 periods presented herein.

Benefit for Income Taxes

Release of Valuation Allowance. Since inception, we have maintained a full valuation allowance against our net deferred tax assets. The net deferred tax liability resulting from the Merger created a source of income to utilize against our existing net deferred tax assets. Under the acquisition method of accounting, the impact on the acquiring company's deferred tax assets is recorded outside of acquisition accounting. Accordingly, the valuation allowance on a portion of the Company's net deferred tax assets was released, resulting in an income tax benefit of approximately $3,073,000, recorded as a credit to income tax expense for the three and six months ended June 30, ~~2020, compared to~~2021. The offsetting amounts reduced net deferred tax liabilities, $3,073,000 of which reduced the ~~three months ended June 30, 2019:~~

●

~~Personnel costs decreased primarily due to $405,000 of management performance-based bonuses paid~~net deferred tax liability established in connection with the achievement of certain performance targets during the six months ended June 30, 2019, including the closing of the IPO and other operational performance targets. Personnel costs for the six months ended June 30, 2019 also includes $247,000 of R&D tax credits which are reflected as an offset to related expense.

●

Noncash stock compensation expense included in general and administrative expense decreased primarily due to certain performance options and warrants previously granted to two of our executives, which vested during the six months ended June 30, 2019, upon the achievement of certain performance targets. Performance targets included the completion of our IPO in February 2019 and other operational performance targets. During the six months ended June 30, 2019, 300,000 of performance-based stock options and warrants vested with a weighted-average grant date fair value of $8.50, resulting in noncash stock compensation expense of $2,549,000 during the six months ended June 30, 2019.

●	Other general and administrative expenses increased primarily due to an increase in directors and officer's insurance premiums, partially offset by a decrease in travel related expenses due to the COVID-19 pandemic.

~~Other Income (expense)~~

Other income (expense), net, for the six months ended June 30, 2020 and 2019, was $0 and $9,933,000, respectively, and was primarily comprised of interest expense related to the convertible notes outstanding during the 2019 period presented as follows:

Six Months
Ended June 30,

Change

2020

2019

$

%

(in thousands, except percentage change values)
Accretion of discount on convertible notes
$-
$2,475
$(2,475)
  (100)%
Accrued interest expense on convertible notes
  -
  187
  (187)
  (100)%
Accretion of convertible note issuance costs
  -
  209
  (209)
  (100)%
Beneficial conversion feature
  -
  7,067
  (7,067)
  (100)%
Total interest expense
$-
$9,938
$(9,938)
  (100)%

~~-24-~~

~~Table of Contents~~

~~Interest Expense.~~ Interest expense for the 2019 periods presented primarily relates to the issuance of 9.00% secured convertible promissory notes, commencing in February 2018 through August 2018. Principal and interest as of February 27, 2019, the closing date of the IPO totaled $13,793,000. ~~Concurrent with the closing of the IPO on February 27, 2019, in accordance with the related agreements,~~ ~~all outstanding principal and interest for the 9.00% convertible notes outstanding was automatically converted into 1,475,164 shares of the Company’s common stock at a conversion price of $9.35.~~ ~~As a result of the automatic conversion of the notes and~~ the application of ~~conversion~~the acquisition method of accounting the Company recorded an immediate charge to interest expense of $1,384,000, representing the write-off of the unamortized balance of debt discounts associated with the 2018 warrants and cash commissions and warrants issued to third parties as of the IPO closing Date.

The non-detachable conversion feature embedded in the notes provides for a conversion rate that was below market value at the commitment date, and therefore, represented a beneficial conversion feature (“BCF”). The BCF is generally recognized separately at issuance by allocating a portion of the debt proceeds equal to the intrinsic value of the BCF to additional paid-in capital. The resulting convertible debt discount is recognized as interest expense using the effective yield method. However, the conversion feature was not exercisable until the consummation of an initial public offering by the Company of its common stock, and therefore, was not required to be recognized in earnings until the IPO related contingency was resolved, which occurred on the IPO closing date. The commitment date is the IPO closing date and the commitment date stock price was $11.00 per share. The intrinsic value of the BCF on the IPO closing date, which was limited to the net proceeds allocated to the debt on a relative fair value basis, was approximately $7,067,000, and is reflected as additional interest expense in the statement of operations for the ~~three months ended June 30, 2019.~~

Merger.

Liquidity and Capital Resources

General

Cash and cash equivalents totaled ~~$6.2~~$31.5 million and ~~$8.4~~$7.9 million at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

~~We have experienced net losses~~ The increase in cash for the periods presented reflect the impact of operating, investing and ~~negative~~financing cash flows from operations since our inception. As of June 30, 2020 and December 31, 2019, we had working capital of approximately $6.0 million and $8.7 million, respectively, and sustained cumulative losses since inception attributable to common stockholders of approximately $95.5 million. Total noncash charges included in accumulated deficit since inception, primarilyflow related to noncash stock compensation, restricted stock units issued in connection with a license agreement, amortization of the discount on convertible debt and in-kind advertising expense, totaled approximately $36.0 million. On February 27, 2019, we completed our IPO, raising net proceeds of approximately $22,458,000. During fiscal 2018, the Company issued 9.00% secured convertible promissory notes,activities as described ~~below, in an aggregate principal amount of approximately $13,000,000.~~ Concurrent with the closing of the IPO on February 27, 2019, in accordance with the related agreements, all outstanding principal and interest for the 9.00% convertible notes outstanding was automatically converted into shares of the Company’s common stock as described below.

To date, our principal sources of capital used to fund our operations have been the net proceeds we received from sales of equity securities, ~~and proceeds received from~~such as the ~~issuance of convertible debt, as described herein.We have and will continue to use significant capital for~~registered direct offerings completed during the ~~growth and development of our business.~~first quarter. Our management ~~team expects operating losses to continue in the near term in connection with the pursuit of~~believes that our ~~strategic objectives. As such, we believe our current~~ cash ~~position, absent receipt of additional capital either from operations or that may~~balances will be ~~available from future issuance(s) of common stock or debt financings, is not~~ sufficient to ~~fund~~meet our ~~planned operations for the twelve months following the date of this Report.~~cash requirements through at least June 2022. We ~~believe these conditions raise substantial doubt about our ability to continue as a going concern. In addition, we~~ may, however, encounter unforeseen difficulties that may deplete our capital resources more rapidly than ~~anticipated, including those set forth under~~anticipated. For a discussion of the ~~heading “Risk Factors” included in~~risk factors related to COVID-19, please refer to Part II, Item ~~1A of this Report.~~

1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020.

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

~~Recent Developments~~

On May 4, 2020, we entered into a potentially forgivable loan from the U. S. Small Business Administration (“SBA”) resulting in net proceeds of approximately $1.2 million pursuant to the Paycheck Protection Program (“PPP”) enacted by Congress under the Coronavirus Aid, Relief, and Economic Security Act (15 U.S.C. 636(a)(36)) (the “CARES Act”) administered by the SBA (the “PPP Loan”). To facilitate the PPP Loan, we entered into a note payable agreement with a third-party lender (the “PPP Loan Agreement”).

~~-25-~~

~~Table of Contents~~

On May 13, 2020, we announced that the Company entered into securities purchase agreements with institutional investors for the purchase and sale of 1,825,000 shares of our common stock at an offering price of $3.50 per share, pursuant to a registered direct offering, priced at-the-market under Nasdaq rules, which closed on May 15, 2020. The gross proceeds of the offering were $6.4 million, before deducting placement agent fees and other offering expenses, as described below. The offering was made pursuant to an effective shelf registration statement on Form S-3 previously filed with the SEC. ~~We intend to use the net proceeds from this offering for working capital and other general corporate purposes~~, including sales and marketing activities, product development and capital expenditures. We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses.

Cash Flows for the Six Months Ended June 30, ~~2020~~2021 and ~~2019~~

2020

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

Six Months
Ended June 30,

2020

2019

Net cash used in operating activities
$(8,585)
$(6,883)
Net cash used in investing activities
  (769)
  (2,189)
Net cash provided by financing activities
  7,153
  22,478
(Decrease) increase in cash
  (2,201)
  13,406
Cash and cash equivalents, at beginning of period
  8,442
  2,774
Cash and cash equivalents, at end of period
$6,241
$16,180

	Six Months Ended June 30,
	2021			2020
Net cash used in operating activities	$	(9,925	)	$	(8,585	)
Net cash used in investing activities		1			(769	)
Net cash provided by financing activities		33,437			7,153
Increase in cash		23,513			(2,201	)
Cash and cash equivalents, at beginning of period		7,942			8,442
Cash and cash equivalents, at end of period	$	31,455		$	6,241

Cash Flows from Operating Activities. Net cash used in operating activities during the six months ended June 30, 2021 primarily reflected our net GAAP loss for the six months ended June 30, 2021 of ($6,651,000), net of adjustments to reconcile net GAAP loss to net cash used in operating activities totaling ($3,274,000), which included $972,000 of noncash stock compensation charges, depreciation and amortization of $801,000, a noncash gain totaling $1,213,000 in connection with the forgiveness of our PPP Loan in May 2021 and changes in valuation allowance totaling $3,073,000. Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course. Net cash used in operating activities during the six months ended June 30, 2020 was $8,585,000, which primarily reflected our net GAAP loss for the six months ended June 30, 2020 of $9,694,000, net of adjustments to reconcile net GAAP loss to net cash used in operating activities of $1,109,000, which included $1,099,000 of noncash stock compensation charges and depreciation and amortization of $854,000. Changes in working capital primarily reflected the impact of the settlement of receivables and payables in the ordinary course. Net cash used in operating activities during the six months ended June 30, 2019 was $6,883,000, which primarily reflected our net loss of $21,574,000, net of adjustments to reconcile net loss to net cash used in operating activities of $14,691,000, which included $4,529,000 of noncash stock compensation charges, $2,871,000 of noncash accrued interest and accretion of debt discount, $7,067,000 of noncash interest expense related to the recognition of the beneficial conversion feature upon the automatic conversion of the notes upon close of the IPO, and depreciation and amortization of $485,000. Changes in working capital primarily reflected the impact of a net decrease in accounts receivable, the prepayment of insurance premiums and the settlement of payables in the ordinary course.

Cash Flows from Investing Activities.Cash flows from investing activities were comprised of the following for the periods presented ~~(in~~(dollars in thousands):

Six Months
Ended June 30,

2020

2019

Cash paid for acquisition of Framerate
$-
$(1,491)
Purchase of property and equipment
  (6)
  (33)
Capitalization of software development costs
  (691)
  (560)
Acquisition of other intangible and other assets
  (72)
  (105)
Net cash used in investing activities
$(769)
$(2,189)

	Six Months Ended June 30,
	2021			2020
Cash acquired in connection with Merger with Mobcrush		586			-
Purchase of property and equipment	$	(11	)	$	(6	)
Capitalization of software development costs		(437	)		(691	)
Acquisition of other intangible and other assets		(137	)		(72	)
Net cash used in investing activities	$	1		$	(769	)

Acquisition of Mobcrush

On June 1, 2021 we completed the acquisition of Mobcrush pursuant to which we acquired all of the issued and outstanding shares of Mobcrush. At closing, the Company issued to the former stockholders of Mobcrush an aggregate total of 12,067,571 shares of Company Common Stock and reserved an aggregate total of 514,633 shares of Company Common Stock for issuance pursuant to stock options to be granted to Mobcrush employees retained in connection with the Merger, resulting in a total of 12,582,204 shares of Company Common Stock issued and reserved as consideration for the Merger. Upon completion of the merger, Mobcrush became a wholly-owned subsidiary of the Company. Refer to Note 4 to the consolidated condensed financial statements herein for information regarding assets acquired and liabilities assumed in connection with the Mobcrush Merger.

-26-

Table of Contents

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.

~~-26-~~

~~Table of Contents~~

Cash Flows from Financing Activities. Cash flows from financing activities were comprised of the following for the periods presented ~~(in~~(dollars in thousands):

Six Months
Ended June 30,

2020

2019

Proceeds from issuance of common stock, net
$5,953
$22,458
Proceeds from note payables
  1,200
$-
Proceeds from warrant exercise
  -
  20
Net cash used in investing activities
$7,153
$22,478

	Six Months Ended June 30,
	2021		2020
Proceeds from issuance of common stock, net	$	33,399	$	5,953
Proceeds from note payable		-		1,200
Proceeds from stock option exercises		38		-
Net cash used in investing activities	$	33,437	$	7,153

Equity Financings

~~Registered Direct Offering.~~

In May 2020, the Company issued 1,825,000 shares of common stock at a price of $3.50 per share, raising aggregate net proceeds of approximately $6.0 million, after deducting placement agent fees of $319,000 and other offering expenses totaling $116,000, pursuant to a registered direct offering. The net proceeds are for working capital and other general corporate purposes, including sales and marketing activities, product development and capital expenditures. We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses.

~~Initial Public Offering.~~

On ~~February 27, 2019, we completed our IPO, pursuant to which we issued and sold an aggregate of 2,272,727 shares of our common stock at a public offering price of $11.00 per share~~ ~~pursuant to a registration statement on Form~~ S-1, declared effective by the SEC on February 25, 2019 (File No. 333-229144). We raised net proceeds of approximately $22,458,000 after underwriting discounts, commissions and other offering costs of $2,542,000.

The principal purposes of the IPO were to obtain additional capital to support our operations, to create a public market for our common stock and to facilitate our future access to the public equity markets. Net proceeds received from the offering were for working capital and general corporate purposes, including sales and marketing activities, product development and capital expenditures (including strategic acquisitions).

Concurrent with the closing of the IPO on February 27, 2019, in accordance with the underlying agreements, all outstanding principal and interest for the 9.00% convertible notes outstanding, totaling $13,793,000, was automatically converted into 1,475,164 shares of the Company’s common stock at a conversion price of $9.35.

~~CARES Act~~

~~As noted above, on~~ May 4, 2020, we entered into ~~the potentially~~a forgivable ~~PPP Loan~~loan from the SBA ~~pursuant to the PPP program enacted under the CARES Act,~~ resulting in net proceeds of approximately $1.2 ~~million.~~million pursuant to the PPP enacted by Congress under the CARES Act administered by the SBA. To facilitate the PPP Loan, we entered into a note payable agreement with a third-party lender. In May 2021, the PPP loan was forgiven pursuant to the terms and conditions of the PPP Loan Agreement ~~with a third-party lender.~~

~~The PPP Loan provided for working capital to us~~ and ~~matures on May 4, 2022. However, under~~the provision of the CARES Act and the PPP Loan Agreement, all payments of both principal and interest will be deferred until at least December 4, 2020. The PPP Loan will accrue interest at a rate of 1.00% per annum, and interest will continue to accrue throughout the period the PPP Loan is outstanding, or until it is forgiven. We will be eligible to apply forAct. Upon forgiveness, of all loan proceeds used to pay payroll costs and other qualifying expenses during the eight-week period following receipt of the loan, provided that the Company maintains its employment and compensation within certain parameters during such period. Any amounts forgiven will not be included in the Company’s taxable income. As specifically intended under the program, the PPP Loan, together with our cost savings initiatives, helped us to continue operations without salary reductions, layoffs or furloughs, during this challenging and uncertain economic environment created by the COVID-19 pandemic.

~~The PPP Loan is accounted for as a financial liability in accordance with FASB ASC 470, “Debt~~” and interest is accrued in accordance with the interest method. Additional interest is not imputed at a market rate pursuant to a scope exception for interest rates prescribed by governmental agencies under the applicable guidance.

The proceeds from the PPP Loan are recorded as a long-term liability on the balance sheet until either (1) the loan is, in part or wholly, forgiven and the company has been “legally released” or (2) the Company pays off the loan to the creditor. Once the loan is, in part or wholly, forgiven, and legal release, ~~is received, the Company will reduce~~we reduced the liability by the amount forgiven, totaling $1,213,000 and ~~record~~recorded a gain on extinguishment in the accompanying statement of operations infor the ~~period of extinguishment.~~

~~-27-~~

~~Table of Contents~~

2021 periods presented herein.

Contractual Obligations

As of June 30, ~~2020,~~2021, except as described below, and excluding the forgivable PPP Loan described above, we had no significant commitments for capital expenditures, nor do we have any committed lines of credit, noncancelable operating leases obligations, other committed funding or long-term debt, and no guarantees. ~~The operating lease for our corporate headquarters expired on May 31, 2017 and was subsequently amended to operate on a month-to-month basis.~~ In June 2020, we terminated the lease for the majority of our corporate headquarters (approximately 4,965 square feet). As of June 30, ~~2020~~2021 we maintain approximately ~~1650~~1,650 square feet of office space on a month-to-month basis. The following table lists our material known future cash commitments as of June 30, ~~2020 (in thousands):~~

Payments Due by Period (In thousands)

Total

Less than 1 year

1-3 years

More than 3 years

Insurance premium financing
$724
$724
$-
$-

2021:

	Payments Due by Period
	Total		Less than 1 year		1-3 years		More than 3 years
Insurance premium financing	$	1,042,000	$	1,042,000		-		-

Off-Balance Sheet Commitments and Arrangements

We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated condensed 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.

-27-

Table of Contents

Contingencies

Certain conditions may exist as of the date the consolidated condensed financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated condensed 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.

~~-28-~~

~~Table of Contents~~

Recent Accounting Pronouncements

Refer to Note 2 to the accompany consolidated condensed financial statements contained elsewherein this ~~Report~~.

Report.

Relaxed Ongoing Reporting Requirements

Upon the completion of our ~~IPO,~~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.~~

●	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.

-28-

Table of Contents

ITEM 4. C~~ONTROLS~~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.

~~-29-~~

~~Table~~

On June 1, 2021 the Company completed the acquisition of ~~Contents~~

P~~ART~~Mobcrush pursuant to which the Company acquired all of the issued and outstanding shares of Mobcrush. Upon completion of the merger, Mobcrush became a wholly-owned subsidiary of the Company. The Company is in the process of evaluating internal control over financial reporting in connection with the acquisition of Mobcrush, and expects to complete our evaluation by December 31, 2021.

-29-

Table of Contents

PART II

OTHER INFORMATION

~~ITEM 1.~~ L~~EGALPROCEEDINGS~~

ITEM 1. LEGAL PROCEEDINGS

None.

~~ITEM 1A.~~R~~ISKFACTORS~~

~~Investing~~

ITEM 1A. RISK FACTORS

Except as set forth below, management is not aware of any material changes to the risk factors discussed in ~~our common stock involves a high degree~~Part 1, Item 1A, of ~~risk. You should carefully consider~~ the ~~risks described below, as well as~~Annual Report on Form 10-K for the year ended December 31, 2020. In addition to the following risk factors and other information set forth in this Quarterly Report on Form 10-Q, ~~including our financial statements and~~you should carefully consider the ~~related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest~~risk factors discussed in ~~our common stock. The occurrence of any~~Part 1, Item 1A, of the ~~events or developments described below~~Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent reports filed pursuant to the Exchange Act which could ~~harm our~~materially and adversely affect the Company’s business, financial condition, ~~operating~~ results of operations, and ~~growth prospects. In such an event,~~stock price. The risks described in the ~~market price of our common stock could decline, and you may lose all or part of your investment.~~Annual Report on Form 10-K subsequent reports filed pursuant to the Exchange Act are not the only risks facing the Company. Additional risks and uncertainties not presently known to usmanagement, or that ~~we currently deem immaterial~~management presently believes not to be material, may also ~~may impair our business operations.~~

~~Risks Related to Our Business and Industry~~

~~We have incurred significant losses since our inception, and we may continue to experience losses in the future.~~

We incurred net losses of $9.7 million and $21.6 million during the six months ended June 30, 2020 and 2019, respectively. Noncash expenses (excluding depreciation and amortization of fixed and intangible assets) totaled $1.1 million and $14.5 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, we had an accumulated deficit of $95.5 million. Moreover, the report of our independent registered public accounting firm to the financial statements for our fiscal year ended December 31, 2019, included elsewhere herein, contains an explanatory paragraph stating that our recurring losses from operations, accumulated deficit and cash used in operating activities raise substantial doubt about our ability to continue as a going concern. We cannot predict if we will achieve profitability soon or at all. We expect to continue to expend substantial financial and other resources on, among other things:

●

investments to expand and enhance our esports technology platform and technology infrastructure, make improvements to the scalability, availability and security of our platform, and develop new offerings;

●

sales and marketing, including expanding our customer acquisition and sales organization and marketing programs, and expanding our programs directed at increasing our brand awareness among current and new customers;

●

~~investments in bandwidth to support our video streaming functionality;~~

●

~~contract labor costs and other expenses to host our leagues and tournaments;~~

●

~~costs to retain and attract gamers and license first tier game titles, grow our online gamer community and generally expand our business operations;~~

●

~~hiring additional employees;~~

●

~~expansion of our operations and infrastructure, both domestically and internationally; and~~

●

~~general administration, including legal, accounting and other expenses related to being a public company.~~

~~-30-~~

~~Table of Contents~~

We may not generate sufficient revenue to offset such costs to achieve or sustain profitability in the future. We expect to continue to invest heavily in our operations, our online and in person experiences, business development related to game publishers, advertisers, sponsors and gamer acquisition, to accelerate as well as maintain our current market position, support anticipated future growth and to meet our expanded reporting and compliance obligations as a public company.

We expect operating losses to continue in the near term in order to carry out our strategic objectives. We consider historical operating results, capital resources and financial position, in combination with current projections and estimates, as part of our plan to fund operations over a reasonable period of time.

We believe our current cash position, absent receipt of additional capital either from operations or that may be available from future issuance(s) of common stock or debt financings, is not sufficient to fund our planned operations for the twelve months following the date of this Report.

We intend to continue implementing our business strategy with the expectation that there will be no material adverse developments in our business, liquidity or capital requirements. If one or more of these factors do not occur as expected, it could have a material adverse impact on our activities, including (i) reduction or delay of our business activities, (ii) forced sales of material assets, (iii) defaults on our obligations, or (iv) insolvency. Our planned investments may not result in increased revenue or growth of our business. We cannot assure you that we will be able to generate revenue sufficient to offset our expected cost increases and planned investments in our business and platform. As a result, we may incur significant losses for the foreseeable future, and may not be able to achieve and/or sustain profitability. If we fail to achieve and sustain profitability, then we may not be able to achieve our business plan, fund our business or continue as a going concern. The financial statements included in this Report do not contain any adjustments which might be necessary if we were unable to continue as a going concern.

~~We are a relatively young company, and we may not be able to sustain our rapid growth, effectively manage our anticipated future growth or implement our business strategies.~~

We have a limited operating history. Although we have experienced significant growth since our gaming platform for amateur online and in person gaming experiences was launched, and we established our amateur city leagues, tournaments and competitions, our historical growth rate may not be indicative of our future performance due to our limited operating history and the rapid evolution of our business model, including a focus on direct to consumer-based gaming. We may not be able to achieve similar results or accelerate growth at the same rate as we have historically. As our amateur city leagues, tournaments and competitions continue to develop, we may adjust our strategy and business model to adapt. These adjustments may not achieve expected results and may have a material and adverse ~~impact on our financial condition and results of operations.~~

~~In addition, our rapid~~growth and expansion have placed, and continue to place, significant strain on our management and resources. This level of significant growth may not be sustainable or achievable at all in the future. We believe that our continued growth will depend on many factors, including our ability to develop new sources of revenues, diversify monetization methods including our direct to consumer offerings, attract and retain competitive gamers, increase engagement, continue developing innovative technologies, tournaments and competitions in response to shifting demand in esports and online gaming, increase brand awareness, and expand into new markets. We cannot assure you that we will achieve any of the above, and our failure to do so may materially and adversely affect our business and results of operations.

~~We are subject to risks associated with operating in a rapidly developing industry and a relatively new market.~~

Many elements of our business are unique, evolving and relatively unproven. Our business and prospects depend on the continuing development of live streaming of competitive esports gaming. The market for esports and amateur online gaming competition is relatively new and rapidly developing and are subject to significant challenges. Our business relies upon our ability to cultivate and grow an active gamer community, and our ability to successfully monetize such community through tournament fees, digital subscriptions for our esports gaming services, and advertising and sponsorship opportunities. In addition, our continued growth depends, in part, on our ability to respond to constant changes in the esports gaming industry, including rapid technological evolution, continued shifts in gamer trends and demands, frequent introductions of new games and titles and the constant emergence of new industry standards and practices. Developing and integrating new games, titles, content, products, services or infrastructure could be expensive and time-consuming, and these efforts may not yield the benefits we expect to achieve at all. We cannot assure you that we will succeed in any of these aspects or that the esports gaming industry will continue to grow as rapidly as it has in the past.

~~-31-~~

~~Table of Contents~~

We generate a portion of our revenues from advertising and sponsorship. If we fail to attract more advertisers and sponsors to our gaming platform or tournaments or competitions, or if advertisers or sponsors are less willing to advertise with or sponsor us, our revenues may be adversely affected.

We generate a growing portion of our revenues from advertising and sponsorship, which we expect to further develop and expand in the near future as online viewership of our esports gaming offerings expand. Our revenues from advertising and sponsorship partly depend on the continual development of the online advertising industry and advertisers’ willingness to allocate budgets to online advertising in the esports gaming industry. In addition, companies that decide to advertise or promote online may utilize more established methods or channels, such as more established internet portals or search engines, over advertising on our gaming platform. If the online advertising and sponsorship market does not continue to grow, or if we are unable to capture and retain a sufficient share of that market, our ability to increase our current level of advertising and sponsorship revenue and our profitability and prospects may be materially and adversely affected.

Furthermore, our core and long-term priority of optimizing the gamer experience and satisfaction may limit our gaming platform’s ability to generate revenues from advertising and sponsorship. For example, in order to provide our gamers with an uninterrupted competitive gaming experience, we do not place significant amounts of advertising on our streaming interface or insert pop-up advertisements during streaming. While this decision could adversely affect our operating results in the short-term, we believe it enables us to provide a superior gamer experience on our gaming platform, which will help us expand and maintain our current base of gamers and enhance our monetization potential in the long-term. However, this philosophy of putting our gamers first may also negatively impact our relationships with advertisers, sponsors or other third parties, and may not result in the long-term benefits that we expect, in which case the success of our business and operating results could be harmed.

~~Our revenue model may not remain effective and we cannot guarantee that our future monetization strategies will be successfully implemented or generate sustainable revenues and profit.~~

We generate revenues from advertising and sponsorship of our league tournaments, and through the operation of our live streaming gaming platform using a revenue model whereby gamers can get free access to certain live streaming of amateur tournaments, and gamers pay fees to compete in league competition. We have generated, and expect to continue to generate, a substantial portion of revenues using this revenue model in the near term. We are, however, particularly focused on implementing a direct to consumer model for our expanding gamer base. Although our business has experienced significant growth in recent years, there is no guarantee that our direct to consumer packages will gain significant traction to maximize our growth rate in the future, as the demand for our offerings may change, decrease substantially or dissipate, or we may fail to anticipate and serve gamer demands effectively.

The loss of or a substantial reduction in activity by one or more of our largest customers and/or vendors could materially and adversely affect our business, financial condition and results of operations.

~~For the three and six months ended June 30, 2020, six customers accounted for 84% and 4 customers accounted for 61% of revenue, respectively.For the three and six months ended June 30, 2019, four customers accounted for 98% and 89% of revenues, respectively.~~At June 30, 2020, four customers accounted for 84% of accounts receivable. At December 31, 2019, one customer accounted for 70% of accounts receivable. At June 30, 2020, one vendor accounted for 48% of accounts payable. At December 31, 2019, one vendor accounted for 21% of accounts payable.

~~The loss of or a substantial reduction in activity by one or more of our largest customers could materially and adversely affect our business, financial condition and results of operations.~~

~~Our marketing and advertising efforts may fail to resonate with amateur gamers.~~

Our amateur city league tournaments and competitions are marketed through a diverse spectrum of advertising and promotional programs such as online and mobile advertising, marketing through websites, event sponsorship and direct communications with our gaming community including via email, blogs and other electronic means. An increasing portion of our marketing activity is taking place on social media platforms that are either outside, or not totally within, our direct control. Changes to gamer preferences, marketing regulations, privacy and data protection laws, technology changes or service disruptions may negatively impact our ability to reach target gamers. Our ability to market our amateur city league tournaments and competitions is dependent in part upon the success of these programs. If the marketing for our amateur city league tournaments and competitions fails to resonate and expand with the gamer community, or if advertising rates or other media placement costs increase, our business and operating results could be harmed.

~~-32-~~

~~Table of Contents~~

We have a unique community culture that is vital to our success. Our operations may be materially and adversely affected if we fail to maintain this community culture as we expand in our addressable gamer communities.

We have cultivated an interactive and vibrant online social gamer community centered around amateur online and in person gaming. We ensure a superior gamer experience by continuously improving the user interface and features of our gaming platform along with offering a multitude of competitive and recreational gaming experiences with first tier esports games. We believe that maintaining and promoting a vibrant community culture is critical to retaining and expanding our gamer community. We have taken multiple initiatives to preserve our community culture and values. Despite our efforts, we may be unable to maintain our community culture and cease to be the preferred platform for our target gamers as we expand our gamer footprint, which would be detrimental to our business operations.

~~The amateur esports gaming industry is intensely competitive. Gamers may prefer our competitors’ amateur leagues, competitions or tournaments over our own.~~

Competition in the amateur esports gaming industry generally is intense. Our competitors range from established leagues and championships owned directly, as well as leagues franchised by, well known and capitalized game publishers and developers, interactive entertainment companies and diversified media companies to emerging start-ups, and we expect new competitors to continue to emerge throughout the amateur esports gaming ecosystem. If our competitors develop and launch competing amateur city leagues, tournaments or competitions, or develop a more successful amateur online gaming platform, our revenue, margins, and profitability will decline.

~~The amateur esports gaming industry is very “hit” driven. We may not have access to “hit” games or titles.~~

Select game titles dominate competitive amateur esports and online gaming, and many new games titles are regularly introduced in each major industry segment (console, mobile and PC free-to-download). Despite the number of new entrants, only a very few “hit” titles account for a significant portion of total revenue in each segment.

The size and engagement level of our online and in person gamers are critical to our success and are closely linked to the quality and popularity of the esports game publishers with which we have licenses. Esports game publishers on our gaming platform, including those who have entered into license agreements with us, may leave us for other gaming platforms or amateur leagues which may offer better competition, and terms and conditions than we do. Furthermore, we may lose esports game publishers if we fail to generate the number of gamers to our amateur tournaments and competitions expected by such publishers. In addition, if popular esports game publishers cease to license their games to us, or our live streams fail to attract gamers, we may experience a decline in gamer traffic, direct to consumer opportunities and engagement, which may have a material and adverse impact on our results of operations and financial conditions.

Although we have entered into multi-year agreements with certain publishers, if we fail to license multiple additional “hit” games or any of our existing licensed esports game publishers with which we currently have a license decide to breach the license agreement or choose not to continue with us once the term of the license agreement expires, the popularity of our amateur city leagues, tournaments and competitions may decline and the number of our gamers may decrease, which could materially and adversely affect our results of operations and financial condition.

In addition to the esports games we have licensed, we must continue to attract and retain the most popular esports gaming titles in order to maintain and increase the popularity of our amateur city leagues, tournaments and competitions, and ensure the sustainable growth of our gamer community. We must continue to identify and enter into license agreements with esports gaming publishers developing “hit’ games that resonate with our community on an ongoing basis. We cannot assure you that we can continue to attract and retain the same level of first-tier esports game publishers and our ability to do so is critical to our future success.

~~-33-~~

~~Table of Contents~~

~~We have not entered into definitive license agreements with certain game publishers that we currently have relationships with, and we may never do so.~~

We currently do not have definitive license agreements in place with game publishers for the use of certain of the game titled played on our platform, as these publishers currently permit us to integrate the specifications of the game title with our technology. We may not ever enter into license agreements with these parties in the future, instead continuing our relationship with these game publishers without a license agreement. These game publishers may unilaterally choose to discontinue their relationship with the Company, thereby preventing us from offering experiences on our platform using their game titles, as the case may be. Should those game publishers choose not to allow us to offer experiences involving their respective game titles to our users, the popularity of our amateur city leagues, tournaments and competitions may decline and the number of our gamers may decrease, which could materially and adversely affect our results of operations and financial condition.

If we fail to keep our existing gamers highly engaged, to acquire new gamers, to successfully implement a direct to consumer model for our gaming community, our business, profitability and prospects may be adversely affected.

Our success depends on our ability to maintain and grow the number of amateur gamers attending and participating in our in-person and online tournaments and competitions, and using our gaming platform, and keeping our gamers highly engaged. Of particular importance is the successful deployment and expansion of our direct to consumer model to our gaming community for purposes of creating predictable recurring revenues.

In order to attract, retain and engage amateur gamers and remain competitive, we must continue to develop and expand our city leagues, including internationally, produce engaging tournaments and competitions, successfully license the newest “hit” esports games and titles, implement new technologies and strategies, improve features of our gaming platform and stimulate interactions in our gamer community.

A decline in the number of our amateur gamers in our ecosystem may adversely affect the engagement level of our gamers, the vibrancy of our gamer community, or the popularity of our amateur league play, which may in turn reduce our monetization opportunities, and have a material and adverse effecteffects on our business, financial condition, and results of operations.

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

The success of the Bannerfy Acquisition will depend in part on our ability to realize the anticipated business opportunities from combining the operations of Bannerfy 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 Bannerfy Acquisition, and could harm our financial performance. If we are unable to ~~attract and retain,~~successfully or ~~convert gamers into direct to consumer-based paying gamers, our revenues may decline, and our results~~timely integrate the operations of ~~operations and financial condition may suffer.~~

~~We cannot assure you that our online and in person gaming platform will remain sufficiently popular~~Bannerfy with amateur gamers to offset the costs incurred to operate and expand it. It is vital to our operations that we remain sensitive and responsive to evolving gamer preferences and offer first-tier esports game content that attracts our amateur gamers. We must also keep providing amateur gamers with new features and functions to enable superior content viewing, and social interaction. Further, we will need to continue to develop and improve our gaming platform and to enhance our brand awareness, which may require us to incur substantial costs and expenses. If such increased costs and expenses do not effectively translate into an improved gamer experience and direct to consumer-based, long-term engagement, our results of operations may be materially and adversely affected.

~~-34-~~

~~Table of Contents~~

The ability to grow our business is dependent in part on the success and availability of mass media channels developed by third parties, as well as our ability to develop commercially successful content, and amateur tournaments and competitions.

The success of our business is driven in part by the commercial success and adequate supply of third-party mass media channels for which we may distribute our content, amateur league tournaments and competitions, including Twitch, YouTube and ESL.tv. Our success also depends on our ability to accurately predict which channels and platforms will be successful with the esports gaming community, our ability to develop commercially successful content and distribute via SLG.TV, which is presently available on Twitch, amateur tournaments and competition for these channels and gaming platforms and our ability to effectively manage the transition of our gamers from one generation or demographic to the next. Additionally, we may enter into certain exclusive licensing arrangements that affect our ability to deliver or market our amateur gaming tournaments and competitions on certain channels and platforms. A channel or platform may not succeed as expected or new channels or platforms may take market share and gamers away from platforms for which we have devoted significant resources. If demand for the channels or platforms for which we are developing amateur tournaments or competitions is lower than our expectations, we may be unable to fully recover the investments we have made, and our financial performance may be harmed. Alternatively, a channel or platform for which we have not devoted significant resources could be more successful than we initially anticipated, causing us to not be able to take advantage of meaningful revenue opportunities.

~~Our business is subject to risks generally associated with the entertainment industry.~~

Our business is subject to risks that are generally associated with the entertainment industry, many of which are beyond our control. These risks could negatively impact our operating results and include the popularity, price to play, and timing of release of our esports licensed games, economic conditions that adversely affect discretionary consumer spending, changes in gamer demographics, the availability and popularity of other forms of entertainment, and critical reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted.

~~If we fail to maintain and enhance our brand or if we incur excessive expenses in this effort, our business, results of operations and prospects may be materially and adversely affected.~~

We believe that maintaining and enhancing our brand is of significant importance to the success of our business. A well-recognized brand is important to increasing the number of esports gamers and the level of engagement of our overall gaming community which is critical in enhancing our attractiveness to advertisers and sponsors. Since we operate in a highly competitive market, brand maintenance and enhancement directly affect our ability to maintain and enhance our market position.

Although we have developed our brand and amateur tournaments and competitions through word of mouth referrals, key strategic partners and our esports game publisher licensors, as we expand, we may conduct various marketing and brand promotion activities using various methods to continue promoting our brand. We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect we expect.

In addition, any negative publicity in relation to our league tournaments or competitions, or operations, regardless of its veracity, could harm our brands and reputation. Negative publicity or public complaints from gamers may harm our reputation, and if complaints against us are not addressed to their satisfaction, our reputation and our market position could be significantly harmed, which may materially and adversely affect our business, results of operations and prospects.

Negative gamer perceptions about our brand, gaming platform, amateur city leagues, tournaments or competitions and/or business practices may damage our business and increase the costs incurred in addressing gamer concerns.

Esports gamer expectations regarding the quality, performance and integrity of our amateur city league tournaments and competitions are high. Esports gamers may be critical of our brand, gaming platform, amateur city leagues, tournaments or competitions and/or business practices for a wide variety of reasons. These negative gamer reactions may not be foreseeable or within our control to manage effectively, including perceptions about gameplay fairness, negative gamer reactions to game content via social media or other outlets, components and services, or objections to certain of our business practices. Negative gamer sentiment about our business practices also can lead to investigations from regulatory agencies and consumer groups, as well as litigation, which, regardless of their outcome, may be costly, damaging to our reputation and harm our business.

~~Actual or threatened epidemics, pandemics, outbreaks, or other public health crises may adversely affect our business.~~

Our business could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the recent outbreak of novel coronavirus (COVID-19). The risk, or public perception of the risk, of a pandemic or media coverage of infectious diseases could cause a decrease to the attendance of our in person gaming experiences, or cause certain of our partners, such as Wanda Theaters in China, to avoid holding in person events. Moreover, an epidemic, pandemic, outbreak or other public health crisis, such as COVID-19, could cause members of our Action Squad, in whom we rely to manage the logistics of our in person experiences, or on-site employees of partners to avoid any involvement with our in person experiences or other events, which would adversely affect our ability to hold such events. The ultimate extent of the impact of any epidemic, pandemic or other health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among others. These and other potential impacts of an epidemic, pandemic or other health crisis, such as COVID-19, could therefore adversely affect our business, financial condition and results of operations.

~~-35-~~

~~Table of Contents~~

~~Technology changes rapidly in our business and if we fail to anticipate or~~successfully implement new technologies or adopt new business strategies, technologies or methods, the quality, timeliness and competitiveness of our amateur city leagues, tournaments or competition may suffer.

Rapid technology changes in the esports gaming market require us to anticipate, sometimes years in advance, which technologies we must develop, implement and take advantage of in order to be and remain competitive in the esports gaming market. We have invested, and in the future may invest, in new business strategies including a direct to consumer model, technologies, products, or games or first-tier game titles to continue to persistently engage the amateur gamer and deliver the best online and in person gaming experience. Such endeavors may involve significant risks and uncertainties, and no assurance can be given that the technology we choose to adopt and the features that we pursue will be successful. If we do not successfully implement these new technologies, our reputation may be materially adversely affected and our financial condition and operating results may be impacted. We also may miss opportunities to adopt technology, or develop amateur city leagues, tournaments or competitions that become popular with gamers, which could adversely affect our financial results. It may take significant time and resources to shift our focus to such technologies, putting us at a competitive disadvantage.

Our development process usually starts with particular gamer experiences in mind, and a range of technical development and feature goals that we hope to be able to achieve. We may not be able to achieve these goals, or our competitors may be able to achieve them more quickly and effectively than we can based on having greater operating capital and personnel resources. If we cannot achieve our technology goals within the original development schedule, then we may delay their release until these goals can be achieved, which may delay or reduce revenue and increase our development expenses. Alternatively, we may be required to significantly increase the resources employed in research and development in an attempt to accelerate our development of new technologies, either to preserve our launch schedule or to keep up with our competitors, which would increase our development expenses.

~~We may experience security breaches and cyber threats.~~

We continually face cyber risks and threats that seek to damage, disrupt or gain access to our networks and our gaming platform, supporting infrastructure, intellectual property and other assets. In addition, we rely on technological infrastructure, including third party cloud hosting and broadband, provided by third party business partners to support the in person and online functionality of our gaming platform. These business partners are also subject to cyber risks and threats. Such cyber risks and threats may be difficult to detect. Both our partners and we have implemented certain systems and processes to guard against cyber risks and to help protect our data and systems. However, the techniques that may be used to obtain unauthorized access or disable, degrade, exploit or sabotage our networks and gaming platform change frequently and often are not detected. Our systems and processes, and the systems and processes of our third-party business partners, may not be adequate. Any failure to prevent or mitigate security breaches or cyber risks, or respond adequately to a security breach or cyber risk, could result in interruptions to our gaming platform, degrade the gamer experience, cause gamers to lose confidence in our gaming platform and cease utilizing it, as well as significant legal and financial exposure. This could harm our business and reputation, disrupt our relationships with partners and diminish our competitive position.

Successful exploitation of our networks and gaming platform can have other negative effects upon the gamer experience we offer. In particular, the virtual economies that exist in certain of our licensed game publishers’ games are subject to abuse, exploitation and other forms of fraudulent activity that can negatively impact our business. Virtual economies involve the use of virtual currency and/or virtual assets that can be used or redeemed by a player within a particular online game or service.

~~-36-~~

~~Table of Contents~~

Our business could be adversely affected if our data privacy and security practices are not adequate, or perceived as being inadequate, to prevent data breaches, or by the application of data privacy and security laws generally.

In the course of our business, we may collect, process, store and use gamer and other information, including personally identifiable information, passwords and credit card information, the latter of which is subject to PCI-DSS compliance. Although we take measures to protect this information from unauthorized access, acquisition, disclosure and misuse, our security controls, policies and practices may not be able to prevent the improper or unauthorized access, acquisition or disclosure of such information. The unauthorized access, acquisition or disclosure of this information, or a perception that we do not adequately secure this information could result in legal liability, costly remedial measures, governmental and regulatory investigations, harm our profitability and reputation and cause our financial results to be materially affected. In addition, third party vendors and business partners receive access to information that we collect. These vendors and business partners may not prevent data security breaches with respect to the information we provide them or fully enforce our policies, contractual obligations and disclosures regarding the collection, use, storage, transfer and retention of personal data. A data security breach of one of our vendors or business partners could cause reputational harm to them and/or negatively impact our ability to maintain the credibility of our gamer community.

Data privacy, data protection, localization, security and consumer-protection laws are evolving, and the interpretation and application of these laws in the United States, Europe (including compliance with the General Data Protection Regulation), and elsewhere often are uncertain, contradictory and changing. It is possible that these laws may be interpreted or applied in a manner that is averse to us or otherwise inconsistent with our practices, which could result in litigation, regulatory investigations and potential legal liability or require us to change our practices in a manner adverse to our business. As a result, our reputation and brand may be harmed, we could incur substantial costs, and we could lose both gamers and revenue.

We depend on servers to operate our games with online features and our proprietary online gaming service. If we were to lose server functionality for any reason, our business may be negatively impacted.

Our business relies on the continuous operation of servers, some of which are owned and operated by third parties. Although we strive to maintain more than sufficient server capacity, and provide for active redundancy in the event of limited hardware failure, any broad-based catastrophic server malfunction, a significant service-disrupting attack or intrusion by hackers that circumvents security measures, a failure of disaster recovery service or the failure of a company on which we are relying for server capacity to provide that capacity for whatever reason could degrade or interrupt the functionality of our platform, and could prevent the operation of our platform for both in-person and online gaming experiences.

We also rely on networks operated by third parties to support content on our platform, including networks owned and operated by game publishers. An extended interruption to any of these services could adversely affect the use of our platform, which would have a negative impact on our business.

~~Further, insufficient server capacity could also negatively impact our business. Conversely, if we overestimate the amount of server capacity required by~~ our business, we may incur ~~additional operating costs.~~

~~Our online gaming platform~~unanticipated liabilities and ~~games offered through our gaming platform may contain defects.~~

~~Our online gaming platform and~~be unable to realize the games offered through our gaming platform are extremely complex and are difficult to develop and distribute. We have quality controls in place to detect defects in our gaming platform before they are released. Nonetheless, these quality controls are subject to human error, overriding, and reasonable resource or technical constraints. Further, we have not undertaken independent third-party testing, verification or analysis of our gaming platform and associated systems and controls. Therefore, our gaming platform and quality controls and preventative measures we have implemented may not be effective in detecting all defects in our gaming platform. In the event a significant defect in our gaming platform and associated systems and controls is realized, we could be required to offer refunds, suspend the availability of our city league competitionsrevenue growth, synergies and other ~~gameplay, or expend significant resources to cure the defect, each of which could significantly harm our business and operating results.~~

~~-37-~~

~~Table of Contents~~

We may experience system failures, outages and/or disruptions of the functionality of our platform. Such failures, delays and other problems could harm our reputation and business, cause us to lose customers and expose us to customer liability.

We may experience system failures, outages and/or disruptions of our infrastructure, including information technology system failures and network disruptions, cloud hosting and broadband availability at in person and online experiences. Our operations could be interrupted or degraded by any damage to or failure of:

●

~~our computer software or hardware, or our customers’ or suppliers’ computer software or hardware;~~

●

~~our network, our customers’ networks or our suppliers’ networks; or~~

●

~~our connections and outsourced service arrangements with third parties.~~

●

~~Our systems and operations are also vulnerable to damage or interruption from:~~

●

~~power loss, transmission cable cuts and other telecommunications and utility failures;~~

●

~~hurricanes, fires, earthquakes, floods and other natural disasters~~

●

~~a terrorist attack in the U.S. or in another country in which we operate;~~

●

~~interruption of service arising from facility migrations, resulting from changes in business operations including acquisitions and planned data center migrations;~~

●

~~computer viruses or software defects;~~

●

~~loss or misuse of proprietary information or customer data that compromises security, confidentiality or integrity; or~~

●

~~errors by our employees or third-party service providers.~~

From time to time in the ordinary course of our business, our network nodes and other systems experience temporary outages. As a means of ensuring continuity in the services we provide to our community and partners, we have invested in system redundancies via partnerships with industry leading cloud service providers, proactive alarm monitoring and other back-up infrastructure, though we cannot assure you that we will be able to re-route our services over our back-up facilities and provide continuous service to customers in all circumstances without material degradation. Because many of our services play a critical role for our community and partners, any damage to or failure of the infrastructure we rely on could disrupt or degrade the operation of our network, our platform and the provision of our services and result in the loss of current and potential community members and/or partners and harm our ability to conduct normal business operations.

We use third-party services and technologies in connection with our business, and any disruption to the provision of these services and technologies to us could result in negative publicity and a slowdown in the growth of our users, which could materially and adversely affect our business, financial condition and results of operations.

Our business partially depends on services provided by, and relationships with, various third parties, including cloud hosting and broadband providers, among others. To this end, when our cloud hosting and broadband vendors experience outages, our esports gaming services will be negatively impacted and alternative resources will not be immediately available. In addition, certain third-party software we use in our operations is currently publicly available free of charge. If the owner of any such software decides to charge users or no longer makes the software publicly available, we may need to incur significant costs to obtain licensing, find replacement software or develop it on our own. If we are unable to obtain licensing, find or develop replacement software at a reasonable cost, or at all, our business and operations may be adversely affected.

~~-38-~~

~~Table of Contents~~

We exercise no control over the third-party vendors that we rely upon for cloud hosting, broadband and software service. If such third parties increase their prices, fail to provide their services effectively, terminate their service or agreements or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations.

~~Growth and engagement of our gamer community depends upon effective interoperability with mobile operating systems, networks, mobile devices and standards that we do not control.~~

We make our services available across a variety of mobile operating systems and devices. We are dependent on the interoperability of our services with popular mobile devices and mobile operating systems that we do not control, such as Android and iOS. Any changes in such mobile operating systems or devices that degrade the functionality of our services or give preferential treatment to competitive services could adversely affect usage of our services. In order to deliver high quality services, it is important that our services work well across a range of mobile operating systems, networks, mobile devices and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing services that operate effectively with these operating systems, networks, devices and standards. In the event that it is difficult for our users to access and use our services, particularly on their mobile devices, our user growth and user engagement could be harmed, and our business and operating results could be adversely affected.

Our business depends substantially on the continuing efforts of our executive officers, key employees and qualified personnel, and our business operations may be severely disrupted if we lose their services.

Our future success depends substantially on the continued efforts of our executive officers and key employees. If one or more of our executive officers or key employees were unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner, or at all. Since the esports gaming industry is characterized by high demand and intense competition for talents, we cannot assure you that we will be able to attract or retain qualified staff or other highly skilled employees. In addition, as the Company is relatively young, our ability to train and integrate new employees into our operations may not meet the growing demands of our business which may materially and adversely affect our ability to grow our business and hence our results of operations.

If any of our executive officers and key employees terminates their services with us, our business may be severely disrupted, our financial condition and results of operations may be materially and adversely affected and we may incur additional expenses to recruit, train and retain qualified personnel. If any of our executive officers or key employees joins a competitor or forms a competing company, we may lose gamers, know-how and key professionals and staff members. Certain of our executive officers and key employees have entered into a non-solicitation and non-competition agreements with us. However, certain provisions under the non-solicitation and non-competition agreement may be deemed legally invalid or unenforceable. If any dispute arises between our executive officers and us, we cannot assure you that we would be able to enforce these non-compete agreements.

~~Our business is subject to regulation, and changes in applicable regulations may negatively impact our business.~~

We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet. In addition, laws and regulations relating to user privacy, data collection, retention, electronic commerce, virtual items and currency, consumer protection, content, advertising, localization, and information security have been adopted or are being considered for adoption by many jurisdictions and countries throughout the world. These laws could harm our business by limiting the products and services we can offer consumers or the manner in which we offer them. The costs of compliance with these laws may increase in the future as a result of changes in interpretation. Furthermore, any failure on our part to comply with these laws or the application of these laws in an unanticipated manner may harm our business and result in penalties or significant legal liability.

In addition, we include modes in our gaming platform that allow players to compete against each other. Although we structure and operate these skill-based competitions with applicable laws in mind, our skill-based competitions in the future could become subject to evolving rules and regulations and expose us to significant liability, penalties and reputational harm.

~~-39-~~

~~Table of Contents~~

~~Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations.~~

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could affect the tax treatment of our earnings and adversely affect our operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, on December 22, 2017, President Trump signed tax legislation into law, commonly referred to as the Tax Cuts and Jobs Act of 2017, that contains many significant changes to the U.S. tax laws. The new legislation reduced the corporate income tax rate from 34% to 21% effective January 1, 2018, causing all of our deferred income tax assets and liabilities, including NOLs, to be measured using the new rate and which value is reflected in the valuation of these assets as of December 31, 2017. As a result, the value of our deferred tax assets decreased by approximately $4.3 million and the related valuation allowance has been reduced by the same amount. Our analysis and interpretation of this legislation is ongoing. Given the full valuation allowance provided for net deferred tax assets for the periods presented herein, the change in tax law did not have a material impact on our financial statements provided herein. There may, however, be additional tax impacts identified in subsequent fiscal periods in accordance with subsequent interpretive guidance issued by the SEC or the Internal Revenue Service. Further, there may be other material adverse effectsanticipated benefits resulting from the ~~legislation that we have not yet identified. No estimated tax provision has been recorded in the financial statements included herein for tax attributes that are incomplete or subject to change.~~

The foregoing items could have a material adverse effect on our business, cash flow, financial condition or results of operations. In addition, it is unclear how these U.S. federal income tax changes will affect stateBannerfy Acquisition, and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. The impact of this tax legislation on holders of our common stock is also uncertain and could be adverse. We urge our stockholders and investors to consult with our legal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding our common stock.

Our online activities are subject to various laws and regulations relating to privacy and child protection, which, if violated, could subject us to an increased risk of litigation and regulatory actions.

In addition to our gaming platform, we use third-party applications, websites, and social media platforms to promote our amateur tournaments and competitions and engage gamers, as well as monitor and collect certain information about gamers in our online forums. A variety of laws and regulations have been adopted in recent years aimed at protecting children using the internet such as the Children’s Online Privacy and Protection Act of 1998 (“COPPA”). COPPA sets forth, among other things, a number of restrictions on what website operators can present to children under the age of 13 and what information can be collected from them. COPPA is of particular concern to us, and in an effort to minimize our risk of potential exposure, we retained a COPPA expert as a consultant and have posted a compliant privacy policy, terms of use and various other policies on our website. We undertake significant effort to implement certain precautions to ensure that access to our gaming platform for competitive gameplay is COPPA compliant. Despite our efforts, no assurances can be given that such measures will be sufficient to completely avoid exposure and COPPA violations, any of which could expose us to significant liability, penalties, reputational harm and loss of revenue, among other things.

~~The laws and regulations concerning data privacy are continually evolving. Failure to comply with these laws and regulations could harm our business.~~

Consumers are able to play our licensed game titles online, using our platform. We collect and store information about our consumers both personally identifying and non-personally identifying information. Numerous federal, state and international laws address privacy, data protection and the collection, storing, sharing, use, disclosure and protection of personally identifiable information and other user data. Numerous states already have, and are looking to expand, data protection legislation requiring companies like ours to consider solutions to meet differing needs and expectations of creators and attendees. Outside the United States, personally identifiable information and other user data is increasingly subject to legislation and regulations in numerous jurisdictions around the world, the intent of which is to protect the privacy of information that is collected, processed and transmitted in or from the governing jurisdiction. Foreign data protection, privacy, information security, user protection and other laws and regulations are often more restrictive than those in the United States. In particular, the European Union and its member states traditionally have taken broader views as to types of data that are subject to privacy and data protection laws and regulations and have imposed greater legal obligations on companies in this regard. For example, in April 2016, European legislative bodies adopted the General Data Protection Regulation (“GDPR”), which became effective on May 25, 2018. The GDPR applies to any company established in the European Union as well as to those outside of the European Union if they collect and use personal data in connection with the offering of goods or services to individuals in the European Union or the monitoring of their behavior. The GDPR enhances data protection obligations for processors and controllers of personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of information, mandatory data breach notification requirements and onerous new obligations on service providers. Non-compliance with the GDPR may result in monetary penalties of up to €20 million or 4% of annual worldwide revenue, whichever is higher. In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services. The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of personal data could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions in which we operate. The European Commission is also currently negotiating a new ePrivacy Regulation that would address various matters, including provisions specifically aimed at the use of cookies to identify an individual’s online behavior, and any such ePrivacy Regulation may provide for new compliance obligations and significant penalties. Any of these changes to European Union data protection law or its interpretation could disrupt and/or harm our business.

~~-40-~~

~~Table of Contents~~

Further, following a referendum in June 2016 in which voters in the United Kingdom approved an exit from the European Union, the United Kingdom government has initiated a process to leave the European Union, which has created uncertainty with regard to the regulation of data protection in the United Kingdom. In particular, although a Data Protection Bill designed to be consistent with the GDPR is pending in the United Kingdom’s legislative process, it is unclear whether the United Kingdom will enact data protection laws or regulations designed to be consistent with the GDPR and how data transfers to and from the United Kingdom will be regulated. The interpretation and application of many privacy and data protection laws are, and will likely remain, uncertain, and it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or product features. Although player interaction on our platform is subject to our privacy policies, end user license agreements (“EULAs”), and terms of service, if we fail to comply with our posted privacy policies, EULAs, or terms of service, or if we fail to comply with existing privacy-related or data protection laws and regulations, it could result in proceedings or litigation against us by governmental authorities or others, which could result in fines or judgments against us, damage our reputation, impact our financial condition and/or harm our business.

In addition to government regulation, privacy advocacy and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us. Any inability to adequately address privacy, data protection and data security concerns or comply with applicable privacy, data protection or data security laws, regulations, policies and other obligations could result in additional cost and liability to us, damage our reputation, inhibit sales and harm our business. Further, our failure, and/or the failure by the various third-party service providers and partners with which we do business, to comply with applicable privacy policies or federal, state or similar international laws and regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in the unauthorized release of personally identifiable information or other user data, or the perception that any such failure or compromise has occurred, could damage our reputation, result in a loss of creators or attendees, discourage potential creators and attendees from trying our platform and/or result in fines and/or proceedings by governmental agencies and/or users, any of which could have an adverse effect on our business, results of operations and financial ~~condition. In addition, given the breadth~~condition could be materially and ~~depth of changes in data protection obligations, ongoing compliance with evolving interpretation~~adversely affected.

Closing of the ~~GDPR and other regulatory requirements requires time and resources and a review of the technology and systems currently in use against the requirements of GDPR and other regulations.~~

The preparation of our financial statements involves the use of good faith estimates, judgments and assumptions, and our financial statements may be materially affected if such good faith estimates, judgments or good faith assumptions proveBannerfy Acquisition is subject to ~~be inaccurate~~.

Financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) typically require the use of good faith estimates, judgments and assumptionsconditions to closing that affect the reported amounts. Often, different estimates, judgments and assumptions could reasonably be used that would have a material effect on such financial statements, and changes in these estimates, judgments and assumptions may occur from period to period over time. Significant areas of accounting requiring the application of management’s judgment include, but are not limited to, determining the fair value of assets, share-based compensation and the timing and amount of cash flows from assets. These estimates, judgments and assumptions are inherently uncertain and, if our estimates were to prove to be wrong, we would face the risk that charges to income or other financial statement changes or adjustments would be required. Any such charges or changes would require a restatement of our financial statements and could harm our business, including our financial condition and results of operations and the price of our securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to an understanding of our financial statements and our business.

A reversal of the U.S. economic recovery and a return to volatile or recessionary conditions in the United States or abroad could adversely affect our business or our access to capital markets in a material manner.

To date, our principal sources of capital used to fund our operations have been the net proceeds we received from sales of equity securities and proceeds received from the issuance of convertible debt, as described herein.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 strategy could be adversely affected by general conditions in the global economy, including conditions that are outside of our control, such as the impact of health and safety concerns from the current outbreak of COVID-19. The most recent global financial crisis caused by COVID-19 resulted in extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in ~~a variety~~the Bannerfy Acquisition being delayed or not consummated and can be terminated in certain circumstances, each of ~~risks to~~which could negatively impact our stock price and future business and ~~could have a material adverse effect on us, including limiting our ability~~operations.

The Bannerfy Acquisition is subject to ~~obtain additional capital from~~conditions to closing as set forth in the ~~capital markets. We could also be adversely affected by such factors as changes in foreign currency rates and weak economic and political conditions in~~Purchase Agreement. In addition, each of the ~~countries~~Company and Bannerfy has the right, in ~~which we operate.~~

~~-41-~~

~~Table~~certain circumstances, to terminate the Purchase Agreement. If the Purchase Agreement is terminated or any of ~~Contents~~

~~From time~~the conditions to ~~time we~~the Bannerfy Acquisition are not satisfied and, where permissible, not waived, the Bannerfy Acquisition will not be consummated. Failure to consummate the Bannerfy Acquisition or any delay in the consummation of the Bannerfy Acquisition or any uncertainty about the consummation of the Bannerfy Acquisition may ~~become involved in legal proceedings.~~

~~From time to time we may become subject to legal proceedings, claims, litigation and government investigations~~adversely affect the Company’s stock price or ~~inquiries, which could be expensive, lengthy, disruptive to normal~~have an adverse impact on the Company’s future business ~~operations and occupy a significant amount of our employees’ time and attention.~~ operations.

In addition, the ~~outcome of any legal proceedings, claims, litigation, investigations or inquiries may be difficult to predict and~~Company could ~~have a material adverse effect on our business, operating results, or financial condition.~~

Our amended and restated bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Pursuant to our amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine shall be a state or federal court located within the State of Delaware, in all cases subject to the court’s having personal jurisdiction over indispensable parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to this provision. The forum selection clause in our amended and restated bylaws may have the effect of discouraging lawsuits against us or our directors and officers and may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Because the applicability of the exclusive forum provision is limited to the extent permitted by law, we believe that the exclusive forum provision would not apply to suits brought to enforce any duty or liability created by the Exchange Act, the Securities, any other claim for which the federal courts have exclusive jurisdiction or ~~concurrent jurisdiction~~ over all suits brought to enforce any duty or liability created by the Securities Act. We note that there is uncertainty as to whether a court would enforce the provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.

~~-42-~~

~~Table of Contents~~

~~Risks Related to Intellectual Property~~

~~We may~~ be subject to ~~claims of infringement of third-party intellectual property rights.~~

~~From time~~litigation related to ~~time, third parties may claim that we have infringed their intellectual property rights. For example, patent holding companies may assert patent claims~~any failure to complete the Bannerfy Acquisition or related to any proceeding commenced against ~~us in~~the Company seeking to require the Company to perform its obligations under the Purchase Agreement.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OFPROCEEDS

None.

ITEM 3.DEFAULTS UPON SENIORSECURITIES

None.

ITEM 4.MINESAFETYDISCLOSURES

Not applicable.

ITEM 5.OTHERINFORMATION

Bannerfy Acquisition

On August 11, 2021, the Company entered into a Share Purchase Agreement (the "Purchase Agreement") with William Roberts, Colin Gillespie, and Robert Pierre (collectively, "Sellers"), pursuant to which ~~they seek~~the Company agreed to ~~monetize patents they have purchased or otherwise obtained. Although we take steps~~purchase, and Sellers agreed to ~~avoid knowingly violating the intellectual property rights of others, it is possible that third parties still may claim infringement.~~

Existing or future infringement claims against us, whether valid or not, may be expensive to defend and divert the attention of our employees from business operations. Such claims or litigation could require us to pay damages, royalties, legal fees and other costs. We also could be required to stop offering, distributing or supporting esports games, our gaming platform or other features or services which incorporate the affected intellectual property rights, redesign products, features or services to avoid infringement, or obtain a license,sell, all of ~~which could be costly~~the issued and ~~harm our business.~~

~~In addition, many patents have been issued that may apply to potential new modes~~outstanding common shares of delivering, playing or monetizing interactive entertainment software products and services, such as those offered on our gaming platform or that we would like to offer in the future. We may discover that future opportunities to provide new and innovative modes of game play and game delivery to gamers may be precluded by existing patents that we are unable to license on reasonable terms.

~~Our technology, content and brands are subject to the threat of piracy, unauthorized copying and other forms of intellectual property infringement.~~

We regard our technology, content and brands as proprietary and take measures to protect our technology, content and brands and other confidential information from infringement. Piracy and other forms of unauthorized copying and use of our technology, content and brands are persistent, and policing is difficult. Further,Bannerfy, Ltd., a company organized under the laws of ~~some countries in which our products are or may be distributed either do not protect our intellectual property rights~~England and Wales ("Bannerfy") for a total purchase price of $7.0 million (the "Purchase Price") (the "Bannerfy Acquisition").

Pursuant to the ~~same extent as~~Purchase Agreement, upon the ~~laws~~consummation of the ~~United States or are poorly enforced. Legal protection~~Bannerfy Acquisition (the "Closing"), the Company will pay to Sellers an initial payment of ~~our rights may be ineffective~~$2.45 million (the "ClosingConsideration"), payable as follows (i) approximately $0.52 million in ~~such countries. In addition, although we take steps to enforce and police our rights, factors such as~~ the ~~proliferation~~form of technology designed to circumvent the protection measures used by our business partners or by us, the availability of broadband access to the Internet, the refusal of Internet service providers or platform holders to remove infringing content in certain instances, and the proliferation of online channels through which infringing product is distributed all have contributed to an expansion in unauthorized copying of our technology, content and brands.

Third parties may register trademarks or domain names or purchase internet search engine keywords that are similar to our registered trademark or pending trademarks, brands or websites, or misappropriate our data and copy our gaming platform, all of which could cause confusion, divert gamers away from our gaming platform and league tournaments, or harm our reputation.

~~Competitors and other third parties may purchase (i) trademarks that are similar to our trademarks~~a cash payment, and (ii) ~~keywords that are confusingly similar to our brands or websites in Internet search engine advertising programs and~~approximately $1.92 million in the ~~header and text~~form of shares of the resulting sponsored links or advertisements in order to divert gamers from us to their websites. Preventing such unauthorized use is inherently difficult. If we are unable to prevent such unauthorized use, competitors and other third parties may continue to drive potential gamers away from our gaming platform to competing, irrelevant or potentially offensive platforms, which could harm our reputation and cause us to lose revenue.

~~We may not be able to prevent others from unauthorized use~~Company's common stock at a price per share of ~~our intellectual property, which could harm our business and competitive position.~~

We regard our registered trademark and pending trademarks, service marks, pending patents, domain names, trade secrets, proprietary technologies and similar intellectual property as critical to our success. We rely on trademark and patent law, trade secret protection and confidentiality and license agreements with our employees and others to protect our proprietary rights.

~~-43-~~

~~Table~~$4.10, the closing price of ~~Contents~~

~~We have invested significant resources to develop our own intellectual property and acquire licenses to use and distribute~~ the intellectual property of others on our gaming platform. Failure to maintain or protect these rights could harm our business. In addition, any unauthorized use of our intellectual property by third parties may adversely affect our current and future revenues and our reputation.

Policing unauthorized use of proprietary technology is difficult and expensive. We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. Further, we require every employee and consultant to execute proprietary information and invention agreements prior to commencing work. Despite our efforts to protect our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property or seek court declarations that they do not infringe upon our intellectual property rights. Monitoring unauthorized use of our intellectual property is difficult and costly, and we cannot assure you that the steps we have taken will prevent misappropriation of our intellectual property. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources.

Our patent and trademark applications may not be granted and our patent and trademark rights, once patents are issued and trademarks are registered, may be contested, circumvented, invalidated or limited in scope, and our patent and trademark rights may not protect us effectively once issued and registered, respectively. In particular, we may not be able to prevent others from developing or exploiting competing technologies and trademarks, which could have a material and adverse effect on our business operations, financial condition and results of operations.

Currently, we have three patent applications pending, one registered trademark and eighteen pending trademark applications, along with licenses from game publishers to utilize their proprietary games. For our pending patent applications and we cannot assure you that we will be granted patents pursuant to our pending applications as well as future patent applications we intend to file. Even if our patent applications succeed, it is still uncertain whether these patents will be contested, circumvented or invalidated in the future. In addition, the rights granted under any issued patents may not provide us with sufficient protection or competitive advantages. The claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours. It is also possible that the intellectual property rights of others will bar us from licensing and from exploiting any patents that issue from our pending applications. Numerous U.S. and foreign issued patents and pending patent applications owned by others exist in the fields in which we have developed and are developing our technology. These patents and patent applications might have priority over our patent applications and could subject our patent applications to invalidation. Finally, in addition to those who may claim priority, any of our pending patent and trademark applications may also be challenged by othersCompany’s common stock on the ~~basis that they are otherwise invalid or unenforceable.~~

~~We may be held liable for information or content displayed on, retrieved from or linked to our gaming platform, or distributed to our users.~~

Our interactive live streaming platform enables gamers to exchange information and engage in various other online activities. Although we require our gamers to register their real name, we do not require user identifications used and displayed during gameplay to contain any real-name information, and hence we are unable to verify the sources of all the information posted by our gamers. In addition, because a majoritydate of the communications on our online and in person gaming platform is conducted in real time, we are unable to examine the content generated by gamers before they are posted or streamed. Therefore, it is possible that gamers may engage in illegal, obscene or incendiary conversations or activities, including publishing of inappropriate or illegal content that may be deemed unlawful. If any content on our platform is deemed illegal, obscene or incendiary, or if appropriate licenses and third-party consents have not been obtained, claims may be brought against us for defamation, libel, negligence, copyright, patent or trademark infringement, other unlawful activities or other theories and claims based on the nature and content of the information delivered on or otherwise accessed through our platform. Moreover, the costs of compliance may continue to increase when more content is made available on our platformPurchase Agreement, as ~~a result of our growing base of gamers, which may adversely affect our results of operations.~~

~~-44-~~

~~Table of Contents~~

Intensified government regulation of the Internet industry could restrict our ability to maintain or increase the level of traffic to our gaming platform as well as our ability to capture other market opportunities.

The Internet industry is increasingly subject to strict scrutiny. New laws and regulations may be adopted from time to time to address new issues that come to the authorities’ attention. We may not timely obtain or maintain all the required licenses or approvals or make all the necessary filings in the future. We also cannot assure you that we will be able to obtain the required licenses or approvals if we plan to expand into other Internet businesses. If we fail to obtain or maintain any of the required licenses or approvals or make the necessary filings, we may be subject to various penalties, which may disrupt our business operations or derail our business strategy, and materially and adversely affect our business, financial condition and results of operations.

~~Risks Related to our Common Stock~~

~~Although our common stock is listed~~reported on the Nasdaq Capital ~~Market, our shares are likely~~Market.

In accordance with the Purchase Agreement, all remaining portions of the Purchase Price after the payment of the Closing Consideration, up to ~~be thinly traded for some time and an active market may never develop.~~

~~Although our common stock is listed on the Nasdaq Capital Market,~~ ~~it is likely that initially there~~approximately $4.55 million (the "ContingentConsideration"), will be ~~a very limited trading market~~payable upon the achievement of certain revenue and gross profit thresholds for ~~our common stock,~~the remainder of the 2021 fiscal year, and ~~we cannot ensure that a robust trading market will ever develop or be sustained. Our shares~~each of ~~common stock may be thinly traded,~~the fiscal years ending December 31, 2022, and ~~the price, if traded, may not reflect our actual or perceived value. There can be no assurance that there will be an active market for our shares of common stock~~December 31, 2023. The Contingent Consideration is payable in the ~~future. The market liquidity will be dependent on the perception~~form of ~~our operating business, competitive forces, state of the esports gaming industry, growth rate~~both cash and becoming cash flow profitable on a sustainable basis, among other things. We may, in the future, take certain steps, including utilizing investor awareness campaigns, press releases, road shows, and conferences to increase awareness of our business and any steps that we might take to bring us to the awareness of investors may require we compensate financial public relations firms with cash and/or stock. There can be no assurance that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business and trading may be at an inflated price relative to the performance of our company due to, among other things, availability of sellers of our shares. If a market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms or clearing firms may not be willing to effect transactions in the securities or accept our shares for deposit in an account. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of low-priced shares of common stock, as ~~collateral for any loans.~~

~~Our stock price may~~more specifically set forth in the Purchase Agreement.

The foregoing description of the Purchase Agreement does not purport to be ~~volatile,~~complete and ~~you could lose all or part~~is qualified in its entirety by the terms and conditions of ~~your investment.~~

~~The trading price of our common stock following our offering may fluctuate substantially and may be higher or lower than~~ the ~~initial public offering price. This may be especially true for companies with~~Purchase Agreement, a ~~small public float. The trading price of our common stock following our offering will depend on several factors, including those described in this “Risk Factors” section, many~~copy of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock since you might be unable to sell your shares at or above the price you paid in the offering. Factors that could cause fluctuations in the trading price of our common stock include:

●

~~changes to our industry, including demand and regulations;~~

●

~~we may not be able to compete successfully against current and future competitors;~~

●

~~competitive pricing pressures;~~

●

~~our ability to obtain working capital financing as required;~~

●

~~additions or departures of key personnel;~~

~~-45-~~

~~Table of Contents~~

●

~~sales of our common stock;~~

●

~~our ability to execute our business plan;~~

●

~~operating results that fall below expectations;~~

●

~~loss of any strategic relationship, sponsor or licensor;~~

●

~~any major change in our management;~~

●

~~changes in accounting standards, procedures, guidelines, interpretations or principals; and~~

●

~~economic, geo-political and other external factors.~~

In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously affect the market price of our common stock, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our stock shortly following our offering. If the market price of our common stock after our offering does not exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

In addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigations have often been instituted against these companies. Litigation of this type, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments.

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our common stock could be negatively affected.

Any trading market for our common stock will be influenced in part by any research reports that securities industry analysts publish about us. We may not obtain any future research coverage by securities industry analysts. In the event we are covered by research analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our common stock could be negatively affected.

~~We have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment will likely be limited to the value of our common stock.~~

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

~~-46-~~

~~Table of Contents~~

~~Since we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, stock price appreciation, if any, will be your sole source of gain.~~

We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, appreciation, if any, in the market price of our common stock will be your sole source of gain for the foreseeable future.

Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which would rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock.

In the future, we may attempt to increase our capital resources by offering debt securities. In the event of a bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our common stock. Moreover, if we issue preferred stock in the future, the holders of such preferred stock could be entitled to preferences over holders of common stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred securities in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our common stock must bear the risk that any such future offerings we conduct or borrowings we make may adversely affect the level of return they may be able to achieve from an investment in our common stock.

We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies,” including:

●

~~not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act;~~

●

~~reduced disclosure obligations regarding executive compensation in our periodic reports and annual report on Form 10-K; and~~

●

~~exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.~~

~~-47-~~

~~Table of Contents~~

W~~e could be an emerging growth company for up to five years following the completion of our offering. Our status~~is filed as an ~~emerging growth company will end as soon as any of the following takes place:~~

●

~~the last day of the fiscal year in which we have more than $1.07 billion in annual revenue;~~

●

~~the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates;~~

●

~~the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or~~

●

~~the last day of the fiscal year ending after the fifth anniversary of the completion of our offering.~~

~~We cannot predict if investors will find our common stock less attractive if we choose~~exhibit to rely on the exemptions afforded emerging growth companies. If some investors find our common stock less attractive because we rely on any of these exemptions, there may be a less active trading market for our common stock and the market price of our common stock may be more volatile.

~~Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use~~ this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

~~-48-~~

~~Table of Contents~~

Because of our status as an emerging growth company, you will not be able to depend on any attestation from our independent registered public accounting firm as to our internal control over financial reporting for the foreseeable future.

Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an “emerging growth company” as defined in the JOBS Act. Accordingly, you will not be able to depend on any attestation concerning our internal control over financial reporting from our independent registered public accounting firm for the foreseeable future. Subsequent to the time frame above, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act until such time that the Company becomes an “accelerated filer,” as defined by the SEC.

~~We have granted, and may continue to grant, share incentive awards, which may result in increased share-based compensation expenses.~~

We adopted our Amended and Restated 2014 Stock Option and Incentive Plan (the “2014 Plan”) in October 2014, for purposes of granting share-based compensation awards to employees, directors and consultants to incentivize their performance and align their interests with ours. We account for compensation costs for all share-based awards issued under the 2014 Plan using a fair-value based method and recognize expenses in our statements of comprehensive loss in accordance with GAAP. Under the 2014 Plan, we are authorized to grant options to purchase shares of common stock of our Company, restricted share units to receive shares of common stock and restricted shares of common stock. For the six months ended June 30, 2020 and 2019, we recorded share-based compensation expense of $1.1 million~~and $4.5 million, respectively, primarily related to issuances and vesting of awards under the 2014 Plan.~~

We believe the granting of share incentive awards is important to our ability to attract and retain employees, and we will continue to grant share incentive awards to employees in the future. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations.

~~-49-~~

~~Table of Contents~~

Report.

~~ITEM 2.~~U~~NREGISTERED SALES OF EQUITY SECURITIES AND USE OFPROCEEDS~~

~~None.~~

~~ITEM 3.~~D~~EFAULTS UPON SENIORSECURITIES~~

~~None.~~

~~ITEM 4.~~M~~INESAFETY DISCLOSURES~~

~~Not applicable.~~

~~ITEM 5.~~O~~THERINFORMATION~~

~~None.~~

~~ITEM 6.~~E~~XHIBITS~~

~~(b)~~

~~Exhibits~~

~~Exhibit No.~~		~~Description~~

-30-

Table of Contents

ITEM 6.EXHIBITS

(b)

Exhibits

Exhibit No.	Description	Incorporation by Reference

2.1	Agreement and Plan of Merger, dated March 9, 2021, by and among Super League Gaming, Inc., SLG Merger Sub II, Inc., and Mobcrush, Inc.	Exhibit 2.1 to the Current Report on Form 8-K, filed March 11, 2021.

2.2	Amendment No. 1 to Agreement and Plan of Merger by and between Super League Gaming, Inc., and Mobcrush Streaming, Inc., dated April 20, 2021	Exhibit 10.1 to the Current Report on Form 8-K, filed April 21, 2021.

10.1	Form of Registration Rights Agreement	Exhibit 10.1 to the Current Report on Form 8-K, filed March 11, 2021.

10.2	Form of Voting Agreement	Exhibit 10.2 to the Current Report on Form 8-K, filed March 11, 2021.

10.3	Form of Securities Purchase Agreement, dated March 19, 2021	Exhibit 10.1 to the Current Report on Form 8-K, filed March 23, 2021.

10.4	Share Purchase Agreement, by and between Super League Gaming, Inc. and Bannerfy Ltd., dated August 11, 2021.

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	The instance document does not appear in the Interactive Data File because its XBRL ~~Instance Document~~tags are embedded within the Inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~-50-~~

~~Table of Contents~~

S~~IGNATURES~~

-31-

Table of Contents

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	By	/s/ Ann Hand
		Ann Hand President and Chief Executive Officer (Principal Executive Officer)

	By	By	/s/ Clayton Haynes
			Clayton Haynes Chief Financial Officer (Principal Financial and Accounting Officer)
Date: August ~~12, 2020~~16, 2021

-32-

~~-51-~~

			Page

PART I.		FINANCIAL INFORMATION

	Item 1.	Consolidated Condensed Financial Statements		1

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16	15

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29	28

	Item 4.	Controls and Procedures		29

PART II.		OTHER INFORMATION

	Item 1.	Legal Proceedings		30

	Item 1A.	Risk Factors		30

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50	30

	Item 3.	Defaults Upon Senior Securities	50	30

	Item 4.	Mine Safety Disclosures	50	30

Item 5.	Other Information		30

Item 6.	Exhibits		31

	June 30,	December 31,
	2020	2019
ASSETS	(Unaudited)
Current Assets
Cash and cash equivalents	$6,241,000	$8,442,000
Accounts receivable	497,000	293,000
Prepaid expenses and other current assets	1,361,000	924,000
Total current assets	8,099,000	9,659,000
Property and Equipment, net	186,000	239,000
Intangible and Other Assets, net	1,953,000	1,984,000
Goodwill	2,565,000	2,565,000
Total assets	$12,803,000	$14,447,000

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued expenses	$850,000	$853,000
Deferred revenue	-	151,000
Total current liabilities	850,000	1,004,000

Long-term note payable	1,202,000	-

Total Liabilities	2,052,000	1,004,000

Commitments and Contingencies (Note 7)

Stockholders’ Equity
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding	-	-
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 10,460,696 and 8,573,922 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.	20,000	18,000
Additional paid-in capital	106,237,000	99,237,000
Accumulated deficit	(95,506,000)	(85,812,000)
Total stockholders’ equity	10,751,000	13,443,000
Total liabilities and stockholders’ equity	$12,803,000	$14,447,000

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019

REVENUES	$324,000	$223,000	$567,000	$472,000

COST OF REVENUES	116,000	113,000	233,000	187,000

GROSS PROFIT	208,000	110,000	334,000	285,000

OPERATING EXPENSES
Selling, marketing and advertising	1,256,000	1,167,000	2,529,000	2,139,000
Technology platform and infrastructure	1,685,000	1,291,000	3,590,000	2,453,000
General and administrative	1,826,000	3,157,000	3,922,000	7,334,000
Total operating expenses	4,767,000	5,615,000	10,041,000	11,926,000

NET OPERATING LOSS	(4,559,000)	(5,505,000)	(9,707,000)	(11,641,000)

OTHER INCOME (EXPENSE)
Accrued interest expense	(2,000)	-	(2,000)	(187,000)
Accretion of debt discount	-	-	-	(2,684,000)
Beneficial conversion feature	-	-	-	(7,067,000)
Other	1,000	-	15,000	5,000
Total other income (expense)	(1,000)	-	13,000	(9,933,000)

NET LOSS	$(4,560,000)	$(5,505,000)	$(9,694,000)	$(21,574,000)

Net loss attributable to common stockholders - basic and diluted
Basic and diluted loss per common share	$(0.48)	$(0.65)	$(1.07)	$(3.00)
Weighted-average number of shares outstanding, basic and diluted	9,548,000	8,413,090	9,066,000	7,199,829

	Three Months Ended June 30		Six Months Ended June 30
	2020	2019	2020	2019
Common stock (Shares)
Balance, beginning of period	8,595,742	8,368,833	8,573,922	4,610,109
Initial public offering of common stock, net of issuance costs (Note 6)	-	-	-	2,272,727
Issuance of common stock at $3.50 per share, net of issuance costs (Note 6)	1,825,000	-	1,825,000	-
Automatic conversion of convertible debt to common stock	-	-	-	1,475,164
Common stock issued for Framerate Acquisition (Note 4)	32,936	134,422	32,936	134,422
Stock-based compensation	7,018	-	28,838	10,833
Warrant Exercises	-	66,667	-	66,667
Balance, end of period	10,460,696	8,569,922	10,460,696	8,569,922

Common stock (Amount):
Balance, beginning of period	$18,000	$18,000	$18,000	$14,000
Initial public offering of common stock, net of issuance costs (Note 6)	-	-	-	2,000
Issuance of common stock at $3.50 per share, net of issuance costs (Note 6)	2,000	-	2,000	-
Automatic conversion of convertible debt to common stock	-	-	-	2,000
Balance, end of period	$20,000	$18,000	$20,000	$18,000

Additional paid-in-capital:
Balance, beginning of period	$99,914,000	$94,351,000	$99,237,000	$48,325,000
Initial public offering of common stock, net of issuance costs (Note 6)	-	-	-	22,456,000
Issuance of common stock at $3.50 per share, net of issuance costs (Note 6)	5,951,000	-	5,951,000	-
Automatic conversion of convertible debt to common stock	-	-	-	13,791,000
Beneficial conversion feature	-	-	-	7,067,000
Common stock issued for Framerate Acquisition (Note 4)	-	1,000,000	-	1,000,000
Framerate Earn-Out (Note 4)	-	454,000	-	454,000
Stock-based compensation	372,000	1,773,000	1,049,000	4,485,000
Warrant Exercises	-	20,000	-	20,000
Balance, end of period	$106,237,000	$97,598,000	$106,237,000	$97,598,000

Accumulated Deficit:
Balance, beginning of period	$(90,946,000)	$ (71,202,000)	$(85,812,000)	$(55,133,000)
Net Loss	(4,560,000)	(5,505,000)	(9,694,000)	(21,574,000)
Balance, end of period	(95,506,000)	(76,707,000)	(95,506,000)	(76,707,000)
Total stockholders’ equity	$10,751,000	$20,909,000	$10,751,000	$20,909,000

	June 30, 2020	December 31, 2019
	(Unaudited)
Capitalized software development costs	$2,947,000	$2,363,000
Licenses	-	340,000
Trade name	189,000	189,000
Domain	68,000	68,000
Copyrights and other	361,000	289,000
	3,565,000	3,249,000
Less: accumulated amortization	(1,612,000)	(1,265,000)
Intangible and other assets, net	$1,953,000	$1,984,000

	Three Months				Six Months
	Ended June 30,		Change		Ended June 30,		Change
	2020	2019	$	%	2020	2019	$	%
	(in thousands, except percentage change values)
REVENUES	$324	$223	$101	45%	$567	$472	$95	20%
COST OF REVENUES	116	113	3	3%	233	187	46	25%
GROSS PROFIT	208	110	98	89%	334	285	49	17%
OPERATING EXPENSES
Selling, marketing and advertising	1,256	1,167	89	8%	2,529	2,139	390	18%
Technology platform and infrastructure	1,685	1,291	394	31%	3,590	2,453	1,137	46%
General and administrative	1,826	3,157	(1,331)	(42)%	3,922	7,334	(3,412)	(47)%
Total operating expenses	4,767	5,615	(848)	(15)%	10,041	11,926	(1,885)	(16)%
NET LOSS FROM OPERATIONS	(4,559)	(5,505)	(946)	(17)%	(9,707)	(11,641)	(1,934)	(17)%
OTHER INCOME (EXPENSE), NET	(1)	-	(1)	-%	13	(9,933)	(9,946)	(100)%
NET LOSS	$(4,560)	$(5,505)	$(945)	(17)%	$(9,694)	$(21,574)	$(11,880)	(55)%

	Payments Due by Period (In thousands)
	Total	Less than 1 year	1-3 years	More than 3 years
Insurance premium financing	$724	$724	$-	$-