Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this Quarterly Report on Form 10-Q to "Super League Enterprise, Inc." "Company," "we," "us," "our," or similar references mean Super League Enterprise, Inc. References to the "SEC" refer to the U.S. Securities and Exchange Commission. All references to "Note," followed by a number reference herein, refer to the applicable corresponding numbered footnotes to the condensed financial statements contained elsewhere herein. Percentage changes with an "*" reflect changes greater than 300%.

References to "financial statements," "balance sheets," "statements of comprehensive income (loss)," "statements of cash flows," and "statements of stockholders' equity," refer to the "consolidated financial statements," "consolidated balance sheets," "consolidated statements of comprehensive income (loss)," "consolidated statements of cash flows" and "consolidated statements of stockholders' equity," respectively, of the Company, including the accounts of the Company and its wholly owned subsidiaries, if any. As of December 31, 2025, there were no wholly owned subsidiaries of the Company. The legal entity Mobcrush Streaming, Inc. was dissolved effective May 14, 2025. InPvP, LLC was sold in May 2025 as described at Note 3.

All references to "common stock" refer to the Company's common stock, par value $0.001 per share.

In October 2025, the Company entered into Securities Purchase Agreements (the "PIPE Purchase Agreement") with certain accredited investors), relating to the Company's offering of an aggregate of (a) 332,084 shares (the "PIPE Shares") of the Company's common stock, at a price per share equal to $12.00 and (b) Pre-Funded Warrants to purchase 1,334,584 shares of common stock (the "PIPE Pre-Funded Warrants") at a price per PIPE Pre-Funded Warrant equal to same price as that for PIPE Shares minus $0.00001, and the remaining exercise price of each PIPE Pre-Funded Warrant will equal $0.00001 per share, for gross proceeds to the Company of approximately $20,000,000, before deducting offering costs and expenses (as referenced herein, "October 2025 PIPE")

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed financial statements and the related notes included elsewhere in this interim report. Our condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("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, 2025, as well as in Item II, Part 1A of this Quarterly Report on Form 10-Q (this "Report"). Readers are cautioned not to place undue reliance on these forward-looking statements.

Overview

Super League (Nasdaq: SLE) connects brands with the 3.5 billion-person global gaming population through advertising and branded content programs across gaming and digital media platforms. The Company generates revenue by executing these programs through proprietary interactive formats, creator content, immersive experiences, data-driven insights, and strategic campaign services to improve marketing performance. By translating player behavior into actionable intelligence, Super League serves as a trusted partner that enables brands to more effectively influence consumers who play video games, positioning the Company to capture a greater share of advertising spend over time.

The Company generates revenue from brands and agencies by executing programs targeting U.S. audiences that include (i) mini-games and experiences within Roblox, Minecraft, and Fortnite, (ii) playable and rewarded video ads in mobile and immersive environments, (iii) in-game ads across mobile and PC, (iv) connected TV gaming applications and sponsorships, (v) custom integrations within games, (vi) interactive characters, and (vii) influencer content across social and digital video platforms. An additional emerging revenue source includes participation in revenue generated by select game properties.

Reverse Common Stock Split

On January 16, 2026, the Company filed an amendment (the "2026 Amendment") to the Company's Third Amended Certificate, to effect a reverse stock split of the Company's issued and outstanding shares of common stock at a ratio of 1-for-12 (the "2026 Reverse Split"). The 2026 Amendment became effective on January 23, 2026. As a result of the 2026 Reverse Split, every 12 shares of the Company's issued and outstanding common stock was automatically combined and converted into one issued and outstanding share of common stock.

All references to common stock, warrants to purchase common stock, options to purchase common stock, restricted stock, share data, per share data and related information contained in the financial statements have been retroactively adjusted to reflect the effect of the 2026 Reverse Split (and all other reverse splits described herein) for all periods presented.

Executive Summary

Misfits Transaction

On March 16, 2026, the Company entered into an asset purchase agreement (the "Misfits Asset Purchase Agreement") with Esports Now, LLC ("Misfits"), pursuant to which Misfits agreed to sell certain assets strictly constituting the Misfits Ads assets (the "Misfits Purchased Assets") to the Company (the "Misfits Transaction").

On March 20, 2026, the Company filed a preliminary proxy statement with the SEC, followed by the filing of a definitive proxy statement with the SEC on April 2, 2026 (the "Misfits Proxy Statement"). The Misfits Proxy Statement solicited the approval of the issuance of an aggregate of 1,161,813 shares of common stock to be issued as consideration in connection with the Misfits Transaction (the "Issuance Proposal") by the affirmative vote of a majority of the voting power of the Company's shares present at a special meeting of the Company's stockholders, scheduled for April 30, 2026 (the "Special Meeting").

On April 30, 2026, at the Special Meeting, the Company's stockholders approved the Issuance Proposal. On May 1, 2026 (the "Misfits Closing Date"), the Company and Misfits consummated the Misfits Transaction (the "Misfits Closing").

Misfits Transaction Consideration. At the Misfits Closing, the Company paid the following consideration for the Misfits Purchased Assets: (i) a cash payment in the amount of $1.5 million (the "Misfits Closing Cash Consideration"), (ii) 26,768 shares of common stock (the "Misfits Closing Shares"), (iii) a pre-funded common stock purchase warrant to purchase 509,682 shares of common stock (the "Misfits Pre-Funded Warrant," and the shares issuable upon exercise of the Misfits Pre-Funded Warrant, the "Misfits PFW Shares"), and (iv) a common stock purchase warrant to purchase 536,450 shares of common stock, with an exercise price of $18.00 (the "Misfits Warrant", and the shares issuable upon exercise of the Misfits Warrant, the "Misfits Warrant Shares")(the Misfits Closing Shares, the Misfits PFW Shares, and the Misfits Warrant Shares collectively, the "Misfits Closing Share Consideration"). Pursuant to the terms and subject to the conditions of the Misfits Asset Purchase Agreement, on the one-year anniversary of the Misfits Closing, the Company will pay an additional cash payment in the amount of $300,000 (the "Delayed Cash Payment").

In addition, pursuant to the terms and subject to the conditions of the Misfits Asset Purchase Agreement, on the one-year anniversary of the Misfits Closing, the Company may pay up to an aggregate of (i) $1.2 million in cash (the "Misfits Earnout Cash"), and (ii) 105,571 shares of common stock, or, upon the election of Misfits, Misfits Pre-Funded Warrants to purchase 105,571 shares of common stock (the "Misfits Earnout Shares", and collectively with the Misfits Earnout Cash, the "Misfits Earnout Consideration"). The Misfits Earnout Consideration will be payable to Misfits in connection with: (i) the achievement of certain gross profit milestones for the period beginning on the Misfits Closing Date until the date that is one year from the date of the Misfits Closing; and (ii) the Company's market capitalization as of the one and two year anniversary of the Misfits Closing Date.

The Misfits Warrants are exercisable immediately upon issuance, expire two years from the date of issuance, and have an initial exercise price of $18.00 (the "Initial Exercise Price"), subject to adjustment for any stock splits, stock dividends, recapitalizations, and similar events. The Misfits Warrants also contain a call feature, whereby, after the Company has registered the Misfits Warrant Shares on an effective registration statement filed with the SEC, the Company has the option, but not the obligation, and in the Company's sole and absolute discretion, to purchase the Misfits Warrant from the holder at a price of $0.001 per share of common stock underlying the Misfits Warrant (the "Call Option"), in the event the closing price of the Company's common stock, as listed on the Nasdaq Capital Market, is at or above $18.00 per share for 20 consecutive trading days (the "Call Trigger"). The Company's right to exercise the Call Option will begin on the day immediately following the Call Trigger until the day that is thirty (30) calendar days thereafter, by way of delivery of a notice to exercise the Call Option to the holders of the Misfits Warrants.

The exercise price of the Misfits Pre-Funded Warrant per underlying share of common stock is $0.001. Pursuant to the Misfits Pre-Funded Warrant, a holder will not be entitled to exercise any portion of any Misfits Pre-Funded Warrant that, upon giving effect to such exercise, would cause: (i) the aggregate number of shares of common stock beneficially owned by such holder (together with its affiliates) to exceed 4.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise; or (ii) the combined voting power of the Company's securities beneficially owned by such holder (together with its affiliates) to exceed 4.99% of the combined voting power of all of the Company's securities outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Misfits Pre-Funded Warrant, which percentage may be changed at the holder's election to a higher or lower percentage not in excess of 9.99% upon 61 days' notice to the Company. In addition, in certain circumstances, upon a fundamental transaction, a holder of Misfits Pre-Funded Warrants will be entitled to receive, upon exercise of the Misfits Pre-Funded Warrants, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Misfits Pre-Funded Warrants immediately prior to the fundamental transaction.

The Misfits Purchase Agreement contains representations, warranties and covenants of each of the parties thereto that are customary for transactions of this type.

Brand Partnership Agreement. In connection with the Misfits Closing and the entrance into the Misfits Purchase Agreement, the Company and Misfits entered into an exclusive brand partnership agreement dated May 1, 2026 (the "Brand Partnership Agreement"), pursuant to which Misfits agreed to grant certain preferred rights to the Company for purposes of selling brand partnerships where a third-party brand may be advertised (via sponsorships, marketing, brand endorsements, product placements, brand integrations and other similar associations) in certain games in the Misfits Roblox game portfolio. The initial term of the Brand Partnership Agreement is one year, subject to extension by mutual agreement. The Brand Partnership Agreement may be terminated upon written notice by the parties.

Misfits Director Designee. Pursuant to the terms and conditions of the Misfits Purchase Agreement, at the Misfits Closing, Misfits was granted the right to appoint a designee to the Board of Directors of the Company ("Misfits Board Designee"); provided, however, the Misfits Board Designee must be qualified to serve on a public company's board of directors and meet the requirements of an "independent director" pursuant to the rules and regulations of Nasdaq.

Registration Rights Agreement. In connection with the closing of the Misfits Transaction and the entrance into the Misfits Purchase Agreement, the Company and Misfits entered into a registration rights agreement dated May 1, 2026 (the "Registration Rights Agreement"), pursuant to which the Company agreed to file a registration statement with the SEC on or prior to the 90th calendar day following the Misfits Closing Date, for purposes of registering the Misfits Closing Shares, the Misfits Warrant Shares, and the Misfits PFW Shares (the "Misfits Registration Statement"). The Company agreed to use commercially reasonable efforts to have such Registration Statement declared effective within the time period set forth in the Registration Rights Agreement, and to keep the Registration Statement effective until the date that all registrable securities covered by the Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144.

Other. The closing of the Misfits Transaction and the integration of the Misfits Purchased Assets involves certain risks and uncertainties, including, among other things, risks related to our ability to successfully integrate the Misfits Purchased Assets into our operations; our ability to implement plans, forecasts and other expectations with respect to the Misfits Purchased Assets; our ability to realize the anticipated benefits of the Misfits Transaction, including the possibility that the expected benefits from the Misfits Transaction will not be realized or will not be realized within the expected time period; the achievement of the revenue milestones and payment of the Misfits Earnout Consideration; the outcome of any legal or governmental proceedings related to the Misfits Transaction or otherwise; the negative effects of the announcement of the Misfits Transaction on the market price of our common stock or on our operating results; significant Misfits Transaction costs; unknown liabilities; attracting new customers and maintaining and expanding our existing customer base; our ability to scale and update our platform to respond to customers' needs and rapid technological change; increased competition on our market and our ability to compete effectively; and expansion of our operations and increased adoption of our platform internationally.

In connection with the closing of the Misfits Transaction, pursuant to the terms of the applicable underlying common stock warrant agreements, the exercise price on certain of the common stock purchase warrants issued in connection with the October 2025 PIPE, representing the right to purchase an aggregate 2.7 million shares of common stock, was reset to the floor price, as defined in the underlying common stock purchase agreements, ranging from $4.99 to $6.84 per share, from $12.00 per share.

Acquisition of Let's Bounce, Inc.

In January 2026 ("Bounce Effective Date") the Company acquired Let's Bounce, Inc. ("Bounce"), a marketing technology company focused on enabling scalable, measurable brand engagement inside gaming and UGC environments. The total purchase price for Bounce, which was structured as an asset acquisition, was $200,000, payable as follows: (a) $75,000 at closing; (b) $25,000 on the three-month anniversary of closing; and (c) $100,000 on the six-month anniversary of closing. In addition, pursuant to the terms and subject to the conditions of the asset purchase agreement ("Bounce Asset Purchase Agreement"), up to $325,000 is contingently payable in connection with the achievement of certain net revenue milestones for the Bounce assets acquired during the year ended December 31, 2026 ("Bounce Contingent Consideration") (the "Bounce Acquisition"). The Bounce Acquisition provides the Company with an existing pipeline of opportunities, enabling more efficient in-game marketing programs, the addition of turnkey loyalty solutions to drive advertiser outcomes, and a roadmap to more automated campaign measurement. Refer to Note 4 for additional information.

Investment in Solsten, Inc.

In January 2026, the Company invested $200,000 in Solsten, Inc ("Solsten") an AI-driven audience intelligence company specializing in psychology-based consumer insights, through a Simple Agreement for Future Equity ("SAFE"), which provides the Company with the right to receive equity in a future financing event, subject to the terms and conditions of the SAFE agreement. The SAFE does not represent a current equity ownership interest but rather a forward contract to acquire equity upon the occurrence of specified events, including a qualifying equity financing or liquidity event, at which point the instrument will either convert into preferred stock or entitle the Company to receive the greater of its invested amount or the value of the underlying equity on an as-converted basis. The collaboration expands Super League's ability to deliver differentiated solutions that move beyond traditional demographics toward predictive audience understanding and insights-led campaign design.

Through the partnership, Super League gains select exclusivity to integrate Solsten's proprietary psychographic data and predictive models directly into its campaign planning, creative development, and optimization workflows. Drawing on a proprietary data set built from opt-in assessments from millions of individuals, Super League can identify the underlying motivations and behavioral drivers, such as status orientation or independence, that shape engagement across interactive, social, and linear environments.

Investment in Hide or OOF! Roblox Game

In January 2026, the Company acquired economic and contractual interests in the Roblox digital property commonly referred to as "Hide or OOF!," ("HOO") (formerly known as Hide or Die!) pursuant to an Investment and Brand Partnership Agreement ("HOO Agreement") dated January 5, 2026 ("HOO Effective Date"). HOO is a Top 100 Roblox game (source: Rotrends) that has been visited more than 570 million times in 16 months. The investment reflects a transition from strategy to execution as the Company begins securing ownership positions in cash-generating assets within the gaming content and media economy, establishing a foundation for future digital-asset-based initiatives aligned with owned revenue streams.

Pursuant to the HOO Agreement, the Company transferred total consideration of $202,000 in exchange for certain rights associated with the Hide or OOF! digital property. The consideration consisted of $165,000 in cash and 4,326 shares of the Company's restricted common stock valued at $37,000. In connection with the investment, the Company obtained (i) a fifteen percent (15.0%) equity ownership interest in Hide or OOF!, (ii) a contractual right to receive fifteen percent (15.0%) of Hide or OOF!'s gross revenue, as paid in Robux, post-Roblox split, for the existence of the game, (iii) a contractual right to receive a twelve percent (12.0%) fee on certain direct brand transactions, and (iv) exclusive rights with respect to certain brand partnership opportunities and related placement economics. The agreement also contains a right of first refusal with respect to future sales of equity ownership interests and economic interests in the property.

Expansion of AdArcade Partnership

In January 2026, the Company announced an expansion of its exclusive partnership with AdArcade, introducing new AI-powered capabilities that significantly broaden how brands can deploy playable media at scale within rewarded mobile video inventory. AdArcade's patented Native Playables® technology converts a brand's existing video ad into a playable experience that gamifies interaction with brand messaging. With AdArcade's new AI-powered Creative-as-a-Service (CaaS) offering, programmatic teams can utilize Native Playables with virtually no incremental effort or creative cost. This allows brands to seamlessly extend video campaigns into mobile gaming video inventory, turning what was once a workflow gap into a true omnichannel opportunity without added complexity.

Ownership Interest in My Avatar!

In April 2026, the Company announced the acquisition of an ownership interest in My Avatar!, a Top 25 shopping experience on Roblox (source: Rotrends). The investment advances Super League's Strategic Properties initiative, expanding its portfolio of equity ownership positions in high-performing Roblox experiences that generate both direct cash flow and differentiated inventory for playable advertising and interactive content programs delivered on behalf of global brand partners. The initiative expands Super League's ability to reach one of the largest, most influential, and under-monetized consumer segments in modern media and culture, positioning the Company to capture a greater share of advertising spend directed toward this audience.

Summary Financial Results

Three Months Ended June 30, 2026 as compared to the Three Months Ended June 30, 2025

Revenue for the three months ended June 30, 2026 totaled $3.0 million, relatively consistent with revenue totaling $3.0 million for the comparable prior year quarter. Cost of revenue for the three months ended June 30, 2026 increased $73,000, or 4% to $1.8 million, compared to $1.7 million in the comparable prior year quarter. As a percentage of revenue, gross profit for the three months ended June 30, 2026 was 41%, compared to 44% for the comparable prior year quarter.

Total operating expense for the three months ended June 30, 2026 increased $436,000, or 10% to $4.9 million, compared to $4.5 million in the comparable prior year quarter. Excluding noncash stock compensation expense, intangible asset amortization expense, mark to market related fair value adjustments, and other noncash charges (collectively, "noncash charges and credits"), totaling $2.0 million and $1.0 million, respectively, operating expense for the three months ended June 30, 2026 and 2025 was $2.9 million and $3.4 million, respectively, reflecting a $499,000, or 15% decrease compared to the prior year quarter, reflecting the impact of our ongoing focus on cost reductions and operating efficiencies. Net loss for the three months ended June 30, 2026, which includes the impact of net noncash charges and credits totaling $2.5 million, was $4.4 million or $(2.70) per share, compared to a net loss of $2.8 million, or $(54.24) per share, in the comparable prior year quarter. Excluding net noncash charges and credits, net loss for the three months ended June 30, 2026 was $1.8 million, compared to a net loss of $2.0 million in the comparable prior year quarter. The calculation of net loss per share for the three months ended June 30, 2026 included net noncash common stock dividend and deemed dividend related direct charges to accumulated deficit totaling ($575,000) as described at Note 6.

Six Months Ended June 30, 2026 as compared to the Six Months Ended June 30, 2025

Revenue for the six months ended June 30, 2026 totaled $6.0 million, an increase of $293,000 or 5%, compared to $5.7 million for the comparable prior year period. Cost of revenue for the six months ended June 30, 2026 increased $477,000, or 15% to $3.7 million, compared to $3.2 million in the comparable prior year period, driven partially by the 5% increase in revenues for the same periods. As a percentage of revenue, gross profit for the six months ended June 30, 2026 was 39%, compared to 44% for the comparable prior year period.

Total operating expense for the six months ended June 30, 2026 increased $845,000, or 9% to $10.1 million, compared to $9.3 million in the comparable prior year period. Excluding noncash charges and credits totaling $3.6 million and $1.8 million, respectively, operating expense for the six months ended June 30, 2026 and 2025 was $6.5 million and $7.4 million, respectively, reflecting a $909,000, or 12% decrease compared to the prior year period, reflecting the impact of our ongoing focus on cost reductions and operating efficiencies. Net loss for the six months ended June 30, 2026, which includes the impact of net noncash charges and credits totaling $4.2 million, was $8.4 million or $(3.53) per share, compared to a net loss of $7.0 million, or $(160.74) per share, in the comparable prior year period. Excluding net noncash charges and credits, net loss for the six months ended June 30, 2026 was $4.2 million, compared to a net loss of $5.7 million in the comparable prior year period. The calculation of net loss per share for the six months ended June 30, 2026 included net noncash common stock dividend and deemed dividend related direct charges to accumulated deficit totaling ($828,000) as described at Note 6.

Sale of Mineville

On May 19, 2025, the Company entered into a Membership Interest Purchase and Sale Agreement (the "Mineville Purchase Agreement") with Mineville, LLC a Delaware limited liability company ("Purchaser"), pursuant to which the Company agreed to sell, and Purchaser agreed to purchase, 100% of the membership interests (the "Interests") of InPvP, LLC ("InPvP"). Prior to the Mineville Sale, InPvP was a wholly owned subsidiary of the Company that owned and operated the Company's Mineville digital offering. The closing of the Mineville Sale occurred simultaneously with the execution of the Mineville Purchase Agreement. The Purchaser paid cash consideration totaling $350,000 at the Mineville Closing to acquire the Interests.

The parties also agreed upon separate terms for an ongoing commercial relationship whereby the Company was granted the rights to ad sales and brand integration (the "Sales Rights") to all of Purchaser's Microsoft servers for a term of two years (the "Sales Term"). The Company has exclusive Sales Rights for the first year of the Sales Term, and non-exclusive Sales Rights during the second year. During the Sales Term, the revenue generated from the Sales Rights will be allocated among the Company and Purchaser as follows: (i) the Company will retain 60% of the net revenue until gross sales revenue exceeds $1.0 million; (ii) after gross sales revenue exceed $1.0 million, the Company will retain 50% of the net revenue through the remainder of the Sales Term; and (iii) if gross sales revenue exceeds $1.5 million during the Sales Term, the Sales Term shall renew automatically for one additional year on the same terms as the second year of the Sales Term.

Seasonality

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

Condensed Results of Operations

The following table sets forth a summary of our results of operations for the three and six months ended June 30, 2026 and 2025 (dollars in thousands) (Unaudited):

		Three Months Ended June 30,								Change								Six Months Ended June 30,								Change
		2026				2025				$				%				2026				2025				$				%
REVENUE		$	3,009			$	3,001			$	8				-	%		$	6,012			$	5,719			$	293				5	%
COST OF REVENUE			1,765				1,692				73				4	%			3,691				3,214				477				15	%
GROSS PROFIT			1,244				1,309				(65	)			(5	)%			2,321				2,505				(184	)			(7	)%
OPERATING EXPENSE
Selling, marketing and advertising			1,737				2,107				(370	)			(18	)%			3,728				4,499				(771	)			(17	)%
Engineering, technology and development			1,214				694				520				75	%			1,882				1,623				259				16	%
General and administrative			1,939				1,653				286				17	%			4,516				3,173				1,343				42	%
Contingent consideration			-				-				-				-	%			-				(14	)			(14	)			(100	)%
Total operating expense			4,890				4,454				436				10	%			10,126				9,281				845				9	%
NET LOSS FROM OPERATIONS			(3,646	)			(3,145	)			501				16	%			(7,805	)			(6,776	)			1,029				15	%
OTHER INCOME (EXPENSE), NET			(744	)			362				1,106				306	%			(636	)			(237	)			399				168	%
Loss before benefit from income taxes			(4,390	)			(2,783	)			1,607				58	%			(8,441	)			(7,013	)			1,428				20	%
Benefit from income taxes			-				-				-				-	%			-				-				-				-
NET LOSS		$	(4,390	)		$	(2,783	)		$	1,607				58	%		$	(8,441	)		$	(7,013	)		$	1,428				20	%

Comparison of the Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

Revenue (dollars in thousands) (Unaudited)

		Three Months Ended June 30,								Change								Six Months Ended June 30,								Change
		2026				2025				$				%				2026				2025				$				%
Media and advertising		$	1,416			$	1,476			$	(60	)			(4	)%		$	3,126			$	2,748			$	378				14	%
Publishing and content studio			1,593				1,391				202				15	%			2,886				2,658				228				9	%
Direct to consumer			-				134				(134	)			(100	)%			-				313				(313	)			(100	)%
		$	3,009			$	3,001			$	8				-	%		$	6,012			$	5,719			$	293				5	%

Three Months Ended June 30,

Six Months Ended June 30,

2026

2025

2026

2025

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

Three

/

45%

Three

/

48%

Two

/

28%

Two

/

31%

By revenue category:

Media and advertising

Two

/

14%

Three

/

47%

Two

/

20%

One

/

17%

Publishing and content studio

Three

/

31%

One

/

1%

One

/

8%

One

/

14%

Three Months Ended June 30, 2026, Compared to the Three Months Ended June 30, 2025:

●	Total revenue was relatively flat for the three months ended June 30, 2026 as compared to the comparable prior year quarter.

●

Media and advertising revenue was relatively flat, decreasing $60,000, or 4%, to $1.4 million, compared to $1.5 million in the comparable prior year quarter. The change was primarily due to a $431,000 increase in on-platform revenues across Fortnite and Minecraft and Roblox and $199,000 increase in programmatic media sales revenue, partially offset by a $196,000 decrease in off-platform revenue, including Native Playables and gamified video, and a $470,000 strategic decrease in lower margin influencer marketing revenue.

●

Publishing and content studio revenue increased $202,000, or 15%, to $1.6 million, compared to $1.4 million in the comparable prior year quarter. The change was driven primarily by a net $493,000 increase in custom game development and immersive experience related revenues, partially offset by a $291,000 decrease in content studio revenue.

●	Direct to consumer revenue decreased $134,000, or 100%, primarily reflecting the impact of the sale of our Mineville digital property in May 2025, which prior to the sale, generated direct to consumer Minecraft related digital goods revenues for the Company.

Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025:

●	Total revenue increased $293,000, or 5%, to $6.0 million, compared to $5.7 million in the comparable prior year period.

●

Media and advertising revenue increased $378,000, or 14%, to $3.1 million, compared to $2.7 million in the comparable prior year period. The change was primarily due to a $435,000 increase in on-platform revenues across Fortnite and Minecraft and Roblox and $485,000 increase in off-platform media sales revenue including Native Playables and gamified video and $199,000 increase in programmatic media sales revenue, partially offset by a $692,000 strategic decrease in lower margin influencer marketing revenue and $50,000 decrease in campaign program management fee revenue.

●

Publishing and content studio revenue increased $228,000, or 9%, to $2.9 million, compared to $2.7 million in the comparable prior year period. The change was driven primarily by a net $739,000 increase in custom game development and immersive experience related revenues, partially offset by a $511,000 decrease in content studio revenue.

●	Direct to consumer revenue decreased $313,000, or 100%, primarily reflecting the impact of the sale of our Mineville digital property in May 2025, which prior to the sale, generated direct to consumer Minecraft related digital goods revenues for the Company.

Cost of Revenue

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

Three Months Ended June 30, 2026, Compared to the Three Months Ended June 30, 2025:

●

Cost of revenue was relatively flat, increasing $73,000, or 4%, to $1.8 million, compared to $1.7 million in the comparable prior year quarter.

Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025:

●

Cost of revenue increased $477,000, or 15%, due to the impact of the 59% increase in off platform media sales revenues with lower average margins during the six months ended June 30, 2026 compared to the same period in 2025.

Operating Expense

Refer to the table summarizing our results of operations for the three and six months ended June 30, 2026 and 2025 above.

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

		Three Months Ended June 30,								Change								Six Months Ended June 30,								Change
		2026				2025				$				%				2026				2025				$				%
Selling, marketing and advertising		$	362			$	163			$	199				122	%		$	758			$	251			$	507				202	%
Engineering, technology and development			72				8				64				*	%			150				13				137				*	%
General and administrative			521				305				216				71	%			1,162				495				667				135	%
Total noncash stock compensation expense		$	955			$	476			$	479				101	%		$	2,070			$	759			$	1,311				173	%

The increase in noncash stock compensation expense for the periods presented was primarily due to shareholder approval of the 2025 Omnibus Stock Incentive Plan in June 2025, and shareholder approval of the increase in the number of shares authorized for issuance under the 2025 Plan to 580,667 shares in October 2025. Prior to June and October 2025, the Company granted minimal equity awards due to a lack of availability of authorized shares under the prior 2014 Stock Incentive Plan. As a result of the increase in the available authorized shares for issuance, in June, November and December 2025 the Company's Board issued an aggregate of 529,000 equity incentive awards to employees and contractors under the 2025 Plan, as part of Board approved equity incentive programs, with in general, two year vesting periods and a weighted average grant date fair value of $10.98, resulting in an increase in noncash stock compensation expense in the three and six months ended June 30, 2026, compared to the prior year comparable periods.

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

		Three Months Ended June 30,								Change								Six Months Ended June 30,								Change
		2026				2025				$				%				2026				2025				$				%
Selling, marketing and advertising		$	94			$	176			$	(82	)			(47	)%		$	212			$	351			$	(139	)			(40	)%
Engineering, technology and development			813				237				576				243	%			1,108				468				640				137	%
General and administrative			90				127				(37	)			(29	)%			216				261				(45	)			(17	)%
Total amortization expense		$	997			$	540			$	457				85	%		$	1,536			$	1,080			$	456				42	%

Amortization expense for the three and six months ended June 30, 2026 increased due primarily to the acceleration of amortization related to capitalized internal use software costs due to the reduction of the related estimated useful life.

Selling, Marketing and Advertising

Three Months Ended June 30, 2026, Compared to the Three Months Ended June 30, 2025:

Selling, marketing and advertising expense decreased $370,000, or 18%. The change was primarily due to a $484,000 reduction in selling, marketing and advertising personnel costs reflecting the impact of fiscal year 2025 headcount reductions in connection with ongoing cost reduction and optimization activities, and an $82,000 decrease in amortization related to the sale of our Mineville digital assets in May 2025 and the fourth quarter 2025 write down of advertiser and agency related intangibles acquired in connection with the fiscal year 2021 acquisition of Mobcrush. The decrease was partially offset by a $199,000 increase in noncash stock compensation expense in connection with fiscal year 2025 equity incentive award grants, as described above, and a $63,000 reduction in selling, marketing and advertising personnel costs allocated to cost of revenue due to an increase in the mix of revenue generating programs utilizing external resources.

Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025:

Selling, marketing and advertising expense decreased $771,000, or 17%. The change was primarily due to a $1.3 million reduction in selling, marketing and advertising personnel costs reflecting the impact of fiscal year 2025 headcount reductions in connection with ongoing cost reduction and optimization activities, and an $139,000 decrease in amortization related to sale of our Mineville digital assets in May 2025 and the fourth quarter 2025 write down of advertiser and agency related intangibles acquired in connection with the fiscal year 2021 acquisition of Mobcrush. The decrease was partially offset by a $507,000 increase in noncash stock compensation expense in connection with fiscal year 2025 equity incentive award grants, as described above, and a $243,000 reduction in selling, marketing and advertising personnel costs allocated to cost of revenue due to an increase in the mix of revenue generating programs utilizing external resources.

Engineering, Technology and Development

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

Three Months Ended June 30, 2026, Compared to the Three Months Ended June 30, 2025:

Engineering, technology and development expense increased $520,000, or 75%, driven primarily by the following:

●

Increased primarily due to a $576,000 increase in amortization as described above, a $64,000 increase in noncash stock compensation expense in connection with fiscal year 2025 equity incentive award grants, as described above, and a $110,000 reduction in personnel costs allocated to cost of revenue due to an increase in the mix of revenue generating programs utilizing external resources. The increase was partially offset by a decrease in product and engineering personnel expense totaling $161,000, or 41%, reflecting the impact of fiscal year 2025 personnel reductions, and other cost reduction activities, including the sale of our Mineville assets, and a decrease in cloud services and other technology platform costs totaling $51,000, or 39%.

Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025:

Engineering, technology and development expense increased $259,000, or 16%, driven primarily by the following:

●

Increased primarily due to a $640,000 increase in amortization as described above, a $137,000 increase in noncash stock compensation expense in connection with fiscal year 2025 equity incentive award grants, as described above, and a $223,000 reduction in personnel costs allocated to cost of revenue due to an increase in the mix of revenue generating programs utilizing external resources. The increase was partially offset by a decrease in product and engineering personnel expense totaling $503,000, or 52%, reflecting the impact of fiscal year 2025 personnel reductions, and other cost reduction activities, including the sale of our Mineville assets, and a decrease in cloud services and other technology platform costs totaling $87,000, or 36%.

General and Administrative

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

		Three Months Ended June 30,								Change								Six Months Ended June 30,								Change
		2026				2025				$				%				2026				2025				$				%
Personnel costs		$	409			$	409			$	-				-	%		$	1,009			$	869			$	140				16	%
Office and facilities			14				22				(8	)			(36	)%			25				54				(29	)			(54	)%
Professional fees			270				182				88				48	%			767				440				327				74	%
Stock-based compensation			521				305				216				71	%			1,162				495				667				135	%
Depreciation and amortization			92				131				(39	)			(30	)%			221				270				(49	)			(18	)%
Other			633				604				29				5	%			1,332				1,045				287				27	%
Total general and administrative expense		$	1,939			$	1,653			$	286				17	%		$	4,516			$	3,173			$	1,343				42	%

Three Months Ended June 30, 2026, Compared to the Three Months Ended June 30, 2025:

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

●	Professional fees costs increased primarily due to an increase in legal and audit and accounting related fees incurred in connection with acquisition, complex transaction and other corporate related activities during the three months ended June 30, 2026.
●	The increase in noncash stock compensation expense was primarily due to shareholder approval of the 2025 Omnibus Stock Incentive Plan in June 2025, and shareholder approval of the increase in the number of shares authorized for issuance under the 2025 Plan to 580,667 shares in October 2025. Prior to June and October 2025, the Company granted minimal equity awards due to a lack of availability of authorized shares under the prior 2014 Stock Incentive Plan. As a result of the increase in the available authorized shares for issuance, in June, November and December 2025 the Company's Board issued an aggregate of 529,000 equity incentive awards to employees and contractors under the 2025 Plan, as part of Board approved equity incentive programs, with in general, 2 year vesting periods and a weighted average grant date fair value of $10.98, resulting in an increase in noncash stock compensation expense in the second quarter of 2026, compared to the prior year comparable quarter.

Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025:

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

●	Personnel costs increased due to an increase in incentive compensation in the first quarter of 2026, partially offset by a reduction in various corporate, general and administrative costs in connection with fiscal year 2025 and ongoing cost reduction and optimization activities.

●	Professional fees costs increased primarily due to an increase in legal and audit and accounting related fees incurred in connection with acquisition, complex transaction and other corporate related activities during the six months ended June 30, 2026.

●

The increase in noncash stock compensation expense was primarily due to shareholder approval of the 2025 Omnibus Stock Incentive Plan in June 2025, and shareholder approval of the increase in the number of shares authorized for issuance under the 2025 Plan to 580,667 shares in October 2025, as described above.

●

The increase in other expense was primarily due to an increase in investor relations costs associated with first and second quarter 2026 corporate and investor relations activities, partially offset by a reduction in information technology and other corporate costs in connection with ongoing cost reduction activities.

Other Income (Expense), Net

On May 19, 2025, the Company entered into the Mineville Purchase Agreement with Mineville, LLC a Delaware limited liability company, pursuant to which the Company agreed to sell, and Purchaser agreed to purchase 100% of the Interests of InPvP for cash consideration totaling $350,000, as described earlier in this Report. The net carrying value of Mineville assets sold totaled $350,000 as of May 19, 2025, which historically were included in intangible assets, net in the condensed consolidated balance sheets, resulting in no gain or loss in connection with the Mineville Sale.

Change in Fair Value of Warrant Liability

Series AAA Junior -3 and Series AAA Junior - 4 Warrants

The fair value of the September 2024 Series AAA Junior Investor Warrants are recorded as a liability on the balance sheet and re-valued at each reporting date, with changes in the fair value reported in the statements of comprehensive income (loss). The change in fair value for the September 2024 Series AAA Junior Investor Warrants for the three and six months ended June 30, 2026 totaled $0 and $0, respectively. The change in fair value for the September 2024 Series AAA Junior Investor Warrants for the three and six months ended June 30, 2025 totaled ($58,000) and $(328,000), respectively.

Placement Agent Warrants

The fair value of the Placement Agent Warrants are recorded as a liability on the balance sheet and re-valued at each reporting date, with changes in the fair value reported in the statements of comprehensive income (loss). The change in fair value for the Placement Agent Warrants for the three and six months ended June 30, 2026 totaled $0 and $(4,000), respectively. The change in fair value for the Placement Agent Warrants for the three and six months ended June 30, 2025 totaled $(86,000) and $(533,000), respectively.

Interest Expense

Interest expense, including change in fair value of promissory notes carried at fair value, primarily reflects the change in fair value of debt accounted for under the fair value option ("FVO") as described at Note 2. Interest expense for the periods presented was comprised of the following (Unaudited):

		Three Months								Six Months
		Ended June 30,								Ended June 30,
		2026				2025				2026				2025
Super Biz Note:		$	-			$	23,000			$	-			$	15,000
Agile I Note:			-				-				-				358,000
Agile II Note			-				164,000				-				1,002,000
RP Note:			-				(269,000	)			-				35,000
Belleau Note:			-				(153,000	)			-				(212,000	)
1800 Diagonal Note:			-				14,000				-				(25,000	)
SLR Facility:			-				37,000				-				45,000
Other			-				3,000				-				3,000
Total interest expense (income)		$	-			$	(181,000	)		$	-			$	1,221,000

Deferred Financing Costs

On June 3, 2026, the Company entered into the Series C Redemption Agreement with the Series C Holder pursuant to which the Company and the Series C Holder, among other items, agreed to the termination of a certain equity purchase agreement between the Series C Holder and the Company, dated July 10, 2025 (the "Series C Purchase Agreement"), including, without limitation, the termination of any and all agreements, instruments and documents entered into in connection therewith, so that neither the Company nor the Series C Holder shall have any further rights, obligations, or liabilities under the Series C Purchase Agreement ("Series C Redemption"). In connection with the termination of the equity purchase agreement, the Company expensed $825,000 of deferred financing costs which are reflected in other income (expense) in the statement of comprehensive income (loss) for the three and six months ended June 30, 2026. Of the total deferred financing costs expensed, $600,000 related to the Commitment Stock issued to Yield Point and therefore represented noncash financing costs.

Debt Issuance Costs

The Company paid debt issuance costs totaling $7,000 and $139,000 for the three and six months ended June 30, 2025 in connection with the issuance of the Agile II Note and the Diagonal I & II Notes, as described at Note 5, which is included in "Other" in Other Income and expense in the condensed statements of comprehensive income (loss) for the three and six months ended June 30, 2025.

Liquidity and Capital Resources

General

Cash and cash equivalents totaled $1.1 million and $14.4 million at June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026 and December 31, 2025, short term investments, which were comprised of direct investments in highly liquid, AA and A-1+ rated, U.S. government securities with a weighted average maturity of three years, totaled $5.5 million and $0, respectively. The change in cash and cash equivalents for the periods presented reflects the impact of operating, investing and financing cash flow related activities as described below.

We have historically incurred net losses and negative cash flows from operating activities and may continue to incur net losses and negative cash flows from operating activities as we execute our business strategy. For the six months ended June 30, 2026, we incurred a net loss of $8.4 million and used $4.7 million of cash in operating activities. Net loss for the six months ended June 30, 2026 included $4.2 million of noncash charges, including noncash intangible asset amortization totaling $1.5 million, noncash stock compensation totaling $2.1 million and noncash deferred financing costs of $600,000. Excluding noncash charges and credits, our net loss for the six months ended June 30, 2026 was $4.2 million. Refer to the heading, "Executive Summary" above for additional information.

Since approximately May 2024, the Company implemented a number of operating expense reduction initiatives designed to decrease future operating cash outflows. These actions included workforce optimization, vendor contract renegotiations, reduced discretionary spending, and restructuring of non-core activities. Excluding noncash charges, these operating expense reductions resulted in a decrease in operating expense of 15% and 12% for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, respectively. Excluding noncash charges, these operating expense reductions resulted in a decrease in operating expense of approximately 28% for the year ended December 31, 2025 compared to the year ended December 31, 2024.

As of June 30, 2026, we had cash and cash equivalents of $1.1 million and investments in marketable securities of $5.5 million, resulting in total cash, cash equivalents and marketable securities of approximately $6.7 million. Our principal uses of liquidity are expected to include funding our operations, including personnel costs, technology and infrastructure costs, working capital requirements, capital expenditures and other general corporate purposes.

We regularly evaluate our liquidity requirements, including our expected operating expenses, capital requirements and contractual obligations, based on our current operating plans and expectations. Based on our current working capital, operating plan and forecasted cash requirements, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our working capital requirements, anticipated capital expenditures and other cash requirements for at least the next 12 months from the date of issuance of these financial statements.

Our estimates of future cash requirements and available liquidity are based on estimates and assumptions and our actual cash requirements may differ materially from our current expectations. Our future capital requirements will depend on numerous factors, including our operating performance, the timing and extent of expenditures in support of our business strategy, our ability to generate revenue and cash flows from operations, and other factors described under "Risk Factors." We may from time to time seek additional financing through the issuance of equity or debt securities or other financing arrangements to support our business strategy or for other corporate purposes. However, our current operating plan does not depend upon obtaining additional financing to meet our obligations for at least the next 12 months from the date of issuance of these financial statements.

Cash Flows for the Six Months Ended June 30, 2026 and 2025

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

		Six Months Ended June 30,
		2026				2025
Net cash used in operating activities		$	(4,724	)		$	(3,995	)
Net cash (used in) provided by investing activities			(7,617	)			796
Net cash (used in) provided by financing activities			(922	)			2,364
Net decrease in cash			(13,263	)			(835	)
Cash and cash equivalents, at beginning of period			14,390				1,310
Cash and cash equivalents, at end of period		$	1,127			$	475

Cash Flows from Operating Activities.

Net cash used in operating activities during the six months ended June 30, 2026, primarily reflected our GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $2.1 million, depreciation and amortization charges of $1.5 million, change in fair value of warrant liabilities of ($4,000), amortization/accretion of premium/discount on marketable securities of ($21,000), the noncash write off of deferred financing costs of $600,000, and net changes in working capital of ($476,000). Changes in working capital primarily reflected the impact of the management and settlement of receivables and payables in the ordinary course.

Net cash used in operating activities during the six months ended June 30, 2025, primarily reflected our GAAP net loss, net of adjustments to reconcile net GAAP loss to net cash used in operating activities, which included noncash stock compensation charges of $759,000, depreciation and amortization charges of $1.1 million, net changes in fair value of certain liabilities of ($560,000), noncash gain on sale of Minehut assets of ($152,000) and net changes in working capital of $1.9 million. Changes in working capital primarily reflected the impact of the management and settlement of receivables and payables in the ordinary course.

Cash Flows from Investing Activities.

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

		Six Months Ended June 30,
		2026				2025
Cash paid in connection with Misfits Transaction		$	(1,500	)		$	-
Cash paid in connection with Bounce Acquisition			(100	)			-
Investment in Roblox digital property			(165	)			-
Investment in Solsten Inc.			(200	)			-
Investment in marketable securities, available-for-sale			(8,982	)			-
Proceeds from sale of marketable securities, available-for-sale			3,395				-
Proceeds from sale of Mineville Assets			-				350
Proceeds from sale of Minehut Assets			-				656
Capitalization of software development costs			(40	)			(200	)
Other			(25	)			(10	)
Net cash provided by (used in) investing activities		$	(7,617	)		$	796

Acquisition of Misfits Ads Assets

At the Misfits Closing, the Company paid the following consideration for the Misfits Purchased Assets: (i) a cash payment in the amount of $1.5 million (the "Misfits Closing Cash Consideration"), (ii) 26,768 shares of common stock (the "Misfits Closing Shares"), (iii) a pre-funded common stock purchase warrant to purchase 509,682 shares of common stock (the "Misfits Pre-Funded Warrant," and the shares issuable upon exercise of the Misfits Pre-Funded Warrant, the "Misfits PFW Shares"), and (iv) a common stock purchase warrant to purchase 536,450 shares of common stock, with an exercise price of $18.00 (the "Misfits Warrant", and the shares issuable upon exercise of the Misfits Warrant, the "Misfits Warrant Shares")(the Misfits Closing Shares, the Misfits PFW Shares, and the Misfits Warrant Shares collectively, the "Misfits Closing Share Consideration"). Pursuant to the terms and subject to the conditions of the Misfits Purchase Agreement, on the one-year anniversary of the Misfits Closing, the Company will pay an additional cash payment in the amount of $300,000 (the "Delayed Cash Payment").

Acquisition of Let's Bounce

On the Bounce Effective Date, the Company acquired Bounce, a marketing technology company focused on enabling scalable, measurable brand engagement inside gaming and UGC environments. The total purchase price for Bounce, which was structured as an asset acquisition, was $200,000, payable as follows: (a) $75,000 at closing; (b) $25,000 on the three-month anniversary of closing; and (c) $100,000 on the six-month anniversary of closing. In addition, pursuant to the terms and subject to the conditions of the Bounce Asset Purchase Agreement, up to $325,000 is contingently payable in connection with the achievement of certain net revenue milestones for the Bounce assets acquired during the year ended December 31, 2026. The Bounce Acquisition provides the Company with an existing pipeline of opportunities, enabling more efficient in-game marketing programs, the addition of turnkey loyalty solutions to drive advertiser outcomes, and a roadmap to more automated campaign measurement. Refer to Note 4 for additional information.

Investment in Hide or OOF! Roblox Game

In January 2026, the Company acquired economic and contractual interests in the Roblox digital property HOO (formerly known as Hide or Die!) pursuant to the HOO Agreement.

Pursuant to the HOO Agreement, the Company transferred total consideration of $202,000 in exchange for certain rights associated with the Hide or OOF! digital property. The consideration consisted of $165,000 in cash and 4,326 shares of the Company's restricted common stock valued at $37,000. In connection with the investment, the Company obtained (i) a fifteen percent (15.0%) equity ownership interest in Hide or OOF!, (ii) a contractual right to receive fifteen percent (15.0%) of Hide or OOF!'s gross revenue, as paid in Robux post-Roblox split, for the existence of the game, (iii) a contractual right to receive a twelve percent (12.0%) fee on certain direct brand transactions, and (iv) exclusive rights with respect to certain brand partnership opportunities and related placement economics. The agreement also contains a right of first refusal with respect to future sales of equity ownership interests and economic interests in the property. Management evaluated these rights to determine which elements represent distinct assets and how the total consideration should be allocated to the assets acquired. The Company utilized the relative fair value method to allocate total consideration to the identifiable elements based on their relative standalone fair values as of the HOO Effective Date. Refer to Note 4 for additional information.

Investment in Solsten, Inc.

In January 2026, the Company invested $200,000 in Solsten, an AI-driven audience intelligence company specializing in psychology-based consumer insights, through a SAFE, which provides the Company with the right to receive equity in a future financing event, subject to the terms and conditions of the SAFE agreement. The SAFE does not represent a current equity ownership interest but rather a forward contract to acquire equity upon the occurrence of specified events, including a qualifying equity financing or liquidity event, at which point the instrument will either convert into preferred stock or entitle the Company to receive the greater of its invested amount or the value of the underlying equity on an as-converted basis. The investment is included in other noncurrent assets in the accompanying balance sheets. Refer to Note 4 for additional information.

Sale of Minehut Assets. On February 29, 2024, the Company sold its Minehut Assets to GamerSafer as described above. Pursuant to the GS Agreement, the Company will receive $1.0 million of purchase consideration for the Minehut Assets, which amount will be paid by GamerSafer in revenue and royalty sharing over a multiple-year period, as described in the GS Agreement. During the three months ended March 31, 2025 we received Minehut Purchase Consideration payments totaling $383,000.

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

Cash Flows from Financing Activities.

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

		Six Months Ended June 30,
		2026				2025
Cash paid in connection with redemption of Series C Preferred Stock		$	(922	)		$	-
Proceeds from issuance of common stock, net of issuance costs			-				1,945
Proceeds from notes payable, net of issuance costs			-				4,011
Payments on notes payable			-				(3,518	)
Contingent consideration payments - Super Biz Acquisition			-				(50	)
Advances from accounts receivable facility			-				429
Payments on accounts receivable facility			-				(453	)
Net cash (used in) provided by financing activities		$	(922	)		$	2,364

Equity Financings

On May 30, 2025, the Company entered into a securities purchase agreement with certain investors, which provided for the sale and issuance by the Company in a registered direct offering (the "May III Offering") of an aggregate of (i) 79,750 shares of the Company's common stock, at a purchase price of $4.80 per share (the "May III Shares"), and (ii) pre-funded warrants to purchase up to 59,833 shares of common stock at a purchase price of $4.79 per pre-funded warrant (the "May III Pre-Funded Warrants" and, together with the May III Shares, the "May III Securities"), which represents the per share price for the May III Shares less the exercise price of $0.00001 per share. The May III Offering closed on June 2, 2025. The aggregate gross proceeds to the Company from the May III Offering were approximately $670,000, before deducting placement agent commissions and other estimated offering expenses. The Company utilized the net proceeds of the May III Offering for working capital and general corporate purposes, as well as to repay a portion of the Company's indebtedness.

On May 30, 2025, the Company also entered into a placement agent agreement (the "May III Placement Agent Agreement") with Aegis Capital Corp. (the "Placement Agent"). Pursuant to the terms of the May III Placement Agent Agreement, the Placement Agent agreed to use its reasonable best efforts to arrange for the sale of the securities in the May III Offering. The Company agreed to pay the Placement Agent a cash fee equal to 8% of the aggregate gross proceeds from the sale of the May III Securities. The Company also agreed to reimburse the Placement Agent for certain expenses.

On May 29, 2025, the Company entered into an underwriting agreement (the "May II Underwriting Agreement") with Aegis Capital Corp., (the "Underwriter"), relating to the Company's public offering (the "May II Offering") of 104,167 shares (the "May II Shares") of its common stock. Pursuant to the May II Underwriting Agreement, the Company also granted the Underwriter a 45-day option ("May II Option") to purchase an additional 10,417 shares of common stock (the "May II Option Securities", and together with the Shares, the "May II Securities"). On May 30, 2025, the Company issued the May II Shares and closed the May II Offering at a public price of $4.80 per share, for net proceeds to the Company of approximately $380,000 after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company utilized the net proceeds of the May II Offering for working capital and general corporate purposes, as well as to repay a portion of the Company's indebtedness. On May 29, 2025, the Underwriter delivered notice to the Company that it elected to exercise the May II Option with respect to an aggregate of 10,417 May II Option Securities. The closing of the sale of the May II Option Shares occurred on May 30, 2025.

On May 9, 2025, the Company entered into an underwriting agreement (the "May I Underwriting Agreement") with the Underwriter, relating to the Company's public offering (the "May I Offering") of 127,941 shares (the "May I Shares") of its common stock, par value $0.001 per share. Pursuant to the May I Underwriting Agreement, the Company also granted the Underwriters a 45-day option ("May I Option") to purchase an additional 19,191 shares of common stock (the "May I Option Securities", and together with the Shares, the "May I Securities"). On May 12, 2025, the Company issued the firm May I Securities and closed the May I Offering at a public price of $6.80 per share, for net proceeds to the Company of approximately $700,400 after deducting underwriting discounts, commissions and estimated offering expenses payable by the Company. On May 14, 2025, the Underwriter partially exercised its May I Option and purchased an additional 15,441 shares of common stock at a price of $6.80 per share, before deducting underwriting discounts. The issuance by the Company of the May I Option Securities resulted in total gross proceeds of approximately $104,999, before deducting underwriting discounts, commissions, and other offering expenses payable by the Company. The Company utilized the net proceeds of the May I Offering for working capital and general corporate purposes, as well as to repay a portion of the Company's indebtedness.

Series C Preferred Redemption

On June 3, 2026, the Company entered into a Redemption Agreement (the "Series C Redemption Agreement") with the sole holder (the "Series C Holder") of the Company's Series C Preferred, pursuant to which the Company agreed to pay the Series C Holder a one-time cash payment of $922,400 (the "Series C Agreement Consideration") in exchange for the Series C Holder agreeing to (i) the Company's redemption and cancellation of all 1,153 outstanding shares of Series C Preferred, and (ii) the termination of that certain Equity Purchase Agreement between the Series C Holder and the Company, dated July 10, 2025 (the "Series C Purchase Agreement"), including, without limitation, the termination of any and all agreements, instruments and documents entered into in connection therewith, so that neither the Company nor the Series C Holder shall have any further rights, obligations, or liabilities under the Series C Purchase Agreement ("Series C Redemption"). The Series C Redemption Agreement further contains a release by each of the Company and the Series C Holder releasing the other party from any and all claims, demands, actions, causes of action, liabilities, damages, costs, and expenses of any kind or nature whatsoever, whether known or unknown, arising out of or relating to the Series C Preferred or the Series C Purchase Agreement. On June 8, 2026, the Company paid the Series C Agreement Consideration to the Series C Holder in full satisfaction of its obligations under the Series C Redemption Agreement.

Debt Financings

Agile I

On November 8, 2024 (the "Agile I Effective Date"), the Company entered into a loan agreement with Agile Capital Funding, LLC, as collateral agent ("Agile") (the "Agile I Loan Agreement"), pursuant to which the Company issued to Agile a Confessed Judgment Secured Promissory Note for an aggregate value of $1.85 million (the "Agile I Note"). Pursuant to the Agile I Loan Agreement, (i) the Agile I Note matured 28 weeks from the Agile I Effective Date; (ii) carried an aggregate total interest payment of approximately $0.78 million (the "Applicable Rate"), and (iii) immediately upon the occurrence and during the continuance of an Event of Default (as defined in the Agile I Loan Agreement), interest accrued at a fixed per annum rate equal to the Applicable Rate plus five percent, or 42%. The Company was required to repay all the obligations due under the Agile I Loan Agreement and the Agile I Note in 28 equal payments of $93,821 with the first payment being made to Agile on November 14, 2024, and every seven days thereafter until the Maturity Date. The proceeds received from the Agile I Note were used to fund general working capital needs.

On February 10, 2025, in connection with entering into the Agile II Loan Agreement as described below, the Company paid the remaining balance of the Agile I Note, including interest for the remaining term, totaling $1.5 million.

Agile II

On February 10, 2025 (the "Agile II Effective Date"), the Company entered into a Business Loan and Security Agreement (the "Agile II Loan Agreement"), with Agile Capital Funding, LLC as collateral agent ("Collateral Agent"), and, pursuant to which the Company issued to Agile a Confessed Judgment Secured Promissory Note for an aggregate value of $2.5 million (the "Agile II Note"). Pursuant to the Agile II Loan Agreement, (i) the Agile II Note matures 32 weeks from the Agile II Effective Date; (ii) carried an aggregate total interest payment of approximately $1.05 million, and (iii) immediately upon the occurrence and during the continuance of an Event of Default (as defined in the Agile II Loan Agreement), interest would accrue at a fixed per annum rate equal to the applicable rate plus five percent, or 42%. The Company was required to repay all the obligations due under the Agile II Loan Agreement and the Agile II Note in 32 equal payments of $110,937, with the first payment being made to Agile on February 17, 2025, and every seven days thereafter until the maturity date. The proceeds received from the Agile II Note will be used to fund general working capital needs.

In connection with entering into the Agile II Loan Agreement, the Company was required to pay an administrative fee of $125,000 to the Collateral Agent, which was paid at the closing out of proceeds of the issuance of the Agile II Note and expensed in "other income (expense)" in the statements of comprehensive income (loss) for the six months ended June 30, 2025. $1.5 million of the Agile II Note was used to repay the remaining balance of principal and interest under the Agile I Note, with net proceeds to the Company of approximately $875,000.

On July 10, 2025, the Company entered into an exchange agreement (the "Agile Exchange Agreement") with Agile, pursuant to which the Company and Agile agreed that in exchange for the surrender and forgiveness of the Agile II Note, dated February 7, 2025, with the remaining amount of principal and interest thereunder being $1,331,250, Agile received (a) 3,678 shares of common stock (the "Agile Exchange Shares"), (b) pre-funded warrants to purchase 14,419 shares of common stock (the "Agile Pre-Funded Warrants", and collectively with the Agile Exchange Shares, the "Agile Exchange Securities"), with the Agile Exchange Securities valued at a price of $68.04, such amount above the Nasdaq Minimum Price, and (c) four equal cash payments of $25,000 to Agile, totaling $100,000.

The July 10, 2025 exchange of the balance of the Agile II Note for shares of the Company's common stock was accounted for as an extinguishment of the Agile II Note, resulting in the derecognition of the related liability and the recording of the fair value of the equity securities and other assets exchanged on the date of settlement. The Agile II Note was accounted for under the FVO, and therefore, the carrying amount of the Agile II Note immediately prior to settlement represented its fair value at the settlement date. The fair value of the common stock and cash payments exceeded the fair value of the Agile II Note on the date of the exchange resulting in a loss on extinguishment of a liability totaling $256,000, which was included in other income (expense) in the statements of comprehensive income (loss) for the year ended December 31, 2025.

1800 Diagonal Lending I

On March 26, 2025 (the "Diagonal Effective Date"), the Company and 1800 Diagonal Lending, LLC, a Virginia limited liability company, or registered assignees entered into a Securities Purchase Agreement, pursuant to which the Company issued a Convertible Promissory Note in the principal amount of $300,000, for which the Diagonal Note, among other things, (a) matured on December 30, 2025 (unless otherwise accelerated upon an Event of Default (as defined below)) (the "Diagonal Maturity Date"), (b) accrued interest at a rate of 10% per annum on the unpaid principal balance from the date the Diagonal Note was issued (the "Diagonal Issuance Date") until the principal and interest became due and payable, whether on the Maturity Date or upon acceleration by prepayment or otherwise, (c) began to accrue interest on the Diagonal Issuance Date but would not be payable until the Diagonal Note became payable, and (d) interest accrued at a rate of 22% per annum for any amount of principal or interest which was not paid as required under the Diagonal Note, or during an Event of Default.

Pursuant to the Diagonal Note, Diagonal had the right, from time to time, and at any time, during the period beginning on the date which is 180 days from the Diagonal Effective Date and ending on the earlier of (a) the Diagonal Maturity Date, or (b) the date of payment of the Default Amount, each in respect of the remaining outstanding amount of the Diagonal Note into fully paid and non-assessable shares of common stock at a price equal to 75% multiplied by the Market Price (as defined below) (the "Conversion Price"). For purposes of the Diagonal Note (x) the "Market Price" means the lowest Trading Price for the Company's common stock during the 10 trading ending on the latest complete trading day prior to the Diagonal Conversion Date; (y) the "Trading Price" means the closing price (or bid, if applicable) of the Company's common stock as listed (or quoted, as applicable) on the principal securities exchange or trading market where it is listed or traded; and (z) the "Diagonal Conversion Date" means the date specified in the applicable notice of conversion, delivered to the Company by Diagonal in accordance with the Diagonal Note.

The Diagonal Note was issued with an Original Issue Discount of 4.75% (the "OID"), with net proceeds to the Company of approximately $279,000 after deducting the OID, reimbursement of Diagonal's expenses in an amount equal to $7,000 (expensed in the statements of operation for the six months ended June 30, 2025), and other estimated offering expenses. The Company used the net proceeds from the offering for working capital and general corporate purposes.

During the year ended December 31, 2025, Diagonal converted an aggregate principal and interest amount under the Diagonal Note of $320,000 into shares of the Company's common stock at an average price of $28.44 per share, resulting in the issuance of 11,334 shares of common stock to Diagonal. As of December 31, 2025, the Diagonal Note was fully extinguished.

1800 Diagonal Lending II

On May 12, 2025, the Company and Diagonal entered into a Securities Purchase Agreement, pursuant to which the Company issued a Convertible Promissory Note (the "Diagonal II Note") in the principal amount of $145,200 (the "Diagonal II Principal"), for which the Diagonal II Note, among other things, (a) matured on February 15, 2026 (unless otherwise accelerated upon an Event of Default (as defined below)) (the "Diagonal II Maturity Date"), (b) accrued interest at a rate of 10% per annum on the unpaid principal balance from the date the Diagonal II Note was issued (the "Diagonal II Issuance Date") until the principal and interest became due and payable, whether on the Maturity Date or upon acceleration by prepayment or otherwise, (c) interest began to accrue on the Diagonal II Issuance Date but was not payable until the Diagonal II Note became payable, and (d) interest accrued at a rate of 22% per annum for any amount of principal or interest which is not paid as required under the Diagonal II Note, or during an Event of Default. Refer to Note 6 for additional details.

The Diagonal II Note was issued with an Original Issue Discount of 4.75% (the "OID"), with net proceeds to the Company of $125,000 after deducting the OID, reimbursement of Diagonal's expenses in an amount equal to $7,000 (expensed in the statements of operations for the three and six months ended June 30, 2025), and other estimated offering expenses. The Company used the net proceeds from the offering for working capital and general corporate purposes.

During the year ended December 31, 2025, Diagonal converted an aggregate principal and interest amount under the Diagonal II Note of $157,000 into shares of the Company's Common Stock at an average price of $9.72 per share, resulting in the issuance of 13,084 shares of Common Stock to Diagonal. As of December 31, 2025 the Diagonal II Note was fully extinguished.

Belleau Note Purchase Agreement

On March 28, 2025, the Company entered into a Note Purchase Agreement (the "Belleau Purchase Agreement") with Belleau Wood Capital, LP, or its assignees ("Belleau"). Pursuant to the Belleau Purchase Agreement, the Company will issue to Belleau a total of three Unsecured Promissory Notes (each, a "Belleau Note" and collectively, the "Belleau Notes") with an aggregate principal amount of $1,500,000 (the "Belleau Principal"). Each of the Belleau Notes (x) matured on the date that was 12 months from the date of the issuance of each respective Belleau Note (collectively, the "Belleau Maturity Date"); (y) may be prepaid in part or in full at any time by the Company without penalty; and (z) accrued interest at a rate of 20% simple interest per annum (the "Belleau Interest Rate", and the dollar value of the accrued interest, the "Belleau Interest"). The Company used the proceeds from the sale of the Belleau Notes for working capital and general corporate purposes.

The Belleau Interest that accrued on each respective Belleau Note was payable on each respective Belleau Maturity Date in the form of restricted shares of the Company's common stock equal to 20% of the Belleau Principal, calculated at a price per share of $168.00. In the event of a prepayment of any Belleau Note by the Company, the Belleau Interest would be payable in full at the time of such prepayment.

On August 11, 2025, the Company and Belleau entered into an Amended & Restated Unsecured Promissory Note, pursuant to which the Belleau Principal was reduced to $1,250,000. The Company used the proceeds from the sale of the Belleau Notes for working capital and general corporate purposes. During the three months ended September 30, 2025, the Company repaid $250,000 of principal on the Belleau Note.

Effective October 22, 2025, the Company and Belleau Wood Capital, LP ("Belleau") entered into an exchange agreement, pursuant to which the Company and Belleau agreed (a) to convert the remaining principal amount of $1.0 million due under the Belleau Note into 83,334 shares of common stock, valued at $12.00 per share, simultaneous with the close of the October 2025 PIPE (the "Note Exchange Consideration"), and (b) issue Belleau a common stock purchase warrant to purchase the sum of 10,417 shares of common stock, in form similar to the October 2025 PIPE Warrants (the "Belleau Warrants"), except the warrants will be exercisable for a period of two (2) years.

The exchange of the remaining balance of the Belleau Note for common stock and common stock purchase warrants, as described above, was accounted for as an exchange of debt for equity, resulting in a loss on exchange totaling $1,871,000, reflected in other income (expense) in the statement of comprehensive income (loss) for the year ended December 31, 2025. The Belleau Note was accounted for under the FVO, and therefore, the carrying amount of the Belleau Note immediately prior to the exchange represented its fair value at the exchange date. The fair value of the Belleau Warrants was estimated utilizing Black-Scholes, with inputs including term of 2 years, stock price of $31.20, volatility of 93% and risk-free interest rate of 3.45%.

Related Party Promissory Note

On November 19, 2024 (the "RP Effective Date"), the Company entered into a Note Purchase Agreement (the "RP Purchase Agreement") with a non-employee member of the Board (the "Note Purchaser"). Pursuant to the RP Purchase Agreement, the Company issued to the Note Purchaser an Unsecured Promissory Note (the "RP Note") in the amount of $1,500,000 (the "RP Principal"), for which the RP Note (i) matured on the date that was 12 months from the RP Effective Date (the "RP Maturity Date"), (ii) may be pre-paid at any time by the Company without penalty, and (iii) accrued interest on the RP Principal at a rate of 40% simple interest per annum (the "RP Interest"). The RP Interest was payable on the RP Maturity Date. In the event of a prepayment of the RP Note by the Company, the RP Interest would be pro-rated for the period the RP Note is outstanding. The Company utilized the proceeds for working capital and general corporate purposes.

On June 13, 2025, the Company entered into an amendment to the RP Note (the "RP Amendment"). Pursuant to the RP Amendment, (a) the maturity date of the RP Note was extended to November 19, 2026; (b) beginning on November 19, 2025, interest no longer accrued on the remaining Principal outstanding; and (c) the Company agreed to make monthly payments of $175,000, with such payments to start on November 19, 2025, and continue thereafter for twelve months, at which time the RP Note would be paid in full.

On July 7, 2025, the Company entered into an exchange agreement with the Michael Keller Trust (the "Trust") ("RP Exchange Agreement"), pursuant to which the Company and the Trust agreed that in exchange for the surrender and forgiveness of RP Note, with the principal and interest thereon being equal to $1,878,082, the Trust would be granted (a) 1,500,000 shares of Series AAAA Jr. Convertible Preferred Stock, and (b) cash payments totaling $378,000, such payments to be made in equal monthly installments of approximately $63,000, commencing on October 15, 2025, and concluding on March 15, 2026.

The July 7, 2025 exchange of the balance of the RP Note for shares of the Company's Series AAAA Junior Preferred Stock was accounted for as an extinguishment of the RP Note, resulting in the derecognition of the related liability and the recording of the fair value of the Series AAAA Jr. Preferred Stock exchanged on the date of settlement. The RP Note was accounted for under the FVO, and therefore, the carrying amount of the RP Note immediately prior to settlement represented its fair value at the settlement date, resulting in a loss on extinguishment totaling $26,000. The $378,000 of accrued cash payments were included as a component of the change in fair value of the RP Note for the year ended December 31, 2025, which is included in other income (expense) in the statement of comprehensive income (loss).

Account Receivable Financing Facility

The Company and its subsidiaries (collectively with the Company, the "Borrowers"), entered into a Financing and Security Agreement (the "SLR Agreement") with SLR Digital Finance, LLC ("Lender"), effective December 17, 2023 (the "Facility Effective Date"). Pursuant to the SLR Agreement, Lender may, from time to time and in its sole discretion, make certain cash advances to the Company (each an "Advance", and collectively, "Advances"), against the face amounts of certain uncollected accounts receivable of the Borrowers on an account-by-account basis (each, a "Financed Account", and collectively, the "Accounts"), at a rate of 85% multiplied by the face value of such Account (the "Advance Rate"), less any reserved funds and any other amounts due to Lender from Borrowers, up to a maximum aggregate Advance amount of $4,000,000 (the "Maximum Amount")(the Advances on the Accounts is hereinafter, the "Facility"). Upon receipt of any Advance, Borrowers will have assigned all of its rights in such receivables and all proceeds thereof. The proceeds received from the Facility are, and will be, used to fund general working capital needs.

The SLR Agreement is effective for 24 months from the Facility Effective Date (the "Term"), automatically extends for successive Terms (each, a "Renewal Term"), and the Borrowers' are obligated to pay the Lender an early termination fee in the event the SLR Agreement is terminated under certain circumstances prior to the end of any Term or Renewal Term, as more specifically set forth in the SLR Agreement.

As security for the full and prompt payment and performance of any obligations arising under the SLR Agreement, the Borrowers granted to Lender a continuing first priority security interest in all the assets of the Borrowers. The SLR Agreement also provides for customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, arbitration, and the exercise of remedies upon a breach or default. Refer to Note 5 for additional information.

Hudson Equity Line of Credit

On February 14, 2025, the Company entered into an equity purchase agreement (the "Hudson Equity Purchase Agreement") with Hudson Global Ventures, LLC, a Nevada limited liability company ("Hudson"). Pursuant to the Hudson Equity Purchase Agreement, the Company had the right, but not the obligation, to sell to Hudson, and Hudson is obligated to purchase, up to $2.9 million of newly issued shares of the Company's common stock, from time to time during the term of the Hudson Equity Purchase Agreement, subject to certain limitations and conditions (the "Hudson Offering" or "Hudson ELOC"). As consideration for Hudson's commitment to purchase shares of common stock under the Hudson Equity Purchase Agreement, the Company issued to Hudson 625 shares of common stock, valued at $159,000, following the execution of the Hudson Equity Purchase Agreement (the "Hudson Commitment Shares").

From and after the initial satisfaction of the conditions to the Company's right to commence sales to Hudson under the Hudson Equity Purchase Agreement (such event, the "Hudson Commencement," and the date of initial satisfaction of all such conditions, the "Hudson Commencement Date"), the Company was able to direct Hudson to purchase shares of common stock at a purchase price per share equal to the lesser of (i) 92% of the closing price of the Company's common stock, as listed on Nasdaq, on the trading day immediately preceding the respective Put Date (the "Hudson Initial Purchase Price"), or (ii) 92% of the lowest closing price of the Company's common stock, as listed on Nasdaq, on any trading day during the period beginning on the Put Date (as defined in the Hudson Equity Purchase Agreement) and continuing through the date that is three trading days immediately following the Clearing Date (as defined in the Hudson Equity Purchase Agreement) associated with the applicable Hudson Put Notice (such three trading day period is the "Hudson Valuation Period", and the price is the "Hudson Market Price"), on such date on which the Hudson Purchase Price is calculated in accordance with the terms of the Hudson Equity Purchase Agreement. The Company controlled the timing and amount of any such sales of common stock to Hudson.

During the six months ended June 30, 2025, the Company sold 1,494 shares of common stock, respectively, under the Hudson ELOC at an average per share price of $163.20, raising net proceeds totaling $231,000. The Hudson Equity Purchase Agreement was terminated effective May 8, 2025. The Company utilized the net proceeds from the Hudson Offering for working capital and general corporate purposes, including sales and marketing activities, product development and capital expenditures.

Other

On July 29, 2026, the Company entered into a waiver and release agreement with Aegis Capital Corp. ("Aegis") pursuant to which the Company agreed to pay Aegis: (i) $0.7 million, which was paid on July 30, 2026, in exchange for a waiver of any and all rights of first refusal arising from prior engagement agreements with Aegis; and (ii) $0.3 million, to be paid prior to any future financing, in exchange for a waiver of any tail fees associated with the Prior Agreements.

Contractual Obligations and Off-Balance Sheet Commitments and Arrangements

As of June 30, 2026, except as disclosed elsewhere herein, we had no significant commitments for capital expenditures, nor do we have any committed lines of credit, other committed funding or long-term debt, and no guarantees. As of June 30, 2026 we maintain approximately 200 square feet of office space which is leased on an annual basis at a rate of approximately $3,000 per month.

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 stockholders' equity or that are not reflected in our 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.

Contingencies

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

Global Leisure Partners, LLC, and Blackwatch Advisors, LLC vs. Super League Enterprise, Inc. On January 26, 2026, a complaint was filed against the Company in the United States District Court for the Southern District of New York by Global Leisure Partners, LLC and Blackwatch Advisors, LLC (the "Plaintiff"). Formal service of process on the complaint occurred on February 12, 2026. The complaint alleges, among other things, breach of contract and related claims arising from the Company's completion of a series of financing transactions during the fiscal year. The Plaintiff seeks unspecified damages, together with interest, attorneys' fees and other relief.

The Company believes the claims are wholly without merit and intends to vigorously defend the action. Based on the Company's assessment of the facts currently known, and after consultation with outside legal counsel, the Company believes that the likelihood of a material loss is remote. Accordingly, no liability has been recorded in the accompanying financial statements as of June 30, 2026 and December 31, 2025. Litigation is inherently uncertain, and while the Company believes the claims lack merit, an unfavorable outcome could occur. However, at this time, the Company does not see the need to, nor can it reasonably estimate any possible loss or range of loss associated with this matter.

Recent Accounting Pronouncements

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

Critical Accounting Estimates

Our unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these condensed statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these 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, 2025, as amended (amended to present the information required by Items 10, 11, 12, 13, and 14 of Part III of the Original Filing in reliance on General Instruction G(3) to Form 10-K, which provides that registrants may incorporate by reference certain information from a definitive proxy statement filed with the SEC within 120 days after fiscal year end), filed with the SEC on March 31, 2026. In addition, refer to Note 2 to the 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.

Revenue Recognition

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

Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services and when the customer obtains control of the goods or 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.

We make estimates and judgements when determining whether we will collect substantially all of the consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer. We assess the collectability of receivables based on several factors, including past transaction history and the creditworthiness of our customers. If it is determined that collection is not reasonably assured, amounts due are recognized when collectability becomes reasonably assured, assuming all other revenue recognition criteria have been met, which is generally upon receipt of cash for transactions where collectability may have been an issue. Management's estimates regarding collectability impact the actual revenue recognized each period and the timing of the recognition of revenue. Our assumptions and judgements 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 judgements, assumptions and estimates may be required to determine each party's rights regarding the goods or services to be transferred, each party's 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, whether we are a principal or agent in the arrangement and the appropriate period or periods in which, or during which, the completion of the earnings process and transfer of control occurs. Depending on the magnitude of specific revenue arrangements, if different judgements, assumptions and estimates are made regarding revenue arrangements in any specific period, our periodic financial results may be materially affected.

FVO Election

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

The fair value of the promissory notes described at Note 5 was estimated based on a calculation of the present value of the related cash flows (i.e. payments of principal and interest based on contractual agreement terms) using a discount rate that reflected market rates and related credit risk. The FVO was elected for the promissory notes described at Note 5 due to the short term nature of the promissory notes and to provide relevant and timely information regarding the current market value of the debt, which is marked to market at each balance sheet date reflecting the effects of market fluctuations and other factors.

Significant judgements and estimates may be required in connection with the determination of whether or not to elect the FVO for specific assets and/or liabilities. In addition, significant judgements and estimates may be required in connection with the determination of appropriate discount rates utilized in connection with present value related valuation techniques. Discount rate assumptions typically reflect the estimated yield to maturity of the debt instrument, incorporating the estimated market-implied rate of return an investor would receive if they held the debt until maturity, and taking into account all future cash flows and the current market price; adjusted for credit risk and market conditions. In addition, judgements and estimates are required in connection with the determination of the portion of subsequent fair value adjustments relate to instrument-specific credit risk, which are reflected in OCI, and the portion of subsequent fair value adjustments that relate to changes in interest rates or other variables, which are reflected in the condensed statements of comprehensive income (loss). Variations in any of these judgements and estimates could have a material impact on our financial results.

Accounting for Business Combinations

We account for our business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management's judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items. In addition, when we have acquisitions where substantially all of the fair value of assets acquired is concentrated in a single asset or group of similar assets, we account for the acquisitions as asset acquisitions.

Goodwill

Goodwill is evaluated for impairment at least annually and more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value. The Company operates with a single reporting unit and applies significant judgment in both qualitative and quantitative assessments performed in accordance with ASC 350. In performing these assessments, management estimates the fair value of the reporting unit using a combination of market-based and income-based approaches, if applicable, including consideration of the Company's market capitalization. Determining market capitalization requires judgment, including the selection of an appropriate stock price to use (e.g., point-in-time closing price versus an average or volume-weighted average price over a period surrounding the measurement date), particularly in periods of elevated volatility, low trading volume or other nonstandard activities.

Management also exercises significant judgment in evaluating the extent and duration of declines in the Company's stock price relative to carrying value, including whether such declines are temporary or indicative of a potential impairment. This assessment involves consideration of multiple factors, including the length of time market capitalization has been below carrying value, the magnitude of the decline, overall market and industry conditions, and company-specific performance. The Company has established internal thresholds and policies to assist in evaluating whether a decline is considered other than temporary; however, these determinations require significant judgment and may change based on evolving facts and circumstances. If management determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value, a quantitative impairment test is performed, which involves additional estimates and assumptions that could materially impact the amount of any impairment charge.

Relaxed Ongoing Reporting Requirements

We qualify to report as a "smaller reporting company" (as defined in Rule 12b-2) under the reporting rules set forth under the Exchange Act. For so long as we remain an "smaller reporting company," we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not "smaller reporting companies," including but not limited to not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not "smaller reporting company," 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 a smaller reporting company.