Overview of Super League Enterprise, Inc.

Super League Enterprise, Inc. is redefining how brands connect with consumers through the power of playable media. The company generates revenue from innovative advertising, direct-to-consumer offers, and content and technology production and distribution. Super League operates in one reportable segment.

Executive Summary

During the first quarter of 2025, Super League continued to demonstrate the effectiveness of its overall strategy, providing increasing opportunities to earn a greater share of advertisers’ wallet. The company’s focus on cost reductions and optimization has also positively impacted operating leverage.

Revenue for Q1 2025 totaled $2.7 million, a 35% decrease compared to the prior year quarter. This reflected industry softness in ad sales, continued market education and adoption of immersive platforms, and a reduction in Minehut-related media sales revenues.

Cost of revenue decreased 39% to $1.5 million, driven by the revenue decline. Gross profit margin improved to 44% from 41% in the prior year quarter. Total operating expense decreased 24% to $4.8 million, reflecting the impact of ongoing cost reduction and optimization efforts.

Net loss for Q1 2025 was $4.2 million, compared to a net loss of $5.3 million in the prior year quarter. The improvement was driven by the decrease in operating expenses.

Revenue Trends

Super League’s revenue is divided into three main categories:

1. Media and advertising revenue decreased 7% to $1.3 million, reflecting a decrease in influencer marketing revenue partially offset by increases in on-platform and off-platform media sales.

2. Publishing and content studio revenue decreased 50% to $1.3 million, driven by a net $1.3 million decrease in custom game development and immersive experience related revenues.

3. Direct-to-consumer revenue decreased 42% to $179,000, primarily due to the sale of the Minehut assets in Q1 2024.

The number of customers contributing over 10% of revenue increased from three in Q1 2024 to five in Q1 2025, indicating a concentration of revenue among a smaller number of large customers.

Cost of Revenue and Gross Margin

Cost of revenue decreased 39%, slightly more than the 35% revenue decline, due to the higher direct cost profile of the influencer marketing revenue stream. Gross profit margin improved to 44% from 41% in the prior year quarter.

Operating Expenses

Total operating expenses decreased 24% to $4.8 million, driven by the following:

• Selling, marketing and advertising expense increased 5%, but this was offset by a 28% reduction in related non-cash stock compensation expense.

• Engineering, technology and development expense decreased 45%, reflecting reductions in cloud services, technology platform costs, and personnel expenses.

• General and administrative expense decreased 28%, driven by reductions in personnel costs, amortization, and other corporate expenses.

The company also recorded a $14,000 credit related to changes in the fair value of contingent consideration liabilities.

Other Income and Expenses

Other income and expenses included the following notable items:

• Gain on sale of Minehut assets: Super League recorded an initial gain of $144,000 on the sale of its Minehut digital property in Q1 2024, with an additional $243,000 in gains recognized in Q1 2025.

• Changes in fair value of warrant liabilities: Super League recorded net decreases in the fair value of its warrant liabilities totaling $717,000.

• Interest expense: The company incurred $1.4 million in interest expense, primarily related to new debt financing arrangements entered into during Q1 2025.

Liquidity and Capital Resources

As of March 31, 2025, Super League had $0.7 million in cash and cash equivalents. The company has incurred net losses and used $2.2 million in operating cash flow during Q1 2025.

To fund its operations and growth, Super League has relied on proceeds from equity and debt financings. The company has entered into several new debt agreements in Q1 2025, including:

• Agile II Loan Agreement: $2.5 million loan maturing in 32 weeks, with $1.5 million used to repay the prior Agile I Note.

• 1800 Diagonal Lending Note: $300,000 convertible note maturing in December 2025.

• Belleau Note Purchase Agreement: $1.5 million in unsecured promissory notes maturing in 12 months.

Super League also entered into an equity purchase agreement with Hudson Global Ventures, providing up to $2.9 million in additional equity financing. During Q1 2025, the company raised $231,000 through this facility.

Additionally, in May 2025 Super League completed a public offering of 5.1 million shares of common stock, raising approximately $700,000 in net proceeds.

Management continues to explore alternatives for raising additional capital to facilitate growth and execute the business strategy, including strategic partnerships and other forms of financing. However, the company’s ability to obtain additional funding on favorable terms, or at all, remains uncertain.

Nasdaq Deficiency Letters

Super League has received several deficiency letters from Nasdaq related to non-compliance with listing requirements, including:

1. Minimum bid price: The company’s common stock has traded below $1 per share for 30 consecutive business days, triggering a deficiency notice. Super League has until July 1, 2025 to regain compliance.

2. Annual meeting: The company did not hold an annual meeting of stockholders within 12 months of the end of the 2023 fiscal year, triggering a deficiency notice. Super League has submitted a plan to regain compliance.

3. Stockholders’ equity: As of December 31, 2024, the company reported stockholders’ equity of only $170,000, below the $2.5 million minimum required for continued Nasdaq listing. Super League plans to submit a compliance plan.

Failure to regain compliance with these listing requirements could result in the delisting of Super League’s common stock from Nasdaq. The company would then be entitled to appeal any delisting determination.

Seasonality

Super League’s revenue is generally higher in the second half of the fiscal year, with the fourth quarter typically representing the highest revenue quarter. This reflects the seasonal nature of advertising spending, which tends to be stronger in the second half of the year.

Conclusion

Super League Enterprise, Inc. continues to navigate a challenging operating environment, as evidenced by the 35% year-over-year decline in Q1 2025 revenue. However, the company’s focus on cost optimization has helped improve profitability, with the net loss narrowing by 20% compared to the prior year quarter.

The company’s liquidity position remains tight, with the need to raise additional capital to fund ongoing operations and growth initiatives. Super League’s ability to regain compliance with Nasdaq listing requirements also remains a key near-term concern.

Overall, Super League is working to adapt its business model and cost structure to the current market conditions, while also exploring various financing alternatives to strengthen its financial position and support the execution of its long-term strategic plan. The company’s success in navigating these challenges will be crucial in determining its future performance and growth prospects.