Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 02, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Super League Gaming, Inc. | ||
Entity Central Index Key | 0001621672 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity's Reporting Status Current? | Yes | ||
Is Entity Emerging Growth Company? | true | ||
Elected Not To Use the Extended Transition Period | false | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | DE | ||
Entity File Number | 001-38819 | ||
Entity Common Stock, Shares Outstanding | 21,608,144 | ||
Entity Public Float | $ 24,097,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 7,942,000 | $ 8,442,000 |
Accounts receivable | 588,000 | 293,000 |
Prepaid expenses and other current assets | 837,000 | 924,000 |
Total current assets | 9,367,000 | 9,659,000 |
Property and equipment, net | 138,000 | 239,000 |
Intangible and other assets, net | 1,907,000 | 1,984,000 |
Goodwill | 2,565,000 | 2,565,000 |
Total assets | 13,977,000 | 14,447,000 |
Current Liabilities | ||
Accounts payable and accrued expenses | 1,829,000 | 853,000 |
Deferred revenue | 0 | 151,000 |
Total current liabilities | 1,829,000 | 1,004,000 |
Long-term note payable | 1,208,000 | 0 |
Total liabilities | 3,037,000 | 1,004,000 |
Commitments and contingencies (Note 10) | ||
Stockholders' Equity | ||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 15,483,010 and 8,573,922 shares issued and outstanding as of December 31, 2020 and 2019, respectively | 25,000 | 18,000 |
Additional paid-in capital | 115,459,000 | 99,237,000 |
Accumulated deficit | (104,544,000) | (85,812,000) |
Total stockholders' equity | 10,940,000 | 13,443,000 |
Total liabilities and stockholders' equity | $ 13,977,000 | $ 14,447,000 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 15,483,010 | 8,573,802 |
Common stock, outstanding | 15,483,010 | 8,573,802 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 2,064,000 | $ 1,084,000 |
Cost of revenues | 856,000 | 513,000 |
Gross profit | 1,208,000 | 571,000 |
OPERATING EXPENSES | ||
Selling, marketing and advertising | 5,403,000 | 4,488,000 |
Technology platform development | 6,647,000 | 4,915,000 |
General and administrative | 7,901,000 | 11,938,000 |
Total operating expenses | 19,951,000 | 21,341,000 |
Net operating loss | (18,743,000) | (20,770,000) |
OTHER INCOME (EXPENSE) | ||
Interest expense | (8,000) | (9,938,000) |
Other | 19,000 | 29,000 |
Total other income (expense) | 11,000 | (9,909,000) |
Net loss | $ (18,732,000) | $ (30,679,000) |
Net loss attributable to common stockholders - basic and diluted | ||
Basic and diluted loss per common share | $ (1.64) | $ (3.89) |
Weighted-average number of shares outstanding, basic and diluted | 11,430,057 | 7,894,326 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 4,610,109 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 14,000 | $ 48,325,000 | $ (55,133,000) | $ (6,794,496) |
Initial public offering of common stock, net of issuance costs (Note 7), shares | 2,272,727 | |||
Initial public offering of common stock, net of issuance costs (Note 7), amount | $ 2,000 | 22,456,000 | 22,458,000 | |
Automatic conversion of convertible debt to common stock (Note 6), shares | 1,475,164 | |||
Automatic conversion of convertible debt to common stock (Note 6), amount | $ 2,000 | 13,791,000 | 13,793,000 | |
Beneficial conversion feature (Note 5) | 7,067,000 | 7,067,000 | ||
Common stock issued for Framerate Acquisition (Note 5), shares | 134,422 | |||
Common stock issued for Framerate Acquisition (Note 5), amount | 1,000,000 | 1,000,000 | ||
Framerate Earn-Out (Note 5) | 454,000 | 454,000 | ||
Stock-based compensation, shares | 14,833 | |||
Stock-based compensation, amount | 6,124,000 | 6,124,000 | ||
Stock option and warrant exercises, shares | 66,667 | |||
Stock option and warrant exercises, amount | 20,000 | 20,000 | ||
Net loss | (30,679,000) | (30,679,000) | ||
Ending balance, shares at Dec. 31, 2019 | 8,573,922 | |||
Ending balance, amount at Dec. 31, 2019 | $ 18,000 | 99,237,000 | (85,812,000) | 13,443,000 |
Issuance of common stock at $3.50 per share, net of issuance costs (Note 7), shares | 1,825,000 | |||
Issuance of common stock at $3.50 per share, net of issuance costs (Note 7), amount | $ 2,000 | 5,951,000 | 5,953,000 | |
Issuance of common stock at $1.85 per share, net of issuance costs (Note 7), shares | 4,988,981 | |||
Issuance of common stock at $1.85 per share, net of issuance costs (Note 7), amount | $ 5,000 | 8,398,000 | 8,403,000 | |
Common stock issued for Framerate Acquisition (Note 5), shares | 32,936 | |||
Common stock issued for Framerate Acquisition (Note 5), amount | 0 | |||
Stock-based compensation, shares | 62,171 | |||
Stock-based compensation, amount | 1,863,000 | 1,863,000 | ||
Stock option and warrant exercises, shares | 0 | |||
Stock option and warrant exercises, amount | 10,000 | 10,000 | ||
Net loss | (18,732,000) | (18,732,000) | ||
Ending balance, shares at Dec. 31, 2020 | 15,483,010 | |||
Ending balance, amount at Dec. 31, 2020 | $ 25,000 | $ 115,459,000 | $ (104,544,000) | $ 10,940,000 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (18,732,000) | $ (30,679,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,368,000 | 862,000 |
Stock-based compensation | 2,004,000 | 6,217,000 |
Amortization of discount on convertible notes (Note 6) | 0 | 2,684,000 |
Beneficial conversion feature (Note 6) | 0 | 7,067,000 |
In-kind contribution of services | 0 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | (295,000) | 199,000 |
Prepaid expenses and other current assets | (55,000) | (329,000) |
Accounts payable and accrued expenses | 977,000 | 40,000 |
Deferred revenue | (151,000) | 106,000 |
Accrued interest on convertible notes | 8,000 | 187,000 |
Net cash used in operating activities | (14,876,000) | (13,646,000) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Framerate acquisition, net | 0 | (1,506,000) |
Purchase of property and equipment | (9,000) | (73,000) |
Capitalization of software development costs | (1,035,000) | (1,079,000) |
Acquisition of other intangible assets | (146,000) | (506,000) |
Net cash used in investing activities | (1,190,000) | (3,164,000) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of common stock, net of issuance costs | 14,356,000 | 22,458,000 |
Proceeds from note payable (Note 6) | 1,200,000 | 0 |
Proceeds from stock option and warrant exercises | 10,000 | 20,000 |
Net cash provided by financing activities | 15,566,000 | 22,478,000 |
(Decrease) increase in cash and cash equivalents | (500,000) | 5,668,000 |
Cash and cash equivalents - beginning of year | 8,442,000 | 2,774,000 |
Cash and cash equivalents - end of year | 7,942,000 | 8,442,000 |
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES | ||
Automatic conversion of convertible debt to common stock (Note 6) | 0 | 13,793,000 |
Issuance of common stock for Framerate Acquisition (Note 5) | $ 245,000 | $ 1,000,000 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | Super League Gaming, Inc. (“Super League,” the “Company,” “we” or “our”) Super League was incorporated on October 1, 2014 as Nth Games, Inc. under the laws of the State of Delaware and changed its name to Super League Gaming, Inc. on June 15, 2015. We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012, as amended. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, the valuation of convertible notes and related common stock purchase warrants (hereinafter, “warrants”), stock-based compensation expense, accounting for business combinations, and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments. Reclassifications Certain reclassifications to operating expense line items have been made to prior year amounts for consistency and comparability with the current year’s financial statements presentation. These reclassifications had no effect on the reported total operating expenses for the periods presented. Revenue Recognition Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract);and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material. Super League generates revenues from (i) advertising, serving as a marketing channel for brands and advertisers to reach their target audiences of gamers across our network, (ii) content, curating and distributing esports and entertainment content for our own network of digital channels and media and entertainment partner channels and (iii) direct to consumer offers including digital subscriptions, digital goods, gameplay access fees and merchandise sales. Revenue billed or collected in advance is recorded as deferred revenue until the event occurs or until applicable performance obligations are satisfied. Advertising and Sponsorships Advertising revenue primarily consists of direct sales activity along with sales of programmatic display and video advertising units to third-party advertisers and exchanges. Advertising arrangements typically include contract terms for time periods ranging from several days to several weeks in length. For advertising arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the arrangement as we satisfy our performance obligations, over the applicable contract term. As such, revenue is recognized over the contract term based upon estimates of progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation). Revenue from shorter term advertising arrangements that provide for a contractual delivery or performance date is recognized when performance is substantially complete and or delivery occurs. Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns. Sponsorship revenue arrangements may include: exclusive or non-exclusive title sponsorships, marketing benefits, official product status exclusivity, product visibly and additional infrastructure placement, social media rights, rights to on-screen activations and promotions, display material rights, media rights, hospitality and tickets and merchandising rights. Sponsorship revenues also include revenues pursuant to arrangements with brand and media partners, retail venues, game publishers and broadcasters that allow our partners to run amateur esports experiences, and or capture specifically curated gameplay content that is customized for our partners’ distribution channels. Sponsorship arrangements typically include contract terms for time periods ranging from several weeks or months to terms of twelve months in length. For sponsorship arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the agreement as we satisfy our performance obligations, over the applicable contract term. As such, revenue is recognized over the contract term based upon estimates of progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation). Payments are typically due from customers during the term of the arrangement. Revenue from sponsorship arrangements for one-off branded experiences and/or the development of content tailored specifically for our partners’ distribution channels that provide for a contractual delivery or performance date, is recognized at a point in time, when performance is substantially complete and or delivery occurs. Content Content sales revenue is generated in connection with our curation and distribution of esports and entertainment content for our own network of digital channels and media and entertainment partner channels. We distribute three primary types of content for syndication and licensing, including: (1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology. For content arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the arrangement as we satisfy our performance obligations, over the applicable contract term. As such, revenue is recognized over the contract term based upon estimates of progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation). Revenue from shorter term content sales arrangements that provide for a contractual delivery or performance date is recognized when performance is substantially complete and or delivery occurs. Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns. Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns. Direct to Consumer Direct to consumer revenues primarily consist of primarily monthly digital subscription fees, and sales of digital goods and merchandise. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale. Revenue was comprised of the following for the periods presented: Fiscal Year 2020 2019 Advertising and sponsorships $ 1,170,000 $ 1,019,000 Content sales 735,000 32,000 Direct to consumer 159,000 33,000 $ 2,064,000 $ 1,084,000 For the years ended December 31, 2020 and 2019, 55% and 33% of revenues were recognized at a single point in time, and 45% and 67% of revenues were recognized over time, respectively. Cost of Revenues Cost of revenues includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including direct labor, creative and broadcast related contract services, talent and influencers, content capture and production services, direct marketing, prizing, platform costs and venue fees. Advertising Gaming experience and brand related advertising costs include the cost of ad production, social media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising expenses for the years ended December 31, 2020 and 2019 were $187,000 and $409,000, respectively, and are included in selling, marketing and advertising expenses in the accompanying statements of operations. Technology Platform and Infrastructure Costs Technology platform and infrastructure costs include (i) allocated personnel costs, including salaries, noncash stock compensation, taxes and benefits related to our internal software developers and engineers, employed by Super League, engaged in the operation, maintenance, management, administration, testing and enhancement of our proprietary gaming and content technology platform, (ii) third-party contract software development and engineering resources engaged in developing and enhancing our proprietary gaming and content technology platform (iii) the amortization of capitalized internal use software costs, and (iv) technology platform related cloud services, broadband and other technology platform costs. Cash and Cash Equivalents The Company considers all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. The Company’s cash equivalents consisted of investments in AAA rated money market funds for the periods presented. Accounts Receivable Accounts receivable are recorded at the original invoice amount, less an estimate made for doubtful accounts, if any. The Company provides an allowance for doubtful accounts for potential credit losses based on its evaluation of the collectability and the customers’ creditworthiness. Accounts receivable are written off when they are determined to be uncollectible. As of December 31, 2020 and 2019, no allowance for doubtful accounts was considered necessary. Fair Value Measurements Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: Level 1. Level 2 Level 3. The Company does not have any instruments that are measured at fair value on a recurring basis. However, the Company measured certain acquired intangible assets and the Earn-Out using Level 3 inputs on a nonrecurring basis. Concentration of Credit Risks The Company maintains its cash on deposit with a bank that is insured by the Federal Deposit Insurance Corporation. At various times, the Company maintained balances in excess of insured amounts. The Company has not experienced any significant losses on its cash held in banks. Equity Financing Costs Specific incremental costs directly attributable to a proposed or actual offering of securities or debt are deferred and charged against the gross proceeds of the financing. In the event that the proposed or actual financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred financing costs, if any, are included in other current assets in the accompanying balance sheet. For the years ended December 31, 2020 and 2019, financing costs charged against gross proceeds in connection with equity financings totaled $176,000 and $517,000, respectively. Property and Equipment Property and equipment are recorded at cost. Major additions and improvements that materially extend useful lives of property and equipment are capitalized. Maintenance and repairs are charged against the results of operations as incurred. When these assets are sold or otherwise disposed of, the asset and related depreciation are relieved, and any gain or loss is included in the statements of operations for the period of sale or disposal. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets, typically over a three to five-year period. Intangible Assets Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights and (iv) other intangible assets, which are recorded at cost and amortized using the straight-line method over the estimated useful lives of the assets, ranging from three to 10 years. Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life. Goodwill Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company considers its market capitalization and the carrying value of its assets and liabilities, including goodwill, when performing its goodwill impairment test. When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation of whether it is more likely than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is impaired, the Company then applies a two-step impairment test. The two-step impairment test first compares the fair value of the Company’s reporting unit to its carrying or book value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying value of the reporting unit exceeds its fair value, the Company determines the implied fair value of the reporting unit’s goodwill and if the carrying value of the reporting unit’s goodwill exceeds its implied fair value, then an impairment loss equal to the difference is recorded in the statement of operations. The Company operates in one reporting segment. Impairment of Long-Lived Assets The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. Management believes that there was no impairment of long-lived assets for the periods presented herein. There can be no assurance, however, that market conditions or demand for the Company’s products or services will not change, which could result in long-lived asset impairment charges in the future. Stock-Based Compensation Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued. Risks and Uncertainties Concentrations For the years ended December 31, 2020 and 2019, four customers accounted for 49% and five customers accounted for 69% of revenue, respectively. At December 31, 2020, two customers accounted for 39% of accounts receivable. At December 31, 2019, one customer accounted for 70% of accounts receivable. At December 31, 2020, three vendors accounted for 52% of accounts payable. At December 31, 2019, one vendor accounted for 21% of accounts payable. Segment Information The Company operates in one segment. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period. Diluted earnings per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period, including the dilutive effect of common stock equivalents. Potentially dilutive common stock equivalents primarily consist of employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings. All outstanding stock options, restricted stock units and warrants, totaling 4,470,000 and 4,117,000 at December 31, 2020 and 2019, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive. Income Taxes Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the years ended December 31, 2020 and 2019. The Company has elected to include interest and penalties related to its tax contingences as a component of income tax expense. There were no accruals for interest and penalties related to uncertain tax positions for the periods presented. Income tax returns remain open for examination by applicable authorities, generally three years from filing for federal and four years for state. The Company is not currently under examination by any taxing authority nor has it been notified of an impending examination. Recent Accounting Guidance Recent Accounting Pronouncements – Not Yet Adopted. In February 2016, the FASB issued an ASU that requires lessees to present right-of-use assets and lease liabilities on the balance sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative periods in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The Company is evaluating the impact that this guidance will have on its financial position, results of operations and financial statement disclosures. In June 2016, the FASB issued guidance on the measurement and recognition of credit losses on most financial assets. For trade receivables, loans, and held-to-maturity debt securities, the current probable loss recognition methodology is being replaced by an expected credit loss model. For available-for-sale debt securities, the recognition model on credit losses is generally unchanged, except the losses will be presented as an adjustable allowance. The guidance will be applied retrospectively with the cumulative effect recognized as of the date of adoption. The guidance will become effective at the beginning of the Company’s first quarter of the fiscal year ending December 31, 2021 but can be adopted as early as the beginning of the first quarter of fiscal year ending December 31, 2020. The Company is currently assessing the impact that adopting this new accounting guidance will have on its financial statements and footnote disclosures. |
3. PROPERTY AND EQUIPMENT
3. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment consisted of the following at December 31, 2020 and 2019: 2020 2019 Computer hardware $ 3,143,000 $ 3,141,000 Furniture and fixtures 342,000 334,000 3,485,000 3,475,000 Less: accumulated depreciation and amortization (3,347,000 ) (3,236,000 ) $ 138,000 $ 239,000 Depreciation and amortization expense for property and equipment was $110,000 and $861,000 for the years ended December 31, 2020 and 2019, respectively. |
4. INTANGIBLE AND OTHER ASSETS
4. INTANGIBLE AND OTHER ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
INTANGIBLE AND OTHER ASSETS | Intangible and other assets consisted of the following at December 31, 2020 and 2019: 2020 2019 Capitalized software development costs $ 3,291,000 $ 2,363,000 Licenses - 340,000 Tradename (Note 5) 189,000 189,000 Domain 68,000 68,000 Copyrights and other 435,000 289,000 3,983,000 3,249,000 Less: accumulated amortization (2,076,000 ) (1,265,000 ) $ 1,907,000 $ 1,984,000 Amortization expense totaled $1,258,000 and $245,000 for the years ended December 31, 2020 and 2019, respectively. Future amortization expense of intangible and other assets is expected to be as follows: For the years ending December 31: 2021 $ 899,000 2022 584,000 2023 271,000 2024 80,000 2025 38,000 Thereafter 35,000 $ 1,907,000 In September 2019, the Company and a third party entered into an expanded commercial partnership agreement (the “Expanded Agreement”) pursuant to which Super League became the primary consumer-facing brand within the third party’s software platform. In April 2020, we amended our arrangement with the third party terminating certain rights and licenses from the prior agreement, as amended, focused on in-person play in gaming centers, and securing other rights and licenses from the third party, focused on online play at home. As a result of the termination of the rights and licenses related to the prior arrangement, the Company accelerated the amortization of the remaining balance related to the prior rights and licenses included in “Licenses” above, totaling $306,000, and certain capitalized internal use software development costs totaling $107,000, which are included in technology platform and infrastructure expense in the accompanying statement of operations for the year ended December 31, 2020. |
5. BUSINESS COMBINATION
5. BUSINESS COMBINATION | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | On June 3, 2019, Super League and SLG Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”) with Framerate, Inc., a Delaware corporation (“Framerate”), pursuant to which Framerate merged with and into Merger Sub, with Merger Sub continuing as the surviving corporation (the “Acquisition”). The Acquisition was consummated on June 6, 2019 when the certificate of merger of Merger Sub and Framerate was filed with the Secretary of State of the State of Delaware (the “Effective Date”). As consideration for the Acquisition, the Company ratably paid and/or issued to the former shareholders of Framerate an aggregate of (i) $1.5 million paid in cash and (ii) $1.0 million paid by the issuance of a total of 134,422 shares of the Company’s common stock, at a price per share of $7.4395 (the “Closing Shares”). The Merger Sub was dissolved subsequent to the consummation of the Acquisition. The Acquisition was approved by the board of directors of each of the Company and Framerate, and was approved by the stockholders of Framerate. Transaction costs incurred relating to this acquisition were not material. The acquisition of Framerate expands the Company’s digital programming footprint and enhances the Company’s ability to provide value to its gaming and spectator communities through multiple forms of engagement. In addition to the issuance of the Closing Shares, the Merger Agreement provides for the issuance of up to an additional $980,000 worth of shares of the Company’s common stock at the same price per share as the Closing Shares (the “Earn-Out Shares”) in the event Framerate achieves certain performance-based milestones during the two-year period following the closing of the Acquisition, or June 6, 2021 (the “Earn-Out”). One-half of the Earn-Out Shares are issuable on the one-year anniversary of the Effective Date, and the remaining one-half are issuable on the second anniversary of the Effective Date. The fair value of the Earn-Out on the Effective Date was estimated to be $454,000. In June 2020, we issued an additional 32,936 shares of our common stock to the former shareholders of Framerate in connection with the achievement of certain components of the year-one earn-out related performance milestones. The Company determined that the Acquisition constitutes a business acquisition as defined by Accounting Standards Codification (“ASC”) 805, Business Combinations Fair Value Measurements and Disclosures The Company hired the former Chief Executive of Framerate (“Framerate Executive”), who was also a selling shareholder of Framerate. Pursuant to the provisions of the Earn-Out included in the Merger Agreement, in the event that the Framerate Executive is terminated for cause or resigns from his employment with the Company at any time on or before the second anniversary of the Effective Date, and any such resignation is without “Good Reason” as such term is defined in his employment agreement, then the maximum amount of any portion of the Earn-Out that has not yet been earned as of the date of resignation shall be reduced by 44.0164%. Under ASC 805, a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is considered to be compensation for post-combination services, and not acquisition consideration. As such approximately 44% of the estimated fair value of the Earn-Out, or $200,000 was accounted for as deferred compensation expense and being amortized in the statement of operations over the two-year period ending on the second anniversary of the Effective date. The remaining deferred compensation balance, totaling $90,000, was expensed in July 2020 due to the cessation of services. The Earn-Out arrangement does not meet the liability classification criteria outlined in ASC 480, “Distinguishing Liabilities from Equity,” and is both (i) indexed to the Company’s own shares and (ii) classified in shareholders’ equity in the accompanying balance sheet. Equity-classified contingent consideration is measured initially at fair value on the acquisition date and is not remeasured subsequent to initial recognition. As such, the initial value recognized for the Earn-Out on the acquisition date is not adjusted for changes in the fair value of the Earn-Out as of any future settlement date. Subsequent differences between the estimated fair value of the Earn-Out recorded at the acquisition date and the actual amount of Earn-Out paid based on actual performance will be reflected as a charge or credit, as applicable, in the statement of operations. The following table summarizes the fair value of purchase price consideration paid to acquire Framerate: Amount Cash consideration at closing $ 1,515,000 Equity consideration at closing 1,000,000 Fair value of Earn-Out shares 254,000 Total $ 2,769,000 The preliminary purchase price allocation was based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in connection with the acquisition of Framerate, as follows: Amount Accounts receivable $ 15,000 Intangible assets - trade name 189,000 Goodwill 2,565,000 Total purchase price $ 2,769,000 The identifiable intangible asset acquired, totaling $189,000, was comprised of Framerate’s trade name with an estimated useful life of approximately five years, and is included in intangible and other assets, net in the accompanying balance sheet. The trade name intangible asset is being amortized over the estimated useful life on a straight-line basis. Goodwill recognized primarily reflects anticipated cost and growth synergies associated with the combined operations. Management is responsible for determining the fair value of the identifiable intangible assets acquired as of the Effective Date. Management considered a number of factors, including reference to an analysis under ASC 805 solely for the purpose of allocating the purchase price to the assets acquired. The fair values of the acquired intangible asset, as described above, was determined using the following methods: Description Valuation Method Valuation Method Description Assumptions Trade Name Relief-from-Royalty method under the income approach Under the Relief-from-Royalty method, the royalty savings is calculated by estimating a reasonable royalty rate that a third party would negotiate in a licensing agreement. Such royalties are most commonly expressed as a percentage of total revenue involving a trade name. Useful life: 5 years; Royalty Rate: 05%; Discount Rate: 50% Earn-Out Scenario Based Model The payoff structure was determined to be linear and the Earn-Out is payable within two years. Revenue scenarios were estimated and a probability for each scenario based on the likelihood of achieving the forecasted revenues was estimated. The estimated payments from the scenarios were then discounted based on the Company's credit risk and the related risk-free rate. The value per share was then adjusted for the time period through the payout date. The option methodology employed was the Black-Scholes Option Model. Volatility: 75% - 100%; Term 1 -2 years; Risk Free Rate 2.21% - 1.95%; The Acquisition was treated for tax purposes as a nontaxable transaction and as such, the historical tax bases of the acquired assets, net operating losses, and other tax attributes of Framerate will carryover. As a result, no new goodwill for tax purposes was be created in connection with the Acquisition as there is no step-up to fair value of the underlying tax bases of the acquired net assets. The historical balance sheets and statements of operations of Framerate were not material to the Company. |
6. NOTES PAYABLE
6. NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | Long-Term Note Payable On May 4, 2020, the Company entered into a potentially forgivable loan from the U.S. Small Business Administration (“SBA”) resulting in net proceeds of $1,200,047 pursuant to the Paycheck Protection Program (“PPP”) enacted by Congress under the CARES Act administered by the SBA (the “PPP Loan”). To facilitate the PPP Loan, the Company entered into a Note Payable Agreement with a bank (the “Lender”) (the “PPP Loan Agreement”). The PPP Loan will mature on May 4, 2022. However, under the CARES Act and the PPP Loan Agreement, all payments of both principal and interest will be deferred until at least December 4, 2020. The PPP Loan accrues interest at a rate of 1.00% per annum, and interest will continue to accrue throughout the period the PPP Loan is outstanding, or until it is forgiven. The Company will be eligible to apply for forgiveness of all loan proceeds used to pay payroll costs and other qualifying expenses during the 24-week period following receipt of the loan, provided that the Company maintained its employment and compensation within certain parameters during such period. Any amounts forgiven will not be included in the Company’s taxable income. As specifically intended under the program, the PPP Loan, together with our cost savings initiatives, helped us to continue operations without salary reductions, layoffs or furloughs, during the challenging and uncertain economic environment created by the COVID-19 pandemic. The PPP Loan is accounted for as a financial liability in accordance with FASB ASC 470, “ Debt The proceeds from the PPP Loan are recorded as a long-term liability on the balance sheet until either (1) the loan is, in part or wholly, forgiven and the company has been “legally released” or (2) the Company pays off the loan to the Lender. Once the loan is, in part or wholly, forgiven, and legal release is received, the Company will reduce the liability by the amount forgiven and record a gain on extinguishment in the statement of operations in the period of extinguishment. Under the CARES Act, for federal tax purposes, the amount of PPP Loan forgiven is excluded from gross income. In December 2020, the Consolidated Appropriations Act was signed into law, which reversed then existing U.S. Internal Revenue Service guidance provided in prior notices, allowing taxpayers to fully deduct any business expenses, regardless of whether the expense was paid for using forgiven PPP Loan proceeds. In September 2020, California passed tax legislation which conforms to the federal rules for PPP Loan forgiveness, allowing an exclusion from gross income for the amount of PPP Loans that are forgiven, while disallowing the deductions for amounts paid or incurred using the forgiven PPP Loan funds. Under the CARES Act, for federal tax purposes, the amount of PPP Loan forgiven is excluded from gross income. In December 2020, the Consolidated Appropriations Act was signed into law, which reversed then existing U.S. Internal Revenue Service guidance provided in prior notices, allowing taxpayers to fully deduct any business expenses, regardless of whether the expense was paid for using forgiven PPP Loan proceeds. In September 2020, California passed tax legislation which conforms to the federal rules for PPP Loan forgiveness, allowing an exclusion from gross income for the amount of PPP Loans that are forgiven, while disallowing the deductions for amounts paid or incurred using the forgiven PPP Loan funds. Convertible Notes Payable In February through April 2018, the Company issued 9.00% secured convertible promissory notes with a collective face value of $3,000,000 (the “Initial 2018 Notes”). The Initial 2018 Notes (i) accrued simple interest at the rate of 9.00% per annum, (ii) matured on the earlier of December 31, 2018 or the close of a $15,000,000 equity financing (“Qualifying Equity Financing”) by the Company, and (iii) all outstanding principal and accrued interest was automatically convertible into equity or equity-linked securities sold in a Qualifying Equity Financing based upon a conversion rate equal to (x) a 10% discount to the price per share of a Qualifying Equity Financing, with (y) a floor of $10.80 per share. In addition, the holders of the Initial 2018 Notes were collectively issued warrants to purchase approximately 55,559 shares of common stock, at an exercise price of $10.80 per share and a term of five years (the “Initial 2018 Warrants”). In May through August 2018, the Company issued additional 9.00% secured convertible promissory notes with a collective face value of $10,000,000 (the “Additional 2018 Notes”). In May 2018, all of the Initial 2018 Notes and related accrued interest, totaling $3,056,000, were converted into the Additional 2018 Notes, resulting in an aggregate principal amount of $13,056,000 (hereinafter collectively, the “2018 Notes”). The holders of the converted Initial 2018 Notes retained their respective Initial 2018 Warrants. The 2018 Notes (i) accrued simple interest at the rate of 9.00% per annum, (ii) matured on the earlier of the closing of an initial public offering of the Company’s common stock on a national securities exchange or April 30, 2019, and (iii) all outstanding principal and accrued interest was automatically convertible into shares of common stock upon the closing of an IPO at the lesser of (x) $10.80 per share or (y) a 15% discount to the price per share of the IPO. In addition, the holders of the 2018 Notes were collectively issued 1,396,420 warrants to purchase common stock equal to 100% of the aggregate principal amount of the 2018 Notes divided by $9.35 per share (the “2018 Warrants”). The 2018 Warrants are exercisable for a term of five years, commencing on the close of an IPO, at an exercise price of $9.35 and are callable at the election of the Company at any time following the closing of an IPO. The 2018 Notes were secured by a security interest in all of the assets, tangible and intangible, of the Company. The proceeds from the sale of the 2018 Notes, the 2018 Warrants and the Initial 2018 Warrants, were allocated to the instruments based on the relative fair values of the convertible debt instrument without the warrants and of the warrants themselves at the time of issuance. The portion of the proceeds, totaling $5,933,000 allocated to the 2018 Warrants, was accounted for as a discount to the debt, with the offsetting credit to additional paid-in capital. The remainder of the proceeds were allocated to the convertible debt instrument portion of the transaction. The resulting debt discount is amortized over the period from issuance to April 30, 2019, the stated maturity date of the debt. Debt issuance costs were comprised of $389,000 of cash commissions and warrants with a fair value of $223,000, paid and issued, respectively, to third-parties in connection with the debt financing, and are reflected as a discount to the debt instrument, net of accumulated amortization, in the December 31, 2018 balance sheet. Debt issuance costs are amortized over the term of the debt as interest expense in the statement of operations. Concurrent with the closing of the IPO on February 27, 2019, all outstanding principal and accrued interest outstanding under the 2018 Notes totaling $13,793,000 was automatically converted into 1,475,164 shares of the Company’s common stock at a conversion price per share of $9.35. As a result of the automatic conversion of the 2018 Notes and the application of conversion accounting, the Company recorded an immediate charge to interest expense of $1,384,000 for the year ended December 31, 2019, representing the write-off of the unamortized balance of debt discounts associated with the 2018 Warrants and cash commissions and warrants issued to third parties. Unamortized debt discounts at December 31, 2019 and 2018 totaled $0 and $2,684,000, respectively. The non-detachable conversion feature embedded in the 2018 Notes provides for a conversion rate that is below market value at the commitment date, and therefore, represents a beneficial conversion feature (“BCF”). The BCF is generally recognized separately at issuance by allocating a portion of the debt proceeds equal to the intrinsic value of the BCF to additional paid-in capital. The resulting convertible debt discount is recognized as interest expense using the effective yield method. The BCF is measured using the commitment date stock price. However, the conversion feature associated with the 2018 Notes was not exercisable until the consummation of an initial public offering by the Company of its common stock, and therefore, was not required to be recognized in earnings until the IPO related contingency was resolved, which occurred on the IPO Closing Date. The commitment date is the IPO Closing Date and the commitment date stock price was $11.00 per share. The intrinsic value of the BCF on the IPO Closing Date, which was limited to the net proceeds allocated to the debt on a relative fair value basis, was approximately $7,067,000, and is reflected as additional interest expense in the statement of operations for the year ended December 31, 2019. The weighted-average grant date fair value of 2018 Warrants issued during the year ended December 31, 2018 was $7.98. The aggregate fair value of 2018 Warrants that vested during the year ended December 31, 2018 was $10,296,926. The weighted-average exercise price and weighted-average remaining contractual term for the 2018 Warrants was $9.41 and 4.5 years. At December 31, 2019 the aggregate intrinsic value of the 2018 Warrants totaled $(10,230,000). The fair value of Debt Warrants issued was estimated on their respective issue dates using the Black Scholes-Merton option pricing model and the following weighted-average assumptions: Volatility 96 % Risk–free interest rate 2.75 Dividend yield - % Expected life of options (in years) 5 Weighted-average fair value of common stock $ 9.41 |
7. STOCKHOLDERS' EQUITY
7. STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity | |
STOCKHOLDERS' EQUITY | Preferred Stock The Company’s initial certificate of incorporation authorized 5,000,000 shares of preferred stock, par value $0.001 per share. No preferred stock had been issued and outstanding since inception of the Company. In October 2016, the Company’s Board of Directors (the “Board of Directors”) and a majority of the holders of the Company’s common stock approved an amendment and restatement of the certificate of incorporation which, in part, eliminated the authorized preferred stock. In August 2018, the Board of Directors approved a second amendment and restatement of the Company’s amended and restated certificate of incorporation (the “Amended and Restated Charter”) to, in part, increase the Company’s authorized capital to a total of 110.0 million shares, including 10.0 million shares of newly created preferred stock, par value $0.001 per share (“Preferred Stock”), authorize the Board of Directors to fix the designation and number of each series of Preferred Stock, and to determine or change the designation, relative rights, preferences, and limitations of any series of Preferred Stock. The Amended and Restated Charter was approved by a majority of the Company’s stockholders in September 2018, and was filed with the State of Delaware in November 2018. All references in the accompanying financial statements to Preferred Stock have been restated to reflect the Amended and Restated Charter. Common Stock The Amended and Restated Charter also increased the Company’s authorized capital to include 100.0 million shares of common stock, par value $0.001, and removed the deemed liquidation provision, as such term is defined in the Amended and Restated Charter. Each holder of common stock is entitled to one vote for each share of common stock held at all meetings of stockholders. Reverse Stock Split On February 8, 2019, the Company filed an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse split of shares of the Company’s common stock on a one-for-three basis (the “Reverse Stock Split”). All references to common stock, warrants to purchase common stock, options to purchase common stock, early exercised options, restricted stock, share data, per share data and related information contained in the financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split will be rounded down to a whole share, and any effected stockholders will receive a cash payment equal to the value of such fractional shares. Equity Financings In August 2020, the Company issued 4,540,541 shares of common stock at a price of $1.85 per share, raising aggregate net proceeds of approximately $7.6 million, after deducting placement agent fees of $588,000 and other offering expenses totaling $180,000. The offering was conducted pursuant to the Company’s effective Registration Statements on Form S-1 (File No. 333-248248), and a related registration statement filed pursuant to Rule 462(b) under the Securities Act. In addition, pursuant to the terms of the related underwriting agreement, the Company granted to the underwriter a 30-day over-allotment option to purchase up to an additional 681,081 Shares at the same public offering price per share, less discounts and commissions, which was partially exercised in September 2020, resulting in the issuance of 448,440 shares of common stock and net proceeds of $771,000, after deducting placement agent fees of $58,000. In May 2020, the Company issued 1,825,000 shares of common stock at a price of $3.50 per share, raising aggregate net proceeds of approximately $6.0 million, after deducting placement agent fees of $319,000 and other offering expenses totaling $116,000. The offering was made pursuant to an effective shelf registration statement on Form S-3 previously filed with the U.S. Securities and Exchange Commission. The net proceeds from these offerings are intended to be used for working capital and other general corporate purposes, including sales and marketing activities, product development and capital expenditures. The Company may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses. On February 27, 2019, Super League completed its IPO of its common stock, pursuant to which the Company issued and sold an aggregate of 2,272,727 shares of common stock at $11.00 per share, raising aggregate net proceeds of $22,458,000 after deducting underwriting discounts, commissions and offering costs of $2,542,000. Concurrent with the closing of the IPO on February 27, 2019 (the “IPO Closing Date”), in accordance with the related agreements, all outstanding principal and interest for the 9.00% convertible notes outstanding, totaling $13,793,000, was automatically converted into 1,475,164 shares of the Company’s common stock at a conversion price of $9.35. The principal purposes of the IPO were to obtain additional capital to support our operations, to create a public market for our common stock and to facilitate our future access to the public equity markets. The net proceeds received from the IPO were used for working capital and general corporate purposes, including sales and marketing activities, product development and capital expenditures. A portion of the net proceeds were also available for any strategic acquisition of, or investment in, technologies, solutions or businesses that may have complemented our business and or accelerated our growth. The amounts and timing of our actual expenditures, including expenditure related to sales and marketing and product development depended on numerous factors, including the status of our product development efforts, our sales and marketing activities, expansion internationally, the amount of cash generated or used by our operations, competitive pressures and other factors. Upon closing of the IPO, 83,333 options and 125,000 warrants previously granted to the CEO (with an average grant date fair value of $8.50) became fully vested. As a result, the Company recorded an additional $1,770,000 of stock-based compensation during the year ended December 31, 2019. Pursuant to the related underwriting agreement, in connection with the completion of the IPO, for the purchase price of $50.00, the Company issued a warrant to purchase shares of our common stock equal to 3.0% of the shares sold in the IPO, or 68,182 shares, at an exercise price of $11.00 per share (the “Underwriters’ Warrants”). The Underwriters’ Warrants are exercisable during the period commencing from the date of the close of the IPO and ending five years from the closing date of the IPO. The Underwriters’ Warrants represent additional noncash offering costs, with an estimated grant date fair value of $547,000, which was reflected in additional-paid-in capital when issued and as a corresponding offering cost in the statement of shareholders equity for the year ended December 31, 2019. The fair value of the Underwriters’ Warrant was estimated on February 27, 2019, the grant date, using the Black Scholes-Merton option pricing model and the following weighted-average assumptions: (i) volatility of 95%, (ii) risk-free interest rate of 2.5%, and (iii) expected term of five years. |
8. STOCK-BASED INCENTIVE PLANS
8. STOCK-BASED INCENTIVE PLANS | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED INCENTIVE PLANS | The Super League 2014 Stock Option and Incentive Plan (the “Plan”) was approved by the Board of Directors and the stockholders of Super League in October 2014. The Plan was subsequently amended in May 2015, May 2016, July 2017 and October 2018. The Plan allows grants of stock options, stock awards and performance shares with respect to common stock of the Company to eligible individuals, which generally includes directors, officers, employees, advisors and consultants. The Plan provides for both the direct award and sale of shares of common stock and for the grant of options to purchase shares of common stock. Options granted under the Plan include non-statutory options as well as incentive options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended. The Board of Directors administers the Plan and determines which eligible individuals are to receive option grants or stock issuances under the Plan, the times when the grants or issuances are to be made, the number of shares of common stock subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant or stock issuance and the maximum term for which any granted option is to remain outstanding. The exercise price of options is generally equal to the fair market value of common stock of the Company on the date of grant. Options generally begin to be exercisable six months to one year after grant and typically expire 10 years after grant. Stock options and restricted shares generally vest over two to four years (generally representing the requisite service period). The Plan terminates automatically on July 1, 2027. The Plan provides for the following programs: Option Grants Under the discretionary option grant program, the Company’s compensation committee of the Board of Directors may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Super League or its affiliates (including employees, non-employee members of the Board of Directors and consultants) at an exercise price not less than 85% of the fair market value of such shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100% of the fair market value of such shares on the grant date (not less than 110% of fair market value if such employee actually or constructively owns more than 10% of Super League’s voting stock or the voting stock of any of its subsidiaries). Stock Awards or Sales Under the stock award or sales program, eligible individuals may be issued shares of common stock of the Company directly, upon the attainment of performance milestones or the completion of a specified period of service or as a bonus for past services. Under this program, the purchase price for the shares will not be less than 100% of the fair market value of the shares on the date of issuance, and payment may be in the form of cash or past services rendered. Eligible individuals will have no stockholder rights with respect to any unvested restricted shares or restricted stock units issued to them under the stock award or sales program; however, eligible individuals will have the right to receive any regular cash dividends paid on such shares. The initial reserve under the Plan was 583,334 shares of common stock, which reserve was subsequently increased to 1,000,000 shares upon stockholders’ approval in May 2016. In July 2017, the Company amended and restated the Plan to increase the number of shares of common stock reserved thereunder from1,000,000 shares to 1,500,000 shares. In October 2018, the Company amended and restated the Plan to increase the number of shares of common stock reserved thereunder from 1,500,000 shares to 1,833,334 shares. In July 2020, the Company’s shareholders approved an amendment to the Plan to increase the number of shares authorized for issuance from 1,833,334 to 2,583,334. As of December 31, 2020, 588,423 shares remained available for issuance under the Plan. Super League issues new shares of common stock upon the exercise of stock options, the grant of restricted stock, or the delivery of shares pursuant to vested restricted stock units. The compensation committee of the Board of Directors may amend or modify the Plan at any time, subject to any required approval by the stockholders of the Company, pursuant to the terms therein. Stock Options The fair value of stock options granted was estimated on their respective grant dates using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions for the years ended December 31, 2020 and 2019: 2020 2019 Volatility 95 % 95 % Risk–free interest rate .47 % 1.99 % Dividend yield - % - % Expected life of options (in years) 6.02 6.08 Weighted-average fair value of common stock $ 2.23 $ 7.45 A summary of stock option activity for the year ended December 31, 2020 is as follows: Weighted-Average Options (#) Exercise Price Per Share ($) Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) Outstanding at December 31, 2019 1,551,000 $ 8.86 7.51 $ 309,000 Granted 815,000 $ 2.93 Exercised (33,000 ) $ 0.30 Canceled / forfeited (695,000 ) $ 9.42 Outstanding at December 31, 2020 1,638,000 $ 5.59 7.71 $ 308,000 Vested and exercisable at December 31, 2020 812,000 $ 7.47 6.09 $ 296,000 The weighted-average grant date fair value of stock options granted during the years ended December 31, 2020 and 2019 was $2.23 and $5.76, respectively. The aggregate fair value of stock options that vested during the years ended December 31, 2020 and 2019 was $620,000 and $3,989,000, respectively. As of December 31, 2020, the total unrecognized compensation expense related to non-vested stock option awards was $1,864,000, which is expected to be recognized over a weighted-average term of approximately 3.14 years. In February 2020, the Board of Directors approved the cancellation of 540,000 stock options in exchange for 243,000 RSUs (the “Stock Swap”) for seven employees. The stock options canceled had a weighted average exercise price of $10.16 and a weighted average grant date fair value of $8.33. The RSUs issued had weighted average grant date fair value of $2.60 and vest over two years. Cancellation of an existing equity-classified award along with a concurrent grant of a replacement award is accounted for as a modification under ASC 718, “Stock-based Compensation.” Total compensation cost to be recognized is equal to the original grant date fair value plus any incremental fair value calculated as the excess of the fair value of the replacement RSUs over the fair value of the original stock option awards on the cancellation date. Any incremental compensation cost is recognized prospectively over the remaining service period, in addition to the remaining unrecognized grant date fair value. There was no incremental compensation cost in connection with the Stock Swap. Total remaining unrecognized grant date fair value for the Stock Swap was $1,775,000, which is expected to be recognized over a weighted-average term of approximately two years. The net impact of the Stock Swap was to return 297,000 shares to the share reserve under the Plan for the Company’s future employee related incentive and retention activities. Restricted Stock Units The following table summarizes non-vested restricted stock unit activity for the year ended December 31, 2020: Restricted Stock Units (#) Weighted Average Grant Date Fair Value ($) Non-vested restricted stock units at December 31, 2019 29,000 $ 10.40 Granted 382,000 $ 4.68 Vested (29,000 ) $ 10.40 Canceled – Non-vested restricted stock units at December 31, 2020 382,000 $ 4.68 As of December 31, 2020, the total unrecognized compensation expenses related to non-vested restricted stock units was $1,003,000 which will be recognized over a weighted-average term of approximately 1.0 years. Warrants Issued to Employees and Nonemployees for Services A summary of employee and nonemployee warrant activity for the year ended December 31, 2020 is as follows: Weighted-Average Warrants (#) Exercise Price Per Share ($) Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) Outstanding at December 31, 2019 1,031,000 $ 9.92 Expired (67,000 ) $ 9.00 $ - Outstanding at December 31, 2020 964,000 $ 10.02 4.56 $ - Vested and exercisable as of December 31, 2020 964,000 $ 10.02 4.56 $ - Compensation expense related to common stock purchase warrants was $282,000 and $2,182,000 for the years ended December 31, 2020 and 2019, respectively. No warrants were granted to employees or non-employees in exchange for services performed during the periods presented herein. The aggregate fair value of warrants that vested during the years ended December 31, 2020 and 2019 was $206,000 and $2,092,000, respectively. As of December 31, 2020, the total unrecognized compensation expense related to warrants was $0. Noncash Stock Compensation Expense Noncash stock-based compensation expense for the periods presented was comprised of the following: Fiscal Year 2020 2019 Stock options $ 745,000 $ 3,573,000 Warrants 282,000 2,182,000 Restricted stock units 836,000 370,000 Earn-out compensation expense (Note 5) 141,000 58,000 Other - 34,000 Total noncash stock compensation expense $ 2,004,000 $ 6,217,000 Noncash stock-based compensation expense for the periods presented was included in the following financial statement line items: Fiscal Year 2020 2019 Sales, marketing and advertising $ 849,000 $ 635,000 Technology platform and infrastructure 254,000 129,000 General and administrative 901,000 5,453,000 Total noncash stock compensation expense $ 2,004,000 $ 6,217,000 Noncash stock-based compensation expense for the year ended December 31, 2019 included compensation expense resulting from the vesting of certain performance-based options and warrants The fair value of these equity awards was estimated on October 31, 2018, their original grant date, using the Black Scholes-Merton option pricing model and the following weighted-average assumptions: (i) volatility of 93%, (ii) risk-free interest rate of 3.0%, and (iii) expected term of 6.5 years. |
9. INCOME TAXES
9. INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Super League’s provision for income taxes consisted of the following for the years ended December 31, 2020 and 2019: 2020 2019 Current: Federal taxes $ – $ – State taxes Total current $ $ 2020 2019 Deferred: Federal taxes $ 2,919,000 $ 4,098,000 State taxes 886,000 1,374,000 Subtotal 3,805,000 5,472,000 Change in valuation allowance (3,805,000 ) (5,472,000 ) Total deferred – – Provision for income taxes $ - $ - The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following as of December 31, 2020 and 2019. 2020 2019 Deferred tax assets (liabilities): Net operating loss and credits $ 20,799,000 $ 14,456,000 Stock compensation 3,155,000 3,992,000 Accrued liabilities 65,000 - Accrued interest expense - 1,541,000 Fixed assets and intangibles (106,000 ) 118,000 Total deferred tax assets 23,913,000 20,107,000 Valuation allowance (23,913,000 ) (20,107,000 ) Total deferred tax assets, net of valuation allowance $ - $ - A reconciliation of the federal statutory income tax rate and the effective income tax rate is as follows: 2020 2019 Statutory federal tax rate - (benefit) expense 21 % 21 % State tax, net - - Non-deductible permanent items (1 ) (6 ) Change in tax rate - - Valuation allowance (20 ) (15 ) - % - % For the years ended December 31, 2020 and 2019, the Company recorded full valuation allowances against its net deferred tax assets due to uncertainty regarding future realizability pursuant to guidance set forth in the FASB’s Accounting Standards Codification Topic No. 740, Income Taxes At December 31, 2020, the Company had U.S. federal and state income tax net operating loss carryforwards of approximating $74,592,000 and $73,520,000, respectively, expiring through 2040. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation due to the complexity and cost associated with such a study, and the fact that there may be additional such ownership changes in the future. |
10. COMMITMENTS AND CONTINGENCI
10. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Operating Leases The Company leased office space under an operating lease agreement which expired on May 31, 2017 and was amended to a month-to-month lease. In June 2020, we terminated the lease for the majority of our corporate headquarters (approximately 4,965 square feet). As of December 31, 2020 we maintain approximately 1650 square feet of office space on a month-to-month basis. Rent expense for the years ended December 31, 2020 and 2019 was approximately $200,000 and $349,000, respectively, and is included in general and administrative expenses in the accompanying statements of operations. Rental payments are expensed in the statements of operations in the period to which they relate. Scheduled rent increases, if any, are amortized on a straight-line basis over the lease term. Related Party Transactions In May 2018, the Company entered into a consulting agreement with a member of the Board of Directors, pursuant to which the board member provides the Company with strategic advice and planning services for which he receives a cash payment of $7,500 per month from the Company. The consulting agreement had an initial term ending December 31, 2019, and could be extended upon mutual agreement of the board member and the Company. The consulting agreement was extended throughout fiscal year 2020, and continues to be active during fiscal year 2021. |
11. SUBSEQUENT EVENTS
11. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The Company evaluated subsequent events for their potential impact on the financial statements and disclosures through the date the annual audited financial statements were available to be issued and determined that no subsequent events occurred that were reasonably expected to impact the financial statements presented herein. Equity Financings In January 2021, we entered into securities purchase agreements with institutional investors for the registered direct offering of an aggregate of 3,076,924 shares of our common stock at a purchase price of $2.60 per share. The offering closed on January 13, 2021, and resulted in gross proceeds to the Company of $8.0 million. The offering was conducted pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on April 10, 2020 (File No. 333-237626). In February 2021, we entered into securities purchase agreements with institutional investors for the registered direct offering of an aggregate of 2,926,830 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $4.10 per share. The offering closed on February 11, 2021, and resulted in gross proceeds to the Company of $12.0 million. The shares were offered pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on April 10, 2020 (File No. 333-237626). Proposed Acquisition of Mobcrush Streaming, Inc. On March 9, 2021, Super League Gaming, Inc. entered into an Agreement and Plan of Merger (the “MC Merger Agreement”) by and among Mobcrush Streaming, Inc. (“Mobcrush”), the Company, and SLG Merger Sub II, Inc., a wholly-owned subsidiary of the Company (“Merger Co”). The MC Merger Agreement provides for the acquisition of Mobcrush by Super League pursuant to the merger of Merger Co with and into Mobcrush, with Mobcrush as the surviving corporation (the “Merger”). Upon completion of the Merger, Mobcrush will be a wholly-owned subsidiary of Super League, Inc. In accordance with the terms and subject to the conditions of the MC Merger Agreement: (A) each outstanding share of Mobcrush common stock ("Mobcrush Common Stock") and Mobcrush preferred stock ("Mobcrush Preferred Stock", and with the Mobcrush Common Stock, the "Mobcrush Stock") (other than dissenting shares) will be canceled and converted into the right to receive (i) 0.528 shares of the Company's common stock ("Company Common Stock"), as determined in the MC Merger Agreement (the “Share Conversion Ratio”), and (ii) any cash in lieu of fractional shares of Common Stock otherwise issuable under the Merger Agreement (the "Merger Consideration"); (B) vested options of Mobcrush will be assumed by Mobcrush and converted into comparable options that are exercisable for shares of Company Common Stock, with a value determined in accordance with the Share Conversion Ratio; and (C) unvested options of Mobcrush will either be (i) assumed by the Company and converted into comparable options that are exercisable for shares of Company Common Stock, with a value as determined by the Company and Mobcrush prior to the closing of the Merger, or (ii) terminated and re-issued as options that are exercisable for shares of Company Common Stock with a value as determined by the Company and Mobcrush prior to the closing of the Merger. Subject to certain adjustments and other terms and conditions more specifically set forth in the MC Merger Agreement, the Company will be issuing 12,582,204 shares of the Company’s Common Stock as the Merger Consideration. The Merger Agreement contains representations, warranties and covenants of each of the parties thereto that are customary for transactions of this type. The obligations of the Company and Mobcrush to consummate the Merger are subject to certain closing conditions, including, but not limited to the approval of Mobcrush's and the Company’s shareholders. |
2. SUMMARY OF SIGNIFICANT ACC_2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Company believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, impairment of goodwill and intangibles, capitalized internal-use-software costs, the valuation of convertible notes and related common stock purchase warrants (hereinafter, “warrants”), stock-based compensation expense, accounting for business combinations, and accounting for income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments. |
Reclassifications | Certain reclassifications to operating expense line items have been made to prior year amounts for consistency and comparability with the current year’s financial statements presentation. These reclassifications had no effect on the reported total operating expenses for the periods presented. |
Revenue Recognition | Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract);and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material. Super League generates revenues from (i) advertising, serving as a marketing channel for brands and advertisers to reach their target audiences of gamers across our network, (ii) content, curating and distributing esports and entertainment content for our own network of digital channels and media and entertainment partner channels and (iii) direct to consumer offers including digital subscriptions, digital goods, gameplay access fees and merchandise sales. Revenue billed or collected in advance is recorded as deferred revenue until the event occurs or until applicable performance obligations are satisfied. Advertising and Sponsorships Advertising revenue primarily consists of direct sales activity along with sales of programmatic display and video advertising units to third-party advertisers and exchanges. Advertising arrangements typically include contract terms for time periods ranging from several days to several weeks in length. For advertising arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the arrangement as we satisfy our performance obligations, over the applicable contract term. As such, revenue is recognized over the contract term based upon estimates of progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation). Revenue from shorter term advertising arrangements that provide for a contractual delivery or performance date is recognized when performance is substantially complete and or delivery occurs. Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns. Sponsorship revenue arrangements may include: exclusive or non-exclusive title sponsorships, marketing benefits, official product status exclusivity, product visibly and additional infrastructure placement, social media rights, rights to on-screen activations and promotions, display material rights, media rights, hospitality and tickets and merchandising rights. Sponsorship revenues also include revenues pursuant to arrangements with brand and media partners, retail venues, game publishers and broadcasters that allow our partners to run amateur esports experiences, and or capture specifically curated gameplay content that is customized for our partners’ distribution channels. Sponsorship arrangements typically include contract terms for time periods ranging from several weeks or months to terms of twelve months in length. For sponsorship arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the agreement as we satisfy our performance obligations, over the applicable contract term. As such, revenue is recognized over the contract term based upon estimates of progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation). Payments are typically due from customers during the term of the arrangement. Revenue from sponsorship arrangements for one-off branded experiences and/or the development of content tailored specifically for our partners’ distribution channels that provide for a contractual delivery or performance date, is recognized at a point in time, when performance is substantially complete and or delivery occurs. Content Content sales revenue is generated in connection with our curation and distribution of esports and entertainment content for our own network of digital channels and media and entertainment partner channels. We distribute three primary types of content for syndication and licensing, including: (1) our own original programming content, (2) user generated content (“UGC”), including online gameplay and gameplay highlights, and (3) the creation of content for third parties utilizing our remote production and broadcast technology. For content arrangements that include performance obligations satisfied over time, customers typically simultaneously receive and consume the benefits under the arrangement as we satisfy our performance obligations, over the applicable contract term. As such, revenue is recognized over the contract term based upon estimates of progress toward complete satisfaction of the contract performance obligations (typically utilizing a time, effort or delivery-based method of estimation). Revenue from shorter term content sales arrangements that provide for a contractual delivery or performance date is recognized when performance is substantially complete and or delivery occurs. Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns. Payments are typically due from customers during the term of the arrangement for longer-term campaigns, and once delivery is complete for shorter-term campaigns. Direct to Consumer Direct to consumer revenues primarily consist of primarily monthly digital subscription fees, and sales of digital goods and merchandise. Subscription revenue is recognized in the period the services are rendered. Payments are typically due from customers at the point of sale. Revenue was comprised of the following for the periods presented: Fiscal Year 2020 2019 Advertising and sponsorships $ 1,170,000 $ 1,019,000 Content sales 735,000 32,000 Direct to consumer 159,000 33,000 $ 2,064,000 $ 1,084,000 For the years ended December 31, 2020 and 2019, 55% and 33% of revenues were recognized at a single point in time, and 45% and 67% of revenues were recognized over time, respectively. |
Cost of Revenues | Cost of revenues includes direct costs incurred in connection with the satisfaction of performance obligations under our revenue arrangements including direct labor, creative and broadcast related contract services, talent and influencers, content capture and production services, direct marketing, prizing, platform costs and venue fees. |
Advertising | Gaming experience and brand related advertising costs include the cost of ad production, social media, marketing, promotions, and merchandising. The Company expenses advertising costs as incurred. Advertising expenses for the years ended December 31, 2020 and 2019 were $187,000 and $409,000, respectively, and are included in selling, marketing and advertising expenses in the accompanying statements of operations. |
Technology Platform and Infrastructure Costs | Technology platform and infrastructure costs include (i) allocated personnel costs, including salaries, noncash stock compensation, taxes and benefits related to our internal software developers and engineers, employed by Super League, engaged in the operation, maintenance, management, administration, testing and enhancement of our proprietary gaming and content technology platform, (ii) third-party contract software development and engineering resources engaged in developing and enhancing our proprietary gaming and content technology platform (iii) the amortization of capitalized internal use software costs, and (iv) technology platform related cloud services, broadband and other technology platform costs. |
Cash and Cash Equivalents | The Company considers all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. The Company’s cash equivalents consisted of investments in AAA rated money market funds for the periods presented. |
Accounts Receivable | Accounts receivable are recorded at the original invoice amount, less an estimate made for doubtful accounts, if any. The Company provides an allowance for doubtful accounts for potential credit losses based on its evaluation of the collectability and the customers’ creditworthiness. Accounts receivable are written off when they are determined to be uncollectible. As of December 31, 2020 and 2019, no allowance for doubtful accounts was considered necessary. |
Fair Value Measurements | Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: Level 1. Level 2 Level 3. The Company does not have any instruments that are measured at fair value on a recurring basis. However, the Company measured certain acquired intangible assets and the Earn-Out using Level 3 inputs on a nonrecurring basis. |
Concentration of Credit Risks | The Company maintains its cash on deposit with a bank that is insured by the Federal Deposit Insurance Corporation. At various times, the Company maintained balances in excess of insured amounts. The Company has not experienced any significant losses on its cash held in banks. |
Equity Financing Costs | Specific incremental costs directly attributable to a proposed or actual offering of securities or debt are deferred and charged against the gross proceeds of the financing. In the event that the proposed or actual financing is not completed, or is deemed not likely to be completed, such costs are expensed in the period that such determination is made. Deferred financing costs, if any, are included in other current assets in the accompanying balance sheet. For the years ended December 31, 2020 and 2019, financing costs charged against gross proceeds in connection with equity financings totaled $176,000 and $517,000, respectively. |
Property and Equipment | Property and equipment are recorded at cost. Major additions and improvements that materially extend useful lives of property and equipment are capitalized. Maintenance and repairs are charged against the results of operations as incurred. When these assets are sold or otherwise disposed of, the asset and related depreciation are relieved, and any gain or loss is included in the statements of operations for the period of sale or disposal. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets, typically over a three to five-year period. |
Intangible Assets | Intangible assets primarily consist of (i) internal-use software development costs, (ii) domain name, copyright and patent registration costs, (iii) commercial licenses and branding rights and (iv) other intangible assets, which are recorded at cost and amortized using the straight-line method over the estimated useful lives of the assets, ranging from three to 10 years. Software development costs incurred to develop internal-use software during the application development stage are capitalized and amortized on a straight-line basis over the software’s estimated useful life, which is generally three years. Software development costs incurred during the preliminary stages of development are charged to expense as incurred. Maintenance and training costs are charged to expense as incurred. Upgrades or enhancements to existing internal-use software that result in additional functionality are capitalized and amortized on a straight-line basis over the applicable estimated useful life. |
Goodwill | Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets acquired. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company considers its market capitalization and the carrying value of its assets and liabilities, including goodwill, when performing its goodwill impairment test. When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation of whether it is more likely than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is impaired, the Company then applies a two-step impairment test. The two-step impairment test first compares the fair value of the Company’s reporting unit to its carrying or book value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying value of the reporting unit exceeds its fair value, the Company determines the implied fair value of the reporting unit’s goodwill and if the carrying value of the reporting unit’s goodwill exceeds its implied fair value, then an impairment loss equal to the difference is recorded in the statement of operations. The Company operates in one reporting segment. |
Impairment of Long-Lived Assets | The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. Management believes that there was no impairment of long-lived assets for the periods presented herein. There can be no assurance, however, that market conditions or demand for the Company’s products or services will not change, which could result in long-lived asset impairment charges in the future. |
Stock-Based Compensation | Compensation expense for stock-based awards is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense, typically on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. Compensation expense for awards with performance conditions that affect vesting is recorded only for those awards expected to vest or when the performance criteria are met. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of stock option and common stock purchase warrant awards is estimated on the date of grant utilizing the Black-Scholes-Merton option pricing model. The Company utilizes the simplified method for estimating the expected term for options granted to employees due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The Company accounts for forfeitures of awards as they occur. Grants of equity-based awards (including warrants) to non-employees in exchange for consulting or other services are accounted for using the grant date fair value of the equity instruments issued. |
Risks and Uncertainties | Concentrations For the years ended December 31, 2020 and 2019, four customers accounted for 49% and five customers accounted for 69% of revenue, respectively. At December 31, 2020, two customers accounted for 39% of accounts receivable. At December 31, 2019, one customer accounted for 70% of accounts receivable. At December 31, 2020, three vendors accounted for 52% of accounts payable. At December 31, 2019, one vendor accounted for 21% of accounts payable. |
Segment Information | The Company operates in one segment. |
Earnings (Loss) Per Share | Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period. Diluted earnings per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of common stock for the applicable period, including the dilutive effect of common stock equivalents. Potentially dilutive common stock equivalents primarily consist of employee stock options, warrants issued to employees and non-employees in exchange for services and warrants issued in connection with financings. All outstanding stock options, restricted stock units and warrants, totaling 4,470,000 and 4,117,000 at December 31, 2020 and 2019, respectively, have been excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive. |
Income Taxes | Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. Under U.S. GAAP, a tax position is a position in a previously filed tax return, or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not, based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not thresholds are measured using a probability weighted approach as the largest amount of tax benefit being realized upon settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. Management believes the Company has no uncertain tax positions for the years ended December 31, 2020 and 2019. The Company has elected to include interest and penalties related to its tax contingences as a component of income tax expense. There were no accruals for interest and penalties related to uncertain tax positions for the periods presented. Income tax returns remain open for examination by applicable authorities, generally three years from filing for federal and four years for state. The Company is not currently under examination by any taxing authority nor has it been notified of an impending examination. |
Recent Accounting Guidance | Recent Accounting Pronouncements – Not Yet Adopted. In February 2016, the FASB issued an ASU that requires lessees to present right-of-use assets and lease liabilities on the balance sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative periods in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The Company is evaluating the impact that this guidance will have on its financial position, results of operations and financial statement disclosures. In June 2016, the FASB issued guidance on the measurement and recognition of credit losses on most financial assets. For trade receivables, loans, and held-to-maturity debt securities, the current probable loss recognition methodology is being replaced by an expected credit loss model. For available-for-sale debt securities, the recognition model on credit losses is generally unchanged, except the losses will be presented as an adjustable allowance. The guidance will be applied retrospectively with the cumulative effect recognized as of the date of adoption. The guidance will become effective at the beginning of the Company’s first quarter of the fiscal year ending December 31, 2021 but can be adopted as early as the beginning of the first quarter of fiscal year ending December 31, 2020. The Company is currently assessing the impact that adopting this new accounting guidance will have on its financial statements and footnote disclosures. |
2. SUMMARY OF SIGNIFICANT ACC_3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Disaggregation of revenue | Fiscal Year 2020 2019 Advertising and sponsorships $ 1,170,000, $ 1,019,000 Content sales 735,000 32,000 Direct to consumer 159,000 33,000 $ 2,064,000 $ 1,084,000 |
3. PROPERTY AND EQUIPMENT (Tabl
3. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | 2020 2019 Computer hardware $ 3,143,000 $ 3,141,000 Furniture and fixtures 342,000 334,000 3,485,000 3,475,000 Less: accumulated depreciation and amortization (3,347,000 ) (3,236,000 ) $ 138,000 $ 239,000 |
4. INTANGIBLE AND OTHER ASSETS
4. INTANGIBLE AND OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Intangible and other assets | 2020 2019 Capitalized software development costs $ 3,291,000 $ 2,363,000 Licenses - 340,000 Tradename (Note 5) 189,000 189,000 Domain 68,000 68,000 Copyrights and other 435,000 289,000 3,983,000 3,249,000 Less: accumulated amortization (2,076,000 ) (1,265,000 ) $ 1,907,000 $ 1,984,000 |
Future amortization expense of intangible and other assets | For the years ending December 31: 2021 $ 899,000 2022 584,000 2023 271,000 2024 80,000 2025 38,000 Thereafter 35,000 $ 1,907,000 |
5. BUSINESS COMBINATION (Tables
5. BUSINESS COMBINATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Purchase price consideration | Amount Cash consideration at closing $ 1,515,000 Equity consideration at closing 1,000,000 Fair value of Earn-Out shares 254,000 Total $ 2,769,000 |
Assets acquired and liabilities assumed | Amount Accounts receivable $ 15,000 Intangible assets - trade name 189,000 Goodwill 2,565,000 Total purchase price $ 2,769,000 |
6. NOTES PAYABLE (Tables)
6. NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt weighted-average assumptions | Volatility 96 % Risk–free interest rate 2.75 Dividend yield - % Expected life of options (in years) 5 Weighted-average fair value of common stock $ 9.41 |
8. STOCK-BASED INCENTIVE PLANS
8. STOCK-BASED INCENTIVE PLANS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Weighted-average assumptions | 2020 2019 Volatility 95 % 95 % Risk–free interest rate .47 % 1.99 % Dividend yield - % - % Expected life of options (in years) 6.02 6.08 Weighted-average fair value of common stock $ 2.23 $ 7.45 |
Stock option activity | Weighted-Average Options (#) Exercise Price Per Share ($) Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) Outstanding at December 31, 2019 1,551,000 $ 8.86 7.51 $ 309,000 Granted 815,000 $ 2.93 Exercised (33,000 ) $ 0.30 Canceled / forfeited (695,000 ) $ 9.42 Outstanding at December 31, 2020 1,638,000 $ 5.59 7.71 $ 308,000 Vested and exercisable at December 31, 2020 812,000 $ 7.47 6.09 $ 296,000 |
Non-vested restricted stock unit activity | Restricted Stock Units (#) Weighted Average Grant Date Fair Value ($) Non-vested restricted stock units at December 31, 2019 29,000 $ 10.40 Granted 382,000 $ 4.68 Vested (29,000 ) $ 10.40 Canceled – Non-vested restricted stock units at December 31, 2020 382,000 $ 4.68 |
Warrant activity | Weighted-Average Warrants (#) Exercise Price Per Share ($) Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) Outstanding at December 31, 2019 1,031,000 $ 9.92 Expired (67,000 ) $ 9.00 $ - Outstanding at December 31, 2020 964,000 $ 10.02 4.56 $ - Vested and exercisable as of December 31, 2020 964,000 $ 10.02 4.56 $ - |
Noncash stock-based compensation expense | Noncash stock-based compensation expense for the periods presented was comprised of the following: Fiscal Year 2020 2019 Stock options $ 745,000 $ 3,573,000 Warrants 282,000 2,182,000 Restricted stock units 836,000 370,000 Earn-out compensation expense (Note 5) 141,000 58,000 Other - 34,000 Total noncash stock compensation expense $ 2,004,000 $ 6,217,000 Noncash stock-based compensation expense for the periods presented was included in the following financial statement line items: Fiscal Year 2020 2019 Sales, marketing and advertising $ 849,000 $ 635,000 Technology platform and infrastructure 254,000 129,000 General and administrative 901,000 5,453,000 Total noncash stock compensation expense $ 2,004,000 $ 6,217,000 |
9. INCOME TAXES (Tables)
9. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Provision for income taxes | 2020 2019 Current: Federal taxes $ – $ – State taxes Total current 2020 2019 Deferred: Federal taxes $ 2,919,000 $ 4,098,000 State taxes 886,000 1,374,000 Subtotal 3,805,000 5,472,000 Change in valuation allowance (3,805,000 ) (5,472,000 ) Total deferred – – Provision for income taxes $ - $ - |
Deferred tax assets and liabilities | 2020 2019 Deferred tax assets (liabilities): Net operating loss and credits $ 20,799,000 $ 14,456,000 Stock compensation 3,155,000 3,992,000 Accrued liabilities 65,000 - Accrued interest expense - 1,541,000 Fixed assets and intangibles (106,000 ) 118,000 Total deferred tax assets 23,913,000 20,107,000 Valuation allowance (23,913,000 ) (20,107,000 ) Total deferred tax assets, net of valuation allowance $ - $ - |
Effective income tax rate reconciliation | 2020 2019 Statutory federal tax rate - (benefit) expense 21 % 21 % State tax, net - - Non-deductible permanent items (1 ) (6 ) Change in tax rate - - Valuation allowance (20 ) (15 ) - % - % |
1. DESCRIPTION OF BUSINESS (Det
1. DESCRIPTION OF BUSINESS (Details Narrative) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Date of incorporation | Oct. 1, 2014 |
State of incorporation | DE |
2. SUMMARY OF SIGNIFICANT ACC_4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | $ 2,064,000 | $ 1,084,000 |
Sponsorships and Advertising | ||
Revenues | 1,170,000 | 1,019,000 |
Content Sales [Member] | ||
Revenues | 735,000 | 32,000 |
Direct to Consumer | ||
Revenues | $ 159,000 | $ 33,000 |
2. SUMMARY OF SIGNIFICANT ACC_5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Dec. 31, 2020USD ($)Segmentsshares | Dec. 31, 2019USD ($)shares | |
Advertising expense | $ 187,000 | $ 409,000 |
Allowance for doubtful accounts | 0 | 0 |
Financing costs | $ (176,000) | $ (517,000) |
Operating segments | Segments | 1 | |
Anti-dilutive securities | shares | 4,470,000 | 4,117,000 |
Revenue | Point in Time | ||
Concentration risk | 55.00% | 33.00% |
Revenue | Over Time | ||
Concentration risk | 45.00% | 67.00% |
Revenue | Four Customers | ||
Concentration risk | 49.00% | |
Revenue | Five Customers | ||
Concentration risk | 69.00% | |
Accounts Receivable | Two Customers | ||
Concentration risk | 39.00% | |
Accounts Receivable | One Customer | ||
Concentration risk | 70.00% | |
Accounts Payable | Three Vendors | ||
Concentration risk | 52.00% | |
Accounts Payable | One Vendor | ||
Concentration risk | 21.00% |
3. PROPERTY AND EQUIPMENT (Deta
3. PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property and equipment, gross | $ 3,485,000 | $ 3,475,000 |
Less: accumulated depreciation and amortization | (3,347,000) | (3,236,000) |
Property and equipment, net | 138,000 | 239,000 |
Computer Hardware | ||
Property and equipment, gross | 3,143,000 | 3,141,000 |
Furniture and Fixtures | ||
Property and equipment, gross | $ 342,000 | $ 334,000 |
3. PROPERTY AND EQUIPMENT (De_2
3. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 110,000 | $ 861,000 |
4. INTANGIBLE AND OTHER ASSET_2
4. INTANGIBLE AND OTHER ASSETS (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Intangible assets, gross | $ 3,983,000 | $ 3,249,000 |
Less: accumulated amortization | (2,076,000) | (1,265,000) |
Intangible assets, net | 1,907,000 | 1,984,000 |
Capitalized Software Development Costs | ||
Intangible assets, gross | 3,291,000 | 2,363,000 |
Licenses | ||
Intangible assets, gross | 0 | 340,000 |
Tradename | ||
Intangible assets, gross | 189,000 | 189,000 |
Domain | ||
Intangible assets, gross | 68,000 | 68,000 |
Copyrights and Other | ||
Intangible assets, gross | $ 435,000 | $ 289,000 |
4. INTANGIBLE AND OTHER ASSET_3
4. INTANGIBLE AND OTHER ASSETS (Details 1) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
2021 | $ 899,000 | |
2022 | 584,000 | |
2023 | 271,000 | |
2024 | 80,000 | |
2025 | 38,000 | |
Thereafter | 35,000 | |
Total | $ 1,907,000 | $ 1,984,000 |
4. INTANGIBLE AND OTHER ASSET_4
4. INTANGIBLE AND OTHER ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Amortization expense | $ 1,258,000 | $ 245,000 |
5. BUSINESS COMBINATION (Detail
5. BUSINESS COMBINATION (Details) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Business Combinations [Abstract] | |
Cash consideration at closing | $ 1,515,000 |
Equity consideration at closing | 1,000,000 |
Fair value of Earn-Out shares | 254,000 |
Total | $ 2,769,000 |
5. BUSINESS COMBINATION (Deta_2
5. BUSINESS COMBINATION (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Business Combinations [Abstract] | ||
Accounts receivable | $ 15,000 | |
Intangible assets - Trade Name | 189,000 | |
Goodwill | 2,565,000 | $ 2,565,000 |
Total purchase price | $ 2,769,000 |
6. NOTES PAYABLE (Details)
6. NOTES PAYABLE (Details) - Debt Warrants | 12 Months Ended |
Dec. 31, 2020$ / shares | |
Volatility | 96.00% |
Risk-free interest rate | 2.75% |
Dividend yield | 0.00% |
Expected life of options (in years) | 5 years |
Weighted-average fair value of common stock | $ 9.41 |
6. NOTES PAYABLE (Details Narra
6. NOTES PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2020 | |
Debt Disclosure [Abstract] | ||
Interest expense | $ 1,384,000 | |
Unamortized debt discounts | $ 2,684,000 | $ 0 |
8. STOCK-BASED INCENTIVE PLAN_2
8. STOCK-BASED INCENTIVE PLANS (Details) - Stock Options - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Volatility | 95.00% | 95.00% |
Risk-free interest rate | 0.47% | 1.99% |
Dividend yield | 0.00% | 0.00% |
Expected life of options (in years) | 6 years 7 days | 6 years 29 days |
Weighted-average fair value of common stock | $ 2.23 | $ 7.45 |
8. STOCK-BASED INCENTIVE PLAN_3
8. STOCK-BASED INCENTIVE PLANS (Details 1) - Stock Options - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Options | ||
Outstanding at beginning of year | 1,551,000 | |
Granted | 815,000 | |
Exercised | (33,000) | |
Canceled / forfeited | (695,000) | |
Outstanding at end of year | 1,638,000 | 1,551,000 |
Vested and exercisable | 812,000 | |
Weighted-Average Exercise Price | ||
Outstanding at beginning of year | $ 8.86 | |
Granted | 2.93 | |
Exercised | .30 | |
Canceled / forfeited | 9.42 | |
Outstanding at end of year | 5.59 | $ 8.86 |
Vested and exercisable | $ 7.47 | |
Weighted-Average Remaining Contractual Life in Years | ||
Outstanding at end of year | 7 years 8 months 16 days | 7 years 6 months 4 days |
Vested | 6 years 1 month 2 days | |
Exercisable | 6 years 1 month 2 days | |
Aggregate Intrinsic Value | ||
Outstanding at beginning of year | $ 309,000 | |
Outstanding at end of year | 308,000 | $ 309,000 |
Vested and exercisable | $ 296,000 |
8. STOCK-BASED INCENTIVE PLAN_4
8. STOCK-BASED INCENTIVE PLANS (Details 2) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number of Awards | |
Outstanding at beginning of year | shares | 29,000 |
Granted | shares | 382,000 |
Vested | shares | (29,000) |
Canceled | shares | 0 |
Outstanding at end of year | shares | 382,000 |
Weighted-Average Grant Date Fair Value | |
Outstanding at beginning of year | $ / shares | $ 10.40 |
Granted | $ / shares | 4.68 |
Vested | $ / shares | 10.40 |
Canceled | $ / shares | .00 |
Outstanding at end of year | $ / shares | $ 4.68 |
8. STOCK-BASED INCENTIVE PLAN_5
8. STOCK-BASED INCENTIVE PLANS (Details 3) - Warrants | 12 Months Ended |
Dec. 31, 2020USD ($)$ / sharesshares | |
Warrants | |
Outstanding at beginning of year | shares | 1,031,000 |
Expired | shares | (67,000) |
Outstanding at end of year | shares | 964,000 |
Vested and exercisable | shares | 964,000 |
Weighted-Average Exercise Price | |
Outstanding at beginning of year | $ 9.92 |
Expired | 9 |
Outstanding at end of year | 10.02 |
Vested and exercisable | $ 10.02 |
Weighted-Average Remaining Contractual Life in Years | |
Outstanding at end of year | 4 years 6 months 22 days |
Vested and exercisable | 4 years 6 months 22 days |
Aggregate Intrinsic Value | |
Expired | $ 0 |
Outstanding at end of year | $ | $ 0 |
Vested and exercisable | $ | $ 0 |
8. STOCK-BASED INCENTIVE PLAN_6
8. STOCK-BASED INCENTIVE PLANS (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock options | $ 745,000 | $ 3,573,000 |
Warrants | 282,000 | 2,182,000 |
Restricted stock units | 836,000 | 370,000 |
Earn-out compensation expense (Note 5) | 141,000 | 58,000 |
Other | 0 | 34,000 |
Total noncash stock compensation expense | $ 2,004,000 | $ 6,217,000 |
8. STOCK-BASED INCENTIVE PLAN_7
8. STOCK-BASED INCENTIVE PLANS (Details 5) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Total noncash stock compensation expense | $ 2,004,000 | $ 6,217,000 |
Sales, Marketing and Advertising | ||
Total noncash stock compensation expense | 849,000 | 635,000 |
Technology Platform and Infrastructure | ||
Total noncash stock compensation expense | 254,000 | 129,000 |
General and Administrative | ||
Total noncash stock compensation expense | $ 901,000 | $ 5,453,000 |
9. INCOME TAXES (Details)
9. INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | ||
Federal taxes | $ 0 | $ 0 |
State taxes | 0 | 0 |
Total current | 0 | 0 |
Deferred: | ||
Federal taxes | 2,919,000 | 4,098,000 |
State taxes | 886,000 | 1,374,000 |
Subtotal | 3,805,000 | 5,472,000 |
Change in valuation allowance | (3,805,000) | (5,472,000) |
Total deferred | 0 | 0 |
Provision for income taxes | $ 0 | $ 0 |
9. INCOME TAXES (Details 1)
9. INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets (liabilities): | ||
Net operating loss and credits | $ 20,799,000 | $ 14,456,000 |
Stock compensation | 3,155,000 | 3,992,000 |
Accrued liabilities | 65,000 | |
Accrued interest expense | 0 | 1,541,000 |
Fixed assets and intangibles | 106,000 | 118,000 |
Total deferred tax assets | 23,913,000 | 20,107,000 |
Valuation allowance | (23,913,000) | (20,107,000) |
Total deferred tax assets, net of valuation allowance | $ 0 | $ 0 |
9. INCOME TAXES (Details 2)
9. INCOME TAXES (Details 2) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal tax rate - (benefit) expense | 21.00% | 21.00% |
Statutory state tax rate - (benefit) expense | 0.00% | 0.00% |
Non-deductible permanent items | (1.00%) | (6.00%) |
Change in tax rate | 0.00% | 0.00% |
Valuation allowance | (20.00%) | (15.00%) |
Effective tax rate | 0.00% | 0.00% |
9. INCOME TAXES (Details Narrat
9. INCOME TAXES (Details Narrative) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 74,592,000 | $ 73,520,000 |
10. COMMITMENTS AND CONTINGEN_2
10. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 200,000 | $ 349,000 |