Business Context and Reporting Period
Company: Super League Gaming, Inc. (SLGG)
Filing Type: Form 8-K (Current Report)
Date of Report: October 4, 2021
Event: Entry into a Material Definitive Agreement and Completion of Acquisition of Bloxbiz Co. assets and founders' goodwill.
Key Financial Metrics and Transaction Details
This filing reports a specific acquisition transaction rather than periodic financial results (revenue, profit, or cash flow). Key transaction metrics include:
- Total Closing Consideration: $6.0 million paid to Bloxbiz and its founders.
- Cash Component: $3.0 million.
- Stock Component: $3.0 million in Common Stock (valued at $2.91 per share, the closing price on the transaction date).
- Contingent Consideration: Up to $11.5 million total payable based on revenue milestones achieved between the closing date and December 31, 2023.
- Payment Structure for Contingent Consideration: Split equally between cash and Common Stock.
Material Changes and Transaction Structure
The Company acquired substantially all assets of Bloxbiz Co., along with the personal goodwill of founders Samuel Drozdov and Benjamin Khakshoor. The consideration was allocated as follows:
- Bloxbiz: 25% of total consideration.
- Samuel Drozdov: 37.5% of total consideration.
- Benjamin Khakshoor: 37.5% of total consideration.
The stock issuance was made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.
Outlook, Risks, and Contingencies
Management Commentary and Outlook: The acquisition is intended to integrate Bloxbiz's operations and leverage the founders' know-how. Future payments are contingent on achieving specific revenue milestones for the periods ending December 31, 2022, and December 31, 2023.
Risks and Uncertainties: The filing highlights several risks, including:
- Ability to successfully integrate operations and realize anticipated benefits within the expected timeframe.
- Failure to achieve revenue milestones required for contingent consideration payments.
- Potential negative effects on the market price of Common Stock.
- Unknown liabilities and significant transaction costs.
- Challenges in scaling the platform, responding to technological changes, and international expansion.
Investor Verification Checklist
- Verify the specific revenue milestones required to trigger the $11.5 million contingent consideration in the full Asset Purchase Agreement (Exhibit 2.1).
- Review the confidential disclosure schedules referenced in the filing to understand exceptions to representations and warranties.
- Assess the dilution impact of the stock consideration issued at $2.91 per share.
- Monitor future 10-Q and 10-K filings for updates on the integration progress and achievement of revenue targets.