Good afternoon, everyone, and thank you for participating in today's conference call to discuss Super League Gaming's Financial Results for the Fourth Quarter Ended December 31, 2020. Joining us today are Super League's President and CEO, Ann Hand; and CFO, Clayton Haynes. Following their remarks, we'll open up the call for your questions. Before we go further, please take note of the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995. This statement provides important cautions regarding forward-looking statements. The company's remarks during today's conference call will include forward-looking statements. These statements, along with other information presented that does not reflect historical facts, are subject to a number of risks and uncertainties. 8-K filed with the Securities and Exchange Commission for more information about the risks and uncertainties that could cause actual results to differ. I would like to remind everyone that this call is being recorded and will be available for replay through March 18th, 2021, starting 8:00 P.M. Eastern Time tonight. A webcast replay will also be available via the link provided in today's press release as well as on the company's website at www.superleague.com. Now, I would like to turn the call over to the President and CEO of Super League Gaming, Ann Hand. Go ahead please.

Good afternoon and thank you for joining us on this momentous day for our company. I can't begin to tell you the palpable enthusiasm and confidence flowing from our all-staffs this morning when we shared our latest news of the proposed acquisition of Mobcrush; a wildly stark contrast to one year ago when we completed our fourth quarter 2019 earnings call and saw the world go into lockdown, but that challenge that upended the world transformed Super League for the better. We saw a surge in engagement that has not only held but continuously grown in very material ways giving us heft and critical mass. It forced us to focus to double down on what was working and it certainly offered us a window to explore inorganic growth in addition to our explosive organic growth. Before I get into today's announcement and what it means for us I want to table set a bit on the wider industry; the trends and our positioning. Our focus has always been to provide competitive video gaming and E-sports entertainment for everyday players of all ages and over the last year we have leaned more and more into putting these tools into the hands of the players themselves to create and share their own gameplay and relevant content with others. This mission speaks to the overall democratization of content creation. The Gen Z millennial thirst to create and share and their desire to spend more and more of their day connecting and communicating in a virtual space and time and in a highly engaging and creative way and gaming is only an entry point. It's bigger than that. Super League is a social media and entertainment platform. Yesterday's Roblox direct listing on the New York Stock Exchange further validated this. Their metaverse has similar…

Thank you Ann and good afternoon everyone and thank you for joining us for today's fourth quarter and year-end 2020 earnings conference call. First I would like to summarize our fiscal 2020 KPI result. Then I will move on to a summary of our Q4 and our full year 2020 financial results and wrap up with a brief summary of some of the details of the proposed M&A transaction we announced today. As you know, each quarter we provide updates on our key non-financial performance indicators that we believe help investors understand, engage the progress we are making with respect to building our business and the long-term opportunity we see in front of us. We will continue to provide KPIs but over time we may focus on different metrics as our business evolves. Currently we continue to focus and report on three primary non-financial KPIs the first being registered users, the second being video views and the third being hours of engagement. Looking at our KPI metrics as of the end of 2020 we saw dramatic increases in our audience size and level of engagement over the course of the 2020 fiscal year. We ended 2020 with nearly 3 million registered users roughly three times the number at the end of 2019 and easily surpassing our goal of 2 million registered users for 2020. In 2020 we experienced over 2 billion video views which is nearly 20 times the number in 2019 and several times the level of video views we had targeted at the beginning of the year. And lastly we saw over 72 million hours of engagement mostly gameplay across all of our platforms nearly five times the total we saw in 2019. We posted a strong year of KPI performance in 2020 and we look forward to…

Thank you Clayton. Before we turn to questions let me offer a bit more context on the key drivers that we have spoken about on previous calls that indicate the underlying health of our business model across our three revenue streams. Some highlights; from our advertising model the revenue traction continues. We have talked about the health of the pipeline. The importance of winning a larger share of advertisers’ wallet and the value of swifter closings and repeat deals. So far in 2021, the average size of our one deals is two times that of 2020 and over 50% is repeat business and six figure deals represent over 35% of the deal opportunities we are pursuing maintaining all the while our premium CPM in the $15 to $20 range. For Super League's direct to consumer business while early we have some strong indicators as well. Through February we have grown to 3.4 million registered users and as mentioned 1 million monthly unique users and in that same month the average user spent approximately 11.5 hours on our platform. We like the trends on player monetization as well. Our average purchase size is holding up at $10 to $12 albeit we still have a small percentage of players who have become buyers with our freemium model but we are improving it and optimizing it. A proof point, our very smart nimble and light marketing investment accounts for over 30% of our new user registrations in the month of February at a mere customer acquisition cost or CAC of less than $0.20 per new user and on the content front our swift pivot to more quickly monetize our content library and our proprietary content technology became a meaningful tranche of revenue in 2020 with a good outlook ahead. We delivered 290 episodes…

Thank you. [Operator Instructions] Your first question comes from the line of Brian Kinstlinger with Alliance Global Partners. Go ahead please.

Great. Thanks so much. I assume Mobcrush generates all its revenue through advertising and if so how much is programmatic versus direct sales and then maybe you can talk about the impact on the cash burns you've burned 16 million each of the last two years. Does Mobcrush improve that burn by itself or does it increase that burn?

Yes. I mean certainly with all M&A activity you're always looking for both the top line amplification as well as the potential synergies that can be born out of the cost and the infrastructure. We do have very highly complementary businesses as I already laid out and while we do believe there will be additional cost synergies by bringing those companies together I think the part that we think is the biggest grab we'll be able to take on the cost side Brian is going to be the infrastructure cost because when you think about us both being entirely cloud-based companies and having the kind of surge of engagement that we're having that is one of the biggest line items on our cost structure. So we're super excited to see what kind of synergies we can gain from that. Obviously we're in the midst of an audit. So we can't get into specifics about that. It was important for me to be able to show you a little bit about the shape of the top line but we really just need to walk through the next week or two, get the audit complete and then we'll be able to file that information and have that full transparency with all of you. As far as the top line goes it's correct. It's fair to say that it's primarily ad revenue much like ours but I have to tell you the Mineville business is a valuable business in itself. It's highly complementary as I said to our Mine hub business and again I'd like the audit to make its way through but it does represent a decent enough amount of that 6 million unaudited revenue number that I mentioned to make it a material leg of revenue going forward. So advertising is still number one for both of us but we see really nice traction and growth on the direct to consumer side.

And just to be clear there's this direct sales not programmatic.

So yes. So thank you for clarifying. Yes. So they do have a direct sales arm as do we which is the primary reason and way that we get that kind of high CPM because we offer that high deep engagement. That said when you look at their video inventory and increasingly ours we have been testing some programmatic video models and we are seeing kind of $10, $12 CPM off that so when our direct sales is not selling out that video inventory we're able to supplement it with programmatic. We think we can apply that same opportunity to some of the video inventory inside of Mobcrush's that inventory as well. What we want to do the key is on programmatic is while there's some minimal amounts of testing we're doing on display programmatic we all know that that kind of ruins customer experience and it's a low CPM model. What we want is we want more and more video units and if we can fill in some of that programmatically and smartly so we don't have to add a direct sales force person every time we expand ad inventory as long as it's good content, we're up for that. So yes I would say right now the companies are primarily driven off direct sales but we're excited about where video programmatic go.

Great and then Mobcrush is you said about 6 million revenue. Super League is about 2 million in 2020 roughly. I didn't do the math, but I assume your KPIs are higher but maybe I'm wrong because I didn't look too closely if they are what are they doing different in terms of execution that Super League can learn and maybe hasn't been doing?

Yes. No. Good question again. So I mean, our KPIs that's why we took the time to really kind of separate them out because they're not completely apples to apples. So when we talk about the fact that we're able to now reach 85 million Americans in the U.S. a lot of that is on the back of the streamer's social reach. That's still reach. It still counts. It's still what advertisers want. It's highly relevant, but it is using our business partners in the middle those great streamers to reach that audience so it's leveraging their kind of social reach and scale. When we talk about the Minecraft businesses that we have Mineville is able to reach 22 million users per year through the Minecraft server system. Minehut is its own owned and operated property so when I talk about the 3.4 million registered users that we have and many of them are on Minehut we own that customer 100% and fully and so that owned and operated property I think Mobcrush would say is very exciting to them because if they can package the kind of reach they're getting through their streamers reach and then couple it with owned and operated they believe that they can get a much greater share of advertiser wallet. We feel the same, we offer brands and advertisers really deep engagement and hey we've had good growth and through that good growth we certainly are now giving them kind of enough critical mass to be interested in very similar to the Netflix deal I talked about in the last call but now imagine we can package with it all of that additional reach those eyeballs off of that streaming audience. So I think those are the differences between the company. I think what…

All right. One last one and then I'll get back in the queue because I have others. It's no secret the ad market seasonal in the first quarter is almost over and typically in the ad market weaker than the fourth quarter. Are you too small for seasonality impact to or that not the case?

Yes. It's a little different the gaming industry. You're absolutely right that 4Q is always typically in the advertiser world strong. The gaming industry benefits a bit because there's a lot of new game launches in 1Q but I do think that right now we don't see extreme seasonality. I think what you've seen more of in our progress last year is that we are continually improving quarter-on-quarter. Now that doesn't mean it's always going to be perfectly that way and a stair step but what Mike would say if he were on the call is that sometimes he sees a little bit of a dip in 2Q because he's been writing a bit of that the game publisher, new game release wave in 1Q but I think that between the two of us we'll be able to smooth that out.

Great. I'll get back into my other two questions.

And your next question comes from the line of Allen Klee with Maxin Group. Your line is open.

Yes. Hi, could you tell us what you're thinking, what your plans are for potentially rolling out subscriptions in 2021?

Yes. So we do have already a subscription model inside Minehut. When people are participating in our marketplace they can choose a monthly purchase to upgrade their server capability. So it's small but we do have the mechanism for subscription as well as those one-time digital good purchases. For the most part inside Mineville for their direct to consumer model it is those one-time purchases of player entry fees or cosmetic purchases but what I am excited about is if you think about subscription in a bigger sense, right now Mobcrush is a free toolkit. When you start to look at some of the broadcast technology that we have inside virtual house studios we believe there could be a really interesting play there to put some of that technology into their suite of tools and offerings and perhaps create an upgrade more of a freemium model where those kind of highest ranking streamers are looking for an advanced set of content production and broadcast tools. So we believe that it's a worthy exploration to see what is the role inside Mobcrush for subscription because we know the market likes recurring revenue and then continue to expand subscription inside our own Super League properties as well. And then there's always licensing technology too Allen. So right now, we have as I mentioned big name media companies who are trying out our virtual house studios product for their own production needs and it's not about gaming and Esports. So we believe that there could be as well technology licensing opportunities. Very similarly there could be technology licensing opportunities on the Mobcrush side of things with their great streamer, mid-tier streamer toolkit and if those things occur those could take the shape as some kind of monthly subscription type model more of like a B2B or white label model.

Okay. How do you think about as people get vaccinated the opportunity for you to start doing brick and mortar type of events that you had prior to the pandemic and what that could potentially represent?

Yes. I mean, look I spent a lot of my career in retail. My dad was a franchisee and owned a lot of restaurants and I grew up working in them and we're rooting for that brick and mortar operator and we still enjoy our great partnerships with Topgolf and Cinemark theaters and others. So when they're ready to come back I believe they're going to need us more than ever as a new way to bring foot traffic back in and try to reach a younger audience and use their spaces and try to optimize that capacity in as many ways as possible. I have said though on previous calls I think we'll do it a little differently now. We've advanced the tech enough that we really don't need to be as hands-on with it. So if that retail partner is interested in pop-up Esports experiences or other types of entertainment I think that's another retail licensing subscription type model where we can offer them to pay some kind of toll gate or monthly fee to use our technology to drive more people into their venues. I like that. That was always the original vision of the retail model was at some point we just really let the brick and mortar owner do the heavy lifting as far as marketing the event. They know their customer better than anyone. Getting people there, making sure it's a great experience, not Super League doing it from afar and so I think with the vaccinations getting underway when we come back to retail we'll have a much cleaner model with a stronger margin profile.

Okay. My last question is somewhat philosophical but you currently monetize a bit of a small fraction of the digital viewers that you have and I know that you get a high premium for that but how do you think about the opportunity of expanding it with programmatic and technology where even if you don't get the high CPM getting something for something that you're getting nothing for could actually be quite meaningful potentially on such a large user base that you've created. So any thoughts on that?

Yes. I mean this is, you're right it's philosophical. I mean we so protected no different than a lot of digital platforms out there in the early days. It was all about let's free model let's get as many people onto the platform as possible really focused that number one priority is a great experience. We didn't want to quickly try to monetize it because we didn't want to turn them off from the experience and we know like gamers value that experience. They value their community and so with that we've really tried to be careful about where we introduce ad inventory and make sure that it is improving the overall experience and I think the Netflix deal that I spoke on the last call is a perfect example of that. I mean kids were having a ball and the unique gameplay experience that we created. They were watching cool trailers. They weren't just seeing Netflix logos everywhere. Now that said your question about programmatic. I think it really goes back to I just don't want us to become a company that overly leans into display. Display is annoying for all of us. And so I think the key is that video it is engaging and fun and I think the key for us will be to find more and more video inventory that we can put into our combined systems. Now the good news is that Mobcrush has that. When a streamer is streaming they can opt in to participate in the advertising economy by saying yes I'm happy to promote Red Bull and that is an ad unit that Red Bull is paying for and it is a premium ad unit and so it's more about that type of programmatic that we really want to focus on going forward and remember it's got that ad block technology to it as well. And so we can guarantee to that brand or advertiser that they're getting what they're paying for but I do want to just be careful about programmatic and turn it on smartly and I really want it to be focused on video units where you can see $10 and up CPMs and look I have no doubt between the capability at Mobcrush and Mike's talents and what we've worked so hard to build organically. I think we're going to be able to really look at how do we preserve premium CPMs but to your point sell out a heck of a lot more of those units.

Okay. Thank you very much.

And your next question will come from Bill Morrison with National Securities. Your line is open.

Yes. Can you hear me?

I can hear you Bill.

Hi Ann. Great quarter. Lots of interesting stuff going on. Just on the merger itself so can you remind me the surviving entity is Mobcrush roughly you're going to issue like 12.5 million shares is that it?

Clayton, you want to take that?

Yes. That's correct. That is correct.

Okay. Good. On the sales team side can you the relative like size of both sales teams and like the relative efficiency of both and also then whose tools are more advanced for advertising and is there any like plans for having like a programmatic direct platform not using a sell side platform. Those are my main questions. Thanks.

Yes. Definitely on the Mobcrush side on your last point there have been some tech that's been built to kind of create a little bit more of a again I don't want to use the term programmatic but something that is a little bit more rinse and repeat or ways that others can kind of take that inventory and sell it for us without us having to continue to build up the direct sales team and so there are some explorations going on that. I would say again for the most part most of the advertising sales to date for both firms are coming from that direct side though. As far as the teams go we find them very synergistic. Certainly Mobcrush has a very seasoned team, direct sales team. We just started building up our direct sales team about a year ago. Ours has really been focused a lot on youth and brands and advertisers trying to find youth gaming and so in some ways we've really kind of started to dominate in that vertical. So you think about the repeat business we continue to do with Moose toys even the Disney Plus and the Netflix deals were targeting young gamers with family friendly new releases. So what's kind of nice is we've kind of been building out that lane and while --

Okay. So it sounds like she may have dropped. I just sent her a quick note to that effect. She should be dialing back in shortly.

Okay. Thanks.

Did you have any other questions there Bill?

No Clayton maybe you can help me so what's the relative size of the teams and then you were talking about getting to it like an efficiency level like 50% was like a shorter term goal. How is that on both sides?

It's my understanding in terms of the size of the teams I believe on the Mobcursh I believe it's in the 9 to 10 range and then on the Super League side that's in 5 to 6 range and then in terms of the sales efficiency I know Ann has spoken about that in the past in terms of levels that we might want to get to. I've not had a chance to dive into the sales efficiency sort of on the Mobcrush side just yet and as we continue to work towards trying to build up our sales force efficiency over time.

Okay. Good. I'll jump back into the queue. Appreciate it.

Okay.

I'm back. Sorry guys. Hello?

Okay. Hi, Ann. So I am just curious on the sales efficiency on the Super League side how close are you to the 50% level and that's kind of where we left off.

Yes. I think the best estimate I have for you on that right now Bill is that we're kind of in that kind of 20% to 25% range. What we're finding is that when brands are wanting to do business with us I guess it's a good thing because a lot of these deals are coming in and in the kind of six figure range but it means they're doing full take downs and then we'll have kind of quiet periods where we don't have that full takedown happening. As we've talked about kind of like 80% is like a really super high efficiency high performing team and we're still kind of trying to march up that curve. I think what's going to be exciting is when we sit down and really work with the Mobcrush sales team and again a lot of this under Mike's leadership to really look at their efficiency metrics because I don't want to quote those right now and misquote them but look at what we can learn from each other, how we can align across verticals, how we can combine most importantly our ad inventory and so when they're going out and selling something to a Red Bull or an Anheuser-Busch they should be packaging all of our age-appropriate ad content with it just like we should be packaging their younger ad inventory against some of our younger verticals. So I just look forward to the next call where I can start to share with you what we see is the combined entity and how we're performing against it but it's just a little too soon for me to report on it.

Okay, great. Congrats on the transaction. Appreciate it.

Thank you. We're super excited. We looked at a lot of companies and over the last year and boy a lot of them I think we would have gotten on a call and you guys would have said this feels like a pivot and it is a wonderful moment when you see that both of us have been refining our business model as we've known each other. Our offices are just a few blocks away from each other in Santa Monica before we both gave them up and to see us finally converge to a point where there's so much alignment it just felt to both companies like it was a match made in heaven.

Yes that's what seems like that to me. Congrats and thanks.

Thank you.

Hey Ann if you could just double check my recollection on the size of Mobcrush sales team?

Mobcrush's sales team is more in the 10%. so they're about two XRs and I would say they've just they've been added longer a very seasoned group of people and it just again super complementary.

[Operator Instructions] And for our last question we have Brian Kinstlinger with Alliance Global Partners.

Great. I have two more. Thanks. It's kind of a follow-up to that talking about fill rates of ads I know in the past about three quarters ago maybe even two you talked about all the inventory and the potential represents for ad revenue what are the biggest impediments to fill rates and when do you see that inflection point I mean to Allen's point your top 50 in terms of you you're talking about so when is that inflection point of when you can start to get, see stronger fill rates?

Yes. I mean that's what we achieve when we combine. So announcing today is the first step out of the gate. When we start to go forward and tell advertisers the added half we can bring by putting it together. It's just almost self-fulfilling that we're going to grab a bigger share of wallet, more repeat business because we become a go-to for them. One of the go-to places one of the rare kind of gaming centric advertising solutions for them. So I do think that once we start seeing us putting out packages together we're going to see all those health metrics go the right way, better fill through rates, preserving that good CPM certainly continuing repeats and bigger and bigger average deals. So that's what we're so excited we're chomping at the bit to start doing and so I think it's inevitable. We've already bringing them under confidentiality brought that sales team together and the enthusiasm. These are hunters by nature and so the enthusiasm in the call when they were realizing sharing pipeline and talking about the opportunities if we became a combined company were materials. So I think that you'll start to see by the time we're reporting next already proof points of us selling more faster and bigger deals but the good news is we were already starting to improve on those sales effectiveness metrics on our own. As I talked about 50% of our deals this year Super League alone are repeat deals. We're already trending with a higher overall deal size. But as you and Bill said now let's put our money where our mouth is and start showing that we leave no impression behind that we can sell out more and more of that and if we can smartly fill in programmatic I'm all for it. I absolutely want to be able to scale this model and I think there's a smart way to do programmatic without suppressing our overall CPM rate.

Great. Lastly to that to another point you just mentioned in 3Q you had two customers that were ran rather large campaigns. I believe it was Netflix and Disney Plus not that I'm sure. Were those customers at least that ran large campaigns in 3Q the same customers that were your two that represented 36% of revenue in the fourth quarter?

So certainly, we continue to have more deals in the pipeline with both of those customers. The nice thing is for us is that the larger customers that we had in 4Q like Snapchat and other kind of big-name media companies I think show that we're starting to have them, we don't just have, it wasn't a one-time fluke solution for Netflix that them and their competition are coming back to us as a go-to for their next kind of appropriate releases that are targeting that type of audience. So no, it was not just the same kind of basket of customers. It was new customers but it was all with that same kind of heft of the ones that we talked about in 3Q and like I said the little bit of tidbit I can share about 4Q is 50% repeat and so that is inevitably from that pool of people that we've talked about for last year.

Okay. Thanks very much.

Okay.

Excuse me speakers, I am not showing any further questions. At this time this concludes our question and answer session. I would now like to turn the call back over to Ms. Hand for closing remarks.

Okay. Well other than me losing connection for a bit I want to thank you for joining the call today. Again it's a fantastic day for Super League and a really bright future going forward just the company couldn't be more ecstatic and we're just so excited to join forces with the Mobcrush folks and their great brand. We look forward to speaking to you at our upcoming conferences and when we report our first quarter results in May. Stay safe.

Ladies and gentlemen this concludes today's teleconference. Thank you for participating. You may now disconnect your lines.