Good afternoon, everyone, and thank you for participating in today's conference call to discuss Super League Gaming Financial Results for the Second Quarter Ended June 30, 2019. Joining us today are Super League’s President and CEO, Ann Hand; and CFO, Clayton Haynes. Following their remarks, we’ll open 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. The 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 fact, are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by these forward-looking statements. Please refer to the Company's recent earnings release and to the Company's reports 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 will be available for replay through August 21st, 2019, starting at 8 o'clock pm Eastern Standard 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. Ann?

Thank you very much. Good afternoon, everyone, and thank you for joining us for our second quarterly conference call. As I expressed on our first earnings call, we have found the process of being public Company to be very empowering, and it has supercharged our approach and results. As I think you will hear today, we had a busy second quarter continuing our momentum. Today, I will review some of our recent corporate developments and our growing position in the wider esports ecosystem, and then get into our results against the key performance indicators we laid out at the start of the year. After that, Clayton will review our financials, and we will open it up for questions. So, first, a quick review of some of our commercial highlights of our second quarter as well as past few weeks. Early in Q2, we announced a partnership with ggCircuit whose venue management software is used in hundreds of esports gaming centers around the world. The partnership will help us expand our base of venues to allow us to reach more gamers with the Super League branded experience. We added Capcom Street Fighter V Arcade Edition as our fifth game title, expanding our offering into this highly attractive fighting game genre. We announced a partnership with NetLevel, the first nationwide fiber network for out-of-home entertainment. The partnership allows us to further build out our movie theater footprint on the back of their infrastructure. In June, we announced the acquisition of Framerate, one of the fastest growing social channels on Instagram, and our first acquisition since the IPO. This is an important strategic step in our audience building efforts with the channel that averages over 10 million video views a month, where gamers of all levels can upload their personal esports highlight reels…

Thank you, Ann. Good afternoon, everyone, and thank you for joining us today. As summarized in our earnings release filed earlier today, second quarter 2019 revenues were $223,000 compared to $358,000 for the second quarter of 2018. As we stated on our last call, we have continued our focus in 2019 toward offering a mix of paid and free-to-play, physical and digital events to build audience. And we continue to see the emergence of platform-as-a-service revenue, which generally comes with a more favorable margin profile. While we reported a decline in second quarter revenue relative to the second quarter of 2018, year-to-date 2019 revenues are relatively consistent on a year-to-date basis, and we continue to see a decline in cost of revenues for the 2019 quarterly and year-to-date periods versus a comparable 2018 period. Second quarter and year-to-date 2019 cost of revenues decreased approximately 40% compared to the comparable 2018 period due to operational efficiencies and lower direct costs associated with our revenue-generating physical and digital experiences. Second quarter 2019 operating expenses were $5.7 million, compared to $3.8 million in the comparable prior quarter. Approximately $1 million of the $1.9 million increase in operating expenses was due to higher noncash stock-based compensation costs compared to Q2 of last year due to the vesting of certain performance-based options and warrants upon the achievement of certain operational performance targets during the second quarter of 2019. The remaining increase was driven by higher costs for personnel, marketing, technology, platform development, insurance, and other corporate costs partially offset by lower depreciation and external professional costs. Excluding noncash expenses and the cost associated with now being a public company, we have kept our costs in line with prior year, focusing personnel investment on high-grading staff, rather than large headcount expansion. We continue to be committed…

Thank you, Clayton. In summary, I would say that our goal remains to grow our audience as fast as possible by expanding the number of games we offer, the footprint of venues and the digital channels for gaming viewership. We are confident that revenue growth will accelerate as our audience continues to grow. We believe that by working with game publishers, brand partners and retailers, we’ll be able to generate content and build an audience for that content through both our digital and physical experiences. Even as esports continues to attract massive investments in teams and commitments by publishers, Super League remains one of the few pure play investment opportunities in the industry. We are well-positioned to be at the epicenter of esports growth. And we're meeting or beating all the KPIs we’ve outline, and not in small ways. Again, just to highlight, our newly audience target is 50 times what we set out at the start of the year. We had a goal for 2 million audience views and our new target is 100 million by the end of 2019. In addition to our ongoing active investor outreach and analyst conversations, we will be participating in several investor conferences in the coming months including Gateway, Goldman Sachs and Lake Street in September. We expect that the combination of executing our plan, achieving our KPIs and actively communicating these results to the investment community will result in significant shareholder value enhancement. And with that, Clayton and I will now take your questions. Operator?

Thank you. [Operator instructions] Our first question comes from Mark Argento with Lake Street Capital Markets. Your line is now open.

Just a couple of quick ones. I just wanted to -- obviously a lot of success, supercharging the viewership especially with the acquisition of Framerate. When you think about 100 million viewers, which is a ton of viewers relative to the opportunity from advertising, CPM, could you just talk about how do you start to engage, how do you start to actually monetize that audience? And you talked to a CPM of $40 or $45, I’m guessing that’s a little bit of a different CPM than CPM you could potentially get with the traditional viewership. Maybe you could just talk about that engagement, when we could see some revenue coming on line from that business. And then, I have a follow up for Clayton after.

Yes. If you look at the historic brand partner deals that we’ve done, we’ve been able to give them that high-quality engagement experience that premium experience with our physical events is what usually would garner that kind of a higher CPM. And then, because every brand partner wants that kind of higher volume, lower CPM reach as well, we could go out and we could deliver that audience through influencers and other ways to give them that aggregate package. Now that we have those digital channels ourselves we don't have to go out and buy that reach, which is the classic strategy that most brand partner deals employ. We actually can deliver a perfect beautiful target. So, for example, in our current program right now with Sony Pictures around Angry Birds 2, they are trying to reach a Minecraft group of kids. We have a few hundred thousand kids registered to Minehut platform, engaging the gameplay. We can promote that brand activation directly to them and give them that perfect bull’s eye target and deliver all those millions of impressions in video views as part of our package through our own proprietary channels. So, what it means is out of the gate, is that now with as already owning all of that fast growing digital audience, we can now package much bigger deals to brand partners, so the value of those deals are going to be higher. The gross margin on those deals are going to be better because we have that audience already built into our platform and can reach them. And we haven't even gotten into the advertising side of things. So, when you think about the fact that in just a couple of weeks time, we were able to generate for, say, Sony, 4 million impressions, 1 million video views, imagine it’s in that same Minehut channel, we were dropping other just forms of just traditional advertising content, a banner ad, maybe a screen takedown. And you're right, that's going to be a lower CPM range than what we've been able to get. But, that is just a whole additional source of advertising that we've just begun to scratch the surface on. So, just like most other models will tell you out there, once you have that meaningful critical mass of audience, there's a lot of ways to monetize them. And let's not even forget that ultimately, we want to convert that audience into being direct-to-consumer paying subscribers as well.

That's hopeful color there. And then, Clayton, I just wanted to get your feeling on the balance sheet relatively to cash needs. I think you said cash was just over $16 million at the end of the quarter. You guys consumed roughly $5 million, I know I think about a $1.5 million of that was for the acquisition. So, what's kind of run rate cash consumption, at least the way you're looking at the model for the next few quarters, and relative to when you can start to see some kind of uptake and hopefully some of the ad revenue here starting to flow?

Sure. On a monthly basis, we're still running our cash run rate at a little over $1 million per month, so 3.3 to 3.4 a quarter. So that's consistent with the trends that we recorded after the first quarter of 2019.

And then, do you -- I guess, kind of dovetailing back to my question for Ann. So, do you guys see -- how quickly I guess can you see or potentially start to see engagement from selling ads and generating some type of revenue off of those impressions, given how immense they are at this point?

Yes. I mean, it's a good question. We don't provide guidance. But, what I would say is, is that when we're starting to look at generating, 10 million, 20 million views a month, we're now accelerating all of our plans for that type of advertising revenue. Originally, we thought that was going to be more a part of our 2020 revenue story. And I believe that before the end of the year, we'll be able to at least be able to demonstrate some tangible examples of ways that we're able -- now that we have that critical mass to actually get into a very different type of revenue stream. And to be frank, we wouldn't have gotten there if we were still sitting on that incremental kind of 1 million to 2 million views. So, this is a step change in viewership that should mean that we're pulling for that advertising revenue much faster.

Thank you. And our next question comes from the line of Ilya Grozovsky with National Securities.

On the -- obviously, the registered users are ahead of plan, what is the thought process to when you will begin charging a premium from some of the users for the premium services? Thanks.

Yes. So, when I talked a little bit about that very small beta test that's happening right now inside of our Minehut business, that is where we are charging the small pilot of players, anywhere from $5 to $15 additional a month to give them access to additional tools to enhance their gameplay. We believe just as well, when we talk about like Framerate, the fact that all those amateur players out there are giving us their own user generated highlight content, and we've already started to design some additional tools or services to allow them much like the typical revenue model or business model that you see for game publishers, a more of a premium approach. For free, you get a certain level of services, and then when you want to upgrade into a new expanded type of tool. So, we still have every intention of launching consumer subscription offers. We're pleased that we're already in that piloting of this first one. And our goal is to make sure that by the end of the year, we have a consumer subscription offer launched. And we told the market very transparently that we didn't expect to be doing that until the second half of the year. So, right now we are on track for that.

Okay. And then, what's the timing on the game launches, the new launches?

Yes. So, that really depends on the game publisher strategies that are tied to other marketing programs that they have. But, you should expect that in the October timeframe, you'll see Street Fighter V and PUBG spinning up. But, I do want to say that even though we talk about that six-game-title target that we've already met for the year, you could argue right now we're already north of 10 game titles because we're already, as I mentioned, doing things with NBA 2K. There's a very hot new game called Paladins that we ran a pretty exciting experience for Topgolf around. You'll continue to see us move into more sports titles, more mobile titles, more fighting genre titles. In fact, if you just get on superleague.com right, now you're going to see two unique things we're doing. First is you're going to see Super League offering their own Super League branded experiences across these 10 or so titles. But, more importantly, you're going to see a pretty extensive experience directory that is a home for all esports experiences happening across tons of different physical and digital locations. Because we want Super League to be that home base that allows players to find great esports experiences and find each other. The other thing you'll see is that we're even becoming a portal for parents. We’re telling parents about where there are esports scholarships opportunities for their kids. They’re small things, but those small feature sets that we're bringing are bringing more people to our Super League sites, and also hopefully bringing more gamers together locally.

[Operator instructions] Our next question comes from the line of Mike Latimore with Northland Capital Markets. Your line is open.

On the higher viewership number, you talked a little bit about the advertising opportunity there. Does that -- how does that sort of flow through to the platform-as-a-service opportunity? Does it accelerate anything or just increase the opportunities?

Yes. So, I was kind of going at this a little bit with Mark Argento’s question. So, if you think about it, when you look at somebody like a Sony hiring us for the Angry Birds activation or a Capcom hiring us for Street Fighter V, when we now go out and package together those platform-as-a-service deals we are now able to deliver them anywhere from 5 to 10x the type of audience target we were originally pitching them for. So, the more audience you bring to those packages, the higher dollar amount those are worth. So, that audience is now one of the biggest sales tools we have as we go in and talk to these brand partners to escalate or increase the size of those deal. So, it could mean that the deal that usually we would have priced at 150,000 with maybe a margin of call it 40% is now a deal that can be priced to say 300,000 with a 50% or 60% margin because again we now have this built in audience. So, it’s directly related.

And then, on the Tencent partnership, can you elaborate a little bit on that? Did they reach out to you or did you reach out to them? Is there any sort of a new nuance because it’s more mobile focused? Little more color would be great.

Yes, absolutely. So of course, we have great relationships with all the publishers. And because we're now in a position where we can start ingesting titles faster, you could argue many of them have -- over the last couple years are waiting for us to be ready, and now we are. And obviously Tencent is the largest game publisher in the world. So, it’s not a small thing for us to be a little say that we have now joined in a commercial and business partnership with them. And you know that they have access to tons of titles. What we like about PUBG is it’s allowing us to get another game genre under our belt because certain types of players prefer different types of genres. But, absolutely it’s about as well the fact that we want to add another mobile title. We run Fortnite mobile events, we run Clash Royale mobile events, we want that third title because the trend is, is that increasingly mobile gaming is becoming more and more competitive. You really can play in a heightened competitive game just off your phone and it’s also super accessible. We want people to be able to be gaming with us from anywhere that they are to be able to walk into one of our venues and decide very conveniently to join into a game. And so, having more mobile titles, as well as adding more genres is a big piece of our strategy. And then, of course, as I’ve mentioned to you guys before, we also really do try to think as well about not just having game title specific to genres but also games that people grow from and into, because we want you to establish a relationship with Super League that transcends your interest in just one game title. So, we want to know that Minecraft kid can grow into be one of our Fortnite players or maybe one of our PUBG players.

And then, you hired a new CTO effectively. What are some of his kind of priorities over the next 12 months?

Yes. It’s a great question, because this is just one of the most excited hires that I’ve had in my career. We have really for about 12 to 18 months been really thinking through what we need this position to be. I mean, one of the core things it is, is that the real partnership with our Chief Product Officer and founder David Steigelfest. But, we knew we not only wanted the smartest technologists in the room or in the Company, but we wanted somebody who had squarely been facing in consumer facing businesses. A good example is just the other day, it was Samir driving the conversation about ways we can more quickly start monetizing advertising revenue off of our digital channels. Because he's not just a classic CTO in the back office, he's actually been central into driving the strategies of ways to monetize massive consumer digital audiences, just like he did at IMDb, just like he did at Fandango. And very candidly, he is only -- this is only his fourth week. And it is -- I've noticed the many people I've talked to about it. It's rare to see someone have the kinds of impact he's had in just the first month on job. And he's definitely in kind of the top five of people that I've just witnessed, be decisive, confident and add real value in time. So, I just couldn't be more pleased with this hire and all of the leadership team and Board feels the same.

Right. And then, just last one, Clayton, what should we have stock-based comp and then D&A for the third quarter?

I'm sorry. The second part of your question was?

Just the stock-based comp, and then the depreciation and amortization number for the third quarter?

Okay. With respect to stock-based comp for the second half of 2019, that's going to trend at around $1.3 million in expense, based upon current outstanding grants and awards. And from a depreciation and amortization, it should be relatively consistent on a quarterly basis with what we reported in Q2 2019.

Thank you. And our next question comes from the line of Michael Brcic with National Securities. Your line is open.

Hi. I got some questions. Too long or too many just popping off. First of all, from IPO, the convertibles, the preferreds converted, was there a six months lockup on that?

Yes, there was, and those weren't preferred stock; that was convert -- that was common and converted. So, everybody on our top table was subject to the same lockup period.

Got it. Are you able to -- I'm trying to think of ways of monetizing things, and can you offer like, tournaments or whatever you want to call it, that have even small cash prizes? It’s sort of interesting, like even on the poker sites or whatever, very small amount of money a lot of people will play, is that legal or is that turned into gambling, or have you looked at it? Does that make any sense?

Yes, absolutely. So, originally, we had focused cash prizing more around our youth program and in the form of college scholarships. And we just recently started doing some testing with cash prizes. Now, Super League has a pretty high code of conduct and a pretty high bar on sportsmanship. And so, what we've resisted is, anybody can go and just throw a giant cash prize at something and claim that they got millions of users, we didn't want to buy our way to user registration. We wanted it to be legitimate, valid, targeted customers that we were going for. So, no gimmicks on how we've gone and built that registered user base. We did recently do a couple events with Topgolf where we tested small cash prizes. And we also do charge tournament fees. Players pay to enter them. And we have seen some good results from it. And what we kind of like to do is try to have a good mix of a little bit of cash plus some other kind of flag to keep the experience also socially positive. But, it isn't illegal. It's something that that we have recently started to try out and see how we kind of get different types of results.

Yes. And also maybe the types [ph] of prizes can get into a number of performance [ph] or something like that?

Exactly. That's one of the ideas were testing for the paid subscription.

Do the tournaments have like -- or is that a viable thing where you can actually maybe have a halftime show with some highlights of other stuff and ads and things like that, and that's another way you can look at monetizing?

Exactly. So historically, when we've taken down that physical screen in that venue, we've been able to drop different types of sponsor placement, maybe it's a Logitech ad. Now, imagine that, we could have 10 Topgolfs participating in a set of event, but all the other Topgolfs could be still watching those events and seeing that there's a battle on that given night between Houston and Dallas Topgolf. We can also take all that content, we're amassing gameplay content, and those highlight reels and we can start to package up weekly highlights shows that we can allow to be distributed to physical and digital channels beyond just our Super League experiences. So, you've got it exactly right. I mean, right now to-date, the majority of the ways that we have monetized content is running gameplay, and then dropping brand sponsorship around it. The direction we're going now is we still do that, but way beyond gameplay, we can be capturing content supplied to us at no cost by the users themselves, and packaging it and distributing it in a whole host of different ways to a much wider network of physical and digital locations.

And finally, the drop in revenue, you said it had to do with timing of brand and media sponsorship activities. Can you go a little bit deeper into that, was it delays and why or was it someone didn't re-up and just give us a different color on that?

Yes. No, it's purely a function of timing and revenue recognition requirement. So, we have contracted revenues, but of course we have to adhere two accounting policies and recognize that revenue as those programs advance. So, it really is just due to the fact that when you -- and this is what we've historically been is a brand partner and sponsor revenue stream company, those things are little lumpy and are tied to the completion of those events. And so, it's a timing thing.

Thank you. And I'm not showing any 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.

Thank you. And we want to thank everyone for listening today's call. We look forward to speaking with you our upcoming conferences. Continue to keep your eyes out for great press. We're really proud of all the advancements we've made in just six months of being public, and we know there's a lot more excitement to come. And we’ll speak to you when we report our third quarter results. Thank you again for joining us.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.