Note 12 – Commitments and Contingencies

Litigations, Claims, and Assessments

The Company is periodically involved in various disputes, claims, liens and litigation matters arising out of the normal course of business. While the outcome of these disputes, claims, liens and litigation matters cannot be predicted with certainty, after consulting with legal counsel, management does not believe that the outcome of these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Frank Ng

On October 4, 2023, Frank Ng, the former Chief Executive Officer of the Company, filed an arbitration demand with the American Arbitration Association alleging that the Company failed to make approximately $1.0 million in payments allegedly due under certain Restricted Stock Unit and separation agreements. Due to nonpayment of arbitration fees, the arbitration was held in abeyance in December 2025.

Thereafter, Frank Ng filed a complaint in the Superior Court of California, County of Orange, asserting arbitration-related and breach of contract claims arising from the same underlying dispute. On June 12, 2026, the court granted in part the Company’s motion to compel arbitration and stayed the court proceedings pending completion of the arbitration. The arbitration has resumed, and the Company has asserted counterclaims against Mr. Ng. A hearing on the merits is scheduled for January 2027. The matter remains pending.

Since the Company is unable to reasonably estimate the amount of the loss, or range of loss, related to the Frank Ng matter, no accrual for this contingency has been included in the accompanying consolidated financial statements.

Operating Leases

The Company’s aggregate lease expense incurred during the three months ended June 30, 2026 and 2025 amounted to $360,468 and $441,583, respectively, of which $328,331 and $349,536, respectively, is included within in-person costs and $32,137 and $92,047, respectively, is included in general and administrative expenses on the accompanying condensed consolidated statements of operations.

The Company’s aggregate lease expense incurred during the six months ended June 30, 2026 and 2025 amounted to $483,541 and $874,787, respectively, of which $413,676 and $699,140, respectively, is included within in-person costs and $69,866 and $175,647, respectively, is included in general and administrative expenses on the accompanying condensed consolidated statements of operations.

A summary of the Company’s right-of-use assets and liabilities is as follows:

A summary of the Company’s remaining operating lease liabilities as of June 30, 2026 is as follows:

Lease Modification

In June 2026, the Company entered into an amendment to its operating lease agreement for its Esports arena in Las Vegas, Neveda. Under the amended lease, all remaining fixed minimum rental payments were eliminated and replaced with variable lease payments equal to a specified percentage of Gross Sales, as defined in the lease agreement.

The amendment was evaluated under ASC 842, Leases, and accounted for as a lease modification. Upon the effective date of the amendment, the Company derecognized the existing operating lease liability and the related right-of-use asset associated with the fixed lease payments. As a result, the Company recognized a gain of approximately $3.4 million, representing the excess of the carrying amount of the lease liability over the carrying amount of the related right-of-use asset derecognized.

Following the modification, lease payments based on a percentage of Gross Sales are accounted for as variable lease payments and are recognized in lease expense in the period in which the underlying sales occur. These variable payments are not included in the measurement of the operating lease liability or right-of-use asset under ASC 842.