What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-15 · 219 added, 264 removed, 857 unchanged (36% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

457,077 415,119

Other Receivables

Unbilled receivables

53 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

$ 881,690 $ 1,349,331 $ 2,838,908 $ 3,925,618

53 unchanged sentences

SHARPLINK GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

FOR THE three and six months ended June 30, 2024 and 2023

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (DEFICIT)

FOR THE three and nine months ended September 30, 2024 and 2023

Common/Ordinary shares

3 unchanged sentences

Balance, December 31, 2022

2,688,541 $ 537,731 6,630 1,326 12,481 $ 2,496 $ 76,039,605 $ ( 29,000 ) $ ( 73,565,641 ) $ 2,986,517

- - - - - - - - ( 2,823,746 ) ( 2,823,746 )

Stock-based compensation expense

- - - - - - 152,034 - - 152,034

Warrants issued in conjunction with convertible debenture

- - - - - - 1,174,229 - - 1,174,229

Dividends on Series B preferred stock in Series A-1 preferred stock

- - 250 50 - - ( 50 ) - - -

Balance, March 31, 2023

2,688,541 537,731 6,880 1,376 12,481 2,496 77,365,818 ( 29,000 ) ( 76,389,387 ) 1,489,034

- - - - - - - - ( 3,441,158 ) ( 3,441,158 )

Stock-based compensation expense

- - - - - - 167,630 - - 167,630

Deemed dividends on Series B preferred stock anti-dilutive provision

- - - - - - 48,633 - ( 48,633 ) -

Dividends on Series B preferred stock in Series A-1 preferred stock

- - 250 50 - - ( 50 ) - - -

Balance, June 30, 2023

2,688,541 537,731 7,130 1,426 12,481 2,496 77,582,031 ( 29,000 ) ( 79,879,178 ) ( 1,784,494 )

Stock-based compensation expense

Issuance of ordinary shares for cashless exercised warrants

Issuance of ordinary shares to SportsHub shareholders which were previously reserved for future issuance

Deemed dividend on Series B preferred stock anti-dilutive provision

Dividends on Series B preferred stock in Series A-1 preferred stock

Balance, September 30, 2023

Balance, December 31, 2023

2,863,734 $ 572,770 7,202 1,440 12,481 2,496 77,909,981 ( 29,000 ) ( 87,857,456 ) ( 9,399,769 )

- - - - - - - - 12,350,356 12,350,356

Domestication equity adjustment - Note 1

- ( 572,476 ) - ( 1,439 ) - ( 2,495 ) 576,410 - - -

Stock-based compensation expense

- - - - - - 42,152 - - 42,152

Shares issued for vested restricted stock

75,000 - - - - - 108,000 - - 108,000

Issuance of common stock for exercise of warrants

266,667 27 - - - - 159,973 - - 160,000

Warrant settlement agreement - Note 8

- - - - - - ( 900,000 ) - - ( 900,000 )

Issuance of common stock for exchange of warrants - Note 8

156,207 15 - - - - 210,879 - ( 6,503 ) 204,391

Warrant exchange agreement - deemed dividend - Note 8

- - - - - - 44,619 - ( 44,619 ) -

Warrant exchange agreement, issuance of pre-funded warrants - Note 8

- - - - - - 287,150 - - 287,150

Balance, March 31, 2024

3,361,608 336 7,202 1 12,481 1 78,439,164 ( 29,000 ) ( 75,558,222 ) 2,852,280

- - - - - - - - ( 462,959 ) ( 462,959 )

Stock-based compensation expense

- - - - - - 43,052 - - 43,052

Shares issued for vested restricted stock

75,000 - - - - - 104,800 - - 104,800

Shares sold for cash

71,200 7 - - - - 71,349 - - 71,356

Warrant exchange amendment - Note 8

- - - - - - 152,386 - - 152,386

Balance, June 30, 2024

3,507,808 $ 343 7,202 $ 1 12,481 $ 1 $ 78,810,751 $ ( 29,000 ) $ ( 76,021,181 ) $ 2,760,915

Shares issued for vested restricted stock

Stock-based compensation expense

Issuance of common stock for exercise of warrants

Balance, September 30, 2024

See accompanying notes to these condensed consolidated financial statements.

2 unchanged sentences

Includes cash flow activities from both continuing and discontinued operations

For the Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

11,887,397 ( 6,264,904 )

Net income (loss) from discontinued operations, net of tax

14,564,872 ( 1,701,662 )

Net loss from continuing operations

$ ( 2,677,475 ) $ ( 4,563,242 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

2 unchanged sentences

Amortization of debt discount

71,781 196,778

Amortization of prepaid stock issued for services

Change in fair value

( 255,819 ) 678,037

Accrued interest on convertible debenture

Deferred tax expense

( 7,155 ) ( 62,218 )

Stock-based compensation expense

73,163 136,498

Changes in assets and liabilities

Accounts receivable

97,223 ( 66,138 )

Unbilled receivables

Other receivables

( 368,743 ) -

Due from Rsports Interactive, Inc.

Prepaid expenses and other current assets

195,042 ( 124,646 )

Accounts payable and accrued expenses

( 1,080,970 ) 609,596

Contract liabilities

Customer deposits and other current liabilities

Net cash provided by (used in) operating activities – continuing operations

( 3,952,960 ) ( 2,832,754 )

Net cash used in operating activities - discontinued operations

( 17,002,007 ) ( 9,211,756 )

Net cash used in operating activities – continuing operations

Net cash (used in) provided by operating activities - discontinued operations

Net cash used in operating activities

( 20,954,967 ) ( 12,044,510 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures for equipment

( 1,719 ) ( 10,978 )

Proceeds from sale of intellectual property

Capital expenditures for internally developed software

- ( 114,160 )

Net cash used in investing activities – continuing operations

148,281 ( 125,138 )

Net cash provided by (used in) investing activities – continuing operations

Net cash used in investing activities - discontinued operations

( 18,857,834 ) ( 343,206 )

Net cash used for investing activities

( 18,709,553 ) ( 468,344 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from convertible debenture and purchase warrants

( 4,148,571 ) 4,000,000

Proceeds from sale of common stock

1 unchanged sentence

Repayment of line of credit

( 6,900,000 ) -

Payments on long-term debt

( 2,070,479 ) ( 314,600 )

Proceeds from exercise of warrants

Net cash generated by (used in) financing activities – continuing operations

( 12,337,694 ) 3,685,400

Net cash generated by financing activities - discontinued operations

( 5,835,352 ) 683,156

Net cash (used in) generated by financing activities - discontinued operations

Net cash generated by (used in) financing activities

( 18,173,046 ) 4,368,556

Net change in cash

( 57,837,566 ) ( 8,144,298 )

Cash and restricted cash, beginning of period including discontinued operations

60,441,130 51,105,486

Cash and restricted cash, end of period including discontinued operations

2,603,564 42,961,188

Less cash from discontinued operations

( 167,964 ) ( 42,358,930 )

Cash and restricted cash, end of period

$ 2,435,600 $ 602,258

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for interest

485,531 286,898

Cash paid for taxes

366,678 63,934

Extension of maturity of operating lease liability

1 unchanged sentence

Settlement agreement, liability issued for warrants

( 900,000 ) -

Issuance of common stock in exchange of warrants

1 unchanged sentence

Deemed Dividend

44,619 48,633

Warrant exchange agreement, issuance of pre-funded warrants

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE three and six months ended June 30, 2024 and 2023

FOR THE three and nine months ended September 30, 2024 and 2023

Note 1 – Basis of Presentation

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(the “Company,” “SharpLink,” “we” or “our”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

In the opinion of the Company, the foregoing statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of June 30, 2024 and December 31, 2023 , as well as its results of operations and cash flows for the three and six months ended June 30, 2024 and 2023 .

In the opinion of the Company, the foregoing statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of September 30, 2024 and December 31, 2023 , as well as its results of operations for the three and nine months ended September 30, 2024 and 2023 .

The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements as of that date.

2 unchanged sentences

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to rules and regulations of the SEC.

Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete financial statement presentation.

Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by GAAP for a complete financial statement presentation.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2023 , which are included in the Company’s Annual Report on Form 10 -K filed with the SEC on March 29, 2024.

12 unchanged sentences

On February 13, 2024, SharpLink Gaming Ltd.

(“SharpLink Israel” and former parent company) completed its previously announced domestication merger (“Domestication Merger”), pursuant to the terms and conditions set forth in an Agreement and Plan of Merger (the “Domestication Merger Agreement”), dated June 14, 2023 and amended July 24, 2023, among SharpLink Israel, SharpLink Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of SharpLink Gaming, Inc.

(“Domestication Merger Sub”) and SharpLink Gaming, Inc.

(“SharpLink US”).

(“SharpLink US”), SharpLink Israel, SharpLink Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of subsidiary of SharpLink US (Domestication Merger Sub) .

The Domestication Merger was achieved through a merger of Domestication Merger Sub Ltd.

3 unchanged sentences

As a result of the Domestication Merger, all SharpLink Israel ordinary shares outstanding immediately prior to the Domestication Merger automatically converted, on a one -for- one basis, into the right to receive, and become exchangeable for, shares of SharpLink US common stock, par value $ 0.0001 per share (“Common Stock”) and all preferred shares, options and warrants of SharpLink Israel outstanding immediately prior to the Domestication Merger converted into or exchanged for equivalent securities of SharpLink US on a one -for- one basis.

The following represents the change in the par value based on the outstanding ordinary and preferred shares to common and preferred stock after the redomestication on February 13, 2024:

The following represents the change in the par value based on the outstanding ordinary and preferred shares to common and preferred stock after the Domestication Merger on February 13, 2024:

Ordinary Shares

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Certain amounts in prior periods have been reclassified to reflect the impact of the discontinued operations treatment in order to conform to the current period presentation.

During the three months ended June 30, 2024, we realigned our organizational structure and resources to more closely align with our strategic priorities.

During the nine months ended September 30, 2024 , we realigned our organizational structure and resources to more closely align with our strategic priorities.

As a result of the change, we have one reportable segment, consisting of Affiliate Marketing, for the purpose of making operational and resource decisions and assessing financial performance.

4 unchanged sentences

The resulting monetary assets and liabilities are translated into U.S.

dollars at exchange rates prevailing on the subsequent balance sheet date.

dollars at exchange rates prevailing on the balance sheet date.

Revenue and expense components are translated to U.S.

2 unchanged sentences

Reverse Share Split

On April 23, 2023, the Company effected a one -for- ten ( 1:10 ) reverse share split of all the Company’s share capital and adopted amendments to its Memorandum of Association and Second Amended and Restated Articles of Association (“M&AA”), whereby the Company (i) decreased the number of issued and outstanding ordinary shares, nominal value NIS 0.60 per share, from 26,881,244 to 2,688,541;

On April 23, 2023, SharpLink Israel effected a one -for- ten ( 1:10 ) reverse share split of all the Company’s share capital and adopted amendments to its Memorandum of Association and Second Amended and Restated Articles of Association (“M&AA”), whereby the Company (i) decreased the number of issued and outstanding ordinary shares, nominal value NIS 0.60 per share, from 26,881,244 to 2,688,541;

(ii) reduced the total number of the Company’s authorized shares under its M&AA from 92,900,000 shares of ordinary shares, nominal value NIS 0.06 (USD 0.02 ) per share, to 9,290,000 shares of ordinary shares, nominal value NIS 0.60 (USD 0.20 ) per share;

3 unchanged sentences

Discontinued Operations

In June 2022, the Company’s Board of Directors approved management to enter into negotiations to sell Israel-based Mer Telemanagement Solutions Ltd.

In June 2022, SharpLink Israel's Board of Directors approved management to enter into negotiations to sell Israel-based Mer Telemanagement Solutions Ltd.

(“MTS” or “Enterprise TEM”).

The Company completed the sale of MTS on December 31, 2022.

Accordingly, the assets and liabilities of the MTS business are separately reported as assets and liabilities from discontinued operations as of June 30, 2024 and December 31, 2023 .

Accordingly, the assets and liabilities of the MTS business are separately reported as assets and liabilities from discontinued operations as of September 30, 2024 and December 31, 2023 .

The results of operations and cash flows of MTS for all periods are separately reported as discontinued operations.

In December 2023, the Company’s Board of Directors approved management to enter into a Letter of Intent with RSports to purchase the Company’s Sports Gaming Client Services and SportsHub Gaming Network businesses.

In December 2023, the Company discontinued its C4 technology due to the lack of market acceptance.

C4 technology centered on cost effectively monetizing our own online audience and our customers’ respective online audiences of U.S.

In December 2023, SharpLink Israel's Board of Directors approved management to enter into a Letter of Intent with RSports to purchase the Company’s Sports Gaming Client Services and SHGN businesses.

In December 2023, SharpLink Israel discontinued its C4 technology due to the lack of market acceptance.

C4 technology centered on monetizing our own online audience and our customers’ respective online audiences of U.S.

fantasy sports and casual sports fans and casino gaming enthusiasts by converting them into loyal online sports and iGaming bettors.

5 unchanged sentences

See Note 3 for an amendment to the PA agreement and Note 4.

The Company has discontinued operations for the Sports Gaming Client Services and SportsHub Gaming Network businesses.

The Company is in the process of closing its remaining legal entities in MTS in order to simplify its legal structure.

The Company has discontinued operations for the Sports Gaming Client Services and SHGN businesses.

The Company is in the process of closing its legal entities in MTS in order to simplify its legal structure.

Nasdaq Notice

On July 11, 2024 , SharpLink received a letter from Nasdaq Listing Qualifications (the "Letter") indicating that the Company is no longer in compliance with the minimum bid price requirement for continued listing set forth in Listing Rule 5550 (a)( 2 ), which requires listed securities to maintain a minimum bid price of $1.00 per share.

The rules also provide SharpLink a compliance period of 180 calendar days to regain compliance.

According to the Letter, the Company has until January 7, 2025 to regain compliance with the minimum bid price requirement.

SharpLink can regain compliance if at any time during this 180 -day period, the closing bid price of its Common Stock is at least $1.00 for a minimum of ten consecutive business days, in which case SharpLink will be provided with written confirmation of compliance by Nasdaq and this matter will be closed.

In the event that the Company fails to regain compliance after the initial 180 -day period, SharpLink may then be eligible for additional time if it meets the continued listing requirements for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will be required to provide written notice of its intention to cure the deficiency during the second compliance period equal to an additional 180 calendar days.

If SharpLink cannot demonstrate compliance by the end of the second compliance period, Nasdaq will notify SharpLink that its Common Stock is subject to delisting.

The Letter has no immediate effect on SharpLink’s listing or the trading of its Common Stock, and during the grace period, as may be extended, the Company’s Common Stock will continue to trade on The Nasdaq Capital Market under the symbol “SBET.”

Evaluation of Strategic Alternatives

On July 18, 2024 , SharpLink announced that its Board of Directors (“Board”) has initiated a formal review process to evaluate strategic alternatives for the Company.

The Board and management team are taking a measured approach to considering multiple proposals that have been received by the Company and other proposals it expects to receive.

SharpLink has been exploring strategic alternatives that include, but are not limited to, a sale, merger, strategic business combination or other transactions.

SharpLink has not set a deadline or definitive timetable for completion of the strategic alternatives review process and there can be no assurance that this process will result in the Company pursuing a transaction or any other strategic outcome.

Recently Issued Accounting Pronouncements Not Yet Adopted

11 unchanged sentences

Note 2 – Going Concern

During the three and si x months ended June 30, 2024 and 2023 , the Company had net loss from continuing operations of $( 916,664 ) and $( 2,406,059 ) For the three months ended June 30, 2023, respectively, and $( 2,677,475 ) and $( 4,563,242 ) respectively;

and cash used for operating activities from continuing operations of $( 3,952,960 ) and $( 2,832,754 ) for the six months ended June 30, 2024 and 2023 , respectively.

For the three and nine months ended September 30, 2024 and 2023 , the Company had a net loss from continuing operations of $( 787,992 ) and $( 2,027,447 ), respectively, and for the nine months ended September 30, 2024 and 2023, the net loss from continuing operations totaled $( 3,465,467 ) and $( 6,590,689 ) respectively.

The Company used cash for operating activities from continuing operations of $( 4,434,002 ) and $( 3,820,153 ) for the nine months ended September 30, 2024 and 2023 , respectively.

In January 2024, the Company completed the Sale of our Sports Gaming Client Services and SHGN business units for $ 22.5 million in an all cash transaction.

1 unchanged sentence

In addition, the Company redeemed the outstanding convertible debenture issued to Alpha Capital Anstalt (“Alpha”) for 110 % of the outstanding balance, plus accrued and unpaid interest, for $ 4,484,230 in aggregate, thereby satisfying all obligations under the debenture and discharging the debt on the balance sheet.

We may need to raise additional capital to fund the Company’s growth and future business operations.

On May 1, 2024, Company entered into an ATM Sales Agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (the “Agent”) pursuant to which the Company may offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares of its common stock, par value $ 0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $ 1,676,366 , subject to certain limitations on the amount of Common Stock that may be offered and sold by the Company set forth in the ATM Sales Agreement (the “Offering”).

The Company is not obligated to make any sales of Shares under the ATM Sales Agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs.

As of November 14, 2024, SharpLink has raised gross proceeds of $ 71,343 from sales of Shares under the ATM Sales Agreement.

In addition to funds that may be raised through the ATM Sales Agreement, we may need to raise additional capital to fund the Company’s growth and future business operations.

We cannot be certain that additional funding will be available on acceptable terms, or at all.

If we are not able to secure additional funding when needed to support our business growth and to respond to business challenges, track and comply with applicable laws and regulations, develop new technology and services or enhance our existing offering, improve our operating infrastructure, enhance our information security systems to combat changing cyber threats and expand personnel to support our business, we may have to delay or reduce the scope of planned strategic growth initiatives.

If we are not able to secure additional funding when needed to support our business and to respond to business challenges, track and comply with applicable laws and regulations, develop new technology and services or enhance our existing offering, improve our operating infrastructure, enhance our information security systems to combat changing cyber threats and expand personnel to support our business, we may have to delay or reduce the scope of our planned strategic initiatives.

Moreover, any additional equity financing that we obtain may dilute the ownership held by our existing shareholders.

6 unchanged sentences

The Subsidiary Seller owns all of the outstanding membership interests of Sports Technologies, LLC, a Minnesota limited liability company, Holdings Quinn, LLC, a Delaware limited liability company and SHGN owns all of the issued membership interests in SHReserve, a Minnesota limited liability company;

SHPA, a Pennsylvania limited liability company, and SHHoldings, a Minnesota limited liability company, and SHOperations, a Minnesota limited liability company (collectively referred to as the “Targets”).

The PA contemplated the sale of the Company’s Sports Gaming Client Services and SHGN business units to the Buyer, by selling all of the issued and outstanding membership interests of the Targets and the Acquired Subsidiaries for $ 22,500,000 in an all cash transaction SHHoldings LLC owns all of the membership interests in Virtual Fantasy Games Acquisitions, LLC, a Minnesota limited liability company;

SHPA, a Pennsylvania limited liability company, and SHHoldings LLC, a Minnesota limited liability company, and SHOperations, a Minnesota limited liability company (collectively referred to as the “Targets”).

SHHoldings LLC owns all of the membership interests in Virtual Fantasy Games Acquisitions, LLC, a Minnesota limited liability company;

LeagueSafe Management, LLC, a Minnesota limited liability company and SportsHub Regulatory, LLC, a Minnesota limited liability company.

On May 8, 2024, SharpLink entered into an amended and fully restated Post Closing Assignment Agreement with RSports, whereby SharpLink and RSports have agreed to amend the PA to exclude the transfer/sale of SHGN and have agreed to the assignment/sale of the Acquired Subsidiaries membership interests in SHReserve and SHPA to be made directly to RSports upon and subsequent to the approval of a petition by the Pennsylvania Gaming Control Board.

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The gain is preliminary and subject to finalization of post-closing adjustments pursuant to the PA, the Post Closing Assignment Agreement and PCCA Agreement.

In the statement of cashflows for the six months ended June 30, 2024 , the net cash used in investing activities - discontinued operations is due to cash received from the sale of business of $ 22,500,000 , net of the cash transferred of $ 41,357,834 .

In the statement of cashflows for the nine months ended September 30, 2024 , the net cash used in investing activities - discontinued operations is due to cash received from the sale of business of $ 22,500,000 , net of the cash transferred of $ 41,357,834 .

The majority of the cash transferred of $ 41,357,834 was reflected in discontinued operations customer deposits liability and deferred revenue of $ 36,959,573 and $ 4,888,704 , respectively.

During the three and six months ended June 30, 2024 , SharpLink paid RSports $ 70,420 and $ 93,597 , respectively, for use of accounting service personnel.

RSports paid SharpLink $ 21,588 and $ 53,154 under the PCCA agreement for the three and six months ended June 30, 2024, respectively.

During the three and nine months ended September 30, 2024 , SharpLink paid RSports $ 38,816 and $ 132,413 , respectively, for use of accounting service personnel under the PCCA agreement.

RSports paid SharpLink $ 21,929 and $ 75,083 under the PCCA agreement for the three and nine months ended September 30, 2024 , respectively.

Note 4 – Discontinued Operations

6 unchanged sentences

The historical results of these business segments have been reflected as discontinued operations in our consolidated financial statements for all periods prior to the closing date of the Sale of Business on January 18, 2024.

In June 2022, the Company’s Board of Directors authorized management to enter into negotiations to sell MTS.

The Company negotiated a Share and Asset Purchase Agreement which was closed on December 31, 2022.

1 unchanged sentence

The assets and liabilities remaining post transaction are in the process of winding down subsequent to the year ended December 31, 2022.

Accordingly, the assets and liabilities of the MTS business were separately reported as assets and liabilities from discontinued operations as of June 30, 2024 and June 30, 2023 .

Accordingly, the assets and liabilities of the MTS business were separately reported as assets and liabilities from discontinued operations as of September 30, 2024 and September 30, 2023 .

The results of operations and cash flows of MTS for all periods are separately reported as discontinued operations.

During the three months ended June 30, 2024, the Company was notified by the Buyer of an earn-out payment due to SharpLink in connection with the sale and accrued $ 297,387 in an earn-out payment to be received from the Buyer.

During the second quarter of 2024, the Company was notified by the Buyer of an earn-out payment due to SharpLink in connection with the sale and recorded $ 297,387 in an earn-out receivable to be received from the Buyer.

Payment was received by the Company in July 2024.

No further payment is expected.

During the three months ended June 30, 2024, in accordance with the dissolution of certain MTS entities, the Company wrote-off $ 400,669 of aged liabilities in the statement of operations for discontinued operations.

No further earn-out payment is expected.

During the second quarter of 2024, in accordance with the dissolution of certain MTS entities, the Company wrote-off $ 400,669 of aged liabilities in the statement of operations for discontinued operations.

This write-off was recorded in the Other (expense) income line item below.

1 unchanged sentence

In December 2023, the Company discontinued its C4 technology due to the lack of market acceptance.

C4 technology centered on cost effectively monetizing our own online audience and our customers’ respective online audiences of U.S.

C4 technology centered on monetizing our own online audience and our customers’ respective online audiences of U.S.

fantasy sports and casual sports fans and casino gaming enthusiasts by converting them into loyal online sports and iGaming bettors.

2 unchanged sentences

For the Three Months Ended

For the Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

For the Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

$ 17,621 $ 1,920,592 $ 431,199 $ 5,992,053

19 unchanged sentences

( 107,112 ) ( 815,963 ) 15,044,337 ( 2,513,181 )

Provision for income tax expenses

Income tax (benefit) expense

( 9,973 ) 6,137 576,604 10,573

1 unchanged sentence

$ ( 97,139 ) $ ( 822,100 ) $ 14,467,733 $ ( 2,523,754 )

The following table presents a reconciliation of the carrying amounts of major classes of assets and liabilities of the Company classified as discontinued operations as of June 30, 2024 and December 31, 2023 :

The following table presents a reconciliation of the carrying amounts of major classes of assets and liabilities of the Company classified as discontinued operations as of September 30, 2024 and December 31, 2023 :

September 30,

Carrying amounts of major classes of assets included as part of discontinued operations:

14 unchanged sentences

$ 243,141 $ 67,805,379

September 30,

Carrying amounts of major classes of liability included as part of discontinued operations:

5 unchanged sentences

Customer obligations

( 246 ) 50,249,095

Line of credit

6 unchanged sentences

Equipment, net

Equipment consists of computers, furniture and fixtures and is presented net of accumulated depreciation from continuing operations for a net book value of $ 6,168 and $ 8,792 as of June 30, 2024 and December 31, 2023 , respectively.

Depreciation expense from continuing operations for the three months ended June 30, 2024 and 2023 was $ 2,140 and $ 3,006 , respectively, and $4, 343 and $ 5,907 , respectively, for the six months ended June 30, 2024 and 2023 .

Depreciation expense for discontinued operations for the three months ended June 30, 2024 and 2023 was $ 0 and $ 2,381 , respectively and was $ 1,044 and $ 9,507 , respectively, for the six months ended June 30, 2024 and 2023.

Equipment consists of computers, furniture and fixtures and is presented net of accumulated depreciation from continuing operations for a net book value of $ 4,624 and $ 8,792 as of September 30, 2024 and December 31, 2023 , respectively.

Depreciation expense from continuing operations for the three months ended September 30, 2024 and 2023 was $ 1,544 and $ 3,459 , respectively, and $5,88 7 and $ 9,366 respectively, for the nine months ended September 30, 2024 and 2023 .

Depreciation expense for discontinued operations for the three months ended September 30, 2024 and 2023 was $ 0 and $ 5,399 , respectively and was $ 1,044 and $ 14,906 , respectively, for the nine months ended September 30, 2024 and 2023 .

Intangible assets, net

Intangible assets, net of accumulated amortization as of June 30, 2024 and December 31, 2023 consisted of the following:

Intangible assets, net of accumulated amortization as of September 30, 2024 and December 31, 2023 consisted of the following:

Weighted Average Amortization Period (Years)

1 unchanged sentence

Accumulated Amortization

Balance, June 30, 2024

Balance, September 30, 2024

Acquired technology

9 unchanged sentences

$ 1,166,824 $ 998,712 $ 168,112

Amortization expense from continuing operations on intangible assets for the three and six months ended June 30, 2024 was $ 1,230 and $ 2,461 , respectively.

Amortization expense from discontinued operations was $ 0 and $ 23,469 for the three and six months ended June 30, 2024, respectively.

For the three and six months ended June 30, 2023 , amortization expense from continuing operations was $25,198 and $47,660 respectively.

Amortization expense for the discontinued operations was $ 167,118 and $328,679 for the three and six months ended June 30, 2023, respectively.

Amortization expense from continuing operations on intangible assets for the three and nine months ended September 30, 2024 was $ 1,245 and $ 3,706 , respectively.

Amortization expense from discontinued operations was $ 0 and $ 23,469 for the three and nine months ended September 30, 2024 , respectively.

For the three and nine months ended September 30, 2023 , amortization expense from continuing operations was $ 28,158 and $ 78,267 respectively.

Amortization expense for the discontinued operations was $ 172,968 and $ 501,647 for the three and nine months ended September 30, 2023 , respectively.

As of December 31, 2023 , the Company impaired, net $ 849,565 for the customer relationship and internally developed software in Affiliate Marketing Services due to the loss of future revenue by the exit of Affiliate Marketing Services' largest customer from the European market.

4 unchanged sentences

There was $ 6,350,000 outstanding as of December 31, 2023 .

In connection with the Sale of Business in January 2024, the revolving credit line was paid off.

In connection with the Sale of Business in January 2024, the revolving credit line was paid off in its entirety.

Note 7 – Debt

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The discount for warrants, the Original Issuance Discount (“OID”) and the initial allocation of fair value of compound derivatives reduce the initial carrying amount of the convertible notes.

The carrying value is accredited to the stated principal amount at contractual maturity using the effective-interest method with a corresponding charge to interest expense.

The carrying value is the stated principal amount at contractual maturity using the effective-interest method with a corresponding charge to interest expense.

Debt discounts are presented on the condensed consolidated balance sheets as a direct deduction from the carrying amount of that related debt.

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The Debenture initially accrues interest at the rate of 8 % per annum for the first 12 months from the February 15, 2023, at the rate of 10 % per annum for the ensuing 12 months, and thereafter until maturity, at the rate of 12 %, Interest may be paid in cash or ordinary shares of the Company or a combination thereof at the option of the Company;

provided that interest may only be paid in shares if the Equity Conditions (as defined in the Debenture) have been satisfied, including shareholder approval.

provided that interest may only be paid in shares if the Equity Conditions (as defined in the Debenture) have been satisfied.

The Debenture includes a beneficial ownership blocker of 9.99 %.

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At the time of execution, the Company classified the Warrant as an equity contract and performed an initial fair value measurement.

As the Warrant was issued with the sale of the Debenture, the value assigned to the Warrant was based on an allocation of proceeds, subject to the allocation to the Debenture.

As the Warrant was issued with the assumption of the Debenture, the value assigned to the Warrant was based on an allocation of proceeds, subject to the allocation to the Debenture.

The Company recorded a debt discount for the Warrant of $ 1,174,229 , based on the Black Scholes option-pricing model which was calculated independently of the fair value of the Debenture, and recorded the Warrant as additional paid-in capital in the condensed consolidated balance sheet as of December 31, 2023 .

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The Pre-Funded Warrant and the Warrant Repurchase Balance were valued using Black Scholes option-pricing model.

As part of this transaction, the Company recorded a deemed dividend of $ 44,619 as presented in the statement of stockholders’ equity for the six months ended June 30, 2024 .

As part of this transaction, the Company recorded a deemed dividend of $ 44,619 as presented in the statement of stockholders’ equity for the nine months ended September 30, 2024 .

On June 30, 2024, SharpLink negotiated an Amendment to the Exchange Agreement (the "Amendment") to reduce the strike price per warrant of the unexchanged balance of the 2023 Warrants Repurchase Balance from $ 4.07 to $ 0.0001 and to remove the re-purchase option.

The modification to the Exchange Agreement was valued on June 29, 2024, the day before the modification, using Black Scholes option-pricing model.

The Company recorded a fair value adjustment of $ 17,996 on the condensed consolidated statements of operations for the six months ended June 30, 2024 and removed the remaining accrued warrant liability of $ 152,386 through an adjustment to additional paid in capital.

The modification to the Exchange Agreement was valued on June 29, 2024, the day before the modification, using the Black Scholes option-pricing model.

The Company recorded a fair value adjustment of $17,996 on the condensed consolidated statements of operations during the second quarter of 2024 and removed the remaining accrued warrant liability of $ 152,386 through an adjustment to additional paid in capital.

The fair value of the Warrant Repurchase balance and the Pre-Funded Warrant are estimated on the following dates using the Black Scholes option pricing model with the following assumptions:

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The fair value of the warrant liability was

June 30, 2024.

September 30, 2024 .

Fair Value, December 31, 2023

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Settlement of warrant liability due to amendment

Fair Value, June 30, 2024

Fair Value, September 30, 2024

As disclosed in Note 8 , the Debenture and the Warrant were reported at fair value at issuance.

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Fair Value - December 31, 2023

At inception, the Company valued the Debenture using a Monte Carlo Simulation model using the value of the underlying stock price of $ 3.50 , exercise price of $ 8.75 , expected dividend rate of 0 %, risk-free interest rate of 3.96 % and volatility of 40.0 %.

At inception, the Company valued the Debenture using a MCS model using the value of the underlying stock price of $ 3.50 , exercise price of $ 8.75 , expected dividend rate of 0 %, risk-free interest rate of 3.96 % and volatility of 40.0 %.

The Company estimated the term of the warrant to be 2.9 years.

On December 31, 2023, the Company valued the Debenture using a Monte Carlo Simulation model using the expected dividend rate of 0 % and the risk-free interest rate of 5.60 %.

On December 31, 2023 , the Company valued the Debenture using a MCS model using the expected dividend rate of 0 % and the risk-free interest rate of 5.60 %.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors.

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The fair value of the re-priced warrants on June 29, 2023 was $ 152,386 , a decrease of $ 17,996 .

The incremental value of the warrants was recorded as change in fair value on the condensed consolidated statements of operations as of June 30, 2024.

The incremental value of the warrants was recorded as change in fair value on the condensed consolidated statements of operations during the second quarter of 2024.

As a result of the removal of the repurchase option, the remaining warrant liability of $ 152,386 was removed as an adjustment to additional paid in capital as of June 30, 2024.

Following is a summary of the Company’s warrant activity for the six months ended June 30, 2024 :

On July 21, 2024, 5,833 warrants expired at an exercised price of $ 26.42 .

Following is a summary of the Company’s warrant activity for the nine months ended September 30, 2024 :

Weighted Average

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( 425,374 ) $ 1.88 -

Outstanding as of June 30, 2024

( 5,833 ) $ 26.42 -

Following is a summary of the Company’s warrant activity for the six months ended June 30, 2023 :

Outstanding as of September 30, 2024

726,808 $ 0.07 7.20

Following is a summary of the Company’s warrant activity for the nine months ended September 30, 2023 :

Weighted Average

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266,667 0.60 0.49

( 125,359 ) ( 0.01 ) -

Issued and vested

883,015 4.15 3.34

Outstanding as of June 30, 2023

Outstanding as of September 30, 2023

1,158,015 $ 3.43 3.84

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Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the plans.

The Company granted 0 and 169,309 options for the six months ended June 30, 2024 and 2023 , respectively.

The Company recognized stock compensation expense for stock options of $ 85,204 and $319,664 for the six months ended June 30, 2024 and 2023 , respectively, of which $ 12,041 and $ 183,186 of expense are recorded in discontinued operations.

The Company recognized stock compensation expense for stock options of $ 43,052 and $ 167,630 for the three months ended June 30, 2024 and 2023 , respectively , of which $ 0 and $ 95,210 of expense are recorded in discontinued operations.

The Company granted 0 and 169,309 options for the nine months ended September 30, 2024 and 2023 , respectively.

The Company recognized stock compensation expense for stock options of $ 124,763 and $ 489,780 for the nine months ended September 30, 2024 and 2023 , respectively, of which $ 12,041 and $ 285,479 of expense are recorded in discontinued operations.

The Company recognized stock compensation expense for stock options of $ 39,559 and $ 170,116 for the three months ended September 30, 2024 and 2023 , respectively, of which $ 0 and $ 102,293 of expense are recorded in discontinued operations.

The fair value of each option award is estimated on the date of grant using a Black Scholes option-pricing model.

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The expected volatility is determined using the volatility of peer companies.

The Company’s underlying stock has been publicly traded since the date of the MTS Merger.

The Company’s underlying stock has been publicly traded since the date of the MTS Merger on July 26, 2021.

Subsequent to the MTS Merger, option grants made under the SharpLink, Inc.

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All option grants made under the SportsHub Games Network Inc.

2018 Incentive Plan were prior to the SportsHub Acquisition.

2018 Incentive Plan were prior to the SHGN Acquisition by SharpLink.

The underlying SportsHub stock under that plan was not publicly traded, but was estimated on the date of the grants using valuation methods that consider valuations from recent equity financings as well as future planned transactions.

On July 21, 2024, 2,500 warrants were exercised at an exercise price of $ 0.00 .

The fair value of each stock option grant is estimated on the date of grant using the Black Scholes option pricing model with the following assumptions:

June 30, 2024

June 30, 2023

September 30, 2024

September 30, 2023

Expected volatility

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$ 1.70 - 32.88 1.7 7 - 4.03 03

The summary of activity under the plans as of June 30, 2024 , and change during the six months ended June 30, 2024 , is as follows:

The summary of activity under the plans as of September 30, 2024 , and change during the nine months ended September 30, 2024 , is as follows:

Outstanding as of December 31, 2023

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( 104,648 ) 5.71

Outstanding as of June 30, 2024

( 199,410 ) 11.10

Exercisable as of June 30, 2024

Outstanding as of September 30, 2024

108,261 $ 7.59 7.9 $ -

The summary of activity under the plans as of June 30, 2023 , and change during the six months ended June 30, 2023 , is as follows:

Exercisable as of September 30, 2024

75,966 $ 8.05 7.8 $ -

The summary of activity under the plans as of September 30, 2023 , and change during the nine months ended September 30, 2023 , is as follows:

Outstanding as of December 31, 2022

1 unchanged sentence

( 7,112 ) 5.70

Outstanding as of June 30, 2023

( 1,413 ) 8.84

Exercisable as of June 30, 2023

Outstanding as of September 30, 2023

450,696 $ 9.21 8.9 4,000

Exercisable as of September 30, 2023

211,949 $ 11.47 8.5 4,000

Unamortized stock compensation expense of $ 159,896 will be amortized through 2026 for 33,615 of unvested options and has a weighted average recognition period of 8.1 years.

Restricted Stock Units

For the six months ended June 30, 2024 , the Company’s Compensation Committee recommended to the Board of Directors and the Board approved the granting of certain restricted stock units (“RSU”) to members of the senior leadership team and the Board of Directors.

For the nine months ended September 30, 2024 , the Company’s Compensation Committee recommended to the Board of Directors and the Board approved the granting of certain restricted stock units (“RSU”) to members of the senior leadership team and the Board of Directors.

The aggregate fair value of RSU awards was $ 567,203 and valued at the closing price of the Company’s Common Stock on the date of grant.

The RSUs vest at quarterly intervals over the remainder of 2024.

The RSUs vest at quarterly intervals through September 30, 2025.

There were no RSU's granted in 2023.

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( 225,000 ) 1.40 - $ 3,200

Outstanding and unvested as of June 30, 2024

Outstanding and unvested as of September 30, 2024

275,004 $ 0.92 10.63 -

The Company recognized $ 212,800 as part of the total stock compensation expense related to RSU awards for the six months ended June 30, 2024 .

The total unrecognized compensation cost related to unvested RSUs as of June 30, 2024 was $ 206,400 .

The Company recognized $ 317,600 as part of the total stock compensation expense related to RSU awards for the nine months ended September 30, 2024 .

The total unrecognized compensation cost related to unvested RSUs as of September 30, 2024 was $ 249,603 .

Note 12 - Operating Segments

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Affiliate Marketing Services.

During the three months ended June 30, 2024 , we realigned our organizational structure and resources to more closely align with our strategic priorities.

nine months ended September 30, 2024 , we realigned our organizational structure and resources to more closely align with our strategic priorities.

As a result of the change, we have

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The Company earns a commission from sportsbooks and casino operators (cost per acquisition or a portion of net gaming revenues) on new depositors referred to them.

Summarized revenues by country in which the Company operated for the three and six months ended June 30, 2024 and 2023 are shown below:

For the three months ended June 30, 2024 :

Summarized revenues by country in which the Company operated for the three and nine months ended September 30, 2024 and 2023 are shown below:

For the three months ended September 30, 2024 :

Affiliate Marketing

1 unchanged sentence

Rest of the World

For the six months ended June 30, 2024 :

For the nine months ended September 30, 2024 :

Affiliate Marketing

1 unchanged sentence

Rest of the World

For the three months ended June 30, 2023 :

For the three months ended September 30, 2023 :

Affiliate Marketing

1 unchanged sentence

Rest of the World

For the six months ended June 30, 2023 :

For the nine months ended September 30, 2023 :

Affiliate Marketing

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The table below presents the percentage of consolidated revenues derived from large customers:

June 30, 2024

June 30, 2023

September 30, 2024

September 30, 2023

Note 13 - Revenue Recognition

For the six months ended June 30, 2024 and 2023 , the Company has recognized its revenue at a point in time.

For the nine months ended September 30, 2024 and 2023 , the Company has recognized its revenue at a point in time.

The Company’s only revenue stream is services.

The Company’s assets and liabilities related to its contracts with customers were as follows:

June 30, 2024

June 30, 2023

September 30, 2024

December 31, 2023

Accounts receivable

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As the year progresses, we refine our estimate based on the facts and circumstances, including discrete events, by each tax jurisdiction.

The effective tax rate for the six -month periods ended June 30, 2024 was ( 0.3 %) and ( 0.31 %), respectively.

The effective tax rate for the nine -month ended September 30, 2024 was ( 0.43 %), respectively.

The Company has NOLs available to offset 80% of the current year taxable income and the gain, net of tax is classified as discontinued operations in the financial statements.

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This analysis also considered the results of the U.S.

Management determined that the technical merits for uncertain tax exposure resulting from the gain for Israeli tax purposes did not exceed the more-likely-than- not threshold and has not recorded any income tax liability at June 30, 2024 .

Management’s determination is based on known facts and circumstances and requires judgment of a complex set of rules and regulations.

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Diluted net loss per share is computed similar to basic loss per share, except that the denominator is increased to include the number of additional common stock that would have been outstanding if potential shares of common stock had been issued if such additional common stock were dilutive.

As the Company had a net loss from continuing operations and net income from discontinued operations for the three and six months ended June 30, 2024 , the following presents dilutive and anti-dilutive securities.

As the Company had a net loss from continuing operations and net income from discontinued operations for the three and nine months ended September 30, 2024 , the following presents dilutive and anti-dilutive securities.

For continuing operations, since there was a net loss, all securities presented below were excluded from weighted average shares outstanding.

For discontinued operations, dilutive securities presented below were included in the net income per share calculation and the anti-dilutive securities were excluded in weighted average shares outstanding:

Three Months Ended June 30, 2024

For the Six Months Ended June 30, 2024

Three Months Ended September 30, 2024

Nine Months Ended September 30, 2024

Prefunded warrants

2 unchanged sentences

254,233 254,233

MTS Stock options

Total Dilutive

11 unchanged sentences

405,963 405,963

As the Company had net loss from continuing operations and discontinued operations for the three and six months ended June 30, 2023 , the following anti-dilutive securities outstanding as of June 30, 2023 were excluded in weighted average shares outstanding:

As the Company had net loss from continuing operations and discontinued operations for the three and nine months ended September 30, 2023 , the following anti-dilutive securities outstanding as of September 30, 2023 were excluded in weighted average shares outstanding:

Anti-Dilutive:

Three Months Ended June 30, 2023

For the Six Months Ended June 30, 2023

Prefunded warrants

125,359 125,359

Three Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Stock options

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The calculation of the net income (loss) per share and weighted-average shares of the Company’s common stock outstanding for the periods presented are as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Net loss from continuing operations

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Brown is considered a related party as an executive of Brown previously served on the Board of Directors of SharpLink Israel.

The Company paid $ 203,765 and $ 486,111 for the six months ended June 30, 2024 and 2023 , respectively, for insurance coverage brokered by Brown.

The Company paid $ 328,940 and $ 700,975 for the nine months ended September 30, 2024 and 2023 , respectively, for insurance coverage brokered by Brown.

SharpLink Israel’s former director earned no commissions for the placement of these policies.

The Company leased office space in Canton, Connecticut from CJEM, LLC (CJEM), which is owned by a former executive of the Company.

The Company paid rent expense of $ 3,200 and $ 19,200 for the six months ended June 30, 2024 and 2023 , respectively.

For the three month period June 30, 2024 and 2023, the Company paid rent expense of $ 0 and $ 9,600 , respectively,

The Company paid rent expense of $ 3,200 and $ 28,800 for the nine months ended September 30, 2024 and 2023 , respectively.

For the three month period September 30, 2024 and 2023 , the Company paid rent expense of $ 0 and $ 9,600 , respectively,

Note 17 – Subsequent Events

On July 11, 2024, SharpLink received a letter from Nasdaq Listing Qualifications indicating that the Company is no longer in compliance with the minimum bid price requirement for continued listing set forth in Listing Rule 5550 (a)( 2 ), which requires listed securities to maintain a minimum bid price of $1.00 per share.

The rules also provide SharpLink a compliance period of 180 calendar days to regain compliance.

According to the Letter, the Company has until January 7, 2025 to regain compliance with the minimum bid price requirement.

If SharpLink cannot demonstrate compliance by the end of the second compliance period, Nasdaq will notify SharpLink that its Common Stock is subject to delisting.

On July 18, 2024, SharpLink announced that its Board of Directors (“Board”) has initiated a formal review process to evaluate strategic alternatives for the Company.

The Board and management team are taking a measured approach to considering multiple proposals that have been received by the Company and other proposals it expects to receive.

SharpLink has been exploring strategic alternatives that include, but are not limited to, a sale, merger, strategic business combination or other transaction.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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In December 2023, the Company discontinued investments into and operation of its C4 sports betting conversion technology (“C4”) due to the lack of market acceptance.

C4 centered on cost effectively monetizing our own proprietary audiences and our customers’ audiences of U.S.

C4 centered on monetizing our own proprietary audiences and our customers’ audiences of U.S.

fantasy sports and casual sports fans and casino gaming enthusiasts by converting them into loyal online sports and iGaming bettors.

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We largely utilize search engine optimization and programmatic advertising campaigns to drive traffic to our direct-to-player (“D2P”) sites.

In the first quarter of 2023, we unveiled SharpBetting.com, a U.S.

sports betting education hub for experienced and novice sports fans.

SharpBetting.com is a robust educational website dedicated to teaching new sports betting enthusiasts the fundamentals of, and winning strategies for, navigating the legal sports betting landscape responsibly.

Today, our vision is to power a targeted and personalized online sports betting and casino gaming environment that organically introduces fans to our operator partners through relevant tools and rich content – all in a safe, credible and responsible environment.

During the three months ended June 30, 2024 , we realigned our organizational structure and resources to more closely align with our strategic priorities.

During the nine months ended September 30, 2024, we realigned our organizational structure and resources to more closely align with our strategic priorities.

As a result of the change in our organizational structure, we have one reportable segment, consisting of Affiliate Marketing, for the purpose of making operational and resource decisions and assessing financial performance.

During the three and six months ended June 30, 2024 and 2023, our continuing operations generated revenues of $981,272 and $1,343,526, respectively, for the three months ended and $1,957,218and $2,576,287respectively, for the six months ended representing a -27.0% decrease on a comparative quarter over quarter basis and a 24.0% decrease on a comparative year-over-year basis.

During the three and nine months ended September 30, 2024 and 2023, our continuing operations generated revenues of $881,690 and $1,349,331, respectively, for the three months ended and $2,838,908and $3,925,618respectively, for the nine months ended representing a 34.7% decrease on a comparative quarter over quarter basis and a 27.7% decrease on a comparative year-over-year basis.

Sale of Legacy MTS Business

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Within ten (10) calendar days of the approval by the board of directors of the Buyer of the audited annual financial statements of the business as at December 31, 2023, and for the 12-month period ending on such date (as applicable, the “Earn-Out Schedule Delivery Date”), which shall occur no later than May 31, 2024, Buyer shall deliver to the Seller a schedule certified by its Chief Executive Officer and Chief Financial Officer (an “Earn-Out Schedule”) setting forth the computation of the Earn-Out Payment (as applicable), if any, together with the calculation thereof in an agreed Excel table format (including, but not limiting to all relevant details of the EBITDA calculations for the year 2023).

During the 2nd quarter ended June 30, 2024, the Company was notified that amount was $297,387.

Payment was received by the Company in July 2024.

No further payment is expected.

During the 2nd quarter ended June 30, 2024, the Company was notified that the Earn-Out Payment amount was $297,387.

The Earn-Out Payment in full was received by the Company in July 2024.

No further earn-out is expected.

Discontinued Operations

SharpLink’s business-building platform previously included the provision of Free-To-Play (“F2P”) sports game and mobile app development services to a marquis list of customers, which included several of the biggest names in sports and sports betting, including Turner Sports, NBA, NFL, PGA TOUR, NASCAR and BetMGM, among others.

In addition, we previously owned and operated a variety of proprietary real-money fantasy sports and sports simulation games and mobile apps through our SportsHub/fantasy sports business unit, which also owned and operated LeagueSafe, one of the fantasy sports industry’s most trusted sources for collecting and protecting private fantasy league dues.

On January 18, 2024, SharpLink sold all of the issued and outstanding shares of common stock or membership interests, as applicable, in our Sports Gaming Client Services and SportsHub Gaming Network business units to RSports Interactive, Inc.

(“RSports”) for $22.5 million in an all-cash transaction, pursuant to the signing of a purchase agreement and other related agreements.

In addition, we previously owned and operated a variety of proprietary real-money fantasy sports and sports simulation games and mobile apps through our SHGN sports business unit, which also owned and operated LeagueSafe, one of the fantasy sports industry’s most trusted sources for collecting and protecting private fantasy league dues.

On January 18, 2024, SharpLink sold all of the issued and outstanding membership interests, as applicable, in our Sports Gaming Client Services and SHGN business units to RSports for $22.5 million in an all-cash transaction, pursuant to the signing of a purchase agreement and other related agreements.

Nearly all of the employees of these acquired business units moved to RSports to help ensure a seamless transition.

The historical results of our Sports Gaming Client Services and SportsHub Gaming Network businesses have been reflected as discontinued operations in our condensed consolidated financial statements for all periods prior to the Sale of Business.

The historical results of our Sports Gaming Client Services and SHGN businesses have been reflected as discontinued operations in our condensed consolidated financial statements for all periods prior to the Sale of Business.

Nasdaq Notice

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Nasdaq Listing Rule 5550(b)(1) (the “Rule”) requires listed companies to maintain stockholders’ equity of at least $2.5 million under the net equity standard.

As of the SharpLink Quarterly Report on Form 10-Q for the three and nine-month periods ended September 30, 2023, SharpLink reported total stockholders’ deficit of $4,463,917.

As of the Quarterly Report filed on Form 10-Q at September 30, 2023, SharpLink reported total stockholders’ deficit of $4,463,917.

SharpLink did not meet the alternative standards for market value of listed securities or net income from continuing operations, thus SharpLink was not in compliance with Nasdaq’s Listing Rule.

2 unchanged sentences

and, the delisting action referenced in the Staff’s determination letter, dated November 21, 2023, had been stayed, pending a final determination by the Panel.

On January 25, 2024, SharpLink filed a Current Report on Form 8-K with the SEC, disclosing details of the sale of its Sports Gaming Client Services and SportsHub Gaming Network business units to RSports Interactive, Inc.

for $22.5 million in an all-cash transaction.

As a result, the Company’s total stockholders’ equity exceeded $2.5 million as of the date of the above referenced Form 8-K filing and the Company believed that it had regained compliance with all applicable continued listing requirements and had requested that the Staff determine whether the Hearing should be cancelled.

18 unchanged sentences

As of August 14, 2024, SharpLink has raised gross proceeds of $71,343 from sales of Shares under the ATM Sales Agreement.

As of November 14, 2024, SharpLink has raised gross proceeds of $71,343 from sales of Shares under the ATM Sales Agreement.

Exchange Agreement with Alpha Capital Anstalt

10 unchanged sentences

Pursuant to the terms and conditions set forth in the Exchange Agreement, the Company agreed to exchange the 2023 Warrant for (i) 156,207 shares of Common Stock (the "Shares”), (ii) a pre-funded warrant in the amount of 469,560 shares of Common Stock (the "Pre-Funded Warrant”) and (iii) the unexchanged balance of the 2023 Warrant Repurchase (the "Warrant Repurchase Balance”).

The Warrant Repurchase Balance is valued at $260,111 and shall be subject to the repurchase terms set forth in the Settlement Agreement.

Effective June 30, 2024, SharpLink and Alpha entered into an Exchange Agreement No.

2 (the "Exchange Agreement No.

2”), but made effective as of June 30, 2024, whereby Alpha exchanged the Warrant Repurchase Balance for (i) a new warrant to purchase 254,233 shares of SharpLink’s common stock with a strike price of $0.001 (the "New Warrant”);

and (ii) the termination of the Warrant Repurchase Balance including the repurchase obligations set forth thereunder.

The Warrant Repurchase Balance is valued at $260,111 on the date of the Exchange Agreement and shall be subject to the repurchase terms set forth in the Settlement Agreement.

On June 30, 2024, SharpLink negotiated an Amendment to the Exchange Agreement (the "Amendment") to reduce the strike price per warrant of the unexchanged balance of the 2023 Warrants Repurchase Balance from $4.07 to $0.0001 and to remove the re-purchase option.

The modification to the Exchange Agreement was valued on June 29, 2024, the day before the modification, using Black Scholes option-pricing model.

The Company recorded a fair value adjustment of $17,996 on the condensed consolidated statements of operations for the nine months ended September 30, 2024 and removed the remaining accrued warrant liability of $152,386 through an adjustment to additional paid-in capital.

Results of Operations

The following table provides certain selected financial information for the periods presented:

For the Three Months Ended June 30, 2024

For the Three Months Ended June 30, 2023

For the Six Months Ended June 30, 2024

For the Six Months Ended June 30, 2023

For the Three Months Ended September 30, 2024

For the Three Months Ended September 30, 2023

For the Nine Months Ended September 30, 2024

For the Nine Months Ended September 30, 2023

Cost of Revenues

8 unchanged sentences

Net income (loss)

For the Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

For the three months ended June 30, 2024, revenues declined 27.0% to $981,272 compared to $1,343,526 reported for the same three-month period in the prior year.

For the Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

For the three months ended September 30, 2024, revenues declined 34.7% to $881,690 compared to $1,349,331 reported for the same three-month period in the prior year.

The decrease is largely due to the market conditions softening and the loss of customers.

For the three months ended June 30, 2024, gross profit totaled $280,130, reflecting a 30.2% decrease from a gross profit of $401,322 for the three months ended June 30, 2023.

Our gross profit margin modestly declined to 28.5% %from 29.9% for the three months ended June 30, 2024 and 2023, respectively.

For the three months ended September 30, 2024, gross profit totaled $172,645, reflecting a 55.8% decrease from a gross profit of $390,666 for the three months ended September 30, 2023.

Our gross profit margin declined to 19.6% % from 29.0% for the three months ended September 30, 2024 and 2023, respectively.

The decline represents highercasino payouts due to large winnings by individuals during the three months ended September 30, 2024.

For the casino business, as greater payouts are made to winners, this has the impact of reducing gross profit.

Total Operating Expenses

For the three months ended June 30, 2024, total operating expenses decreased 30.5% to $1,484,680 from $2,136,936 reported for the same three-month period in the prior year.

The decrease was primarily due to higher payroll, online marketing, editorial and travel related costs in the second quarter of 2023 associated with the Company’s second quarter 2023 primarily related to the expansion initiatives relating to our Affiliate Marketing Services.

Further, total business insurance costs were higher in the 2nd quarter of 2023.

For the three months ended September 30, 2024, total operating expenses decreased 46.0% to $970,080 from $1,795,057 reported for the same three-month period in the prior year.

The decrease was attributable to lower payroll, audit and legal, insurance, marketing and travel-related costs in the third quarter of 2024 compared to the 3rd quarter in 2023.

The 3rd quarter of 2023 also included expenses in connection with the expansion initiatives associated with our Affiliate Marketing Services.

Net Income (Loss) from Continuing Operations

Largely attributable to the Company’s concerted effort to lower payroll and other costs, net loss from continuing operations decreased -61.9% to $(916,664) for the three months ended June 30, 2024, compared to a net loss from continuing operations of $(2,406,059)reported for the same three months in 2023.

Largely attributable to the Company’s concerted effort to lower payroll and other discretionary costs, net loss from continuing operations decreased 61.1% to $(787,992) for the three months ended September 30, 2024, compared to a net loss from continuing operations of $(2,027,447)reported for the same three months in 2023.

Net Income (Loss) from Discontinued Operations, Net of Tax

For the three months ended June 30, 2024, net loss from discontinued operations, net of tax decreased 143.8% to $453,705, which compared to a net loss from discontinued operations, net of tax of $(1,035,099) for the three months ended June 30, 2023.

The decrease in net loss is due to the gain on the wind down of certain MTS business operations.

For the three months ended September 30, 2024, net loss from discontinued operations, net of tax decreased 88.2% to $(97,139), which compared to a net loss from discontinued operations, net of tax of $(822,100) for the three months ended September 30, 2023.

The decrease in net loss is due to the gain on the wind down of MTS business operations.

Net Income (Loss)

As a result of the aforementioned reasons, net loss for the three months ended June 30, 2024 totaled $(462,959), which was an 86.5% improvement from a net loss of $(3,441,158) reported for three months ended June 30, 2023.

For the Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

For the six months ended June 30, 2024, revenues declined 24.0% to $1,957,218 compared to $2,576,287 reported for the same six-month period in the prior year.

As a result of the aforementioned reasons, net loss for the three months ended September 30, 2024 totaled $(885,131), which was an 68.9% improvement from a net loss of $(2,849,547) reported for three months ended September 30, 2023.

For the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

For the nine months ended September 30, 2024, revenues declined 27.7% to $2,838,908 compared to $3,925,618 reported for the same nine-month period in the prior year.

The decrease is largely due to the market conditions softening and the loss of customers.

For the six months ended June 30, 2024, gross profit totaled $567,342, reflecting a 28.3% decrease from a gross profit of $791,401 for the six months ended June 30, 2023.

Our gross profit margin slightly decreased to 29.0% from 30.7% for the six months ended June 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024, gross profit totaled $739,987, reflecting a 37.4% decrease from a gross profit of $1,182,067 for the nine months ended September 30, 2023.

Our gross profit margin decreased to 26.1% from 30.1% for the nine months ended September 30, 2024 and 2023, respectively.

As mentioned previously, during the three months ended September 30, 2024, we experienced higher casino payouts due to large individual winnings, resulting in a decrease in our gross profit.

For the casino business, as greater payouts are made to winners, this has the impact of reducing gross profit.

Total Operating Expenses

For the six months ended June 30, 2024, total operating expenses decreased 17.3% to $3,456,755 from $4,182,270 reported for the same six-month period in the prior year.

The decrease was primarily due to primarily due to higher business insurance costs and higher payroll, online marketing, editorial and travel related costs in the first half of 2023 associated with the Company’s expansion initiatives of our Affiliate Marketing Services.

For the nine months ended September 30, 2024, total operating expenses decreased 25.9% to $4,426,835 from $5,977,327 reported for the same nine-month period in the prior year.

The decrease was primarily due to primarily due to higher business insurance and payroll expenses, audit and legal, marketing and travel related costs in the nine months ended September 30, 2023 associated with the Company’s expansion initiatives of our Affiliate Marketing Services at that time.

Net Income (Loss) from Continuing Operations

Largely attributable to the Company’s concerted effort to lower payroll and other costs, net loss from continuing operations decreased 41.3% to $(2,677,475) for the six months ended June 30, 2024, compared to a net loss from continuing operations of $(4,563,242) reported for the same six months in 2023.

Largely attributable to the Company’s concerted effort to lower payroll and other discretionary costs, net loss from continuing operations decreased 47.4% to $(3,465,467) for the nine months ended September 30, 2024, compared to a net loss from continuing operations of $(6,590,689) reported for the same nine months in 2023.

Net Income (Loss) from Discontinued Operations, Net of Tax

For the six months ended June 30, 2024, net income from discontinued operations, net of tax increased 955.9% to $14,564,872, which compared to a net loss from discontinued operations, net of tax of $(1,701,662) for the six months ended June 30, 2023.

For the nine months ended September 30, 2024, net income from discontinued operations, net of tax increased 673.3% to $14,467,733, which compared to a net loss from discontinued operations, net of tax of $(2,523,754) for the nine months ended September 30, 2023.

The increase is due to the gain on the sale of SHGN and Sports Gaming Client Services in January 2024 for $22.5 million.

Net Income (Loss)

As a result of the aforementioned reasons, net income for the six months ended June 30, 2024 totaled $11,887,397, which was a 289.7% improvement from a net loss of $(6,264,904) reported for six months ended June 30, 2023.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

As of June 30, 2024, cash on hand was $2,435,600, a -2.1%decrease when compared to cash on hand of $2,487,481 as of December 31, 2023.

For the six months ended June 30, 2024, net cash used in operating activities from continuing operations totaled $(3,952,960) compared to net cash used for operating activities from continuing operations of $(2,832,754) in the prior year.

Net cash used in operating activities from discontinued operations was $(17,002,007), which compared to net cash used in operating activities of $(9,211,756) from discontinued operations for the same six-month period in 2023.

Overall, net cash used for operating activities was $(20,954,967) and $(12,044,510)for the six months ended June 30, 2024 and 2023, respectively.

The change in the operating cashflows was largely attributable to the gain on the sales of assets in connection with the Sale of the Company’s SHGN and Sports Gaming Client Services businesses in January 2024, 2024 six-month reporting period as compared to the six months ended June 30, 2023.

For the six months ended June 30, 2024, net cash used in the Company’s investing activities from continuing operations totaled $148,281, a decrease of 218.5% when compared to cash used for investing activities from continuing operations of $(125,138) for the same six-month period in 2023.

For the six months ended June 30, 2024 and 2023, net cash used for investing activities from discontinued operations was $(18,857,834) and $(343,206), respectively.

The increase in cash used in investing activities is due to cash received from the sale of business of $22,500,000, net of the cash transferred of $41,357,834.

As a result of the aforementioned reasons, net income for the nine months ended September 30, 2024 totaled $11,002,266, which was a 220.7% improvement from a net loss of $(9,114,443) reported for nine months ended September 30, 2023.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

As of September 30, 2024, cash on hand was $1,850,206, a 25.6%decrease when compared to cash on hand of $2,487,481 as of December 31, 2023.

For the nine months ended September 30, 2024, net cash used in operating activities from continuing operations totaled $(4,434,002) compared to net cash used for operating activities from continuing operations of $(3,820,153) in the prior year.

Net cash used in operating activities from discontinued operations was $(17,112,182), which compared to net cash provided by operating activities of $10,033,364 from discontinued operations for the same nine-month period in 2023.

Overall, net cash (used in) provided by operating activities was $(21,546,184) and $6,213,211for the nine months ended September 30, 2024 and 2023, respectively.

Additionally, in 2023, SHGN's division, LeagueSafe, a secure online payment and league dues management website, received cash coinciding with the start of the NFL season.

For the nine months ended September 30, 2024, net cash provided by the Company’s investing activities from continuing operations totaled $148,281, an increase of 169.3% when compared to cash used for investing activities from continuing operations of $(214,093) for the same nine-month period in 2023.

For the nine months ended September 30, 2024 and 2023, net cash used for investing activities from discontinued operations was $(18,857,834) and $(630,257), respectively.

The increase in total cash used in investing activities is due to cash received from the sale of business of $22,500,000, net of the cash transferred of $41,357,834.

The majority of the cash transferred of $41,357,834 was reflected in discontinued operations customer deposits liability and deferred revenue of $36,959,573 and $4,888,704, respectively.

For the six months ended June 30, 2024, net cash used for financing from continuing operations was $(12,337,694), a 434.8% decrease when compared to net cash provided by financing activities from continuing operations for the same six-month period in 2023.

For the six months ended June 30, 2024 net cash used in financing activities from discontinued operations was $5,835,352 compared to net cash provided by financing activities of $3,685,400 for the six months ended June 30, 2023.

The comparable decline was largely due to the issuance of a $4,000,000 convertible debenture to an institutional investor and proceeds from a line of credit secured from our commercial lender in February 2023, offset primarily by repayments of $19,205,606 in debt in the first quarter of 2024, including the repayment of the convertible debenture for $4,395,753.

For the nine months ended September 30, 2024, net cash used for financing from continuing operations was $(12,337,694), a 269.5% decrease when compared to net cash provided by financing activities from continuing operations of $7,279,771 for the same nine-month period in 2023.

For the nine months ended September 30, 2024 net cash used in financing activities from discontinued operations was $5,835,352 compared to net cash provided by financing activities of $583,135 for the nine months ended September 30, 2023.

The decline was largely due to the issuance of a $4,000,000 convertible debenture to an institutional investor and proceeds from a line of credit secured from our commercial lender in February 2023, offset primarily by repayments of $19,205,606 in debt in the first quarter of 2024, including the repayment of the convertible debenture for $4,395,753.

Liquidity and Capital Resources

As of June 30, 2024, we had working capital of $2,739,096.

For the three and six months ended June 30, 2024, we had a net loss from continuing operations of $(916,664) and $(2,677,475), respectively, compared to a net loss from continuing operations of $(2,406,059) and $(4,563,242), respectively, reported for the same three and six months in 2023.

As of September 30, 2024, we had working capital of $2,001,113.

For the three and nine months ended September 30, 2024, we had a net loss from continuing operations of $(787,992) and $(3,465,467), respectively, compared to a net loss from continuing operations of $(2,027,447) and $(6,590,689), respectively, reported for the same three and nine months in 2023.

SharpLink Israel completed the Sale of our Sports Gaming Client Services and SHGN business units for $22.5 million in an all-cash transaction in January 2024.

In connection with the closing of the Sale of Business, SharpLink repaid in full all outstanding term loans and lines of credit with Platinum Bank, together with accrued but unpaid interest and all other amounts due in connection with such repayment under existing credit agreements, totaling an aggregate $14,836,625, and thereby terminating all existing credit facilities with Platinum Bank and discharging the debt on the Company’s balance sheet.

In addition, we redeemed the outstanding convertible debenture issued to Alpha for 110% of the outstanding balance, plus accrued and unpaid interest, for or $4,484,230, thereby satisfying all obligations under the debenture and discharging the debt on the balance sheet.

In connection with the closing of the Sale of Business, SharpLink Israel repaid in full all outstanding term loans and lines of credit with Platinum Bank, together with accrued but unpaid interest and all other amounts due in connection with such repayment under existing credit agreements, totaling an aggregate $14,836,625, and thereby terminating all existing credit facilities with Platinum Bank and discharging the debt on the Company’s balance sheet.

In addition, SharpLink Israel redeemed the outstanding convertible debenture issued to Alpha for 110% of the outstanding balance, plus accrued and unpaid interest, for or $4,484,230, thereby satisfying all obligations under the debenture and discharging the debt on the balance sheet.

On May 1, 2024, Company entered into an ATM Sales Agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (the “Agent”) pursuant to which the Company may offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $1,676,366 (“Shares”), subject to certain limitations on the amount of Common Stock that may be offered and sold by the Company set forth in the ATM Sales Agreement (the “Offering”).

In addition to the ATM Sales Agreement, we may need to raise additional capital to fund the Company’s growth and future business operations.

As of November 14, 2024, SharpLink has raised gross proceeds of $71,343 from sales of Shares under the ATM Sales Agreement.

In addition to funds that may be raised through the ATM Sales Agreement, we may need to raise additional capital to fund the Company’s growth and future business operations.

We cannot be certain that additional funding will be available on acceptable terms or at all.

If we are not able to secure additional funding when needed to support our business growth and to respond to business challenges, develop new technology and services or enhance our existing offering, track and comply with applicable laws and regulations, improve our operating infrastructure, enhance our information security systems to combat changing cyber threats and expand personnel to support our business, we may have to delay or reduce the scope of planned strategic growth initiatives.

If we are not able to secure additional funding when needed to support our business and to respond to business challenges, develop new technology and services or enhance our existing offering, track and comply with applicable laws and regulations, improve our operating infrastructure, enhance our information security systems to combat changing cyber threats and expand personnel to support our business, we may have to delay or reduce the scope of planned strategic initiatives.

Moreover, any additional equity financing that we obtain may dilute the ownership held by our existing shareholders.

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Off-Balance Sheet Arrangements

On June 30, 2024, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

On September 30, 2024, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Since our inception, except for standard operating leases accounted for prior to January 1, 2022, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Our opinion is that inflation did not have a material effect on our operations for the six months ended June 30, 2024.

Our opinion is that inflation did not have a material effect on our operations for the nine months ended September 30, 2024.

Climate Change

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ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company anticipates the adoption of ASC 280 will not have a material impact on its condensed consolidated financial statements.

The Company believes the adoption of ASC 280 will not have a material impact on its condensed consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09 – Income Taxes (Topic ASC 740) Income Taxes.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements