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Item 5. Market for Registrant’s Common Equity

2025-03-14 compared with 2024-03-29 · 307 added, 22 removed, 13 unchanged (96% of the section changed)

MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock is currently quoted on the Nasdaq Capital Market under the symbol “SBET.”

following table sets forth, for the period indicated, the quarterly high and low closing sales prices per share of our Common Stock for

each quarter during our last two fiscal years, as well as the first quarter in 2024 through March 22, 2024, as reported by Nasdaq.

Our Common Stock is currently quoted on the Nasdaq Capital Market under the symbol “SBET.”

The following table sets forth, for the period indicated, the quarterly high and low closing sales prices per share of our Common Stock for each quarter during our last two fiscal years, as well as the first quarter in 2025 through March 14, 2025, as reported by Nasdaq.

First Quarter

7 unchanged sentences

Fourth Quarter

of March 29, 2024, we had approximately 107 individual shareholders of record of our Common Stock.

We believe that the number of beneficial

owners of our Common Stock is greater than the number of record holders, because a number of our shares of Common Stock is held through

brokerage firms in “street name.”

do not intend to pay cash dividends to our stockholders in the foreseeable future.

We currently intend to retain all our available funds

and future earnings, if any, to finance the growth and development of our business.

Any future determination related to our dividend

policy will be made at the discretion of our Board of Directors and will depend upon, among other factors, our results of operations,

financial condition, capital requirements, contractual restrictions, business prospects and other factors our Board of Directors may

deem relevant.

Compensation Plan

following table provides summary of equity compensation plans and arrangements as of December 31, 2023:

As of March 14, 2025, we had approximately 54 individual shareholders of record of our Common Stock.

We believe that the number of beneficial owners of our Common Stock is greater than the number of record holders, because a number of our shares of Common Stock is held through brokerage firms in “street name.”

Dividend Policy

We do not intend to pay cash dividends to our stockholders in the foreseeable future.

We currently intend to retain all our available funds and future earnings, if any, to finance the growth and development of our business.

Any future determination related to our dividend policy will be made at the discretion of our Board of Directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our Board of Directors may deem relevant.

Equity Compensation Plan

The following table provides summary of equity compensation plans and arrangements as of December 31, 2024:

Outstanding as of December 31, 2023

1 unchanged sentence

Exercisable as of December 31, 2024

During the year ended December 31, 2023, the Company recognized 14,552 options that were acquired during the SportsHub Acquisition.

The options have an exercise price of $14.16 and expire December 21, 2032.

The options were fully vested upon the SportsHub Acquisition.

Sales of Unregistered Securities

sales of unregistered securities during the year ended December 31, 2023 were previously disclosed in Current Reports on Form 8-K.

of Equity Securities by Issuer and Its Affiliates

Recent Sales of Unregistered Securitie

Purchases of Equity Securities by Issuer and Its Affiliates

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

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described.

This discussion should be read in conjunction with our Consolidated Financial Statements and the related notes included in Item 8 of this Form 10-K.

This discussion contains forward-looking statements.

Please see the explanatory note concerning “Forward-Looking Statements” in Part I of this Annual Report on Form 10-K and Item 1A.

Risk Factors for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

The operating results for the periods presented were not materially affected by inflation.

Headquartered in Minneapolis, Minnesota, SharpLink Gaming is an online performance-based marketing company that leverages our unique fan activation solutions to generate and deliver high quality leads to our U.S.

sportsbook and global casino gaming partners.

Continuing Operations

As part of our strategy to expand our affiliate marketing services from Europe to the emerging American sports betting market, in November 2022, we began a systematic roll-out of our U.S.-focused performance-based marketing business with the launch of 15 state-specific, content-rich affiliate marketing websites.

Our user-friendly, state-specific domains are designed to attract, acquire and drive local sports betting and casino traffic directly to our sportsbook and casino partners’ which are licensed to operate in each respective state.

As of January 2024, we are licensed to operate in 18 jurisdictions and own and operate sites serving 17 U.S.

states (Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wyoming) and Puerto Rico.

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.

Discontinued Operations

SharpLink’s business-building platform also included the provision of 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 Gaming Network 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 in a Sale of Business, as applicable, of our Sports Gaming Client Services and SportsHub Gaming Network business units to RSports for $22.5 million in an all-cash transaction.

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

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

Additional disclosures relating to the Sale of Business are provided in NOTE 3 included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023.

In December 2023, the Company discontinued investments into and the 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.

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

SharpLink also previously owned and operated an enterprise telecom expense management business (“Enterprise TEM”) acquired in July 2021 in connection with SharpLink’s go-public merger with Mer Telemanagement Solutions.

During 2022, we discontinued operations for this business unit and sought a buyer for the business.

On December 31, 2022, we completed the sale of this business to Israel-based Entrypoint South Ltd.

Recent Developments

Merger with SportsHub Games Network Inc.

(the “ SportsHub Merger ” )

SharpLink Israel, SHGN Acquisition Corp., a Delaware corporation and the Merger Subsidiary, SportsHub and Christian Peterson, an individual acting as the SportsHub stockholders’ representative entered into a Merger Agreement on September 7, 2022.

The Merger Agreement, as amended, contained the terms and conditions of the proposed business combination of SharpLink Israel and SportsHub.

Pursuant to the Merger Agreement, as amended, on December 22, 2022, SportsHub merged with and into Merger Subsidiary with Merger Subsidiary surviving as a wholly owned subsidiary of SharpLink Israel.

In association with the transaction, SharpLink Israel issued, in the aggregate, 431,926 ordinary shares to common and preferred stockholders of SportsHub, on a fully diluted basis.

An additional aggregate of 40,585 ordinary shares were held in escrow for SportsHub shareholders who had not yet provided the applicable documentation required in connection with the SportsHub Merger, as well as shares held in escrow for indemnifiable losses and for the reimbursement of expenses incurred by the Stockholder Representative in performing his duties pursuant to the Merger Agreement.

On December 28, 2023, the escrow shares were disbursed to SportsHub shareholders in accordance with the Merger Agreement.

Sale of Legacy MTS Business

On December 31, 2022, SharpLink Israel closed on the sale of its Legacy MTS to Israel-based Entrypoint South Ltd., a subsidiary of Entrypoint Systems 2004 Ltd.

In consideration of Entrypoint South Ltd.

acquiring all rights, title, interests and benefits to Legacy MTS, including 100% of the shares of MTS Integratrak Inc., one of the Company’s U.S.

subsidiaries, Entrypoint South Ltd.

will pay SharpLink an Earn-Out Payment equal to three times Legacy MTS’ EBITDA for the year ending December 31, 2023, up to a maximum earn-out payment of $1 million (adjusted to reflect net working capital as of the closing date).

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 the Earn-Out Schedule Delivery Date, which shall occur no later than May 31, 2024, Buyer shall deliver to the Seller an Earn-out Schedule certified by its Chief Executive Officer and Chief Financial Officer 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).

Sharplink received an earnout payout of $297,387 during July 2024.

2023 Convertible Debenture and Warrant Financing

On February 15, 2023, SharpLink Israel issued a Debenture due February 15, 2026 in the original amount of $4,400,000 to Alpha.

Pursuant to Section 8(a)(vi) of the Debenture, it is an event of default if SharpLink Israel is party to a fundamental transaction or agrees to sell or dispose of all or in excess of 33% of its assets in one transaction or a series of related transactions.

In addition, on February 15, 2023, SharpLink Israel issued a warrant to Alpha to initially purchase 880,000 ordinary shares of SharpLink Israel (the “2023 Warrant”), which provides that in the event of a fundamental transaction, SharpLink Israel, at Alpha’s option, would repurchase the Warrant from Alpha on the terms set forth in Section 3(e)(ii) of the 2023 Warrant (the “Warrant Repurchase”).

In conjunction with the Convertible Debenture and Warrant issuance on February 14, 2023, 266,667 warrants that were previously issued to Alpha on November 19, 2021 were revalued on February 14, 2023, reducing the exercise price from $45.00 per warrant share to $0.60 per warrant share.

The Company performed a Black Scholes model for the re-pricing of the warrants using the value of the underlying stock price of $5.10 stock price, exercise price of $0.60, expected dividend rate of 0%, risk-free interest rate of 4.04% and volatility of 52.57% and remaining term of 2.9 years.

These same assumptions were applied to the 880,000 warrants.

The value allocated to the warrants on November 19, 2021 was $11,435 and was recorded in Additional Paid-In Capital.

The fair value of the re-priced warrants on February 15, 2023 was $1,218,205, an increase of $1,206,771.

The incremental value of the warrants is also recorded in Additional Paid-In Capital as of December 31, 2023 as a deemed dividend.

On January 19, 2024, SharpLink and Alpha entered into a settlement agreement (the “Settlement Agreement”) whereby Alpha agreed to waive (i) the event of default under Section 8(a)(vi) of the Debenture and Section 3(e)(ii) of the 2023 Warrant in connection with the Sale of Business;

and (ii) payment of the Mandatory Default Amount;

and the parties agreed that SharpLink will pay 110% of the outstanding principal amount of the Debenture, plus accrued and unpaid interest, in the aggregate total amount of $4,484,230 (the “Debenture Redemption Amount”).

On January 19, 2024, the Company paid Alpha the Debenture Redemption Amount.

As a result, the Company’s obligations under the Debenture have been satisfied.

Pursuant to Section 5(1) of the 2023 Warrant, Alpha further agreed to waive its right to elect that, in connection with and at the closing of the Sale of Business, the 2023 Warrant shall be repurchased by the Company as set forth in Section 3(e) of the 2023 Warrant.

The Parties agreed in the Settlement Agreement that the Warrant Repurchase for its Black Scholes value shall take place upon the earlier of (a) June 30, 2024;

(b) the Company raising a gross amount of not less than $3,000,000 whether by equity or debt;

and (c) the Company entering into a “fundamental transaction” as defined in the 2023 Warrant.

The Parties further agree in the Settlement Agreement to fix the Black Scholes value of the 2023 Warrant for purposes of the Warrant Repurchase at $900,000.

On March 6, 2024, SharpLink entered into an Exchange Agreement (the “Exchange Agreement”) with Alpha to change the Warrant Repurchase of $900,000.

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 of 254,233 warrants is valued at $170,636 and shall be subject to the repurchase terms set forth in the Settlement Agreement.

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 year ended December 31, 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 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.

On December 9, 2024, Alpha exercised 120,000 warrants from the 2023 Warrants Repurchase Balance at a strike price per warrant of $.0001 per share.

Additionally, on January 23, 2024, Alpha exercised 266,667 warrants issued pursuant to the Exchange Agreement at a strike price per warrant of $.60 per share with the Company receiving approximately $160,000.

Further, during this same period, 2,500 warrants with a strike price of $0 were exercised by former management of MTS.

Change in Share Capital

On October 24, 2023, SharpLink Israel held an Extraordinary General Meeting of Shareholders at which shareholders approved the adoption of an amendment to SharpLink Israel’s amended and restated articles of association to increase authorized share capital of SharpLink Israel from 9,290,000 ordinary shares, nominal value NIS 0.60 per share, to 100,000,000 ordinary shares, nominal value NIS 0.60 per share, and a corresponding amendment to SharpLink Israel’s memorandum of association.

Potential Reverse St ock-Split

On November 5, 2024, SharpLink Gaming, Inc.'s Board of Directors unanimously adopted resolutions approving, declaring advisable and recommending to the stockholders for their approval a proposal to authorize the Board of Directors, in its discretion, to amend our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding Common Stock at a ratio of up to and including 6:1, such ratio to be determined by the Board of Directors, including any increase in our authorized capital required in the event a fractional share will be created as a result of the reverse stock split.

On December 23, 2024 at SharpLink's Annual General Meeting of Stockholders, stockholders approved the reverse stock split, granting the Board of Directors the authority, without further action by the stockholders, to carry out such action, with the exact exchange ratio and timing to be determined at the discretion of the Board of Directors.

The Board of Directors may determine in its discretion not to effect the reverse stock split and not to file any amendment to our Amended and Restated Certificate of Incorporation.

The primary purpose for effecting the reverse stock split, should the Board of Directors choose to effect one, would be to increase the per share price of SharpLink's Common Stock to regain compliance with the minimum bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2).

On July 17, 2024, the Company received a letter (the "Bid Price Deficiency Notice”) from Nasdaq notifying the Company that, because the closing bid price for its common stock had been below $1.00 per share for 30 consecutive trading days, it was not compliant with the Minimum Bid Price Requirement.

In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company had a period of 180 calendar days, or until January 7, 2025, to regain compliance with the Minimum Bid Price Requirement.

If at any time before January 7, 2025, the closing bid price of the Company’s common stock closed at or above $1.00 per share for a minimum of 10 consecutive trading days (which number days may be extended by Nasdaq), Nasdaq would provide written notification that the Company had achieved compliance with the Minimum Bid Price Requirement, and the matter would be resolved.

On January 8, 2025, SharpLink received a letter (the "Notice”) from the Listing Qualifications Department of the Nasdaq indicating the Company’s continued non-compliance with Nasdaq Marketplace Rule 5550(a)(2) (the "Bid Price Rule”).

The Notice from the Staff informed the Company that the Staff had determined that the Company has not regained compliance with the Minimum Bid Price Requirement and was not eligible for a second 180-day compliance period, due to the Company’s previously reported failure to comply with the $5,000,000 minimum stockholders’ equity requirement for initial listing on The Nasdaq Capital Market as required under Listing Rule 5505(b)(1).

SharpLink is working to evidence compliance with Minimum Bid Price Requirement for continued listing on the Nasdaq Capital Market and intends to submit a plan to that effect to the Nasdaq Hearings Panel (the "Panel”) as part of the hearing process, which is expected to include plans to effect the reverse stock split.

However, there can be no assurance the Panel will grant any request for continued listing or that the Company will be able to regain compliance with the applicable listing criteria within the period of time that may be granted by the Panel even in the event that the Company's Board elects to effect a reverse stock split of its share capital.

See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023.

Sale of Sports Gaming Services and SportsHub Gaming Network Operating Segments

On January 18, 2024, Parent Seller and SLG1 Holdings, LLC, a Delaware limited liability company, and the Subsidiary Seller, SHGN (and together with Parent Seller and Subsidiary Seller, the “Seller”), a Delaware corporation and wholly owned subsidiary of SharpLink, entered into a Purchase Agreement (the “PA”) with RSports, a Minnesota corporation (“Buyer”).

The Subsidiary Seller owned all of the issued and outstanding membership interests of Sports Technologies, LLC, a Minnesota limited liability company, SHGN and Holdings Quinn, LLC, a Delaware limited liability company (collectively referred to as the “Targets”).

The PA contemplated the sale of the Company’s Sports Gaming Services and SportsHub Gaming Network business units to the Buyer, by selling all of the issued and outstanding shares of common stock or membership interests of the Targets and the Acquired Subsidiaries for $22,500,000 in an all cash transaction.

SHGN 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;

SportsHub Reserve, LLC, a Minnesota limited liability company;

SportsHub PA, LLC, a Pennsylvania limited liability company;

SportsHub Operations, LLC, a Minnesota limited liability company;

SportsHub Holdings, LLC, a Minnesota limited liability company;

SportsHub Regulatory, LLC, a Minnesota limited liability company;

and SportsHub Player Reserve, LLC, a Minnesota limited liability company (collectively, the “Acquired Subsidiaries”).

As a result of the Sale of Business, we have ceased our Sports Gaming Client Services and SportsHub Gaming Network operations.

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.

See NOTE 3 included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023.

Nasdaq Deficiency Notices

2023 Continued Listing Deficiencies

On May 23, 2023, SharpLink received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that SharpLink did not comply with the equity standard for continued listing on The Nasdaq Capital Market.

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.

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.

As reported on a Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December 12, 2023, SharpLink submitted a hearing request with the Nasdaq Hearings Panel (the “Panel”) on November 28, 2023, relating to the Staff’s determination to delist the Company’s securities from Nasdaq due to the Company’s failure to meet the minimum $2.5 million shareholders’ equity requirement for continued listing as defined by the Rule.

On November 28, 2023, the Company was notified by Nasdaq that an oral hearing (the “Hearing”) had been scheduled for February 20, 2024;

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 24, 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 (the “Sale of Business”).

As a result of the Sale of Business, the Company’s total stockholders’ equity exceeded $2.5 million as of the date of the above referenced Form 8-K filing.

As a result of the Sale of Business, 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.

On February 7, 2024, SharpLink received formal notification from Nasdaq that the Company’s previously announced deficiency under the Rule had been cured, and the Company had regained compliance with all applicable continued listing standards.

Therefore, the Hearing before the Nasdaq Hearings Panel, originally scheduled for February 20, 2024, was cancelled.

2024 Continued Listing Deficiencies

As previously announced in a press release, dated July 17, 2024, and reported on Form 10-Q filed by the Company on August 15, 2024, the Company received a letter on July 17, 2024, from Nasdaq notifying the Company that, because the closing bid price for its Common Stock had been below $1.00 per share for 30 consecutive trading days, it was not compliant with the Minimum Bid Price Requirement (the "Bid Price Deficiency Notice”).

In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company had a period of 180 calendar days, or until January 7, 2025, to regain compliance with the Minimum Bid Price Requirement.

Further, as previously reported on our Current Report on Form 8-K filed on November 22, 2024, the Nasdaq Staff notified the Company that it did not comply with the $2.5 million minimum stockholders’ equity requirement, as set forth in Nasdaq Listing Rule 5550(a)(2).

The Company had 45 calendar days to submit a plan to regain compliance or until January 6, 2025.

The Companys requested and received a hearing with the Nasdaq Hearing Panel, which took place on February 25, 2025.

The Company’s Common Stock will remain listed and eligible for trading on Nasdaq pending the ultimate conclusion of the hearing process.

SharpLink is working to evidence compliance with both the Minimum Bid Price Requirement and Minimum Stockholder’s Equity Requirement for continued listing on the Nasdaq Capital Market and intends to submit a plan to that effect to the Nasdaq Hearings Panel (the "Panel”) as part of the hearing process;

however, there can be no assurance the Panel will grant any request for continued listing or that the Company will be able to regain compliance with the applicable listing criteria within the period of time that may be granted by the Panel.

See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023.

Redomestication from Israel to Delaware

On February 13, 2024, SharpLink Israel completed its previously announced Domestication Merger, pursuant to the terms and conditions set forth in 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 Domestication Merger Sub and SharpLink US.

The Domestication Merger was achieved through a merger of SharpLink Merger Sub with and into SharpLink Israel, with SharpLink Israel surviving the merger and becoming a wholly owned subsidiary of SharpLink US.

The Domestication Merger was approved by the shareholders of SharpLink Israel at an extraordinary special meeting of shareholders held on December 6, 2023.

SharpLink US’s Common Stock commenced trading on the Nasdaq Capital Market under the same ticker symbol, SBET, on February 14, 2024.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period.

Our most critical estimates include those related to use of accounting for revenue recognition, stock-based compensation, warrants and discontinued operations.

On an ongoing basis, we evaluate our estimates and assumptions.

We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Our actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting estimates affect the more significant judgments and estimates used in preparing our consolidated financial statements.

See NOTE 1 included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023, which are included in ITEM 8 “FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report, for our Summary of Significant Accounting Policies.

There have been no material changes made to the critical accounting estimates during the periods presented in the consolidated financial statements.

Revenue Recognition

The Company follows a five-step model to assess each sale to a customer;

identify the legally binding contract, identify the performance obligations, determine the transaction price, allocate the transaction price, and determine whether revenue will be recognized at a point in time or over time.

Revenue is recognized upon transfer of control of promised products or services (i.e., performance obligations) to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services.

Management judgment is required in determining whether the performance obligations will be recognized at a point in time or overtime and when the transfer of control of goods and services are made to entitle the Company to receive payment.

The exercise of management judgment has a material impact on when revenue is recognized.

The Affiliate Marketing Services operating segment generates revenue by earning commissions from sportsbooks and casino operators when a new depositor is directed to them by our affiliate marketing websites and our PAS network.

Stock-Based Compensation

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

Significant management assumptions and estimates are made when using the Black Scholes option-pricing model.

The Company uses historical option exercise and termination data to estimate the expected term the options are expected to be outstanding.

The risk-free rate is based on the U.S.

Treasury yield curve in effect at the time of grant.

The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issue date.

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.

All option grants during the years ended December 31, 2024 and 2023 were granted under the 2021 plan subsequent to the MTS Merger.

During the year ended December 31, 2024, the Company issued to members of its Board of Directors and its executives a total of 500,000 RSUs that were converted into 350,001 shares of Common Stock registered pursuant to Form S-8s (Registration No.

333-277612 and Registration No.

and based on a quarterly vesting schedule.

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

If an agreement calls for the repricing of a warrant, the Company also uses a Black Scholes option-pricing model.

Significant management assumptions and estimates are made when using the Black Scholes option-pricing model.

The Company uses the underlying stock price, the exercise price, expected dividend assumptions, rate risk-free interest rate, estimated volatility and remaining term to calculate the warrant's value using the Black Scholes option-pricing model.

Discontinued Operations

In accordance with ASC 205-20 Presentation of Financial Statements:

Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major impact on an entity’s operations and financial results when the components of an entity meets the criteria in ASC paragraph 205-20-45-10.

In the period in which the component meets the held for sale or discontinued operations criteria, the major assets, other assets, current liabilities and non-current liabilities shall be reported as a component of total assets and liabilities separate from those balances of the continuing operations.

At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the income (loss) of continuing operations.

In June 2022, SharpLink Israel’s Board of Directors approved management to enter into negotiations to sell MTS.

SharpLink Israel negotiated a Share and Asset Purchase Agreement with the transaction completed on December 31, 2022.

In December 2023, the Company discontinued investment 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’ respective audiences of U.S.

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

In January 2024, SharpLink Israel closed on the sale of the issued and outstanding shares of common stock or membership interests in our Sports Gaming Client Services and SportsHub Gaming Network business segments.

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Results of Operations

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

December 31, 2024

December 31, 2023

Cost of Revenues

Gross profit percentage

Total operating expenses

Operating loss

Total other income (expenses)

Net income (loss) before income taxes

Provision for income taxes

Net income (loss) from continuing operations

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

Net income (loss)

For the Year Ended December 31, 2024 as Compared to Year Ended December 31, 2023

For the year ended December 31, 2024, revenues decreased 26.1% to $3,662,349 as compared to revenues of $4,952,725 reported for the year ended December 31, 2023.

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

The sports betting, poker and casino industries are facing increased government regulation and oversight, including increased taxes, both internationally and in the United States.

This has contributed to players considering alternative gambling platforms such as "grey" or "black" gambling markets.

The Company does not participate in any "grey" to "black" gambling markets.

For the year ended December 31, 2024, gross profit decreased 40.9% to $906,273 from $1,532,663 reported for the previous year.

The decline represents softening of market conditions (see revenues explanation above) and higher casino payouts due to large winnings by individuals during the year ended December 31, 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 12 months ended December 31, 2024, total operating expenses decreased 45.6% to $5,669,248 from $10,425,865reported for the prior year.

The notable drop in total operating expenses was primarily due to lower selling, general and administrative expenses which decreased to $5,669,248 in 2024 from $7,961,133 in 2023.

The decrease was due to cost savings initiatives by the Company that resulted in lower payroll costs, lower marketing costs, deceases in insurance expenses and a reduction in travel and travel related costs.

The improvement was further impacted by reduced non-cash goodwill and intangible impairment expenses, which totaled $- and $2,464,732 for the years ended December 31, 2024 and 2023, respectively.

Operating Loss

Operating loss decreased 46.4% for the 12-months ended December 31, 2024, declining to $(4,762,975) as compared to $(8,893,202) for the 12-month ended December 31, 2023.

Net Loss from Continuing Operations

After factoring the provision for income tax expenses of $232 and total other expense of $289,100, inclusive of $(324,518) in interest expense and $255,819 in the change in fair value of our Convertible Debenture, the net loss from our continuing operations was reduced to $(4,473,643) for the year ended December 31, 2024.

This compared to a net loss from continuing operations of $(11,248,598) for the prior year after factoring total other income of $(2,339,688) and an income tax expense totaling $(15,708)

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

Net income (loss) from discontinued operations, net of tax increased 586.7% to $14,573,262 from $(2,994,584) for the 12-month periods ended December 31, 2024 and 2023, respectively.

This increase was due to the gain on the sale of Sports Gaming Client Services and SportsHub Gaming Network.

Net Income (Loss)

As a result of the aforementioned reasons, net income for the 12 months ended December 31, 2024 totaled $10,099,619, which was an improvement from the net loss of $(14,243,182) reported for the prior year.

Year Ended December 31, 2024 as Compared to the Year ended December 31, 2023

As of December 31, 2024, cash on hand was $1,436,729, an -42.2% increase when compared to cash on hand of $2,487,481 as of December 31, 2023.

For the year ended December 31, 2024, net cash used for operating activities totaled $(5,856,053) compared to net cash used for operating activities of $(4,916,412) in the prior year.

The change in the net operating cashflows was due to increased gross margins in 2023 versus 2024.

After factoring net cash used for operating activities for discontinued operations of $(16,958,433), net cash used in operating activities from continuing operations totaled $(22,814,486) for the year ended December 31, 2024, compared to net cash used by continuing operating activities from operations of $(4,916,412) after factoring $5,499,299 of net cash provided by operating activities from discontinued operations, cash provided by operations activiti es $ 582,887 for the year ended December 31, 2023

For the year ended December 31, 2024, net cash provided by the Company’s investing activities from continuing operations totaled $148,281, a increase of 151.8% when compared to cash used for investing activities from continuing operations of $(286,146) for the previous year.

For the years ended December 31, 2024 and 2023, net cash used for investing activities from discontinued operations was $(18,857,834), compared to net cash used by investing activities from discontinued operations of $(745,951), respectively.

Net cash used for investing activities for the year ended December 31, 2024 totaled $(18,709,553), which compared to net cash generated by investing activities for continuing operations of $(1,032,097) for the year ended December 31, 2023.

For the year ended December 31, 2024, cash used in financing activities from continuing operations was $(11,539,883), a 224.0% decrease when compared to net cash provided by financing activities from continuing operations of $9,303,279 provided from financing activities during the year ended December 31, 2023.

The year-over-year change 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 debt.

For the years ended December 31, 2024 and 2023, net cash used in and provided for financing activities from discontinued operations was $(5,835,352), and $481,575, respectively.

Liquidity and Capital Resources

As of December 31, 2024, we had working capital of $2,066,348.

For the year ended December 31, 2024, we incurred a net loss from continuing operations of $(4,473,643), representing a 60.2% decrease from a loss from continuing operations of $(11,248,598) for the 12 months ended December 31, 2023.

In the pursuit of SharpLink’s growth strategy, the Company has sustained continued operating losses.

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

In connection with the closing of 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, or $4,484,230, thereby satisfying all obligations under the debenture and discharging the debt on the balance sheet.

On May 2, 2024, the Company entered into an At-The-Market ("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 Common Stock 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 working capital needs.

As of December 31, 2024, SharpLink had raised gross proceeds of $896,215 (net proceeds of $869,329, less professional fees) from the sale of 1,128,380 shares of Common Stock pursuant to the ATM Sales Agreement.

On February 4, 2025, the Company filed a prospectus supplement that amended and supplemented the ATM Sales Agreement (see Note 9) and the information in the prospectus supplement, dated May 2, 2024, relating to the offer and sale of up to $1,676,366 of our shares of Common Stock, $0.0001 par value per share.

Through February 6, 2025, the Company has sold 2,843,902 shares of Common Stock in accordance with the ATM Sales Agreement under the initial and supplemental prospectuses with total proceeds to the Company of $1,834,925.

The aggregate market value of our outstanding shares of Common Stock held by non-affiliates as of February 4, 2025 was $5,505,158, based on 6,259,056 shares of Common Stock outstanding, of which 5,856,552 were held by non-affiliates, and a closing price on Nasdaq of $0.94 on December 6, 2024, which is within 60 days of the date of this prospectus supplement.

Accordingly, under the terms of the ATM Sales Agreement, we may offer and sell through the initial prospectus, as amended and supplemented by this supplement, shares of Common Stock having an aggregate offering price of up to $1,835,052 from time to time to or through the Agents.

We have sold 2,843,905 shares of Common Stock in accordance with the Sales Agreement under the initial prospectus.

There is no remaining availability under the initial and supplemental prospectuses.

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.

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

The economic dilution to our shareholders will be significant if our stock price does not materially increase, or if the effective price of any sale is below the price paid by a particular shareholder.

Any debt financing could involve substantial restrictions on activities and creditors could seek additional pledges of some or all of our assets.

If we fail to obtain additional funding as needed, we may be forced to cease or scale back operations, and our results, financial conditions and stock price would be adversely affected.

As such, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.

Off-Balance Sheet Arrangements

On December 31, 2024, we did not have any off-balance sheet arrangements.

Additionally, 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.

Contractual Obligations

Material contractual obligations arising in the normal course of business primarily consist of purchase obligations in the normal course of business, principal and interest payment obligations to our commercial lender and debtholders and payments for lease obligations.

Our opinion is that inflation did not have a material effect on our operations for 2024.

Climate Change

Our opinion is that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.

Recently Issued Accounting Pronouncements Not Yet Adopted

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

The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The amendments in ASU 2023-09 will become effective beginning of our 2025 fiscal year.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

We do not expect that this guidance will have a material impact upon our financial position and results of operations.

In November 2024, the FASB issued Accounting Standards Update No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) :

Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued Accounting Standards Update No.

2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date ("ASU 2025-01").

ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement.

ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis.

Both early adoption and retrospective application are permitted.

The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial statements and disclosures.

Also, in November 2024, the Financial Account Standards Board (FASB), issued Accounting Standards Update (ASU) 2024-04, Debt-Debt with Conversions and Other Option.

ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion.

This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the potential impact of this guidance on its disclosures.

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.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements are contained in pages F-1 through F-37, which appear at the end of this Annual Report on Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 5. Market for Registrant’s Common Equity