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What changed in SharpLink Gaming, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SharpLink Gaming, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+260 added−209 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-29)

Top changes in SharpLink Gaming, Inc.'s 2024 10-K

260 paragraphs added · 209 removed · 145 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

44 edited+34 added−4 removed61 unchanged
Biggest changeThe PA contemplated the sale of the Company’s Sports Gaming Client 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. 7 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”).
Biggest changeThe PA contemplated the sale of the Company’s Sports Gaming Client 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.
(“SharpLink Israel”) and its Nasdaq ticker symbol from MTSL to SBET. FourCubed Acquisition On December 31, 2021, in a combination of cash and stock transaction, we acquired certain assets of 6t4 Company, a Minnesota corporation and FourCubed Management, LLC, a Delaware limited liability company (collectively “FourCubed”), including FourCubed’s iGaming and affiliate marketing network, known as PAS.net.
(“SharpLink Israel”) and its Nasdaq ticker symbol from MTSL to SBET. FourCubed Acquisition On December 31, 2021, in a combination cash and stock transaction, we acquired certain assets of 6t4 Company, a Minnesota corporation, and FourCubed Management, LLC, a Delaware limited liability company (collectively “FourCubed”), including FourCubed’s iGaming and affiliate marketing network, known as PAS.net.
As a result of the Equity Sale, 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 Equity Sale on January 18, 2024.
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.
To support these objectives, our human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, benefit and perquisite programs; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high performing, diverse workforce; engage employees as brand ambassadors of our products; and evolve and invest in technology, tools and resources to enable employees at work. 13 Intellectual Property Intellectual property rights are important to the success of SharpLink’s business.
To support these objectives, our human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, benefit and perquisite programs; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high performing, diverse workforce; engage employees as brand ambassadors of our products; and evolve and invest in technology, tools and resources to enable employees at work. 13 Table of Contents Intellectual Property Intellectual property rights are important to the success of SharpLink’s business.
Through the recent Equity Sale of our Sports Gaming Client Services and SportsHub Gaming Network businesses, SharpLink has emerged as a pure-play performance marketing company with a solid balance sheet, cash, no interest-bearing debt, significantly reduced operating expenses and a core team of affiliate marketing experts – all with an innate entrepreneurial mindset and a shared commitment to growth, cost discipline and long-term value creation. ● Effectively managing our growth portfolio for long-term value creation.
Through the recent Sale of Business of our Sports Gaming Client Services and SportsHub Gaming Network businesses, SharpLink has emerged as a pure-play performance marketing company with a solid balance sheet, cash, no interest-bearing debt, significantly reduced operating expenses and a core team of affiliate marketing experts – all with an innate entrepreneurial mindset and a shared commitment to growth, cost discipline and long-term value creation. ● Effectively managing our growth portfolio for long-term value creation.
The data privacy and collection laws and regulations that affect SharpLink’s business include, but are not limited to: ● U.S. federal, state and local data protections laws such as the Federal Trade Commission Act and similar state laws; ● state data breach laws and state privacy laws, such as the California Consumer Privacy Act, the California Consumer Privacy Rights Act, and the Stop Hacks and Improve Electronic Data Security Act of New York; and ● other data protection, data localization and state laws impacting data privacy and collection. 12 Other regulations that affect SharpLink’s business include: ● U.S. state laws regulating sports betting, fantasy sports and online gaming and related licensing requirements; ● laws regulating the advertising and marketing of sports betting, including but not limited to the U.S.
The data privacy and collection laws and regulations that affect SharpLink’s business include, but are not limited to: ● U.S. federal, state and local data protections laws such as the Federal Trade Commission Act and similar state laws; ● state data breach laws and state privacy laws, such as the California Consumer Privacy Act, the California Consumer Privacy Rights Act, and the Stop Hacks and Improve Electronic Data Security Act of New York; and ● other data protection, data localization and state laws impacting data privacy and collection. 12 Table of Contents Other regulations that affect SharpLink’s business include: ● U.S. state laws regulating sports betting, fantasy sports and online gaming and related licensing requirements; ● laws regulating the advertising and marketing of sports betting, including but not limited to the U.S.
The strategic acquisition of FourCubed brought SharpLink an industry respected operating team with decades of combined experience in conversion through affiliate marketing services and in securing highly profitable, recurring net gaming revenue contracts with many of the world’s leading iGaming companies, including Party Poker, bwin, UNIBET, GG Poker, 888 poker, betfair and others.
The strategic acquisition of FourCubed brought SharpLink an industry respected operating team with decades of combined experience in conversion through affiliate marketing services and in securing highly profitable, recurring net gaming revenue contracts with many of the world’s leading iGaming companies, including Party Poker, bwin, UNIBET, GG Poker, 888 poker, betfair, WPT Global and others.
These businesses generally fall into three categories: small companies with some similar products but with minimal distribution; companies that acknowledge official rights but lack meaningful scale; and genuine competitors that offer similar products and services to the same target clients. SharpLink considers its most direct and relevant competitors to be Gambling.com, Catena Media and Bettor Collective.
These businesses generally fall into three categories: small companies with some similar products but with minimal distribution; companies that acknowledge official rights but lack meaningful scale; and genuine competitors that offer similar products and services to the same target clients. SharpLink considers its most direct and relevant competitors to be Gambling.com, Catena Media and Better Collective.
See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022. 8 Redomestication from Israel to Delaware On February 13, 2024, SharpLink Israel 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 US (“Domestication Merger Sub”) and SharpLink Gaming, Inc.
See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023. 8 Table of Contents Redomestication from Israel to Delaware On February 13, 2024, SharpLink Israel 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 US (“Domestication Merger Sub”) and SharpLink Gaming, Inc.
On December 28, 2023, the escrow shares were disbursed to the SportsHub shareholders in accordance with the Merger Agreement. 6 Sale of Legacy MTS Business On December 31, 2022, SharpLink Israel closed on the sale of its legacy MTS business (“Legacy MTS”) to Israel-based Entrypoint South Ltd., a subsidiary of Entrypoint Systems 2004 Ltd.
On December 28, 2023, the escrow shares were disbursed to the SportsHub shareholders in accordance with the Merger Agreement. 6 Table of Contents Sale of Legacy MTS Business On December 31, 2022, SharpLink Israel closed on the sale of its legacy MTS business (“Legacy MTS”) to Israel-based Entrypoint South Ltd., a subsidiary of Entrypoint Systems 2004 Ltd.
Recent Equity Sale of Sports Gaming Client Services and SportsHub Gaming Network Operating Segments On January 18, 2024, SharpLink Israel (“Parent Seller”) and SLG1 Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of SharpLink (“Subsidiary Seller”), SHGN Acquisition Corp.
Sale of Sports Gaming Client Services and SportsHub Gaming Network Operating Segments On January 18, 2024, SharpLink Israel (“Parent Seller”) and SLG1 Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of SharpLink (“Subsidiary Seller”), SHGN Acquisition Corp.
However, upon closing of the Equity Sale of our Sports Gaming Services and SportsHub Gaming Network businesses to RSports on January 18, 2024, 46 people previously employed by us moved to RSports in connection with the Equity Sale.
However, upon closing of the Sale of Business of our Sports Gaming Services and SportsHub Gaming Network businesses to RSports on January 18, 2024, 46 people previously employed by us moved to RSports in connection with the Sale of Business.
Affiliate Marketing Services – United States As part of our strategy to deliver unique fan activation solutions to our sportsbook and casino partners, in November 2022, we executed the first phase of a planned multi-phase roll-out of our U.S.-focused direct to player (“D2P”) business with the launch of state-specific affiliate marketing websites.
As part of our strategy to deliver unique fan activation solutions to our sportsbook and casino partners, in November 2022, we executed the first phase of a planned multi-phase roll-out of our U.S.-focused direct to player (“D2P”) business with the launch of state-specific affiliate marketing websites.
However, today, the value of a modern affiliate marketer goes far beyond the number of first-time depositors they generate in a month. Rather, they also provide expert feedback, educate new players on betting responsibly and offer a low-risk marketing alternative to traditional advertising, as they are paid on performance.
However, today, the value of a modern affiliate marketer far surpasses the number of first-time depositors they generate in a month. Rather, they also provide expert feedback, educate new players on betting responsibly and offer a low-risk marketing alternative to traditional advertising, as they are paid on performance.
Specifically, the following proprietary affiliate marketing web properties are in operation: ● Arizona – sharpbettingaz.com ● Colorado – sharpbettingco.com 9 ● Iowa – sharpbettingia.com ● Illinois – sharpbettingil.com ● Indiana – sharpbettingin.com ● Kansas – sharpbettingks.com ● Louisiana – sharpbettingla.com ● Maryland – sharpbettingmd.com ● Michigan – sharpbettingmi.com ● New Jersey – sharpbettingnj.com ● New York – sharpbettingny.com ● Ohio – sharpbettingoh.com ● Pennsylvania – sharpbettingpa.com ● Tennessee – sharpbettingtn.com ● Virginia – sharpbettingva.com ● West Virginia – sharpbettingwv.com ● Wyoming – sharpbettingwy.com All 17 websites feature key highlights, sports betting offers and special promo codes for partner sportsbooks operating in each state.
Specifically, the following proprietary affiliate marketing web properties are in operation: ● Arizona – sharpbettingaz.com ● Colorado – sharpbettingco.com 9 Table of Contents ● Iowa – sharpbettingia.com ● Illinois – sharpbettingil.com ● Indiana – sharpbettingin.com ● Kansas – sharpbettingks.com ● Louisiana – sharpbettingla.com ● Maryland – sharpbettingmd.com ● Michigan – sharpbettingmi.com ● New Jersey – sharpbettingnj.com ● New York – sharpbettingny.com ● Ohio – sharpbettingoh.com ● Pennsylvania – sharpbettingpa.com ● Tennessee – sharpbettingtn.com ● Virginia – sharpbetting.com ● West Virginia – sharpbettingwv.com ● Wyoming – sharpbettingwy.com All 17 websites feature key highlights, sports betting offers and special promo codes for partner sportsbooks operating in each state.
(the “SportsHub Merger”) SharpLink Israel, SHGN Acquisition Corp., a Delaware corporation and wholly owned subsidiary of SharpLink Israel (“Merger Subsidiary”), SportsHub Games Network Inc. (“SportsHub”) and Christian Peterson, an individual acting as the SportsHub stockholders’ representative entered into a Merger Agreement on September 7, 2022.
(the “ SportsHub Merger ” ) SharpLink Israel, SHGN Acquisition Corp., a Delaware corporation and wholly owned subsidiary of SharpLink Israel (“Merger Subsidiary”), SportsHub Games Network Inc. (“SportsHub”) and Christian Peterson, an individual acting as the SportsHub stockholders’ representative entered into a Merger Agreement on September 7, 2022.
The strategic acquisition of FourCubed brought SharpLink talent with proven experience in affiliate marketing services and recurring net gaming revenue (“NGR”) contracts with many of the world’s leading online casino gambling companies, including Party Poker, bwin, UNIBET, GG Poker, 888 poker, betfair, World Poker Tour and others. 4 As part of our strategy to expand our affiliate marketing services 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.
The strategic acquisition of FourCubed brought SharpLink talent with proven experience in affiliate marketing services and recurring net gaming revenue (“NGR”) contracts with many of the world’s leading online casino gambling companies, including Party Poker, bwin, UNIBET, GG Poker, 888 poker, betfair, WPT Global and others. 4 Table of Contents As part of our strategy to expand our affiliate marketing services 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.
Depending on the terms of our marketing agreement with each operator and the type of license SharpLink has been granted in a particular state by its regulator, commissions may be paid in the form of cost per acquisition (“CPA”) or by sharing in NGR generated by the referred depositor. 10 Market Opportunity Search for odds or lines on any given match-up, and the vast majority of search results will spring from affiliate marketing sites.
Depending on the terms of our marketing agreement with each operator and the type of license SharpLink has been granted in a particular state by its regulator, commissions may be paid in the form of cost per acquisition (“CPA”) or by sharing in Net Gaming Revenues ("NGR") generated by the referred depositor. 10 Table of Contents Market Opportunity Search for odds or lines on any given match-up, and the vast majority of search results will spring from affiliate marketing sites.
These state-specific domains are designed to attract, acquire and drive local sports betting and casino traffic directly to the Company’s sportsbook and casino partners’ which are licensed to operate in each respective state. As of March 29, 2024, we are licensed to operate in 18 jurisdictions and own and operate D2P sites serving 17 U.S. states.
These state-specific domains are designed to attract, acquire and drive local sports betting and casino traffic directly to the Company’s sportsbook and casino partners’ which are licensed to operate in each respective state. As of March 15 , 2025, we are licensed to operate in 18 jurisdictions and own and operate D2P sites serving 17 U.S. states.
See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022.
See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023.
SharpLink’s products, services, experience, industry relationships and corporate culture allow it to compete effectively across all these factors. 11 Key Growth Strategies ● Focusing on performance marketing.
SharpLink’s products, services, experience, industry relationships and corporate culture allow it to compete effectively across all these factors. 11 Table of Contents Key Growth Strategies ● Focusing on performance marketing.
For more than 18 years, FourCubed has provided its global iGaming operating partners with affiliate marketing services.
For more than 19 years, FourCubed has provided its global iGaming operating partners with affiliate marketing services.
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 (the “Equity Sale”).
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”).
Affiliate Marketing Services Revenue Models SharpLink generates revenue from both our Affiliate Marketing Services International and United States segments by earning a commission from sportsbooks and casino operators on new depositors directed to them via our PAS affiliate marketing network in international markets and from our proprietary D2P websites in America.
Affiliate Marketing Services Revenue Models SharpLink generates revenue from our Affiliate Marketing Services segments by earning a commission from sportsbooks and casino operators on new depositors directed to them via our PAS affiliate marketing network in international markets and from our proprietary D2P websites in U.S. jurisdictions.
In the United States, SharpLink currently hold several domain names and, in the future, it may acquire patents, additional trademarks and domain names. As of March 29, 2024, SharpLink owns 294 domain name registrations.
In the United States, SharpLink currently hold several domain names and, in the future, it may acquire patents, additional trademarks and domain names. As of March 14, 2025, SharpLink owns 177 domain name registrations.
Change from Foreign Private Issuer to Domestic Issuer Prior to January 1, 2023, SharpLink Israel qualified as a foreign private issuer. There are two tests to determine whether a foreign company qualifies as a foreign private issuer: the U.S. shareholder test and U.S. business contacts test.
In July 2024, SharpLink received an earnout payment of $297,387. Change from Foreign Private Issuer to Domestic Issuer Prior to January 1, 2023, SharpLink Israel qualified as a foreign private issuer. There are two tests to determine whether a foreign company qualifies as a foreign private issuer: the U.S. shareholder test and U.S. business contacts test.
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.
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.
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.
As more states legalize sports betting, our portfolio of state-specific affiliate marketing properties may expand to include them. 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.
We acknowledge that our employees are our most valued asset and the driving force behind our success. For this reason, we aspire to be an employer that is known for cultivating a positive and welcoming work environment and one that fosters growth, provides a safe place to work, supports diversity and embraces inclusion.
For this reason, we aspire to be an employer that is known for cultivating a positive and welcoming work environment and one that fosters growth, provides a safe place to work, supports diversity and embraces inclusion.
During the fiscal years ended December 31, 2023 and 2022, our continuing operations generated revenues of $4,952,725 and $3,489,948 respectively, representing an increase of 42% on a comparative year-over-year basis.
During the fiscal years ended December 31, 2024 and 2023, our continuing operations generated revenues of $3,662,349 and $4,952,725 respectively, representing a decrease of 26.1% on a comparative year-over-year basis.
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 Equity Sale.
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.
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 (the “Equity Sale”), pursuant to the signing of a Purchase Agreement and other related agreements.
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.
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). As more states legalize sports betting, our portfolio of state-specific affiliate marketing properties may expand to include them.
As of March 15, 2025, 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).
Additional disclosures relating to the Equity Sale are provided in NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022. 5 Organizational History Go-Public Merger with Mer Telemanagement Solutions Ltd. Formerly known as Mer Telemanagement Solutions Ltd.
See NOTE 3 included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023. 5 Table of Contents Organizational History Go-Public Merger with Mer Telemanagement Solutions Ltd. Formerly known as Mer Telemanagement Solutions Ltd.
Nasdaq Notice 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.
See Note 3 included in the notes to the consolidated financial statements for the years ended December 31, 2024 and 2023 Nasdaq Notice 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.
As a result of the Equity Sale, 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 Equity Sale, 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.
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.
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.
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. Continuing Operations In December 2021, SharpLink acquired certain assets of FourCubed, including FourCubed’s online casino gaming-focused affiliate marketing network, known as PAS.net (“PAS”).
We intend to preserve this culture to nurture the design and development of innovative performance marketing solutions that help to distinguish us in the markets we serve. Government Regulation We operate in various jurisdictions and our business is subject to extensive regulation under the laws, rules and regulations of the jurisdictions in which we operate.
We intend to preserve this culture to nurture the design and development of innovative performance marketing solutions that help to distinguish us in the markets we serve. ● Evaluation of strategic alternatives.
Violations of laws or regulations in one jurisdiction could result in disciplinary action in that and other jurisdictions. We have a progressive U.S. licensing strategy. We are currently licensed or authorized to provide affiliate marketing services to sports betting and online casino gaming operators in 17 U.S. states.
We are currently licensed or authorized to provide affiliate marketing services to sports betting and online casino gaming operators in 17 U.S. states.
For more than 18 years, PAS has focused on delivering quality traffic and player acquisitions, retention and conversions to U.S. regulated and global iGaming operator partners worldwide. In fact, PAS won industry recognition as the European online gambling industry’s Top Affiliate Manager, Top Affiliate Website and Top Affiliate Program for four consecutive years by both igambingbusiness.com and igamingaffiliate.com.
In fact, PAS won industry recognition as the European online gambling industry’s Top Affiliate Manager, Top Affiliate Website and Top Affiliate Program for four consecutive years by both igambingbusiness.com and igamingaffiliate.com.
In fact, Influencer Marketing Hub projects that affiliate marketing spend will reach $15.7 billion globally in 2024. That’s up from $8.6 billion in 2017. Competition A number of businesses exist in the market for performance marketing solutions for the sports betting and casino gaming industries.
Competition A number of businesses exist in the market for performance marketing solutions for the sports betting and casino gaming industries.
SharpLink US’s Common Stock commenced trading on the Nasdaq Capital Market under the same ticker symbol, SBET, on February 14, 2024. See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022.
SharpLink US’s Common Stock commenced trading on the Nasdaq Capital Market under the same ticker symbol, SBET, on February 14, 2024. Operating Segments We operate in one reportable segment, Affiliate Marketing Services.
Due to technical tools and features like digital marketing, analytics and the extended usage of cookies, affiliate marketing in sports betting and online casino gaming has become extremely cost effective to implement and measure, making it a billion dollar industry.
Due to technical tools and features like Artificial Intelligence, machine learning, digital marketing, analytics and the extended usage of cookies, the landscape of iGaming affiliate marketing has not just grown, it has transformed into a colossal global powerhouse, reshaping how millions engage with online gambling and online sports betting.
Operating Segments The table below reflects our revenue by operating segment for the years indicated below: For the Year Ended December 31, Segment 2023 2022 Affiliate Marketing Services - International $ 4,198,279 $ 3,427,698 Affiliate Marketing Services – United States 754,446 62,250 Total $ 4,952,725 $ 3,489,948 Affiliate Marketing Services – International On December 31, 2021, in a combination of cash and stock transaction, SharpLink acquired certain assets of FourCubed, including FourCubed’s iGaming and affiliate marketing network, known as PAS.net (“PAS”).
Affiliate Marketing Services On December 31, 2021, in a combination of cash and stock transaction, SharpLink acquired certain assets of FourCubed, including FourCubed’s iGaming and affiliate marketing network, known as PAS.net (“PAS”). For more than 18 years, PAS has focused on delivering quality traffic and player acquisitions, retention and conversions to U.S. regulated and global iGaming operator partners worldwide.
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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. Beginning in 2022, we discontinued operations for this business unit and sought a buyer for the business.
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(“RSports”) for $22.5 million in an all-cash transaction (the “Sale of Business”), pursuant to the signing of a Purchase Agreement and other related agreements. Nearly all of the employees of these acquired business units also moved to RSports to help ensure a seamless transaction.
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On December 31, 2022, we completed the sale of this business to Israel-based Entrypoint South Ltd. Continuing Operations In December 2021, SharpLink acquired certain assets of FourCubed, including FourCubed’s online casino gaming-focused affiliate marketing network, known as PAS.net (“PAS”).
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Potential Reverse Stock-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.
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SharpLink’s Common Stock continues to be listed and traded on Nasdaq.
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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.
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According to data analysts at Demand Sage, the global affiliate marketing industry is growing at a “very handsome rate,” with a current market size of $27.8 billion that is projected to reach $48 billion by 2027. Affiliate marketing has been a critical strategy in ecommerce for nearly a decade.
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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.
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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).
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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.
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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.
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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.
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On January 8, 2025, SharpLink received a letter (the "Notice") from the Listing Qualifications Department of the Nasdaq (the "Staff") indicating the Company's continued non-compliance with Nasdaq Marketplace Rule 5550(a)(2) (the "Bid Price Rule").
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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).
Added
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.
Added
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.
Added
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.
Added
Based on this amended agreement, the sale of the business is an asset sale for legal and tax purposes instead of an equity sale.
Added
Further, in connection with the Sale of Business, SharpLink entered into a Post Closing Covenant Agreement (the “PCCA”) with the Buyer defining the post-closing terms and conditions relating to certain transfers and assignments of assets subsequent to the closing of the Sale of Business, including: ● Transferring control of all bank accounts held by the Targets to the Buyer; ● Transferring or cooperating with the application process for all state gaming licenses held by the Targets in connection with the change of control to the Buyer; ● Providing the Buyer with an accounting of all funds due to and from and any deferred revenue between Sports Technologies, LLC, SHGN and SharpLink, Inc.; ● Assigning to Buyer or its affiliates, or cause the counterparty to consent to, all contracts assumed by the Buyer or its affiliates on or subsequent to the closing based upon change of control provisions; and ● Assigning to Buyer or its affiliates all of its intellectual property rights purchased in the PA for the Acquired Subsidiaries or Targets.
Added
In accordance with the terms of the PCCA, SharpLink will complete all post-closing covenants following the closing as reasonably possible, with the exception of Seller covenants that are dependent on governmental authorities or governmental orders for completion, in which case it will use diligent, good faith efforts to cause the same to be completed as soon as practical.
Added
The $14.6 million gain was calculated by measuring the difference between the fair value of consideration received less the carrying amount of assets and liabilities sold in accordance with ASC 810.
Added
In the statement of cashflows for the year ended December 31, 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.
Added
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 year ended December 31, 2024, SharpLink paid RSports $157,857, respectively, for use of accounting service personnel under the PCCA agreement.
Added
RSports paid SharpLink $89,940 under the PCCA agreement for the same period. 7 Table of Contents 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”).
Added
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.
Added
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”).
Added
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.
Added
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).
Added
The Company had 45 calendar days to submit a plan to regain compliance or until January 6, 2025. 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”).
Added
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).
Added
The Company’s had a hearing with the Nasdaq Hearing Panel 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.
Added
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.
Added
In fact, according to Grand View Research industry analysts, the global iGaming market is projected to balloon from $63.53 billion in 2022 to more than $153 million by 2030, representing a compound annual growth rate of 11.7 from 2023 to 2030.
Added
On July 18, 2024, we announced that our Board of Directors had initiated a formal review process to evaluate strategic alternatives for SharpLink, taking a measured approach to considering multiple proposals that had been received by the Company and other proposals it was expecting to receive.
Added
Strategic alternatives under consideration have included, but are not limited to, a sale, merger, strategic business combination or other transaction.
Added
As part of the Board's efforts to evaluate strategic alternatives, the Board and SharpLink's management team have been advancing discussions with those prospects believed to offer us the best opportunities to optimize our existing business operations, drive growth and create and optimize value for the Company's stockholders.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

42 edited+26 added−8 removed153 unchanged
Biggest changeInstability and uncertainties arising from the global geopolitical environment and the evolving international and domestic political, regulatory and economic landscape, including the potential for changes in global trade policies, including sanctions and trade barriers, and trends such as populism, economic nationalism and negative sentiment toward multinational companies, as well as the cost of compliance with increasingly complex and often conflicting regulations worldwide, can impair our flexibility in modifying our product offerings, marketing, hiring or other strategies for growing our businesses, as well as our ability to improve productivity and maintain acceptable operating margins. 23 The United States and other countries may implement actions, including trade actions, tariffs, export controls and sanctions, against other countries or localities, including against certain Russian government, government-related or other entities or individuals related to actions in Ukraine, which along with any retaliatory measures could increase costs, adversely affect our operations, or adversely affect our ability to meet contractual and financial obligations.
Biggest changeInstability and uncertainties arising from the global geopolitical environment and the evolving international and domestic political, regulatory and economic landscape, including the potential for changes in global trade policies, including sanctions and trade barriers, and trends such as populism, economic nationalism and negative sentiment toward multinational companies, as well as the cost of compliance with increasingly complex and often conflicting regulations worldwide, can impair our flexibility in modifying our product offerings, marketing, hiring or other strategies for growing our businesses, as well as our ability to improve productivity and maintain acceptable operating margins. 23 Table of Contents While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.
We believe a significant portion of our success is owed to Chairman and CEO Rob Phythian and his longstanding relationships with sports leagues, sports media companies and fantasy sports companies. The leadership of Mr. Phythian and our other current executive officers and key employees has been critical and the departure of Mr.
We believe a significant portion of our success is owed to our Chairman and CEO, Rob Phythian, and his longstanding relationships with sports leagues, sports media companies and fantasy sports companies. The leadership of Mr. Phythian and our other current executive officers and key employees has been critical and the departure of Mr.
Our securities may experience substantial volatility as a result of a number of factors, including, among others: ● sales or potential sales of substantial amounts of our Common Stock; ● announcements about us or about our competitors or new product or service introductions; ● developments concerning our strategic business partners; ● the loss or unanticipated underperformance of our D2P/Affiliate Marketing Services—International business unit; ● litigation and other developments relating to our proprietary rights or those of our competitors; ● conditions in the U.S. sports betting and global online casino gaming industries; ● governmental regulation and legislation; ● variations in our anticipated or actual operating results; ● changes in any securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations; ● foreign currency values and fluctuations; and ● overall political and economic conditions, including Russia’s invasion of Ukraine, the Israel and Palestine conflict and growing geopolitical tension with China.
Our securities may experience substantial volatility as a result of a number of factors, including, among others: ● sales or potential sales of substantial amounts of our Common Stock; ● announcements about us or about our competitors or new product or service introductions; ● developments concerning our strategic business partners; ● the loss or unanticipated underperformance of our D2P/Affiliate Marketing Services business unit; ● litigation and other developments relating to our proprietary rights or those of our competitors; ● conditions in the U.S. sports betting and global online casino gaming industries; ● governmental regulation and legislation; ● variations in our anticipated or actual operating results; ● changes in any securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations; ● foreign currency values and fluctuations; and ● overall political and economic conditions, including Russia’s invasion of Ukraine, the Israel and Palestine conflict and growing geopolitical tension with China.
We depend on a limited number of customers for a substantial portion of our Affiliate Marketing Services – International revenue, and the loss of customers, unfavorable changes to terms in customer contracts or unfavorable changes in the markets served by our customers due to geopolitical, regulatory or other facts could materially and adversely affect our revenue, profitability and financial condition.
We depend on a limited number of customers for a substantial portion of our Affiliate Marketing Services , and the loss of customers, unfavorable changes to terms in customer contracts or unfavorable changes in the markets served by our customers due to geopolitical, regulatory or other facts could materially and adversely affect our revenue, profitability and financial condition.
Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations, either as a result of our determination that a jurisdiction should be blocked, or because a local license or approval may be costly for us or our business partners to obtain and/or such licenses or approvals may contain other commercially undesirable conditions. 21 States also impose substantial tax rates on online sports betting and online casino gaming revenue, in addition to the federal excise tax of 25 basis points on the amount of each wager.
Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations, either as a result of our determination that a jurisdiction should be blocked, or because a local license or approval may be costly for us or our business partners to obtain and/or such licenses or approvals may contain other commercially undesirable conditions. 21 Table of Contents States also impose substantial tax rates on online sports betting and online casino gaming revenue, in addition to the federal excise tax of 25 basis points on the amount of each wager.
Actual or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants. 25 Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data protection, data security, network and information systems security and other laws and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Actual or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants. 25 Table of Contents Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data protection, data security, network and information systems security and other laws and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
This area may receive additional focus in the U.S. after the overturning of federal restrictions on sports betting under PASPA, thus giving individual states the power to legalize sports betting. 24 We cannot be certain that our current uses of data from publicly available sources (including third-party websites) or otherwise, which are not known to infringe or misappropriate third-party intellectual property today, will not result in claims for infringement or misappropriation of third-party intellectual property in the future.
This area may receive additional focus in the U.S. after the overturning of federal restrictions on sports betting under PASPA, thus giving individual states the power to legalize sports betting. 24 Table of Contents We cannot be certain that our current uses of data from publicly available sources (including third-party websites) or otherwise, which are not known to infringe or misappropriate third-party intellectual property today, will not result in claims for infringement or misappropriation of third-party intellectual property in the future.
New factors emerge from time to time and it is not possible for us to predict all of these factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. 14 Risks Related to Our Business and the Industries We Serve SharpLink has a history of losses and may not be able to achieve or sustain profitability in the future.
New factors emerge from time to time and it is not possible for us to predict all of these factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. 14 Table of Contents Risks Related to Our Business and the Industries We Serve SharpLink has a history of losses and may not be able to achieve or sustain profitability in the future.
If we eliminate or phase out a product or service and we are not able to offer and successfully market and sell alternative products or services, our revenues may decrease, which could have a material adverse effect on our results of operations. 16 Our ability to effectively monitor and respond to the rapid and ongoing developments and expectations relating to the environmental, social and governance matters, including related social expectations and concerns, may impose unexpected costs or results in reputational or other harm that could have a material adverse effect on our business.
If we eliminate or phase out a product or service and we are not able to offer and successfully market and sell alternative products or services, our revenues may decrease, which could have a material adverse effect on our results of operations. 16 Table of Contents Our ability to effectively monitor and respond to the rapid and ongoing developments and expectations relating to environmental, social and governance matters, including related social expectations and concerns, may impose unexpected costs or results in reputational or other harm that could have a material adverse effect on our business.
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. 15 SharpLink relies on our relationships with sportsbooks and online casino gaming operators and loss of existing relationships or failure to renew or expand existing relationships may cause loss of a competitive advantage or require SharpLink to modify, limit or discontinue certain offerings, which could materially and adversely affect our business, financial condition, results of operations and prospects.
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. 15 Table of Contents SharpLink relies on our relationships with sportsbooks and online casino gaming operators and loss of existing relationships or failure to renew or expand existing relationships may cause loss of a competitive advantage or require SharpLink to modify, limit or discontinue certain offerings, which could materially and adversely affect our business, financial condition, results of operations and prospects.
In response to a removal of service offerings in various markets, our Affiliate Marketing Services – International segment has the ability to market our user base to other operators who continue to offer service to the various markets.
In response to a removal of service offerings in various markets, our Affiliate Marketing Services segment has the ability to market our user base to other operators who continue to offer service to the various markets.
Some jurisdictions have introduced regulations attempting to restrict or prohibit sports betting, online gaming and advertising, while others have taken the position that sports betting or online gaming should be licensed and regulated and have adopted or are in the process of considering legislation and regulations to enable sports betting or online gaming in their jurisdictions. 20 There can be no assurance that legally enforceable legislation will not be proposed and passed in jurisdictions relevant or potentially relevant to our businesses and/or the businesses of our clients.
Some jurisdictions have introduced regulations attempting to restrict or prohibit sports betting, online gaming and advertising, while others have taken the position that sports betting or online gaming should be licensed and regulated and have adopted or are in the process of considering legislation and regulations to enable sports betting or online gaming in their jurisdictions. 20 Table of Contents There can be no assurance that legally enforceable legislation will not be proposed and passed in jurisdictions relevant or potentially relevant to our businesses and/or the businesses of our clients.
Our Affiliate Marketing Services – International business segment generates revenue by delivering a broad base of players to casino gaming operators, which are our customers.
Our Affiliate Marketing Services business segment generates revenue by delivering a broad base of players to casino gaming operators, which are our customers.
If notice were provided, our revenues would decline from then-current net gaming revenue rates to approximately one-third the then-current rate. 18 The impact to gross margin percentage would be a similar reduction to that of revenue percentage as we pay our sub-affiliates based on a percentage of the then-current net gaming revenue and any reduction in our revenue would be a corresponding reduction in our cost of revenue.
If notice were provided, our revenues would decline from then-current net gaming revenue rates to approximately one-third the then-current rate. 18 Table of Contents The impact to gross margin percentage would be a similar reduction to that of revenue percentage as we pay our sub-affiliates based on a percentage of the then-current net gaming revenue and any reduction in our revenue would be a corresponding reduction in our cost of revenue.
Our business may suffer if we are unable to successfully integrate acquired businesses into us or otherwise manage the growth associated with multiple acquisitions. As part of our growth strategy, we have made, and intend to continue to pursue, mergers and acquisitions as opportunities arise to add new or complementary businesses, products, brands or technologies.
Our business may suffer if we are unable to successfully integrate acquired businesses into us or otherwise manage the growth associated with multiple acquisitions. As part of our growth strategy, we have made, and intend to continue to pursue, strategic investment opportunities, mergers and acquisitions as opportunities arise to add new or complementary businesses, products, brands or technologies.
Moreover, these rules and regulations have increased our legal and financial compliance costs and have made some activities more time consuming and costly. 27 We currently have outstanding, and we may in the future issue, instruments which are convertible into shares of Common Stock, which will result in additional dilution to our shareholders.
Moreover, these rules and regulations have increased our legal and financial compliance costs and have made some activities more time consuming and costly. 27 Table of Contents We currently have outstanding, and we may in the future issue, instruments which are convertible into shares of Common Stock, which will result in additional dilution to our shareholders.
In some cases, the costs of the Company’s mergers and acquisitions may be substantial, including as a result of professional fees and due diligence efforts. There is no assurance that the time and resources expended on pursuing a particular acquisition will result in a completed transaction, or that any completed transaction will ultimately be successful.
In some cases, the costs of the Company’s strategic investments, mergers and acquisitions may be substantial, including as a result of professional fees and due diligence efforts. There is no assurance that the time and resources expended on pursuing a particular acquisition will result in a completed transaction, or that any completed transaction will ultimately be successful.
SharpLink’s merger and acquisition strategy may not succeed if we are unable to remain attractive to target companies or expeditiously close transactions. Moreover, issuing common or preferred stock, or other securities, to fund an acquisition would cause economic dilution to existing shareholders.
SharpLink’s strategic investment, merger and acquisition strategy may not succeed if we are unable to remain attractive to target companies or expeditiously close transactions. Moreover, issuing common or preferred stock, or other securities, to fund an acquisition would cause economic dilution to existing shareholders.
To be successful, SharpLink must be able to quickly adapt to changes in technology, industry standards and regulatory requirements by continually enhancing our technology, services and solutions. Developing new services and upgrades to services, as well as integrating and coordinating current services, imposes burdens on our staff and management.
To be successful, SharpLink must be able to quickly adapt to changes in technology, industry standards and regulatory requirements by continually enhancing and/or expanding our technology, services and solutions. Developing new services and upgrades to services, as well as integrating and coordinating current services, imposes burdens on our staff and management.
In addition, we may be unable to identify suitable acquisition or strategic investment opportunities or may be unable to obtain any required financing or regulatory approvals, and therefore may be unable to complete such acquisitions or strategic investments on favorable terms, if at all. 19 We may decide to pursue acquisitions or mergers with which our investors may not agree, and we cannot assure investors that any acquisition or investment will be successful or otherwise provide a favorable return on investment.
In addition, we may be unable to identify suitable acquisition or strategic investment opportunities or may be unable to obtain any required financing or regulatory approvals, and therefore may be unable to complete such acquisitions or strategic investments on favorable terms, if at all. 19 Table of Contents We may decide to pursue strategic investment opportunities, acquisitions or mergers with which our investors may not agree, and we cannot assure investors that any strategic investment, acquisition or investment will be successful or otherwise provide a favorable return on investment.
Compliance with such data protection and privacy laws will require significant time and expense, particularly as we continue to expand our businesses across multiple jurisdictions. 22 For example, California has enacted the California Consumer Privacy Act, or CCPA, which became effective on January 1, 2020.
Compliance with such data protection and privacy laws will require significant time and expense, particularly as we continue to expand our businesses across multiple jurisdictions. 22 Table of Contents For example, California has enacted the California Consumer Privacy Act, or CCPA, which became effective on January 1, 2020.
Any change in existing regulations or their interpretation, or the regulatory climate and requirements applicable to us or our partners’ businesses, could have a material adverse impact on our business, prospects, financial condition and results of operations.
Any change in existing regulations or their interpretation, or the regulatory climate and requirements applicable to us or our partners ’ businesses, could have a material adverse impact on our business, prospects, financial condition and results of operations.
SharpLink’s collection, storage and use of personal data are subject to applicable data protection and privacy laws, and any failure to comply with such laws may harm our reputation and business or expose SharpLink to fines and other enforcement action.
SharpLink ’ s collection, storage and use of personal data are subject to applicable data protection and privacy laws, and any failure to comply with such laws may harm our reputation and business or expose SharpLink to fines and other enforcement action.
SharpLink’s business may be materially and adversely affected if we are unable to keep pace with or adapt to rapidly changing technology, evolving industry standards and changing regulatory requirements, or if we do not invest in product development and provide services that are attractive to our partners.
SharpLink ’ s business may be materially and adversely affected if we are unable to keep pace with or adapt to rapidly changing technology, evolving industry standards and changing regulatory requirements, or if we do not invest in product development and provide services that are attractive to our partners.
Risks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business SharpLink’s failure to protect or enforce our proprietary and intellectual property rights, including our unregistered intellectual property, and the costs involved in such protection and enforcement, could harm our business, financial condition, results of operations and prospects.
Risks Related to the Technology, Intellectual Property and Infrastructure of SharpLink ’ s Business SharpLink ’ s failure to protect or enforce our proprietary and intellectual property rights, including our unregistered intellectual property, and the costs involved in such protection and enforcement, could harm our business, financial condition, results of operations and prospects.
The Company is continually evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, equity financing, issuing, or restructuring debt, entering into other financing arrangements, and restructuring operations to increase revenues and decrease expenses.
The Company is continually evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, equity financings, issuing debt, evaluating potential business combinations, entering into other financing arrangements, and restructuring operations to increase revenues and decrease expenses.
Risks Related to Legal Matters and Regulations Affecting SharpLink’s Business We and our partners are subject to complex laws and regulations, which are subject to change and interpretation, and which could subject us to claims or otherwise harm us and our clients.
Risks Related to Legal Matters and Regulations Affecting SharpLink ’ s Business We and our partners are subject to complex laws and regulations, which are subject to change and interpretation, and which could subject us to claims or otherwise harm us and our clients.
Failure to achieve one or more of these objectives could have a material adverse effect on our business, financial condition and operating results. 17 SharpLink’s operations are subject to seasonal fluctuations that may impact results of operations and cash flow.
Failure to achieve one or more of these objectives could have a material adverse effect on our business, financial condition and operating results. 17 Table of Contents SharpLink ’ s operations are subject to seasonal fluctuations that may impact results of operations and cash flow.
As of December 31, 2023, we had an accumulated deficit of $87,857,456. We cannot predict when or whether we will reach or maintain profitability. If we are unable to increase our revenues or our operating costs are higher than expected, we may not be able to achieve profitability and our operating results may fluctuate significantly.
As of December 31, 2024, we had an accumulated deficit of $(77,808,959). We cannot predict when or whether we will reach or maintain profitability. If we are unable to increase our revenues or our operating costs are higher than expected, we may not be able to achieve profitability and our operating results may fluctuate significantly.
If we are found to have breached or failed to fully comply with all the terms and conditions of an Open Source Software license, we could face infringement or other liability, or be required to seek costly licenses from third parties to continue providing our product and service offerings on terms that are not economically feasible, to find replacement software, to discontinue or delay the provision of our product and service offerings if replacement cannot be accomplished on a timely basis or to make generally available, in source code form, our proprietary software, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. 26 Risks Associated with Our Capital Stock The market price of our securities may be volatile and may fluctuate in a way that is disproportionate to our operating performance.
If we are found to have breached or failed to fully comply with all the terms and conditions of an Open Source Software license, we could face infringement or other liability, or be required to seek costly licenses from third parties to continue providing our product and service offerings on terms that are not economically feasible, to find replacement software, to discontinue or delay the provision of our product and service offerings if replacement cannot be accomplished on a timely basis or to make generally available, in source code form, our proprietary software, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. 26 Table of Contents Risks Associated with Our Capital Stock We may not regain compliance with the continued listing requirements of The Nasdaq Capital Market.
Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, the price of our securities could decline. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, the price of our securities could decline.
If we are required to change service providers, we expect to incur switching costs, which could include lost revenues during the transition period and additional player promotions to incentive players to migrate to a new platform once the platform previously used is no longer available. On February 24, 2022, Russia launched an invasion in Ukraine.
If we are required to change service providers, we expect to incur switching costs, which could include lost revenues during the transition period and additional player promotions to incentive players to migrate to a new platform once the platform previously used is no longer available.
Entain plc, an operator, is our largest customer, comprising approximately 38% of our Affiliate Marketing Services – International business segment’s revenue for the year ended December 31, 2023. The contract with this customer requires a nominal notice period to terminate the contract.
WPT Global, an operator, is our largest customer, comprising approximately 39% of our Affiliate Marketing Services segment’s revenue for the year ended December 31, 2024. The contract with this customer requires a nominal notice period to terminate the contract.
We have a history of incurring net losses and we may not achieve or maintain profitability in the future. We experienced net losses of $14,243,182 and $15,233,378 for the years ended December 31, 2023 and 2022, respectively, after factoring a net loss from discontinued operations of $2,994,584 and $1,137,732 for the same comparable periods, respectively.
We have a history of incurring net losses and we may not achieve or maintain profitability in the future. We experienced net income (losses) of $10,099,619 and $(14,243,182) for the years ended December 31, 2024 and 2023, respectively, after factoring a net income (loss) from discontinued operations of $14,573,262 and $(2,994,584) for the same comparable periods, respectively.
Furthermore, we cannot assure you that we will be able to issue shares or other securities in any offering at a price per share that is equal to or greater than the price per share paid by investors or the then current market price. FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our securities.
Furthermore, we cannot assure you that we will be able to issue shares or other securities in any offering at a price per share that is equal to or greater than the price per share paid by investors or the then current market price.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS; and we may need to issue similar instruments in the future. In the event that these convertible instruments are converted into shares of outstanding Common Stock, or that we make additional issuances of other convertible or exchangeable securities, you could experience additional dilution.
In the event that these convertible instruments are converted into shares of outstanding Common Stock, or that we make additional issuances of other convertible or exchangeable securities, you could experience additional dilution.
The Financial Industry Regulatory Authority, Inc. (“FINRA”) has adopted rules that a broker-dealer must have reasonable grounds for believing that an investment recommended to a customer is suitable for that customer.
FINRA sales practice requirements may limit a stockholder ’ s ability to buy and sell our securities. The Financial Industry Regulatory Authority, Inc. (“FINRA”) has adopted rules that a broker-dealer must have reasonable grounds for believing that an investment recommended to a customer is suitable for that customer.
During the years ended December 31, 2023 and December 31, 2022, the Company had a net loss from continuing operations of $11,248,598 and $14,095,646, respectively; and cash used in operating activities from continuing operations of $ 7,910,996 for the year ended December 31, 2023 and cash used for operating activities from continuing operations of $8,047,278 for the prior year.
During the years ended December 31, 2024 and December 31, 2023, the Company had a net loss from continuing operations of $(4,473,643) and $(11,248,598), respectively; and cash used in operating activities from continuing operations of $(5,856,053) for the year ended December 31, 2024 and cash used for operating activities from continuing operations of $(4,916,412) for the prior year.
Any such claims, which could include a claim for injunctive relief and damages, if successful, could have a material adverse effect on our business, prospects, financial condition and results of operations. The operation of SharpLink’s Affiliate Marketing Services – International segment are in non-U.S. jurisdictions, which subjects the Company to the economic, political, regulatory and other risks of international operations.
Any such claims, which could include a claim for injunctive relief and damages, if successful, could have a material adverse effect on our business, prospects, financial condition and results of operations.
We conduct business in numerous countries that carry high levels of currency, political, compliance and economic risk. Operations in these countries can present many risks, including volatility in gross domestic product and rates of economic growth, financial and governmental instability, fluctuations of currency exchange rates, and the imposition of exchange and capital controls.
Operations in non-U.S. jurisdictions can present many risks, including volatility in gross domestic product and rates of economic growth, financial and governmental instability, cultural differences and the imposition of exchange and capital controls.
Compliance with data protection and privacy laws and regulations will become more complex, time intensive and costly as we grow, particularly when we begin to rely on the movement of data across national boundaries. SharpLink may face claims for data rights infringement, which could subject us to monetary damages.
Compliance with data protection and privacy laws and regulations will become more complex, time intensive and costly as we grow, particularly when we begin to rely on the movement of data across national boundaries. Reductions in discretionary consumer spending could have an adverse effect on our business, financial condition, results of operations and prospects.
As of March 29, 2024, we had outstanding instruments which are convertible into 1,364,200 shares of Common Stock, including those 880,000 shares relating to the transaction entered into on February 14, 2023 with Alpha Capital Anstalt (“Alpha”), as further described in ITEM 7.
As of March 14, 2025, we had outstanding pre funded warrants with Alpha Capital Anstalt (“Alpha”), which are convertible into 303, 808 shares of Common Stock, as further described in ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS; and we may need to issue similar instruments in the future.
Removed
In connection with the status of international relations with Russia, particularly in light of Russian’s invasion of Ukraine, the U.S. government and the European Union have adopted sanctions on certain industry sectors and parties in Russia.
Added
Our business is particularly sensitive to reductions from time to time in discretionary consumer spending. Demand for entertainment and leisure activities, including iGaming and online sports betting, can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control.
Removed
The United States and other countries may implement additional actions, including trade actions, tariffs, export controls and sanctions against other countries or localities, including potentially against certain Russian government, government-related or other entities or individuals related to actions in Ukraine, which along with any retaliatory measures could increase costs, adversely affect our operations or adversely affect our ability to meet contractual and financial obligations.
Added
Unfavorable changes in general economic conditions, including recessions, economic slowdowns, sustained high levels of unemployment, and rising prices or the perception by consumers of weak or weakening economic conditions, may reduce our users’ disposable income or result in fewer individuals engaging in entertainment and leisure activities, such as sports betting or iGaming.
Removed
These potential sanctions and export controls, as well as any responses from Russia, could adversely affect us and/or the Company’s business partners or customers. While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.
Added
As a result, we cannot ensure that the demand for our product offerings will remain consistent.
Removed
In addition, in connection with the current status of international relations with Russia, particularly in light of Russian’s invasion of Ukraine, the U.S. government has adopted sanctions on certain industry sectors and parties in Russia. The governments of other jurisdictions in which we operate, such as the European Union, may also implement additional sanctions or other restrictive measures.
Added
Adverse developments affecting economies throughout the world, and particularly in the United States, including a general tightening of availability of credit, decreased liquidity in certain financial markets, inflation, increased interest rates, foreign exchange fluctuations, increased energy costs, the impact of higher tariffs or escalating trade disputes, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could lead to a reduction in discretionary spending on leisure activities.
Removed
These potential sanctions and export controls, as well as any responses from Russia, may adversely affect us, business partners or customers.
Added
SharpLink may face claims for data rights infringement, which could subject us to monetary damages.
Removed
For example, Entain plc, the largest customer of our Affiliate Marketing Services – International business segment, elected to exit the Russian market in February 2022 in response to Russia’s conflict with Ukraine, resulting in the loss of approximately 40% of the annual revenue historically generated from this customer.
Added
A portion of the operation of SharpLink ’ s Affiliate Marketing Services segment are in non-U.S. jurisdictions, which subjects the Company to the economic, political, regulatory and other risks of international operations We conduct business in numerous countries that carry high levels of currency, political, compliance and economic risk.
Removed
Consequently, during the year ended December 31, 2022, we recorded goodwill and intangible asset impairment charges of $4,726,000, largely resulted from Entain plc’s loss of access to customers in Russia.
Added
For example, we have offices in Ukraine and Israel, and the military conflict between Russia and Ukraine and the evolving conflict in the Middle East and any business interruptions or other spillover effects from such conflicts could adversely affect our operations.
Removed
While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.
Added
We may invest in or acquire other businesses, and our business may suffer if we are unable to successfully integrate acquired businesses into our Company or otherwise manage the growth associated with multiple acquisitions.
Added
As part of our business strategy, we have made, and may continue to make, strategic investments in or complete strategic acquisitions as opportunities arise to add new or complementary businesses, products, brands or technologies.
Added
In some cases, the costs of such investments or acquisitions may be substantial, includi ng as a result of professional fees, financing costs and due diligence efforts.
Added
There is no assurance that the time and resources expended on pursuing a particular acquisition or strategic investment opportunity will result in a completed transaction, or that any completed transaction will ultimately be successful. In addition, the assumptions we use to evaluate investment and acquisition opportunities may not prove to be accurate, and intended benefits may not be realized.
Added
Our due diligence investigations may fail to identify all of the issues, liabilities or other challenges associated with an acquired business, which could result in increased risk of unanticipated or unknown issues or liabilities, including with respect to privacy, competition and other regulatory matters, and our mitigation strategies for such risks that are identified may not be effective.
Added
Further, we may be unable to identify suitable acquisition or strategic investment opportunities, or may be unable to obtain any required financing or regulatory approvals, and therefore may be unable to complete such acquisitions or strategic investments on favorable terms, if at all.
Added
We may decide to pursue acquisitions with which our investors may not agree, and we cannot assure you that any acquisition or investment will be successful or otherwise provide a favorable return on investment.
Added
As previously reported, on July 17, 2024, the Company received a letter (the "Bid Price Deficiency Notice”) from the Nasdaq Stock Market ("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.
Added
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.
Added
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.
Added
Further, as previously reported on our Current Report on Form 8-K filed on November 22, 2024, the Listing Qualifications Department (the “Staff”) of Nasdaq 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 “Bid Price Rule”).
Added
As a result, the Staff requested that the Company provide a plan of compliance by January 6, 2025. O n January 8, 2025, SharpLink received a letter (the "Notice”) from the Staff indicating the Company’s continued non-compliance with the Bid Price Rule.
Added
On February 5, 2025, the Company requested a hearing before the Nasdaq Hearing Panel (the "Panel"), which has stayed any furtherdelisting action by the Staff pending the ultimate outcome of the hearing. The Company’s Common Stock will remain listed and eligible for trading on Nasdaq pending the ultimate conclusion of the hearing process.
Added
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).
Added
Further, as previously reported on our Current Report on Form 8-K filed on November 22, 2024, the 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). As a result, the Staff requested that the Company provide a plan of compliance by January 6, 2025.
Added
However, pursuant to Nasdaq Listing Rule 5810(d)(2), this deficiency became an additional basis for delisting, and as such, the Company addressed these concerns before the Panel.
Added
We understand that the delisting action referenced in the Notice, dated January 8, 2025, has been stayed pending the issuance of a formal decision by the Panel following a hearing which was held on February 25, 2025.
Added
At the hearing, the Company delivered he Panel with a detailed update regarding the Company’s plan to demonstrate compliance with all applicable requirements for continued listing on The Nasdaq Capital Market. However, there can be no assurance that the Panel will approve the compliance plan or that the Company will ultimately regain compliance with all applicable requirements for continued listing.
Added
The market price of our securities may be volatile and may fluctuate in a way that is disproportionate to our operating performance.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Removed
ITEM 1C. CYBERSECURITY SharpLink has established policies and processes for assessing, identifying and managing material cybersecurity risks, and have integrated these processes into our overall risk-management processes. We have also established policies and processes for managing and responding to material cybersecurity incidents.
Added
ITEM 1C. CYBERSECURITY 28 ITEM 2. PROPERTIES 29 ITEM 3. LEGAL PROCEEDINGS 29 ITEM 4. MINE SAFETY DISCLOSURES 29 PART II ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 30
Removed
We routinely assess material cybersecurity risks, including potential unauthorized occurrences on, or conducted through, our information systems that may compromise the confidentiality, integrity or availability of those systems or information maintained in them. We devote appropriate resources and designate members of our management, including our Chief Executive Officer and Chief Financial Officer, to manage the risk assessment and mitigation process.
Removed
Employees are provided specific guidance to mitigate the risk of a cybersecurity attack. This guidance includes safeguards over confidential data, being aware of suspicious emails, choosing passwords, protection of Company issued and use of personal devices, managing large data transfers and use of VPNs when outside the office.
Removed
Employees are directed to immediately contact either the Chief Financial Officer and Vice President of Affiliate Marketing if they encounter any suspicious activity. 28 We also require appropriate third-party service providers to certify that they can implement and maintain appropriate security measures, consistent with all applicable laws, in connection with their work for us, and to promptly report any suspected breach of their security measures that may affect our company.
Removed
We oversee and identify risks from cybersecurity threats associated with our use of service providers through an onboarding vendor risk management program, including an inherent risk assessment. We have not, to date, experienced a cybersecurity incident which was determined to be material, although, like any technology provider, we have experienced incidents in the past.
Removed
For additional information regarding whether any risks from cybersecurity threats are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this Annual Report on Form 10-K under the heading “ Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.
Removed
Any such breach could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disruption of our operations and the services we provide to clients, damage to our reputation, and a loss of confidence in our products and services, each of which could adversely affect our business, financial condition, results of operations and prospects ,” which should be read in conjunction with the information above.
Removed
Cybersecurity Governance One of the key functions of our Board of Directors is informed oversight of our risk management process, including risks from cybersecurity threats. Our Board of Directors is responsible for monitoring and assessing our strategic risk exposure, and our executive officers are responsible for day-to-day management of the material risks we face.
Removed
Our Board of Directors administers its cybersecurity risk-oversight function as a whole, as well as through the audit committee. Our Chief Financial Officer and Vice President of Affiliate Marketing are responsible for assessing and managing material risks from cybersecurity threats, as well as managing, responding to and reporting material cyber incidents if any occur.
Removed
They will provide periodic briefings to the Audit Committee and to the Board of Directors about our cybersecurity risks and activities, including cybersecurity incidents and responses, cybersecurity systems testing, third-party activities and related topics. In addition, our policies for managing and responding to cybersecurity incidents include procedures for appropriate escalations to our Audit Committee Chair.
Removed
Although we have designed our cybersecurity program and governance procedures above to mitigate cybersecurity risks, we face unknown cybersecurity risks, threats and attacks. To date, these risks, threats or attacks have not had a material impact on our operations, business strategy or financial results, but we cannot provide assurance that they will not have a material impact in the future.
Removed
See the section entitled “Risk Factors” included elsewhere in this Annual Report for further information. We continuously work to enhance our cybersecurity risk management program.

Item 2. Properties

Properties — owned and leased real estate

2 edited+2 added−1 removed0 unchanged
Biggest changeThe agreement also required the Company to pay real estate taxes, insurance and repairs during the lease. After the consummation of the Equity sale, the Company is required to pay RSports a monthly amount for shared lease space at the same address at $1,000 per month.
Biggest changeAfter the consummation of the Sale of Business in January 2024, the Company is required to pay RSports a monthly amount for shared lease space at the same address at $1,000 per month. This lease is on a month-to-month basis and can be terminated upon notice to RSports prior to the next monthly payment.
ITEM 2. PROPERTIES During 2023, the Company leased certain office space at 333 Washington Avenue North, Suite 104, Minneapolis, Minnesota 55401, USA under a long-term, non-cancelable operating lease agreement. The contract provided the right to substantially all of the economic benefits from the use of the office space and the right to direct the use of the office space.
ITEM 2. PROPERTIES At the beginning of 2024, the Company leased certain office space at 333 Washington Avenue North, Suite 104, Minneapolis, Minnesota 55401, USA under a long-term, non-cancelable operating lease agreement.
Removed
This lease is on a month-to-month basis and can be terminated upon notice to RSports prior to the next monthly payment.
Added
The contract provided the right to substantially all of the economic benefits from the use of the office space and the right to direct the use of the office space. The agreement also required the Company to pay real estate taxes, insurance and repairs during the lease.
Added
The Company terminated this lease arrangement on December 31, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny 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. 30 Equity Compensation Plan The following table provides summary of equity compensation plans and arrangements as of December 31, 2023: Weighted Weighted average average remaining Aggregate exercise contractual intrinsic Options Shares price term value Outstanding as of December 31, 2022 288,914 $ 11.40 $ 7,750 Granted 155,755 4.46 Exercised - - Acquired 1 14,552 14.16 Forfeited (42,989 ) 6.99 Expired (1,413 ) 8.84 Outstanding as of December 31, 2023 414,819 $ 8.79 7.7 $ 3,750 Exercisable as of December 31, 2023 660,594 $ 10.59 6.9 $ 3,750 1 During the year ended December 31, 2023, the Company recognized 14,552 options that were acquired during the SportsHub Acquisition.
Biggest changeAny 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. 30 Table of Contents Equity Compensation Plan The following table provides summary of equity compensation plans and arrangements as of December 31, 2024: Weighted Weighted average average remaining Aggregate exercise contractual intrinsic Options Shares price term value Outstanding as of December 31, 2023 414,819 $ 8.79 7.7 $ 3,750 Granted - - Exercised (2,500 ) 0.62 Forfeited (104,648 ) 5.69 Expired (199,410 ) 11.06 Outstanding as of December 31, 2024 108,261 $ 7.59 7.6 $ - Exercisable as of December 31, 2024 79,571 $ 8.05 7.6 $ - Recent Sales of Unregistered Securitie s None.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 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 2024 through March 22, 2024, as reported by Nasdaq. 2024 High Low First Quarter $ 1.83 $ 1.10 2023 High Low First Quarter $ 7.80 $ 3.40 Second Quarter $ 4.50 $ 2.52 Third Quarter $ 3.17 $ 1.58 Fourth Quarter $ 1.88 $ 1.21 2022 High Low First Quarter $ 27.50 $ 11.40 Second Quarter $ 15.00 $ 7.40 Third Quarter $ 13.90 $ 8.70 Fourth Quarter $ 8.80 $ 2.50 As of March 29, 2024, we had approximately 107 individual shareholders of record of our Common Stock.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 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. 2025 High Low First Quarter $ $ 2024 High Low First Quarter $ 1.83 $ 1.10 Second Quarter $ 1.41 $ 0.60 Third Quarter $ 0.83 $ 0.46 Fourth Quarter $ 0.94 $ 0.52 2023 High Low First Quarter $ 7.80 $ 3.40 Second Quarter $ 4.50 $ 2.52 Third Quarter $ 3.17 $ 1.58 Fourth Quarter $ 1.88 $ 1.28 As of March 14, 2025, we had approximately 54 individual shareholders of record of our Common Stock.
Removed
The options have an exercise price of $14.16 and expire December 21, 2032. The options were fully vested upon the SportsHub Acquisition. Recent Sales of Unregistered Securities All sales of unregistered securities during the year ended December 31, 2023 were previously disclosed in Current Reports on Form 8-K. Purchases of Equity Securities by Issuer and Its Affiliates None.
Added
Purchases of Equity Securities by Issuer and Its Affiliates None. ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

55 edited+51 added−38 removed42 unchanged
Biggest changeResults of Operations The following table provides certain selected financial information for the periods presented: December 31, 2023 December 31, 2022 Change % Change Revenues $ 4,952,725 $ 3,489,948 $ 1,462,777 41.9 % Cost of Revenues 3,420,062 2,173,835 $ 1,246,227 57.3 % Gross profit 1,532,663 1,316,113 $ 216,550 16.5 % Gross profit percentage 30.9 % 37.7 % Total operating expenses 10,425,865 15,598,951 $ (5,173,086 ) -33.2 % Operating loss (8,893,202 ) (14,282,838 ) $ 5,389,636 -37.7 % Total other (income) expenses (2,339,688 ) 174,237 $ (2,513,925 ) -1442.8 % Net loss before income taxes (11,232,890 ) (14,108,601 ) $ 2,875,711 -20.4 % Provision for income taxes 15,708 (12,955 ) $ 28,663 221.3 % Net loss from continuing operations (11,248,598 ) (14,095,646 ) $ 2,847,048 -20.2 % Net loss from discontinued ops, net of tax (2,994,584 ) (1,137,732 ) $ (1,856,852 ) 163.2 % Net loss $ (14,243,182 ) $ (15,233,378 ) $ 990,196 -6.5 % 38 For the Year Ended December 31, 2023 as Compared to Year Ended December 31, 2022 Revenues For the year ended December 31, 2023, revenues increased 42% to $4,952,725 as compared to revenues of $3,489,948 reported for the year ended December 31, 2022.
Biggest changeResults of Operations The following table provides certain selected financial information for the periods presented: December 31, 2024 December 31, 2023 Change % Change Revenues $ 3,662,349 $ 4,952,725 $ (1,290,376 ) -26.1 % Cost of Revenues 2,756,076 3,420,062 (663,986 ) -19.4 % Gross profit 906,273 1,532,663 (626,390 ) -40.9 % Gross profit percentage 24.7 % 30.9 % Total operating expenses 5,669,248 10,425,865 (4,756,617 ) -45.6 % Operating loss (4,762,975 ) (8,893,202 ) 4,130,227 -46.4 % Total other income (expenses) 289,100 (2,339,688 ) 2,628,788 -112.4 % Net income (loss) before income taxes (4,473,875 ) (11,232,890 ) 6,759,015 -60.2 % Provision for income taxes 232 (15,708 ) 15,940 -101.5 % Net income (loss) from continuing operations (4,473,643 ) (11,248,598 ) 6,774,955 -60.2 % Net income (loss) from discontinued ops, net of tax 14,573,262 (2,994,584 ) 17,567,846 -586.7 % Net income (loss) $ 10,099,619 $ (14,243,182 ) $ 24,342,801 -170.9 % 37 Table of Contents For the Year Ended December 31, 2024 as Compared to Year Ended December 31, 2023 Revenues 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.
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.
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.
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 with our 2025 fiscal year.
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.
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 Equity Sale.
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.
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 Equity Sale; 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, 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”).
Nasdaq Listing Rule 5550(b)(1) 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 a total stockholders’ deficit of $4,463,917.
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.
In connection with the closing of the Equity Sale, 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 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.
Recent Equity 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”).
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”).
On January 18, 2024, SharpLink sold all of the issued and outstanding shares of common stock or membership interests in an Equity Sale, 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.
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.
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. Beginning in 2022, we discontinued operations for this business unit and sought a buyer for the business.
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.
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. Inflation Our opinion is that inflation did not have a material effect on our operations for 2023.
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. Inflation Our opinion is that inflation did not have a material effect on our operations for 2024.
The year-over-year increase 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.
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.
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, 2023, we did not have any off-balance sheet arrangements.
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.
As a result of the Equity Sale, 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.
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.
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. 37 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.
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. 36 Table of Contents 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.
On December 31, 2022, we completed the sale of this business to Israel-based Entrypoint South Ltd. 32 Recent Developments Merger with SportsHub Games Network Inc.
On December 31, 2022, we completed the sale of this business to Israel-based Entrypoint South Ltd. 32 Table of Contents 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.
(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.
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”). 34 As a result of the Equity Sale, we have ceased our Sports Gaming Client Services and SportsHub Gaming Network operations.
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”). 34 Table of Contents As a result of the Sale of Business, we have ceased our Sports Gaming Client Services and SportsHub Gaming Network operations.
As a result, the Company’s obligations under the Debenture have been satisfied. 33 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 Equity Sale, the 2023 Warrant shall be repurchased by the Company as set forth in Section 3(e) of the 2023 Warrant.
As a result, the Company’s obligations under the Debenture have been satisfied. 33 Table of Contents 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 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 Equity Sale on January 18, 2024. See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022.
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.
ITEM 7. 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.
ITEM 7. 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.
Additional disclosures relating to the Equity Sale are provided in NOTE 18 included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022. 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.
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.
Please See NOTE 1 included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022, which are included in Item 8 “Financial Statements and Supplementary Data ” of this Annual Report, for our Summary of Significant Accounting Policies.
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.
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). 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.
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).
The improvement was further impacted by lower non-cash goodwill and intangible impairment expenses, which totaled $2,464,732 and $4,726,000 for the years ended December 31, 2023 and 2022, respectively. Operating Loss Operating loss decreased 38% for the 12-months ended December 31, 2023, declining to $8,893,202 as compared to $14,282,838 for the 12-month ended December 31, 2022.
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 cash used for investing activities for the year ended December 31, 2023 totaled $1,032,097, which compared to net cash generated by investing activities for continuing operations of $48,302,068 for the year ended December 31, 2022.
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.
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. We may need to raise additional capital to fund the Company’s growth and future business operations.
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.
Cash Flows Year Ended December 31, 2023 as Compared to the Year ended December 31, 2022 As of December 31, 2023, cash on hand was $2,487,481, an 80% increase when compared to cash on hand of $1,381,344 as of December 31, 2022.
Cash Flows 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.
As more states legalize sports betting, our portfolio of state-specific affiliate marketing properties will expand to include them. 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.
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.
For the years ended December 31, 2023 and 2022, net cash used for investing activities from discontinued operations was $745,951, compared to net cash generated by investing activities from discontinued operations of $48,721,370, respectively.
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.
On February 7, 2024, SharpLink received formal notification from Nasdaq that the Company’s previously announced deficiency under the Rule has 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.
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.
Continued Listing on Nasdaq On May 23, 2023, SharpLink received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that SharpLink was no longer in compliance with the equity standard for continued listing on The Nasdaq Capital Market.
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.
Total Operating Expenses For the 12 months ended December 31, 2023, total operating expenses decreased 33% to $10,425,865 from $15,598,951 reported for the prior year. The notable drop in total operating expenses was primarily due to lower selling, general and administrative expenses which decreased to $7,961,133 in 2023 from $10,872,951 in 2022.
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.
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. 41 Recently Issued Accounting Pronouncements Not Yet Adopted In November 2023, the FASB issued Accounting Standards Update 2023-07 – Segment Reporting (Topic ASC 280) Improvements to Reportable Segment Disclosures.
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. 40 Table of Contents 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.
On January 24, 2024, SharpLink filed a Current Report on Form 8-K with the SEC, disclosing details of the Equity Sale to RSports for $22.5 million in an all-cash transaction.
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”).
SharpLink’s Common Stock continues to be listed and traded on Nasdaq. See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022.
See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023.
For the year ended December 31, 2023, cash provided by financing activities from continuing operations was $9,303,279, a 247% increase when compared to net cash provided by financing activities from continuing operations of $2,675,343 provided from financing activities during the year ended December 31, 2022.
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.
Our most critical estimates include those related to use of the acquisition method of accounting for business combinations, intangibles and long-lived assets, goodwill and impairment, convertible debenture fair value, stock-based compensation, discontinued operations and revenue recognition. On an ongoing basis, we evaluate our estimates and assumptions.
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.
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.
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.
This increase was due to the SportsHub Gaming Network segment not having a full year of activity in 2022. Net Loss As a result of the aforementioned reasons, net loss for the 12 months ended December 31, 2023 totaled $14,243,182, which was an improvement from the net loss of $15,233,378 reported for the prior year.
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.
Net Loss from Continuing Operations After factoring the provision for income tax expenses of $15,708 and total other expense of $2,339,688, inclusive of $1,150,341 in interest expense and $1,230,234 in the change in fair value of our Convertible Debenture, the net loss from our continuing operations was reduced to $11,248,598 for the year 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.
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.
Overview 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. 31 Table of Contents 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.
This compared to a net loss from continuing operations of $14,095,646 for the prior year after factoring total other income of $174,237 and an income tax benefit totaling $12,955. 39 Net Loss from Discontinued Operations, Net of Tax Net loss from discontinued operations, net of tax increased 163% to $2,994,584 from $1,137,732 for the 12-month periods ended December 31, 2023 and 2022, respectively.
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) 38 Table of Contents 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.
The Warrant Repurchase Balance is valued at $260,111 and shall be subject to the repurchase terms set forth in the Settlement Agreement. See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022.
See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2024 and 2023.
See NOTE 18 – SUBSEQUENT EVENTS included in the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022. 35 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”).
SharpLink US’s Common Stock commenced trading on the Nasdaq Capital Market under the same ticker symbol, SBET, on February 14, 2024. 35 Table of Contents 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”).
Liquidity and Capital Resources As of December 31, 2023, we had negative working capital of $8,144,610. For the year ended December 31, 2023, we incurred a net loss from continuing operations of $11,248,598, representing a 20% decrease from a loss from continuing operations of $14,095,646 for the 12 months ended December 31, 2022.
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.
The Affiliate Marketing Services – United States and the Affiliate Marketing Services – International operating segments generate 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.
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.
For the year ended December 31, 2023, cash provided by operating activities totaled $582,887 compared to net cash used for operating activities of $5,937,386 in the prior year. The change in the operating cashflows was due to a full year of the Sports Gaming Network being included in 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.
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 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.
There have been no material changes made to the critical accounting estimates during the periods presented in the consolidated financial statements. Business Combinations The purchase price of an acquired business is allocated to the assets acquired and liabilities assumed at their estimated fair values on the date of acquisition using the acquisition method of accounting.
There have been no material changes made to the critical accounting estimates during the periods presented in the consolidated financial statements.
A change to any of the assumptions could lead to a future impairment that could be material. Stock-Based Compensation The fair value of each option award is estimated on the date of grant using a 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.
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 Company further disclosed that it used a portion of the proceeds from the Equity Sale to retire approximately $19.4 million in aggregate, in outstanding debt obligations, thereby significantly strengthening its balance sheet. As a result of the Equity Sale, 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’s total stockholders’ equity exceeded $2.5 million as of the date of the above referenced Form 8-K filing.
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, 2023 and 2022 were granted under the 2021 plan subsequent to the MTS Merger. Discontinued Operations In June 2022, SharpLink Israel’s Board of Directors approved management to enter into negotiations to sell MTS.
All option grants during the years ended December 31, 2024 and 2023 were granted under the 2021 plan subsequent to the MTS Merger.
For the year ended December 31, 2023, net cash used for the Company’s investing activities from continuing operations totaled $286,146, a decrease of 32% when compared to cash used for investing activities from continuing operations of $419,302 for the previous year.
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.
Moreover, on February 14, 2023, SharpLink Israel entered into the SPA with Alpha, a current shareholder of the Company, pursuant to which SharpLink Israel issued to Alpha a convertible debenture in the aggregate principal amount of $4,400,000 for proceeds of $4,000,000. 40 SharpLink Israel completed the Equity Sale 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 the pursuit of SharpLink’s growth strategy, the Company has sustained continued operating losses. 39 Table of Contents 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.
Removed
Overview 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. 31 Continuing Operations In December 2021, SharpLink had acquired certain assets of FourCubed, including FourCubed’s online casino gaming-focused affiliate marketing network, known as PAS.
Added
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.
Removed
For more than 18 years, PAS has focused on delivering quality traffic and player acquisitions, retention and conversions to regulated and global casino gaming operator partners worldwide. In fact, PAS won industry recognition as the European online gambling industry’s Top Affiliate Manager, Top Affiliate Website and Top Affiliate Program for four consecutive years by both igambingbusiness.com and igamingaffiliate.com.
Added
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.
Removed
The strategic acquisition of FourCubed brought SharpLink talent with proven experience in affiliate marketing services and recurring NGR contracts with many of the world’s leading online casino gambling companies, including Party Poker, bwin, UNIBET, GG Poker, 888 poker, betfair, World Poker Tour and others.
Added
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.
Removed
Change from Foreign Private Issuer to Domestic Issuer Prior to January 1, 2023, SharpLink Israel qualified as a foreign private issuer. There are two tests to determine whether a foreign company qualifies as a foreign private issuer: the U.S. shareholder test and U.S. business contacts test.
Added
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.
Removed
Under the U.S. shareholder test, a foreign company will qualify as a foreign private issuer if 50% or less of its outstanding voting securities are held by U.S. residents. If a foreign company fails this shareholder test, it will still be considered a foreign private issuer unless it fails any one part of the U.S. business contacts test.
Added
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.
Removed
The U.S. business contacts test includes the following three parts: 1) the majority of the company’s executive officers or directors are U.S. citizens or residents; 2) more than 50% of the issuer’s assets are located in the United States; or 3) the issuer’s business is administered principally in the United States.
Added
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.
Removed
Because we failed these tests, we ceased being a foreign private issuer and effective January 1, 2023, we began complying with the reporting requirements under the rules and regulations of the Exchange Act, applicable to U.S. domestic companies.
Added
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.
Removed
SharpLink US’s Common Stock commenced trading on the Nasdaq Capital Market under the same ticker symbol, SBET, on February 14, 2024.
Added
The modification to the Exchange Agreement was valued on June 29, 2024, the day before the modification, using the Black Scholes option-pricing model.
Removed
Any unallocated purchase price amount is recognized as goodwill on the consolidated balance sheet if it exceeds the estimated fair value or as a bargain purchase gain on the consolidated statement of operations if it is below the estimated fair value.
Added
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.
Removed
Determining the fair value of assets acquired and liabilities assumed requires management’s judgment, and the utilization of independent valuation experts as well as the use of historical information and significant estimates and assumptions with respect to the timing and amounts of future cash inflows and outflows, discount rates, market prices and asset lives, among other items.
Added
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.
Removed
The judgments made in the determination of the estimated fair value assigned to the assets acquired and liabilities assumed, as well as the estimated useful life of each asset and the duration of each liability, can materially impact the financial statements in periods after acquisition, especially depreciation and amortization expense.
Added
Further, during this same period, 2,500 warrants with a strike price of $0 were exercised by former management of MTS.
Removed
Acquisition-related costs are expensed as incurred and changes in deferred tax asset valuation allowances and income tax uncertainties after the measurement period are recorded in Provision for Income Taxes. Intangible, Long-Lived Assets and Impairments Intangible assets consist of internally developed software, customer relationships, trade names and acquired technology and are carried at cost less accumulated amortization.
Added
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.
Removed
The Company amortizes the cost of identifiable intangible assets on a straight-line basis over the expected period of benefit, which ranges from three to ten years. Costs associated with internally developed software are expensed as incurred unless they meet generally accepted accounting criteria for deferral and subsequent amortization.

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