SharpLink Gaming Inc
For the period ended Jun 30, 2024. Filed Aug 15, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 15, 2024
SBET$6.24-2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-17.
0001493152-24-020437
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-15.
0001437749-24-026906
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 60 previous paragraphs and 81 current paragraphs.
42 unchanged; 17 reworded; 16 added; 1 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
During the three months ended June 30, 2024, we realigned our organizational structure and resources to more closely align with our strategic priorities. As a result of the change in our organizational structure, we have one reportable segment, consisting of Affiliate Marketing, for the purpose of making operational and resource decisions and assessing financial performance.
Current report
On July 11, 2024, SharpLink received a notice (the "Notice") from Nasdaq Listing Qualifications indicating that the Company is no longer in compliance with the minimum bid price requirement for continued listing set forth in Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share. The rules also provide SharpLink a compliance period of 180 calendar days to regain compliance. According to the Notice, the Company has until January 7, 2025 to regain compliance with the minimum bid price requirement. SharpLink can regain compliance if at any time during this 180-day period, the closing bid price of its Common Stock is at least $1.00 for a minimum of ten consecutive business days, in which case SharpLink will be provided with written confirmation of compliance by Nasdaq and this matter will be closed. In the event that the Company fails to regain compliance after the initial 180-day period, SharpLink may then be eligible for additional time if it meets the continued listing requirements for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will be required to provide written notice of its intention to cure the deficiency during the second compliance period equal to an additional 180 calendar days. If SharpLink cannot demonstrate compliance by the end of the second compliance period, Nasdaq will notify SharpLink that its Common Stock is subject to delisting. The Notice has no immediate effect on SharpLink’s listing or the trading of its Common Stock, and during the grace period, as may be extended, the Company’s Common Stock will continue to trade on The Nasdaq Capital Market under the symbol “SBET.”
Current report
At-The-Market ("ATM") Offering
Current report
Exchange Agreement with Alpha Capital Anstalt
Current report
As previously reported on a Current Report on Form 8-K, dated February 16, 2023, on February 15, 2023, SharpLink issued a warrant to Alpha Capital Anstalt ("Alpha”) to purchase 880,000 common shares (as adjusted for the 1-for-10 -reverse stock split) of the Company (the "2023 Warrant”). The 2023 Warrant provided that in the event of a fundamental transaction, which included a sale of substantially all of the Company’s assets, at Alpha’s option, the Company would repurchase the 2023 Warrant from Alpha on the terms set forth in Section 3(e)(ii) of the 2023 Warrant (the "Warrant Repurchase”). On January 18, 2024, SharpLink sold substantially all of its assets as was disclosed in a Current Report on Form 8-K, filed on January 24, 2024 (the "Asset Sale”).
Current report
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 3(e)(ii) of the 2023 Warrant in connection with the Asset Sale. Pursuant to Section 5(1) of the 2023 Warrant, Alpha agreed to waive its right to the Warrant Repurchase at the time of the Asset Sale. The Settlement Agreement provides that the Warrant Repurchase for its Black Scholes value would take place upon the earlier of (a) June 30, 2024; (b) the Company raising a gross amount of not less than $3,000,000 whether by equity or debt; and (c) the Company entering into a "fundamental transaction” as defined in the 2023 Warrant. The Parties fixed the Black Scholes value of the 2023 Warrant for purposes of the Warrant Repurchase at $900,000.
Current report
On March 6, 2024, SharpLink entered into an Exchange Agreement (the "Exchange Agreement”) with Alpha. Pursuant to the terms and conditions set forth in the Exchange Agreement, the Company agreed to exchange the 2023 Warrant for (i) 156,207 shares of Common Stock (the "Shares”), (ii) a pre-funded warrant in the amount of 469,560 shares of Common Stock (the "Pre-Funded Warrant”) and (iii) the unexchanged balance of the 2023 Warrant Repurchase (the "Warrant Repurchase Balance”). The Warrant Repurchase Balance is valued at $260,111 and shall be subject to the repurchase terms set forth in the Settlement Agreement.
Current report
Effective June 30, 2024, SharpLink and Alpha entered into an Exchange Agreement No. 2 (the "Exchange Agreement No. 2”), but made effective as of June 30, 2024, whereby Alpha exchanged the Warrant Repurchase Balance for (i) a new warrant to purchase 254,233 shares of SharpLink’s common stock with a strike price of $0.001 (the "New Warrant”); and (ii) the termination of the Warrant Repurchase Balance including the repurchase obligations set forth thereunder.
Current report
For the three months ended June 30, 2024, total operating expenses decreased 30.5% to $1,484,680 from $2,136,936 reported for the same three-month period in the prior year. The decrease was primarily due to higher payroll, online marketing, editorial and travel related costs in the second quarter of 2023 associated with the Company’s second quarter 2023 primarily related to the expansion initiatives relating to our Affiliate Marketing Services. Further, total business insurance costs were higher in the 2nd quarter of 2023.
Current report
For the three months ended June 30, 2024, net loss from discontinued operations, net of tax decreased 143.8% to $453,705, which compared to a net loss from discontinued operations, net of tax of $(1,035,099) for the three months ended June 30, 2023. The decrease in net loss is due to the gain on the wind down of certain MTS business operations.
Current report
For the Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Current report
Gross Profit
Current report
For the six months ended June 30, 2024, gross profit totaled $567,342, reflecting a 28.3% decrease from a gross profit of $791,401 for the six months ended June 30, 2023. Our gross profit margin slightly decreased to 29.0% from 30.7% for the six months ended June 30, 2024 and 2023, respectively.
Current report
Total Operating Expenses
Current report
Net Income (Loss)
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Removed paragraphs (1)
Previous report
Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023
Reworded paragraphs (17)
Previous wording
The following discussion of SharpLink Gaming, Inc. and its wholly owned subsidiaries (collectively, “SharpLink Gaming,” “SharpLink,” “our Company,” the “Company,” “we,” “our,” and “us”), highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion should be read in conjunction with our consolidated financial statements and the related notes included in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our 2023 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on March 29, 2024. As discussed in the section titled “Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.
Current wording
The following discussion of SharpLink Gaming, Inc. and its wholly owned subsidiaries (collectively,“SharpLink Gaming,”* “SharpLink,” “our Company,” the*“Company,”* “we,” “our,” and*“us”), highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion should be read in conjunction with our condensed consolidated financial statements and the related notes included in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our 2023 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on March 29, 2024. As discussed in the section titled“Note Regarding Forward-Looking Statements,”* the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.*
Previous wording
During the three months ended March 31, 2024 and 2023, our continuing operations generated revenues of $975,946 and $1,232,761 respectively, representing a 20.8% decrease on a comparative quarter-over-quarter basis.
Current wording
During the three and six months ended June 30, 2024 and 2023, our continuing operations generated revenues of $981,272 and $1,343,526, respectively, for the three months ended and $1,957,218and $2,576,287respectively, for the six months ended representing a -27.0% decrease on a comparative quarter over quarter basis and a 24.0% decrease on a comparative year-over-year basis.
Previous wording
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. In consideration of Entrypoint South Ltd. acquiring all rights, title, interests and benefits to Legacy MTS, including 100% of the shares of MTS Integratrak Inc., one of the Company’s U.S. subsidiaries, Entrypoint South Ltd. will pay SharpLink an earn-out payment (an “Earn-Out Payment”) equal to three times Legacy MTS’ Earnings Before Interest, Taxes Depreciation and Amortization (“EBITDA”) for the year ending December 31, 2023, up to a maximum earn-out payment of $1 million (adjusted to reflect net working capital as of the closing date). Within ten (10) calendar days of the approval by the board of directors of the Buyer of the audited annual financial statements of the business as at December 31, 2023, and for the 12-month period ending on such date (as applicable, the “Earn-Out Schedule Delivery Date”), which shall occur no later than May 31, 2024, Buyer shall deliver to the Seller a schedule certified by its Chief Executive Officer and Chief Financial Officer (an “Earn-Out Schedule”) setting forth the computation of the Earn-Out Payment (as applicable), if any, together with the calculation thereof in an agreed Excel table format (including, but not limiting to all relevant details of the EBITDA calculations for the year 2023).
Current wording
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. In consideration of Entrypoint South Ltd. acquiring all rights, title, interests and benefits to Legacy MTS, including 100% of the shares of MTS Integratrak Inc., one of the Company’s U.S. subsidiaries, Entrypoint South Ltd. will pay SharpLink an earn-out payment (an “Earn-Out Payment”) equal to three times Legacy MTS’ Earnings Before Interest, Taxes Depreciation and Amortization (“EBITDA”) for the year ending December 31, 2023, up to a maximum earn-out payment of $1 million (adjusted to reflect net working capital as of the closing date). Within ten (10) calendar days of the approval by the board of directors of the Buyer of the audited annual financial statements of the business as at December 31, 2023, and for the 12-month period ending on such date (as applicable, the “Earn-Out Schedule Delivery Date”), which shall occur no later than May 31, 2024, Buyer shall deliver to the Seller a schedule certified by its Chief Executive Officer and Chief Financial Officer (an “Earn-Out Schedule”) setting forth the computation of the Earn-Out Payment (as applicable), if any, together with the calculation thereof in an agreed Excel table format (including, but not limiting to all relevant details of the EBITDA calculations for the year 2023). During the 2nd quarter ended June 30, 2024, the Company was notified that amount was $297,387. Payment was received by the Company in July 2024. No further payment is expected.
Previous wording
SharpLink’s business-building platform also included the provision of Free-To-Play (“F2P”) sports game and mobile app development services to a marquis list of customers, which included several of the biggest names in sports and sports betting, including Turner Sports, NBA, NFL, PGA TOUR, NASCAR and BetMGM, among others. In addition, we previously owned and operated a variety of proprietary real-money fantasy sports and sports simulation games and mobile apps through our SportsHub/fantasy sports business unit, which also owned and operated LeagueSafe, one of the fantasy sports industry’s most trusted sources for collecting and protecting private fantasy league dues.
Current wording
SharpLink’s business-building platform previously included the provision of Free-To-Play (“F2P”) sports game and mobile app development services to a marquis list of customers, which included several of the biggest names in sports and sports betting, including Turner Sports, NBA, NFL, PGA TOUR, NASCAR and BetMGM, among others. In addition, we previously owned and operated a variety of proprietary real-money fantasy sports and sports simulation games and mobile apps through our SportsHub/fantasy sports business unit, which also owned and operated LeagueSafe, one of the fantasy sports industry’s most trusted sources for collecting and protecting private fantasy league dues.
Previous wording
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.
Current wording
The historical results of our Sports Gaming Client Services and SportsHub Gaming Network businesses have been reflected as discontinued operations in our condensed consolidated financial statements for all periods prior to the Sale of Business.
Previous wording
For the three months ended March 31, 2024, revenues declined 20.8% to $975,946 compared to $1,232,761 reported for the same three-month period in the prior year. The decrease is largely due to the market conditions softening and the loss of customers.
Current wording
For the three months ended June 30, 2024, revenues declined 27.0% to $981,272 compared to $1,343,526 reported for the same three-month period in the prior year. The decrease is largely due to the market conditions softening and the loss of customers.
Previous wording
For the three months ended March 31, 2024, gross profit totaled $287,212, reflecting a 26.4% decrease from a gross profit of $390,079 for the three months ended March 31, 2023. Our gross profit margin modestly declined to 29.4% from 31.6% for the three months ended March 31, 2024 and 2023, respectively.
Current wording
For the three months ended June 30, 2024, gross profit totaled $280,130, reflecting a 30.2% decrease from a gross profit of $401,322 for the three months ended June 30, 2023. Our gross profit margin modestly declined to 28.5% %from 29.9% for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
Largely attributable to the Company’s concerted effort to lower payroll and other costs, net loss from continuing operations decreased 18.4% to $(1,760,811) for the three months ended March 31, 2024, compared to a net loss from continuing operations of $(2,157,183) reported for the same three months in 2023.
Current wording
Largely attributable to the Company’s concerted effort to lower payroll and other costs, net loss from continuing operations decreased -61.9% to $(916,664) for the three months ended June 30, 2024, compared to a net loss from continuing operations of $(2,406,059)reported for the same three months in 2023.
Previous wording
As a result of the aforementioned reasons, net income for the three months ended March 31, 2024 totaled $12,350,356, which was a 537.4% improvement from a net loss of $(2,823,746) reported for three months ended March 31, 2023.
Current wording
As a result of the aforementioned reasons, net loss for the three months ended June 30, 2024 totaled $(462,959), which was an 86.5% improvement from a net loss of $(3,441,158) reported for three months ended June 30, 2023.
Previous wording
For the three months ended March 31, 2024, total operating expenses decreased 3.6% to $1,972,075 from $2,045,334 reported for the same three-month period in the prior year. The decrease was primarily due toprimarily due to higher online marketing, editorial and travel related costs in the first quarter of 2023 associated with the Company’s expansion initiatives of our Affiliate Marketing Services – U.S. business unit.
Current wording
For the six months ended June 30, 2024, total operating expenses decreased 17.3% to $3,456,755 from $4,182,270 reported for the same six-month period in the prior year. The decrease was primarily due to primarily due to higher business insurance costs and higher payroll, online marketing, editorial and travel related costs in the first half of 2023 associated with the Company’s expansion initiatives of our Affiliate Marketing Services.
Previous wording
For the three months ended March 31, 2024, net income from discontinued operations, net of tax increased 2,217.0% to $14,111,167, which compared to a net loss from discontinued operations, net of tax of $(666,563) for the three months ended March 31, 2023. The increase is due to the gain on the sale of SHGN and Sports Gaming Client Services in January 2024 for $22.5 million.
Current wording
For the six months ended June 30, 2024, net income from discontinued operations, net of tax increased 955.9% to $14,564,872, which compared to a net loss from discontinued operations, net of tax of $(1,701,662) for the six months ended June 30, 2023. The increase is due to the gain on the sale of SHGN and Sports Gaming Client Services in January 2024 for $22.5 million.
Previous wording
As of March 31, 2024, cash on hand was $4,013,838, a 61.0% increase when compared to cash on hand of $2,487,481 as of December 31, 2023.
Current wording
As of June 30, 2024, cash on hand was $2,435,600, a -2.1%decrease when compared to cash on hand of $2,487,481 as of December 31, 2023.
Previous wording
For the three months ended March 31, 2024, net cash used in operating activities from continuing operations totaled $2,848,643 compared to net cash used for operating activities from continuing operations of $2,549,225 in the prior year. Net cash used in operating activities from discontinued operations was $16,446,314, which compared to net cash used in operating activities of $12,418,545 from discontinued operations for the same three-month period in 2023. Overall, net cash used for operating activities was $19,294,957 and $14,967,770 for the three months ended March 31, 2024 and 2023, respectively. The change in the operating cashflows was largely attributable to the gain on the sales of assets in connection with the Sale of the Company’s SHGN and Sports Gaming Client Services businesses in January 2024, offset by lower stock-based compensation expense, depreciation and amortization in the 2024 three-month reporting period as compared to the three months ended March 31, 2023.
Current wording
For the six months ended June 30, 2024, net cash used in operating activities from continuing operations totaled $(3,952,960) compared to net cash used for operating activities from continuing operations of $(2,832,754) in the prior year. Net cash used in operating activities from discontinued operations was $(17,002,007), which compared to net cash used in operating activities of $(9,211,756) from discontinued operations for the same six-month period in 2023. Overall, net cash used for operating activities was $(20,954,967) and $(12,044,510)for the six months ended June 30, 2024 and 2023, respectively. The change in the operating cashflows was largely attributable to the gain on the sales of assets in connection with the Sale of the Company’s SHGN and Sports Gaming Client Services businesses in January 2024, 2024 six-month reporting period as compared to the six months ended June 30, 2023.
Previous wording
For the three months ended March 31, 2024, net cash used in the Company’s investing activities from continuing operations totaled $1,719, a decrease of 98.6% when compared to cash used for investing activities from continuing operations of $123,560 for the same three-month period in 2023. For the three months ended March 31, 2024 and 2023, net cash used for investing activities from discontinued operations was $18,707,834 and $117,567, respectively. The increase in cash used in investing activities is due to cash received from the sale of business of $22,500,000, net of the cash transferred of $41,357,834. 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.
Current wording
For the six months ended June 30, 2024, net cash used in the Company’s investing activities from continuing operations totaled $148,281, a decrease of 218.5% when compared to cash used for investing activities from continuing operations of $(125,138) for the same six-month period in 2023. For the six months ended June 30, 2024 and 2023, net cash used for investing activities from discontinued operations was $(18,857,834) and $(343,206), respectively. The increase in cash used in investing activities is due to cash received from the sale of business of $22,500,000, net of the cash transferred of $41,357,834. 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.
Previous wording
For the three months ended March 31, 2024, net cash used for financing from continuing operations was $12,409,050, a 423.2% decrease when compared to net cash provided by financing activities from continuing operations for the same three-month period in 2023. For the three months ended March 31, 2024 net cash used in financing activities from discontinued operations was $5,835,352 compared to net cash provided by financing activities of $402,429 for the three months ended March 31, 2023. The comparable quarter-over-quarter decline was largely due to the issuance of a $4,000,000 convertible debenture to an institutional investor and proceeds from a line of credit secured from our commercial lender in February 2023, offset primarily by repayments of $19,205,606 in debt in the first quarter of 2024, including the repayment of the convertible debenture for $4,395,753.
Current wording
For the six months ended June 30, 2024, net cash used for financing from continuing operations was $(12,337,694), a 434.8% decrease when compared to net cash provided by financing activities from continuing operations for the same six-month period in 2023. For the six months ended June 30, 2024 net cash used in financing activities from discontinued operations was $5,835,352 compared to net cash provided by financing activities of $3,685,400 for the six months ended June 30, 2023. The comparable decline was largely due to the issuance of a $4,000,000 convertible debenture to an institutional investor and proceeds from a line of credit secured from our commercial lender in February 2023, offset primarily by repayments of $19,205,606 in debt in the first quarter of 2024, including the repayment of the convertible debenture for $4,395,753.
Previous wording
As of March 31, 2024, we had working capital of $2,827,090. For the three months ended March 31, 2024, we had a net loss from continuing operations of $1,760,811, compared to a net loss from continuing operations of $2,157,183 reported for the same three months in 2023.
Current wording
As of June 30, 2024, we had working capital of $2,739,096. For the three and six months ended June 30, 2024, we had a net loss from continuing operations of $(916,664) and $(2,677,475), respectively, compared to a net loss from continuing operations of $(2,406,059) and $(4,563,242), respectively, reported for the same three and six months in 2023.
Previous wording
Our opinion is that inflation did not have a material effect on our operations for the three months ended March 31, 2024.
Current wording
Our opinion is that inflation did not have a material effect on our operations for the six months ended June 30, 2024.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
On May 1, 2024, Company entered into an ATM Sales Agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (the “Agent”) pursuant to which the Company may offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $1,676,366, subject to certain limitations on the amount of Common Stock that may be offered and sold by the Company set forth in the ATM Sales Agreement (the “Offering”). The Company is not obligated to make any sales of Shares under the ATM Sales Agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs. As of August 14, 2024, SharpLink has raised gross proceeds of $71,343 from sales of Shares under the ATM Sales Agreement.
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, revenues declined 24.0% to $1,957,218 compared to $2,576,287 reported for the same six-month period in the prior year. The decrease is largely due to the market conditions softening and the loss of customers.
Current report — wording carried from elsewhere
Net Income (Loss) from Continuing Operations
Current report — wording carried from elsewhere
Largely attributable to the Company’s concerted effort to lower payroll and other costs, net loss from continuing operations decreased 41.3% to $(2,677,475) for the six months ended June 30, 2024, compared to a net loss from continuing operations of $(4,563,242) reported for the same six months in 2023.
Current report — wording carried from elsewhere
Net Income (Loss) from Discontinued Operations, Net of Tax
Current report — wording carried from elsewhere
As a result of the aforementioned reasons, net income for the six months ended June 30, 2024 totaled $11,887,397, which was a 289.7% improvement from a net loss of $(6,264,904) reported for six months ended June 30, 2023.