SharpLink Gaming Inc

Previous wording

In December 2023, the Company discontinued investments into and operation of its C4 sports betting conversion technology (“C4”) due to the lack of market acceptance. C4 centered on cost effectively monetizing our own proprietary audiences and our customers’ audiences of U.S. fantasy sports and casual sports fans and casino gaming enthusiasts by converting them into loyal online sports and iGaming bettors.

Current wording

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

Previous wording

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 wording

During the nine months ended September 30, 2024, we realigned our organizational structure and resources to more closely align with our strategic priorities. As a result of the change in our organizational structure, we have one reportable segment, consisting of Affiliate Marketing, for the purpose of making operational and resource decisions and assessing financial performance.

Previous 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.

Current wording

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

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). 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.

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 the Earn-Out Payment amount was $297,387. The Earn-Out Payment in full was received by the Company in July 2024. No further earn-out is expected.

Previous 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.

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 SHGN sports business unit, which also owned and operated LeagueSafe, one of the fantasy sports industry’s most trusted sources for collecting and protecting private fantasy league dues.

Previous wording

On January 18, 2024, SharpLink sold all of the issued and outstanding shares of common stock or membership interests, as applicable, in our Sports Gaming Client Services and SportsHub Gaming Network business units to RSports Interactive, Inc. (“RSports”) for $22.5 million in an all-cash transaction, pursuant to the signing of a purchase agreement and other related agreements. Nearly all of the employees of these acquired business units moved to RSports to help ensure a seamless transition.

Current wording

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

Previous 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.

Current wording

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

Previous wording

On May 23, 2023, SharpLink received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that SharpLink did not comply with the equity standard for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1) (the “Rule”) requires listed companies to maintain stockholders’ equity of at least $2.5 million under the net equity standard. As of the SharpLink Quarterly Report on Form 10-Q for the three and nine-month periods ended September 30, 2023, SharpLink reported total stockholders’ deficit of $4,463,917. SharpLink did not meet the alternative standards for market value of listed securities or net income from continuing operations, thus SharpLink was not in compliance with Nasdaq’s Listing Rule.

Current wording

On May 23, 2023, SharpLink received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that SharpLink did not comply with the equity standard for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1) (the “Rule”) requires listed companies to maintain stockholders’ equity of at least $2.5 million under the net equity standard. As of the Quarterly Report filed on Form 10-Q at September 30, 2023, SharpLink reported total stockholders’ deficit of $4,463,917. SharpLink did not meet the alternative standards for market value of listed securities or net income from continuing operations, thus SharpLink was not in compliance with Nasdaq’s Listing Rule.

Previous wording

On January 25, 2024, SharpLink filed a Current Report on Form 8-K with the SEC, disclosing details of the sale of its Sports Gaming Client Services and SportsHub Gaming Network business units to RSports Interactive, Inc. for $22.5 million in an all-cash transaction. As a result, the Company’s total stockholders’ equity exceeded $2.5 million as of the date of the above referenced Form 8-K filing and the Company believed that it had regained compliance with all applicable continued listing requirements and had requested that the Staff determine whether the Hearing should be cancelled.

Current wording

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 for $22.5 million in an all-cash transaction. As a result, the Company’s total stockholders’ equity exceeded $2.5 million as of the date of the above referenced Form 8-K filing and the Company believed that it had regained compliance with all applicable continued listing requirements and had requested that the Staff determine whether the Hearing should be cancelled.

Previous wording

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 wording

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 on the date of the Exchange Agreement and shall be subject to the repurchase terms set forth in the Settlement Agreement.

Previous 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.

Current wording

For the three months ended September 30, 2024, revenues declined 34.7% to $881,690 compared to $1,349,331 reported for the same three-month period in the prior year. The decrease is largely due to the market conditions softening and the loss of customers.

Previous 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.

Current wording

For the three months ended September 30, 2024, gross profit totaled $172,645, reflecting a 55.8% decrease from a gross profit of $390,666 for the three months ended September 30, 2023. Our gross profit margin declined to 19.6% % from 29.0% for the three months ended September 30, 2024 and 2023, respectively. The decline represents highercasino payouts due to large winnings by individuals during the three months ended September 30, 2024. For the casino business, as greater payouts are made to winners, this has the impact of reducing gross profit.

Previous wording

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 wording

For the three months ended September 30, 2024, total operating expenses decreased 46.0% to $970,080 from $1,795,057 reported for the same three-month period in the prior year. The decrease was attributable to lower payroll, audit and legal, insurance, marketing and travel-related costs in the third quarter of 2024 compared to the 3rd quarter in 2023. The 3rd quarter of 2023 also included expenses in connection with the expansion initiatives associated with our Affiliate Marketing Services.

Previous 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.

Current wording

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

Previous wording

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 wording

For the three months ended September 30, 2024, net loss from discontinued operations, net of tax decreased 88.2% to $(97,139), which compared to a net loss from discontinued operations, net of tax of $(822,100) for the three months ended September 30, 2023. The decrease in net loss is due to the gain on the wind down of MTS business operations.

Previous 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.

Current wording

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

Previous wording

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 wording

For the nine months ended September 30, 2024, revenues declined 27.7% to $2,838,908 compared to $3,925,618 reported for the same nine-month period in the prior year. The decrease is largely due to the market conditions softening and the loss of customers.

Previous 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.

Current wording

For the nine months ended September 30, 2024, total operating expenses decreased 25.9% to $4,426,835 from $5,977,327 reported for the same nine-month period in the prior year. The decrease was primarily due to primarily due to higher business insurance and payroll expenses, audit and legal, marketing and travel related costs in the nine months ended September 30, 2023 associated with the Company’s expansion initiatives of our Affiliate Marketing Services at that time.

Previous wording

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 wording

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

Previous 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.

Current wording

For the nine months ended September 30, 2024, net income from discontinued operations, net of tax increased 673.3% to $14,467,733, which compared to a net loss from discontinued operations, net of tax of $(2,523,754) for the nine months ended September 30, 2023. The increase is due to the gain on the sale of SHGN and Sports Gaming Client Services in January 2024 for $22.5 million.

Previous wording

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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash used in operating activities from continuing operations totaled $(4,434,002) compared to net cash used for operating activities from continuing operations of $(3,820,153) in the prior year. Net cash used in operating activities from discontinued operations was $(17,112,182), which compared to net cash provided by operating activities of $10,033,364 from discontinued operations for the same nine-month period in 2023. Overall, net cash (used in) provided by operating activities was $(21,546,184) and $6,213,211for the nine months ended September 30, 2024 and 2023, respectively. 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. Additionally, in 2023, SHGN's division, LeagueSafe, a secure online payment and league dues management website, received cash coinciding with the start of the NFL season.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash provided by the Company’s investing activities from continuing operations totaled $148,281, an increase of 169.3% when compared to cash used for investing activities from continuing operations of $(214,093) for the same nine-month period in 2023. For the nine months ended September 30, 2024 and 2023, net cash used for investing activities from discontinued operations was $(18,857,834) and $(630,257), respectively. The increase in total cash used in investing activities is due to cash received from the sale of business of $22,500,000, net of the cash transferred of $41,357,834. The majority of the cash transferred of $41,357,834 was reflected in discontinued operations customer deposits liability and deferred revenue of $36,959,573 and $4,888,704, respectively.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash used for financing from continuing operations was $(12,337,694), a 269.5% decrease when compared to net cash provided by financing activities from continuing operations of $7,279,771 for the same nine-month period in 2023. For the nine months ended September 30, 2024 net cash used in financing activities from discontinued operations was $5,835,352 compared to net cash provided by financing activities of $583,135 for the nine months ended September 30, 2023. The decline was largely due to the issuance of a $4,000,000 convertible debenture to an institutional investor and proceeds from a line of credit secured from our commercial lender in February 2023, offset primarily by repayments of $19,205,606 in debt in the first quarter of 2024, including the repayment of the convertible debenture for $4,395,753.

Previous 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.

Current wording

As of September 30, 2024, we had working capital of $2,001,113. For the three and nine months ended September 30, 2024, we had a net loss from continuing operations of $(787,992) and $(3,465,467), respectively, compared to a net loss from continuing operations of $(2,027,447) and $(6,590,689), respectively, reported for the same three and nine months in 2023.

Previous wording

SharpLink Israel completed the Sale of our Sports Gaming Client Services and SHGN business units for $22.5 million in an all-cash transaction in January 2024. In connection with the closing of the Sale of Business, SharpLink repaid in full all outstanding term loans and lines of credit with Platinum Bank, together with accrued but unpaid interest and all other amounts due in connection with such repayment under existing credit agreements, totaling an aggregate $14,836,625, and thereby terminating all existing credit facilities with Platinum Bank and discharging the debt on the Company’s balance sheet. In addition, we redeemed the outstanding convertible debenture issued to Alpha for 110% of the outstanding balance, plus accrued and unpaid interest, for or $4,484,230, thereby satisfying all obligations under the debenture and discharging the debt on the balance sheet.

Current wording

SharpLink Israel completed the Sale of our Sports Gaming Client Services and SHGN business units for $22.5 million in an all-cash transaction in January 2024. In connection with the closing of the Sale of Business, SharpLink Israel repaid in full all outstanding term loans and lines of credit with Platinum Bank, together with accrued but unpaid interest and all other amounts due in connection with such repayment under existing credit agreements, totaling an aggregate $14,836,625, and thereby terminating all existing credit facilities with Platinum Bank and discharging the debt on the Company’s balance sheet. In addition, SharpLink Israel redeemed the outstanding convertible debenture issued to Alpha for 110% of the outstanding balance, plus accrued and unpaid interest, for or $4,484,230, thereby satisfying all obligations under the debenture and discharging the debt on the balance sheet.

Previous wording

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

Current wording

On May 1, 2024, Company entered into an ATM Sales Agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (the “Agent”) pursuant to which the Company may offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $1,676,366 (“Shares”), subject to certain limitations on the amount of Common Stock that may be offered and sold by the Company set forth in the ATM Sales Agreement (the “Offering”). The Company is not obligated to make any sales of Shares under the ATM Sales Agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs. As of November 14, 2024, SharpLink has raised gross proceeds of $71,343 from sales of Shares under the ATM Sales Agreement.

Previous wording

In addition to the ATM Sales Agreement, we may need to raise additional capital to fund the Company’s growth and future business operations. We cannot be certain that additional funding will be available on acceptable terms or at all. If we are not able to secure additional funding when needed to support our business growth and to respond to business challenges, develop new technology and services or enhance our existing offering, track and comply with applicable laws and regulations, improve our operating infrastructure, enhance our information security systems to combat changing cyber threats and expand personnel to support our business, we may have to delay or reduce the scope of planned strategic growth initiatives. Moreover, any additional equity financing that we obtain may dilute the ownership held by our existing shareholders. The economic dilution to our shareholders will be significant if our stock price does not materially increase, or if the effective price of any sale is below the price paid by a particular shareholder. Any debt financing could involve substantial restrictions on activities and creditors could seek additional pledges of some or all of our assets. If we fail to obtain additional funding as needed, we may be forced to cease or scale back operations, and our results, financial conditions and stock price would be adversely affected. As such, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.

Current wording

In addition to funds that may be raised through the ATM Sales Agreement, we may need to raise additional capital to fund the Company’s growth and future business operations. We cannot be certain that additional funding will be available on acceptable terms or at all. If we are not able to secure additional funding when needed to support our business and to respond to business challenges, develop new technology and services or enhance our existing offering, track and comply with applicable laws and regulations, improve our operating infrastructure, enhance our information security systems to combat changing cyber threats and expand personnel to support our business, we may have to delay or reduce the scope of planned strategic initiatives. Moreover, any additional equity financing that we obtain may dilute the ownership held by our existing shareholders. The economic dilution to our shareholders will be significant if our stock price does not materially increase, or if the effective price of any sale is below the price paid by a particular shareholder. Any debt financing could involve substantial restrictions on activities and creditors could seek additional pledges of some or all of our assets. If we fail to obtain additional funding as needed, we may be forced to cease or scale back operations, and our results, financial conditions and stock price would be adversely affected. As such, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.

Previous wording

On June 30, 2024, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. Since our inception, except for standard operating leases accounted for prior to January 1, 2022, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities. We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Current wording

On September 30, 2024, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. Since our inception, except for standard operating leases accounted for prior to January 1, 2022, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Previous wording

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

Current wording

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

Previous wording

In November 2023, the FASB issued Accounting Standards Update 2023-07 – Segment Reporting (Topic ASC 280) Improvements to Reportable Segment Disclosures. This Accounting Standards Update improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses. The enhancements under this update require disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss, require disclosure ofother segment items by reportable segment and a description of the composition ofother segment items, require annual disclosures under Topic ASC 280 to be provided in interim periods, clarify use of more than one measure of segment profit or loss by the CODM, require that the title of the CODM be disclosed with an explanation of how the CODM uses the reported measures of segment profit or loss to make decisions, and require that entities with a single reportable segment provide all disclosures required by this update and required under Topic ASC 280. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company anticipates the adoption of ASC 280 will not have a material impact on its condensed consolidated financial statements.

Current wording

In November 2023, the FASB issued Accounting Standards Update 2023-07 – Segment Reporting (Topic ASC 280) Improvements to Reportable Segment Disclosures. This Accounting Standards Update improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses. The enhancements under this update require disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss, require disclosure ofother segment items by reportable segment and a description of the composition ofother segment items, require annual disclosures under Topic ASC 280 to be provided in interim periods, clarify use of more than one measure of segment profit or loss by the CODM, require that the title of the CODM be disclosed with an explanation of how the CODM uses the reported measures of segment profit or loss to make decisions, and require that entities with a single reportable segment provide all disclosures required by this update and required under Topic ASC 280. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company believes the adoption of ASC 280 will not have a material impact on its condensed consolidated financial statements.