UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

Commission file number: 001-41962

SHARPLINK GAMING, INC.

(Exact name of registrant as specified in its charter)

Delaware		87-4752260
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

333 Washington Avenue North, Suite 104 Minneapolis, Minnesota		55401
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (612) 293-0619

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock		SBET		The Nasdaq Capital Market, LLC

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “emerging growth company” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to Section 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of May 15, 2025, there were 659,684 shares of Common Stock issued and outstanding.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	3

ITEM 1.	FINANCIAL STATEMENTS:	3

	Condensed Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024	3

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024 (unaudited)	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2025 and 2024 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28

ITEM 4.	CONTROLS AND PROCEDURES	28

PART II.	OTHER INFORMATION	29

ITEM 1.	LEGAL PROCEEDINGS	29

ITEM 1A.	RISK FACTORS	29

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	29

ITEM 4.	MINE SAFETY DISCLOSURES	29

ITEM 5.	OTHER INFORMATION	29

ITEM 6.	EXHIBITS	29

SIGNATURES		30

Table of Contents

PART I.

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

SHARPLINK GAMING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2025			December 31, 2024
Assets
Current Assets
Cash	$	1,374,943		$	1,436,729
Accounts receivable, net of allowance for credit losses of $0		322,952			264,831
Other Receivables		-			272,813
Prepaid expenses and other current assets		345,549			310,180
Due from Rsports Interactive, Inc.		1,511			307
Current assets from discontinued operations		218,677			269,788
Total current assets		2,263,632			2,554,648

Investment, cost		500,000			-
Equipment, net		2,153			3,359
Intangible assets, net		11,944			13,162
Total assets	$	2,777,729		$	2,571,169

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued expenses	$	692,183		$	478,280
Current liabilities from discontinued operations		930			10,020
Total current liabilities		693,113			488,300

Total liabilities		693,113			488,300

Commitments and Contingencies		-			-

Stockholders’ Equity
Series A-1 preferred stock, $0.0001 par value; authorized shares: 260,000; issued and outstanding shares: 601; liquidation preference: $116,997		1			1
Series B preferred stock, $0.0001 par value; authorized shares: 370,000; issued and outstanding shares: 1,040; liquidation preference: $529,122		1			1
Preferred stock		1			1
Common stock, $0.0001 par value; authorized shares 100,000,000; issued and outstanding shares: 575,255 and 407,295, respectively		58			41
Treasury stock, 8 common shares at cost		(29,000	)		(29,000	)
Additional paid-in capital		80,897,416			79,920,785
Accumulated deficit		(78,783,860	)		(77,808,959	)
Total stockholders’ equity		2,084,616			2,082,869
Total liabilities and stockholders’ equity	$	2,777,729		$	2,571,169

See accompanying notes to these condensed consolidated financial statements

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SHARPLINK GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	2025			2024
	For the Three Months Ended March 31,
	2025			2024
Revenues	$	741,731		$	975,946
Cost of revenues		609,936			688,734
Gross profit		131,795			287,212

Operating expenses
Selling, general, and administrative expenses		1,057,339			1,972,075
Operating loss		(925,544	)		(1,684,863	)

Other income and expense
Interest income		11,932			16,097
Interest expense		-			(324,194	)
Other expense		(312	)		-
Change in fair value of convertible debenture and warrant liabilities		-			237,823
Total other income (expense)		11,620			(70,274	)

Net loss before income taxes		(913,924	)		(1,755,137	)
Income tax (expense)		(2,808	)		(5,674	)
Net loss from continuing operations		(916,732	)		(1,760,811	)
Net income (loss) from discontinued operations, net of tax		(58,169	)		14,111,167
Net income (loss)	$	(974,901	)	$	12,350,356

Numerator for basic and diluted net loss per share:
Net loss from continuing operations available to common stockholders	$	(916,732	)	$	(1,805,430	)
Net income (loss) from discontinued operations available to common stockholders		(58,169	)		14,111,167
Net income (loss)		(974,901	)		12,305,737

Denominator for net loss per share:
Basic weighted average shares for continuing and discontinued operations		531,226			259,140
Diluted weighted average shares for discontinued operations		531,226			298,479
Net earnings (loss) per share:
Net loss from continuing operations per share - basic	$	(1.73	)	$	(6.97	)
Net income (loss) from discontinued operations per share – basic		(0.11	)		54.45
Net income (loss) per share - basic	$	(1.84	)	$	47.48
Net loss from continuing operations per share - diluted	$	(1.73	)	$	(6.97	)
Net income (loss) from discontinued operations per share – diluted		(0.11	)		47.28
Net income (loss) per share - diluted	$	(1.84	)	$	40.31

See accompanying notes to these condensed consolidated financial statements

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SHARPLINK GAMING, INC.

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

FOR THE three months ended March 31, 2025 and 2024

(UNAUDITED)

	Shares		Amount			Shares		Amount			Shares		Amount			Capital			stock			deficit			equity
	Common/Ordinary shares					Series A-1 preferred stock					Series B preferred stock					Additional Paid-In			Treasury			Accumulated			Total shareholders’
	Shares		Amount			Shares		Amount			Shares		Amount			Capital			stock			deficit			equity

Balance, December 31, 2023		238,645	$	47,729			601	$	120			1,040	$	208		$	78,438,630		$	(29,000	)	$	(87,857,456	)		(9,399,769	)
Net Income		-		-			-		-			-		-			-			-			12,350,356			12,350,356
Domestication equity adjustment - Note 1		-		(47,704	)		-		(119	)		-		(207	)		48,030			-			-			-
Stock-based compensation expense		-					-		-			-		-			42,152			-			-			42,152
Shares issued for vested restricted stock		6,250		-			-		-			-		-			108,000			-			-			108,000
Issuance of common stock for exercise of warrants		22,222		2			-		-			-		-			159,998			-			-			160,000
Warrant settlement agreement - Note 8		-		-			-		-			-		-			(900,000	)		-			-			(900,000	)
Issuance of common stock for exchange of warrants - Note 8		13,017		1			-		-			-		-			210,893			-			(6,503	)		204,391
Warrant exchange agreement - deemed dividend - Note 8		-		-			-		-			-		-			44,619			-			(44,619	)		-
Warrant exchange agreement, issuance of pre-funded warrants - Note 8		-		-			-		-			-		-			287,150			-			-			287,150
Balance at March 31, 2024		280,134	$	28			601	$	1			1,040	$	1		$	78,439,472		$	(29,000	)	$	(75,558,222	)		2,852,280

Balance at December 31, 2024		407,295	$	41			601	$	1			1,040	$	1		$	79,920,785		$	(29,000	)	$	(77,808,959	)		2,082,869
Balance		407,295	$	41			601	$	1			1,040	$	1		$	79,920,785		$	(29,000	)	$	(77,808,959	)		2,082,869
Net Loss		-		-			-		-			-		-			-			-			(974,901	)		(974,901	)
Net Income (Loss)		-		-			-		-			-		-			-			-			(974,901	)		(974,901	)
Stock-based compensation expense		-		-			-		-			-		-			69,460			-			-			69,460
Issuance of common stock for exchange of warrants		25,000		3			-		-			-		-			-			-			-			3
Shares sold for cash		142,960		14			-		-			-		-			907,171			-			-			907,185
Balance at March 31, 2025		575,255	$	58			601	$	1			1,040	$	1		$	80,897,416		$	(29,000	)	$	(78,783,860	)	$	2,084,616
Balance		575,255	$	58			601	$	1			1,040	$	1		$	80,897,416		$	(29,000	)	$	(78,783,860	)	$	2,084,616

See accompanying notes to these condensed consolidated financial statements.

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SHARPLINK GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	2025			2024
Includes cash flow activities from both continuing and discontinued operations	Three Months Ended March 31,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		(974,901	)		12,350,356
Net income (loss) from discontinued operations, net of tax		(58,169	)		14,111,167
Net loss from continuing operations	$	(916,732	)	$	(1,760,811	)
Net income (loss)		(974,901	)		12,350,356

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		2,112			3,433
Amortization of debt discount		-			71,781
Change in fair value		-			(237,823	)
Deferred tax expense		-			(7,155	)
Stock-based compensation expense		69,460			30,110
Loss on disposal of equipment		312			-
Changes in assets and liabilities
Accounts receivable		(58,121	)		63,110
Other receivable		272,813			-
Due from Rsports Interactive, Inc.		(1,204	)		-
Prepaid expenses and other current assets		(35,369	)		(131,822	)
Accounts payable and accrued expenses		213,902			(879,466	)
Net cash used in operating activities – continuing operations		(452,827	)		(2,848,643	)
Net cash (used in) provided by operating activities - discontinued operations		(61,258	)		(16,446,314	)
Net cash used in operating activities		(514,085	)		(19,294,957	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for equipment		-			(1,719	)
Investment in Crypto Casino		(500,000	)		-
Net cash provided by (used in) investing activities – continuing operations		(500,000	)		(1,719	)
Net cash used in investing activities - discontinued operations		-			(18,707,834	)
Net cash used for investing activities		(500,000	)		(18,709,553	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of convertible debenture		-			(4,148,571	)
Proceeds from sale of common stock		907,185			-
Proceeds from line of credit		-			550,000
Repayment of line of credit		-			(6,900,000	)
Principal payments on long-term debt		-			(2,070,479	)
Proceeds from exercise of warrants		3			160,000
Net cash generated by (used in) financing activities – continuing operations		907,188			(12,409,050	)
Net cash (used in) generated by financing activities - discontinued operations		-			(5,835,352	)
Net cash generated by (used in) financing activities		907,188			(18,244,402	)

Net change in cash		(106,897	)		(56,248,912	)

Cash and restricted cash, beginning of period including discontinued operations		1,541,856			60,441,130
Cash and restricted cash, end of period including discontinued operations		1,434,959			4,192,218
Less cash from discontinued operations		(60,016	)		(178,380	)
Cash, end of period	$	1,374,943		$	4,013,838

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest		-			485,531
Cash paid for taxes		-			86,320

NON-CASH FINANCING ACTIVITIES:
Settlement agreement, liability issued for warrants		-			(900,000	)
Issuance of common stock in exchange of warrants		-			210,879
Issuance of common stock for vested RSUs		-			108,000
Deemed Dividend		-			44,619
Warrant exchange agreement, issuance of pre-funded warrants		-			287,150

See accompanying notes to these condensed consolidated financial statements.

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SHARPLINK GAMING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE three months ended March 31, 2025 and 2024

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by SharpLink Gaming, Inc. (the “Company,” “SharpLink,” “we” or “our”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company, the foregoing statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of March 31, 2025 and December 31, 2024, as well as its results of operations for the three months ended March 31, 2025 and 2024. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to rules and regulations of the SEC. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by GAAP for a complete financial statement presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2024, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2025 and Form 10-K/A filed with the SEC on March 17, 2025.

Nature of Business

SharpLink, a Delaware corporation, is an online performance marketing company that delivers unique fan activation solutions to its sportsbook and casino partners. Through its global affiliate marketing network, known as PAS.net, SharpLink drives qualified traffic and player acquisitions, retention and conversions to U.S. regulated sportsbooks and global casino gaming partners worldwide. In addition, SharpLink owns a performance marketing platform through which the Company owns and operates U.S. state-specific web domains designed to attract, acquire and drive local sports betting and casino traffic directly to its sportsbook and casino partners which are licensed to operate in each respective state.

Prior to the sale of SharpLink’s Sports Gaming Client Services and SportsHub Gaming Network (“SHGN”) business units in January 2024 to RSports Interactive, Inc. (“RSports”), a Minnesota corporation, (the “Sale of Business”), the SHGN unit owned and operated an online gaming business that primarily facilitated daily and seasonal peer-to-peer fantasy contests for its end users. The SHGN business unit also operated a website that provided a variety of services to private fantasy league commissioners, including secure online payment options, transparent tracking and reporting of transactions, payment reminders, in-season security of league funds and facilitation of prize payouts. SharpLink’s Sports Gaming Client Services game development business was engaged in the provision of fantasy and free-to-play 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.

On January 18, 2024, the Company entered into a Purchase Agreement (the “PA”) with RSports to sell the Company’s fantasy sports and sports game development business units to RSports. All of the membership interests of Sports Technologies, LLC, a Minnesota limited liability company, SHGN and Holdings Quinn, LLC, a Delaware limited liability company (collectively referred to as the “Divested Operations”) were sold for $22,500,000 in an all cash transaction. The transaction resulted in SharpLink selling a majority of its assets and the classification of the Divested Operation’s financial results as discontinued operations. All prior periods presented have been restated to present the Divested Operations financial results as discontinued operations. All explanations and amounts relating to discontinued operations are referred throughout the consolidated financial statements to Note 3 - Discontinued Operations.

On February 13, 2024, SharpLink Gaming Ltd. (“SharpLink Israel” and former parent company) completed its previously announced domestication merger (“Domestication Merger”), pursuant to the terms and conditions set forth in an Agreement and Plan of Merger (the “Domestication Merger Agreement”), dated June 14, 2023 and amended July 24, 2023, among SharpLink Gaming, Inc. (“SharpLink US”), SharpLink Israel, SharpLink Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of subsidiary of SharpLink US (Domestication Merger Sub). The Domestication Merger was achieved through a merger of Domestication Merger Sub Ltd. with and into SharpLink Israel, with SharpLink Israel surviving the merger and becoming a wholly owned subsidiary of SharpLink US. The Domestication Merger was approved by the shareholders of SharpLink Israel at an extraordinary special meeting of shareholders held on December 6, 2023. SharpLink US’s Common Stock commenced trading on the Nasdaq Capital Market under the same ticker symbol, SBET, on February 14, 2024.

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

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

Ordinary Shares
Par value for ordinary shares at $0.20 as reported at February 13, 2024	$	47,729
Par value for common stock at $0.0001 at February 13, 2024		25
Par value for common stock		25
Net change in par value — will be reflected in additional paid-in capital	$	47,704

Preferred Shares
Par value for Series A-1 preferred stock at $0.20 par value as reported at February 13, 2024	$	120
Par value for Series A-1 preferred stock at $0.0001 par value as reported at February 13, 2024		1
Net change in par value — will be reflected in additional paid-in capital	$	119
Par value for Series B preferred stock at $0.20 par value as reported at February 13, 2024		208
Par value for Series B preferred stock at $0.0001 par value at February 13, 2024		1
Par value for preferred stock		1
Net change in par value — will be reflected in additional paid-in capital	$	207

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of SharpLink Gaming, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions between consolidated subsidiaries have been eliminated in consolidation.

Reclassifications

During the year ended December 31, 2024, we realigned our organizational structure and resources to more closely align with our strategic priorities. As a result of the change, we have one reportable segment, consisting of Affiliate Marketing, for the purpose of making operational and resource decisions and assessing financial performance. See Note 9 - Operating Segment.

Functional Currency

The Company’s functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. The resulting monetary assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the balance sheet date. Revenue and expense components are translated to U.S. dollars at weighted-average exchange rates in effect during the period. Foreign currency transaction gains and losses resulting from remeasurement are recognized in other income and expenses within the condensed consolidated statements of operations.

Reverse Share Split

On May 5, 2025, the Company effected a one-for-twelve (1:12) reverse stock split of all the Company’s share capital, whereby the Company decreased the number of issued and outstanding common shares from 7,916,206 to 659,684. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retrospectively adjusted as of the earliest period presented in the financial statements to reflect the reverse stock split.

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Regaining Compliance with Nasdaq Continued Listing Standards

As previously reported on Form 10-K filed by the Company on March 14, 2025 and 10-K/A filed by the Company on March 17, 2025, the Company received a letter on July 17, 2024 from Nasdaq notifying the Company that, because of the closing bid price for its common stock had been below $1.00 per share for 30 consecutive trading days, it was not compliant with the Minimum Bid Price Requirement (the “Bid Price Deficiency Notice”). In accordance with Nasdaq Marketplace Rule 5810 (c)(3)(A), the Company had a period of 180 calendar days, or until January 7, 2025, to regain compliance with the Minimum Bid Price Requirement. Further, as previously reported on our Current Report on Form 8-K filed on November 22, 2024, the Nasdaq Staff notified the Company that it did not comply with the $2.5 million minimum stockholders’ equity requirement, as set forth in Nasdaq Listing Rule 5550(a)(2). The Company had 45 calendar days to submit a plan to regain compliance or until January 6, 2025.

The Company had a hearing with the Nasdaq Hearing Panel (the “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. SharpLink worked to evidence compliance with the Minimum Bid Price Requirement and Minimum Stockholder’s Equity Requirement for continued listing on the Nasdaq Capital Market and submitted a plan to that effect to the Panel as part of the hearing process on February 25, 2025.

On March 21, 2025, SharpLink received notice (the “Notice”) from the Panel of The Nasdaq Stock Market, LLC (“Nasdaq”) stating that the Panel has granted the Company’s request for additional time to achieve compliance with Nasdaq’s continued listing rules and demonstrate long-term compliance with the minimum bid price requirement as set forth in Rule 5550(a)(2) (the “Bid Price Rule”), which requires issuers to maintain a minimum bid price of $1.00 per share on the Nasdaq, and with Listing Rule 5550(b)(1), which requires listed issuers to maintain minimum stockholders’ equity of $2.5 million (the “Equity Rule”). Specifically, the Panel has agreed to provide the Company until May 23, 2025 to regain compliance with both the Bid Price Rule and the Equity Rule.

We must satisfy Nasdaq’s continued listing requirements, including, among other things, the Bid Price Rule and the Equity Rule, or risk delisting, which could have a material adverse effect on our business. If our common stock is delisted from Nasdaq, it could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. If our common stock is delisted, it could be more difficult to buy or sell our common stock or to obtain accurate quotations, and the price of our common stock could suffer a material decline. Delisting could also impair our ability to raise capital on acceptable terms, if at all.

The Company is currently attempting to raise equity in public offerings in order to achieve compliance with the Equity Rule. We may not be able to comply with the Equity Rule even after these offerings due to our cash burn rate, operating expenses, and payment obligations. As a result, we may be required to raise additional funds after these offerings in order to achieve compliance.

Acquisition of 10% Equity Stake in Armchair Enterprises

On February 24, 2025, SharpLink entered into a subscription agreement (“Subscription Agreement”) with U.K-based Armchair Enterprises Limited (“Armchair”), which owns and operates CryptoCasino.com. The acquisition of a 10% equity stake in Armchair was made for $500,000 in cash, along with a right of first refusal to acquire a controlling interest in Armchair. The investment was recorded at cost and will be measured at cost minus impairment, adjusted for any observable price changes. There was no impairment as of March 31, 2025.

Evaluation of Strategic Alternatives

On July 18, 2024, SharpLink announced that its Board of Directors (“Board”) has initiated a formal review process to evaluate strategic alternatives for the Company. The Board and management team are taking a measured approach to considering multiple proposals that have been received by the Company and other proposals it expects to receive. SharpLink has been exploring strategic alternatives that include, but are not limited to, a sale, merger, strategic business combination or other transactions. SharpLink has not set a deadline or definitive timetable for completion of the strategic alternatives review process and there can be no assurance that this process will result in the Company pursuing a transaction or any other strategic outcome.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)2023-09 – Income Taxes (Topic ASC 740) Income Taxes. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 became effective beginning with our 2025 fiscal year. We do not expect that this guidance will have a material impact upon our financial position and results of operations.

In November 2024, the FASB issued ASU 2024-04, Debt-Debt with Conversions and Other Option. ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on its disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial statements and disclosures.

Note 2 – Going Concern and Liquidity

For the three months ended March 31, 2025 and 2024, the Company had a net loss from continuing operations of $(916,732) and $(1,760,811). The Company used cash for operating activities from continuing operations of $(452,827) and $(2,848,643) for the three months ended March 31, 2025 and 2024, respectively.

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On May 2, 2024, Company entered into an ATM Sales Agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“AGP” or 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. On February 4, 2025, the Company, under the terms of the ATM Sales Agreement, filed a prospectus supplement that amended the number shares of Common Stock having an aggregate offering price of up to $1,835,052. As of March 31, 2025, SharpLink has raised total gross proceeds of $1,834,925.

On May 5, 2025 and May 6, 2025, SharpLink filed a registration statement on Form S-1 and Form S-1/A, respectively, in connection with a potential public offering to raise up to $5 million (the “Offering”) in gross proceeds through the offering of i) shares of common stock or prefunded warrants, in lieu thereof, ii) Series A-1 Common Stock Warrants, and iii) Series A-2 Common Stock Warrants (collectively, the Series A-1 Common Stock Warrants and Series A-2 Common Stock Warrants, the “Common Warrants.” Pursuant to the registration statement, as amended, SharpLink has engaged AGP to use its reasonable best efforts to solicit offers to purchase our securities in this offering. The Agent has no obligation to purchase any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities. Because there is no minimum offering amount required as a condition to closing in this offering the actual public offering amount, Agent’s fee, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth in the registration statement, as amended, and related preliminary prospectus. See Note 13.

In addition to funds that may be raised through the ATM Sales Agreement or the potential Offering, 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, track and comply with applicable laws and regulations, develop new technology and services or enhance our existing offering, improve our operating infrastructure, enhance our information security systems to combat changing cyber threats and expand personnel to support our business, we may have to delay or reduce the scope of our planned strategic initiatives. Moreover, any additional equity financing that we obtain may dilute the ownership held by our existing shareholders. 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.

Note 3 – Discontinued Operations

In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major impact on an entity’s operations and financial results when the components of an entity meets the criteria in ASC paragraph 205-20-45-10. In the period in which the component meets the held for sale or discontinued operations criteria the major assets, other assets, current liabilities and non-current liabilities shall be reported as a component of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the income (loss) of continuing operations.

Sale of SHGN and Sports Gaming Client Services

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. (“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 Interactive, Inc., a Minnesota corporation (“Buyer”). The Subsidiary Seller owns all of the issued and outstanding membership interests of Sports Technologies, LLC, a Minnesota limited liability company, SHGN and Holdings Quinn, LLC, a Delaware limited liability company (collectively referred to as the “Targets”). The PA contemplated the sale of the Company’s Sports Gaming Client Services and SportsHub Gaming Network business units to the Buyer, by selling all of the issued and outstanding membership interests of the Targets and the Acquired Subsidiaries for $22,500,000 in an all cash transaction. SHGN owns all of the membership interests in Virtual Fantasy Games Acquisitions, LLC, a Minnesota limited liability company; LeagueSafe Management, LLC, a Minnesota limited liability company; SportsHub Reserve, LLC, a Minnesota limited liability company; SportsHub PA, LLC, a Pennsylvania limited liability company; SportsHub Operations, LLC, a Minnesota limited liability company; SportsHub Holdings, LLC, a Minnesota limited liability company; SportsHub Regulatory, LLC, a Minnesota limited liability company; and SportsHub Player Reserve, LLC, a Minnesota limited liability company (collectively, the “Acquired Subsidiaries”).

As a result of the Sale of Business, we ceased our Sports Game Client Services and SportsHub Gaming Network segments. The historical results of these business segments have been reflected as discontinued operations in our consolidated financial statements for all periods prior to the closing date of the Sale of Business on January 18, 2024.

In connection with the Sale of Business, the Company entered into with the Buyer a Transition Services Agreement to provide for an orderly transfer and the continuity of business services. The Parent Seller would be able to use certain Buyer employees at an agreed upon hourly rate. The Buyer would be charged monthly amounts for business services such as accounting software, insurance and data services.

On May 8, 2024, SharpLink entered into an amended and fully restated Post Closing Assignment Agreement with RSports, whereby SharpLink and RSports agreed to amend the PA to exclude the transfer/sale of SHGN and 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. Based on this amended agreement, the Sale of Business is an asset sale for legal and tax purposes instead of an equity sale.

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.

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. 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.

In the statement of cashflows for the three months ended March 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. The majority of the cash transferred of $41,357,834 was reflected in discontinued operations customer deposits liability and deferred revenue of $36,959,573 and $4,888,704, respectively.

During the three months ended March 31, 2025 and 2024, SharpLink paid RSports $0 and $34,059, respectively, for use of accounting service personnel under the PCCA agreement; and RSports paid SharpLink $0 and $39,957 under the PCCA agreement for the three months ended March 31, 2025 and 2024, respectively.

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Sale of MTS

The Company negotiated a Share and Asset Purchase Agreement which was closed on December 31, 2022. The majority of the assets of the primary reporting unit within MTS were sold. Accordingly, the assets and liabilities of the MTS business were separately reported as assets and liabilities from discontinued operations as of March 31, 2025 and March 31, 2024. The results of operations and cash flows of MTS for all periods are separately reported as discontinued operations.

Summary Reconciliation of Discontinued Operations

	For the Three Months Ended			For the Three Months Ended
	March 31, 2025			March 31, 2024

Revenues	$	-		$	398,813

Cost of Revenues		(8,881	)		154,491

Gross Profit		8,881			244,322

Operating Expenses
Selling, general, and administrative expenses		69,054			319,523

Operating Loss		(60,173	)		(75,201	)

Interest income		-			98,161
Other (expense) income		3,004			(2,000	)
Gain on sale of business		-			14,670,811
Interest expense		-			(9,027	)
Total other income and expense		3,004			14,757,945

Income (loss) before income taxes		(57,169	)		14,682,744

Income tax expense		1,000			571,577

Income (loss) from discontinued operations, net	$	(58,169	)	$	14,111,167

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The following table presents a reconciliation of the carrying amounts of major classes of assets and liabilities of the Company classified as discontinued operations as of March 31, 2025 and December 31, 2024:

	March 31,		December 31,
	2025		2024
Carrying amounts of major classes of assets included as part of discontinued operations:

Current assets
Cash	$	60,016	$	105,127
Prepaid expenses and other current assets		158,661		164,661
Total current assets	$	218,677	$	269,788

	March 31,		December 31,
	2025		2024
Carrying amounts of major classes of liability included as part of discontinued operations:

Current Liabilities
Accounts payable and accrued expenses		930	$	10,020
Total current liabilities	$	930	$	10,020

Note 4 – Additional Balance Sheet Information

Equipment, net

Equipment consists of computers, furniture and fixtures and is presented net of accumulated depreciation from continuing operations for a net book value of $2,153 and $3,359 as of March 31, 2025 and December 31, 2024, respectively. Depreciation expense from continuing operations for the three months ended March 31, 2025 and 2024 was $894 and $2,202, respectively.

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Intangible assets, net

Intangible assets, net of accumulated amortization as of March 31, 2025 and December 31, 2024 consisted of the following:

Schedule of Intangible Assets

	Weighted Average Amortization Period (Years)	Cost, Net of Impairment		Accumulated Amortization		Net
Balance, March 31, 2025
Acquired technology	5	$	24,700	$	12,756	$	11,944
		$	24,700	$	12,756	$	11,944

Balance, December 31, 2024
Acquired technology	5	$	24,700	$	11,538	$	13,162
		$	24,700	$	11,538	$	13,162

Amortization expense from continuing operations on intangible assets for the three months ended March 31, 2025 and 2024 was $1,218 and $1,231, respectively. The Company sold $150,000 of software in development to a third party during the first quarter of 2024.

Note 5 - Convertible Debenture and Warrant

Convertible Debenture at Fair Value

The Company accounts for convertible debentures using an amortized cost model. The discount for warrants, the Original Issuance Discount (“OID”) and the initial allocation of fair value of compound derivatives reduce the initial carrying amount of the convertible notes. The carrying value is the stated principal amount at contractual maturity using the effective-interest method with a corresponding charge to interest expense. Debt discounts are presented on the condensed consolidated balance sheets as a direct deduction from the carrying amount of that related debt.

The Company made an irrevocable election at the time of issuance of the Debenture to record the Debenture at its fair value (the “Fair Value Option”) with changes in fair value recorded through the Company’s condensed consolidated statements of operations within other income (expense) at each reporting period. The Fair Value Option provides the Company with a measurement basis election for financial instruments on an instrument-by-instrument basis.

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On February 14, 2023, the Company entered into the Securities Purchase Agreement (the “SPA”) with Alpha, a current shareholder of the Company, pursuant to which the Company issued to Alpha an 8% Interest Rate, 10% Original Issue Discount, Senior Convertible Debenture (the “Debenture”) in the aggregate principal amount of $4,400,000 for a purchase price of $4,000,000 on February 15, 2023. The Debenture is convertible, at any time, and from time to time, at Alpha’s option, into shares of Common Stock of the Company (the “Conversion Shares”), at an initial conversion price equal to $84.00 per share, subject to adjustment as described in the debenture agreement. A registration statement on Form S-1 (file No.: 333-271396) was filed on April 21, 2023, and as a result, the reset price was set to $50.13.

Pursuant to Section 8(a)(vi) of the Debenture, it is an event of default if the Company is party to a Fundamental Transaction or agrees to sell or dispose of all or in excess of 33% of its assets in one transaction or a series of related transactions. 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 in connection with the Sale of Business; and (ii) payment of the Mandatory Default Amount; and the parties agreed that the Company would pay 110% of the outstanding principal amount of the Debenture, plus accrued and unpaid interest, in the aggregate total amount of $4,484,230 (the “Debenture Redemption Amount”).

On January 19, 2024, the Company paid Alpha the Debenture Redemption Amount. As a result, the Company’s obligations under the Debenture have been satisfied.

Purchase Warrant

On February 15, 2023, the Company also issued to Alpha a warrant (the “Warrant”) to purchase 73,333 common shares of the Company at an initial exercise price of $105.01 (the “Warrant Shares,” and, together with the Conversion Shares, and any other common shares of the Company that may otherwise become issuable pursuant to the terms of the Debenture and Warrant, the “Underlying Shares”). The Warrant is exercisable in whole or in part, at any time on or after February 15, 2023 and before February 15, 2028.

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At the time of execution, the Company classified the Warrant as an equity contract and performed an initial fair value measurement. As the Warrant was issued with the assumption of the Debenture, the value assigned to the Warrant was based on an allocation of proceeds, subject to the allocation to the Debenture. The Company recorded a debt discount for the Warrant of $1,174,229, based on the Black Scholes option-pricing model which was calculated independently of the fair value of the Debenture, and recorded the Warrant as additional paid-in capital.

The Warrant provides that in the event of a Fundamental Transaction (as defined in the Debenture), SharpLink, at Alpha’s option, would repurchase the Warrant from Alpha on the terms set forth in Section 3(e)(ii) of the 2023 Warrant (the “Warrant Repurchase”). 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 Warrant in connection with the Sale of Business.

Pursuant to Section 5(1) of the Warrant, Alpha further agreed to waive its right to elect that, in connection with and at the closing of the Sale of Business, the Warrant shall be repurchased by the Company as set forth in Section 3(e) of the 2023 Warrant. The parties agreed in the Settlement Agreement that the Warrant Repurchase for its Black Scholes value shall take place upon the earlier of (a) June 30, 2024; (b) the Company raising a gross amount of not less than $3,000,000 whether by equity or debt; and (c) the Company entering into a Fundamental Transaction as defined in the 2023 Warrant. The parties further agree in the Settlement Agreement value of the 2023 Warrant for purposes of the Warrant Repurchase at $900,000, which was based on a Black Scholes model.

On March 6, 2024, SharpLink entered into an Exchange Agreement (the “Exchange Agreement”) with Alpha to change the Warrant Repurchase of $900,000. Pursuant to the terms and conditions set forth in the Exchange Agreement, the Company agreed to exchange the 2023 Warrant to purchase 73,333 shares of common stock for (i) 13,017 shares of Common Stock (the “Shares”), (ii) a pre-funded warrant in the amount of 39,130 shares of Common Stock (the “Pre-Funded Warrant”) and (iii) the unexchanged balance of the 2023 Warrant Repurchase (the “Warrant Repurchase Balance”). The Warrant Repurchase Balance of 21,186 warrants is valued at $170,636 and shall be subject to the repurchase terms set forth in the Settlement Agreement. The Pre-Funded Warrant and the Warrant Repurchase Balance were valued using Black Scholes option-pricing model. As part of this transaction, the Company recorded a deemed dividend of $44,619 as presented in the statement of stockholders’ equity for the three months ended March 31, 2024.

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

	January 19, 2024			March 6, 2024			March 31, 2024
Expected volatility		112.98	%		90.90	%		87.36	%
Expected dividends		0.00	%		0.00	%		0.00	%
Expected term (years)		4.08			3.92			3.90
Risk-free rate		3.75	%		4.12	%		4.21	%
Warrants measurement input		3.75	%		4.12	%		4.21	%

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 $48.85 to $0.0012 and to remove the re-purchase option.

Note 6 - Fair Value

In accordance with fair value accounting guidance, the Company determines fair value based on the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As disclosed in Note 5, SharpLink entered into a Settlement Agreement on January 19, 2024 for the 2023 Warrant for purposes of the Warrant Repurchase at $900,000. On March 6, 2024, SharpLink entered into an Exchange Agreement with Alpha to change the Warrant Repurchase of $900,000. Pursuant to the terms set forth in the Exchange Agreement, the Company agreed to exchange the 2023 Warrant for (i) 13,107 shares of Common Stock (the “Shares”), (ii) a pre-funded warrant in the amount of