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

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

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.

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).

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.

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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of ~~August 14,~~November 13, 2023, there were ~~2,833,734~~2,863,734 Ordinary Shares, nominal value NIS 0.60 per share, issued and outstanding.

	June 30, 2023			December 31, 2022			September 30, 2023			December 31, 2022
	(unaudited)						(unaudited)
Assets
Current Assets
Cash	$	31,874,620		$	39,324,529		$	49,309,668		$	39,324,529
Restricted cash		10,785,568			11,132,957			14,874,585			11,132,957
Accounts receivable, net of allowance for credit losses of $0 and $0, respectively		1,360,528			776,530
Accounts receivable								1,394,340			776,530
Unbilled receivables		195,234			47,000			128,879			47,000
Contract assets		68,602			219,116			99,410			219,116
Deferred Prize Expense		2,655,276			356,158
Deferred prize expense								5,349,300			356,158
Prepaid expenses and other current assets		1,183,250			744,275			1,770,813			744,275
Current assets from discontinued operations		537,000			1,310,000			389,000			1,310,000
Total current assets		48,660,078			53,910,565			73,315,995			53,910,565

Investment, cost		200,000			200,000			200,000			200,000
Equipment, net		55,782			60,218			61,796			60,218
Right-of-use asset - operating lease		280,532			230,680			264,381			230,680
Intangibles
Intangible assets, net		3,804,864			3,727,933			3,970,213			3,727,933
Goodwill		6,916,095			6,916,095			6,916,095			6,916,095
Total assets	$	59,917,351		$	65,045,491		$	84,728,480		$	65,045,491

Liabilities and Stockholders’ Equity
Liabilities and Stockholders’ Equity (Deficit)

Current Liabilities
Accounts payable and accrued expenses	$	2,365,789		$	2,125,707		$	2,584,120		$	2,125,707
Contract liabilities		5,633,004			2,166,451			8,448,201			2,166,451
Prize liability		5,843,661			6,061,434			11,585,038			6,061,434
Customer deposits		34,455,925			42,171,589			49,147,991			42,171,589
Line of credit		4,994,090			4,120,651			8,745,034			4,120,651
Current portion of long-term debt		1,042,436			1,018,918			1,054,954			1,018,918
Current portion of convertible debt, net of discount of $350,001 and $0, respectively, warrant discount of $1,027,450 and $0, respectively, accrued interest of $130,192 and $0, respectively		3,830,778			-
Current portion of convertible debt, net of discount								4,372,963			-
Current portion of lease liability		57,441			31,070			56,369			31,070
Current liabilities from discontinued operations		821,497			1,215,213			821,498			1,215,213
Total current liabilities		59,044,621			58,911,033			86,816,168			58,911,033

Long-Term Liabilities
Deferred tax liability		24,689			6,206			24,689			6,206
Debt, less current portion		2,408,735			2,931,698			2,142,338			2,931,698
Lease liability, less current portion		223,800			210,037			209,202			210,037
Total liabilities		61,701,845			62,058,974			89,192,397			62,058,974

Commitments and Contingencies		-			-			-			-
Stockholders’ Equity
Ordinary shares, $0.20 par value; authorized shares 9,290,000 issued and outstanding shares: 2,688,541		537,731			537,731
Series A-1 preferred stock, $0.20 par value; authorized shares: 260,000; issued and outstanding shares: 7,130 and 6,630, respectively; liquidation preference: $115,834 and $138,414, respectively		1,426			1,326
Series B preferred stock, $0.20 par value; authorized shares: 370,000; issued and outstanding shares: 12,481 liquidation preference: $528,908 and $595,245		2,496			2,496
Series A-1 preferred stock, NIS 0.60 par value; authorized shares: 260,000; issued and outstanding shares: 7,202 and 6,630, respectively; liquidation preference: $117,009 and $138,414, respectively								1,440			1,326
Series B preferred stock, NIS 0.60 par value; authorized shares: 370,000; issued and outstanding shares: 12,481 liquidation preference: $529,122 and $595,245, respectively								2,496			2,496
Preferred stock, value
Ordinary shares, NIS 0.60 par value; authorized shares 9,290,000 issued and outstanding shares: 2,833,734 and 2,688,541, respectively								566,770			537,731
Treasury stock, nine ordinary shares at cost		(29,000	)		(29,000	)		(29,000	)		(29,000	)
Additional paid-in capital		77,582,031			76,039,604			77,723,094			76,039,604
Accumulated deficit		(79,879,178	)		(73,565,641	)		(82,728,717	)		(73,565,641	)
Total stockholders’ equity (deficit)		(1,784,494	)		2,986,517			(4,463,917	)		2,986,517
Total liabilities and stockholders’ equity	$	59,917,351		$	65,045,491
Total liabilities and stockholders’ equity (deficit)							$	84,728,480		$	65,045,491

	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022			September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
	For the Three Months Ended,						For the Six Months Ended,						For the Three Months Ended						For the Nine Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022			September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022

Revenues	$	3,257,357		$	1,751,255		$	6,647,748		$	3,647,590		$	3,269,924		$	1,292,674		$	9,917,671		$	4,940,264
Cost of revenues		2,292,045			1,661,241			4,338,795			2,930,143			2,133,604			1,104,695			6,472,399			4,034,837
Gross profit		965,312			90,014			2,308,953			717,447			1,136,320			187,979			3,445,272			905,427

Operating expenses
Selling, general, and administrative expenses		3,748,509			3,729,746			7,419,926			6,559,638			3,595,072			2,105,178			11,014,991			8,664,818
Goodwill and intangible asset impairment expenses		-			-			-			4,726,000			-			-			-			4,726,000
Total operating expenses		3,748,509			3,729,746			7,419,926			11,285,638			3,595,072			2,105,178			11,014,991			13,390,818
Operating loss		(2,783,197	)		(3,639,732	)		(5,110,973	)		(10,568,191	)		(2,458,752	)		(1,917,199	)		(7,569,719	)		(12,485,391	)

Other income and expense
Interest income		376,842			11,188			649,263			23,502			541,784			6,922			1,191,046			30,424
Interest expense		(379,943	)		(34,034	)		(717,364	)		(54,418	)		(450,577	)		(32,397	)		(1,167,940	)		(86,815	)
Other expense		(76,644	)					(76,644	)					(5,347	)		-			(81,990	)		-
Change in fair value of convertible debenture		(422,808	)		-			(678,037	)		-			(324,205	)		-			(1,002,243	)		-
Total other income and expense		(502,553	)		(22,846	)		(822,782	)		(30,916	)		(238,345	)		(25,475	)		(1,061,127	)		(56,391	)

Net loss before income taxes		(3,285,750	)		(3,662,578	)		(5,933,755	)		(10,599,107	)		(2,697,097	)		(1,942,674	)		(8,630,846	)		(12,541,782	)
Provision for income tax expenses		6,408			700			37,149			700			4,450			300			41,600			1,000
Net loss from continuing operations		(3,292,158	)		(3,663,278	)		(5,970,904	)		(10,599,807	)		(2,701,547	)		(1,942,974	)		(8,672,446	)		(12,542,782	)
Net loss from discontinued operations, net of tax		(149,000	)		(1,147,654	)		(294,000	)		(1,255,654	)		(148,000	)		(104,633	)		(441,997	)		(1,360,286	)

Net loss	$	(3,441,158	)	$	(4,810,932	)	$	(6,264,904	)	$	(11,855,461	)	$	(2,849,547	)	$	(2,047,607	)	$	(9,114,443	)	$	(13,903,068	)

Numerator for basic and diluted net loss per share:
Net loss from continuing operations available to ordinary shareholders	$	(3,341,490	)	$	(3,665,525	)	$	(6,021,185	)	$	(10,605,648	)	$	(2,701,760	)	$	(1,945,221	)	$	(8,722,940	)	$	(12,550,870	)
Net loss from discontinued operations available to ordinary shareholders		(149,000	)		(1,147,654	)		(294,000	)		(1,255,654	)		(148,000	)		(104,633	)		(441,997	)		(1,360,286	)
Total Numerator for basic net loss per share		(3,490,490	)		(4,813,179	)		(6,315,185	)		(11,861,302	)		(2,849,760	)		(2,049,854	)		(9,164,937	)		(13,911,156	)

Denominator for basic and diluted net loss per share:
Weighted average shares outstanding		2,813,900			2,361,974			2,813,900			2,361,974			2,863,607			2,361,974			2,736,583			2,361,974

Net loss per share - Basic and diluted
Net loss from continuing operations per share	$	(1.19	)	$	(1.55	)	$	(2.14	)	$	(4.49	)	$	(0.94	)	$	(0.82	)	$	(3.19	)	$	(5.31	)
Net loss from discontinued operations per share		(0.05	)		(0.49	)		(0.10	)		(0.53	)		(0.05	)		(0.04	)		(0.16	)		(0.58	)
Net loss per share	$	(1.24	)	$	(2.04	)	$	(2.24	)	$	(5.02	)	$	(0.99	)	$	(0.86	)	$	(3.35	)	$	(5.89	)

~~See accompanying notes to these condensed consolidated financial statements.~~

Includes cash flow activities from both continuing and discontinued operations	2023			2022			2023			2022
	For the Six Months Ended June 30,						For the Nine Months Ended September 30,
Includes cash flow activities from both continuing and discontinued operations	2023			2022			2023			2022

Operating activities
Net loss from continuing operations	$	(5,970,904	)	$	(10,599,807	)	$	(8,672,446	)	$	(12,542,782	)
Net loss from discontinued operations, net of tax	$	(294,000	)	$	(1,255,654	)	$	(441,997	)	$	(1,360,286	)
Net loss	$	(6,264,904	)	$	(11,855,461	)	$	(9,114,443	)	$	(13,903,068	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		395,849			586,750			600,492			866,204
Amortization of loan costs		5,438			-			8,153			-
Amortization of warrant and debt discount		196,778			-			327,962			-
Amortization of prepaid stock issued for services		86,000			-			129,000			-
Change in fair value of convertible debenture		678,037			-			1,002,243			-
Accrued interest on convertible debenture		130,192			-			216,987			-
Deferred tax expense		18,483			698			18,483			977
Stock-based compensation expense		319,664			2,245,526			489,780			2,353,859
Non-cash lease expense		(9,718	)					(9,237	)		-
Write-off of amounts related to acquisition of FourCubed		-			4,726,000			-			4,726,000
Gain on disposal of equipment		-			(480	)		-			(480	)
Changes in assets and liabilities
Accounts receivable		(583,998	)		(21,873	)		(617,810	)		397,857
Unbilled receivable		(148,234	)		(20,375	)		(81,879	)		(12,122	)
Contract assets		150,514			72,509			119,706			(182,383	)
Deferred prize expense		(2,299,118	)		-			(4,993,142	)		-
Prepaid expenses and other current assets		(524,975	)		(122,329	)		(1,155,538	)		(123,834	)
Accounts payable and accrued expenses		240,082			(107,475	)		458,414			(485,741	)
Contract liabilities		3,466,553			(256,313	)		6,281,750			(13,900	)
Customer deposits and other current liabilities		(7,848,153	)		-			12,585,290			-

Net cash (used for) operating activities – continuing operations		(11,991,510	)		(4,752,823	)
Net cash provided by (used for) operating activities – continuing operations								6,266,211			(6,376,631	)
Net cash provided by (used for) operating activities - discontinued operations		(53,000	)		818,355			(53,000	)		873,319
Net cash (used for) operating activities		(12,044,510	)		(3,934,468	)
Net cash used for operating activities								6,213,211			(5,503,312	)

Investing activities
Proceeds from sale of equipment		-			4,993			-			4,993
Payments relating to the acquisition of FourCubed		-			(441,523	)		-			(441,523	)
Capital expenditures for equipment		(10,978	)		(7,919	)		(25,850	)		(21,406	)
Capital expenditures for internally developed software		(457,366	)		(69,116	)		(818,500	)		(135,449	)

Net cash used for investing activities		(468,344	)		(513,565	)		(844,350	)		(593,385	)
Net cash used for investing activities – discontinued operations		-			(10,443	)		-			(10,443	)
Net cash used for investing activities - continuing operations		(468,344	)		(524,008	)		(844,350	)		(603,828	)

Financing activities
Net advances to and proceeds from affiliate								-			(61,079	)
Proceeds from convertible debenture		4,000,000			-			4,000,000			-
Proceeds from debt		-			3,250,000			-			3,250,000
Proceeds from line of credit		879,349			-			4,629,349			-
Repayments of debt		(503,293	)		(248,598	)		(758,943	)		(397,993	)
Payments of debt issue costs		(7,500	)		(25,431	)		(7,500	)		(25,431	)
Net cash generated by financing activities - continuing operations		4,368,556			2,975,971
Net cash generated by financing activities								7,862,906			2,765,497

Net change in cash and restricted cash		(8,144,298	)		(1,482,505	)		13,231,767			(3,341,643	)

Cash and restricted cash, beginning of period		51,105,486			7,780,671			51,105,486			7,780,671
Less cash from discontinued operations		301,000			1,276,129			153,000			1,441,873
Cash and restricted cash, end of period		42,660,188		$	5,022,037			64,184,253		$	2,997,155

Reconciliation of Cash and Restricted Cash
Cash	$	31,874,620		$	5,022,037		$	49,309,668		$	2,997,115
Restricted cash		10,785,568			-			14,874,585			-
Total cash and restricted cash	$	42,660,188		$	5,022,037		$	64,184,253		$	2,997,155

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest		286,898			50,671			485,531			80,848
Cash paid for taxes		63,934			19,916			86,320			19,916
Extension of maturity of operating lease liability		77,742			-

Non-cash financing activities
Deemed dividend on Series B preferred stock		48,633			-			48,633			-
Discount on convertible debenture and purchase warrant		1,574,229			-			1,574,229			-
Dividends on Series B preferred stock in Series A-1 preferred stock		1,648			7,784			1,861			8,088
Extension of maturity of operating lease liability								77,742			-

FOR THE ~~SIX~~THREE AND NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022

The accompanying unaudited condensed consolidated financial statements have been prepared by SharpLink Gaming Ltd. (the “Company,” “SharpLink,” formerly Mer Telemanagement Services or “MTS”, “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 ~~June~~September 30, 2023 and December 31, 2022, its results of operations and cash flows for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022. The condensed consolidated balance sheet as of December 31, 2022, 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 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, 2022, which are included the Company’s Annual Report on Form 10-K filed with the SEC on April 5, 2023 and the Form 10-K/A filed with the SEC on July 14, 2023.

The Company is an Israeli-based corporation. SharpLink is a leading online technology company that connects sports fans, leagues and sports websites to relevant and timely sports betting and iGaming content. SharpLink uses proprietary, intelligent, online conversion technology and direct-to-player (“D2P”) performance marketing strategies to convert sports fans into sports bettors and online casino game players for licensed, online sportsbook and casino operators. Further, SharpLink, through its SportsHub ~~Gaming~~Games Network Inc. (“SportsHub”) reporting unit, owns and operates an online gaming business that primarily facilitates daily and seasonal peer-to-peer fantasy contests for its end users. The Company also operates a website that provides 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. SportsHub was acquired by the Company on December 22, 2022.

On July 26, 2021, SharpLink, Inc. completed its merger with Mer Telemanagement Solutions Ltd. (the “MTS Merger”), which changed its name to SharpLink Gaming Ltd. and commenced trading on NASDAQ under the ticker symbol “SBET.” As a result of the MTS Merger, SharpLink, Inc. shareholders owned 86% of the Company, on a fully diluted and as-converted basis, which represented a majority of the voting shares. Additionally, immediately following the closing of the MTS Merger, legacy MTS directors and officers agreed to resign, pursuant to an Agreement and Plan of Merger, dated as of July 26, 2021 (“MTS Merger Agreement”). SharpLink, Inc.’s executives became officers of the Company and new members were appointed to the board of directors. The MTS Merger represented a reverse acquisition in which SharpLink, Inc. was the accounting acquirer and legacy MTS was the accounting acquiree. The Company applied the acquisition method of accounting to the identifiable assets and liabilities of legacy MTS, which were measured at estimated fair value as of the date of the business combination.

On April 23, 2023, the Company effected a one-for-ten (1:10) reverse share split of all the Company’s share capital and adopted amendments to its Memorandum of Association and Second Amended and Restated Articles of Association (“M&AA”) whereby the Company (i) decreased the number of issued and outstanding ordinary shares, nominal value NIS 0.60 per share, from 26,881,244 to 2,688,541; (ii) reduced the total number of the Company’s authorized shares under its M&AA from 92,900,000 ordinary shares, nominal value NIS 0.06 per share, to 9,290,000 ordinary shares, nominal value NIS 0.60 per share; and (ii) decreased by a ratio of one-for-ten (1:10) the number of retrospectively issued and outstanding ordinary shares. 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.

Certain reclassifications were made to the balance sheet as of December 31, 2022 to conform to the ~~June~~September 30, 2023 method of presentation. Certain reclassifications were made to the consolidated statements of operations for the ~~six~~nine months ended ~~June~~September 30, 2022 to conform to the ~~June~~September 30, 2023 method of presentation. These reclassifications had no effect on reported total current assets, total assets, total current liabilities, total liabilities, total stockholder’s equity, or revenues.

In the pursuit of SharpLink’s long-term growth strategy and the development of its fan activation and conversion software and related businesses, the Company has sustained continued operating losses. During the ~~six~~nine months ended ~~June~~September 30, 2023 and ~~June~~September 30, 2022, the Company had a net loss from continuing operations of $~~5,970,904~~8,672,446 and $~~10,599,807~~12,542,782 respectively; and cash ~~used in~~provided by operating activities from continuing operations of $~~11,991,510~~6,266,211 and $cash used for operating activities from continuing operations ($~~4,752,823~~6,376,631), respectively. To fund anticipated future planned losses from operations, on February 13, 2023, the Company entered into a Securities Purchase Agreement (the “SPA”) with Alpha Capital Anstalt (“Alpha”), a current shareholder of the Company, on February 14, 2023, 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. In addition, on February 13, 2023, SharpLink, Inc., a Minnesota corporation and wholly owned subsidiary of the Company, entered into a Revolving Credit Agreement with Platinum Bank, a Minnesota banking corporation and executed a revolving promissory note of $7,000,000.

The Company is continually evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, equity financing, issuing, or restructuring debt, entering into other financing arrangements, and restructuring operations to ~~grow~~increase revenues and decrease expenses. The Company may be unable to access further equity or debt financing when needed or obtain additional liquidity under acceptable terms, if at all. 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.

The unaudited condensed consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in the ASU also simplify the guidance in ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The Company adopted ASU 2020-06 on January 1, 2023 and was applied to the Company’s accounting for its convertible debenture and warrants (see Note 8).

In June 2016 and subsequently amended in March 2022, the FASB issued ASC 326, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments (“ASC 326”), which replaces the existing incurred loss model with a current expected credit loss (“CECL”) model that requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company would be required to use a forward-looking CECL model for accounts receivables, guarantees and other financial instruments. The Company adopted ASC 326 on January 1, 2023 and ASC 326 did not have a material impact on its consolidated financial statements as the Company has not had any historical credit losses.

Equipment consists of computers, furniture and fixtures and is presented net of accumulated depreciation of $~~116,148~~125,006 and $100,733 as of ~~June~~September 30, 2023 and December 31, 2022, respectively. Depreciation expense for the three months ended ~~June~~September 30, 2023 and 2022 was $~~5,387~~8,858 and $~~6,119~~5,454 respectively and $~~15,414~~24,272 and $~~12,790~~18,243 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

Intangible assets, net of accumulated amortization as of ~~June~~September 30, 2023 and December 31, 2022 consisted of the following:

Amortization expense on intangible assets was $~~192,316~~199,883 and $~~271,771~~271,768 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and $~~380,435~~576,220 and $~~570,213~~841,983 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

Goodwill as of ~~June~~September 30, 2023 and December 31, 2022 consisted of the following:

	Sports Gaming Client Services		Sports Hub Gaming		Affiliate Marketing Services - International		Total		Sports Gaming Client Services		Sports Hub Gaming		Affiliate Marketing Services - International		Total
Balance as of December 31, 2022	$	381,000	$	4,919,928	$	1,615,167	$	6,916,095	$	381,000	$	4,919,928	$	1,615,167	$	6,916,095
Goodwill		-		-		-		-		-		-		-		-
Less: Impairment charges		-		-		-		-		-		-		-		-
Balance as of June 30, 2023	$	381,000	$	4,919,928	$	1,615,167	$	6,916,095
Balance as of September 30, 2023									$	381,000	$	4,919,928	$	1,615,167	$	6,916,095

On December 22, 2022, SharpLink, through its wholly owned subsidiary, SHGN Acquisition Corp (“Acquirer” or the “Merger Subsidiary”) acquired all of the outstanding capital stock of SportsHub (the “SportsHub Acquisition”), via an Agreement and Plan of Merger, dated as of September 6, 2022 (the “SportsHub Merger Agreement”). In accordance with the terms of the SportsHub Merger Agreement between the Acquirer, SportsHub and an individual acting as the SportsHub stockholders’ representative (the “Stockholder Representative”):

The transaction was accomplished through a direct acquisition, whereby SHGN Acquisition Corp effectively acquired all of the outstanding capital stock of SportsHub, as a result of which SHGN Acquisition Corp obtained control over SportsHub. Therefore, SHGN Acquisition Corp has been determined to be the acquirer in the transaction, and SportsHub the acquiree.

The Acquirer obtained control of SportsHub following the exchange of consideration on December 22, 2022. Thus, the closing date of December 22, 2022 was the acquisition date.

The purchase price is based on SharpLink’s closing share price of $2.90 on December 22, 2022 and 472,513 of ordinary shares as well as the fair value of Seller’s term loan of $1,267,199 and line of credit of $4,120,651. The following table represents the purchase consideration paid in the SportsHub Acquisition:

The SportsHub Acquisition assets and liabilities were measured at fair values as of December 22, 2022, primarily based on the valuation determined by an independent valuation, which were based on income-based method and relief from royalty method. Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions, including royalty rates and customer attrition rates and others. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the acquisition date.

The fair value of the assets acquired and liabilities assumed as of December 22, 2022 were as follows:

The fair value, as determined by assumptions that market participants would use in pricing the assets, and weighted average useful life of the identifiable intangible assets are as follows:

			Weighted Average				Weighted Average
	Fair Value		Useful Life (Years)		Fair Value		Useful Life (Years)
Customer relationships	$	1,550,000		5	$	1,550,000		5
Trade names		640,000		6		640,000		6
Acquired technology		200,000		5		200,000		5
	$	2,390,000			$	2,390,000

The excess of consideration for the acquisition over the fair value of net assets acquired was recorded as goodwill and derived from the market price of the shares at the time of the SportsHub Acquisition. The goodwill created in the acquisition is not expected to be deductible for tax purposes.

As of ~~June~~September 30, 2023, the calculation and allocation of the purchase price to tangible and intangible assets and liabilities ~~is preliminary,~~are final as well as the ~~Company is still in the process of accumulating all of the required information to finalize the opening balance sheet~~recognition and ~~calculations of intangible assets.~~disclosure over warrant and stock option equity awards, see Notes 11 and 12.

SharpLink’s transaction costs incurred in connection with the SportsHub Acquisition were $83,866 for the year ended December 31, 2022. These costs were primarily comprised of professional fees, recorded in selling, general and administrative expenses in the consolidated statement of operations. The transaction costs are not expected to be deductible for tax purposes.

The following unaudited supplemental pro forma financial information presents the financial results for the ~~six~~nine months ended ~~June~~September 30, 2022 as if the SportsHub Acquisition had occurred on January 1, 2022. The pro forma financial information includes, where applicable, adjustments for: (i) ~~additional~~a reduction in amortization expense of $~~220,889~~574,343 would have been recognized related to the acquired intangible assets in 2022 and (ii) transaction costs and other one-time non-recurring costs which ~~reduced~~increased expenses by $83,866 in 2022.

The pro forma financial information excludes adjustments for estimated cost synergies or other effects of the integration of SportsHub:

	June 30, 2022			September 30, 2022

Revenues	$	5,699,941		$	8,379,821

Loss from continuing operations		(11,617,505	)		(13,873,171	)
Less: dividends accrued on series B preferred stock		(5,841	)		(8,088	)
Net loss from continuing operations available to ordinary shareholders		(11,623,346	)		(13,881,259	)

Net income (loss) from discontinued operations, net of tax, available to ordinary shareholders		(1,255,654	)		(1,360,286	)
Net loss available to ordinary shareholders		(12,879,000	)		(15,241,545	)

Basic and diluted:
Net loss from continuing operations per share	$	(4.92	)	$	(5.88	)
Net loss from discontinued operations per share		(0.53	)		(0.58	)
Net loss per share	$	(5.45	)	$	(6.45	)

The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the SportsHub Acquisition been completed as of the date indicated or the results that may be obtained in the future.

The Company, through the SportsHub Acquisition, has available a variable rate (~~8.75~~9.0% as of ~~June~~September 30, 2023) bank line of credit for $5,000,000, expiring June 15, 2025. There was $5,000,000 outstanding as of ~~June~~September 30, 2023.

On February 13, 2023, the Company entered into a Revolving Credit Agreement with Platinum Bank (the “Lender”) and executed a variable rate (~~8.75~~9.0% as of ~~June~~September 30, 2023) revolving promissory note of $7,000,000, expiring January 26, 2025. As collateral, the Company granted a security interest in and to all of the Company’s right, title and interest in certain assets on account at Platinum Bank, together with all financial assets, security entitlements with respect to such financial assets, investment property, securities and other property, to secure the payment and performance of the revolving credit agreement. There was $3,750,000 outstanding as of as of September 30, 2023. The Company incurred $7,500 in debt issuance costs ~~to be amortized over the term of~~associated with the revolving ~~note. There were no borrowings under~~note, which are presented net within the line of credit ason the balance sheet and amortized on a method which approximates the effective interest method to interest expense on the consolidated statement of ~~June 30, 2023.~~operations.

On January 31, 2022, FourCubed Acquisition Company, LLC (“FCAC”), a wholly owned subsidiary of the Company, entered into a $3,250,000 term loan agreement with Platinum Bank. The agreement bears annual interest at a rate of 4% and requires a fixed monthly payment of $59,854, consisting of principal and interest, through the term loan’s maturity, which is January 31, ~~2027~~.2027. The Company capitalized $25,431 of loan initiation fees associated with the agreement which are presented net within debt on the consolidated balance sheet and amortized on a method which approximates the effective interest method to interest expense on the consolidated statement of operations.

The remaining principal balance outstanding on the term loan is $~~2,393,691~~2,238,062 as of ~~June~~September 30, 2023, of which $~~632,599~~639,567 is due within the next year.In addition to customary non-financial covenants, the term loan requires FCAC to maintain a minimum quarterly debt service coverage ratio, defined as adjusted EBITDA divided by debt service (interest expense and mandatory debt principal repayment) of 1.20. The Company was in compliance with the debt service coverage ratio as of ~~June~~September 30, 2023.

Included in the SportsHub Acquisition was a $2,000,000 term loan agreement with a financial institution. The agreement bears annual interest at a rate of 5.50% percent and requires a fixed monthly payment of $38,202, consisting of principal and interest, through the term loan’s maturity, which is December 9, 2025. Included in the term loan liability is $29,975 of loan initiation fees associated with the agreement which are presented net within debt on the consolidated balance sheet and amortized on a method which approximates the effective interest method to interest expense on the consolidated statement of operations. The remaining principal balance outstanding on the term loan is $~~1,071,007~~970,986 as of ~~June~~September 30, 2023, of which $~~409,745~~415,387 is due within the next year.

	June 30, 2023		September 30, 2023

Note Payable – Bank, $2,000,000 principle, secured by assets of SportsHub	$	1,071,007
Note Payable – Bank, $3,250,000 principle, secured by assets of FCAC		2,393,691
Note Payable – Bank, $2,000,000 principle, secured by assets of SportsHub			$	970,986
Note Payable – Bank, $3,250,000 principle, secured by assets of FCAC				2,238,062
Total		3,464,698		3,209,048
Less unamortized debt issuance costs		13,527		11,756
Less current portion		1,042,436		1,054,954
Long-term debt	$	2,408,735	$	2,142,338

The outstanding amount of debt as of ~~June~~September 30, 2023, matures by year as follows:

Year	Amount		Amount
For the remaining six months ended December 31, 2023		515,152
For the remaining three months ended December 31, 2023			$	259,181
2024		1,066,714		1,066,696
2025		1,120,272		1,120,612
2026		700,256		700,256
2027		62,304		62,303
Total		3,464,698	$	3,209,048

The term loan contains a parent company guaranty, which states that the Company will enter into a guaranty agreement in favor of FCAC, pursuant to which the Company will guarantee the repayment of the loan, not later than 30 days following the Company’s anticipated redomicile to the United ~~States.~~States, see Note 19.

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 accreted to 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 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 consolidated statements of operations within other income (expense) at each reporting period. The Fair Value Option provides the Company a measurement basis election for financial instruments on an instrument-by-instrument basis.

On February 14, 2023, the Company entered into 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 ordinary shares of the Company (the “Conversion Shares”), at an initial conversion price equal to $7.00 per share, subject to adjustment as described below and in the Debenture (the “Conversion Price”). In addition, the Conversion Price of the Debenture was subject to an initial reset immediately prior to the Company’s filing of a registration statement covering the resale of the underlying shares to the lower of $7.00 and the average of the five Nasdaq Official Closing Prices immediately preceding such date (the “Reset Price”). The registration statement on Form S-1 (file No.: 333-271396) was filed on April 21, 2023, and as a result, the Reset Price is now $4.1772. The initial adjustment of the Conversion Price to the Reset Price had a floor price of $3.00 (the “Floor Price”).

Commencing November 1, 2023 and continuing on the first day of each month thereafter until the earlier of (i) February 15, 2026 (the “Maturity Date”) and (ii) the full redemption of the Debenture (each such date, a “Monthly Redemption Date”), the Company will redeem $209,524 plus accrued but unpaid interest, and any amounts then owing under the Debenture (the “Monthly Redemption Amount”). The Monthly Redemption Amount will be paid in cash; provided, that the Company may elect to pay all or a portion of a Monthly Redemption Amount in ordinary shares of the Company, based on a conversion price equal to the lesser of (i) the then Conversion Price of the Debenture and (ii) 80% of the average of the VWAPs (as defined in the Debenture) for the five consecutive trading days ending on the trading day that is immediately prior to the applicable Monthly Redemption ~~Date.~~Date. The Company may also redeem some or all of the then outstanding principal amount of the Debenture at any time for cash in an amount equal to the then outstanding principal amount of the Debenture being redeemed plus accrued but unpaid interest, liquidated damages and any amounts then owing under the Debenture. These monthly redemption and optional redemptions are subject to the satisfaction of the Equity Conditions (as defined in the Debenture).

The Debenture initially accrues interest at the rate of 8% per annum for the first 12 months from the February 15, 2023, at the rate of 10% per annum for the ensuing 12 months, and thereafter until Maturity, at the rate of 12%, Interest may be paid in cash or ordinary shares of the Company or a combination thereof at the option of the Company; provided that interest may only be paid in shares if the Equity Conditions (as defined in the Debenture) have been satisfied, including Shareholder Approval. The Debenture includes a beneficial ownership blocker of 9.99%. The Debenture provides for adjustments to the Conversion Price in connection with stock dividends and splits, subsequent equity sales and rights offerings, pro rata distributions, and certain Fundamental Transactions. In the event the Company, at any time while the Debentures is outstanding, issues or grants any right to re-price, ordinary shares or any type of securities giving rights to obtain ordinary shares at a price below the Conversion Price, Alpha shall be extended full-ratchet anti-dilution protection (subject to customary Exempt Transaction issuances), and such reset shall not be limited by the Floor Price.

At the time of execution, on February 14, 2023, the Company recorded an initial debt discount of $383,333 based on the allocation of fair value for the Debenture, which will be amortized into interest expense over term of the Debenture. For the period from February 14 through ~~June~~September 30, 2023, the Company recognized ($~~($678,037)~~1,002,243) change in fair value of the convertible Debenture which is reflected in Other income and expense in the condensed consolidated statement of operations and $~~50,000~~83,333 for the amortization of the OID, which is included in interest expense on the condensed consolidated statement of operations.

~~The following provides a summary of the Convertible Debenture recorded at fair value as of June 30, 2023:~~

On February 15, 2023, the Company also issued to Alpha a warrant (the “Warrant”) to purchase 880,000 ordinary shares of the Company at an initial exercise price of $8.75 (the “Warrant Shares,” and, together with the Conversion Shares, and any other ordinary 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. The exercise price of the Warrant was subject to an initial reset immediately prior to the Company’s filing of a proxy statement that included a shareholder proposal to approve the issuance of Underlying Share in excess of 19.99% of the issued and outstanding ordinary shares on the Closing Date (the “Shareholder Proposal”) to the lower of $8.75 and the average of the five Nasdaq Official Closing Prices immediately preceding such date the. As a result, the exercise price has been reset to $4.0704, the average of the five Nasdaq Official Closing Prices immediately preceding April 14, 2023, the date the Company filed its preliminary proxy statement which included the Shareholder Proposal. The Warrant includes a beneficial ownership blocker of 9.99%. The Warrant provides for adjustments to the exercise price, in connection with stock dividends and splits, subsequent equity sales and rights offerings, pro rata distributions, and certain ~~fundamental transactions.~~Fundamental Transactions.

In the event the Company, at any time while the Warrant is still outstanding, issues or grants any right to re-price, ordinary shares or any type of securities giving rights to obtain ordinary shares at a price below exercise price, Alpha shall be extended full-ratchet anti-dilution protection on the Warrant (reduction in price, only, no increase in number of Warrant Shares, and subject to customary Exempt Transaction issuances), and such reset shall not be limited by the Floor Price.

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 sale 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 in the condensed consolidated balance sheet as of ~~June~~September 30, 2023. Amortization of the debt discount amounted to $~~146,778~~244,631 for the period ended ~~June~~September 30, 2023 and is included in interest expense on the condensed consolidated statements of operations.

The following provides a summary of the Convertible Debenture recorded at fair value as of September 30, 2023:

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. The inputs used to measure fair value are classified into the following hierarchy:

~~Level 1:~~ ~~Unadjusted quoted prices in active markets for identical instruments that are accessible as of the measurement date~~

~~Level 2~~~~: Other significant pricing inputs that are either directly or indirectly observable~~

~~Level 3~~~~: Significant unobservable pricing inputs, which result in the use of management’s own assumptions~~

	●	Level 1: Unadjusted quoted prices in active markets for identical instruments that are accessible as of the measurement date
	16
	●	Level 2: Other significant pricing inputs that are either directly or indirectly observable

	●	Level 3: Significant unobservable pricing inputs, which result in the use of management’s own assumptions

As disclosed in Note 8, the Debenture and the Warrant were reported at fair value at issuance. The Debenture is adjusted to fair value on a recurring basis with changes in fair value ~~of the Debenture~~ recorded through the Company’s condensed consolidated statements of operations as other income (expense) for the ~~six~~nine months ended ~~June~~September 30, 2023.

The following table sets forth the Company’s consolidated financial assets and liabilities measured at fair value by level within the fair value hierarchy ~~at June~~on September 30, 2023:

Schedule of Consolidated Financial Assets and Liabilities Measured at Fair Value


	Convertible Debenture		Purchase Warrant		Convertible Debenture		Purchase Warrant
Level I	$	-	$	-	$	-	$	-
Level II	$	-	$	-	$	-	$	-
Level III	$	3,830,778	$	1,174,229	$	4,372,963	$	1,174,229
Total	$	3,830,778	$	1,174,229	$	4,372,963	$	1,174,229

The following table presents a reconciliation of the beginning and ending balances of the Debenture measured at fair value on a recurring basis that uses significant unobservable inputs (Level 3) and the related expenses and losses recorded in the consolidated statement of operations during the ~~six~~nine months ended ~~June~~September 30, 2023.


Fair Value, December 31, 2022	$	-	$	-
Issuance of convertible debenture		2,825,771		2,825,771
Accretion for discount for warrants		146,778		244,629
Accretion for discount for OID		50,000		83,333
Interest expense		130,192		216,987
Change in fair value		678,037		1,002,243
Fair Value, June 30, 2023	$	3,830,778
Fair Value, September 30, 2023			$	4,372,963

The fair value of the Debenture was determined using a Monte Carlo Simulation (“MCS”) which incorporates the probability and timing of the consummation of a Fundamental Transaction event and conversion of the Debenture as of the valuation date.

The MCS implied a discount rate at issuance that resulted in a total value to the debenture and warrants that equated to the transaction proceeds. This discount rate was 75.28% at issuance and was calibrated to the ~~June~~September 30, 2023 valuation date by comparing the B rated commercial paper credit spread at both dates. B spreads as follows:

~~At June~~On September 30, 2023, the Company valued the Debenture using a Monte Carlo Simulation model using the value of the underlying stock price of $~~2.98~~1.60, exercise price of $8.75, expected dividend rate of 0%, risk-free interest rate of ~~4.53~~4.83% and volatility of ~~53.0~~66.3%. The Company estimated the term of the warrant to be ~~2.63~~2.38 years.

~~On December 23, 2020, the SharpLink, Inc. board authorized the establishment and designation of~~ ~~900~~ ~~shares of~~ 8~~% convertible preferred stock (“Series A preferred stock”) at $0.10~~ ~~par value. Additionally, the SharpLink, Inc. board reserved~~ ~~415,000~~ shares of common stock issuable upon the conversion of the shares of Series A preferred stock. On December 23, 2020, SharpLink, Inc. entered into a securities purchase agreement with an investor to issue ~~200~~ ~~shares of Series A preferred stock for $2,000,000~~ ~~(“First Tranche”).~~

~~Voting~~ ~~– Series A preferred stock has equal rights to vote on all matters submitted~~ to a vote of the Ordinary Shares (on an as-converted basis, but only up to the number of votes equal to the number of Ordinary Shares into which the Preferred Shares would be convertible pursuant to the Beneficial Ownership Limitation), however, without the affirmative vote of the majority of the outstanding shares of Series A preferred stock, SharpLink, Inc. cannot (a) alter or change adversely the powers, preferences or rights given to the Series A preferred stock, (b) authorize or create any class of stock ranking in priority to as to dividends, redemption or distribution of assets upon a liquidation, (c) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares of Series A preferred stock, or (e) enter into any agreement with respect to any of the above.

~~Dividends~~ ~~– Holders of each share of Series A preferred stock shall be entitled to receive cumulative dividends at the rate per share (as a percentage of the stated value per share) of~~ 8% per annum, payable quarterly on January 1, April 1, July 1 and October 1, beginning on the first such date after the issuance of such share of Series A preferred stock and on each conversion date in cash, or at SharpLink, Inc.’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination thereof.

~~Liquidation~~ – Upon any liquidation, dissolution or winding-up of SharpLink, Inc., whether voluntary or involuntary, Series A preferred stock holders shall be entitled to receive out of the assets an amount equal to the stated value of $~~100~~ per share, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due (the preferred liquidation preference), for each share of Series A preferred stock before any distribution or payment shall be made to the holders of any Junior Securities.

~~Conversion~~ – Each share of Series A preferred stock shall be convertible, at any time and from time to time from and after the original issue date at the option of the holder, into that number of shares of common stock determined by dividing the stated value of such share of Series A preferred stock by the conversion price, $~~22.80~~ per share. The conversion price would be reduced if SharpLink, Inc. issues common stock at a price lower than the conversion price or issues an instrument granting the holder rights to purchase common stock at a price lower than the conversion price. As defined in the certificate of designations of the Series A preferred stock and upon the date the SharpLink common stock is listed or quoted on any trading market (the “Going Public Transaction,”), all outstanding shares of Series A preferred stock shall automatically be converted into that number of shares of common stock, subject to a beneficial ownership limitation of ~~9.99%, determined by dividing the stated value of such share of Series A preferred stock by the conversion price.~~

~~Second Tranche~~ ~~– Immediately prior to completing the Going Public Transaction, SharpLink, Inc. shall sell to the current Series A preferred stock shareholder not less than $5,000,000~~ ~~of preferred stock.~~

~~Commitment Fee~~ ~~– Immediately following the Second Tranche, SharpLink, Inc.~~ ~~shall issue preferred stock equal to the greater of either 15% of the aggregate of the First and Second Tranche or 3% of the Company’s issued and outstanding capital.~~

~~Redemption~~ – SharpLink, Inc. shall redeem all of the outstanding shares of Series A preferred stock if SharpLink, Inc. has not completed the Going Public Transaction by December 23, 2021. SharpLink, Inc. would be required to redeem at the aggregate stated value, plus accrued but unpaid dividends, all liquidated damages. Interest shall accrue at the lesser of 12% per annum or the maximum rate permitted by applicable law until the amount is paid in full. SharpLink, Inc. accretes the carrying value of the Series A preferred stock to the full redemption value ratably until December 23, 2021.

~~On June 15, 2021, the Company entered into the first amendment to the securities purchase agreement, which amended the following terms:~~

~~Second Tranche~~ ~~– Amended to provide that immediately prior to completing the Going Public Transaction, SharpLink, Inc. shall sell to the current Series A preferred stock shareholder Series B preferred stock for $6,000,000~~.

~~Commitment Fee~~ ~~– Amended to provide that immediately following the Second Tranche, SharpLink, Inc. shall issue Series A-1 Preferred Stock equal to~~ 3~~% of the issued and outstanding capital of the Company.~~

~~On July 23, 2021, the Company entered into the second amendment to the securities purchase agreement, which amended the following terms:~~

On July 26, 2021, the Company’s board authorized the establishment and designation of 52,502 shares of Series A-1 Preferred Stock at $0.10 par value.

Voting – Series A-1 Preferred Stock has equal rights to vote on all matters submitted to a vote of the Ordinary Shares (on an as-converted basis, but only up to the number of votes equal to the number of Ordinary Shares into which the Preferred Shares would be convertible pursuant to the Beneficial Ownership Limitation), however, without the affirmative vote of the majority of the outstanding shares of Series A-1 Preferred Stock, the Company cannot (a) alter or change adversely the powers, preferences or rights given to the Series A-1 Preferred Stock, authorize or create any class of stock ranking in priority to as to dividends, redemption or distribution of assets upon a liquidation, (c) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares of Series A-1 Preferred Stock, or (e) enter into any agreement with respect to any of the above.

Liquidation – Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, Series A-1 Preferred Stock holders shall be entitled to receive out of the assets an amount equal to the stated value of $16.246 per share, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due (the preferred liquidation preference), for each share of Series A-1 Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities.

Conversion – Each share of Series A-1 Preferred Stock shall be convertible, at any time and from time to time from and after the original issue date at the option of the holder, into that number of shares of common stock determined by dividing the stated value of such share of Series A-1 Preferred Stock by the conversion price, $16.246 per share. The conversion price would be reduced if the Company issues common stock at a price lower than the conversion price or issues an instrument granting the holder rights to purchase common stock at a price lower than the conversion price. Upon the closing of the Going Public Transaction all outstanding shares of Series A-1 preferred stock shall automatically be converted into that number of shares of common stock, subject to a beneficial ownership limitation of 9.99%, determined by dividing the stated value of such share of Series A-1 Preferred Stock by the conversion price.

~~Redemption~~ – The Company shall redeem all of the outstanding shares of Series A-1 Preferred Stock if the Company has not completed the Going Public Transaction by July 26, 2022. The Company would be required to redeem at the aggregate stated value, plus accrued but unpaid dividends, all liquidated damages. Interest shall accrue at the lesser of 12~~% per annum or the maximum rate permitted by applicable law until the amount is paid in full.~~

On July 26, 2021, the Company’s board authorized the establishment and designation of 276,582 shares of Series B Convertible Preferred Stock (“Series B Preferred Stock”) at $0.10 par value.

Voting – Series B Preferred Stock shall have no voting rights, however, without the affirmative vote of the majority of the outstanding shares of Series B Preferred Stock, the Company cannot (a) alter or change adversely the powers, preferences or rights given to the Series B preferred stock, (b) authorize or create any class of stock ranking in priority to as to dividends, redemption or distribution of assets upon a liquidation, (c) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares of Series B Preferred Stock, or (e) enter into any agreement with respect to any of the above.

Dividends –- Holders of each share of Series B ~~Preferred Stock~~preferred stock shall be entitled to receive cumulative dividends until the second anniversary of the Original Issue date of July 26, 2021 at the rate per share (as a percentage of the stated value per share) of 8% per annum, payable quarterly on January 1, April 1, July 1 and October 1, beginning on the first such date after the issuance of such share of Series B ~~Preferred Stock~~preferred stock and on each conversion date in cash, or at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of ~~common stock,~~preferred A-1 shares, or a combination thereof. In accordance with the Series B preferred stock terms, dividends of Series A-1 preferred stock are accrued on a quarterly basis, within additional paid in capital. A total of ~~7,129~~7,202 shares at a value of $~~326,142~~326,356 have been ~~accrued~~recorded in additional paid in capital as of the year ended ~~June~~September 30, 2023. The Company stopped accruing dividends as of July 26, 2023.

Liquidation – Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, Series B Preferred Stock holders shall be entitled to receive out of the assets an amount equal to the stated value of $16.246 per share, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due (the preferred liquidation preference), for each share of Series B Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities.

Conversion – Each share of Series B Preferred Stock shall be convertible, at any time and from time to time from and after the original issue date at the option of the holder, into that number of shares of common stock determined by dividing the stated value of such share of Series B Preferred Stock by the conversion price, $16.246 per share. The conversion price would be reduced if the Company issues common stock at a price lower than the conversion price or issues an instrument granting the holder rights to purchase common stock at a price lower than the conversion price. Upon the closing of the Going Public Transaction all outstanding shares of Series B Preferred Stock shall automatically be converted into that number of shares of common stock, subject to a beneficial ownership limitation of 9.99%, determined by dividing the stated value of such share of Series B Preferred Stock by the conversion price.

~~Redemption~~ – The Company shall redeem all of the outstanding shares of Series B Preferred Stock if the Company has not completed the Going Public Transaction by July 26, 2022. The Company would be required to redeem at the aggregate stated value, plus accrued but unpaid dividends, all liquidated damages. Interest shall accrue at the lesser of 12~~% per annum or the maximum rate permitted by applicable law until the amount is paid in full.~~

Anti-Dilution Adjustment – If and whenever the Company issues of sells ordinary shares for a consideration price that is less than the Series B Preferred Shares Conversion Price, then immediately after such Dilutive Issuance, the Conversion Price of the Series B Preferred Shares shall be reduced to equal the Discounted Per Share Ordinary Share Purchase Price and the holders are entitled to receive a number of conversion shares, but in no event shall the Conversion Price become lower than the greater of (i) $2.00 or (ii) 20% of the closing price on the Trading Day immediately prior to the Effective ~~Date.~~

On July 26, 2021, SharpLink, Inc. completed the MTS Merger, changed its name to SharpLink Gaming Ltd. and commenced trading on NASDAQ under the ticker symbol “SBET.” The MTS Merger was effectuated by a share exchange in which MTS issued shares to SharpLink, Inc. stockholders, resulting in SharpLink, Inc. stockholders owning approximately 86~~% of the capital stock of SharpLink on a fully diluted, as-converted basis. The exchange ratio used to determine the number of shares issued to SharpLink, Inc. shareholders was~~ ~~13.352, which was calculated pursuant to the terms of the MTS Merger Agreement.~~

At the Company’s Extraordinary General Meeting of Shareholders held on July 21, 2021, the Company’s shareholders approved an Amended and Restated Articles of Association, which was effective upon consummation of the MTS Merger reflecting the reverse stock split at a ratio of one-to-two (1:2), which became effective on July 26, 2021 immediately prior to the effectiveness of the MTS Merger.

~~The MTS Merger represented a Going Public Transaction. Immediately prior to the MTS Merger, the outstanding shares of SharpLink, Inc. Series A Preferred Stock were exchanged for~~ ~~123,096~~ ~~shares of SharpLink, Inc. Series A-1 Preferred Stock. Additionally, the holder of the Series A Preferred Stock received~~ ~~70,099~~ ~~shares of SharpLink, Inc. Series A-1 Preferred Stock to settle the commitment fee and~~ ~~369,286~~ ~~shares of SharpLink, Inc. Series B Preferred Stock in exchange for $6,000,000~~ ~~to settle the second tranche commitment.~~

~~Subsequent to the MTS Merger, the holder of the Series A-1 Preferred Stock and Series B Preferred Stock converted~~ ~~193,195~~ ~~and~~ ~~356,805~~ ~~shares, respectively, to ordinary shares of the Company, each at a 1:1 ratio. The Company had total shares outstanding of~~ ~~7,130~~ ~~and~~ ~~6,630~~ ~~Preferred Series A-1 and~~ ~~12,481~~ ~~and~~ ~~12,481~~ ~~shares of Series B Preferred Stock as of June 30, 2023 and December 31 2022, respectively.~~Date .

Deemed Dividend – On February 14, 2023, the Company executed an SPA with a current shareholder of the Company (see Note 8) which triggered the anti-dilution adjustment for Series B Preferred Shares. As such, the Company recognized a deemed dividend of $48,633 for an additional 16,486 shares in incremental share value as an adjustment to accumulated deficit and additional paid in capital for the period ended ~~June~~September 30, 2023.

The Company had total shares outstanding of no share of Preferred A outstanding as of September 30, 2023 and 2022. As of September 30, 2023 and 2022, the Company had 7,202 and 6,131 Preferred Series A-1 and 12,481 and 12,481 shares of Series B Preferred Stock outstanding, respectively.

In conjunction with the Convertible Debenture and Warrant issuance on February 14, 2023,266,667 warrants that were previously issued to Alpha on November 19, 2021 were revalued on February 14, 2023, reducing the exercise price from $45.00 per warrant share to $0.60 per warrant share. The Company performed a Black Scholes model for the re-pricing of the warrants using the value of the underlying stock price of $5.10 stock price, exercise price of $0.60, expected dividend rate of 0%, risk-free interest rate of 4.04% and volatility of 52.57% and remaining term of 2.9 years. These same assumptions were applied to the Warrant as discussed in Note 9.8. The value allocated to the warrants on November 19, 2021 was $11,435 and recorded in Additional Paid-In Capital. The fair value of the re-priced warrants on February 15, 2023 was $1,218,205, an increase of $1,206,771. The ~~revaluation~~incremental value of the warrants is also recorded in Additional Paid-In Capital as of ~~June~~September 30, 2023 as a deemed dividend.

On June 6, 2023, an investor exercised 125,359 warrants via a cashless exercise for 121,479 ordinary shares.

On June 14, 2023, the Company filed a registration statement on Form S-1 (file number: 333-272652) with the SEC to register 266,667 ordinary shares issuable upon exercise of the purchase warrants issued to Alpha in November 2021. The registration statement on Form S-1 ~~is currently undergoing~~was deemed effective on September 29, 2023.

During the ~~SEC review~~nine months ended September 30, 2023, the Company recognized 3,015 warrants acquired during the SportsHub Acquisition, see Note 5. The warrants have an exercise price of $17.90 and ~~comment process.~~expire October 29, 2028.

Following is a summary of the Company’s warrant activity for the ~~six-month~~nine-month period ended ~~June~~September 30, 2023:

	Number of Shares			Weighted Average Exercise Price per Share			Weighted Average Remaining Life (Years)		Number of Shares			Weighted Average Exercise Price per Share			Weighted Average Remaining Life (Years)
Outstanding as of December 31, 2022		455,713		$	0.39			2.98		400,359		$	0.82			2.83
Previously issued regular warrants		(266,667	)		(8.93	)		0.48		(266,667	)		(45.00	)		0.49
Revalued regular warrants		266,667			0.12			0.48		266,667			0.60			0.49
Exercised										(125,359	)		(0.01	)		-
Issued and vested		880,000			2.68			3.05		883,015			4.15			3.34
Outstanding as of June 30, 2023		1,335,713		$	2.84			3.90
Outstanding as of September 30, 2023										1,158,015		$	3.43			3.84

Option awards are generally granted with an exercise price equal to the market price of the Company’s ordinary shares at the date of grant; those options generally vest based on three years of continuous service and have ten-year contractual terms. Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the plans.

The fair value of each option award is estimated on the date of grant using a Black Scholes option-pricing model. The Company uses historical option exercise and termination data to estimate the term the options are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issue date. The expected volatility is determined using the volatility of peer companies. The Company’s underlying stock has been publicly traded since the date of the MTS Merger. Subsequent to the MTS Merger, option grants made under the SharpLink Inc. 2021 Plan utilized the publicly traded stock price of the Company on the day of the option award. All option grants made under the SharpLink, Inc. 2020 Stock Incentive Plan were prior to the MTS Merger. The underlying SharpLink, Inc. stock under that plan was not publicly traded but was estimated on the date of the grants using valuation methods that consider valuations from recent equity financings as well as future planned transactions. All option grants made under the SportsHub Games Network Inc. 2018 Incentive Plan were prior to the SportsHub Acquisition. The underlying SportsHub stock under that plan was not publicly traded but was estimated on the date of the grants using valuation methods that consider valuations from recent equity financings as well as future planned transactions.

The fair value of each stock option grant is estimated on the date of grant using the Black Scholes option pricing model with the following assumptions:

Schedule of Fair Values of Stock Options Granted Using Black-scholes Valuation Model Assumptions

The summary of activity under the plans as of ~~June~~September 30, 2023, and change during the ~~six~~nine months ended ~~June~~September 30, 2023 is as follows:

				Weighted		Weighted average							Weighted		Weighted average
				average		remaining		Aggregate					average		remaining		Aggregate
Options	Shares			exercise price		contractual term		intrinsic value		Shares			exercise price		contractual term		intrinsic value
Outstanding as of December 31, 2022		288,912			1.14				7,750		288,914			11.40				7,750
Granted		169,309			5.23						155,755			4.46
Exercised		—			—						—			—
Acquired¹											14,552			14.16
Forfeited		(7,111	)		5.70						(7,112	)		5.70
Expired		(889	)		5.70						(1,413	)		8.84
Outstanding as of June 30, 2023		450,221			4.97		9.1		7,450
Exercisable as of June 30, 2023		174,650			7.17		8.6		7,450
Outstanding as of September 30, 2023											450,696			9.21		8.9		4,000

Exercisable as of September 30, 2023											211,949			11.47		8.5		4,000

Unamortized stock compensation expense of $~~945,153~~894,970 as of ~~June~~September 30, 2023, will be amortized through 2026 and has a weighted average recognition period of three years.

The Company has four operating segments: Affiliate Marketing Services – United States, Affiliate Marketing Services – International, Sports Gaming Client Services and SportsHub Games Network. Each operating segment is also a reportable segment. The Enterprise Telecom Expense Management (“Enterprise TEM”) business unit is reflected in discontinued operations (see Note 16). The Enterprise TEM and Affiliate Marketing Services – International segments are a result of the MTS Merger and FourCubed acquisition, respectively, in 2021. The Enterprise TEM segment will not be presented going forward due to its sale on December 31, 2022.

The Affiliate Marketing Services – United States segment operates a performance marketing platform which owns and operates state-specific web domains designed to attract, acquire and drive local sports betting and casino traffic directly to the Company’s sportsbook and casino partners which are licensed to operate in each respective state. The Company earns a commission from sportsbooks and casino operators on new depositors directed to them via our proprietary D2P websites in America. In addition, this segment provides sports betting data (e.g., betting lines) to sports media publishers in exchange for a fixed fee.

The Affiliate Marketing Services – International segment is an iGaming and affiliate marketing network, focused on delivering quality traffic and player acquisitions, retention and conversions to global iGaming operator partners worldwide in exchange for a commission (cost per acquisition or portion of net gaming revenues) paid to the Company by the partners for the new players referred to them.

The Sports Gaming Client Services segment provides its clients with development, hosting, operations, maintenance, and service of free-to-play games and contests. These relationships can be either software-as-service (“SaaS”) arrangements that are hosted by SharpLink and accessed through its clients’ websites or other electronic media; or software licenses that allow the client to take the software on premise.

The SportsHub Games Network segment owns and operates a variety of real-money fantasy sports and sports simulation games and mobile apps on its platform; and is licensed or authorized to operate in every state in the United States where fantasy sports play is legal and in which SportsHub has elected to operate based on the financial viability of operating there.

The Enterprise TEM segment is a global provider of solutions for telecommunications expense management, enterprise mobility management, call usage and accounting software. The segment’s TEM solutions allow enterprises and organizations to make smarter choices with their telecommunications spending at each stage of the service lifecycle, including allocation of cost, proactive budget control, fraud detection, processing of payments and spending forecasting. The Enterprise TEM segment is reflected as discontinued operations in 2023 and 2022 and was sold inon December 31, 2022. See Note 16.

A measure of segment assets and liabilities has not been currently provided to the Company’s chief operating decision maker and is therefore not presented below.

Summarized financial information for the Company’s reportable segments for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 are shown below:

	Affiliate Marketing Services - United States			Affiliate Marketing Services - International			Sports Gaming Client Services			SportsHub Gaming Network			Enterprise TEM			Total			Affiliate Marketing Services - United States			Affiliate Marketing Services - International			Sports Gaming Client Services			SportsHub Gaming Network			Enterprise TEM			Total

Revenue	$	305,571		$	1,124,887		$	698,529		$	1,128,370		$	-		$	3,257,357
Revenues																			$	231,921		$	1,191,964		$	420,100		$	1,425,939		$	-		$	3,269,924
Cost of revenues		192,275			791,869			929,732			378,169			-			2,292,045			167,109			840,308			628,499			497,688			-			2,133,604
Loss from operations		(2,072,433	)		(108,458	)		(301,345	)		(300,961	)		-			(2,783,197	)		(1,741,432	)		(114,696	)		(274,914	)		(327,710	)		-			(2,458,752	)
Loss from discontinued operations		-			-			-			-			(149,000	)		(149,000	)		-			-			-			-			(148,000	)		(148,000	)
Net income (loss)	$	(2,715,488	)	$	(135,848	)	$	(301,345	)	$	(139,477	)	$	(149,000	)	$	(3,441,158	)	$	(2,338,783	)	$	(140,399	)	$	(276,374	)	$	54,009		$	(148,000	)	$	(2,849,547	)

	Affiliate Marketing Services - United States			Affiliate Marketing Services - International			Sports Gaming Client Services			SportsHub Gaming Network		Enterprise TEM			Total			Affiliate Marketing Services - United States			Affiliate Marketing Services - International			Sports Gaming Client Services			SportsHub Gaming Network		Enterprise TEM			Total

Revenue	$	108,509		$	840,212		$	802,534		$	-	$	-		$	1,751,255
Revenues																		$	114,972		$	760,585		$	417,117		$	-	$	-		$	1,292,674
Cost of revenues		23,374			514,153			1,123,714			-		-			1,661,241			25,484			489,808			589,403			-		-			1,104,695
Income (loss) from operations		(3,149,607	)		(104,459	)		(385,666	)		-		-			(3,639,732	)
Loss from operations																			(1,439,115	)		(143,500	)		(334,584	)		-		-			(1,917,199	)
Loss from discontinued operations		-			-			-			-		(1,147,654	)		(1,147,654	)		-			-			-			-		(104,633	)		(104,633	)
Net income (loss)	$	(3,139,119	)	$	(138,493	)	$	(385,666	)	$	-	$	(1,147,645	)	$	(4,810,932	)	$	(1,432,493	)	$	(175,897	)	$	(334,584	)	$	-	$	(104,633	)	$	(2,047,607	)

	Affiliate Marketing Services - United States			Affiliate Marketing Services - International			Sports Gaming Client Services			SportsHub Gaming Network			Enterprise TEM			Total			Affiliate Marketing Services - United States			Affiliate Marketing Services - International			Sports Gaming Client Services			SportsHub Gaming Network			Enterprise TEM			Total

Revenue	$	585,347		$	2,133,164		$	1,763,544		$	2,165,693		$	-		$	6,647,748
Revenues																			$	817,268		$	3,325,128		$	2,183,644		$	3,591,631		$	-		$	9,917,671
Cost of revenues		407,731			1,459,775			1,696,610			774,679			-			4,338,795			574,841			2,300,084			2,325,107			1,272,367			-			6,472,399
Loss from operations		(4,093,441	)		(197,858	)		(91,834	)		(727,840	)		-			(5,110,973	)		(5,834,870	)		(312,551	)		(366,747	)		(1,055,551	)		-			(7,569,719	)
Loss from discontinued operations		-			-			-			-			(294,000	)		(294,000	)		-			-			-			-			(441,997	)		(441,997	)
Net income (loss)	$	(5,209,944	)	$	(253,728	)	$	(91,834	)	$	(415,398	)	$	(294,000	)	$	(6,264,904	)	$	(7,548,726	)	$	(394,124	)	$	(368,207	)	$	(361,389	)	$	(441,997	)	$	(9,114,443	)

Summarized revenues by country in which the Company operated for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 are shown below:

Three Months Ended June 30, 2023	Affiliate Marketing Services - United States		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Enterprise TEM		Total
Three Months Ended September 30, 2023													Affiliate Marketing Services - United States		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total

United States	$	305,571	$	-	$	698,529	$	1,128,370	$	-	$	2,132,470	$	231,921	$	-	$	420,100	$	1,425,939	$	2,077,960
Rest of World		-		1,124,887		-		-		-		1,124,887		-		1,191,964		-		-		1,191,964
Revenues	$	305,571	$	1,124,887	$	698,529	$	1,128,370	$	-	$	3,257,357	$	231,921	$	1,191,964	$	420,100	$	1,425,939	$	3,269,924

Three Months Ended June 30, 2022
Three Months Ended September 30, 2022

United States	$	108,509	$	-	$	802,534	$	-	$	-	$	911,043	$	114,972	$	-	$	417,117	$	-	$	532,089
Rest of World		-		840,212		-		-		-		840,212		-		760,585		-		-		760,585
Revenues	$	108,509	$	840,212	$	802,534	$	-	$	-	$	1,751,255	$	114,972	$	760,585	$	417,117	$	-	$	1,292,674

Six Months Ended June 30, 2023	Affiliate Marketing Services - United States		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Enterprise TEM		Total
Nine Months Ended September 30, 2023													Affiliate Marketing Services - United States		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total

United States	$	585,347	$	-	$	1,763,544	$	2,165,693	$	-	$	4,514,584	$	817,268	$	-	$	2,183,644	$	3,591,631	$	6,592,543
Rest of World		-		2,133,164		-		-		-		2,133,164		-		3,325,128		-		-		3,325,128
Revenues	$	585,347	$	2,133,164	$	1,763,544	$	2,165,693	$	-	$	6,647,748	$	817,268	$	3,325,128	$	2,183,644	$	3,591,631	$	9,917,671

Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022

United States	$	170,031	$	-	$	1,713,597	$	-	$	-	$	1,883,628	$	285,004	$	-	$	2,130,713	$	-	$	2,415,717
Rest of World		-		1,763,962		-		-		-		1,763,962		-		2,524,547		-		-		2,524,547
Revenues	$	170,031	$	1,763,962	$	1,713,597	$	-	$	-	$	3,647,590	$	285,004	$	2,524,547	$	2,130,713	$	-	$	4,940,264

The Company does not have material tangible long-lived assets in foreign jurisdictions.

The Company’s Sports Gaming Client Services and Affiliate Marketing Services – International segments derive a significant portion of their revenues from several large customers. The table below presents the percentage of consolidated revenues derived from large customers:

For the three months ended June 30, 2023	Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
For the three months ended September 30, 2023											Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
Software-as-a-service	$	86,933	$	-	$	698,529	$	-	$	785,462	$	74,554	$	-	$	420,100	$	-	$	494,654
Fee revenue		-		-		-		1,128,370		1,128,370		-		-		-		1,425,939		1,425,939
Services and other		218,638		1,124,887		-		-		1,343,525		157,367		1,191,964		-		-		1,349,331
Total	$	305,571	$	1,124,887	$	698,529	$	1,128,370	$	3,257,357	$	231,921	$	1,191,964	$	420,100	$	1,425,939	$	3,269,924

For the three months ended June 30, 2022	Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
For the three months ended September 30, 2022											Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
Software-as-a-service	$	108,509	$	-	$	802,534	$	-	$	911,043	$	111,227	$	-	$	417,117	$	-	$	528,344
Fee revenue		-		-		-		-		-		-		-		-		-		-
Services and other		-		840,212		-		-		840,212		3,745		760,585		-		-		764,330
Total	$	108,509	$	840,212	$	802,534	$	-	$	1,751,255	$	114,972	$	760,585	$	417,117	$	-	$	1,292,674

For the six months ended June 30, 2023	Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
For the nine months ended September 30, 2023											Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
Software-as-a-service	$	142,224	$	-	$	1,763,544	$	-	$	1,905,768	$	216,778	$	-	$	2,183,644	$	-	$	2,400,422
Fee revenue		-		-		-		2,165,693		2,165,693		-		-		-		3,591,631		3,591,631
Services and other		443,123		2,133,164		-		-		2,576,287		600,490		3,325,128		-		-		3,925,618
Total	$	585,347	$	2,133,164	$	1,763,544	$	2,165,693	$	6,647,748	$	817,268	$	3,325,128	$	2,183,644	$	3,591,631	$	9,917,671

The Company’s license contracts contain promises to transfer multiple products to the customer. Judgment is required to determine whether each product is considered to be a distinct performance obligation that should be accounted for separately under the contract. We have elected to utilize the “right to invoice” practical expedient under ASC 606 which allows us to recognize revenue for our performance under the contract for the value which we have provided to the customer during a period of time in our contract with them.

Determining whether licenses are distinct performance obligations that should be accounted for separately, or not distinct and thus accounted for together, requires significant judgment. In some arrangements, such as the Company’s license arrangements, the Company has concluded that the individual licenses are distinct from each other. In others, like the Company’s SaaS arrangements, the software development and final product are not distinct from each other because they are highly integrated and therefore the Company has concluded that these promised goods are a single, combined performance obligation.

The Company is required to estimate the total consideration expected to be received from contracts with customers. In certain circumstances, the consideration expected to be received is fixed based on the specific terms of the contract or based on the Company’s expectations of the term of the contract. The Company has not experienced significant returns from or refunds to customers. These estimates require significant judgment and the change in these estimates could have an effect on its results of operations during the periods involved.

The Company follows a five-step model to assess each sale to a customer; identify the legally binding contract, identify the performance obligations, determine the transaction price, allocate the transaction price, and determine whether revenue will be recognized at a point in time or over time. Revenue recognized point in time and over time is presented by period below:

	Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total		Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
Point in time	$	218,638	$	1,124,887	$	-	$	239,488	$	1,583,013	$	157,367	$	1,191,964	$	-	$	360,088	$	1,709,419
Over time		86,933		-		698,529		888,882		1,674,344		74,554		-		420,100		1,065,851		1,560,505
Total	$	305,571	$	1,124,887	$	698,529	$	1,128,370	$	3,257,357	$	231,921	$	1,191,964	$	420,100	$	1,425,939	$	3,269,924

	Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total		Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
Point in time	$	-	$	840,212	$	-	$	-	$	840,212	$	3,745	$	760,585	$	-	$	-	$	764,330
Over time		108,509		-		802,534		-	$	911,043		111,227		-		417,117		-	$	528,344
Total	$	108,509	$	840,212	$	802,534	$	-	$	1,751,255	$	114,972	$	760,585	$	417,117	$	-	$	1,292,674

	Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total		Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
Point in time	$	443,123	$	2,133,164	$	-	$	671,026	$	3,247,313	$	600,490	$	3,325,128	$	-	$	1,031,113	$	4,956,731
Over time		142,224		-		1,763,544		1,494,667		3,400,435		216,778		-		2,183,644		2,560,518		4,960,940
Total	$	585,347	$	2,133,164	$	1,763,544	$	2,165,693	$	6,647,748	$	817,268	$	3,325,128	$	2,183,644	$	3,591,631	$	9,917,671

The Company’s assets and liabilities related to its contracts with customers were as follows:

	June 30, 2023			December 31, 2022			September 30, 2023			December 31, 2022

Accounts receivable	$	1,360,528		$	776,530		$	1,394,340		$	776,530
Unbilled revenue		195,234			47,000			128,879			47,000
Contract assets		68,602			219,116			99,410			219,116
Contract liabilities		(5,633,004	)		(2,166,451	)		(8,448,201	)		(2,166,451	)

The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in contract advanced billings on the Company’s consolidated balance sheet. The Company has an enforceable right to payment upon invoicing and records contract liabilities when revenue is recognized subsequent to invoicing. The Company recognized unbilled revenue when revenue is recognized prior to invoicing.

The Company recognized contract assets related to direct costs incurred to ~~fulfill~~fulfil the contracts. These costs are primarily labor costs associated with the development of the software. The Company defers these costs and amortizes them into cost of revenues over the period revenues are recognized.

The activity in the contract assets for the ~~six~~nine months ended ~~June~~September 30, 2023 is as follows:

	Amount			Amount
Balance as of December 31, 2022	$	219,116		$	219,116
Labor costs expensed		(493,871	)		(577,956	)
Labor costs deferred		343,357			458,250
Balance as of June 30, 2023	$	68,602
Balance as of September 30, 2023				$	99,410

The Company recognizes contract liabilities for cash received from its users prior to recognition of revenue to ~~fulfill~~fulfil its contracts. The payments received are primarily from the Company’s operation of its own online gaming business. The Company defers the revenue and recognizes it throughout the online game’s respective season.

The activity in the contract liabilities for the ~~six~~nine months ended ~~June~~September 30, 2023 is as follows:

	Amount			Amount
Balance as of December 31, 2022	$	(2,166,451	)	$	(2,166,451	)
Revenue recognized or reclassified		5,098,540			10,374,078
Deferred revenue		(8,565,093	)		(16,655,828	)
Balance as of June 30, 2023	$	(5,633,004	)
Balance as of September 30, 2023				$	(8,448,201	)

All contract liabilities at ~~June~~September 30, 2023 and December 31, 2022 were recognized as revenue or expected to be recognized within the next fiscal year. All other activity in contract liabilities is due to the timing of invoices in relation to the timing of revenue as described above.

Contracted but unsatisfied performance obligations were approximately $~~643,564~~410,110 and $850,000 as of ~~June~~September 30, 2023 and December 31, 2022, respectively, of which the Company expects to recognize the entire amount in revenue over the next year.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, and not to facilitate financing arrangements.

The Company had three customers that accounted for approximately 3936% of revenue for the ~~six~~nine months ended ~~June~~September 30, 2023. There was $~~780,637~~451,035 due from these customers at ~~June~~September 30, 2023.

The Company had three customers that accounted for approximately 6059% of revenue for the ~~six~~nine months ended ~~June~~September 30, 2022. There was $~~621,161~~322,085 due from these customers at ~~June~~September 30, 2022.

On a quarterly basis, we estimate our annual effective tax rate and record a quarterly income tax provision based on the anticipated rate. As the year progresses, we refine our estimate based on the facts and circumstances, including discrete events, by each tax jurisdiction. The effective tax rate for the ~~six-month~~nine-month period ended ~~June~~September 30, 2023 was (~~0.31~~0.32%); and for the ~~six-month~~nine-month period ended ~~June~~September 30, 2022, it was (~~0.0~~0.01)%.

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

In June 2022, the Company’s board of directors authorized management to enter into negotiations to sell 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. The assets and liabilities remaining post transaction are in the process of winding down subsequent to the year ended December 31, 2022. Accordingly, the assets and liabilities of the MTS business are separately reported as assets and liabilities from discontinued operations as of ~~June~~September 30, 2023 and December 31, 2022. The results of operations and cash flows of MTS for all periods are separately reported as discontinued operations.

Prior to the sale of MTS on December 31, 2022, the Enterprise TEM operating segment’s performance obligations are satisfied either overtime (managed services and maintenance) or at a point in time (software licenses). Professional services rendered after implementation are recognized as performed. Software license revenue is recognized when the customer has access to the license and the right to use and benefit from the license. Many of the Enterprise TEM operating segment’s agreements include software license bundled with maintenance and supports. The Company allocates the transaction price for each contract to each performance obligation identified in the contract based on the relative standalone selling price (SSP). The Company determines SSP for the purposes of allocating the transaction price to each performance obligation by considering several external and internal factors including, but not limited to, transactions where the specific element sold separately, historical actual pricing practices in accordance with ASC 606, Revenues from Contracts with Customers. The determination of SSP requires the exercise of judgement. For maintenance and support, the Company determines the SSP based on the price at which the Company sells a renewal contract.

A reconciliation of the major classes of line items constituting the loss from discontinued operations, net of income taxes as presented in the condensed consolidated statements of operations for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 (unaudited) is summarized in the table below.

	Three months ended June 30, 2023			Three months ended June 30, 2022			Six months ended June 30, 2023			Six months ended June 30, 2022			Three months ended September 30, 2023			Three months ended September 30, 2022			Nine months ended September 30, 2023			Nine months ended September 30, 2022

Revenues	$	-		$	936,830		$	-		$	1,869,830		$	-		$	862,239		$	-		$	2,732,069

Cost of Revenues		(1,000	)		509,175			7,000			1,044,175			3,500			435,896			10,500			1,480,072

Gross (Loss) Profit		(1,000	)		427,655			(7,000	)		825,655			(3,500	)		426,343			(10,500	)		1,251,997

Operating Expenses
Selling, general, and administrative expenses		149,000			345,293			278,000			843,293			139,000			548,435			416,997			1,391,726
Goodwill and intangible asset impairment expense		-			1,224,671			-			1,224,671			-			-			-			1,224,671
Total operating expenses		149,000			1,569,964			278,000			2,067,964			139,000			548,435			416,997			2,616,397

Operating Loss		(148,000	)		(1,142,309	)		(285,000	)		(1,242,309	)		(142,500	)		(122,092	)		(427,497	)		(1,364,400	)

Other Income and Expense		-			(5,345	)		(7,000	)		(12,345	)		(3,500	)		20,459			(10,500	)		8,114
Total other income and expense		-			(5,345	)		(7,000	)		(12,345	)		(3,500	)		20,459			(10,500	)		8,114

Loss Before Income Taxes		(148,000	)		(1,147,654	)		(292,000	)		(1,254,654	)		(146,000	)		(101,633	)		(437,997	)		(1,356,286	)

Provision for income tax expenses		1,000			-			2,000			1,000			2,000			3,000			4,000			4,000

Loss from discontinued operations	$	(149,000	)	$	(1,147,654	)	$	(294,000	)		(1,255,654	)	$	(148,000	)	$	(104,633	)	$	(441,997	)		(1,360,286	)

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 ~~June~~September 30, 2023 (unaudited) and December 31, 2022:

The calculation of loss per share and weighted-average shares of the Company’s ordinary shares outstanding for the periods presented are as follows:

													2023			2022			2023			2022
	Three months ended June 30						Six months ended June 30						Three months ended September 30						Nine months ended September 30
	2023			2022			2023			2022			2023			2022			2023			2022
Net loss from continuing operations	$	(3,292,158	)	$	(3,663,278	)	$	(5,970,904	)	$	(10,599,807	)	$	(2,701,547	)	$	(1,942,974	)	$	(8,672,446	)	$	(12,542,782	)
Less: deemed dividends on Series B preferred stock		(48,633	)		-			(48,633	)		-			-			-			(48,633	)		-
Less: dividends on series B preferred stock		(699	)		(2,247	)		(1,648	)		(5,841	)		(213	)		(2,247	)		(1,861	)		(8,088	)
Net loss from continuing operations available to ordinary shareholders		(3,341,490	)		(3,665,525	)		(6,021,185	)		(10,605,648	)		(2,701,760	)		(1,945,221	)		(8,722,940	)		(12,550,870	)

Net income (loss) from discontinued operations, net of tax, available to ordinary shareholders		(149,000	)		(1,147,654	)		(294,000	)		(1,255,654	)		(148,000	)		(104,633	)		(441,997	)		(1,360,286	)
Net loss available to ordinary shareholders	$	(3,490,490	)	$	(4,813,179	)	$	(6,315,185	)	$	(11,861,302	)	$	(2,849,760	)	$	(2,049,854	)	$	(9,164,937	)	$	(13,911,156	)

Basic and diluted weighted-average shares outstanding		2,813,900			2,361,974			2,813,900			2,361,974			2,863,607			2,361,974			2,736,583			2,361,974

Basic and diluted:
Net loss from continuing operations per share	$	(1.19	)	$	(1.55	)	$	(2.14	)	$	(4.49	)	$	(0.94	)	$	(0.82	)	$	(3.19	)	$	(5.31	)
Net income (loss) from discontinued operations per share		(0.05	)		(0.49	)		(0.10	)		(0.53	)		(0.05	)		(0.04	)		(0.16	)		(0.58	)
Net loss per share	$	(1.24	)	$	(2.04	)	$	(2.24	)	$	(5.02	)	$	(0.99	)	$	(0.86	)	$	(3.35	)	$	(5.89	)

The redeemable Series B convertible preferred stock is a participating security, whereby if a dividend is declared to the holders of ordinary shares, the holders of preferred stock would participate to the same extent as if they had converted the preferred stock to ordinary shares.

For the periods presented, the following securities were not required to be included in the computation of diluted shares outstanding:

The Company uses Brown & Brown (“Brown”) as an insurance broker. Brown is considered a related party as an executive of Brown serves on the board of directors for the Company. The Company paid $~~486,111~~700,975 and $~~514,764~~921,640 for the ~~six~~nine months ending ~~June~~September 30, 2023 and 2022, respectively for insurance coverage brokered by Brown. The Company’s director earned no commissions for the placement of these policies.

The Company leases office space in Canton, Connecticut from CJEM, LLC, which is owned by an officer and director of the Company. The Company paid rent expense of $~~19,200~~28,800 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 related to this lease.

The Company performed an evaluation of subsequent events for potential recognition and disclosure ~~through~~past the date of the financial statements’ issuance.

On May 23, 2023, SharpLink received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that SharpLink is no longer in compliance with the equity standard for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain stockholders’ equity of at least $~~2,500,000~~ ~~under the net equity standard. Because SharpLink Quarterly Report on Form 10-Q for the three-month period ended June 30, 2023 and March 31, 2023 reported an accumulated stockholders’ deficit of $1,784,494~~ ~~and a stockholders’ equity $1,489,034~~, respectively, SharpLink does not meet the alternative standards for market value of listed securities or net income from continuing operations, thus SharpLink no longer complies with Nasdaq’s Listing Rule.

Nasdaq provided the Company with 45 calendar days, or until July 7, 2023, to submit a plan to regain compliance. The Company timely submitted its plan and relevant materials to Nasdaq and requested an extension through November 20, 2023 to evidence compliance with the Rule. On ~~August 3,~~June 14, 2023, the Company ~~received~~(or “SharpLink Israel”), SharpLink Gaming, Inc., a ~~determination letter~~Delaware corporation and a wholly owned subsidiary of SharpLink Israel (“SharpLink US”), and SharpLink Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of SharpLink US (“Domestication Merger Sub”), entered into an Agreement and Plan of Merger and Reorganization (as amended July 24, 2023, the “Domestication Merger Agreement”), pursuant to which Domestication Merger Sub will be merged with and into SharpLink Israel, with SharpLink Israel being the surviving entity and continuing as a wholly owned subsidiary of SharpLink US (the ~~“Letter”~~“Domestication Merger”) ~~from Nasdaq advising it that Nasdaq determined to grant~~.

Under the ~~Company an extension to regain compliance~~Domestication Merger Agreement, SharpLink Israel will become a wholly owned subsidiary of a Delaware corporation by the Domestication Merger Sub merging with and into SharpLink Israel, with SharpLink Israel surviving the Domestication Merger and becoming a wholly owned subsidiary of SharpLink US. In connection with the ~~Rule~~Domestication Merger, all SharpLink Israel ordinary shares, par value NIS 0.60 per share (the “SharpLink Israel Shares”), outstanding immediately prior to the Domestication Merger will convert, on a one-for-one basis, into the right to receive, and become exchangeable for, shares of common stock of SharpLink US, par value $0.0001 per share (the “SharpLink US Common Stock”), and all preferred shares, options and warrants of SharpLink Israel outstanding immediately prior to the Domestication Merger will be converted into or ~~before November 20, 2023.~~exchanged for equivalent securities of SharpLink US. The Debenture issued to Alpha on February 15, 2023, convertible into SharpLink Israel Shares, will be convertible into shares of SharpLink US Common Stock at the same price and on the same other terms and any interest paid thereunder in shares will be paid in SharpLink US Common Stock. By virtue of the ~~extension are~~Domestication Merger, all of the SharpLink Israel Shares and SharpLink Israel Preferred Shares shall represent the right to receive the applicable SharpLink US Common Stock and Preferred Stock, shall be deemed to have been transferred to SharpLink US in exchange for the right to receive such applicable SharpLink US Common Stock and Preferred Stock, and each holder of a certificate or of evidence of shares in book-entry account, representing any certificated or non-certificated SharpLink Israel Shares or SharpLink Israel Preferred Shares, shall cease to have any rights with respect thereto, except the right to receive the applicable SharpLink US Common Stock and Preferred Stock.

The proxy statement/registration statement on Form S-4 (file number: 333-272655), as ~~follows:~~amended, was originally filed with the SEC by SharpLink Israel and SharpLink US on June 15, 2023, and declared effective by the SEC on October 23, 2023. SharpLink Israel’s Board of Directors has set October 30, 2023 as the record date for shareholders to vote, by proxy or ~~before~~in person, on approving and adopting the Domestication Merger Agreement and the transactions contemplated therein at an Extraordinary General Meeting of Shareholders that will be held on November ~~20,~~29, 2023 at 11:00 A.M. Central time at the Company’s corporate office located at 333 Washington Avenue North, Suite 104, Minneapolis, Minnesota 55401.

On October 24, 2023, the Company ~~must take~~held an Extraordinary General Meeting of Shareholders (the “Meeting”) at which shareholders approved the ~~actions set forth in~~adoption of an amendment to the ~~plan~~Company’s amended and ~~opt for one~~restated articles of association to increase authorized share capital of the ~~two alternatives~~Company from 9,290,000 Ordinary Shares, nominal value NIS 0.60 per share, to ~~evidence compliance with~~100,000,000 Ordinary Shares, nominal value NIS 0.60 per share and a corresponding amendment to the ~~Rule.~~Company’s memorandum of association.

Regardless of which alternative the Company chooses, if the Company fails to evidence compliance upon filing its periodic report for the year ended December 31, 2023, with the SEC and Nasdaq, the Company may receive a written notification from Staff that its securities will be delisted. At that time, the Company may appeal Staff’s determination to a Hearings Panel.

The following discussion of SharpLink Gaming Ltd., an Israel corporation, 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 2022 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on April 5, 2023 and the related Annual Report, as amended, filed with the SEC on July 14, 2023. 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.

Founded in 2019 and headquartered in Minneapolis, Minnesota, SharpLink Gaming Ltd. is a leading business-to-business provider of performance marketing and advanced technology-enabled fan engagement and conversion solutions for the fast emerging U.S. sports betting and iGaming industries. Our base of marquis customers and trusted business partners comprise many of the nation’s leading sports media publishers, leagues, teams, sportsbook operators, casinos and sports technology companies, including Turner Sports, NASCAR, PGA TOUR, National Basketball Association (“NBA”), National Collegiate Athletic Association (“NCAA”), NBC Sports, BetMGM, Party Poker, World Poker Tour and Tipico, among numerous others.

We continue to make deliberate and substantial investments in support of our long-term growth objectives. Our primary growth strategy is centered on cost effectively monetizing our own and our customers’ respective online audiences of U.S. fantasy sports and casual sports fans and casino gaming enthusiasts by converting them into loyal online sports and iGaming bettors. We are endeavoring to achieve this through deployment of our proprietary conversion technologies, branded as our “C4” solutions, which are seamlessly integrated with fun, highly engaging fan experiences. Purpose-built from the ground-up specifically for the U.S. market, SharpLink’s C4 innovations are designed to help unlock the lifetime value of sports bettors and online casino players. More specifically, C4:

We reach fans and cultivate audience growth and activation through our four primary operating segments: 1) Sports Gaming Client Services; 2) SportsHub Games Network/Fantasy Sports; 3) Affiliate Marketing Services – International; and 4) Affiliate Marketing Services – United States.

The Company previously owned and operated an enterprise telecom expense management business (“Enterprise TEM”) acquired in July 2021 in connection with SharpLink’s go-public merger with Mer Telemanagement Solutions. Beginning in 2022, we discontinued operations for this business unit and sought a buyer for the business. On December 31, 2022, we completed the sale of this business to Israel-based Entrypoint South Ltd.

SharpLink is guided by an accomplished, entrepreneurial leadership team of industry veterans and pioneers encompassing decades of experience in delivering innovative sports solutions to partners that have included Turner Sports, Google, Facebook, the National Football League (“NFL”), NCAA and NBA, among many other iconic organizations, with executive experience at companies which include ESPN, NBC, Sportradar, AOL, Betfair and others.

As of ~~June~~September 30, 2023, the Company’s state regulatory initiatives have resulted in SharpLink being licensed and/or authorized to operate in 2426 U.S. states, the District of Columbia, Puerto Rico and Ontario, Canada, which represents most of the legal online betting market in North America.

By leveraging our technology and building on our current client and industry relationships, SharpLink believes we are well positioned to earn a leadership position in the rapidly evolving sports betting and iGaming markets by driving down customer acquisition costs, materially increasing and enhancing player engagement and delivering users with high lifetime value to our proprietary web properties and to those of our gaming partners.

On June 14, 2023, SharpLink Israel, SharpLink Gaming, Inc., a Delaware corporation and a wholly owned subsidiary of SharpLink Israel (“SharpLink US”), and SharpLink Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of SharpLink US (“Domestication Merger Sub”), entered into an Agreement and Plan of Merger and Reorganization (as amended July 24, 2023, the “Domestication Merger Agreement”), pursuant to which Domestication Merger Sub will be merged with and into SharpLink Israel, with SharpLink Israel being the surviving entity and continuing a wholly owned subsidiary of SharpLink US (the “Domestication Merger”).

Under the Domestication Merger Agreement, SharpLink Israel will become a wholly owned subsidiary of a Delaware corporation by the Domestication Merger Sub merging with and into SharpLink Israel, with SharpLink Israel surviving the merger and becoming a wholly owned subsidiary of SharpLink US. In connection with the Domestication Merger, all SharpLink Israel ordinary shares, par value NIS 0.60 per share (the “SharpLink Israel Shares”), outstanding immediately prior to the Domestication Merger will convert, on a one-for-one basis, into the right to receive, and become exchangeable for, shares of common stock of SharpLink US, par value $0.0001 per share (the “SharpLink US Common Stock”), and all preferred shares, options and warrants of SharpLink Israel outstanding immediately prior to the Domestication Merger will be converted into or exchanged for equivalent securities of SharpLink US. The 8% Interest Rate, 10% Original Issue Discount, Senior Convertible Debenture in the aggregate principal amount of $4,400,000 (as amended, the “Debenture”) issued to Alpha Capital Anstalt (“Alpha”) on February 15, 2023, convertible into SharpLink Israel Shares, will be convertible into shares of SharpLink US Common Stock at the same price and on the same other terms and any interest paid thereunder in shares will be paid in SharpLink US Common Stock. By virtue of the Merger, all of the SharpLink Israel Shares and SharpLink Israel Preferred Shares shall represent the right to receive the applicable SharpLink US Common Stock and Preferred Stock, shall be deemed to have been transferred to SharpLink US in exchange for the right to receive such applicable SharpLink US Common Stock and Preferred Stock, and each holder of a certificate or of evidence of shares in book-entry account, representing any certificated or non-certificated SharpLink Israel Shares or SharpLink Israel Preferred Shares, shall cease to have any rights with respect thereto, except the right to receive the applicable SharpLink US Common Stock and Preferred Stock.

The registration statement on Form S-4, filed with the SEC by SharpLink Israel and SharpLink US on June 15, 2023, is currently undergoing review by SEC Staff. Once the S-4 is cleared and deemed effective by the SEC, the Board of Directors of SharpLink Israel will set a record date and a meeting date for an Extraordinary General Meeting of Shareholders to vote on approving and adopting the Domestication Merger Agreement and the transactions contemplated therein.

On May 23, 2023, SharpLink received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that SharpLink is no longer in compliance with the equity standard for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain stockholders’ equity of at least $2,500,000 under the net equity standard. ~~Because~~As of SharpLink Quarterly Report on Form 10-Q for the ~~three-month period~~three and nine-month periods ended ~~June~~September 30, 2023, ~~and March 31, 2023~~SharpLink reported an accumulated stockholders’ deficit of ~~$1,784,494~~$82,728,717 and atotal stockholders’ ~~equity $1,489,034, respectively,~~deficit of $4,463,917 respectively. SharpLink currently does not meet the alternative standards for market value of listed securities or net income from continuing operations, thus SharpLink ~~no longer complies~~is not in compliance with Nasdaq’s Listing Rule.

On June 14, 2023, the Company (or “SharpLink Israel”), SharpLink Gaming, Inc., a Delaware corporation and a wholly owned subsidiary of SharpLink Israel (“SharpLink US”), and SharpLink Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of SharpLink US (“Domestication Merger Sub”), entered into an Agreement and Plan of Merger and Reorganization (as amended July 24, 2023, the “Domestication Merger Agreement”), pursuant to which Domestication Merger Sub will be merged with and into SharpLink Israel, with SharpLink Israel being the surviving entity and continuing a wholly owned subsidiary of SharpLink US (the “Domestication Merger”).

Under the Domestication Merger Agreement, SharpLink Israel will become a wholly owned subsidiary of a Delaware corporation by the Domestication Merger Sub merging with and into SharpLink Israel, with SharpLink Israel surviving the Domestication Merger and becoming a wholly owned subsidiary of SharpLink US. In connection with the Domestication Merger, all SharpLink Israel ordinary shares, par value NIS 0.60 per share (the “SharpLink Israel Shares”), outstanding immediately prior to the Domestication Merger will convert, on a one-for-one basis, into the right to receive, and become exchangeable for, shares of common stock of SharpLink US, par value $0.0001 per share (the “SharpLink US Common Stock”), and all preferred shares, options and warrants of SharpLink Israel outstanding immediately prior to the Domestication Merger will be converted into or exchanged for equivalent securities of SharpLink US. The 8% Interest Rate, 10% Original Issue Discount, Senior Convertible Debenture in the aggregate principal amount of $4,400,000 (as amended, the “Debenture”) issued to Alpha Capital Anstalt (“Alpha”) on February 15, 2023, convertible into SharpLink Israel Shares, will be convertible into shares of SharpLink US Common Stock at the same price and on the same other terms and any interest paid thereunder in shares will be paid in SharpLink US Common Stock. By virtue of the Domestication Merger, all of the SharpLink Israel Shares and SharpLink Israel Preferred Shares shall represent the right to receive the applicable SharpLink US Common Stock and Preferred Stock, shall be deemed to have been transferred to SharpLink US in exchange for the right to receive such applicable SharpLink US Common Stock and Preferred Stock, and each holder of a certificate or of evidence of shares in book-entry account, representing any certificated or non-certificated SharpLink Israel Shares or SharpLink Israel Preferred Shares, shall cease to have any rights with respect thereto, except the right to receive the applicable SharpLink US Common Stock and Preferred Stock.

The proxy statement/registration statement on Form S-4 (file number: 333-272655), as amended, was originally filed with the SEC by SharpLink Israel and SharpLink US on June 15, 2023, and declared effective by the SEC on October 23, 2023. SharpLink Israel’s Board of Directors has set October 30, 2023 as the record date for shareholders to vote, by proxy or in person, on approving and adopting the Domestication Merger Agreement and the transactions contemplated therein at an Extraordinary General Meeting of Shareholders that will be held on November 29, 2023 at 11:00 A.M. Central time at the Company’s corporate office located at 333 Washington Avenue North, Suite 104, Minneapolis, Minnesota 55401.

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

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 as Compared to Three ~~and Six~~ Months Ended ~~June~~September 30, 2022

For the ~~three months~~three-month periods ended ~~June~~September 30, 2023 and 2022, revenues ~~increased 86%, rising~~climbed 153% to ~~$3,257,357 as compared~~$3,269,924 from $1,292,674, respectively, due primarily to ~~revenues of $1,751,255 reported for the same three-month period in 2022. The improvement was largely attributed to additional~~ revenue ~~resulting~~contribution from ~~the Company’s merger and acquisition activities, namely the merger with~~ SportsHub ~~Gaming~~Games Network Inc. (“SportsHub”), which ~~closed~~was merged with SharpLink on December 22, 2022, coupled with ~~sales increases~~revenue growth in all other SharpLink’s ~~Affiliate Market Services groups for both U.S. and International.~~

~~On a segmented basis, sales in the Company’s~~business units. More specifically, revenues from our Affiliate Marketing Services – United States ~~group rose 182%~~business unit increased to ~~$305,571~~$231,921 from ~~$108,509~~$114,972 on a comparable quarter-over-quarter basis. Likewise, revenue from our Affiliate Marketing Services – International business unit totaled $1,191,964 for the three months ended ~~June~~September 30, 2023, which compared to $760,585 for the same three months in the prior year. Revenues from the development of free-to-play games by our Sports Gaming Client Services saw a modest improvement, increasing to $420,100 from $417,117 for the three months ended September 30, 2023 and 2022, respectively. The Affiliate Marketing Services – International division posted revenues of $1,124,887 for the three months ended June 30, 2023, which is up 34% over revenues of $840,212 for the three months ended June 30, 2022. Revenues contributed by the Company’s Sports Gaming Client Services division totaled $698,529, a 13% decline when compared to revenues of $802,534 for the same three-month period in the prior year. Due to the timing of the SportsHub Acquisition on December 22, 2023, revenues totaled $1,128,370 for the three months ended June 30, 2023, compared to $0 for the three months ended June 30, 2022.

Total revenues for the six months ended June 30, 2023 were $6,647,748, representing an 82% increase from revenues of $3,647,590 reported for the comparable six months in the previous year. The notable improvement was due primarily to revenues generated by SportsHub, which was acquired by SharpLink in December 2022, as well as revenue growth in all of SharpLink’s operating divisions.

For the ~~six-month period~~same reasons mentioned above, total revenues for the nine months ended ~~June~~September 30 2023 and 2022 more than doubled, increasing 101% to $9,917,671 from $4,940,264, respectively. On a segmented basis, nine-month revenues from our Affiliate Marketing Services – United States ~~increased 244% to $585,347~~business unit totaled $817,268 in 2023 which compared to ~~$170,031~~$285,004 for the same ~~six-month~~nine-month reporting period in 2022. Total revenues from our Affiliate Marketing Services – International ~~climbed 21%~~business unit rose to ~~$2,133,164~~$3,325,128 compared to ~~$1,763,962~~$2,524,547 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. ~~Revenues from SharpLink’s~~Our Sports Gaming Client Services ~~division improved 3%, rising to $1,763,544 from $1,713,597~~group contributed $2,183,644 towards total revenues for the ~~comparable six-month reporting periods in~~nine-months ended September 30, 2023, ~~and 2022, respectively. Revenue contribution~~up from $2,130,713 reported for the nine months ended September 30, 2022. Revenues from SportsHub totaled ~~$2,165,693~~$3,591,631 for the ~~six~~first nine months ~~ended June 30,~~of 2023, which compared to $0 for the same ~~six months~~period in 2022 due to the timing of the merger in December 2022.

Gross profit ~~climbed 972%~~for the three and nine months ended September 30, 2023 and 2022, improved significantly, rising to ~~$965,312~~$1,136,320, increasing 505% from $187,979 for the comparable three-month reporting periods, respectively; and increasing 281% to $3,445,272 compared to $905,427 for the nine months ended September 30, 2023 and 2022, respectively. Gross profit margin for the three months ended ~~June~~September 30, 2023 improved to 35%, which compared to ~~$90,014~~15% for the same three months in the prior year. Gross profit margin also improved, rising to 30% from 5%. For the six months ended June 30, 2023, gross profit increased 222% to $2,308,953 – up from $717,447 reported for the six months ended June 30, 2022. Six month2022; and gross profit margin ~~also improved, rising~~increased to 35% from ~~20%. The increases were due primarily to~~18% for the ~~Company offering a broader mix of higher margin products~~nine months ended September 30, 2023 and ~~services, resulting from the Company’s merger with SportsHub and its Affiliate Marketing expansion initiatives, which began in late 2022.~~2022, respectively.

For the three months ended ~~June~~September 30, 2023, total operating expenses ~~remained relatively flat at $3,748,509 compared~~increased 71% to ~~total operating expenses of $3,729,746~~$3,595,072, up from $2,105,178 for the three months ended ~~June~~September 30, 2022. The increase was attributable solely to higher selling, general and administrative expenses attributable primarily to our December 2022 merger with SportsHub as well as expansion initiatives associated with our Affiliate Marketing Services business units. For the ~~first six~~nine months ofended September 30, 2023 ~~total~~and 2022, operating expenses declined ~~34%~~18% to ~~$7,419,926~~$11,014,991 from ~~$11,285,638 reported for the same six months in 2022. The reduction in total operating expenses for the comparable six month period was~~$13,390,818 due largely to a ~~$4,726,000 non-cash expenses associated with~~ goodwill and intangible asset impairment ~~offset by lower selling, general and administrative costs reported for~~expense of $4,726,000 recorded in the ~~six-month~~nine-month period inended September 30, 2022.

Operating loss ~~decreased 24%~~increased 28% to ~~$2,783,197~~$2,458,752 for the three months ended ~~June~~September 30, 2023 compared to an operating loss of ~~$3,639,732~~$1,917,199 for the three-month period ended ~~June~~September 30, 2022. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, operating ~~losses declined 52%~~loss decreased 39% to ~~$5,110,973~~$7,569,719 from ~~$10,568,191, respectively. The improvement in operating losses was attributable~~$12,485,391, respectively, due largely to a ~~combination~~goodwill and intangible asset impairment expense of ~~higher revenues and lower operating expenses recorded during~~$4,726,000 booked in the ~~three- and six-month periods.~~nine-month period ended September 30, 2022.

For the reasons detailed above and after factoring in an expense in total other income and expense of ~~$502,533~~$238,345 and provision for income taxes of ~~$6,408~~$4,450, net loss from continuing operations for the three months ended ~~June~~September 30, 2023 totaled ~~$3,292,158,~~$2,701,547, a ~~10% decrease~~39% increase from ~~$3,663,278~~$1,942,974 reported for the same three months in the prior year after factoring total other income and expense of ~~$22,846~~$25,475 and provision for income taxes of ~~$700.~~$300.

For the ~~six~~nine months ended ~~June~~September 30, 2023, the Company’s net loss from continuing operations ~~decreased 44%~~improved 31%, declining to ~~$5,970,904~~$8,672,446 after factoring ~~$822,782~~an expense of $1,061,127 in total other income and expense and provision for income taxes of ~~$37,149.~~$41,600. This compared to a net loss from continuing operations of ~~$10,599,807~~$12,542,782 for the ~~six~~nine months ended ~~June~~September 30, 2022 after factoring ~~$30,916~~$56,391 in total other ~~income~~expense and ~~expense and~~a provision for income taxes of ~~$700.~~$1,000.

During the three- and ~~six-month~~nine-month reporting periods in 2023, total other income and expense was largely attributable to interest and other expenses associated with the Company’s bank lines of credit, coupled with accounting for the change in fair value of its convertible debenture offset by higher interest income earned on its cash on hand.

Net loss from discontinued operations of SharpLink’s legacy MTS business ~~declined 87%~~increased to ~~$149,000~~$148,000 for the three months ended ~~June~~September 30, 2023, which compared to a net loss from discontinued operations of ~~$1,147,654~~$104,633 for the three months ended ~~June~~September 30, 2023. For the ~~six~~nine months ended ~~June~~September 30, 2023, net loss from discontinued operations of the legacy MTS business totaled ~~$294,000,~~$441,997, down ~~77%~~68% from ~~$1,255,654~~$1,360,286 reported for the same ~~six~~nine months in 2022.

For all of the aforementioned reasons, the total net loss available to ordinary shareholders ~~declined 28%~~increased 39% to ~~$3,490,490,~~$2,849,760, or ~~$1.24~~$0.99 loss per basic and diluted share, compared to a net loss of $4,813,179, or $2.04 loss per basic and diluted share, for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023, net loss dropped 47% to $6,315,185, or $2.24 loss per basic and diluted share, which compared to a net loss attributable to shareholders of ~~$11,861,302,~~$2,049,854 or ~~$5.02~~$0.86 loss per ~~basic and diluted~~ share, for the ~~six~~same three months in 2022. For the nine months ended ~~June~~September 30, ~~2022.~~2023, the total net loss available to ordinary shareholders was $9,164,937, or $3.35 loss per share, reflecting a 34% decline when compared to a total net loss attributable to shareholders of $13,911,156, or $5.89 loss per share, reported for the comparable nine-month period in the previous year.

As of ~~June~~September 30, 2023, the Company had ~~$31,874,620~~$49,309,668 in cash and ~~$10,785,568~~$14,874,585 in restricted cash, as compared to cash of $39,324,529 and restricted cash of $11,132,957 as of December 31, 2022. For the ~~six~~nine months ended ~~June~~September 30, 2023, cash ~~used in~~provided by operations from continuing activities was ~~$11,991,510,~~$6,266,211, which compared to cash used in ~~operating~~operations from continuing activities of ~~$4,752,823~~$6,376,631 for the first ~~six~~nine months ended ~~June~~September 30, 2022. The increase in cash and ~~the decline~~ in restricted cash was primarily attributable to fantasy sports league entry fees collected for the 2023-2024 NFL season as well as entry fees for the 2023 MLB season, offset by payouts for fantasy sports prizes following the end of the 2022-2023 NFL season that occurred in January ~~offset by payments received for the beginning of the 2023 Major League Baseball season, as well as other~~in addition to normal working capital spend.

For the ~~six~~nine months ended ~~June~~September 30, 2023, cash used in investing activities from continuing operations was ~~$468,344,~~$844,350, which compared to ~~$524,008~~$593,385 for the ~~six~~nine months ended ~~June~~September 30, 2022. The ~~decrease~~increase in cash used in investing activities was largely attributable to an increase in capital expenditures associated with ongoing development of our C4 sports betting conversion technology and new generative Artificial Intelligence solution, Betsense, in 2023, ~~offset by~~as well as payments related to the acquisition of FourCubed in 2022.

For the ~~six~~nine months ended ~~June~~September 30, 2023, cash provided by financing activities was ~~$4,368,556,~~$7,862,906, as compared to cash provided by financing activities of ~~$2,975,971~~$2,765,497 recorded for the ~~six~~nine months ended ~~June~~September 30, 2022. In February 2023, a securities purchase agreement entered into with a current shareholder of the Company, pursuant to which the Company issued the investor ~~the Debenture~~a convertible debenture in the aggregate principal amount of $4,400,000 for ~~a purchase price~~proceeds of $4,000,000. The Company also drew down ~~$879,349~~$4,629,349 from its line of credit with Platinum Bank in the first ~~six~~nine months of 2023. The overall increase was offset by repayments of debt totaling ~~$503,293~~$758,943 and payments of debt issue costs totaling $7,500 in the 2023 ~~six-month~~nine-month reporting period.

We will require additional capital to support our growth plans and such capital may not be available on reasonable terms or at all. There is substantial doubt about our ability to continue as a going concern.

As of ~~June~~September 30, 2023, we had negative working capital of ~~$10,384,544.~~$13,500,173. For the ~~six~~nine months ended ~~June~~September 30, 2023, we incurred a net loss from continuing operations of ~~$5,970,904~~$8,672,446 representing a ~~43%~~31% decrease from a loss from continuing operations of ~~$10,599,807~~$12,542,782 for the ~~six~~nine months ended ~~June~~September 30, 2022. In the pursuit of SharpLink’s long-term growth strategy and the development of its fan activation and conversion software and related businesses, the Company has sustained continued operating losses. To fund anticipated future losses from operations, the Company secured additional financing through a $3,250,000 term loan in January 2022, as described in Note 7 - Debt. In addition, as described in Note 6, on February 13, 2023, the Company entered into a Revolving Credit Agreement with Platinum Bank and executed a revolving promissory note of $7,000,000. Moreover, on February 14, 2023, the Company entered into the SPA with Alpha, a current shareholder of the Company, pursuant to which the Company issued to Alpha ~~and the Debenture~~a convertible debenture in the aggregate principal amount of $4,400,000 for ~~a purchase price~~proceeds of $4,000,000.

Until we can generate a sufficient amount of revenue to finance our capital needs, which we may never achieve, we expect to finance our cash needs primarily through public or private equity financings or conventional debt financings. 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, 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 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.

On ~~June~~September 30, 2023, 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.

Our opinion is that inflation did not have a material effect on our operations for the ~~six~~nine months ended ~~June~~September 30, 2023.

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

There were certain updates recently issued by the Financial Accounting Standards Board (“FASB”), most of which represented technical corrections to the accounting literature or application to specific industries or situations and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

The Company’s Chief Executive Officer and the Company’s Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures as of ~~June~~September 30, 2023 and concluded that the Company’s disclosure controls and procedures are effective. The term disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated, recorded, processed, summarized and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure to be reported within the time periods specified in the SEC’s rules and forms.

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(t) and 15d-15(f) under the Exchange Act, during the three and ~~six~~nine months ended ~~June~~September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Israel		98-1657258
(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)

PART I	FINANCIAL INFORMATION	3

ITEM 1.	FINANCIAL STATEMENTS:	3

	Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2023 (unaudited) and December 31, 2022	3

	Condensed Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (unaudited)	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022(unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3328

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3834

ITEM 4.	CONTROLS AND PROCEDURES	3834

PART II		3935

ITEM 1.	LEGAL PROCEEDINGS	3935

ITEM 1A.	RISK FACTORS	3935

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES	3935

ITEM 3.	DEFAULT UPON SENIOR SECURITIES	3935

ITEM 4.	MINE SAFETY DISCLOSURES	3935

ITEM 5.	OTHER INFORMATION	3935

ITEM 6.	EXHIBITS	3935

SIGNATURES		4036

	Weighted-average
	amortization period		Cost, Net of		Accumulated
	(years)		Impairment		Amortization		Net
Balance, June 30, 2023
Customer relationships		5 - 10	$	2,643,000	$	486,273	$	2,156,727
Acquired technology		3 - 5		1,438,700		1,239,766		198,934
Tradenames		6		640,000		56,740		583,260
Internally developed software		5		973,283		371,966		601,317
Software in development		N/A		264,626		-		264,626
			$	5,959,609	$	2,154,745	$	3,804,864

Balance, December 31, 2022
Customer relationships		5 – 10	$	2,643,000	$	280,636	$	2,362,364
Acquired technology		3 - 5		1,437,050		1,201,739		235,311
Tradenames		6		640,000		3,405		636,595
Internally developed software		5		749,147		288,530		460,617
Software in development		N/A		33,046		-		33,046
			$	5,502,243	$	1,774,310	$	3,727,933

	Weighted-average
	amortization period		Cost, Net of		Accumulated
	(years)		Impairment		Amortization		Net
Balance, September 30, 2023
Customer relationships		5 - 10	$	2,643,000	$	586,234	$	2,056,766
Acquired technology		3 - 5		1,433,357		1,245,668		187,689
Tradenames		6		640,000		83,407		556,593
Internally developed software		5		1,145,902		435,221		710,681
Software in development		N/A		458,484		-		458,484
			$	6,320,743	$	2,350,530	$	3,970,213

Balance, December 31, 2022
Customer relationships		5 – 10	$	2,643,000	$	280,636	$	2,362,364
Acquired technology		3 - 5		1,437,050		1,201,739		235,311
Tradenames		6		640,000		3,405		636,595
Internally developed software		5		749,147		288,530		460,617
Software in development		N/A		33,046		-		33,046
			$	5,502,243	$	1,774,310	$	3,727,933

Description	Amount
Fair Value of Equity Consideration	$	1,370,287
Fair Value of Seller Platinum Line of Credit and Loan		5,387,850
Total Purchase Price	$	6,758,137

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Ordinary Shares		SBET		The Nasdaq Capital Market

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

	●	SharpLink issued an aggregate of 431,926ordinary shares to the equity holders of SportsHub, on a fully diluted basis, including 377,985 ordinary shares actually issued on December 22, 2022 and an additional aggregate of 53,941 shares being held in escrow as well as shares held in escrow for indemnifiable losses and for the reimbursement of expenses incurred by the Stockholder Representative in performing his duties pursuant to the SportsHub Merger Agreement. An additional aggregate of 40,585 ordinary shares were reserved for future issuance, including 23,714 ordinary shares reserved for SportsHub shareholders who had yet to provide the applicable documentation required in connection with the SportsHub Acquisition and were issued in June 2023 when the documentation was available. 13,975 ordinary shares underlying the options and 2,896 ordinary shares underlying the warrants ~~have not been issued.~~remain unissued until the options and/or warrants are exercised.

	●	SportsHub merged with and into the Merger Subsidiary, with the Merger Subsidiary remaining as the surviving corporation and wholly owned subsidiary of SharpLink.

	●	SportsHub, which owned 889,380 ordinary shares of SharpLink prior to the ~~merger,~~SportsHub Acqusition, distributed those shares to its stockholders immediately prior to the consummation of the ~~Merger.~~SportsHub Acqusition. These shares were not part of the purchase consideration.

	●	SharpLink assumed $5,387,850 of SportsHub’s debt as purchase consideration.


Assets:
Cash	$	38,255,266
Restricted cash		10,604,004
Accounts receivable		186,712
Prepaid expenses and other current assets		1,916,932
Equipment		11,953
Other long-term assets		95,793
Intangible assets		2,390,000
Total Assets	$	53,460,660

Liabilities:
Accrued expenses	$	284,345
Deferred tax liabilities		48,775
Deferred revenue		3,574,285
Other current liabilities		47,657,117
Other long-term liabilities		106,705
Total liabilities	$	51,671,227

Net assets acquired, excluding goodwill	$	1,789,433

Goodwill		4,968,703

Purchase consideration for accounting acquiree	$	6,758,137


Principle amount of convertible debenture at issuance:	$	4,400,000
Less:
Unamortized discount for warrants		1,027,450
Unamortized discount for OID		350,001
Accrued interest expense		(130,192	)
Change in fair value		(678,037	)
Balance of convertible debenture as of June 30, 2023:		3,830,778


Issuance February 14, 2023	4.13	%
Fair Value ~~June~~September 30, 2023	~~2.21~~2.81	%

	~~June~~September 30, 2023

Expected volatility		53.6-~~54.6~~116.6	%
Expected dividends		0.0	%
Expected term (years)		~~5.6~~ – ~~5.9~~5.7
Risk-free rate		3.4 -– ~~4.1~~4.3	%
Fair value of ordinary shares on grant date	$	1.70 – $~~3.44~~4.03

	June 30, 2023			June 30, 2022

Customer A		15	%		2	%
Customer B		13	%		41	%
Customer C		10	%		21	%

For the six months ended June 30, 2022	Affiliate Marketing Services - U.S.		Affiliate Marketing Services - International		Sports Gaming Client Services		SportsHub Gaming Network		Total
Software-as-a-service	$	170,031	$	-	$	1,713,597	$	-	$	1,883,628
Fee revenue		-		-		-		-		-
Services and other		-		1,763,962		-		-		1,763,962
Total	$	170,031	$	1,763,962	$	1,713,597	$	-	$	3,647,590

	June 30, 2023 (Unaudited)		December 31, 2022
Carrying amounts of major classes of assets included as part of discontinued operations:

Current Assets
Cash	$	301,000	$	648,000
Accounts receivable, net of allowance		69,000		191,000
Prepaid expenses and other current assets		164,000		187,000
Equipment, net		3,000		5,000
Other Assets		-		279,000
Total current assets	$	537,000	$	1,310,000

	June 30, 2023 (Unaudited)		December 31, 2022
Carrying amounts of major classes of liability included as part of discontinued operations:

Current Liabilities
Accrued expenses	$	82,100	$	374,879
Contract liabilities		3,000		2,000
Other current liabilities		736,397		838,274
Total current liabilities	$	821,497	$	1,215,153

	June 30, 2023		June 30, 2022
Stock options		450,221		175,005
Series A-1 preferred stock		7,130		5,881
Series B preferred stock		12,481		12,481
Advisory		63,687		-
Prefunded warrants		125,359		-
MTS warrants		-		8,333
Purchase warrants		880,000		-
Regular warrants		266,667		266,667
Total		1,805,545		468,367

	●	COLLECTS, analyzes and leverages deep learning of behavioral data relating to individual fans;
	●	CONNECTS and controls fan engagement with real-time, personalized betting offers sourced from U.S. sportsbooks and casinos in states where online betting has been legalized;
	●	CONVERTS passive fantasy sports and casual sports fans into sports bettors on a fully automated basis; and
	●	readily enables gaming operators and publishers to CAPITALIZE on acquiring and scaling sports betting and iGaming depositors, resulting in higher revenue generation and greatly enhanced user experiences.

	Three Months Ended September 30,
	2023			2022			$ Change			% Change
Revenues	$	3,269,924		$	1,292,674		$	1,977,250			153.0	%
Cost of Revenues		2,133,604			1,104,695			1,028,909			93.1	%
Gross profit		1,136,320			187,979			948,341			504.5	%
Gross profit percentage		34.8	%		14.5	%
Total operating expenses		3,595,072			2,105,178			1,489,894			70.8	%
Operating loss from continuing operations		(2,458,752	)		(1,917,199	)		(541,553	)		28.2	%
Total other income (expenses)		(238,345	)		(25,475	)		(212,870	)		835.6	%
Net loss before income taxes		(2,697,097	)		(1,942,674	)		(754,423	)		38.8	%
Provision for income taxes		4,450			300			4,150			1383.3	%
Net loss from continuing operations		(2,701,547	)		(1,942,974	)		(758,573	)		39.0	%
Net income (loss) from discontinued ops, net of tax		(148,000	)		(104,633	)		(43,367	)		41.49	%
Net loss	$	(2,849,547	)	$	(2,047,607	)	$	(801,940	)		39.2	%

	Nine Months Ended September 30,
	2023			2022			$ Change			% Change
Revenues	$	9,917,671		$	4,940,264		$	4,977,407			100.8	%
Cost of Revenues		6,472,399			4,034,837			2,437,562			60.4	%
Gross profit		3,445,272			905,427			2,539,845			280.5	%
Gross profit percentage		34.7	%		18.3	%
Total operating expenses		11,014,991			13,390,818			(2,375,827	)		-17.7	%
Operating loss from continuing operations		(7,569,719	)		(12,485,391	)		4,915,672			-39.4	%
Total other income (expenses)		(1,061,127	)		(56,391	)		(1,004,736	)		1781.7	%
Net loss before income taxes		(8,630,846	)		(12,541,782	)		3,910,936			-31.2	%
Provision for income taxes		41,600			1,000			40,600			4060.0	%
Net loss from continuing operations		(8,672,446	)		(12,542,782	)		3,870,336			-30.9	%
Net income (loss) from discontinued ops, net of tax		(441,997	)		(1,360,286	)		918,289			-67.5	%
Net loss	$	(9,114,443	)	$	(13,903,068	)	$	4,788,625			-34.4	%

Exhibit No.		Description

31.1		Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer

31.2		Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer

32.1		Section 1350 Certification of principal executive officer

32.2		Section 1350 Certification of principal financial officer and principal accounting officer

101.INS		Inline XBRL INSTANCE DOCUMENT
101.SCH		Inline XBRL TAXONOMY EXTENSION SCHEMA
101.CAL		Inline XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF		Inline XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB		Inline XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE		Inline XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	SharpLink Gaming Ltd.

Dated: ~~August 14,~~November 13, 2023	By:	/s/ Rob Phythian
		Rob Phythian
		Chief Executive Officer

Dated: ~~August 14,~~November 13, 2023	By:	/s/ ~~Jason Lee~~Robert DeLucia
		~~Jason Lee~~Robert DeLucia
		~~Corporate Controller~~
	~~(Interim Principal~~Chief Financial ~~and Accounting Officer)~~Officer