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Basis of Presentation
 6 Months Ended
Jun. 30, 2025
Accounting Policies [Abstract]  
Basis of Presentation

Note 1 – Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared by SharpLink Gaming, Inc. (the “Company” or “SharpLink”), 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 30, 2025 and December 31, 2024, as well as its results of operations for the three and six months ended June 30, 2025 and 2024. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.

 

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

 

Background and Nature of Business

 

Headquartered in Minneapolis, SharpLink, a Delaware corporation, recently undertook a significant strategic shift by adopting Ether (“ETH”), the native cryptocurrency of the Ethereum blockchain (“Ether” or “ETH”) as its primary treasury asset. This strategy reflects the Company’s commitment to align the corporate treasury with the future of programmable finance, digital capital markets and decentralized infrastructure. The Company also operates an online performance marketing company that delivers unique fan activation solutions to its sportsbook and online casino gaming partners. Through its global affiliate iGaming marketing network, known as PAS.net, SharpLink drives qualified traffic and player acquisitions, retention and conversions to U.S. regulated sportsbooks and global casino gaming partners worldwide. In addition, SharpLink owns a performance marketing platform through which the Company owns and operates U.S. state-specific web domains designed to attract, acquire and drive local sports betting and casino traffic directly to its sportsbook and casino partners which are licensed to operate in each respective state.

 

On May 26, 2025, the Company entered into a securities purchase agreement for a private placement in public equity (“PIPE”), offering an aggregate of (i) 58,699,760 shares of common stock of the Company, par value $0.0001 per share, at an offering price of $6.15 per share, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 10,400,553 shares of Common Stock at an offering price of $6.1499 per Pre-Funded Warrant. Each of the Pre-Funded Warrants is exercisable for one share of Common Stock at the exercise price of $0.0001 per Pre-Funded Warrant Share, immediately exercisable, and may be exercised at any time until all of the Pre-Funded Warrants issued in the Offering are exercised in full. The gross proceeds from the PIPE, before deduction the placement agents fees and offering expenses, were approximately $425,000,000 funded in a combination of cash and Ether. On June 2, 2025, SharpLink launched its treasury reserve strategy with the commencement of its purchasing of ETH, serving as the Company’s primary treasury reserve asset. Consensys Software Inc. acted as the lead investor in the PIPE, along with prominent crypto venture capital firms and infrastructure providers, with an intent to assist the Company in earning distinction as one of the largest ETH-focused treasury strategies in the public markets. The Company also implemented native and liquid staking activities in the second quarter of 2025 to earn staking rewards from the Company’s digital assets held. See Note 2 - Digital Asset Holdings and Note 6 - Warrants.

 

 

On May 20, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) for an offering of 34,000 shares (the “Shares”) of common stock, $0.0001 par value per share, and Pre-Funded Warrants (the “Pre-Funded Warrants”) to purchase up to 1,496,612 shares of common stock . The Shares were offered at an offering price of $2.94 per share. The gross proceeds from the Purchase Agreement, before deducting the placement agent fees and offering expenses, were approximately $4,500,000. See Note 6 - Warrants.

 

Issue of shares and pre-funded warrants were recorded at the offering price in equity in accordance with ASC 505, Equity, with any amounts above the par value of shares were recorded in Additional paid-in capital.

 

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

 

On January 18, 2024, the Company entered into a Purchase Agreement (the “PA”) with RSports to sell the Company’s fantasy sports and sports game development business units to RSports. All of the membership interests of Sports Technologies, LLC, a Minnesota limited liability company, SHGN and Holdings Quinn, LLC, a Delaware limited liability company (collectively referred to as the “Divested Operations”) were sold for $22,500,000 in an all cash transaction. The transaction resulted in SharpLink selling a majority of its assets and the classification of the Divested Operation’s financial results as discontinued operations. All prior periods presented have been restated to present the Divested Operations financial results as discontinued operations. All explanations and amounts relating to discontinued operations are referred throughout the consolidated financial statements to Note 12 - Discontinued Operations.

 

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

 

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

 

 

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

 

Ordinary Shares    
Par value for ordinary shares at $0.20 as reported at February 13, 2024  $572,770 
Par value for common stock at $0.0001 at February 13, 2024   294 
Net change in par value — reflected in additional paid-in capital  $572,476 
      
Preferred Shares     
Par value for Series A-1 preferred stock at $0.20 par value as reported at February 13, 2024  $1,440 
Par value for Series A-1 preferred stock at $0.0001 par value as reported at February 13, 2024   1 
Net change in par value — will be reflected in additional paid-in capital  $1,439 
Par value for Series B preferred stock at $0.20 par value as reported at February 13, 2024   2,496 
Par value for Series B preferred stock at $0.0001 par value at February 13, 2024   1 
Net change in par value — reflected in additional paid-in capital  $2,495 

 

Exchange of Series A-1 Preferred Stock and Series B Preferred Stock for Common Stock and Prefunded Warrants

 

On April 2, 2025, SharpLink entered into an exchange agreement (“Exchange Agreement”) with Alpha Capital Anstalt (“Alpha”), whereby, pursuant to the terms and conditions set forth in the Exchange Agreement and in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), 600 shares of the Company’s Series A-1 Preferred Stock and 1,040 shares of the Company’s Series B Preferred Stock (collectively, the “Existing Securities”) held by Alpha were exchanged for 38,683 shares of SharpLink’s common stock (“Common Stock”) and 44,650 prefunded warrants to purchase shares of SharpLink’s common stock (“Alpha Prefunded Warrants”) at an exercise price of $0.012. With the exchange of Alpha’s Existing Securities for Common Stock and Alpha Prefunded Warrants, SharpLink no longer has any Series A-1 Preferred Stock or Series B Preferred Stock issued and outstanding.

 

Principles of Consolidation

 

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

 

Functional Currency

 

The Company’s functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. The resulting monetary assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the balance sheet date. Revenue and expense components are translated to U.S. dollars at weighted-average exchange rates in effect during the period. Foreign currency translation adjustments, which arise from the remeasurement of foreign-denominated monetary assets and liabilities, are typically recorded in Other Comprehensive Income (OCI) in accordance with U.S. GAAP, however, the Company does not have material operations in a foreign currency which require a translation into U.S dollar. Foreign currency transaction gains and losses resulting from remeasurement are recognized in selling, general and administrative expenses within the condensed consolidated statements of operations.

 

Reverse Share Split

 

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

 

At-The-Market (“ATM”) Offerings

 

On May 2, 2024, Company entered into an ATM Sales Agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“AGP” or the “Agent”) pursuant to which the Company may offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares of the Company’s Common Stock, having an aggregate offering price of up to $1,676,366, subject to certain limitations on the amount of Common Stock that may be offered and sold by the Company set forth in the ATM Sales Agreement (the “Offering”). On February 4, 2025, the Company, under the terms of the ATM Sales Agreement, filed a prospectus supplement that amended the number shares of Common Stock having an aggregate offering price of up to $1,835,052. 

 

On May 30, 2025, SharpLink entered into a second ATM Sales Agreement with the Agent relating to the sale of shares of our Common Stock from time to time, having an aggregate offering price of up to $1,000,000,000.

 

As of June 30, 2025, SharpLink raised total net proceeds of $126,045,108 from sales of Shares under our ATM Sales Agreements. The proceeds were used to further the Company’s ETH treasury reserve strategy as well as provide for working capital.

 

Acquisition of 10% Equity Stake in Armchair Enterprises

 

On February 24, 2025, SharpLink entered into a subscription agreement (“Subscription Agreement”) with U.K-based Armchair Enterprises Limited (“Armchair”), which owns and operates CryptoCasino.com. The acquisition of a 10% equity stake in Armchair was made for $500,000 in cash, along with a right of first refusal to acquire a controlling interest in Armchair.  The investment was recorded at cost and will be measured at cost less impairment, adjusted for any observable price changes. There was no impairment as of June 30, 2025.

 

 

Significant Accounting Policies

 

Digital Assets

 

The Company’s digital assets primarily include ETH and Liquid Staked ETH (“LsETH”). The Company distinguishes between digital assets which fall within the scope of ASC 350-60 and those which do not. The Company refers to digital assets which fall within the scope of ASC 350-60 (e.g., ETH) as “crypto assets.” Digital assets which do not fall within the scope of ASC 350-60, Accounting for and Disclosure of Crypto Assets, are referred to as “digital intangible assets.”

 

As of June 30, 2025, the Company held $61.5 million of crypto assets comprised of ETH that are in the scope of ASC 350-60 at fair value. The Company reflects crypto assets held at fair value on the consolidated balance sheets within the Crypto assets line item. In determining the fair value of the crypto assets in accordance with ASC 820, the Company utilizes Coinbase as the principal market. The activity from remeasurement of crypto assets at fair value is reflected in the consolidated statements of operations within Unrealized loss on crypto assets. Realized gains and losses from the derecognition of crypto assets are included in Realized gain on crypto assets, net in the consolidated statements of operations. The Company uses a first-in, first-out methodology to assign costs to crypto assets for purposes of the crypto assets held and realized gains and losses disclosures in Note 2, Digital Asset Holdings. Sales and purchases of crypto assets are reflected as cash flows from investing activities in the consolidated statements of cash flows. Contributions of crypto assets received as part of the consideration received in the PIPE and deposits of ETH into liquid staking protocol are presented as noncash investing and financing activities in the consolidated statements of cash flows.

 

As of June 30, 2025, the Company held $382.4 million of digital intangible assets comprised of LsETH that are intangible assets outside the scope of ASC 350-60. A receipt token, in general and by design, entitles the holder to redeem the crypto intangible asset(s) for which it was exchanged. Therefore, it fails the ‘other goods and services criterion’ in paragraph 350-60-15-1(b), and thus is outside the scope of Subtopic 350-60.

 

These digital intangible assets are recorded at cost, less impairment within digital intangible assets on the consolidated balance sheets in accordance with ASC 350-30. The Company tests digital intangible assets for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. The test for impairment consists of a comparison of the fair value of the digital intangible assets with their carrying amounts. Refer to Note 2, Digital Asset Holdings, for additional information.

 

ETH Staking

 

Beginning in June 2025, the Company used the proceeds from its capital raising activities to acquire and deploy ETH in staking activities, which can include native staking, liquid staking and restaking. The Company has entered into separate contractual agreements with various third-party entities to facilitate its ETH staking activities. The Company commenced both native staking and liquid staking in June of 2025. The Company intends for staking to become a primary yield generation strategy of the Company within the current fiscal year.

 

Native Staking

 

The Company utilized two third-party asset managers to manage and stake ETH on its behalf as of June 30, 2025. Through its agreements with these asset managers, the Company’s ETH is held by qualified custodians, staked in the Ethereum protocol, and the stake is delegated to third party validators. When chosen as validators by the Ethereum network, these validators earn staking rewards and transaction fees proportional to the amount of stake delegated to them. The Company recognizes rewards from native staking as revenue in accordance with ASC 606. However, since the amount of rewards are not known by the Company until a validation activity is completed and the Company receives rewards in their custodial account, the staking rewards are constrained under the Topic 606 guidance on variable consideration, until such time.

 

Because the Company is not the principal to the block validation service, it does not control the full output of the reward-generating activity, and instead receives net staking rewards, after validator commissions are deducted. As such, the Company presents staking revenue on a net basis, reflecting only the portion of protocol rewards to which it is entitled. Asset manager fees are presented as separate operating expenses.

 

Liquid Staking

 

The Company participates in liquid staking, which is similar to native staking. One key difference and intended benefit of liquid staking is that it provides for liquidity by allowing the Company to earn staking rewards while still maintaining the ability, provided through the receipt token, to enter into to other transactions. When the Company’s ETH is staked, the Company is provided with a digital intangible asset (i.e., LsETH) which represents the crypto asset (i.e., ETH) which has been staked. LsETH is a non-rebasing liquid staking receipt token. It uses a floating redemption rate between LsETH and the underlying staked ETH. The redemption rate is determined by the underlying staked ETH and the current value of accumulated staking rewards, penalties, and fees associated with the underlying staked ETH. As a result, staking rewards earned from the Company’s liquid staking activities are not recognized as revenue.

 

These staking rewards will be recognized as gains or losses upon redemption or sale of the LsETH in accordance with ASC 610-20 Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets as the Company is unable to determine the staking rewards to which is entitled at the time of the initial staking such that the staking rewards are constrained under the ASC 606 guidance on variable consideration which also applies to transfers of non-financial assets under ASC 610-20. No LsETH was redeemed or sold in the quarter ended June 30, 2025.

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversions and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”). ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on its disclosures.

 

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

 

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires enhanced disclosures surrounding income taxes, particularly related to rate reconciliation and income taxes paid information. In particular, on an annual basis, companies will be required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Companies will also be required to disclose, on an annual basis, the amount of income taxes paid, disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions above a quantitative threshold. The standard is effective for the Company for annual periods beginning January 1, 2025 on a prospective basis, with retrospective application permitted for all prior periods presented. The Company will adopt ASU 2023-09 for the annual period ending December 31, 2025 and is currently evaluating the impact of this guidance on its disclosures.