Financial Performance - Revenues for the six months ended June 30, 2022, were $3,647,590, representing a 123% increase from $1,631,966 in the same period of 2021[8] - Gross profit for the same period was $210,190, slightly up from $203,967 in 2021, indicating a stable gross margin despite increased revenues[8] - Operating loss for the six months ended June 30, 2022, was $(10,492,658), a reduction in loss compared to $(21,094,446) in 2021, showing improved operational efficiency[8] - Net loss for the six months ended June 30, 2022, was $(11,844,362), compared to $(21,089,284) in the prior year, reflecting a significant decrease in losses[8] - For the six months ended June 30, 2022, the company reported a net loss of $11,844,362, a decrease from a net loss of $21,089,284 in the same period of 2021, representing a 43% improvement[12] - The company reported a net loss of $11,844,362 for the six months ended June 30, 2022, compared to a net loss of $21,089,284 for the same period in 2021[136] Assets and Liabilities - Total assets as of June 30, 2022, were $12,589,797, down from $20,559,826 as of December 31, 2021, indicating a reduction in asset base[5] - Total liabilities increased to $7,997,177 as of June 30, 2022, compared to $6,368,370 at the end of 2021, suggesting a rise in financial obligations[5] - Cash and cash equivalents decreased to $5,022,037 from $6,065,461, highlighting liquidity challenges[5] - The accumulated deficit increased to $(70,176,625) as of June 30, 2022, from $(58,332,263) at the end of 2021, indicating ongoing financial losses[6] - Stockholders' equity decreased to $4,592,620 as of June 30, 2022, from $14,191,456 at the end of 2021, reflecting the impact of net losses on equity[6] Cash Flow and Operating Activities - The company experienced cash used for operating activities of $3,484,288, compared to $2,038,734 in the prior year, indicating an increase in cash outflow[12] - Total cash and restricted cash at the end of the period was $5,022,037, down from $6,065,461 at the beginning of the year, reflecting a net change of $(1,043,424)[12] Goodwill and Impairments - Goodwill impairment charges totaled $1,515,000 due to the loss of access to players in the Russian market, impacting the company's financial position[28] - The Company recognized a goodwill and intangible asset impairment charge of $1,224,671 for the six months ended June 30, 2022, impacting the loss from discontinued operations[156] Mergers and Acquisitions - SharpLink, Inc. shareholders held 86% of the company post-MTS Merger, indicating a majority control[33] - The purchase consideration for the MTS Merger was $22,110,032, based on the fair value of MTS assets and liabilities[34] - The fair value of MTS assets acquired totaled $3,379,000, while total liabilities amounted to $3,850,000, resulting in net assets acquired of $(471,000)[41] - Goodwill recorded from the MTS acquisition was $22,581,032, with $21,722,213 impaired during the year ended December 31, 2021[41] - SharpLink acquired FourCubed for total consideration of $8,492,725, which included $6,886,523 in cash and 606,114 Ordinary Shares[52] - FourCubed's acquisition resulted in goodwill of $3,130,167, attributed to expected synergies and market opportunities[56] Financing and Debt - The company raised $3,250,000 through a term loan in 2022 to support ongoing operations and address liquidity needs[19] - The company entered into a $3,250,000 term loan agreement with Platinum Bank, bearing an annual interest rate of 4.00%, with a fixed monthly payment of $59,854 until maturity on January 31, 2027[63] - As of June 30, 2022, the remaining principal balance on the term loan was $3,001,402, with $607,711 due within the next 12 months[64] - The term loan requires the company to maintain a minimum quarterly debt service coverage ratio of 1.25, defined as adjusted EBITDA divided by debt service[64] Stock and Equity - The company authorized the establishment of 9,000 shares of 8% convertible preferred stock (Series A) and reserved 4,150,000 shares of common stock for conversion[67] - The Series A preferred stock has a cumulative dividend rate of 8% per annum, payable quarterly, and is convertible at a price of $2.1693 per share[70][72] - The company plans to issue Series B preferred stock for $6,000,000 immediately prior to completing the Going Public Transaction[75] - The company completed the MTS Merger on July 26, 2021, resulting in SharpLink, Inc. stockholders owning approximately 86% of the capital stock of SharpLink on a fully diluted, as-converted basis[90] Operational Highlights - The Affiliate Marketing Services – United States segment generated $170,032 in revenue, while the Sports Gaming Client Services segment contributed $1,713,597 for the six months ended June 30, 2022[136] - Customer A accounted for 41% of consolidated revenues in June 2022, while Customer B contributed 21%[140] - Software-as-a-service revenue for the United States segment was $170,032 for the six months ended June 30, 2022, up from $103,541 in the same period of 2021, reflecting a growth of about 64%[147] Management and Governance - The company appointed RSM US LLP as its independent registered public accountants for the year ending December 31, 2022[171] - The company’s new CFO, Robert DeLucia, was appointed effective August 22, 2022, following the departure of the former CFO[169] - The company’s CEO, Rob Phythian, may receive an annual bonus of up to 10 monthly base salaries, currently amounting to $250,000, based on performance criteria[171] - A special bonus of $68,000 was approved for the CEO due to his contribution to a $10 million financing round in November 2021[173]
SharpLink Gaming .(SBET) - 2022 Q3 - Quarterly Report