As
filed with the United States Securities and Exchange Commission on September 22, 2023
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
|
SHARPLINK
GAMING LTD. |
|
|
(Exact
name of registrant as specified in our charter) |
|
Israel |
|
7999 |
|
98-1657258 |
(State
or other jurisdiction of
Incorporation
or organization) |
|
(Primary
Standard Industrial
Classification
Code Number) |
|
(I.R.S.
Employer
I.D.
N.) |
SharpLink
Gaming Ltd.
333
Washington Avenue North, Suite 104
Minneapolis,
Minnesota
(612)
293-0619
(Address,
including zip code and telephone number, including area code, of registrant’s principle executive offices)
Copies
to:
Mitchell
S. Nussbaum, Esq. |
Odeya
Brick-Zarsky, Adv. |
Oded
Har-Even, Esq. |
Tahra
Wright, Esq. |
Guy
Eizenberg, Adv. |
Eric
Victorson, Esq. |
Loeb
& Loeb LLP |
S.
Friedman, Abramson & Co. |
Sullivan
& Worcester LLP |
345
Park Avenue |
146
Derech Menachem Begin |
1633
Broadway |
New
York, New York 10154 |
Tel Aviv 6492103 |
New
York, New York 10019 |
|
Israel |
|
Approximate
date of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
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” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large
Accelerated Filer |
☐ |
Accelerated
Filer |
☐ |
Non-accelerated
Filer |
☒ |
Smaller
reporting company |
☒ |
|
|
Emerging
growth company |
☐ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant will file a further amendment which specifically states that this Registration Statement will thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement will become effective
on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities
and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED SEPTEMBER 22, 2023
PRELIMINARY
PROSPECTUS
SHARPLINK
GAMING LTD.
Up
to [●] Ordinary Shares or Ordinary Shares Underlying Pre-Funded Warrants
Ordinary Warrants to Purchase Up to [●] Ordinary
Shares
Up
to [●] Ordinary Shares Underlying Ordinary Warrants
Pre-Funded Warrants to Purchase Up to [●] Ordinary Shares
This
is a reasonable best efforts public offering of (i) up to [●] ordinary shares (the “Shares”), par value NIS
0.60 share (the “Ordinary Shares”), or pre-funded warrants to purchase [●] Ordinary Shares (the “Pre-Funded
Warrants”), (ii) warrants (the “Ordinary Warrants”) to purchase an aggregate of up to [●] Ordinary Shares,
and (iii) [●] Ordinary Shares underlying the Ordinary Warrants, at an assumed combined public offering price of $[●]
per Share and Ordinary Warrant (assuming a public offering price equal to the last sale price of our Ordinary Shares as
reported by the Nasdaq Capital Market (“Nasdaq”) on [●], 2023). Each Ordinary Warrant is assumed to have an
exercise price of $[●] per Ordinary Share (100% of the public offering price per Share and Ordinary Warrant), will
be exercisable upon issuance, and will expire five years from the date of issuance.
We
are also offering to those purchasers, if any, whose purchase of Shares in this offering would otherwise result in any such
purchaser, together with its affiliates, beneficially owning more than 4.99% (or, at the election of such purchaser, 9.99%) of our
outstanding Ordinary Shares immediately following the consummation of this offering, the opportunity to purchase Pre-Funded Warrants
in lieu of Ordinary Shares that would otherwise result in such purchaser’s beneficial ownership exceeding 4.99% (or, at
the election of such purchaser, 9.99%) of our outstanding Ordinary Shares. The purchase price for each Pre-Funded Warrant will equal
the per share public offering price for the Ordinary Shares in this offering less the $0.001 per share exercise price of each such
Pre-Funded Warrant. Each Pre-Funded Warrant will be exercisable upon issuance and will not expire prior to exercise. For each
Pre-Funded Warrant we sell, the number of Shares we are offering will be decreased on a one-for-one basis.
For
purposes of clarity, each Share and each Pre-Funded Warrant to purchase one Ordinary Share is being sold together with
an Ordinary Warrant to purchase one Ordinary Share.
These
securities are being sold in this offering to certain purchasers under a securities purchase agreement dated [●], 2023 between
us and such purchasers. Pursuant to this prospectus, we are also offering Ordinary Shares issuable upon the exercise of Pre-Funded Warrants
and Ordinary Warrants offered hereby.
The
shares issuable upon exercise of the Pre-Funded Warrants or Ordinary Warrants will be issued upon the exercise thereof. Because
there is no minimum number of securities or minimum aggregate amount of proceeds for this offering to close, we may sell fewer than all
of the securities offered hereby, and purchasers in this offering will not receive a refund in the event that we do not sell an amount
of securities sufficient to pursue the business goals outlined in this prospectus. Because there is no escrow account and there is no
minimum offering amount, purchasers could be in a position where they have invested in our company, but we are unable to fulfill
our objectives due to a lack of interest in this offering. Also, any proceeds from the sale of securities offered by us will be available
for our immediate use, despite uncertainty about whether we would be able to use such funds to effectively implement our business plan.
The
offering of the Shares, Pre-Funded Warrants and Ordinary Warrants will terminate no later than [●], 2023; however, the Ordinary
Shares underlying the Pre-Funded Warrants and the Ordinary Warrants will be offered on a continuous basis pursuant to Rule 415
under the Securities Act of 1933, as amended (the “Securities Act”).
Our
Ordinary Shares trade on Nasdaq, under the symbol “SBET.” On September 21, 2023, the last reported sale price of our
Ordinary Shares on Nasdaq was $2.32 per share. The combined public offering price per Share and accompanying Ordinary
Warrant or per Pre-Funded Warrant and accompanying Ordinary Warrant will be determined between us and purchasers based on
market conditions at the time of pricing and may be at a discount to the current market price of our Ordinary Shares. Therefore, the
recent market price and resulting assumed public offering price used throughout this prospectus may differ substantially from
the actual offering price. None of the Ordinary Warrants or Pre-Funded Warrants are listed on a national securities exchange.
We do not intend to apply to list the Ordinary Warrants or Pre-Funded Warrants on any national securities exchange. Without an
active trading market, the liquidity of the Ordinary Warrants and Pre-Funded Warrants may be limited.
We
expect this offering to be completed within two business days following the commencement of this offering and we will deliver all securities
to be issued in connection with this offering delivery versus payment upon receipt of purchaser funds received by us.
INVESTING
IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED UNDER
THE HEADING “RISK FACTORS” BEGINNING ON PAGE 19 OF THIS PROSPECTUS AND UNDER SIMILAR HEADINGS IN ANY AMENDMENTS OR SUPPLEMENTS
TO THIS PROSPECTUS, INCLUDING OUR MOST RECENT ANNUAL REPORT ON FORM 10-K AND ANY SIMILAR SECTION CONTAINED IN ANY DOCUMENTS THAT ARE
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
We
have engaged A.G.P./Alliance Global Partners as our exclusive placement agent (“A.G.P.” or the “Placement Agent”)
to use its reasonable best efforts to solicit offers to purchase our securities in this offering. The Placement Agent has no obligation
to purchase any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities.
Because there is no minimum offering amount required as a condition to closing in this offering the actual public offering amount, placement
agent’s fee, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering
amounts set forth above and throughout this prospectus. We have agreed to pay the Placement Agent the placement agent fees set forth
in the table below and to provide certain other compensation to the Placement Agent. See “Plan of Distribution” beginning
on page 34 of this prospectus for more information regarding these arrangements.
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Per Share and Ordinary
Warrant | | |
Per Pre-Funded Warrant and Ordinary
Warrant | | |
Total | |
Public offering price | |
$ | | | |
$ | | | |
$ | | |
Placement Agent fees
(1) | |
$ | | | |
$ | | | |
$ | | |
Proceeds to us, before
expenses (2) | |
$ | | | |
$ | | | |
$ | | |
(1)
We have agreed to pay the Placement Agent a cash placement commission equal to 7.0% of the aggregate proceeds from this offering.
We have also agreed to reimburse the Placement Agent for certain expenses incurred in connection with this offering. See “Plan
of Distribution” beginning on page 34 for additional information regarding the compensation to be paid to the Placement
Agent.
(2)
The above summary of offering proceeds does not give effect to any proceeds from the exercise of the Ordinary Warrants or
Pre-Funded Warrants being issued in this offering.
Delivery
of the Shares and Pre-Funded Warrants, together with accompanying Ordinary Warrants, is expected to be made on or about [●],
2023, subject to customary closing conditions.
Sole
Placement Agent
A.G.P.
The
date of this prospectus is , 2023.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement on Form S-1 that we filed with the U.S. Securities and Exchange Commission (“SEC”)
to register the securities offered hereby under the Securities Act. We may also file a prospectus supplement or post-effective amendment
to the registration statement of which this prospectus forms a part that may contain material information relating to this offering.
The prospectus supplement or post-effective amendment may also add, update or change information contained in this prospectus with respect
to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement or
post-effective amendment, you should rely on the prospectus supplement or post-effective amendment, as applicable. Before purchasing
any securities, you should carefully read this prospectus, any post-effective amendment, and any applicable prospectus supplement, together
with the additional information incorporated by reference into this prospectus and described under the heading “Where You Can Find
More Information.” You may obtain the information incorporated by reference without charge by following the instructions under
“Where You Can Find More Information.” You should carefully read this prospectus as well as additional information described
under “Information Incorporated by Reference,” before deciding to invest in our securities.
You
should rely only on the information contained in this prospectus. We have not, and the Placement Agent has not, authorized anyone to
provide you with any information other than that contained in this prospectus. We take no responsibility for and can provide no assurance
as to the reliability of, any other information that others may give you. This prospectus may only be used where it is legal to offer
and sell our securities. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time
of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects
may have changed since that date. We are not, and the Placement Agent is not, making an offer of these securities in any jurisdiction
where the offer is not permitted.
For
investors outside the United States: We have not, and the Placement Agent has not, done anything that would permit this offering or possession
or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons
outside the United States must inform themselves about, and observe any restrictions relating to, the offering of securities and the
distribution of this prospectus outside the United States.
For
purposes of this prospectus, references to the terms “SBET,” “the Company,” “we,” “us”
and “our” refer to SharpLink Gaming Ltd., together with its subsidiaries, unless the context otherwise requires. This prospectus
and the information incorporated herein by reference include trademarks, service marks and trade names owned by us or other companies.
All trademarks, service marks and trade names included or incorporated by reference into this prospectus and the information incorporated
herein by reference are the property of their respective owners.
We
urge you to read carefully this prospectus, as supplemented and amended, before deciding whether to invest in any of the securities being
offered.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING INFORMATION
This
prospectus, any prospectus supplement and any free writing prospectus, if applicable, including the documents we incorporate by reference
herein and therein, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and
involve substantial risks and uncertainties. All statements other than statements of historical fact are forward-looking statements.
Forward-looking statements include statements regarding our plans, strategies, objectives, expectations and intentions, which are subject
to change at any time at our discretion. Forward-looking statements include our assessment, from time to time of our competitive position,
the industry environment, potential growth opportunities, the effects of regulation and events outside of our control, such as natural
disasters, wars or health epidemics. Forward-looking statements include all statements that are not historical facts and can be identified
by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,”
“hopes,” “intends,” “may,” “plans,” “potential,” “predicts,”
“projects,” “should,” “will,” “would” or similar expressions.
Forward-looking
statements are merely predictions and therefore inherently subject to uncertainties and other factors which could cause the actual results
to differ materially from the forward-looking statement. These uncertainties and other factors include, among other things:
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unexpected
technical and marketing difficulties inherent in major research and product development efforts; |
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our
ability to remain a market innovator, to create new market opportunities, and/or to expand into new markets; |
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the
potential need for changes in our long-term strategy in response to future developments; |
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our
ability to attract and retain skilled employees; |
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our
ability to raise sufficient capital to support our operations and fund our growth initiatives; |
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unexpected
changes in significant operating expenses; |
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changes
in the supply, demand and/or prices for our products and services; |
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increased
competition, including from companies which may have substantially greater resources than we have; |
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the
impact of potential security and cyber threats or the risk of unauthorized access to our, our customers’ and/or our business
partners’ information and systems; |
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changes
in the regulatory environment and the consequences to our financial position, business and reputation that could result from failing
to comply with such regulatory requirements; |
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our
ability to continue to successfully integrate acquired companies into our operations; |
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varying
attitudes towards sports and online casino games and poker (“iGaming”) data providers and betting by foreign governments; |
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failure
to develop or integrate new technology into current products and services; |
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unfavorable
results in legal proceedings to which we may be subject; |
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failure
to establish and maintain effective internal control over financial reporting; and |
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general
economic and business conditions in the United States and elsewhere in the world, including the impact of inflation. |
PROSPECTUS
SUMMARY
The
following summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more
detailed information and financial statements included elsewhere in this prospectus. It does not contain all the information that may
be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under
“Risk Factors” and the financial statements and related notes and other information that we incorporate by reference herein,
including our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and in our other reports filed from time to time
with the SEC.
Overview
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 includes 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:
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● |
COLLECTS,
analyzes and leverages deep learning of behavioral data relating to individual fans; |
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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; |
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CONVERTS
passive fantasy sports and casual sports fans into sports bettors on a fully automated basis; and |
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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. |
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 Ltd. Beginning in 2022, we sought a buyer
for the business; and on December 31, 2022, we completed the sale of this business to Israel-based MTS Technology 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 September 2023, the Company’s state regulatory initiatives have resulted in SharpLink being licensed and/or authorized to operate
in 26 U.S. states, the District of Columbia, Puerto Rico and Ontario, Canada, which represents nearly 100% 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.
During
the fiscal years ended December 31, 2022 and 2021, we generated revenues of $7,288,029 and $2,635,757, respectively, representing an
increase of 177% on a comparative year-over-year basis.
Sports
Gaming Client Services
SharpLink’s
Client Services division designs, develops, tests, hosts and manages online Free-To-Play (“F2P”) games and mobile apps for
a licensing fee. We also integrate sports betting markets for major league and media clients for a licensing fee. We hold longstanding
F2P game development agreements with several of the biggest names in sports, including Turner Sports, NBA, NFL, PGA TOUR and the Women’s
Tennis Association.
In
2022, our Client Services group supported more than two million players and delivered over 40 bespoke F2P games to more than a dozen
clients. To highlight a few, for the past 13 years, we have produced the official NCAA March Madness Live bracket challenge in collaboration
with Turner Sports; delivered three F2P games for the NBA, including the very popular Playoffs Bracket Challenge; built multiple game
titles for both NASCAR and the PGA Tour, extending our working relationship with those leagues to over ten years each; and created the
Stanley Cupple game for the NHL – a game similar to the social word game sensation, Wordle. In addition, we launched two
games for global betting giant Tipico in anticipation of Ohio becoming a legal betting state on January 1, 2023. The first was a highly
interactive, in-stadium digital scratch-off game revealing three in-game proposition bets, or props, for fans attending home games of
the Columbus Crew held through the end of the 2022 MLS season; and the second launched in mid-November was the Win Ohio football
props game which challenged players to choose from a slate of props available on college and NFL football games each weekend through
the 2022 NFL regular season.
Subsequent
to the end of 2022, BetMGM named SharpLink as a developer of F2P games and contests for the leading sports betting and iGaming operator.
We will leverage our Client Services team’s game development expertise and the integration of our C4 technology to launch a portfolio
of diverse and entertaining F2P games designed to reach, engage and drive engagement of sports fans to sports bettors across the jurisdictions
where BetMGM is currently licensed to be operative. SharpLink is currently pursuing additional new business arrangements with other top
professional sports leagues, teams, sportsbooks and media companies in the United States.
SportsHub
Games Network/Fantasy Sports
On
December 22, 2022, SharpLink completed its merger with SportsHub. Originally founded in 2015 by Rob Phythian, our current Chief Executive
Officer, and based in Minneapolis, SportsHub 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 platform currently reaches
more than two million fantasy sports fans who spent approximately $40 million on our portfolio of digital gaming experiences and contests
in 2022.
SportsHub’s
platform currently includes the following line-up of fantasy sports-related assets:
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National
Fantasy Championships (nfc.shgn.com) – the premier operator of high stakes fantasy football, baseball, basketball and hockey
contests with grand prize payouts as high as $250,000 and featuring the industry’s premier live draft experience in Las Vegas
and New York; |
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Bestball10s
(bestball10s.shgn.com) – the hugely popular season-long best ball fantasy league format that provides users with the fun
of drafting their teams without the burden of managing their roster every week; |
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Fanball
(fanball.com) – one of the top daily fantasy sports destinations where NFL, MLB and NBA fans compete against similarly
skilled players in draft, auction and salary cap style daily fantasy sports contests; |
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Fantasy
National Golf Club (fantasynational.com) – a provider of world class data analysis and research tools for fantasy golf
players and sports bettors; |
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WhatIfSports
(whatifsports.com) – one of the leading sports simulation sites featuring online simulation games and predictions
for MLB, NFL, NHL, NBA, NCAA sports and more, allowing players to compete in a full season with their respective dream teams drafted
from past and present seasons; and |
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LeagueSafe
(leaguesafe.com) – an online platform for private fantasy leagues to collect entry fees, provide transparency into
league transactions, secure funds throughout the season, encourage timely payment of entry fees, and facilitate end-of-season payouts.
LeagueSafe is the trusted source for collecting and protecting private fantasy league dues since 2008 and attracts over 150,000 paying
users each year. |
SportsHub’s
Multiple Revenue Channels
Net
Gaming Revenues
SharpLink
collects fees from customers for daily and season-long online fantasy sports games in advance and recognizes the related fees over the
term of the online fantasy game. Net gaming revenue means the gross revenue generated in a transaction reduced by all applicable marketing
and platform costs, progressive contributions, gaming taxes, and player-related costs.
Fee
Revenues
We
collect various forms of fee revenue from customers using our LeagueSafe platform. Our performance obligation is to provide these customers
with an online platform to collect entry fees, provide transparency into league transactions, encourage timely payment of entry fees,
safeguard funds during the season and facilitate end-of-season prize payouts. Fee revenue related to payment transactions is deferred
until the end of the specific season. Other types of fee revenue are recognized on a transactional basis when users complete transactions
or when a customer’s account becomes inactive under the terms of the user agreement.
Subscription
Revenues
Our
WhatIfSports games provide sports simulation software that our users pay a subscription fee to access over a period of time. SharpLink
provides and maintains the software throughout the duration of the season, which constitutes a single performance obligation and revenue
is recognized over the term of the service. When a customer subscribes to Fantasy National Golf Club, SharpLink also collects a subscription
fee. Our performance obligation under these contracts is to provide our users with access to our intellectual property. Revenue is initially
deferred and recognized ratably over the subscription period.
Affiliate
Marketing Services Segments
Affiliate
Marketing Services – International
On
December 31, 2021, in a combination of cash and stock transaction, SharpLink acquired certain assets of FourCubed, including FourCubed’s
iGaming and affiliate marketing network, known as PAS.net (“PAS”). For more than 16 years, PAS has focused on delivering
quality traffic and player acquisitions, retention and conversions to U.S. regulated and global iGaming operator partners worldwide.
In fact, PAS won industry recognition as the European online gambling industry’s Top Affiliate Manager, Top Affiliate Website and
Top Affiliate Program for four consecutive years by both igambingbusiness.com and igamingaffiliate.com. The strategic acquisition of
FourCubed brought SharpLink an industry respected operating team with decades of combined experience in conversion through affiliate
marketing services and in securing recurring net gaming revenue (“NGR”) contracts with many of the world’s leading
iGaming companies, including Party Poker, bwin, UNIBET, GG Poker, 888 poker, betfair and others.
In
May 2022, SharpLink announced that its wholly owned subsidiary Trendfront Marketing International Limited, acquired in the FourCubed
transaction, was selected by WPT Global to manage the new WPT Global affiliate program as its Master Affiliate (“Master Affiliate”).
As the Master Affiliate, SharpLink will receive a second tier commission from the results that its network of referred affiliated marketers
are generating. WPT Global is a new online gaming operator that has licensed the World Poker Tour brand (“WPT”) to market
and promote its gaming platform. Since its launch in 2003, the WPT has been an iconic brand at the forefront of the global poker community.
WPT is the premier name in internationally televised gaming and entertainment with brand presence in land-based tournaments, television,
online and mobile. With the April 2022 introduction of WPT Global in nearly 100 countries worldwide, fans and players are now able to
take their game play to the next level, playing real money games on WPT Global’s online platform, home to the largest pool of recreational
players in online poker and designed for fun, fair and secure play.
Affiliate
Marketing Services – United States
As
part of our strategy to deliver unique fan activation solutions to our sportsbook and casino partners, in November 2022, we executed
the first phase of a planned multi-phase roll-out of our U.S.-focused D2P business with the launch of 15 state-specific affiliate marketing
websites. These state-specific domains are 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. As of September 2023,
we own and operate sites serving 18 U.S. states (Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Louisiana, Maryland, Michigan, New
Jersey, New York, Ohio, Pennsylvania, Puerto Rico, Tennessee, Virginia, West Virginia and Wyoming). As more states legalize sports betting,
our portfolio of state-specific affiliate marketing properties will expand to include them. We largely utilize search engine optimization
and programmatic advertising campaigns to drive traffic to our D2P sites.
In
the first quarter of 2023, we announced that in connection with our national audience aggregation and phased D2P revenue growth initiatives,
phase two of our plan was implemented when we launched SharpBetting.com, a sports betting education hub for experienced and novice sports
fans. SharpBetting.com is a robust educational website dedicated to teaching new sports betting enthusiasts the fundamentals of, and
winning strategies for, navigating the legal sports betting landscape.
The
third and final planned phase of our D2P strategy will focus on launching an entirely new content experience in the fall of 2023, which
we expect will bring all our affiliate marketing assets together in a hyper-local, fan-centric experience. Our vision is to power a targeted
and personalized sports betting and iGaming environment that organically introduces all fans to our marketing partners through relevant
tools, free-to-play games and high quality content – all in a credible environment. The result is expected to be a premium monetization
solution that allows us to achieve our audience building objectives while delivering quantifiable conversion results for our sportsbook
and casino partners.
SharpLink’s
Affiliate Marketing Services – U.S. group also works closely with a wide range of industry leading sportsbooks to receive, normalize
and monitor their betting markets data; and then provides an API to give our partners near real-time access to the latest betting markets
and their prices. Additionally, SharpLink manages the ongoing updates to these APIs and markets, removing the technical headache of changing
and evolving specifications in a fast-moving industry. The data for every market received from a sportsbook is presented with additional
market metadata, enabling partners to quickly cross-reference similar markets across different operators and removing the need for them
to parse and map new and changing market names for each sportsbook. Every betting market is also cross-referenced to the relevant sporting
entity, allowing SharpLink’s clients to access every market for Patrick Mahomes II, for example, in just one API call. SharpLink’s
technologies remove the need for developers to parse and understand these sporting relationships across multiple sports, instead enabling
them to leverage existing data sources, such as Sportradar, to automatically select the right markets.
Affiliate
Marketing Services Revenues
SharpLink
generates revenue from both our Affiliate Marketing Services International and United States segments by earning a commission from sportsbooks
and casino operators on new depositors directed to them via our PAS.net affiliate marketing network in international markets and via
our proprietary D2P websites in America. Depending on the terms of our marketing agreement with each operator and the type of license
SharpLink has been granted in a particular state by its regulator, commissions may be paid in the form of cost per acquisition (“CPA”)
or by sharing in NGR generated by the referred depositor. In addition, our Affiliate Marketing Services – U.S. segment provides
sports betting data (e.g., betting lines) to sports media publishers in exchange for a fixed fee.
In
November 2021, we and Quintar, Inc. (“Quintar”), the developer of the world’s first Augmented Reality (“AR”)
centered sport fan technology platform, jointly announced our intent to partner to integrate SharpLink’s C4 sports betting conversion
technology with Quintar’s Q.Reality technology to produce an AR experience that combines live sporting events with real-time
sports betting for sports fans in legal betting states – whether they are at the event or viewing live game action from home on
the television. Quintar is currently focused on implementing its phased development roadmap for its Q.Reality platform and will
look to integrate SharpLink’s sports betting conversion technology into its capabilities as it further evolves.
Market
Opportunity
Online
Sports Betting
Prior
to May 2018, the Professional and Amateur Sports Protection Act of 1992, or “PASPA,” restricted the ability of individual
states to legalize sports betting in the United States. However, in May 2018, the U.S. Supreme Court ruled that PASPA violated the United
States Constitution. As a result of the Supreme Court’s decision, the federal restrictions on sports betting under PASPA were no
longer enforceable, giving individual states the power to legalize sports betting. Since PASPA overturned the federal ban on regulated
sports wagering outside of Nevada, all but 16 states in the country have legalized sports betting in some capacity and have collectively
benefited from over $2.6 billion generated in taxes/jurisdiction revenue from June 2018 through March 14, 2022. (Source: Legal Sports
Report, March 14, 2023, https://www.legalsportsreport.com/sports-betting/revenue/).
According
to the latest analysis from PlayUSA published in December 2022, the U.S. sports betting market is poised for a record-breaking
year in 2023. In total, PlayUSA reports that it expects legal states to generate nearly $120 billion in handle and nearly $9 billion
in revenue during the year. Considering that the total handle wagered in November 2022 for all legal states hit a new record high, cresting
$10 billion for the month, the 2023 growth outlook for U.S. sports betting is on pace to meet and, perhaps, exceed this forecast.
In
February 2023, the American Gaming Association (“AGA”) reported that a record 50.4 million American adults were expected
to wager $16 billion on Super Bowl LVII alone – with 30 million projected to place bets online. The total amount expected to be
wagered is more than double the amount from 2021. Hard data was used to back up the AGA’s predictions of a record-setting betting
market for this year’s game. GeoComply, which handles nearly all the online betting traffic for the U.S. sports betting market
to verify a customer is in a particular location where such bets are legal, said it had recorded over 550 million geolocation checks
during the NFL playoffs from January 14-29, 2023; and subsequently announced on February 12, 2023 that it had conducted a record
100 million geolocation checks across 23 U.S. states and the District of Columbia with legal, online sports betting during Super LVII
weekend.
iGaming
iGaming
is any kind of online betting that wagers on the future outcome of a game or event. Sports betting, online casinos, poker and eSports
all fall under the iGaming definition. However, the legality of iGaming has different timelines around the world, and the U.S. is one
of the most recent to establish a regulated iGaming market. This compares to the United Kingdom, which has enjoyed regulated online sports
betting, casinos and poker sites since 2005. In fact, as of the end of 2022, just seven U.S. states have legalized online casino games,
poker or both: Connecticut, Delaware, Michigan, Nevada, New Jersey, Pennsylvania and West Virginia. Although yet nascent, the U.S. iGaming
industry presents a compelling growth opportunity for industry stakeholders as more states seek to legalize, regulate and tax iGaming.
Free-To-Play
Sports Games
As
sports betting continues to proliferate in the United States, F2P sports games continue to play an important role in allowing operators
to offer engaging services in states where sports betting is not legal, attract and educate prospective new sports bettors where it is
legally permitted, and provide a host of other benefits to operators, including building brand awareness and capturing big data and deep
behavioral insights on would-be bettors. F2P is an opportunity for players to engage with games and products for fun or practice, sometimes
in real-time. F2P provides the same entertaining gameplay, even offering bonus rewards or prizes found in real-money games, while allowing
game producers, brands and operators to cultivate audience. Moreover, F2P allows operators to tap into sports fans who have yet to engage
in real money sports betting or DFS, but are intrigued by the prospect of learning how to become real online sports bettors — something
they can do by playing F2P games.
As
the sports betting landscape continues to evolve, the ways fans interact with the various games that interest them will change as well.
Fans are looking for innovation not only in the game, but how they interact with it. According to an article published in Global
Gaming Business Magazine, “The old saying goes that innovation is the mother of invention. The same is true of the sports
betting market of the future. Today’s bettors and those in the future are looking for innovation in their experience. F2P allows
operators to test various methods and innovate the experience to see what resonates with sports fans who may want to bet, if they don’t
already. Sometimes the fan is forgotten in the experience, and creating a conversation between the fan and the game through an F2P offering
can ensure that the fan is kept in mind.”
Sports
are about fan interaction, creating a conversation between fellow fans and opposing fans alike, and building that relationship between
the fan, the team and the sports that they love. By creating that dialogue, organizations can build further affinity for the sport and
keep the fans engaged at a higher level, whether they are in-venue, watching from the comfort of their own home, or sitting at a bar
with other fans. F2P also allows operators to find a more reasonable acquisition cost per player in a competitive market that has some
operators providing several hundreds, if not thousands, of dollars in promotional play, providing an F2P option early and continuously
can bring in players at a much lower cost and build enduring affinity with the player.
Fantasy
Sports
On
a global basis, the Fantasy Sports Market was valued at $21.39 billion in 2021 and is expected to reach $44.07 billion, with an estimated
CAGR of 12.92% over the forecast period of 2022-2027, according to a report published by market research firm Mordor Intelligence in
June 2022. In this report, the author states, “The increasing popularity of players, the emergence of sports leagues, growing investment
in digital and Internet infrastructure and the launch of fantasy sports applications as other means to connect with fans’ favorite
sports are some of the factors driving the market’s growth.”
In
September 2022, research firm Market Decipher forecasted in its report titled, “Global Fantasy Sports Market Size, Statistics,
Trend Analysis and Forecast Report, 2022-2032,” that the industry will reach $92.61 billion by 2032 with North America and
India expected to lead the growth. In fact, Technavio, another independent market research firm, is projecting that 41% of the
growth in the global industry will originate in North America between its forecasted period of 2021-2026.
Based
on its May 2022 survey of 2,000 American adults, research firm Leger reported that approximately 20% of all Americans over the
age of 18, or approximately 50.4 million people, now play fantasy sports, an increase of six million versus 2021 when the U.S. sports
industry was still in the throes of the COVID pandemic. The Leger study also showed that DFS continued to grow with over 30 million U.S.
adults playing – up 12% over 2019 when the number was last calculated. Data from the study also reflected that the crossover between
DFS players and season-long fantasy players is up significantly, too. Looking strictly at key behavioral indicators of a fantasy sports
player, the NFL, MLB and NBA continue to be the most popular sports leagues with players — with eSports making a huge jump among
DFS players.
Affiliate
Marketing
Search
for odds or lines on any given match-up, and the vast majority of search results will spring from affiliate marketing sites. The affiliate
market has a long history of operating in tandem with sports betting, reaching back to much-more-mature markets like the United Kingdom
and countries throughout Europe – or even beyond locally regulated online betting – and into the early annals of U.S. sports
betting upon PASPA’s 2018 repeal. However, today, the value of a modern affiliate marketer goes far beyond the number of first-time
depositors they generate in a month. Rather, they also provide expert feedback, educate new players and offer a low-risk marketing alternative
to traditional advertising, as they are paid on performance.
Virtually
every online gambling operator in the Unites States utilizes affiliate marketing, also referred to as performance marketing, to get their
brand in front of the most valuable customers — the high intent customers. Many of the end-users that browse an affiliate website
have already decided that they are going to open an account with a sportsbook and wager online; however, they have not yet decided where
they want to do that.
Due
to technical tools and features like digital marketing, analytics and the extended usage of cookies, affiliate marketing in sports betting
has become extremely cost effective to implement and measure, making it a billion-dollar industry. In the U.S., affiliate marketing spending
was estimated to reach $8.2 billion in 2022 and is projected to grow to reach approximately $13 billion in 2023, according to statistics
published by Demand Sage, an advanced business intelligence solutions company. Other statistical data supplied by Demand Sage include
the following:
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Affiliate
Marketing is used by 83% of marketers to raise brand recognition; |
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Bloggers
and review sites are the leading channels for affiliate marketing; |
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Some
of the top businesses in the world get 5-30% of their Internet revenue via affiliate marketing; |
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Affiliate
programs are the most important client acquisition method for 40% of U.S. firms; and |
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The
future of affiliate marketing is inextricably linked to the Internet market in the United States; according to available statistics,
the U.S. has the largest share of the worldwide affiliate marketing accounting for 39%. |
Competition
A
number of businesses exist in the markets in which SharpLink operates – namely the B2B provision of sports data-driven technology
and related services to the sports betting and iGaming industries. These businesses generally fall into three categories: small companies
with some similar products but with minimal distribution; companies that acknowledge official rights but lack meaningful scale; and genuine
competitors that offer similar products and services to the same target clients. SharpLink considers its most direct and relevant competitors
to be Gambling.com, Catena Media, Bettor Collective, Genius Sports, Sportradar, Fresh8Gaming (acquired by Sportradar in March 2021) and
MetaBet.
The
specific industries in which we operate are characterized by dynamic customer demand and technological advances, and there is significant
competition among sports betting and iGaming affiliate marketers, F2P game developers and fantasy sports property operators. A number
of established, well-financed companies producing online gaming and/or sports betting conversion products and services compete with our
product offerings, and other well-capitalized companies may introduce competitive services. There has also been consolidation among competitors
in the sports betting and iGaming industries and such consolidation and future consolidation could result in the formation of larger
competitors with increased financial resources and altered cost structures, which may enable them to offer more competitive products
and services, gain a larger market share, expand their product and service offerings and broaden their geographic scope of operations.
In
its sports gaming betting services business, SharpLink and one or more of its competitors may often simultaneously serve the same clients.
SharpLink’s competitors have their own portfolio of technology products and services, and sportsbooks rarely agree to have exclusive
agreements with just one provider as this prevents them from offering a broad range of solutions, placing them at a competitive disadvantage.
These dynamics result in a highly competitive industry.
Our
Competitive Strengths
SharpLink
believes that the principal differentiating factors in the sports data industry include the breadth and depth of its market-centric portfolio
of conversion solutions, reliability of key services, relationships with sportsbooks and leagues, ease of integration and scalability.
SharpLink’s products, services, experience, industry relationships and corporate culture allow it to compete effectively across
all these factors. By delivering what SharpLink believes is an unprecedented level of user engagement and stickiness for our valued clients
made possible by our proprietary C4 technology solutions, we help our clients reduce their customer acquisition costs and achieve significantly
higher customer lifetime values.
Key
Growth Strategies
The
key elements of SharpLink’s long-term growth strategy are focused on:
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Continuing
to invest in the development and expansion of our proprietary C4 conversion technologies and tech-enabled sports marketing solutions.
Our research and development efforts are critical building blocks of us, and we intend to continue investing in our own innovations,
pioneering new and enhanced products and services that lead to our converting millions of sports fans into sports and iGaming depositors
for our sportsbook partners. We believe that by investing in research and development, we can perpetuate the trust and fidelity that
we have earned with our customers and with sports fans by continuing to deliver innovative highly immersive fan engagement experiences
and quantifiable, cost-effective conversion solutions. |
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Growing
our audience of sports fans engaging with our current portfolio of real-money fantasy sports,
F2P games and local affiliate marketing web properties. With our differentiated brands
and organic virality, strong funnel of new customers and continued focus on marketing efficiencies,
we remain intent on monetizing the growing number of U.S. sports fans passionate about the
sports, teams and players they love – and providing them with the ability to fully
express their personal fandom through direct connectivity with the greater sports ecosystem
– ultimately expanding from conversion to sportsbook and casino depositors to customers
of live sports event tickets, sports merchandise and sports streaming services, among other
in-demand products and services.
Our
current digital platform, which is currently reaching over two million fantasy game players, and another two million through our
bespoke F2P games created for our clients, is enabling SharpLink to connect, engage, track and deliver contextualized and personalized
content designed to entertain, educate and convert them into sports bettors, real money casino players and active sports brand consumers.
This platform also provides us with valuable quantitative and qualitative customer data that we will continue to leverage to inform
all aspects of our business operations – from technology and product development to marketing and formation of strategic new
business partnerships. |
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Expanding
our SportsHub/Fantasy Sports platform to further penetrate the emerging U.S. online sports betting market. In October 2021, SportsHub
and we integrated our C4 sports betting conversion technology with National Fantasy Championships (“NFC”) and Fanball
Daily Fantasy Sports gaming websites to proactively engage and convert this high-stakes fantasy game players into sports bettors
in states where online sports betting has been legalized. |
A
recent June 2022 study performed by polling firm Leger for the Fantasy Sports & Gaming Association found that 69.5 million adults
in the United States either bet on sports or play some type of fantasy sports. The survey also estimated that 59% of that population
are doing both. The Leger study showed that 98% of fantasy sports players who started betting also continued to play fantasy sports and
63% of sports bettors are now using the Internet to place their bets. This suggests that there exists an opportunity for SportsHub to
engage and convert its growing base of fantasy sports games into sports bettors could lead to pronounced revenue growth for SportsHub
in the future through the addition of net gaming revenues earned from sports betting on its platform or customer acquisition fees earned
through direct referrals of new sports bettors to sportsbooks.
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Designing
and implementing new highly engaging fantasy sports games and adopting advanced technologies to enhance user experience. We will
continue to expand and enhance our portfolio of fantasy sports games to increase revenues and drive deeper market penetration of
the global Fantasy Sports Market. We also believe that there is an opportunity to leverage artificial intelligence and machine learning
to drive even greater efficiencies in our customer acquisition and retention strategies and materially enhance user experience for
our customers. |
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Effectively
managing our growth portfolio for long-term value creation. Our production and development programs present numerous investment
opportunities that we believe will deliver long-term growth by providing our customers with valuable new capabilities. We evaluate
each opportunity independently, as well as within the context of other investment opportunities, to determine its relative cost,
timing and potential for generation of returns, and thereby its priority. This process helps us to make informed decisions regarding
potential growth capital requirements and supports our allocation of resources based on relative risks and returns to maximize long-term
value creation, which is the key objective of our growth strategy. We also review our portfolio on a regular basis to determine if
and when to narrow our focus on the highest potential growth opportunities. |
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Expanding
our reportable business segments to help provide the industry and our stakeholders with the greatest possible transparency into our
business and our multiple revenue channels. As the U.S. sports betting and iGaming industries continue to evolve and we rise
to the challenge of pioneering new tech-led solutions for the expanding number of specific markets we serve or intend to serve in
the future, we expect to continue refining how we segment our business-building platform to ensure that we are providing optimal
insight into our performance by individual business segments when we report our future quarterly operating results. |
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Fostering
our entrepreneurial culture and continue to attract, develop and retain highly skilled personnel. Our Company’s culture
encourages innovation and entrepreneurialism, which helps to attract and retain highly skilled professionals. We intend to preserve
this culture to nurture the design and development of the innovative, highly technical system solutions that give us our competitive
advantage. |
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Growing
through strategic acquisitions and new markets. Capitalizing on the platform infrastructure that we have built to support our
portfolio of C4 technologies, fantasy sports and F2P gaming properties and affiliate marketing assets, we plan to actively look to
identify and pursue new opportunities to vertically integrate other synergistic sports technologies into our product mix to fuel
future revenue growth and increase shareholder value. |
Government
Regulation
We
operate in various jurisdictions and our business is subject to extensive regulation under the laws, rules and regulations of the jurisdictions
in which we operate. Violations of laws or regulations in one jurisdiction could result in disciplinary action in that and other jurisdictions.
We
have a progressive U.S. licensing strategy. We are currently licensed or authorized to provide fantasy sports and online sports betting
services in 24 U.S. states, the District of Columbia, Puerto Rico and Ontario, Canada. State gaming authorities may, subject to certain
administrative procedural requirements, (i) deny an application, or limit, condition, revoke or suspend any license issued by them;
(ii) impose fines, either on a mandatory basis or as a consensual settlement of regulatory action; (iii) demand that named individuals
or shareholders be disassociated from a gaming business; and (iv) in serious cases, liaise with local prosecutors to pursue
legal action, which may result in civil or criminal penalties. In those states that currently require a license or registration for Daily
Fantasy Sports (“DFS”) operations, SharpLink has either obtained the appropriate license or registration or a provisional
license from the relevant regulatory authority, or is operating pursuant to a grandfathering clause that allows operation pending the
availability of licensing applications and subsequent grant of a license. In the United States, our DFS licenses are generally granted
for a predetermined period of time – typically ranging from one to four years – or require documents to be supplied on a
regular basis in order to maintain our licenses.
Among
others, applicable laws include those regulating privacy, data/cyber security, data collection and use, cross-border data transfers,
advertising regulations and/or sports betting and online gaming laws and regulations. These laws impact, among other things, data collection,
usage, storage, security and breach, dissemination (including transfer to third parties and cross-border), retention and destruction.
Certain of these laws provide for civil and criminal penalties for violations.
The
data privacy and collection laws and regulations that affect SharpLink’s business include, but are not limited to:
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U.S.
federal, state and local data protections laws such as the Federal Trade Commission Act and similar state laws; |
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state
data breach laws and state privacy laws, such as the California Consumer Privacy Act, the California Consumer Privacy Rights Act,
and the Stop Hacks and Improve Electronic Data Security Act of New York; and |
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other
data protection, data localization and state laws impacting data privacy and collection. |
Other
regulations that affect SharpLink’s business include:
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U.S.
state laws regulating sports betting, fantasy sports and online gaming and related licensing requirements; |
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laws
regulating the advertising and marketing of sports betting, including but not limited to the U.S. Federal Trade Commission Act; |
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laws
and regulations relating to antitrust, competition, anti-money laundering, economic and trade sanctions, intellectual property, consumer
protection, accessibility claims, securities, tax, labor and employment, commercial disputes, services and other matters; and |
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other
international, domestic federal and state laws impacting marketing and advertising, including but not limited to laws such as the
Americans with Disabilities Act, the Telephone Consumer Protection Act of 1991, state telemarketing laws and regulations, and state
unfair or deceptive practices acts. |
For
more detailed information regarding government regulations that has historically affected or may affect our business in the foreseeable
future, please refer to “Risk Factors.”
Compliance
SharpLink
has implemented (and is committed to continually refining and enhancing) a holistic internal compliance program to help ensure that we
remain in full compliance with state regulatory licensing requirements imposed on us in connection with our business operations. Compliance
is an important cornerstone of our growth strategy and we are committed to building our business and our reputation by adhering to the
highest compliance standards.
Intellectual
Property
Intellectual
property rights are important to the success of SharpLink’s business. SharpLink relies on a combination of database, trademark,
trade secret, confidentiality and other intellectual property protection laws in the United States and other jurisdictions, as well as
license agreements, confidentiality procedures, non-disclosure agreements with third parties and other contractual protections, to protect
its intellectual property rights, including its database, proprietary technology, software, know-how and brand. In the United States,
SharpLink has filed trademark applications, currently hold several trademarks and domain names and, in the future, it may acquire patents,
additional trademarks and domain names. SharpLink has also entered into license agreements, data rights agreements and other arrangements
with sports organizations for rights to collect and supply their sports data. These agreements typically have terms of several years
and are subject to renewal or extension. As of September 21, 2023, SharpLink owns two patents, 22 registered trademarks in the United
States and 450 domain name registrations.
It
has not always been, and in the future may not be, possible or commercially desirable to obtain registered protection for SharpLink’s
products, software, databases or other technology. In such situations, SharpLink relies on laws governing protection of unregistered
intellectual property rights, confidentiality and/or contractual exclusivity of and to underlying data and technology to prevent unauthorized
use by third parties. SharpLink uses Open Source Software in its services and periodically reviews its use of Open Source Software to
attempt to avoid subjecting its services and product offerings to conditions SharpLink does not intend to impose on them.
SharpLink
controls access to and use of its data, database, proprietary technology and other confidential information through the use of internal
and external controls, including contractual protections with employees, contractors, clients and partners. SharpLink requires its employees,
consultants and other third parties to enter into confidentiality and proprietary rights agreements, and it controls and monitors access
to its data, database, software, documentation, proprietary technology and other confidential information. SharpLink’s policy is
to require all of its employees and independent contractors to sign agreements assigning to it any inventions, trade secrets, works of
authorship, developments, processes and other intellectual property generated by them on its behalf and under which they agree to protect
its confidential information. In addition, SharpLink generally enters into confidentiality agreements with its clients and partners.
Human
Capital Resources
As
of September 21, 2023, SharpLink employed a total of 66 full-time employees, including seven in general and administrative,
ten in sales/marketing/customer support, and 49 in product development. SharpLink outsources certain employment benefits
and other employee-related administrative functions to a third party service provider, which serves as a co-employer of its employees
for these purposes. None of SharpLink’s employees are currently represented by a labor union or covered by a collective bargaining
agreement, and SharpLink’s management believes that the company’s relations with its employees are good.
We
acknowledge that our employees are our most valued asset and the driving force behind our success. For this reason, we aspire to be an
employer that is known for cultivating a positive and welcoming work environment and one that fosters growth, provides a safe place to
work, supports diversity and embraces inclusion. To support these objectives, our human resources programs are designed to develop talent
to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, benefit
and perquisite programs; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent
and facilitate internal talent mobility to create a high performing, diverse workforce; engage employees as brand ambassadors of our
products; and evolve and invest in technology, tools and resources to enable employees at work.
Properties
SharpLink
occupies approximately 1,929 square feet of office space in Minneapolis, Minnesota, which also serves as its corporate headquarters.
Pursuant to a lease agreement that expires in October 2028, the lease provides for annual lease payments of $33,000.
SharpLink
also holds a lease for 2,200 square feet of office space located in Collinsville, Connecticut pursuant to a lease agreement with an initial
term that expires in December 2023, subject to a three-year right of SharpLink to extend. The lease provides for annual lease payments
of approximately $38,000. This facility is indirectly owned by Chris Nicholas, SharpLink’s Chief Operating Officer and member of
its Board of Directors. See “Transactions with Related Persons” below.
SharpLink
believes its current facilities will be adequate to meet its needs. It does not own any real property for use in its operation or otherwise.
Recent
Developments
Nasdaq Notice
On
May 23, 2023, SharpLink received a notice (the “Notice”) from the staff of the Listing Qualifications Department at Nasdaq
that it is no longer in compliance with the equity standard for continued listing on Nasdaq. Nasdaq Listing Rule 5550(b)(1) requires
listed companies to maintain shareholders’ equity of at least $2,500,000 under the net equity standard (the “Nasdaq
Rule”). SharpLink does not meet the alternative standards for market value of listed securities or net income from continuing operations.
Nasdaq
provided the Company with 45 calendar days, or until July 7, 2023, to submit a plan to regain compliance with the Nasdaq Rule. The Company
timely submitted its plan and relevant materials to Nasdaq and requested an extension through November 20, 2023 to evidence compliance
with the Nasdaq Rule. On August 3, 2023, the Company received a determination letter from Nasdaq advising it that Nasdaq granted the
Company an extension to regain compliance with the Nasdaq Rule, and that on or before November 20, 2023 the Company must take the actions
set forth in the plan and opt for one of the two alternatives to evidence compliance with the Nasdaq Rule. The consummation of this
offering is part of the actions set forth in the plan to regain compliance with the Nasdaq Rule.
If
the Company fails to evidence compliance upon filing its periodic report for the year ended December 31, 2023, with the SEC, the Company
may receive a written notification from the Staff that its securities will be delisted. At that time, the Company may appeal the Staff’s
determination to a Hearings Panel.
Extraordinary
Meeting of Shareholders to be Held
On
September 14, 2023, SharpLink filed a preliminary proxy notice and proxy statement in connection with its planned Extraordinary General
Meeting of Shareholders to be held in October. At the Meeting, SharpLink’s shareholders will be asked to vote to adopt an
amendment to the Company’s amended and restated articles of association (the “Articles”) to increase the 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 to approve a corresponding amendment to the Company’s Memorandum of Association.
The
primary purpose of this proposal is to provide sufficient authorized Ordinary Shares for SharpLink to consummate this offering, which
is part of the plan to regain compliance with the Nasdaq Rule. As disclosed in the Proxy Statement and as set forth above, in order to
regain compliance with the Nasdaq Rule, SharpLink will need to complete an equity offering prior to November 20, 2023. In addition, the
increase in the authorized shares is also necessary to ensure the availability of a sufficient number of authorized Ordinary Shares for
possible future conversion of convertible financial instruments into Ordinary Shares, or the restructuring of Company debt, and will
allow the Company to issue additional Ordinary Shares for various corporate purposes, including but not limited to, financings, potential
strategic transactions, including mergers, acquisitions, strategic partnerships, joint ventures, divestitures, and business combinations,
as well as other general corporate transactions, without the expense and delay of arranging another extraordinary meeting of shareholders.
Corporate
History and Transactions
Go-Public
Merger with Mer Telemanagement Solutions Ltd.
Formerly
known as Mer Telemanagement Solutions Ltd. (“MTS”), the Company was incorporated as a public limited liability company under
the laws of the State of Israel in December 1995. The Company continues to operate under such laws and associated legislation of an Israeli
business. In July 2021, MTS completed a merger between New SL Acquisition Corp., its wholly owned subsidiary, and SharpLink, Inc. (“Old
SharpLink”) (the “MTS Merger”). In the MTS Merger, Old SharpLink was treated as the acquirer for accounting purposes
because, among other reasons, its pre-merger shareholders held a majority of the outstanding shares of the Company immediately following
the merger. After the merger, the Company changed its name from Mer Telemanagement Solutions Ltd. to SharpLink Gaming Ltd. and its NASDAQ
ticker symbol from MTSL to SBET.
FourCubed
Acquisition
On
December 31, 2021, in a combination of cash and stock transaction, we acquired certain assets of 6t4 Company, a Minnesota corporation
and FourCubed Management, LLC, a Delaware limited liability company (collectively “FourCubed”), including FourCubed’s
iGaming and affiliate marketing network, known as PAS.net. For more than 16 years, FourCubed provided its global iGaming operating partners
with affiliate marketing services. The strategic acquisition of FourCubed brought SharpLink an industry respected operating team with
decades of combined experience in conversion through affiliate marketing services and in securing highly profitable, recurring net gaming
revenue contracts with many of the world’s leading iGaming companies, including Party Poker, bwin, UNIBET, GG Poker, 888 poker,
betfair and others. Originally established in 2005, FourCubed’s international iGaming affiliate network, Poker Affiliate Solutions
(“PAS”) is currently comprised of over 12,000 sub-affiliates and has delivered nearly two million referred players since
it was launched in 2008 at www.pas.net.
Merger
with SportsHub Games Network Inc. (the “SportsHub Merger”)
SharpLink,
SHGN Acquisition Corp., a Delaware corporation and wholly owned subsidiary of SharpLink (“Merger Subsidiary”), SportsHub
Games Network Inc. (“SportsHub”) and Christian Peterson, an individual acting as the SportsHub stockholders’ representative
entered into a Merger Agreement on September 7, 2022. The Merger Agreement, as amended, contained the terms and conditions of the proposed
business combination of SharpLink and SportsHub. Pursuant to the Merger Agreement, as amended, on December 22, 2022, SportsHub merged
with and into Merger Subsidiary with Merger Subsidiary surviving as a wholly owned subsidiary of SharpLink. In association with the transaction,
SharpLink issued, in the aggregate, 431,926 Ordinary Shares to common and preferred stockholders of SportsHub, on a fully diluted basis.
An additional aggregate of 40,586 Ordinary Shares are being held in escrow for SportsHub shareholders who have yet to provide the applicable
documentation required in connection with the SportsHub Merger, as well as 40,586 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 Merger Agreement.
Sale
of Legacy MTS Business
On
December 31, 2022, SharpLink closed on the sale of its legacy MTS business (“Legacy MTS”) to Israel-based MTS Technology
Ltd. (formerly Entrypoint South Ltd.), a subsidiary of Entrypoint Systems 2004 Ltd. In consideration of MTS Technology Ltd. acquiring
all rights, title, interests and benefits to Legacy MTS, including 100% of the shares of MTS Integratrak Inc., one of the Company’s
U.S. subsidiaries, MTS Technology Ltd. will pay SharpLink an earn-out payment (an “Earn-Out Payment”) equal to three times
Legacy MTS’ Earnings Before Interest, Taxes and Depreciation for the year ending December 31, 2023, up to a maximum earn-out payment
of $1 million (adjusted to reflect net working capital as of the closing date). Within ten (10) calendar days of the approval by the
board of directors of the Buyer of the audited annual financial statements of the Business as at December 31, 2023, and for the 12-month
period ending on such date, which shall occur no later than May 31, 2024, Buyer shall deliver to the Seller a schedule certified by its
Chief Executive Officer and Chief Financial Officer setting forth the computation of the Earn-Out Payment (as applicable), if any, together
with the calculation thereof in an agreed Excel table format (including, but not limiting to all relevant details of the EBITDA calculations
for the year 2023).
Alpha
Financing
On
February 14, 2023, the Company entered into a Securities Purchase Agreement with Alpha Capital Anstalt (“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. 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.
Purchase
Warrant
On
February 15, 2023, the Company also issued to Alpha a warrant (the “Purchase 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 Purchase
Warrant, the “Underlying Shares”). The Purchase 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 Purchase 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 Purchase Warrant includes a beneficial
ownership blocker of 9.99%. The Purchase 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.
In
the event the Company, at any time while the Purchase 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 Purchase 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.
Reverse
Stock Split
On
January 20, 2023, the Company held an extraordinary general meeting of shareholders (the “Meeting”), at which the Company’s
shareholders approved amendments to the Company’s Memorandum of Association and Second Amended and Restated Articles of Association
(the “M&A”) to effect a reverse stock split of the Company’s Ordinary Shares, by a ratio of up to and including
20:1, to be effective at the ratio and on a date to be determined by the Company’s Board of Directors (the “Board”).
On April 17, 2023, the Board determined to effect the Reverse Stock Split at a ratio of 1-for-10 on May 3, 2023 or any other date determined
by the Chairman of the Board, and approved the corresponding amendments to the M&AA. On April 25, 2023 (the “Effective Date”),
the Company effected a 1-for-10 reverse share split of all of the Company’s share capital, including its Ordinary Shares. The Company
undertook the Reverse Stock Split with the objective of meeting the minimum $1.00 per Ordinary Share bid requirement for maintaining
the listing of its Ordinary Shares on Nasdaq. On the Effective Date, the Company’s 26,881,144 Ordinary Shares issued and outstanding
were reduced to 2,688,451 Ordinary Shares issued and outstanding, and the total number of the Company’s authorized Ordinary Shares
under its M&AA was reduced from 92,900,000 Ordinary Shares to 9,290,000 Ordinary Shares. On May 10, 2023, Nasdaq notified the Company
that since the bid price of the Company’s Ordinary Shares closed above $1.00 for ten consecutive trading days from April 26, 2023
through May 9, 2023, the Company had cured the bid price deficiency.
Smaller
Reporting Company
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. To the extent we qualify as a smaller
reporting company, we may continue to take advantage of certain exemptions from various reporting requirements that are applicable to
other public companies that are not smaller reporting companies, including, among other things, providing only two years of audited financial
statements and we are also permitted to elect to incorporate by reference information filed after the effective date of the S-1 registration
statement of which this prospectus forms a part. We will remain a smaller reporting company until the last day of the fiscal year in
which (1) the market value of our shares of Ordinary Shares held by non-affiliates exceeds $250 million as of the prior June 30, or (2)
our annual revenues exceeded $100 million during such completed fiscal year and the market value of our shares of Ordinary Shares held
by non-affiliates exceeds $700 million as of the prior June 30.
Our
Corporate Information
Our
principal executive offices are located at 333 Washington Avenue North, Suite 104, Minneapolis, Minnesota and our telephone number is
612-293-0619. Our website address is www.sharplink.com. The information contained in, or that can be accessed through, our website is
not a part of or incorporated by reference in this prospectus, and you should not consider it part of this prospectus or of any prospectus
supplement. We have included our website address in this prospectus solely as an inactive textual reference.
THE
OFFERING
Ordinary
Shares Offered by Us |
|
Up
to [●] Shares. |
|
|
|
Ordinary
Warrants Offered by Us |
|
Ordinary
Warrants to purchase up to [●] Ordinary
Shares, which will be exercisable during the period commencing on the date of their issuance and ending five years from such date
at an exercise price of $[●] per Ordinary Share (100% of the public offering price per Share and Ordinary Warrant).
|
|
|
|
Pre-Funded
Warrants Offered by Us |
|
We
are also offering to certain purchasers whose purchase of Ordinary Shares in this offering would otherwise result in the purchaser,
together with its affiliates, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding
Ordinary Shares immediately following the consummation of this offering, the opportunity to purchase Pre-Funded Warrants (together
with the Ordinary Warrants, the “Warrants”) in lieu of Ordinary Shares that would otherwise result in any such
purchaser’s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding shares of
Ordinary Shares. Each Pre-Funded Warrant will be exercisable for one Ordinary Share. The purchase price of each Pre-Funded
Warrant and the accompanying Ordinary Warrant will equal the price at which each Ordinary Share and the accompanying Ordinary
Warrant are being sold to the public in this offering, minus $0.001, and the exercise price of each Pre-Funded Warrant will be
$[●] per Ordinary Share. The Pre-Funded Warrants will be exercisable immediately and may be exercised at any time until exercised
in full. For each Pre-Funded Warrant we sell, the number of Shares we are offering will be decreased on a one-for-one basis. Because
we will issue Ordinary Warrants to purchase one Ordinary Share for each Ordinary Share and for each Pre-Funded Warrant sold
in this offering, the number of Warrants sold in this offering will not change as a result of a change in the mix of the our Ordinary Shares and Pre-Funded Warrants sold. |
|
|
|
Assumed
Public Offering Price |
|
$[●] per
Share and accompanying Ordinary Warrant, or $[●] per Pre-Funded Warrant and accompanying Ordinary Warrant, as
applicable. |
|
|
|
Ordinary
Shares Outstanding
Before
this Offering |
|
2,833,734 Ordinary Shares |
|
|
|
Ordinary
Shares Outstanding Immediately
After
this Offering |
|
[●]
Ordinary Shares (assuming we sell only Ordinary Shares and accompanying Ordinary Warrants and no Pre-Funded Warrants, and none
of the Ordinary Warrants issued in this offering are exercised). |
|
|
|
Use
of Proceeds: |
|
We
estimate that the net proceeds from this offering will be approximately $[●], based on an assumed combined public offering
price of $[●] per Share and accompanying Ordinary Warrant, after deducting the Placement Agent fees and estimated
offering expenses payable by us. We intend to use the net proceeds from this offering to strengthen our cash position, which will
aid us in regaining compliance with Nasdaq’s minimum requirement for total shareholders’ equity; investment in
ongoing development of our C4 stock betting conversion technologies; working capital; and other general corporate purposes. Because
this is a reasonable best efforts offering with no minimum amount as a condition to closing, we may not sell all or any of the securities
offered hereby. As a result, we may receive significantly less in net proceeds than we currently estimate. See “Use of Proceeds”
on page 21. |
|
|
|
Risk
Factors: |
|
You
should carefully read the “Risk Factors” on page 19 and other information included in this prospectus for a discussion
of factors you should consider carefully before deciding to invest in our Ordinary Shares. |
|
|
|
Nasdaq
Symbol for Our Ordinary Shares: |
|
SBET |
Unless
otherwise indicated, the number of Ordinary Shares to be outstanding after this offering is based on 2,833,734 Ordinary Shares
outstanding as of September 21, 2023. The number of Ordinary Shares outstanding after this offering excludes:
|
● |
450,644
Ordinary Shares issuable upon the exercise of
stock options outstanding at a weighted average exercise price of $9.1620 per Ordinary Share; |
|
|
|
|
● |
7,202
Ordinary Shares underlying our accrued
Series A-1 Preferred Shares; |
|
|
|
|
● |
12,481
Ordinary Shares underlying our Series B Preferred
Shares; |
|
|
|
|
● |
1,104,232 Ordinary Shares underlying the debenture granted
to Alpha in connection with the February 2023 financing transaction; and |
|
|
|
|
● |
1,157,895
Ordinary Shares underlying outstanding warrants. |
RISK
FACTORS
An
investment in our securities involves a significant degree of risk. You should carefully consider the risk factors and all of the other
information included in this prospectus and the documents incorporated by reference into this prospectus, including those in
“Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, incorporated herein by reference, before making an investment decision. Any of these
risks and uncertainties could have a material adverse effect on our business, financial condition, cash flows and results of operations.
If that occurs, the trading price of our Ordinary Shares could decline materially, and you could lose all or part of your investment.
The
risks included in this prospectus and the documents we have incorporated by reference into this prospectus are not the only risks we
face. We may experience additional risks and uncertainties not currently known to us, or as a result of developments occurring in the
future. Conditions that we currently deem to be immaterial may also materially and adversely affect our business, financial condition,
cash flows and results of operations, and our ability to pay distributions to shareholders.
Risks
Related to This Offering
You
will experience immediate and substantial dilution in the net tangible book value per share of the Ordinary Shares you purchase. You
may also experience future dilution as a result of future equity offerings.
The
price per share, together with the number of Ordinary Shares we propose to issue and ultimately will issue if this offering is completed,
may result in an immediate decrease in the market price of our Ordinary Shares. Our historical net tangible book value as of [●],
2023 was $[●], or approximately $[●] per Ordinary Share. After giving effect to the issuance of [●] Shares or
the exercise of the Pre-Funded Warrants to be sold in this offering at an assumed public offering price of $[●] per share
(assuming a public offering price equal to the last sale price of our Ordinary Shares as reported by Nasdaq on [●], 2023, which
was $[●] per Ordinary Share), our as adjusted net tangible book value as of [●], 2023 would have been $[●], or approximately
$[●] per Ordinary Share. This represents an immediate dilution in the net tangible book value of $[●] per share of our Ordinary
Shares to our existing shareholders and an immediate increase in net tangible book value of approximately $[●] per share
of our Ordinary Shares to new investors, representing the difference between the assumed public offering price and our as adjusted
net tangible book value as of [●], 2023, after giving effect to this offering, and the assumed public offering price per
Share.
In
addition, in order to raise additional capital, we may in the future offer additional Ordinary Shares or other securities convertible
into or exchangeable for our Ordinary Shares at prices that may not be the same as the price per share in this offering. In the event
that the outstanding options or warrants are exercised or settled, or that we make additional issuances of Ordinary Shares or other convertible
or exchangeable securities, you could experience additional dilution. We cannot assure you that we will be able to sell shares or other
securities in any other offering at a price per share that is equal to or greater than the price per share paid by investors in this
offering, and investors purchasing shares or other securities in the future could have rights superior to existing shareholders,
including investors who purchase Ordinary Shares in this offering. The price per share at which we sell additional Ordinary Shares or
securities convertible into our Ordinary Shares in future transactions, may be higher or lower than the price per share in this offering.
As a result, purchasers of the shares we sell, as well as our existing shareholders, will experience significant dilution if we
sell at prices significantly below the price at which they invested.
Resales
of our Ordinary Shares in the public market during this offering by our shareholders may cause the market price of our Ordinary
Shares to fall.
Sales
of a substantial number of Ordinary Shares could occur at any time. The issuance of new Ordinary Shares could result in resales of our
Ordinary Shares by our current shareholders concerned about the potential ownership dilution of their holdings. In turn, these
resales could have the effect of depressing the market price for our Ordinary Shares.
You
may experience future dilution as a result of future equity offerings.
In
order to raise additional capital, we may in the future offer additional Ordinary Shares or other securities convertible into or exchangeable
for our Ordinary Shares that could result in further dilution to the investors purchasing our Ordinary Shares in this offering or result
in downward pressure on the price of our Ordinary Shares. We may sell our Ordinary Shares or other securities in any other offering at
prices that are higher or lower than the prices paid by the investors in this offering, and the investors purchasing shares or other
securities in the future could have rights superior to existing shareholders. Moreover, to the extent that we issue options or warrants
to purchase, or securities convertible into or exchangeable for, our Ordinary Shares in the future and those options, warrants or other
securities are exercised, converted or exchanged, shareholders may experience further dilution.
We
will have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
We
intend to use the net proceeds from this offering to strengthen our cash position, which will aid us in regaining compliance with Nasdaq’s
minimum requirement for total shareholders’ equity; investment in ongoing development of our C4 stock betting conversion
technologies; working capital; and other general corporate purposes. The failure by our management to apply these funds effectively could
harm our business, financial condition and results of operations. Pending their use, we may invest the net proceeds from this offering
in short-term, interest-bearing instruments. These investments may not yield a favorable return to our shareholders.
This
offering may cause the trading price of our Ordinary Shares to decrease.
The
price per share, together with the number of shares of Ordinary Shares we propose to issue and ultimately will issue if this offering
is completed, may result in an immediate decrease in the market price of our Ordinary Shares. This decrease may continue after the completion
of this offering.
There
is no public market for the Pre-Funded Warrants and Ordinary Warrants being offered in this offering.
There
is no established public trading market for the Pre-Funded Warrants and Ordinary Warrants being offered in this offering, and
we do not expect a market to develop. In addition, we do not intend to apply to list the Pre-Funded Warrants and Ordinary Warrants
on any securities exchange or nationally recognized trading system. Without an active market, the liquidity of the Pre-Funded Warrants
and Ordinary Warrants will be limited.
Holders
of our Pre-Funded Warrants and Ordinary Warrants will have no rights as Ordinary Shareholders until they acquire our Ordinary
Shares.
Until
you acquire our Ordinary Shares upon exercise of your Pre-Funded Warrants or the Ordinary Warrants, you will have no rights with
respect to the Ordinary Shares issuable upon exercise of your Warrants. Upon exercise of your Pre-Funded Warrants or the Ordinary
Warrants, you will be entitled to exercise the rights of a holder of shares only as to matters for which the record date occurs after
the issuance date for such shares of Ordinary Shares.
The
Pre-Funded Warrants and the Ordinary Warrants are speculative in nature.
The
Pre-Funded Warrants and Ordinary Warrants offered hereby do not confer any rights of Ordinary Share ownership on their holders,
such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of Ordinary Shares at
a fixed price. Specifically, commencing on the date of issuance, holders of the Pre-Funded Warrants may acquire the ordinary Shares issuable
upon exercise of such warrants at an exercise price of $[●] per share and holders of the Ordinary Warrants may acquire the
Ordinary Shares issuable upon exercise of such warrants at an exercise price per share equal to the public offering price of the Ordinary
Shares in this offering. Moreover, following this offering, the market value of the Pre-Funded Warrants and the Ordinary Warrants
is uncertain, and there can be no assurance that the market value of the Pre-Funded Warrants or the Ordinary Warrants will equal
or exceed their public offering price.
The
Warrants may not have any value.
Each
Warrant has an exercise price per share equal to the public offering price of the Ordinary Shares in this offering and expires on the
fifth anniversary of its original issuance date. In the event the market price per Ordinary Share does not exceed the exercise price
of the Warrants during the period when the Warrants are exercisable, the Warrants may not have any value.
This
is a reasonable best efforts offering, in which no minimum number or dollar amount of securities is required to be sold, and we may not
raise the amount of capital we believe is required for our business plans.
The
Placement Agent has agreed to use its reasonable best efforts to solicit offers to purchase the securities in this offering. The Placement
Agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar
amount of the securities. There is no required minimum number of securities that must be sold as a condition to completion of this offering.
Because there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, placement
agent fees and proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth herein.
We may sell fewer than all of the securities offered hereby, which may significantly reduce the amount of proceeds received by us, and
investors in this offering will not receive a refund. Thus, we may not raise the amount of capital we believe is required for our operations
and may need to raise additional funds to complete such short-term operations. Such additional fundraises may not be available or available
on terms acceptable to us.
The
Placement Agent is offering the shares on a “reasonable best efforts” basis, and the Placement Agent is under no obligation
to purchase any shares for its own account. The Placement Agent is not required to sell any specific number or dollar amount of shares
of Ordinary Shares in this offering but will use its reasonable best efforts to sell the securities offered in this prospectus. as a
“reasonable best efforts” offering, there can be no assurance that the offering contemplated hereby will ultimately be consummated.
This
offering might reduce the conversion/exercise price of certain of our outstanding securities and as a result, we may have less proceeds
from the exercise or conversion of these securities.
The current conversion
prices of our Series B Preferred Shares and Debenture are $7.00 and $4.1772 per share, respectively. The current exercise price of
our warrants issued to Alpha in February 2023 is $4.0704 per share. All of these securities include an anti-dilution mechanism. If
and when the shares are issued with a public offering price less than the conversion/exercise prices, these prices will be reduced
accordingly, subject to certain floor prices. As a result, we will receive less proceeds from the conversion/exercise of these
securities.
USE
OF PROCEEDS
We
estimate that we will receive net proceeds of approximately $[●] million from the sale of the securities by us in this offering,
based on an assumed combined public offering price of $[●] per share and accompanying Ordinary Warrant (assuming a public
offering price equal to the last sale price of our Ordinary Shares as reported by Nasdaq on [●], 2023, which was $[●]), after
deducting the Placement Agent fees and estimated offering expenses payable by us, and excluding the proceeds, if any, received from the
exercise of warrants issued in this offering.
We
intend to use the net proceeds from this offering to strengthen our cash position, which we believe will aid us in regaining compliance
with Nasdaq’s minimum requirement for total shareholders’ equity; investment in ongoing development of our C4 stock
betting conversion technologies; working capital; and other general corporate purposes. Our expected use of net proceeds from this offering
represents our intentions based on our present plans and business conditions, which could change as our plans and business conditions
evolve. The amount and timing of our actual expenditures will depend on numerous factors, including the timing and success of clinical
studies or clinical studies we may commence in the future, the timing of regulatory submissions and the feedback from regulatory authorities.
As a result, our management will have broad discretion over the use of the net proceeds from this offering. Pending our use of the net
proceeds from this offering, we may temporarily invest the net proceeds in investment-grade, interest-bearing securities.
MARKET
FOR ORDINARY SHARES AND DIVIDEND POLICY
Our
Ordinary Shares are traded on the Nasdaq under the symbol “SBET.” The last reported sale price of our Ordinary Shares on
September 21, 2023 on the Nasdaq was $2.32 per share. As of September 21, 2023, there were 93 shareholders
of record of our Ordinary Shares.
We
have never declared or paid, and do not anticipate declaring, or paying in the foreseeable future, any cash dividends on our capital
stock. Future determinations as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors
and will depend on then existing conditions, including our operating results, financial conditions, contractual restrictions, capital
requirements, business prospects and other factors our board of directors may deem relevant.
Instead
of paying cash dividends, we anticipate that all of our earnings will be used to provide working capital, to support our operations,
and to finance the growth and development of our business. The payment of dividends is within the discretion of the Board and will depend
on our earnings, capital requirements, financial condition, prospects, applicable Israeli law, which, among other requirements, provides
that dividends are only payable out of retained earnings, and other factors our Board might deem relevant. There are no restrictions
that currently limit our ability to pay dividends on our Ordinary Shares other than those generally imposed by applicable Israeli law
and the restriction imposed by the terms of the Series B Preferred Shares and the Debenture (an 8% interest rate, 10% original
issue discount, senior convertible debenture issued by SharpLink), which provide that as long as any portion
of the Series B Preferred Shares and Debenture remains outstanding, unless the holders of at least 50.1% of the Series B Preferred Shares
and 67% in principal amount of the then outstanding Debenture shall have otherwise given prior written consent, the Company shall not,
and shall not permit any of the subsidiaries to, directly or indirectly pay cash dividends or distributions on any equity securities
of the Company.
CAPITALIZATION
The
following table presents a summary of our cash and restricted cash and capitalization as of June 30, 2023:
| ● | on
an actual basis; and |
| | |
| ● | on
an as adjusted basis to reflect the issuance and sale of Ordinary Shares in this offering,
after deducting placement agent fees and estimated offering expenses payable by us. The as
adjusted basis assumes no Pre-Funded Warrants are sold in this offering and excludes the
proceeds, if any, from the exercise of any Ordinary Warrants issued in this offering. |
The
unaudited as adjusted information below is prepared for illustrative purposes only and our capitalization following the completion of
this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. You
should read the following table in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of
Operations and the historical financial statements and related notes in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2022 and our Quarterly Report on Form 10-Q for the period ended June 30, 2023, incorporated herein by
reference.
| |
As of June 30, 2023 | |
(in thousands) | |
Actual | | |
As adjusted | |
Cash and restricted cash | |
$ | 42,661 | | |
$ | [●] | |
| |
| | | |
| | |
Ordinary shares, $0.20 par value; authorized shares 9,290,000 issued and 2,688,541 outstanding shares | |
| 538 | | |
| [●] | |
Additional paid-in capital | |
| 77,582 | | |
| [●] | |
Accumulated deficit | |
| (79,879 | ) | |
| [●] | |
Total shareholders’ equity | |
$ | (1,785 | ) | |
$ | [●] | |
Each
$ increase (decrease) in the assumed public offering price of $[●] per share would increase (decrease) each of cash and restricted
cash, additional paid-in capital and total shareholders’ equity by approximately $[●] million, assuming the number of Shares
and Ordinary Warrants offered, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated
placement agent fees and estimated offering expenses. Similarly, each increase (decrease) of shares in the number of Shares and Ordinary
Warrants offered would increase (decrease) cash and cash equivalents, additional paid-in capital and total shareholders’ equity
by approximately $[●], assuming the assumed public offering price remains the same, and after deducting estimated placement
agent fees and estimated offering expenses payable by us. The pro forma as adjusted information discussed above is illustrative only
and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.
The
number of Ordinary Shares outstanding before and after this offering is based on 2,833,734 Ordinary Shares outstanding as of September
21, 2023 and excludes:
|
● |
450,644
Ordinary Shares issuable upon the exercise of stock options outstanding at a weighted average exercise price of $9.1620 per Ordinary
Share; |
|
|
|
|
● |
7,202
Ordinary Shares underlying our accrued Series A-1 Preferred Shares; |
|
|
|
|
● |
12,481
Ordinary Shares underlying our Series B Preferred Shares; |
|
|
|
|
● |
1,104,232
Ordinary Shares underlying the debenture granted to Alpha in connection with the February 2023 financing transaction; and |
|
|
|
|
● |
1,157,895
Ordinary Shares underlying outstanding warrants. |
DILUTION
If
you purchase our Ordinary Shares in this offering, your interest will be diluted immediately to the extent of the difference between
the offering price per share you will pay in this offering and the as adjusted net tangible book value per share of our Ordinary Shares
after this offering. Net tangible book value per share represents our total tangible assets less total liabilities, divided by the number
of our Ordinary Shares outstanding.
As
of June 30, 2023, our net tangible book value was [●] million, or $[●] per Ordinary Share.
After
giving effect to the foregoing pro forma adjustments and the sale by us of [●] Ordinary Share and Pre-Funded Warrants at an assumed
public offering price of $[●] per Ordinary Share and accompanying Ordinary Warrant and $[●] per Pre-Funded Warrant
and accompanying Ordinary Warrant, and after deducting the placement agent fees and estimated offering expenses payable by us,
our as adjusted net tangible book value as of June 30, 2023, would have been $[●] million, or $[●] per share. This
represents an immediate dilution in as adjusted net tangible book value of approximately $[●] per share to our existing shareholders,
and an immediate increase of $[●] per share to purchasers of shares in this offering, as illustrated in the following table:
Assumed public offering price per Share | |
$ | [●] | |
Net tangible book value per share as of June 30, 2023 | |
$ | [●] | |
Net dilution in net tangible book value per share attributable to existing shareholders | |
$ | [●] | |
As adjusted net tangible book value per share after this offering | |
$ | [●] | |
Dilution in net tangible book value per share to new investors in the offering | |
$ | [●] | |
A $1.00 increase (decrease)
in the assumed public offering price of $[●] per share would result in an incremental increase (decrease) in our as adjusted net
tangible negative book value of approximately $[●] million or approximately $[●] per share, and would result in an incremental
increase (decrease) in the dilution to new investors of approximately $[●] per share, assuming that the number of Ordinary Shares
sold by us remains the same and after deducting the placement agent fees and estimated offering expenses payable by us.
The
number of Ordinary Shares outstanding before and after this offering is based on 2,688,541 Ordinary Shares outstanding
as of June 30, 2023 and excludes:
|
● |
450,644 Ordinary Shares issuable upon the exercise of stock options
outstanding at a weighted average exercise price of $9.1620 per Ordinary Share; |
|
|
|
|
● |
7,202 Ordinary Shares underlying our accrued Series A-1 Preferred
Shares; |
|
|
|
|
● |
12,481 Ordinary Shares underlying our Series B Preferred Shares;
|
|
|
|
|
● |
1,104,232 Ordinary Shares underlying the debenture granted to Alpha
in connection with the February 2023 financing transaction; and |
|
|
|
|
● |
1,157,895 Ordinary Shares underlying outstanding warrants. |
DESCRIPTION
OF SECURITIES
As
of the date of this prospectus, the authorized capital
of the Company consists of 9,290,000 Ordinary Shares, 80,000 Preferred A Shares, 260,000 Preferred A-1 Shares and 370,000 Preferred B
Shares, nominal value NIS 0.60 each. On September 14, 2023, we filed a preliminary proxy notice and proxy statement in connection
with its planned Extraordinary General Meeting of Shareholders to adopt an amendment to the Company’s Articles to increase the
authorized share capital of the Company from 9,290,000 Ordinary Shares, nominal value NIS 0.60 per share, to 24,290,000 Ordinary Shares,
nominal value NIS 0.60 per share. For further information, see “Prospectus Summary—Recent Developments—Extraordinary
Meeting of Shareholders to be Held”.
Ordinary
Shares
As
of September 21, 2023, we have 2,833,734 Ordinary Shares issued and outstanding. Our Ordinary Shares are listed on Nasdaq under the symbol “SBET.” The transfer agent for our Ordinary Shares is Equiniti/American Stock Transfer & Trust
Company, and its address is 6201 15th Avenue Brooklyn, New York 11219.
The
rights attached to the Ordinary Shares are as follows:
|
● |
equal
rights to receive an invitation to attend all of and vote at all of the general meetings of the Company. Each one of the Ordinary
Shares will confer upon the holder a single vote at every general meeting of the Company at which the holder participates and votes,
in person, by agent, or by proxy. |
|
|
|
|
● |
equal
rights to receive dividends, if and when distributed, whether in cash or any other manner, and to participate in a distribution of
bonus shares, if and when distributed, according to the ratio between the shareholders’ holdings in the Company’s issued
and outstanding share capital (Ordinary Shares and Preferred Shares on an as-converted basis, without regard to the Beneficial Ownership
Limitation) and the Company’s total issued and outstanding share capital (Ordinary Shares and Preferred Shares on an as-converted
basis, without regard to the Beneficial Ownership Limitation). |
|
|
|
|
● |
equal
right to participate in a distribution of the Company’s assets available for distribution, in the event of liquidation or winding-up
of the Company, following the distribution to the holders of the Series B Preferred Shares, if applicable, and pari-passu with the
Series A and Series A-1 Preferred Shares (on an as-converted basis). |
Liability
to capital calls by our company.
Under
our Articles of Association, the liability of our shareholders is limited to the payment of the unpaid amount that they are required
to pay the Company for the shares held by them.
Limitations
on any existing or prospective major shareholder.
The
Israeli Companies Law, 1999, as amended (the “Israeli Companies Law”) requires that an office holder (a term that includes
also directors and executive officers) promptly, and no later than the first board meeting at which such transaction is considered, disclose
any personal interest that he or she may have and all related material information known to him or her and any material documents in
their possession, in connection with any existing or proposed transaction by us. The disclosure requirements that apply to an office
holder also apply to a transaction in which a controlling shareholder of the company has a personal interest. The Israeli Companies Law
provides that an extraordinary transaction (a transaction other than in the ordinary course of business, other than on market terms,
or that may have a material impact on the company’s profitability, assets or liabilities) with a controlling shareholder or an
extraordinary transaction with another person in which the controlling shareholder has a personal interest or a transaction with a controlling
shareholder or his relative regarding Terms of Service and Employment, must be approved by the audit committee or the compensation committee,
as the case may be, the board of directors and shareholders. The shareholders’ approval of such a transaction requires a simple
majority approval and the fulfillment of one of the following conditions: (i) at least a majority of the votes cast by shareholders who
have no personal interest in the transaction and who vote on the matter are voted in favor of the transaction, or (ii) the votes cast
by shareholders who have no personal interest in the transaction voted against the transaction do not represent more than two percent
of the voting rights in the company. In addition, any such transaction with a term that exceeds three years requires approval as described
above every three years, unless (with respect only to extraordinary transactions and not to other transactions that require the special
approval process) the audit committee approves that a longer term is reasonable under the circumstances.
Under
the Companies Regulations (Relief from Related Party Transactions), 5760-2000, promulgated under the Israeli Companies Law, as amended,
certain extraordinary transactions between a public company and its controlling shareholder(s) do not require shareholder approval. In
addition, under such regulations, directors’ compensation and employment arrangements in a public company do not require the approval
of the shareholders if both the compensation committee and the board of directors agree that such arrangements are solely for the benefit
of the company or if the directors’ compensation does not exceed the maximum amount of compensation for outside directors determined
by applicable regulations.
Preferred
A-1 Shares and Preferred B Shares
The
Company’s issued share capital includes Preferred Shares of the following classes, the rights, terms and preferences
of which are summarized below: Preferred A-1 Shares and Preferred B Shares. As of June 30, 2023, the Company had 12,481 Preferred B Shares
issued and outstanding.
Our
Articles provide that we shall not effect any conversion of the Preferred Shares to the extent that, after giving effect to the conversion,
the applicable shareholder would beneficially own in excess of the Beneficial Ownership Limitation. The “Beneficial Ownership Limitation”
is defined as 9.99% of the number of Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares issuable
upon conversion of Preferred Shares held by the applicable shareholder. The applicable shareholder, upon notice to the Company, may increase
or decrease the Beneficial Ownership Limitation provisions applicable to its Preferred Shares, but not greater than 9.99%. Any such increase
or decrease in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company
and shall only apply to such shareholder.
Preferred
A-1 Shares
As
of July 21, 2023, there were 7,202 Preferred A-1 Shares accrued as payment of quarterly dividends on the Preferred B Shares
held by Alpha, but not yet issued. Preferred A-1 Shares have equal rights to the Ordinary Shares and are convertible into Ordinary Shares
on a 1-for-1 basis (subject to customary adjustments); provided, however, that the Preferred A-1 Shares shall not be converted to the
extent that, after giving effect to such conversion, the holder of the Preferred A-1 Shares (together with such holder’s affiliates
and any persons acting as a group together with such holder) would beneficially own in excess of the beneficial ownership cap, which
is initially set at 9.99%, of the number of the Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary
Shares issuable upon conversion of the Preferred A-1 Shares held by the holder, or the Beneficial Ownership Limitation.
Prior
to conversion into Ordinary Shares, the Preferred A-1 Shares are entitled to the following rights:
|
● |
equal
rights to receive dividends, if and when distributed to holders of Ordinary Shares, whether in cash or any other manner, and to participate
in a distribution of bonus shares, if and when distributed, according to the ratio between the shareholders’ holdings in the
Company’s issued and outstanding share capital (Ordinary Shares and Preferred Shares on an as-converted basis, without regard
to the Beneficial Ownership Limitation) and the Company’s total issued and outstanding share capital (Ordinary Shares and Preferred
Shares on an as-converted basis, without regard to the Beneficial Ownership Limitation); |
|
|
|
|
● |
equal
right to participate in a distribution of the Company’s assets available for distribution, in the event of liquidation or winding-up
of the Company, on an as-converted basis, following the distribution to the holders of the Series B Preferred Shares, if applicable,
and pari passu with the Ordinary Shares; and |
|
|
|
|
● |
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 subject to the Beneficial Ownership
Limitation). The rights attached to any class (other than modifications to the Beneficial Ownership Limitation, which may not be
modified) may be modified or abrogated by the affirmative consent of the respective Determining Majority of the shares of such class;
provided, however, that the creation of additional shares of a specific class, or the issuance of additional shares of a specific
class, shall not be deemed a modification or abrogation of rights attached to shares of such class or of any other class. |
Preferred
B Shares
The
Preferred B Shares, currently held by Alpha, are non-voting shares and convertible into Ordinary Shares on a 1-for-1 basis (subject to
customary adjustments), subject to the Beneficial Ownership Limitation.
Prior
to conversion into Ordinary Shares, the Preferred B Shares are entitled to the following rights:
|
● |
a
right to receive from the Company an amount equal to the purchase price of each outstanding Preferred B Share, plus any accrued and
unpaid dividends, fees or liquidated damages due thereon (in connection with delays in conversion of Preferred B Shares), to be paid
upon any liquidation, dissolution or winding-up of the Company, before any distribution to the other securityholders of the Company; |
|
|
|
|
● |
a
“full ratchet” anti-dilution adjustment to the conversion price of the Preferred B Shares in the event the Company issues
or sells Ordinary Shares or Ordinary Share equivalents for a consideration per share that is less than the conversion price per share
of the Preferred B Shares then in effect, other than in connection with an Exempt Issuance (as such term is defined in the Revised
Articles) and to a minimum price of $6.64. |
Limitations
on the Rights to Own Securities in Our Company
Neither
our Memorandum of Association nor our Articles of Association nor any applicable law restrict in any way the ownership or voting of shares
by non-residents of Israel, except with respect to subjects of countries that are in a state of war with Israel.
Provisions
Restricting Change in Control of Our Company
Tender
Offer
The
Israeli Companies Law provides that an acquisition of shares in a public company must be made by means of a tender offer if as a result
of the acquisition the purchaser would become a holder of a “control stake” (i.e., shares granting 25% or more of the aggregate
voting rights at a general meeting of the company). This rule does not apply if there is already another shareholder holding 25% or of
the company. Similarly, the Israeli Companies Law provides that an acquisition of shares in a public company must be made by means of
a tender offer if as a result of the acquisition the purchaser would hold more than a 45% of the aggregate voting rights at a general
meeting of the company, unless there is another shareholder holding more than 45% of the aggregate voting rights at a general meeting
of the company. These requirements do not apply if, in general, the acquisition: (1) was made in a private placement that received shareholder
approval as a private placement that was meant to grant the purchaser 25% or more of the voting rights of a company in which no other
shareholder holds 25% or more of the voting rights, or to grant the purchaser more than 45% of the voting rights of a company in which
no other shareholder holds more than 45% of the voting rights, (2) was from a 25% or greater shareholder of the company which resulted
in the acquiror becoming a 25% or greater shareholder of the company, or (3) was from a shareholder holding more than a 45% interest
in the company which resulted in the acquiror becoming a holder of more than a 45% interest in the company.
If,
as a result of an acquisition of shares, the acquiror will hold more than 90% of a company’s outstanding shares, the acquisition
must be made by means of a tender offer for all of the outstanding shares (a “Full Tender Offer”). A Full Tender Offer is
accepted if either: (i) holders of less than 5% of the outstanding shares do not accept the tender offer and more than half of the offerees
who do not have a personal interest in accepting the tender offer accepted it, or (ii) holders of less than 2% of the outstanding shares
do not accept the tender offer. If the Full Tender Offer is not accepted, then the acquiror may not acquire shares in the tender offer
that will cause his shareholding to exceed 90% of the outstanding shares.
The
Israeli Companies Law provides for appraisal rights in the event a Full Tender Offer is accepted if the shareholder files a request with
the court within six months following the consummation of a Full Tender Offer. The acquirer may provide in the tender offer documents
that any shareholder that accepted the offer and tendered his shares will not be entitled to appraisal rights.
Merger
The
Israeli Companies Law permits merger transactions if approved by each party’s board of directors and, except under certain circumstances
specified below, by the majority of each party’s shares voted on the proposed merger at a shareholders meeting. A merger is defined
as the transfer of all assets and liabilities, including conditional, future, known and unknown debts of the target company to the surviving
company, as a result of which the target company is liquidated, and stricken out of the Companies Register.
Under
the Israeli Companies Law, if one of the merging companies, or a shareholder that holds 25% or more of the means of control of one of
the merging companies (a “25% Shareholder”), holds shares of the other merging company, then a dissenting vote of holders
of the majority of the shares of the other merging company present and voting, excluding shares held by the merging company or a 25%
Shareholder thereof, or by anyone acting on behalf of either of them, their relatives and corporations controlled by them, is sufficient
to reject the merger transaction. Means of control are defined as any of the following: (i) the right to vote at a general meeting of
a company; and (ii) the right to appoint a director of a company. If the transaction would have been approved but for the exclusion of
the votes as previously indicated, a court may still approve the merger upon the request of holders of at least 25% of the voting rights
of the company. The court will not approve a merger unless it is convinced that the merger is fair and reasonable, taking into account
the values of the merging companies and the consideration offered to the shareholders. Upon the request of a creditor of either party
to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that, as a result
of the merger, the surviving company will be unable to satisfy the obligations of the merged company. In addition, a merger may not be
completed unless at least 50 days have passed from the date that a proposal for approval of the merger was filed with the Israeli Registrar
of Companies and 30 days have passed from the date that shareholder approval of both merging companies was obtained.
Notwithstanding
the foregoing, a merger is not subject to the approval of the shareholders of the target company if the target company is a wholly owned
subsidiary of the surviving company. In addition, a merger is not subject to the approval of the shareholders of the surviving company
if:
|
● |
the
merger does not require the alteration of the memorandum or articles of association of the surviving company; |
|
● |
the
surviving company would not issue more than 20% of the voting rights thereof in the course of the merger and no person will become,
as a result of the issuance, a controlling shareholder of the surviving company (for this purpose any securities convertible into
shares of the surviving company that such person holds or that are issued to him in the course of the merger are deemed to have been
converted or exercised); |
|
● |
neither
the target company, nor any shareholder that holds 25% of the means of control of the target company is a shareholder of the surviving
company; and |
|
● |
there
is no person that holds 25% or more of the means of control in both companies. |
Disclosure
of Shareholders Ownership
The
Israeli Securities Law and regulations promulgated thereunder do not require shareholders of a company whose shares are publicly traded
solely on a stock exchange outside of Israel, as in the case of our company, to disclose their share ownership.
Changes
in Our Capital
Changes
in our capital are subject to the approval of the shareholders at a general meeting by a special majority of 75% of the votes of shareholders
participating and voting in the general meeting.
Warrants
As
of September 21, 2023, the Company has 1,158,015 warrants outstanding and exercisable for Ordinary Shares.
Alpha
Warrants
In
November 2021, the Company issued warrants to purchase 266,667 Ordinary Shares to Alpha. Each warrant had an initial exercise price of
$45.00 per share, which was reduced to $0.60 pursuant to the 2023 Purchase Agreement entered between the Company and Alpha on February
14, 2023. These warrants were exercisable beginning on May 19, 2022 and will expire on November 19, 2025. These warrants may be exercised
only by payment of the exercise price in cash, unless at the time of exercise there is not a registration statement in place for the
underlying Ordinary Shares, in which case the warrants will be eligible for net exercise by forfeiture of the warrants with value equal
to the exercise price. The warrant includes a beneficial ownership blocker of 9.99%.
In
February 2023, the Company issued a warrant to Alpha to purchase 880,000 Ordinary Shares. The warrant has an initial exercise price of
$8.75 per share, subject to full-ratchet anti-dilution protection on the warrant (reduction in price, only, no increase in number of
warrant shares (subject to customary exempt transaction issuances) and customary anti-dilution adjustments. 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 and as a result, the exercise price was reset to $4.0704, the average of the five Nasdaq Official Closing Prices
immediately preceding April 14, 2023. The warrant includes a beneficial ownership blocker of 9.99%.
Warrants
- MTS
Prior
to the MTS Merger, the MTS shareholders approved the issuance to the former MTS CEO of (i) a warrant to the former MTS CEO to acquire
5,833 ordinary shares, at an exercise price of $26.42, which vested and became immediately exercisable upon the consummation of the MTS
Merger and expires on July 21, 2024, and (ii) a warrant to acquire 2,500 ordinary shares, with a $0 exercise price, which vested and
became immediately exercisable upon the consummation of the MTS Merger and expires on July 21, 2024.
Transfer Agent and Registrar
Our transfer agent is Equiniti/American
Stock Transfer & Trust Company, LLC, located at 6201 15th Avenue, Brooklyn, New York 11219.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
Ordinary
Shares
The
material terms and provisions of our Ordinary Shares are described in the section titled, “Description of Securities” in
this prospectus.
Pre-Funded
Warrants
The
following summary of certain terms and provisions of the Pre-Funded Warrants that are being offered hereby is not complete and
is subject to, and qualified in its entirety by, the provisions of the Pre-Funded Warrant, the form of which is filed as an exhibit to
the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions
of the form of Pre-Funded Warrant for a complete description of the terms and conditions of the Pre-Funded Warrants.
Duration
and Exercise Price. Each Pre-Funded Warrant offered hereby will have an initial exercise price per share equal to $0.001. The Pre-Funded
Warrants will be immediately exercisable and may be exercised at any time until the Pre-Funded Warrants are exercised in full. The exercise
price and number of Ordinary Shares issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock
splits, reorganizations or similar events affecting our Ordinary Shares and the exercise price. The Pre-Funded Warrants will be issued
separately from the accompanying Ordinary Warrants and may be transferred separately immediately thereafter.
Exercisability.
The Pre-Funded Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed
exercise notice accompanied by payment in full for the number of our Ordinary Shares purchased upon such exercise (except in the
case of a cashless exercise as discussed below). Purchasers of the Pre-Funded Warrants in this offering may elect to deliver their exercise
notice following the pricing of the offering and prior to the issuance of the Pre-Funded Warrants at closing to have their Pre-Funded
Warrants exercised immediately upon issuance and receive Ordinary Shares underlying the Pre-Funded Warrants upon closing of this offering.
A holder (together with its affiliates) may not exercise any portion of the Pre-Funded Warrant to the extent that the holder would own
more than 4.99% of the outstanding Ordinary Shares immediately after exercise, except that upon at least 61 days’ prior notice
from the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s Pre-Funded
Warrants up to 9.99% of the number of our Ordinary Shares outstanding immediately after giving effect to the exercise, as such
percentage ownership is determined in accordance with the terms of the Pre-Funded Warrants. Purchasers of Pre-Funded Warrants in this
offering may also elect prior to the issuance of the Pre-Funded Warrants to have the initial exercise limitation set at 9.99% of our
outstanding Ordinary Shares. No fractional Ordinary Shares will be issued in connection with the exercise of a Pre-Funded Warrant. In
lieu of fractional shares, we will round up to the next whole share.
Cashless
Exercise. If, at the time a holder exercises its Pre-Funded Warrants, a registration statement registering the issuance of the Ordinary
Shares underlying the Pre-Funded Warrants under the Securities Act is not then effective or available, then in lieu of making the cash
payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead
to receive upon such exercise (either in whole or in part) the net number of Ordinary Shares determined according to a formula set forth
in the Pre-Funded Warrants.
Transferability.
Subject to applicable laws, a Pre-Funded Warrant may be transferred at the option of the holder upon surrender of the Pre-Funded Warrant
to us together with the appropriate instruments of transfer.
Exchange
Listing. There is no trading market available for the Pre-Funded Warrants on any securities exchange or nationally recognized trading
system. We do not intend to list the Pre-Funded Warrants on any securities exchange or nationally recognized trading system.
Right
as a Shareholder. Except as otherwise provided in the Pre-Funded Warrants or by virtue of such holder’s ownership of
Ordinary Shares, the holders of the Pre-Funded Warrants do not have the rights or privileges of holders of our Ordinary Shares, including
any voting rights, until they exercise their Pre-Funded Warrants.
Fundamental
Transaction. In the event of a fundamental transaction, as described in the Pre-Funded Warrants and generally including any reorganization,
recapitalization or reclassification of our Ordinary Shares, the sale, transfer or other disposition of all or substantially all of our
properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding Ordinary
Shares, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding Ordinary Shares,
the holders of the Pre-Funded Warrants will be entitled to receive upon exercise of the Pre-Funded Warrants the kind and amount of securities,
cash or other property that the holders would have received had they exercised the Pre-Funded Warrants immediately prior to such fundamental
transaction, other than one in which a successor entity that is a publicly traded corporation (whose stock is quoted or listed for trading
on a national securities exchange, including, but not limited to, the New York Stock Exchange, the NYSE American, the Nasdaq Global Select
Market, the Nasdaq Global Market or the Nasdaq Capital Market) assumes the Pre-Funded Warrant such that the warrant shall be exercisable
for the publicly traded common stock of such successor entity.
Ordinary Warrants
The
following summary of certain terms and provisions of Ordinary Warrants that are being offered hereby is not complete and is subject
to, and qualified in its entirety by, the provisions of the Ordinary Warrants, the form of which is filed as an exhibit to the
registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions
of the form of Ordinary Warrants for a complete description of the terms and conditions of the Ordinary Warrants.
Duration
and Exercise Price. The Company is also offering Ordinary Warrants to purchase up to an aggregate of [●] our Ordinary
Shares. Each Ordinary Warrant may be exercised, in cash or by a cashless exercise at the election of the holder at any time
following the date of issuance and from time to time thereafter through and including the five year anniversary of the initial exercise
date. The exercise price and number of Ordinary Shares issuable upon exercise is subject to appropriate adjustment in the event of stock
dividends, stock splits, reorganizations or similar events affecting our Ordinary Shares and the exercise price. The exercise price is
separately subject to reduction in the event of certain future dilutive issuances of Ordinary Shares by us, including pursuant to ordinary
share equivalents and convertible or derivative securities. The Ordinary Warrants will be issued separately from the Ordinary
Shares and will be held separately immediately thereafter. One Ordinary Warrant to purchase one Ordinary Share will be issued
for every Ordinary Share or Pre-Funded Warrant to purchase one share purchased in this offering.
Exercisability.
The Ordinary Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed
exercise notice accompanied by payment in full for the number of Ordinary Shares purchased upon such exercise (except in the case of
a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the Ordinary Warrants
to the extent that the holder would own more than 4.99% (or, at the election of the holder, 9.99%) of the outstanding Ordinary
Shares immediately after exercise, except that upon at least 61 days’ prior notice from the holder to us, the holder may increase
the amount of ownership of outstanding stock after exercising the holder’s Ordinary Warrants up to 9.99% of the number of
our Ordinary Shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in
accordance with the terms of the Ordinary Warrants. No fractional shares of Ordinary Shares will be issued in connection with
the exercise of Ordinary Warrants. In lieu of fractional shares, we will round up to the next whole share.
Cashless
Exercise. If, at the time a holder exercises its Ordinary Warrants, a registration statement registering the issuance of the
shares of Ordinary Shares underlying the Ordinary Warrants under the Securities Act is not then effective or available and an
exemption from registration under the Securities Act is not available for the issuance of such shares, then in lieu of making the cash
payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead
to receive upon such exercise (either in whole or in part) the net number of shares of Ordinary Shares determined according to a formula
set forth in the Ordinary Warrants.
Transferability.
Subject to applicable laws, a Ordinary Warrant may be offered for sale, sold, transferred or assigned at the option of the
holder upon surrender of the Ordinary Warrant to us together with the appropriate instruments of transfer.
Exchange
Listing. There is no established public trading market for the Ordinary Warrants, and we do not expect a market to develop.
In addition, we do not intend to list the Ordinary Warrants on any securities exchange or nationally recognized trading system.
Without an active trading market, the liquidity of the Ordinary Warrants will be limited.
Right
as a Shareholder. Except as otherwise provided in the Ordinary Warrants or by virtue of such holder’s ownership
of our Ordinary Shares, the holders of the Ordinary Warrants do not have the rights or privileges of holders of our Ordinary
Shares, including any voting rights, until they exercise their Ordinary Warrants.
Fundamental
Transaction. In the event of a fundamental transaction, as described in the form of Ordinary Warrant, and generally including
any reorganization, recapitalization or reclassification of our Ordinary Shares, the sale, transfer or other disposition of all or substantially
all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding
Ordinary Shares, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding Ordinary
Shares, the holders of the Ordinary Warrants will be entitled to receive upon exercise of the Ordinary Warrants the kind
and amount of securities, cash or other property that the holders would have received had they exercised the Ordinary Warrants
immediately prior to such fundamental transaction, other than one in which a successor entity that is a publicly traded corporation (whose
stock is quoted or listed for trading on a national securities exchange, including, but not limited to, the New York Stock Exchange,
the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market) assumes the Ordinary Warrant
such that the warrant shall be exercisable for the publicly traded common stock of such successor entity.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information as of September 21, 2023, with respect to the beneficial ownership of our Ordinary Shares
by (i) each director, (ii) each named executive officer, (iii) all directors and executive officers as a group, and (iv) each person
who we know beneficially owns more than 5% of our Ordinary Shares based on filings with the SEC, unless otherwise indicated below.
Name (1) | |
Number of Ordinary Shares Beneficially
Owned(2) | | |
Percentage of Outstanding
Ordinary Shares(3) | |
Principal Shareholders | |
| | | |
| | |
Alpha Capital Anstalt (“Alpha”)(4) (5) | |
| 283,081 | | |
| 9.99 | % |
| |
| | | |
| | |
Executive Officers | |
| | | |
| | |
Rob Phythian, CEO(6) | |
| 77,586 | | |
| 2.7 | % |
Chris Nicholas, COO(7) | |
| 142,620 | | |
| 5.0 | % |
Robert DeLucia, CFO(8) | |
| 6,944 | | |
| * | |
David Abbott, CTO(9) | |
| 7,638 | | |
| * | |
| |
| | | |
| | |
Non-Employee Directors | |
| | | |
| | |
Paul Abdo(10) | |
| 116,290 | | |
| 4.1 | % |
Joe Housman(11) | |
| 26,443 | | |
| * | |
Tom Doering | |
| — | | |
| — | |
Scott Pollei | |
| — | | |
| — | |
Adrienne Anderson | |
| — | | |
| — | |
All directors and executive officers as a group | |
| 377,521 | | |
| 13.3 | % |
*
Indicates less than 1%.
1 |
Unless
otherwise indicated, such individual’s address is C/O SharpLink Gaming Ltd., 333 Washington Avenue North, Suite 104, Minneapolis,
Minnesota 55401. |
|
|
2 |
Beneficial
ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to
securities. Ordinary shares relating to options currently exercisable or exercisable within 60 days of the date of this table are
deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing
the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by
them. |
|
|
3 |
Percentages
are calculated based on 2,833,734 Ordinary Shares issued and outstanding as of September 13, 2023, less 90 Ordinary Shares held as
treasury stock. This represents a total number of 2,833,644. |
|
|
4 |
Beneficial
ownership reflects the maximum number of Ordinary Shares that may be acquired by Alpha subject to the Beneficial Ownership Limitation.
Pursuant to the Company’s records, Alpha owns of record (i) 101,406 Ordinary Shares, (ii) 12,481 Preferred B Shares, (iii)
regular warrant to purchase 266,667 Ordinary Shares at an exercise price of $0.60 per share, (iv) the Debenture convertible to up
to 1,391,798 Ordinary Shares (consisting of 1,053,337 Conversion Shares to be issued at $4.1772 per share (the “Conversion
Price”), and 338,461 interest shares which may be issued at $3.90 per share, the closing price of our Ordinary Shares as of
April 20, 2023, assuming all permissible interest and principal payments are made in Ordinary Shares and the Debenture is held
until maturity), and (v) warrant to purchase up to 880,000 Ordinary Shares at an exercise price of $4.0704 per share. |
|
|
5 |
Alpha’s
address is Altenbach 8, 9490 Vaduz, Principality of Liechtenstein. |
|
|
6 |
Includes
972 Ordinary Shares issuable upon exercise of options within 60 days. |
|
|
7 |
Includes
1,667 Ordinary Shares issuable upon exercise of options within 60 days. |
|
|
8 |
Includes
1,111 Ordinary Shares issuable upon exercise of options within 60 days. |
|
|
9 |
Includes
1,389 Ordinary Shares issuable upon exercise of options within 60 days. |
|
|
10 |
Includes
74 Ordinary Shares issuable upon exercise of options within 60 days, and 82,793 Ordinary Shares indirectly owned by Mr. Abdo through
Abdo Investments II, Inc., a Minnesota corporation. Mr. Abdo is a director of Abdo Investments II, Inc. |
|
|
11 |
Includes
74 Ordinary Shares issuable upon exercise of options within 60 days. |
PLAN
OF DISTRIBUTION
A.G.P.
has agreed to act as our Placement Agent in connection with this offering subject to the terms and conditions of the placement agency
agreement dated [●], 2023. The Placement Agent is not purchasing or selling any of the securities offered by this prospectus, nor
is it required to arrange the purchase or sale of any specific number or dollar amount of securities, but it has agreed to use its reasonable
best efforts to arrange for the sale of all of the securities offered hereby. We may not sell the entire amount of securities offered
pursuant to this prospectus.
We
will enter into a securities purchase agreement directly with certain purchasers, at the purchaser’s option, who purchase our securities
in this offering. Purchasers who do not enter into a securities purchase agreement shall rely solely on this prospectus in connection
with the purchase of our securities in this offering. We will deliver the securities being issued to purchasers upon receipt of purchaser
funds for the purchase of the securities offered pursuant to this prospectus.
This
offering will be completed no later than two business days following the commencement of this offering and the delivery of such securities
will be made upon receipt of investor funds received by the Company. We expect to deliver the securities being offered pursuant to this
prospectus on or about [●], 2023.
We
have agreed to indemnify the Placement Agent and specified other persons against specified liabilities, including liabilities under the
Securities Act, and to contribute to payments the Placement Agent may be required to make in respect thereof.
Fees
and Expenses
This
offering is being conducted on a “reasonable best efforts” basis and the Placement Agent has no obligation to buy any of
the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of securities. We have agreed to
pay the placement agent fees set forth in the table below (assuming the purchase of all of the securities we are offering).
| |
Per Share and
Ordinary Warrant | | |
Per Pre-Funded Warrant
and Ordinary Warrant | | |
Total | |
Public offering price | |
$ | | | |
$ | | | |
$ | | |
Placement Agent fees | |
$ | | | |
$ | | | |
$ | | |
Proceeds to us, before expenses(1) | |
$ | | | |
$ | | | |
$ | | |
(1)
The amount of the offering proceeds to us presented in this table does not give effect to any exercise of the Pre-Funded Warrants or
Ordinary Warrants being issued in this offering.
We
have agreed to pay to the Placement Agent a cash fee equal to 7.0% of the aggregate gross proceeds raised in this offering. Because there is no minimum offering amount required as a condition
to closing in this offering, the actual aggregate cash placement fee, if any, is not presently determinable and may be substantially
less than the maximum amount set forth above.
We
have also agreed to reimburse the Placement Agent at closing for legal and other expenses incurred by the placement agent in connection
with this offering in an amount equal to $100,000 and for certain non-accountable expenses, up to $25,000. We estimate the total
expenses payable by us for this offering, excluding the placement agent fees and expenses, will be approximately $[●].
The
Placement Agent may be deemed to be an underwriter within the meaning of Section 2(a)(ii) of the Securities Act. and any commissions
received by it and any profit realized on the resale of the securities sold by it while acting as principal might be deemed to be underwriting
discounts or commissions under the Securities Act. As an underwriter, the Placement Agent would be required to comply with the requirements
of the Securities Act and the Exchange Act, including, without limitation, Rule 4l5(a)(4) under the Securities Act and Rule 10b-5 and
Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of securities by the Placement
Agent acting as principal. Under these rules and regulations, the Placement Agent:
| ● | may
not engage in any stabilization activity in connection with our securities; and |
| | |
| ● | may
not bid for or purchase any of our securities or attempt to induce any person to purchase
any of our securities, other than as permitted under the Exchange Act, until it has completed
its participation in the distribution. |
Placement Agent Warrants
We
have agreed to issue to A.G.P. Placement Agent Warrants to purchase up to [●] of our Ordinary Shares, representing 5.0% of the
aggregate number of Ordinary Shares and Ordinary Shares underlying Pre-Funded Warrants sold in this offering. The Placement Agent Warrants
will have an exercise price equal to $[●] (110% of the public offering price of each Ordinary Share) and will be exercisable beginning
on [●], 2024, which is 180 days after the commencement of sales in this offering and terminate five years from the commencement
of sales in this offering. Pursuant to FINRA Rule 5110(e), the Placement Agent Warrants and any Ordinary Shares issued upon exercise
of the Placement Agent Warrants shall not be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any person
for a period of 180 days immediately following the date of effectiveness or commencement of sales of this offering, except the transfer
of any security: (i) by operation of law or by reason of our reorganization; (ii) to any FINRA member firm participating in the offering
and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction set forth above for
the remainder of the time period; (iii) if the aggregate amount of our securities held by the placement agent or related persons do not
exceed 1% of the securities being offered; (iv) that is beneficially owned on a pro-rata basis by all equity owners of an investment
fund, provided that no participating member manages or otherwise directs investments by the fund and the participating members in the
aggregate do not own more than 10% of the equity in the fund; or (v) the exercise or conversion of any security, if all securities remain
subject to the lock-up restriction set forth above for the remainder of the time period.
Lock-Up
Agreements
Our
directors and executive officers have agreed to enter lock-up agreements. Under these agreements, these individuals have agreed, subject
to specified exceptions, not to sell or transfer any Ordinary Shares or securities convertible into, or exchangeable or exercisable for,
our Ordinary Shares during a period ending 90 days after the date of this prospectus, without first obtaining the written consent of
the Placement Agent, subject to certain exceptions. Specifically, these individuals have agreed, in part, not to:
| ● | sell,
offer, contract or grant any option to sell (including any short sale), pledge, transfer,
establish an open “put equivalent position” within the meaning of Rule 16a-l(h)
under the Securities Exchange Act of 1934, as amended; |
| | |
| ● | enter
into any swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of our securities, whether any such transaction is
to be settled by delivery of our Ordinary Shares, in cash or otherwise; |
| | |
| ● | make
any demand for or exercise any right with respect to the registration of any of our securities; |
| | |
| ● | publicly
disclose the intention to make any offer, sale, pledge or disposition of, or to enter into
any transaction, swap, hedge; |
| | |
| ● | or
other arrangement relating to any of our securities. |
Notwithstanding
these limitations, our securities may be transferred under limited circumstances, including, without limitation, by gift, will or intestate
succession.
In
addition, we have agreed that, subject to certain exceptions, (i) we will not conduct any issuances of our Ordinary Shares for a
period of 90 days following closing of this offering and that (ii) we will not enter into a variable rate transaction for a period
of 180 days following the closing of this offering.
Determination
of Offering Price
The
public offering price of the securities we are offering was negotiated between us and the investors, in consultation with the Placement
Agent based on the trading of our shares of Ordinary Shares prior to the offering, among other things. Other factors considered in determining
the public offering price of the securities we are offering include our history and prospects, the industry in which we operate, our
past and present operating results, the stage of development of our business, our business plans for the future and the extent to which
they have been implemented, the previous experience of our executive officers, general conditions of the securities markets at the time
of the offering and such other factors as were deemed relevant.
Listing
Our
Ordinary Shares are listed on the Nasdaq under the symbol “SBET.” There is no established public trading market for the Ordinary
Warrants or Pre-Funded Warrants, and we do not expect such a market to develop. We do not intend to apply to list the Ordinary
Warrants or Pre-Funded Warrants on any securities exchange or other nationally recognized trading system. Without an active
trading market, the liquidity of the warrants will be limited.
Discretionary
Accounts
The
Placement Agent does not intend to confirm sales of the securities offered hereby to any accounts over which it has discretionary authority.
Other
Activities and Relationships
The
Placement Agent and certain of its affiliates are full service financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment,
hedging, financing and brokerage activities. The Placement Agent and certain of its affiliates have, from time to time, performed, and
may in the future perform, various commercial and investment banking and financial advisory services for us and our affiliates, for which
they received or will receive customary fees and expenses.
In
addition, in the ordinary course of their various business activities, the Placement Agent and certain of its affiliates may make or
hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments
(including bank loans) for their own account and for the· accounts of their customers, and such investment and securities activities
may involve securities and/or instruments issued by us and our affiliates. If the Placement Agent or its affiliates enter into a lending
relationship with us, they will routinely hedge their credit exposure to us consistent with their customary risk management policies.
The Placement Agent and its affiliates may hedge such exposure by entering into transactions that consist of either the purchase of credit
default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the Ordinary
Shares offered hereby. Any such short positions could adversely affect future trading prices of the Ordinary Shares offered hereby. The
Placement Agent and certain of its affiliates may also communicate independent investment recommendations, market color or trading ideas
and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend
to clients that they acquire, long and/or short positions in such securities and instruments.
LEGAL
MATTERS
The
validity of the issuance of the Ordinary Shares offered hereby will be passed upon for us by S. Friedman, Abramson & Co., Tel Aviv,
Israel. The Placement Agent is being represented in connection with this offering by Sullivan & Worcester LLP, New York, New York.
Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name in an applicable
prospectus supplement.
EXPERTS
The
consolidated financial statements of the Company as of December 31, 2022, which are incorporated by reference in this prospectus in the
registration statement, have been audited by Cherry Bekaert LLP, an independent registered public accounting firm, as set forth in their
report thereon and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The
consolidated financial statements of the Company as of and for the year ended December 31, 2021 incorporated in this prospectus and registration
statement by reference from the SharpLink Gaming Ltd. Annual Reports on Form 10-K and form 10-K/A for the year ended December
31, 2022, have been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report thereon, which
report expresses an unqualified opinion and includes explanatory paragraphs relating to going concern and retrospective adjustments for
discontinued operations, incorporated herein by reference, and have been incorporated in this prospectus and registration statement in
reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
The
consolidated financial statements of SportsHub Games Network, Inc. and its Subsidiaries as of and for the year ended December 31, 2021,
which are incorporated by reference in this prospectus in the registration statement from the SharpLink Gaming Ltd. Annual Report on
Form 10-K/A for the year ended December 31, 2022, have been audited by Bergan KDV Ltd., an independent registered public accounting
firm, as stated in their report thereon and are incorporated in this prospectus and registration statement in reliance upon such report
and upon the authority of such firm as experts in accounting and auditing.
The
consolidated financial statements of SportsHub Games Network, Inc. and its Subsidiaries as of and for the year ended December 31, 2020,
which are incorporated by reference in this prospectus and registration statement from the SharpLink Gaming Ltd. Annual Report on Form
10-K/A for the year ended December 31, 2022, have been audited by RSM US LLP, an independent auditor, as stated in their report
thereon and incorporated in this prospectus and registration statement in reliance upon such report and upon the authority of such firm
as experts in accounting and auditing.
TRANSFER
AGENT
Our
transfer agent is Equiniti/American Stock Transfer & Trust Company, LLC, located at 6201 15th Avenue, Brooklyn, New York
11219.
LEGAL
PROCEEDINGS
From
time to time, we may become involved in lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
Although we currently maintain liability insurance coverage intended to cover professional liability and certain other claims, we cannot
assure that our insurance coverage will be adequate to cover liabilities arising out of claims asserted against us in the future where
the outcomes of such claims are unfavorable to us. Liabilities in excess of our insurance coverage, including coverage for professional
liability and certain other claims, could have a material adverse effect on our business, financial condition and results of operations.
As of September 21, 2023, there are no pending, nor to our knowledge threatened, legal proceedings against us.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the
public over the Internet at the SEC’s website at www.sec.gov. Copies of certain information filed by us with the SEC are also available
on our website at www.sharplink.com. Information accessible on or through our website is not a part of this prospectus.
This
prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all of the
information in the registration statement. You should review the information and exhibits in the registration statement for further information
on us and our consolidated subsidiaries and the securities that we are offering. Forms of any indenture or other documents establishing
the terms of the offered securities are filed as exhibits to the registration statement of which this prospectus forms a part or under
cover of a Current Report on Form 8-K and incorporated in this prospectus by reference. Statements in this prospectus or any prospectus
supplement about these documents are summaries and each statement is qualified in all respects by reference to the document to which
it refers. You should read the actual documents for a more complete description of the relevant matters.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information
to you by referring you to those documents instead of having to repeat the information in this prospectus. The information incorporated
by reference is considered to be part of this prospectus, and because we are a smaller reporting company, later information that we file
with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any
future filings (including those made after the initial filing of the registration statement of which this prospectus is a part and prior
to the effectiveness of such registration statement) we will make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act until the termination of the offering of the shares covered by this prospectus (other than information furnished under Item 2.02
or Item 7.01 of Form 8-K):
| ● | Our
Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April
5, 2023; |
| | |
| ● | Our
amended Annual Report on Form 10-K/A ended December 31, 2022, filed with the SEC on July
14, 2023; |
| | |
| ● | Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on
May 16, 2023; |
| | |
| ● | Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on
August 14, 2023; |
| | |
| ● | Our
definitive proxy statement on Schedule
14A, filed with the SEC on April 25, 2023; |
| | |
| ● | Our
preliminary proxy statement on Schedule
14A, filed with the SEC on September 14, 2023; |
| | |
|
● |
Our
Current Reports on Form 8-K filed with the SEC on January
5, 2023, January
23, 2023, February 16, 2023, February
17, 2023, April 26, 2023, May 10, 2023, May
26, 2023, May 26, 2023, June 21, 2023, August 9, 2023 and September 8, 2023; |
| | |
| ● | The
description of the rights of each class of securities contained in Exhibit
2.4 to our Annual Report on Form
10-K for the year ended December 31, 2022 filed with the SEC on April 5, 2023, including
any amendment or report filed for the purpose of updating such description. |
As
a smaller reporting company, we also are incorporating by reference any future information filed (rather than furnished) by us with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of the initial filing
of the registration statement of which this prospectus is a part and before the effective date of the registration statement and after
the date of this prospectus until the termination of the offering. Any statements contained in a previously filed document incorporated
by reference into this prospectus is deemed to be modified or superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus, or in a subsequently filed document also incorporated by reference herein, modifies or supersedes that
statement.
We
will provide to each person, including any beneficial owner, to whom a prospectus is delivered, at no cost, upon written or oral request,
a copy of any or all of the reports or documents that have been incorporated by reference in the prospectus contained in the registration
statement but not delivered with the prospectus. You should direct requests for documents to:
SharpLink
Gaming Ltd.
333
Washington Avenue North
Suite
104
Minneapolis,
Minnesota 55401
Attention:
Chief Financial Officer
Phone:
612-293-0619
Up
to [●] Ordinary Shares or Ordinary Shares Underlying Pre-Funded Warrants
Ordinary
Warrants to Purchase Up to [●] Ordinary
Shares
Up
to [●] Ordinary Shares Underlying Ordinary Warrants
Pre-Funded
Warrants to Purchase Up to [●] Ordinary Shares
PRELIMINARY
PROSPECTUS
Sole
Placement Agent
A.G.P.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distributions
The
following table sets forth the costs and expenses payable by SharpLink Gaming, Ltd. (the “Company,” “MTS”
or “Old SharpLink”) in connection with the offering and sale of the ordinary shares, par value NIS 0.60 share (the
“Ordinary Shares”) being registered. All amounts shown are estimates, except the Securities and Exchange Commission (the
“SEC”) registration fee.
SEC registration fee | |
$ | 1,812 | |
Federal and state taxes and fees | |
| * | |
FINRA filing fee | |
| * | |
Accounting fees and expenses | |
| * | |
Legal fees and expenses | |
| * | |
Transfer agent and registrar fees | |
| * | |
Printing expenses | |
| * | |
Miscellaneous | |
| * | |
Total | |
| * | |
*To
be provided by amendment
Item
14. Indemnification of Directors and Officers
Exculpation
of Office Holders. The Israeli Companies Law provides that an Israeli company cannot exculpate an office holder from liability with
respect to a breach of his or her duty of loyalty. If permitted by its articles of association, a company may exculpate in advance an
office holder from his or her liability to the company, in whole or in part, with respect to a breach of his or her duty of care. However,
a company may not exculpate in advance a director from his or her liability to the company with respect to a breach of his duty of care
in connection with distributions.
Insurance
of Office Holders. Israeli law provides that a company may, if permitted by its articles of association, enter into a contract to
insure its office holders for liabilities incurred by the office holder with respect to an act or omission performed in his or her capacity
as an office holder, as a result of: (i) a breach of the office holders duty of care to the company or another person; (ii) a breach
of the office holders duty of loyalty to the company, provided that the office holder acted in good faith and had reasonable cause to
assume that the act would not prejudice the company’s interests; and (iii) a financial liability imposed upon the office holder
in favor of another person.
Indemnification
of Office Holders. Under Israeli law a company may, if permitted by its articles of association, indemnify an office holder for acts
or omissions performed by the office holder in such capacity for (a) monetary liability imposed upon the office holder in favor of another
person pursuant to a court judgment, including a settlement or an arbitration award approved by a court; (b) reasonable litigation expenses,
including attorney’s fees, actually incurred by the office holder as a result of an investigation or proceeding instituted against
him or her by a competent authority, provided that such investigation or proceeding concluded without the filing of an indictment against
the office holder or the imposition of any monetary liability in lieu of criminal proceedings, or concluded without the filing of an
indictment against the office holder and a monetary liability was imposed on him or her in lieu of criminal proceedings with respect
to a criminal offense that does not require proof of criminal intent; and (c) reasonable litigation expenses, including attorneys’
fees, actually incurred by the office holder or imposed upon the office holder by a court: (i) in an action, suit or proceeding brought
against the office holder by or on behalf of the company or another person, (ii) in connection with a criminal action in which the office
holder was acquitted, or (iii) in connection with a criminal action in which the office holder was convicted of a crime that does not
require proof of criminal intent.
Israeli
law provides that a company’s articles of association may permit the company to (a) indemnify an office holder retroactively, following
a determination to this effect made by the company after the occurrence of the event in respect of which the office holder will be indemnified;
and (b) undertake in advance to indemnify an office holder, except that with respect to a monetary liability imposed on the office holder
by any judgment, settlement or court-approved arbitration award, the undertaking must be limited to types of occurrences, which, in the
opinion of the company’s board of directors, are, at the time of the undertaking, foreseeable due to the company’s activities
and to an amount or standard that the board of directors has determined is reasonable under the circumstances.
Limitations
on Exculpation, Insurance and Indemnification. The Israeli Companies Law provides that a company may not exempt or indemnify an office
holder nor enter into an insurance contract which would provide coverage for liability incurred as a result of any of the following:
(a) a breach by the office holder of his or her duty of loyalty (however, a company may insure and indemnify against such breach if the
office acted in good faith and had reasonable cause to assume that his act would not prejudice the company’s interests); (b) a
breach by the office holder of his or her duty of care if the breach was done intentionally or recklessly, unless made in negligence
only; (c) any act of omission done with the intent to derive an illegal personal benefit; or (d) any fine, civil fine, monetary sanction
or penalty levied against the office holder.
Pursuant
to the Israeli Companies Law, exculpation of, procurement of insurance coverage for, and an undertaking to indemnify or indemnification
of, our office holders must be approved by our Compensation Committee and our board of directors and, if the office holder is a controlling
shareholder, director or a chief executive officer, also by our shareholders.
Our
Articles allow us to insure, indemnify and exempt our office holders, to the fullest extent permitted by the provisions of the Israeli
Companies Law. We have provided several of our directors and officers a letter of indemnification for liabilities or expenses incurred
as a result of their acts in their capacity as directors and officers of our company, in an aggregate amount not to exceed $3 million.
Following
the expiration of our previous policy, we acquired a new directors’ and officers’ policy with liability coverage of $5.0
million, and additional side A (only) coverage of $5.0 million, commencing July 26, 2021. Our shareholders approved the purchase of the
new policy commencing July 26, 2021 and the terms and conditions for the purchase, renewal, extension and/or replacement, from time to
time, of our directors’ and officers’ liability insurance policy for all directors and officers of our company and its subsidiaries,
who may serve from time to time (including our Chief Executive Officer) (the “New Policy”), as follows: (i) the coverage
limit per claim and in the aggregate under the New Policy may not exceed an amount representing an increase of 25% in any year, as compared
to the previous year’s aggregate coverage limit; (ii) our Compensation Committee determines that the New Policy is on market terms;
and (iii) any New Policy may not be entered into after 2023. No further approval of our shareholders will be required in connection with
any renewal and/or extension and/or purchase of the New Policy entered into in compliance with the foregoing terms and conditions.
Administrative
Sanctions. The Israeli Securities Authority is authorized to impose administrative sanctions against companies like ours and their
office holders for certain violations of the Israeli Securities Law or the Israeli Companies Law. These sanctions include monetary sanctions
and certain restrictions on serving as a director or senior officer of a public company for certain periods of time. The maximum amount
of the monetary sanctions that could be imposed upon individuals is a fine of NIS 1.0 million (currently equivalent to approximately
$309,000), plus the greater of the following amounts payable to persons who suffered damages as a result of the violation: (i) the amount
of profits earned or losses avoided by the violator as a result of the violation, up to the amount of the applicable fine, or (ii) compensation
for damages suffered by the injured persons, up to 20% of the fine imposed on the violator.
Only
certain types of liabilities may be reimbursed by indemnification and insurance. Specifically, legal expenses (including attorneys’
fees) incurred by an individual in the applicable administrative enforcement proceeding and any compensation payable to injured parties
for damages suffered by them (as described in clause (ii) of the immediately preceding paragraph) are permitted to be reimbursed via
indemnification or insurance, provided that such indemnification and insurance are authorized by the company’s articles of association.
Item
15. Recent Sales of Unregistered Securities
On
December 23, 2020, the Company entered into a securities purchase agreement with an
investor to issue 200 shares of Series A preferred stock for $2,000,000. On June 15, 2021, Old SharpLink entered into the first amendment
to the securities purchase agreement, pursuant to which Old SharpLink sold to the current Series A preferred stock shareholder Series
B preferred stock for $6,000,000, and issued Series A-1 preferred stock equal to 3% of the issued and outstanding capital of the Company.
On July 23, 2021, Old SharpLink entered into the second amendment to the securities purchase agreement, pursuant to which Old SharpLink
sold to the Series A preferred stock shareholder 276,582 shares of Series B preferred stock for $6,000,000.
In
February 2021, MTS issued a warrant in exchange for advisory services, which vested upon the completion of the MTS Merger.
On
July 21, 2021, MTS granted a warrant to the former MTS CEO to acquire 5,833 ordinary shares, at an exercise price of $26.42, and a warrant
to acquire 2,500 ordinary shares, with a $0 exercise price. Both warrants vested and became immediately exercisable upon the consummation
of the MTS Merger and expire three years after the grant date.
On
July 26, 2021, Old SharpLink completed the MTS Merger, changing the name of the Company from Mer Telemanagement Solutions Ltd. to SharpLink
Gaming Ltd., which was effectuated by a share exchange in which MTS issued 1,160,101 Ordinary Shares in the transaction in exchange for
shares of Old SharpLink’s outstanding common stock.
On
November 16, 2021, in a concurrent private placement, the Company agreed to issue to Alpha the Regular Warrants which are initially exercisable
six months following issuance and terminate four years following issuance. The Regular Warrants are exercisable to purchase an aggregate
of 266,667 Ordinary Shares and initially had an exercise price of $45.00 per share, which was reduced to $0.60 per share in connection
with the 2023 Purchase Agreement executed with Alpha in February 2023.
On
December 31, 2021, the Company issued 60,611 Ordinary Shares as part of the consideration for the FourCubed acquisition. Subsequent to
closing, the seller is able to earn up to an additional 58,775 Ordinary Shares (the “Earn-Out Shares”) of the Company by
maintaining employment and meeting certain performance conditions. In March 2022, the seller’s employment was terminated. No performance-based
milestones were achieved prior to termination. As issuance of the Earn-Out Shares to the seller was contingent upon achieving specified
milestones and continued employment, the Company does not expect to recognize compensation cost related to the earnout.
On
December 22, 2022, the Company issued, in the aggregate, 431,926 Ordinary Shares to common and preferred stockholders of SportsHub, on
a fully diluted basis. An additional aggregate of 40,586 Ordinary Shares are being held in escrow for SportsHub shareholders who have
yet to provide the applicable documentation required in connection with the SportsHub Merger, as well as 40,586 Ordinary 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 Merger Agreement.
On
February 15, 2023, the Company issued to Alpha, an 8% Interest Rate, 10% Original Issue Discount, Senior Convertible Debenture in the
aggregate principal amount of $4,400,000 for a purchase price of $4,000,000. On February 15, 2023, the Company also issued to Alpha the
warrant to purchase 880,000 Ordinary Shares of the Company at an initial exercise price of $8.75. The exercise price of the warrant was
subject to an initial reset immediately prior to the Company’s filing of a proxy statement that includes the Shareholder Approval
Proposal, to the lower of $8.75 and the average of the five Nasdaq Official Closing Prices immediately preceding such date. 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 includes the Shareholder Approval Proposal.
Item
16. Exhibits and Financial Statement Schedules
(a)Exhibits
Exhibit
Number |
|
Description |
|
|
|
1.1* |
|
Form
of Placement Agent Agreement |
|
|
|
2.1 |
|
Agreement and Plan of Merger, dated June 14, 2023, by and among SharpLink Gaming Ltd., SharpLink Gaming, Inc., and SharpLink Merger Sub Ltd. (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form S-4 filed with the SEC on June 15, 2023). |
|
|
|
2.2 |
|
Amendment No. 1 to Agreement and Plan of Merger, dated July 24, 2023, by and among SharpLink Gaming Ltd., SharpLink Gaming, Inc., and SharpLink Merger Sub Ltd. |
|
|
|
3.1 |
|
Memorandum of Association of SharpLink Gaming Ltd. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on April 26, 2023) (translated from Hebrew; the original language version is on file with the Registrant and is available upon request) |
|
|
|
3.2 |
|
Second Amended and Restated Articles of Association of SharpLink Gaming Ltd. (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed with the SEC on May 26, 2023) |
|
|
|
4.1 |
|
Form of Regular Warrant issued to Alpha Capital Anstalt (incorporated by reference to Exhibit 4.2 to the Current Report on Form 6-K submitted to the SEC on November 19, 2021) |
|
|
|
4.2 |
|
Common Stock Purchase Warrant for 8,800,000 shares in favor of Alpha Capital Anstalt, dated February 15, 2023 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
4.3 |
|
MTS Warrant issued to Roy Hess for 58,334 Ordinary Shares of SharpLink Gaming Ltd. |
|
|
|
4.4 |
|
MTS Warrant issued to Roy Hess for 25,000 Ordinary Shares of SharpLink Gaming Ltd. |
|
|
|
4.5 |
|
Common Stock Purchase Warrant of SportsHub Games Network, Inc., dated October 29, 2018 |
|
|
|
4.6* |
|
Form
of Pre-Funded Warrant |
|
|
|
4.7* |
|
Form
of Ordinary Warrant |
|
|
|
4.8* |
|
Form
of Placement Agent Warrant |
|
|
|
5.1* |
|
Opinion
of S. Friedman, Abramson & Co. |
|
|
|
10.1 |
|
Agreement and Plan of Merger, dated April 15, 2021, among Mer Telemanagement Solutions Ltd., SharpLink, Inc., and New SL Acquisition Corp. (incorporated by reference to Exhibit 99.2 to the Current Report on Form 6-K submitted to the SEC on April 15, 2021) |
10.2 |
|
Amendment No. 1 to Agreement and Plan of Merger, dated July 23, 2021, Mer Telemanagement Solutions Ltd., New SL Acquisition Corp. and SharpLink, Inc. (incorporated by reference to Exhibit 2.2 to the Registration Statement on Form F-3 filed with the SEC on July 27, 2021) |
|
|
|
10.3+ |
|
SharpLink Gaming Ltd. 2003 Israeli Share Option Plan (incorporated by reference to Exhibit B to Item IV of Exhibit 99.1 the Current Report on Form 6-K submitted to the SEC on July 2, 2013) |
|
|
|
10.4+ |
|
SharpLink, Inc. 2020 Stock Incentive Plan (incorporated by reference to Exhibit 99.2 to the Registration Statement on Form S-8 filed with the SEC on October 12, 2021) |
|
|
|
10.5+ |
|
2021 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 filed with the SEC on October 12, 2021) |
|
|
|
10.6+ |
|
SportsHub Games Network, Inc. 2018 Equity Incentive Plan |
|
|
|
10.7+ |
|
Employment Agreement by and between SharpLink, Inc. and Rob Phythian, dated July 26, 2021 (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-4 filed with the SEC on February 3, 2022) |
|
|
|
10.8+ |
|
Employment Agreement by and between SharpLink, Inc. and Chris Nicholas, dated July 26, 2021 (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-4 filed with the SEC on February 3, 2022) |
|
|
|
10.9+ |
|
Employment Agreement by and between SharpLink Gaming Ltd. and Bob DeLucia, dated August 16, 2022 (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-1/A filed with the SEC on May 8, 2023) |
|
|
|
10.10+ |
|
Directors and Officers Compensation Policy (incorporated by reference to Annex C to Exhibit 99.2 of the Current Report on Form 6-K submitted to the SEC on July 28, 2022) |
|
|
|
10.11 |
|
Securities Purchase Agreement dated December 23, 2020, between SharpLink, Inc. and Alpha Capital Anstalt, as amended on June 15, 2021 and July 23, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K submitted to the SEC on November 19, 2021) |
|
|
|
10.12 |
|
Securities Purchase Agreement dated November 16, 2021 between the Company and Alpha Capital Anstalt (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K submitted to the SEC on November 19, 2021) |
|
|
|
10.13 |
|
Asset Purchase Agreement, dated December 31, 2021, by and among FourCubed Acquisition Company, LLC, 6t4 Company, FourCubed Management, LLC, Chris Carlson, and SharpLink Gaming Ltd. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K submitted to the SEC on January 12, 2022) |
|
|
|
10.14† |
|
Registration Rights Agreement, dated December 31, 2021, by and among SharpLink Gaming Ltd., 6t4 Company, and Chris Carlson (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 6-K submitted to the SEC on January 12, 2022) |
|
|
|
10.15 |
|
Agreement and Plan of Merger, dated September 7, 2022, by and among Sharplink Gaming Ltd., SHGN Acquisition Corp., SportsHub Games Network, Inc. and Christian Peterson, in his capacity as the Stockholder Representative (incorporated by reference to Annex A-1 to Exhibit 99.2 of the Current Report on Form 6-K submitted to the SEC on November 8, 2022) |
10.16 |
|
First Amendment to Agreement and Plan of Merger, dated November 2, 2022, by and among Sharplink Gaming Ltd., SHGN Acquisition Corp., SportsHub Games Network, Inc. and Christian Peterson, in his capacity as the Stockholder Representative (incorporated by reference to Annex A-1 to Exhibit 99.2 of the Current Report on Form 6-K submitted to the SEC on November 8, 2022) |
|
|
|
10.17†† |
|
Share and Asset Purchase Agreement, dated as of November 9, 2022, by and between SharpLink Gaming Ltd. and Entrypoint South Ltd. (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 6-K submitted to the SEC on January 5, 2023) |
|
|
|
10.18 |
|
Revolving Credit Agreement, dated February 13, 2023, by and between SharpLink, Inc. and Platinum Bank (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.19 |
|
Revolving Promissory Note, dated February 13, 2023, executed by SharpLink, Inc. (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.20 |
|
Deposit Account Pledge And Control Agreement, dated February 13, 2023, by and between SHGN Acquisition Corp. and Platinum Bank (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.21 |
|
Form of Company Guaranty, dated February 13, 2023, issued by SHGN Acquisition Corp., SLG 1 Holdings LLC and SLG 2 Holdings LLC (incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.22 |
|
Term Loan Agreement, dated June 9, 2020, by and between SportsHub Games Network, Inc. and Platinum Bank (incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.23 |
|
Amendment Agreement, dated November 4, 2021, by and between SportsHub Games Network, Inc., LeagueSafe Management, LLC, Virtual Fantasy Games Acquisition, LLC, Rob Phythian, Chris Nicholas and Platinum Bank (incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.24 |
|
Consent, Assumption and Second Amendment Agreement, dated February 13, 2023, by and between SHGN Acquisition Corp., LeagueSafe Management, LLC, Virtual Fantasy Games Acquisition, LLC and Platinum Bank (incorporated herein by reference to Exhibit 10.7 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.25 |
|
Amended and Restated Term Promissory Note, dated February 13, 2023, executed by SHGN Acquisition Corp. (incorporated herein by reference to Exhibit 10.8 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.26 |
|
Security Agreement, dated June 9, 2020, executed by SHGN Acquisition Corp. (incorporated herein by reference to Exhibit 10.9 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
10.27 |
|
Third Party Security Agreement, dated as of June 9, 2020, executed by Virtual Fantasy Games Acquisition, LLC (incorporated herein by reference to Exhibit 10.10 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.28 |
|
Amended and Restated Deposit Account Pledge Agreement, dated February 13, 2023, executed by SHGN Acquisition Corp. (incorporated herein by reference to Exhibit 10.11 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.29 |
|
Revolving Credit Agreement, dated March 27, 2020, by and between SportsHub Games Network, Inc. and Platinum Bank (incorporated herein by reference to Exhibit 10.12 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.30 |
|
Second Amendment Agreement, dated November 4, 2021, by and between SportsHub Games Network, Inc., LeagueSafe Management, LLC, Virtual Fantasy Games Acquisition, LLC and Platinum Bank (incorporated herein by reference to Exhibit 10.13 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.31 |
|
Consent, Assumption and Third Amendment Agreement, dated February 13, 2023, by and between SHGN Acquisition Corp., LeagueSafe Management, LLC, Virtual Fantasy Games Acquisition, LLC and Platinum Bank (incorporated herein by reference to Exhibit 10.14 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.32 |
|
Amended and Restated Promissory Note executed by SHGN Acquisition Corp., dated February 13, 2023 (incorporated herein by reference to Exhibit 10.15 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.33 |
|
Security Agreement, dated March 27, 2020, executed by SportsHub Games Network, Inc. (incorporated herein by reference to Exhibit 10.16 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.34 |
|
Security Agreement, dated March 27, 2020, by and between LeagueSafe Management, LLC and SportsHub Games Network, Inc. (incorporated herein by reference to Exhibit 10.17 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.35 |
|
Third Party Security Agreement, dated March 27, 2020, executed by Virtual Fantasy Games Acquisition, LLC (incorporated herein by reference to Exhibit 10.18 to the Current Report on Form 8-K/A filed with the SEC on February 17, 2023) |
|
|
|
10.36 |
|
Securities Purchase Agreement, dated February 14, 2023, by and between SharpLink, Inc. and Alpha Capital Anstalt (incorporated herein by reference to Exhibit 10.19 to the Current Report on Form 8-K filed with the SEC on February 16, 2023) |
|
|
|
10.37 |
|
8% Senior Convertible Debenture Due February 15, 2026 (incorporated herein by reference to Exhibit 10.20 to the Current Report on Form 8-K filed with the SEC on February 16, 2023) |
|
|
|
10.38 |
|
Registration Rights Agreement, dated February 14, 2026, by and between SharpLink, Inc. and Alpha Capital Anstalt (incorporated herein by reference to Exhibit 10.21 to the Current Report on Form 8-K filed with the SEC on February 16, 2023) |
|
|
|
10.39* |
|
Form
of Securities Purchase Agreement |
|
|
|
21.1 |
|
List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the Annual Report on Form 10-K filed to the SEC on April 5, 2023) |
|
|
|
23.1 |
|
Consent of Cherry Bekaert, LLP |
|
|
|
23.2 |
|
Consent of RSM US LLP |
|
|
|
23.3 |
|
Consent
of RSM US LLP |
|
|
|
23.4 |
|
Consent of BerganKD, LTD. |
|
|
|
23.5* |
|
Consent of S. Friedman, Abramson & Co. (included in Exhibit 5.1) |
|
|
|
24.1 |
|
Power of Attorney |
|
|
|
107 |
|
Filing Fee Table |
* |
To
be filed by amendment |
† |
Pursuant
to Item 601(b)(10)(iv) of Regulation S-K, certain information contained in this has been redacted as indicated therein |
†† |
Annexes
and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the
SEC a copy of any omitted annexes and schedules upon request. |
+ |
Indicates
management contract or compensatory plan. |
(b)Financial
Statement Schedules.
None.
Item
17. Undertakings
We
hereby undertake:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933 (the “Securities Act”);
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; provided, however, that paragraphs (1)(i), (l)(ii) and
(l)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the registration statement or is contained in a form of prospectus filed pursuant to Rule 462(b)
that is part of the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser:
Each
prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness.
Provided,
however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such
first use.
(5)
That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(6)
That, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution
of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus
of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424 of the Securities Act; (ii) any free
writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned
Registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the
undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and (iv) any other communication that
is an offer in the offering made by the undersigned Registrant to the purchaser.
(7)
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that, in the opinion of
the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(8)
that:
(a)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time
it was declared effective.
(b)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, SharpLink Gaming Ltd. has duly caused this registration statement on Form
S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on the
22nd day of September, 2023.
|
SharpLink
Gaming Ltd. |
|
|
|
|
By: |
/s/
Rob Phythian |
|
Name: |
Rob
Phythian |
|
Title: |
Chief
Executive Officer |
SIGNATURES
AND POWER OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Rob Phythian and Robert
DeLucia, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution,
for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration
statement, including post-effective amendments, and registration statements filed pursuant to Rule 462 under the Securities Act, and
to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent and each of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith and about the premises, as fully for all intents and purposes as they, he
or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or any of them, or their,
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this registration statement has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signatures |
|
Title |
|
Date |
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|
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/s/
Rob Phythian |
|
Chief
Executive Officer and Director |
|
September
22, 2023 |
Rob
Phythian |
|
(Principal
Executive Officer) |
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|
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|
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|
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/s/
Robert DeLucia |
|
Chief
Financial Officer |
|
September
22, 2023 |
Robert
DeLucia |
|
(Principal
Financial Officer and Principal Accounting Officer) |
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|
|
|
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/s/
Chris Nicholas |
|
Chief
Operator Officer and Director |
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September
22, 2023 |
Chris
Nicholas |
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|
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|
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/s/
Joseph Housman |
|
Chairman
of the Board |
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September
22,
2023 |
Joseph
Housman |
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/s/
Paul Abdo |
|
Director |
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September
22,
2023 |
Paul
Abdo |
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/s/
Thomas Doering |
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Director |
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September
22,
2023 |
Thomas
Doering |
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|
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/s/
Adrienne Anderson |
|
Director |
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September
22,
2023 |
Adrienne
Anderson |
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|
|
|
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|
|
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/s/
Scott Pollei |
|
Director |
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September
22, 2023 |
Scott
Pollei |
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|
|
Exhibit 2.2
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT (this
“Amendment”) to the AGREEMENT AND PLAN OF MERGER, dated June 14, 2023 (the “Agreement”),
is made and entered into as of July 19, 2023, by and among SharpLink Gaming Ltd., an Israeli limited company (“SharpLink
Israel”), SharpLink Gaming, Inc., a Delaware corporation and wholly-owned subsidiary of SharpLink Israel (“SharpLink
US”), and SharpLink Merger Sub Ltd., an Israeli limited company and wholly-owned subsidiary of SharpLink US (“Merger
Sub”). SharpLink Israel, SharpLink US and Merger Sub may each be referred to herein individually as a “Party”
and collectively as the “Parties”.
RECITALS
A. The
Parties entered into the Merger Agreement, which provided that Merger Sub will merge with and into SharpLink Israel (the “Merger”),
following which Merger Sub will cease to exist, and SharpLink Israel will become a wholly-owned subsidiary of SharpLink US, all upon the
terms and subject to the conditions set forth in the Agreement.
B. The
Parties wish to amend the Agreement to add the SportsHub Game Network, Inc. 2018 Stock Incentive Plan to the SharpLink Israel Plans being
assumed by SharpLink US.
AGREEMENT
The Parties, intending to be legally
bound, agree as follows:
1. | Definitions. Capitalized terms used but not otherwise
defined herein shall have such definitions provided in the Agreement. |
| |
2. | Amendment of section 1.5(c)(i).
Section 1.5(c)(i) of the Agreement is hereby removed and replaced in its entirety
with the following: |
(i) Options. Each option to purchase
Ordinary Shares (“SharpLink Israel Options”) that is outstanding and unexercised immediately prior to the Effective
Time under SharpLink Israel’s Mer Telemanagement Solutions Ltd. 2003 Israeli Share Option Plan and Sharplink Gaming, Ltd. 2021 Equity
Incentive Plan, SharpLink, Inc. 2020 Stock Incentive Plan (assumed by SharpLink Israel) and SportsHub Game Network, Inc. 2018 Stock Incentive
Plan (assumed by SharpLink Israel) (together, the “SharpLink Israel Plans”), whether or not vested, shall be converted,
on a one-for-one basis, into and become an option to purchase shares of Common Stock, and SharpLink US shall assume the SharpLink Israel
Plans and each such SharpLink Israel Option in accordance with the terms (as in effect as of the date of this Agreement) of the relevant
SharpLink Israel Plan and the terms of the stock option agreement by which such SharpLink Israel Option is evidenced (but with changes
to such documents as SharpLink US in good faith determines are appropriate to reflect the substitution of the SharpLink Israel Options
by options to purchase Common Stock). All rights with respect to Ordinary Shares under SharpLink Israel Options assumed by SharpLink US
shall thereupon be converted into rights with respect to Common Stock. Accordingly, from and after the Effective Time: (i) each SharpLink
Israel Option assumed by SharpLink US may be exercised solely for Common Stock; (ii) the number of Common Stock and the per share exercise
price of each SharpLink Israel Option assumed by SharpLink US shall be the same as the number of Ordinary Shares and per share exercise
price of the relevant SharpLink Israel Option; and (iii) any restriction on the exercise of any SharpLink Israel Options assumed by SharpLink
US shall continue in full force and effect and the term, exercisability and other provisions of such SharpLink Israel Options shall otherwise
remain unchanged; provided, however, that: (A) SharpLink US may amend the terms of the SharpLink Israel Options to reflect SharpLink US’s
substitution of the SharpLink Israel Options with options to purchase shares of Common Stock (such as by making any change in control
or similar definition relate to SharpLink US and having any provision that provides for the adjustment of SharpLink Israel Options upon
the occurrence of certain corporate events relate to SharpLink US and/or Common Stock); and (B) the SharpLink US Board of Directors or
a committee thereof shall succeed to the authority and responsibility of the SharpLink Israel Board of Directors or any committee thereof
with respect to each SharpLink Israel Option assumed by SharpLink US. Notwithstanding anything to the contrary in this Section 1.5(c)(i),
the parties intend that the conversion of each SharpLink Israel Option (regardless of whether such option qualifies as an “incentive
stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”))
into an option to purchase Common Stock shall be made in a manner consistent with Treasury Regulation Sections 1.424-1 and 1.409A-1(b)(5),
such that the conversion of a SharpLink Israel Option shall not constitute a “modification” of such SharpLink Israel Option
for purposes of Section 409A or Section 424 of the Code. Prior to the Effective Time, SharpLink Israel shall take all actions that may
be necessary (under the SharpLink Israel Plans and otherwise) to effectuate the provisions of this Section 1.5(c)(i) and to ensure that,
from and after the Effective Time, holders of SharpLink Israel Options have no rights with respect thereto other than those specifically
provided in this Section 1.5(c)(i).
| 3. | MISCELLANEOUS PROVISIONS |
3.1 Effect
of Amendment. Except as amended by this Amendment, the terms of the Agreement shall remain in full force and effect. All references
in the Agreement to the term “Agreement” shall mean the Agreement as amended by this Amendment.
3.2 Counterparts;
Exchanges by Electronic Transmission. This Amendment may be executed in several counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument. The exchange of a fully executed Amendment (in counterparts or
otherwise) by all Parties by electronic transmission in PDF format shall be sufficient to bind the Parties to the terms and conditions
of this Amendment.
(Remainder of page intentionally left blank)
IN WITNESS WHEREOF, the Parties
have caused this Amendment to be executed as of the date first above written.
|
SHARPLINK GAMING LTD. |
|
|
|
By: |
/s/ Robert Phythian |
|
Name: |
Robert Phythian |
|
Title: |
Chief Executive Officer and Director |
|
|
|
SHARPLINK MERGER SUB LTD. |
|
|
|
By: |
/s/ Robert Phythian |
|
Name: |
Robert Phythian |
|
Title: |
Director |
|
|
|
SHARPLINK GAMING, INC. |
|
|
|
By: |
/s/ Robert Phythian |
|
Name: |
Robert Phythian |
|
Title: |
Director |
Exhibit
4.3
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
WARRANT
TO
PURCHASE ORDINARY SHARES
OF
MER
TELEMANAGEMENT SOLUTIONS LTD.
Issue
Date: July 21, 2021
THIS
CERTIFIES that Roy Hess (the “Holder”), has the right to purchase from MER TELEMANAGEMENT SOLUTIONS LTD., a company
organized under the laws of the State of Israel, with headquarters located at 14 Hatidhar Street, Ra΄anana 4366516, Israel (the
“Company”), up to 116,667 fully paid and nonassessable Ordinary Shares of the Company, nominal value NIS 0.03 (the
“Ordinary Shares”), subject to adjustment as provided herein, at a price per share equal to the Exercise Price (as
defined below), at any time and from time to time beginning on the Commencement Date (as defined below) and ending at 6:00 p.m., eastern
time, on the date that is three years following the Issue date (or, if such date is not a Business Day, on the Business Day immediately
following such date) (the “Expiration Date”).
1.
Exercise.
(a)
Right to Exercise; Exercise Price. The Holder shall have the right to exercise this Warrant at any time and from time to time
during the period beginning on the earliest to occur of: (i) six months from the Issue Date or (ii) the consummation of an M&A or
reverse merger transaction (where current shareholders of the Company will hold less than 50% of the shares of the Company) (as applicable,
the “Commencement Date”) and ending on the Expiration Date as to all or any part of the Ordinary Shares covered hereby
(the “Warrant Shares”). The “Exercise Price” for each Warrant Share purchased by the Holder upon
the exercise of this Warrant shall be equal to US$1.321, subject to adjustment for the events specified in Section 5 below.
(b)
Exercise Notice. In order to exercise this Warrant, the Holder shall send by facsimile or electronic mail transmission, at any
time prior to 5:00 p.m., eastern time, on the Business Day on which the Holder wishes to effect such exercise (the “Exercise
Date”), to the Company an executed copy of the notice of exercise in the form attached hereto as Exhibit A (the “Exercise
Notice”), and, shall forward to the Company the Exercise Price by wire transfer to an account designated by the Company. The
Exercise Notice shall also state the name or names (with address) in which the Ordinary Shares that are issuable on such exercise shall
be issued. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery
of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original
Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. In the case of a dispute
as to the calculation of the Exercise Price or the number of Warrant Shares issuable hereunder (including, without limitation, the calculation
of any adjustment pursuant to Section 5 below and the Cashless Exercise mechanism pursuant to Section 1(c) hereunder), the Company shall
promptly issue to the Holder the number of Warrant Shares that are not disputed and shall submit the disputed calculations to a certified
public accounting firm of national recognition (other than the Company’s independent accountants) within two (2) Business Days
following the date on which the Exercise Notice is delivered to the Company. The Company shall cause such accountant to calculate the
Exercise Price and/or the number of Warrant Shares issuable hereunder and to notify the Company and the Holder of the results in writing
no later than three (3) Business Days following the day on which such accountant received the disputed calculations (the “Dispute
Procedure”). Such accountant’s calculation shall be deemed conclusive absent manifest error. The fees of any such accountant
shall be borne by the party whose calculations were most at variance with those of such accountant.
(c)
Cashless Exercise. The Holder may notify the Company in an Exercise Notice of its election to utilize a cashless exercise, in
which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:
X
= Y [(A-B)/A]
where:
X
= the number of Warrant Shares to be issued to the Holder.
Y
= the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.
A
= the average of the Closing Sale Prices for the three Trading Days immediately preceding (but not including) the Exercise Date.
B
= the applicable Exercise Price.
For
purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued
in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares
shall be deemed to have commenced, on the date this Warrant was originally issued.
For
purposes of this Section, the following definitions will apply:
“Closing
Sale Price” means the last closing trade price for the Ordinary Shares on a Trading Market, as reported by Bloomberg, or, if
the Trading Market begins to operate on an extended hours basis and does not designate the closing trade price then the last trade price
of such security prior to 4:00 p.m., New York time, as reported by Bloomberg, or if the foregoing does not apply, the last closing trade
price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or,
if no trade price is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink sheets” by Pink OTC Markets Inc. (formerly the National Quotation
Bureau, Inc.). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the
Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.
All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction
during the applicable calculation period.
“Trading
Day” means (i) a day on which the Ordinary Shares are traded on a Trading Market, or (ii) if the Ordinary Shares are not listed
on a Trading Market, a day on which the Ordinary Shares are traded in the over-the-counter market, as reported by the OTC Bulletin Board/OTCQB,
or (iii) if the Ordinary Shares are not quoted on any Trading Market or the OTC Bulletin Board/OTCQB, a day on which the Ordinary Shares
are quoted in the over-the-counter market as reported by the Pink OTC Markets Inc. (or any similar organization or agency succeeding
to its functions of reporting prices).
“Trading
Market” means Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq Capital Market, The New York Stock Exchange, Inc. or
the NYSE MKT LLC.
(d)
Cancellation of Warrant. This Warrant shall be canceled upon its exercise and, if this Warrant is exercised in part, the Company
shall, at the time that it delivers Warrant Shares to the Holder pursuant to such exercise as provided herein, issue a new warrant, and
deliver to the Holder a certificate representing such new warrant, with terms identical in all respects to this Warrant (except that
such new warrant shall be exercisable into the number of Ordinary Shares with respect to which this Warrant shall remain unexercised);
provided, however, that the Holder shall be entitled to exercise all or any portion of such new warrant at any time following
the time at which this Warrant is exercised, regardless of whether the Company has actually issued such new warrant or delivered to the
Holder a certificate therefor.
2.
Delivery of Warrant Shares Upon Exercise. Upon receipt of an Exercise Notice pursuant to Section 1 above, the Company shall (A)
no later than the close of business on the later to occur of (i) the third (3rd) Business Day following the Exercise Date set forth in
such Exercise Notice and (ii) such later date on which the Company shall have received payment of the Exercise Price, and (B) with respect
to Warrant Shares that are the subject of a Dispute Procedure, the close of business on the third (3rd) Business Day following the determination
made pursuant to Section 1(b) (each of the dates specified in (A) or (B) being referred to as athe “Delivery Date”),
issue and deliver or caused to be delivered to the Holder the number of Warrant Shares as shall be determined as provided herein. The
Company shall effect delivery of Warrant Shares by delivering to the Holder or its nominee physical certificates representing such Warrant
Shares, no later than the close of business on such Delivery Date.
3.
Failure to Deliver Warrant Shares.
(a)
In the event that the Company fails for any reason to deliver to the Holder the number of Warrant Shares specified in the applicable
Exercise Notice on or before the Delivery Date therefor (an “Exercise Default”), the Company shall pay to the Holder
payments (“Exercise Default Payments”) in the amount of (i) (N/365) multiplied by (ii) the aggregate Exercise
Price of the Warrant Shares which are the subject of such Exercise Default multiplied by (iii) the lower of ten percent (10%)
and the maximum rate permitted by applicable law (the “Default Interest Rate”), where “N” equals the number
of days elapsed between the original Delivery Date of such Warrant Shares and the date on which all of such Warrant Shares are issued
and delivered to the Holder. Cash amounts payable under this Section 3(a) shall be paid on or before the fifth (5th) Business Day of
each calendar month following the calendar month in which such amount has accrued.
(b)
In the event of an Exercise Default, the Holder may, upon written notice to the Company (an “Exercise Default Notice”),
regain on the date of such notice the rights of the Holder under the exercised portion of this Warrant that is the subject of such Exercise
Default (it being understood that the Holder may deliver an Exercise Notice at any time following delivery of an Exercise Default Notice
to the Company). In the event that the Holder delivers an Exercise Default Notice, the Holder shall retain all of the Holder’s
rights and remedies with respect to the Company’s failure to deliver such Warrant Shares prior to delivery of such Notice (including
without limitation the right to receive the cash payments specified in Section 3(a) above).
(c)
The Holder’s rights and remedies hereunder are cumulative, and no right or remedy is exclusive of any other. In addition to the
amounts specified herein, the Holder shall have the right to pursue all other remedies available to it at law or in equity (including,
without limitation, a decree of specific performance and/or injunctive relief). Nothing herein shall limit the Holder’s right to
pursue actual damages for the Company’s failure to issue and deliver Warrant Shares on the applicable Delivery Date.
4.
Payment of the Exercise Price. The Holder shall pay the Exercise Price by delivering immediately available funds.
5.
Anti-Dilution Adjustments; Distributions; Other Events. The Exercise Price and the number of Warrant Shares issuable hereunder
shall be subject to adjustment from time to time as provided in this Section 5. In the event that any adjustment of the Exercise Price
or the number of Warrant Shares required herein results in a fraction of a cent or of an Ordinary Share, the Exercise Price and the number
of Warrant Shares shall be rounded up or down to the nearest one hundredth of a cent or whole Ordinary Share, as the case may be.
(a)
Subdivision or Combination of Ordinary Shares. If the Company, at any time after the Issue Date, subdivides (by any stock split,
stock dividend, recapitalization, reorganization, reclassification or otherwise) the outstanding Ordinary Shares into a greater number
of shares, then effective upon the close of business on the record date for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If the Company, at any time after the Issue Date, combines (by
reverse stock split, recapitalization, reorganization, reclassification or otherwise) the outstanding Ordinary Shares into a smaller
number of shares, then, effective upon the close of business on the record date for effecting such combination, the Exercise Price in
effect immediately prior to such combination will be proportionally increased.
(b)
Distributions. If the Company shall declare or make any distribution of cash or any other assets (or rights to acquire such assets)
to holders of Ordinary Shares, as a partial liquidating dividend or otherwise, including without limitation any dividend or distribution
to the Company’s shareholders in shares (or rights to acquire shares) of capital stock of a subsidiary) (a “Distribution”),
the Company shall deliver written notice of such Distribution (a “Distribution Notice”) to the Holder at least thirty
(30) days prior to the earlier to occur of (i) the record date for determining shareholders entitled to such Distribution and (ii) the
date on which such Distribution is made (the earlier of such dates being referred to herein as the “Determination Date”).
In the Distribution Notice to a Holder, the Company must indicate whether the Company has elected (A) to deliver to such Holder the same
amount and type of assets being distributed in such Distribution as though the Holder were a holder on the Determination Date therefor
of a number of Ordinary Shares into which this Warrant is exercisable as of such Determination Date (such number of shares to be determined
at the Exercise Price then in effect and without giving effect to any limitations on such exercise) or (B) to reduce the Exercise Price
as of the Determination Date therefor by an amount equal to the fair market value of the assets to be distributed divided by the
number of Ordinary Shares as to which such Distribution is to be made, such fair market value to be reasonably determined in good faith
by the independent members of the Company’s Board of Directors. If the Company does not notify the Holders of its election pursuant
to the preceding sentence on or prior to the Determination Date, the Company shall be deemed to have elected clause (A) of the preceding
sentence.
(c)
Adjustments; Additional Shares, Securities or Assets. In the event that at any time, as a result of an adjustment made pursuant
to this Section 5, the Holder of this Warrant shall, upon exercise of this Warrant, become entitled to receive securities or assets (other
than Ordinary Shares) then, wherever appropriate, all references herein to Ordinary Shares shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject
to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 5. Any
adjustment made pursuant to this Section 5 that results in a decrease or increase in the Exercise Price shall also effect a proportional
increase or decrease in the number of Ordinary Shares into which this Warrant is exercisable.
6.
Fractional Interests.
No
fractional shares or scrip representing fractional shares shall be issuable upon the exercise of this Warrant.
7.
Benefits of this Warrant.
This
Warrant shall be for the sole and exclusive benefit of the Holder of this Warrant and nothing in this Warrant shall be construed to confer
upon any person other than the Holder of this Warrant any legal or equitable right, remedy or claim hereunder.
8.
Taxes.
The
Holder acknowledges that the grant of the Warrant, the issue of the Warrant Shares and the execution and/or performance of this Warrant
may have tax consequences to the Holder and that the Company is not able to ensure or represent to the Holder the nature and extent of
such tax consequences. The Company shall not pay any taxes payable by the Holder and the Holder shall indemnify the Company, without
derogating from the Holder’s obligation to pay such amounts, for any and all charges or payments as aforesaid. The Company shall
withhold required taxes pursuant to applicable law on payments to the Holder under this Warrant, unless the Holder shall provide the
Company with written confirmation of withholding tax exemption in the form prescribed by law.
9.
Loss, theft, destruction or mutilation of Warrant.
Upon
receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity reasonably satisfactory to the Company, and upon surrender of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
10.
Notice or Demands.
Any
notice, demand or request required or permitted to be given by the Company or the Holder pursuant to the terms of this Warrant shall
be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile or electronic mail transmission,
unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as follows:
If
to the Company:
Mer
Telemanagement Solutions Ltd.
14
Hatidhar Street, P.O. Box 2112
Ra΄anana
4366516, Israel
Fax:
972-9-7777-566
Attn:
CFO
and
if to the Holder, to such address as shall be designated by the Holder in writing to the Company.
11.
Applicable Law.
This
Warrant is issued under and shall for all purposes be governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within the State of New York.
12.
Restrictions.
The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon
resale imposed by state and federal securities laws unless the Holder complies with Rule 144.
13.
Amendments.
This
Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
14.
Entire Agreement.
This
Warrant document constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Warrant
document supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.
15.
Acceptance.
Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
16.
No Transfer of Warrant.
Transfer
of Warrant. This Warrant may not be offered for sale, sold, transferred or assigned without the consent of the Company, other than transfers
mandated by law, such as by inheritance. In the event of a transfer permitted pursuant to this Warrant, the new holder will be deemed
to be a “Holder” for all intents and purposes.
17.
Headings.
The
headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
IN
WITNESS WHEREOF, the Company has duly executed and delivered this Warrant as of the Issue Date.
|
MER
TELEMANAGEMENT SOLUTIONS LTD. |
|
|
|
|
By:
|
/s/
Haim Mer |
|
Name:
|
Haim
Mer |
|
Title:
|
Chairman |
EXHIBIT
A to WARRANT
EXERCISE
NOTICE
The
undersigned Holder hereby irrevocably exercises the right to purchase of the Ordinary Shares (“Warrant Shares”) of
MER TELEMANAGEMENT SOLUTIONS LTD. evidenced by the attached Warrant (the “Warrant”). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the Warrant.
1.
Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:
☐
a “CASH EXERCISE” with respect to _________________ Warrant Shares.; or
☐
a “CASHLESS EXERCISE” with respect to _________________ Warrant Shares.
2.
Payment of Exercise Price. If using a “Cash Exercise: The holder is hereby delivering to the Company payment in the amount of $_________
representing the aggregate Exercise Price for such Warrant Shares.
Date:
______________________
___________________________________
Name
of Holder
Exhibit
4.4
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
WARRANT
TO
PURCHASE ORDINARY SHARES
OF
MER
TELEMANAGEMENT SOLUTIONS LTD.
Issue
Date: July 21, 2021
THIS
CERTIFIES that Roy Hess (the “Holder”), has the right to purchase from MER TELEMANAGEMENT SOLUTIONS LTD., a company
organized under the laws of the State of Israel, with headquarters located at 14 Hatidhar Street, Ra΄anana 4366516, Israel (the
“Company”), up to 50,000 fully paid and nonassessable Ordinary Shares of the Company, nominal value NIS 0.03 (the
“Ordinary Shares”), subject to adjustment as provided herein, with no exercise price (i.e., an exercise price equal
to $0), at any time and from time to time beginning on the Commencement Date (as defined below) and ending at 6:00 p.m., eastern time,
on the date that is three years following the Issue date (or, if such date is not a Business Day, on the Business Day immediately following
such date) (the “Expiration Date”).
1.
Exercise.
(a)
Right to Exercise. The Holder shall have the right to exercise this Warrant at any time and from time to time during the period
beginning on the earliest to occur of: (i) the consummation of an M&A or reverse merger transaction (where current shareholders of
the Company will hold less than 50% of the shares of the Company), or (ii) the date of consummation of the transactions contemplated
by the Agreement and Plan of Merger, dated April 15, 2021, by and among the Company, SL Acquisition Corp. and SharpLink, Inc. (as applicable,
the “Commencement Date”) and ending on the Expiration Date as to all or any part of the Ordinary Shares covered hereby
(the “Warrant Shares”).
(b)
Exercise Notice. In order to exercise this Warrant, the Holder shall send by facsimile or electronic mail transmission, at any
time prior to 5:00 p.m., eastern time, on the Business Day on which the Holder wishes to effect such exercise (the “Exercise
Date”), to the Company an executed copy of the notice of exercise in the form attached hereto as Exhibit A (the “Exercise
Notice”). The Exercise Notice shall also state the name or names (with address) in which the Ordinary Shares that are issuable
on such exercise shall be issued. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.
Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation
of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. In the
case of a dispute as to the calculation of the number of Warrant Shares issuable hereunder (including, without limitation, the calculation
of any adjustment pursuant to Section 5 below), the Company shall promptly issue to the Holder the number of Warrant Shares that are
not disputed and shall submit the disputed calculations to a certified public accounting firm of national recognition (other than the
Company’s independent accountants) within two (2) Business Days following the date on which the Exercise Notice is delivered to
the Company. The Company shall cause such accountant to calculate the number of Warrant Shares issuable hereunder and to notify the Company
and the Holder of the results in writing no later than three (3) Business Days following the day on which such accountant received the
disputed calculations (the “Dispute Procedure”). Such accountant’s calculation shall be deemed conclusive absent
manifest error. The fees of any such accountant shall be borne by the party whose calculations were most at variance with those of such
accountant.
(c)
[Deleted]
(d)
Cancellation of Warrant. This Warrant shall be canceled upon its exercise and, if this Warrant is exercised in part, the Company
shall, at the time that it delivers Warrant Shares to the Holder pursuant to such exercise as provided herein, issue a new warrant, and
deliver to the Holder a certificate representing such new warrant, with terms identical in all respects to this Warrant (except that
such new warrant shall be exercisable into the number of Ordinary Shares with respect to which this Warrant shall remain unexercised);
provided, however, that the Holder shall be entitled to exercise all or any portion of such new warrant at any time following
the time at which this Warrant is exercised, regardless of whether the Company has actually issued such new warrant or delivered to the
Holder a certificate therefor.
2.
Delivery of Warrant Shares Upon Exercise. Upon receipt of an Exercise Notice pursuant to Section 1 above, the Company shall (A)
no later than the close of business on the later to occur of (i) the third (3rd) Business Day following the Exercise Date set forth in
such Exercise Notice, and (B) with respect to Warrant Shares that are the subject of a Dispute Procedure, the close of business on the
third (3rd) Business Day following the determination made pursuant to Section 1(b) (each of the dates specified in (A) or (B) being referred
to as athe “Delivery Date”), issue and deliver or caused to be delivered to the Holder the number of Warrant Shares
as shall be determined as provided herein. The Company shall effect delivery of Warrant Shares by delivering to the Holder or its nominee
physical certificates representing such Warrant Shares, no later than the close of business on such Delivery Date.
3.
[Deleted].
4.
[Deleted].
5.
Anti-Dilution Adjustments; Distributions; Other Events. The number of Warrant Shares issuable hereunder shall be subject to adjustment
from time to time as provided in this Section 5. In the event that any adjustment of the number of Warrant Shares required herein results
in a fraction of an Ordinary Share, the number of Warrant Shares shall be rounded up or down to the nearest whole Ordinary Share.
(a)
Subdivision or Combination of Ordinary Shares. If the Company, at any time after the Issue Date, subdivides (by any stock split,
stock dividend, recapitalization, reorganization, reclassification or otherwise) the outstanding Ordinary Shares into a greater number
of shares, then effective upon the close of business on the record date for effecting such subdivision, the number of Warrant Shares
underlying the Warrant immediately prior to such subdivision will be proportionately increased. If the Company, at any time after the
Issue Date, combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the outstanding Ordinary
Shares into a smaller number of shares, then, effective upon the close of business on the record date for effecting such combination,
the number of Warrant Shares underlying the Warrant immediately prior to such combination will be proportionally decreased.
(b)
Distributions. If the Company shall declare or make any distribution of cash or any other assets (or rights to acquire such assets)
to holders of Ordinary Shares, as a partial liquidating dividend or otherwise, including without limitation any dividend or distribution
to the Company’s shareholders in shares (or rights to acquire shares) of capital stock of a subsidiary) (a “Distribution”),
the Company shall deliver to such Holder the same amount and type of assets being distributed in such Distribution as though the Holder
were a holder on the Determination Date therefor of a number of Ordinary Shares into which this Warrant is exercisable as of such Determination
Date (such number of shares to be determined without giving effect to any limitations on such exercise).
(c)
Adjustments; Additional Shares, Securities or Assets. In the event that at any time, as a result of an adjustment made pursuant
to this Section 5, the Holder of this Warrant shall, upon exercise of this Warrant, become entitled to receive securities or assets (other
than Ordinary Shares) then, wherever appropriate, all references herein to Ordinary Shares shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject
to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 5.
6.
Fractional Interests.
No
fractional shares or scrip representing fractional shares shall be issuable upon the exercise of this Warrant.
7.
Benefits of this Warrant.
This
Warrant shall be for the sole and exclusive benefit of the Holder of this Warrant and nothing in this Warrant shall be construed to confer
upon any person other than the Holder of this Warrant any legal or equitable right, remedy or claim hereunder.
8.
Taxes.
The
Holder acknowledges that the grant of the Warrant, the issue of the Warrant Shares and the execution and/or performance of this Warrant
may have tax consequences to the Holder and that the Company is not able to ensure or represent to the Holder the nature and extent of
such tax consequences. The Company shall not pay any taxes payable by the Holder and the Holder shall indemnify the Company, without
derogating from the Holder’s obligation to pay such amounts, for any and all charges or payments as aforesaid. The Company shall
withhold required taxes pursuant to applicable law on payments to the Holder under this Warrant, unless the Holder shall provide the
Company with written confirmation of withholding tax exemption in the form prescribed by law.
9.
Loss, theft, destruction or mutilation of Warrant.
Upon
receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity reasonably satisfactory to the Company, and upon surrender of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
10.
Notice or Demands.
Any
notice, demand or request required or permitted to be given by the Company or the Holder pursuant to the terms of this Warrant shall
be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile or electronic mail transmission,
unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as follows:
If
to the Company:
Mer
Telemanagement Solutions Ltd.
14
Hatidhar Street, P.O. Box 2112
Ra΄anana
4366516, Israel
Fax:
972-9-7777-566
Attn:
CFO
and
if to the Holder, to such address as shall be designated by the Holder in writing to the Company.
11.
Applicable Law.
This
Warrant is issued under and shall for all purposes be governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within the State of New York.
12.
Restrictions.
The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon
resale imposed by state and federal securities laws unless the Holder complies with Rule 144.
13.
Amendments.
This
Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
14.
Entire Agreement.
This
Warrant document constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Warrant
document supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.
15.
Acceptance.
Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
16.
No Transfer of Warrant.
Transfer
of Warrant. This Warrant may not be offered for sale, sold, transferred or assigned without the consent of the Company, other than transfers
mandated by law, such as by inheritance. In the event of a transfer permitted pursuant to this Warrant, the new holder will be deemed
to be a “Holder” for all intents and purposes.
17.
Headings.
The
headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
IN
WITNESS WHEREOF, the Company has duly executed and delivered this Warrant as of the Issue Date.
|
MER
TELEMANAGEMENT SOLUTIONS LTD. |
|
|
|
|
By:
|
/s/
Haim Mer |
|
Name:
|
Haim
Mer |
|
Title:
|
Chairman |
EXHIBIT
A to WARRANT
EXERCISE
NOTICE
The
undersigned Holder hereby irrevocably exercises the right to purchase of the Ordinary Shares (“Warrant Shares”) of
MER TELEMANAGEMENT SOLUTIONS LTD. evidenced by the attached Warrant (the “Warrant”). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the Warrant.
Date:
______________________
___________________________________
Name
of Holder
Exhibit
4.5
THE
SECURITIES REPRESENTED BY THIS WARRANT OR ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES, OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER
DISTRIBUTION FOR VALUE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
WARRANT
TO
PURCHASE 115,409 SHARES OF COMMON STOCK OF
SportsHub
Games Network, Inc.
THIS
CERTIFIES THAT, for good and valuable consideration of $50.00, Cedar Point Capital, LLC (the “Agent”), or its registered
assigns, is entitled to subscribe for and purchase from SportsHub Games Network, Inc., a Delaware corporation (the “Company”),
at any time after October 29, 2018 and up to and including 5:00 p.m. Minneapolis, Minnesota time on the Expiration Date (as defined herein),
One Hundred Fifteen Thousand Four Hundred and Nine (115,409) fully paid and nonassessable shares of Common Stock, par value $0.0001 per
share (“Common Stock”) of the Company at the price of $1.79 per share (the “Warrant Exercise Price”),
subject to adjustment pursuant to Section 5 hereof. The shares which may be acquired upon exercise of this Warrant are referred to herein
as the “Warrant Shares.” As used herein, the term “Holder” means the Agent, any party who acquires
all or a part of this Warrant as a registered transferee of the Agent, or any record holder or holders of the Warrant Shares issued upon
exercise, whether in whole or in part, of the Warrant.
This
Warrant is subject to the following provisions, terms and conditions:
1.
Exercise; Transferability.
(a)
Subject to the provisions of Section 3 hereof, the rights represented by this Warrant may be exercised by the Holder hereof, in whole
or in part (but not as to a fractional Warrant Share), by written notice of exercise (in the form attached hereto) delivered to the Company
at the principal office of the Company prior to the Expiration Date and accompanied or preceded by the surrender of this Warrant and
(unless the Warrant or a portion thereof is being converted pursuant to Section 10 hereof) a check in payment of the Warrant Exercise
Price for such Warrant Shares.
(b)
This Warrant is immediately assignable, in whole or in part (but not as to a fractional Warrant Share), notwithstanding anything herein
to the contrary, to persons who are owners, officers or employees of Cedar Point Capital, LLC who are accredited investors within the
meaning of Rule 501 of Regulation D or licensed securities professionals who are sophisticated, experienced investors. Each successive
holder of this Warrant, or of any portion of the rights represented thereby, shall be bound by the terms and conditions set forth herein.
Warrant | -1- | |
SportsHub Games Network, Inc. | | |
2.
Exchange and Replacement. Subject to Sections 1 and 8 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder
to the Company at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of
Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not
to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and,
in case of loss, theft, or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant; provided,
however, that if the Agent shall be such Holder, an agreement of indemnity by such Holder shall be sufficient for all purposes
of this Section 2. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or
replacement. The Company shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Section 2.
3.
Issuance of the Warrant Shares.
(a)
The Company agrees that the Warrant Shares purchased hereby shall be and are deemed to be issued to the Holder as of the close of business
on the date on which this Warrant shall have been surrendered for exercise and the payment made for such Warrant Shares as aforesaid.
Subject to the provisions of the next section, certificates for the Warrant Shares so purchased shall be delivered to the Holder within
a reasonable time, not exceeding 15 days after the rights represented by this Warrant shall have been so exercised, and, unless this
Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be delivered to the Holder within such time.
(b)
Notwithstanding the foregoing, however, the Company shall not be required to deliver any certificate for Warrant Shares upon exercise
of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under
applicable securities laws.
4.
Covenants of the Company. The Company covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and
issued, fully paid, nonassessable, and free from all taxes, liens, and charges with respect to the issue thereof except for all taxes,
liens, and charges imposed by the Holder. The Company further covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise
of the rights represented by this Warrant.
Warrant | -2- | |
SportsHub Games Network, Inc. | | |
5.
Antidilution Adjustments. The provisions of this Warrant are subject to adjustment as provided in this Section 5.
(a)
The Warrant Exercise Price shall be adjusted from time to time such that in case the Company shall hereafter:
(i)
pay any dividends on any class of stock of the Company payable in Common Stock or securities convertible into Common
Stock;
(ii)
subdivide its then outstanding shares of Common Stock into a greater number of shares; or
(iii)
combine outstanding shares of Common Stock, by reclassification or otherwise;
then,
in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto)
be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (a) the number of shares
of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise Price, by (b) the total
number of shares of Common Stock outstanding immediately after such event (including the maximum number of shares of Common Stock issuable
in respect of any securities convertible into Common Stock), and the resulting quotient shall be the adjusted Warrant Exercise Price.
An adjustment made pursuant to this Subsection shall become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, or reclassification.
If, as a result of an adjustment made pursuant to this Subsection, the Holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Company,
the Board of Directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Warrant Exercise Price
between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under this
Subsection shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that at any time as
a result of an adjustment made pursuant to this Subsection, the Holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive any shares of the Company other than shares of Common Stock, thereafter the Warrant Exercise Price of such other
shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock contained in this Section 5.
Upon
each adjustment of the Warrant Exercise Price pursuant to this Section 5(a), the Holder of each Warrant shall thereafter (until another
such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of Warrant Shares, calculated to the nearest
full share, obtained by multiplying the number of Warrant Shares specified in such Warrant (as adjusted as a result of all adjustments
in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and
dividing the product so obtained by the adjusted Warrant Exercise Price.
(b)
Upon any adjustment of the Warrant Exercise Price, then and in each such case, the Company shall within 10 days after the date when the
circumstances giving rise to the adjustment occurred give written notice thereof, by first-class mail, postage prepaid, addressed to
the Holder as shown on the books of the Company, which notice shall state the Warrant Exercise Price resulting from such adjustment and
the increase or decrease, if any, in the number (and type) of Warrant Shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.
Warrant | -3- | |
SportsHub Games Network, Inc. | | |
6.
Expiration. This Warrant (and the right to purchase Warrant Shares upon exercise hereof) shall terminate upon the earlier to occur
of (i) the full exercise of this Warrant for the full number of Warrant Shares that may be purchased hereby, or (ii) 5:00 p.m., Minneapolis,
Minnesota time, on the ten (10) year anniversary of the date of this Warrant (the “Expiration Date”).
7.
No Voting Rights. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Company.
8.
Notice of Transfer of Warrant or Resale of the Warrant Shares.
(a)
Subject to the sale, assignment, hypothecation, or other transfer restrictions set forth in Section 1 hereof, the Holder, by acceptance
hereof, agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder’s
intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company
shall present copies thereof to the Company’s counsel and to counsel to the original purchaser of this Warrant. If in the opinion
of each such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities
laws), the Company, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer
this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of
the notice delivered by the Holder to the Company; provided that an appropriate legend may be endorsed on this Warrant or the certificates
for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel to the Company
and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933,
as amended, and applicable state securities laws; and provided further that the Holder and prospective transferee or purchaser shall
execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions
relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.
(b)
If in the opinion of either of the counsel referred to in this Section 8, the proposed transfer or disposition of this Warrant or such
Warrant Shares described in the written notice given pursuant to this Section 8 may not be effected without registration or qualification
of this Warrant or such Warrant Shares, the Company shall promptly give written notice thereof to the Holder, and the Holder will limit
its activities in respect to such as, in the opinion of both such counsel, are permitted by law.
9.
Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the Holder would,
except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Company shall, upon
the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the sum of (a) the excess,
if any, of the Fair Market Value (as defined in Section 10(d)) of such fractional share over the proportional part of the Warrant Exercise
Price represented by such fractional share, plus (b) the proportional part of the Warrant Exercise Price represented by such fractional
share.
Warrant | -4- | |
SportsHub Games Network, Inc. | | |
10.
Additional Right to Convert Warrant.
(a)
The Holder of this Warrant shall have the right to require the Company to convert this Warrant (the “Conversion Right”)
at any time after it is exercisable, but prior to its expiration, into Warrant Shares as provided for in this Section 10. Upon exercise
of the Conversion Right with respect to a particular number of Warrant Shares (the “Converted Warrant Shares”), the
Company shall deliver to the Holder (without payment by the Holder of any Warrant Exercise Price) that number of Warrant Shares equal
to the quotient obtained by dividing (x) the Conversion Value (as defined herein) of the Converted Warrant Shares by (y) the Fair Market
Value of one Warrant Share immediately prior to the exercise of the Conversion Right. The “Conversion Value” of the
Converted Warrant Shares shall be determined by subtracting the aggregate Warrant Exercise Price of the Converted Warrant Shares from
the aggregate Fair Market Value (as defined in paragraph (d) below) of the Converted Warrant Shares.
(b)
The Conversion Right may be exercised by the Holder, at any time or from time to time after it is exercisable, prior to the Expiration
Date, on any business day by delivering a written notice in the form attached hereto (the “Conversion Notice”) to
the Company at the offices of the Company exercising the Conversion Right and specifying (i) the total number of Warrant Shares the Holder
will purchase pursuant to such conversion and the corresponding number of Converted Warrant Shares and (ii) a place and date not less
than one or more than 20 business days from the date of the Conversion Notice for the closing of such purchase.
(c)
At any closing under Section 10(b) hereof, (i) the Holder will surrender the Warrant and (ii) the Company will deliver to the Holder
a certificate or certificates for the number of Warrant Shares issuable upon such conversion, together with cash, in lieu of any fraction
of a share, and (iii) the Company will deliver to the Holder a new Warrant representing the right to purchase the number of Warrant Shares,
if any, remaining after the subtraction of the Converted Warrant Shares from the total number of Warrant Shares prior to the immediately
preceding exercise of the Conversion Right.
(d)
Fair Market Value of a Warrant Share as of a particular date (the “Determination Date”) shall mean:
(i)
If the Warrant Shares are traded on an exchange, including the Nasdaq Stock Market, then the average closing prices reported for the
10 business days immediately preceding the Determination Date,
(ii)
If the Warrant Shares are not traded on an exchange, including the Nasdaq Stock Market, but are traded on the over-the-counter market,
then the average closing bid and asked prices reported for the 10 business days immediately preceding the Determination Date, and
(iii)
If the Warrant Shares are not traded on an exchange, including the Nasdaq Stock Market, or other over-the-counter market, then the
price established in good faith by the Company’s Board of Directors.
Warrant | -5- | |
SportsHub Games Network, Inc. | | |
11.
Miscellaneous.
(a)
The Company will not, by amendment of its Certificate of Incorporation or through reorganization, consolidation, merger, dissolution,
or sale of assets, or by any other voluntary act or deed, avoid or seek to avoid the observance or performance of any of the covenants,
stipulations, or conditions to be observed or performed hereunder by the Company, but will, at all times in good faith, assist, insofar
as it is able, in the carrying out of all provisions hereof and in the taking of all other action which may be necessary in order to
protect the rights of the Holder hereof against dilution.
(b)
The representations, warranties, and agreements herein contained shall survive the exercise of this Warrant. References to the “Holder”
include the immediate holder of Warrant Shares purchased upon the exercise of this Warrant, and the word “Holder” shall include
the plural thereof. This Warrant shall be interpreted under the laws of the State of Minnesota. Any action brought concerning the transactions
contemplated by this Warrant shall be brought in the state and federal courts located in the State of Minnesota.
(c)
All Warrant Shares or other securities issued upon the exercise of the Warrant shall be validly issued, fully paid, and non-assessable,
and the Company will pay all taxes due and payable by the issuer in respect of the issuance thereof.
(d)
Notwithstanding anything contained herein to the contrary, the Holder shall not be deemed a shareholder of the Company by reason of being
a Holder of this Warrant for any purpose whatsoever until and unless this Warrant is duly exercised.
[Remainder
of page intentionally left blank.]
Warrant | -6- | |
SportsHub Games Network, Inc. | | |
IN
WITNESS WHEREOF, SportsHub Games Network, Inc. has caused this Warrant to be signed by its duly authorized officer and this Warrant to
be dated October 29, 2018.
| SportsHub
Games Network, Inc. |
| |
|
| By: |
/s/
Rob Phythian |
| Name: |
Rob
Phythian |
| Its: |
Chief
Executive Officer |
[signature
page to SportsHub Games Network, Inc. Warrant]
To:
SportsHub Games Network, Inc.
NOTICE
OF EXERCISE OF WARRANT
The
undersigned hereby irrevocably elects to exercise the attached Warrant to purchase for cash, ________________of the Warrant Shares issuable upon
the exercise of such Warrant.
Please
issue a certificate or certificates for such Warrant Shares (together with a new Warrant to purchase the number of Warrant Shares, if
any, with respect to which this Warrant is not exercised) in the name of, and pay any cash for any fractional Warrant Share to:
|
|
|
(Print
Name) |
|
|
Please
insert social security |
|
or
other identifying number |
|
of
registered Holder of |
|
certificate
( ________) |
Address |
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
_________ |
Signature* |
*The
signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular
without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity,
please indicate your position(s) and title(s) with such entity.
ASSIGNMENT
FORM
To
be signed only upon authorized transfer of Warrants.
FOR
VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto _______________________________ the right to purchase the
securities of SportsHub Games Network, Inc. to which the within Warrant relates and appoints ___________________, attorney, to transfer said right on
the books of SportsHub Games Network, Inc. with full power of substitution in the premises.
|
|
Dated:
___________ |
Signature |
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CASHLESS
EXERCISE FORM
(To
be executed upon conversion of Warrant pursuant to Section 10)
To: |
SportsHub Games Network, Inc. |
NOTICE
OF EXERCISE OF WARRANT CONVERSION RIGHT
The
undersigned hereby irrevocably elects a cashless exercise of the right of purchase represented by the within Warrant Certificate
for, and to purchase thereunder, __________ Warrant Shares, corresponding to _________________Converted Warrant Shares, as provided
for in Section 10 therein.
Please
issue a certificate or certificates for such Warrant Shares (together with a new Warrant to purchase the number23 of Warrant Shares,
if any, with respect to which this Warrant is not exercised) in the name of, and pay any cash for any fractional Warrant Share to:
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(Print Name) |
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Please insert social security |
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or other identifying number |
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of registered Holder of |
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certificate ( __________) |
Address |
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Dated: ___________ |
Signature* |
*The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular
without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity,
please indicate your position(s) and title(s) with such entity.
Exhibit
10.6
SPORTSHUB
GAME NETWORK, INC.
2018
STOCK INCENTIVE PLAN
Adopted
December, 2018
Table
of Contents
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Page
|
1. |
Purpose
of Plan. |
1 |
2. |
Definitions. |
1 |
3. |
Effective
Date and Duration of the Plan. |
4 |
4. |
Shares
Available for Issuance. |
4 |
|
4.1 |
Maximum
Number of Shares Available |
4 |
|
4.2 |
Accounting
for Incentive Awards |
4 |
|
4.3 |
Adjustments
to Shares and Incentive Awards |
4 |
5. |
Plan
Administration. |
5 |
|
5.1 |
The
Committee |
5 |
|
5.2 |
Authority
of the Committee. |
5 |
6. |
Participation. |
6 |
7. |
Options. |
7 |
|
7.1 |
Grant |
7 |
|
7.2 |
Exercise
Price |
7 |
|
7.3 |
Exercisability
and Duration |
7 |
|
7.4 |
Payment
of Exercise Price |
7 |
|
7.5 |
Manner
of Exercise |
7 |
|
7.6 |
Aggregate
Limitation of Stock Subject to Incentive Stock Options |
7 |
8. |
Stock
Appreciation Rights. |
8 |
|
8.1 |
Grant |
8 |
|
8.2 |
Exercise
Price |
8 |
|
8.3 |
Exercisability
and Duration |
8 |
9. |
Restricted
Stock Awards. |
8 |
|
9.1 |
Grant |
8 |
|
9.2 |
Rights
as a Stockholder; Transferability |
8 |
|
9.3 |
Dividends
and Distributions |
9 |
|
9.4 |
Enforcement
of Restrictions |
9 |
Table
of Contents continued
|
|
Page
|
10. |
Performance
Units. |
9 |
11. |
Stock
Bonuses. |
9 |
12. |
Effect
of Termination of Employment or Other Service. |
10 |
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12.1 |
Termination
Due to Death, Disability or Retirement |
10 |
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12.2 |
Termination
for Reasons Other than Death, Disability or Retirement |
10 |
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12.3 |
Modification
of Rights Upon Termination |
11 |
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12.4 |
Exercise
of Incentive Stock Options Following Termination |
11 |
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12.5 |
Date
of Termination of Employment or Other Service |
11 |
13. |
Payment
of Withholding Taxes. |
11 |
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13.1 |
General
Rules |
11 |
|
13.2 |
Special
Rules |
12 |
14. |
Action
upon Change in Control. |
12 |
15. |
Rights
of Eligible Recipients and Participants; Transferability. |
12 |
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15.1 |
Employment
or Service |
12 |
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15.2 |
Rights
as a Stockholder |
13 |
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15.3 |
Restrictions
on Transfer |
13 |
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15.4 |
Breach
of Confidentiality, Assignment of Inventions or Non-Compete Agreements |
13 |
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15.5 |
Non-Exclusivity
of the Plan |
13 |
16. |
Securities
Law and Other Restrictions. |
13 |
17. |
Plan
Amendment, Modification and Termination. |
14 |
18. |
Miscellaneous. |
14 |
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18.1 |
Governing
Law |
14 |
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18.2 |
Successors
and Assigns |
14 |
SPORTSHUB
GAME NETWORK, INC.
2018
STOCK INCENTIVE PLAN
1. Purpose
of Plan.
The
purpose of the SportsHub Games Network, Inc. 2018 Stock Incentive Plan (the “Plan”) is to advance the interests of SportsHub
Games Network, Inc., a Delaware corporation (the “Company”) and its stockholders by enabling the Company and its Subsidiaries
to attract and retain persons of skill and ability to perform services for the Company and its Subsidiaries by providing an incentive
to such individuals through equity participation in the Company and by rewarding such individuals who contribute to the achievement by
the Company of its economic objectives.
2. Definitions.
The
following terms will have the meanings set forth below, unless the context clearly otherwise requires:
2.1 “Board”
means the Board of Directors of the Company.
2.2 “Broker
Exercise Notice” means a written notice pursuant to which a Participant, upon exercise of an Option, irrevocably instructs
a broker or dealer to sell a sufficient number of shares or lend a sufficient amount of money to pay all or a portion of the exercise
price of the Option and/or any related withholding tax obligations and remit such sums to the Company and directs the Company to deliver
stock certificates to be issued upon such exercise directly to such broker or dealer.
2.3 “Cause”
means:
(a) “Cause”
as defined in any employment or other agreement or policy applicable to the Participant; or
(b) If
no such agreement or policy exists, (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury,
in each case related to the Company or any Subsidiary, (ii) substantial failure on the part of the Participant to perform his or her
duties to the Company or any Subsidiary or gross negligence on the part of the Participant in the performance of such duties, (iii) any
unlawful or criminal activity of a serious nature, or (iv) any material breach of any employment, service, confidentiality or non-compete
agreement entered into with the Company or any Subsidiary.
2.4 “Change
in Control” of the Company means the occurrence of any of the following events:
(a) the
sale, lease, exchange or other transfer of all or substantially all of the assets of the Company (in one transaction or in a series of
related transactions) except
where
such sale, lease, exchange or other transfer is to an entity controlled by the Company;
(b) the
approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; or
(c) any
person becomes after the effective date of the Plan the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the combined voting power of the Company’s outstanding securities ordinarily
having the right to vote at elections of directors; or
(d) a
merger or consolidation to which the Company is a party if the persons who are the stockholders of the Company immediately prior to effective
date of such merger or consolidation have “beneficial ownership” (as defined in Rule l3d-3 under the Exchange Act), immediately
following the effective date of such merger or consolidation, of securities of the surviving corporation representing 50% or less of
the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections
of directors.
2.5 “Code”
means the Internal Revenue Code of 1986, as amended.
2.6 “Committee”
means the group of individuals administering the Plan, as provided in Section 5 of the Plan.
2.7 “Common
Stock” means the common stock of the Company, $0.0001 par value, or the number and kind of shares of stock or other
securities into which such common stock may be changed in accordance with Section 4.3 of the Plan.
2.8 “Disability”
means the disability of the Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term
disability plan of the Company or Subsidiary then covering the Participant or, if no such plan exists or is applicable to the Participant,
the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code.
2.9 “Effective
Date” shall mean December 20, 2018, the date this Plan was adopted by the Board.
2.10 “Eligible
Recipient” means any employee of the Company or any Subsidiary and any non-employee director, consultant or independent contractor
of the Company or any Subsidiary.
2.11 “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
2.12 “Fair
Market Value” means, with respect to the Common Stock, as of any date: (i) the last reported sale price of a share of Common
Stock as of such date during the regular daily trading session on the Nasdaq Stock Market or on any national exchange (or, if no shares
were traded or quoted on such date, as of the next preceding date on which there was such a trade or quote); or (ii) if the Common Stock
is publicly traded but is not so listed, the average of the closing bid and asked prices on such date, as reported by The Wall Street
Journal, in the over- the- counter market (or, if no shares were quoted on such date, as of the next preceding date on which there was
such a quote); or (iii) if the Common Stock is not so listed or reported, such price as the Committee determines in good faith in the
exercise of its reasonable discretion, taking into account all available information material to the value of the Common Stock, and consistent
with the definition of “fair market value” under Section 409A of the Code.
2.13 “Incentive
Award” means an Option, Stock Appreciation Right, Restricted Stock Award, Performance Unit or Stock Bonus granted to an Eligible
Recipient pursuant to the Plan.
2.14 “Incentive
Stock Option” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 7 of the Plan that
qualifies as an “incentive stock option” within the meaning of Section 422 of the Code.
2.15 “Non-Statutory
Stock Option” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 7 of the Plan that
does not qualify as an Incentive Stock Option.
2.16 “Option”
means an Incentive Stock Option or a Non-Statutory Stock Option.
2.17 “Participant”
means an Eligible Recipient who receives one or more Incentive Awards under the Plan.
2.18 “Performance
Unit” means a right granted to an Eligible Recipient pursuant to Section 10 of the Plan to receive a payment from the Company,
in the form of stock, cash or a combination of both, upon the achievement of established employment, service, performance or other goals.
2.19 “Previously
Acquired Shares” means shares of Common Stock that are already owned by the Participant or, with respect to any Incentive Award,
that are to be issued upon the grant, exercise or vesting of such Incentive Award.
2.20 “Restricted
Stock Award” means an award of Common Stock granted to an Eligible Recipient pursuant to Section 9 of the Plan that is subject
to the restrictions on transferability and the risk of forfeiture imposed by the provisions of such Section 9.
2.21 “Retirement”
means termination of employment or service pursuant to and in accordance with the regular (or, if approved by the Board for purposes
of the Plan, early) retirement/pension plan or practice of the Company or Subsidiary then covering the Participant, provided that if
the Participant is not covered by any such plan or practice, the Participant will be deemed to be covered by the Company’s plan
or practice for purposes of this determination.
2.22 “Securities
Act” means the Securities Act of 1933, as amended.
2.23 “Stock
Appreciation Right” means a right granted to an Eligible Recipient pursuant to Section 8 of the Plan to receive a payment from
the Company at the time of exercise, in the form of stock, cash or a combination of both, equal to the difference between the Fair Market
Value of one or more shares of Common Stock and the exercise price of such shares under the terms of such Stock Appreciation Right.
2.24 “Stock
Bonus” means an award of Common Stock granted to an Eligible Recipient pursuant to Section 11 of the Plan.
2.25 “Subsidiary”
means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity
interest, as determined by the Committee.
2.26 “Tax
Date” means the date any withholding tax obligation arises under the Code or other applicable tax statute for a Participant
with respect to an Incentive Award.
3. Effective
Date and Duration of the Plan.
The
Plan is effective as of the Effective Date. The Plan will terminate at midnight on tenth (10th) anniversary of the Effective Date and
may be terminated prior to such time by Board action, and no Incentive Award may be granted after such termination. Incentive Awards
outstanding upon termination of the Plan may continue to be exercised, or become free of restrictions, in accordance with their terms.
The
Plan shall be submitted to the stockholders of the Company for approval within twelve (12) months before or after the Effective Date.
Incentive Awards may be granted prior to the date this Plan is approved by the stockholders of the Company; provided, however, that any
incentive stock options granted after adoption of the Plan by the Board shall be treated as nonqualified stock options if stockholder
approval is not obtained within such twelve-month period.
4. Shares
Available for Issuance.
4.1 Maximum
Number of Shares Available. Subject to adjustment as provided in Section 4.3 of the Plan or by amendment, the maximum number of shares
of common stock that will be available for issuance under the Plan will be 572,155 shares of Common Stock.
4.2 Accounting
for Incentive Awards. Shares of Common Stock that are issued under the Plan or that are subject to outstanding Incentive Awards will
be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan. Any shares of Common
Stock that are subject to an Incentive Award that lapse, expire, are forfeited or for any reason are terminated unexercised or unvested
and any shares of Common Stock that are subject to an Incentive Award that is settled or paid in cash or any form other than shares of
Common Stock will automatically again become available for issuance under the Plan. Any shares of Common Stock that constitute the forfeited
portion of a Restricted Stock Award, however, will not become available for re-issuance under the Plan after they have been so forfeited.
4.3 Adjustments
to Shares and Incentive Awards. In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification,
stock dividend, stock split, combination of shares, rights offering, divestiture or extraordinary dividend (including a spin- off) or
any other similar change in the corporate structure or shares of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving corporation) will make appropriate adjustment (which determination
will be conclusive) as to the number and kind of securities or other property (including cash) available for issuance or payment under
the Plan and, in order to prevent dilution or enlargement of the rights of Participants, (a) the number and kind of securities or other
property (including cash) subject to outstanding Options, and (b) the exercise price of outstanding Options.
5. Plan
Administration.
5.1 The
Committee. The Plan will be administered by the Board or by a committee of the Board. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, any committee administering the Plan will consist solely of two or more members
of the Board who are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act. Such a committee,
if established, will act by majority approval of the members (but may also take action with the written consent of a majority of the
members of such committee), and a majority of the members of such a committee will constitute a quorum. As used in the Plan “Committee”
will refer to the Board or to such a committee, if established. To the extent consistent with corporate law, the Committee may delegate
to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations
as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect
to Eligible Recipients who are subject to Section 16 of the Exchange Act. The Committee may exercise its duties, power and authority
under the Plan in its sole and absolute discretion without the consent of any Participant or other party, unless the Plan specifically
provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the
Plan will be final, conclusive and binding for all purposes and on all persons, including, without limitation, the Company, the stockholders
of the Company, the participants and their respective successors-in-interest. No member of the Committee will be liable for any action
or determination made in good faith with respect to the Plan or any Incentive Award granted under the Plan.
5.2 Authority
of the Committee.
(a) In
accordance with and subject to the provisions of the Plan, the Committee will have the authority to determine all provisions of Incentive
Awards as the Committee may deem necessary or desirable and as consistent with the terms of the Plan, including, without limitation,
the following: (i) the Eligible Recipients to be selected as Participants; (ii) the nature and extent of the Incentive Awards to be made
to each Participant (including the number of shares of Common Stock to be subject to each Incentive Award, any exercise price, the manner
in which Incentive Awards will vest or become exercisable and whether Incentive Awards will be granted in tandem with other Incentive
Awards) and the form of written agreement, if any, evidencing such Incentive Award; (iii) the time or times when Incentive Awards will
be granted; (iv) the duration of each Incentive Award; and (v) the restrictions and other conditions to which the payment or vesting
of Incentive Awards may be subject. In addition, the Committee will have the authority under the Plan in its sole discretion to pay the
economic value of any Incentive Award in the form of cash, Common Stock or any combination of both.
(b) The
Committee will have the authority under the Plan to amend or modify the terms of any outstanding Incentive Award in any manner, including,
without limitation, the authority to modify the number of shares or other terms and conditions of an Incentive Award, extend the term
of an Incentive Award, accelerate the exercisability or vesting or otherwise terminate any restrictions relating to an Incentive Award,
accept the surrender of any outstanding Incentive Award or, to the extent not previously exercised or vested, authorize the grant of
new Incentive Awards in substitution for surrendered Incentive Awards; provided, however, that the amended or modified
terms are permitted by the Plan as then in effect, that such amendment or modification does not cause the Incentive Award to become subject
to Section 409A of the Code, and that any Participant adversely affected by such amended or modified terms has consented to such amendment
or modification. No amendment or modification to an Incentive Award, however, whether pursuant to this Section 5.2 or any other provisions
of the Plan, will be deemed to be a re-grant of such Incentive Award for purposes of the Plan.
(c) In
the event of (i) any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other similar change in corporate
structure or shares, (ii) any purchase, acquisition, sale or disposition of a significant amount of assets or a significant business,
(iii) any change in accounting principles or practices, or (iv) any other similar change, in each case with respect to the Company or
any other entity whose performance is relevant to the grant or vesting of an Incentive Award, the Committee (or, if the Company is not
the surviving corporation in any such transaction, the board of directors of the surviving corporation) may, without the consent of any
affected Participant, amend or modify the vesting criteria of any outstanding Incentive Award that is based in whole or in part on the
financial performance of the Company (or any Subsidiary or division thereof) or such other entity so as equitably to reflect such event,
with the desired result that the criteria for evaluating such financial performance of the Company or such other entity will be substantially
the same (in the sole discretion of the Committee or the board of directors of the surviving corporation) following such event as prior
to such event; provided, however, that the amended or modified terms are permitted by the Plan as then in effect.
6. Participation.
Participants
in the Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are expected
to contribute to the achievement of economic objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time
to time one or more Incentive Awards, singly or in combination or in tandem with other Incentive Awards, as may be determined by the
Committee in its sole discretion. Incentive Awards will be deemed to be granted as of the date specified in the grant resolution of the
Committee, which date will be the date of any related agreement with the Participant.
7. Options.
7.1 Grant.
An Eligible Recipient may be granted one or more Options under the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may designate
whether an Option is to be considered an Incentive Stock Option or a Non-Statutory Stock Option. To the extent that any Incentive Stock
Option granted under the Plan ceases for any reason to qualify as an “incentive stock option” for purposes of Section 422
of the Code, such Incentive Stock Option will continue to be outstanding for purposes of the Plan but will thereafter be deemed to be
a Non-Statutory Stock Option.
7.2 Exercise
Price. The per share price to be paid by a Participant upon exercise of an Option will be determined by the Committee in its discretion
at the time of the Option grant; provided, however, that such price will not be less than one hundred percent (100%) of the Fair Market
Value of one share of Common Stock on the date of grant (or, with respect to an Incentive Stock Option, one hundred ten percent (110%)
of the Fair Market Value if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than
ten percent (10%) of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of
the Company).
7.3 Exercisability
and Duration. An Option will become exercisable at such times and in such installments as may be determined by the Committee in its
sole discretion at the time of grant; provided, however, that no Incentive Stock Option may be exercisable after ten (10) years from
its date of grant (five (5) years from its date of grant if, at the time the Incentive Stock Option is granted, the Participant owns,
directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation of the Company).
7.4 Payment
of Exercise Price. The total purchase price of the shares to be purchased upon exercise of an Option will be paid entirely in cash
(including check, bank draft or money order); provided, however, that the Committee, in its sole discretion and upon terms and conditions
established by the Committee, may allow such payments to be made, in whole or in part, by tender of a Broker Exercise Notice, Previously
Acquired Shares, a promissory note (on terms acceptable to the Committee in its sole discretion) or a combination of such methods, or
by any other form of payment the Committee may authorize.
7.5 Manner
of Exercise. An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained
in the Plan and in the agreement evidencing such Option, by delivery in person, by facsimile or electronic transmission or through the
mail of written notice of exercise to the Company (Attention: Chief Financial Officer) at its principal executive office, and by paying
in full the total exercise price for the shares of Common Stock to be purchased in accordance with Section 7.4 of the Plan.
7.6 Aggregate
Limitation of Stock Subject to Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined as of the
date an Incentive Stock Option is granted) of the shares of Common Stock with respect to which incentive stock options (within the meaning
of Section 422 of the Code) are exercisable for the first time by a Participant during any calendar year (under the Plan and any other
incentive stock option plans of the Company or any subsidiary or parent corporation of the Company (within the meaning of the Code))
exceeds $100,000 (or such other amount as may be prescribed by the Code from time to time), such excess Options will be treated as Non-Statutory
Stock Options. The determination will be made by taking incentive stock options into account in the order in which they were granted.
If such excess only applies to a portion of an Incentive Stock Option, the Committee, in its discretion, will designate which shares
will be treated as shares to be acquired upon exercise of an Incentive Stock Option.
8. Stock
Appreciation Rights.
8.1 Grant.
An Eligible Recipient may be granted one or more Stock Appreciation Rights under the Plan, and such Stock Appreciation Rights will be
subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its
sole discretion. The Committee will have the sole discretion to determine the form in which payment of the economic value of Stock Appreciation
Rights will be made to a Participant (i.e., cash, Common Stock or any combination thereof) or to consent to or disapprove the election
by a Participant of the form of such payment.
8.2 Exercise
Price. The exercise price of a Stock Appreciation Right will be determined by the Committee, in its discretion, at the date of grant
but may not be less than one hundred percent (100%) of the Fair Market Value of one share of Common Stock on the date of grant.
8.3 Exercisability
and Duration. A Stock Appreciation Right will become exercisable at such time and in such installments as may be determined by the
Committee in its sole discretion at the time of grant; provided, however, that no Stock Appreciation Right may be exercisable after ten
(10) years from its date of grant. A Stock Appreciation Right will be exercised by giving notice in the same manner as for Options, as
set forth in Section 7.5 of the Plan.
9. Restricted
Stock Awards.
9.1 Grant.
An Eligible Recipient may be granted one or more Restricted Stock Awards under the Plan, and such Restricted Stock Awards will be subject
to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion.
The Committee may impose such restrictions or conditions, such as forfeiture or a repurchase option, not inconsistent with the provisions
of the Plan, to the vesting of or the lapse of restrictions or conditions for any such Restricted Stock Awards as it deems appropriate,
including, without limitation, that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain
period or that the Participant or the Company (or any Subsidiary or division thereof) satisfy certain performance goals or criteria.
9.2 Rights
as a Stockholder; Transferability. Except as provided in Sections 9.1, 9.3 and 15.3 of the Plan, a Participant will have all voting,
dividend, liquidation and other rights with respect to shares of Common Stock issued to the Participant as a Restricted Stock Award under
this Section 9 upon the Participant becoming the holder of record of such shares as if such Participant were a holder of record of shares
of unrestricted Common Stock.
9.3 Dividends
and Distributions. Unless the Committee determines otherwise in its sole discretion (either in the agreement evidencing the Restricted
Stock Award at the time of grant or at any time after the grant of the Restricted Stock Award), any dividends or distributions (including
regular quarterly cash dividends) paid with respect to shares of Common Stock subject to the unvested portion of a Restricted Stock Award
will be subject to the same restrictions as the shares to which such dividends or distributions relate. In the event the Committee determines
not to pay dividends or distributions currently, the Committee will determine in its sole discretion whether any interest will be paid
on such dividends or distributions. In addition, the Committee in its sole discretion may require such dividends and distributions to
be reinvested (and in such case the Participant consents to such reinvestment) in shares of Common Stock that will be subject to the
same restrictions as the shares to which such dividends or distributions relate.
9.4 Enforcement
of Restrictions. To enforce the restrictions referred to in this Section 9, the Committee may place a legend on the stock certificates
referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the stock certificates, together
with duly endorsed stock powers, in the custody of the Company or its transfer agent or to maintain evidence of stock ownership, together
with duly endorsed stock powers, in a certificate-less book-entry stock account with the Company’s transfer agent.
10. Performance
Units.
An
Eligible Recipient may be granted one or more Performance Units under the Plan, and such Performance Units will be subject to such terms
and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee
may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Performance Units
as it deems appropriate, including, without limitation, that the Participant remain in the continuous employ or service of the Company
or any Subsidiary for a certain period or that the Participant or the Company (or any Subsidiary or division thereof) satisfy certain
performance goals or criteria. The Committee will have the sole discretion to determine the form in which payment of the economic value
of Performance Units will be made to a Participant (i.e., cash, Common Stock or any combination thereof) or to consent to or disapprove
the election by a Participant of the form of such payment.
11. Stock
Bonuses.
An
Eligible Recipient may be granted one or more Stock Bonuses under the Plan, and such Stock Bonuses will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be determined by the Committee. The Participant will have all voting,
dividend, liquidation and other rights with respect to the shares of Common Stock issued to a Participant as a Stock Bonus under this
Section 11 upon the Participant becoming the holder of record of such shares; provided, however, that the Committee may
impose such restrictions on the assignment or transfer of a Stock Bonus as it deems appropriate.
12. Effect
of Termination of Employment or Other Service.
12.1 Termination
Due to Death, Disability or Retirement. Unless otherwise provided by the Committee in its sole discretion in the agreement evidencing
an Incentive Award:
(a) In
the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of death or
Disability:
(i) all
outstanding Options and Stock Appreciation Rights then held by the Participant will become immediately exercisable in full and remain
exercisable for a period of six (6) months after such termination (but in no event after the expiration date of any such Option or Stock
Appreciation Right);
(ii) all
Restricted Stock Awards then held by the Participant will become fully vested; and
(iii) all
Performance Units and Stock Bonuses then held by the Participant will vest and/or continue to vest in the manner determined by the Committee
and set forth in the agreement evidencing such Performance Units or Stock Bonuses.
(b) In
the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of Retirement:
(i) all
outstanding Options and Stock Appreciation Rights then held by the Participant will remain exercisable, to the extent exercisable as
of the date of such termination, for a period of six (6) months after such termination (but in no event after the expiration date of
any such Option or Stock Appreciation Right);
(ii) all
Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and
(iii) all
Performance Units and Stock Bonuses then held by the Participant will vest and/or continue to vest in the manner determined by the Committee
and set forth in the agreement evidencing such Performance Units or Stock Bonuses.
12.2 Termination
for Reasons Other than Death, Disability or Retirement. Unless otherwise provided by the Committee in its sole discretion in the
agreement evidencing an Incentive Award, in the event a Participant’s employment or other service with the Company and all Subsidiaries
is terminated for any reason other than death, Disability or Retirement, or a Participant is in the employ or service of a Subsidiary
and the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant continues in the employ or service of the Company
or another Subsidiary), all rights of the Participant under the Plan and any agreements evidencing an Incentive Award will immediately
terminate without notice of any kind, and no Options or Stock Appreciation Rights then held by the Participant will thereafter be exercisable,
all Restricted Stock Awards then held by the Participant that have not vested will be terminated and forfeited, and all Performance Units
and Stock Bonuses then held by the Participant will vest and/or continue to vest in the manner determined by the Committee and set forth
in the agreement evidencing such Performance Units or Stock Bonuses; provided, however, that if such termination is due to any reason
other than voluntary termination by the Participant or termination by the Company or any Subsidiary for “Cause,” all outstanding
Options and Stock Appreciation Rights then held by such Participant will remain exercisable, to the extent exercisable as of such termination,
for a period of ninety (90) days after such termination (but in no event after the expiration date of any such Option or Stock Appreciation
Right).
12.3 Modification
of Rights Upon Termination. Notwithstanding the other provisions of this Section 12, upon a Participant’s termination of employment
or other service with the Company and all Subsidiaries, the Committee may, in its sole discretion (which may be exercised at any time
on or after the date of grant, including following such termination), cause Options and Stock Appreciation Rights (or any part thereof)
then held by such Participant to become or continue to become exercisable and/or remain exercisable following such termination of employment
or service and Restricted Stock Awards, Performance Units and Stock Bonuses then held by such Participant to vest and/or continue to
vest or become free of transfer restrictions, as the case may be, following such termination of employment or service, in each case in
the manner determined by the Committee; provided, however, that no Incentive Award may remain exercisable or continue to vest beyond
its expiration date. Notwithstanding the foregoing, no extension to exercise will be permitted if such extension would cause the Award
to become subject to Section 409A of the Code.
12.4 Exercise
of Incentive Stock Options Following Termination. Any Incentive Stock Option that remains exercisable pursuant to an agreement with
the Company following termination of employment and is unexercised more than one (1) year following termination of employment by reason
of death or Disability or more than three (3) months following termination for any reason other than death or Disability will thereafter
be deemed to be a Non- Statutory Stock Option.
12.5 Date
of Termination of Employment or Other Service. Unless the Committee otherwise determines in its sole discretion, a Participant’s
employment or other service will, for purposes of the Plan, be deemed to have terminated on the date recorded on the personnel or other
records of the Company or the Subsidiary for which the Participant provides employment or other service, as determined by the Committee
in its sole discretion based upon such records.
13. Payment
of Withholding Taxes.
13.1 General
Rules. The Company is entitled to (a) withhold and deduct from future wages of the Participant (or from other amounts that may be
due and owing to the Participant from the Company or a Subsidiary), or make other arrangements for the collection of, all legally required
amounts necessary to satisfy any and all foreign, federal, state and local withholding and employment-related tax requirements attributable
to an Incentive Award, including, without limitation, the grant, exercise or vesting of, or payment of dividends with respect to, an
Incentive Award or a disqualifying disposition of stock received upon exercise of an Incentive Stock Option, or (b) require the Participant
promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock,
with respect to an Incentive Award.
13.2 Special
Rules. The Committee may, in its sole discretion and upon terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 13.1 of the Plan
by electing to tender Previously Acquired Shares, a Broker Exercise Notice or a promissory note (on terms acceptable to the Committee
in its sole discretion), or by a combination of such methods. In no event shall any Incentive Award provided under this Plan be considered
qualified equity grant under Section 83(i) of the Code, and no Participant (or beneficiary) shall be permitted to make a deferral election
for qualified stock under Section 83(i) of the Code.
14. Action
upon Change in Control.
If
a Change in Control of the Company occurs or is about to occur, the Committee, in its sole discretion, may provide for one or more of
the following:
(a) the
partial or full acceleration of the exercisability of outstanding Incentive Awards held by some or all Participants, provided that
the Committee, in its sole discretion, may condition such acceleration (or the Participant’s receipt of any securities or payments
with respect to such acceleration) upon the Participant’s continued service to the Company or to the successor person in the Change
in Control;
(b) the
complete termination of the Plan and cancellation of outstanding Incentive Awards not exercised prior to a date specified by the Committee;
(c) the
continuance of the Plan with respect to outstanding Incentive Awards;
(d) replacement
or exchange of the Incentive Awards for options to purchase similar securities of the successor person in the Change in Control;
(e) the
substitution for outstanding Incentive Awards of shares of common stock of the person acquiring control of the Company or a related corporation;
or
(f) the
receipt by some or all Participants holding outstanding Incentive Awards with respect to some or all of the shares of Common Stock subject
to such Incentive Awards, as of the effective date of any such Change in Control of the Company, of cash in an amount equal to the excess
of the per share price paid in connection with the Change in Control of the Company over the exercise price per share of such Incentive
Awards, multiplied by the number of shares subject to such Incentive Awards.
15. Rights
of Eligible Recipients and Participants; Transferability.
15.1 Employment
or Service. Nothing in the Plan will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant any
right to continue in the employ or service of the Company or any Subsidiary.
15.2 Rights
as a Stockholder. As a holder of Incentive Awards (other than Restricted Stock Awards and Stock Bonuses), a Participant will have
no rights as a stockholder unless and until such Incentive Awards are exercised for, or paid in the form of, shares of Common Stock and
the Participant becomes the holder of record of such shares. Except as otherwise provided in the Plan, no adjustment will be made for
dividends or distributions with respect to such Incentive Awards as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may determine in its discretion.
15.3 Restrictions
on Transfer. Except pursuant to testamentary will or the laws of descent and distribution or as otherwise expressly permitted by
the Plan, unless approved by the Committee in its sole discretion, no right or interest of any Participant in an Incentive Award prior
to the exercise or vesting of such Incentive Award will be assignable or transferable, or subjected to any lien, during the lifetime
of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise. A Participant will,
however, be entitled to designate a beneficiary to receive an Incentive Award upon such Participant’s death, and in the event of
a Participant’s death, payment of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted
pursuant to Section 12 of the Plan) may be made by, the Participant’s legal representatives, heirs and legatees.
15.4 Breach
of Confidentiality, Assignment of Inventions or Non-Compete Agreements. Notwithstanding anything in the Plan to the contrary, in
the event that a Participant materially breaches the terms of any confidentiality, assignment of inventions or non-compete agreement
entered into with the Company or any Subsidiary, whether such breach occurs before or after termination of such Participant’s employment
or other service with the Company or any Subsidiary, the Committee in its sole discretion may immediately terminate all rights of the
Participant under the Plan and any agreements evidencing an Incentive Award then held by the Participant without notice of any kind.
15.5 Non-Exclusivity
of the Plan. Nothing contained in the Plan is intended to modify or rescind any previously or subsequently approved compensation
plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation
arrangements as the Board may deem necessary or desirable.
16. Securities
Law and Other Restrictions.
Notwithstanding
any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any shares
of Common Stock under the Plan, and a Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued
pursuant to Incentive Awards granted under the Plan, unless (a) there is in effect with respect to such shares a registration statement
under the Securities Act and any applicable state or foreign securities laws or an exemption from such registration under the Securities
Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other
regulatory body which the Committee, in its sole discretion, deems necessary or advisable. The Company may condition such issuance, sale
or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates
representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law
or other restrictions.
17. Plan
Amendment, Modification and Termination.
The
Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects
as the Board may deem advisable in order that Incentive Awards under the Plan will conform to any change in applicable laws or regulations
or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no amendments
to the Plan will be effective without approval of the stockholders of the Company if stockholder approval of the amendment is then required
pursuant to Section 422 of the Code or the rules of any stock exchange or Nasdaq or similar regulatory body. No termination, suspension
or amendment of the Plan may adversely affect any outstanding Incentive Award without the consent of the affected Participant; provided,
however, that this sentence will not impair the right of the Committee to take whatever action it deems appropriate under Sections
5.2, 4.3 and 14 of the Plan.
18. Miscellaneous.
18.1 Governing
Law. The validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating
to the Plan will be governed by and construed exclusively in accordance with the laws of the State of Delaware, notwithstanding the conflicts
of laws principles of any jurisdictions.
18.2 Successors
and Assigns. The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the
Participants.
Exhibit
23.1
Consent
of Independent Registered Public Accounting Firm
We
hereby consent to the incorporation by reference in the Registration Statement on Form S-1 of our report dated April 4, 2023, relating
to the consolidated financial statements of SharpLink Gaming Ltd. and Subsidiaries (the “Company”), appearing in the Annual
Report on Form 10-K and Form 10-K/A of the Company as of and for the year ended December 31, 2022. Our report contains an explanatory
paragraph regarding the Company’s ability to continue as a going concern. We also consent to the reference to our firm under the
heading “Experts” in the prospectus.
/s/
Cherry Bekaert LLP
Raleigh,
North Carolina
September
22, 2023
Exhibit
23.2
Consent
of Independent Registered Public Accounting Firm
We
consent to the incorporation by reference in this Registration Statement on Form S-1 and related Prospectus of SharpLink Gaming Ltd.
of our report dated May 16, 2022, relating to the consolidated financial statements of SharpLink Gaming Ltd. as of and for the year ended
December 31, 2021, appearing in the Annual Reports on Form 10-K and Form 10-K/A of SharpLink Gaming Ltd. for the year ended December
31, 2022.
As
discussed in Note 16 to the financial statements, the 2021 financial statements and disclosures have been restated to retrospectively
apply discontinued operations. We have not audited the adjustments to the 2021 financial statements to retrospectively apply discontinued
operations, as described in Note 16.
We
also consent to the reference to our firm under the heading “Experts.”
/s/
RSM US LLP
Minneapolis,
Minnesota
September
22, 2023
Exhibit 23.3
Consent
of Independent Auditor
We
consent to the incorporation by reference in this Registration Statement on Form S-1 and related Prospectus of SharpLink Gaming Ltd.
of our report dated April 27, 2022, relating to the consolidated financial statements of SportsHub Games Network, Inc., and Subsidiaries
as of and for the year ended December 31, 2020, appearing in the Annual Report on Form 10-K/A of SharpLink Gaming Ltd. for the year ended
December 31, 2022.
We
also consent to the reference to our firm under the heading “Experts.”
/s/
RSM US LLP
Minneapolis,
Minnesota
September
22, 2023
Exhibit
23.4
Consent
of Independent Registered Public Accounting Firm
We
hereby consent to the incorporation by reference in the Registration Statement on Form S-1 of our report dated October 11, 2022, relating
to the consolidated financial statements of SportsHub Games Network, Inc. and Subsidiaries for the year ended December 31, 2021, appearing
in the SharpLink Gaming Ltd.’s Annual Report on Form 10-K/A filed on July 14, 2023. We also consent to the reference to our firm
under the heading “Experts” in the prospectus.
/s/
BerganKDV, Ltd.
Minneapolis,
Minnesota
September
22, 2023
EXHIBIT
107
Calculation
of Filing Fee Tables
Form
S-1
(Form
Type)
SharpLink
Gaming Ltd.
(Exact
Name of Registrant as Specified in its Charter)
Table
1: Newly Registered Securities
| |
Security
Type | |
Security
Class Title(1) | |
Fee Calculation or
Carry Forward Rule | | |
Amount Registered | | |
Proposed Maximum Offering Price Per Unit | | |
Maximum
Aggregate Offering Price(2) | | |
Fee
Rate | | |
Amount
of Registration Fee | |
Fees
to Be Paid | |
Equity | |
Ordinary
shares, nominal value NIS 0.60 (3) | |
| Rule
457(o) | | |
| | | |
| | | |
$ | 8,000,000 | | |
| 0.00011020 | | |
$ | 881.60 | |
| |
Other | |
Pre-Funded
Warrants to purchase ordinary shares(3)(4) | |
| Rule
457(g) | | |
| | | |
| | | |
| Included
above | | |
| — | | |
| — | |
| |
Other | |
Ordinary Warrants to purchase ordinary shares(4) | |
| Rule
457(g) | | |
| | | |
| | | |
| — | | |
| — | | |
| — | |
| |
Other | |
Placement Agent Warrants to purchase ordinary shares(5) | |
| Rule
457(g) | | |
| | | |
| | | |
| — | | |
| — | | |
| — | |
| |
Equity | |
Ordinary
shares issuable upon exercise of the Ordinary Warrants | |
| Rule
457(o) | | |
| | | |
| | | |
$ | 8,000,000 | | |
| 0.00011020 | | |
$ | 881.60 | |
| |
Equity | |
Ordinary
shares issuable upon exercise of the Placement Agent Warrants(5) | |
| Rule
457(o) | | |
| | | |
| | | |
$ | 440,000 | | |
| 0.00011020 | | |
$ | 48.49 | |
| |
Equity | |
Ordinary
shares issuable upon exercise of the Pre-Funded Warrants(3) | |
| Rule
457(o) | | |
| | | |
| | | |
| Included
above | | |
| — | | |
| — | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fees
Previously Paid | |
— | |
— | |
| — | | |
| | | |
| | | |
| — | | |
| — | | |
| — | |
Carry
Forward Securities | |
— | |
— | |
| — | | |
| | | |
| | | |
| — | | |
| — | | |
| — | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Total
Offering Amounts | |
| |
| | | |
| | | |
| | | |
$ | 16,440,000 | | |
| 0.00011020 | | |
$ | 1,811.69 | |
| |
Total
Fees Previously Paid | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| — | |
| |
Total
Fee Offsets | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| — | |
| |
Net
Fee Due | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 1,811.69 | |
|
(1) |
Pursuant
to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), there are also being registered such
additional securities that may be issued because of events such as recapitalizations, stock dividends, stock splits and reverse stock
splits, and similar transactions. |
|
(2) |
Estimated
solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(o) under the Securities Act. |
|
(3) |
The
proposed maximum aggregate offering price of the ordinary shares proposed to be sold in the offering will be reduced on a dollar-for-dollar
basis based on the aggregate offering price of the pre-funded warrants offered and sold in the offering (plus the aggregate exercise
price of the ordinary shares issuable upon exercise of the pre-funded warrants), and as such the proposed aggregate maximum offering
price of the ordinary shares and pre-funded warrants (including ordinary shares issuable upon exercise of the Pre-Funded Warrants),
if any, is $8,000,000. |
|
(4) |
No
fee due pursuant to Rule 457(g) under the Securities Act because the warrants are being registered in the same registration statement
as the ordinary shares issuable upon exercise of the warrants. |
|
(5) |
Represents
warrants to be issued to the placement agent to purchase ordinary shares in an amount equal to 5% of the ordinary shares and ordinary
shares underlying the pre-funded warrants sold in the placement, at an initial exercise price per ordinary share equal to 110% of
the public offering price of each ordinary share. |
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