Sharplink, Inc. Q4 FY2021 earnings call

Re-domiciling Process

• SharpLink merged with NASDAQ-listed Martel Management Solutions (Israeli company) in July 2020. Aim to reclassify as US-based reporting company by completing re-domiciling process. Filed Form S-4 with SEC, need to amend with 2021 audited results and first half 2022 info, objective to complete in 2022.

2021 Results Highlights

• Revenue grew 82% to $4.15M, segment breakdowns provided. Operating expenses surged due to non-cash charges, net loss widened. Balance sheet showed cash increase and equity rise.

Industry Outlook

• Sports betting market in US grew in 2021 with legalization in 30+ states, expected growth. Need for tech tailored to US market as old European tech not adaptable easily.

Partnerships and Technology

• C4 engine results with NASCAR: 9.2% engagement vs 1-2% typical, 72% registration at BetMGM, 152% higher deposits vs prior year. Partnerships with PGA and NASCAR, advancing discussions with operators, teams, etc.

Acquisition of FourCubed

• Brings affiliate marketing talent, PAS network of over 12,000 sub-affiliates, helps build global sub-affiliate network for US market, cross-refer iGamers and sports betters.

Sports Game Development

• Created free-to-play games for PGA, NHL, NCAA, March Madness, etc., with large viewing audience, aiming to expand relationships and benefit from net gaming revenue.

Total revenues for the 12 months ended December 31, 2021 climbed to $4.15 million, up 82% from $2.28 million in 2020. Affiliated marketing services U.S. business contributed approximately $210,000 to overall revenues. Affiliate marketing services international business (acquired FourCubed at end of 2021) had no revenue contribution for the 12 months ended December 31, 2021. Sports gaming client services business contributed $2.4 million to total revenues. Legacy Mer Telemanagement business segment (Enterprise 10) contributed $1.52 million to consolidated revenue. Total operating expenses in 2021 were $55.93 million vs $1.63 million in 2020. Net loss in 2021 was $55.66 million vs $1.14 million in 2020. Cash on hand as of December 31, 2021 was $6.76 million with $1.03 million restricted, compared to $2.5 million in cash in 2020. Shareholders' equity increased to $14.19 million from $1.36 million in 2020.

Forward-Looking Statements

• Objective to complete re-domiciling process in 2022. Expect to share more on new customer growth in coming weeks/months. Confident in C4 engine and partnerships driving future revenue and growth.

Risks Identified

• Market volatility affecting stock performance. Uncertainties in re-domiciling process if SEC has further comments. Geopolitical issues and supply chain disruptions impacting market conditions.

Q: Why is SharpLink still a foreign private issuer and what's the re-domiciling status?

A: SharpLink merged with Israeli company Martel Management Solutions. Filed Form S-4, need to amend with 2021 audited results and first half 2022 info, aim to complete re-domiciling in 2022.

Q: What were the highlights of SharpLink's 2021 financial results?

A: Revenue climbed to $4.15 million, up 82% from 2020. Segment breakdowns, operating expenses, net loss, and balance sheet details provided.

Q: How is the sports betting industry evolving and where does SharpLink fit in?

A: Sports betting market growing in US with expanded legal states. SharpLink's C4 tech is tailored for US market, successful with NASCAR partnership showing strong conversion results.

Q: Details on NASCAR partnership and C4 engine results?

A: 9.2% engagement with BetMGM bet slip on nascar.com vs 1-2% typical, 72% registration at BetMGM, 152% higher deposits vs prior year.

Q: Why is net gaming revenue considered the Holy Grail?

A: Sportsbooks pay 30% of net gaming revenue, SharpLink is paid for lifetime value of users from conversions.

Q: What's the logic behind acquiring FourCubed?

A: Brings affiliate marketing talent, PAS network, helps build global sub-affiliate network, and enables cross-referencing iGamers and sports betters.

Q: Performance of SharpLink's sports game development?

A: Created free-to-play games for major leagues, NCAA, etc., with large viewing audience, aiming to expand relationships.

Q: Impact of market volatility on SharpLink?

A: Acknowledges market decline, but believes fundamentals and performance will drive recovery over time.