Sharplink, Inc.

Good afternoon, everyone, and welcome to Sharplink Gaming Limited's 2023 Second Quarter Results Webcast. Presenting on today's webcast is Sharplink's Chief Executive Officer, Mr. Rob Fithian, who will be joined by Dodie Handy, the company's Director of Communications. Before I turn the floor over to them, I remind you that during today's call, statements that are not historical facts, including any projections, Statements regarding future events or future financial performance or statements of intent or belief are forward-looking statements and are covered by the safe harbor disclaimers contained in the company's public filings with the SEC. Actual outcomes and results may differ materially from what is expressed in or implied by these forward-looking statements. At this time, I'd now like to introduce Dodie Handy. Please go ahead, Dodie.

Thank you, Karen, and good morning, everyone, and thanks for joining us on this webcast. Your interest in and support of SharpLink is deeply appreciated, and we're glad you're with us. Due to personal reasons, Bob DeLucia, our Chief Financial Officer, is not able to participate on today's webcast, but he will be back on air when we broadcast our third quarter results in November. So in Bob's absence, Rob will endeavor to cover all the key highlights of the second quarter results and provide you with some meaningful insight into the company's progress and outlook for the remainder of this year. So let's begin. I'd like to first welcome Rob onto our call. Good morning, Rob.

Hey, Dodie, and greetings to everyone listening in. We're pleased to again have this opportunity to connect with our fellow shareholders and hope that you find the time spent with us this morning helpful and understanding and appreciating. where Sharplink is today, and where we are working hard to get to in the future. Yesterday afternoon, after the market closed, we filed our 2023 second quarter report on Form 10Q with the SEC. If you haven't had a chance to review it, you may access it on SEC.gov or via Sharplink's Investor Relations section on our website under SEC Filings. I'd like to encourage everyone to read our 10Qs and other filings with the SEC to ensure you have a full understanding of our business, financial results, and other important information disclosed. First, looking at our income statement for three months ended June 30th, 2023, revenues nearly doubled, rising 86% to $3.26 million. as compared to 1.75 million reported for the same three-month period in 2022. The overall increase was largely attributable to new revenue contribution from Sports Hub Gaming Network, which we merged on December 22, 2022, as well as higher sales from our affiliate marketing services group for both the U.S. and international divisions. More specifically, Sports Hub's revenue totaled $1.13 million in Q2, which compared to zero from the prior year Q2 due to the timing of the merger. Revenues for our affiliate marketing services U.S. group increased 182% to approximately $306,000, up from $109,000. and sales from Affiliate Marketing Services International totaled $1.13 million, a 34% increase over revenues of approximately $840,000 for the three months ended June 30, 2022. Revenue contribution from our Sports Gaming Client Services Division declined 13% to approximately $699,000 for Q2 of 2023, which compared to revenues of approximately $803,000 for the second quarter in the prior year. Now, looking at the results for the first half of 2023, total revenues rose 82 percent to $6.65 million, up from $3.65 million reported for the first six months of 2022. On a segmented basis, Revenues increased across all business segments, with Sports Hub contributing 2.17 million to overall sales compared to zero the prior year. Affiliate Marketing Services' U.S. revenues increased 244% to approximately 585,000 compared to 170,000 in the first half of 2022. Affiliate Marketing Services International saw revenues climb 21% to $2.13 million, up from $1.76 million, and revenues from sports gaming client services improved 3% to $1.76 million from $1.71 million. Gross profit also greatly improved, increasing 972% to approximately $965,000, for the three-month reporting period in 2023, and 222 percent to $2.31 million for the first six months of the year. This compared to gross profit of approximately $90,000 and $718,000 for the three- and six-month period end of June 30th, 2022. Gross profit margin also improved. increasing to 30 percent from 5 percent for the comparable three-month periods ended June 30, 2023 and 2022, respectively. And to 35 percent and 20 percent for the comparable six-month period ended June 30, 2023 and 2022, respectively. Both our gross profit and profit margins were positively impacted by the company's broader mix of higher margin products and services, resulting from our merger with SportsHub, along with expansion initiatives being successfully implemented by our affiliate marketing services divisions. Moving down the income statement, for the three-month end of June 30, 2023, total operating expenses remained relatively flat, at $3.75 million when compared to total operating expenses of $3.73 million for the same three months in 2022. For the six-month reporting period ending June 30, 2023 and 2022, total operating expenses declined 34 percent to $7.42 million from $11.29 million respectively. The reduction in total operating expenses was primarily due to a $4.73 million non-cash expense associated with goodwill and intangible asset impairment offset by lower selling general and administrative costs reported for the six months ended June 30th, 2022. As a result of the higher sales and lower operating expenses, our total operating loss decreased 24% to 2.73 million for the three months ended June 30th, 2023, as compared to 3.65 million reported for the same three months in 2022. For the six month period in 2023 and 2022, operating losses declined 52% to 5.11 million from 10.59 million respectively. For the aforementioned reasons and after factoring total other income and expense of approximately $503,000 and provision for income taxes of $6,400, net loss from continuing operations for the three months ended June 30th, 2023 totaled 3.29 million, a 10% decrease from 3.66 million reported for the same three months in the prior year after factoring total other income and expense of approximately $23,000 and provision for income taxes of $700. For the six months ended June 30, 2023, the company's net loss from continuing operations decreased 44% to $5.97 million after factoring approximately $823,000 in total other income and expense and provision for income taxes of $37,000. This, compared to a net loss from continuing operations of $10.6 million for the six months ended June 30, 2022, after factoring roughly $31,000 in total other income and expense and a provision for income taxes of $700. During the three- and six-month reporting periods in 2023, total other income and expense was largely attributable to interest and other expenses associated with our bank lines of credit, coupled with accounting for the change in the fair value of our convertible debenture, offset by higher interest income earned on its cash on hand. Net loss from discontinued operations of SharpLink's legacy Mare Telemanagement Solutions business declined 87% to $149,000 for the three-month end of June 30, 2023, as compared to a net loss from discontinued operations of $1.15 million for the three-month reporting period in 2022. For the six months ended June 30th, 2023, net loss from discontinued operations of the legacy MTF business totaled 294,000, down 77% from 1,255,654 reported for the same six months in the prior year. Moving all the way down to net loss available to our ordinary shareholders, our net loss declined 28% to 3.49 million or $1.24 loss per basic and diluted share, which compared to a net loss of 4.81 million or $2.04 loss per basic and diluted share for the three months ended June 30th, 2023 and 2022 respectively. For the six months ended June 30th, 2023, net loss dropped 47% to 6.32 million or $2.24 loss per basic and diluted share, which compared to a net loss of $11.86 million, or $5.02 loss per basic and diluted share for the six months ended June 30th, 2022. Now pivoting to the balance sheet, as of June 30th, 2023, Sharplink had $31.88 million in cash, and 10.79 million in restricted cash as compared to cash of 39.33 million and restricted cash of 11.13 million as of December 31st, 2022. Total stockholders deficit was 1.78 million at June 30th, 2023, which compared to total stockholders equity of 2.99 million at December 31st, 2022. That completes my review of the Q2 results. Now, why don't we talk about some other operational developments that have helped drive our strong second quarter financial performance? Several of our shareholders kindly submitted questions in advance of today's webcast. Dodie, would you mind kicking off our Q&A session?