Sharplink, Inc. (SBET) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for participating on today's conference call and webcast. Joining us from SharpLink Gaming are several members of the company's senior management team led by Rob Phythian, Co-Founder and CEO. 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. With that said, I'd now like to introduce Dodi Handy, SharpLink's Director of Communications. Dodi, the floor is yours.

Thank you, Karen, and good afternoon to everyone who has taken your valuable time to listen in. Before we launch into our discussion, I'd first like to welcome the members of the team who have kindly joined us today to provide you with some meaningful insight into SharpLink's business, our primary growth strategies, the logic behind those strategies and our vision for the future of the company. As I hope you'll soon discover under Rob's leadership, SharpLink has built a very deep bench of highly accomplished industry veterans, all of whom bring our company specialized expertise in decades of collective experience and entrepreneurial ventures within the fantasy sports, sports betting and iGaming industries. In addition to Rob, today, we're going to be joined by Bob DeLucia, Chief Financial Officer; Chris Nicholas, Co-Founder of the company and Chief Operating Officer; Dave Abbott, our newly appointed Chief Technology Officer; Tom Masterman, who also recently joined the team as VP of Revenue; Barry Carpe, Vice President of Business Development; and Tori Roberts, Vice President of Affiliate Marketing. Further, in view of our recently announced intent to merge with SportsHub Games Network, which is subject to shareholder approval at our upcoming Extraordinary General Meeting of Shareholders in 2 weeks, we have invited SportsHub President, Christian Peterson, to also join today's conversation. The format for today's call will be more fireside chat rather than just having our team read scripted prepared statements. But before we begin, I'd like to thank all of the shareholders who kindly submitted questions to us in advance of today's call. We really do appreciate your active engagement in helping us to ensure we cover the topics of most relevant interest to you. So let's get this conversation underway. Before I begin with the questions, Rob, would you like to say a few words?

Thanks, Dodi, and thanks, everyone, for joining the call and for their ongoing support of fellow shareholders of the company. 2022 has been a busy year for us. We've been focused on executing mission-critical objectives, many of which will be discussed on this call. So Dodi, let's get going with the questions.

Okay. Great. All right. So our first series of questions actually relate to SharpLink's vision for its own future. Many of our shareholders in e-mails and calls have expressed confusion about our business-building platform. They're asking, are we a sports betting conversion technology platform? Are we a games development company? Are we an affiliate marketing company? Why did we want to buy a fantasy sports company? All great questions. Can you help our shareholders to understand the business that we're actually building and how we intend to create enduring, sustainable value creation for all of our shareholders?

Sure. So Dodi, let's first talk about the gaming market, the U.S. gaming market as it sits today. The state-by-state reports show over $167 billion in handle in 2022. The macro trends are strong. The American Gaming Association also came out with some information recently that said, even though it's strong, 40% of the market is still offshore, which is another $60 billion in sports bet that already been counted today. We're also sitting at 34 jurisdictions that are legal, and we haven't even signed up California, Texas and Florida for sports betting to date. So it's a very big addressable market. I just wanted everyone to remember that, and it's early days. Another data point that the AGA just released, and people need to understand that following right behind sports betting is going to be iGaming. And offshore legal iGaming is projected to be $500 billion just from the U.S. in the last year. So the conclusion is, it's early days. Very early days for people to remember that. Second, you need to talk about our objectives that drive our business forward. One of the things that you need to measure us by, and I really think it's important for you to think about it this way, we're an audience aggregation company. So we're building an ecosystem. We're trying to acquire audience through the acquisition of the fantasy sports group that you're going to hear about later. We're trying to aggregate audience through our relationships with league and media. And then also apply some of the direct-to-player strategies that you'll hear from Tori and the FourCubed business we acquired that worked in Europe. So it's all about audience. That's the first thing. The second thing you should think about is the technology. A lot of people are approaching the U.S. market either with old technology, technology for a different culture or they're taking shortcuts. That's not our style. As you'll hear later from our Head of Product and Technology, Dave Abbott, we're going to invest in enterprise solutions so that when we work with the league and media, and the big audience companies will be the solution that pays off in the long term. So that's another point for you to remember. The third thing is just the relationships we have. We have a huge head start in the U.S. Chris Nicholas has been a part of the services team for 10 years and has relationships with the biggest name. We had CAA, NBA, PGA Tour and NASCAR to mention a few. And as we grow those relationships and get access to the audience, we could keep applying with C4 software to convert to the sportsbooks. So following on that, now that you know kind of the tenets for the business, there's multichannel revenue streams that, frankly, can be confusing. So I think it's good to pause and talk a little bit about that, particularly as it pertains to the fantasy sports acquisition. SportsHub Games Network has a large audience. They have cash players. They have their wallet system that has over $30 million to $40 million of hold sitting in it at any time. So with that in mind, we could take that audience and that cash gaming network and convert to sportsbook deposits. That's the goal. So when you think about it that way, audience, fantasy sports players, gaming, it fits. So that's just one way to clarify why we're interested in the fantasy sports business. There's others that Christian will get into later. Now I'm going to describe the 4 primary business units, and you're going to hear from each of the leaders of these units. The first is the client servicing sports games development. That's our connection to the big league to media. We build free-to-play games for the largest customers in media and leagues in the country. Second is the direct-to-player in affiliate marketing. This is related to FourCubed. We're leveraging our acquisition of FourCubed, and we're activating that audience in the U.S. with the same tactics. The third is our C4 technology. That's Dave Abbott. He joined us this fall, and we're going to develop enterprise software for frictionless conversion. And the final division, fantasy sports. That's the acquisition. That's up for a vote. We'll know on December 14 when it closes, that it will be a part of our network, and that's the platform that converts the fantasy sports audience to sports betting. Dodi, back to you.

Thanks, Rob. So right now, why don't we delve deeper into each one of those business segments. And let's start with the first one you listed, which is our client services group. Chris Nicholas is SharpLink's Chief Operating Officer, and he heads up this group. So they're responsible for developing free-to-play online sports games for a wide range of customers. Chris, are you with us?

Yes. I'm here Dodi.

Great. Can you share some insight into our client services group area of focus and share with us how it's been performing in '22 and how you expect it to perform in the coming year?

Yes, you bet. Happy to. So client services had a very busy and successful 2022, delivering nearly 40 free-to-play games to a dozen clients. And these clients include league and media companies and sportsbooks. And these game solutions that we deliver, they vary. We have engines for pick on top games, salary cap games, brackets and other types. And we've been building and delivering these games for nearly 15 years. And to highlight a few specifics, we launched the official NCAA bracket with Turner Sports and that was the 13th straight year of that relationship. We also delivered 3 free-to-play games for the NBA this season, including the super popular playoffs bracket challenge. This was our fourth straight year working with the NBA. And we built multiple game titles for both the NASCAR and the PGA Tour, extending those working relationships to over 10 years each. We also work with NASCAR and the Tour to integrate our C4 betting technology that you're going to learn more about. And this was integrated into specific locations on their digital products, and it's something that we expect to do more of with current and future clients next year. We're also really excited about working with global betting giant Tipico for whom we launched 2 games this year for Ohio residents, and that's in anticipation of Ohio becoming a legal betting state. So the first game was a props state game done with the Columbus Crew and the second, which just launched a couple of weeks ago, it's called WinOhio, and that's a football props game. And basically, that game allows users to choose a slate of props or college games and NFL games each weekend, and that game will run through the end of the NFL regular season. And it's a fun combination of fan engagement and top of funnel gaming that allows a sportsbook like Tipico to eventually convert those Ohio fantasy fans into first-time depositors. And then looking out into 2023, I'd say it really promises to be a strong year. At this point in the calendar, we've already renewed agreements with all the aforementioned clients and expect other clients to renew as we get closer to their season starts in 2023. We also expect to extend our free-to-play solutions to new clients, including sportsbooks where free games represent a competitive and fun way for them to convert their audience to sports betting. So all in all, yes, I'd say we're expecting really great things for 2023 in client services.

Great. Well, thank you, Chris. Now let's turn the discussion to the next business unit, which is our direct-to-player affiliate marketing group. The investor chat rooms, quite frankly, have recently been rather critical of the fact that we announced the launch of 15 state-specific affiliate marketing sites. And they're asking, why did we do this? What is the value and the ultimate benefit? And how does it fit into our overall growth strategy of the company? Tori Roberts and Barry Carpe are leading this new D2P business unit. Let's start with you, Tori. Can you help our listeners understand the logic behind this lead generation initiative and the impact you believe it can have on the company's future success?

Dodi, sure thing. So let's kind of talk about these 15 states specific that we launched about a month ago. And really, they are critical building blocks for the future of sharping tractive player strategy, which really circles back to Rob's statements earlier about owning and aggregating an audience that we can monetize through various different revenue streams of sports betting, fantasy games, client services with their free-to-play games. And where it really gets interesting for us is that while these sites may look generic in their infancy, they're really designed as the foundation to really pave the future of where our direct-to-player strategy is going. And kind of what I mean by that is that their basic sites that have listing grids of offers available in each of the 15 legalized states that are currently accepting online iGaming and sports betting opportunities, and we are running paid media against those specific sites. And paid media in our industry is often referred to as PPC or programmatic marketing. Now these sites do have some SEO value behind them, and they will continue to grow with organic traffic as an SEO value continues to grow on these specific sites. However, these sites are designed to take a qualified user who is already searching a web for sports betting and casino offers and present them with an ad that can direct them to 1 of the state-specific websites based on where the current user is living and move them through that conversion funnel faster. Spending the last several years working within the European business of sports betting and iGaming, inclusive of Poker, we've proven that this exact approach has been very successful. And when we take a look at it in the U.S. sector of sports betting and iGaming, there are some very early adopters of this exact approach. You take a look at -- we talk about it as foundational blocks, but Catena Media has done something very similar with playnj.com or playpennsylvania.com, as well as many other media partners that are affiliate marketing experts within the U.S., have also taken this approach. Now looking back 2 weeks ago, Catena released their earnings for Q3 and they're looking at a $63 million year-to-date U.S. revenue and gutting for $100 million run rate. And this really does tell you that this is part of our foundational block into the future of what we're paving the way of this direct-to-player strategy to look like, which Barry will definitely kind of get into a little bit more. One of the things I do want to mention now that we have talked about kind of Catena Media with their current press release that came out on their financials is, since inception of these sites on the -- over the last 30 days, we've already achieved an annualized run rate of over $400,000 in revenue. And while this is our initial focus is to optimizing the paid marketing spend. We do expect these numbers to continue to double and then triple and so forth as we get better at optimizing these sites with paid media traffic. Part of this whole process and creating a direct-to-player owned or operated traffic of site is really the foundation comes from the strategic partnerships and relationships that we have built within the space. And we are currently working with all of the top U.S. sports betting and casino operators. But not only that, we're also working with the industry's best like-minded talent to help us establish our core direct-to-player strategy. Just as Rob mentioned, the talent that we have on this team today is talent that has been in the space for 15 years or more and that we've taken our talent, and we've pulled it together, and we're working on creating something great. And this is just one of our initiatives on our direct-to-payer strategy, which Barry is definitely going to be able to say more. So I think, Dodi, I will pass back to you.

Great. Thank you so much, Tori. So Barry, your next up. Can you provide us some idea on the actual phase rollout of the direct-to-player business that Tori chatted about? And is there any opportunity to leverage this platform to enhance growth of our other business units?

Yes, certainly, Dodi. Thank you. As part of the strategy to deliver unique fan activation solutions, we recognized the value of leveraging our technology to launch a content platform that meets the needs of all sports fans. So in order to achieve this, we looked at the landscape and broke the strategy down into 3 distinct phases. So the first phase, as Tori discussed, was to achieve market parity by launching state-specific sites that appeal to qualified sports fans who are actively searching for sports betting content and offers. This foundational piece was key to building a long-term annuity for SharpLink and for our marketing partners. The second phase of the strategy, which is in process now is to launch an educational site that is designed to help all sports fans understand the nuances of sports betting. Research shows that in 2022, 70% of the U.S. market consider themselves sports fans, but only 7% of those people are what we call super users. These super users are betters who understand how to bet, they bet big, they bet off, and they don't need to be enticed to make bets because they're already doing it. However, the other 93% of sports fans really need the help and guidance to understand how and where to bet. They need to make sense of all this betting specific terminology to get educated before they take the next step. So we think there's a tremendous opportunity to serve this group over the long term. So we'll be launching our educational site in the coming weeks so that we can really start that relationship with this underserved group of what we call the 93 percenters. Finally, we have a more ambitious plan to launch an entirely new content experience next fall that will really bring together all of the assets in the SharpLink family to deliver a hyper-local fan-centric experience. Our vision is to power a targeted personalized iGaming environment that organically introduces all fans to our marketing partners really through relevant tools, free-to-play games and high-quality content, all in a credible environment. So when we look at it in its entirety, we really think the end result will be a premium monetization solution that improves our audience-building goals that Rob talked about earlier while also delivering conversion results for our marketing partners.

Great. Thank you very much, Tori and Barry. I'm going to switch gears here again. And we recently announced the appointment of Dave Abbott as SharpLink's new Chief Technology Officer, which followed the announcement of Tom Masterman, being named as our new Vice President of Revenue. Both of these highly accomplished sports marketing execs have some history with you, Rob, don't they?

Yes. Dodi, they certainly do. Tom and Dave were part of my past when we started a data company in the U.S. in 2010. And Dave and I met and decided that the market in data needed disruption. There was 1 big monopolistic poly called [ STAT ]. And we decided with raising some capital, we could build a brand-new scalable enterprise solution to deliver real-time data to customers in the U.S., and we did it. And we brought Tom along for the ride because someone had to sell the data, as Dave and his team is producing it. And Tom did an excellent job in selling this data to Google, Facebook, Twitter, Turner Sports. And so I'm super excited to have Dave back in the fold as this fall, and Tom in the summer so that we can again come up with an enterprise solution when it comes to affiliate marketing and fandom and build that solution to scale and have Tom sell it to his big [indiscernible] customers. So I'm super excited to have them back together. The end of that story with the data company is we ended up selling it to Sportradar in 2015, and it's become the backbone of the real-time data delivery in the U.S. And yes, we did defeat the monopolistic poly. So Sportradar is #1 in the U.S. and it has a lot to do with the team that's now here.

Well, that's great. And that, I think, offers important perspective on the depth of the bench as I mentioned earlier. So let's go to Dave. Dave, you are with us?

I'm.

Great. So you chose to leave Sportradar because you saw something special brewing at SharpLink, I'm guessing. So what did you see in the C4 technology platform that you believe its game-changing for the industry? And if you could provide us with some insight into your future development plans for the platform. And quite frankly, what is possible with the platform?

Absolutely. So really, there were 2 things that had me particularly excited about joining the SharpLink family. I mean first, the chance to work with Rob and the original startup team from SportsData, again, like Rob mentioned, where the C4 engineering team that was kind of the heart of our original SportsData engineering team, Rob had recruited and brought to SharpLink and then also with Tom Masterman leading Revenue. I couldn't say no to that. I mean, really going through the struggle of growing from a small start-up, like Rob was saying, all the way through becoming the market leader again, I can say with confidence, we really do have a world-class team, and I can't wait to dig in more. And the second reason I find SharpLink is so exciting is the market opportunity. Sports is really the last fashion of live in the broadcast world. I mean you look at the most watched events outside of an election year, and they're nearly all sporting events. And we've all had front row seats, watching the disruption in the industry with regards to how and where we watch the sports we love. For example, Apple and MLS, Amazon and Thursday Night Football. It's opening up a whole new way for fans to experience the sports and how advertisers actually reach the fans. And this change is breeding opportunity. One of the ways -- some of us like to enjoy sports through a game -- a particular game is through sports betting. And just like back in the day when we started to play fantasy and other free-to-play games, wow, did we engage more with the sport and wow, did our consumption of sports increase. And we see the same thing happening again with regards to increased engagement with the edition of sports betting. It's important to remember, though, we're a really new market. We believe that the casual U.S. better has a different complexion compared to those in the rest of the world and that there is tremendous opportunity for growth for the operators beyond just the VIPs. The games that we've been playing for years that we're comfortable with, like the games in the SportsHub Game Network or what Chris' client services team has been providing for all the professional leagues and the largest media companies for what you're saying well more than a decade. These are great ways to get fans to transact in the gaming market by providing education and exposure, all while we're being entertained. So the opportunity in what the C4 technology platform delivers on is the ability for a league, for a betting operator, for an advertiser to get that right message in front of the right fan at the right moment, helping that fan accentuate his or her fandom by connecting them with the relevant offer. And we do this by analyzing content the fan is consuming at that moment, creating recommendations based on observations of behaviors from previous interactions and then matching those against relevant betting markets, and finally, inserting or returning betting opportunities as a piece of relevant content. So all of that together, look at all of it and then return it real time. That's what we do. The entire C4 platform, it's solution-based, ease to interact with and scale to provide meaningful value for our operator partners as well as for others in the sports ecosystem. So yes, very excited about it and very excited to see it grow.

And it's exciting to have you part of our team, Dave. And Tom, are you there?

I'm. Hello, Dodi.

Great. Hello, Tom. And like Dave, you too share the same enthusiasm for SharpLink as an enabler in the sports betting and iGaming industry. And as we all know, you have some very specific views on fan activation, and capitalizing on the full expression of fandom, as I've heard you say 1,000 times now. So can you talk a bit about how you see the market evolving and expanding to provide for this and the role you expect SharpLink will play in making that come about?

Yes. Absolutely, Dodi. Thanks. Yes, this is definitely one of my favorite topics. I generally don't stop talk and will shut up about it. So stop me if I go way too long here. Rob stated earlier on that we are in the business of building and nurturing audiences. And the way we view it, it's not just about targeting potential sports betters, it's about connecting with these sports fans. So we did some research, we dug into the affiliate marketing in competitive landscape, learned a lot about how our competitors are engaging fans. And outside of that, the specific direct-to-player site strategy, which is what Tori and Barry took you through earlier, there was really very little localization and not that much focused on the fan. Some of the messaging was about learning how to bet, but a lot of it was about just the huge special offers. These huge bonuses. Now understanding how to bet and getting free money to bet, that is certainly attractive to a fan. It's not really a loyalty play, it's not really an affinity play. So we thought, well, okay, how do we get fans excited about betting. And that's when we decided like, let's build off of their fandom. That's where they have the most passionate. They may not love betting. They may never love betting, but they love their hometown teams. They're also passionate about their city. And they have local media brands that they trust. So let's offer these fans betting content when they're already expressing that passionate fandom. They're reading article about their favorite team on their favorite local newspaper sites. And then let's offer, like Dave said, betting as a relevant piece of content and another way for them to express that fandom. And we want to take this business is to become essentially a mega affiliate driving fan conversion across all these commerce categories, starting, of course, with betting because it's a relatively new activity for most fans, has a lot of low-hanging fruit from a conversion standpoint. Then we want to include ticketing, merchandise, streaming and that contextual content that Dave is talking about the C4 technology, all our games, quizzes, polls, having bets list that you can enter bets into the publisher site. That's going to help us surround that fan. And all that data we collect will give us a holistic view of that local fans. And then we can offer the most relevant opportunities for them to express that fandom. And the way we see it, everyone wins that way. Fans get what they want, when they want it, so they interact more and they spend more. The publishers don't know their users with nonrelevant content and ads, and they use less inventory to make more money. And then the, we'll call them merchants, the ticketing, merchandise and the betting operators we work with, they convert more with less spend. And I believe they'll acquire users because of that fandom who are more likely to become a more frequent consumer than someone you might acquire from a bonus offer or a deep price discount. And I guess, lastly, this local fandom strategy would be taking it around the industry, and it's been really well received with our media and our operator partners. They definitely see the value in building off of fandom to create affinity with their brands. We are, like Rob was saying, the laser-focused on connecting with these local fan audiences, converting them into new betters and generating meaningful revenue for our partners at the SharpLink. And in the years to come, like I was saying before, we expect to create this full ecosystem with that fan at the center and SharpLink as the connective tissue to all those places where fans express their fandom. So we're super excited to go after it, and I'm really looking forward to seeing how it all plays out. So that's me. Thanks, Dodi.

That's great. Thanks, Tom. Okay. So let's come back to you, Rob, and talk about SportsHub. So we recently announced our intention to acquire and merge with SportsHub. To briefly recap some history, SharpLink actually was spun out of SportsHub in 2021 when we merged with Mer Telemanagement Solutions and our go public transaction. Now the intention is to reunite SharpLink and SportsHub. Can you explain the value proposition you believe exists from remerging with SportsHub, both in the short term and the long term?

Sure, Dodi, I'd be happy to. We also have Christian with us, and I won't steal his thunder, so I'll just give you some quick bullet points. As I mentioned in the introduction, it's all about audience. The audience at the SportsHub network has very high quality, prequalified sports betters, but they play a cash fantasy sports. So the acquisitions that have been made on that platform for fantasy sports are valuable. Secondly, they have a very high cash hold that sits in the system, thanks to the software that was acquired through the LeagueSafe acquisition. It's a clear differentiator in the space. And I think it's something that C4 can definitely leverage in the software build as we move forward at SharpLink. So those are just some of the big overarching points, but I'd be happy to let Christian expand on that.

Great. Christian, are you with us?

Yes, Dodi.

Great. So Christian, as I mentioned, is President of SportsHub. Christian, can you share what impact you and the other shareholders of SportsHub believe that this merger will have on the future of your company?

Yes, absolutely. We're all really excited about the merger. As Rob mentioned already, we've got a wide variety of fantasy sports games and services with a large and really extremely loyal user base. In addition to that, our wallet ecosystem processes millions of dollars of fantasy sports and gaming payments every year. We're also a fully licensed fantasy sports operator with a large suite of fantasy games spanning from high stakes season long options to daily fantasy sports or DFS and even Best Ball platforms. With well-known products like LeagueSafe, National Fantasy Championships and WhatIfSports that have been around for decades, we have a really strong foundation and a consistent, stable revenue base. We expect that joining with SharpLink will provide access to additional resources to not only maintain and grow our existing base fantasy sports businesses, but also give us access to new strategic opportunities we might not have had on our own and perhaps, most importantly, unlocking significant new revenue streams by converting our large and highly qualified fantasy sports audience to sports betting through integrations with the SharpLink's C4 engine. I've been working with Rob and the rest of the SharpLink management team for many years. And although it's admittedly been a little bit of a long and convoluted road to get to this point, we're all excited to get the band back together and to be part of something bigger than what we could achieve on our own.

Well, let's hope that happens. But before this merger can be consummated, SharpLink shareholders must first approve it at the upcoming shareholder meeting to be held on December 14 in Minneapolis. We'll remind everyone that the proxy notice and statement has been filed with the SEC and has been mailed to all the shareholders. So if you haven't already voted, it's important that you get your votes in by way of either mailing your proxy cards or by a way of the Internet or phone. Instructions are provided on the proxy card mailed to you for any 1 of those ways of voting. So please get your votes in. And since SportsHub and SharpLink have many of the same shareholders. And Rob, I bring this up because we've gotten this question from several shareholders. Only votes from SharpLink shareholders who are not shareholders of SportsHub will actually count when determining the approval of the merger. But it's important that everyone votes. Rob, since you and other Board members and officers hold interest in both companies, how did the company approach assuring that the merger is deemed to be fair to all stockholders from an independent objective point of view? Was there a way you approach this so that it wasn't just the insiders benefiting?

Yes. So Dodi, thanks for asking that question because we took great care in the process when we looked at this merger because of the crossover ownership. So SharpLink's Board of Directors, there was 2 independent Board members that had no interest or investment in SportsHub. And they were the 2 that formed the special committee. And this special committee negotiated directly with SportsHub, did all the due diligence, did all the negotiating and recommended the merger to the Board. So they were totally independent. The second, this transaction was reviewed and we engaged Northlane Capital Partners to do its own independent analysis of the transaction and in a fairness opinion, and this is in keeping with best industry practices for this kind of deal. So after carefully reviewing all the terms and conditions and recommendations, the Boards of both companies have determined the merger is a good strategic move that will create long-term value for all the shareholders.

Okay. Thank you for that clarification. So now let's talk about another recent development, and that's the sale of our MTS business unit, formerly known as Mer Telemanagement Solutions. We recently announced that you have a buyer for the company. Why did we elect to divest that business? And how will the company benefit from its sale?

Yes. So, Dodi, this is a business that really deserved a halt. It really needed to be spun out and sold to some of those in -- like business industry. So it took us some time, but we found a good buyer in Israel and we will divest and sell this hopefully by the end of the year. So the process took a little longer. It really isn't core to our mission and we'll execute a sale agreement that will result in a divestiture and an earn-out payment back to the company.

Great. Another shareholder question that we received actually on a regular basis is, what is the status of our redomiciling from Israel to the U.S., particularly in view of the fact that we no longer with the sale of MTS had any Israel-based operations. We filed that S-4 back in the spring, but it appears to us stalled. I'd like to ask our new Chief Financial Officer, Bob DeLucia, it depends on how it's sounding on you're end, I suppose, to provide you with an update on this matter. Bob, do you mind?

No. Great. Thanks, Dodi. I wanted to make sure that it's clear that our intention is to complete the redomiciling filing process, which requires we either amend the S-4 that we currently have on file with the SEC or we actually may withdraw and reissue a new one. And we expect to have this process complete early in 2023. The S-4 that will be filed, we'll include our financial results through 3 and 9 months results as of September 30. And due to timing, we actually may have to include the audited financial statements from the year ended December 31, 2022. Nonetheless, effective January 1, we will no longer be classified as a foreign private issuer and will be automatically converted to being a 34 Act filing company. In addition to that, we -- it is our intention to become a Delaware Corp in the coming year as well. So in this regard, beginning in March of 2023, we'll commence filing the normal 10-Qs and of course, on an annual basis, have the 10-Ks on a go-forward basis.

Okay. Thank you, Bob. So another point of concern for our shareholders is the deficiency notice we received from the NASDAQ. Over to you, Rob. What is the plan for regaining compliance with continued listing?

So, Dodi, based on the notice received from NASDAQ on November 4, we have until May 3, 2023, to regain compliance with a minimum bid requirement of $1. In the event, we failed to regain compliance by that date, we may then be eligible for an additional 180 calendar days to cure the deficiency. Maintaining our listing on NASDAQ is very important to us. So we're hopeful that the market will reward us with the stock price appreciation as we continue to successfully execute our plan so that we can again trade over $1. However, it is important to note that if and only if it becomes necessary, we may be required to do a reverse stock split to cure the stock price efficiency. We intend to continue working very hard to deliver positive performance, so that does not become necessary.

All right. Thank you, Rob. And I think that about does it. I'd like to thank the rest of the SharpLink leadership team who've participated on today's webcast. We hope that all of you listening in have found our discussion informative and insightful. So before we officially close, Rob, do you have any closing comments or key takeaways you'd like to share?

Dodi, just the fact that we've got a great team. I'm glad they were able to participate in the call. And shareholders got to hear from them how they feel about different parts of the business. So that's really important. I think the table is set for next year. I think we've got the right management team to execute. I think the opportunity is going to be very big next year as people evolve from paying money for guarantees to performance-based type deliveries to the sports books. We're right in the middle of that. And based on how my phone is ringing off the hook recently, I think that we're going to have a very strong 2023. So all in all, extremely excited for the future of SharpLink.

Great. Thank you. And Rob, this was a great idea. I think everyone is going to appreciate the fact that they've heard from key members of the team because it is quite a talented group, and it's a pleasure to work with everyone. So for those of you who would like to listen to today's webcast again, a replay of this call will be available later today on our website found at sharplink.com. So with that, I'd like to wish everyone a really great afternoon. So Karen, I'm going to turn the floor back to you.

Thank you. Ladies and gentlemen, this does conclude the SharpLink Gaming conference call and webcast. We thank you for your participation. You may disconnect your lines at this time, and have a great day.