Sharplink (SBET) FY2025 10-K Risk Factors: 40 New, 19 Dropped

What the changes say

Sharplink added 40 new risks, shifting its core business focus toward digital asset treasury management involving ETH and decentralized finance.
The risk profile is now heavily dominated by cryptocurrency volatility, regulatory uncertainty regarding securities classification, and smart contract risks.

What changed since the prior 10-K

New

New
Regulatory and Legal Risks Related to Digital Assets
New
Absent federal regulations, there is a possibility that ETH and LsETH may be classified as a “security.” Any classification of ETH and LsETH as a “security” would subject us to additional regulation and could materially impact the operation of our business
If ETH or LsETH are classified as securities under federal law, we face increased regulation and potential impacts on our operations.
New
If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated
Being deemed an investment company under the Investment Company Act would create restrictions making our current business segments impractical to continue.
New
We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers
We lack the legal and regulatory protections and obligations that apply to registered investment companies, mutual funds, ETFs, and investment advisers.
New
The launch of central bank digital currencies (“CBDCs”) may adversely impact our business
The introduction of government-issued central bank digital currencies could eliminate or reduce the market demand for private cryptocurrencies like ETH.
New
Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns
Regulatory re-interpretations by FinCEN could require us to register as a money transmitter, increasing our compliance costs and risks of operational shutdowns.
NewRisks Related to Our Digital Asset Treasury Strategy and ETH Exposure
Our digital asset treasury strategy exposes us to various risks, including risks associated with ETH
Our ETH treasury strategy exposes us to extreme price volatility, asset concentration, and significant impacts on our financial results and stock price.
NewRisks Related to Our Digital Asset Treasury Strategy and ETH Exposure
We have engaged in decentralized finance transactions and deploy ETH using liquid staking protocols, which present additional risk as opposed to simply holding our digital assets
Deploying ETH through liquid staking and decentralized finance protocols exposes us to smart contract bugs, irreversible losses, hacks, and heightened regulatory scrutiny.
NewRisks Related to Our Digital Asset Treasury Strategy and ETH Exposure
The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of ETH and adversely affect our business
The emergence of alternative digital assets or private blockchain platforms could negatively impact the price of ETH and our financial condition.
NewOperational, Financial Reporting and Capital Stock Risks
ETH is a highly volatile asset and fluctuations in the price of ETH are likely to influence our financial results and the market price of our listed securities
Fluctuations in the price of ETH, which traded between $1,472 and $4,821 in 2025, heavily influence our financial results and stock price.
NewOperational, Financial Reporting and Capital Stock Risks
We may be subject to regulatory developments related to digital assets and digital asset markets, which could adversely affect our business, financial condition, and results of operations
Novel regulatory developments, enforcement actions, or new laws regarding digital assets by U.S. or foreign governments could adversely affect digital asset prices.
NewOperational, Financial Reporting and Capital Stock Risks
The availability of spot ETPs for ETH and other digital assets may adversely affect the market price of our listed securities
The availability of spot ETPs for ETH and other digital assets may alter investor demand and adversely affect the market price of our listed securities.
NewOperational, Financial Reporting and Capital Stock Risks
Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of ETH and LsETH
NewOperational, Financial Reporting and Capital Stock Risks
Our shift towards an ETH-focused treasury strategy, including staking, restaking, liquid staking and other decentralized finance activities, exposes us to significant operational risks
NewOperational, Financial Reporting and Capital Stock Risks
Our ETH holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents
NewOperational, Financial Reporting and Capital Stock Risks
We plan to purchase additional digital assets using primarily proceeds from equity and debt financings, but we may be unable to obtain such financings on favorable terms
NewOperational, Financial Reporting and Capital Stock Risks
If we are unable to recruit or retain skilled personnel, or if we lose the services of our Chairman of the Board of Directors and/or our Chief Executive Officer, and Chief Financial Officer, our business, operating results, and financial condition could be materially adversely affected
NewOperational, Financial Reporting and Capital Stock Risks
Our Common Stock has traded below the value of the digital assets we hold and may trade at a discount to the value of the digital assets in the future
NewOperational, Financial Reporting and Capital Stock Risks
The market price of our Common Stock may be volatile and subject to significant fluctuations
NewOperational, Financial Reporting and Capital Stock Risks
Future issuances of equity securities could dilute existing stockholders
NewOperational, Financial Reporting and Capital Stock Risks
Our capital stock structure and potential future financings may increase stock price volatility
NewOperational, Financial Reporting and Capital Stock Risks
Concentrated ownership or the issuance of shares to strategic investors could influence matters requiring stockholder approval
NewOperational, Financial Reporting and Capital Stock Risks
The absence of dividends may limit the return on an investment in our Common Stock
NewOperational, Financial Reporting and Capital Stock Risks
Provisions in our organizational documents and under applicable law could discourage or delay a change of control
NewOperational, Financial Reporting and Capital Stock Risks
If securities analysts or investors do not continue to view the Company as an attractive investment, the trading price of our Common Stock could decline
NewOperational, Financial Reporting and Capital Stock Risks
An active trading market for our Common Stock may not be sustained
NewOperational, Financial Reporting and Capital Stock Risks
Custody and Technology Risks
NewOperational, Financial Reporting and Capital Stock Risks
Our ETH treasury management strategy exposes us to risk of non-performance by providers and counterparties
NewOperational, Financial Reporting and Capital Stock Risks
Our custodians’ digital asset insurance may not be sufficient to make us whole in the event of any loss of ETH
NewOperational, Financial Reporting and Capital Stock Risks
Cybersecurity incidents and other issues related to our information systems, technology and data may affect us materially and adversely
NewOperational, Financial Reporting and Capital Stock Risks
We face risks relating to the custody of our ETH and ETH-related digital assets, including the loss or destruction of private keys required to access our ETH and ETH-related digital assets and cyberattacks or other data loss relating to our ETH
NewOperational, Financial Reporting and Capital Stock Risks
ETH is created and transmitted through the operations of the peer-to-peer Ethereum network, a decentralized network of computers running software following the Ethereum protocol. If the Ethereum network is disrupted or encounters any unanticipated difficulties, the value of Ethereum could be negatively impacted
NewOperational, Financial Reporting and Capital Stock Risks
A “fork” in the Ethereum protocol could adversely affect the value of the Company’s shares
NewOperational, Financial Reporting and Capital Stock Risks
Blockchain technology may expose us to sanctioned or blocked persons or may result in unintentional or inadvertent violations of economic sanctions and anti-money laundering laws and regulations
NewOperational, Financial Reporting and Capital Stock Risks
Changes in the governance of a digital asset network or protocol may not receive sufficient support from users and validators, which may negatively affect that digital asset network’s or protocol’s ability to grow and respond to challenges
NewOperational, Financial Reporting and Capital Stock Risks
Digital asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful
NewOperational, Financial Reporting and Capital Stock Risks
There is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement or throughput of Ethereum Network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the value of our Common Stock
NewOperational, Financial Reporting and Capital Stock Risks
Digital asset networks are developed by a diverse set of contributors and the perception that certain high-profile contributors will no longer contribute to the network could have an adverse effect on the market price of the related digital asset
NewOperational, Financial Reporting and Capital Stock Risks
Affiliate Marketing Business Risks and the Industries We Serve
NewOperational, Financial Reporting and Capital Stock Risks
A portion of the operation of our Affiliate Marketing segment is in non-U.S. jurisdictions, which subjects the Company to the economic, political, regulatory and other risks of international operations

Dropped

DroppedRisks Related to Our Business and the Industries We Serve
SharpLink has a history of losses and may not be able to achieve or sustain profitability in the future
History of net losses and accumulated deficit of $(77,808,959) as of December 31, 2024.
DroppedRisks Related to Our Business and the Industries We Serve
If we are unable to increase our revenues or our operating costs are higher than expected, we may not be able to achieve profitability and our operating results may fluctuate significantly
Inability to forecast revenues or control higher than expected fixed operating costs.
DroppedRisks Related to Our Business and the Industries We Serve
We will require additional capital to support our growth plans and such capital may not be available on reasonable terms or at all. If we do not raise sufficient capital, there is substantial doubt about our ability to continue as a going concern
Requirement for additional capital and substantial doubt about ability to continue as a going concern.
DroppedRisks Related to Our Business and the Industries We Serve
The loss or significant reduction in business from one or more of our large partners could materially and adversely affect our business, financial condition and results of operations
DroppedRisks Related to Our Business and the Industries We Serve
Our recruitment and retention of qualified personnel and key employees, including members of our senior management team, are vital to growing our businesses and meeting our business plans. The loss of any of our key executives or other key employees could harm our business
DroppedRisks Related to Our Business and the Industries We Serve
SharpLink has acquired, and in the future may acquire or merge with, other businesses. Our business may suffer if we are unable to successfully integrate acquired businesses into us or otherwise manage the growth associated with multiple acquisitions
Loss or significant reduction in business from large partners without long-term contracts.
DroppedRisks Related to Our Business and the Industries We Serve
the ability to retain or hire qualified personnel for expanded operations
DroppedRisks Related to Legal Matters and Regulations Affecting SharpLink’s Business
SharpLink’s collection, storage and use of personal data are subject to applicable data protection and privacy laws, and any failure to comply with such laws may harm our reputation and business or expose SharpLink to fines and other enforcement action
Recruitment and retention of key employees, specifically CEO Rob Phythian.
DroppedRisks Related to Legal Matters and Regulations Affecting SharpLink’s Business
SharpLink may face claims for data rights infringement, which could subject us to monetary damages
Risks associated with past and future business acquisitions, mergers, and strategic investments.
DroppedRisks Related to Legal Matters and Regulations Affecting SharpLink’s Business
We may invest in or acquire other businesses, and our business may suffer if we are unable to successfully integrate acquired businesses into our Company or otherwise manage the growth associated with multiple acquisitions
Inability to retain or hire qualified personnel for expanded operations and shareholder dilution from stock issuance.
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
We use third-party open source software components and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to provide our product and service offerings
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
We may not regain compliance with the continued listing requirements of The Nasdaq Capital Market
Compliance with evolving data protection and privacy laws regarding personal consumer data collection.
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
We understand that the delisting action referenced in the Notice, dated January 8, 2025, has been stayed pending the issuance of a formal decision by the Panel following a hearing which was held on February 25, 2025
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
The market price of our securities may be volatile and may fluctuate in a way that is disproportionate to our operating performance
Potential claims for data rights infringement in unregulated or partially regulated jurisdictions.
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
overall political and economic conditions, including Russia’s invasion of Ukraine, the Israel and Palestine conflict and growing geopolitical tension with China
Inability to successfully integrate acquired businesses and manage related growth costs.
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
We do not intend to pay cash dividends. As a result, capital appreciation, if any, will be your sole source of gain
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
We currently have outstanding, and we may in the future issue, instruments which are convertible into shares of Common Stock, which will result in additional dilution to our shareholders
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our securities
Risks and restrictions associated with using third-party open source software components and licenses.
DroppedRisks Related to the Technology, Intellectual Property and Infrastructure of SharpLink’s Business
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, the price of our securities and trading volume could decline
Failure to regain compliance with Nasdaq minimum bid price requirements following the July 17, 2024 notice.

Reworded

66% rewrittenOperational, Financial Reporting and Capital Stock Risks
Our affiliate marketing business may be materially and adversely affected if we are unable to keep pace with or adapt to rapidly changing technology, evolving industry standards and changing regulatory requirements, or if we do not invest in product development and provide services that are attractive to our partners
Narrowed the risk scope specifically to the affiliate marketing segment rather than overall future business and financial success.
Was: SharpLink’s business may be materially and adversely affected if we are unable to keep pace with or adapt to rapidly changing technology, evolving industry standards and changing regulatory requirements, or if we do not invest in product development and provide services that are attractive to our partners
61% rewrittenOperational, Financial Reporting and Capital Stock Risks
Our affiliate marketing operations are subject to seasonal fluctuations that may impact results of operations and cash flow
Retained identical text describing seasonal fluctuations in sporting events impacting operations for sports leagues, media, and bookmakers.
Was: SharpLink’s operations are subject to seasonal fluctuations that may impact results of operations and cash flow

All 48 risk factors

Headings as the filing states them, in filing order.

Other

01Regulatory and Legal Risks Related to Digital AssetsNew
02Absent federal regulations, there is a possibility that ETH and LsETH may be classified as a “security.” Any classification of ETH and LsETH as a “security” would subject us to additional regulation and could materially impact the operation of our businessNew
03If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplatedNew
04We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisersNew
05The launch of central bank digital currencies (“CBDCs”) may adversely impact our businessNew
06Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdownsNew

Risks Related to Our Digital Asset Treasury Strategy and ETH Exposure

07Our digital asset treasury strategy exposes us to various risks, including risks associated with ETHNew
08We have engaged in decentralized finance transactions and deploy ETH using liquid staking protocols, which present additional risk as opposed to simply holding our digital assetsNew
09The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of ETH and adversely affect our businessNew

Operational, Financial Reporting and Capital Stock Risks

10ETH is a highly volatile asset and fluctuations in the price of ETH are likely to influence our financial results and the market price of our listed securitiesNew
11We may be subject to regulatory developments related to digital assets and digital asset markets, which could adversely affect our business, financial condition, and results of operationsNew
12The availability of spot ETPs for ETH and other digital assets may adversely affect the market price of our listed securitiesNew
13Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of ETH and LsETHNew
14Our shift towards an ETH-focused treasury strategy, including staking, restaking, liquid staking and other decentralized finance activities, exposes us to significant operational risksNew
15Our ETH holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalentsNew
16We plan to purchase additional digital assets using primarily proceeds from equity and debt financings, but we may be unable to obtain such financings on favorable termsNew
17We incur significant costs as a result of operating as a public reporting company, and our management is required to devote substantial time to regulatory compliance initiatives
18If we are unable to recruit or retain skilled personnel, or if we lose the services of our Chairman of the Board of Directors and/or our Chief Executive Officer, and Chief Financial Officer, our business, operating results, and financial condition could be materially adversely affectedNew
19Our Common Stock has traded below the value of the digital assets we hold and may trade at a discount to the value of the digital assets in the futureNew
20The market price of our Common Stock may be volatile and subject to significant fluctuationsNew
21Future issuances of equity securities could dilute existing stockholdersNew
22Our capital stock structure and potential future financings may increase stock price volatilityNew
23Concentrated ownership or the issuance of shares to strategic investors could influence matters requiring stockholder approvalNew
24The absence of dividends may limit the return on an investment in our Common StockNew
25Provisions in our organizational documents and under applicable law could discourage or delay a change of controlNew
26If securities analysts or investors do not continue to view the Company as an attractive investment, the trading price of our Common Stock could declineNew
27An active trading market for our Common Stock may not be sustainedNew
28Custody and Technology RisksNew
29Our ETH treasury management strategy exposes us to risk of non-performance by providers and counterpartiesNew
30Our custodians’ digital asset insurance may not be sufficient to make us whole in the event of any loss of ETHNew
31Cybersecurity incidents and other issues related to our information systems, technology and data may affect us materially and adverselyNew
32We face risks relating to the custody of our ETH and ETH-related digital assets, including the loss or destruction of private keys required to access our ETH and ETH-related digital assets and cyberattacks or other data loss relating to our ETHNew
33ETH is created and transmitted through the operations of the peer-to-peer Ethereum network, a decentralized network of computers running software following the Ethereum protocol. If the Ethereum network is disrupted or encounters any unanticipated difficulties, the value of Ethereum could be negatively impactedNew
34A “fork” in the Ethereum protocol could adversely affect the value of the Company’s sharesNew
35Blockchain technology may expose us to sanctioned or blocked persons or may result in unintentional or inadvertent violations of economic sanctions and anti-money laundering laws and regulationsNew
36Changes in the governance of a digital asset network or protocol may not receive sufficient support from users and validators, which may negatively affect that digital asset network’s or protocol’s ability to grow and respond to challengesNew
37Digital asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successfulNew
38There is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement or throughput of Ethereum Network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the value of our Common StockNew
39Digital asset networks are developed by a diverse set of contributors and the perception that certain high-profile contributors will no longer contribute to the network could have an adverse effect on the market price of the related digital assetNew
40Affiliate Marketing Business Risks and the Industries We ServeNew
41We operate in a competitive market and may lose clients and relationships to both existing and future competitors
42Our affiliate marketing business may be materially and adversely affected if we are unable to keep pace with or adapt to rapidly changing technology, evolving industry standards and changing regulatory requirements, or if we do not invest in product development and provide services that are attractive to our partners66% rewritten
43Our affiliate marketing operations are subject to seasonal fluctuations that may impact results of operations and cash flow61% rewritten
44Failure to obtain or maintain the required regulatory approvals and licenses in the various jurisdictions that we operate or intend to operate, whether individually or collectively, could have a material adverse effect on our business
45Reductions in discretionary consumer spending could have an adverse effect on our business, financial condition, results of operations and prospects
46A portion of the operation of our Affiliate Marketing segment is in non-U.S. jurisdictions, which subjects the Company to the economic, political, regulatory and other risks of international operationsNew
47Our failure to protect or enforce our proprietary and intellectual property rights, including our unregistered intellectual property, and the costs involved in such protection and enforcement, could harm our business, financial condition, results of operations and prospects
48We may face claims for intellectual property infringement, which could subject it to monetary damages or limit us in using some of our technologies or providing certain solutions

Other Sharplink 10-Ks

FY2024 10-K risk factors
27 risks
SharpLink faces ongoing operating losses, liquidity issues, and substantial doubt about its ability to continue as a going concern. The company relies heavily on a few large partners in the competitive online sports betting and iGaming markets. Regulatory approvals across 18 U.S. states and Nasdaq minimum bid price compliance are critical for ongoing operations.
Filed Mar 14, 2025

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The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.