Note 13 - Stock Compensation

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 13 - Stock Compensation

Equity awards are generally granted with an exercise price equal to the market price of the Company’s Ordinary shares at the date of grant; those options generally vest based on three years of continuous service and have ten-year contractual terms. Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the plans.

The Company granted 0 and 155,755 options for the year ended December 31, 2024 and 2023, respectively.  The Company granted 500,004 and 0 restricted stock units for the year ended December 31, 2024 and 2023, respectively.  The Company recognized stock compensation expense of $160,565 and $634,367 for the years ended December 31, 2024 and 2023, respectively, of which $12,041 and $372,994 of expense are recorded in discontinued operations.

The fair value of each option award is estimated on the date of grant using a Black Scholes option-pricing model. The Company uses historical option exercise and termination data to estimate the term the options are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issue date. The expected volatility is determined using the volatility of peer companies. The Company’s underlying stock has been publicly traded since the date of the MTS Merger. Subsequent to the MTS Merger, option grants made under the SharpLink Inc. 2021 Plan utilized the publicly traded stock price of the Company on the day of the option award. All option grants made under the SharpLink, Inc. 2020 Stock Incentive Plan were prior to the MTS Merger. The underlying SharpLink, Inc. stock under that plan was not publicly traded but was estimated on the date of the grants using valuation methods that consider valuations from recent equity financings as well as future planned transactions. All option grants made under the SportsHub Games Network Inc. 2018 Incentive Plan were prior to the SportsHub Acquisition. The underlying SportsHub stock under that plan was not publicly traded but was estimated on the date of the grants using valuation methods that consider valuations from recent equity financings as well as future planned transactions.

The fair value of each stock option grant is estimated on the date of grant using the Black Scholes option pricing model with the following assumptions:

	December 31, 2024			December 31, 2023
Expected volatility		51.02 - 116.56	%		53.6 -116.6	%
Expected dividends		0	%		0	%
Expected term (years)		5.0 - 6.0			5.7
Risk-free rate		.40 - 4.33	%		3.4 - 4.3	%
Fair value of Ordinary Shares on grant date		2.533 -67.4040		1.700 -4.0303

The summary of option activity under the plans as of December 31, 2024 and 2023, and change during the 12 months ended December 31, 2024 and 2023 is as follows:

						Weighted
				Weighted		average
				average		remaining		Aggregate
				exercise		contractual		intrinsic
Options	Shares			price		term		value
Outstanding as of December 31, 2023		414,819		$	8.79		7.7	$	3,750
Granted		-			-
Exercised		(2,500	)		0.62
Forfeited		(104,648	)		5.69
Expired		(199,410	)		11.06
Outstanding as of December 31, 2024		108,261		$	7.59		7.6	$	-
Exercisable as of December 31, 2024		79,571		$	8.05		7.6	$	-

						Weighted
				Weighted		average
				average		remaining		Aggregate
				exercise		contractual		intrinsic
Options	Shares			price		term		value
Outstanding as of December 31, 2022		288,914		$	11.40			$	7,750
Granted		155,755		$	4.46
Exercised		-			-
Acquired 1		14,552		$	14.16
Forfeited		(42,989	)	$	6.99
Expired		(1,413	)	$	8.84
Outstanding as of December 31, 2023		414,819		$	8.79		7.7	$	3,750
Exercisable as of December 31, 2023		245,275		$	10.59		6.9	$	3,750

¹   During the 12 months ended December 31, 2023, the Company recognized 14,552 options that were acquired during the SportsHub Acquisition. The options have an exercise price of $14.16 and expire December 21, 2032. The options were fully vested upon the completion of the SportsHub acquisition.

Unamortized stock compensation expense of $109,080 and $630,473 as of December 31, 2024 and 2023 will be amortized through 2026 for 28,690 and 166,544 of unvested options, respectively, and has a weighted average recognition period of two years.

The summary of restricted stock unit activity under the plans as of December 31, 2024 and 2023, and change during the 12 months ended December 31, 2024 and 2023 is as follows:

						Weighted
						Average
				Weighted		Remaining		Aggregate
				Average Grant		Contractual		Intrinsic
	Shares			Date Fair Value		Term		Value
Outstanding as of December 31, 2023		-		$	-				-
Granted		500,004			0.72		-		-
Cancelled		-			-		-		-
Vested and released		(350,001	)		0.75		-		-
Outstanding and unvested as of December 31, 2024		150,003		$	0.65		13.13	$	-

During the year ended December 31, 2024, the Company recognized $449,360 in expense related to restricted stock units. Unamortized compensation expense for restricted stock units is $106,793 as of December 31, 2024 and 2023he remaining 150,003 of unvested units, will be recognized in 2025.