SharpLink swaps preferred stock for common shares and warrants

Investing.com

Published Apr 03, 2025 06:16AM ET

SharpLink swaps preferred stock for common shares and warrants

In a strategic financial move, SharpLink Gaming, Inc. (NASDAQ:SBET), currently trading at $0.29 with a market capitalization of $2.01 million, has entered into an exchange agreement with Alpha Capital Anstalt, effectively eliminating its Series A-1 and Series B Preferred Stock. According to InvestingPro data, the stock has experienced significant volatility, declining 78.54% over the past year. The transaction, which took place on April 2, 2025, involved Alpha Capital exchanging its existing preferred shares for 464,195 shares of SharpLink's common stock and 535,805 prefunded warrants. These warrants, exercisable at $0.001, provide Alpha Capital with the opportunity to purchase additional common shares.

This exchange is significant for SharpLink as it simplifies the company's capital structure by removing all outstanding Series A-1 and Series B Preferred Stock. InvestingPro analysis shows the company maintains a strong current ratio of 5.23, indicating solid short-term liquidity, though it faces challenges with rapid cash burn. The arrangement was made pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended, which allows for such exchanges without registration if certain conditions are met.

The details of the exchange agreement and the prefunded warrants are documented in exhibits filed with the SEC, providing transparency and legal context to the transaction.

The exchange follows historical events that shaped the company's equity structure. In 2021, SharpLink merged with Mer Telemanagement Solutions Ltd., with SharpLink Inc. shareholders owning a majority stake in the combined entity. Investment agreements with Alpha Capital in 2018 and subsequent exercises of options led to the preferred stock positions that have now been exchanged.

This financial maneuver is part of SharpLink's ongoing efforts to optimize its balance sheet and shareholder value. The information presented is based on the latest SEC filing and provides an insight into the company's strategic financial decisions. InvestingPro analysis suggests the stock is currently undervalued, with 12 additional exclusive insights available to subscribers, including detailed financial health metrics and growth prospects.

In other recent news, SharpLink Gaming, Inc. has been granted an extension by the Nasdaq Listing Qualifications Panel to meet the exchange's minimum bid price and stockholders' equity requirements. The company now has until May 23, 2025, to comply with the Nasdaq's minimum bid price of $1.00 per share and maintain a minimum stockholders' equity of $2.5 million. This decision followed a hearing where SharpLink presented its compliance plan, allowing the company's stock to remain listed on the Nasdaq. By the May deadline, SharpLink is also required to file a public disclosure detailing any equity-increasing transactions and provide updated income projections for the next 12 months. Rob Phythian, Chairman and CEO, expressed satisfaction with the Panel's decision and committed to executing necessary initiatives for compliance. SharpLink is known for its affiliate marketing network, PAS.net, and operates state-specific affiliate marketing websites. The company aims to drive sports betting and online casino gaming traffic to its partner operators. This development is based on a press release from SharpLink Gaming, Inc.

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