Esports Technologies’ rebrand to EBET was certainly a successful one and now the company is seeking to increase the amount of liquid capital it has available by means of a sale of shares through private placement.
This funding round will operate under NASDAQ rules and will mean that the total number of common stock shares, 977,657, will be sold at a purchase price of $3.58 per share, to raise gross proceeds of around $3.5m. That amount is before applicable fees and any other expenses incurred in line with NASDAQ’s regulations. EBET will also issue warrants that will allow the private placement investors to purchase an additional 977,657 shares of common stock.
EBET, Inc is the owner of Gogawi.com, an online gaming platform that focuses on esports betting, offering pre-match and in-play betting markets on a range of esports titles. Users can also play casino games and bet on sports. The platform was relaunched by EBET with major enhancements in its product offering, payment methods and an esports-first approach. Our Gogawi review covers many of the key features of this operator.
Exercise Price And Date Set
As part of the terms of the private placement, EBET investors will have the exercise price of $5.00 per share set and that will be exercisable six months from the closing date of the offering period, which is expected to run until June 15.
Investors will then have the option to exercise the shares at the stated price for a period of five years after the closing date.
Should the private sale go through, the proceeds from this round of fundraising will be used for what EBET called “general corporate purposes.”
What Does A Private Placement Mean?
As you may well be aware, NASDAQ is a stocks and shares market that allows companies and individuals to buy and sell shares. Companies that float on the NASDAQ therefore become publicly owned as a result of shareholders.
However, not all share sales have to be made public and this is what a private placement is. In these cases, a company will seek out a number of selected investors to see if they are interested in purchasing the available shares at the stated price.
Often, this may include current shareholders in the company, or even friends, family members, or other investors or institutions known to the board of directors.
By selling the shares in this way, companies like EBET can raise significant revenue in a relatively short space of time, giving them extra financial liquidity, which is especially useful when a business may have significant expansion potential, but perhaps limited available funding to complete that expansion.
What is the Exercise Price?
The exercise price is simply the price at which the owner of a share is entitled to buy or sell the share within the stated time frame.
Knowing that, it is easy to see why EBET has chosen to make this a private placement as by selling the shares at $3.58 initially, and then offering an exercise price of $5.00 per share within six months time, it means investors stand to make at least a 29.4% increase on their investment.
EBET will be confident that their share price will increase given that the company reported a 166% quarter-on-quarter revenue increase for the second quarter of the 2022 financial year.
Total revenue for that period came in at $19m.
That means investors will know it is safe betting on the shares to appreciate in value over that time to ensure they make a solid return on that investment, while giving the company room to grow its core business.
That is especially the case when you consider that in addition to its award-winning Casino and esports betting odds systems already in operation, the company also has a number of other patents pending for use within the casino and esports industries, including an electronic sports betting exchange system.