In a recent move, Signing Day Sports, Inc. (NYSE American:SGN) has amended a termination agreement with Boustead Securities, LLC, capping the total amount of equity that can be issued to Boustead.
The amendment, filed on October 15, 2024, limits the issuance to no more than 19.99% of the company's outstanding common stock prior to the execution of the original termination agreement, not exceeding 3,621,725 shares.
This amendment follows the termination of a previous engagement letter and a right of first refusal granted to Boustead, which was related to Signing Day Sports’ initial public offering. The original termination agreement, signed on September 18, 2024, allowed for the issuance of 3,000,000 shares to Boustead and additional shares equivalent to 10.35% of any future equity issued to third parties, excluding instances of a change in control.
The revised agreement now includes a provision for a "true up" cash payment to Boustead if the company fails to obtain stockholder approval for the issuance exceeding the capped amount by a specified deadline. The company is required to seek this approval at a stockholders meeting, which must be held within a set timeframe following the effectiveness of a registration statement.
The shares issued to Boustead are exempt from registration under the Securities Act of 1933, pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D. This strategic move by Signing Day Sports, a company specializing in computer processing and data preparation services, is part of its broader corporate restructuring efforts.
Signing Day Sports has not disclosed any prior material relationships with Boustead, apart from those related to the terminated agreements. This decision comes as part of the company's ongoing efforts to manage its capital structure and shareholder relations. The information in this article is based on a press release statement.
In other recent news, Signing Day Sports, Inc., has experienced several significant developments. The company received stockholder approval for a reverse stock split, with the exact ratio to be determined by the Board of Directors. Additionally, the company's stock plan was revised, increasing the number of shares available for grant by an additional 2,250,000.
Signing Day Sports also announced board changes, with five directors elected to serve until the 2025 annual meeting, and BARTON CPA confirmed as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024.
The company issued a $100,000 promissory note to CEO Daniel D. Nelson, with a monthly interest rate of 20%, and entered into an agreement with FirstFire Global Opportunities Fund, allowing the repurchase of unexercised warrants.
Furthermore, a consulting agreement was established with Clayton Adams, who will provide strategic advice on mergers and acquisitions. In return, Adams will receive 127,826 shares of common stock and an additional 668,841 shares as a private placement. The company also revised the employment agreement with CEO Daniel Nelson, outlining specific severance terms in the event of termination.
Lastly, a material agreement was made with the company's outside securities counsel, Bevilacqua PLLC, deferring a payment of $684,350.98 until the next major financial transaction. These are all recent developments.
InvestingPro Insights
Signing Day Sports' recent amendment to its agreement with Boustead Securities reflects the company's efforts to manage its capital structure, which is particularly crucial given its current financial position. According to InvestingPro data, the company has a market capitalization of just $4.53 million USD, indicating its small-cap status.
InvestingPro Tips highlight that Signing Day Sports is "quickly burning through cash" and that "short term obligations exceed liquid assets." These factors likely influenced the decision to cap the equity issuance to Boustead, as the company aims to maintain control over its share dilution.
The company's financial metrics reveal significant challenges. With a negative P/E ratio of -0.58 and an operating income margin of -1142.88% for the last twelve months as of Q2 2024, Signing Day Sports is currently not profitable. This aligns with another InvestingPro Tip stating that the company "does not pay a dividend to shareholders."
Despite these challenges, Signing Day Sports has shown impressive revenue growth, with a 218.74% increase over the last twelve months. This growth may explain the recent stock performance, as InvestingPro Tips note a "significant return over the last week" and a "strong return over the last month," with the 1-month price total return reaching 95.23%.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Signing Day Sports, providing a deeper understanding of the company's financial health and market position.
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