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Fair Value
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value

Note 6 - Fair Value

 

In accordance with fair value accounting guidance, the Company determines fair value based on the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

 

As disclosed in Note 5, SharpLink entered into a Settlement Agreement on January 19, 2024 for the 2023 Warrant for purposes of the Warrant Repurchase at $900,000. On March 6, 2024, SharpLink entered into an Exchange Agreement with Alpha to change the Warrant Repurchase of $900,000. Pursuant to the terms set forth in the Exchange Agreement, the Company agreed to exchange the 2023 Warrant for (i) 13,107 shares of Common Stock (the “Shares”), (ii) a pre-funded warrant in the amount of 39,130 shares of Common Stock (the “Pre-Funded Warrant”) and (iii) the remaining unexchanged balance of the 2023 Warrant Repurchase (the “Warrant Repurchase Balance”).

 

 

As disclosed in Note 5, the Debenture and the Warrant were reported at fair value at issuance.

 

The following table presents a reconciliation of the beginning and ending balances of the Debenture measured at fair value on a recurring basis that uses significant unobservable inputs (Level 3) and the related expenses and losses recorded in the consolidated statement of operations during the three months ended March 31, 2024:

 

     
Fair Value, December 31, 2023  $4,395,753 
Principle and interest convertible debenture repayments   (4,395,753)
Issuance of warrant repurchase balance   900,000 
Conversion of warrants to shares and pre-funded warrants   (498,029)
Change in fair value of warrant repurchase balance   (231,335)
Fair Value, March 31, 2024  $170,636 

 

The fair value of the Debenture was determined using a Monte Carlo Simulation (“MCS”), which incorporates the probability and timing of the consummation of a Fundamental Transaction event and conversion of the Debenture as of the valuation date.