FingerMotion Announces $5.0 Million Registered Direct Offering

Rhea-AI Summary

FingerMotion (NASDAQ: FNGR) has announced a $5.0 million registered direct offering through a securities purchase agreement with institutional investors. The offering includes 3,333,336 shares of common stock and warrants to purchase up to 5,000,004 shares at a combined price of $1.50 per share. The warrants will have an exercise price of $1.50 per share, are immediately exercisable, and have a five-year term. Roth Capital Partners is serving as the exclusive placement agent. The offering is expected to close around December 23, 2024. The company plans to use the net proceeds for general corporate purposes.

Positive

• Secured $5.0 million in additional funding
• Warrants are immediately exercisable
• Five-year warrant term provides long-term exercise opportunity

Negative

• Potential dilution from 3.3M new shares and 5M warrant shares
• Offering price of $1.50 may represent a discount to market price
• Additional shares could pressure stock price

Insights

Financial Analyst

This $5.0 million registered direct offering represents a significant dilutive event for FingerMotion, with the company issuing 3,333,336 shares at $1.50 per share - a 25% discount to the current market price. The inclusion of warrants for an additional 5,000,004 shares at the same strike price creates potential for further dilution.

The deal structure, combining shares with warrants at a 1:1.5 ratio, suggests the company needed attractive terms to secure institutional investment. For a company with a market cap of about $107.6 million, this offering represents approximately 4.7% immediate dilution, with potential to reach 7.7% if all warrants are exercised. The five-year warrant term provides significant optionality for investors while creating long-term overhang risk for existing shareholders.

The vague designation of proceeds for "general corporate purposes" raises concerns about cash burn and operational sustainability. This financing appears more defensive than growth-oriented, potentially indicating working capital constraints rather than strategic expansion opportunities.

Market Research Analyst

The timing and pricing of this offering reveals challenging market dynamics for FingerMotion in the mobile services sector. The $1.50 per share pricing, substantially below market value, combined with warrant sweeteners, suggests institutional investors required significant incentives to participate.

While securing institutional investment provides some validation, the terms reflect cautious investor sentiment toward small-cap tech companies in the current market environment. The involvement of Roth Capital Partners as placement agent indicates reliance on specialized micro-cap investment banking channels rather than broader market interest.

The shelf registration used for this offering was only recently declared effective in September 2023, indicating this capital raise was likely planned rather than opportunistic. However, the dilutive terms suggest weaker negotiating position than management may have initially anticipated when filing the shelf registration.

Singapore, Singapore--(Newsfile Corp. - December 20, 2024) -  FingerMotion, Inc. (NASDAQ: FNGR) (the "Company" or "FingerMotion"), a mobile services and data company, today announced that it has entered into a definitive securities purchase agreement with certain institutional investors for the purchase and sale of 3,333,336 shares of the Company's common stock (or common stock equivalents) and warrants to purchase up to an aggregate of 5,000,004 shares of its common stock at a combined public offering price of $1.50 per share of common stock (or common stock equivalent) and associated warrant in a registered direct offering. The common warrants will have an exercise price of $1.50 per share, are exercisable immediately, and have a term of exercise equal to five years from the date of initial exercise. The closing of the offering is expected to occur on or about December 23, 2024, subject to the satisfaction of customary closing conditions.

Roth Capital Partners is acting as the exclusive placement agent for the offering.

The gross proceeds to the Company from this offering are expected to be approximately $5.0 million, before deducting the placement agent's fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from this offering for general corporate purposes.

The securities in the offering described above are being offered by the Company pursuant to a "shelf" registration statement on Form S-3 (File No. 333-274456) previously filed with the Securities and Exchange Commission (the "SEC") and declared effective by the SEC on September 29, 2023. The offering is being made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement, relating to the offering that will be filed with the SEC. Electronic copies of the final prospectus supplement and accompanying prospectus may be obtained, when available, on the SEC's website at http://www.sec.gov or by contacting Roth Capital Partners, LLC at 888 San Clemente Drive, Newport Beach CA 92660, by phone at (800) 678-9147.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About FingerMotion, Inc.

FingerMotion is an evolving technology company with a core competency in mobile payment and recharge platform solutions in China. As the user base of its primary business continues to grow, the Company is developing additional value-added technologies to market to its users. The vision of the Company is to rapidly grow the user base through organic means and have this growth develop into an ecosystem of users with high engagement rates utilizing its innovative applications. Developing a highly engaged ecosystem of users would strategically position the Company to onboard larger customer bases. FingerMotion eventually hopes to serve over 1 billion users in the China market and eventually expand the model to other regional markets.

For more information on FingerMotion, visit: https://fingermotion.com/

Company Contact:

FingerMotion, Inc.
For further information e-mail: info@fingermotion.com
Phone: 718-269-3366

Investor Relations Contact:
Skyline Corporate Communications Group, LLC
Scott Powell, President
One Rockefeller Plaza, 11th Floor
New York, NY 10020
Office: (646) 893-5835
Email: info@skylineccg.com

Forward Looking Statements

Except for the statements of historical fact contained herein, the information presented in this news release constitutes "forward-looking statements" as such term is used in applicable United States securities laws. These statements relate to analysis and other information that are based on forecasts or future results, estimates of amounts not yet determinable and assumptions of management. Any other statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and should be viewed as "forward-looking statements". We have based these forward-looking statements on our current expectations about future events or performance, including the completion of the public offering and the satisfaction of customary closing conditions related to the public offering and the intended use of proceeds from the public offering. While we believe these expectations are reasonable, such forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond our control. Our actual future results may differ materially from those discussed or implied in our forward-looking statements for various reasons. Factors that could contribute to such differences include, but are not limited to: international, national and local general economic and market conditions; demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to manage its VIE contracts; the ability of the Company to maintain its relationships and licenses in China; adverse publicity; competition and changes in the Chinese telecommunications market; fluctuations and difficulty in forecasting operating results; business disruptions, such as technological failures and/or cybersecurity breaches; and the other factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release and in any document referred to in this news release. The forward-looking statements included in this release are made only as of the date hereof. For forward-looking statements in this news release, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Report Act of 1995. The Company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise. This news release shall not constitute an offer to sell or the solicitation of any offer to buy our securities.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/234655

FAQ

What is the size and price of FingerMotion's (FNGR) December 2024 offering?

FingerMotion's offering includes 3,333,336 shares and warrants for 5,000,004 shares at a combined price of $1.50 per share, totaling $5.0 million.

What are the terms of FNGR's warrants in the December 2024 offering?

The warrants have an exercise price of $1.50 per share, are immediately exercisable, and have a five-year term from the initial exercise date.

When will FNGR's December 2024 registered direct offering close?

The offering is expected to close on or about December 23, 2024, subject to customary closing conditions.

How will FingerMotion use the proceeds from its December 2024 offering?

FingerMotion intends to use the net proceeds from the offering for general corporate purposes.

Who is the placement agent for FNGR's December 2024 offering?

Roth Capital Partners is acting as the exclusive placement agent for the offering.