Lichen China Limited Announces $3.1 Million Registered Direct Offering

Rhea-AI Summary

Lichen China (LICN) has announced a registered direct offering of 25,000,000 Class A ordinary shares at $0.125 per share, aiming to raise approximately $3.1 million in gross proceeds. The offering includes pre-funded warrants with an exercise price of $0.001 per share. The transaction, with Univest Securities, acting as the sole placement agent, is expected to close around December 31, 2024. The offering is being conducted under a shelf registration statement on Form F-3 previously declared effective by the SEC on March 1, 2024.

Positive

• Secured $3.1 million in additional funding through share offering

Negative

• Significant shareholder dilution with 25,000,000 new shares being issued
• Low share pricing at $0.125 indicates potential market weakness

Insights

Financial Analyst

This $3.1 million registered direct offering represents a significant dilution event for LICN shareholders, with 25 million new shares being issued at $0.125 per share - a steep discount to current market prices. The offering size relative to LICN's $11.1 million market cap indicates substantial dilution of approximately 225% to existing shareholders. The extremely low offering price signals potential desperation for capital and could trigger further downward pressure on the stock. The inclusion of pre-funded warrants with a nominal $0.001 exercise price suggests the company is utilizing creative financing structures to attract investors. While the capital raise provides short-term liquidity, the terms are highly unfavorable and could indicate deeper financial challenges. The timing of the offering, at year-end, may suggest urgency in securing funding before the new year. The involvement of Univest Securities as the sole placement agent, rather than a larger investment bank, might reflect institutional interest.

Legal Expert

The offering's structure through a recently effective shelf registration (Form F-3 from March 2024) demonstrates compliance with SEC regulations while enabling quick capital access. The pre-funded warrant mechanism provides flexibility in the offering structure while navigating regulatory requirements. Critical legal safeguards are evident in the disclosure language regarding jurisdictional restrictions and the pending prospectus supplement filing. The rapid execution timeline, with closing expected by December 31, suggests thorough advance preparation of regulatory documentation. The offering's compliance framework appears robust, though investors should note that the extreme dilution could potentially trigger shareholder litigation risks. The use of a shelf registration indicates the company anticipated needing capital access, as this regulatory pathway was established nine months prior.

XIAMEN, China, Dec. 30, 2024 /PRNewswire/ -- Lichen China Limited (Nasdaq: LICN) ("Lichen China" or the "Company"), a dedicated financial and taxation service provider in China today announced that it has entered into a definitive agreement with several investors for the purchase and sale of an aggregate of 25,000,000 of the Company's Class A ordinary share, par value $0.00004 per share (the "Shares") (or pre-funded warrants in lieu thereof) at a purchase price of $0.125 per share in a registered direct offering. The purchase price for the pre-funded warrants is identical to the purchase price for Shares, less the exercise price of $0.001 per share.

The aggregate gross proceeds to the Company of this offering are expected to be approximately $3.1 million. The transaction is expected to close on or about December 31, 2024, subject to the satisfaction of customary closing conditions.

Univest Securities, LLC is acting as the sole placement agent.

The registered direct offering is being made pursuant to a shelf registration statement on Form F-3 (File No. 333-277230) previously filed by the Company and declared effective by the U.S. Securities and Exchange Commission ("SEC") on March 1, 2024. A final prospectus supplement and accompanying prospectus describing the terms of the proposed offering will be filed with the SEC and will be available on the SEC's website located at http://www.sec.gov. Electronic copies of the final prospectus supplement and the accompanying prospectus may be obtained, when available, by contacting Univest Securities, LLC at info@univest.us, or by calling +1 (212) 343-8888.

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sales of such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Copies of the prospectus supplement relating to the registered direct offering, together with the accompanying base prospectus will be filed by the Company and, upon filing, can be obtained at the SEC's website at www.sec.gov.

About Lichen China Limited

Lichen China Limited focuses on providing financial and taxation solution services, education support services, and software and maintenance services under its "Lichen" brand. In recognition of the Company's expertise and experience in the financial and taxation solution services industry for over 18 years, the Company has built up its reputation as a dedicated financial and taxation solution services provider of professional and high-quality services in China. For more information, please visit the Company's website: https://ir.lichenzx.com/. 

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and in its other filings with the U.S. Securities and Exchange Commission.

For more information, please contact:

Tian Sun
Phone: +86-0592-5586999
Email: ir@lichenzx.com

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SOURCE Lichen China Limited

FAQ

How much money is LICN raising in its December 2024 offering?

Lichen China (LICN) is raising approximately $3.1 million through a registered direct offering of 25,000,000 Class A ordinary shares.

What is the share price for LICN's December 2024 registered direct offering?

The shares are being offered at $0.125 per share, with pre-funded warrants available at the same price less $0.001 exercise price.

When will LICN's $3.1 million registered direct offering close?

The transaction is expected to close on or about December 31, 2024, subject to customary closing conditions.

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

Univest Securities, is acting as the sole placement agent for the offering.

How many new shares is LICN issuing in its December 2024 offering?

Lichen China is issuing 25,000,000 Class A ordinary shares in this registered direct offering.