DatChat, Inc. Announces Pricing of $5.1 Million Registered Direct Offering Priced At-The Market Under Nasdaq Rules

Rhea-AI Summary

DatChat (DATS) has announced a registered direct offering priced at-the-market under Nasdaq rules, involving the sale of 1,200,000 shares of common stock at $4.25 per share to institutional investors. The offering is expected to generate gross proceeds of approximately $5.1 million and close around January 10, 2025.

The Benchmark Company is serving as the sole placement agent for this offering. DatChat plans to utilize the net proceeds for working capital and general corporate expenses. The offering is being conducted through an effective shelf registration statement on Form S-3 filed with the SEC.

Positive

• Secured $5.1 million in gross proceeds through institutional investors
• Offering priced at market value, indicating fair market alignment
• Strengthens working capital position

Negative

• Share dilution of 1,200,000 new shares impacting existing shareholders
• Additional offering expenses will reduce net proceeds

Insights

Financial Analyst

This $5.1 million registered direct offering marks a significant capital raise for DatChat, priced at $4.25 per share. The pricing "at-the-market" under Nasdaq rules typically indicates a fair market valuation, though it often leads to immediate dilution for existing shareholders. With a current market cap of about $7.6 million, this offering represents substantial dilution of approximately 67% relative to the company's current market value. The use of proceeds for "working capital and general corporate expenses" suggests defensive capital raising rather than strategic growth initiatives. The involvement of The Benchmark Company as placement agent adds credibility to the transaction, but the dilutive impact and generic use of proceeds raise concerns about the company's cash position and operational sustainability. The timing of the offering, coming early in 2025, might indicate urgent capital needs that couldn't wait for potential operational improvements.

Market Research Analyst

The offering's structure and timing reveal important market dynamics. By choosing a registered direct offering over other financing options, DatChat is opting for a faster, more certain capital raise, though typically at a higher cost. The clean shelf registration from December 2022 facilitated this quick execution, but the size of the offering relative to market cap suggests significant pressure on the stock price. With 1.2 million new shares being introduced, the increased float will likely impact trading dynamics and potentially increase volatility. For a small-cap company in the competitive messaging and metaverse space, this level of dilution could hamper future capital raising efforts and valuation multiples. The market's reaction to this offering will be important in determining DatChat's ability to secure future funding on favorable terms.

New Brunswick, NJ, Jan. 08, 2025 (GLOBE NEWSWIRE) -- DatChat, Inc. (Nasdaq: DATS) (“DatChat” or the “Company”), a secure messaging, social media, and metaverse company, today announced that it has entered into securities purchase agreements with certain institutional investors for the purchase and sale of an aggregate of 1,200,000 shares of common stock at a purchase price of $4.25 per share in a registered direct offering priced at-the-market under Nasdaq rules. The offering is expected to close on or about January 10, 2025, subject to the satisfaction of customary closing conditions.

The Benchmark Company, LLC is acting as the sole placement agent for the offering.

The gross proceeds from the offering are expected to be approximately $5.1 million, prior to deducting offering expenses payable by DatChat. DatChat intends to use the net proceeds from the offering for working capital and general corporate expenses.

The securities were offered by the Company pursuant to an effective "shelf" registration statement on Form S-3 (File No. 333-268058), which was filed with the U.S. Securities and Exchange Commission (“SEC”) on October 28, 2022, as amended on November 18, 2022, and declared effective by the SEC on December 6, 2022, and the accompanying prospectus contained therein.

A 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 prospectus supplement may be obtained, when available, by contacting The Benchmark Company, LLC, 150 East 58^th Street, 17^th Floor, New York, NY 10155, by email at prospectus@benchmarkcompany.com, or by calling +1 (212)-312-6700. Before investing in this offering, interested parties should read in their entirety the final prospectus supplement and the accompanying prospectus and the other documents that the Company has filed with the SEC that are incorporated by reference in such final prospectus supplement and the accompanying prospectus, which provide more information about the Company and such offering.

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

About DatChat, Inc.

DatChat, Inc. is a secure messaging, metaverse, and social media company that not only focuses on protecting privacy on personal devices, but also protects user information after it is shared with others. The DatChat Messenger & Private Social Network presents technology that allows users to change how long their messages can be viewed before or after users send them, prevents screenshots, and hides encrypted photos in plain sight on camera rolls. DatChat's patented technology offers users a traditional texting experience while providing control and security for their messages. With the DatChat Messenger, a user can decide how long their messages last on a recipient's device, while feeling secure that at any time, they can delete individual messages or entire message threads, making it like the conversation never happened.

Notice Regarding Forward-Looking Statements

The information contained herein includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as "may," "will," "should," "would," "expect," "plan," "believe," "intend," "look forward," and other similar expressions among others. These statements relate to future events or to the Company’s future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to the Company’s operations, results of operations, growth strategy and liquidity. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. Except as may be required by applicable law, The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

ir@datchats.com
800-658-8081

FAQ

What is the price per share for DatChat's (DATS) January 2025 offering?

DatChat's registered direct offering is priced at $4.25 per share.

How many shares is DatChat (DATS) offering in the January 2025 financing?

DatChat is offering 1,200,000 shares of common stock.

What are the expected gross proceeds from DatChat's (DATS) January 2025 offering?

The expected gross proceeds from the offering are approximately $5.1 million.

When is DatChat's (DATS) January 2025 offering expected to close?

The offering is expected to close on or about January 10, 2025.

How will DatChat (DATS) use the proceeds from the January 2025 offering?

DatChat intends to use the net proceeds for working capital and general corporate expenses.