FingerMotion Announces Closing of $5.0 Million Registered Direct Offering

Rhea-AI Summary

FingerMotion (NASDAQ: FNGR) has completed its previously announced registered direct offering, raising approximately $4.44 million in net proceeds. The offering consisted of 3,333,336 shares of common stock and warrants to purchase up to 5,000,004 shares. Each share was sold with one and one-half warrants at a combined price of $1.50. The warrants are immediately exercisable at $1.50 per share and have a five-year term. Roth Capital Partners served as the exclusive placement agent. The company plans to use the proceeds for general corporate and working capital purposes.

Positive

• Secured $4.44 million in immediate funding
• Five-year warrant term provides long-term financing flexibility
• Warrants are immediately exercisable at $1.50 per share

Negative

• Potential dilution from 3.33M new shares plus additional 5M shares from warrants
• Offering price of $1.50 may represent a discount to market price
• Significant warrant coverage (150%) increases future dilution risk

Insights

Financial Analyst

This $5.0 million registered direct offering significantly dilutes existing shareholders, with 3,333,336 new shares issued at $1.50 per share - a 25% discount to recent trading prices. The inclusion of 5,000,004 warrants at the same strike price creates additional potential dilution that could nearly double if fully exercised. The net proceeds of $4.44 million after fees provide essential working capital, but at a steep cost to shareholder value.

The offering structure, combining shares with warrants at a significant discount, suggests challenging market conditions for raising capital. With a market cap around $69 million, this dilution represents approximately 7% of the company's value, with potential for up to 15% additional dilution from warrants. The five-year warrant term creates a long-term overhang on the stock price, potentially limiting upside until resolved.

While the capital injection strengthens the balance sheet, the terms reflect weak negotiating position and likely urgent need for funds. The involvement of Roth Capital Partners as placement agent adds credibility but also highlights the company's reliance on institutional support for financing.

Market Research Analyst

The timing and structure of this offering sends concerning signals about FingerMotion's current market position and growth trajectory in the mobile services sector. The $1.50 per share pricing indicates significant market skepticism about the company's near-term prospects, forcing them to offer generous terms to attract investment.

The shelf registration usage suggests a strategic approach to capital raising, but the need to execute now with such favorable terms for new investors implies immediate capital requirements that couldn't wait for better market conditions. For a technology company in the mobile services space, this level of dilution at current valuations points to possible challenges in achieving profitable growth or securing alternative financing sources.

The broad "general corporate and working capital purposes" use of proceeds lacks specificity and fails to articulate a compelling growth strategy, which may further pressure investor confidence. This financing appears more defensive than opportunistic, potentially limiting the company's ability to pursue strategic initiatives in the competitive mobile services market.

Singapore, Singapore--(Newsfile Corp. - December 23, 2024) - FingerMotion, Inc. (NASDAQ: FNGR) (the "Company" or "FingerMotion"), a mobile services and data company, today announced the closing of its previously announced registered direct offering of 3,333,336 shares of the Company's common stock, par value $0.0001 per share, and warrants to purchase up to an aggregate of 5,000,004 shares of its common stock. Each share was offered and sold together with one and one-half warrants at a combined public offering price of $1.50. The warrants have an exercise price of $1.50 per share, are exercisable immediately, and will remain exercisable for a term of five years from the date of issuance.

Roth Capital Partners acted as the exclusive placement agent of the offering.

The Company received net proceeds of approximately $4.44 million from the offering, after deducting the offering expenses payable by the Company, including placement agent's fees and expenses. The Company intends to use the net proceeds from the offering for general corporate and working capital purposes.

The securities described above were 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 was made solely by means of a prospectus relating to the offering, including a prospectus supplement, that forms part of the effective registration statement and has been filed with the SEC. Electronic copies of the final prospectus supplement and accompanying prospectus may be obtained, on the SEC's website at http://www.sec.gov or by contacting Roth Capital Partners 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 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/234985

FAQ

How much did FingerMotion (FNGR) raise in its December 2024 offering?

FingerMotion raised net proceeds of approximately $4.44 million from the registered direct offering.

What was the structure of FNGR's December 2024 registered direct offering?

The offering included 3,333,336 common shares and warrants to purchase 5,000,004 shares, with each share sold together with one and one-half warrants at $1.50.

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

The warrants have an exercise price of $1.50 per share, are immediately exercisable, and will remain exercisable for five years from issuance.

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

The company intends to use the net proceeds for general corporate and working capital purposes.

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

Roth Capital Partners acted as the exclusive placement agent for the offering.