GLOBAL MOFY AI LIMITED Announces Closing of $2.5 Million Private Placement Financing

Rhea-AI Summary

Global Mofy AI (Nasdaq: GMM) has successfully closed a $2.5 million private placement financing on October 31, 2024. The company issued 5,000,000 Class A ordinary shares and 10,000,000 warrants, with each warrant exercisable at $3.00 per share for a 5-year term. The proceeds will fund the development of their generative AI platform, R&D initiatives, administrative operations, talent acquisition, and working capital needs. The company will file a registration statement with the SEC for the resale of the shares and warrant-exercisable shares.

Positive

• Secured $2.5 million in gross proceeds from private placement
• 5-year warrant terms provide potential for additional future capital through warrant exercises
• Funding secured for key business development areas including AI platform and R&D

Negative

• Potential dilution for existing shareholders through 5 million new shares
• Additional dilution risk from 10 million warrant shares if exercised
• Share issuance at undisclosed price suggests possible discount to market value

Insights

Financial Analyst

The $2.5 million private placement, while modest in size, provides important working capital for Global Mofy's AI development initiatives. The structure of the deal - 5 million shares plus 10 million warrants with a $3.00 strike price - creates significant potential dilution but also provides upside opportunity through the 5-year warrant term.

The warrant exercise price represents a premium to current trading levels, suggesting investor confidence in future growth. If all warrants are exercised, it could bring in an additional $30 million in capital. However, the dilutive impact of this financing should be carefully considered - the warrant coverage at 200% is notably high, indicating the company had to offer attractive terms to secure funding.

The use of proceeds focuses on platform development and operational expansion, which is critical for maintaining competitiveness in the rapidly evolving AI sector. The registration rights agreement for resale provides investors with future liquidity but may create selling pressure once effective.

Tech Expert

The funding allocation toward generative AI platform development and 3D digital asset creation aligns with market demands in the virtual content industry. The company's focus on AI-driven transformation positions it within a high-growth sector, but faces intense competition from established players and well-funded startups.

The investment in R&D and talent acquisition is important for developing proprietary AI algorithms and expanding the digital asset library. However, the relatively small funding amount may limit the scope and speed of technological advancement compared to better-funded competitors. The success will largely depend on efficient capital deployment and the ability to create distinctive AI solutions that address specific market needs in virtual content production.

BEIJING, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Global Mofy AI Limited (the “Company” or “Global Mofy”) (Nasdaq: GMM), a generative AI-driven technology solutions provider engaged in virtual content production and the development of 3D digital assets for use in the broader digital content industry, today announced the successful closing of its previously announced private placement financing (the “Offering”) on October 31, 2024. In connection with the closing of the Offering, the Company issued an aggregate of 5,000,000 Class A ordinary shares, par value $0.000002 per share (each an “Class A Ordinary Share”), and 10,000,000 warrants (each a “Warrant”), each to purchase one Class A Ordinary Share at an exercise price of $3.00 per share, subject to adjustment, pursuant to the securities purchase agreement dated October 13, 2024, as amended on October 31, 2024, by and between the Company and each investor. The Warrants are exercisable upon issuance and will have a term of 5 years from the issuance date.

The Company received gross proceeds of approximately $2.5 million from the Offering, before deducting customary transaction costs and expenses. These funds will be strategically utilized to support the development of the Company’s generative AI platform, drive research and development initiatives, bolster administrative operations, facilitate talent acquisition, and satisfy working capital needs.

“We are excited to complete this financing round, which marks an important step in our mission to lead the generative AI-driven transformation in the digital content sector,” said Haogang Yang, CEO of Global Mofy. “This funding enables us to further strengthen our AI capabilities, expand our 3D digital asset offerings, and explore new frontiers for AI applications in the virtual content industry. Our focus remains on advancing the capabilities of our platform to meet the ever-evolving needs of the digital economy.”

The securities described above have not been registered under the Securities Act of 1933, as amended. Accordingly, these securities may not be offered or sold in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act. Global Mofy has agreed to file a registration statement with the Securities and Exchange Commission (SEC) registering the resale of the Class A Ordinary Shares and Class A Ordinary Shares issuable upon the exercise of the Warrants issued in this Offering.

This press release shall not constitute an offer to sell or the 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 jurisdiction.

About Global Mofy AI Limited
Global Mofy AI Limited (Nasdaq: GMM) is a generative AI-driven technology solutions provider engaged in virtual content production, and the development of digital assets for the digital content industry. Utilizing its proprietary "Mofy Lab" technology platform, which consists of interactive 3D and artificial intelligence ("AI") technology, the Company creates high-definition virtual versions of a wide range of physical world objects in 3D ranging from characters, objects to scenes and more. The digital assets can be used in different applications, including movies, TV series, AR/VR, animation, advertising, gaming, and more. Global Mofy Metaverse is one of the leading digital asset banks in China, which consists of more than 100,000 high-precision 3D digital assets. For more information, please visit www.globalmofy.cn/ or ir.globalmofy.cn.

Forward-Looking Statement
This press release contains forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. These forward-looking statements include, without limitation, the Company's statements regarding the expected trading of its Ordinary Shares on the Nasdaq Capital Market and the closing of the Offering. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and the completion of the initial public offering on the anticipated terms or at all, and other factors discussed in the "Risk Factors" section of the registration statement filed with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

For more information, please contact:
Global Mofy AI Ltd.
Investor Relations Department
ir@mof-vfx.com

FAQ

How much did Global Mofy AI (GMM) raise in their private placement financing?

Global Mofy AI (GMM) raised $2.5 million in gross proceeds from their private placement financing, which closed on October 31, 2024.

What are the terms of the warrants issued by Global Mofy AI (GMM) in October 2024?

The warrants have a 5-year term, with each warrant exercisable at $3.00 per share to purchase one Class A Ordinary Share.

How will Global Mofy AI (GMM) use the proceeds from the $2.5M financing?

The proceeds will be used to develop their generative AI platform, fund R&D initiatives, support administrative operations, facilitate talent acquisition, and satisfy working capital needs.