Genius Group Announces Exercise of Warrants for $3.8 Million Gross Proceeds

Rhea-AI Summary

Genius Group has announced the exercise of Series 2024-C warrants, generating approximately $3.8 million in gross proceeds. The exercise involves 10,950,451 ordinary shares at $0.35 per share. H.C. Wainwright & Co. acted as the exclusive placement agent. In return, the company will issue new Series 2024-D and 2024-E warrants. The 2024-D warrants have a term of five and one-half years, and the 2024-E warrants have a term of two years. Additionally, certain existing warrants from April 2024 will be amended to reduce the exercise price, and new warrants will be issued. The proceeds will be used for general corporate purposes, including working capital, operating expenses, debt repayment, and supporting acquired assets. The offering is expected to close around May 22, 2024, subject to customary conditions.

Positive

• Gross proceeds of approximately $3.8 million.
• New Series 2024-D warrants with a term of five and one-half years.
• New Series 2024-E warrants with a term of two years.
• Proceeds intended for general corporate purposes, including working capital and debt repayment.
• H.C. Wainwright & Co.'s involvement as an exclusive placement agent.

Negative

• Issuance of new unregistered Series 2024-D and 2024-E warrants, leading to potential shareholder dilution.
• Amendment of existing warrants to reduce the exercise price from $0.41 to $0.35, indicating potential undervaluation.
• Offering expected to close subject to customary conditions, which may introduce closing uncertainties.

Insights

Financial Analyst

The announcement of warrant exercises yielding $3.8 million in gross proceeds provides an influx of funds that can bolster Genius Group's liquidity. This is particularly relevant for working capital and operating expenses, which can be critical for a company in its growth phase. The issuance of new unregistered warrants, however, suggests potential dilution of existing shareholders’ equity in the future.

From a financial perspective, while the immediate cash infusion is beneficial and indicates investor confidence, the terms of the new warrants (notably their exercise prices and terms) warrant a cautious outlook. Investors should recognize that the lowered exercise price of the amended warrants to $0.35 per share may reflect current market conditions and could imply a less optimistic valuation of the company. Reducing the exercise price typically aims to encourage early warrant exercise but might also suggest the company’s current stock price is struggling to meet previous expectations.

In terms of debt repayment and asset support, the prudent allocation of these funds could improve the company's financial health. However, the long-term impact depends on how effectively these funds are utilized to generate returns. Investors should monitor subsequent financial reports to gauge how well the proceeds are being managed.

Overall Financial Rating: Neutral (0)

Market Research Analyst

The exercise of Series 2024-C warrants provides an upcoming liquidity boost, but the issuance of Series 2024-D and 2024-E warrants indicates an ongoing strategy to maintain investor engagement through warrant incentives. This can be seen as a double-edged sword. On one hand, it ensures continuous investor interest and potential future funding. On the other hand, it increases the future share count, which might dilute earnings per share (EPS) and potentially impact stock value over time.

From a market perspective, the terms and conditions of the new warrants are quite generous, with long-term exercisable periods (five and a half years for Series 2024-D and two years for Series 2024-E). This extended timeline for execution provides a long runway for stock price appreciation, which might attract more speculative investors looking for future gains.

The decision to reduce the exercise price of existing warrants from $0.41 to $0.35 could perhaps be seen as the company responding to market pressures or acknowledging current market realities. This proactive measure might prevent warrants from becoming worthless if the stock price doesn’t recover quickly. However, it could also suggest the company is experiencing difficulties in achieving its prior stock price targets, reflecting a cautious or conservative outlook on its near-term performance.

Market Sentiment Rating: Neutral (0)

SINGAPORE, May 20, 2024 (GLOBE NEWSWIRE) -- Genius Group Limited (NYSE American: GNS) (“Genius Group” or the “Company”), a leading AI-powered education group, today announced the entry into definitive agreements for the immediate exercise of certain outstanding Series 2024-C warrants to purchase up to an aggregate of 10,950,451 of the Company’s ordinary shares originally issued in January 2023, at the current exercise price of $0.35 per share. The ordinary shares issuable upon exercise of the warrants are registered pursuant to an effective registration statement on Form F-1 (No. 333-273841). The gross proceeds to the Company from the exercise of the warrants are expected to be approximately $3.8 million, prior to deducting placement agent fees and estimated offering expenses.

H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering.

In consideration for the immediate exercise of the warrants for cash, the Company will issue new unregistered Series 2024-D warrants to purchase up to 10,950,451 ordinary shares and new unregistered Series 2024-E warrants to purchase up to 10,950,451 ordinary shares. The new warrants will have an exercise price of $0.35 per share and will be immediately exercisable upon issuance. The Series 2024-D warrants will have a term of five and one-half years from the issuance date and the Series 2024-E warrants will have a term of two years from the issuance date.

The offering is expected to close on or about May 22, 2024, subject to satisfaction of customary closing conditions. The Company intends to use the net proceeds from the offering for general corporate purposes, including working capital, operating expenses, debt repayment and to support acquired assets.

The Company also has agreed, effective upon the closing of the offering, to (i) amend certain existing warrants to purchase up to an aggregate of 8,945,000 ordinary shares that were previously issued in April 2024 and have an exercise price of $0.41 per share, such that the amended warrants will have a reduced exercise price of $0.35 per share and (ii) issue to the holder of such existing warrants a warrant to purchase up to an aggregate of 6,000,000 ordinary shares, at an exercise price of $0.35 per share, which will be immediately exercisable upon issuance and will have a term of five years from the issuance date.

The new warrants described above were offered in a private placement pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933, as amended (the “1933 Act”) and, along with the ordinary shares issuable upon their exercise, have not been registered under the 1933 Act, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (“SEC”) or an applicable exemption from such registration requirements. The Company has agreed to file a registration statement with the SEC covering the resale of the ordinary shares issuable upon exercise of the new warrants.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy 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 the registration or qualification under the securities laws of any such state or jurisdiction.

About Genius Group

Genius Group (NYSE: GNS) is a leading provider of AI-powered, digital-first education solutions, disrupting the highly standardized system of traditional education with a personalized, flexible and life-long learning curriculum for the modern student. Genius Group services 5.6 million users in over 200 countries, providing personalized curriculums for individuals, enterprises and governments. The comprehensive, AI-powered platform offers programs for K-12 education, accredited university courses and skills-based courses for entrepreneurs. To learn more, please visit https://www.geniusgroup.net/.

Forward-Looking Statements

Statements made in this press release include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue,” or comparable terminology. Such forward-looking statements are inherently subject to certain risks, trends and uncertainties, including market and other conditions, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate and involve factors that may cause actual results to differ materially from those projected or suggested. Forward-looking statements in this press release include, without limitation, statements pertaining to the completion of the offering, the satisfaction of customary closing conditions related to the offering and the intended use of proceeds from the offering. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Risk Factors” in the Company’s Annual Reports on Form 20-F, as may be supplemented or amended by the Company’s Reports of a Foreign Private Issuer on Form 6-K. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise, except as required by law.

Contacts

Brian M. Prenoveau, CFA
Managing Director
MZ Group - MZ North America
(561) 489-5315
GNS@mzgroup.us
www.mzgroup.us

FAQ

What are the gross proceeds from the exercise of Genius Group Series 2024-C warrants?

The gross proceeds from the exercise of the Series 2024-C warrants are approximately $3.8 million.

At what price were the Genius Group Series 2024-C warrants exercised?

The Series 2024-C warrants were exercised at a price of $0.35 per share.

What is the term for the new Series 2024-D warrants issued by Genius Group?

The new Series 2024-D warrants have a term of five and one-half years.

What is the term for the new Series 2024-E warrants issued by Genius Group?

The new Series 2024-E warrants have a term of two years.

How will Genius Group use the net proceeds from the warrant exercise?

Genius Group intends to use the net proceeds for general corporate purposes, such as working capital, operating expenses, debt repayment, and supporting acquired assets.

Which company acted as the exclusive placement agent for the Genius Group warrant exercise?

H.C. Wainwright & Co. acted as the exclusive placement agent for the warrant exercise.

What changes were made to certain existing warrants issued by Genius Group in April 2024?

The exercise price of certain existing warrants was reduced from $0.41 to $0.35 per share, and new warrants to purchase 6,000,000 ordinary shares were issued.

When is the offering expected to close for Genius Group's warrant exercise?

The offering is expected to close on or around May 22, 2024, subject to customary closing conditions.