Mega Matrix Announces $1.5 Million Private Placement

Rhea-AI Summary

Mega Matrix Corp. (NYSE American: MPU) has announced a $1.5 million private placement of common stock and warrants. The company will issue 681,818 shares of common stock (or equivalents) at $2.20 per share, along with short-term series A warrants and series B warrants to purchase up to 681,818 shares each. The warrants will have an exercise price of $2.20 per share.

The closing is expected around August 5, 2024. H.C. Wainwright & Co. is acting as the exclusive placement agent. MPU plans to use the net proceeds for working capital and general corporate purposes. The securities are being offered under Section 4(a)(2) of the Securities Act and have not been registered, limiting their sale in the United States.

Positive

• Secured $1.5 million in gross proceeds through private placement
• Issuance of additional warrants potentially increasing future capital
• Funds to be used for working capital and general corporate purposes

Negative

• Potential dilution of existing shareholders due to issuance of new shares
• Warrants may lead to further dilution if exercised
• Securities not registered, limiting their tradability

Financial Analyst

Mega Matrix Corp.'s (MPU) recent $1.5 million private placement is a significant development, albeit a relatively small capital raise. This move suggests the company is seeking to bolster its financial position, likely to fund ongoing operations or potential growth initiatives.

The structure of this deal is noteworthy:

• 681,818 shares of common stock (or equivalents) priced at $2.20 per share
• Short-term Series A warrants (24-month expiry)
• Long-term Series B warrants (5.5-year expiry)

Both warrant series have an exercise price of $2.20, indicating the company's confidence in potential share price appreciation.

The dilutive impact of this offering is a key consideration for existing shareholders. The immediate dilution from the share issuance is approximately 3% (assuming ~22 million shares outstanding pre-offering). However, if all warrants are exercised, this could lead to further dilution of about 6%.

The use of proceeds for "working capital and general corporate purposes" is vague, which may concern some investors. It's important for MPU to provide more clarity on its strategic plans to justify this capital raise and instill confidence in its growth trajectory.

The involvement of H.C. Wainwright & Co. as the exclusive placement agent lends some credibility to the offering, given their reputation in small-cap financings. However, investors should be aware that placement fees will reduce the net proceeds available to MPU.

Overall, while this capital infusion provides short-term financial flexibility, the company's ability to effectively deploy these funds and drive shareholder value will be critical in the coming months.

Legal Expert

The private placement by Mega Matrix Corp. (MPU) presents several legal considerations that investors should be aware of:

Securities Act Compliance: The offering is being conducted under Section 4(a)(2) of the Securities Act and/or Regulation D. This exemption from registration is commonly used for private placements, allowing companies to raise capital without the extensive disclosure requirements of a public offering. However, it also means these securities are "restricted" and subject to resale limitations.

Registration Rights Agreement: MPU has agreed to file a resale registration statement, which is a positive for investors. This agreement typically requires the company to register the resale of the private placement shares and warrant shares within a specified timeframe, enhancing the liquidity of these securities for investors.

Investor Accreditation: While not explicitly stated, private placements under Regulation D are typically to accredited investors. This restriction aims to protect less sophisticated investors from high-risk investments but also limits the pool of potential investors.

Disclosure Obligations: Despite being a private placement, MPU must still provide material information to investors and avoid any misleading statements. The vague use of proceeds could potentially raise questions if not further clarified in the investment documents.

NYSE American Compliance: As a NYSE American-listed company, MPU must ensure this transaction complies with exchange rules, particularly regarding shareholder approval requirements for certain private placements.

Investors should note that while this press release doesn't constitute an offer to sell securities, any actual offering materials would need to comply with applicable securities laws and provide more detailed risk disclosures.

PALO ALTO, Calif., Aug. 2, 2024 /PRNewswire/ -- Mega Matrix Corp. ("MPU" or the "Company") (NYSE American: MPU), today announced that it has entered into definitive agreements for the issuance and sale of an aggregate of 681,818 shares of its common stock (or common stock equivalents in lieu thereof), short-term series A warrants to purchase up to 681,818 shares of common stock and series B warrants to purchase up to 681,818 shares of common stock at a purchase price of $2.20 per share (or per common stock equivalent in lieu thereof) and accompanying warrants in a private placement. The short-term series A warrants and series B warrants will have an exercise price of $2.20 per share and will be exercisable immediately upon issuance. The short-term series A warrants will expire twenty-four months following the issuance date and the series B warrants will expire five and one-half years following the issuance date. The closing of the private placement is expected to occur on or about August 5, 2024, subject to the satisfaction of customary closing conditions.

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

The gross proceeds to the MPU from the offering are expected to be approximately $1.5 million, before deducting the placement agent's fees and other offering expenses payable by MPU, and excluding the proceeds, if any, from the exercise of the warrants. MPU currently intends to use the net proceeds from the offering for working capital and general corporate purposes.

The securities described above are being offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and/or Regulation D promulgated thereunder and, along with the shares of common stock underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the securities described above, including the shares of common stock underlying the warrants, 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 and such applicable state securities laws. Pursuant to a registration rights agreement, the Company has agreed to file a resale registration statement covering the securities described above.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities in this offering, 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 Mega Matrix 

Mega Matrix Corp. (NYSE AMEX: MPU) is a holding company and operates FlexTV, a short-video streaming platform and producer of short dramas, through Yuder Pte, Ltd., an indirect majority-controlled subsidiary of Mega Matrix. Mega Matrix is a Delaware corporation headquartered in Palo Alto, CA. For more information, please contact info@megamatrix.io or visit: http://www.megamatrix.io.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. All statements in this press release other than statements that are purely historical are forward looking statements that include, but are not limited to, statements related to the completion of the private placement, the satisfaction of customary closing conditions related to the private placement and the intended use of proceeds therefrom. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose," and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees for future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, are: the ability to manage growth; ability to identify and integrate future acquisitions; ability to grow and expand our FlexTV business;  ability to obtain additional financing in the future to fund capital expenditures; fluctuations in general economic and business conditions; costs or other factors adversely affecting the Company's profitability; litigation involving patents, intellectual property, and other matters; potential changes in the legislative and regulatory environment; a pandemic or epidemic; the possibility that the Company may not succeed in developing its new lines of businesses due to, among other things, changes in the business environment, competition, changes in regulation, or other economic and policy factors; and the possibility that the Company's new lines of business may be adversely affected by other economic, business, and/or competitive factors. The forward-looking statements in this press release and the Company's future results of operations are subject to additional risks and uncertainties set forth under the heading "Risk Factors" in documents filed by the Company with the Securities and Exchange Commission, including the Company's latest annual report on Form 10-K, and are based on information available to the Company on the date hereof.  The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release.

Disclosure Channel

We announce material information about the Company and its services and for complying with our disclosure obligation under Regulation FD via the following social media channels:

X (f/k/a Twitter):  twitter.com/MegaMatrixMPU
Facebook:     facebook.com/megamatrixmpu
facebook.com/flextvus
LinkedIn:      linkedin.com/company/megamatrixmpu
TikTok:  tiktok.com/@flextv_english
YouTube:      youtube.com/@FlexTV_English

The Company will also use its landing page on its corporate website (www.megamatrix.io) to host social media disclosures and/or links to/from such disclosures. The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following our website, press releases, SEC filings and public conference calls and webcasts. The social media channels that we intend to use as a means of disclosing the information described above may be updated from time to time as listed on our website.

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SOURCE Mega Matrix Corp.

FAQ

What is the size of Mega Matrix Corp's (MPU) recent private placement?

Mega Matrix Corp (MPU) has announced a $1.5 million private placement of common stock and warrants.

How many shares and at what price is MPU offering in the private placement?

MPU is offering 681,818 shares of common stock (or equivalents) at $2.20 per share, along with warrants to purchase additional shares.

When is the expected closing date for MPU's private placement?

The closing of MPU's private placement is expected to occur on or about August 5, 2024, subject to customary closing conditions.

What is the exercise price of the warrants issued by MPU in the private placement?

The warrants issued by MPU in the private placement have an exercise price of $2.20 per share.

How does MPU plan to use the proceeds from the private placement?

MPU intends to use the net proceeds from the offering for working capital and general corporate purposes.