Netcapital Announces Exercise of Warrants for $2.2 Million Gross Proceeds
Netcapital has announced the immediate exercise of Series A-2 warrants, reducing their price from $0.25 to $0.155 per share. This decision will generate gross proceeds of approximately $2.2 million before fees and expenses. H.C. Wainwright & Co. acted as the exclusive placement agent. In return, Netcapital will issue new Series A-3 and Series A-4 warrants, each exercisable at $0.155 per share upon shareholder approval. Series A-3 warrants have a five-year expiration, while Series A-4 warrants expire in eighteen months. The funds will be used for general working capital. The offering is expected to close around May 29, 2024, subject to customary conditions.
- Immediate exercise of warrants will generate approximately $2.2 million in gross proceeds.
- Reduced exercise price may attract more investors to exercise their warrants.
- H.C. Wainwright & Co. acting as the exclusive placement agent adds credibility.
- Issuance of new Series A-3 and Series A-4 warrants at $0.155 per share provides potential future capital influx.
- Funds will be utilized for general working capital purposes, potentially strengthening the company's financial position.
- Reduction in exercise price from $0.25 to $0.155 per share indicates possible struggles in warrant conversion.
- Issuance of new warrants could lead to shareholder dilution.
- Gross proceeds of $2.2 million are subject to placement agent fees and estimated offering expenses, reducing net gain.
- New warrants are unregistered and cannot be sold in the U.S. without SEC registration or applicable exemption, potentially limiting liquidity.
Insights
The exercise of warrants leading to
Given that the new Series A-3 and A-4 warrants have a similar exercise price and are unregistered, there could be potential dilution issues for existing shareholders. Investors need to consider the long-term impact of this dilution, especially with the newly issued warrants being exercisable upon stockholder approval.
The role of H.C. Wainwright & Co. as the placement agent underlines the importance of the transaction, but investors should be mindful of the placement agent fees and offering expenses which will reduce net proceeds. Furthermore, the company's intent to use these funds for general working capital purposes does not provide specific insights into any strategic initiatives or projects that might drive future growth.
In summary, while the immediate capital raise is positive, the reduced exercise price and potential dilution introduce elements of risk that investors should monitor closely.
For investors, understanding the broader market implications is crucial. Netcapital operates in the digital private capital markets ecosystem, a niche but growing sector. The additional funding might help the company to enhance its platform or expand its service offerings, making it more competitive in the market.
However, the reduced exercise price may signal weaker than expected financial health or a need to attract investors quickly. This could be viewed as a defensive move, potentially reflecting underlying operational challenges. The issuance of new Series A-3 and Series A-4 warrants, while providing future capital opportunities, also suggests the company is preparing for ongoing capital requirements, indicating that more funding rounds could follow.
From a competitive standpoint, securing
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 A-3 warrants to purchase up to 14,320,000 shares of common stock and new unregistered Series A-4 warrants to purchase up to 14,320,000 shares of common stock. The Series A-3 new warrants will have an exercise price of
The offering is expected to close on or about May 29, 2024, subject to satisfaction of customary closing conditions. The Company intends to use the net proceeds from the offering for general working capital purposes.
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 shares of common stock issuable upon their exercise, have not been registered under the 1933 Act, and may not be offered or sold in
The Company is voluntarily reducing the exercise price for all outstanding Series A-2 Warrants to purchase 16,000,000 shares of common stock, including the Series A-2 Warrants to purchase up to 14,320,000 shares of common stock referred to above, that were previously issued in December 2023 and have an exercise price of
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 Netcapital Inc.
Netcapital Inc. is a fintech company with a scalable technology platform that allows private companies to raise capital online and provides private equity investment opportunities to investors. The Company's consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies. The Company’s funding portal, Netcapital Funding Portal Inc. is registered with the
Forward Looking Statements
The information contained herein includes forward-looking statements. These statements relate to future events, including, but not limited to, statements relating to closing of the offering and satisfaction of closing conditions of the offering, the expected gross proceeds from the offering and statements regarding the anticipated use of proceeds from the offering, or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our 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 our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume 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, even if new information becomes available in the future.
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Investor Contact
800-460-0815
ir@netcapital.com
Source: Netcapital Inc.
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