Zhibao Technology Inc. Announces Up to $7.2 Million Convertible Note Financing

Rhea-AI Summary

Zhibao Technology Inc. (NASDAQ: ZBAO), a leading InsurTech company in China, has announced a convertible note financing agreement with an institutional investor. The deal includes:

• Sale of senior secured 10% original issue discount convertible promissory notes
• Principal amount of up to $8 million
• 40% warrant coverage
• To be drawn in tranches
• Gross proceeds of up to $7.2 million

Additionally, Zhibao issued $750,000 of pre-funded warrants, exercisable upon events of default as outlined in the Notes. The company plans to use the net proceeds for working capital purposes. EF Hutton acted as the exclusive placement agent for this offering.

Positive

• Secured up to $7.2 million in gross proceeds through convertible note financing
• Financing agreement with an institutional investor, potentially indicating confidence in the company
• Funds to be used for working capital, potentially improving the company's financial position

Negative

• 10% original issue discount on convertible notes may lead to dilution for existing shareholders
• Issuance of $750,000 in pre-funded warrants tied to events of default, potentially indicating financial risk
• Convertible nature of the notes may lead to future share dilution if converted

Insights

Financial Analyst

This convertible note financing is a significant development for Zhibao Technology. The company is securing up to $7.2 million in gross proceeds, which could provide important working capital for its operations. However, there are several important factors to consider:

• The $8 million principal amount comes with a 10% original issue discount, effectively reducing the actual cash received.
• The 40% warrant coverage adds a dilutive element that could impact existing shareholders.
• The inclusion of pre-funded warrants tied to default events introduces additional complexity and potential dilution risks.

While the financing provides needed capital, the terms suggest the company may be facing challenges in securing more favorable funding. Investors should closely monitor Zhibao's ability to effectively utilize this capital to drive growth and improve its financial position.

InsurTech Specialist

As a high-growth InsurTech company, Zhibao's decision to secure this convertible note financing reflects the capital-intensive nature of scaling digital insurance brokerage services. The $7.2 million in potential funding could be instrumental in:

• Enhancing their technology platform
• Expanding market reach in China
• Developing new insurance products or services
• Strengthening their competitive position

However, the terms of this financing, including the discount and warrant coverage, suggest that Zhibao may be facing some headwinds in the competitive InsurTech landscape. The company's ability to leverage this capital effectively to accelerate growth and achieve profitability will be important for long-term success in the rapidly evolving digital insurance market.

Shanghai, China--(Newsfile Corp. - September 23, 2024) - Zhibao Technology Inc. (NASDAQ: ZBAO) ("Zhibao" or the "Company"), a leading and high growth InsurTech company primarily engaged in providing digital insurance brokerage services through its operating entities in China, today announced that it has entered into a definitive securities purchase agreement with an institutional investor for the sale of senior secured 10% original issue discount convertible promissory notes (the "Notes") in the principal amount of up to $8 million, with 40% warrant coverage, to be drawn in tranches, for gross proceeds of up to $7.2 million. The Company also issued $750,000 of pre-funded warrants to such institutional investor, exercisable upon the occurrence of events of defaults as set forth in the Notes. The Company plans to use the net proceeds when received from the offering for working capital purposes.

EF Hutton LLC acted as exclusive placement agent for the offering.

About Zhibao Technology Inc.

Zhibao Technology Inc. is a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through its operating entities ("Zhibao China Group") in China. 2B2C ("to-business-to-customer") digital embedded insurance is the Company's innovative business model, which Zhibao China Group pioneered in China. Zhibao China Group launched the first digital insurance brokerage platform in China in 2020, which is powered by their proprietary PaaS ("Platform as a Service").

Zhibao has developed more than 40 proprietary and innovative digital insurance solutions addressing different scenarios in a wide range of industries, including but not limited to travel, sports, logistics, utilities, and e-commerce. Zhibao China Group acquire and analyze customer data, utilize big data and artificial intelligence technology to continually iterate and enhance its digital insurance solutions. This iterative process, in addition to continually improving its digital insurance solutions, will keep the Company abreast of the new trends and customer preferences in the market.

For more information, please visit the Company's website at www.zhibao-tech.com.

Forward Looking Statements

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "is/are likely to," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions, and other factors discussed in the "Risk Factors" section of the registration statement filed with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov.

Contact Information:

For Media and Investor Relations
Zhibao Technology Inc.
Investor Relations Office
ir@zhibao-tech.com

Skyline Corporate Communications Group, LLC
Scott Powell, President
Avenues Tower
1177 Avenue of the Americas, 5th floor
New York, NY 10036
Office: (646) 893-5835
Email: info@skylineccg.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/224233

FAQ

What is the maximum amount of gross proceeds Zhibao Technology (ZBAO) expects from its convertible note financing?

Zhibao Technology (ZBAO) expects to receive up to $7.2 million in gross proceeds from its convertible note financing agreement.

What is the principal amount of the convertible notes issued by Zhibao Technology (ZBAO)?

The principal amount of the convertible notes issued by Zhibao Technology (ZBAO) is up to $8 million.

How does Zhibao Technology (ZBAO) plan to use the proceeds from the convertible note financing?

Zhibao Technology (ZBAO) plans to use the net proceeds from the convertible note financing for working capital purposes.

Who acted as the placement agent for Zhibao Technology's (ZBAO) convertible note offering?

EF Hutton acted as the exclusive placement agent for Zhibao Technology's (ZBAO) convertible note offering.