FingerMotion, Inc. (NASDAQ:FNGR), a prepackaged software services company, has entered into a material definitive agreement securing a short-term loan to bolster its working capital, as per a recent 8-K filing with the Securities and Exchange Commission.
On Monday (NASDAQ:MNDY), FingerMotion's wholly owned subsidiary, Finger Motion Company Limited, entered into a loan agreement with Rita Chou Phooi Har, agreeing to a loan facility of SGD$250,000 (approximately USD $183,000).
The loan, intended for working capital purposes, has already been fully drawn as of Thursday. It carries an interest rate of 1.67% per month, with interest payments due monthly. The principal is repayable one year from the drawdown date, with the option for early repayment in increments of SGD$50,000, subject to accrued interest and a three-day notice period.
FingerMotion's agreement contains specific covenants restricting the subsidiary's ability to make substantial ownership changes, extend credit outside of regular business, or dispose of any significant assets without the lender's consent. Additionally, the subsidiary cannot amend its governing documents in a way that would adversely affect its obligations under the loan agreement.
This strategic financial move comes as the company, incorporated in Delaware and headquartered in Singapore, continues to navigate the competitive prepackaged software industry. The terms of the agreement are detailed in the Exhibit 10.1 filed with the SEC and are integral to understanding the company's current financial strategy.
The information disclosed is based on the latest SEC filing by FingerMotion, Inc. and provides investors with insights into the company's financial maneuvers. The loan agreement reflects FingerMotion's efforts to maintain liquidity and operational flexibility in the short term.
In other recent news, FingerMotion, Inc. has made significant strides in both its financial operations and technological advancements. The software services company recently announced a change in its independent registered public accounting firm.
The Board of Directors and Audit Committee approved the termination of Centurion ZD CPA & Co. and appointed CT International LLP as the new auditor. This decision was not due to any disagreements on accounting principles or practices, financial statement disclosure, or auditing scope or procedures.
In addition to this corporate development, FingerMotion has also launched a new crisis and emergency response technology in China. Developed by its subsidiary, Shanghai JuiGe Information Technology Co., Ltd., the Advanced Mobile Integrated Command and Communication Platform (C2 Platform) aims to enhance the coordination and communication of emergency response teams.
The technology will be integrated into vehicles as part of China's civil emergency crisis program, unifying disaster communication systems into a single interface.
The first contract for the technology has been signed with Zhejiang province for two vehicles, indicating an expected increase in demand for the C2 Platform.
As part of the nationwide effort to enhance disaster response capabilities, FingerMotion anticipates steady demand for its C2 Platform and vehicles in the coming years. These recent developments highlight FingerMotion's commitment to expanding its technology products and services within and outside China.
InvestingPro Insights
FingerMotion's recent loan agreement aligns with its current financial position, as revealed by InvestingPro data. The company's market cap stands at $113.8 million, with a revenue of $31.18 million in the last twelve months. This context underscores the importance of the $183,000 loan for working capital purposes.
InvestingPro Tips highlight that FingerMotion "operates with a moderate level of debt" and "liquid assets exceed short term obligations," which may explain the company's ability to secure this short-term loan. However, the tip indicating that the company "suffers from weak gross profit margins" (with a gross profit margin of 7.51% in the last twelve months) suggests why additional working capital might be necessary.
Interestingly, despite recent financial challenges, including a significant price fall over the last year, analysts anticipate sales growth in the current year and predict the company will be profitable. This optimistic outlook could be a factor in the lender's decision to provide the loan.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for FingerMotion, providing a deeper understanding of the company's financial health and market position.
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