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SHENZHEN, China - Fangdd Network Group Ltd. (NASDAQ:DUO), a property technology company based in China, today announced a new financing deal involving the issuance of convertible promissory notes and additional shares. According to InvestingPro data, the company has been quickly burning through cash, with a weak financial health score of 1.2, highlighting the importance of this financing round. The agreement with certain investors will provide the company with $5 million in aggregate principal amount through senior 5% original issue discount convertible promissory notes, along with 251,890 Class A ordinary shares as part of the issuance. This financing comes as the stock has experienced significant volatility, with InvestingPro showing an 87% decline over the past year and trading near its 52-week low of $0.38.
The notes, which are senior to all other existing indebtedness, have a nine-month term from the issue date and do not accrue interest unless a default occurs, in which case the interest rate will rise to 15% per annum or the maximum allowed by law. The conversion terms allow holders to convert their notes into Class A ordinary shares at a price based on the lower of two calculations, with a floor price set at $0.10 per share to protect against excessive dilution.
The transaction is expected to close today, subject to customary closing conditions. Fangdd has designated MM Global Securities, Inc. as the exclusive placement agent for the offering. The company plans to use the net proceeds for general corporate purposes. Recent financial data from InvestingPro reveals annual revenue of $37.35 million with a concerning negative EBITDA of -$36.37 million, underscoring the company’s need for additional capital. InvestingPro subscribers have access to 10+ additional key metrics and insights about Fangdd’s financial health.
The offering is made under an effective shelf registration statement filed with the U.S. Securities and Exchange Commission on September 13, 2022, and declared effective on September 29, 2022. Prospective investors can access the prospectus supplement and accompanying base prospectus on the SEC’s website or by contacting Fangdd directly.
Fangdd, known for its real estate transaction digitalization services, leverages mobile internet, cloud, big data, and artificial intelligence technologies to provide innovative solutions for real estate transaction participants. The company’s suite of products is powered by SaaS tools, products, and technology. Despite technological capabilities, the company faces profitability challenges with a gross profit margin of 14.31% and negative returns on invested capital, according to recent InvestingPro analysis.
This press release contains forward-looking statements under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, and the company does not undertake any obligation to update these statements as per applicable law. The information is based on a press release statement from Fangdd Network Group Ltd.
In other recent news, Fangdd Network Group Ltd. has secured $5 million through a convertible notes offering. The transaction involves senior 5% original issue discount convertible promissory notes and 164,610 Class A ordinary shares. These notes have a nine-month maturity period and include provisions for conversion into shares based on the company’s volume-weighted average price. MM Global Securities, Inc. acted as the exclusive placement agent for this offering, which is part of a shelf registration statement filed with the SEC. Fangdd intends to use the proceeds for general corporate purposes.
Additionally, Fangdd has received a notification from Nasdaq regarding non-compliance with the minimum bid price requirement, as its share price has been below $1 for 30 consecutive business days. The company has until June 23, 2025, to meet the requirement of a $1 closing bid price for ten consecutive business days. If Fangdd does not comply within this timeframe, it may qualify for an additional 180-day period to rectify the situation. Fangdd has expressed its intention to monitor its share price and explore options to address this deficiency. Despite the notification, the company’s shares continue to be listed and traded on Nasdaq.
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