Fingermotion, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Fingermotion, Inc. (FNGR) on May 13, 2026. The filing discloses the entry into a Material Definitive Agreement involving the issuance of debt securities to an institutional investor.
Key Financial Metrics and Transaction Details
- Instrument: Senior Secured Convertible Note.
- Principal Amount: $5,000,000.
- Original Issue Discount (OID): $700,000.
- Net Proceeds at Closing: $3,300,000.
- Deferred Proceeds: $1,000,000 (to be released upon effectiveness of a resale registration statement).
- Interest Rate: 0% (unless an event of default occurs, at which point default interest accrues at 12% annually).
- Maturity Date: May 13, 2027 (first anniversary of the Closing Date).
- Conversion Price: Initial fixed price of $0.94 per share, subject to adjustments and a floor price mechanism.
- Collateral: First-priority security interest in substantially all of the Company's personal property assets.
- Transaction Costs: $200,000 cash commission paid to placement agent Weild & Co.
Material Changes and Terms
The Company has incurred a new direct financial obligation of $5,000,000. The transaction includes complex conversion mechanics allowing the investor to convert up to $1,000,000 of principal monthly at a "Redemption Conversion Price" based on the lower of the fixed price or 90% of the lowest VWAP over seven days, subject to a floor price. If the Company cannot issue shares due to exchange caps or floor price conditions, it must satisfy the conversion in cash at a 7.5% premium.
The Note includes an "Exchange Cap" limiting the issuance of Conversion Shares to 12,256,260 shares (approximately 19.99% of outstanding shares) unless stockholder approval is obtained. Additionally, conversions are subject to a 9.99% beneficial ownership limitation.
Outlook, Risks, and Contingencies
- Events of Default: Include suspension of trading on Nasdaq, failure to deliver shares, failure to maintain share reserves, payment defaults, acceleration of other indebtedness exceeding $500,000, bankruptcy, judgments exceeding $500,000, and failure to maintain minimum cash covenants.
- Default Consequences: Upon default, the Note becomes due at 125% of the Outstanding Value (principal, accrued interest, and other unpaid amounts).
- Redemption Rights: The Company may redeem the Note after 40 trading days following the effectiveness of the resale registration statement at 115% of the Outstanding Value. The Investor has a put right upon a change of control and a subsequent placement redemption right.
- Registration Obligations: The Company must file a resale registration statement for 200% of the maximum Conversion Shares within 30 days of the agreement or 10 days after filing its 2026 10-K, whichever is later.
Investor Verification Checklist
- Verify the Company's current cash balance to ensure compliance with the "minimum cash covenant" mentioned in the default provisions.
- Confirm the status of the resale registration statement required to release the deferred $1,000,000 in proceeds.
- Review the Company's current share count to assess the impact of the 12,256,260 share "Exchange Cap" and potential dilution.
- Monitor the Nasdaq listing status, as suspension of trading constitutes an immediate event of default.
- Check for any other indebtedness that could be accelerated if the Company defaults on this Note.