FingerMotion, Inc. Announces $5M Convertible Note Financing; New CFO

What Happened

• FingerMotion, Inc. filed an 8‑K on August 17, 2026 disclosing that on August 16, 2026 it entered a securities purchase agreement for a $5,000,000 senior secured convertible note (original issue discount $700,000). At closing the Company will receive $4,300,000: $1.3M immediately and $3.3M held in a DACA account pending release conditions. The Note matures one year after closing, bears no interest except on default, and is convertible into common stock at a fixed conversion price of $0.35 per share. The Company also issued a warrant for 4,092,993 shares (five‑year term) and granted the investor first‑priority security in substantially all personal property.
• The company also announced an executive change: Chris Polimeni succeeds Lee Yew Hon as Chief Financial Officer. Both CEO Jolie Kahn and CFO Polimeni will be paid $30,000 per month until the Compensation Committee finalizes executive agreements.

Key Details

• Note principal: $5,000,000; original issue discount: $700,000; net proceeds at closing: $4,300,000 ( $1.3M available now; $3.3M in DACA account).
• Conversion mechanics: fixed conversion price $0.35/share; monthly conversion may use a “Redemption Conversion Price” (the lower of fixed price or 90% of lowest VWAP over a 7‑day lookback), subject to a Floor Price initially set at 20% of the Nasdaq Minimum Price; cash settlement option at a 7.5% premium if shares cannot be issued.
• Cap and limits: absent shareholder approval, an exchange cap limits Conversion Shares to 12,256,260 aggregate shares; Company will seek approval to allow issuance above 19.99% of outstanding common stock; conversions also subject to a 9.99% beneficial ownership limit.
• Investor protections and remedies: investor gets registration rights (Company to file resale registration within 15 days for up to 150% of maximum Conversion Shares and 100% of Warrant Shares), a first‑priority security interest, and default remedies (upon default investor may demand 125% payment of outstanding value and default interest accrues at 12% per year). Company has optional redemption and other put/redemption mechanics (115% or other premiums in certain events).

Why It Matters

• Financing impact: the transaction provides near‑term liquidity ($1.3M immediately plus potential release of $3.3M) but much of the proceeds are escrowed and contingent on release conditions. Investors should note timing and conditional nature of the funds.
• Dilution risk: conversion at $0.35 and the large number of potential Conversion and Warrant Shares could materially increase outstanding shares if conversions and exercises occur; an exchange cap and beneficial ownership limits constrain issuance unless shareholders approve larger issuance.
• Investor rights and company risk: the investor holds secured collateral and strong default remedies, which could be significant if the company fails covenants. Registration rights enable the investor to resell shares once the registration statement is effective.
• Management: the appointment of an experienced CFO (Chris Polimeni) may affect financial strategy and reporting; interim compensation for CEO and new CFO is set at $30,000/month pending formal agreements.