The stock in Lion Group Holding Ltd. (Nasdaq: LGHL) closed down 7% Monday, at $3.55 per share, after the company filed its prospectus with the SEC in which Lion Group has filed to issue 17.8 million American depositary shares, issuable upon the exercise of warrants, and to resell 6.6 million shares owned by selling shareholders.
Included in the prospectus is a share purchase agreement entered into on Aug. 1 with Greentree Financial Group. According to the agreement, the company will sell issued ADSs priced at $3 per share for an aggregate purchase price of $3 million with an option for an additional $1 million.
The Hong Kong trading platform will not receive the proceeds from the resale of shares, it said in the prospectus.
Lion Group operates an app called “Lion Brokers Pro” – a platform offering trading in CFDs (contract-for-differences) and securities, as well as insurance brokerage, futures brokerage, and asset management services. The app aims to be a one-stop-shop where users can trade approximately 100 futures products on major futures exchanges worldwide.
Lion Group said its clientele are “well-educated and affluent Chinese investors residing both inside and outside the PRC, as well as institutional clients in Hong Kong that use our futures brokerage service.”
For the three months through March, Lion Group reported that revenue increased 197.2% to $3.3 million. However, that was a decrease of 43.2% from the year-end quarter, which the company attributed to the instability of the financial markets and the challenges posed by Covid-19. Income (before income taxes) in the first quarter was $400,000 in contrast to losses of $100,000 in the same period of the previous year.
Lion Group said revenue last year reached $18.5 million, up 180% from 2018. It also posted income (before income taxes) of $8.3 million for 2019 in contrast to losses of $2.7 million in the preceding twelve months.
Lion Financial Group Ltd. merged with Proficient Alpha Acquisition Corp. (PAACU) in mid-June, upon which Lion’s ADSs and warrants began trading on the Nasdaq Stock Market as “LGHL” and “LGHLW,” respectively.
At the time, Lion Group's chairman, Jian Wang, said in a statement, "Today marks an important milestone for Lion. As a public company, Lion will be well-positioned to execute its growth plan to become a leading financial service provider in Asia."