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Nippon Ichi Software Sells Stocks at Lower Price to Raise Funds

Nippon Ichi Software announced on Friday that it will issue stock warrants through a third party allotment, issuing 3,750 warrants for an issue price of 837 yen each (for 3,138,750 yen in total) in order to aim to raise funds equivalent to 573,638,750 yen (about US$5.20 million).

This type of MS ("moving strike") warrant is often used by companies to raise funds due to being unable to borrow from banks or investors due to already being in deficit. While the sale of stocks at cheaper prices generates funds quickly, existing investors lose out due to dilution of their own stocks, leading to investors losing trust in the company.

If Nippon Ichi Software raises the required 573,638,750 yen, it noted that it will use 369,638,750 yen (about US$3.35 million) for paying its employees, 170,000,000 yen (about US$1.54 million) for paying for partial outsourcing of development, and 34,000,000 yen (about US$308,500) for investing in development. These payments will be implemented in June and will be used through June 2021.

Nippon Ichi Software ended its fiscal year on March 31, and on May 10 reported sales of 4.523 billion yen (about US$41.1 million), down 4.5% from the previous year. The company's operating profit was down 35.2% to 426 million yen (about US$3.86 million), and its ordinary profit was down 26.6% to 529 million yen (about US$4.8 million). Nippon Ichi Software forecasted that its sales for the fiscal year ending on March 31, 2020 will be down 25% to 3.373 billion yen (about US$30.6 million). The company also forecasted that its operating profit will decrease 32.7% and its ordinary profit will decrease 45.9%.

Nippon Ichi Software is best known for its Disgaea series of tactical role-playing games, and is also known for its NIS America subsidiary, which localizes and publishes its games in North America, and also licenses and releases anime. Nippon Ichi Software recently announced its Jinrui no Minasama e (To All of Mankind) game, which will launch on June 27. The company launched its Makai Senki Disgaea RPG smartphone game on March 19, but pulled the game shortly thereafter due to major bugs that require maintenance that the company stated will take at least three months.

Sources: Nippon Ichi Software, Game Biz via Siliconera