BIO-key International, Inc. (NASDAQ:BKYI), a provider of identity and access management solutions with a market capitalization of $8.49 million, has entered into two significant financial agreements, as disclosed in a recent SEC filing.
According to InvestingPro analysis, the company faces financial challenges with a current ratio of 0.78, indicating short-term obligations exceed liquid assets. On January 15, 2025, the company signed a Warrant Exercise Agreement with an institutional investor, and separately, two Exchange Agreements with Streeterville Capital, LLC.
Under the Warrant Exercise Agreement, the investor exercised existing warrants to purchase approximately 2.06 million shares of BIO-key's common stock at $1.85 per share, which were originally issued on September 13, 2024. In return, the investor received new unregistered Series A and Series B warrants to purchase up to 1.55 million shares each, at an exercise price of $2.15 per share. These new warrants are immediately exercisable and will expire five years from the issuance date. With trailing twelve-month revenue of $7.29 million and negative EBITDA of $4.99 million, InvestingPro data suggests the company is currently overvalued based on its Fair Value analysis.
BIO-key has committed to filing a resale registration statement for the public resale of the shares issuable upon exercise of the new warrants and aims to have it declared effective within 90 days following the agreement date. The new warrants include a beneficial ownership limitation, capping the investor's ownership at 4.99% of the company's outstanding common stock.
The gross proceeds from this exercise are expected to be around $3.8 million, prior to deducting fees and estimated expenses. The closing of the agreement is scheduled for today. BIO-key plans to allocate the net proceeds towards working capital, general corporate purposes, and partial repayment of an outstanding secured note.
Maxim (NASDAQ:MXIM) Group LLC served as the exclusive placement agent for this transaction, receiving a 6% cash fee on the gross proceeds.
In parallel, BIO-key has executed Exchange Agreements with Streeterville Capital, LLC, partitioning and reducing the balance of an original note by $834,000. In exchange, BIO-key issued approximately 489,635 shares of common stock, reducing the outstanding principal amount of the original note to about $738,400.
In other recent news, BIO-key International Inc. has made significant strides in strengthening its financial position and pursuing growth. The company recently reported an 18% increase in revenue to $2.1 million for the third quarter of 2024, compared to the same period last year. The high-margin license revenue also saw a substantial increase of 52% to $1.4 million.
In a strategic development, BIO-key acquired 5 million shares of Boumarang's common stock, enhancing its balance sheet with an additional $5 million in net assets. This move is part of BIO-key's compliance plan, approved by Nasdaq, to meet the stockholders' equity threshold. The company's management is cautiously optimistic about the value of the Boumarang shares and the final decision by Nasdaq, which will be determined in the next periodic report submission.
Moreover, BIO-key has also formed a partnership with Fiber Food Systems, Inc. to enhance security and operational efficiency in high-traffic food service locations. This collaboration is expected to leverage BIO-key's PortalGuard IAM platform, recognized for its multi-factor authentication capabilities.
The company has also secured significant orders from a foreign defense ministry and a major financial services customer, which are anticipated to positively impact future results. The company expects its 2024 annual revenues to meet or exceed the previous year's $7.75 million. These recent developments highlight BIO-key's strategic moves to improve its financial health and stimulate growth.
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