BIO-key International Enters into $1.9 Million Warrant Inducement

Rhea-AI Summary

BIO-key International, Inc. (NASDAQ: BKYI) has entered into a $1.9 million warrant inducement agreement with an existing institutional investor. The investor will exercise warrants to purchase 1,030,556 shares of common stock at an amended price of $1.85 per share. In return, BIO-key will issue new unregistered Series A and Series B Warrants, each for 1,030,556 shares at $1.85 per share. These new warrants are immediately exercisable and expire in five years. The transaction is expected to close on September 13, 2024. Maxim Group is the exclusive Placement Agent. BIO-key will file a registration statement with the SEC within 45 days for the resale of shares from the new warrants.

Positive

• Immediate influx of $1.9 million in gross proceeds from warrant exercise
• Potential for additional future capital through new warrant issuances
• Engagement with existing institutional investor suggests continued confidence in the company

Negative

• Dilution of existing shareholders due to issuance of new shares
• Potential future dilution from additional warrants issued
• Amended warrant exercise price of $1.85 may be below current market price, indicating possible discount

Financial Analyst

BIO-key International's $1.9 million warrant inducement is a strategic move to bolster its cash position. This transaction demonstrates the company's ability to leverage existing relationships with institutional investors for immediate capital infusion. The amended exercise price of $1.85 per share, compared to the current market price, suggests investor confidence in BIO-key's potential. However, the issuance of additional warrants (Series A and B) could lead to future dilution if exercised. The gross proceeds of $1.9 million will likely strengthen BIO-key's balance sheet, potentially funding growth initiatives in the competitive IAM market. Investors should monitor how effectively management deploys this capital to drive value in the Identity-Bound Biometrics sector.

Tech Expert

BIO-key's focus on Identity-Bound Biometrics (IBB) for phoneless, tokenless and passwordless authentication positions it at the forefront of cybersecurity innovation. The company's emphasis on phish-resistant experiences addresses a critical need in the market, as phishing attacks continue to be a major threat vector. The capital raised through this warrant exercise could accelerate BIO-key's R&D efforts, potentially leading to more advanced IAM solutions. However, the competitive landscape in the IAM sector is intense, with tech giants and startups vying for market share. BIO-key's success will hinge on its ability to differentiate its IBB technology and secure key partnerships to expand its customer base.

Legal Expert

The warrant inducement agreement and issuance of new warrants involve complex securities law considerations. BIO-key's commitment to file a registration statement within 45 days for the resale of shares issuable upon exercise of the New Warrants is important for compliance with SEC regulations. This proactive approach to registration helps mitigate potential legal risks associated with unregistered securities. The company's explicit statement that the press release does not constitute an offer to sell or solicitation to buy securities demonstrates awareness of regulatory requirements. Investors should note that the closing of the warrant exercise is subject to customary closing conditions, which introduces a level of uncertainty until the transaction is completed. The involvement of Maxim Group as the exclusive Placement Agent adds a layer of credibility to the transaction structure.

HOLMDEL, N.J., Sept. 12, 2024 (GLOBE NEWSWIRE) -- BIO-key® International, Inc. (NASDAQ: BKYI), an innovative provider of workforce and customer identity and access management (IAM) solutions featuring Identity-Bound Biometrics (IBB) for phoneless, tokenless, passwordless and phish-resistant authentication experiences, today announced it has entered into a warrant inducement agreement with an existing institutional investor for the immediate exercise of certain outstanding warrants that the Company issued on October 30, 2023. Pursuant to the warrant inducement agreement, the investor has agreed to exercise outstanding warrants to purchase an aggregate of 1,030,556 shares of the Company's common stock at an amended exercise price of $1.85. The gross proceeds from the exercise of the warrants are expected to be approximately $1.9 million, prior to deducting placement agent fees and estimated offering expenses.

The closing of the warrant exercise transactions is expected to occur on or about September 13, 2024, subject to satisfaction of customary closing conditions.

Maxim Group LLC is acting as the exclusive Placement Agent for the transaction.

In consideration for the immediate exercise of the warrants, the Company also agreed to issue to the investor unregistered Series A Warrants to purchase an aggregate of 1,030,556 shares of the Company's common stock and Series B Warrants to purchase an aggregate of 1,030,556 shares of the Company's common stock, each with an exercise price of $1.85 per share (the “New Warrants”). The Series A and Series B warrants share substantially the same terms, are immediately exercisable and will expire five years from the date of issuance. The Company has agreed to file a registration statement within forty five (45) days with the Securities and Exchange Commission (“SEC”) covering the resale of the shares of common stock issuable upon exercise of the New Warrants. This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About BIO-key International, Inc.

BIO-key is revolutionizing authentication and cybersecurity with biometric-centric, multi-factor identity and access management (IAM) software securing access for over thirty-five million users. BIO-key allows customers to choose the right authentication factors for diverse use cases, including phoneless, tokenless and passwordless biometric options. Its hosted or on-premise PortalGuard IAM solution provides cost-effective, easy-to-deploy, convenient, and secure access to computers, information, applications, and high-value transactions.

Forward-Looking Statements

All statements contained in this press release other than statements of historical facts are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the "Act"). The words "estimate," "project," "intends," "expects," "anticipates," "believes" and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are made based on management's beliefs, as well as assumptions made by, and information currently available to, management pursuant to the "safe-harbor" provisions of the Act. These statements are not guarantees of future performance or events and are subject to risks and uncertainties that may cause actual results to differ materially from those included within or implied by such forward-looking statements. These risks and uncertainties include, without limitation, the ability to satisfy the closing conditions related to the transaction and the overall timing and completion of such closing; our history of losses and limited revenue; our ability to raise additional capital to satisfy working capital needs and comply with Nasdaq continued listing rules to maintain stockholders’ equity of at least $2,500,000; our ability to continue as a going concern; our ability to protect our intellectual property; changes in business conditions; changes in our sales strategy and product development plans; changes in the marketplace; continued services of our executive management team; security breaches; competition in the biometric technology industry; market acceptance of biometric products generally and our products under development; our ability to convert sales opportunities to customer contracts; our ability to expand into Asia, Africa and other foreign markets; our ability to integrate the operations and personnel of Swivel Secure into our business; fluctuations in foreign currency exchange rates; delays in the development of products, the commercial, reputational and regulatory risks to our business that may arise as a consequence the restatement of our financial statements, including any consequences of non-compliance with Securities and Exchange Commission (“SEC”) and Nasdaq periodic reporting requirements; our temporary loss of the use of a Registration Statement on Form S-3 to register securities in the future; any disruption to our business that may occur on a longer-term basis should we be unable to remediate during fiscal year 2024 certain material weaknesses in our internal controls over financial reporting, and statements of assumption underlying any of the foregoing as well as other factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 and other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to disclose any revision to these forward-looking statements whether as a result of new information, future events, or otherwise.

Investor Contact

William Jones, David Collins
Catalyst IR
BKYI@catalyst-ir.com or 212-924-9800

FAQ

What is the value of the warrant inducement agreement BIO-key International (BKYI) entered into?

BIO-key International (BKYI) entered into a $1.9 million warrant inducement agreement with an existing institutional investor.

How many shares of BIO-key International (BKYI) common stock will be purchased through the warrant exercise?

The investor will exercise warrants to purchase 1,030,556 shares of BIO-key International (BKYI) common stock.

What is the amended exercise price for the warrants in BIO-key International's (BKYI) agreement?

The amended exercise price for the warrants in BIO-key International's (BKYI) agreement is $1.85 per share.

When is the expected closing date for BIO-key International's (BKYI) warrant exercise transaction?

The expected closing date for BIO-key International's (BKYI) warrant exercise transaction is on or about September 13, 2024.