Following Stockholder Approval, BIO-key Announces 1-for-18 Reverse Stock Split to Regain Compliance with Nasdaq Minimum Bid Price Requirement
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Insights
The 1-for-18 reverse stock split by BIO-key International is a strategic financial move aimed at addressing the company's non-compliance with Nasdaq's minimum bid price requirement. This action typically indicates that a company's share price has been trading below the exchange's required threshold, which for Nasdaq is $1 per share. The immediate effect of such a reverse split is to raise the stock price by reducing the number of shares outstanding, thus potentially avoiding delisting.
Investors should note that while the reverse split does not inherently change the company's market capitalization, it can have psychological impacts on investor perception, often being viewed as a negative signal about the company's performance or prospects. In the case of BIO-key, the reduction from approximately 16.9 million shares to about 941,000 shares will significantly increase the per-share price, but it's crucial for investors to monitor whether the company can achieve its growth and profitability goals to sustain this price level.
Long-term effects of reverse splits can vary; they may lead to improved stock performance if accompanied by fundamental business improvements. However, if the underlying business challenges persist, the uplift in stock price may be temporary and further declines could occur. Shareholders should closely watch the company's operational progress post-split.
The decision to undergo a reverse stock split often falls under the purview of corporate governance, reflecting the board's role in critical decision-making to protect shareholder value and maintain stock exchange listings. BIO-key's board's choice of a 1-for-18 ratio is a definitive action that suggests a calculated approach to ensure compliance with Nasdaq's regulations while trying to minimize the potential negative connotations associated with reverse splits.
From a governance perspective, the move indicates proactive measures to address stock market requirements and demonstrates the board's commitment to maintaining the company's public listing status. However, it's important to assess whether such decisions are part of a broader strategic plan that includes operational improvements, as reverse splits alone do not resolve underlying business issues.
Stakeholders should evaluate the transparency and rationale behind the board's decisions, including the communication of long-term strategic goals. The effectiveness of governance in this context will be judged by the company's ability to leverage the reverse split as a stepping stone towards sustainable growth and value creation.
In the context of market dynamics, a reverse stock split like the one BIO-key is undertaking can have several implications. The immediate market response to such news can be mixed, with some investors interpreting it as a red flag for potential liquidity issues or a lack of positive growth drivers. On the other hand, it can also be seen as a company taking decisive steps to maintain its listing status and improve its appeal to institutional investors who may be prohibited from holding stocks below certain price levels.
Market analysts will be observing the stock's performance post-split to gauge investor sentiment and the effectiveness of the reverse split in stabilizing the stock's price. It is also critical to analyze the company's sector performance and competitive positioning to understand if the reverse split might lead to a reassessment of the stock's value by the market.
Furthermore, the market will be looking for signs of operational improvements and growth, as these are fundamental to justifying the increased share price over time. Without tangible progress in the company's core business, the effects of the reverse split may be short-lived, leading to further volatility in the stock's performance.
WALL, N.J., Dec. 19, 2023 (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), today announced that it has approved a 1-for-18 reverse stock split that will become effective with the commencement of trading on December 21, 2023.
BIO-key stockholders approved a proposal last week to allow the Board to proceed with a reverse split to assist the Company in its effort to regain compliance with the minimum bid price requirement.
BIO-key had approximately 16.9 million shares of common stock issued and outstanding as of December 19, 2023. After giving effect to the 1-for-18 reverse stock split, BIO-key will have approximately 941,000 shares of common stock issued and outstanding.
BIO-key CEO Michael DePasquale commented, “We view our Nasdaq listing as an important stockholder and corporate asset. In order to regain compliance with Nasdaq’s
About BIO-key International, Inc. (www.BIO-key.com)
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.
BIO-key Safe Harbor Statement
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, our history of losses and limited revenue; our ability to raise additional capital to satisfy debt repayment obligations and working capital needs; our ability to continue as a going concern; our ability to regain compliance with the Nasdaq continued listing standards, market conditions and the impact of the reverse stock split on the trading price of our common stock; 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 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, 2022 and other filings with the Securities and Exchange Commission. 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.
| Engage with BIO-key: | |
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| LinkedIn – Corporate: | https://www.linkedin.com/company/bio-key-international |
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| Twitter – Investors: | @BIO_keyIR |
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Investor Contacts:
William Jones, David Collins
Catalyst IR
BKYI@catalyst-ir.com
212-924-9800
FAQ
What is the reverse stock split approved by BIO-key International, Inc. (Nasdaq: BKYI)?
How many shares of common stock did BIO-key International, Inc. (Nasdaq: BKYI) have before the reverse split?
How many shares of common stock will BIO-key International, Inc. (Nasdaq: BKYI) have after the reverse split?
Why did BIO-key International, Inc. (Nasdaq: BKYI) decide to proceed with a reverse stock split?
What was the intention behind setting the ratio at 1-for-18 for the reverse stock split by BIO-key International, Inc. (Nasdaq: BKYI)?
