SEALSQ Announces Closing of the Second $10.0 Million Tranche of Convertible Notes and Warrants Private Placement

Rhea-AI Summary

SEALSQ Corp (Nasdaq: LAES) announced the closing of the second tranche of a private placement, amounting to $10 million, part of a $20 million private placement. The first $10 million tranche has been repaid with less than 20% still outstanding. Gross proceeds from the recent investment totaled $9.6 million, in the form of Senior Unsecured Original Issue 4% Discount Convertible Promissory Notes. The Notes bear an interest rate of 4% per annum and are convertible into SEALSQ's ordinary shares at an initial conversion price. The Investors have received five-year warrants to purchase up to 2,288,678 ordinary shares of SEALSQ, with the exercise price initially set at $4.00 per share. The net proceeds from this financing will be strategically allocated to several key areas, including investment in post-quantum semiconductor technology, expansion of U.S. operations, upgrading production facilities, and the development of a novel machine-to-machine token, SEALCOIN.

Financial Analyst

The closing of SEALSQ's second tranche of private placement is significant for the company's financial health and future growth prospects. The infusion of $10 million capital, as part of a larger $20 million fundraising effort, is poised to bolster the company's balance sheet. The repayment of the first tranche with less than 20% outstanding is a positive signal to investors about the company's liquidity and ability to manage debt. The structure of the financing, particularly the Senior Unsecured Original Issue 4% Discount Convertible Promissory Notes, reflects a strategic move to raise capital while providing investors with an opportunity for conversion into equity, which could potentially dilute current shareholders but also aligns investor interests with the company's success.

The warrants issued as part of the investment package may result in future dilution but also indicate a vote of confidence by the investors in the company's long-term prospects. The terms of the agreement, including the conversion price and the sale limitations, suggest a careful negotiation aimed at balancing investor incentives with the company's need to minimize stock volatility and manage dilution. The potential for a third tranche of funding provides the company with additional financial flexibility, subject to market conditions and mutual agreement with the investors.

Maxim Group LLC's role as the sole placement agent is notable, indicating the investment bank's confidence in SEALSQ's business model and growth trajectory. The strategic allocation of net proceeds towards key areas such as post-quantum semiconductor technology, U.S. operations expansion, production facility upgrades and the development of SEALCOIN suggests a targeted approach to scaling operations and investing in innovative projects with the potential for high returns.

Market Research Analyst

The quantum computing sector, particularly in the context of quantum semiconductors, is attracting significant attention for its disruptive potential across industries. SEALSQ's focus on developing quantum-ready semiconductor technology places it at the cusp of a rapidly evolving market. The company's strategic decision to allocate funds towards the commercial launch of this technology by 2025 demonstrates foresight and positions SEALSQ to capitalize on early market opportunities.

Expansion of U.S. operations and upgrading of production facilities are critical moves in a global market where semiconductor supply chain resilience has become a priority. By localizing production and enhancing sales efforts, SEALSQ is not only aiming to mitigate risks associated with semiconductor production but also to capture a larger share of the growing American market. This expansion could lead to increased market penetration and revenue growth, especially in a geopolitical climate where there is a push for technological sovereignty and self-reliance in critical technologies.

The development of SEALCOIN as a machine-to-machine (M2M) token is particularly intriguing. As the Internet of Things (IoT) continues to expand, the need for efficient, secure and scalable M2M economic interactions becomes increasingly important. If successfully implemented, SEALCOIN could position SEALSQ as a pioneer in the IoT transaction space, potentially creating a new revenue stream and establishing the company as a key player in the emerging M2M economy.

Technology Analyst

SEALSQ's investment in post-quantum semiconductor technology is a strategic move that aligns with industry projections of quantum computing's significant growth. The company's focus on becoming quantum-ready indicates an awareness of the transformative impact quantum computing is expected to have on sectors like finance, healthcare and artificial intelligence. By solving complex problems more efficiently, quantum technology can offer a competitive edge and SEALSQ's early investment positions it to be a beneficiary of these advancements.

The SEALCOIN project represents a forward-thinking approach to the burgeoning field of IoT. By enabling autonomous interactions among IoT devices and transcending traditional currency exchange, SEALSQ is tapping into a nascent yet potentially lucrative market. The success of this initiative hinges on the adoption rate of IoT technologies and the integration of SEALCOIN into existing and future IoT frameworks. If successful, it could establish a new standard for M2M transactions and provide SEALSQ with a first-mover advantage in this space.

Overall, SEALSQ's recent financial maneuvers and strategic investments suggest a company positioning itself at the forefront of technological innovation. The focus on quantum computing and the IoT economy are indicative of a long-term vision that could redefine the company's market standing and offer substantial growth opportunities.

Tortola, British Virgin Islands, Jan. 11, 2024 (GLOBE NEWSWIRE) -- SEALSQ Corp (Nasdaq: LAES) (“SEALSQ” or “Company”), a leader in semiconductor, PKI, and Post-Quantum technology development, today announced the closing of the second tranche of a private placement, amounting to $10 million, which is part of the Company's $20 million private placement pursuant to the securities purchase agreement entered into July 11, 2023 with a select group of institutional investors (the “Investors”).   Of note, the first $10 million tranche under this securities purchase agreement has been repaid (in the form of the Company’s Ordinary Shares) with less than 20% of the original amount still outstanding.

Gross proceeds, before expenses, from this recent in-bound investment in the form of Senior Unsecured Original Issue 4% Discount Convertible Promissory Notes, totaled $9.6 million. The 24-month maturity Notes, bearing an interest rate of 4% per annum, are convertible into SEALSQ's ordinary shares at an initial conversion price equal to the lesser of $4.00 per ordinary share or 92% of the lowest daily volume weighted average price of the ordinary shares during the ten trading days immediately preceding the notice of conversion of the Notes, subject to adjustment as further specified in the Notes. The Notes will be fully repayable in cash upon maturity. In addition, the Investors have the option of prepayment of up to 30% of the issuance amount of a subsequent financing. The Investors have agreed to use commercially reasonable efforts to limit their sale of shares received under the second tranche and any subsequent tranches in a weekly quantity not to exceed 15% of the average weekly trading volume of the Ordinary Shares on the Nasdaq in that week.

Accompanying this investment, the Investors have received five-year warrants to purchase up to 2,288,678 ordinary shares of SEALSQ, with the exercise price initially set at $4.00 per share.

This arrangement paves the way for a potential third funding tranche of up to $10 million, if mutually agreed to by the Investors and the Company, subject to a 4% original issue discount and other agreed conditions.

Maxim Group LLC served as the sole placement agent for this private placement.

SEALSQ will file a registration statement for the resale of shares issuable upon conversion of the Notes and exercise of the warrants.

The net proceeds from this financing will be strategically allocated to several key areas:

1. Investment in post-quantum semiconductor technology, slated for commercial launch in 2025.
2. Expansion of U.S. operations, including the establishment of a new office in the U.S., recruitment of top-tier talent, and enhancement of the sales force to cater to the growing American market.
3. Upgrading production facilities in the U.S. and France with advanced manufacturing and testing equipment to heighten efficiency and mitigate semiconductor production localization risks.
4. Development of a novel machine-to-machine token, codenamed SEALCOIN. SEALCOIN is designed as a groundbreaking solution for the emerging Machine-to-Machine (M2M) economy, facilitating seamless data and currency exchanges among billions of internet-connected devices. This innovative protocol enables IoT structures from various companies to autonomously interact and access a wide range of services, transcending conventional currency exchange to encompass a complex network of IoT-enabled transactions and services. While individual traders can engage with SEALCOIN similarly to other cryptocurrencies, its principal value lies in transforming the economic operations and communications within IoT devices.

Carlos Moreira, CEO of SEALSQ, remarked, “Our relentless focus on quantum-ready semiconductors has positioned us at the forefront of global technological innovation. This new round of funding empowers us to enter an exciting phase of growth, aligning with the anticipated pivotal role of quantum computing in the global economy. With the quantum computing market projected to reach $65 billion by 2030, our goal at SEAL is to develop our technology such that we are well placed to capture new clients and generate new revenues as the market grows.”

Quantum computing, especially quantum semiconductors, is widely viewed by industry experts as a crucial growth sector in the next decade. We believe that its potential to revolutionize various fields, from finance to healthcare and AI, by efficiently solving complex problems, is immense.

About SEALSQ:
SEALSQ focuses on selling integrated solutions based on Semiconductors, PKI and Provisioning services, while developing Post-Quantum technology hardware and software products. Our solutions can be used in a variety of applications, from Multi-Factor Authentication tokens, Smart Energy, Smart Home Appliances, and IT Network Infrastructure, to Automotive, Industrial Automation and Control Systems.

Post-Quantum Cryptography (PQC) refers to cryptographic methods that are secure against an attack by a quantum computer. As quantum computers become more powerful, they may be able to break many of the cryptographic methods that are currently used to protect sensitive information, such as RSA and Elliptic Curve Cryptography (ECC). PQC aims to develop new cryptographic methods that are secure against quantum attacks.

For more information please visit www.sealsq.com.

Forward-Looking Statements

This communication expressly or implicitly contains certain forward-looking statements concerning SEALSQ Corp and its businesses. Forward-looking statements include statements regarding our business strategy, financial performance, results of operations, market data, events or developments that we expect or anticipates will occur in the future, as well as any other statements which are not historical facts. Although we believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include SEALSQ’s ability to implement its growth strategies; SEALSQ’s ability to successfully launch post-quantum semiconductor technology; SEALSQ’s ability to capture a share of the quantum semiconductor market; the growth of the quantum computing market; SEALSQ’s ability to expand its U.S. operations; SEALSQ’s ability to enhance its production facilities in the U.S. and France; SEALSQ’s ability to make additional investments towards the development of a new generation of quantum-ready semiconductors; the success of SEALCOIN; SEALSQ’s ability to continue beneficial transactions with material parties, including a limited number of significant customers; market demand and semiconductor industry conditions; the growth of the quantum computing market; and the risks discussed in SEALSQ’s filings with the SEC. Risks and uncertainties are further described in reports filed by SEALSQ with the SEC.

SEALSQ Corp is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.

SEALSQ Corp. Company Contact: Carlos Moreira Chairman & CEO Tel: +41 22 594 3000 info@sealsq.com

SEALSQ Investor Relations (US) Contact: Lena Cati The Equity Group Inc. Tel: +1 212 836-9611 lcati@equityny.com

FAQ

What is the recent announcement from SEALSQ Corp (Nasdaq: LAES)?

SEALSQ Corp (Nasdaq: LAES) announced the closing of the second tranche of a private placement, amounting to $10 million, part of a $20 million private placement.

What are the details of the recent investment?

Gross proceeds from the recent investment totaled $9.6 million, in the form of Senior Unsecured Original Issue 4% Discount Convertible Promissory Notes. The Investors have received five-year warrants to purchase up to 2,288,678 ordinary shares of SEALSQ, with the exercise price initially set at $4.00 per share.

How will the net proceeds from the financing be allocated?

The net proceeds from this financing will be strategically allocated to several key areas, including investment in post-quantum semiconductor technology, expansion of U.S. operations, upgrading production facilities, and the development of a novel machine-to-machine token, SEALCOIN.

What is the goal of SEALSQ with the new funding?

Carlos Moreira, CEO of SEALSQ, mentioned that the goal is to develop technology to capture new clients and generate new revenues as the quantum computing market grows, projected to reach $65 billion by 2030.