BIO-key Brings in Capital with Secured Convertible Note

BIO-key has sold a $3.06 million Senior Secured Convertible Note, the company has announced. The Note was sold to Lind Global Macro Fund, with $2.55 million in proceeds at closing.

In a statement, BIO-key explained that the capital raised in the transaction will “be used for general working capital purposes, including repayment of outstanding indebtedness.” BIO-key CEO Michael DePasquale added that the funding was pursued “to ensure that we have sufficient financial resources to fund our business and execute on our growth strategy,” and emphasized that financing structure’s “above-market conversion price and 12 month repayment schedule”.

The Note is secured via a first priority lien on “substantially all of BIO-key’s assets and properties”, according to BIO-key’s statement, and the investor has the option of converting it into shares of common stock at a fixed price of $1.50 per share. BIO-key has 180 days to pay $918,000 of the principal, 270 days to pay $1,071,000, and 12 months to pay the balance, with the option to pay in full at any time.

One additional term of the deal is a five-year warrant issued to the investor to purchase 2,000,000 shares of common stock at a fixed price of $1.50 per share.

BIO-key’s announcement comes at a somewhat tumultuous time with respect to its long-term business planning. In a fiscal update issued at the start of April, the company indicated that it anticipated a bump in revenues for 2019 thanks to a major new contract with a China-based client, but the news was soon followed by a Q1 update marred somewhat by escalating trade tensions between the US and China.

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July 12, 2019 – by Alex Perala