BIO-key raises $2.55M to weather unforeseen circumstances

BIO-key has raised $2.55 million in a private placement of a Senior Secured Convertible Note to repay outstanding debts and use for general working capital purposes. The $3.06 million Senior Secured Convertible Note was purchased by Lind Global Macro Fund.

The Note is secured by a first-priority lien on BIO-key assets and properties, and can be converted to common stock in BIO-key at a fixed rate of $1.50 per share, at the investors option, according to the announcement.

“BIO-key completed this funding to ensure that we have sufficient financial resources to fund our business and execute on our growth strategy,” comments BIO-key CEO Michael DePasquale. “We believe this financing structure, including its above-market conversion price and 12-month repayment schedule, provides an attractive source of capital for our company, particularly in light of the unforeseen delay in the receipt of software license payments from a large international customer.”

After 180 days the first $918,000 is due, $1,071,000 comes due 90 days later, and a year from the funding date the balance comes due. The company could also repay the note in full without penalty at any time, which would give the investor an option to convert 25 percent of the outstanding amount to shares. The investor was also issued a five-year warrant to purchase two million shares of common stock at a fixed price of $1.50 per share, immediately exercisable.

BIO-key announced a significant follow-on order from a foreign defence ministry last month, raising the prospect that its cash-flow situation may be improving after being hampered by U.S.-China trade relations.

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