BIO-key takes $2.2 million in short-term debt financing for working capital
BIO-key has raised $2.2 million in funding through a promissory note, with plans to use the funds for general working capital.
The company has been expanding the reach of its biometric IAM solutions by signing up distributors, including most recently for the Southeast Asia region. It also signed up two counties in the U.S. as customers for its biometric access control platform PortalGuard.
The promissory note is issued with a six-month term at a 10 percent interest rate to AJB Capital Investments.
“As we look to opportunities next year, we elected to secure short-term funding to enhance our financial position,” comments CEO Michael DePasquale. “Today’s debt financing makes the most sense for our company and stakeholders in today’s market environment. We are confident in BIO-key’s global outlook in 2023 and our ability to service our obligations under the Note. We expect to enter the year with roughly $7M in annual recurring SaaS revenues from software contracts, a solid pipeline of customer opportunities, and hardware inventory that we look to convert to cash.”
BIO-key says the note was issued at a 9 percent original issue discount, and can be extended for an additional 6 months as a 12 percent rate. The investor also gets 700,000 shares of BIO-key’s common stock as payment of a commitment fee, and a five-year warrant to purchase another 200,000 at $3.00 each. If BIO-key has fully repaid the note within the six-month term, it will repurchase 350,000 shares initially issued for $1.00 in aggregate, according to the announcement.
The deal also includes a condition for converting the note into shares if BIO-key defaults. AJB’s total share acquisition from the deal is capped at 19.9 percent of BIO-key’s issued and outstanding shares.