In a significant development reported on Monday, BIO-key International Inc. (NASDAQ:BKYI) disclosed a strategic transaction intended to strengthen its balance sheet and satisfy Nasdaq's minimum stockholders’ equity requirement.
The prepackaged software services company, as per the Securities and Exchange Commission filing dated November 27, 2024, has entered into a Securities Purchase Agreement with Fiber Food Systems, Inc., and Boumarang Inc.
Under the terms of the agreement, BIO-key acquired 5 million shares of Boumarang's common stock in exchange for 595,000 BIO-key shares, representing 19% of BIO-key's shares before the transaction. The company has valued the newly acquired Boumarang shares at $5 million, effectively boosting its stockholders' equity by an equivalent amount.
This transaction is a strategic move by BIO-key following a notification from Nasdaq on June 10, 2024, concerning the company's non-compliance with the stockholders’ equity threshold of $2.5 million. In response, BIO-key submitted a compliance plan on July 25, 2024, which was later supplemented and approved by Nasdaq on August 13, 2024.
With this latest move, BIO-key believes it has surpassed the required stockholders’ equity level, potentially regaining compliance with Nasdaq's listing rules. However, the company's compliance status is subject to Nasdaq's final review upon the next periodic report submission. If BIO-key fails to demonstrate sustained compliance, it may face delisting risks.
The company's management has expressed caution regarding forward-looking statements, indicating that the actual value of the Boumerang shares and the final decision by Nasdaq could differ from current expectations due to various factors.
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This news is based on the latest 8-K filing by BIO-key International Inc. with the SEC, providing a glimpse into the company's efforts to maintain its listing status and strengthen its financial position.
In other recent news, BIO-key International has reported a growth in revenue and a significant reduction in net loss for the third quarter of 2024. The company's revenue rose by 18% to $2.1 million compared to the same quarter in the previous year, with high-margin license revenue jumping 52% to $1.4 million. BIO-key improved its net loss to $0.7 million, down from $1.8 million in Q3 2023, and reported a net income of $2.9 million, or $1.69 per share.
In strategic developments, BIO-key acquired shares in Boumarang, bolstering its balance sheet with an additional $5 million in net assets. This transaction is expected to streamline operations and stimulate innovation. Moreover, BIO-key's partnership with Fiber aims to enhance security and operational efficiency in high-traffic food service locations, leveraging BIO-key's PortalGuard IAM platform.
Lastly, the company secured significant orders from a foreign defense ministry and a major financial services customer, which are anticipated to positively impact future results. BIO-key expects 2024 annual revenues to meet or exceed the previous year's $7.75 million, with a continued focus on increasing high-margin license revenue.
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