BIO-KEY INTERNATIONAL, INC. (OTCMKTS:BKYID) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive |
Securities Purchase Agreement
On April 28, 2017, BIO-Key International, Inc. (the Company)
entered into a Securities Purchase Agreement with Wong Kwok Fong
(Kelvin) (the Securities Purchase Agreement) to which it issued
and sold 277,778 shares of common stock in consideration of an
aggregate purchase price of $1,000,000, or $3.60 per share. Mr.
Wong is a director and executive officer of the Company.
The shares were issued in a private placement transaction to one
accredited investor to the exemption from registration provided
by Section 4(a)(2) of the Securities Act of 1933, as amended (the
Securities Act), without payment of any placement or brokerage
fees.
Common Stock Purchase Agreement
On May 2, 2017, the Company entered into a Common Stock Purchase
Agreement (the Common Stock Purchase Agreement) with Xanthe
Holdings Ltd., a company organized and existing under the laws of
the British Virgin Islands (the Investor), to which the Company
may, subject to certain conditions, issue and sell to the
Investor up to $5.0 million (the Total Commitment) worth of
shares of the Companys common stock, subject to certain
limitations, over the 36-month term of the Common Stock Purchase
Agreement following the effectiveness of the resale registration
statement described below. This type of agreement is sometimes
referred to as a committed equity line financing.
From time to time over the term of the Common Stock Purchase
Agreement, the Company may, in its sole discretion, provide the
Investor with fixed request notices (each, a Fixed Request
Notice) to purchase a specified dollar amount (the Fixed Request
Amount), up to a maximum of $100,000 (the Maximum Fixed Request
Amount), of shares over a five consecutive trading day period
commencing on the trading day specified in the applicable Fixed
Request Notice (the Pricing Period), with each draw down subject
to the limitations discussed below. Alternatively, in the
Companys sole discretion, but subject to certain limitations, the
Company may require the Investor to purchase a percentage of the
daily trading volume of the Companys common stock for each
trading day during the Pricing Period.
Once presented with a Fixed Request Notice, the Investor is
required to purchase a pro rata portion of the applicable Fixed
Request Amount on each trading day during the applicable Pricing
Period on which the daily volume weighted average price for the
Companys common stock (the VWAP) equals or exceeds an applicable
floor price equal to the greater of (i) the product of (a) 0.85
and (b) the VWAP for the trading day immediately preceding the
date the Fixed Request Notice is delivered and (ii) $3.83,
subject to adjustment (the Floor Price). If the VWAP falls below
the applicable Floor Price on any trading day during the
applicable Pricing Period, the Common Stock Purchase Agreement
provides that the Investor will not purchase the pro rata portion
of the applicable Fixed Request Amount allocated to that trading
day. The per share purchase price for the shares subject to a
Fixed Request Notice shall be equal to 6.0% of the lowest VWAP
that equals or exceeds the applicable Floor Price during the
applicable Pricing Period. Each purchase to a Fixed Request
Notice shall reduce, on a dollar-for-dollar basis, the Total
Commitment under the Common Stock Purchase Agreement.
The Company is prohibited from issuing a Fixed Request Notice if
(i) the amount requested in such Fixed Request Notice exceeds the
Maximum Fixed Request Amount, (ii) the sale of shares to such
Fixed Request Notice would cause the Company to issue or sell or
the Investor to acquire or purchase an aggregate dollar value of
shares that would exceed the Total Commitment, or (iii) the sale
of shares to the Fixed Request Notice would cause the Company to
sell or the Investor to purchase an aggregate number of shares of
the Companys common stock which would result in beneficial
ownership by the Investor of more than 9.99% of the Companys
common stock (as calculated to Section 13(d) of the Securities
Exchange Act of 1934, as amended, (the Exchange Act) and the
rules and regulations thereunder). The Common Stock Purchase
Agreement also limits sales of shares of the Companys common
stock to 19.99% of the total outstanding shares of the Companys
common stock as of the date of the Common Stock Purchase
Agreement, unless the Company obtains stockholder approval of the
issuance of common stock to the Investor to the Common Stock
Purchase Agreement.
At closing, the Company paid a fee of $25,000 to cover the
Investors legal fees and expenses. In addition, the Company
issued 55,000 shares of its common stock to the Investor as a
commitment fee.
The issuance of the shares of common stock to the Common Stock
Purchase Agreement is exempt from registration under the
Securities Act to an exemption from registration provided by
Section 4(a)(2) of the Securities Act and Rule 506 of Regulation
D promulgated thereunder.
The Company has agreed to indemnify the Investor and its
affiliates for losses related to a breach of the representations
and warranties by the Company under the Common Stock Purchase
Agreement or the other transaction documents or any action
instituted against the Investor or its affiliates due to the
transactions contemplated by the Common Stock Purchase Agreement
or other transaction documents, subject to certain limitations.
The Investor is an “underwriter” within the meaning of Section
2(a)(11) of the Securities Act. The Investor will use an
unaffiliated broker-dealer to effectuate all sales, if any, of
common stock that it may purchase from us to the Common Stock
Purchase Agreement.
Registration Rights Agreement
In connection with the Purchase Agreement, the Company entered
into a Registration Rights Agreement (the “Registration Rights
Agreement”) with the Investor, to which the Company granted to
the Investor certain registration rights related to the shares
issuable in accordance with the Common Stock Purchase Agreement.
Under the Registration Rights Agreement, the Company agreed to
use its commercially reasonable efforts to prepare and file with
the Securities and Exchange Commission (the “SEC”) one or more
registration statements for the purpose of registering the resale
of the maximum shares of common stock issuable to the Common
Stock Purchase Agreement (the “Registrable Securities”). to the
Registration Rights Agreement, the Company agreed to indemnify
the Investor and its affiliates against certain liabilities,
including liabilities under the Securities Act, and the Investor
agreed to indemnify the Company and its affiliates for losses
under securities laws for any material omissions or misstatements
with respect to information provided by the Investor for
inclusion in the registration statement covering the resale by
the Investor of shares sold to it under the Common Stock Purchase
Agreement, subject to certain limitations.
The foregoing descriptions of the Securities Purchase Agreement,
the Common Stock Purchase Agreement, and the Registration Rights
Agreement are not complete and are qualified in their entirety by
reference to the full text of such agreements, copies of which
are filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this
Current Report on Form 8-K and which are incorporated herein by
reference.
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Item 2.02 |
Results of Operations and Financial |
On May 3, 2017, the Company issued a press release announcing the
transactions described above and announcing its anticipated
financial results for its first quarter ended March 31, 2017. A
copy of the press release issued by the Company on May 3, 2017 is
attached as Exhibit99.1.
The information in this Item 2.02 of this Current Report on Form
8-K, including exhibit 99.1 attached hereto, shall not be deemed
filed for purposes of Section 18 of the Exchange Act, or
otherwise subject to the liabilities of that Section, nor shall
it be deemed incorporated by reference in any filing under the
Securities Act or the Exchange Act, except as otherwise expressly
stated in such filing.
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Item 3.02 |
Unregistered Sales of Equity Securities |
The information provided under Item 1.01 regarding the
unregistered sale of equity securities is incorporated herein by
reference.
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Item 9.01 |
Financial Statements and Exhibits |
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(d) |
Exhibits |
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10.1 |
Securities Purchase Agreement, dated as of April 28, 2017, |
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10.2 |
Common Stock Purchase Agreement, dated as of May 2, 2017, |
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10.3 |
Registration Rights Agreement, dated as of May 2, 2017, by |
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99.1 |
Press Release of BIO-key International, Inc. dated May 3, |
About BIO-KEY INTERNATIONAL, INC. (OTCMKTS:BKYID)
BIO-key International, Inc. develops and markets fingerprint biometric identification and identity verification technologies, cryptographic authentication-transaction security technologies, as well as related identity management and credentialing software solutions. The Company is also engaged in developing automated, finger identification technology that supplements or compliments other methods of identification and verification, such as personal inspection identification, passwords, tokens, smart cards, identity cards, public key infrastructure (PKI), credit card, passports, driver’s licenses, one-time password (OTP) or other form of possession or knowledge-based credentialing. Its solutions identify individuals and verify, or confirm, their identity before granting access to, among other things, corporate resources, subscribed data and services, Web portals, applications, physical locations or assets. BIO-KEY INTERNATIONAL, INC. (OTCMKTS:BKYID) Recent Trading Information
BIO-KEY INTERNATIONAL, INC. (OTCMKTS:BKYID) closed its last trading session up +0.29 at 2.75 with 8,887 shares trading hands.