GENEVA - WISeKey International Holding Ltd. (SIX: WIHN, NASDAQ: WKEY), a Swiss cybersecurity and IoT company, has entered into agreements for convertible notes subscriptions totaling $30 million with institutional investors. The initial issuance of convertible notes is $2.5 million, with the option for WISeKey to request additional tranches of $1.25 million each from the investors.
These convertible notes, with a maturity of 12 months from the issue date, can be converted into WISeKey Class B shares at a conversion price determined by the agreements or at 94% of the lowest daily volume-weighted average prices (VWAP) of one Class B Share during the ten trading days before conversion.
Carlos Moreira, WISeKey's CEO, stated that this funding offers competitive and flexible financing, crucial in the current market environment. It will support the growth of the company's core cybersecurity business and strategic projects at its subsidiaries. Moreira highlighted ongoing initiatives such as the deployment of a low-orbit satellite constellation by WISeSat.Space by 2027, the launch of next-generation post-quantum semiconductors by SEALSQ in 2025, and the development of SEALCOIN, including a second Proof of Concept for token transfer via satellite to IoT devices scheduled for January 2025.
Maxim Group LLC acted as the sole placement agent for the private placements.
WISeKey specializes in secure data and device management solutions, leveraging its Public Key Infrastructure (PKI) to ensure encrypted communications and authentication. The company is also focusing on post-quantum cryptography to protect against the emerging threats of quantum computing.
This press release contains forward-looking statements that are subject to risks and uncertainties, and there is no guarantee that the anticipated results or developments will be realized. The information is based on a press release statement and does not constitute an offer to sell securities or a solicitation of an offer to buy securities.
In other recent news, WISeKey International experienced a significant decrease in its first-half 2024 revenues, reporting a 66% drop to $5.2 million, down from $15.1 million in the same period the previous year. This shortfall was attributed to an expected downturn in semiconductor sales through its spinoff, SEALSQ Corp. Despite this, H.C. Wainwright maintained its Buy rating for the company. Other strategic projects, such as the WISeSat satellite constellation and SEALCOIN, are progressing, with the latter expected to commence scale proof-of-concept trials later this year.
WISeKey also received a notable $50 million token investment commitment from GEM Digital Limited, directed towards the development of its SEALCOIN AG project. This initiative aims to revolutionize the Internet of Things (IoT) landscape by enabling autonomous transactions and service exchanges among IoT devices. In addition, the company has entered into an agreement with The Hashgraph Group (THG), which will provide engineering expertise and strategic guidance.
These recent developments indicate a focus on expanding and enhancing the company's capabilities in the IoT landscape, with a particular emphasis on the SEALCOIN platform, expected to launch in Q4 of this year.
InvestingPro Insights
WISeKey's recent $30 million convertible notes agreement comes at a crucial time for the company, as reflected in its financial metrics. According to InvestingPro data, WISeKey's market capitalization stands at a modest $7.13 million, with a revenue of $20.98 million for the last twelve months as of Q2 2024. However, the company faces significant challenges, as evidenced by its revenue growth of -25.27% over the same period.
An InvestingPro Tip highlights that WISeKey is "quickly burning through cash," which underscores the importance of this new funding for the company's strategic initiatives. This cash burn rate aligns with the negative operating income of -$21.48 million reported for the last twelve months, indicating the company's need for additional capital to fund its ambitious projects.
Despite these financial hurdles, another InvestingPro Tip notes that WISeKey "holds more cash than debt on its balance sheet," which could provide some financial flexibility as it pursues its growth strategies. This positive aspect of the company's financial health may have contributed to its ability to secure the convertible notes agreement.
For investors considering WISeKey's potential, it's worth noting that InvestingPro offers 12 additional tips that could provide further insights into the company's financial position and prospects. These tips, available through the InvestingPro product, could be valuable for assessing the impact of the new funding on WISeKey's future performance.
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