Technology company Ability Security Systems (Nasdaq: ABIL; TASE: ABIL) took advantage of the surge in its share price last week to raise $10 million. The company's shares price tumbled 46% on Nasdaq on Friday in response, back to around the prices at which it was traded before the surge. The company's share is down 30% today on the Tel Aviv Stock Exchange (TASE).
Ability, managed by cofounder and CEO Anatoly Hurgin, provides intelligence technologies to government agencies and the military. After reporting an agreement to acquire the supplier that develops and sells Ability an exclusive license on which ULIN technology is based, Ability's share zoomed 97% to $5.55 on Nasdaq last Wednesday.
Because of the Thanksgiving holiday, no trading took place on Nasdaq on Thursday. The company announced a $10 million private placement on Friday at $3.25 per share. The share closed at $3 on Friday, reflecting a $10 million market cap. The effective price in the offering is lower, because Ability issued 3.1 million units, each containing one share and one warrant to buy another share. The underwriter for the offering was HC Wainwright, and the investor was described as an investment institution, with no details of its identity. Ability's share has been volatile in recent months, with the price fluctuating between $2.20 and $12. Last June, with no apparent reason, Ability's share price rose on Nasdaq, then went right back down.
Ability will now recognize all revenue from the acquired ULIN technology
Last week, Ability announced its acquisition of full ownership of ULIN technology, which facilitates interception of communications and remote eavesdropping. Up until now, Ability has paid half of its revenue from this technology to the company it has now acquired, and from now on will recognize all of the revenue from ULIN.
Ability will buy all of the company's shares with its own shares. It will issue 355,000 new shares, with a value of $1 million at the time of the report. At the same time, Ability will give the sellers three warrants, each for 100,000 shares, with a $3.81 strike price, which is higher than the current price. The maturity date for the first set of warrants is in one year and 30 days after the deal is completed, the date for the next is one year after that, and the third date is one year after that.
In addition to the shares and warrants, Ability estimates the annual operating expenses of the acquired activity at $750,000.
Published by Globes, Israel business news - en.globes.co.il - on November 25, 2018
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