HOLMDEL, N.J., Nov. 14, 2024 (GLOBE NEWSWIRE) — BIO-key® International, Inc. (Nasdaq: BKYI), an innovative provider of workforce and customer Identity and Access Management (IAM) solutions featuring passwordless, phoneless and token-less Identity-Bound Biometric (IBB) authentication, announced results for its third quarter ended September 30, 2024 (Q3’24). BIO-key’s 2023 Q3 and nine month results were restated and filed with the Company’s 2023 Form 10-K and are reflected in this release. BIO-key will host an investor call tomorrow, Friday, November 15th at 10:00am ET (details below).
Financial Highlights
- Q3’24 revenues rose 18% to $2.1M from $1.8M in Q3’23, principally due to a $0.5M increase in license revenue related to expanded software deployments by long-term customers.
- Gross profit improved to $1.7M (78.3% gross margin) in Q3’24 vs. $0.3M (18.7% gross margin) in Q3’23, due to an increase in high-margin license revenue, lower costs to support deployments, and a $1M hardware reserve taken in the prior-year period.
- BIO-key trimmed Q3’24 operating expenses by $46,000 versus Q3’23, reflecting proactive reductions in administration, sales personnel costs and marketing show expenses, offset by higher professional services expenses principally related to financing activities.
- BIO-key reported a Q3’24 net loss of $0.7M compared to a Q3’23 net loss of $1.8M, due primarily to an increase in high-margin license revenue, level operating expenses, and the prior-year hardware reserve.
- Cash used in operating activities was $2.4M through the first nine months of 2024 vs. $2.3M in the prior-year period. The current-year period reflects BIO-key’s net loss through the first nine months and positive adjustments for non-cash expenses of approximately $667,000.
Recent Highlights
Commentary
BIO-key CEO, Mike DePasquale commented, “We had a very productive third quarter, with revenue increasing 18% year-over-year and $1M compared to Q2’24, supported by license fee revenue which rose to $1.4M in Q3’24 from $1.0M in Q3’23. Our Q3’24 revenues reflected strength in orders from existing customers who are expanding their deployment of BIO-key solutions. This momentum continued into Q4 with an exciting order from a long-time foreign financial services customer to utilize our biometric identification technology for customer identification within their branches.
“This firm has already enrolled the fingerprint biometrics of over 25M of its customers using BIO-key technology as part of its know your customer (KYC) process. They are now upgrading to BIO-key’s “fingerprint only” identification solution which will enable them to identify each of their customers with just a fingerprint scan, eliminating the need for a bank card, account or ID number. This highly secure and efficient identification approach is expected to save an estimated thirty seconds per client encounter, benefiting both customers and bank personnel.
“We believe this is one of the world’s largest deployments of one-to-many biometric technology in a private commercial or enterprise setting, as compared to one-to-one matching of a fingerprint scan with a biometric associated with an account, ID number or card. Working with the client and our partner at AWS, we intend to publish a more detailed whitepaper on this deployment to fully explain the unique benefits our advanced biometric identity solutions can provide to other enterprises. We are of course very excited about this large-scale adoption of our technology and look to leverage the value and benefits of use in this example for our direct and Channel Alliance Partner (CAP) sales programs.
“Given the nature of our size and the timing and impact of larger customer orders, we do expect our performance to vary on a quarter-to-quarter basis as we build a growing base of high-margin, annually recurring revenue streams from software licenses and services. We expect full year 2024 revenues to meet or exceed the $7.75M achieved in 2023, and we continue to pursue opportunities to lower our overhead and variable costs, as we progress the business toward positive operating cash flow and profitability in the coming quarters. Additionally, we continue to seek potential strategic opportunities that can leverage our core strengths and business platform to create value for our shareholders.
“From a financial perspective, we were able to raise $1.9M during the third quarter through a warrant inducement agreement, pursuant to which an existing institutional investor exercised warrants to purchase 1,030,556 BIO-key shares at $1.85 per share. Reflecting these proceeds, our cash position improved to $1.8M at close of Q3’24 vs. $0.5M at year end 2023.”
Financial Results
BIO-key’s Q3’24 revenues increased 18% to $2.1M from $1.8M in Q3’23. License revenue increased $491,000 or 52% to $1.4M and hardware sales increased 56% to $436,000, as several long-term customers expanded their license deployments and purchased additional biometric readers. Declines in recurring and non-recurring service revenues of $320,522 stemmed from the loss of one large recurring service agreement and one large customization customer from the prior-year period. For the nine months ended September 30, 2024, revenues were $5.5M compared to $5.9M in the comparable 2023 period, as increased license fees and hardware revenue was offset by lower service revenues.
Q3’24 Gross profit was $1.7M (78.3% gross margin) versus $0.3M (18.7% gross margin) in Q3’23, primarily reflecting the impact of a $1M hardware reserve in Q3’23, a higher proportion of high margin license fee revenue in Q3’24, and lower costs to support deployments, including license fees for third-party software included in BIO-key’s Swivel Secure offerings.
BIO-key trimmed operating expenses by $46,000 in Q3’24 versus Q3’23, reflecting reductions in administration expenses, including lower headquarters expense, sales personnel costs, and marketing show expenses, partially offset by an increase in professional services, principally related to the Company’s financing activities. Also offsetting lower SG&A costs was a $122,000 increase in research, development and engineering expense due to increased personnel costs to support new product development.
Reflecting higher revenue and gross profit and flat operating expenses, BIO-key’s net loss improved to $0.7M, or $0.39 per share, in Q3’24, from a net loss of $1.8M, or $3.22 per share, in Q3’23. Likewise, BIO-key reduced its net loss for the first nine months of 2024 to $2.9M, or $1.69 per share, compared to a net loss of $6.1M, or $10.79 per share, in the first nine months of 2023. Q3’23 results included the hardware reserve of $1.0M and the first nine months of 2023 included a hardware reserve of $2.5M.
Balance Sheet
At September 30, 2024, BIO-key had current assets of approximately $4.6M, including $1.8M of cash and cash equivalents, $2.0M of net accounts receivable and due from factor, and $387,000 of inventory. This compares to current assets of $2.6M at December 31, 2023, including approximately $511,000 of cash equivalents, $1.3M of net accounts receivable and due from factor, and $446,000 of inventory.
| Conference Call Details | ||
| Date / Time: | Friday, November 15th at 10 a.m. ET | |
| Call Dial In #: | 1-877-418-5460 U.S. or 1-412-717-9594 Int’l | |
| Live Webcast / Replay: | Webcast & Replay Link – Available for 3 months. | |
| Audio Replay: | 1-877-344-7529 U.S. or 1-412-317-0088 Int’l; code 7307131 | |
About BIO-key International, Inc. (http://www.BIO-key.com)
BIO-key is revolutionizing authentication and cybersecurity with biometric-centric, multi-factor identity and access management (IAM) software securing access for over forty million users. BIO-key allows customers to choose the right authentication factors for diverse use cases, including phoneless, tokenless, and passwordless biometric options. Its hosted or on-premise PortalGuard IAM solution provides cost-effective, easy-to-deploy, convenient, and secure access to computers, information, applications, and high-value transactions.
BIO-key Safe Harbor Statement
All statements contained in this press release other than statements of historical facts are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “Act”). The words “estimate,” “project,” “intends,” “expects,” “anticipates,” “believes” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are made based on management’s beliefs, as well as assumptions made by, and information currently available to, management pursuant to the “safe-harbor” provisions of the Act. These statements are not guarantees of future performance or events and are subject to risks and uncertainties that may cause actual results to differ materially from those included within or implied by such forward-looking statements. These risks and uncertainties include, without limitation, our history of losses and limited revenue; our ability to raise additional capital to satisfy working capital needs; our ability to continue as a going concern; our ability to protect our intellectual property; changes in business conditions; changes in our sales strategy and product development plans; changes in the marketplace; continued services of our executive management team; security breaches; competition in the biometric technology industry; market acceptance of biometric products generally and our products under development; our ability to convert sales opportunities to customer contracts; our ability to expand into Asia, Africa and other foreign markets; our ability to integrate the operations and personnel of Swivel Secure into our business; fluctuations in foreign currency exchange rates; delays in the development of products, the commercial, reputational and regulatory risks to our business that may arise as a consequence the restatement of our financial statements, including any consequences of non-compliance with Securities and Exchange Commission and Nasdaq periodic reporting requirements; our temporary loss of the use of a Registration Statement on Form S-3 to register securities in the future; if we fail to increase our stockholders’ equity to at least $2.5 million, our common stock will be delisted from the Nasdaq Capital Market which could negatively impact the trading price of our common stock and impair our ability to raise capital, any disruption to our business that may occur on a longer-term basis should we be unable to remediate during fiscal year 2024 certain material weaknesses in our internal controls over financial reporting, and statements of assumption underlying any of the foregoing as well as other factors set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to disclose any revision to these forward-looking statements whether as a result of new information, future events, or otherwise.
Investor Contacts
William Jones, David Collins
Catalyst IR
BKYI@catalyst-ir.com or 212-924-9800
| BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | ||||||||||||||||
| Services | $ | 267,371 | $ | 587,893 | $ | 764,062 | $ | 1,740,880 | ||||||||
| License fees | 1,441,011 | 950,015 | 4,165,669 | 3,764,342 | ||||||||||||
| Hardware | 436,422 | 279,200 | 537,562 | 424,582 | ||||||||||||
| Total revenues | 2,144,804 | 1,817,108 | 5,467,293 | 5,929,804 | ||||||||||||
| Costs and other expenses | ||||||||||||||||
| Cost of services | 110,723 | 125,039 | 322,957 | 639,996 | ||||||||||||
| Cost of license fees | 146,732 | 253,891 | 443,384 | 1,022,919 | ||||||||||||
| Cost of hardware | 207,655 | 97,674 | 260,684 | 240,074 | ||||||||||||
| Cost of hardware – reserve | – | 1,000,000 | – | 2,500,000 | ||||||||||||
| Total costs and other expenses | 465,110 | 1,476,604 | 1,027,025 | 4,402,989 | ||||||||||||
| Gross profit | 1,679,694 | 340,504 | 4,440,268 | 1,526,815 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling, general and administrative | 1,607,925 | 1,776,305 | 5,332,764 | 5,851,201 | ||||||||||||
| Research, development and engineering | 652,174 | 529,757 | 1,850,929 | 1,778,097 | ||||||||||||
| Total Operating Expenses | 2,260,099 | 2,306,062 | 7,183,693 | 7,629,298 | ||||||||||||
| Operating loss | (580,405 | ) | (1,965,558 | ) | (2,743,425 | ) | (6,102,483 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | 2 | 5,917 | 53 | 5,944 | ||||||||||||
| Loss on foreign currency transactions | – | – | – | (15,000 | ) | |||||||||||
| Loan fee amortization | (60,000 | ) | – | (64,000 | ) | – | ||||||||||
| Change in fair value of convertible note | – | 167,283 | – | 264,706 | ||||||||||||
| Interest expense | (98,556 | ) | (45,655 | ) | (108,823 | ) | (159,380 | ) | ||||||||
| Total other income (expense), net | (158,554 | ) | 127,545 | (172,770 | ) | 96,270 | ||||||||||
| Loss before provision for income tax | (738,959 | ) | (1,838,013 | ) | (2,916,195 | ) | (6,006,213 | ) | ||||||||
| Provision for (income tax) tax benefit | – | 189 | – | (142,811 | ) | |||||||||||
| Net loss | $ | (738,959 | ) | $ | (1,837,824 | ) | $ | (2,916,195 | ) | $ | (6,149,024 | ) | ||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | $ | (738,959 | ) | $ | (1,837,824 | ) | $ | (2,916,195 | ) | $ | (6,149,024 | ) | ||||
| Other comprehensive income (loss) – Foreign currency translation adjustment | 89,933 | 35,364 | 51,878 | 127,394 | ||||||||||||
| Comprehensive loss | $ | (649,026 | ) | $ | (1,802,460 | ) | $ | (2,864,317 | ) | $ | (6,021,630 | ) | ||||
| Basic and Diluted Loss per Common Share | $ | (0.39 | ) | $ | (3.22 | ) | $ | (1.69 | ) | $ | (10.79 | ) | ||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| Basic and diluted | 1,889,694 | 570,753 | 1,726,716 | 569,882 | ||||||||||||
| All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023. | ||||||||||||||||
| BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,801,137 | $ | 511,400 | ||||
| Accounts receivable, net | 1,930,258 | 1,201,526 | ||||||
| Due from factor | 49,018 | 99,320 | ||||||
| Inventory | 386,944 | 445,740 | ||||||
| Prepaid expenses and other | 382,866 | 364,171 | ||||||
| Total current assets | 4,550,223 | 2,622,157 | ||||||
| Equipment and leasehold improvements, net | 162,551 | 220,177 | ||||||
| Capitalized contract costs, net | 430,596 | 229,806 | ||||||
| Deposits and other assets | 7,975 | – | ||||||
| Operating lease right-of-use assets | 73,637 | 36,905 | ||||||
| Intangible assets, net | 1,174,721 | 1,407,990 | ||||||
| Total non-current assets | 1,849,480 | 1,894,878 | ||||||
| TOTAL ASSETS | $ | 6,399,703 | $ | 4,517,035 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 1,564,654 | $ | 1,316,014 | ||||
| Accrued liabilities | 1,254,415 | 1,305,848 | ||||||
| Note payable | 2,164,693 | – | ||||||
| Government loan – BBVA Bank, current portion | 141,854 | 138,730 | ||||||
| Deferred revenue, current | 719,846 | 414,968 | ||||||
| Operating lease liabilities, current portion | 24,545 | 37,829 | ||||||
| Total current liabilities | 5,870,007 | 3,213,389 | ||||||
| Deferred revenue, long term | 240,664 | 28,296 | ||||||
| Deferred tax liability | 22,998 | 22,998 | ||||||
| Government loan – BBVA Bank – net of current portion | 83,901 | 188,787 | ||||||
| Operating lease liabilities, net of current portion | 49,091 | – | ||||||
| Total non-current liabilities | 396,654 | 240,081 | ||||||
| TOTAL LIABILITIES | 6,266,661 | 3,453,470 | ||||||
| Commitments and Contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock — authorized, 170,000,000 shares; issued and outstanding; 3,109,288 and 1,032,777 of $.0001 par value at September 30, 2024 and December 31, 2023, respectively | 311 | 103 | ||||||
| Additional paid-in capital | 127,981,436 | 126,047,851 | ||||||
| Accumulated other comprehensive loss | 74,699 | 22,821 | ||||||
| Accumulated deficit | (127,923,404 | ) | (125,007,210 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 133,042 | 1,063,565 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 6,399,703 | $ | 4,517,035 | ||||
| All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023. | ||||||||
| BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (2,916,195 | ) | $ | (6,149,024 | ) | ||
| Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
| Depreciation | 69,115 | 38,213 | ||||||
| Amortization of intangible assets | 233,269 | 217,978 | ||||||
| Change in fair value of convertible note | – | (264,706 | ) | |||||
| Amortization of capitalized contract costs | 128,953 | 126,057 | ||||||
| Amortization of Note Payable | 64,000 | – | ||||||
| Reserve for inventory | (98,875 | ) | 2,500,000 | |||||
| Operating leases right-of-use assets | (58,950 | ) | 146,890 | |||||
| Share and warrant-based compensation for employees and consultants | 162,614 | 163,584 | ||||||
| Stock based directors’ fees | 9,003 | 39,006 | ||||||
| Deferred income tax benefit | – | (20,000 | ) | |||||
| Bad debts | – | 550,000 | ||||||
| Change in assets and liabilities: | ||||||||
| Accounts receivable | (398,753 | ) | (434,989 | ) | ||||
| Due from factor | 50,302 | (13,072 | ) | |||||
| Capitalized contract costs | (329,743 | ) | (107,336 | ) | ||||
| Deposits | (7,975 | ) | – | |||||
| Inventory | 58,796 | 145,156 | ||||||
| Prepaid expenses and other | (18,695 | ) | (51,831 | ) | ||||
| Accounts payable | 248,640 | 488,417 | ||||||
| Accrued liabilities | (51,433 | ) | 327,131 | |||||
| Income taxes payable | – | 62,811 | ||||||
| Deferred revenue | 517,246 | 128,253 | ||||||
| Operating lease liabilities | (60,827 | ) | (154,460 | ) | ||||
| Net cash used in operating activities | (2,399,508 | ) | (2,261,922 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | (23,047 | ) | – | |||||
| Net cash used in investing activities | (23,047 | ) | – | |||||
| CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from Note Payable | 2,000,000 | – | ||||||
| Offering costs | (147,862 | ) | (25,434 | ) | ||||
| Proceeds for exercise of warrants | 1,908,099 | – | ||||||
| Receipt of cash from Employee stock purchase plan | 1,939 | 13,934 | ||||||
| Repayment of government loan | (101,762 | ) | (113,885 | ) | ||||
| Net cash used in financing activities | 3,660,414 | (125,385 | ) | |||||
| Effect of exchange rate changes | 51,878 | 58,871 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,289,737 | (2,328,436 | ) | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 511,400 | 2,635,522 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 1,801,137 | $ | 307,086 | ||||
| All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023. | ||||||||
