WALL, N.J., Aug. 14, 2018 (GLOBE NEWSWIRE) -- BIO-key International, Inc. (NASDAQ: BKYI), an innovative provider of biometric authentication and security solutions, today reported results for its second quarter ended June 30, 2018 (Q2’18) and reviewed recent progress. The Company will host a conference call today at 10:00 a.m. EDT (details below) to review its results and outlook.
BIO-key's CEO Michael DePasquale commented, "Despite slower than anticipated deal activity during the second quarter, BIO-key continued to advance a range of business development initiatives designed to position the Company for substantial growth. We are particularly encouraged by our growing base of distribution relationships – fueled by partners who come to us to help them address customer needs. While we continue to work on several opportunities that could make significant contributions to this year’s and future results, we were not able to close many of these opportunities in the quarter.
“One area where we see substantial near-term potential is in the protection of high value customer data that is accessed by call center personnel. We secured a very large order in this area last year and were able to leverage this use case in Latin America. The protection of customer data is one of the greatest priorities on the IT landscape and we are working to expand awareness of the game-changing role that our biometric solutions can play. We think enterprises will soon recognize that they could be exposed to liability for not taking action to implement more robust protections and reporting for those accessing customer data.
"We are also building awareness and distribution reach for our innovative biometric and Bluetooth enabled locks across Asia and North America. We continue to expand our distribution reach through partnerships that have enabled us to place our products with prominent retailers, such as Best Buy, where our products are available in store and online.
“We also continue to expand our presence across Asia, via offices in India, Singapore and our primary subsidiary office in Hong Kong, and across Europe and North Africa, where we have new sales partnerships with leading technology providers supporting our international expansion strategy.
"Turning to our high value intellectual property portfolio, BIO-key recently secured a patent for our adaptive indexing method that accelerates biometric searches. While the most visible use of biometrics is principally focused on device-based authentication for mobile devices, our patent for accelerating one-to-many biometric authentication searches in the cloud, enables a far more secure and value-added solution, that can prevent duplicate enrollments, fraud and identity errors. Such protections are just not possible in the device-only authentication world. This technology is already in use in our enterprise biometric solutions, and the patent issuance may eventually present additional revenue opportunities.
"As continues to be the case given that we are still in the early stages of market adoption of many of our products, BIO-key’s quarterly performance will fluctuate based on the timing of larger software and hardware agreements, which in the past two years have been heavily weighted to the second half of each fiscal year. For that reason, we continue to focus investors on full year results, which represent a more relevant performance metric for our business.”
Financial Results Q2’18 total revenue declined by $138,740 to $748,141 from $886,881 in Q2’17, due principally to lower hardware revenue related to the timing of larger orders.
Gross margin was negative 38% in Q2’18 compared to 10% in Q2’17, due largely to an increase in non-cash software license amortization to $659,136 in Q2’18 compared to $388,595 in Q2’17. The decline was also due to the unfavorable mix of products and services sold.
Q2’18 operating expenses declined 27% to $1,373,817 from $1,880,257 in Q2'17. The prior-year period included costs primarily related to factoring expenses and our Nasdaq up-listing, as well as higher R&D expenses, for product development.
BIO-key's Q2’18 net loss improved by $133,864 to $(1,655,465), or $(0.15) per basic share after preferred dividends, as compared to $(1,789,329), or $(0.32) per basic share after preferred dividends, in Q2’17. Per share results are based on 11,375,320 and 6,359,974 weighted average basic shares outstanding in Q2’18 and Q2’17, respectively.
For the first six-months of 2018, total revenue was $1,589,596 versus $2,305,216 in the first half of 2017, a decline of $715,620, principally due to the timing of larger software and hardware deals.
The net loss was $(3,847,456), or $(0.42) per basic share after preferred dividends, in the first half of 2018 versus $(3,145,516), or $(0.57) per basic share after preferred dividends, in a year-ago period.
Per share results are based on 9,623,151 and 6,228,197 weighted average basic shares outstanding in the first six months of 2018 and 2017, respectively.
At June 30, 2018, BIO-key had net working capital of $3.6 million compared to $4.7 million at December 31, 2017.
Financial Guidance Based on specific opportunities in discussion, including sales & marketing, partner and distribution initiatives, as well as anticipated recurring revenue streams, BIO-key is reiterating its full year revenue guidance of $8M-12M. Within this guidance range, BIO-key would expect to generate positive cash flow from operations for the full year 2018.
877-344-7529 U.S. or 412-317-0088 (Int’l); code 10123118
About BIO-key International, Inc. (www.bio-key.com) BIO-key is revolutionizing authentication with biometric solutions that enable convenient and secure access to information and high-stakes transactions. We offer software solutions providing alternatives to passwords, PINs, tokens, and cards to make it easy for enterprises and consumers to secure their devices as well as information in the cloud. Our premium finger scanning devices offer market-leading quality, performance and price. BIO-key also brings the power and ease of use of biometric technology in its expanding TouchLockTM line of biometric and Bluetooth enabled padlocks – thereby providing even more ways to BIO-key your world!
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; 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 between us and other companies in the biometric technology industry; market acceptance of biometric products generally and our products under development; our ability to expand into the Asian market; delays in the development of products and statements of assumption underlying any of the foregoing, as well as other factors set forth under the caption see "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2017 and other filings with the Securities and Exchange Commission. 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, the Company undertakes no obligation to disclose any revision to these forward-looking statements whether as a result of new information, future events, or otherwise.
Investor & Media Contacts William Jones, Tanya Kamatu Catalyst IR 212-924-9800 [email protected]
BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2018
December 31, 2017
(Unaudited)
ASSETS
Cash and cash equivalents
$
304,006
$
288,721
Accounts receivable, net
491,651
2,875,946
Due from factor
27,663
109,865
Inventory
930,478
946,847
Resalable software license rights
2,820,000
2,640,000
Prepaid expenses and other
156,695
152,654
Total current assets
4,730,493
7,014,033
Resalable software license rights, net of current portion
6,425,706
7,933,808
Accounts receivable, net of current portion
720,000
760,000
Equipment and leasehold improvements, net
189,360
181,165
Capitalized contract costs, net
341,622
-
Deposits and other assets
8,712
8,712
Intangible assets, net
187,826
181,104
Total non-current assets
7,873,226
9,064,789
TOTAL ASSETS
$
12,603,719
$
16,078,822
LIABILITIES
Accounts payable
$
330,431
$
499,230
Accrued liabilities
484,578
688,023
Dividends payable
-
630,408
Deferred revenue
328,183
507,866
Total current liabilities
1,143,192
2,325,527
TOTAL LIABILITIES
1,143,192
2,325,527
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Series A-1 convertible preferred stock: authorized, 100,000 (liquidation preference of $100 per share); issued
and outstanding 0 and 62,596 of $.0001 par value at June 30, 2018 and December 31, 2017, respectively
-
6
Series B-1 convertible preferred stock; authorized, 105,000 (liquidation preference of $100 per share): issued and outstanding 0 and 105,000 of $.0001 par value at June 30, 2018 and December 31, 2017, respectively
-
11
Common stock: authorized, 170,000,000 shares; issued and outstanding; 12,587,997 and 7,691,324 of $.0001 par value at June 30, 2018 and December 31, 2017, respectively
1,259
769
Additional paid-in capital
82,143,199
80,829,001
Accumulated deficit
(70,683,931
)
(67,076,492
)
TOTAL STOCKHOLDERS’ EQUITY
11,460,527
13,753,295
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
12,603,719
$
16,078,822
BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended June 30,
Six months ended June 30,
2018
2017
2018
2017
Revenues
Services
$
249,121
$
134,061
$
551,570
$
454,648
License fees
154,251
127,751
256,970
624,319
Hardware
344,769
625,069
781,056
1,226,249
Total revenues
748,141
886,881
1,589,596
2,305,216
Costs and other expenses
Cost of services
120,841
55,660
275,573
94,480
Cost of license fees and other
908,962
740,301
1,933,675
1,362,415
Total costs and other expenses
1,029,803
795,961
2,209,248
1,456,895
Gross profit (loss)
(281,662
)
90,920
(619,652
)
848,321
Operating Expenses
Selling, general and administrative
1,076,184
1,431,208
2,538,038
3,051,358
Research, development and engineering
297,633
449,049
689,787
942,493
Total Operating Expenses
1,373,817
1,880,257
3,227,825
3,993,851
Operating loss
(1,655,479
)
(1,789,337
)
(3,847,477
)
(3,145,530
)
Other income
Interest income
14
8
21
14
Total other income
14
8
21
14
Net loss
(1,655,465
)
(1,789,329
)
(3,847,456
)
(3,145,516
)
Convertible preferred stock dividends
(41,870
)
(200,625
)
(198,033
)
(401,250
)
Net loss available to common stockholders
$
(1,697,335
)
$
(1,989,954
)
$
(4,045,489
)
$
(3,546,766
)
Basic and Diluted Loss per Common Share
$
(0.15
)
$
(0.32
)
$
(0.42
)
$
(0.57
)
Weighted Average Shares Outstanding:
Basic and diluted
11,375,320
6,359,974
9,623,151
6,228,197
BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30,
2018
2017
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss
$
(3,847,456
)
$
(3,145,516
)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Allowance for doubtful accounts
-
500,000
Depreciation
44,596
15,513
Amortization of intangible assets
8,966
6,833
Amortization of software license rights
1,318,559
729,755
Amortization of capitalized contract costs
59,044
-
Share-based and warrant compensation for employees and consultants
676,454
564,275
Stock based director's fees
23,021
10,008
Change in assets and liabilities:
Accounts receivable
2,424,295
715,357
Due from factor
82,202
24,176
Capitalized contract costs
(160,649
)
-
Inventory
16,369
(101,754
)
Software license rights
9,543
75,648
Prepaid expenses and other
(4,041
)
16,556
Accounts payable
(168,799
)
(133,215
)
Accrued liabilities
(203,445
)
86,027
Deferred revenue
(179,683
)
(215,598
)
Net cash provided by (used for) operating activities
98,976
(851,935
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(68,479
)
(140,664
)
Net cash used for investing activities
(68,479
)
(140,664
)
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock
-
1,000,000
Preferred dividends paid
-
-
Costs to issue preferred and common stock
(15,212
)
(80,366
)
Net cash provided by (used for) financing activities
(15,212
)
919,634
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS