BIO-key(R) International, Inc. Reports Fourth Quarter and Fiscal
2013 Financial Results
Expects Growth and Profitability in Q1 2014
WALL, NJ--(Marketwired - Mar 31, 2014) - BIO-key International,
Inc. (OTCBB: BKYI), a leader in fingerprint biometric
identification technologies, cloud-based mobile credentialing and
identity verification solutions, today reported financial results
for the Fourth Quarter and Fiscal Year, ended December 31, 2013 and
provided a strong outlook for the first Quarter of Fiscal
2014.
Three Month
Comparisons
Total revenue for the three months ended December 31, 2013 was
$327,500, compared to Q4'12 revenue of $1.48 million, a decrease of
approximately 78%. Sales fell, year over year, primarily from
lower license revenue. Michael DePasquale, BIO-key Chairman
and CEO, commented, "Despite disappointing financial performance,
2013 was a pivotal year for BIO-key. We met virtually all of our
initiatives to prepare for what we believe is the beginning of a
hyper-growth phase of development for us. With Apple, Samsung
and other providers deploying fingerprint enabled smartphones,
there is no doubt our market is here. Our marquee partnerships with
InterDigital, IBM, CA and others drive our cloud-based
strategy. Our recent partnership with IDEX promises to put
BIO-key technologies on mobile phones in the United States and
abroad. We believe we are one of the only core fingerprint
technology developers that can perform both cloud and on-device
authentication and we may be the only biometric vendor that
currently integrates to most of the popular security infrastructure
solutions used by enterprises and governments worldwide."
Q4'13 gross margin remained stable, sequentially, at 78%, but
fell from 90% in Q4'12 as a result of lower license sales as a
percentage of total sales. Operating expenses for Q4'13
increased 38%, year over year, to $1,163,961 from roughly $842,000
in Q4'12. Net loss for Q4'13 was ($1,039,595), as compared to
net income of $486,000 in Q4'12. Mr. DePasquale continued,
"2013 was about important corporate development, strategic hires,
strategic partnerships, new operating processes and strategic
planning. With a refreshed and very experienced Board, we are
ready for 2014 which we see as our break-out year."
Fiscal Year
Comparison
Total revenue for the year ended December 31, 2013 was $1.99
million, as compared to $3.84 million for the year ended December
31, 2012, a decrease of 48%. 2013 license and hardware revenue
totaled approximately $1.0 million and fell roughly 64% year over
year, while 2013 service revenue of $988,002 fell 10% from $1.1
million in 2012.
FY'13 gross margin of 81%, fell slightly from 85% in 2012,
primarily as a result of lower license revenue as percentage of
total revenue. FY'13 operating expense increased to $4.1
million, from $3.2 million. S,G&A expense increased to
$2.8 million in 2013, from $2.3 million in 2012, largely as a
result of a one-time reversal of reserves for doubtful accounts in
Q3'12 in the amount of $300,000, and non-recurring legal
expense in Q1'13 of $130,000 related to the InterDigital
transaction. FY'13 R&D expense increased 42%, to $1.34
million from $947,000 in 2012 as new customer integrations and
project development requirements increased. Net loss for 2013
was $2.6 million, or ($0.03) per diluted share, as compared to
break-even in 2012.
Liquidity and Capital
Resources
The Company reported cash and cash equivalents of $2.02 million
as of December 31, 2013, as compared to $83,989 at December 31,
2012. BIO-key has no long-term debt. Mr. DePasquale concluded,
"Not only is BIO-key in its strongest financial position in years,
but we are operationally prepared to capitalize on increased market
demand and substantially grow our business. Our pipeline is
expanding and we are executing well on our strategic plan. We
believe our sales visibility and prospects for both growth and more
consistent revenue performance are improving, such that we can
provide some guidance for our shareholders. We've got more
work to do, but I've never been more excited about our
prospects for Q1 and beyond."
2014 First Quarter
Outlook For the First Quarter of 2014, the Company expects
revenue between $1.2 million and $1.4 million. Gross margin is
expected to exceed 85%. The Company expects to generate
operating income and net profit for the quarter. Further, the
Company expects to exit the first quarter with a modest sales
backlog. The pipeline value was approximately $12 million at
the beginning of the quarter and approximately $15 million at
quarter-end.
Conference Call and
Webcast
In conjunction with this release, BIO-key has scheduled a
conference call, which will be broadcast live over the Internet on
Tuesday, April 1, 2014 at 10:00 a.m. Eastern Daylight
Time. Participate live via phone by dialing 1-877-317-6789 (U.S.)
1-412-317-6789
(International) and asking for the BIO-key Call at least 10 minutes
prior to the start time. Or join the call live over the Internet by
logging on to the web address http://www.bio-key.com. A
streaming audio replay of the webcast will be available shortly
after the call on www.bio-key.com for a period of thirty days. You
can also access the recorded call by dialing 1-877-344-7529 and
using access code 10043330. International callers should dial
1-412-317-0088 and
use the same access code.
|
BIO-key International, Inc. and Subsidiary |
CONSOLIDATED BALANCE SHEETS |
|
|
December 31, |
|
|
|
2013 |
|
|
2012 |
|
ASSETS |
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
2,023,349 |
|
|
$ |
83,989 |
|
Accounts receivable, net of allowance for doubtful accounts of
$20,526 at December 31, 2013 and December 31, 2012 |
|
|
284,025 |
|
|
|
604,784 |
|
Due
from factor |
|
|
2,449 |
|
|
|
189,904 |
|
Inventory |
|
|
9,376 |
|
|
|
4,186 |
|
Prepaid expenses and other |
|
|
73,482 |
|
|
|
25,088 |
|
Total
current assets |
|
|
2,392,681 |
|
|
|
907,951 |
|
Equipment and leasehold improvements, net |
|
|
125,062 |
|
|
|
24,267 |
|
Deposits and other assets |
|
|
8,712 |
|
|
|
8,712 |
|
Intangible assets--less accumulated amortization |
|
|
174,950 |
|
|
|
195,911 |
|
Total
non-current assets |
|
|
308,724 |
|
|
|
228,890 |
|
TOTAL
ASSETS |
|
$ |
2,701,405 |
|
|
$ |
1,136,841 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
540,912 |
|
|
$ |
931,276 |
|
Accrued liabilities |
|
|
338,321 |
|
|
|
593,599 |
|
Deferred revenue |
|
|
528,160 |
|
|
|
508,520 |
|
Note
payable - related party |
|
|
- |
|
|
|
321,428 |
|
Total
current liabilities |
|
|
1,407,393 |
|
|
|
2,354,823 |
|
Warrant liabilities |
|
|
243,077 |
|
|
|
- |
|
TOTAL
LIABILITIES |
|
|
1,650,470 |
|
|
|
2,354,823 |
|
|
|
|
|
|
|
|
|
|
Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUIY (DEFICIT) |
|
|
|
|
|
|
|
|
Common stock -- authorized, 170,000,000 shares; issued and
outstanding; 115,842,315 and 78,155,413 of $.0001 par value at
December 31, 2013 and December 31, 2012, respectively |
|
|
11,584 |
|
|
|
7,815 |
|
Additional paid-in capital |
|
|
55,909,923 |
|
|
|
51,062,624 |
|
Accumulated deficit |
|
|
(54,870,572 |
) |
|
|
(52,288,421 |
) |
TOTAL
STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
1,050,935 |
|
|
|
(1,217,982 |
) |
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
$ |
2,701,405 |
|
|
$ |
1,136,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BIO-key International, Inc. and Subsidiary |
CONSOLDIATED STATEMENTS OF OPERATIONS |
|
|
|
Years ended December 31, |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Services |
|
$ |
988,003 |
|
|
$ |
1,094,731 |
|
License fees and other |
|
|
997,973 |
|
|
|
2,741,162 |
|
|
|
|
1,985,976 |
|
|
|
3,835,893 |
|
Costs and other expenses |
|
|
|
|
|
|
|
|
Cost of services |
|
|
145,702 |
|
|
|
221,027 |
|
Cost of license fees and other |
|
|
241,326 |
|
|
|
350,706 |
|
|
|
|
387,028 |
|
|
|
571,733 |
|
Gross Profit |
|
|
1,598,948 |
|
|
|
3,264,160 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
2,776,559 |
|
|
|
2,288,903 |
|
Research, development and engineering |
|
|
1,344,070 |
|
|
|
947,371 |
|
|
|
|
4,120,629 |
|
|
|
3,236,274 |
|
Operating (loss) income |
|
|
(2,521,681 |
) |
|
|
27,886 |
|
|
|
|
|
|
|
|
|
|
Other income (deductions) |
|
|
|
|
|
|
|
|
Interest income |
|
|
7 |
|
|
|
7 |
|
Interest expense |
|
|
(29,281 |
) |
|
|
(24,626 |
) |
Gain on derivative liabilities |
|
|
78,812 |
|
|
|
- |
|
Income taxes |
|
|
(2,805 |
) |
|
|
- |
|
Amortization of deferred costs |
|
|
(107,203 |
) |
|
|
- |
|
|
|
|
(60,470 |
) |
|
|
(24,619 |
) |
Net income (loss) |
|
$ |
(2,582,151 |
) |
|
$ |
3,267 |
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted (Loss) Income per Common Share: |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding: |
|
|
|
|
|
|
|
|
Basic and Diluted |
|
|
91,791,690 |
|
|
|
78,155,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BIO-key International, Inc. and Subsidiary |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
Years ended December 31, |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2,582,151 |
) |
|
$ |
3,267 |
|
Adjustments to reconcile net (loss) income to cash
(used for) provided by operating activities: |
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
|
- |
|
|
|
(377,000 |
) |
Depreciation |
|
|
28,618 |
|
|
|
28,603 |
|
Amortization |
|
|
|
|
|
|
|
|
Intangible assets |
|
|
20,961 |
|
|
|
11,269 |
|
Deferred costs |
|
|
107,203 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
81,642 |
|
|
|
49,842 |
|
|
Derivative |
|
|
(78,812 |
) |
|
|
- |
|
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable trade |
|
|
320,759 |
|
|
|
359,562 |
|
Due from factor |
|
|
187,455 |
|
|
|
(189,904 |
) |
Inventory |
|
|
(5,190 |
) |
|
|
4,051 |
|
Prepaid expenses and other |
|
|
(48,394 |
) |
|
|
33,833 |
|
Accounts payable |
|
|
(480,364 |
) |
|
|
243,835 |
|
Accrued liabilities |
|
|
(255,278 |
) |
|
|
(82,234 |
) |
Deferred revenue |
|
|
19,640 |
|
|
|
(19,572 |
) |
Net cash (used for) provided by operating
activities |
|
|
(2,683,911 |
) |
|
|
65,552 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(129,413 |
) |
|
|
- |
|
Net cash used for investing activities |
|
|
(129,413 |
) |
|
|
- |
|
CASH FLOW FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Issuances of common stock |
|
|
5,649,793 |
|
|
|
- |
|
Repayment of notes payable - related party |
|
|
(321,428 |
) |
|
|
(25,000 |
) |
Proceeds from issuance of Note Payable |
|
|
497,307 |
|
|
|
- |
|
Repayment of Note Payable |
|
|
(497,307 |
) |
|
|
- |
|
Costs to issue common stock and Note Payable |
|
|
(575,681 |
) |
|
|
- |
|
Net cash provided by (used for) financing
activities |
|
|
4,752,684 |
|
|
|
(25,000 |
) |
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
1,939,360 |
|
|
|
40,552 |
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR |
|
|
83,989 |
|
|
|
43,437 |
|
CASH AND CASH EQUIVALENTS, END OF YEAR |
|
$ |
2,023,349 |
|
|
$ |
83,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About BIO-key BIO-key International, Inc., headquartered
in Wall, New Jersey, develops and delivers advanced identification
solutions to commercial and government enterprises, integrators,
and custom application developers. BIO-key's award winning, high
performance, scalable, cost-effective and easy-to-deploy biometric
finger identification technology accurately identifies and
authenticates users of wireless and enterprise applications. Our
solutions are used in local embedded OEM products as well as some
of the world's largest identification deployments to improve
security, guarantee identity, and help reduce identity
theft. BIO-key's technology is offered directly or by market
leading partners around the world. (http://www.bio-key.com)
BIO-key Safe Harbor Statement Certain statements contained in
this press release 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 subject to certain risks and
uncertainties that may cause actual results to differ materially
from those projected on the basis of these statements. These
risks and uncertainties include, without limitation, our history of
losses and limited revenue, our ability to develop new products and
evolve existing ones, wider market acceptance of biometric
technologies, our ability to raise additional financing, and our
ability to attract and retain key personnel. For a more
complete description of these and other risk factors that may
affect the future performance of BIO-key International, Inc., see
"Risk Factors" in the Company's Annual Report on Form 10-K for the
year ended December 31, 2013 and its 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. The Company undertakes no
obligation to disclose any revision to these forward-looking
statements whether to reflect events or circumstances after the
date hereof or otherwise.
Contacts: BIO-key
International, Inc. Jay Meier VP Corporate Development
651-789-6116
Jay.meier@bio-key.com
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