UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 20, 2015

 

 

BIO-key International, Inc.

(Exact name of registrant as specified in its charter)

 
 

Delaware

(State or other jurisdiction of incorporation)

1-13463

(Commission File Number)

41-1741861

(I.R.S. Employer Identification No.)

 
 

 3349 Highway 138, Building A, Suite E

Wall, NJ 07719

(Address of principal executive offices)

 
 

 (732359-1100

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

 

Item 2.02.     Results of Operations and Financial Condition.

 

On March 20, 2015, BIO-key International, Inc. (the “Company”) issued a press release announcing its financial results for its fourth quarter and fiscal year of 2014. A copy of the press release issued by the Company on March 20, 2015 is attached as Exhibit 99.

 

                The information, including the exhibit attached hereto, in this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise expressly stated in such filing.

 

 

Item 9.01.     Financial Statements, Pro Forma Financial Information and Exhibit.

 

(d)       Exhibits

 

99.1     Press Release, dated March 20, 2015, issued by the Company.

  

 
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

BIO-KEY INTERNATIONAL, INC. 

 

Date: March 20, 2015 

 

 

 

 

By: 

/s/ Cecilia C. Welch 

 

 

 

Cecilia C. Welch 

 

 

 

Chief Financial Officer 

 

 

 
 

 

 

EXHIBIT INDEX

 

         

 

Exhibit No.  Description
   

99.1

Press Release, dated March 20, 2015, issued by the Company.



Exhibit 99.1

 

 NEWS RELEASE

 

BIO-key® 2014 Revenue Grew 102% to $4.0M; Strong Sales

Pipeline Supports Revenue Guidance of $5M - $7M for 2015

 

Wall, NJ, March 20, 2015 – BIO-key International, Inc. (OTCQB: BKYI), a leader in fingerprint biometric identification technologies, cloud-based mobile credentialing and identity verification solutions, today reported record financial results its fourth quarter (Q4’14) and year ended December 31, 2014 and initiated financial guidance for 2015. The Company will host a conference call today at 10:00 a.m. EDT, details below.

 

Fiscal 2014 Highlights: 

Revenue growth of 102% over 2013 while holding administrative expenses at less than 2% above 2013 levels.

Strategic agreements with IDEX and NEXT Biometrics Group ASA, emerging fingerprint sensor manufacturers for the Mobile and Internet-of-Things Industries.

The launch of two finger sensors, SideSwipe™ and DASH, offered at price-points 50% less than traditional fingerprint readers available in the market today.

A collaboration agreement with Experian whereby BIO-key technology can provide fingerprint biometric authentication for Experian’s next generation fraud platform, Precise ID.

Agreements with roughly 20 top-tier IAM channel partners, integration partners and resellers.

Introduced and demonstrated along with InterDigital, a groundbreaking multifactor authentication (MFAS) solution, incorporating BIO-key’s fingerprint technology for the Android mobile platform at Mobile World Congress 2014 in Barcelona, Spain.

 

“We achieved strong sales growth in 2014, and despite the continued variations in the business quarter-to-quarter, we expect 2015 to be another record year,” stated Michael DePasquale, BIO-key Chairman and CEO. “We have two primary goals for 2015; to grow profitable revenue rapidly and implement rigorous internal business processes and best practices, to ensure the most consistent and predictable outcomes as the business grows in 2015 and beyond. Even after doubling our revenue in 2014, our pipeline remains robust and we expect our momentum to continue.”

 

Mr. DePasquale concluded, “Our 2015 Strategic Plan calls for several things, but mainly focuses on disciplined execution in sales and operations. We are targeting highly regulated industries in the U.S., in particular healthcare, in addition to our OEM business, including Mobility, Identity & Access Management vendors and VARs. Internally, we are implementing structure and processes to reduce risk. With so much momentum in the industry, we believe we can maintain strong growth through 2015”

 

Q4 Results  

Total revenue for the three months ended December 31, 2014 was $951,698, compared to $327,500 in Q4’13, an increase of approximately 191%. Sales grew largely as a result of substantially higher license sales, higher hardware sales and service sales, while maintenance sales held firm. License and service sales grew largely as a result of OEM partnerships with fingerprint sensor vendors.

 

Q4’14 gross margin was essentially unchanged at 76% as compared to 78% in Q4’13. Operating expenses for Q4’14 increased 9%, to $1,272,024 from $1,163,961 in Q4’13, while administrative expenses decreased marginally. Q4’14 net loss decreased approximately 45% to ($506,546) from ($929,188) in Q4’13, and loss per share was ($0.01) versus ($0.02) in Q4’13.

  

 
 

 

 

2014 Results  

Total revenue for the year ended December 31, 2014 increased 102% to $4,005,856 as compared to $1,985,976 for the year ended December 31, 2013. Sales increased primarily as a result of higher license and service sales with OEM fingerprint sensor manufacturers, offsetting a slight reduction in maintenance revenue.

 

We maintained gross margins at 81% in 2014 as compared to 80% in 2013. Operating expenses for the period increased 29%, year over year, to $5,296,226, from $4,120,629 in 2013. Operating expenses rose primarily due to increased variable selling expenses and higher R&D and marketing expenses, while administrative expense remained relatively constant. Net loss for the year ended December 31, 2014 was ($1,883,572), or ($0.03) per share, which decreased from a net loss of ($2,582,151), or ($0.06) per share, for the year ended December 31, 2013.

 

Liquidity and Capital Resources

The Company reported cash, cash equivalents, and accounts receivable of $1,468,973 at December 31, 2014, as compared to $2,307,374 at December 31, 2013. Net cash used for operations during FY ’14 was approximately $2.5 million, as compared to approximately $2.7 million during FY ’13. The Company issued common shares and warrants to raise approximately $1.6 million in FY ’14, as compared to approximately $5.6 million in Q4 ’13

 

Q1’15 and 2015 Guidance 

For the first quarter of 2015, the Company expects revenue between $0.5 million and $1.0 million and gross margin of approximately 75%-80%. For the 2015 Fiscal Year, the Company expects revenue between $5.0 million and $7.0 million and gross margin of approximately 75%-80%. Further, the Company expects break-even run rates of $6.5-$7.0 million for the year. As of December, 31, 2014, the Company’s opportunity pipeline was valued at $25 million, as compared to $12.7 million at December 31, 2013.

 

Conference Call and Webcast Replay

 

Date/Time:  

Friday March 20, 2015 at 10am EDT 

 

 

Dial-In number:   

1-877-418-5460 (U.S.), 412-717-9594 (Intl.), ask for the BIO-key call 

 

 

Webcast Replay: 

available shortly after the call at www.bio-key.com 

 

 

Call Replay:  

1-877-344-7529 (U.S.), 1-855-669-9568 (Canada), 1-412-317-0088 (Intl.)

Access code: 10055289. 


Investor & Media Contacts: 

 

Jay Meier, VP Corporate Development     

David Collins 

BIO-key Intl, Inc. 

Catalyst Global 

651-789-6116  

212-924-9800 

Jay.meier@bio-key.com 

bkyi@catalyst-ir.com 

 

 
 

 

 

BIO-key International, Inc. and Subsidiary

CONSOLIDATED BALANCE SHEETS

 

   

December 31,

 
   

2014

   

2013

 

ASSETS

               

Cash and cash equivalents

  $ 843,632     $ 2,023,349  

Accounts receivable, net

    625,341       284,025  

Due from factor

    76,657       2,449  

Inventory

    11,825       9,376  

Prepaid expenses and other

    236,429       73,482  

Total current assets

    1,793,884       2,392,681  

Equipment and leasehold improvements, net

    103,509       125,062  

Deposits and other assets

    8,712       8,712  

Intangible assets—less accumulated amortization

    161,344       174,950  

Total non-current assets

    273,565       308,724  

TOTAL ASSETS

  $ 2,067,449     $ 2,701,405  
                 

LIABILITIES

               

Accounts payable

  $ 347,311     $ 540,912  

Accrued liabilities

    488,617       338,321  

Deferred revenue

    429,233       528,160  

Warrant liabilities

    43,227       -  

Total current liabilities

    1,308,388       1,407,393  

Warrant liabilities

    -       243,077  

TOTAL LIABILITIES

    1,308,388       1,650,470  
                 

Commitments

               
                 

STOCKHOLDERS’ EQUITY (DEFICIT)

               

Common stock — authorized, 170,000,000 shares; issued and outstanding; 66,001,260 and 57,921,259 of $.0001 par value at December 31, 2014 and December 31, 2013, respectively

    13,200       11,584  

Additional paid-in capital

    57,500,005       55,909,923  

Accumulated deficit

    (56,754,144

)

    (54,870,572

)

TOTAL STOCKHOLDERS’ EQUITY

    759,061       1,050,935  

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

  $ 2,067,449     $ 2,701,405  

 

All per-share amounts and BIO-key shares outstanding for all periods reflect BIO-key’s 1-for-2 reverse stock split, which was effective February 3, 2015.

 

 
 

 

 

  BIO-key International, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF OPERATIONS

 

   

Years ended December 31,

 
   

2014

   

2013

 
                 

Revenues

               

Services

  $ 1,489,820     $ 988,003  

License fees and other

    2,516,036       997,973  
      4,005,856       1,985,976  

Costs and other expenses

               

Cost of services

    445,803       145,702  

Cost of license fees and other

    302,947       241,326  
      748,750       387,028  

Gross Profit

    3,257,106       1,598,948  
                 

Operating expenses

               

Selling, general and administrative

    3,670,090       2,776,559  

Research, development and engineering

    1,626,136       1,344,070  
      5,296,226       4,120,629  

Operating loss

    (2,039,120

)

    (2,521,681

)

                 

Other income (deductions)

               

Interest income

    7       7  

Interest expense

    -       (136,484

)

Gain on derivative liabilities

    157,253       78,812  

Income taxes

    (1,712

)

    (2,805

)

      155,548       (60,470

)

Net loss

  $ (1,883,572

)

  $ (2,582,151

)

                 

Basic and Diluted Loss per Common Share:

  $ (0.03

)

  $ (0.06

)

                 

Weighted Average Shares Outstanding:

               

Basic and Diluted

    59,047,282       45,895,946  

 

All per-share amounts and BIO-key shares outstanding for all periods reflect BIO-key’s 1-for-2 reverse stock split, which was effective February 3, 2015.

 

 

 

 

 
 

 

 

BIO-key International, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   

Years ended December 31,

 
   

2014

   

2013

 
                 

CASH FLOW FROM OPERATING ACTIVITIES:

               

Net (loss) income

  $ (1,883,572

)

  $ (2,582,151

)

Adjustments to reconcile net (loss) income to cash used for operating activities:

               

Allowance for doubtful accounts

    -       -  

Depreciation

    28,618       28,618  

Amortization:

               

Intangible assets

    40,186       20,961  

Deferred costs

    -       107,203  

Share-based compensation

    207,258       81,642  

Gain on derivative liabilities

    (157,253

)

    (78,812

)

Change in assets and liabilities:

               

Accounts receivable trade

    (341,316

)

    320,759  

Due from factor

    (74,208

)

    187,455  

Inventory

    (2,449

)

    (5,190

)

Prepaid expenses and other

    (162,647

)

    (48,394

)

Accounts payable

    (193,601

)

    (480,364

)

Accrued liabilities

    150,296       (255,278

)

Deferred revenue

    (98,927

)

    19,640  

Net cash used for operating activities

    (2,502,927

)

    (2,683,911

)

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Capital expenditures

    (18,633

)

    (129,413

)

Net cash used for investing activities

    (18,633

)

    (129,413

)

CASH FLOW FROM FINANCING ACTIVITIES:

               

Issuances of common stock

    1,595,000       5,649,793  

Repurchase of outstanding warrants

    (150,000

)

    -  

Costs to issue common stock and Note Payable

    (103,157

)

    (575,681

)

Repayment of notes payable – related party

    -       (321,428

)

Proceeds from issuance of Note Payable

    -       497,307  

Repayment of Note Payable

    -       (497,307

)

Net cash provided by financing activities

    1,341,843       4,752,684  

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

    (1,179,717

)

    1,939,360  

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

    2,023,349       83,989  

CASH AND CASH EQUIVALENTS, END OF YEAR

  $ 843,632     $ 2,023,349  

  

 
 

 

 

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 and in other public statements by the Company and Company officers include or may contain certain forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “will,” “may,” “future,” “plan,” “intend” and “expect” and similar expressions generally identify forward-looking statements. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Although we believe that our plans, intentions and expectations reflected in the forward-looking statements are reasonable, we cannot be sure that they will be achieved. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: 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; 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 “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Except as required by law, we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

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