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): August 14, 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 August 14, 2015, BIO-key International, Inc. (the “Company”) issued a press release announcing its financial results for its second quarter of 2015. A copy of the press release issued by the Company on August 14, 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 August 14, 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: August 14, 2015

By:

/s/ Cecilia C. Welch

 

 

 

Cecilia C. Welch

 

 

 

Chief Financial Officer

 

 

 
 

 

 

EXHIBIT INDEX

 

Exhibit No. Description
   

99.1

Press Release, dated August 14, 2015, issued by the Company.

 

 

 

 

 



Exhibit 99.1

 

 

 

 NEWS RELEASE

 

Fingerprint Biometric Provider BIO-key Reports Record

 

Revenue of $2.3M and Net Income of $753,000 for Q2 2015

 

Confirms 2015 Revenue Guidance of $5M - $7M

 

Wall, NJ, August 14, 2015 – BIO-key International, Inc. (OTCQB: BKYI), a leading fingerprint biometric identification software and technology provider, today reported record results for its second quarter ended June 30, 2015 and will host a conference call today at 10:00 a.m. EDT, details below.

 

Q2 Highlights:

 

Q2 ‘15 revenue increased to $2,272,804 compared to $402,879 in Q2 ’14, principally reflecting a $2.0 million license order from an existing international customer.

 

Q2 ’15 net income rose to $753,000, or $0.01 per basic and diluted share, compared to a net loss of $1,026,286, or ($0.02) per basic and diluted share, in Q2 ’14.

 

Executed a Memorandum of Understanding with an existing strategic partner Worldwide Touch Technology Holdings Limited regarding a proposed equity investment in BIO-key.

 

Michael DePasquale, Chairman and CEO of BIO-key commented, “BIO-key continues to see growth in demand for our products as enterprises and governments move to deploy stronger user authentication technologies. Network breaches, identity theft and fraud are on the rise as traditional password and other single factor authentication methods continue to fail. BIO-key’s proven, scalable and highly secure fingerprint biometric software solutions directly address this problem, providing security and convenience in a cost effective manner.”

 

“Our favorable growth outlook is supported by a steady increase in customer dialogues across healthcare, financial services, mobile communications and government markets. The prospects are considering deployment of fingerprint biometrics to solve key cybersecurity, regulatory and fraud prevention goals. While we continue to expect variability in our quarterly operating results due to the size and timing of potential deals in our pipeline, we remain confident that we will achieve our full year revenue guidance of between 5 and 7 million and expect cash flow breakeven at or above revenue of 6.5 million,” stated DePasquale.

 

“As previously announced and to support BIO-key’s ability to capitalize on growing industry demand, we are in discussions with Worldwide Touch Technology, an existing BIO-key partner with substantial reach in Asia, regarding a strategic partnership and substantial capital infusion. We believe this relationship would substantially broaden our distribution reach while providing additional capital and opportunities to jointly develop new products based on our collective biometric technologies.”

 

 
 

 

 

Q2 Results

BIO-key’s Q2 ’15 license fee revenue increased to $2,017,535 from $121,078 in Q2 ‘14, principally reflecting a large telecommunications license signed in Q2 ’15. Service revenues decreased slightly to $255,269 in Q2’15 from $281,711 in Q2’14. Total revenue for Q2 ’15 increased to $2,272,804 compared to $402,789 in Q2’14. In Q2, sales in highly regulated industries represented approximately 83% of total sales, with the OEM channel representing approximately 80% of total sales.

 

Q2’15 gross margin increased to 94% from 60% in Q2’14, principally due to the substantial increase in high-margin software license revenue. Q2 ’15 operating expenses rose 1% to $1,373,860 from $1,366,035 in Q2 ’14, reflecting increases in selling, general and administrative and reductions in research, development and engineering expense.

 

BIO-key reported Q2’15 net income of $753,146, or $0.01 per basic and diluted share, compared to a net loss of ($1,026,286), or ($0.02) per basic and diluted share, in Q2’14. Share and per-share figures have been adjusted to reflect a February 2015 1-for-2 reverse split.

 

Liquidity and Capital Resources

BIO-key had total current assets of $2,445,334, including cash and cash equivalents of $282,376, at June 30, 2015, compared to total current assets $1,793,884, including cash and cash equivalents $843,632 at December 31, 2014. BIO-key expects to receive proceeds from the $2.0M license order, net of factored amounts, during Q3 ’15. Net cash used for operations during the six months ended June 30, 2015 was ($505,599) compared to ($1,350,089) in the six months ended June 30, 2014.

 

2015 Financial Guidance

 

BIO-key remains on track to achieve its full year 2015 revenue guidance range of $5.0 million to $7.0 million, compared to revenue of $4.0 million in 2014. The Company’s 2015 year-to-date revenue is tracking to the midpoint of its full year guidance range. BIO-key currently expects its Q3 revenue to range between $700,000 and $1.5 million, versus $1.3 million in Q3 ’14. 

 

Gross margin is expected to range between 75% and 80% in the Q3 and full year 2015 periods and BIO-key continues to believe it can achieve breakeven on a cash basis with annual revenues of roughly $6.5 million. Given the variability in the timing and size of potential contracts within the Company’s sales opportunity pipeline, BIO-key’s quarterly financial performance will likely vary significantly from quarter to quarter.

 

Underlying the Company’s 2015 financial guidance is its opportunity pipeline (the aggregate total of all deal opportunities that could book as revenue over the next twelve months), which is currently valued at $25.0 million, as compared to $25.0 million at December 31, 2014, and $30.0 million at March 31, 2015.

 

Conference Call and Webcast Replay
   

Date/Time:

Friday, August 14, 2015 at 10:00 a.m. EDT

   
Dial-In number:  877-418-5460 or 412-717-9594, ask for BIO-key call
   
Webcast Replay:    Available shortly after call at www.bio-key.com/events
   
Call Replay:  877-344-7529 U.S., 855-669-9568 Canada, 412-317-0088 Intl.
  Access code: 10070824

    

 
 

 

 

About BIO-key

BIO-key International, Inc. develops and delivers advanced fingerprint biometric identification solutions to commercial and government enterprises, integrators, and 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 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 may be construed as “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, the impact on our business of the recent financial crisis in the global capital markets and negative global economic trends, 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, 2014 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 also undertakes no obligation to disclose any revision to these forward-looking statements to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

 

 

Investor & Media Contacts:

 

Jay Meier, VP Corporate Development 

David Collins, Tanya Kamatu

BIO-key Intl, Inc.

Catalyst Global

651-789-6116                           212-924-9800
Jay.meier@bio-key.com  bkyi@catalyst-ir.com

 

 
 

 

  

FINANCIAL INFORMATION

 

BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

June 30,

2015

   

December 31,

2014

 
   

(Unaudited)

         

ASSETS

               

Cash and cash equivalents

  $ 282,376     $ 843,632  

Accounts receivable, net of allowance for doubtful accounts of $20,526 at June 30, 2015 and December 31, 2014

    133,985       625,341  

Due from factor

    1,542,184       76,657  

Inventory

    412,569       11,825  

Prepaid expenses and other

    74,220       236,429  

Total current assets

    2,445,334       1,793,884  

Equipment and leasehold improvements, net

    84,317       103,509  

Deposits and other assets

    8,712       8,712  

Intangible assets—less accumulated amortization

    154,541       161,344  

Total non-current assets

    247,570       273,565  

TOTAL ASSETS

  $ 2,692,904     $ 2,067,449  
                 

LIABILITIES

               

Accounts payable

  $ 869,114     $ 347,311  

Accrued liabilities

    436,293       488,617  

Deferred revenue

    601,751       429,233  

Warrant liabilities

    28,974       43,227  

Total current liabilities

    1,936,132       1,308,388  

TOTAL LIABILITIES

    1,936,132       1,308,388  
                 

Commitments and contingencies

               
                 

STOCKHOLDERS’ EQUITY

               

Common stock — authorized, 170,000,000 shares; issued and outstanding; 66,001,260 of $.0001 par value at June 30, 2015 and December 31, 2014

    6,600       6,600  

Additional paid-in capital

    57,675,273       57,506,605  

Accumulated deficit

    (56,925,101

)

    (56,754,144

)

TOTAL STOCKHOLDERS’ EQUITY

    756,772       759,061  

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

  $ 2,692,904     $ 2,067,449  

 

 
 

 

  

BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   

Three months ended

June 30,

   

Six months ended

June 30,

 
   

2015

   

2014

   

2015

   

2014

 
                                 

Revenues

                               

Services

  $ 255,269     $ 281,711     $ 505,622     $ 530,942  

License fees and other

    2,017,535       121,078       2,416,008       1,239,369  
      2,272,804       402,789       2,921,630       1,770,311  

Costs and other expenses

                               

Cost of services

    56,905       113,105       123,968       152,280  

Cost of license fees and other

    88,489       48,146       160,782       126,195  
      145,394       161,251       284,750       278,475  

Gross Profit

    2,127,410       241,538       2,636,880       1,491,836  
                                 

Operating Expenses

                               

Selling, general and administrative

    979,861       895,147       2,020,542       1,752,143  

Research, development and engineering

    393,999       470,888       800,640       957,545  
      1,373,860       1,366,035       2,821,182       2,709,688  

Operating profit (loss)

    753,550       (1,124,497

)

    (184,302

)

    (1,217,852

)

Other income (expenses)

                               

Interest income

    2       2       4       3  

Gain (loss) on derivative liabilities

    (406

)

    98,209       14,253       (106,739

)

Income taxes

    -       -       (912

)

    (912

)

Total other income (expenses)

    (404

)

    98,211       13,345       (107,648

)

Net profit (loss)

  $ 753,146     $ (1,026,286

)

  $ (170,957

)

  $ (1,325,500

)

                                 

Basic and Diluted Earnings (Loss) per Common Share

  $ 0.01     $ (0.02

)

  $ (0.00

)

  $ (0.02

)

                                 

Weighted Average Shares Outstanding:

                               

Basic and diluted

    66,001,260       58,001,934       66,001,260       57,970,309  

 

 
 

 

 

BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   

Six Months Ended June 30,

 
   

2015

   

2014

 
                 

CASH FLOW FROM OPERATING ACTIVITIES:

               

Net loss

  $ (170,957

)

  $ (1,325,500

)

Adjustments to reconcile net loss to cash used in operating activities:

               

Depreciation

    21,270       20,016  

Amortization

               

Intangible assets

    6,803       6,803  

Deferred costs

    -       -  

Loss (gain) on derivative liabilities

    (14,253

)

    106,739  

Share-based and warrant compensation

    222,247       132,218  

Exercise of stock options

    -       14,651  

Change in assets and liabilities:

               

Accounts receivable trade

    491,356       (100,794

)

Due from factor, net

    (1,465,527

)

    (18,678

)

Inventory

    (400,744

)

    (12,873

)

Prepaid expenses and other

    162,209       (709

)

Accounts payable

    521,803       (188,850

)

Accrued liabilities

    (52,324

)

    39,324  

Deferred revenue

    172,518       (22,436

)

Net cash used for operating activities

    (505,599

)

    (1,350,089

)

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Capital expenditures

    (2,078

)

    (5,501

)

Net cash used for investing activities

    (2,078

)

    (5,501

)

CASH FLOW FROM FINANCING ACTIVITIES:

               

Repurchase of outstanding warrants

    -       (150,000

)

Costs to issue common stock

    (53,579

)

    -  

Net cash used for financing activities

    (53,579

)

    (150,000

)

NET DECREASE IN CASH AND CASH EQUIVALENTS

    (561,256

)

    (1,505,590

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

    843,632       2,023,349  

CASH AND CASH EQUIVALENTS, END OF PERIOD

  $ 282,376     $ 517,759  

 

 

 

 

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