BIO-key International, Inc. (Nasdaq: BKYI), an
innovative provider of workforce and customer identity and access
management (IAM) solutions featuring Identity-Bound Biometrics
(IBB) and large-scale identity solutions, today reported results
for its third quarter and nine months ended September 30, 2021
(Q3’21). BIO-key will host a conference call tomorrow at 10:00 a.m.
ET (details below) to review its results and outlook.
Recent Customer Wins
- Orange County, FL Supervisor of Elections Expands Biometrics
use with PortalGuard® to Secure Election Data Access
- University of Denver and Oklahoma Wesleyan select PortalGuard
IAM for Enterprise-wide Secure, Frictionless Portal and Application
Access
Growing Channel Alliance Partner (CAP)
Program
- Nation’s leading provider of technology services and solutions,
Intelisys, joins CAP program
- Cyberlitica, a provider of advanced cyber threat intelligence
services for enterprise, government and consumer markets, joins CAP
program.
Product Launches and Awards
- BIO-key Launches FIDO2 Compliant Security Keys
- Expands Fingerprint Scanner Line with Next-Generation EcoID II
USB Compact
- Unveils MobilePOS Pro Android All-in-one Terminal for
Biometric-Secured Commerce
- PortalGuard Wins 2021 Cybersecurity Breakthrough Award “Access
Management Solution of the Year”
- BIO-key MobileAuth™ with PalmPositive™ wins Lucintel 2021
Technology Innovation Award in Biometric Market Category
BIO-key CEO Michael DePasquale commented, “We
are pleased with the progress of our core business in Q3, as we
continued to generate increasing demand for our cloud-based
PortalGuard identity and access control solution. We substantially
expanded the reach of our Channel Alliance Partner program through
a Master Agent Referral Partner Program with Intelisys. PortalGuard
is now the first IAM platform to be offered by Intelisys to its
extensive partner network, providing a potentially transformational
opportunity to expand our customer engagement. We have added over
40 partners to the CAP program this year, bringing us over 100
partners to significantly extend our reach into new and existing
markets. “We launched the cloud-hosted version of
PortalGuard in late 2020 and we are achieving solid new customer
engagement, particularly in higher education, enterprise, and
election security verticals. PortalGuard supports sixteen
multi-factor authentication methods, including BIO-key’s advanced
biometric solutions. The strength of PortalGuard IDaaS and our
biometric solutions resulted in Florida’s Orange County Supervisor
of Elections Office selecting our platform to secure access to
voter data files in Florida’s fifth-largest county, building on
their earlier deployment of our FIPS-compliant fingerprint scanner
solutions.
“Within higher education sector, PortalGuard
IDaaS continues to gain momentum for providing a strong, user
friendly, cost effective, and quick to deploy solution for the IT
security challenges posed by large user populations outside an
organization’s firewall. We have migrated over 10% of more than 200
active PortalGuard customers to our cloud solution and expect this
move to the cloud to continue. Importantly, the growth in our cloud
solution deployments provides BIO-key with a growing base of
recurring software subscription revenue, which now represents
approximately 80% of our total software and service revenue.
“Looking to the future, we continued to invest
in new product development and innovation which enabled the launch
of several products during the third quarter, including our new
MobilePOS Pro, a handheld, biometrically enabled, durable Android
Point-of-Sale terminal and MobilePOS Pro, a new and exciting
extension of BIO-keys’ technology and solutions. It enables mobile,
in-person commerce to enable banking, social- and aid-worker and
healthcare applications, supported by biometric ID verification for
secure, fraud-free transactions. We also launched an all-new lineup
of BIO-key cryptographic FIDO2 compliant security keys to expand
our authentication options and debuted our EcoID II compact USB
fingerprint scanner utilizing new NIST-tested algorithms for
improved scanning, image capture, and user experience.
“I am also proud of various industry awards that
BIO-key has recently received for our solutions, as well as for our
organization being CertifiedTM by Great Place to Work® for the
first time.
“While our large-scale projects in Africa have
been slow in progressing, they continue to represent a tremendous
opportunity for our company. In fact, the federal government of
Nigeria recently announced it has begun training 1,850 youths
across the country on transaction mobile Point-of-Sale business. We
remain in close contact with our partners and the government there
and are assured our contracts remain in place, supported by strong
commitments to the programs. We now expect that hardware deliveries
could resume by year end and gain traction as we progress into
2022.
Outlook
“With the timetable of material revenues from
Africa pushed into 2022, we are revising our full-year 2021 revenue
guidance to a range of $5.5M to $7M; down from our prior estimated
range of $8-12M. The mid-point of this range would represent 120%
growth over 2020 revenue, in line with our growth rate so far this
year. Considering our growing portfolio of high-margin,
Software-as-a-Service solutions within the rapidly increasing
cybersecurity sector, supported by our strong capital position and
talented development and sales teams, we remain very optimistic
about our prospects going forward. We will update our revenue and
profitability goals for 2022 when we report our 2021 year-end
results.”
Financial Results
Q3’21 revenues increased $356k, or 38%, to $1.3M
from $943k in Q3’20. The increase is attributable to a $524k
increase in license fee revenues to $870K in Q3’21 from $346k in
Q3’20. Revenues also increased 31% sequentially from the $992k
achieved in Q2’21. In the first nine months of 2021, revenues
increased 136% to $4.2M from $1.8M in the first nine months of
2020. The nine-month periods are less comparable due to the
PortalGuard acquisition which closed on June 30, 2020 and COVID-19
disruptions in 2020.
Q3’21 gross profit increased $272k, or 37%, to
$1.0M from $732k in Q3’20, due primarily to license revenue growth.
Gross margin remained strong at 77.3% in Q3’21 versus 77.6% in
Q3’20, with the majority of revenue derived from high-margin
license fees in both periods.
Operating expenses increased $177k, or 10%, to
$2.0M in Q3’21 from $1.8M in Q3’20, due to increased research,
development and engineering costs, reflecting continued investment
in new product development, which was partially offset by lower
SG&A costs, reflecting the absence of one-time integration
costs incurred in connection with the acquisition of PistolStar,
initial costs associated with establishing our African subsidiary
in 2020, and legal and professional fees related to financing
transactions in 2020.
Due to revenue growth exceeding operating
expense growth, BIO-key reported a reduced operating loss of $1.0M
in Q3’21, as compared to an operating loss of $1.1K in Q3’20, an
improvement of 9%. Through the first nine months of 2021, the
company’s operating loss was $3.0M versus $3.8M in the first nine
months of 2020, an improvement of 22%.
BIO-key reported a net loss available to common
stockholders of $1.0M, or ($0.13) per share, in Q3’21, compared to
a net loss of $3.3M, or ($0.51) per share, in Q3’20. Weighted
average basic shares outstanding were approximately 7.8M in Q3’21,
as compared to 6.4M in Q3’20, reflecting a 1-for-8 reverse split in
Q4’20, following a successful capital raise in Q3’20. As a direct
result of the Company’s public offering in Q3’20, interest expense
was reduced from $2.2M in Q3’20 to zero in Q3’21.
In the first nine months of 2021, BIO-key’s net
loss to stockholders improved 64% to $3.0M from $8.4M during the
first nine months of 2020, due to lower interest expense and a
reduced operating loss.
Financial StrengthBIO-key ended
Q3’21 with current assets of $16.8M, including $9.6M of cash and
cash equivalents, and no debt outstanding. For comparison, BIO-key
had current assets of $17.3M, including $11.5M of cash and cash
equivalents, and no debt outstanding at June 30, 2021.
Conference Call Details |
|
Date /
Time: |
Tomorrow,
Tuesday, November 16th at 10 a.m. ET |
Call Dial In #: |
1-877-418-5460 U.S. or 1-412-717-9594
International |
Live Webcast / Replay: |
Investor Webcast & Replay – Available for 3 months. |
Audio Replay: |
1-877-344-7529 U.S. or 1-412-317-0088 Int’l; code 10161954 |
About BIO-key International, Inc.
(www.BIO-key.com)BIO-key has over two decades of expertise
in providing authentication technology for thousands of
organizations and millions of users and is revolutionizing
authentication with biometric-centric, multi-factor identity and
access management (IAM) solutions, including PortalGuard that
provides convenient and secure access to devices, information,
applications, and high-value transactions. BIO-key's patented
software and hardware solutions, with industry-leading biometric
capabilities, enable large-scale on-premises and
Identity-as-a-Service (IDaaS) solutions as well as customized
enterprise and cloud solutions.
BIO-key Safe Harbor
StatementAll 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 in the biometric technology and identity
access management industries; market acceptance of biometric
products generally and our products under development; our ability
to execute and deliver on contracts in Africa; our ability to
expand into Asia, Africa and other foreign markets; our ability to
integrate the operations and personnel of PistolStar into our
business; the duration and severity of the current coronavirus
COVID-19 pandemic and its effect on our business operations, sales
cycles, personnel, and the geographic markets in which we
operate; 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, 2020 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, we undertake no obligation to disclose any
revision to these forward-looking statements whether as a result of
new information, future events, or otherwise.
Engage
with BIO-key |
|
Facebook –
Corporate: |
https://www.facebook.com/BIOkeyInternational/ |
LinkedIn – Corporate: |
https://www.linkedin.com/company/bio-key-international |
Twitter – Corporate: |
@BIOkeyIntl |
Twitter – Investors: |
@BIO_keyIR |
StockTwits: |
BIO_keyIR |
Media
Contact |
Investor Contact |
Erin Knapp |
William Jones, David Collins |
Matter Communications |
Catalyst IR |
BIO-key@matternow.com |
BKYI@catalyst-ir.com |
914-260-3158 |
212-924-9800 |
BIO-KEY INTERNATIONAL, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
September 30,2021 |
|
|
December 31,2020 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,591,863 |
|
|
$ |
16,993,096 |
|
Accounts receivable, net |
|
|
1,541,239 |
|
|
|
548,049 |
|
Due from factor |
|
|
53,500 |
|
|
|
60,453 |
|
Note receivable |
|
|
- |
|
|
|
295,000 |
|
Inventory |
|
|
4,634,835 |
|
|
|
330,947 |
|
Prepaid expenses and
other |
|
|
950,552 |
|
|
|
201,507 |
|
Investment - debt
security |
|
|
- |
|
|
|
512,821 |
|
Total current assets |
|
|
16,771,989 |
|
|
|
18,941,873 |
|
Resalable software license
rights |
|
|
51,294 |
|
|
|
58,882 |
|
Equipment and leasehold
improvements, net |
|
|
71,466 |
|
|
|
81,793 |
|
Capitalized contract costs,
net |
|
|
218,596 |
|
|
|
165,315 |
|
Deposits and other assets |
|
|
8,712 |
|
|
|
8,712 |
|
Note receivable, net |
|
|
195,000 |
|
|
|
- |
|
Investment - debt
security |
|
|
482,821 |
|
|
|
- |
|
Operating lease right-of-use
assets |
|
|
313,607 |
|
|
|
487,325 |
|
Intangible assets, net |
|
|
1,352,095 |
|
|
|
1,514,146 |
|
Goodwill |
|
|
1,262,526 |
|
|
|
1,262,526 |
|
Total non-current assets |
|
|
3,956,117 |
|
|
|
3,578,699 |
|
TOTAL
ASSETS |
|
$ |
20,728,106 |
|
|
$ |
22,520,572 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,437,045 |
|
|
$ |
244,158 |
|
Accrued liabilities |
|
|
699,422 |
|
|
|
508,487 |
|
Note payable – PistolStar
acquisition, net of debt discount |
|
|
- |
|
|
|
232,000 |
|
Deferred revenue, current
portion |
|
|
671,896 |
|
|
|
657,349 |
|
Operating lease liabilities,
current portion |
|
|
206,004 |
|
|
|
234,309 |
|
Total current liabilities |
|
|
3,014,367 |
|
|
|
1,876,303 |
|
Deferred revenue, net of
current portion |
|
|
61,488 |
|
|
|
44,987 |
|
Operating lease liabilities,
net of current portion |
|
|
118,800 |
|
|
|
264,163 |
|
Total non-current liabilities |
|
|
180,288 |
|
|
|
309,150 |
|
TOTAL
LIABILITIES |
|
|
3,194,655 |
|
|
|
2,185,453 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock — authorized,
170,000,000 shares; issued and outstanding; 7,825,299 and 7,814,572
of $.0001 par value at September 30, 2021 and December 31, 2020,
respectively |
|
|
783 |
|
|
|
782 |
|
Additional paid-in
capital |
|
|
120,079,118 |
|
|
|
119,844,026 |
|
Accumulated deficit |
|
|
(102,546,450 |
) |
|
|
(99,509,689 |
) |
TOTAL
STOCKHOLDERS’ EQUITY |
|
|
17,533,451 |
|
|
|
20,335,119 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
20,728,106 |
|
|
$ |
22,520,572 |
|
All BIO-key securities issued and outstanding for
all periods reflect BIO-key’s 1-for-8 reverse stock split, which
was effective November 20, 2020.
BIO-KEY INTERNATIONAL, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services |
|
$ |
318,500 |
|
|
$ |
491,535 |
|
|
$ |
985,163 |
|
|
$ |
928,561 |
|
License fees |
|
|
870,459 |
|
|
|
346,479 |
|
|
|
2,011,610 |
|
|
|
605,366 |
|
Hardware |
|
|
109,870 |
|
|
|
105,311 |
|
|
|
1,182,784 |
|
|
|
239,025 |
|
Total Revenues |
|
|
1,298,829 |
|
|
|
943,325 |
|
|
|
4,179,557 |
|
|
|
1,772,952 |
|
Costs and other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
|
176,976 |
|
|
|
173,823 |
|
|
|
511,360 |
|
|
|
336,940 |
|
Cost of license fees |
|
|
45,986 |
|
|
|
10,775 |
|
|
|
133,328 |
|
|
|
29,486 |
|
Cost of hardware |
|
|
71,712 |
|
|
|
27,011 |
|
|
|
656,190 |
|
|
|
117,900 |
|
Total costs and other expenses |
|
|
294,674 |
|
|
|
211,609 |
|
|
|
1,300,878 |
|
|
|
484,326 |
|
Gross Profit |
|
|
1,004,155 |
|
|
|
731,716 |
|
|
|
2,878,679 |
|
|
|
1,288,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
1,385,534 |
|
|
|
1,490,241 |
|
|
|
4,276,016 |
|
|
|
4,083,568 |
|
Research, development and engineering |
|
|
612,597 |
|
|
|
331,213 |
|
|
|
1,545,200 |
|
|
|
986,675 |
|
Total operating expenses |
|
|
1,998,131 |
|
|
|
1,821,454 |
|
|
|
5,821,216 |
|
|
|
5,070,243 |
|
Operating loss |
|
|
(993,976 |
) |
|
|
(1,089,738 |
) |
|
|
(2,942,537 |
) |
|
|
(3,781,617 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
329 |
|
|
|
1,106 |
|
|
|
3,776 |
|
|
|
26,908 |
|
Government grant – Paycheck Protection Program |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
340,819 |
|
Foreign currency loss |
|
|
- |
|
|
|
- |
|
|
|
(50,000 |
) |
|
|
- |
|
Investment-debt security reserve |
|
|
(30,000 |
) |
|
|
- |
|
|
|
(30,000 |
) |
|
|
- |
|
Interest expense |
|
|
- |
|
|
|
(2,204,920 |
) |
|
|
(18,000 |
) |
|
|
(4,323,577 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(499,076 |
) |
Total other income (expense),
net |
|
|
(29,671 |
) |
|
|
(2,203,814 |
) |
|
|
(94,224 |
) |
|
|
(4,454,926 |
) |
Net loss |
|
|
(1,023,647 |
) |
|
|
(3,293,552 |
) |
|
|
(3,036,761 |
) |
|
|
(8,236,543 |
) |
Deemed dividend from trigger
of anti-dilution provision feature |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(112,686 |
) |
Net loss available to common
stockholders |
|
$ |
(1,023,647 |
) |
|
$ |
(3,293,552 |
) |
|
$ |
(3,036,761 |
) |
|
$ |
(8,349,229 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss
per Common Share |
|
$ |
(0.13 |
) |
|
$ |
(0.51 |
) |
|
$ |
(0.39 |
) |
|
$ |
(2.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
|
7,790,778 |
|
|
|
6,435,845 |
|
|
|
7,788,734 |
|
|
|
3,663,178 |
|
All BIO-key securities issued and outstanding for
all periods reflect BIO-key’s 1-for-8 reverse stock split, which
was effective November 20, 2020.
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