BIO-key®
International, Inc.
(Nasdaq: BKYI), an innovative provider of workforce and customer
identity and access management (IAM) and large-scale identity
solutions, featuring Identity-Bound Biometrics (IBB), today
reported results for its third quarter ended September 30, 2022
(Q3’22). BIO-key will host an investor call tomorrow at 10:00 a.m.
ET (details below).
Q3 Highlights:
- Q3’22 revenues rose 6% to
$1.4M vs. Q3’21 and year-to-date revenues increased 26% to
$5.3M, with increased software license and service fees
which were partially offset by lower hardware revenue in both 2022
periods.
- BIO-key
expanded its global footprint with enterprise customers
including a Dutch-based multi-national conglomerate and a leading
Saudi Arabia healthcare procurement provider.
-
Broadened partner network with Florida-based
Darksteel Technologies and Israel’s Multi-Point Group.
- Advanced
higher education franchise with PortalGuard deployments
for the University of Arkansas at Fort Smith and California's Long
Beach Community College District.
-
Showcased Launch of our Mobile Authenticator App
(MobileAuth), featuring both server-secured and on-device
multi-biometrics at 2022 Gartner IAM Summit.
BIO-key Chairman & CEO Michael DePasquale
commented, “Despite delays in our African business, some slippage
from Q3 to Q4 in our domestic business, and seasonal slowness in
Europe in the late summer, BIO-key continued to grow revenues and
integrate our expanding operations. We have developed a substantial
customer footprint generating high-margin annual recurring revenue
(ARR) and our brand is now recognized on a global basis.
“Our integration of Swivel Secure Europe, which
we acquired in March, is proceeding well, and we are now a truly
global company. Through the first nine months of 2022, our sales by
region grew in North America, Europe, the Middle East, South
America, and Asia, but not in Africa, which continues to experience
delays in the rollout of government sponsored national ID programs.
In particular, the Nigerian Identity Management Commission has had
both technical and financial issues that have led to delays in
enrolling significant numbers of citizens, and we expect that to
resolve itself in Q1 of 2023.
“Innovation remains core to our mission as we
continue to expand password-less and mobile user IAM options,
including the launch of BIO-key’s Mobile Authenticator App which
supports both server-secured and on-device biometric multi-factor
authentication (MFA). We also introduced an enhanced admin panel
for our PortalGuard, Identity-as-a-Service (IDaaS) platform. Our
PortalGuard IDaaS franchise continues to expand within higher
education, county governments, and enterprises. Customers are drawn
to this highly secure, efficient, user-friendly and cost-effective
solution designed to meet today’s needs for scalable, secure
on-site, mobile, and off-site user access.
“To enhance the global awareness and reach of
our solutions and brand, we have invested in an expanded team of
direct sales resources, supported by traditional and digital
marketing.
“We believe the IAM and multi-factor
authentication segments of the cybersecurity space are some of the
most lucrative opportunities in the global software market right
now. We are building a recurring annual revenue stream with a
proven portfolio of Identity-as-a-Service products across customers
in several key verticals. Our expanding global footprint of direct
sales and distribution partner resources positions us well to
address significant IAM and cybersecurity needs around the world.
In addition to integrating Swivel Secure and launching BIO-key
Europe, we’ve built a strong pipeline of significant customer and
project opportunities, some of which have progressed more slowly
than anticipated over the past several months, or slipped to Q4, as
I had mentioned.
Outlook
“We expect a strong close to the year, however,
given our slower than expected sales so far this year, we now
expect full-year revenues of $7M to $9M in 2022, representing
growth of 37% to 76% over 2021 revenue. Our updated outlook
anticipates growth in recurring software license revenue to roughly
70% of our total revenue, supported by hardware and services
revenue contributions, which are typically in support of specific
projects.
“Our current outlook is supported by our
technology leadership, our talented global sales, marketing and
management teams, and the growing productivity of our channel
partner program. With our acquisition of Swivel Secure Europe, we
have added critical mass in Europe, the Middle East and Asia
(EMEA). Accordingly, we expect to see significant EMEA growth
moving into 2023 now that our team has been fully trained on the
value and capabilities of our extended line of solutions and
services.”
Financial Results
Q3’22 revenues rose 6% to $1.4M vs. Q3’21 and year-to-date
revenues increased 26% to $5.3M, with increased software license
and service fees which were partially offset by lower hardware
revenue in both 2022 periods.
Gross profit was $1.0M in Q3’22, flat from Q’21,
due to higher cost of license fees as a result of third
party-software required for Swivel Secure licenses, which offset
revenue growth. Likewise, realized gross profit margin declined to
71% in Q3’22 from 77% in Q3’21.
Total operating expenses increased to $3.3M in
Q3’22 from $2.0M in Q3’21, reflecting a $1.1M increase in selling,
general and administrative (SG&A) expenses, and a $0.2M
increase in research, development and engineering expenses. The
SG&A increases included costs related to Swivel Secure
operations, trade show expenses, share based compensation,
travel, and wages and benefits for new employees. Higher research,
development & engineering expenses were due to higher personnel
costs, including consulting, wages, and benefits for new employees
and product development, including the Q3 launch of significant
enhancements and updates to the MobileAuth application.
BIO-key reported a Q3’22 net loss of $2.4M, or
$0.29 per share, compared to a Q3’21 net loss of $1.0M, or $0.13
per share. The weighted average basic shares outstanding were
approximately 8.1M in Q3’22 and 7.8M in Q3’21.
Financial Strength
As of September 30, 2022, BIO-key had current
assets of $9.9M, including $2.8M of cash and cash equivalents,
$1.8M of accounts receivable, and $4.9M of inventory. Stockholders’
Equity was $11.2M, or approximately $1.32 per share at quarter
end.
Conference Call Details
Date /
Time: |
Tuesday,
November 15th 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 8070313 |
About BIO-key International, Inc.
(www.BIO-key.com)
BIO-key provides 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, Europe, and other foreign markets; our
ability to integrate the operations and personnel of Swivel Secure
into our business; fluctuations in foreign currency exchange rates;
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;
the duration and extent of continued hostilities in Ukraine and its
impact on our European customers, 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, 2021 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 30,2022 |
|
|
December 31,2021 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,774,617 |
|
|
$ |
7,754,046 |
|
Accounts receivable, net |
|
|
1,808,036 |
|
|
|
970,626 |
|
Due from factor |
|
|
49,500 |
|
|
|
49,500 |
|
Note receivable, net of
allowance |
|
|
- |
|
|
|
82,000 |
|
Inventory |
|
|
4,892,667 |
|
|
|
4,940,660 |
|
Prepaid expenses and
other |
|
|
357,726 |
|
|
|
216,041 |
|
Total current assets |
|
|
9,882,546 |
|
|
|
14,012,873 |
|
Resalable software license
rights |
|
|
41,286 |
|
|
|
48,752 |
|
Investment – debt security,
net |
|
|
262,821 |
|
|
|
452,821 |
|
Equipment and leasehold
improvements, net |
|
|
125,824 |
|
|
|
69,168 |
|
Capitalized contract costs,
net |
|
|
298,673 |
|
|
|
249,012 |
|
Deposits and other assets |
|
|
8,712 |
|
|
|
8,712 |
|
Note receivable, net of
allowance |
|
|
146,000 |
|
|
|
113,000 |
|
Operating lease right-of-use
assets |
|
|
263,377 |
|
|
|
254,100 |
|
Intangible assets, net |
|
|
1,799,074 |
|
|
|
1,298,077 |
|
Goodwill |
|
|
2,197,698 |
|
|
|
1,262,526 |
|
Total non-current assets |
|
|
5,143,465 |
|
|
|
3,756,168 |
|
TOTAL
ASSETS |
|
$ |
15,026,011 |
|
|
$ |
17,769,041 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,068,571 |
|
|
$ |
427,772 |
|
Accrued liabilities |
|
|
875,903 |
|
|
|
828,997 |
|
Earnout payable – Swivel
acquisition |
|
|
500,000 |
|
|
|
- |
|
Government loan – BBVA Bank,
current portion |
|
|
120,000 |
|
|
|
- |
|
Deferred revenue, current
portion |
|
|
600,819 |
|
|
|
565,355 |
|
Operating lease liabilities,
current portion |
|
|
178,277 |
|
|
|
177,188 |
|
Total current liabilities |
|
|
3,343,570 |
|
|
|
1,999,312 |
|
Deferred revenue, net of
current portion |
|
|
75,187 |
|
|
|
67,300 |
|
Operating lease liabilities,
net of current portion |
|
|
86,874 |
|
|
|
86,974 |
|
Government loan – BBVA Bank,
net of current portion |
|
|
321,872 |
|
|
|
- |
|
Total non-current liabilities |
|
|
483,933 |
|
|
|
154,274 |
|
TOTAL
LIABILITIES |
|
|
3,827,503 |
|
|
|
2,153,586 |
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock — authorized,
170,000,000 shares; issued and outstanding; 8,452,621 and 7,853,759
of $.0001 par value at September 30, 2022 and December 31, 2021,
respectively |
|
|
845 |
|
|
|
786 |
|
Additional paid-in
capital |
|
|
121,123,352 |
|
|
|
120,190,139 |
|
Accumulated other
comprehensive loss |
|
|
(229,350 |
) |
|
|
- |
|
Accumulated deficit |
|
|
(109,696,339 |
) |
|
|
(104,575,470 |
) |
TOTAL
STOCKHOLDERS’ EQUITY |
|
|
11,198,508 |
|
|
|
15,615,455 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
15,026,011 |
|
|
$ |
17,769,041 |
|
BIO-KEY INTERNATIONAL, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE
LOSS(Unaudited)
|
|
Three months endedSeptember
30, |
|
|
Nine months endedSeptember
30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services |
|
$ |
371,956 |
|
|
$ |
318,500 |
|
|
$ |
1,202,866 |
|
|
$ |
985,163 |
|
License fees |
|
|
918,260 |
|
|
|
870,459 |
|
|
|
3,540,592 |
|
|
|
2,011,610 |
|
Hardware |
|
|
83,333 |
|
|
|
109,870 |
|
|
|
518,377 |
|
|
|
1,182,784 |
|
Total revenues |
|
|
1,373,549 |
|
|
|
1,298,829 |
|
|
|
5,261,835 |
|
|
|
4,179,557 |
|
Costs and other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
|
162,632 |
|
|
|
176,976 |
|
|
|
554,222 |
|
|
|
511,360 |
|
Cost of license fees |
|
|
173,310 |
|
|
|
45,986 |
|
|
|
604,677 |
|
|
|
133,328 |
|
Cost of hardware |
|
|
57,841 |
|
|
|
71,712 |
|
|
|
296,278 |
|
|
|
656,190 |
|
Total costs and other
expenses |
|
|
393,783 |
|
|
|
294,674 |
|
|
|
1,455,177 |
|
|
|
1,300,878 |
|
Gross profit |
|
|
979,766 |
|
|
|
1,004,155 |
|
|
|
3,806,658 |
|
|
|
2,878,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
2,510,706 |
|
|
|
1,385,534 |
|
|
|
6,315,277 |
|
|
|
4,276,016 |
|
Research, development and engineering |
|
|
829,506 |
|
|
|
612,597 |
|
|
|
2,418,855 |
|
|
|
1,545,200 |
|
Total Operating Expenses |
|
|
3,340,212 |
|
|
|
1,998,131 |
|
|
|
8,734,132 |
|
|
|
5,821,216 |
|
Operating loss |
|
|
(2,360,446 |
) |
|
|
(993,976 |
) |
|
|
(4,927,474 |
) |
|
|
(2,942,537 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
8 |
|
|
|
329 |
|
|
|
216 |
|
|
|
3,776 |
|
Loss on foreign currency transactions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(50,000 |
) |
Investment-debt security reserve |
|
|
(40,000 |
) |
|
|
(30,000 |
) |
|
|
(190,000 |
) |
|
|
(30,000 |
) |
Noncash interest expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(18,000 |
) |
Interest expense |
|
|
(2,071 |
) |
|
|
- |
|
|
|
(3,611 |
) |
|
|
- |
|
Total other income (expense), net |
|
|
(42,063 |
) |
|
|
(29,671 |
) |
|
|
(193,395 |
) |
|
|
(94,224 |
) |
Net loss |
|
$ |
(2,402,509 |
) |
|
$ |
(1,023,647 |
) |
|
$ |
(5,120,869 |
) |
|
$ |
(3,036,761 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,402,509 |
) |
|
$ |
(1,023,647 |
) |
|
$ |
(5,120,869 |
) |
|
$ |
(3,036,761 |
) |
Other comprehensive loss – Foreign currency translation
adjustment |
|
|
(119,269 |
) |
|
|
- |
|
|
|
(229,350 |
) |
|
|
- |
|
Net loss available to common stockholders |
|
$ |
(2,521,778 |
) |
|
$ |
(1,023,647 |
) |
|
$ |
(5,350,219 |
) |
|
$ |
(3,036,761 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common Share |
|
$ |
(0.29 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.39 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
8,148,848 |
|
|
|
7,790,778 |
|
|
|
8,054,207 |
|
|
|
7,788,734 |
|
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