BIO-key® International, Inc. (Nasdaq: BKYI), an innovative provider
of workforce and customer Identity and Access Management (IAM)
solutions featuring passwordless, phoneless and token-less
Identity-Bound Biometric (IBB) authentication, announced results
for its second quarter ended June 30, 2024 (Q2’24). Note, BIO-key’s
results for 2023 were restated at year-end and filed with the
Company’s 2023 Form 10-K, and as a result Q2’23 and six months
ended June 30, 2023 comparisons in this release have been restated.
BIO-key will host an investor call Thursday, August 15th at 10:00am
ET (details below).
Financial Highlights
- Q2’24 revenues decreased to $1.1M
from $1.9M in Q2’23, principally due to a delay in recognition of
approximately $450,000 in software license fees generated by the
Company’s European subsidiary and lower project-related services
revenue of approximately $200,000 as compared to the year-ago
period for one large customer.
- Gross profit improved to $0.9M
(77.0% gross margin) in Q2’24 vs. $0.3M (16.7% gross margin) in
Q2’23, primarily reflecting the impact of a $1M hardware reserve in
Q2’23.
- BIO-key trimmed Q2’24 operating
expenses by $0.2M versus Q2’23, reflecting ongoing cost management
initiatives.
- BIO-key reported a Q2’24 net loss
of $1.7M compared to a Q2’23 net loss of $2.6M, primarily due to a
$1M hardware reserve in Q2’23.
- Cash used in operating activities
improved 48% to $1.1M in the first six months of 2024 vs. $2.1M
used in the first six months of 2023. Improved operating cash flow
reflects the benefit of a Q1’24 $1.5M 2-year extension/expansion of
a biometric technology license with a long-term financial services
customer and continued reductions in S,G &A.
Recent Business Highlights
- Williamsburg, VA advanced its Zero
Trust initiative with BIO-key’s Identity-Bound Biometrics.
- Los Angeles LGBT Center secured its
IT Systems with BIO-key’s Seamless Badge-Tap Authentication
Solution.
- University of Iowa Hospital and
Dayton Children’s Hospital) expanded their BIO-key deployments in
Q2’24.
- BIO-key introduced Passkey:YOU, a
phish-resistant, phoneless and tokenless biometric FIDO Passkey
Authentication Solution.
- BIO-key won the Global InfoSec
Award for Multi-factor Authentication at RSA Conference 2024.
CommentaryBIO-key CEO, Mike
DePasquale commented, “Q2 was impacted by delays we experienced in
the closing of approximately $450,000 in software license contracts
and lower non-recurring, project-related services revenue of
approximately $200,000 versus the year-ago period for one large
customer in 2023.
“Despite our lower than expected revenues this
quarter, we remain very encouraged by the growing enterprise
awareness of the importance of implementing secure, zero-trust
Identity and Access Management solutions which form the core of our
offerings. We remain focused on driving revenue growth and
progressing our business to profitability and positive cash flow
over the next several quarters. We are working to support our
Channel Alliance Partners around the globe while also working to
progress larger-scale customer dialogues via our in-house direct
sales efforts.
“We are also excited by the growth potential for
our new Passkey:YOU solution which we believe provides a very
powerful, differentiated solution within the rapidly expanding
deployment of passkey solutions by some of the largest global
companies. Unlike other solutions, BIO-key’s Passkey:YOU utilizes
our industry leading biometric technology to deliver a unique
passwordless and device-less authentication solution able to meet a
broad range of needs, including some of the most challenging use
cases.
“We continue to expect to benefit from the
rollout and enforcement of increasingly stringent regulatory
standards and cyber insurance underwriting requirements, much of
which are now mandating multi-factor authentication or passwordless
security solutions that BIO-key is well positioned to provide on a
very competitive basis.
“Given our size, our performance will likely
remain variable on a quarter to quarter and year over year basis,
based on the impact and timing of customer contracts, though we
remain confident in our ability to drive sequential growth on a
full year basis. Importantly, we are building a growing base of
high-margin annually recurring revenues (ARRs) with solid potential
to expand as we move forward. We also continue to seek and
implement cost reduction opportunities and identify potential
strategic opportunities to leverage our core expertise to
accelerate our path to profitability and positive cash flow. For
these and other reasons, we believe BIO-key is well-positioned for
the future.”
Financial ResultsBIO-key
reported Q2’24 revenues of $1.1M compared to $1.9M in Q2’23. The
current-year period was negatively impacted by the delay in
recognition of approximately $450,000 in software license fees
generated by the Company’s European subsidiary and the year-ago
period benefitted from approximately $200,000 of non-recurring
services revenue for one large customer. For the six months ended
June 30, 2024, revenues were $3.3M compared to $4.1M in 2023,
principally due to the factors that impacted Q2’24 results.
Q2’24 Gross profit was $0.9M (77.0% gross
margin) versus $0.3M (16.7% gross margin) in Q2’23, primarily
reflecting the impact of a $1M hardware reserve in 2023 and higher
gross margins from services in Q2’24.
BIO-key was able to reduce operating expenses by
$0.2M in Q2’24 versus Q2’23, reflecting reductions in
administration, sales personnel costs and marketing show expenses,
including lower headquarters expense. Partially offsetting lower
SG&A costs, was a $33,000 increase in research, development and
engineering expense related to new product development.
Reflecting lower costs and the $1M hardware
reserve in 2023, BIO-key’s net loss improved to $1.7M, or $1.00 per
share, in Q2’24, from $2.6M, or $4.71 per share, in Q2’23.
Likewise, BIO-key trimmed its net loss for the first six months of
2024 to $2.2M, or $1.33 per share, compared to a net loss of $4.3M,
or $7.74 per share, in the first six months of 2023. Q2’23 results
included a hardware reserve of $1M and the first six months of 2023
included a hardware reserve of $1.5M.
Balance SheetAt June 30, 2024,
BIO-key had current assets of approximately $3.0M, including $1.3M
of cash and cash equivalents, $932,210 of net accounts receivable
and due from factor, and $433,182 of inventory. This compares to
current assets of approximately $2.6M, including $511,400 of cash
equivalents, $1.3M of net accounts receivable and due from factor,
and $445,740 of inventory, at December 31, 2023.
Conference Call Details
Date /
Time: |
Thursday, August 15th at
10 a.m. ET |
Call Dial In #: |
1-877-418-5460 U.S. or 1-412-717-9594 Int’l |
Live Webcast / Replay: |
Webcast & Replay Link – Available for 3
months. |
Audio Replay: |
1-877-344-7529 U.S. or 1-412-317-0088 Int’l; code 7767803 |
About BIO-key International,
Inc. (www.BIO-key.com)BIO-key is revolutionizing
authentication and cybersecurity with biometric-centric,
multi-factor identity and access management (IAM) software securing
access for over forty million users. BIO-key allows customers to
choose the right authentication factors for diverse use cases,
including phoneless, tokenless, and passwordless biometric options.
Its hosted or on-premise PortalGuard IAM solution provides
cost-effective, easy-to-deploy, convenient, and secure access to
computers, information, applications, and high-value
transactions.
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 to satisfy working capital needs; our ability to
continue as a going concern; 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
industry; market acceptance of biometric products generally and our
products under development; our ability to convert sales
opportunities to customer contracts; our ability to expand into
Asia, Africa and other foreign markets; our ability to integrate
the operations and personnel of Swivel Secure into our business;
fluctuations in foreign currency exchange rates; delays in the
development of products, the commercial, reputational and
regulatory risks to our business that may arise as a consequence
the restatement of our financial statements, including any
consequences of non-compliance with Securities and Exchange
Commission and Nasdaq periodic reporting requirements; our
temporary loss of the use of a Registration Statement on Form S-3
to register securities in the future; if we fail to increase our
stockholders’ equity to at least $2.5 million, our common stock
will be delisted from the Nasdaq Capital Market which could
negatively impact the trading price of our common stock and impair
our ability to raise capital, any disruption to our business that
may occur on a longer-term basis should we be unable to remediate
during fiscal year 2024 certain material weaknesses in our internal
controls over financial reporting, 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, 2023 and other filings with the
SEC. 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 |
X – Corporate: |
@BIOkeyIntl |
X – Investors: |
@BIO_keyIR |
StockTwits: |
BIO_keyIR |
Investor ContactsWilliam Jones, David
CollinsCatalyst IRBKYI@catalyst-ir.com or 212-924-9800
|
|
BIO-KEY INTERNATIONAL, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE
LOSS(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
|
|
June 30, |
|
|
June 30, |
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services |
|
|
|
$ |
283,569 |
|
|
$ |
620,465 |
|
|
$ |
496,690 |
|
|
$ |
1,152,987 |
|
License fees |
|
|
|
|
774,225 |
|
|
|
1,235,771 |
|
|
|
2,724,659 |
|
|
|
2,814,327 |
|
Hardware |
|
|
|
|
83,492 |
|
|
|
72,693 |
|
|
|
101,140 |
|
|
|
145,382 |
|
Total revenues |
|
|
|
|
1,141,286 |
|
|
|
1,928,929 |
|
|
|
3,322,489 |
|
|
|
4,112,696 |
|
Costs and other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
|
|
|
73,385 |
|
|
|
360,156 |
|
|
|
212,234 |
|
|
|
514,957 |
|
Cost of license fees |
|
|
|
|
148,432 |
|
|
|
198,147 |
|
|
|
296,652 |
|
|
|
819,028 |
|
Cost of hardware |
|
|
|
|
40,455 |
|
|
|
47,808 |
|
|
|
53,029 |
|
|
|
92,400 |
|
Cost of hardware - reserve |
|
|
|
|
- |
|
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,500,000 |
|
Total costs and other
expenses |
|
|
|
|
262,272 |
|
|
|
1,606,111 |
|
|
|
561,915 |
|
|
|
2,926,385 |
|
Gross profit |
|
|
|
|
879,014 |
|
|
|
322,818 |
|
|
|
2,760,574 |
|
|
|
1,186,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
1,941,866 |
|
|
|
2,143,164 |
|
|
|
3,724,839 |
|
|
|
4,074,896 |
|
Research, development and engineering |
|
|
|
|
591,234 |
|
|
|
558,181 |
|
|
|
1,198,755 |
|
|
|
1,248,340 |
|
Total Operating Expenses |
|
|
|
|
2,533,100 |
|
|
|
2,701,345 |
|
|
|
4,923,594 |
|
|
|
5,323,236 |
|
Operating loss |
|
|
|
|
(1,654,086 |
) |
|
|
(2,378,527 |
) |
|
|
(2,163,020 |
) |
|
|
(4,136,925 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
46 |
|
|
|
23 |
|
|
|
51 |
|
|
|
27 |
|
Loss on foreign currency transactions |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(15,000 |
) |
Loan fee amortization |
|
|
|
|
(4,000 |
) |
|
|
- |
|
|
|
(4,000 |
) |
|
|
- |
|
Change in fair value of
convertible note |
|
|
|
|
- |
|
|
|
(44,568 |
) |
|
|
- |
|
|
|
97,423 |
|
Interest expense |
|
|
|
|
(8,910 |
) |
|
|
(56,806 |
) |
|
|
(10,267 |
) |
|
|
(113,725 |
) |
Total other income (expense), net |
|
|
|
|
(12,864 |
) |
|
|
(101,351 |
) |
|
|
(14,216 |
) |
|
|
(31,275 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for
income tax |
|
|
|
|
(1,666,950 |
) |
|
|
(2,479,878 |
) |
|
|
(2,177,236 |
) |
|
|
(4,168,200 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (income tax) tax
benefit |
|
|
|
|
- |
|
|
|
(143,000 |
) |
|
|
- |
|
|
|
(143,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
$ |
(1,666,950 |
) |
|
$ |
(2,622,878 |
) |
|
$ |
(2,177,236 |
) |
|
$ |
(4,311,200 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
$ |
(1,666,950 |
) |
|
$ |
(2,622,878 |
) |
|
$ |
(2,177,236 |
) |
|
$ |
(4,311,200 |
) |
Other comprehensive income (loss) – Foreign currency translation
adjustment |
|
|
|
|
24,220 |
|
|
|
19,884 |
|
|
|
(38,530 |
) |
|
|
92,030 |
|
Comprehensive loss |
|
|
|
$ |
(1,642,730 |
) |
|
$ |
(2,602,994 |
) |
|
$ |
(2,215,766 |
) |
|
$ |
(4,219,170 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common Share |
|
|
|
$ |
(1.00 |
) |
|
$ |
(4.71 |
) |
|
$ |
(1.33 |
) |
|
$ |
(7.74 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
|
1,663,042 |
|
|
|
556,758 |
|
|
|
1,639,183 |
|
|
|
556,758 |
|
All BIO-key shares issued and outstanding for all
periods reflect BIO-key’s 1-for-18 reverse stock split, which
was effective December 21, 2023.
|
|
BIO-KEY INTERNATIONAL, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,260,351 |
|
|
$ |
511,400 |
|
Accounts receivable, net |
|
|
904,046 |
|
|
|
1,201,526 |
|
Due from factor |
|
|
28,164 |
|
|
|
99,320 |
|
Inventory |
|
|
433,182 |
|
|
|
445,740 |
|
Prepaid expenses and other |
|
|
388,786 |
|
|
|
364,171 |
|
Total current assets |
|
|
3,014,529 |
|
|
|
2,622,157 |
|
Equipment and leasehold improvements, net |
|
|
174,419 |
|
|
|
220,177 |
|
Capitalized contract costs, net |
|
|
348,617 |
|
|
|
229,806 |
|
Operating lease right-of-use assets |
|
|
9,341 |
|
|
|
36,905 |
|
Intangible assets, net |
|
|
1,252,090 |
|
|
|
1,407,990 |
|
Total non-current assets |
|
|
1,784,467 |
|
|
|
1,894,878 |
|
TOTAL ASSETS |
|
$ |
4,798,996 |
|
|
$ |
4,517,035 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,539,548 |
|
|
$ |
1,316,014 |
|
Accrued liabilities |
|
|
1,164,681 |
|
|
|
1,305,848 |
|
Note payable |
|
|
2,010,293 |
|
|
|
- |
|
Government loan – BBVA Bank, current portion |
|
|
135,400 |
|
|
|
138,730 |
|
Deferred revenue, current |
|
|
715,193 |
|
|
|
414,968 |
|
Operating lease liabilities, current portion |
|
|
9,570 |
|
|
|
37,829 |
|
Total current liabilities |
|
|
5,574,685 |
|
|
|
3,213,389 |
|
Deferred revenue, long term |
|
|
142,949 |
|
|
|
28,296 |
|
Deferred tax liability |
|
|
22,998 |
|
|
|
22,998 |
|
Government loan – BBVA Bank – net of current portion |
|
|
114,656 |
|
|
|
188,787 |
|
Total non-current liabilities |
|
|
280,603 |
|
|
|
240,081 |
|
TOTAL LIABILITIES |
|
|
5,855,288 |
|
|
|
3,453,470 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock — authorized, 170,000,000 shares; issued and
outstanding; 1,815,618 and 1,032,777 of $.0001 par value at June
30, 2024 and December 31, 2023, respectively |
|
|
182 |
|
|
|
103 |
|
Additional paid-in capital |
|
|
126,143,205 |
|
|
|
126,047,851 |
|
Accumulated other comprehensive loss |
|
|
(15,234 |
) |
|
|
22,821 |
|
Accumulated deficit |
|
|
(127,184,445 |
) |
|
|
(125,007,210 |
) |
TOTAL STOCKHOLDERS’ EQUITY |
|
|
(1,056,292 |
) |
|
|
1,063,565 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
4,798,996 |
|
|
$ |
4,517,035 |
|
All BIO-key shares issued and outstanding for all
periods reflect BIO-key’s 1-for-18 reverse stock split, which
was effective December 21, 2023.
|
|
BIO-KEY INTERNATIONAL, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(Unaudited) |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,177,236 |
) |
|
$ |
(4,311,200 |
) |
Adjustments to reconcile net loss to net cash used for
operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
46,069 |
|
|
|
26,637 |
|
Amortization of intangible
assets |
|
|
155,900 |
|
|
|
162,166 |
|
Change in fair value of
convertible note |
|
|
- |
|
|
|
(97,423 |
) |
Amortization of capitalized
contract costs |
|
|
80,074 |
|
|
|
80,717 |
|
Reserve for inventory |
|
|
- |
|
|
|
1,500,000 |
|
Operating leases right-of-use
assets |
|
|
27,564 |
|
|
|
112,745 |
|
Share and warrant-based
compensation for employees and consultants |
|
|
96,561 |
|
|
|
120,767 |
|
Stock based directors’
fees |
|
|
9,003 |
|
|
|
28,004 |
|
Deferred income tax
benefit |
|
|
|
|
|
|
(13,000 |
) |
Bad debts |
|
|
|
|
|
|
250,000 |
|
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
297,480 |
|
|
|
(757,170 |
) |
Due from factor |
|
|
71,156 |
|
|
|
(24,750 |
) |
Capitalized contract
costs |
|
|
(198,885 |
) |
|
|
(75,096 |
) |
Inventory |
|
|
12,558 |
|
|
|
50,271 |
|
Prepaid expenses and
other |
|
|
(24,615 |
) |
|
|
14,799 |
|
Accounts payable |
|
|
258,384 |
|
|
|
726,657 |
|
Accrued liabilities |
|
|
(141,167 |
) |
|
|
(109,208 |
) |
Income taxes payable |
|
|
- |
|
|
|
156,000 |
|
Deferred revenue |
|
|
414,878 |
|
|
|
174,437 |
|
Operating lease
liabilities |
|
|
(51,257 |
) |
|
|
(110,545 |
) |
Net cash used in operating activities |
|
|
(1,123,533 |
) |
|
|
(2,095,192 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(1,869 |
) |
|
|
- |
|
Net cash used in investing activities |
|
|
(1,869 |
) |
|
|
- |
|
CASH FLOW FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from Note
Payable |
|
|
2,000,000 |
|
|
|
- |
|
Offering costs |
|
|
(13,470 |
) |
|
|
- |
|
Proceeds for exercise of warrants |
|
|
1,400 |
|
|
|
- |
|
Receipt of cash from Employee
stock purchase plan |
|
|
1,939 |
|
|
|
13,934 |
|
Repayment of government loan |
|
|
(77,461 |
) |
|
|
(56,241 |
) |
Net cash used in financing activities |
|
|
1,912,408 |
|
|
|
(42,307 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
(38,055 |
) |
|
|
67,490 |
|
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
748,951 |
|
|
|
(2,070,009 |
) |
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD |
|
|
511,400 |
|
|
|
2,635,522 |
|
CASH AND CASH
EQUIVALENTS, END OF PERIOD |
|
$ |
1,260,351 |
|
|
$ |
565,513 |
|
All BIO-key shares issued and outstanding for all
periods reflect BIO-key’s 1-for-18 reverse stock split, which
was effective December 21, 2023.
BIO key (NASDAQ:BKYI)
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From Jul 2024 to Aug 2024
BIO key (NASDAQ:BKYI)
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From Aug 2023 to Aug 2024