WALL, NJ--(Marketwire - Nov 19, 2012) - BIO-key International, Inc. (OTCBB: BKYI), a global leader in fingerprint biometric identification solutions and advanced mobile identification technology, today reported financial results for the third quarter ending September 30, 2012.
Total revenue for the three months ended September 30, 2012 was approximately $410,000, representing a decrease of 29% from the $574,000 reported for the quarter ended September 30, 2011.
BIO-key's gross margin for the third quarter of 2012 was 76% compared to 63% for the same period in 2011, due to reduced costs associated with the third party hardware revenue. Operating expenses for the third quarter of 2012 decreased 40%, primarily attributable to the decrease of our reserve for doubtful accounts of $300,000 due to partial payments received for a contract whose payments are behind schedule, decreases in R&D contractor expense as well as commission and referral fees related to decreased revenue.
Net loss for the three months ended September 30, 2012 was ($232,609) a 57% improvement over the net loss of ($540,165) for the same period in 2011.
"While not yet reflected in our financials, the third quarter of 2012 included a number of significant accomplishments with key partners," stated Mike DePasquale, CEO. "In healthcare, which is a target industry for our company, BIO-key was featured during the opening ceremony of the Allscripts Client Experience 2012. During his key note address, Glen Tullman the CEO of Allscripts, lauded the BIO-key solution. He also presented BIO-key customer, Holzer Health Systems, whose staff members shared video testimonials about their positive experience using BIO-key technology. The result was a measurable increase in traffic at our booth at the Allscripts conference, leading to the BIO-key sales team reaching agreements with more than ten different hospitals and clinics to conduct Pilot programs."
"Also, during the third quarter, IBM published a 'Redguide' detailing the integration of BIO-key biometrics within the IBM TAM ESSO solution offering. IBM field sales representatives and technical support engineers rely on IBM Redguides to help them identify innovative customer solutions. The guide has already been distributed to thousands of IBMers and can be found by visiting IBM BIO-key Redguide (http://www.redbooks.ibm.com/abstracts/Redp4892.html?Open&cm_sp=MTE23578)," added DePasquale.
Nine Month Comparisons
Total revenue for the nine months ended September 30, 2012 was $2.353 million representing a 21% decrease from the $2.963 million reported for the same period in 2011. The product mix varied for the nine months ended September 30, 2012 as compared to the same period in 2011with a decrease in third party hardware revenue and license revenue, and an increase in service revenue and royalty income.
Gross margin for the nine months ended September 30, 2012 was 82% compared to 79% for the same period in 2011. Operating expenses for 2012 decreased 15% to approximately $2,395,000 compared to $2,829,000 in the same period ended September 30, 2011. The decline in operating expenses was primarily related to lower R&D contractor expenses, commissions, referral fee expenses and a decrease in reserve for doubtful accounts. Operating loss for the nine months ended September 30, 2012 was approximately ($464,000) compared to an operating loss of ($484,000) reported for the same period in 2011.
Net loss for the first nine months of 2012 was approximately ($483,000) compared to net loss of ($894,000) for the same period in 2011. Net loss for the 2011 period included approximately $400,000 in expenses related to derivative and fair value adjustments which are no longer applicable in 2012.
Liquidity and Capital Resources
Consolidated cash, cash equivalents and accounts receivables was approximately $385,000 on September 30, 2012, compared to $630,000 as of December 31, 2011.
Highlights for Q3 2012 included the following:
- Purchase Orders for continued product roll-outs at Robinson Memorial Hospital, McKesson, Davlong, Identimetrics, Life South, MedFlow and LexisNexis.
- IBM produced, promoted and distributed an IBM Redguide "BIO-key Biometric Service Provider for IBM Security Access Manager for Enterprise Single Sign-On."
- Additional order for services from British Columbia Ministry of Labour.
- Attended Allscripts Client Experience (ACE) meeting in August. Secured 10+ Pilot programs with various hospitals and clinics. BIO-key was one of four Allscripts partners featured during the Glen Tullman, CEO, keynote address to open the meeting.
- Launched a new Allscripts demo and training program. BIO-key is providing the Allscripts training engineers and field sales team with biometric product sales training and fingerprint readers. Allscripts is including the BIO-key solution in standard customer demos and new Allscripts sales personnel will be trained on BIO-key technology at the Allscripts training facility located in Atlanta.
- Attended the Epic "by invitation only" User Group Meeting in September 2012. This was a small gathering of healthcare technology provider and leading hospital executives.
DePasquale concluded "We expect our FY 2012 fourth quarter to be our strongest of the year in terms of revenues and profit and for the company to be profitable for the year ending December 31, 2012. With a number of industry changing events taking place over the past 90 days including the purchase of AuthenTec, a fingerprint manufacturer, by Apple, we are experiencing an increase in demand for our product offerings. The partner relationships that we have built in healthcare and in the Identity Access Management space are creating many new international opportunities that we will monetize in the coming quarters."
The company will hold a conference call early December to update investors and other interested parties on our progress and to review a number of strategic initiatives that are underway.
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 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, 2011 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.