SOURCE: BIO-key International, Inc.

BIO-key International, Inc.

May 16, 2016 08:10 ET

Biometric ID Provider BIO-key Reports Q1 2016 Results and Hosts Update Conference Call Today at 10:00 a.m. ET

WALL, NJ--(Marketwired - May 16, 2016) - BIO-key International, Inc. (OTCQB: BKYI), an innovative provider of biometric software and hardware solutions for stronger user authentication, today reported results for its first quarter ended March 31, 2016 (Q1'16). BIO-key is hosting a conference call today at 10:00 a.m. ET to review its results, as detailed below.

Michael DePasquale, Chairman & CEO of BIO-key, commented, "BIO-key made solid strides in the first quarter of 2016 in expanding our market position through several strategic initiatives, however as we cautioned during our March conference call, quarterly variances in our business, including difficulty predicting the timing of contracts, will remain with us in fiscal year 2016. Our first quarter revenue declined to $431K compared to $648K in the first quarter of 2015 however, looking beneath the top line, there was ongoing growth in our base of recurring revenue from software maintenance and services of $58,372 or 44% in the first quarter of 2016 versus last year." 

"Converting prospects into customers is our top priority, as we continue to nurture and advance agreements with a number of large partners including our announcement today regarding the availability of our affordable and compact SideSwipe and EcoID USB fingerprint readers on Amazon.com. The readers, initially available in a three-pack configuration for $119.97, are targeted to enterprise customers."

"As part of our commitment to expanding our visibility and sales reach, during the quarter we advanced several strategic partnerships. Most notably, we secured our first joint customer through our partnership with healthcare analytics firm, Caradigm Technologies, and another with healthcare IT firm HealthCast. We also made progress with several large enterprise prospects generated from our marketing partnership with Microsoft. On a global scale, we partnered with Arthur & Co., a Morrocan based technology company that serves customers throughout the Middle East and North Africa. In summary, we anticipate leveraging these partnerships to take advantage of high demand for advanced authentication security in various verticals of the economy."

Highlights:

  • Enhanced our offering of secure biometric authentication with the addition of robust identity proofing and optional hosted authentication services in partnership with HealthIDx, a federal standards-compliant Credential Services Provider (CSP). 
  • Announced the successful completion of our national 12- city tour with Microsoft, featuring our compact fingerprint readers and software solutions as part of the U.S. launch of Windows 10 for Business and Office 2016. Microsoft featured BIO-key as its only biometric solution partner during the highly successful launch. 
  • Launched a strategic partnership with 2FA, Inc., a veteran-owned cybersecurity company providing enterprise multifactor authentication (MFA) and single sign-on (SSO) solutions. 
  • Introduced a new product, SideTouch, which combines IDEX's (IDEX.NO) advanced off-chip sensor technology with BIO-key's NIST-tested universal Windows Biometric Framework (WBF) fingerprint engine. 
  • Expanded our healthcare partner program as our biometric solutions were highlighted at ten of our partners' and customers' booths during HIMSS 2016, the largest healthcare technology event in the United States.
  • Secured our first joint customer through our partnership with healthcare analytics firm, Caradigm Technologies jointly owned by GE and Microsoft, and another with healthcare SSO firm HealthCast.
  • BIO-key was the Silver Sponsor at connect:ID 2016, in Washington, D.C.
  • Subsequent to the close of the quarter, Pieter Knook, a former Vodafone & Microsoft executive based in United Kingdom was appointed to the Board.

Guidance:

Based on pipeline of opportunities and efforts to date, we remain confident in our growth prospects for 2016, reiterate our full year financial guidance, and expect revenues will grow from approximately $5M in 2015 to a range of $7M - $9.5M in 2016.

Q1 Results:

Q1'16 total revenue declined to $430,592 compared to $648,826 in Q1'15. Service revenues, principally comprised of recurring maintenance and support, increased 14% to $284,726 compared to $250,353 in Q1'15, reflecting BIO-key's growing base of customer installations. License and other revenue decreased to $145,866 from $398,473, principally reflecting the timing of larger contract revenues. Hardware sales decreased 20% from $126,451 in Q1 2015 to $101,075 in Q1 2016.

Q1'16 gross margin declined to 74% from 79% in Q1'15, due to lower revenue. Q1'16 operating expenses rose by 2.3% to $1,481,014 compared to $1,447,322 in Q1'15, principally due to increased R&D expense.

BIO-key's Q1'16 net loss increased to ($1,163,214), or ($0.02) per basic share, compared to a net loss of ($924,103), or ($0.01) per basic share, in Q1'15.

Liquidity and Capital Resources
At March 31, 2016, BIO-key had cash, cash equivalents and net receivables of $5,698,295 compared to $7,712,483 December 31, 2015.

Conference Call and Webcast Replay 

Date/Time:  Monday, May 16, 2016 at 10 am ET
Dial-In number: 1-877-418-5460 (U.S.), 412-717-9594 (Intl.) 
Webcast Replay: http://services.choruscall.com/links/biokey160516 - Available for 30 days.
Call Replay: 1-877-344-7529 U.S. or 412-317-0088 use code 10086164

About BIO-key International, Inc. (www.bio-key.com)

BIO-key is revolutionizing authentication as our easy to use biometric solutions enable convenient and secure access to information and financial transactions. We eliminate passwords, PINs tokens and cards and make it easy for enterprises and consumers to secure their devices as well as information in the cloud. Our premium finger scanning devices SideSwipe and EcoID offer market leading quality, performance and price.

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, market acceptance of biometric solutions generally and our specific offerings, our ability to expand into the Asian market, the impact on our business of the recent financial crisis in the global capital markets and negative global economic trends, and 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, 2015 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 undertakes no obligation to disclose any revision to these forward-looking statements to reflect events or circumstances after the date made.

Twitter: BIO-keyIR

   
BIO-key International, Inc. and Subsidiary  
CONDENSED CONSOLIDATED BALANCE SHEETS  
   
    March 31,
2016
    December 31,
2015
 
    (Unaudited)        
ASSETS            
Cash and cash equivalents   $ 3,474,648     $ 4,321,078  
Accounts receivable, net of allowance for doubtful accounts of $13,785 at March 31, 2016 and December 31, 2015     2,223,647       3,391,405  
Due from factor     147,102       37,421  
Inventory     458,853       348,645  
Software license rights     5,000,000       5,000,000  
Prepaid expenses and other     100,727       97,203  
      Total current assets     11,404,977       13,195,752  
Software license rights, less current portion     7,000,000       7,000,000  
Equipment and leasehold improvements, net     71,646       63,877  
Deposits and other assets     8,712       8,712  
Intangible assets--less accumulated amortization     144,337       147,738  
      Total non-current assets     7,224,695       7,220,327  
TOTAL ASSETS   $ 18,629,672     $ 20,416,079  
                 
LIABILITIES                
Accounts payable   $ 628,631     $ 1,158,555  
Accrued liabilities     312,066       493,067  
Dividends payable     200,625       133,851  
Deferred revenue     455,291       376,405  
Warrant liabilities     104,322       104,284  
    Total current liabilities     1,700,935       2,266,162  
TOTAL LIABILITIES     1,700,935       2,266,162  
                 
Commitments and Contingencies                
STOCKHOLDERS' EQUITY:                
                 
Series A-1 convertible preferred stock: authorized, 100,000 (liquidation preference of $100 per share); issued and outstanding 90,000 of $.0001 par value     9       9  
Series B-1 convertible preferred stock: authorized, 105,000 (liquidation preference of $100 per share); issued and outstanding 105,000 of $.0001 par value     11       11  
Common stock -- authorized, 170,000,000 shares; issued and outstanding; 66,198,482 and 66,098,482 of $.0001 par value at March 31, 2016 and December 31, 2015, respectively     6,620       6,610  
Additional paid-in capital     76,696,761       76,754,737  
Accumulated deficit     (59,774,664 )     (58,611,450 )
TOTAL STOCKHOLDERS' EQUITY     16,928,737       18,149,917  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 18,629,672     $ 20,416,079  
                 
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.                
                 
   
BIO-KEY International, Inc. and Subsidiary  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
   
    Three months ended
March 31,
 
    2016     2015  
                 
Revenues                
      Services   $ 284,726     $ 250,353  
      License fees and other     145,866       398,473  
      430,592       648,826  
    Costs and other expenses                
      Cost of services     55,782       67,063  
      Cost of license fees and other     56,066       72,293  
      111,848       139,356  
    Gross Profit     318,744       509,470  
                 
    Operating Expenses                
      Selling, general and administrative     991,613       1,040,681  
      Research, development and engineering     489,401       406,641  
    Total Operating Expenses     1,481,014       1,447,322  
    Operating loss     (1,162,270 )     (937,852 )
    Other income (expenses)                
      Interest income     6       2  
      Gain (loss) on derivative liabilities     (38 )     14,659  
      Income taxes     (912 )     (912 )
    Total Other Income (Expenses)     (944 )     13,749  
Net loss     (1,163,214 )     (924,103 )
Convertible preferred stock dividends     (200,625 )     -  
Net loss available to common stockholders   $ (1,363,839 )   $ (924,103 )
                 
    Basic & Diluted Loss per Common Share   $ (0.02 )   $ (0.01 )
                 
                 
Weighted Average Shares Outstanding:                
    Basic & Diluted     66,123,757       66,001,260  
                 
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.                
                 
   
BIO-KEY International, Inc. and Subsidiary  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited)  
   
    Three Months Ended March 31,  
    2016     2015  
             
CASH FLOW FROM OPERATING ACTIVITIES:                
    Net loss   $ (1,163,214 )   $ (924,103 )
    Adjustments to reconcile net loss to cash used for operating activities:                
      Depreciation     11,518       10,606  
      Amortization of intangible assets     3,401       3,401  
      Share and warrant-based compensation for employees and consultants     158,363       162,219  
      Loss (gain) on derivative liabilities     38       (14,659 )
      Stock based directors fees     16,000       -  
    Change in assets and liabilities:                
      Accounts receivable     1,167,758       36,034  
      Due (from) to factor     (109,681 )     192,705  
      Inventory     (110,208 )     (193,585 )
      Prepaid expenses and other     (3,524 )     127,839  
      Accounts payable     (529,924 )     68,518  
      Accrued liabilities     (181,001 )     (17,201 )
      Deferred revenue     78,886       29,001  
        Net cash used for operating activities     (661,588 )     (519,225 )
CASH FLOW FROM INVESTING ACTIVITIES:                
      Capital expenditures     (19,287 )     -  
        Net cash used for investing activities     (19,287 )     -  
CASH FLOW FROM FINANCING ACTIVITIES:                
      Preferred dividends paid     (133,851 )     -  
      Costs to issue preferred and common stock     (31,704 )     (20,908 )
        Net cash used for financing activities     (165,555 )     (20,908 )
NET DECREASE IN CASH AND CASH EQUIVALENTS     (846,430 )     (540,133 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     4,321,078       843,632  
CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 3,474,648     $ 303,499  
                 

Contact Information

  • Investor & Media Contacts:
    David Collins, William Jones, Helen Sun
    Catalyst Global
    212-984-9800
    bkyi@catalyst-ir.com