SOURCE: BIO-key International, Inc.

BIO-key International, Inc.

August 14, 2015 08:00 ET

Fingerprint Biometric Provider BIO-key Reports Record Revenue of $2.3M and Net Income of $753,000 for Q2 2015

Confirms 2015 Revenue Guidance of $5M - $7M

WALL, NJ--(Marketwired - Aug 14, 2015) - BIO-key International, Inc. (OTCQB: BKYI), a leading fingerprint biometric identification software and technology provider, today reported record results for its second quarter ended June 30, 2015 and will host a conference call today at 10:00 a.m. EDT, details below.

Q2 Highlights:

  • Q2 '15 revenue increased to $2,272,804 compared to $402,879 in Q2 '14, principally reflecting a $2.0 million license order from an existing international customer.

  • Q2 '15 net income rose to $753,000, or $0.01 per basic and diluted share, compared to a net loss of $1,026,286, or ($0.02) per basic and diluted share, in Q2 '14.

  • Executed a Memorandum of Understanding with an existing strategic partner Worldwide Touch Technology Holdings Limited regarding a proposed equity investment in BIO-key.

Michael DePasquale, Chairman and CEO of BIO-key, commented, "BIO-key continues to see growth in demand for our products as enterprises and governments move to deploy stronger user authentication technologies. Network breaches, identity theft and fraud are on the rise as traditional password and other single factor authentication methods continue to fail. BIO-key's proven, scalable and highly secure fingerprint biometric software solutions directly address this problem, providing security and convenience in a cost effective manner."

"Our favorable growth outlook is supported by a steady increase in customer dialogues across healthcare, financial services, mobile communications and government markets. The prospects are considering deployment of fingerprint biometrics to solve key cybersecurity, regulatory and fraud prevention goals. While we continue to expect variability in our quarterly operating results due to the size and timing of potential deals in our pipeline, we remain confident that we will achieve our full year revenue guidance of between 5 and 7 million and expect cash flow breakeven at or above revenue of 6.5 million," stated DePasquale.

"As previously announced and to support BIO-key's ability to capitalize on growing industry demand, we are in discussions with Worldwide Touch Technology, an existing BIO-key partner with substantial reach in Asia, regarding a strategic partnership and substantial capital infusion. We believe this relationship would substantially broaden our distribution reach while providing additional capital and opportunities to jointly develop new products based on our collective biometric technologies."

Q2 Results
BIO-key's Q2 '15 license fee revenue increased to $2,017,535 from $121,078 in Q2 '14, principally reflecting a large telecommunications license signed in Q2 '15. Service revenues decreased slightly to $255,269 in Q2'15 from $281,711 in Q2'14. Total revenue for Q2 '15 increased to $2,272,804 compared to $402,789 in Q2'14. In Q2, sales in highly regulated industries represented approximately 83% of total sales, with the OEM channel representing approximately 80% of total sales.

Q2'15 gross margin increased to 94% from 60% in Q2'14, principally due to the substantial increase in high-margin software license revenue. Q2 '15 operating expenses rose 1% to $1,373,860 from $1,366,035 in Q2 '14, reflecting increases in selling, general and administrative and reductions in research, development and engineering expense.

BIO-key reported Q2'15 net income of $753,146, or $0.01 per basic and diluted share, compared to a net loss of ($1,026,286), or ($0.02) per basic and diluted share, in Q2'14. Share and per-share figures have been adjusted to reflect a February 2015 1-for-2 reverse split.

Liquidity and Capital Resources
BIO-key had total current assets of $2,445,334, including cash and cash equivalents of $282,376, at June 30, 2015, compared to total current assets $1,793,884, including cash and cash equivalents $843,632 at December 31, 2014. BIO-key expects to receive proceeds from the $2.0M license order, net of factored amounts, during Q3 '15. Net cash used for operations during the six months ended June 30, 2015 was ($505,599) compared to ($1,350,089) in the six months ended June 30, 2014.

2015 Financial Guidance

BIO-key remains on track to achieve its full year 2015 revenue guidance range of $5.0 million to $7.0 million, compared to revenue of $4.0 million in 2014. The Company's 2015 year-to-date revenue is tracking to the midpoint of its full year guidance range. BIO-key currently expects its Q3 revenue to range between $700,000 and $1.5 million, versus $1.3 million in Q3 '14.

Gross margin is expected to range between 75% and 80% in the Q3 and full year 2015 periods and BIO-key continues to believe it can achieve breakeven on a cash basis with annual revenues of roughly $6.5 million. Given the variability in the timing and size of potential contracts within the Company's sales opportunity pipeline, BIO-key's quarterly financial performance will likely vary significantly from quarter to quarter.

Underlying the Company's 2015 financial guidance is its opportunity pipeline (the aggregate total of all deal opportunities that could book as revenue over the next twelve months), which is currently valued at $25.0 million, as compared to $25.0 million at December 31, 2014, and $30.0 million at March 31, 2015.

Conference Call and Webcast Replay
 Friday, August 14, 2015 at 10:00 a.m. EDT
Dial-In number: 877-418-5460 or 412-717-9594, ask for BIO-key call
Webcast Replay: Available shortly after call at
Call Replay: 877-344-7529 U.S., 855-669-9568 Canada, 412-317-0088 Intl.
Access code: 10070824

About BIO-key
BIO-key International, Inc. develops and delivers advanced fingerprint biometric identification solutions to commercial and government enterprises, integrators, and 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 reduce identity theft. BIO-key's technology is offered directly or by market leading partners around the world. (

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, 2014 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.


    June 30,
    December 31,
Cash and cash equivalents   $ 282,376     $ 843,632  
Accounts receivable, net of allowance for doubtful accounts of $20,526 at June 30, 2015 and December 31, 2014     133,985       625,341  
Due from factor     1,542,184       76,657  
Inventory     412,569       11,825  
Prepaid expenses and other     74,220       236,429  
  Total current assets     2,445,334       1,793,884  
Equipment and leasehold improvements, net     84,317       103,509  
Deposits and other assets     8,712       8,712  
Intangible assets--less accumulated amortization     154,541       161,344  
  Total non-current assets     247,570       273,565  
TOTAL ASSETS   $ 2,692,904     $ 2,067,449  
Accounts payable   $ 869,114     $ 347,311  
Accrued liabilities     436,293       488,617  
Deferred revenue     601,751       429,233  
Warrant liabilities     28,974       43,227  
  Total current liabilities     1,936,132       1,308,388  
TOTAL LIABILITIES     1,936,132       1,308,388  
Commitments and contingencies                
STOCKHOLDERS' EQUITY                
Common stock -- authorized, 170,000,000 shares; issued and outstanding; 66,001,260 of $.0001 par value at June 30, 2015 and December 31, 2014     6,600       6,600  
Additional paid-in capital     57,675,273       57,506,605  
Accumulated deficit     (56,925,101 )     (56,754,144 )
TOTAL STOCKHOLDERS' EQUITY     756,772       759,061  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 2,692,904     $ 2,067,449  
    Three months ended
June 30,
    Six months ended
June 30,
    2015     2014     2015     2014  
  Services   $ 255,269     $ 281,711     $ 505,622     $ 530,942  
  License fees and other     2,017,535       121,078       2,416,008       1,239,369  
      2,272,804       402,789       2,921,630       1,770,311  
Costs and other expenses                                
  Cost of services     56,905       113,105       123,968       152,280  
  Cost of license fees and other     88,489       48,146       160,782       126,195  
      145,394       161,251       284,750       278,475  
Gross Profit     2,127,410       241,538       2,636,880       1,491,836  
Operating Expenses                                
  Selling, general and administrative     979,861       895,147       2,020,542       1,752,143  
  Research, development and engineering     393,999       470,888       800,640       957,545  
      1,373,860       1,366,035       2,821,182       2,709,688  
    Operating profit (loss)     753,550       (1,124,497 )     (184,302 )     (1,217,852 )
Other income (expenses)                                
  Interest income     2       2       4       3  
  Gain (loss) on derivative liabilities     (406 )     98,209       14,253       (106,739 )
  Income taxes     -       -       (912 )     (912 )
  Total other income (expenses)     (404 )     98,211       13,345       (107,648 )
    Net profit (loss)   $ 753,146     $ (1,026,286 )   $ (170,957 )   $ (1,325,500 )
Basic and Diluted Earnings (Loss) per Common Share   $ 0.01     $ (0.02 )   $ (0.00 )   $ (0.02 )
Weighted Average Shares Outstanding:                                
  Basic and diluted     66,001,260       58,001,934       66,001,260       57,970,309  
    Six Months Ended June 30,  
    2015     2014  
  Net loss   $ (170,957 )   $ (1,325,500 )
  Adjustments to reconcile net loss to cash used in operating activities:                
    Depreciation     21,270       20,016  
      Intangible assets     6,803       6,803  
      Deferred costs     -       -  
    Loss (gain) on derivative liabilities     (14,253 )     106,739  
    Share-based and warrant compensation     222,247       132,218  
    Exercise of stock options     -       14,651  
  Change in assets and liabilities:                
    Accounts receivable trade     491,356       (100,794 )
    Due from factor, net     (1,465,527 )     (18,678 )
    Inventory     (400,744 )     (12,873 )
    Prepaid expenses and other     162,209       (709 )
    Accounts payable     521,803       (188,850 )
    Accrued liabilities     (52,324 )     39,324  
    Deferred revenue     172,518       (22,436 )
      Net cash used for operating activities     (505,599 )     (1,350,089 )
  Capital expenditures     (2,078 )     (5,501 )
    Net cash used for investing activities     (2,078 )     (5,501 )
      Repurchase of outstanding warrants     -       (150,000 )
      Costs to issue common stock     (53,579 )     -  
    Net cash used for financing activities     (53,579 )     (150,000 )
NET DECREASE IN CASH AND CASH EQUIVALENTS     (561,256 )     (1,505,590 )
CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 282,376     $ 517,759  

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