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WALL, N.J., Aug. 12, 2022 (GLOBE NEWSWIRE) — 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 second quarter ended June 30, 2022 (Q2’22). BIO-key is hosting a conference call today at 10:00 a.m. ET (details below) to review its results and outlook.
Highlights:
BIO-key CEO Michael DePasquale commented, “Our second quarter and first half revenue demonstrate growing momentum in our base of annual recurring revenue (ARR) from software licenses, which is a core focus and principal value driver for our business. Our Q2’22 performance included the first full quarter of operating results from our Swivel Secure Europe operations acquired in March and the integration of this business is proceeding according to plan.
“PortalGuard continues to gain momentum in higher education, municipal governments, and enterprises as a high-value, easy-to-deploy solution for hybrid access needs. Our progress is being supported by a growing base of Channel Alliance Partners (CAP) around the world, strong customer references, an expanding base of industry awards, and our digital and direct sales and marketing initiatives. Customers are increasingly recognizing PortalGuard’s value, flexibility and support for sixteen multi-factor authentication factors, including BIO-key’s industry leading Identity Bound Biometric capabilities.
Outlook
“BIO-key has built a strong base of products and services and a growing global footprint of partnerships and direct sales resources to address the substantial cybersecurity and IAM needs around the world. Given our progress to date and the growing scope of opportunities we are identifying, we remain confident in achieving our full-year 2022 revenue guidance of $10-13M, representing growth of over 100% above 2021. We believe BIO-key is positioned to achieve break-even operations within this range, subject to our mix of hardware and higher-margin software revenue.
“Our guidance anticipates continued growth in recurring software license revenue to roughly 70% of the lower end of our revenue range, supported by hardware and services revenue contributions that are generally tied to specific projects. Our outlook is supported by our strong capital position, talented management and product development teams, and our expanding global sales, marketing and channel partner footprint.”
Financial Results
Q2’22 revenues increased 96% to $1.9M from $0.9M in Q2’21, driven by a 75.5% increase in software license revenue as well as solid growth in both hardware and services revenue.
Gross profit grew to $1.2M in Q2’22 from $0.8M in Q2’21, due primarily to increased revenues. Gross profit margin declined from 75% in Q2’21 to 63% in Q2’22, due to growth in lower-margin hardware revenue and a decline in the gross margin realized on license fees as a result of third party-software required for Swivel Secure licenses.
Total operating expenses increased to $2.8M in Q2’22 from $1.9M in Q2’21, reflecting a $0.6M increase in selling, general and administrative expenses and a $0.3M increase in research, development and engineering expenses. Increases included the consolidation of Swivel Secure and increased personnel costs related to multiple new hires. Higher research, development & engineering costs were attributable to costs associated with the development and Q2 launch of significant enhancements and updates to our MobileAuth application, the only multi-factor authentication mobile app that integrates Identity-Bound Biometrics with other authentication modalities.
BIO-key reported a net loss of $1.7M, or $0.21 per share, compared to a Q2’21 loss of $1.2M, or $0.15 per share. Weighted average basic shares outstanding were approximately 8.1M in Q2’22 and 7.8M in Q2’21.
Financial Strength
BIO-key ended the second quarter with working capital of $8.8M, including $4.9M of cash and cash equivalents and $4.9M in inventory, and a book value of $13.6M, or approximately $1.61 per share.
| Conference Call Details | ||
| Date / Time: | Friday, August 12th 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 6599160 | |
About BIO-key International, Inc. (www.BIO-key.com)
BIO-key has over two decades of expertise in providing 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 Statement
All 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 and other foreign markets; our ability to integrate the operations and personnel of PistolStar and 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.
| BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| June 30, 2022 |
December 31, 2021 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 4,893,042 | $ | 7,754,046 | ||||
| Accounts receivable, net | 2,039,062 | 970,626 | ||||||
| Due from factor | 76,940 | 49,500 | ||||||
| Note receivable, net of allowance | 119,644 | 82,000 | ||||||
| Inventory | 4,888,601 | 4,940,660 | ||||||
| Prepaid expenses and other | 331,697 | 216,041 | ||||||
| Total current assets | 12,348,986 | 14,012,873 | ||||||
| Resalable software license rights | 43,768 | 48,752 | ||||||
| Investment – debt security, net | 302,821 | 452,821 | ||||||
| Equipment and leasehold improvements, net | 135,237 | 69,168 | ||||||
| Capitalized contract costs, net | 301,225 | 249,012 | ||||||
| Deposits and other assets | 8,712 | 8,712 | ||||||
| Note receivable, net of allowance | 68,356 | 113,000 | ||||||
| Operating lease right-of-use assets | 206,792 | 254,100 | ||||||
| Intangible assets, net | 1,952,606 | 1,298,077 | ||||||
| Goodwill | 2,256,402 | 1,262,526 | ||||||
| Total non-current assets | 5,275,919 | 3,756,168 | ||||||
| TOTAL ASSETS | $ | 17,624,905 | $ | 17,769,041 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 1,279,301 | $ | 427,772 | ||||
| Accrued liabilities | 849,719 | 828,997 | ||||||
| Earnout payable – Swivel acquisition | 500,000 | – | ||||||
| Government loan – BBVA Bank, current portion | 122,000 | – | ||||||
| Deferred revenue, current portion | 588,949 | 565,355 | ||||||
| Operating lease liabilities, current portion | 192,581 | 177,188 | ||||||
| Total current liabilities | 3,532,550 | 1,999,312 | ||||||
| Deferred revenue, net of current portion | 71,524 | 67,300 | ||||||
| Operating lease liabilities, net of current portion | 22,004 | 86,974 | ||||||
| Government loan – BBVA Bank, net of current portion | 379,287 | – | ||||||
| Total non-current liabilities | 472,815 | 154,274 | ||||||
| TOTAL LIABILITIES | 4,005,365 | 2,153,586 | ||||||
| Commitments and Contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock — authorized, 170,000,000 shares; issued and outstanding; 8,441,574 and 7,853,759 of $.0001 par value at June 30, 2022 and December 31, 2021, respectively | 844 | 786 | ||||||
| Additional paid-in capital | 121,022,606 | 120,190,139 | ||||||
| Accumulated other comprehensive loss | (110,081 | ) | – | |||||
| Accumulated deficit | (107,293,830 | ) | (104,575,470 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 13,619,540 | 15,615,455 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 17,624,905 | $ | 17,769,041 | ||||
| BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | ||||||||||||||||
| Services | $ | 435,106 | $ | 286,641 | $ | 830,910 | $ | 666,663 | ||||||||
| License fees | 1,162,148 | 662,193 | 2,622,331 | 1,141,151 | ||||||||||||
| Hardware | 349,861 | 43,256 | 435,045 | 1,072,914 | ||||||||||||
| Total revenues | 1,947,115 | 992,090 | 3,888,286 | 2,880,728 | ||||||||||||
| Costs and other expenses | ||||||||||||||||
| Cost of services | 180,677 | 158,440 | 391,590 | 334,384 | ||||||||||||
| Cost of license fees | 358,136 | 48,373 | 431,366 | 87,342 | ||||||||||||
| Cost of hardware | 185,140 | 32,756 | 238,438 | 584,478 | ||||||||||||
| Total costs and other expenses | 723,953 | 239,569 | 1,061,394 | 1,006,204 | ||||||||||||
| Gross profit | 1,223,162 | 752,521 | 2,826,892 | 1,874,524 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling, general and administrative | 2,006,573 | 1,374,084 | 3,804,571 | 2,890,482 | ||||||||||||
| Research, development and engineering | 784,083 | 490,952 | 1,589,349 | 932,603 | ||||||||||||
| Total Operating Expenses | 2,790,656 | 1,865,036 | 5,393,920 | 3,823,085 | ||||||||||||
| Operating loss | (1,567,494 | ) | (1,112,515 | ) | (2,567,028 | ) | (1,948,561 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | 77 | 832 | 208 | 3,447 | ||||||||||||
| Loss on foreign currency transactions | – | (50,000 | ) | – | (50,000 | ) | ||||||||||
| Investment-debt security reserve | (150,000 | ) | – | (150,000 | ) | – | ||||||||||
| Interest expense | (1,540 | ) | – | (1,540 | ) | (18,000 | ) | |||||||||
| Total other income (expense), net | (151,463 | ) | (49,168 | ) | (151,332 | ) | (64,553 | ) | ||||||||
| Net loss | $ | (1,718,957 | ) | $ | (1,161,683 | ) | $ | (2,718,360 | ) | $ | (2,013,114 | ) | ||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | $ | (1,718,957 | ) | $ | (1,161,683 | ) | $ | (2,718,360 | ) | $ | (2,013,114 | ) | ||||
| Other comprehensive income – Foreign currency translation adjustment | (165,883 | ) | – | (110,081 | ) | – | ||||||||||
| Comprehensive loss | $ | (1,884,840 | ) | $ | (1,161,683 | ) | $ | (2,828,441 | ) | $ | (2,013,114 | ) | ||||
| Basic and Diluted Loss per Common Share | $ | (0.21 | ) | $ | (0.15 | ) | $ | (0.34 | ) | $ | (0.26 | ) | ||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| Basic and diluted | 8,098,020 | 7,776,190 | 7,992,102 | 7,774,946 | ||||||||||||
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