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Cyber-Security Provider BIO-key Reports Q3 and Year-to-Date Revenues Rose to $1.4M and $5.3M, Respectively, on Growing Software and Services Revenue; Investor Call Tomorrow at 10am ET

WALL, N.J., Nov. 14, 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 third quarter ended September 30, 2022 (Q3’22). BIO-key will host an investor call tomorrow at 10:00 a.m. ET (details below).

Q3 Highlights:

BIO-key Chairman & CEO Michael DePasquale commented, “Despite delays in our African business, some slippage from Q3 to Q4 in our domestic business, and seasonal slowness in Europe in the late summer, BIO-key continued to grow revenues and integrate our expanding operations. We have developed a substantial customer footprint generating high-margin annual recurring revenue (ARR) and our brand is now recognized on a global basis.

“Our integration of Swivel Secure Europe, which we acquired in March, is proceeding well, and we are now a truly global company. Through the first nine months of 2022, our sales by region grew in North America, Europe, the Middle East, South America, and Asia, but not in Africa, which continues to experience delays in the rollout of government sponsored national ID programs. In particular, the Nigerian Identity Management Commission has had both technical and financial issues that have led to delays in enrolling significant numbers of citizens, and we expect that to resolve itself in Q1 of 2023.

“Innovation remains core to our mission as we continue to expand password-less and mobile user IAM options, including the launch of BIO-key’s Mobile Authenticator App which supports both server-secured and on-device biometric multi-factor authentication (MFA). We also introduced an enhanced admin panel for our PortalGuard, Identity-as-a-Service (IDaaS) platform. Our PortalGuard IDaaS franchise continues to expand within higher education, county governments, and enterprises. Customers are drawn to this highly secure, efficient, user-friendly and cost-effective solution designed to meet today’s needs for scalable, secure on-site, mobile, and off-site user access.  

“To enhance the global awareness and reach of our solutions and brand, we have invested in an expanded team of direct sales resources, supported by traditional and digital marketing.

“We believe the IAM and multi-factor authentication segments of the cybersecurity space are some of the most lucrative opportunities in the global software market right now. We are building a recurring annual revenue stream with a proven portfolio of Identity-as-a-Service products across customers in several key verticals. Our expanding global footprint of direct sales and distribution partner resources positions us well to address significant IAM and cybersecurity needs around the world. In addition to integrating Swivel Secure and launching BIO-key Europe, we’ve built a strong pipeline of significant customer and project opportunities, some of which have progressed more slowly than anticipated over the past several months, or slipped to Q4, as I had mentioned.

Outlook

“We expect a strong close to the year, however, given our slower than expected sales so far this year, we now expect full-year revenues of $7M to $9M in 2022, representing growth of 37% to 76% over 2021 revenue. Our updated outlook anticipates growth in recurring software license revenue to roughly 70% of our total revenue, supported by hardware and services revenue contributions, which are typically in support of specific projects.

“Our current outlook is supported by our technology leadership, our talented global sales, marketing and management teams, and the growing productivity of our channel partner program. With our acquisition of Swivel Secure Europe, we have added critical mass in Europe, the Middle East and Asia (EMEA). Accordingly, we expect to see significant EMEA growth moving into 2023 now that our team has been fully trained on the value and capabilities of our extended line of solutions and services.”

Financial Results

Q3’22 revenues rose 6% to $1.4M vs. Q3’21 and year-to-date revenues increased 26% to $5.3M, with increased software license and service fees which were partially offset by lower hardware revenue in both 2022 periods.

Gross profit was $1.0M in Q3’22, flat from Q’21, due to higher cost of license fees as a result of third party-software required for Swivel Secure licenses, which offset revenue growth. Likewise, realized gross profit margin declined to 71% in Q3’22 from 77% in Q3’21.

Total operating expenses increased to $3.3M in Q3’22 from $2.0M in Q3’21, reflecting a $1.1M increase in selling, general and administrative (SG&A) expenses, and a $0.2M increase in research, development and engineering expenses. The SG&A increases included costs related to Swivel Secure operations, trade show expenses, share based compensation, travel, and wages and benefits for new employees. Higher research, development & engineering expenses were due to higher personnel costs, including consulting, wages, and benefits for new employees and product development, including the Q3 launch of significant enhancements and updates to the MobileAuth application.

BIO-key reported a Q3’22 net loss of $2.4M, or $0.29 per share, compared to a Q3’21 net loss of $1.0M, or $0.13 per share. The weighted average basic shares outstanding were approximately 8.1M in Q3’22 and 7.8M in Q3’21.

Financial Strength

As of September 30, 2022, BIO-key had current assets of $9.9M, including $2.8M of cash and cash equivalents, $1.8M of accounts receivable, and $4.9M of inventory. Stockholders’ Equity was $11.2M, or approximately $1.32 per share at quarter end.

Conference Call Details

Date / Time:Tuesday, November 15th 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 8070313


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

BIO-key provides 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, Europe, and other foreign markets; our ability to integrate the operations and personnel of 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.

Engage with BIO-key

Facebook – Corporate: https://www.facebook.com/BIOkeyInternational/ 
LinkedIn – Corporate:  https://www.linkedin.com/company/bio-key-international 
Twitter – Corporate: @BIOkeyIntl 
Twitter – Investors:  @BIO_keyIR 
StockTwits:  BIO_keyIR 


   

Media Contact     Investor Contact
Erin KnappWilliam Jones, David Collins
Matter Communications   Catalyst IR
[email protected]   [email protected] 
914-260-3158     212-924-9800

      
                                           

BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

   September 30,
2022
   December 31,
2021
 
  (Unaudited)     
ASSETS        
Cash and cash equivalents $2,774,617  $7,754,046 
Accounts receivable, net  1,808,036   970,626 
Due from factor  49,500   49,500 
Note receivable, net of allowance  -   82,000 
Inventory  4,892,667   4,940,660 
Prepaid expenses and other  357,726   216,041 
Total current assets  9,882,546   14,012,873 
Resalable software license rights  41,286   48,752 
Investment – debt security, net  262,821   452,821 
Equipment and leasehold improvements, net  125,824   69,168 
Capitalized contract costs, net  298,673   249,012 
Deposits and other assets  8,712   8,712 
Note receivable, net of allowance  146,000   113,000 
Operating lease right-of-use assets  263,377   254,100 
Intangible assets, net  1,799,074   1,298,077 
Goodwill  2,197,698   1,262,526 
Total non-current assets  5,143,465   3,756,168 
TOTAL ASSETS $15,026,011  $17,769,041 
         
LIABILITIES        
Accounts payable $1,068,571  $427,772 
Accrued liabilities  875,903   828,997 
Earnout payable – Swivel acquisition  500,000   - 
Government loan – BBVA Bank, current portion  120,000   - 
Deferred revenue, current portion  600,819   565,355 
Operating lease liabilities, current portion  178,277   177,188 
Total current liabilities  3,343,570   1,999,312 
Deferred revenue, net of current portion  75,187   67,300 
Operating lease liabilities, net of current portion  86,874   86,974 
Government loan – BBVA Bank, net of current portion  321,872   - 
Total non-current liabilities  483,933   154,274 
TOTAL LIABILITIES  3,827,503   2,153,586 
         
Commitments and Contingencies        
         
STOCKHOLDERS EQUITY        
         
Common stock — authorized, 170,000,000 shares; issued and outstanding; 8,452,621 and 7,853,759 of $.0001 par value at September 30, 2022 and December 31, 2021, respectively  845   786 
Additional paid-in capital  121,123,352   120,190,139 
Accumulated other comprehensive loss  (229,350)  - 
Accumulated deficit  (109,696,339)  (104,575,470)
TOTAL STOCKHOLDERS EQUITY  11,198,508   15,615,455 
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $15,026,011  $17,769,041 


BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)

   Three months ended
September 30,
   Nine months ended
September 30,
 
  2022  2021  2022  2021 
Revenues                
Services $371,956  $318,500  $1,202,866  $985,163 
License fees  918,260   870,459   3,540,592   2,011,610 
Hardware  83,333   109,870   518,377   1,182,784 
Total revenues  1,373,549   1,298,829   5,261,835   4,179,557 
Costs and other expenses                
Cost of services  162,632   176,976   554,222   511,360 
Cost of license fees  173,310   45,986   604,677   133,328 
Cost of hardware  57,841   71,712   296,278   656,190 
Total costs and other expenses  393,783   294,674   1,455,177   1,300,878 
Gross profit  979,766   1,004,155   3,806,658   2,878,679 
                 
Operating Expenses                
Selling, general and administrative  2,510,706   1,385,534   6,315,277   4,276,016 
Research, development and engineering  829,506   612,597   2,418,855   1,545,200 
Total Operating Expenses  3,340,212   1,998,131   8,734,132   5,821,216 
Operating loss  (2,360,446)  (993,976)  (4,927,474)  (2,942,537)
Other income (expense)                
Interest income  8   329   216   3,776 
Loss on foreign currency transactions  -   -   -   (50,000)
Investment-debt security reserve  (40,000)  (30,000)  (190,000)  (30,000)
Noncash interest expense  -   -   -   (18,000)
Interest expense  (2,071)  -   (3,611)  - 
Total other income (expense), net  (42,063)  (29,671)  (193,395)  (94,224)
Net loss $(2,402,509) $(1,023,647) $(5,120,869) $(3,036,761)
                 
Comprehensive loss:                
Net loss $(2,402,509) $(1,023,647) $(5,120,869) $(3,036,761)
Other comprehensive loss – Foreign currency translation adjustment  (119,269)  -   (229,350)  - 
Net loss available to common stockholders $(2,521,778) $(1,023,647) $(5,350,219) $(3,036,761)
                 
Basic and Diluted Loss per Common Share $(0.29) $(0.13) $(0.64) $(0.39)
                 
Weighted Average Common Shares Outstanding:                
Basic and diluted  8,148,848   7,790,778   8,054,207   7,788,734 

 

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