BIO-key® International, Inc. (Nasdaq: BKYI), an innovative
provider of workforce and customer Identity and Access Management
(IAM) featuring passwordless, phoneless and token-less
Identity-Bound Biometric (IBB) authentication solutions, announced
results for its third quarter ended September 30, 2023 (Q3’23).
Highlights:
- Revenue rose over 30% to $1.8M vs.
$1.4M in Q3’22
- Gross profit improved more than 40%
to $1.4M vs. $1.0M in Q3’22
- Q3’23 operating loss improved to
approximately ($750,000) vs. an operating loss of ($2.4M) in
Q3’22.
- Q3’23 net loss per share reduced
approximately 72% to ($0.08) vs. ($0.29) in Q3’22.
CEO CommentaryBIO-key CEO, Mike
DePasquale commented, “Our Q3 performance reflects continued
progress driving revenue growth and reducing expenses to move our
business toward sustained profitability. These trends are also
reflected in our nine-month results, with revenues up approximately
30% to $6.8M and our operating loss reduced by over 50%.
“We are pleased to report that our sales team
has developed a significant pipeline of larger customer
opportunities interested in the savings and superior user
experience of our phoneless, tokenless, passwordless
authentication. Our team is focused on those opportunities with the
greatest potential for generating meaningful Annual Recurring
Revenue (ARR). Our Channel Alliance Partner (CAP) program continues
to build both its geographic scope and its sales productivity.
These channels have enabled us to build our ARR to approximately
$7M per year, providing a solid base on which to layer new SaaS
deployments around the globe, through new customer wins and the
expanded penetration of existing customer accounts.
Outlook“We believe BIO-key is
well positioned to deliver solid top-line and bottom-line
improvements going forward. This view is based on the very
attractive value proposition of our secure, convenient, scalable
and cost-efficient solutions incorporating the industry’s widest
array of multi-factor authentication methods, including our
identity-bound biometric solutions. With greater cyber-insurer
scrutiny and the recent SEC regulation requiring companies to
report on their cybersecurity measures beginning in mid-December,
we expect that most sizeable companies will be implementing
multi-factor authentication throughout their workforce. We believe
the market is ripe for a phoneless, tokenless passwordless FIDO
passkey authentication option for manufacturing, retail, call
center, and other roving workforces. Historically, Q4 tends to be
one of our strongest quarters each year in terms of business
volume, and we are confident about our prospects for continued
growth and improved bottom line performance in 2024.
“Supporting our near-term outlook is a
significant recent commitment from a long-standing international
defense ministry customer, for additional software and hardware to
support their expanded rollout of our biometric authentication
solution. To support our working capital requirements, we are
working to convert certain inventories into cash while also
pursuing operating expense reduction opportunities, including
relocating our headquarters, to accelerate our path to cash flow
breakeven.”
Financial ResultsPlease
note that the review of our Q3 FY2023 financial statements has not
been completed by our independent registered public accounting firm
as of the date of this press release and are therefore subject to
change.
Q3’23 revenues rose 33% to $1.8M, reflecting
increased services, software license and hardware revenue versus
Q3’22. Q3’23 service revenue was driven by custom service
installations for new and existing customer deployments and
upgrades, and hardware revenue reflected new contact activity as
well as progress in reducing hardware inventories. For the first
nine months of 2023, total revenues rose 30% to $6.8M compared to
$5.3M for the first nine months of 2022, reflecting growth in
service and license revenue and a decline in hardware revenue.
Gross profit grew 43% to $1.4M in Q3’23 from
$1.0M in Q3’22, reflecting an increase in gross margin to 77% from
71% in Q3’22. Gross profit and gross margin benefitted from a
year-over-year increase in higher margin services and software
license revenue and a decrease in third-party software costs,
principally due to the seasonal, vacation-related slowdown in Q3
business activity in Europe.
Q3’23 operating expenses decreased 36% to $2.2
million from $3.3 million in Q3’22, due primarily to lower selling,
general and administrative expenses reflecting progress in
BIO-key’s expense reduction initiatives as well as lower research
and development investments. BIO-key continues to seek expense
reduction opportunities to further benefit its operating
results.
Reflecting higher gross profit and lower
operating costs, BIO-key trimmed its Q3’23 net loss to $749,000, as
compared to $2.4M in Q3’22. Similarly, for the first nine months of
2023 compared to 2022, the Company reduced its year-to-date 2023
net loss to $2.5M from a net loss of $5.1M.
At September 30, 2023, BIO-key had current
assets of $7.9M, including $0.3M of cash and cash equivalents,
$2.9M of accounts receivable, and $4.3M of inventory.
About BIO-key International, Inc.
(www.BIO-key.com)BIO-key is revolutionizing authentication
and cybersecurity with biometric-centric, multi-factor identity and
access management (IAM) software managing millions of users. Its
cloud-based PortalGuard IAM solution provides cost-effective,
easy-to-deploy, convenient, and secure access to devices,
information, applications, and high-value transactions. With
industry-leading Identity-Bound Biometric (IBB) capabilities,
BIO-key's patented software and hardware solutions enable
large-scale Identity-as-a-Service (IDaaS) solutions and customized
on-premises solutions.
BIO-key Safe Harbor
StatementAll 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 to satisfy debt repayment obligations and
working capital needs; our ability to continue as a going concern;
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 industry; market acceptance of biometric
products generally and our products under development; our ability
to convert sales opportunities to customer contracts; our ability
to expand into Asia, Africa and other foreign markets; our ability
to integrate the operations and personnel of Swivel Secure into our
business; fluctuations in foreign currency exchange
rates; 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, 2022 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 |
|
|
Investor ContactsWilliam Jones, David
CollinsCatalyst IRBKYI@catalyst-ir.com or 212-924-9800
BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIESPreliminary
Condensed Consolidated Statements of Operations and Comprehensive
Loss(Unaudited and Unreviewed) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services |
|
$ |
599,156 |
|
|
$ |
371,956 |
|
|
$ |
1,752,143 |
|
|
$ |
1,202,866 |
|
License fees |
|
|
950,015 |
|
|
|
918,260 |
|
|
|
4,664,341 |
|
|
|
3,540,592 |
|
Hardware |
|
|
279,200 |
|
|
|
83,333 |
|
|
|
424,583 |
|
|
|
518,377 |
|
Total revenues |
|
|
1,828,371 |
|
|
|
1,373,549 |
|
|
|
6,841,067 |
|
|
|
5,261,835 |
|
Costs and other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
|
125,039 |
|
|
|
162,632 |
|
|
|
639,996 |
|
|
|
554,222 |
|
Cost of license fees |
|
|
203,891 |
|
|
|
173,310 |
|
|
|
1,022,919 |
|
|
|
604,677 |
|
Cost of hardware |
|
|
97,674 |
|
|
|
57,841 |
|
|
|
190,074 |
|
|
|
296,278 |
|
Total costs and other
expenses |
|
|
426,604 |
|
|
|
393,783 |
|
|
|
1,852,989 |
|
|
|
1,455,177 |
|
Gross profit |
|
|
1,401,767 |
|
|
|
979,766 |
|
|
|
4,988,078 |
|
|
|
3,806,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
1,592,410 |
|
|
|
2,510,706 |
|
|
|
5,467,306 |
|
|
|
6,315,277 |
|
Research, development and engineering |
|
|
558,686 |
|
|
|
829,506 |
|
|
|
1,807,026 |
|
|
|
2,418,855 |
|
Total Operating Expenses |
|
|
2,151,096 |
|
|
|
3,340,212 |
|
|
|
7,274,332 |
|
|
|
8,734,132 |
|
Operating loss |
|
|
(749,329 |
) |
|
|
(2,360,446 |
) |
|
|
(2,286,254 |
) |
|
|
(4,927,474 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
3 |
|
|
|
8 |
|
|
|
29 |
|
|
|
216 |
|
Loss on foreign currency transactions |
|
|
- |
|
|
|
- |
|
|
|
(15,000 |
) |
|
|
- |
|
Investment-debt security reserve |
|
|
- |
|
|
|
(40,000 |
) |
|
|
- |
|
|
|
(190,000 |
) |
Change in fair value of convertible note |
|
|
85,890 |
|
|
|
- |
|
|
|
183,313 |
|
|
|
- |
|
Interest expense |
|
|
(23,655 |
) |
|
|
(2,071 |
) |
|
|
(137,379 |
) |
|
|
(3,611 |
) |
Total other income (expense), net |
|
|
62,238 |
|
|
|
(42,063 |
) |
|
|
30,963 |
|
|
|
(193,395 |
) |
Loss before provision for
income tax |
|
|
(687,091 |
) |
|
|
(2,402,509 |
) |
|
|
(2,255,291 |
) |
|
|
(5,120,869 |
) |
Provision for income tax |
|
|
(62,000 |
) |
|
|
- |
|
|
|
(205,000 |
) |
|
|
- |
|
Net loss |
|
$ |
(749,091 |
) |
|
$ |
(2,402,509 |
) |
|
$ |
(2,460,291 |
) |
|
$ |
(5,120,869 |
) |
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(749,091 |
) |
|
$ |
(2,402,509 |
) |
|
$ |
(2,460,291 |
) |
|
$ |
(5,120,869 |
) |
Other comprehensive income (loss) – Foreign currency translation
adjustment |
|
|
35,363 |
|
|
|
(119,269 |
) |
|
|
127,393 |
|
|
|
(229,350 |
) |
Comprehensive loss |
|
$ |
(713,728 |
) |
|
$ |
(2,521,778 |
) |
|
$ |
(2,332,898 |
) |
|
$ |
(5,350,219 |
) |
Basic and Diluted Loss per Common Share |
|
$ |
(0.08 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.64 |
) |
Weighted Average
Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
9,130,899 |
|
|
|
8,148,848 |
|
|
|
9,049,835 |
|
|
|
8,054,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please note that the review of our Q3 FY2023 financial
statements has not been completed by our independent
registered public accounting firm as of the date of this press
release and are therefore subject to change.
BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIESPreliminary
Consolidated Balance Sheets |
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(Unaudited andUnreviewed) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
307,086 |
|
|
$ |
2,635,522 |
|
Accounts receivable, net |
|
|
2,899,218 |
|
|
|
1,522,784 |
|
Due from factor |
|
|
62,572 |
|
|
|
49,500 |
|
Inventory |
|
|
4,289,213 |
|
|
|
4,434,369 |
|
Prepaid expenses and
other |
|
|
362,250 |
|
|
|
342,706 |
|
Total current assets |
|
|
7,920,339 |
|
|
|
8,984,881 |
|
Equipment and leasehold
improvements, net |
|
|
69,202 |
|
|
|
107,413 |
|
Capitalized contract costs,
net |
|
|
264,349 |
|
|
|
283,069 |
|
Deposits and other assets |
|
|
8,712 |
|
|
|
8,712 |
|
Operating lease right-of-use
assets |
|
|
50,464 |
|
|
|
197,355 |
|
Intangible assets, net |
|
|
1,519,592 |
|
|
|
1,762,825 |
|
Total non-current assets |
|
|
1,912,319 |
|
|
|
2,359,374 |
|
TOTAL
ASSETS |
|
$ |
9,832,658 |
|
|
$ |
11,344,255 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,644,100 |
|
|
$ |
1,108,279 |
|
Accrued liabilities |
|
|
1,030,033 |
|
|
|
1,009,123 |
|
Income taxes payable |
|
|
231,000 |
|
|
|
- |
|
Convertible note payable |
|
|
2,412,890 |
|
|
|
2,596,203 |
|
Government loan – BBVA Bank,
current portion |
|
|
135,308 |
|
|
|
120,000 |
|
Deferred revenue, current |
|
|
594,262 |
|
|
|
462,418 |
|
Operating lease liabilities,
current portion |
|
|
42,176 |
|
|
|
159,665 |
|
Total current liabilities |
|
|
6,089,769 |
|
|
|
5,455,688 |
|
Deferred revenue, long
term |
|
|
37,280 |
|
|
|
52,134 |
|
Deferred tax liability |
|
|
146,997 |
|
|
|
170,281 |
|
Government loan – BBVA Bank –
net of current portion |
|
|
221,625 |
|
|
|
326,767 |
|
Operating lease liabilities,
net of current portion |
|
|
9,570 |
|
|
|
37,829 |
|
Total non-current liabilities |
|
|
415,472 |
|
|
|
587,011 |
|
TOTAL
LIABILITIES |
|
|
6,505,241 |
|
|
|
6,042,699 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock — authorized,
170,000,000 shares; issued and outstanding; 9,438,894 and 9,190,504
of $.0001 par value at Sept 30, 2023 and Dec. 31, 2022,
respectively |
|
|
946 |
|
|
|
919 |
|
Additional paid-in
capital |
|
|
122,362,110 |
|
|
|
122,028,612 |
|
Accumulated other
comprehensive loss |
|
|
(115,208 |
) |
|
|
(242,602 |
) |
Accumulated deficit |
|
|
(118,920,431 |
) |
|
|
(116,485,373 |
) |
TOTAL
STOCKHOLDERS’ EQUITY |
|
|
3,327,417 |
|
|
|
5,301,556 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
9,832,658 |
|
|
$ |
11,344,255 |
|
|
|
|
|
|
|
|
|
|
Please note that the review of our Q3 FY2023 financial
statements has not been completed by our independent registered
public accounting firm as of the date of this press release and are
therefore subject to change.
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