WALL, NJ--(Marketwired - Aug 15, 2016) - BIO-key International, Inc. (
Michael DePasquale, Chairman & CEO of BIO-key, commented, "While we made good incremental progress positioning BIO-key for significant hardware and software revenue opportunities later this year and into next year, our second quarter sales performance was disappointing. Revenue declined to $415,000 in the second quarter as several larger scale opportunities did not close during the period for a variety of reasons that were unrelated to BIO-key. We believe these opportunities still have strong prospects for closing, and we remain in active discussions with the customers to that end. At the same time, we are building out our sales, marketing and distribution channels to drive sales of our line of fingerprint readers for enterprise and retail users.
"We have also continued to build upon our strategic partnership with Microsoft to support the use of expanded biometric security capabilities now resident in the Windows 10 Anniversary Edition released on August 2 nd . Windows 10 has already been downloaded on over 350 million devices, providing a substantial and growing market opportunity for our biometric solutions. We believe BIO-key offers the the strongest, most convenient, and cost effective authentication solutions for Windows 10 enterprise and retail users.
"To tackle this opportunity, we are establishing enterprise and retail distribution channels, packaging and collateral, and sales and marketing support and expect to see broad availability of our products in September. In summary, despite the slow start to the year, BIO-key is working a robust pipeline of enterprise hardware and software opportunities. Over the next several months we believe we can convert these opportunities into meaningful revenue growth for the full year 2016, which we now expect to range between $6.0M and $8.5M."
Recent Highlights:
- Partnered with Access Sales Group to expand distribution and marketing for fingerprint biometric readers and software into high-volume national enterprise and retail channels.
- BIO-key worked closely with Microsoft's device team to achieve Windows Hello ™ certification of its compact USB fingerprint readers , including web application security extensions to use Windows Hello to sign into Microsoft Edge compatible web sites and apps such as iHeartRadio.
- Completed development of its enterprise authentication software for Microsoft Active Directory environments . BIO-key's solution ID Director for Windows allows large and small enterprises to leverage BIO-key fingerprint readers for web authentication envirnoments.
- Expanded sales and production of BIO-key's new SideTouch fingerprint reader . SideTouch combines the new IDEX (IDEX.NO) advanced off-chip sensor technology with BIO-key's universal Windows Biometric Framework (WBF) fingerprint engine. SideTouch is a Microsoft tested and qualified Windows Hello device.
- Launched availability of SideSwipe and EcoID USB fingerprint readers on Amazon .
- Expanded sales reach into the Middle East and North Africa via distribution relationship with Moroccan technology provider, Arthur & Co.
- UK-based former Vodafone & Microsoft executive Pieter Knook was appointed to BIO-key Board .
Guidance: Managment remains confident in the company's pipeline of hardware and software revenue opportunities for the balance of 2016. However, based on delays in the conversion of several significant opportunities into revenue so far in 2016, BIO-key believes it prudent to reduce its full year revenue guidance to a range of $6.0M - $8.5M in 2016, versus revenue of approximately $5M in 2015. BIO-key's estimated breakeven revenue run rate is approximately $7.5M.
Q2 2016 Results: Q2'16 total revenue declined to $415,814 compared to $2,272,804 in Q2'15, principally due to a $2.0 million software license from an existing customer in Q2'15. Service revenues, principally comprised of recurring maintenance and support, decreased 13% to $220,926 compared to $255,269 in Q2'15, reflecting an increase in maintenance revenue offset by no special software requirements for current or new customers. License and other revenue decreased to $194,888 from $2,017,535, principally reflecting the $2.0 million software license booked in Q2'15. Hardware sales increased 5% reflecting an increase in volume.
Q2'16 gross margin declined to 67% from 94% in Q2'15, due to lower revenue and a change in revenue mix. Q2'16 operating expenses rose 17% to $1,605,352 compared to $1,373,860 in Q2'15, principally due to increased R&D expense for new personnel, temporary outside services, and recruiting expenses.
BIO-key's Q2'16 net loss to common shareholders was ($1,576,114), or ($0.02) per share, compared to net income of $753,146, or $0.01 per share, in Q2'15.
Liquidity and Capital Resources At June 30, 2016, BIO-key had cash, cash equivalents and net receivables of $4.3M compared to $7.7M at December 31, 2015.
Conference Call and Webcast Replay
Date/Time: Tuesday, August 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/biokey160815 - Available for 30 days.
Call Replay: 1-877-344-7529 U.S. or 412-317-0088 use code 10091361#
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 , SideTouch 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
Investor & Media Contacts: David Collins, William Jones Catalyst Global 212-984-9800 bkyi@catalyst-ir.com
| BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| June 30, 2016 | December 31, 2015 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 2,006,665 | $ | 4,321,078 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $13,785 at June 30, 2016 and December 31, 2015 | 2,298,744 | 3,391,405 | ||||||
| Due from factor | 2,323 | 37,421 | ||||||
| Inventory | 480,039 | 348,645 | ||||||
| Software license rights | 5,000,000 | 5,000,000 | ||||||
| Prepaid expenses and other | 92,855 | 97,203 | ||||||
| Total current assets | 9,880,626 | 13,195,752 | ||||||
| Software license rights, less current portion | 7,000,000 | 7,000,000 | ||||||
| Equipment and leasehold improvements, net | 91,083 | 63,877 | ||||||
| Deposits and other assets | 8,712 | 8,712 | ||||||
| Intangible assets--less accumulated amortization | 140,935 | 147,738 | ||||||
| Total non-current assets | 7,240,730 | 7,220,327 | ||||||
| TOTAL ASSETS | $ | 17,121,356 | $ | 20,416,079 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 696,419 | $ | 1,158,555 | ||||
| Accrued liabilities | 350,833 | 493,067 | ||||||
| Dividends payable | 200,625 | 133,851 | ||||||
| Deferred revenue | 318,046 | 376,405 | ||||||
| Warrant liabilities | 153,790 | 104,284 | ||||||
| Total current liabilities | 1,719,713 | 2,266,162 | ||||||
| TOTAL LIABILITIES | 1,719,713 | 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; 66,339,655 and 66,098,482 of $.0001 par value at June 30, 2016 and December 31, 2015, respectively | 6,634 | 6,610 | ||||||
| Additional paid-in capital | 76,545,142 | 76,754,737 | ||||||
| Accumulated deficit | (61,150,153 | ) | (58,611,450 | ) | ||||
| TOTAL STOCKHOLDERS' EQUITY | 15,401,643 | 18,149,917 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 17,121,356 | $ | 20,416,079 | ||||
| BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Revenues | |||||||||||||||||
| Services | $ | 220,926 | $ | 255,269 | $ | 505,652 | $ | 505,622 | |||||||||
| License fees and other | 194,888 | 2,017,535 | 340,754 | 2,416,008 | |||||||||||||
| 415,814 | 2,272,804 | 846,406 | 2,921,630 | ||||||||||||||
| Costs and other expenses | |||||||||||||||||
| Cost of services | 66,597 | 56,905 | 122,379 | 123,968 | |||||||||||||
| Cost of license fees and other | 69,893 | 88,489 | 125,959 | 160,782 | |||||||||||||
| 136,490 | 145,394 | 248,338 | 284,750 | ||||||||||||||
| Gross Profit | 279,324 | 2,127,410 | 598,068 | 2,636,880 | |||||||||||||
| Operating Expenses | |||||||||||||||||
| Selling, general and administrative | 1,038,904 | 979,861 | 2,030,517 | 2,020,542 | |||||||||||||
| Research, development and engineering | 566,448 | 393,999 | 1,055,849 | 800,640 | |||||||||||||
| 1,605,352 | 1,373,860 | 3,086,366 | 2,821,182 | ||||||||||||||
| Operating profit (loss) | (1,326,028 | ) | 753,550 | (2,488,298 | ) | (184,302 | ) | ||||||||||
| Other income (expenses) | |||||||||||||||||
| Interest income | 7 | 2 | 13 | 4 | |||||||||||||
| Gain (loss) on derivative liabilities | (49,468 | ) | (406 | ) | (49,506 | ) | 14,253 | ||||||||||
| Income taxes | - | - | (912 | ) | (912 | ) | |||||||||||
| Total other income (expenses) | (49,461 | ) | (404 | ) | (50,405 | ) | 13,345 | ||||||||||
| Net income (loss) | (1,375,489 | ) | 753,146 | (2,538,703 | ) | (170,957 | ) | ||||||||||
| Convertible preferred stock dividends | (200,625 | ) | - | (401,250 | ) | - | |||||||||||
| Net income (loss) available to common stockholders | $ | (1,576,114 | ) | $ | 753,146 | $ | (2,939,953 | ) | $ | (170,957 | ) | ||||||
| Basic and Diluted Earnings (Loss) per Common Share | $ | (0.02 | ) | $ | 0.01 | $ | (0.04 | ) | $ | (0.00 | ) | ||||||
| Weighted Average Shares Outstanding: | |||||||||||||||||
| Basic and diluted | 66,276,050 | 66,001,260 | 66,199,903 | 66,001,260 | |||||||||||||
| BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (Unaudited) | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2016 | 2015 | ||||||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | (2,538,703 | ) | $ | (170,957 | ) | |||||
| Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
| Depreciation | 24,577 | 21,270 | |||||||||
| Amortization of intangible assets | 6,803 | 6,803 | |||||||||
| Share-based and warrant compensation for employees and consultants | 184,299 | 222,247 | |||||||||
| Loss (gain) on derivative liabilities | 49,506 | (14,253 | ) | ||||||||
| Stock based directors fees | 39,999 | - | |||||||||
| Change in assets and liabilities: | |||||||||||
| Accounts receivable trade | 1,092,661 | 491,356 | |||||||||
| Due from factor | 35,098 | (1,465,527 | ) | ||||||||
| Inventory | (131,394 | ) | (400,744 | ) | |||||||
| Prepaid expenses and other | 4,348 | 162,209 | |||||||||
| Accounts payable | (462,136 | ) | 521,803 | ||||||||
| Accrued liabilities | (142,234 | ) | (52,324 | ) | |||||||
| Deferred revenue | (58,359 | ) | 172,518 | ||||||||
| Net cash used for operating activities | (1,895,535 | ) | (505,599 | ) | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Capital expenditures | (51,783 | ) | (2,078 | ) | |||||||
| Net cash used for investing activities | (51,783 | ) | (2,078 | ) | |||||||
| CASH FLOW FROM FINANCING ACTIVITIES: | |||||||||||
| Preferred dividends paid | (334,476 | ) | - | ||||||||
| Costs to issue preferred and common stock | (32,619 | ) | (53,579 | ) | |||||||
| Net cash used for financing activities | (367,095 | ) | (53,579 | ) | |||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (2,314,413 | ) | (561,256 | ) | |||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 4,321,078 | 843,632 | |||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 2,006,665 | $ | 282,376 | |||||||
Investor & Media Contacts: David Collins, William Jones Catalyst Global 212-984-9800 bkyi@catalyst-ir.com
