Home / Top News / Biometric ID and Authentication Security Provider BIO-key Reports Q2 Results

Biometric ID and Authentication Security Provider BIO-key Reports Q2 Results

WALL, N.J., Aug. 14, 2019 (GLOBE NEWSWIRE) — BIO-key International, Inc. (Nasdaq: BKYI), an innovative provider of biometric authentication and security solutions, today reported results for its second quarter (Q2’19) ended June 30, 2019 and will host a conference call tomorrow at 10:00 a.m. EDT (details below) to review its results and outlook.

Recent Highlights:

  • NY Regional Bank and Maryland Credit Union Selected BIO-key ID Director Biometric Authentication
  • Foreign Defense Ministry Expanded its Biometric Solutions Deployment with a $300K Order, Increasing Total Project Revenue to Nearly $1M Since January 2018
  • BIO-key Q2’19 revenue of $728K declined slightly vs Q2’18 revenue of $748K but increased vs Q1’19 revenue of $552K
  • Q2’19 performance impacted by continued delays in the receipt of anticipated software license payments, now totaling $1.65M in Q2’19 and $2.75M in the first half of 2019.

BIO-key CEO Michael DePasquale commented, “Our second quarter results reflect progress engaging with foreign government institutions and companies operating in highly regulated industries such as financial services.  These areas represent the fastest growing verticals for our solutions.

“Our new sales and marketing initiatives are generating an increasing level of requests for demonstrations and proofs of concept from customers looking to incorporate the security and convenience of biometrics into their existing workflow. These initiatives include a range of enhancements to our website and sales & marketing collateral intended to better target and illustrate BIO-key’s value-add for key verticals. During the second quarter, we advanced several new customer dialogues which provide promise for revenue in the second half of 2019.

“Unfortunately, our results continue to be negatively impacted by ongoing delays in anticipated cash payments from a large contract we closed with a Chinese customer in Q4 2018. To support BIO-key through this period, we have taken steps to provide sufficient working capital for our operations, including completing a convertible debt financing early in Q3’19.”

2019 Financial Guidance
Reflecting its current outlook for the balance of 2019, including ongoing uncertainty regarding the timing of monthly software license payments from a $5 million order with a Chinese customer, which includes two annual extensions for an additional $7 million, BIO-key has revised its full-year 2019 revenue guidance to a range of $6.0M to $12.0M.  The upper end of the range assumes the receipt of all software license payments contractually due in 2019, totaling $6.0M, and the bottom end of the range excludes all such payments.

Within this guidance range, BIO-key expects to deliver significant top and bottom line improvements for full year 2019, and would expect to achieve positive cash flow and net income on full year revenues of $8M and above.  BIO-key will revise this guidance as warranted when it reports its Q3 results.

Q2 2019 Results

Q2’19 revenue declined 2.7% to $728,383 versus 748,141 in Q2’18, due principally to lower license fees and services revenues related to delays in timing of large orders.

Service revenues decreased 7% to $231,993 in Q2’19 as compared to $249,121 in Q2’18, principally due to a decline in non-recurring services revenue and recurring service revenue pending customer renewals.

Software license revenue decreased 61% to $60,300 in Q2’19 from $154,251 in Q2’18 principally due to the Company’s transition to software as a service (SaaS) model from its historical license sale model. The net effect of this transition is to decrease the upfront revenue realized from a new software engagement and replace it with a recurring revenue stream with the potential to be significantly larger.

Hardware sales increased 26% to $436,090 from $344,769 in Q2’18 as a result of a large order from an existing customer in addition to several new customer deployments.

Gross margin was 7% in Q2’19 compared to negative 38% in Q2’18, reflecting the impact of a larger amount of non-cash software license amortization expense in Q2’18. Excluding amortization of software license rights, adjusted gross margin would have been 45% in Q2’19 versus 51% in Q2’18, with the decrease attributable to a reduction in software license revenue and an increase in hardware sales in Q2’19 compared to the year ago period.

Q2’19 operating expenses decreased 1% to $1,359,888 from $1,373,817 in Q2’18, due primarily to lower SG&A expenses principally related to reduction in payroll and non-cash compensation offset by increased factoring fees.

BIO-key’s Q2’19 net loss improved to $(1,425,743), or $(0.10) per basic share, as compared to $(1,697,335), or $(0.15) per basic share after preferred dividends, in Q2’18.

Per share results are based on 14,117,062 and 11,375,320 weighted average basic shares outstanding in Q2’19 and Q2’18, respectively.

For the first six-months of 2019, total revenue was $1,280,006 versus $1,589,596 in the first half of 2018, a decline of $309,590 or 19%, reflecting both the impact of the Company’s SaaS sales strategy and the variable timing of software and hardware deals.

Net loss improved to $(3,229,251), or $(0.23) per basic share in the first half of 2019 versus $(4,045,489), or $(0.42) per basic share after preferred dividends, in the corresponding period in 2018.

Per share results are based on 14,048,570 and 9,623,151 weighted average basic shares outstanding in the first six months of 2019 and 2018, respectively.

At June 30, 2019, BIO-key had net working capital of $1.1 million compared to $3.0 million at December 31, 2018. Net working capital included $687,023 of cash and cash equivalents at June 30, 2019 versus $323,943 at December 31, 2018.

In July 2019, BIO-key completed a $3.06M convertible note financing generating $2.55M in gross proceeds to be used for general working capital purposes, including repayment of outstanding indebtedness. The note is convertible at the option of the investor into common stock at $1.50 per share and is subject to redemption at any time by BIO-key.

Conference Call and Webcast Replay
Date/Time: Thursday, August 15, 2019 at 10 am ET
Dial-In number: 1-877-418-5460 U.S. or 412-717-9594 (Intl.)
Webcast Replay: BIO-key Q2’19 Webcast – Available for 30 days
Call Replay: 1-877-344-7529 U.S. or 412-317-0088; Replay access code 10134247#

About BIO-key International, Inc. (
BIO-key is revolutionizing authentication with biometric solutions that enable convenient and secure access to information and high-stakes transactions. We offer software-based alternatives to passwords, PINs, tokens, and cards to make it easy for enterprises and consumers to secure their devices as well as information in the cloud. Our premium finger scanning devices offer market-leading quality, performance and price. BIO-key also brings the power and ease of use of biometric technology to its TouchLock line™ of biometric and Bluetooth enabled padlocks – providing more ways to BIO-key your world!

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 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; competition in the biometric technology industry; market acceptance of biometric products generally and our products under development; our ability to expand into the Asian market; 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 see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 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, the Company undertakes 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: BIO-key International
Twitter – Corporate: @BIOkeyIntl
Twitter – Investors: @BIO_keyIR
StockTwits: BIO_keyIR

Investor & Media Contacts
William Jones, David Collins
Catalyst IR
[email protected]


    Three months ended
June 30,
    Six months ended
June 30,
    2019     2018     2019     2018  
Services   $ 231,993     $ 249,121     $ 473,603     $ 551,570  
License fees     60,300       154,251       143,508       256,970  
Hardware     436,090       344,769       662,895       781,056  
Total revenues     728,383       748,141       1,280,006       1,589,596  
Costs and other expenses                                
Cost of services     58,421       120,841       149,250       275,573  
Cost of license fees     372,327       766,637       749,543       1,540,102  
Cost of hardware     248,678       142,325       384,683       393,573  
Total costs and other expenses     679,426       1,029,803       1,283,476       2,209,248  
Gross profit (loss)     48,957       (281,662 )     (3,470 )     (619,652 )
Operating Expenses                                
Selling, general and administrative     1,058,671       1,076,184       2,435,704       2,538,038  
Research, development and engineering     301,217       297,633       675,335       689,787  
Total Operating Expenses     1,359,888       1,373,817       3,111,039       3,227,825  
Operating loss     (1,310,931 )     (1,655,479 )     (3,114,509 )     (3,847,477 )
Other income (expense)                                
Interest income     54       14       124       21  
Interest expense     (114,866 )           (114,866 )      
Total other income (expense) net     (114,812 )     14       (114,742 )     21  
Net loss     (1,425,743 )     (1,655,465 )     (3,229,251 )     (3,847,456 )
Convertible preferred stock dividends           (41,870 )           (198,033 )
Net loss available to common stockholders   $ (1,425,743 )   $ (1,697,335 )   $ (3,229,251 )   $ (4,045,489 )
Basic and diluted loss per common share attributable to   $ (0.10 )   $ (0.15 )   $ (0.23 )   $ (0.42 )
common stockholders                                
Weighted Average Common Shares Outstanding:                                
Basic and diluted     14,117,062       11,375,320       14,048,570       9,623,151  



    June 30,
    December 31,
Cash and cash equivalents   $ 687,023     $ 323,943  
Accounts receivable, net     689,900       1,574,032  
Due from factor     138,568       56,682  
Inventory     1,011,703       998,829  
Resalable software license rights     1,125,000       1,125,000  
Prepaid expenses and other     161,997       150,811  
Total current assets     3,814,191       4,229,297  
Resalable software license rights, net of current portion     6,193,417       6,790,610  
Equipment and leasehold improvements, net     137,458       148,608  
Capitalized contract costs, net     278,286       319,199  
Deposits and other assets     8,712       8,712  
Operating lease right-of-use assets     532,757        
Intangible assets, net     191,014       195,906  
Total non-current assets     7,341,644       7,463,035  
TOTAL ASSETS   $ 11,155,835     $ 11,692,332  
Accounts payable   $ 864,879     $ 481,269  
Accounts payable – related party     142,623        
Accrued liabilities     714,250       548,232  
Convertible notes payable, net of debt discount and debt issuance costs     541,667        
Deferred revenue     294,261       196,609  
Operating lease liabilities, current portion     141,068        
Total current liabilities     2,698,748       1,226,110  
Operating lease liabilities, net of current portion     383,028        
Total non-current liabilities     383,028        
TOTAL LIABILITIES     3,081,776       1,226,110  
STOCKHOLDERS’ EQUITY                
Common stock — authorized, 170,000,000 shares; issued and outstanding; 14,295,923 and 13,977,868 of $.0001 par value at June 30, 2019 and December 31, 2018, respectively     1,429       1,398  
Additional paid-in capital     86,436,197       85,599,140  
Accumulated deficit     (78,363,567 )     (75,134,316 )
TOTAL STOCKHOLDERS’ EQUITY     8,074,059       10,466,222  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 11,155,835     $ 11,692,332  



    Six Months Ended June 30,  
    2019     2018  
Net loss   $ (3,229,251 )   $ (3,847,456 )
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:                
Depreciation     39,903       44,596  
Amortization of intangible assets     6,628       8,966  
Amortization of resalable software license rights     562,150       1,318,559  
Amortization of debt discount     15,467        
Amortization of capitalized contract costs     67,774       59,044  
Amortization of debt issuance costs     56,200        
Share and warrant-based compensation for employees and consultants     635,077       676,454  
Stock based directors’ fees     22,011       23,021  
Change in assets and liabilities:                
Accounts receivable     884,132       2,424,295  
Due from factor     (81,886 )     82,202  
Operating leases right-of-use assets     70,180        
Capitalized contract costs     (26,861 )     (160,649 )
Inventory     (12,874 )     16,369  
Resalable software license rights     35,043       9,543  
Prepaid expenses and other     (23,781 )     (4,041 )
Accounts payable     526,233       (168,799 )
Accrued liabilities     166,018       (203,445 )
Deferred revenue     97,652       (179,683 )
Operating lease liabilities     (66,246 )      
Net cash provided by (used for) operating activities     (256,431 )     98,976  
Purchase of intangible assets     (1,736 )      
Capital expenditures     (28,753 )     (68,479 )
Net cash used for investing activities     (30,489 )     (68,479 )
Issuance of convertible debentures     667,000        
Costs to issue notes, preferred and common stock     (17,000 )     (15,212 )
Net cash provided by (used for) financing activities     650,000       (15,212 )
CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 687,023     $ 304,006