Identity and Access Management Cyber-Security Provider BIO-key�s Q2 Revenue Rises 96% to $1.9M, Driven by Growth in Software, Services and Products; Investor Call Today at 10am ET

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:

• Q2’22 revenues rose 96% to $1.9M from $1.0M in Q2’21, driven by a $0.5M increase in software license fees, as well as $0.3M and $0.15M increases in hardware and services revenue, respectively.
• Expanded PortalGuard Penetration with new customers, including YYK Enterprises Operations and a Texas City and New Channel Alliance Program partners, including the Amazon Web Services Partner Network, 3Eye Technologies and Darksteel Technologies.
• BIO-key’s PortalGuard® platform was a gold recipient of Security Today magazine’s 2022 Govies Government Security Award in User Authentication/Identification/Credentialing and Management; the Publisher’s Choice for Multi-factor Authentication (MFA) Award from Cyber Defense Magazine during RSA 2022; the 2022 Fortress Cyber Security Award in Authentication and Identity; and RemoteTech Breakthrough’s Identity Management Solution of the Year 2022.

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.

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 Knapp		William Jones, David Collins
Matter Communications		Catalyst IR
BIO-key@matternow.com		BKYI@catalyst-ir.com
914-260-3158		212-924-9800

      

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