Identity & Access Management Solutions Provider BIO-key’s Q1 Revenues Improved to $1.9M versus $0.5M in Q1’20 and $1.1M in Q4; Investor Call Today at 10am ET

Wall Township, New Jersey, UNITED STATES


WALL, N.J., May 14, 2021 (GLOBE NEWSWIRE) -- BIO-key International, Inc. (Nasdaq: BKYI), an innovative provider of biometric and multi-factor identity and access management (IAM) solutions for strong, convenient user authentication and large-scale identity applications, today reported results for its first quarter ended March 31, 2021 (Q1’21). BIO-key will host a conference call today at 10:00 a.m. ET (details below) to review its results and outlook.

Q1 & Recent Highlights:

BIO-key CEO Michael DePasquale commented, “Our first quarter performance reflects the progress BIO-key has achieved over the past year in expanding and strengthening our business. We saw improved demand across the business in the first quarter, adding 29 new members to our Channel Alliance Partner program, positioning BIO-key to pursue a much broader base of opportunities on a global basis. Importantly, after several quarters of delay, we commenced initial hardware shipments in support of our large-scale ID projects in Africa and expect to see growing momentum as we progress through the year.

“We also continue to focus on innovation and new product development to provide greater functionality and value to our enterprise customers. We recently launched our new mobile app, BIO-key MobileAuthTM with PalmPositiveTM, a touchless palm-scan authentication technology for IOS and Android systems. This easy-to-use app requires no specialized hardware, as it utilizes the device’s camera, offers fast registration and enrollment while supporting multifactor and Single Sign-on solutions to streamline logins, while also making them more secure. MobileAuth builds upon our substantial biometric experience to add touchless biometric capabilities to the 16 authentication factors already supported by BIO-key’s PortalGuard® platform.

“PalmPositive is substantially more accurate than common, user-controlled mobile biometric authentication methods. Given the well-known deficiencies in traditional authentication methods, such as passwords, we believe enterprises are increasingly recognizing that they have no choice but to raise the bar on their authentication methods. We plan to add other identity-bound biometric authentication methods, such as voice and facial recognition, to the MobileAuth application in 2021. This will extend our leadership and support for strong multi-factor authentication (MFA) that offers the highest levels of integrity, security, accuracy, and availability across devices.

“We continue to see building demand for our PortalGuard solution within the higher education and enterprise markets, particularly our cloud-hosted, IDaaS solution, launched in Q4. PortalGuard IDaaS is an ideal solution for enterprises and institutions that are increasingly moving their IT infrastructure to the ‘asset-light’ cloud model. The transition to the cloud has been accelerated by the pandemic and the rapid rise in work-from-anywhere and study-from-home demands, and we believe the need to support remote access is here to stay. Off-premises access creates unprecedented IT security challenges as more users access mission critical data and applications outside the enterprise firewall. BIO-key helps enterprises meet these challenges with attractively priced IAM solutions supporting a wide array of MFA options, including our core, patented biometric capabilities.

“BIO-key’s Channel Alliance Partner (CAP) Program continues to build momentum and is expected to be a key component of our long-term growth strategy as it helps us to substantially expand our reach into new customers on a global basis. We have grown to 60 Partners over the past year, and we are working to double the size of this program in coming months, having expanded the program to include managed service providers (MSPs) and managed security service providers (MSSPs) in addition to system integrators and value-added resellers. We are targeting partners in key verticals, including financial services, government, and higher education – where our solutions and value proposition are well established.

“During the first quarter, we delivered our first shipment of biometric fingerprint scanners in support of our initiatives in Nigeria, recording initial revenue of $680K in the period.  We anticipate increased activity from these contracts throughout 2021, while we continue pursuing other projects in neighboring countries, and additional opportunities across Africa.

Outlook
“We believe we have the right team in place, a broad suite of solutions, a strong balance sheet, and the resources we need to drive growth. We are on-track to achieve our full year revenue guidance of $8M to $12M, with potential upside, particularly related to our African contracts, the pace and timing of which remain difficult to predict. The mid-point of our revenue guidance range would represent growth of more than 250% over FY 2020. We believe BIO-key is positioned to achieve profitability within this guidance range depending on the mix of hardware and software revenues.”

Financial Results
Q1’21 revenue grew significantly to $1.8M from $522k in Q1’20. The increase is attributable to more than 100% growth in license revenue and 1193% growth in hardware revenue, including $680k of revenue from the Africa projects. License and services growth includes revenue from the PistolStar/PortalGuard acquisition that closed on June 30, 2020 and was not included in Q1’20 results.

Q1’21 gross profit increased 182% to $1.1M from $0.4M in Q1’20 reflecting higher revenues. Gross margin decreased to 59.4% in Q1’21 vs. 76.2% in Q1’20, due to a higher proportion of hardware sales in Q1’21, including fingerprint scanners for our African projects. Hardware represented 55% of Q1’21 revenue vs. 15% in Q1’20, however the mix between hardware and software is expected to include more software revenue in future periods.

Q1’21 operating expenses increased 7% to $1.8M from $1.7M in Q1’20, despite significantly higher revenue. The increase in operating expenses was attributable primarily to higher research, development and engineering costs reflecting the addition of the PortalGuard operations and continued investments in new product development.  

BIO-key reported a net loss available to stockholders of $0.7M, or ($0.09) per share, in Q1’21, compared to a net loss of $3.5M, or ($1.84) per share, in Q1’20. Weighted average basic shares outstanding were approximately 7.8M in Q1’21 compared to 1.9M in Q1’20.

Financial Strength
BIO-key ended the first quarter with no debt and current assets of $17.8M, including $13.5M of cash and cash equivalents, compared to current assets of $2.0M and $2.3M of convertible notes outstanding at the end of Q1’20.

Conference Call Details 
Date / Time:Today, Friday, May 14th 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 10156403

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. Its PortalGuard IAM solution 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-premise 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 industry; 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 into our business; 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; 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, 2020 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: 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 ContactInvestor Contact
Erin KnappWilliam Jones, David Collins
Matter CommunicationsCatalyst IR
BIO-key@matternow.com
BKYI@catalyst-ir.com
914-260-3158212-924-9800


BIO-KEY International, Inc. and Subsidiaries
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS

  March 31,
2021
  December 31,
2020
 
  (Unaudited)     
ASSETS        
Cash and cash equivalents $13,528,521  $16,993,096 
Accounts receivable, net  1,432,248   548,049 
Due from factor  49,808   60,453 
Note receivable  -   295,000 
Inventory  600,447   330,947 
Prepaid expenses and other  1,706,161   201,507 
Investment – debt security  512,821   512,821 
Total current assets  17,830,006   1,894,873 
Resalable software license rights  56,361   58,882 
Equipment and leasehold improvements, net  69,985   81,793 
Capitalized contract costs, net  170,219   165,315 
Deposits and other assets  8,712   8,712 
Note receivable  295,000   - 
Operating lease right-of-use assets  430,206   487,325 
Intangible assets, net  1,460,130   1,514,146 
Goodwill  1,262,526   1,262,526 
Total non-current assets  3,753,139   3,578,699 
TOTAL ASSETS $21,583,145  $22,520,572 
         
LIABILITIES        
Accounts payable $309,323  $244,158 
Accrued liabilities  515,952   508,487 
Note payable – PistolStar acquisition, net of debt discount  -   232,000 
Deferred revenue – current  524,836   657,349 
Operating lease liabilities, current portion  230,072   234,309 
Total current liabilities  1,580,183   1,876,303 
Deferred revenue – long term  49,393   44,987 
Operating lease liabilities, net of current portion  211,442   264,163 
Total non-current liabilities  260,835   309,150 
TOTAL LIABILITIES  1,841,018   2,185,453 
         
Commitments and Contingencies        
         
STOCKHOLDERS EQUITY        
Common stock — authorized, 170,000,000 shares; issued and outstanding; 7,817,913 and 7,814,572 of $.0001 par value at March 31, 2021 and December 31, 2020, respectively  782   782 
Additional paid-in capital  119,982,465   119,844,026 
Accumulated deficit  (100,241,120)  (99,509,689)
TOTAL STOCKHOLDERS EQUITY  19,742,127   20,335,119 
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $21,583,145  $22,520,572 

All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-8 reverse stock split, which was effective November 20, 2020.


BIO-KEY International, Inc. and Subsidiaries
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

  Three months ended
March 31,
 
  2021  2020 
Revenues        
Services $380,022  $207,523 
License fees  478,958   235,345 
Hardware  1,029,658   79,617 
Total revenues  1,888,638   522,485 
Costs and other expenses        
Cost of services  175,944   70,445 
Cost of license fees  38,969   10,456 
Cost of hardware  551,722   43,362 
Total cost of goods sold  766,635   124,263 
Gross Profit  1,122,003   398,222 
         
Operating Expenses        
Selling, general and administrative  1,396,398   1,381,399 
Research, development and engineering  441,651   336,889 
Total Operating Expenses  1,838,049   1,718,288 
Operating loss  (716,046)  (1,320,066)
Other income (expenses)        
Interest income  2,615   1 
Interest expense  (18,000)  (1,551,141)
Loss on extinguishment of debt  -   (499,076)
Total Other Income (Expenses)  (15,385)  (2,050,216)
Net loss  (731,431)  (3,370,282)
Deemed dividends related to down-round features  -   (112,686)
Net loss available to common stockholders $(731,431) $(3,482,968)
         
Basic Loss per Common Share $(0.09) $(1.84)
         
Weighted Average Shares Outstanding:        
Basic  7,773,688   1,895,690 

BIO-key’s weighted average shares outstanding in the 2021 and 2020 periods have been adjusted to reflect BIO-key’s 1-for-8 reverse stock split, which was effective November 20, 2020.