Biokey International Inc (BKYI)

[wickw50]

Biometric ID Provider BIO-key Reports Q1 2016 Results and Hosts Update Conference Call Today at 10:00 a.m. ET
Mon May 16, 2016 8:10 AM|Marketwire | About: BKYI
WALL, NJ -- (Marketwired) -- 05/16/16 -- BIO-key International, Inc. (BKYI), an innovative provider of biometric software and hardware solutions for stronger user authentication, today reported results for its first quarter ended March 31, 2016 (Q1'16). BIO-key is hosting a conference call today at 10:00 a.m. ET to review its results, as detailed below.

Michael DePasquale, Chairman & CEO of BIO-key, commented, "BIO-key made solid strides in the first quarter of 2016 in expanding our market position through several strategic initiatives, however as we cautioned during our March conference call, quarterly variances in our business, including difficulty predicting the timing of contracts, will remain with us in fiscal year 2016. Our first quarter revenue declined to $431K compared to $648K in the first quarter of 2015 however, looking beneath the top line, there was ongoing growth in our base of recurring revenue from software maintenance and services of $58,372 or 44% in the first quarter of 2016 versus last year."

"Converting prospects into customers is our top priority, as we continue to nurture and advance agreements with a number of large partners including our announcement today regarding the availability of our affordable and compact SideSwipe and EcoID USB fingerprint readers on Amazon.com. The readers, initially available in a three-pack configuration for $119.97, are targeted to enterprise customers."

"As part of our commitment to expanding our visibility and sales reach, during the quarter we advanced several strategic partnerships. Most notably, we secured our first joint customer through our partnership with healthcare analytics firm, Caradigm Technologies, and another with healthcare IT firm HealthCast. We also made progress with several large enterprise prospects generated from our marketing partnership with Microsoft. On a global scale, we partnered with Arthur & Co., a Morrocan based technology company that serves customers throughout the Middle East and North Africa. In summary, we anticipate leveraging these partnerships to take advantage of high demand for advanced authentication security in various verticals of the economy."

Highlights:

Enhanced our offering of secure biometric authentication with the addition of robust identity proofing and optional hosted authentication services in partnership with HealthIDx, a federal standards-compliant Credential Services Provider (CSP).
Announced the successful completion of our national 12- city tour with Microsoft, featuring our compact fingerprint readers and software solutions as part of the U.S. launch of Windows 10 for Business and Office 2016. Microsoft featured BIO-key as its only biometric solution partner during the highly successful launch.
Launched a strategic partnership with 2FA, Inc., a veteran-owned cybersecurity company providing enterprise multifactor authentication (MFA) and single sign-on (SSO) solutions.
Introduced a new product, SideTouch, which combines IDEX's (IDEX.NO) advanced off-chip sensor technology with BIO-key's NIST-tested universal Windows Biometric Framework (WBF) fingerprint engine.
Expanded our healthcare partner program as our biometric solutions were highlighted at ten of our partners' and customers' booths during HIMSS 2016, the largest healthcare technology event in the United States.
Secured our first joint customer through our partnership with healthcare analytics firm, Caradigm Technologies jointly owned by GE (GE) and Microsoft, and another with healthcare SSO firm HealthCast.
BIO-key was the Silver Sponsor at connect:ID 2016, in Washington, D.C.
Subsequent to the close of the quarter, Pieter Knook, a former Vodafone & Microsoft executive based in United Kingdom was appointed to the Board.
Guidance:

Based on pipeline of opportunities and efforts to date, we remain confident in our growth prospects for 2016, reiterate our full year financial guidance, and expect revenues will grow from approximately $5M in 2015 to a range of $7M - $9.5M in 2016.

Q1 Results:

Q1'16 total revenue declined to $430,592 compared to $648,826 in Q1'15. Service revenues, principally comprised of recurring maintenance and support, increased 14% to $284,726 compared to $250,353 in Q1'15, reflecting BIO-key's growing base of customer installations. License and other revenue decreased to $145,866 from $398,473, principally reflecting the timing of larger contract revenues. Hardware sales decreased 20% from $126,451 in Q1 2015 to $101,075 in Q1 2016.

Q1'16 gross margin declined to 74% from 79% in Q1'15, due to lower revenue. Q1'16 operating expenses rose by 2.3% to $1,481,014 compared to $1,447,322 in Q1'15, principally due to increased R&D expense.

BIO-key's Q1'16 net loss increased to ($1,163,214), or ($0.02) per basic share, compared to a net loss of ($924,103), or ($0.01) per basic share, in Q1'15.

Liquidity and Capital Resources
At March 31, 2016, BIO-key had cash, cash equivalents and net receivables of $5,698,295 compared to $7,712,483 December 31, 2015.

Conference Call and Webcast Replay

Date/Time: Monday, May 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/biokey160516 - Available for 30 days.
Call Replay: 1-877-344-7529 U.S. or 412-317-0088 use code 10086164

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 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

BIO-key International, Inc. and Subsidiary
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2016 2015
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 3,474,648 $ 4,321,078
Accounts receivable, net of allowance for
doubtful accounts of $13,785 at March 31, 2016
and December 31, 2015 2,223,647 3,391,405
Due from factor 147,102 37,421
Inventory 458,853 348,645
Software license rights 5,000,000 5,000,000
Prepaid expenses and other 100,727 97,203
------------ ------------
Total current assets 11,404,977 13,195,752
------------ ------------
Software license rights, less current portion 7,000,000 7,000,000
Equipment and leasehold improvements, net 71,646 63,877
Deposits and other assets 8,712 8,712
Intangible assets--less accumulated amortization 144,337 147,738
------------ ------------
Total non-current assets 7,224,695 7,220,327
------------ ------------
TOTAL ASSETS $ 18,629,672 $ 20,416,079
============ ============
LIABILITIES
Accounts payable $ 628,631 $ 1,158,555
Accrued liabilities 312,066 493,067
Dividends payable 200,625 133,851
Deferred revenue 455,291 376,405
Warrant liabilities 104,322 104,284
------------ ------------
Total current liabilities 1,700,935 2,266,162
------------ ------------
TOTAL LIABILITIES 1,700,935 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; 66,198,482 and
66,098,482 of $.0001 par value at March 31,
2016 and December 31, 2015, respectively 6,620 6,610
Additional paid-in capital 76,696,761 76,754,737
Accumulated deficit (59,774,664) (58,611,450)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 16,928,737 18,149,917
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,629,672 $ 20,416,079
============ ============
The accompanying notes to the condensed
consolidated financial statements are an
integral part of these statements.
BIO-KEY International, Inc. and Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
--------------------------
2016 2015
------------ ------------
Revenues
Services $ 284,726 $ 250,353
License fees and other 145,866 398,473
------------ ------------
430,592 648,826
Costs and other expenses
Cost of services 55,782 67,063
Cost of license fees and other 56,066 72,293
------------ ------------
111,848 139,356
Gross Profit 318,744 509,470
------------ ------------
Operating Expenses
Selling, general and administrative 991,613 1,040,681
Research, development and engineering 489,401 406,641
------------ ------------
Total Operating Expenses 1,481,014 1,447,322
------------ ------------
Operating loss (1,162,270) (937,852)
Other income (expenses)
Interest income 6 2
Gain (loss) on derivative liabilities (38) 14,659
Income taxes (912) (912)
------------ ------------
Total Other Income (Expenses) (944) 13,749
------------ ------------
Net loss (1,163,214) (924,103)
Convertible preferred stock dividends (200,625) -
------------ ------------
Net loss available to common stockholders $ (1,363,839) $ (924,103)
============ ============
Basic & Diluted Loss per Common Share $ (0.02) $ (0.01)
Weighted Average Shares Outstanding:
Basic & Diluted 66,123,757 66,001,260
The accompanying notes to the condensed
consolidated financial statements are an
integral part of these statements.
BIO-KEY International, Inc. and Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
----------------------------
2016 2015
----------- ---------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $(1,163,214) $ (924,103)
Adjustments to reconcile net loss to cash
used for operating activities:
Depreciation 11,518 10,606
Amortization of intangible assets 3,401 3,401
Share and warrant-based compensation for
employees and consultants 158,363 162,219
Loss (gain) on derivative liabilities 38 (14,659)
Stock based directors fees 16,000 -
Change in assets and liabilities:
Accounts receivable 1,167,758 36,034
Due (from) to factor (109,681) 192,705
Inventory (110,208) (193,585)
Prepaid expenses and other (3,524) 127,839
Accounts payable (529,924) 68,518
Accrued liabilities (181,001) (17,201)
Deferred revenue 78,886 29,001
----------- ---------------
Net cash used for operating activities (661,588) (519,225)
----------- ---------------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (19,287) -
----------- ---------------
Net cash used for investing activities (19,287) -
----------- ---------------
CASH FLOW FROM FINANCING ACTIVITIES:
Preferred dividends paid (133,851) -
Costs to issue preferred and common stock (31,704) (20,908)
----------- ---------------
Net cash used for financing activities (165,555) (20,908)
----------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (846,430) (540,133)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,321,078 843,632
----------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,474,648 $ 303,499
=========== ===============
Investor & Media Contacts:
David Collins, William Jones, Helen Sun
Catalyst Global
212-984-9800
[e-mail]
Source: BIO-key International, Inc.