8-K
BIO KEY INTERNATIONAL INC (BKYI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 16, 2022
| BIO-key International, Inc.<br><br> <br>(Exact name of registrant as specified in its charter) | ||
|---|---|---|
| Delaware<br><br> <br>(State or other jurisdiction of incorporation) | 1-13463<br><br> <br>(Commission File Number) | 41-1741861<br><br> <br>(I.R.S. Employer Identification No.) |
| 3349 Highway 138, Building A, Suite E<br><br> <br>Wall , NJ 07719<br><br> <br>(Address of principal executive offices) | ||
| (732) 359-1100<br><br> <br>(Registrant’s telephone number, including area code) | ||
| Securities registered pursuant to Section 12(b) of the Act: | ||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Common Stock | BKYI | Nasdaq Capital market |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c)) |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 16, 2022, BIO-key International, Inc. (the “Company”) issued a press release announcing its financial results for its first quarter 2022. A copy of the press release issued by the Company on May 16, 2022 is attached as Exhibit 99.
The information, including the exhibit attached hereto, in this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise expressly stated in such filing.
Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibit.
| (d) | Exhibits. The following exhibit is furnished herewith: |
|---|---|
| 99.1 | Press Release, dated May 16, 2022, issued by the Company. |
| --- | --- |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| --- | --- |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BIO-KEY INTERNATIONAL, INC. | ||
|---|---|---|
| Date: May 16, 2022 | ||
| By: | /s/ Cecilia C. Welch | |
| Cecilia C. Welch | ||
| Chief Financial Officer |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated May 16, 2022 issued by the Company. |
| --- | --- |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| --- | --- |
ex_376206.htm
Exhibit 99.1
Identity and Access Management Cyber-Security Provider BIO-key’s Q1 Revenue Improved to $1.9M, Driven by 205% Increase in Software License Fees; Investor Call Today at 10am ET
WALL, NJ – May 16, 2022 - BIO-key^®^^^International, Inc. (Nasdaq: BKYI), an innovative provider of workforce and customer identity and access management (IAM) solutions featuring Identity-Bound Biometrics (IBB) and large-scale identity solutions, today reported results for its first quarter ended March 31, 2022 (Q1’22). BIO-key is hosting a conference call today at 10:00 a.m. ET (details below) to review its results and outlook.
BIO-key’s revenue improved 3% to $1.94M in Q1’22 from $1.89MN in Q1’21 and 108% from $935K in Q4 2021 driven by a $981,000 increase in software license fees year over year. BIO-key is focused on growing its base of annual recurring software license fees which provide more predictable revenue trends and higher margins than its more episodic hardware revenues.
Recent Highlights:
| ● | Expanding PortalGuard Penetration with Local Government Customers , including New Deployments in Missouri, New Mexico, New York, South Dakota and Texas counties and municipalities. |
|---|---|
| ● | March 8 ^th^ acquisition of Swivel Secure Europe, an IAM solutions provider in Europe, the Middle East and Africa (EMEA) that generated approximately $3.1M in revenue and $578K in operating income in 2021. contributed $368K of revenue during the remainder of March, and substantially expands BIO-key’s global customer base, geographic reach, and long term growth potential. |
| --- | --- |
| ● | Added New Enterprise Customers and Channel Alliance Program partners |
| --- | --- |
| ● | Initial Hardware Deployments for Nigeria’s National Identity Management Commission’s National ID Enrollment Program in partnership with Sterling Bank Nigeria’s Specta online lending platform - BIO-key’s Pocket10 device for mobile biometric enrollments for agent banking is being deployed to support increased adoption and use of the National Identity Number and mobile banking and payments across the country. |
| --- | --- |
BIO-key CEO Michael DePasquale commented, “As anticipated, we are off to a solid start in Q1’22, with software license sales increasing 205% year-over-year and 168% over Q4’21. This strong performance reflects growing momentum in our Annual Recurring Revenue (ARR) base from software licenses, which is a core focus and value driver for our business. While hardware remains an important component and differentiator in our business, its episodic nature can create some variability in our quarterly operating performance. Our Q1’22 performance included just 22 days of operating results from our Swivel Secure Europe operations acquired in March.
“Looking forward, we see an expanding worldwide opportunity to grow our software license revenue base, driven by the compelling security, scalability, ease of use and deployment, and customer value proposition of our PortalGuard IAM platform, along with an expanding array of security solutions. Customers are increasingly recognizing PortalGuard’s, flexibility and differentiated multi-factor authentication capabilities, with support for sixteen different factors including BIO-key’s industry leading Identity Bound Biometric capabilities.
“PortalGuard continues to gain momentum in the higher education and municipal government verticals and with enterprises as a high-value, easy-to-deploy solution for hybrid access needs. The industry continues to recognize BIO-key as we recently earned four recent 2022 Cybersecurity Excellence Awards and a Security Today magazine 2022 Govies Government Security Award for PortalGuard, in the User Authentication/ Identification/Credentialing and Management category.
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Outlook
“There is a clear and growing global need for enterprises of all kinds to protect their data and systems with stronger cybersecurity solutions. BIO-key has built a strong base of products, services and partnerships to address this substantial opportunity. Given the growing momentum in our business, complemented with the addition of Swivel Secure Europe and further progress advancing our opportunities in Africa, we remain confident in achieving our full-year 2022 revenue guidance of $10-13M. Approximately 70% of the lower end of this guidance range relates to contracted recurring software license revenue.
“Our revenue guidance represents growth of more than 100% over 2021, benefitting from continued growth in software license revenue, along with hardware and services revenue contributions that are generally tied to specific projects. Our positive outlook is supported by our strong capital position, talented global management and product development teams, and expanded global sales, marketing and channel partner footprint. Further, we believe BIO-key is positioned to achieve break-even operations starting at the lower end of this range, subject to our mix of hardware and higher-margin software revenue.”
Financial Results
Q1’22 revenue increased 3% to $1.94M from $1.89M in Q1’21, driven by a 205% increase in software license fees and a modest increase in services revenue, which more than offset a decline in hardware revenue. The year-ago period included $680,000 in hardware revenue related to the initiation of product shipments for one of the Company’s large scale ID projects in Nigeria.
Gross profit grew to $1.6M in Q1’22 from $1.1M in Q1’21, due primarily to the increase of higher-margin license fee revenue as a percentage of total revenue in the current-year period.
Total operating expenses increased to $2.6M in Q1’22 from $2.0M in Q1’21, reflecting a $0.4M increase in research, development and engineering expense related to our recently announced MobileAuth and IDaaS solutions and a $0.3M increase in selling, general and administrative expense reflecting acquisition expenses associated with Swivel Secure Europe.
BIO-key reported an operating loss of $1.0M in Q1’22 vs. $0.8M in Q1’21, as the Company’s increase in gross profit was more than offset by higher operating expenses intended to support long term growth. BIO-key reported a Q1’22 net loss available to common stockholders of $1.0M, or $0.12 per share, compared to a Q1’21 net loss of $0.9M, or $0.11 per share. Weighted average basic shares outstanding were approximately 7.9M in Q1’22 and 7.8M in Q1’21.
Financial Strength
BIO-key ended the first quarter with working capital of $10.1M, including $5.8M of cash and cash equivalents and $5.0M in inventory, and a book value of $15.3M.
Conference Call Details
| Date / Time: | Today, Monday, May 16th 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 3884798 |
**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.
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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; 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 |
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| BIO-key International, Inc. and Subsidiaries |
|---|
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31,<br><br> <br>2021 | |||||
|---|---|---|---|---|---|
| **** | **** | **** | |||
| ASSETS | **** | **** | **** | **** | **** |
| Cash and cash equivalents | 5,846,798 | $ | 7,754,046 | ||
| Accounts receivable, net | 2,668,147 | 970,626 | |||
| Due from factor | 51,850 | 49,500 | |||
| Note receivable, net of allowance | 82,000 | 82,000 | |||
| Inventory | 4,956,472 | 4,940,660 | |||
| Prepaid expenses and other | 363,209 | 216,041 | |||
| Total current assets | 13,954,691 | 14,012,873 | |||
| Resalable software license rights | 46,247 | 48,752 | |||
| Investment – debt security, net | 452,821 | 452,821 | |||
| Equipment and leasehold improvements, net | 134,929 | 69,168 | |||
| Capitalized contract costs, net | 279,789 | 249,012 | |||
| Deposits and other assets | 8,712 | 8,712 | |||
| Note receivable, net of allowance | 110,000 | 113,000 | |||
| Operating lease right-of-use assets | 202,513 | 254,100 | |||
| Intangible assets, net | 2,768,067 | 1,298,077 | |||
| Goodwill | 1,648,481 | 1,262,526 | |||
| Total non-current assets | 5,651,559 | 3,756,168 | |||
| TOTAL ASSETS | 19,606,250 | $ | 17,769,041 | ||
| LIABILITIES | **** | **** | **** | **** | **** |
| Accounts payable | 1,084,452 | $ | 427,772 | ||
| Accrued liabilities | 896,702 | 828,997 | |||
| Government loan – Swivel | 580,992 | - | |||
| Deferred revenue - current | 798,830 | 565,355 | |||
| Operating lease liabilities, current portion | 156,730 | 177,188 | |||
| Total current liabilities | 3,517,706 | 1,999,312 | |||
| Deferred revenue – long term | 54,699 | 67,300 | |||
| Operating lease liabilities, net of current portion | 54,710 | 86,974 | |||
| Total non-current liabilities | 109,409 | 154,274 | |||
| TOTAL LIABILITIES | 3,627,115 | 2,153,586 | |||
| Commitments and Contingencies | |||||
| STOCKHOLDERS’ EQUITY | **** | **** | **** | **** | **** |
| Common stock — authorized, 170,000,000 shares; issued and outstanding; 8,406,451 and 7,853,759 of .0001 par value at March 31, 2022 and December 31, 2021, respectively | 841 | 786 | |||
| Additional paid-in capital | 121,509,367 | 120,190,139 | |||
| Accumulated other comprehensive gain | 43,800 | ||||
| Accumulated deficit | (105,574,873 | ) | (104,575,470 | ) | |
| TOTAL STOCKHOLDERS’ EQUITY | 15,979,135 | 15,615,455 | |||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 19,606,250 | $ | 17,769,041 |
All values are in US Dollars.
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BIO-key International, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Revenues | **** | **** | **** | **** | **** | **** |
| Services | $ | 395,804 | $ | 380,022 | ||
| License fees | 1,460,183 | 478,958 | ||||
| Hardware | 85,184 | 1,029,658 | ||||
| Total revenues | 1,941,171 | 1,888,638 | ||||
| Costs and other expenses | **** | **** | **** | **** | **** | **** |
| Cost of services | 210,913 | 175,944 | ||||
| Cost of license fees | 73,230 | 38,969 | ||||
| Cost of hardware | 53,298 | 551,722 | ||||
| Total costs and other expenses | 337,441 | 766,635 | ||||
| Gross Profit | 1,603,730 | 1,122,003 | ||||
| Operating expenses | **** | **** | **** | **** | **** | **** |
| Selling, general and administrative | 1,797,998 | 1,516,398 | ||||
| Research, development and engineering | 805,266 | 441,651 | ||||
| Total operating expenses | 2,603,264 | 1,958,049 | ||||
| Operating loss | (999,534 | ) | (836,046 | ) | ||
| Other income (expense) | **** | **** | **** | **** | **** | **** |
| Interest income | 131 | 2,615 | ||||
| Interest expense | - | (18,000 | ) | |||
| Total other income (expense) | 131 | (15,385 | ) | |||
| Net loss | $ | (999,403 | ) | $ | (851,431 | ) |
| Comprehensive loss: | ||||||
| Net loss | $ | (999,403 | ) | |||
| Other comprehensive gain | 43,800 | |||||
| Comprehensive loss | $ | (955,603 | ) | $ | (851,431 | ) |
| Basic and Diluted Loss per Common Share | $ | (0.12 | ) | $ | (0.11 | ) |
| Weighted Average Shares Outstanding: | **** | **** | **** | **** | **** | **** |
| Basic and Diluted | 7,885,008 | 7,773,688 |
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