EX-99.1 2 ex_145189.htm EXHIBIT 99.1 ex_145189.htm

Exhibit 99.1



Biometric Authentication Provider BIO-key Reports Q1 Results



Wall, NJ, May 15, 2019 - BIO-key International, Inc. (Nasdaq: BKYI), an innovative provider of biometric authentication and security solutions, today reported results for its first quarter (Q1'19) ended March 31, 2019 and will host a conference call tomorrow at 10:00 a.m. EDT (details below) to review its results and outlook.


BIO-key CEO Michael DePasquale commented, “Our Q1 results fell short of our expectations as a result of delays in the receipt of monthly cash payments related to a significant software license agreement completed with a Chinese customer in Q4 2018. We had anticipated recording as Q1’19 revenue the receipt of two payments totaling $1.1 million as we had done in Q4’18, however the payments have not yet been received. Candidly, the deteriorating state of U.S. – China trade relations the past few months has emerged as a significant impediment in cross border commerce and particularly in the case of intangible goods such as software. We continue to aggressively monitor the timing of these anticipated payments.”


"Importantly, BIO-key continues to see increasing customer interest and traction for our biometric authentication solutions. We are also enhancing our sales efforts and resources and already see positive developments that should lead to stronger results in future periods. To date in 2019, we executed several new deployments of our technology, including deployments by internationally recognized police forces in both Dubai and Singapore and a global aerospace and defense contractor that deployed BIO-key's fingerprint technology.


“Expanding the application scope of our solutions, we introduced ID Director for SAML, a biometric single sign-on solution, which we are targeting toward larger enterprises as well as to identity access management (IAM) providers. We also debuted smart commercial biometric locks with cloud tracking and reporting capabilities at CES 2019 and along with our partners, announced a new smart emergency notification system for schools using biometric data."


Mr. DePasquale concluded, “Despite payment delays with one large customer, there are many reasons for BIO-key to remain confident in its growth prospects. Our optimism is supported by a growing number of enterprises that are starting to take action on security initiatives and are interested in biometric solutions. Those that have evaluated our solution have been impressed by the ease of implementation with Microsoft solutions. Importantly, recurring service revenue grew 19% and contributed 99% of total service revenues in Q1’19, compared to 66% of total service revenues in Q1'18, demonstrating traction in our focus on recurring Software-as-a-Service revenue.”





Q1 Highlights:

Dubai Police Force Selected BIO-key's Windows-Compatible Biometric Authentication Solution

Singapore Police Deployed BIO-key Biometric Technology to Secure Access to Critical Information

Aerospace/Defense Contractor deployed BIO-key Fingerprint Solution for Windows Hello for Business

BIO-key Introduced ID Director for SAML, Facilitating Biometric Single Sign-On for Cloud Services

BIO-key, identiMetrics and Bright Arrow partnered on Smart Emergency Notification System for Schools

BIO-key Debuted Commercial Biometric IoT Locks with Cloud Tracking and Reporting at CES 2019


2019 Financial Guidance

Notwithstanding the revenue impact of delays of monthly payments for the large software license, BIO-key remains confident that it is well positioned to deliver significant top and bottom line improvements for full year 2019. BIO-key believes that its full-year 2019 revenue guidance of $11 to $14M remains achievable and within this revenue guidance range, it would also expect to achieve positive cash flow and net income for the full year. However, the Company cautions investors that based on additional data and collections experience in coming months, it may have to reduce its 2019 revenue and other guidance later in the year when it reports Q2 or Q3 results.


Q1 2019 Results

Q1'19 revenue declined by $289,832 to $551,623 versus $841,455 in Q1'18 with hardware sales, which decreased by $209,500, contributing most to the decline. Hardware sales include both fingerprint readers and biometric locks. During Q1'19, the Company shipped $34,826 of biometric locks or 15% of total hardware revenue compared to $150,680 or 35% of hardware revenue in Q1'18, with the prior-year period benefitting from our introduction of biometric locks.


Service revenues were $241,610 as compared to $302,449 in Q1'18, a decrease of $60,839 or 20%. The decrease was due to non-recurring custom service revenue decreasing $99,100, mostly related to the end of a custom project to one customer. This decrease was partially offset by recurring maintenance and support revenue increasing by $38,300.





License revenue decreased to $83,208 from $102,719 or 19%, due to smaller initial orders from new customers. During the quarter, we shipped products to Omnicell for the continued deployment of our identification technology in its AccuDose(R) product line, as well as to several commercial partners and several healthcare facilities and banks for initial biometric ID deployments or expansion.


Gross margin improved to -9.5% compared to -40.2% in Q1'18, principally due to lower non-cash software license rights amortization expense of $281,074 versus $659,414 in Q1'18. Adjusting for this amortization of non-cash software license rights, gross margin would have been 41% in Q1'19 versus 38% in Q1'18, with the improvement due to a higher proportion of software and services in the Q1'19 revenue mix.


Operating expenses declined 6% to $1.8M in Q1'19 compared to $1.9M in Q1'18, primarily reflecting a decrease in selling, general and administrative expenses as well as lower R&D expenses.


BIO-key’s Q1'19 net loss was ($1.8M), or ($0.13) per basic share, compared to a net loss of ($2.3M), or ($0.30) per basic share after preferred dividends, in Q1'18. Per share results in Q1'19 and Q1'18 are based on a weighted average of 14.0 million and 7.9 million basic shares outstanding, respectively.


BIO-key had net working capital of $1.9 million as of March 31, 2019 compared to $3.0 million at December 31, 2018. Net working capital included $459,311 of cash and cash equivalents at March 31, 2019 versus $323,943 at December 31, 2018.


In April 2019 BIO-key entered into a financing agreement to fund BIO-key’s sales efforts and working capital requirements. The funding is in the form of a $550,000 principal amount secured convertible debenture issued at a 7% discount which was completed on April 4, 2019. The debenture converts into BIO-key common stock at $1.50 per share and may be redeemed at any time by BIO-key at a premium to the principal balance. Subject to the mutual agreement of the Company and the investor, two additional $550,000 debentures may be issued on the same terms at 45 day intervals from the first debenture. 


Conference Call and Webcast Replay

Date/Time: Thursday, March 16, 2019 at 10 am ET

Dial-In number: 1-877-418-5460 U.S. or 412-717-9594 (Intl.)

Webcast Replay: BKYI Q1 2019 Webcast & Replay – Available for 30 days

Call Replay: 1-877-344-7529 U.S. or 412-317-0088; Int’l code 10131570#





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.


Facebook – Corporate: BIO-key International
Twitter – Corporate:  @BIOkeyIntl
Twitter – Investors: @BIO_keyIR
StockTwits: BIO_keyIR


Investor & Media Contacts  
William Jones, Tanya Kamatu  
Catalyst IR  






BIO-KEY International, Inc. and Subsidiary



Three months ended
March 31,









  $ 241,610     $ 302,449  

License fees

    83,208       102,719  


    226,805       436,287  
      551,623       841,455  

Costs and other expenses


Cost of services

    90,829       154,733  

Cost of license fees and hardware

    513,221       1,024,712  
      604,050       1,179,445  

Gross Profit (Loss)



    (337,990 )

Operating Expenses


Selling, general and administrative

    1,377,033       1,461,854  

Research, development and engineering

    374,118       392,154  

Total Operating Expenses

    1,751,151       1,854,008  

Operating loss





Other income (expenses)


Interest income

    70       6  

Total Other Income (Expenses)

    70       6  

Net loss





Convertible preferred stock dividends

    -       (156,162


Net loss available to common stockholders

  $ (1,803,508


  $ (2,348,154



Basic & Diluted Loss per Common Share

  $ (0.13


  $ (0.30



Weighted Average Shares Outstanding:


Basic & Diluted

    13,979,318       7,851,514  





BIO-KEY International, Inc. and Subsidiary



March 31,



December 31,







Cash and cash equivalents

  $ 459,311     $ 323,943  

Accounts receivable, net

    740,419       1,574,032  

Due from factor

    75,824       56,682  


    980,908       998,829  

Resalable software license rights

    1,125,000       1,125,000  

Prepaid expenses and other

    175,144       150,811  

Total current assets

    3,556,606       4,229,297  

Resalable software license rights, net of current portion

    6,483,406       6,790,610  

Equipment and leasehold improvements, net

    152,707       148,608  

Capitalized contract costs, net

    299,398       319,199  

Deposits and other assets

    8,712       8,712  

Operating lease right-of-use assets

    568,073       -  

Intangible assets, net

    194,330       195,906  

Total non-current assets

    7,706,626       7,463,035  


  $ 11,263,232     $ 11,692,332  



Accounts payable

  $ 472,629     $ 481,269  

Accounts payable – related party

    133,174       -  

Accrued liabilities

    577,996       548,232  

Deferred revenue

    333,240       196,609  

Operating lease liabilities, current portion

    138,274       -  

Total current liabilities

    1,655,313       1,226,110  

Operating lease liabilities, net of current portion

    419,171       -  

Total non-current liabilities

    419,171       -  


    2,074,484       1,226,110  





Common stock — authorized, 170,000,000 shares; issued and outstanding; 13,991,688 and 13,977,868 of $.0001 par value at March 31, 2019 and December 31, 2018, respectively

    1,399       1,398  

Additional paid-in capital

    86,125,173       85,599,140  

Accumulated deficit






    9,188,748       10,466,222  


  $ 11,263,232     $ 11,692,332  





BIO-KEY International, Inc. and Subsidiary



Three Months Ended March 31,








Net loss

  $ (1,803,508


  $ (2,191,992


Adjustments to reconcile net loss to cash provided by operating activities:



    19,292       21,020  

Amortization of intangible assets

    3,314       5,655  

Amortization of software license rights

    281,074       659,414  

Amortization of capitalized contract costs

    33,510       18,668  

Operating leases right-of-use assets

    34,864       -  

Stock based directors’ fees

    16,505       16,512  

Share and warrant-based compensation for employees and consultants

    509,528       533,421  

Change in assets and liabilities:


Accounts receivable

    833,613       2,590,770  

Due from factor




Capitalized contract costs






    17,921       47,687  

Resalable software license rights

    26,130       (11,954


Prepaid expenses and other





Accounts payable

    124,534       (246,245


Accrued liabilities

    29,764       (163,343


Deferred revenue

    136,631       (133,427


Operating leases liability




Net cash provided by operating activities

    160,496       1,043,767  



Purchase of intangible assets




Capital expenditures





Net cash used for investing activities






    135,368       1,010,910  


    323,943       288,721  


  $ 459,311     $ 1,299,631