SOURCE: BIO-key International, Inc.
WALL, NJ--(Marketwire - Aug 15, 2012) - BIO-key International, Inc. (OTCBB: BKYI), a global leader in fingerprint biometric identification solutions and advanced mobile identification technology, yesterday reported financial results for the second quarter ending June 30, 2012.
Total revenue for the three months ended June 30, 2012 was approximately $533,000, representing a decrease of 46% from the $984,000 reported for the quarter ended June 30, 2011. There was an increase in the service revenues for maintenance and support contracts, which was driven by a mix of new accounts and renewed maintenance agreements from legacy customers. The increase was offset by a decrease in its core license and third party hardware revenue.
BIO-key's gross margin for the second quarter of 2012 was 73% compared to 70% for the same period in 2011, due to costs associated with the third party hardware revenue. Operating expenses for the second quarter of 2012 increased 8%, primarily attributable to the increase of our reserve for doubtful accounts of $193,000 due to a contract whose payments are behind schedule, and was offset by decreases in R&D contractor expense and in commission and referral fees related to decreased revenue, to approximately $998,000 compared to $926,000 in the comparable quarter ended June 30, 2011. Operating loss for the second quarter of 2012 was ($607,292), compared to operating loss of ($234,039) reported in the quarter ended June 30, 2011.
Net loss for the three months ended June 30, 2012 was ($613,419) compared to net loss of ($594,224) for the comparable period in 2011. Net loss for the 2011 period included approximately $291,000 in expenses related to derivative and fair value adjustments that were no longer relevant in 2012.
"Momentum in the biometric industry continues to grow and for the first time ever we are seeing distinct market drivers at both the enterprise and consumer level. Apple's recent offer to purchase AuthenTec validates that fingerprint technology will replace passwords for iPhone and iPad customers," said Mike DePasquale, Chief Executive Officer. "BIO-key's results for Q2 proved to be choppy; as we migrate towards universal adoption of our biometric technology. The second quarter included one of our single greatest partnering achievements as IBM agreed to publish and distribute IBM's premier technical resource, Redguide, dedicated to promoting BIO-key solutions. Today the guide is accessible to thousands of IBM sales and technical support reps in the field, providing a global presence and awareness for our fingerprint biometric solutions," added DePasquale.
Six Month Comparisons
Total revenue for the six months ended June 30, 2012 was $1.943 million representing a 19% decrease from the $2.389 million reported for the same period in 2011. The product mix varied with a decrease in third party hardware revenue to approximately $289,000, license revenue of $1.0 million and an increase in service revenue to $563,000 for the six months ended June 30, 2012 compared with third party hardware revenue of approximately $530,000, license revenue of $1.5 million and service revenue of $309,000 for the same period in 2011.
Gross margin for the six months ended June 30, 2012 was approximately $1.6 million representing an 18% decrease from the same period in 2011 of approximately $2.0 million. Operating expenses for 2012 decreased 4% to approximately $1,857,000 compared to $1,932,000 in the comparable period ended June 30, 2011. The decline in operating expenses was primarily related to lower R&D contractor expenses, commission and referral fee expenses, offset by an increase in reserve for doubtful accounts. Operating loss for the six months ended June 30, 2012 was approximately ($238,000) compared to an operating profit of $50,000 reported for the same period in 2011.
Net loss for the first six months of 2012 was approximately ($250,000) compared to net loss of ($354,000) for the comparable period in 2011. Net loss for the 2011 period included approximately $400,000 in expenses related to derivative and fair value adjustments which are no longer applicable in 2012.
Liquidity and Capital Resources
Consolidated cash, cash equivalents and accounts receivables was approximately $324,000 on June 30, 2012, compared to $630,000 as of December 31, 2011.
Highlights for Q2 2012 included the following:
- Purchase Orders for continued product roll-outs at the Muskingum Valley Health Center, Children's Medical Center of Dayton, McKesson, Davlong, My Life Plan, Identimetrics, Life South, MedFlow and LexisNexis.
- Commitment from IBM to produce a Redguide highlighting BIO-key technology.
- Team Praxis installed BIO-key technology at two leading eye centers in Hawaii.
- Dancom, an IBM technology reseller in Malaysia installed BIO-key technology for Aeon Credit Services to support staff log-on and tracking for representatives handling financial transactions.
- Finalized agreements and initiated integration with Allscripts Pro product, the most widely installed EHR product that Allscripts offers. BIO-key is already integrated with Allscripts Sunrise and Enterprise solutions.
- Attended Allscripts Regional Events in Des Moines, Los Angeles and Atlanta leading to over $600K in short-term pipeline opportunities, including a leading university.
- Nationwide Children's Hospital, one of the largest pediatric hospitals and research institutes in the U.S. placed additional orders for continued expansion within their new facility.
- Received an invitation to attend the Epic User Group Meeting, a special industry event aligning leading hospitals with Epic representatives and a few select vendors.
Conference Call Details
BIO-key has scheduled a call for Wednesday August 15th, at 10:00 a.m. Eastern Time to discuss 2012 second quarter. To access the conference call live, dial 800-860-2442 (U.S.) or 412-858-4600 (International) and ask for the BIO-key call at least 10 minutes prior to the start time. The conference call will also be broadcast live over the Internet by logging onto www.bio-key.com. A telephonic replay of the conference call will be available through September 16, 2012 and may be accessed by dialing 877-344-7529 (U.S.) 412-317-0088 (International) and using the pass code 10017451#. A streaming audio replay of the webcast will be available shortly after the call on the Company's website (www.bio-key.com) for a period of thirty days.
BIO-key International, Inc., headquartered in Wall, New Jersey, develops and delivers advanced identification solutions to commercial and government enterprises, integrators, and custom application developers. BIO-key's award winning, high performance, scalable, cost-effective and easy-to-deploy biometric finger identification technology accurately identifies and authenticates users of wireless and enterprise applications. Our solutions are used in local embedded OEM products as well as some of the world's largest identification deployments to improve security, guarantee identity, and help reduce identity theft. BIO-key's technology is offered directly or by market leading partners around the world. (http://www.bio-key.com)
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, the impact on our business of the recent financial crisis in the global capital markets and negative global economic trends, 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, 2011 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 also undertakes no obligation to disclose any revision to these forward-looking statements to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.