BIO-key(R) International, Inc. Reports Third Quarter 2012 Financial Results

Mon Nov 19, 2012 4:30pm EST

* Reuters is not responsible for the content in this press release.

  WALL, NJ, Nov 19 (Marketwire) -- 
BIO-key International, Inc. (OTCBB: BKYI), a global leader in fingerprint
biometric identification solutions and advanced mobile identification
technology, today reported financial results for the third quarter ending
September 30, 2012. 

    Total revenue for the three months ended September 30, 2012 was
approximately $410,000, representing a decrease of 29% from the $574,000
reported for the quarter ended September 30, 2011. 

    BIO-key's gross margin for the third quarter of 2012 was 76% compared to
63% for the same period in 2011, due to reduced costs associated with the
third party hardware revenue. Operating expenses for the third quarter of
2012 decreased 40%, primarily attributable to the decrease of our reserve
for doubtful accounts of $300,000 due to partial payments received for a
contract whose payments are behind schedule, decreases in R&D contractor
expense as well as commission and referral fees related to decreased
revenue.

    Net loss for the three months ended September 30, 2012 was ($232,609) a
57% improvement over the net loss of ($540,165) for the same period in
2011. 

    "While not yet reflected in our financials, the third quarter of 2012
included a number of significant accomplishments with key partners,"
stated Mike DePasquale, CEO. "In healthcare, which is a target industry
for our company, BIO-key was featured during the opening ceremony of the
Allscripts Client Experience 2012. During his key note address, Glen
Tullman the CEO of Allscripts, lauded the BIO-key solution. He also
presented BIO-key customer, Holzer Health Systems, whose staff members
shared video testimonials about their positive experience using BIO-key
technology. The result was a measurable increase in traffic at our booth
at the Allscripts conference, leading to the BIO-key sales team reaching
agreements with more than ten different hospitals and clinics to conduct
Pilot programs."

    "Also, during the third quarter, IBM published a 'Redguide' detailing the
integration of BIO-key biometrics within the IBM TAM ESSO solution
offering. IBM field sales representatives and technical support engineers
rely on IBM Redguides to help them identify innovative customer
solutions. The guide has already been distributed to thousands of IBMers
and can be found by visiting IBM BIO-key Redguide
(http://www.redbooks.ibm.com/abstracts/Redp4892.html?Open&cm_sp=MTE23578),"
added DePasquale.

    Nine Month Comparisons

    Total revenue for the nine months ended September 30, 2012 was $2.353
million representing a 21% decrease from the $2.963 million reported for
the same period in 2011. The product mix varied for the nine months ended
September 30, 2012 as compared to the same period in 2011with a decrease
in third party hardware revenue and license revenue, and an increase in
service revenue and royalty income.

    Gross margin for the nine months ended September 30, 2012 was 82%
compared to 79% for the same period in 2011. Operating expenses for 2012
decreased 15% to approximately $2,395,000 compared to $2,829,000 in the
same period ended September 30, 2011. The decline in operating expenses
was primarily related to lower R&D contractor expenses, commissions,
referral fee expenses and a decrease in reserve for doubtful accounts.
Operating loss for the nine months ended September 30, 2012 was
approximately ($464,000) compared to an operating loss of ($484,000)
reported for the same period in 2011. 

    Net loss for the first nine months of 2012 was approximately ($483,000)
compared to net loss of ($894,000) for the same 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 $385,000 on September 30, 2012,
compared to $630,000 as of December 31, 2011. 

    Highlights for Q3 2012 included the following:


--  Purchase Orders for continued product roll-outs at Robinson Memorial
    Hospital, McKesson, Davlong, Identimetrics, Life South, MedFlow and
    LexisNexis.
--  IBM produced, promoted and distributed an IBM Redguide "BIO-key
    Biometric Service Provider for IBM Security Access Manager for
    Enterprise Single Sign-On."
--  Additional order for services from British Columbia Ministry of
    Labour.
--  Attended Allscripts Client Experience (ACE) meeting in August. Secured
    10+ Pilot programs with various hospitals and clinics. BIO-key was one
    of four Allscripts partners featured during the Glen Tullman, CEO,
    keynote address to open the meeting.
--  Launched a new Allscripts demo and training program. BIO-key is
    providing the Allscripts training engineers and field sales team with
    biometric product sales training and fingerprint readers. Allscripts
    is including the BIO-key solution in standard customer demos and new
    Allscripts sales personnel will be trained on BIO-key technology at
    the Allscripts training facility located in Atlanta.
--  Attended the Epic "by invitation only" User Group Meeting in September
    2012. This was a small gathering of healthcare technology provider and
    leading hospital executives.

    

DePasquale concluded "We expect our FY 2012 fourth quarter to be our
strongest of the year in terms of revenues and profit and for the company
to be profitable for the year ending December 31, 2012. With a number of
industry changing events taking place over the past 90 days including the
purchase of AuthenTec, a fingerprint manufacturer, by Apple, we are
experiencing an increase in demand for our product offerings. The partner
relationships that we have built in healthcare and in the Identity Access
Management space are creating many new international opportunities that
we will monetize in the coming quarters."

    The company will hold a conference call early December to update
investors and other interested parties on our progress and to review a
number of strategic initiatives that are underway.

    About BIO-key
 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. 

    

Contacts:
BIO-key International, Inc.
Scott Mahnken
732-359-1113 

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