Digital Authentication and Identity Provider BIO-key Sees Q3 Revenues Rising over 30% to $1.8M on Strength in Software License Fees, Services and Hardware Sales

HOLMDEL, N.J., Oct. 25, 2023 (GLOBE NEWSWIRE) -- BIO-key® International, Inc. (Nasdaq: BKYI), an innovative provider of workforce and customer Identity and Access Management (IAM) featuring passwordless, phoneless and token-less Identity-Bound Biometric (IBB) authentication solutions, announced results for its third quarter ended September 30, 2023 (Q3’23).


  • Revenue rose over 30% to $1.8M vs. $1.4M in Q3’22
  • Gross profit improved more than 40% to $1.4M vs. $1.0M in Q3’22
  • Q3’23 operating loss improved to approximately ($750,000) vs. an operating loss of ($2.4M) in Q3’22.
  • Q3’23 net loss per share reduced approximately 72% to ($0.08) vs. ($0.29) in Q3’22.

CEO Commentary
BIO-key CEO, Mike DePasquale commented, “Our Q3 performance reflects continued progress driving revenue growth and reducing expenses to move our business toward sustained profitability. These trends are also reflected in our nine-month results, with revenues up approximately 30% to $6.8M and our operating loss reduced by over 50%.

“We are pleased to report that our sales team has developed a significant pipeline of larger customer opportunities interested in the savings and superior user experience of our phoneless, tokenless, passwordless authentication. Our team is focused on those opportunities with the greatest potential for generating meaningful Annual Recurring Revenue (ARR). Our Channel Alliance Partner (CAP) program continues to build both its geographic scope and its sales productivity. These channels have enabled us to build our ARR to approximately $7M per year, providing a solid base on which to layer new SaaS deployments around the globe, through new customer wins and the expanded penetration of existing customer accounts.

“We believe BIO-key is well positioned to deliver solid top-line and bottom-line improvements going forward. This view is based on the very attractive value proposition of our secure, convenient, scalable and cost-efficient solutions incorporating the industry’s widest array of multi-factor authentication methods, including our identity-bound biometric solutions. With greater cyber-insurer scrutiny and the recent SEC regulation requiring companies to report on their cybersecurity measures beginning in mid-December, we expect that most sizeable companies will be implementing multi-factor authentication throughout their workforce. We believe the market is ripe for a phoneless, tokenless passwordless FIDO passkey authentication option for manufacturing, retail, call center, and other roving workforces. Historically, Q4 tends to be one of our strongest quarters each year in terms of business volume, and we are confident about our prospects for continued growth and improved bottom line performance in 2024.

“Supporting our near-term outlook is a significant recent commitment from a long-standing international defense ministry customer, for additional software and hardware to support their expanded rollout of our biometric authentication solution. To support our working capital requirements, we are working to convert certain inventories into cash while also pursuing operating expense reduction opportunities, including relocating our headquarters, to accelerate our path to cash flow breakeven.”

Financial Results
Please note that the review of our Q3 FY2023 financial statements has not been completed by our independent registered public accounting firm as of the date of this press release and are therefore subject to change.

Q3’23 revenues rose 33% to $1.8M, reflecting increased services, software license and hardware revenue versus Q3’22. Q3’23 service revenue was driven by custom service installations for new and existing customer deployments and upgrades, and hardware revenue reflected new contact activity as well as progress in reducing hardware inventories. For the first nine months of 2023, total revenues rose 30% to $6.8M compared to $5.3M for the first nine months of 2022, reflecting growth in service and license revenue and a decline in hardware revenue.

Gross profit grew 43% to $1.4M in Q3’23 from $1.0M in Q3’22, reflecting an increase in gross margin to 77% from 71% in Q3’22. Gross profit and gross margin benefitted from a year-over-year increase in higher margin services and software license revenue and a decrease in third-party software costs, principally due to the seasonal, vacation-related slowdown in Q3 business activity in Europe.

Q3’23 operating expenses decreased 36% to $2.2 million from $3.3 million in Q3’22, due primarily to lower selling, general and administrative expenses reflecting progress in BIO-key’s expense reduction initiatives as well as lower research and development investments. BIO-key continues to seek expense reduction opportunities to further benefit its operating results.

Reflecting higher gross profit and lower operating costs, BIO-key trimmed its Q3’23 net loss to $749,000, as compared to $2.4M in Q3’22. Similarly, for the first nine months of 2023 compared to 2022, the Company reduced its year-to-date 2023 net loss to $2.5M from a net loss of $5.1M.

At September 30, 2023, BIO-key had current assets of $7.9M, including $0.3M of cash and cash equivalents, $2.9M of accounts receivable, and $4.3M of inventory.

About BIO-key International, Inc. (
BIO-key is revolutionizing authentication and cybersecurity with biometric-centric, multi-factor identity and access management (IAM) software managing millions of users. Its cloud-based PortalGuard IAM solution provides cost-effective, easy-to-deploy, convenient, and secure access to devices, information, applications, and high-value transactions. With industry-leading Identity-Bound Biometric (IBB) capabilities, BIO-key's patented software and hardware solutions enable large-scale Identity-as-a-Service (IDaaS) solutions and customized on-premises solutions.

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 to satisfy debt repayment obligations and working capital needs; our ability to continue as a going concern; 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 industry; market acceptance of biometric products generally and our products under development; our ability to convert sales opportunities to customer contracts; our ability to expand into Asia, Africa and other foreign markets; our ability to integrate the operations and personnel of Swivel Secure into our business; fluctuations in foreign currency exchange rates; 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, 2022 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.

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Investor Contacts
William Jones, David Collins
Catalyst IR or 212-924-9800


Preliminary Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited and Unreviewed)
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2023  2022  2023  2022 
Services $599,156  $371,956  $1,752,143  $1,202,866 
License fees  950,015   918,260   4,664,341   3,540,592 
Hardware  279,200   83,333   424,583   518,377 
Total revenues  1,828,371   1,373,549   6,841,067   5,261,835 
Costs and other expenses                
Cost of services  125,039   162,632   639,996   554,222 
Cost of license fees  203,891   173,310   1,022,919   604,677 
Cost of hardware  97,674   57,841   190,074   296,278 
Total costs and other expenses  426,604   393,783   1,852,989   1,455,177 
Gross profit  1,401,767   979,766   4,988,078   3,806,658 
Operating Expenses                
Selling, general and administrative  1,592,410   2,510,706   5,467,306   6,315,277 
Research, development and engineering  558,686   829,506   1,807,026   2,418,855 
Total Operating Expenses  2,151,096   3,340,212   7,274,332   8,734,132 
Operating loss  (749,329)  (2,360,446)  (2,286,254)  (4,927,474)
Other income (expense)                
Interest income  3   8   29   216 
Loss on foreign currency transactions  -   -   (15,000)  - 
Investment-debt security reserve  -   (40,000)  -   (190,000)
Change in fair value of convertible note  85,890   -   183,313   - 
Interest expense  (23,655)  (2,071)  (137,379)  (3,611)
Total other income (expense), net  62,238   (42,063)  30,963   (193,395)
Loss before provision for income tax  (687,091)  (2,402,509)  (2,255,291)  (5,120,869)
Provision for income tax  (62,000)  -   (205,000)  - 
Net loss $(749,091) $(2,402,509) $(2,460,291) $(5,120,869)
Comprehensive loss:                
Net loss $(749,091) $(2,402,509) $(2,460,291) $(5,120,869)
Other comprehensive income (loss) – Foreign currency translation adjustment  35,363   (119,269)  127,393   (229,350)
Comprehensive loss $(713,728) $(2,521,778) $(2,332,898) $(5,350,219)
Basic and Diluted Loss per Common Share $(0.08) $(0.29) $(0.27) $(0.64)
Weighted Average Common Shares Outstanding:                
Basic and diluted  9,130,899   8,148,848   9,049,835   8,054,207 

Please note that the review of our Q3 FY2023 financial statements has not been completed by our independent registered public accounting firm as of the date of this press release and are therefore subject to change.

Preliminary Consolidated Balance Sheets
  September 30,  December 31, 
  2023  2022 
  (Unaudited and
Cash and cash equivalents $307,086  $2,635,522 
Accounts receivable, net  2,899,218   1,522,784 
Due from factor  62,572   49,500 
Inventory  4,289,213   4,434,369 
Prepaid expenses and other  362,250   342,706 
Total current assets  7,920,339   8,984,881 
Equipment and leasehold improvements, net  69,202   107,413 
Capitalized contract costs, net  264,349   283,069 
Deposits and other assets  8,712   8,712 
Operating lease right-of-use assets  50,464   197,355 
Intangible assets, net  1,519,592   1,762,825 
Total non-current assets  1,912,319   2,359,374 
TOTAL ASSETS $9,832,658  $11,344,255 
Accounts payable $1,644,100  $1,108,279 
Accrued liabilities  1,030,033   1,009,123 
Income taxes payable  231,000   - 
Convertible note payable  2,412,890   2,596,203 
Government loan – BBVA Bank, current portion  135,308   120,000 
Deferred revenue, current  594,262   462,418 
Operating lease liabilities, current portion  42,176   159,665 
Total current liabilities  6,089,769   5,455,688 
Deferred revenue, long term  37,280   52,134 
Deferred tax liability  146,997   170,281 
Government loan – BBVA Bank – net of current portion  221,625   326,767 
Operating lease liabilities, net of current portion  9,570   37,829 
Total non-current liabilities  415,472   587,011 
TOTAL LIABILITIES  6,505,241   6,042,699 
Common stock — authorized, 170,000,000 shares; issued and outstanding; 9,438,894 and 9,190,504 of $.0001 par value at Sept 30, 2023 and Dec. 31, 2022, respectively  946   919 
Additional paid-in capital  122,362,110   122,028,612 
Accumulated other comprehensive loss  (115,208)  (242,602)
Accumulated deficit  (118,920,431)  (116,485,373)
TOTAL STOCKHOLDERS EQUITY  3,327,417   5,301,556 

Please note that the review of our Q3 FY2023 financial statements has not been completed by our independent registered public accounting firm as of the date of this press release and are therefore subject to change.