BIO-key(R) Announces Third Quarter 2008 Results

WALL, N.J. , Nov. 14 /PRNewswire-FirstCall/ -- BIO-key International, Inc. (OTC Bulletin Board: BKYI), a leader in wireless public safety and finger-based biometric identification solutions, announced results for its third quarter ended September...


WALL, N.J. , Nov. 14 /PRNewswire-FirstCall/ -- BIO-key International, Inc. (OTC Bulletin Board: BKYI), a leader in wireless public safety and finger-based biometric identification solutions, announced results for its third quarter ended September 30, 2008 .

Total revenue from continuing operations for the quarter ended September 30, 2008 was $2.9 million representing an increase of 33% from the $2.2 million reported for the corresponding period in 2007. An increase in new orders received by the Company's Law Enforcement and Biometrics units drove revenue growth in the third quarter of 2008. Total revenue from continuing operations for the quarter ended September 30, 2008 decreased 19.5% from $3.6 million reported for the quarter ended June 30, 2008 . This sequential reduction was attributable primarily to delays in converting several orders, from 2008 second and third quarter backlog, into revenue in the third quarter.

"We are pleased to report another quarter of operational achievements led by our ongoing ability to generate additional operational efficiencies primarily by managing our cost base," said Michael DePasquale , BIO-key's Chief Executive Officer. "As a result of the initiatives that we deployed in the previous year, we are now realizing significant and consistent cost savings that allow us to operate our businesses more efficiently. Consequently, our gross margin has improved markedly since the first quarter of 2008. We will continue to evaluate ways in which we can improve productivity and our financial results."

BIO-key's gross margin for the third quarter of 2008 was 85.9% compared to 78.7% for the corresponding period in 2007. Sales of higher margin license product facilitated this improvement in year-over-year gross margins.

Operating expenses from continuing operations for the third quarter of 2008 decreased by 15.5% to $2.7 million compared to the $3.2 million reported for the corresponding period in 2007. Operating expenses from continuing operations for the third quarter of 2008 decreased by 6.7% when compared to the second quarter of 2008, reflecting a continued emphasis on cost containment.

BIO-key's net loss for the third quarter of 2008 improved to ($45,000), or ($0.01) per share, representing a reduction of $1.1 million when compared to the net loss of ($1.2 million), or ($0.03) per share, reported for the corresponding period in 2007. BIO-key's net loss for the three months ended September 30, 2008 increased by $213,000 when compared to the previous quarter's reported net income of $168,000, or $0.00 per share.

Highlights:

-- An agreement with McKesson Provider Technologies that allows BIO-key's WEB-Key(R) technology to be incorporated into McKesson's AcuDose-Rx(R) system that is used to authenticate the identity of users accessing patient medications.

-- Approximately $1 million in new contracts for the Company's Law Enforcement business, including PocketCop(R) solutions deployed over BlackBerry smartphones, enabling the business unit to report an 11% increase in third quarter 2008 revenues compared to first quarter of 2008.

-- Over 40% of the Company's third quarter Law Enforcement orders were from new customers and additional agencies hosted by current customers and included the Bexley (OH) Police Department, and the Pulaski (IN) Sheriff's Office as well as an add-on contract from the Hawaii County (HI) Police Department.

-- U.S. Patent & Trademark Office patent issued (No. 7,415,605) covering BIO-key's "Biometric Identification Network Security" method.

Nine Months Consolidated Results

Total revenue from continuing operations for the nine months ended September 30, 2008 increased 22.6% to $9.0 million from the corresponding period in 2007. Gross margin for the nine months ended September 30, 2008 increased to 85.9% compared to 80.9% for the corresponding period in 2007. Gross profit increased by 30.1% to $7.7 million compared to $5.9 million in the corresponding period in 2007. Operating expenses from continuing operations for the nine months ended September 30, 2008 decreased 19.2% to $8.6 million.

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