BIO-key(BKYI) - 2024 Q2 - Quarterly Results

Revenue Performance - Q2'24 revenues decreased to $1.1M from $1.9M in Q2'23, primarily due to a delay in recognizing approximately $450,000 in software license fees and lower project-related services revenue of approximately $200,000[2]. - The company reported a total of $3.3M in revenues for the first six months of 2024, down from $4.1M in the same period of 2023[7]. - Total revenues for the three months ended June 30, 2024, were $1,141,286, a decrease of 40.9% compared to $1,928,929 for the same period in 2023[13]. Profitability and Loss - Gross profit improved to $0.9M with a 77.0% gross margin in Q2'24, compared to $0.3M and a 16.7% gross margin in Q2'23, mainly due to the impact of a $1M hardware reserve in Q2'23[2][8]. - Q2'24 net loss was reduced to $1.7M, or $1.00 per share, from a net loss of $2.6M, or $4.71 per share, in Q2'23[9]. - Operating loss for the three months ended June 30, 2024, was $(1,654,086), an improvement from $(2,378,527) in the same period last year[13]. - The company reported a net loss of $(1,666,950) for the three months ended June 30, 2024, compared to $(2,622,878) for the same period in 2023[13]. - Net loss for the six months ended June 30, 2024, was $2,177,236, an improvement from a net loss of $4,311,200 for the same period in 2023, representing a 49.5% reduction in losses[15]. Cash Flow and Operating Activities - Cash used in operating activities improved by 48% to $1.1M in the first six months of 2024, compared to $2.1M in the same period of 2023[2]. - Cash used in operating activities decreased to $1,123,533 for the six months ended June 30, 2024, compared to $2,095,192 in the prior year, indicating a 46.5% improvement[15]. - Cash and cash equivalents increased to $1,260,351 as of June 30, 2024, compared to $511,400 at December 31, 2023[14]. - Cash and cash equivalents at the end of the period increased to $1,260,351, up from $565,513 at the end of June 30, 2023, reflecting a 123.5% increase[15]. Assets and Liabilities - Current assets as of June 30, 2024, were approximately $3.0M, including $1.3M in cash and cash equivalents, compared to $2.6M at the end of 2023[10]. - Total current assets rose to $3,014,529 as of June 30, 2024, up from $2,622,157 at December 31, 2023[14]. - Total liabilities increased to $5,855,288 as of June 30, 2024, compared to $3,453,470 at December 31, 2023[14]. - The company’s accumulated deficit increased to $(127,184,445) as of June 30, 2024, from $(125,007,210) at December 31, 2023[14]. - Total stockholders' equity was $(1,056,292) as of June 30, 2024, compared to $1,063,565 at December 31, 2023[14]. Cost Management and Expenses - Operating expenses were trimmed by $0.2M in Q2'24 compared to Q2'23, reflecting ongoing cost management initiatives[2][8]. - The company recorded a depreciation expense of $46,069 for the six months ended June 30, 2024, compared to $26,637 in the same period last year, representing a 73.1% increase[15]. - The company incurred capital expenditures of $1,869, a new investment compared to no capital expenditures in the same period last year[15]. Business Development and Strategy - BIO-key introduced Passkey:YOU, a biometric FIDO Passkey Authentication Solution, aimed at enhancing security in identity management[3][6]. - BIO-key is focused on building a base of high-margin annually recurring revenues (ARRs) to support future growth[7]. - The company remains optimistic about the growth potential of its new solutions amid increasing regulatory standards for cybersecurity[6]. Deferred Revenue and Inventory Management - Deferred revenue increased significantly to $414,878 from $174,437 year-over-year, indicating a 137.5% growth[15]. - Inventory changes showed a cash inflow of $12,558, contrasting with a cash outflow of $50,271 in the previous year, indicating improved inventory management[15]. Financing Activities - Proceeds from Note Payable amounted to $2,000,000, contributing positively to financing activities[15]. - The effect of exchange rate changes resulted in a cash outflow of $38,055, compared to a cash inflow of $67,490 in the prior year, highlighting currency volatility impacts[15]. - The company reported a significant increase in accounts payable, which rose to $258,384 from $726,657, indicating changes in payment terms or supplier relationships[15].