BIO-key International, Inc. reported its financial results for the three and nine months ended September 30, 2024, highlighting both revenue fluctuations and strategic developments. For the three-month period, total revenues increased by 18% to $2.1 million, up from $1.8 million in the same period in 2023. This growth was primarily driven by a 52% rise in license fees, which reached $1.4 million, and a 56% increase in hardware sales to $436,422. However, service revenues saw a significant decline of 55%, falling to $267,371, attributed to the loss of a major customer service agreement.

In contrast, for the nine-month period, total revenues decreased by 8% to $5.5 million, down from $5.9 million in 2023. The decline was largely due to a 56% drop in service revenues, which totaled $764,062, while license revenues increased by 11% to $4.2 million, reflecting expansions by long-term customers. The company reported a gross profit margin of 81% for the nine months, a notable improvement from 26% in the prior year.

Despite the revenue challenges, BIO-key's gross profit for the three months ended September 30, 2024, surged to $1.7 million, compared to $340,504 in 2023. The operating loss improved to $(580,405) from $(1.97 million) year-over-year, and the net loss narrowed to $(738,959) from $(1.84 million). For the nine-month period, the net loss was $(2.9 million), a significant reduction from $(6.1 million) in 2023.

The company’s financial position showed a substantial increase in cash and cash equivalents, rising to $1.8 million as of September 30, 2024, from $511,400 at the end of 2023. However, total current liabilities also increased significantly to $5.9 million, leading to negative working capital of approximately $1.3 million. The company is exploring additional financing options to support its operations, which require approximately $732,000 monthly.

Strategically, BIO-key has implemented cost reductions across marketing, research and development, and rent expenses. The company is also focusing on expanding its market presence, particularly in the identity and access management sector, and is actively evaluating potential acquisitions to enhance its operations. Additionally, the company has entered into a distribution agreement with Swivel Secure Limited, effective until January 31, 2027, to bolster its product offerings in the EMEA region.

Overall, while BIO-key International, Inc. has made strides in revenue growth in certain areas, it continues to face challenges in service revenues and overall profitability, necessitating strategic adjustments and potential financing to ensure operational sustainability.