Bio-Key International, Inc. (BKYI)

Bio-Key International, Inc. 2024 Financial Report

Report Date: April 30, 2025
Period Covered: Fiscal Year ended December 31, 2024
Form Type: 10-K

Profit & Loss Analysis

• Revenues declined 10.7% to $6.93 M in 2024 from $7.75 M in 2023, driven by lower hardware sales and a one-time distribution exit in EMEA.
• License revenues grew 63.5% to $847 K, reflecting expanded deployments and new contract wins.
• Service revenues (maintenance & support) were $1.70 M, of which $1.02 M was recurring; custom services dipped from $1.03 M to $91 K.
• Hardware revenues fell from $1.19 M to $562 K due to timing of large international projects and inventory reserves.
• Gross profit improved markedly to $1.43 M (versus –$3.28 M in 2023), aided by a $2.13 M write-off of fully reserved slow-moving inventory and a shift toward higher-margin licenses.
• SG&A expense was reduced by 9.2% to $7.14 M through headcount and facility rationalization.
• R&D expenses rose 4.8% to $2.51 M as key biometric enhancements and new factors were developed.
• Net loss narrowed to $4.22 M from $8.52 M in 2023.

Debt & Liquidity

• In June 2024 issued a senior secured note for $2.36 M (9% interest), ending 2024 with $738,400 outstanding after prepayments and exchanges.
• Convertible notes were fully repaid in late 2023.
• Cash & equivalents stood at $438 K at year-end; monthly burn of $812 K vs average monthly cash inflow of $577 K from operations.
• Going concern remains an area of substantial doubt; continued access to capital markets or new strategic partnerships will be critical.

Pros

• Strong margin recovery from hardware reserve reversal and higher-margin license growth.
• Expanding recurring revenue base (maintenance and SaaS deployments).
• Leaner cost structure with headcount reductions and facility consolidations.
• Robust R&D pipeline addressing passwordless and continuous-authentication use cases.

Cons

• Continued net losses and reliance on external financing.
• Elevated debt levels from the new secured note.
• Historical restatements and material weaknesses in internal controls may affect credibility.
• High cash burn relative to revenue; inventory risk in EMEA and Nigeria projects.
• Competitive IAM market with large incumbents and evolving FIDO standards.

Outlook

Bio-Key’s strategic focus on shifting from one-time hardware and custom services toward subscription license and SaaS models should improve revenue visibility and margins. Execution risk remains high given the need for additional capital, potential dilution, and the requirement to close strategic acquisitions or partnerships. Continued product innovation in biometric IAM, an aggressive channel expansion, and tight cost controls will determine whether Bio-Key can reach profitability and sustain its going concern assumption.

*Service total for 2023 is the sum of maintenance ($1.19 M) and custom services ($1.03 M).

Bio-Key has demonstrated the ability to pivot toward higher-margin software license and recurring revenue streams, de-emphasizing lagging hardware and custom engagements. Continued R&D investment in server-secured biometrics, FIDO compliance, and passwordless solutions underpins its technology leadership, while the expansion of channel partners in North America and EMEA broadens its go-to-market reach. However, the company must secure additional funding or strategic alliances to shore up its balance sheet and address its going concern warning. Integrating complementary acquisitions remains part of management’s growth playbook but carries execution and integration risks. Overall, Bio-Key’s direction is positive in terms of product roadmap and margin improvement, but financial health and capital access represent the critical hurdles for sustainable growth.