Exhibit 99.2
TO BUSINESS EDITOR:
/C O R R E C T I O N — BIO-key International, Inc./
In the news release, BIO-key International (OTC Bulletin Board: BKYI) Reports Third Quarter 2006 Results, issued earlier today by BIO-key International, Inc. over PR Newswire, we are advised by a representative of the company that the third paragraph, first sentence, should read “Net Loss was $6.2 million...” rather than “Net Loss was $6.6 million...” The second sentence should read “The $6.2 million net loss...” instead of “The $6.6 million net loss...” The third sentence should read “The third quarter 2006 net loss per fully diluted share was $(0.13)...” rather than “The third quarter 2006 net loss per fully diluted share was $(0.14)...” In the seventh paragraph, the first sentence should read “Net loss was $11.1 million...” rather than “Net loss was $11.5 million...” The second sentence should read “The $11.1 million net loss…” instead of “The $11.5 million net loss...” The third sentence should read “The net loss per fully diluted share for nine months ended September 30, 2006 was $(0.24)...” instead of “The net loss per fully diluted share for nine months ended September 30, 2006 was $(0.25)...” as originally issued inadvertently. Corrected tables follow:
BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
|
| September 30, |
| December 31, |
| ||
|
| 2006 |
| 2005 |
| ||
|
| (Unaudited) |
| ||||
ASSETS: |
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|
|
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Cash and cash equivalents |
| $ | 1,293,599 |
| $ | 1,422,827 |
|
Receivables |
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|
| ||
Billed, less allowance for doubtful receivables of $184,074 and $160,000, respectively |
| 3,721,544 |
| 1,635,371 |
| ||
Unbilled |
| 38,776 |
| 201,942 |
| ||
Costs and earnings in excess of billings on uncompleted contracts |
| 1,448,905 |
| 4,321,392 |
| ||
Inventory |
| 26,588 |
| 8,760 |
| ||
Prepaid expenses |
| 163,332 |
| 137,000 |
| ||
Total current assets |
| 6,692,744 |
| 7,727,292 |
| ||
Equipment and leasehold improvements, net |
| 464,417 |
| 548,267 |
| ||
Deposits |
| 800,974 |
| 1,828,560 |
| ||
Intangible assets-less accumulated amortization |
| 2,703,659 |
| 3,301,823 |
| ||
Deferred financing costs, net |
| 231,879 |
| 1,562,338 |
| ||
Goodwill |
| 11,389,654 |
| 11,389,654 |
| ||
Total non-current assets |
| 15,590,583 |
| 18,630,642 |
| ||
TOTAL ASSETS |
| $ | 22,283,327 |
| $ | 26,357,934 |
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LIABILITIES: |
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Current maturities of long-term obligations and related obligations, net of discount |
| $ | 1,481,611 |
| $ | 6,584,437 |
|
Accounts payable |
| 1,151,100 |
| 833,608 |
| ||
Billings in excess of costs and earnings on uncompleted contracts |
| 78,343 |
| 32,385 |
| ||
Accrued liabilities |
| 4,393,872 |
| 5,520,515 |
| ||
Deferred rent |
| 485,163 |
| 443,603 |
| ||
Deferred revenue |
| 5,491,144 |
| 3,264,283 |
| ||
Total current liabilities |
| 13,081,233 |
| 16,678,831 |
| ||
Warrants and long-term obligations |
| 4,131,950 |
| 1,483,511 |
| ||
Redeemable preferred stock derivatives |
| 1,387,238 |
| — |
| ||
Deferred rent |
| 498,601 |
| 867,850 |
| ||
Deferred revenue |
| 137,879 |
| 1,163,738 |
| ||
Total non-current liabilities |
| 6,155,668 |
| 3,515,099 |
| ||
TOTAL LIABILITIES |
| 19,236,901 |
| 20,193,930 |
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Commitments and contingencies |
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Series B redeemable convertible preferred stock: authorized, 1,000,000 shares (liquidation preference of $1 per share); issued and outstanding 1,000,000 and 0 shares of $.0001 par value respectively, net |
| 753,229 |
| — |
| ||
Series C redeemable convertible preferred stock: authorized, 600,000 shares (liquidation preference of $10 per share); issued and outstanding 592,032 and 0 shares of $.0001 par value respectively, net |
| 4,878,005 |
| — |
| ||
|
| 5,631,234 |
| — |
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STOCKHOLDERS’ EQUITY: |
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Preferred stock - authorized, 5,000,000 shares (liquidation preference of $100 per share) Series A 7% Convertible; issued and outstandin g 35,557 and 44,557 shares of $.0001 par value, respectively |
| 4 |
| 4 |
| ||
Common stock - authorized, 170,000,000 shares; issued and outstanding; 53,956,837 and 46,306,589 shares of $.0001 par value, respectiv ely |
| 5,545 |
| 4,632 |
| ||
Additional paid-in capital |
| 51,399,062 |
| 48,921,316 |
| ||
Accumulated deficit |
| (53,989,419 | ) | (42,761,948 | ) | ||
TOTAL STOCKHOLDERS’ EQUITY |
| (2,584,808 | ) | 6,164,004 |
| ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 22,283,327 |
| $ | 26,357,934 |
|
BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Three months ended |
| Nine months ended |
| ||||||||
|
| September 30, |
| September 30, |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
| (As restated) |
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| (As restated) |
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Revenues |
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Services |
| $ | 3,226,184 |
| $ | 2,496,883 |
| $ | 8,397,122 |
| $ | 8,318,624 |
|
License fees and other |
| 973,914 |
| 735,588 |
| 2,784,937 |
| 2,538,990 |
| ||||
|
| 4,200,098 |
| 3,232,471 |
| 11,182,059 |
| 10,857,614 |
| ||||
Costs and other expenses |
|
|
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|
|
|
|
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Cost of services |
| 612,441 |
| 503,843 |
| 2,024,655 |
| 2,373,535 |
| ||||
Cost of license fees and other |
| 148,275 |
| 125,633 |
| 361,334 |
| 658,875 |
| ||||
|
| 760,716 |
| 629,476 |
| 2,385,989 |
| 3,032,410 |
| ||||
Gross Profit |
| 3,439,382 |
| 2,602,995 |
| 8,796,070 |
| 7,825,204 |
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Operating Expenses |
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Selling, general and administrative |
| 2,467,347 |
| 2,836,875 |
| 7,834,137 |
| 8,808,969 |
| ||||
Research, development and engineering |
| 1,653,238 |
| 1,799,845 |
| 4,830,186 |
| 5,545,386 |
| ||||
|
| 4,120,585 |
| 4,636,720 |
| 12,664,323 |
| 14,354,355 |
| ||||
Operating loss |
| (681,203 | ) | (2,033,725 | ) | (3,868,253 | ) | (6,529,151 | ) | ||||
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Other income (deductions) |
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Derivative and warrant fair value adjustments |
| 547,752 |
| 3,210,057 |
| 5,548,604 |
| 8,160,305 |
| ||||
Interest income |
| — |
| 6,908 |
| — |
| 35,958 |
| ||||
Interest expense |
| (586,689 | ) | (1,605,771 | ) | (4,915,445 | ) | (2,992,780 | ) | ||||
Loss on extinguishment of debt |
| (5,493,701 | ) | — |
| (7,233,743 | ) | — |
| ||||
Other |
| (18,891 | ) | (24,816 | ) | (51,185 | ) | (45,348 | ) | ||||
|
| (5,551,529 | ) | 1,586,378 |
| (7,618,743 | ) | 5,158,135 |
| ||||
NET LOSS |
| $ | (6,232,732 | ) | $ | (447,347 | ) | $ | (11,101,996 | ) | $ | (1,371,016 | ) |
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Basic and Diluted Loss to Common Shareholders: |
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Net loss |
| $ | (6,232,732 | ) | $ | (447,347 | ) | $ | (11,101,996 | ) | $ | (1,371,016 | ) |
Convertible preferred stock dividends and accretion |
| (369,200 | ) | (72,632 | ) | (581,877 | ) | (261,152 | ) | ||||
Net loss attributable to common shareholders |
| $ | (6,601,932 | ) | $ | (519,979 | ) | $ | (11,683,873 | ) | $ | (1,632,168 | ) |
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Net Loss Per Share: |
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Basic |
| $ | (0.13 | ) | $ | (0.01 | ) | $ | (0.24 | ) | $ | (0.04 | ) |
Diluted |
| $ | (0.13 | ) | $ | (0.02 | ) | $ | (0.24 | ) | $ | (0.09 | ) |
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Weighted Average Shares Outstanding: |
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Basic |
| 50,733,960 |
| 45,476,802 |
| 48,752,262 |
| 45,129,000 |
| ||||
Diluted |
| 50,733,960 |
| 53,861,595 |
| 48,752,262 |
| 52,017,328 |
|
Contacts: | BIO-key International, Inc. |
| Mike DePasquale, CEO |
| 732-359-1111 |
|
|
| DRG&E |
| Gus Okwu, Managing Director |
| 203-752-0446 |