BIO-key to offer full biometric authentication stack with $2.5M PistolStar acquisition

BIO-key to offer full biometric authentication stack with $2.5M PistolStar acquisition

BIO-key has reached an agreement to acquire enterprise authentication provider PistolStar for $2.5 million in cash, with plans to integrate the companies and continue the innovation of PistolStar’s product line.

PistolStar offers large-scale identity and access management (IAM) solutions, in both on-premises and Identity-as-a-Service (IDaaS) deployments. The company’s flagship product is multi-factor authentication (MFA) and single sign-on (SSO) platform PortalGuard. Enterprises leverage PortalGuard for a uniform logon MFA experience across clouds and workstations, and the platform supports nearly every cloud authentication federation standard, all major directories, and numerous authenticators including BIO-key’s passwordless biometrics.

The deal is subject to the customary closing conditions, and is expected to close by the end of the second quarter of BIO-key’s fiscal 2020. The acquisition will be immediately accretive in terms of both revenue and operating income, according to the announcement. BIO-key is funding the purchase with cash on hand, an escrowed deposit, short term financing, and a 12-month promissory note.

BIO-key expects PistolStar to enable it to address the growing demand for biometrics in MFA, provide what BIO-key refers to as “super-MFA” solutions for cloud, hybrid, or on-premise environments that bring capabilities from BIO-key that it says are not available from competitors, while still allowing customers to continue using factors they have already invested in. PistolStar’s team and product line expand BIO-key’s market reach and revenue potential, and position it as the only biometric IDaaS provider with its own biometric IP stack, according to the press release.

PortalGuard supports all major authentication factors found within the enterprise, including Windows Hello, FIDO/WebAuthn hardware keys, and RSA SecurID hard and soft tokens, as well as leading federation and SSO standards such as SAML, OAuth v2.0/OpenIDConnect, Shibboleth and more, making it compatible with a wide range of applications. PortalGuard also integrates with Microsoft Active Directory, served from Azure on on-premises, OpenLDAP, IBM System I, Lotus Domino, or custom SQL directories.

PistolGuard also brings a customer base of over 200 enterprises and institutions, including a footprint in the education sector, that has little overlap with BIO-key’s existing customer base. Eliminating license payments for PistolStar technology used in BIO-key’s ID Director for Windows is expected to improve the latter’s gross margins.

PistolStar’s co-founder will take on a consulting role to assist in the transition.

“Cyber-attacks are growing threats to global enterprises and small businesses alike, and implementing MFA is high on most IAM roadmaps,” BIO-key CEO Michael DePasquale explains. “Still, large functionality gaps exist in traditional MFA solutions, including how to handle roving and work-from-anywhere users, how to prevent unauthorized account delegation, and absorbing the cost of multiple authenticators per user to prevent lost token downtime. Phone authenticators only authenticate the phone, not the user, and many workplaces prohibit phones for safety or security reasons. The time for secure, privacy-by-design server-based biometric authentication is now. PortalGuard and BIO-key will allow enterprises to leverage whatever legacy authenticators they have, and then elevate their capabilities using biometrics where it makes sense.”

BIO-key recently raised an amount nearly equivalent to the PistolStar purchase price and wrote down uncollected license fees as it shifts strategy. The company is also currently in an extended grace period for its listing on the Nasdaq, but its shares rose above the minimum $1 amount in Wednesday trading on the news. If it remains above $1 for ten consecutive business days the company’s probationary trading status will be removed.

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