bkyi20240630

bkyi20240630_10q.htm

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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐

TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT

For the Transition Period from to

Commission file number 1-13463

BIO-KEY INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	41-1741861
(State or Other Jurisdiction of Incorporation of Organization)	(IRS Employer Identification Number)

101 CRAWFORDS CORNER ROAD, SUITE 4116, HOLMDEL, NJ 07733

(Address of Principal Executive Offices) (Zip Code)

(732) 359-1100

(Registrant’s telephone number, including area code)

Securities registered pursuance to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which

registered

Common Stock, par value $0.0001 per share

BKYI

Nasdaq Capital Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☒		Smaller Reporting Company ☒

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Number of shares of Common Stock, $.0001 par value per share, outstanding as of August 13, 2024 is 1,982,201

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BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION	3

Item 1— Financial Statements:
Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023	3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023 (Unaudited)	4
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023 (Unaudited)	5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)	7
Notes to Condensed Consolidated Financial Statements	9

Item 2—Management’s Discussion and Analysis of Financial Conditions and Results of Operations.	16

Item 3—Quantitative and Qualitative Disclosures about Market Risk.	23

Item 4—Controls and Procedures.	23

PART II. OTHER INFORMATION	24

Item 1—Legal Proceedings.	24

Item 1A—Risk Factors.	24

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds.	24

Item 3—Defaults upon Senior Securities.	24

Item 4—Mine Safety Disclosures.	24

Item 5—Other Information.	24

Item 6—Exhibits.	24

Signatures	25

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PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	*June 30,*			*December 31,*
	*2024*			*2023*
	(Unaudited)
ASSETS
Cash and cash equivalents	$	1,260,351		$	511,400
Accounts receivable, net		904,046			1,201,526
Due from factor		28,164			99,320
Inventory		433,182			445,740
Prepaid expenses and other		388,786			364,171
Total current assets		3,014,529			2,622,157
Equipment and leasehold improvements, net		174,419			220,177
Capitalized contract costs, net		348,617			229,806
Operating lease right-of-use assets		9,341			36,905
Intangible assets, net		1,252,090			1,407,990
Total non-current assets		1,784,467			1,894,878
TOTAL ASSETS	$	4,798,996		$	4,517,035

LIABILITIES
Accounts payable	$	1,539,548		$	1,316,014
Accrued liabilities		1,164,681			1,305,848
Note payable		2,010,293			-
Government loan – BBVA Bank, current portion		135,400			138,730
Deferred revenue, current		715,193			414,968
Operating lease liabilities, current portion		9,570			37,829
Total current liabilities		5,574,685			3,213,389
Deferred revenue, long term		142,949			28,296
Deferred tax liability		22,998			22,998
Government loan – BBVA Bank – net of current portion		114,656			188,787
Total non-current liabilities		280,603			240,081
TOTAL LIABILITIES		5,855,288			3,453,470

Commitments and Contingencies

STOCKHOLDERS’ EQUITY

Common stock — authorized, 170,000,000 shares; issued and outstanding; 1,815,618 and 1,032,777 of $.0001 par value at June 30, 2024 and December 31, 2023, respectively		182			103
Additional paid-in capital		126,143,205			126,047,851
Accumulated other comprehensive loss		(15,234	)		22,821
Accumulated deficit		(127,184,445	)		(125,007,210	)
TOTAL STOCKHOLDERS’ EQUITY		(1,056,292	)		1,063,565
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	4,798,996		$	4,517,035

All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023.

See accompanying notes to the condensed consolidated financial statements.

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BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	*Three Months Ended*						*Six Months Ended*
	*June 30,*						*June 30,*
	*2024*			*2023*			*2024*			*2023*
Revenues
Services	$	283,569		$	620,465		$	496,690		$	1,152,987
License fees		774,225			1,235,771			2,724,659			2,814,327
Hardware		83,492			72,693			101,140			145,382
Total revenues		1,141,286			1,928,929			3,322,489			4,112,696
Costs and other expenses
Cost of services		73,385			360,156			212,234			514,957
Cost of license fees		148,432			198,147			296,652			819,028
Cost of hardware		40,455			47,808			53,029			92,400
Cost of hardware - reserve		-			1,000,000			-			1,500,000
Total costs and other expenses		262,272			1,606,111			561,915			2,926,385
Gross profit		879,014			322,818			2,760,574			1,186,311

Operating Expenses
Selling, general and administrative		1,941,866			2,143,164			3,724,839			4,074,896
Research, development and engineering		591,234			558,181			1,198,755			1,248,340
Total Operating Expenses		2,533,100			2,701,345			4,923,594			5,323,236
Operating loss		(1,654,086	)		(2,378,527	)		(2,163,020	)		(4,136,925	)
Other income (expense)
Interest income		46			23			51			27
Loss on foreign currency transactions		-			-			-			(15,000	)
Loan fee amortization		(4,000	)		-			(4,000	)		-
Change in fair value of convertible note		-			(44,568	)		-			97,423
Interest expense		(8,910	)		(56,806	)		(10,267	)		(113,725	)
Total other income (expense), net		(12,864	)		(101,351	)		(14,216	)		(31,275	)

Loss before provision for income tax		(1,666,950	)		(2,479,878	)		(2,177,236	)		(4,168,200	)

Provision for (income tax) tax benefit		-			(143,000	)		-			(143,000	)

Net loss	$	(1,666,950	)	$	(2,622,878	)	$	(2,177,236	)	$	(4,311,200	)

Comprehensive loss:
Net loss	$	(1,666,950	)	$	(2,622,878	)	$	(2,177,236	)	$	(4,311,200	)
Other comprehensive income (loss) – Foreign currency translation adjustment		24,220			19,884			(38,530	)		92,030
Comprehensive loss	$	(1,642,730	)	$	(2,602,994	)	$	(2,215,766	)	$	(4,219,170	)

Basic and Diluted Loss per Common Share	$	(1.00	)	$	(4.71	)	$	(1.33	)	$	(7.74	)

Weighted Average Common Shares Outstanding:
Basic and diluted		1,663,042			556,758			1,639,183			556,758

All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023.

See accompanying notes to the condensed consolidated financial statements.

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BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

								*Accumulated*
						*Additional*		*Other*
	*Common Stock*					*Paid-in*		*Comprehensive*			*Accumulated*
		*Shares*			*Amount*	*Capital*		*Income (Loss)*			*Deficit*				*Total*
Balance as of January 1, 2024		1,032,777		$	103	$	126,047,851	$	22,821		$	(125,007,210	)	$	1,063,565
Issuance of common stock for directors’ fees		4,287			-		9,003		-			-			9,003
Issuance of common stock to employees		-			-		-		-			-			-
Restricted stock forfeited		(316	)		-		-		-			-			-
Exercise of warrants		777,666			78		1,322		-			-			1,400
Foreign currency translation adjustment		-			-				(62,275	)		-			(62,275	)
Share-based compensation		-			-		47,790		-			-			47,790
Issuance costs		-			-		(

SEC Form 10-Q filed by BIO-key International Inc.