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Note 1 - Nature of Business and Basis of Presentation
6 Months Ended
Jun. 30, 2018
Notes to Financial Statements  
Business Description and Accounting Policies [Text Block]
1.
NATURE OF BUSINESS AND BASIS OF PRESENTATION
 
Nature of Business
 
BIO-key International, Inc., founded in 
1993,
 develops and markets proprietary fingerprint identification biometric technology and software solutions. The Company was a pioneer in developing automated, finger identification technology that supplements or compliments other methods of identification and verification, such as personal inspection identification, passwords, tokens, smart cards, ID cards, PKI, credit card, passports, driver’s licenses, OTP or other form of possession or knowledge-based credentialing. Additionally, advanced BIO-key® technology has been, and is, used to improve both the accuracy and speed of competing finger-based biometrics.
 
Basis of Presentation
 
The accompanying unaudited interim condensed consolidated financial statements include the accounts of BIO-key International, Inc. and its wholly-owned subsidiary (collectively, the “Company” or “BIO-key”) and are stated in conformity with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The operating results for interim periods are
not
necessarily indicative of results that
may
be expected for any other interim period or for the full year. Pursuant to such rules and regulations, certain financial information and footnote disclosures normally included in the financial statements have been condensed or omitted. Significant intercompany accounts and transactions have been eliminated in consolidation.
 
In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all necessary adjustments, consisting only of those of a recurring nature, and disclosures to present fairly the Company’s financial position and the results of its operations and cash flows for the periods presented. The balance sheet at
June 30, 2018
was derived from the audited financial statements, but does
not
include all of the disclosures required by accounting principles generally accepted in the United States of America. These unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements and the related notes thereto included in the Company’s Annual Report on Form
10
-K for the year ended
December 31, 2017,
filed with the SEC on
April 2, 2018. 
 
Recently Issued Accounting Pronouncements
  
In
May 2014,
ASU
No.
 
2014
-
09,
“Revenue from Contracts with Customers” was issued. The Company adopted ASU
2014
-
09
and its related amendments (collectively known as ASC
606
) effective on
January 1, 2018
using the modified retrospective method. Please see Note 
3
 "Revenue from Contracts with Customers" for the required disclosures related to the impact of adopting this standard and a discussion of the Company's updated policies related to revenue recognition and accounting for costs to obtain and fulfill a customer contract.
 
In
February 2016,
the FASB issued ASU
2016
-
02,
“Leases”. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than
12
months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after
December 15, 2018,
including interim periods within those fiscal years. A modified retrospective transition approach is required for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements, and expects that it will increase its assets and liabilities for amounts yet to be determined.
 
In
July 2017,
the FASB issued ASU
2017
-
11,
Earnings Per Share (Topic
260
), Distinguishing Liabilities from Equity (Topic
480
) and Derivatives and Hedging (Topic
815
): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Under ASU
2017
-
11,
down round features do
not
meet the criteria for derivative accounting and
no
liability is to be recorded until an actual issuance of securities triggers the down-round feature. Part II of this update addresses the difficulty of navigating Topic
480,
Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do
not
have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after
December 15, 2018,
with early adoption permitted. The adoption of ASU
2017
-
11,
during the fiscal
2017
year did
not
have any impact on the condensed consolidated financial statements, however our disclosures with respect to equity instruments with down round features have been updated.   
 
Management does
not
believe that any other recently issued, but
not
yet effective, accounting standard if currently adopted would have a material effect on the accompanying consolidated financial statements.
 
Reclassification
 
Reclassifications occurred to certain prior year amounts in order to conform to the current year classifications including segregating the hardware revenues. The reclassifications have
no
effect on the reported net loss.