8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 14, 2023

BIO-key International, Inc. (Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation)	1-13463 (Commission File Number)	41-1741861 (I.R.S. Employer Identification No.)
3349 Highway 138, Building A, Suite E Wall, NJ 07719 (Address of principal executive offices)
(732) 359-1100 (Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BKYI	Nasdaq Capital market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

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. ☐

Item 2.02. Results of Operations and Financial Condition.

On August 14, 2023 BIO-key International, Inc. (the “Company”) issued a press release announcing its financial results for its second quarter 2023. A copy of the press release issued by the Company on August 14, 2023 is attached as Exhibit 99.

The information, including the exhibit attached hereto, in this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise expressly stated in such filing.

Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibit.

(d) Exhibits. The following exhibit is furnished herewith:

99.1 Press Release, dated August 14, 2023, issued by the Company.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BIO-KEY INTERNATIONAL, INC.
Date: August 15, 2023
	By:	/s/ Cecilia C. Welch
		Cecilia C. Welch
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated August 14, 2023 issued by the Company.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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EX-99.1

Exhibit 99.1

Identity and Access Management Provider BIO-key Reports Q2 Revenue of $1.9M;

Hosts Investor Call Tomorrow, August 15^th at 10am ET

WALL, NJ – August 14, 2023 - BIO-key® International, Inc. (Nasdaq: BKYI), an innovative provider of workforce and customer Identity and Access Management (IAM) and Identity-Bound Biometric (IBB) solutions, today reported results for its second quarter ended June 30, 2023 (Q2’23). BIO-key will host an investor call tomorrow at 10:00 a.m. ET (details below) to review its results and outlook.

Highlights:

● Q2’23 revenues of $1.9M approximated Q2’22 revenue of $1.9M, despite delays in the closing of certain larger customer opportunities, including a $0.3M defense ministry order signed in early Q3’23. Revenue rose 29% in the first six months of FY’23 over the prior-year period, due to a record start in Q1’23.

● Continued PortalGuard IDaaS Traction Supporting Healthcare Migrations to Epic Hyperdrive, including Dayton Children’s Hospital, University of Iowa Hospitals and clinics, and Paulding, Ohio Hospital.

● Growing customer footprint across geographies and markets, including in Florida, Ohio, and Maine, particularly in higher education and other migrations to our cloud solution PortalGuard® IDaaS.

● Expanding global distribution partner network, including Savvy Info Tech, the AWS Partner Network, and Pixel Infinito, in large, growing markets in Europe, the Middle East and Africa (EMEA).

● BIO-key remains positioned to deliver significant top-line growth and bottom-line improvements for the full fiscal 2023 year.

CEO Commentary

BIO-key CEO Michael DePasquale commented, “While Q2’23 revenues were roughly flat compared to Q2’22, related principally to the timing of larger opportunities, our first half performance demonstrates growing demand for our unique set of IAM solutions, supported by our industry leadership in Identity-Bound Biometrics. Our first six months’ revenues rose 29% and we were able to trim our net loss from a year ago.

“Importantly, we have developed a robust pipeline of highly qualified, large revenue opportunities and a growing base of annual recurring revenue in key verticals, including government and higher education, which we expect will generate positive results in the coming quarters and years. Our internal sales and marketing efforts have generated several significant IAM deployment prospects that we are working to advance to the contract stage. However, the size and scope of these projects makes it more difficult to predict the timing of the customer decision making process. Complementing these efforts is our expanding network of global distribution partners which positions BIO-key to pursue a much broader base of opportunities both in the US and abroad.

“We also continue to expand the adoption of PortalGuard IDaaS to support healthcare customers as they migrate to Epic’s browser-based Hyperdrive solution. Longstanding customers, Dayton’s Children’s Hospital and the University of Iowa Hospitals and clinics, added BIO-key’s PortalGuard IDaaS® platform to leverage their existing BIO-key biometric authentication investment as they transitioned from Epic Systems’ legacy Hyperspace application to the new browser-based Hyperdrive interface. Our biometric authentications technology provides an ideal security and authentication solution for the healthcare industry which must comply with stringent HIPAA requirements to protect patient data accessed via shared workstations and mobile devices. We believe these successful deployments provide excellent case studies for other providers required to migrate to Epic Hyperdrive over the next few months.

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Outlook

“Based on customer dialogues, we understand that most organizations recognize the need to deploy more secure, efficient, and passwordless identity and access management solutions to support hybrid user environments. We have positioned BIO-key to meet this growing need with convenient, scalable and cost-effective IAM solutions, including a broad range of multi-factor and identity-bound biometric capabilities. We are excited by the progress we have made in building our base of customers and annual recurring revenue, and believe BIO-key has a strong foundation for growth and improving bottom-line performance.

“Reflecting progress to date, a growing pipeline of customer opportunities, and our expanding global partner network, we remain confident that BIO-key is positioned to deliver significant top-line growth and bottom-line improvements in FY 2023.”

Financial Results

Please note that the review of our Q2 FY2023 financial statements has not been completed as of the date of this press release and the financial statements and financial information provided below have not been finalized and are subject to change.

Q2’23 revenues of $1.9M were nearly level with Q2’22, reflecting growth in higher-margin service and software license revenue, offsetting lower hardware revenue. Q2’23 service revenue was driven by custom service installations for new and existing customer deployments and upgrades. License revenue increased due to the addition of Swivel Secure customers in the EMEA region and PortalGuard customers, primarily in the U.S. higher education market. For the first six months of 2023, total revenues rose 29% to $5.9M compared to $3.0M, also reflecting growth in service and license revenue and a decline in hardware revenue.

Gross profit grew 8% to $1.3M in Q2’23 from $1.2M in Q2’22, reflecting an increase in gross margin to 69% from 63% in Q2’22. Gross profit and gross margin benefitted from a year-over-year increase in higher margin services and software license revenue and a decrease in third-party software costs, due to the mix in product licenses issued.

Q2’23 operating expenses decreased over 10% to $2.5 million from $2.8 million in Q2’22, due primarily to lower research and development expenses, as well as lower selling, general and administrative expenses. The completion of BIO-key’s Mobile Auth application contributed to the decrease in research and development costs. The modest decrease in Q2’23 SG&A costs reflected lower marketing personnel costs, partially offset by increased professional services fees related to regulatory filing delays. BIO-key continues to undertake a number of expense reduction initiatives designed to reduce overhead expenses in future periods.

Reflecting higher gross profit and lower operating costs, BIO-key trimmed its Q2’23 net loss to $1.4M, as compared to $1.7M in Q2’22. Similarly, for the first six months of 2023 compared to 2022, the Company reduced its net loss to $1.7 million from $2.7 million.

At June 30, 2023, BIO-key had current assets of $8.5M, including $0.6M of cash and cash equivalents, $3.2M of accounts receivable, and $4.4M of inventory.

Conference Call Details

Date / Time:	Today, Tuesday August 15th at 10 a.m. ET
Call Dial In #:	1-877-418-5460 U.S. or 1-412-717-9594 International
Live Webcast / Replay:	Webcast & Replay Link – Available for 3 months.
Audio Replay:	1-877-344-7529 U.S. or 1-412-317-0088 Int’l; code 2616534

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About BIO-key International, Inc. (www.BIO-key.com)

BIO-key is revolutionizing authentication and cybersecurity with biometric-centric, multi-factor identity and access management (IAM) software managing millions of users. Its cloud-based PortalGuard IAM solution provides cost-effective, easy to deploy, convenient and secure access to devices, information, applications, and high-value transactions. BIO-key's patented software and hardware solutions, with industry-leading Identity-Bound Biometric (IBB) capabilities, enable large-scale Identity-as-a-Service (IDaaS) solutions, as well as customized on premises solutions.

BIO-key Safe Harbor Statement

All statements contained in this press release other than statements of historical facts are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the "Act"). The words "estimate," "project," "intends," "expects," "anticipates," "believes" and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are made based on management's beliefs, as well as assumptions made by, and information currently available to, management pursuant to the "safe-harbor" provisions of the Act. These statements are not guarantees of future performance or events and are subject to risks and uncertainties that may cause actual results to differ materially from those included within or implied by such forward-looking statements. These risks and uncertainties include, without limitation, our history of losses and limited revenue; our ability to raise additional capital; our ability to continue as a going concern; our ability to protect our intellectual property; changes in business conditions; changes in our sales strategy and product development plans; changes in the marketplace; continued services of our executive management team; security breaches; competition in the biometric technology industry; market acceptance of biometric products generally and our products under development; our ability to execute and deliver on contracts in Africa; our ability to expand into Asia, Africa and other foreign markets; our ability to integrate the operations and personnel of Swivel Secure into our business; fluctuations in foreign currency exchange rates; delays in the development of products and statements of assumption underlying any of the foregoing as well as other factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 and other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to disclose any revision to these forward-looking statements whether as a result of new information, future events, or otherwise.

Engage with BIO-key

Facebook – Corporate:	https://www.facebook.com/BIOkeyInternational/
LinkedIn – Corporate:	https://www.linkedin.com/company/bio-key-international
Twitter – Corporate:	@BIOkeyIntl
Twitter – Investors:	@BIO_keyIR
StockTwits:	BIO_keyIR

Investor Contacts

William Jones, David Collins

Catalyst IR

BKYI@catalyst-ir.com

212-924-9800

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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,
	2023			2022			2023			2022
Revenues
Services	$	620,465		$	435,106		$	1,152,987		$	830,910
License fees		1,235,771			1,162,148			3,714,327			2,622,331
Hardware		72,693			349,861			145,382			435,045
Total revenues		1,928,929			1,947,115			5,012,696			3,888,286
Costs and other expenses
Cost of services		360,156			180,677			514,957			391,590
Cost of license fees		198,147			358,136			819,028			431,366
Cost of hardware		47,808			185,140			92,400			238,438
Total costs and other expenses		606,111			723,953			1,426,385			1,061,394
Gross profit		1,322,818			1,223,162			3,586,311			2,826,892
Operating Expenses
Selling, general and administrative		1,943,164			2,006,573			3,874,896			3,804,571
Research, development and engineering		558,181			784,083			1,248,341			1,589,349
Total Operating Expenses		2,501,345			2,790,656			5,123,237			5,393,920
Operating loss		(1,178,527	)		(1,567,494	)		(1,536,926	)		(2,567,028	)
Other income (expense)
Interest income		23			77			27			208
Loss on foreign currency transactions		-			-			(15,000	)		-
Investment-debt security reserve		-			(150,000	)		-			(150,000	)
Change in fair value of convertible note		(44,568	)		-			97,423			-
Interest expense		(56,806	)		(1,540	)		(113,724	)		(1,540	)
Total other income (expense), net		(101,351	)		(151,463	)		(31,274	)		(151,332	)
Loss before provision for income tax	$	(1,279,878	)	$	(1,718,957	)	$	(1,568,200	)	$	(2,718,360	)
Provision for income tax		(143,000	)		-			(143,000	)		-
Net loss	$	(1,422,878	)	$	(1,718,957	)	$	(1,711,200	)	$	(2,718,360	)
Comprehensive loss:
Net loss	$	(1,422,878	)	$	(1,718,957	)	$	(1,711,200	)	$	(2,718,360	)
Other comprehensive loss – Foreign currency translation adjustment		19,884			(165,883	)		92,030			(110,081	)
Comprehensive loss	$	(1,402,994	)	$	(1,884,840	)	$	(1,619,170	)	$	(2,828,441	)
Basic and Diluted Loss per Common Share	$	(0.16	)	$	(0.21	)	$	(0.19	)	$	(0.34	)
Weighted Average Common Shares Outstanding:
Basic and diluted		9,021,426			8,098,020			9,008,631			7,992,102

Please note that the review of our Q2 FY2023 financial statements has not been completed as of the date of this press release and the financial statements and financial information provided below have not been finalized and are subject to change.

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BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2023			2022
	(Unaudited)
ASSETS
Cash and cash equivalents	$	565,513		$	2,635,522
Accounts receivable, net		3,178,785			1,522,784
Due from factor		74,250			49,500
Inventory		4,384,098			4,434,369
Prepaid expenses and other		328,684			342,706
Total current assets		8,531,330			8,984,881
Equipment and leasehold improvements, net		81,053			107,413
Capitalized contract costs, net		277,448			283,069
Deposits and other assets		8,712			8,712
Operating lease right-of-use assets		84,610			197,355
Intangible assets, net		1,600,092			1,762,825
Total non-current assets		2,051,915			2,359,374
TOTAL ASSETS	$	10,583,245		$	11,344,255
LIABILITIES
Accounts payable	$	1,855,988		$	1,108,279
Accrued liabilities		900,924			1,009,123
Income taxes payable		156,000			-
Convertible note payable		2,498,780			2,596,203
Government loan – BBVA Bank, current portion		135,308			120,000
Deferred revenue, current		651,709			462,418
Operating lease liabilities, current portion		77,379			159,665
Total current liabilities		6,276,088			5,455,688
Deferred revenue, long term		37,280			52,134
Deferred tax liability		159,997			170,281
Government loan – BBVA Bank – net of current portion		255,219			326,767
Operating lease liabilities, net of current portion		9,570			37,829
Total non-current liabilities		462,066			587,011
TOTAL LIABILITIES		6,738,154			6,042,699
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Common stock — authorized, 170,000,000 shares; issued and outstanding; 9,262,853 and 9,190,504 of $.0001 par value at June 30, 2023 and December 31, 2022, respectively		926			919
Additional paid-in capital		122,191,310			122,028,612
Accumulated other comprehensive loss		(150,572	)		(242,602	)
Accumulated deficit		(118,196,573	)		(116,485,373	)
TOTAL STOCKHOLDERS’ EQUITY		3,845,091			5,301,556
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	10,583,245		$	11,344,255

Please note that the review of our Q2 FY2023 financial statements has not been completed as of the date of this press release and the financial statements and financial information provided below have not been finalized and are subject to change.

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XML

Document And Entity Information	Aug. 14, 2023
Document Information [Line Items]
Entity, Registrant Name	BIO-key International, Inc.
Document, Type	8-K
Document, Period End Date	Aug. 14, 2023
Entity, Incorporation, State or Country Code	DE
Entity, File Number	1-13463
Entity, Tax Identification Number	41-1741861
Entity, Address, Address Line One	3349 Highway 138, Building A, Suite E
Entity, Address, City or Town	Wall
Entity, Address, State or Province	NJ
Entity, Address, Postal Zip Code	07719
City Area Code	732
Local Phone Number	359-1100
Title of 12(b) Security	Common Stock
No Trading Symbol Flag	true
Security Exchange Name	NASDAQ
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Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
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Entity, Central Index Key	0001019034