bkyi20260630

bkyi20260630_10q.htm

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒

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

For the quarterly period ended June 30, 2026

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

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 11, 2026, is 1,436,344 (as adjusted to reflect our 1-for-10 reverse stock split, which was effective April 30, 2026).

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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, 2026 (unaudited) and December 31, 2025	3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 and 2025 (Unaudited)	4
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025 (Unaudited)	5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 (Unaudited)	7
Notes to Condensed Consolidated Financial Statements	9

Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17

Item 3—Quantitative and Qualitative Disclosures about Market Risk.	24

Item 4—Controls and Procedures.	24

PART II. OTHER INFORMATION	25

Item 1—Legal Proceedings.	25

Item 1A—Risk Factors.	25

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds.	25

Item 3—Defaults upon Senior Securities.	25

Item 4—Mine Safety Disclosures.	25

Item 5—Other Information.	25

Item 6—Exhibits.	25

Signatures	26

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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,*
	*2026*			*2025*
	(Unaudited)
ASSETS
Cash and cash equivalents	$	1,379,300		$	2,694,663
Accounts receivable, net		1,731,509			1,220,822
Inventory		375,740			370,879
Prepaid expenses and other		320,086			251,323
Total current assets		3,806,635			4,537,687
Equipment and leasehold improvements, net		34,804			67,751
Capitalized contract costs, net		266,510			311,591
Deposits and other assets		7,976			7,976
Operating lease right-of-use assets		148,721			47,953
Investments		2,500,000			2,500,000
Intangible assets, net		718,430			830,357
Total non-current assets		3,676,441			3,765,628
TOTAL ASSETS	$	7,483,076		$	8,303,315

LIABILITIES
Accounts payable	$	411,203		$	507,357
Accrued liabilities		1,169,747			1,333,930
Note payable		699,769			604,102
Government loan – BBVA Bank, current portion		12,351			50,530
Deferred revenue, current		653,529			572,513
Operating lease liabilities, current portion		66,585			27,728
Total current liabilities		3,013,184			3,096,160
Deferred revenue, long term		35,367			62,584
Deferred tax liability		16,500			16,500
Operating lease liabilities, net of current portion		83,147			21,266
Total non-current liabilities		135,014			100,350
TOTAL LIABILITIES		3,148,198			3,196,510

Commitments and Contingencies

STOCKHOLDERS’ EQUITY

Common stock — authorized, 170,000,000 shares; issued and outstanding; 1,087,360 of $.0001 par value at June 30, 2026 and 1,085,360 at December 31, 2025, respectively		109			109
Additional paid-in capital		141,588,797			141,497,741
Accumulated other comprehensive income		(6,291	)		74,803
Accumulated deficit		(137,247,737	)		(136,465,848	)
TOTAL STOCKHOLDERS’ EQUITY		4,334,878			5,106,805
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,483,076		$	8,303,315

All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-10 reverse stock split, which was effective April 30, 2026.

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,*
	*2026*			*2025*			*2026*			*2025*
Revenues
Services	$	231,005		$	321,996		$	479,388		$	594,594
License fees		1,229,345			806,087			2,595,238			1,904,845
Hardware		459,641			568,824			990,898			804,627
Total revenues		1,919,991			1,696,907			4,065,524			3,304,066
Costs and other expenses
Cost of services		79,716			118,301			158,214			216,445
Cost of license fees		74,972			86,488			148,206			159,373
Cost of hardware		794,313			536,806			1,117,851			645,275
Cost of hardware - reserve		(703,050	)		(277,415	)		(802,020	)		(277,415	)
Total costs and other expenses		245,951			464,180			622,251			743,678
Gross profit		1,674,040			1,232,727			3,443,273			2,560,388

Operating expenses
Selling, general and administrative		1,563,027			1,680,550			2,873,093			3,053,074
Research, development and engineering		640,418			636,027			1,257,299			1,231,802
Total operating expenses		2,203,445			2,316,577			4,130,392			4,284,876
Operating loss		(529,405	)		(1,083,850	)		(687,119	)		(1,724,488	)
Other income (expense)
Interest income		386			2,092			1,062			2,095
Loan fee amortization		(20,833	)		(60,000	)		(41,666	)		(120,000	)
Interest expense		(27,000	)		(25,638	)		(54,166	)		(61,548	)
Total other income (expense), net		(47,447	)		(83,546	)		(94,770	)		(179,453	)

Loss before provision for income tax		(576,852	)		(1,167,396	)		(781,889	)		(1,903,941	)