Table of Contents

As filed with the Securities and Exchange Commission on July 17, 2020June 15, 2023

Registration No. 333-239782333-

 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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Amendment No. 2 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

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BIO-key International,, Inc.

(Exact name of registrant as specified in its charter)

 

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Delaware		8071		41-1741861
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)	(I.R.S. Employer Identification Number)

3349 HIGHWAYHIGHWAY 138, BUILDING A, SUITE E

WALL, NJ 07719

(732) 359-1100

(Address, including zip code, and telephone number,

including area code, of registrant’sregistrant’s principal executive offices)

 

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Michael DePasquale

Chief Executive Officer

BIO-keyBIO-key International,, Inc.

3349 HIGHWAYHIGHWAY 138, BUILDING A, SUITE E

WALL, NJ 07719

(732) 359-1100

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

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Copies to:

Vincent A. Vietti Fox Rothschild LLP Princeton Pike Corporate Center 997 Lenox Drive Building 3 Lawrenceville, NJ 0864808648-2311 (609) 896-3600

Barry I. Grossman Sarah E. Williams Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, NY 10105 (212) 370-1300

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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

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If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 7(a)(2)(B) of the Securities Act.  ☐

 

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CALCULATION OF REGISTRATION FEE

Title of Securities being Registered	Proposed Maximum Aggregate Offering Price (1) (2) (3)	Amount of Registration Fee
Shares of common stock, $0.0001 par value per share	$20,700,000	$2,686.86
Warrants to purchase shares of common stock(4)
Shares of common stock issuable upon exercise of the Warrants	$20,700,000	$2,686.86
Pre-Funded Warrants to purchase shares of common stock	(5)
Shares of common stock issuable upon exercise of the Pre-Funded Warrants (4)
Total	$41,400,000	$5,373.72(6)

(1)	Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended, or the Securities Act.
(2)	Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional securities as may be issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(3)	Includes the offering price of any additional shares of common stock and warrants to purchase shares of common stock that the underwriters have the right to purchase from the Registrant.
(4)	No fee is required pursuant to Rule 457(i) under the Securities Act.
(5)	The proposed maximum aggregate offering price of the common stock proposed to be sold in the offering will be reduced on a dollar-for-dollar basis based on the offering price of any Pre-Funded Warrants offered and sold in the offering, and, as such, the proposed maximum aggregate offering price of the common stock and Pre-Funded Warrants (including the common stock issuable upon exercise of the Pre-Funded Warrants), if any, is $20,700,000.
(6)	$4,724.40 previously paid.

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The Registrantregistrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective dateuntil the Registrantregistrant shall file a further amendment thatwhich specifically states that this registration statement shall thereafter become effective in accordance with Section8(a) of the Securities Act of 1933 as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section8(a), may determine. 

 

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The information in this prospectus is not complete and may be changed. WeThe selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission isdeclares our registration statement effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION, DATED JUNE 15, 2023JULY 17, 2020

 

 

15,000,000900,000 Shares of Common Stock

 

Pre-Funded Warrants to Purchase up to 15,000,000Shares of Common Stock

Warrants to Purchase up to 15,000,000 Shares of Common Stock

 

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We are offering 15,000,000

This prospectus relates to the resale, from time to time, by the selling stockholder identified in this prospectus under the caption “Selling Stockholder,” of up to 900,000 shares of common stock, and warrants to purchase up to 15,000,000 shares of our common stock at a combined public offering price of $___par value $0.0001 per share, of common stockBIO-key International, Inc. issued and accompanying warrant.

We are also offeringsold by us in a private placement transaction, consisting of up to those purchasers whose purchase700,000 issued and outstanding shares and 200,000 shares issuable upon exercise of our common stock in this offering would otherwise result in such purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of our outstanding common stock immediately followingpurchase warrants.

All of the consummationproceeds from the sale of the shares covered by this offering, the opportunity, in lieu of purchasing common stock, pre-funded warrants to purchase 15,000,000 shares of our common stock, or Pre-Funded Warrants. Each Pre-Funded Warrantprospectus will be exercisable for one sharereceived by the selling stockholder. We will not receive any proceeds from the sale of our common stock (subject to adjustment as provided for therein) at any time at the option of the holder until such Pre-Funded Warrant is exercised in full, provided that the holder will be prohibited from exercising Pre-Funded Warrants for shares of our common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99% of the total number of shares of our common stock then issued and outstanding. However, any holder may increase such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days after such notice to us. The combined purchase price of each Pre-Funded Warrant and accompanying warrant to purchase common stock will equal $___, and the exercise price of each Pre-Funded Warrant will equal $0.01 per share of common stock. Pursuant to this prospectus, we are also offering the shares of common stock issuable upon the exercise of the warrants and Pre-Funded Warrants offered hereby.

Each share of our common stock, or Pre-Funded Warrant in lieu thereof, is being sold together with a warrant to purchase one share of our common stock. Each warrant will have an exercise price of $__ per share, will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. The shares of our common stock and warrants are immediately separable and will be issued separately, but will be purchased together in this offering.these shares.

 

Our common stock is listed on Thethe Nasdaq Capital Market under the symbol “BKYI.” On July 16, 2020,June 9, 2023, the last reported saleclosing price of our common stock on The Nasdaq Capital Market was $1.20$0.72 per share. The final public offering price

We will bear all costs, expenses and fees in connection with the registration of the securities offered hereby, as well asshares. See “Plan of Distribution” beginning on page 22 for more information about how the exercise priceselling stockholder may sell or dispose of the warrants to purchaseshares of common stock will be determined through negotiation between us and the underwriter in this offering and the recent market price used throughout the prospectus may not be indicative of the actual offering price. There is no established trading market for the warrants or Pre-Funded Warrants and we do not expect a market to develop. In addition, we do not intend to apply for the listing of the warrants or Pre-Funded Warrants on any national securities exchange or other trading market. Without an active trading market, the liquidity of the warrants and the Pre-Funded Warrants will be limited.offered hereby. 

 

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Investing in our securities involves a high degree of risk. See INVESTING IN OUR SECURITIES INVOLVES RISKS. YOU SHOULD REVIEW CAREFULLY THE RISKS AND UNCERTAINTIES DESCRIBED HEREIN UNDER THE HEADING “RISK FACTORSRisk Factors” beginning on page 7 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.BEGINNING ON PAGE 5 OF THIS PROSPECTUS AND UNDER SIMILAR HEADINGS IN THE OTHER DOCUMENTS THAT ARE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Per Share and Accompanying WarrantNEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Per Pre-Funded Warrant and Accompanying Warrant

Total

Public offering price

$

$

$

Underwriting discounts and commissions(1)

$

$

$

Proceeds, before expenses, to us

$

$

$

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(1)	See “Underwriting” beginning on page 62 for additional disclosure regarding underwriting discounts and commissions and reimbursement of expenses.

We have granted the underwriters an option for a period of 45 days from the date of this prospectus to purchase up to an additional 2,250,000 shares of common stock and/or warrants to purchase 2,250,000 shares of common stock at the public offering price, less the underwriting discounts.

We anticipate that delivery of the shares, Pre-Funded Warrants and warrants against payment will be made on or about [•], 2020.

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Sole Book-Running Manager

Maxim Group LLC

 

 

 

The date of this prospectus is [•], 2020.2023.

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We have not, and the underwriters have not authorized anyone to provide you with information that is different from that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither the delivery of this prospectus nor the sale of our securities means that the information contained in this prospectus or any free writing prospectus is correct after the date of this prospectus or such free writing prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful.

The information in this prospectus is accurate only as of the date on the front cover of this prospectus and the information in any free writing prospectus that we may provide you in connection with this offering is accurate only as of the date of that free writing prospectus. Our business, financial condition, results of operations and prospects may have changed since those dates. No person is authorized in connection with this prospectus to give any information or to make any representations about us, the securities offered hereby or any matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us.

For investors outside the United States: We have not and the underwriters have not, taken any action that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities covered hereby and the distribution of this prospectus outside the United States.

Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. Our management estimates have not been verified by any independent source, and we have not independently verified any third-party information. In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.“Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special“Special Note Regarding Forward-Looking Statements.Statements.”

We further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to the registration statement of which this prospectus is a part were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.

We have registered our trademarks “BIO-key”, “True User Identification”, “Intelligent Image Indexing”, “WEB-key”, “SideSwipe,“SideSwipe”, “SidePass”, “EcoID”, “PistolStar®”, “PortalGuard”, “MobileAuth”, “PASSIVEKEY®” and “The Biometric of Things” (application pending)“PISTOLSTAR®” with the U.S. Patent & Trademark Office, as well as many foreign countries, protecting the names of our namecompanies and PistolStar, Inc. (“PistolStar”)our key technology offering namesofferings discussed later in this prospectus. This prospectus also includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this prospectus may appear (after the first usage) without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and tradenames.

SUMMARY

This summary highlights information contained in other parts of this prospectus or incorporated by reference into this prospectus from our filings with the Securities and Exchange Commission, or SEC, listed in the section of the prospectus entitled “Incorporation of Certain Information by Reference.”SEC. Because it is only a summary, it does not contain all of the information that you should consider before purchasing our securities in this offering and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere or incorporated by reference into this prospectus. You should read the entire prospectus, the registration statement of which this prospectus is a part, and the information incorporated by reference herein in their entirety, including the “Risk Factors”“Risk Factors” and our financial statements and the related notes incorporated by reference into this prospectus, before purchasing our securities in this offering. Unless the context requires otherwise, references in this prospectus to “BIO-key,” the “Company,” “we,“we,” “us”“us” and “our”“our” refer to BIO-key International, Inc. and our subsidiaries.

Overview

We developBIO-key International, Inc. is a leading identity and market advanced fingerprintaccess management, or IAM, platform provider enabling secure work-from-anywhere for enterprise, education, and government customers. Our vision is to enable any organization to secure streamlined and passwordless workforce, customer, citizen and student access to any online service, workstation, or mobile application, without a requirement to use tokens or phones. Our products include PortalGuard® and PortalGuard Identity-as-a-Service (IDaaS) enterprise IAM, PINsafe, WEB-key® biometric identificationcivil and identity verification technologies, as well as related identity managementlarge-scale ID infrastructure, and credentialingaccessory hardware to provide a complete solution for identity-innovating customers.

Millions of people use BIO-key every day to securely access a variety of cloud, mobile and software solutions. We were pioneersweb applications, on-premise and cloud-based servers from all of their devices. Employees, contractors, students and faculty sign in developing automated, finger identification technologythrough PortalGuard to seamlessly and securely access the applications they need to do their work, without relying on personal phone use or per-user tokens. Organizations use our platform to securely collaborate with their supply chain and partners, and to provide their customers with flexible, resilient user experiences online or in-person.

BIO-key PortalGuard and hosted PortalGuard IDaaS are platforms that supplementsenable our customers to securely and easily assure that only the right people can access the right systems by utilizing our world-class biometric core platform among 17 other authentication factors. PortalGuard goes beyond traditional multi-factor authentication, or compliments other methods of identification and verification,MFA, solutions by addressing sizeable gaps, such as personal inspection identification, passwords,allowing roving users to biometrically authenticate at any workstation without using their phones or tokens, smart cards, ID cards, PKI, credit card, passports, driver’s licenses, OTP or other formeliminating unauthorized account delegation, detecting duplicate users, and accommodating in-person identification.

PortalGuard is used by our customers to manage and secure IT access by their employees, contractors and partners, which we call workforce identity. PortalGuard is also used to manage and secure the identities of possession or knowledge-based credentialing. Wean organization’s customers through integration of APIs we have developed whatand industry-standard federation standards, which we believecall customer identity.

In 2022, we expanded our product offerings and customer base when we acquired Swivel Secure, a Madrid, Spain based provider of IAM solutions. Swivel Secure is the most discriminatingexclusive distributer of AuthControl Sentry, AuthControl Enterprise, and effective commercially available finger-based biometric technology.AuthControl MSP product line in Europe, Africa and the Middle East, or EMEA, excluding the United Kingdom and Ireland. These solutions include a patented one-time-code extraction technology, helping enterprises manage the increasing data security risks posed by cloud services and bring your own device policies.

Our primary market focus includes enterprise security, mobile paymentsLarge-scale customer and credentialing, healthcare recordscivil ID customers use our scalable biometric management platform and data security, among other things. Our secondary focus includes government markets,FBI-certified scanner hardware to manage enrollment, de-duplication and authentication for millions of users. One large scale identity projects such as voter’s registration, national ID programs,bank has enrolled and SIM card registration.identifies over 19 million of their customers in branches on a daily basis.

We sell our branded biometric and FIDO authentication hardware as accessories to our IAM platforms, so that customers can have also developed a robust products business.single vendor providing all components of their IAM solution. Our lineNIST-certified fingerprint biometric platform is unique in that it supports interoperable mixing and matching combinations of finger print readers, which we market underdifferent manufactures’ fingerprint scanners in a deployment, so that the brand names SideSwipe^®, EcoID^® and SideTouch™,right scanner can be used on any laptop, tablet or other device which containsselected for the right use case, without mandating the user of a USB port.

We maintain a direct sales force and under our Channel Alliance Program utilize distributors, resellers, integrators and partners with substantial experience in selling technology solutions to government and corporate customers. We have built a global footprint which includes our executive offices in Wall, NJ, our research and development facility in Eagan, MN, and international operations in Hong Kong and Africa.

In 2020, we announced that we had secured two of the largest contracts in the Company’s history, with our partner Technology Transfer Institute (“TTI”). The contracts, valued at a combined $75,000,000, are for large-scale identification projects in Africa and Nigeria. These historic opportunities are expected to showcase the Company’s ability to support large scale projects utilizing our core biometric authentication software engine, WEB-key^®.

We continue to develop advancements in our capabilities and explore potential strategic relationships, including business combinations and acquisitions, which could help us leverage our capability to deliver our solutions.  In furtherance of this strategy, in June, 2020 we acquired PistolStar, a New Hampshire based provider of enterprise-ready identity access management solutions, including multi-factor authentication, identity-as-a-service, single sign-on and self-service password reset to commercial, government and education customers throughout the United States and internationally. PistolStar has over 200 active customer subscribers to their products, which include PortalGuard™ multi-factor authentication (MFA), Nebula™ identity-as-a-service (IDaaS), PortalGuard single sign-on (SSO) and PortalGuard self-service password reset (SSPR).

PistolStar’s PortalGuard MFA offers customers flexible policy-driven choices among 15 different methods of authentication, including BIO-key biometrics, FIDO U2F/2FA tokens, WebAuthn, Windows Hello, Google Authenticator, Microsoft Authenticator, RSA SecureID, Phone Push, OTP, SMS, phone-call, and bar-code, so every user can always be securely authenticated with whichever factor is most appropriate.  For enterprises with existing IAM platforms, PortalGuard can be seamlessly integrated to add its complete MFA by supporting SAML, OpenID Connect, OAuth, WS-Federation, CAS, and Shibboleth, among other standards. 

Combining PistolStar’s proprietary authentication software with our biometric solutions creates an integrated turn-key multi-factor solution which we believe is unparalleled in the industry, and will allow us to provide a unified MFA solution that is differentiated in the market by our biometric user experience and who-you-are strong authentication.particular scanner.

Finger-based Biometric IdentificationWe operate a SaaS business model with customers subscribing to term use of our software resulting in annual recurring revenue. We sell our products directly through our field and Personal Identity Verification

We are a leader in finger-based biometric identification and personal identity verification,inside sales teams, as well as authentication-transaction security. Stand-alone,indirectly through our network of channel partners including resellers, system integrators, master agents and other distribution partners. Our subscription fees include a term license of hosted or on-premise product and technical support and maintenance of our platform. We base subscription fees primarily on the products used and the number of users enrolled in partnershipsour platform. We generate subscription fees pursuant to noncancelable contracts with OEMs, integrators, and solution providers, we provide biometric security solutions to private and public sector customers. We help customers reduce risk by providing the ability to control access to facilities and services, in either the logical or physical domain. Our solutions positively identify individuals and verify, or confirm, their identity before granting access to, among other things, corporate resources, subscribed data and services, web portals, applications, physical locations or assets.a weighted average duration of approximately one year.

Our biometric identification technology improves both the accuracy and speed of screening individuals, for identification purposes or for personal identity verification, by extracting unique data from a fingerprint and comparing it to existing similar fingerprint data. The technology has been built to be scalable and to handle databases containing millions of fingerprints. We achieve the highest levels of discrimination without requiring any other identifying data (multi-factor) such as a user ID, smart ID cards, or tokens, although our technology can be used in conjunction with such additional factors. Users of our technology have the option of on device or cloud authentication. This flexible authentication option, in conjunction with our interoperable capabilities, is another key differentiator of our biometric identification solutions.Strategic Outlook

We also develop and distribute hardware components that are used in conjunction with our software, and sell third-party hardware components with our software in various configurations required by our customers. Our products are interoperable with all major fingerprint reader and hardware manufacturers and across Windows, Linux, and the Android mobile operating systems enabling application developers, value added resellers, and channel partners to integrate our fingerprint biometrics into their applications, while dramatically reducing maintenance, upgrade and life-cycle costs. This interoperability is unique in the industry, is a key differentiator for our products in the biometric market and, in our opinion, makes our technology more viable than competing technologies and expands the size of the overall market for our products.

We support industry standards, such as FIDO, BioAPI, and have received National Institute of Standards and Technology independent laboratory certification of our ability to support Homeland Security Presidential Directive #12 (HSPD-12) and ANSI/INCITS-378 templates, as well as validation of our fingerprint match speed and accuracy in large database environments.

In 2015, Microsoft announced native support for biometrics in the Windows 8.1 and Windows 10 Operating platforms as well as Office 2016. With Microsoft Hello, users can replace their PIN or password to access their device without any special software downloads by using our finger scanners which are plug and play compatible with the Microsoft platforms. We were the exclusive biometric partner at the Microsoft “Ignite your Business” Windows 10 and Office 2016 launch events, which generated a number of opportunities for both our hardware and software offerings.

Our Authentication Transaction Security Solution and Markets

Our authentication-transaction security technology, WEB-key®, provides the ability to conduct identification and identity verification transactions in potentially insecure environments, including the World Wide Web or in off-site cloud environments. We have developed our technology to enable on-device authentication as well as network or cloud-based authentication and believe we may be one of the few if not only technology vendors capable of providing this flexibility and capability.

WEB-key makes cloud-based biometric user-authentication viable and eliminates technology constraints on online service providers, who are otherwise dependent on handset provider hardware and software platform decisions. It extends all features and functionalities of the VST algorithm to customers looking to add an enhanced level of security to their thin client and client/server applications. WEB-key is currently supported by both Windows and Linux operating systems. Clients are available on Windows and Android operating systems.

Historically, our largest market has been access control within highly regulated industries such as government, financial services, and healthcare. DuringIn 2019 we became athe go-to biometric authentication provider for board of election offices as eight offices, in two states, deployedwhich continue to deploy our hardware and software to secure internal access to the voter registration database. Upon acquiring PortalGuard in 2020, we now serve the higher education vertical.

We will seekexpect to grow our business within these highly-regulated industries and expect to continue to extend this footprint in 20202023 and beyond. We believe that continued heightened security and privacy requirements in these industries, and as colleges and universities continue operating in remote environments, we will generate increased demand for security solutions, including biometrics. In addition, we expect that the compatible, yet superior portable biometric user experience offered by our technology for Windows 10 users will accelerate the demand for our computer network log-on solutions and fingerprint readers. Through value add-offerings via direct sales, resellers, and strategic partnerships with leading higher education platform providers, we expect to continue to grow our installed base. With the integration of Swivel Secure, we expect to expand our business into EMEA.

Our two primary sales strategies are focused on expanding(i) increased marketing efforts into the IAM market, along with a(ii) dedicated pursuit of large-scale identification projects across the globe.globe, and (iii) growing our channel alliance program which includes more than one hundred and fifty participants and continues to generate incremental revenues.

Our Products

We offer a full lineA second component of easyour growth strategy is to use finger scanners for both enterprisepursue strategic acquisitions of select businesses and consumer markets. Our SideSwipe, SideTouch and EcoID scanners are plug and play compatible with Microsoft Windows and our Q-180 Touch reader is a Micro USB compatible fingerprint reader for Android devices. The readers are currently soldassets in the Microsoft stores,IAM space. In furtherance of this strategy, we are active in the industry and regularly evaluate businesses that we believe will either provide an entry into new market verticals or be synergistic with our existing operations and in either case, be accretive to earnings. We cannot provide any assurance as well as through their on-line channel, on Amazon,to whether we will be able to complete any acquisition and throughif completed, successfully integrate any business we acquire into our website.

Finally, our ID Director for Windows and ID Director for SAML offer biometric authentication to SAML enables apps such as Office 365, GoToMeeting, Zoom, SalesForce, Google G-Suite, and many others.operations.

General

Our principal executive office is located at 3349 Highway 138, Building A, Suite E, Wall, New Jersey 07719 and our telephone number is (732) 359-1100. Our website is located at www.bio-key.com.www.bio-key.com. The information on our website or any other website is not incorporated by reference into this prospectus supplement or the accompanying base prospectus. Our website address is included as an inactive textual reference only.

The BIO-key logo is our trademark. This prospectus and the documents we incorporate by reference into this prospectus may also contain trademarks and trade names of others. 

The Offering

Unless otherwise stated, all information contained in this prospectus assumes the exercise in full of all Pre-Funded Warrants sold in lieu of common stock in this offering and no exercise by the underwriters of their option to purchase additional shares and/or warrants in this offering.

The number of shares of our common stock to be outstanding after this offering is based on 22,181,3159,234,833 shares of our common stock outstanding as of July 15, 2020June 9, 2023 and excludes as of such date:

CAPITALIZATION

The following table summarizes our unaudited capitalization and cash and cash equivalents as of March 31, 2020 to reflect:

You should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” as well as our financial statements and related notes and the other financial information, incorporated by reference into this prospectus supplement.

We may experience difficulties in integrating the operations, personnel and assets of PistolStarany business we acquire which we acquired in June 2020.may disrupt our business, dilute stockholder value, and adversely affect our operating results.

We recently acquired PistolStar.A component of our business plan is to acquire businesses and assets in the biometric and identity access management industry. There can be no assurance that we will be able to identify, acquire or profitably manage PistolStar’s businessbusinesses or successfully integrate acquired businesses into the business with our historic operationsCompany without substantial costs, delays or other operational or financial problems. In addition, we cannot assure you that we will be to maintain and grow the revenues and operating margins of the combined business, realize cost synergies with PistolStar’s products, services, and operations, or that we will be able to retain all of PistolStar’s existing customers and employees. If we are unable to successfully manage the new business, we will not be able to generate sufficient revenue to offset the acquisition costs that we have incurred which would have a material adverse effect on our financial positon and results of operations.Such acquisitions also involve numerous operational risks, including:

We may pursue strategic acquisitions, including acquiring other identity access management companies, as part of our growth strategy and that may disrupt our growth.

We may pursue strategic acquisitions in the future. Risks in acquisition transactions include difficulties in the integration of acquired businesses into our operations and control environment, difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing clients of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquired businesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations for the acquired businesses. Fully integrating an acquired company or business into our operations may take a significant amount of time. We cannot assure you that we will be successful in overcoming these risks or any other problems encountered with acquisitions and other strategic transactions. These risks may prevent us from realizing the expected benefits from acquisitions and could result in the failure to realize the full economic value of a strategic transaction or the impairment of goodwill and/or intangible assets recognized at the time of an acquisition. These risks could be heightened if we complete a large acquisition or multiple acquisitions within a short period of time.  Additional risks may include:

As a result, if we fail to properly evaluate and execute any acquisitions or investments, our business and prospects may be seriously harmed.

Risks Related To the extent we make any material acquisitions, our earnings may adversely affected by non-cash charges relating to the amortization of intangible assets.

Under applicable accounting standards, purchasers are required to allocate the total consideration paid in a business combination to the identified acquired assets and liabilities based on their fair values at the time of acquisition. The excess of the consideration paid to acquire a business over the fair value of the identifiable tangible assets acquired must be allocated among identifiable intangible assets including goodwill. The amount allocated to goodwill is not subject to amortization. However, it is tested at least annually for impairment. The amount allocated to identifiable intangible assets, such as customer relationships and the like, is amortized over the life of these intangible assets. We expect that this will subject us to periodic charges against our earnings to the extent of the amortization incurred for that period. Because our business strategy focuses, in part, on growth through acquisitions, our future earnings may be subject to greater non-cash amortization charges than a company whose earnings are derived solely from organic growth. As a result, we may experience an increase in non-cash charges related to the amortization of intangible assets acquired in our acquisitions. Our Common Stockfinancial statements will show that our intangible assets are diminishing in value, even if the acquired businesses are increasing (or not diminishing) in value.

RISKS RELATED TO OUR COMMON STOCK

We have issued a substantial number of securities that are convertibleoptions and warrants exercisable into shares of our common stock which could result in substantial dilution to the ownership interests of our existing shareholders.stockholders.

As of the date of this prospectus, approximately 11,300,0005,045,000 shares of our common stock were reserved for issuance upon exercise or conversion of outstanding stock options warrants, and convertible notes.warrants. The exercise or conversion of these securities will result in a significant increase in the number of outstanding shares and substantially dilute the ownership interests of our existing stockholders.

The availability

Upon an event of a substantial number ofdefault under our $2.2 million principal amount secured note, all amounts then due under the note plus all resulting default sums will be convertible into up to 985,576 shares of our common stock for public sale mayat conversion price equal to the 10-day volume weighted average closing price of our stock. Any such conversion could cause substantial dilution to our existing stockholders and cause the price of our common stock to decline.

Our most recent registration statement, which was declared effectiveUpon the occurrence of any event of default (as defined) under our $2.2 million principal amount secured note, whether for payment or covenant breach, and expiration of any applicable cure periods, all amounts then due under the note, will immediately become due and payable in September 2019, coveredfull, interest will accrue at the public resalehigher of 2,040,00018% per annum or the maximum amount permitted by applicable law, the outstanding principal amount due under the Note will be increased by 30% to approximately $2.86 million, and the holder of the note will have the right to convert all amounts then due under the Note into shares of common stock conversion price equal to the 10-day volume weighted average sales price of our common stock underlying a convertible note and 2,000,000 shares underlying warrants which we issued in a July 2019 private offering. Inon the first quarterdate of 2020, we amendedconversion. Although the convertible note to reduce the conversion price to $0.65 per share which increased theaggregate number of shares of common stock issuable upon conversion of the note. AsNote is capped at 985,576 shares, any conversion of the note could cause substantial dilution to our existing stockholders and cause the price of our stock to decline. During April 2023, we were in default under the Note due to our failure to timely file our annual report and timely file this registration statement covering the public resale of the shares issued to the holder of the Note in connection with the financing. We obtained a waiver and as of the date of this prospectus, 5,829,225 shares have been converted under the note.  In addition, on May 6, 2020 and June 29, 2020, we issued convertible notes and warrants convertible and exercisable, respectively, into approximately an aggregate of 6,968,319 shares of common stock.  We have agreed to register the public resale of these shares which represent approximately 31% of our outstanding shares. The availability of these shares for sale to the public, whether orregistration statement  are not sales have occurred or are occurring, and the sale of such shares in the public markets could have an adverse effect on the market price of our common stock. Such an adverse effect on the market price would make it more difficult for us to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.default.

An active trading market for our common stock may not be sustained.

Although our common stock is listed on the Nasdaq Capital Market, an active trading market for our shares may not be developed and if developed, sustained. If an active market for our common stock is not developed or sustained, it may be difficult for you to sell your shares without depressing the market price for the shares or sell your shares at all. Any inactive trading market for our common stock may also impair our ability to raise capital to continue to fund our operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

If we fail to comply with the continued minimum closing bid and the minimum shareholders’ equity requirements of the Nasdaq or other Nasdaq requirements for continued listing, our common stockCommon Stock may be delisted and the price of our common stockCommon Stock and our ability to access the capital markets could be negatively impacted.

Our common stock is listed for trading on Nasdaq. We must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share and minimum stockholders’ agreement. On January 12, 2023, we received a letter from the Nasdaq advising us that we have failed to satisfy the $1.00 minimum bid requirement due to the fact that the closing bid price for 30our Common Stock for thirty consecutive business days.days was less than $1.00. We have 180 calendar days, or until July 11, 2023, to regain compliance. If we are unable to regain compliance during this period, we may be eligible for an additional 180 calendar day period to satisfy the minimum bid requirement. A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our Common Stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer business development opportunities.

In September 2019, we received a letter from the Nasdaq stating that our share price had not satisfied the continued listing requirement to maintain a minimum bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2). We were not able to regain compliance during the 180-day period following the letter, and have provided a written notice to the Nasdaq stating that it is our intention to regain compliance during the second 180-day period. On April 20, 2020, we received notice from the Listing Qualifications Department of The Nasdaq Capital Market that the grace period to regain compliance with the continued listing standard set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules (the “Minimum Bid Price Requirement”) has been extended due to the global market impact caused by COVID-19. More specifically, Nasdaq has stated that the compliance periods for any company previously notified about non-compliance with the Minimum Bid Price Requirement will be suspended effective April 16, 2020, until June 30, 2020. On July 1, 2020, companies will receive the balance of any pending compliance period in effect on April 16, 2020 to come back into compliance with the applicable Minimum Bid Price Requirement. As a result of this extension, we now have until December 4, 2020, to regain compliance with the Minimum Bid Price Requirement.

On May 18, 2020, we received notice (the “Notice”) from the Nasdaq that the Company’s stockholders’ equity reported in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019 does not satisfy the Nasdaq Capital Market continued listing requirement set forth in Nasdaq Listing Rule 5550(b)(1) (the “Rule”). We had 45 calendar days from the date of the Notice to submit to the Nasdaq a plan to regain compliance with the Rule. We have timely submitted our plan to the Nasdaq Capital Market. We expect that a combination of the proceeds of this offering, execution of existing contracts, and the acquisition of PistolStar will allow us to regain compliance within the next sixty (60) days. On, July 10, 2020, our plan to regain compliance was accepted and the Nasdaq Capital Market granted us an extension of 180 calendar days from the date of the Notice for us to provide evidence of compliance. If we are unable to regain compliance, then we may request a hearing before a Nasdaq Hearings Panel. In the event a hearing is requested, all suspension and delisting action would be stayed pending the conclusion of the hearing process. There can be no assurance that we will be able to regain compliance with the Rule. Failure to regain compliance with the Rule and delisting of our shares from the Nasdaq Capital Market this would result in an event of default under the secured convertible promissory notes issued to Lind.

We expectneed to raise additional funds in the future through issuances of securities and such additional funding may be dilutive to stockholders or impose operational restrictions.

We expect that we willmay need to raise additional capital in the future to help fund our operations through sales of shares of our common stock or securities convertible into shares of our common stock, as well as issuances of debt. Such additional financing may be dilutive to our stockholders, and debt financing, if available, and may involve restrictive covenants which may limit our operating flexibility. If additional capital is raised through the issuance of shares of our common stock or securities convertible into shares of our common stock, the percentage ownership of existing stockholders will be reduced. These stockholders may experience additional dilution in net book value per share and any additional equity securities may have rights, preferences and privileges senior to those of the holders of our common stock.

Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase our shares of common stock.

We have never declared or paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. Our paymentPayment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors seeking cash dividends should not purchase shares of our common stock.

Our share ownership is concentrated which will limit your ability to influence corporate matters. 

Our directors, officers and principal stockholders, beneficially own approximately 33% of our common stock and will continue to have significant influence over the outcome of all matters submitted to the stockholders for approval, including the election of our directors and approval of significant corporate transactions. This concentration of ownership will limit your ability to influence corporate matters, and as a result, actions may be taken that you may not view as beneficial.    

Provisions of our certificate of incorporation, bylaws and Delaware law may make a contested takeover of our Company more difficult.

Certain provisions of our certificate of incorporation, bylaws and the General Corporation Law of the State of Delaware (“DGCL”) could deter a change in our management or render more difficult an attempt to obtain control of us, even if such a proposal is favored by a majority of our stockholders. For example, we are subject to the provisions of the DGCL that prohibit a public Delaware corporation from engaging in a broad range of business combinations with a person who, together with affiliates and associates, owns 15% or more of the corporation’s outstanding voting shares (an “interested stockholder”) for three years after the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Our certificate of incorporation also includes undesignated preferred stock, which may enable our board of directors to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise. Finally, our bylaws include an advance notice procedure for stockholders to nominate directors or submit proposals at a stockholders meeting. Delaware law and our charter may, therefore, inhibit a takeover.

The trading price of our common stock may be volatile.

The trading price of our shares has from time to time fluctuated widely and in the future may be subject to similar fluctuations. The trading price may be affected by a number of factors including the risk factors set forth in this prospectus as well as our operating results, financial condition, announcements of innovations or new products by us or our competitors, general conditions in the biometrics and access control industries, and other events or factors. We cannot assure you that any of the broker-dealers that currently make a market in our common stock will continue to serve as market makers or have the financial capability to stabilize or support our common stock. A reduction in the number of market makers or the financial capability of any of these market makers could also result in a decrease in the trading volume of and price of our shares. In recent years broad stock market indices, in general, and the securities of technology companies, in particular, have experienced substantial price fluctuations. Such broad market fluctuations may adversely affect the future-trading price of our common stock.

Risks Relating to This OfferingRISK RELATED TO THIS TRANSACTION

If you purchase our securities in this offering, you may incur immediate andSales of a substantial dilution in the book valuenumber of your shares.

The combined public offering price per share of our common stock and accompanying warrant will be substantially higher than the net tangible book value per share of our common stock immediately prior to the offering. After giving effect to the sale of 15,000,000 shares of our common stock and accompanying warrants in this offering, at an assumed combined public offering price of $1.20 per share and accompanying warrant, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us and attributing no value to the warrants sold in this offering, purchasers of our common stock in this offering will incur immediate dilution of $0.78 per share in the net tangible book value ofpublic market, including the commonshares offered under this prospectus, could lower our stock they acquire. In the event that you exercise your warrants, you may experience additional dilutionprice and impair our ability to the extent that the exercise price of the warrants is higher than the tangible book value per share of our common stock. For a further description of the dilution that investorsraise funds in this offering may experience, see “Dilution.”

In addition, to the extent that outstandingnew stock options or warrants have been or may be exercised or other shares issued, you may experience further dilution.offerings.

We have broad discretion in the use of the net proceeds we receive from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds we receive in this offering, including for any of the purposes described in the section entitled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whetherIf our management is using the net proceeds appropriately. Because of the number and variability of factors that will determine our use of our net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price of our common stock to decline. Pending their use, we may invest our net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders.

Future sales ofstockholders sell substantial amounts of our common stock could adversely affectshares, the market price of our common shares could decrease. We had 9,234,833 common shares outstanding as of June 9, 2023. Under this registration statement, we are registering the resale of 900,000 common shares held by the selling stockholder, which represents approximately 10% of our outstanding common stock. In addition, we may sell additional common shares in subsequent offerings.

We cannot predict the size of future issuances of common shares or the effect, if any, that future issuances and sales of common shares, including the shares offered under this registration statement, other registration statements, and shares available for resale under Rule 144 under the Securities Act, or the perception that such sales could occur, may choosehave on the market price of our common shares or our ability to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If additional capital is raised through the sale of equity or convertible debt securities, or perceptions that those sales could occur, thesecurities. With any additional issuance of these securities could result in furthercommon shares, investors will suffer dilution to investors purchasing our common stock in this offering or result in downward pressure on the price of our common stock, and our ability to raise capital in the future.

Holders of our warrants and Pre-Funded Warrants will have no rights as a common stockholder until they acquire our common stock.

Until you acquire shares of our common stock upon exercise of your warrants or Pre-Funded Warrants, you will have no rights with respect to shares of our common stock issuable upon exercise of your warrants or Pre-Funded Warrants. Upon exercise of your warrants or Pre-Funded Warrants, you will be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.

There is no public market for the warrants to purchase shares of our common stock or Pre-Funded Warrants being offered in this offering.

There is no established public trading market for the warrants or Pre-Funded Warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the warrants or Pre-Funded Warrants on any national securities exchange or other nationally recognized trading system, including The Nasdaq Capital Market. Without an active trading market, the liquidity of the warrants and Pre-Funded Warrants will be limited.may experience dilution in our earnings per share.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

ThisAll statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and the documents incorporated herein by reference containplans and objectives of management for future operations, are forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” in this prospectus. In some cases, you can identify these statements by terms such aswords “anticipate,” “believe,” “should,” “estimate,” “will,” “may,” “future,” “plan,” “intend” and “expect” or the negative of those terms, and similar expressions that convey uncertaintygenerally identify forward-looking statements. These statements are not guarantees of future eventsperformance or outcomes. These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this prospectus and are subject to risks and uncertainties.

Particular uncertainties that couldmay cause our actual results to bediffer materially different thanfrom those expressed in ourincluded within or implied by such forward-looking statements include:statements. These risks and uncertainties include, without limitation, our history of losses and limited revenue; our ability to raise additional capital; our ability to repay our outstanding secured indebtedness; 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 between us and other companies in the biometric technology industry;and identity access management industries; market acceptance of biometric products generally and our products under development; our ability to execute and deliver on contracts in Africa,Africa; our ability to expand into Asia, Africa and other foreign markets,markets; our ability to integrate the operations and personnel of Pistol StarSwivel Secure into our business; fluctuations in foreign currency exchange rates; the duration and severityextent of the current coronavirus COVID-19 pandemiccontinued hostilities in Ukraine and its effectimpact on our business operations, sales cycles, personnel, and the geographic markets in which we operate;European customers; delays in the development of products, and statements of assumption underlying any of the foregoing, as well asand numerous other factorsmatters of national, regional and global scale, including those set forth under the caption “Risk Factors”“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 filedthis prospectus and other filings with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing.

SEC. These factors are not intended to represent a complete list of the general or specific factors that may affect us. It should be recognized that other factors, including general economic factors and business strategies, may be significant, presently or in the future. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

You should carefully read this prospectus and the documents we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.

Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.

This prospectus also refers to estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.

THE OFFERING

This prospectus covers the public sale of 900,000 shares of common stock to be sold by AJB Capital Investments, LLC, consisting of 700,000 issued and outstanding shares of common stock and 200,000 shares of common stock issuable upon the exercise of warrants. This prospectus also covers any additional shares of our common stock that we may issue or that may be issuable by reason of any stock split, stock dividend or similar transaction involving our common stock. The selling stockholder may sell the shares covered by this prospectus through public or private transactions at prevailing market prices or at privately negotiated prices. We will not receive any proceeds from this offering. If all of the 200,000 common stock purchase warrants exercisable for shares of common stock offered hereby are exercised, we will receive aggregate gross proceeds of $600,000.

On December 22, 2022, we issued a senior secured promissory note to AJB Capital Investments, LLC in the principal amount of $2,200,000 (the “Note”). In connection with the issuance of the Note, we issued to AJB Capital Investments, LLC 700,000 shares of common stock (the “Commitment Shares”) and a warrant (the “Warrant”) to purchase 200,000 shares of common stock (the “Warrant Shares”) at an exercise price of $3.00 per share with a term of five years. The Warrant is exercisable on a cashless basis if at any time there is no effective registration statement covering the resale of the Warrant Shares. In the event the Note is paid in full within six months after the date of issuance, we will exercise our right to repurchase 350,000 of the Commitment Shares for aggregate payment of $1.00.

Upon the occurrence of standard and customary events of default and expiration of any applicable cure periods, all amounts due under the Note will immediately and automatically become due and payable in full, interest will accrue at the higher of 18% per annum or the maximum amount permitted by applicable law, the outstanding principal amount due under the Note will be increased by 30%, and the investor will have the right to convert all amounts due under the Note into shares of common stock (the “Conversion Shares”) at a conversion price equal to the 10 day volume weighted average sales price our common stock on the date of conversion, subject to the share cap described in the paragraph below.

The aggregate number of shares of common stock issuable in the forgoing transaction consisting of the Commitment Shares, the Warrant Shares, and the Conversion Shares are capped at 1,684,576 which is equal to 19.9% of our issued and outstanding shares of common stock on December 22, 2022, the date the definitive transaction documents were executed.

The Note and the Warrant also contain “blocker provisions” which prohibit conversion or exercise, as applicable, if such conversion or exercise would result in the Investor being the beneficial owner of in excess of 9.99% of our common stock.

DETERMINATION OF OFFERING PRICE

The selling stockholder will offer common stock at the prevailing market prices or privately negotiated prices.  The offering price of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value.  Our common stock may not trade at the market prices in excess of the offering prices for common stock in any public market will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity.

SELLING STOCKHOLDER

When we refer to the “selling stockholder” in this prospectus, we mean the persons or entities specifically identified in the table below, as well as the permitted transferees, pledges, donees, assignees, successors and other successors-in-interest who may subsequently hold any of the selling stockholder’s interests other than through a public sale.

The selling stockholder identified in the following table is offering for resale 900,000 shares of our common stock. All of the securities were previously issued to the selling stockholder in private placement transactions described above under the section entitled “The Offering”.

The following table sets forth:

The beneficial ownership set forth above has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), based on 9,234,833, shares of our common stock outstanding on June 9, 2023. Except as indicated by footnote, and subject to applicable community property laws, we believe that the beneficial owners of the common stock listed below have sole voting power and investment power with respect to their shares. The selling stockholder is not affiliated with a broker-dealer registered under the Exchange Act of 1934, as amended.

The registration of these shares of common stock does not mean that the selling stockholder will sell or otherwise dispose of all or any of those securities. The selling stockholder may sell or otherwise dispose of all, a portion or none of such shares from time to time. We do not know the number of shares, if any, that will be offered for sale or other disposition by the selling stockholder under this prospectus. Furthermore, the selling stockholder may have sold, transferred or disposed of the shares of common stock covered hereby in transactions exempt from the registration requirements of the Securities Act since the date on which we filed this prospectus.

Information about the selling stockholder may change over time. Any changed information will be set forth in an amendment to the registration statement (of which this prospectus forms a part) or a supplement to this prospectus, to the extent required by law.

USE OF PROCEEDS

The selling stockholder will receive all proceeds from the sale of the shares of common stock offered hereby. We will not receive any proceeds from the sale of common stock by the selling stockholder.

We estimatewill, however, receive cash proceeds equal to the exercise price of the Warrant. Accordingly, we may receive aggregate gross proceeds of up to $600,000 assuming that the netWarrant is exercised in full at an exercise price of $3.00 per share. We expect to use any proceeds of this offering will be approximately $16,360,000, after deducting the underwriting discounts and commissions and estimated offering expenses payablereceived by us and excluding the proceeds, if any, from the exercise of the warrants. IfWarrant for working capital purposes.

We will bear all costs, expenses and fees in connection with the underwriters exercise their option to purchase additional shares and warrants in full, our net proceeds from this offering will be approximately $18,844,000, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, and excluding the proceeds, if any, from the exerciseregistration of the warrants. We currently intend to use $2,415,000 of the net proceeds of the offering to repay in full a secured convertible promissory note in the principal amount of $2,415,000, payable to Lind, due May 6, 2021, of which $2,100,000 was funded to us representing an original issue discount of 15%. The proceeds of this note were used for general working capital purposes. Principal payments on this note are due on a monthly basis commencing December 6, 2020. We intend to use $1,811,250 of the net proceeds from this offering to repay in full a secured convertible promissory note in the principal amount of $1,811,250, payable to Lind, due June 30, 2021, of which $1,575,000 was funded to us representing an original issue discount of 15%.  The proceeds of this note were used to fund the acquisition of PistolStar. Principal payments on this note are due on a monthly basis commencing October 30, 2020. We intend to use the balance of the net proceeds of this offering for general corporateshares, including, without limitation, all registration and working capital purposesfiling fees and to fund ongoing operationsfees and expansionexpenses of our business. We cannot currently allocate specific percentages of the net proceeds to us from this offering that we may use for these purposescounsel and our management will have broad discretion in the allocation of such net proceeds.accountants.

PLAN OF DISTRIBUTION

We are registering 900,000 shares of our common stock for possible sale by the selling stockholder. The selling stockholder will act independently of us in making decisions with respect to the timing, manner and size of each sale. The selling stockholder may, from time to time, sell any or all of its shares of common stock on the Nasdaq Capital Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholder may use any one or more of the following methods when selling shares:

The selling stockholder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus supplement and accompanying prospectus.

Broker-dealers engaged by the selling stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholder does not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling stockholder.

The selling stockholder may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act. If we are notified by the selling stockholder that any arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file an amendment to this prospectus. If the selling stockholder uses this prospectus for any sale of the shares of common stock, the selling stockholder will be subject to the prospectus delivery requirements of the Securities Act.

The selling stockholder and any broker-dealer or agents participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act in connection with such sales. In such event, any commissions paid, or any discounts or concessions allowed to, any such broker-dealer or agent and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. If the selling stockholder is an “underwriter” within the meaning of Section 2(11) of the Securities Act, it will be subject to the applicable prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.

The selling stockholder also may transfer the shares of common stock in other circumstances, in which case the transferees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act supplementing or amending the list of selling stockholders to include the transferees or other successors in interest as selling stockholders under this prospectus.

We will bear all costs, expenses and fees in connection with the registration of the shares.

We will indemnify the selling stockholder against certain liabilities, including liabilities under the Securities Act, or the selling stockholder will be entitled to contribution. We may be indemnified by the selling stockholder against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus or we may be entitled to contribution.

MARKET FOR REGISTRANT’SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock currently trades on the Nasdaq Capital Market under the symbol “BKYI”.

Holders

As of July 15, 2020,June 9, 2023, the number of stockholders of record of our common stock was 58.131.

Dividends

We have not paid any cash dividends on our common stock to date,to-date and have no intention of paying any cash dividends on our common stock in the foreseeable future. The terms of our secured promissory note issued in December 2022 prohibits us from paying or declaring any dividends or without the consent of the lender. The declaration and payment of dividends on our common stock is also subject to the discretion of our Board of Directors and certain limitations imposed under the DGCL.Delaware General Corporation Law. The timing, amount, and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.

DILUTION

If you purchase our securities in this offering, you may experience dilution to the extent of the difference between the combined public offering price per share and accompanying warrant in this offering and our as adjusted net tangible book value per share immediately after this offering, assuming no value is attributed to the warrants, and such warrants are accounted for and classified as equity. Net tangible book value per share is equal to the amount of our total tangible assets, less total liabilities, divided by the number of outstanding shares of our common stock. As of March 31, 2020, our net tangible book value was approximately $(2,440,295), or approximately $(0.13) per share.

After giving effect to the sale by us of 15,000,000 shares of our common stock (including the shares of common stock underlying the Pre-Funded Warrants) and warrants to purchase up to 15,000,000 shares of our common stock in this offering at an assumed combined public offering price of $1.20 per share and accompanying warrant, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of March 31, 2020 would have been $13,919,705, or approximately $0.42 per share. This represents an immediate increase in net tangible book value of $0.55 per share to existing stockholders and an immediate dilution of $0.78 per share to new investors purchasing shares of our common stock and accompanying warrants in this offering, attributing none of the combined public offering price to the warrants offered hereby. The following table illustrates this per share dilution:

The discussion and table above assume (i) no exercise of the underwriters’ option to purchase up to an additional 2,250,000 shares of common stock and/or warrants to purchase 2,250,000 shares of common stock, (ii) no exercise of warrants offered in this offering, and (iii) the immediate exercise in full of all Pre-Funded Warrants in this offering.

The foregoing discussion and table do not take into account further dilution to new investors that could occur upon the exercise of outstanding options or warrants having a per share exercise price less than the combined public offering price per share of common stock and accompanying warrants sold in this offering. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

The table and discussion above are based on 18,391,122 shares of our common stock outstanding as of March 31, 2020 and exclude as of such date:

MANAGEMENT’SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations, and other parts of this prospectus contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this prospectus are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth in the section captioned “RISK FACTORSRisk Factors” and elsewhere in this prospectus. The following should be read in conjunction with our audited financial statements included elsewhere herein.

The following Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand theour Company. The MD&AThis discussion is provided as a supplement to and should be read in conjunction with our consolidated financial statements for the years ended December 31, 2022 and 2021 and the three months ended March 31, 2023 and 2022 and the accompanying notes.notes included elsewhere in this prospectus.

OVERVIEWOverview

We developare a leading identity access management (IAM) platform provider enabling secure work-from-anywhere for enterprise, education, and market advancedgovernment customers using secure multi-factor authentication (MFA). Our vision is to enable any organization to secure streamlined and passwordless workforce, customer, citizen and student access to any online service, workstation, or mobile application, without a requirement to use tokens or phones. Our products include PortalGuard® and PortalGuard Identity-as-a-Service (IDaaS) enterprise IAM, WEB-key® biometric civil and large-scale ID infrastructure, MobileAuth® mobile phone authentication application for iOS and Android, and high-quality, low-cost accessory fingerprint biometric identificationscanner and identity verification technologies, as well as related identity managementFIDO-compliant hardware to provide a full and credentialing fingerprint biometric hardwarecomplete solution for identity-innovating customers.

BIO-key PortalGuard and software solutions. We were pioneers in developing automated, finger identification technologyhosted PortalGuard IDaaS are platforms that supplements or compliments other methods of identificationenable our customers to securely and verification,easily assure that only the right people can access the right systems. PortalGuard goes beyond traditional MFA solutions by addressing functional gaps, such as personal inspection identification, passwords,allowing roving users to biometrically authenticate at any workstation without using their phones or tokens, smart cards, ID cards, PKI, credit card, passports, driver’s licenses, OTP or other forms of possession or knowledge-based credentialing.  Advanced BIO-key® technology has beeneliminating unauthorized account delegation, detecting duplicate users, and is used to improve both the accuracy and speed of competing finger-based biometrics. Our solutions are used by customers in every sector of our economy including government, financial services, education, manufacturing, retail, and call centers.

We provide the ability to positively identify and authenticate individuals before granting access to valuable corporate resources, web portals or applications in seconds.  Powered by our patented Vector Segment Technology (VST), WEB-key and BSP development kits are fingerprint biometric solutions that provide interoperability with dozens of reader manufacturers, enabling application developers and integrators to integrate fingerprint biometrics into their applications. accommodating in-person identification.

Our biometric identification technology improves bothcustomers use BIO-key every day to securely access a variety of cloud, mobile and web applications, on-premise and cloud-based servers from all of their devices. Employees, contractors, students and faculty sign in through PortalGuard to seamlessly and securely access the accuracyapplications they need to do their important work, without relying on personal phone use or per-user tokens. Organizations use our platform to securely collaborate with their supply chain and speed of screening individuals, for identification purposes or for personal identity verification, by extracting unique data from a fingerprint and comparing it to existing similar fingerprint data. The technology has been built to be scalablepartners, and to handle databases containingprovide their customers with flexible, resilient user experiences online or in-person.

Large-scale customer and civil ID customers use our scalable biometric management platform and FBI-certified scanner hardware to manage enrollment, de-duplication and authentication for millions of fingerprints. We achieveusers. One large bank has enrolled and identifies over 21.7 million of their customers using BIO-key fingerprint biometrics in branches on a daily basis.

PortalGuard and hosted PortalGuard IDaaS are platforms that enable our customers to securely and easily assure that only the highest levels of discrimination without requiring anyright people can access the right systems by utilizing our world-class biometric core platform among 17 other identifying data (multi-factor)authentication factors. PortalGuard goes beyond traditional multi-factor authentication, or MFA, solutions by addressing sizeable gaps, such as a user ID, smart cards,allowing roving users to biometrically authenticate at any workstation without using their phones or tokens, although our technology can be used in conjunction with such additional factors. Users of our technology have the option of on device or cloud authentication. This flexible authentication option in conjunction with our interoperable capabilities, is another key differentiator of our biometric identification solutions.eliminating unauthorized account delegation, detecting duplicate users, and accommodating in-person identification.

Our WEB-key solution isPortalGuard and IBB deliver unique value to enterprises who find that mainstream MFA solutions do not adequately address their workforce use cases. PortalGuard operates as a client server suitesingle MFA user experience, providing a rich set of authentication choices to meet every use case. We sell our branded biometric and FIDO authentication hardware as accessories to our IAM platforms, so that customers can be integrated into virtually any application, whether web based or desktop application based on Windows. The WEB-key solution ishave a security solution that protectssingle vendor providing all components of their IAM solution. We do not mandate the biometric data in processing, transmission and storage. WEB-key provides a turn-key solution for biometric as well as multi-factor authentication across an enterprise, government system or any user population.

We also develop and distributeuse of BIO-key hardware components that are used in conjunction with our software and sell third-party hardware components with our software in various configurations required by our customers.services. Our products are interoperable with majorNIST-certified fingerprint reader and hardware manufacturers, supporting Windows, Linux, Mac OS X, and Android operating systems enabling application developers, value added resellers, and channel partners to integrate our fingerprint biometrics into their applications, while dramatically reducing maintenance, upgrade and life-cycle costs. This interoperabilitybiometric platform is unique in that it supports interoperable mixing and matching combinations of different manufactures’ fingerprint scanners in a deployment, so that the industry, andright scanner can be selected for the right use case, without mandating the user of a key differentiator for our products in the biometric market. In our opinion, these features make our technology more viable than competing technologies and expands the size of the overall market for our products.particular scanner.

Security-conscious software developers leverage our platform APIs and federation interfaces to securely and efficiently embed biometric and MFA identity capabilities into their software. Our approach to IDaaS allows our customers to efficiently scale their security and identity infrastructures to protect both internal cloud workforce- and external customer-facing applications.

In partnerships with OEMs, VARs, integrators,2022, we expanded our product offerings and solution providers,customer base when we marketacquired Swivel Secure, a Madrid, Spain based provider of IAM solutions. Swivel Secure is the exclusive distributer of AuthControl Sentry, AuthControl Enterprise, and sell biometric hardwareAuthControl MSP product line in Europe, Africa and softwarethe Middle East, or EMEA, excluding the United Kingdom and Ireland. These solutions to SMBs,include a patented one-time-code extraction technology, helping enterprises manage the Fortune 500increasing data security risks posed by cloud services and government agencies.bring your own device policies.

We support industry standards, including PIV, FIPS, ANSI, ISO, SAML, and BioAPI among others. We have received National Institute of Standards and Technology (NIST) independent laboratory testing and certificationoperate a SaaS business model with customers subscribing to term use of our ability to support Homeland Security Presidential Directive #12 (HSPD-12)software for annual recurring revenue. We sell our products directly through our field and ANSI/INCITS-378 templates,inside sales teams, as well as validationindirectly through our network of channel partners including resellers, system integrators, master agents and other distribution partners. Our subscription fees include a term license of hosted or on-premise product and technical support and maintenance of our fingerprint match speedplatform. We base subscription fees primarily on the products used and accuracythe number of users enrolled in large database environments.our platform. We generate subscription fees pursuant to noncancelable contracts with a weighted average duration of approximately one year.

We have developed what we believe is the most discriminating and effective commercially available finger-based biometric technology. Our primary focus is in marketing and selling this technology to customers seeking to secure access to networks, applications and data on-premises or remotely. Our primary market focus includes, government, financial services, education, healthcare, manufacturing, retail, and call centers.Strategic Outlook

PRODUCTS

We also offer a full line of easy to use finger scanners for both enterprise and consumer markets. Our SideSwipe, SideTouch and EcoID scanners are plug and play compatible with Microsoft Windows and our Q-180 Touch reader is a Micro USB compatible fingerprint reader for Android devices. The readers are currently sold in the Microsoft stores, as well as through their on-line channel, on Amazon, and through our website.  In 2018, we introduced OmniPass Consumer, a secure biometric-enabled application to manage multiple passwords for online apps, services, or accounts.

In 2015, Microsoft announced native support for biometrics in the Windows 8.1 and Windows 10 Operating platforms as well as Office 2016. With Microsoft Hello, any user can replace their PIN or password to access their device without any special software downloads by using our finger scanners, SideSwipe, SideTouch and EcoID, which are plug and play compatible with the Microsoft platforms. We have been the preferred partner, in particular at the Microsoft “Ignite your Business” Windows 10 and Office 2016 launch events.

Finally, our ID Director for Windows and  ID Director for SAML offer biometric authentication to SAML enables apps such as Office 365, GoToMeeting, Zoom, SalesForce, Google G-Suite, and many others.

STRATEGIC OUTLOOK

Historically, our largest market has been access control within highly regulated industries such as government, financial services, and healthcare.  During 2019 we became the go-to biometric authentication provider for board of election offices as eight offices deployed our hardware and software to secure internal access to the voter registration database. We will seek to extend this footprint in 2020 and beyond.

Working with our partner TTI, we expect to begin deploying several large-scale identity and access projects in the second quarter of 2020. We are in the process of establishing an African subsidiary, to work closely with TTI who was awarded contracts of $45M and $30M. Under the first contract, we will provide biometric authentication to support the infrastructure of a new e-commerce project developed with the expectation to generate more than one million jobs in Nigeria. The second contract provides for BIO-key hardware and software to be used by a leading African telecommunications company to secure internal access to customer data. Based on information available today, Africa and the surrounding regions are receiving government funding to expand the use of biometric authentication solutions to help establish trustworthy government programs and reduce fraud.  As described above, the COVID-19 pandemic has and may continue to delay the rollout of these programs.

We plan to have a more significant role in the Identity and Access Management (IAM)IAM market which continues to expand. We plan to offer customers a suite of authentication options that complement our biometric solutions. The more well-rounded offerings of authentication options will allow customers to customize their approach to authentication all under one umbrella.

As devices with onboard fingerprint sensors continue to deploy to consumers, we expect that third-party application developers will demand the ability to authenticate users of their respective applications (apps) with the onboard fingerprint biometric. We further believe that authentication will occur on the device itself for potentially low-value, and therefore low-risk, use-transactions and that user authentication for high-value transactions will migrate to the application provider’s authentication server, typically located within their supporting technology infrastructure, or cloud. We have developed our technology to enable, on-device authentication as well as network or cloud-based authentication and believe we may be the only technology vendor capable of providing this flexibility and capability. Our core technology works on major commercially available fingerprint readers, across Windows and Linux, Mac OS X and Android operating systems. This interoperability, coupled with the ability to authenticate users via the device or cloud, is unique in the industry, provides a key differentiator for us, and in our opinion, makes our technology more viable than competing technologies and expands the size of the overall market for our products.

We believe there is potential for significant market growth in the following key areas:

In the near-term, we expect to grow our business within government services and highly-regulated industries in which we have historically had a strong presence.presence including financial services, higher education, and healthcare. We believe that continued heightened security and privacy requirements in these industries, and as colleges and universities continue operating in remote environments, we will generate increased demand for security solutions, including biometrics. In addition, we expect that the integration ofcompatible, yet superior portable biometric user experience offered by our technology intofor Windows 10 users will accelerate the demand for our computer network log-on solutions and fingerprint readers. Through value add-offerings via direct sales, resellers, and strategic partnerships with leading higher education platform providers, we will continue to grow our installed base.

Our two primary sales strategies call for expandedare focused on (i) increased marketing efforts into the IAM market, along with a(ii) dedicated pursuit of large-scale identification projects across the globe.

We also plan on expandingglobe and (iii) growing our new Channel Alliance Programchannel alliance program which now haswe have grown to more than twentyone hundred and fifty participants and startedcontinues to generate modest initialincremental revenues.

RECENT DEVELOPMENTSA second component of our growth strategy is to pursue strategic acquisitions of select businesses and assets in the IAM space. In furtherance of this strategy, we are active in the industry and regularly evaluate businesses that we believe will either provide an entry into new market verticals or be synergistic with our existing operations and in either case, be accretive to earnings. We cannot provide any assurance as to whether we will be able to complete any acquisition and if completed, successfully integrate any business we acquire into our operations.

COVID-19Recent Developments

As discussed under “Risk Factors” above, an outbreak“Risk Factors” given the uncertainty of the duration and severity of a novel strain ofpossible economic recession and the coronavirus, COVID-19, has been recognized as a pandemic by the World Health Organization. This outbreak has severely restricted the level of economic activity around the world. In response to this coronavirus outbreak the governments of many countries, states, citiesconflict between Ukraine and other geographic regions have taken preventative or protective actions,  including imposing restrictionsRussia and their effects on travel andour business operations, sales cycles, personnel, and requiring individuals to limit or forego their time outsidethe geographic markets in which we operate, and numerous other matters of their homes. Given the uncertainty regarding the spreadnational, regional and global scale, including those of this coronavirus,a political, economic, business and competitive nature, the related financial impact cannot be reasonably estimated at this time.

The complications caused by COVID-19 has forced organizations to quickly adapt to acurrent trend of continued remote work from home remote business model. Thisenvironments increases the risk of unauthorized users, phishing attacks, and hackers whomwho are eager to take advantage of the challenges of securing remote workers. We believe that biometrics should continue to play a key role in remote user authentication.

Acquisition of PistolStar

In June, 2020 we acquired PistolStar, a New Hampshire based provider of enterprise-ready identity access management solutions, including multi-factor authentication, identity-as-a-service, single sign-on and self-service password reset to commercial, government and education customers throughout the United States and internationally. PistolStar has over 200 active customer subscribers to their products, which include PortalGuard™ multi-factor authentication (MFA), Nebula™ identity-as-a-service (IDaaS), PortalGuard single sign-on (SSO) and PortalGuard self-service password reset (SSPR). Combining PistolStar’s proprietary authentication software with our biometric solutions creates an integrated turn-key multi-factor solution which we believe is unparalleled in the industry, and will allow us to provide a unified MFA solution that is differentiated in the market by our biometric user experience and who-you-are strong authentication.RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 20202023 AS COMPARED TO MARCH 31, 20192022

Consolidated Results of Operations - –Percent Trend

Revenues and Cost of Goods Sold

Revenues and cost of goods sold

Revenues

For the three months ended March 31, 2020,2023 and 2022, service revenues were $207,523included approximately $292,000 and $317,000 respectively, of recurring maintenance and support revenue, and approximately $240,000 and $79,000, respectively, of non-recurring custom services revenue. Recurring service revenue decreased 13% in the first quarter of 2023 as compared to $241,610 during the three months ended March 31, 2019, a decreasefirst quarter of $34,087, or 14%. The decrease was2022 due largely to the recognition of annual SaaS revenue versus maintenance renewal contracts. Non-recurring custom services increased due to a decline in recurringservices provided by Swivel Secure. As our customer base continues to grow, we expect the service revenue due to the timing of payments received for year-end renewals.increase in future periods.

For the three months ended March 31, 2020,2023, license revenue increased 70% to $235,345 or 183%$2,478,556 from $83,208$1,460,183 during the three months ended March 31, 2019. The increase was due to an increase2022. We increased both the variation and number of customers, including additional revenue from Swivel Secure which generated 63% of its license revenue from a customer in new customers,Central America, one large SaaS renewal, and for continued expansion of biometric ID deployments with several commercial partners, and several healthcare facilities, voter registration offices, and banks.cloud migrations.

Hardware sales decreased $12,495 during the three months ended March 31, 2020 by approximately $147,188, or 65%,2023 to $79,617$72,689 from $226,805$85,184 during the three months ended March 31, 2019.2022. The decrease resulted from an approximate $34,000 reductionwas attributable to the mix of installations and other projects completed in the shipment of locks and an approximate $113,000 reduction in shipments of fingerprint readers due to smaller orders in 2020 as compared to 2019.periods.

Costs of goods soldGoods Sold

For the three months ended March 31, 2020,2023, cost of service decreased approximately $20,000$56,000 or 22%27% to $70,445 as a result of reduced support required$154,801 from $210,913 for ongoing maintenance, compared to the three months ended March 31, 2019 where2022 due to reduced personnel costs are reclassed from researchassociated with the direct support for BIO-key support and development resources to cost of goods sold as needed.maintenance. For the three months ended March 31, 2020,2022, license fees decreasedincreased to $10,456$620,881 from $377,216$73,230 during the three months ended March 31, 2019,2022, due largely due to decrease of approximately $281,000 in amortization of the software rights which is included in cost ofcosts related to the license fees onfor the statement of operations.Swivel Secure product line. For the three months ended March 31, 2020,2023, hardware costs decreased to $43,362$44,592 from $136,005$53,298 during the three months ended March 31, 2019, related2022, corresponding to lower costs associated with lessthe decrease in hardware revenue.

Selling, generalGeneral and administrativeAdministrative

Selling, general and administrative expenses for the three months ended March 31, 20202023 increased less than 1%7% to $1,381,399$1,931,732 as compared to $1,377,033$1,797,998 for the corresponding period in 2019. The2022. This increase was dueattributable largely to travel costs associated with securing contracts in Africa, marketinga full quarter of Swivel Secure sales expenses and shareholder relations.a reserve for doubtful accounts of $50,000. These amountsincreases were offset, in part, by a decreases in Hong Kong business costs, factoring fees, show attendance,marketing personnel and booth costs.expenses, and non-cash compensation.

Research, Development and Engineering

Research, development and engineering

For the three months ended March 31, 2020,2023, research, development and engineering expenses decreased 10%14% to $336,889$690,159 as compared to $374,118$805,266 for the corresponding period in 2019.2022. Included in the decrease were reductions in personnel expensecosts, and reducedoutside services related to the completed development expenses byof our Hong Kong subsidiary.MobileAuth application.

Other income (expense)Income (Expense)

Other income (expense) for the 2020three month period related to theended March 31, 2023 consisted of interest expense which includedof $54,999 on the amortizationsecured note payable and the government loan through the BBVA bank net of a beneficial conversion featureinterest income, change in fair value of $141,991 on the convertible note payable, and amortization of debt discounts and debt issuance costs in approximate amount of $1,551,000 and a loss on foreign currency transactions. Other income (expense) for the extinguishmentthree month period ending March 31, 2022 consisted of a convertible debt financing in an approximate amount of $500,000.interest income.

YEAR ENDED DECEMBER 31, 20192022 AS COMPARED TO YEAR ENDED DECEMBER 31, 20182021

Consolidated Results of Operations

Two Year % trend

Revenues and Costs and other expenses

Revenues

Revenue decreased $1,777,014increased $1,905,769 or 44%37% to $2,267,528$7,020,258 in 20192022 as compared to $4,044,542$5,114,489 in 20182021 due to the factors stated below.

For the years ended December 31, 20192022, and 2018,2021, service revenues included approximately $904,000$1,243,000 and $895,000,$1,100,000, respectively, of recurring maintenance and support revenue, and approximately $21,000$546,000 and $118,000,$173,000, respectively, of non-recurring custom services revenue. Recurring service revenue increased 1%13% from 20182021 to 2019 as2022 due largely to the increased maintenance related to increased license revenue. Non-recurring custom services increased 216% due to increased new customer installations, Swivel service fees, and conversion to the cloud platform. Although inflation has negatively impacted many industries, we moved from a perpetual licensehave continued to subscription based licensing.see our pipeline increase for the cybersecurity protection software and services that we offer. As our customer base continues to grow, we expect the recurringservice revenue to increase in future periods. Non-recurring custom services decreased 82% in 2019 as a result of a completed special software requirement from an existing customer in the first quarter of 2018.

For the years ended December 31, 20192022 and 2018,2021, license revenue decreased 75%increased $2,028,243 or 79% to $442,649. The decrease was$4,584,052, due primarily due to one large international order receivednew customer orders, revenues from Swivel Secure for approximately $1.9 million, and existing recurring revenue contracts. We expect the recurring revenue to continue to grow in the fourth quarter of 2018 in amount of approximately $1,111,000 without a comparable transaction  in the fourth quarter of 2019.2023.

Hardware sales decreased by approximately $392,000,$638,840, or 30%50%, to $899,634$646,486 in 2019 as a result2022 from $1,285,326 in 2021. The decrease was attributable largely to Q1 2021 sales in Nigeria to an international government agency, which did not recur in 2022 due to delayed roll out of fewer large customer deployments, and primarily reduced lock sales.  Fingerprint reader sales decreased approximately $158,000, or 16%, while the biometric locks decreased approximately $235,000, or 84% from 2018.government project.

Costs of goods sold

For the year ended December 31, 2019,2022, cost of service decreasedservices increased approximately 39%5% to $272,318,$722,152, due to a completed special software requirement from an existing customer in the first quarter of 2018.increased costs to support for the PortalGuard deployments.

License costsfees for the year ended December 31, 2019 decreased2022 increased $732,218, or approximately 70%395%, to $916,112. The decrease was attributable primarily$906,417 related to the amortizationincreased license revenue and actual deployments of thelicense fees payable for third-party software rights in the approximate amount of $884,000 in 2019 compared to $2,658,000 in 2018.distributed by Swivel Secure.

Hardware costs for the year ended December 31, 20192022 increased $7,446, or approximately 96%1%, to $1,272,815.$811,001. The increase was attributable primarily toassociated with the write down of lock inventorydecreased hardware sales and parts as a result of the discontinuance of lock sales in the US,hardware mix described above, offset by a decrease in factory coststhe $400,000 reserve on inventory due to reduced lock sales.slow moving inventory purchased for projects in Nigeria. The Company is looking into other markets and opportunities to sell or return the product.

Selling, general and administrative

Selling, general and administrative costs for year ended December 31, 20192022 were $5,036,820$9,364,887 representing a 6% decrease55% increase from over 2018. Decreases2021. The increase included higher sales and marketing expenses incurred by Swivel Secure which we acquired in costs included non-cash share-based compensation2022, increased legal, professional, and other fees and expenses decreasedincurred in connection with the acquisition of Swivel Secure and the AJB Capital loan, bad debt expense marketing personnel and related costs, and travel. These amounts were offset by increases in factoring fees, legal and accounting fees related to capital raising transactions,a reserve on a note receivable, and insurance costs.

Research, development and engineering

For the year ended December 31, 2019,2022, research, development and engineering costs were $1,331,667$3,252,236 representing a 6% decrease38% increase over 2018, as a result of decreased2021. Included in the increase were personnel non-cash share-based compensation expenses, and costs associated with retaining outside services related to the development of our Hong Kong subsidiary. These amounts were offset by increased recruiting costs.MobileAuth application, and wages and benefits for new engineering employees.

ImpairmentReversal of earnout payable – Swivel acquisition