BIO-key International Stays in the Red on Both Windows as Net and Operating Losses Widen Year Over Year

Bottom line

BIO-key International, Inc. closed its latest interim period still operating at a loss on both a three-month and a six-month basis, and the bottom line deteriorated compared with the prior year on the same calendar windows. Net Income (Loss) Attributable to Parent for the six-month year-to-date period was -$781,889 USD, deeper in loss than the -$1,903,941 USD loss recorded in the six months ended June 30, 2025; the year-over-year direction is an increase in the size of the loss, and the transition reads as loss-to-loss. The three-month picture tracks the same shape: Net Income (Loss) Attributable to Parent for the three-month reporting period was -$576,852 USD, against a -$1,167,396 USD loss in the three months ended June 30, 2025, again moving from a smaller loss to a larger loss. Operating Income (Loss) tells the same story at the operating line, where the six-month figure of -$687,119 USD compares against -$1,724,488 USD in the prior-year six months, and the three-month figure of -$529,405 USD compares against -$1,083,850 USD in the prior-year quarter, with both windows showing a wider operating loss year over year. Across all four income-statement snapshots the company remained unprofitable, with the headline loss and the operating loss each larger than the prior-year comparable.

The reporting identity and source scope for these numbers are the issuer's own unaudited interim condensed consolidated financial statements, presented in 10-Q under accession 0001437749-26-027723 for period-ended-2026-06-30; the issuer is BIO KEY INTERNATIONAL INC (BKYI), filed with the SEC under CIK 0001019034. The basis-of-presentation note confirms that the figures are prepared in conformity with U.S. GAAP for interim financial information, reflect all normal and recurring adjustments, and should be read alongside the company's most recent Annual Report on Form referenced in the filing. Management cautions that interim operating results are not necessarily indicative of results for any other interim period or for the full fiscal year, a standard interim-period caveat rather than a company-specific outlook. Share-count references in the filing are stated on a post-reverse-stock-split basis, so any per-share math drawn from these statements inherits that adjusted share count.

On the question of what drove the wider losses, The filing evidence does not attribute this change to any single cause.. The filing evidence does not attribute the change to any single cause, and management's narrative in the source filing does not isolate a revenue, cost, or one-time driver behind the deterioration. There is also no segment-level cut of the loss in the quoted material, so The filing evidence does not disclose segment-level detail for this dimension., and the filing carries no peer or industry benchmark against which the year-over-year slippage can be sized, so The filing evidence contains no peer or industry comparison.. Readers weighing these results against other biometric and identity-management issuers can place them alongside adjacent earnings coverage such as REINSURANCE GROUP OF AMERICA INC Posts Higher Revenue and Net Income in period-ended Filing for context on interim-period reporting norms, but the underlying judgment on BIO-key's interim losses rests solely on the figures above and the absence of any causal disclosure from the issuer.

Financial performance

- For the three-month reporting period, the filing's Net Income (Loss) Attributable to Parent moved from a loss in the prior-year comparative to a narrower loss in the current quarter, with the current figure reported as -$576,852 USD and the prior-year comparative as -$1,167,396 USD. - For the six-month year-to-date window, the same line also shows a loss on both sides, improving from -$1,903,941 USD in the prior year to -$781,889 USD in the current period. - Operating Income (Loss) tells the same story on a pre-financing basis: the quarter compares -$1,083,850 USD (prior) with -$529,405 USD (current), and the half year compares -$1,724,488 USD with -$687,119 USD, with each pair showing a smaller operating loss than the prior comparative.

- Because the source filing is the interim report under 10-Q for period-ended-2026-06-30 (filed under accession 0001437749-26-027723 by the issuer identified by BIO KEY INTERNATIONAL INC / BKYI and 0001019034), these lines are the primary year-over-year and quarter-over-quarter reading frames for the period; the prior comparatives sit in the three months ended June 30, 2025 and the six months ended June 30, 2025, and the current numbers sit in the three months ended June 30, 2026 and the six months ended June 30, 2026.

- Management's own framing inside Item 1A and Item 2 is explicitly a going-concern discussion, and the cited note acknowledges that the company does not have enough cash for twelve months of operations, has historically financed operations through capital-markets access (convertible debt, convertible preferred, common stock, and factoring), and has lowered expenses by cutting marketing and research and development spending. - The same narrative lists cost-mitigation and cash-flow initiatives the company is "working on" but does not attach quantified revenue or margin targets to them, so the filing does not contain a forward earnings or revenue guidance figure; readers should treat the discussion as directional rather than as numeric guidance.

S. dollars at period-end and average rates, with translation gains and losses running through the statement of operations; share counts across all periods, including warrant, option, and convertible inputs, have been adjusted retrospectively for the (omitted)-for-(omitted) reverse stock split that became effective in April of the reporting year. - On the standards side, the recently-issued-pronouncements section under Item 6 notes that management does not expect any other recently issued but not-yet-effective standard, if currently adopted, to have a material effect on the consolidated financial statements, and that the going-concern assessment under the cited Subtopic was performed across conditions and events in the aggregate.

- The fair-value hierarchy references Level 1, Level 2, and Level 3 are present in the filing but do not, in the filing evidence, attach to any P&L line that would alter the operating-loss comparison above. - The filing evidence contains no peer or industry comparison, so any cross-issuer read against, for example, the REINSURANCE GROUP OF AMERICA INC Posts Higher Revenue and Net Income in period-ended-2026-06-30 Filing analysis is not supported by the catalog and is left to the reader.

- The filing evidence does not attribute this change to any single cause. - No segment-level breakout of operating loss between the identity, mobile-banking, and international subsidiaries is disclosed for these lines in the filing evidence, so a product- or geography-level attribution of the narrower loss is not available.

Operating drivers and segments

The filing evidence does not disclose segment-level detail for this dimension.

The reporting package for BIO KEY INTERNATIONAL INC filed under 10-Q for period-ended-2026-06-30 does not break operating performance out by business line, geography, customer type, or product family, so segment-level margin, growth, or mix-shift commentary cannot be supported from the filing evidence. The disclosed consolidated operating result for the three-month reporting period the three months ended June 30, 2026 is an operating loss of -$529,405 USD, versus an operating loss of -$1,083,850 USD for the three months ended June 30, 2025. For the six-month year-to-date period the six months ended June 30, 2026, the reported operating loss is -$687,119 USD, against -$1,724,488 USD for the six months ended June 30, 2025. On both windows the authorized comparison is a loss-to-loss transition with an authorized direction of increase, meaning the numerical gap between the two losses is smaller in the current period than in the prior period, but no other qualitative read on margin trajectory is licensed by the catalog.

The filing evidence does not attribute this change to any single cause. No peer or industry benchmark is provided in the filing for cross-checks against biometric identity or IAM software comparables, so the comparative magnitude of these operating losses cannot be framed against the wider market either. The filing evidence contains no peer or industry comparison.

Management frames the period within the narrative section of the filing as a continuation of BIO-key's identity access management and fingerprint biometric software business serving commercial, government, and education customers in the United States and internationally, without assigning a specific revenue or cost driver to the change between the current operating loss and the prior-year operating loss on either window. The forward-looking discussion points to ongoing evaluation of recently issued disclosure update guidance and to the operational effect of the retrospective share-count adjustments from the reverse stock split described in the basis of presentation, but it does not attribute the quarter-to-quarter or half-year-to-half-year change in operating result to any individual revenue line, customer concentration movement, headcount action, mix shift, or pricing dynamic.

Independent analysis can therefore only confirm the bookended facts already allowed by the catalog — operating loss in the three months ended June 30, 2026, operating loss in the three months ended June 30, 2025, operating loss in the six months ended June 30, 2026, operating loss in the six months ended June 30, 2025 — and the authorized qualitative transition between them, without overlaying a cause story that the filing does not itself provide. Readers looking for cross-issuer context on interim loss windows can compare against the Lizely Finance Earnings Analysis — UFP TECHNOLOGIES INC Interim Filing: Profit-to-Profit Growth on Both Windows insight, which illustrates a different loss-to-profit trajectory, but the present case remains firmly loss-to-loss on both reporting windows until management or subsequent filings surface a granular driver.

Cash flow and capital

- The reported figures for the six-month year-to-date period frame a clear story of cash strain across all three activities, with operating cash outflow persisting and financing absorbing the gap. - Net Cash Provided by (Used in) Operating Activities was -$1,203,750 USD for the six months ended June 30, 2026, compared with -$1,715,324 USD for the six months ended June 30, 2025 — an authorized direction increase between two negative readings, indicating a smaller operating outflow than the prior-year comparative but still a use of cash.

- Net Cash Provided by (Used in) Investing Activities was $0 USD for the six months ended June 30, 2026, compared with -$6,048 USD for the six months ended June 30, 2025 — an authorized direction increase, with the current period landing at zero and the prior comparative showing a use of cash. The line that drives most of the swing is capital spending: Payments to Acquire Property, Plant, and Equipment were $0 USD for the six months ended June 30, 2026 versus $6,048 USD for the six months ended June 30, 2025 — an authorized direction decrease, with the current period at zero and the prior comparative positive.

The pattern reads as capital discipline rather than a reinvestment cycle. - Net Cash Provided by (Used in) Financing Activities was -$30,519 USD for the six months ended June 30, 2026, compared with $3,493,505 USD for the six months ended June 30, 2025 — an authorized direction decrease, with the current period a use of cash and the prior comparative a source. The flip from positive to negative is the only year-over-year direction change that crosses zero in this section.

The filing evidence does not attribute this change to any single cause. - Management's narrative for period-ended-2026-06-30 filed under 10-Q (0001437749-26-027723, CIK 0001019034, ticker BKYI, company BIO KEY INTERNATIONAL INC) explicitly states that as of the date of the report the Company "does not have enough cash for twelve months of operations," cites the history of losses, the negative cash flow from operations, and dependence on additional financing, and raises substantial doubt about the ability to continue as a going concern within one year after issuance.

Cost-mitigation initiatives cited include cutting marketing and research and development spend and refocusing the EMESA subsidiary on BIO-key and PortalGuard solutions that "do not carry the previous license fee," alongside selling Nigeria-bound inventory into other markets to generate additional cash. - The reported balance sheet at the balance sheet date of June 30, 2026 shows Cash and Cash Equivalents, at Carrying Value of $1,379,300 USD, Accounts Receivable after Allowance for Credit Loss of $1,731,509 USD against gross Accounts Receivable of $1,889,136 USD, and Accounts Payable, Current of $411,203 USD — the working-capital spine that any going-concern revival plan would lean on.

- The filing evidence does not attribute this change to any single cause.

Peer and historical context

- The interim filing provides only the company's own filings, so no peer or industry benchmark sits inside the filing evidence for the three-month reporting period or the six-month year-to-date period. The historical comparison is therefore narrowed to the year-over-year comparison the filing itself draws. - Operating Income (Loss) was a loss in the three-month reporting period and a loss in the prior-year comparative for the three-month reporting period, so the authorized direction is an increase inside the same loss band, not a swing into profit.

- Operating Income (Loss) was a loss in the six-month year-to-date period and a loss in the prior-year comparative for the six-month year-to-date period, again an increase inside a loss band rather than a turn to profitability. - Net Income (Loss) Attributable to Parent was a loss in the three-month reporting period and a loss in the prior-year comparative for the three-month reporting period, again an increase inside a loss band. - Net Income (Loss) Attributable to Parent was a loss in the six-month year-to-date period and a loss in the prior-year comparative for the six-month year-to-date period, again an increase inside a loss band.

- Net Cash Provided by (Used in) Operating Activities was negative in the six-month year-to-date period and negative in the prior-year comparative for the six-month year-to-date period, so cash burn was lower rather than higher. - Net Cash Provided by (Used in) Investing Activities was zero in the six-month year-to-date period and negative in the prior-year comparative for the six-month year-to-date period. - Net Cash Provided by (Used in) Financing Activities was negative in the six-month year-to-date period and positive in the prior-year comparative for the six-month year-to-date period, a swing from inflow to outflow.

- Payments to Acquire Property, Plant, and Equipment were zero in the six-month year-to-date period and positive in the prior-year comparative for the six-month year-to-date period, which is consistent with the investing-activities shift above. - The product-mix comment in the management commentary points to the EMESA subsidiary selling BIO-key and PortalGuard solutions without the previous license fee, and the Nigeria-related inventory being redirected into other markets, which lines up with the smaller cash outflow from operating activities and the absence of capital spending.

- The going-concern paragraph in the source notes that the accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern, which is a structural overlay on the year-over-year comparison rather than a peer-shaped data point. - For the broad historical frame, a separate article documents a positive interim pattern at REINSURANCE GROUP OF AMERICA INC Posts Higher Revenue and Net Income in Filing, which captures a different industry but illustrates why the smaller-loss outcome here is easier to interpret alongside other interim filings.

- The valuation-hierarchy footnotes covering the cited note for the Boumarang investment span the top of the hierarchy through the lower fair-value tier built on unobservable inputs, and the fair-value language itself does not feed a peer comparison. - The filing evidence does not attribute this change to any single cause. - The filing evidence contains no peer or industry comparison.

- The filing evidence does not disclose segment-level detail for this dimension.

Scenario analysis

This Bio-Key International filing presents a narrow but reasonably clear set of conditions for scenario thinking, because the income statement is uniformly negative across both reporting windows. The three-month net loss for the current quarter, captured by -$576,852, sits alongside a larger six-month year-to-date loss recorded in -$781,889, and both compare against losses, not profits, in the prior year. The quarter-over-quarter authorized direction for Net Income (Loss) Attributable to Parent shows a transition loss to loss rather than any profit-to-profit shift, and the half-year comparison carries the same loss-to-loss transition, which is consistent with the picture of an unprofitable interim period rather than a sudden collapse.

For a reader thinking through scenarios, the most informative contrast sits in the cash flow line. Operating cash flow moved from negative to negative on a smaller outflow basis across the six months ended June 30, 2026 versus the six months ended June 30, 2025, which gives a marginally improved cash burn profile even as the income statement remains in loss. Financing cash flow shifted from positive in the prior year to a use of cash in the current period, while investing cash flow went from a prior-year use to roughly flat. Payments to acquire property, plant, and equipment moved from a positive prior-year amount to zero in the current period, suggesting limited near-term capital spending. The investment in privately held Boumarang, Inc., held at fair value under the Level 3 hierarchy and explicitly flagged by management as carrying significant uncertainty due to the lack of a trading market and unobservable inputs, sits at the centre of any upside or downside swing on the asset side.

Upside scenario thinking rests on the Boumarang Shares carrying value forward without impairment, continued small-quantity sales of existing product lines, and operating cash burn staying contained relative to the prior year. Downside scenario thinking centres on possible fair-value write-downs of the Level 3 asset given its early-stage, pre-revenue profile, and on the persistence of net losses across both the three months ended June 30, 2026 and the six months ended June 30, 2026 windows. The operating loss transition from prior year to current period is loss to loss across both windows, so any scenario must work within that continuing-loss envelope rather than a return to profitability. The filing evidence does not attribute the change in net loss to any single cause. The filing evidence does not attribute this change to any single cause.

Risks and what to watch

- Reported facts (from this filing's financial statements): The company closed both reporting windows still in the red. Net Income (Loss) Attributable to Parent for the three-month period was -$576,852, compared with -$1,167,396 for the prior-year quarter, and for the six-month year-to-date period the loss was -$781,889, compared with -$1,903,941 for the prior-year six-month window. On both windows the bottom line remained a loss; against the prior year, the six-month loss widened while the three-month loss narrowed, leaving the direction of overall profitability unchanged across the period.

- Management explanations (from the narrative portion of the filing): The most explicit forward-looking risk management surfaces in the fair-value discussion of the Boumarang Shares, classified as a Level 3 asset and valued using a combination of recent third-party sales and a discounted cash flow analysis that layered in discounts for lack of control and lack of marketability, a small-company risk premium, and a company-specific risk premium tied to Boumarang being an early-stage, pre-revenue company. Management flags that the fair value of the Boumarang Shares may fluctuate from period to period, may differ significantly from values that would have been used had a ready market existed, and may differ materially from amounts the company ultimately realizes. ASC (omitted) is cited as requiring annual impairment testing for equity securities without readily determinable fair values, framing that holding as a recurring valuation risk rather than a settled position. The leases footnote adds a second operational exposure: offices across New Jersey, Minnesota, New Hampshire, Madrid, and Hong-Kong, with the China space paid monthly as used and without a formal agreement, leaving contractual visibility limited for that location.

- Analyst inference (from the filing's own disclosed directional language): The authorized cash-flow comparisons for the six-month year-to-date period show Net Cash Provided by (Used in) Operating Activities improved (still negative on both sides), Net Cash Provided by (Used in) Investing Activities flipped from negative to zero, and Net Cash Provided by (Used in) Financing Activities moved in the opposite direction, decreasing from a positive prior-year figure to a negative current figure. Payments to Acquire Property, Plant, and Equipment for the six-month window fell to zero from a positive prior-year amount. Read together with the still-negative operating result, the inferred picture is one in which the company's loss-making operations and a tighter financing footprint coexist with a pause in capital spending — a combination that can preserve liquidity in the near term while leaving the underlying earnings gap unaddressed. The filing evidence does not attribute this change to any single cause.

- Counter-evidence: The most prominent offsetting signal is the third-party valuation framework supporting the Boumarang holding, which explicitly references recent arm's-length sales and a discounted cash flow model rather than purely unobservable inputs, even though the classification under Level 3 is driven by the absence of an active quoted market. Management's standard litigation disclosure — that the company may be involved in claims arising in the ordinary course of business — does not, in itself, point to any active proceeding that would materially alter the risk picture at this filing.

- Unknowns: Several dimensions remain undisclosed within the filing evidence. No segment-level breakout is provided for revenue, margin, or loss contribution. The filing evidence does not disclose segment-level detail for this dimension. No peer or industry comparison is included. The filing evidence contains no peer or industry comparison. The filing also does not quantify the Boumarang carrying amount, the specific unobservable inputs feeding the valuation, or the lease termination dates that were redacted from the narrative, so the reader cannot independently size those exposures. The drivers behind the quarter-over-quarter and year-over-year shifts in net loss are likewise not attributed. The filing evidence does not attribute this change to any single cause.

- Metrics to watch next period: Readers tracking this name should focus on whether the operating cash burn narrows further on a six-month basis, whether the financing outflow persists or reverses, whether the Boumarang holding remains at a Level 3 classification with any change in carrying value ahead of the next impairment review, whether the China lease situation is formalized, and whether the quarterly net loss continues to compress against the prior-year quarter, as the trailing and forward signals on profitability, valuation, and liquidity will move together.