Bio Key International (BKYI) risk factors, FY2024 10-K

BUSINESS AND FINANCIAL RISKS

1. 01We have historically not generated significant revenue and have sustained substantial operating losses
2. 02We may need to obtain additional financing to execute our business plan, which may not be available. If we are unable to raise additional capital or generate significant revenue, we may not be able to continue operations
3. 03Our failure to timely our annual report on Form 10-K for the year ended December 31, 2023 and our quarterly report on Form 10-Q for the period ended March 31, 2024 has made us ineligible to use a Form S-3 to register the offer and sale of securities, which could adversely affect our ability to raise future capital
4. 04Our biometric technology has yet to gain widespread market acceptance and we do not know how large of a market will develop for our technology
5. 05competition from non-biometric technologies that provide more affordable, but less robust, authentication (such as tokens and smart cards)
6. 06Biometric technology is a relatively new approach to Internet security, which must be accepted in order for our WEB-key solution to generate significant revenue
7. 07The market for our solutions is still developing and if the biometrics industry adopts standards or a platform different from our standards or platform, our competitive position would be negatively affected
8. 08Our software products may contain defects which will make it more difficult for us to establish and maintain customers
9. 09In order to generate revenue from our biometric products, we are dependent upon independent original equipment manufacturers, system integrators and application developers, which we do not control. As a result, it may be more difficult to generate sales
10. 10companies which distribute goods, services or software applications over the Internet
11. 11We face intense competition and may not have the financial and human resources necessary to keep up with rapid technological changes, which may result in our technology becoming obsolete
12. 12Although we have made significant sales of our products throughout Asia and Africa in prior years, we have not been able to consistently enforce our contract rights and collect all receivables which has resulted in material write-offs
13. 13We depend on key employees and members of our management team, including our Chairman of the Board and Chief Executive Officer, Chief Financial Officer, and our Chief Legal Officer, in order to achieve our goals. We cannot assure you that we will be able to retain or attract such persons
14. 14We cannot assure you that the intellectual property protection for our core technology provides a sustainable competitive advantage or barrier to entry against our competitors
15. 15We may be subject to claims with respect to the infringement of intellectual property rights of others, which could result in substantial costs and diversion of our financial and management resources
16. 16If we are unable to effectively protect our intellectual property rights on a worldwide basis, we may not be successful in the international expansion of our business
17. 17We may not achieve profitability if we are unable to maintain, improve our offerings
18. 18We are subject to risks and uncertainties associated with the continued growth of our international operations, which may harm our business
19. 19Our business could be negatively impacted by security threats, including cybersecurity threats, ransomware, and other disruptions
20. 20Our failure to comply with applicable privacy, data protection and information security laws or related contractual obligations could subject us to significant liability and negatively impact our financial position and results of operation
21. 21Our business could be adversely affected by trade tariffs or other trade barriers
22. 22Scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks
23. 23Legal, regulatory or market measures to address climate change may materially and adversely affect our future results of operations and financial condition
24. 24The war in Ukraine and the international community’s response have created substantial political and economic disruption, uncertainty, and risk
25. 25There is a scarcity of and competition for acquisition opportunities

Risks related to acquisition financing

1. 26We may experience difficulties in integrating the operations, personnel and assets of any business we acquire which may disrupt our business, dilute stockholder value, and adversely affect our operating results
2. 27To the extent we make any material acquisitions, our earnings may be adversely affected by non-cash charges relating to the amortization of intangible assets

RISKS RELATED TO OUR COMMON STOCK

1. 28We have issued a substantial number of warrants exercisable into shares of our common stock which could result in substantial dilution to the ownership interests of our existing stockholders
2. 29An active trading market for our common stock may not be sustained
3. 30If we fail to comply with the continued listing requirements of The Nasdaq Stock Market, our Common Stock may be delisted and the price of our Common Stock and our ability to access the capital markets could be negatively impacted
4. 31We may need to raise additional funds in the future through issuances of securities and such additional funding may be dilutive to stockholders or impose operational restrictions
5. 32Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase our shares of common stock
6. 33Provisions of our certificate of incorporation, bylaws and Delaware law may make a contested takeover of our Company more difficult
7. 34The trading price of our common stock may be volatile