Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - BIO KEY INTERNATIONAL INC | ex_195344.htm |
| EX-99.1 - EXHIBIT 99.1 - BIO KEY INTERNATIONAL INC | ex_195343.htm |
| EX-23.1 - EXHIBIT 23.1 - BIO KEY INTERNATIONAL INC | ex_195334.htm |
| 8-K/A - FORM 8-K/A - BIO KEY INTERNATIONAL INC | bkyi20200727_8ka.htm |
Exhibit 99.3
The following proforma financial statements of BIO-key International, Inc. are included herein at the indicated page numbers:
|
Unaudited Pro Forma Condensed Combined Statement of Operations Year Ended December 31, 2019 |
F-2 |
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Unaudited Pro Forma Condensed Combined Statement of Operations Three Months Ended March 31, 2020 |
F-3 |
| Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2020 |
F-4 |
| Notes to the unaudited pro forma condensed combined financial statements |
F-5 |
|
BIO-key International, Inc. and Subsidiaries |
|
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS |
|
Year ended December 31, 2019 |
| Historical Statements | |||||||||||||||||
|
BIO-key International, Inc. |
PistolStar, Inc. |
Proforma adjustments giving effect to the PistolStar, Inc. Acquisition |
Proforma adjustments after giving effect to the Acquisition |
||||||||||||||
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Revenues |
|||||||||||||||||
|
Services |
$ | 925,245 | $ | - | $ | - | $ | 925,245 | |||||||||
|
License fees |
442,649 | 1,584,487 | - | 2,027,136 | |||||||||||||
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Hardware |
899,634 | - | - | 899,634 | |||||||||||||
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Total revenues |
2,267,528 | 1,584,487 | 3,852,015 | ||||||||||||||
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Costs and other expenses |
|||||||||||||||||
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Cost of services |
272,318 | - | - | 272,318 | |||||||||||||
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Cost of license fees |
916,112 | 1,054,950 | 314,895 |
(A) |
2,285,957 | ||||||||||||
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Cost of hardware |
1,272,815 | - | - | 1,272,815 | |||||||||||||
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Total costs and other expenses |
2,461,245 | 1,054,950 | 314,895 | 3,831,090 | |||||||||||||
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Gross Profit (Loss) |
(193,717 | ) | 529,537 | (314,895 | ) | 20,925 | |||||||||||
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Operating expenses |
|||||||||||||||||
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Selling, general and administrative |
5,036,820 | 454,334 | - | 5,491,154 | |||||||||||||
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Research, development and engineering |
1,331,667 | - | - | 1,331,667 | |||||||||||||
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Total operating expenses before impairment |
6,368,487 | 454,334 | - | 6,822,821 | |||||||||||||
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Impairment of resalable software license rights |
(6,957,516 | ) | - | - | (6,957,516 | ) | |||||||||||
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Operating income (loss) |
(13,519,720 | ) | 75,203 | (314,895 | ) | (13,759,412 | ) | ||||||||||
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Other income (expense) |
|||||||||||||||||
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Interest income |
154 | 2,628 | - | 2,782 | |||||||||||||
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Interest expense |
(1,069,134 | ) | - | (975,222 | ) |
(B) |
(2,044,356 | ) | |||||||||
| State taxes | - | (6,699 | ) | - | (6,699 | ) | |||||||||||
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Total other income (expense) |
(1,068,980 | ) | (4,071 | ) | (975,222 | ) | (2,048,273 | ) | |||||||||
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Net income (loss) available to common stockholders |
(14,588,700 | ) | 71,132 | (1,290,117 | ) | (15,807,685 | ) | ||||||||||
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Basic and Diluted Loss per Common Share |
$ | (1.03 | ) | $ | - | $ | - | $ | (1.11 | ) | |||||||
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Weighted Average Shares Outstanding: |
|||||||||||||||||
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Basic and Diluted |
14,223,685 | - | - | 14,223,685 | |||||||||||||
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(A) Represents amortization of intangible assets from PistolStar acquisition for the year |
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(B) Represents amortization of original issuance discount and fees associated with the convertible note and interest expense on the note payable - seller. |
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BIO-key International, Inc. and Subsidiaries |
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS |
| Three months ended March 31, 2020 |
|
Historical Statements |
|||||||||||||||||
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BIO-key International, Inc. |
PistolStar, Inc. |
Proforma adjustments giving effect to the PistolStar, Inc. Acquisition |
Proforma adjustments after giving effect to the Acquisition |
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Revenues |
|||||||||||||||||
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Services |
$ | 207,523 | $ | - | $ | - | $ | 207,523 | |||||||||
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License fees |
235,345 | 405,919 | - | 641,264 | |||||||||||||
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Hardware |
79,617 | - | - | 79,617 | |||||||||||||
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Total revenues |
522,485 | 405,919 | 928,404 | ||||||||||||||
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Costs and other expenses |
|||||||||||||||||
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Cost of services |
70,445 | - | - | 70,445 | |||||||||||||
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Cost of license fees |
10,456 | 299,983 | 79,598 |
(A) |
390,037 | ||||||||||||
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Cost of hardware |
43,362 | - | - | 43,362 | |||||||||||||
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Total costs and other expenses |
124,263 | 299,983 | 79,598 | 503,844 | |||||||||||||
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Gross Profit (Loss) |
398,222 | 105,936 | (79,598 |
) |
424,560 | ||||||||||||
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Operating expenses |
|||||||||||||||||
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Selling, general and administrative |
1,381,399 | 87,386 | - | 1,468,785 | |||||||||||||
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Research, development and engineering |
336,889 | - | - | 336,889 | |||||||||||||
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Total operating expenses |
1,718,288 | 87,386 | - | 1,805,674 | |||||||||||||
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Operating income (loss) |
(1,320,066 |
) |
18,550 | (79,598 |
) |
(1,381,114 |
) |
||||||||||
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Other income (expense) |
|||||||||||||||||
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Interest income |
1 | 590 | - | 591 | |||||||||||||
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Interest expense |
(1,551,141 |
) |
- | (246,458 |
) |
(B) |
(1,797,599 |
) |
|||||||||
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State taxes |
(1,733 |
) |
(1,733 |
) |
|||||||||||||
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Loss on extinguishment of debt |
(499,076 |
) |
- | - | (499,076 |
) |
|||||||||||
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Total other income (expense) |
(2,050,216 |
) |
(1,143 |
) |
(246,458 |
) |
(2,297,817 |
) |
|||||||||
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Net income (loss) |
(3,370,282 |
) |
17,407 | (326,056 |
) |
(3,678,931 |
) |
||||||||||
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Deemed dividends related to down-round features |
(112,686 |
) |
- | - | (112,686 |
) |
|||||||||||
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Net income (loss) available to common stockholders |
(3,482,968 |
) |
17,407 | (326,056 |
) |
(3,791,617 |
) |
||||||||||
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Basic and Diluted Loss per Common Share |
$ | (0.23 |
) |
$ | - | $ | - | $ | (0.25 |
) |
|||||||
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Weighted Average Shares Outstanding: |
|||||||||||||||||
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Basic and Diluted |
15,165,522 | - | - | 15,165,522 | |||||||||||||
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(A) Represents amortization of intangible assets from PistolStar acquisition for the quarter |
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(B) Represents amortization of original issuance discount, warrant discount, and fees associated with the convertible note. |
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BIO-key International, Inc. and Subsidiaries |
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET |
|
March 31, 2020 |
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Historical Statements |
|||||||||||||||||
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BIO-key International Inc. |
PistolStar, Inc. |
Proforma adjustments giving effect to the PistolStar, Inc. Acquisition |
Proforma adjustments after giving effect to the Acquisition |
||||||||||||||
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ASSETS |
|||||||||||||||||
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Cash and cash equivalents |
$ | 661,937 | $ | 513,214 | $ | (520,000 |
) |
(A) |
$ | 655,151 | |||||||
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Accounts receivable, net |
120,293 | 196,138 | - | 316,431 | |||||||||||||
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Due from factor |
130,670 | - | - | 130,670 | |||||||||||||
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Inventory |
397,711 | - | - | 397,711 | |||||||||||||
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Prepaid expenses and other |
166,572 | 10,383 | - | 176,955 | |||||||||||||
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Investment – non-marketable security |
512,821 | - | - | 512,821 | |||||||||||||
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Total current assets |
1,990,004 | 719,735 | (520,000 |
) |
2,189,739 | ||||||||||||
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Resalable software license rights |
68,774 | - | 68,774 | ||||||||||||||
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Equipment and leasehold improvements, net |
75,597 | 41,785 | - | 117,382 | |||||||||||||
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Capitalized contract costs, net |
208,499 | - | - | 208,499 | |||||||||||||
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Deposits and other assets |
8,712 | 194,326 | (193,960 | ) | 9,078 | ||||||||||||
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Operating lease right-of-use assets |
520,470 | - | - | 520,470 | |||||||||||||
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Intangible assets, net |
147,222 | - | 3,148,945 |
(B) |
3,296,167 | ||||||||||||
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Total non-current assets |
1,029,274 | 236,111 | 2,954,985 | 4,220,370 | |||||||||||||
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TOTAL ASSETS |
$ | 3,019,278 | $ | 955,846 | $ | 2,434,985 | $ | 6,410,109 | |||||||||
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LIABILITIES |
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Accounts payable |
$ | 616,985 | $ | 1,452 | $ | 710,334 |
(C) |
$ | 1,328,721 | ||||||||
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Due to related parties |
66,466 | - | - | 66,466 | |||||||||||||
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Accrued liabilities |
515,108 | 2,070 | - | 517,178 | |||||||||||||
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Note payable - seller |
- | - | 500,000 |
(D) |
500,000 | ||||||||||||
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Convertible notes payable, net of debt discount and debt issuance costs |
2,301,956 | - | 856,028 |
(E) |
3,157,984 | ||||||||||||
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Deferred revenue |
413,345 | 807,225 | - | 1,220,570 | |||||||||||||
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Operating lease liabilities, current portion |
162,886 | - | 162,886 | ||||||||||||||
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Total current liabilities |
4,076,746 | 810,747 | 2,066,362 | 6,953,855 | |||||||||||||
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Operating lease liabilities, net of current portion |
353,553 | - | - | 353,553 | |||||||||||||
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Total non-current liabilities |
353,553 | 353,553 | |||||||||||||||
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TOTAL LIABILITIES |
4,430,299 | 810,747 | 2,066,362 | 7,307,408 | |||||||||||||
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STOCKHOLDERS’ EQUITY (DEFICIT) |
|||||||||||||||||
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Common stock |
1,839 | 1,500 | (1,486 |
) |
(F) |
1,853 | |||||||||||
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Additional paid-in capital |
91,793,124 | - | 513,708 |
(G) |
92,306,832 | ||||||||||||
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Retained Earnings (Accumulated deficit) |
(93,205,984 | ) | 143,599 | (143,599 |
) |
(93,205,984 | ) | ||||||||||
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TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) |
(1,411,021 |
) |
145,099 | 368,623 | (897,299 |
) |
|||||||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
$ | 3,019,278 | $ | 955,846 | $ | 2,434,985 | $ | 6,410,109 | |||||||||
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(A) Represents the cash portion of the purchase price for PistolStar Inc. of $2,000,000 and funds received from convertible note payable of $1,575,000 less fees paid in cash related to the convertible note payable of $95,000. |
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(B) Represents the difference between the purchase price and the book value of the assets of PistolStar, Inc. |
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(C) Represents fees paid to a placement agent, of 7% of the convertible note payable in the amount of $110,250, plus $600,084 of working capital adjustments. |
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(D) Represents the portion of the purchase price for PistolStar Inc. paid by issuance of a promissory note. |
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(E) Represents convertible note payable principal of $1,811,250, net of unamortized original issuance discount of $236,250, unamortized warrant discount of $511,402, and unamortized deferred debt costs of $207,570. |
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(F) Represents capital attributed to shares issued for the due diligence fee of $100,000 calculated per the agreement at $0.7322 per share, the closing price of the Company's common stock on June 26, 2020, as reported on Nasdaq less the common stock value of PistolStar, Inc. |
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(G) Represents the value of the $100,000 due diligence fee issued in common stock less the par value of the stock of $14 plus the $511,402 warrant discount, less the equity portion (32%) of the commitment fee, convertible note underwriting fee, and other expenses of $305,250. |
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed combined financial statements of BIO-key International, Inc. (“BIO-key”) have been prepared to give effect to the transaction where, on June 30, 2020, BIO-key acquired all of the outstanding shares of common stock of PistolStar, Inc. (“PistolStar”).
The accompanying unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019 and for the three months ended March 31, 2020 combine the historical consolidated statements of operations of BIO-key and the historical statements of operations from PistolStar to give effect to the transaction as if it occurred on January 1, 2019. The unaudited pro forma condensed combined balance sheet as of March 31, 2020 combines the historical consolidated balance sheet of BIO-key and the historical balance sheet of PistolStar to give effect to the transaction as if it had occurred on March 31, 2020.
Pro forma adjustments have been limited to only those adjustments that are: directly attributable to the transaction; factually supportable; and in the case of pro forma statement of operations adjustments, expected to have a continuing impact on the combined financial results.
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
The unaudited pro forma condensed combined financial statements are provided for informational purposes only and are not necessarily indicative of the results that would have occurred if the transaction had occurred on the first day of each period presented. The unaudited pro forma condensed combined financial statements should not be construed as being representative of future operating results or financial position of the combined company and should be read in conjunction with the:
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1. |
Accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements; |
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2. |
BIO-key’s historical audited consolidated financial statements and notes thereto included in BIO-key’s annual report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on May 14, 2020 and included in this prospectus; |
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3. |
BIO-key’s unaudited condensed consolidated financial statements and notes thereto included in BIO-key’s quarterly report on Form 10-Q for the quarter ended March 31, 2020, as filed with the Securities and Exchange Commission on June 8, 2020 and included in this prospectus; and |
|
4. |
Audited consolidated financial statements and notes thereto of PistolStar, Inc. for the year ended December 31, 2019 included in this prospectus; |
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5. |
The description of the acquisition of PistolStar included herein in the section captioned “BUSINESS”. |
NOTE 2 – ACCOUNTING POLICIES
The accounting policies used in the preparation of the unaudited pro forma condensed combined financial statements are consistent with those described in the unaudited interim period consolidated financial statements of BIO-key for the three months ended March 31, 2020 and the audited consolidated financial statements of BIO-key for the year ended December 31, 2019.
NOTE 3 –PRESENTATION ADJUSTMENTS
Reclassifications were made to PistolStar’ financial statements to conform them to BIO-key’s presentation.
NOTE 4 – FAIR VALUE OF CONSIDERATION TRANSFERRED
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Estimated purchase price |
||||
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Cash |
$ | 2,000,000 | ||
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Issuance of note payable |
500,000 | |||
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Total estimated purchase price |
$ | 2,500,000 | ||
NOTE 5 – ASSETS ACQUIRED AND LIABILITIES ASSUMED
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BIO-key has performed a preliminary valuation analysis of the fair market value of PistolStar’s assets and liabilities. Preliminary purchase price allocation as of the acquisition date of June 30, 2020 is as follows: |
||||
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Current assets |
$ | 296,080 | ||
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Equipment and leasehold improvements |
10,450 | |||
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Intangible assets |
3,148,945 | |||
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Total assets acquired |
3,455,475 | |||
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Current liabilities |
955,475 | |||
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Total liabilities assumed |
955,475 | |||
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Net assets acquired |
$ | 2,500,000 | ||
NOTE 6 – PRO FORMA ADJUSTMENTS (STATEMENTS OF OPERATIONS)
See Unaudited Pro Forma Condensed Combined Statements of Operations on F-2 and F-3
NOTE 7 – PRO FORMA ADJUSTMENTS (BALANCE SHEETS)
See Unaudited Pro Forma Condensed Combined Balance Sheet on F-4