4 unchanged sentences
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
−Removed: Based on the evaluation of our disclosure controls and procedures as of December 31, 2023, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were ineffective.
+Added: Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Management ’ s Annual Report on Internal Control Over Financial Reporting
8 unchanged sentences
Under the supervision and with the participation of our management, including our CEO and CFO, we have conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024, based upon the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of December 31, 2023 as a result of certain material weaknesses discovered during the course of their review.
−Removed: In particular, in connection with the audit of our financial statements as of and for the year ended December 31, 2023, our management identified a lack of control over properly assessing revenue, allowances for accounts receivable and certain reserves for inventory.
−Removed: This resulted in certain errors in the manner in which we recognized revenue generated by our European subsidiary, Swivel Secure Europe, SA, in the first quarter of 2023.
−Removed: In addition, certain allowances for accounts receivable and certain reserves for inventory were understated.
−Removed: We are currently working to implement appropriate corrective actions to remediate the material weakness to strengthen our internal controls over the recording of revenues.
−Removed: Each of the material weaknesses noted will only be deemed to have been remediated after the new controls and procedures have been in place for a sufficient period and management has concluded through appropriate testing that the controls are operating effectively.
−Removed: However, we cannot assure you that these or other measures will fully remediate the material weaknesses in a timely manner.
+Added: Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2024.
As we are a smaller reporting company, this annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.
1 unchanged sentence
Changes in Internal Control Over Financial Reporting
−Removed: Going forward, we will change our internal control over financial reporting for the year ended December 31, 2023 to thoroughly access all accounts for potential adjustments required for proper presentation of the value of the accounts.
+Added: During the fourth quarter of 2024, we implemented a number of changes to our internal control over financial reporting.
+Added: We have adopted policies and procedures designed to enhance our review and procedures to thoroughly assess all accounts, including receivables, revenue, and inventory, for potential adjustments required for proper presentation of the value of the accounts.
+Added: These changes consisted of allocating additional human resources to our finance and accounting functions, implementing additional testing and redundancy, and restructuring financial management personnel at Swivel Secure, including the review and approval of all accounting decisions at both the subsidiary and parent levels.
OTHER INFORMATION
+Added: During the three months ended December 31, 2024, none of our directors or “officers” (as defined in Rule 16a - 1 (f) under the Securities Exchange Act of 1934, as amended) adopted or terminated a “Rule 10b5 - 1 trading arrangement” or “non-Rule 10b5 - 1 trading arrangement,” as each term is defined in Item 408 of Securities and Exchange Commission Regulation S-K.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
86 unchanged sentences
Audit Committe e
−Removed: Our audit committee is comprised of Robert J.
−Removed: Michel (Chair), Cameron Williams, and Emmanuel Alia each of whom meets the independence standards for purposes of serving on an audit committee established by NASDAQ and under the Exchange Act.
+Added: Our audit committee is comprised of Cameron Williams (Chair), Robert J.
+Added: Michel, and Emmanuel Alia each of whom meets the independence standards for purposes of serving on an audit committee established by NASDAQ and under the Exchange Act.
Our audit committee (i) assists the board of directors in its oversight of the integrity of our financial statements, compliance with legal and regulatory requirements, and corporate policies and controls, (ii) has the sole authority to retain and terminate our independent registered public accounting firm, approve all auditing services and related fees and the terms thereof, and pre-approve any non-audit services to be rendered by our independent registered public accounting firm, and (iii) is responsible for confirming the independence and objectivity of our independent registered public accounting firm.
21 unchanged sentences
Any person may obtain a copy of our Code of Ethics free of charge by sending a written request for such to the attention of the Chief Financial Officer of the Company, 101 Crawfords Corner Road, Suite 4116, Holmdel, NJ 07733.
+Added: Insider Trading Policy
+Added: We have adopted an Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees, among other insiders.
+Added: We believe our Insider Trading Policy is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and the Nasdaq Listing Rules.
+Added: Our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.
Term of Office
1 unchanged sentence
Our officers are appointed by the Board and hold office until the annual meeting of the Board next succeeding his or her election, and until his or her successor shall have been duly elected and qualified, subject to earlier termination by his or her death, resignation or removal.
−Removed: Delinquent Section 16(a) Reports
−Removed: Reports of all transactions in our common stock by officers, directors and ten percent (10%) stockholders are required to be filed with the SEC pursuant to Section 16(a) of the Exchange Act.
−Removed: Based solely on our review of copies of the reports received, or representations of such reporting persons, we believe that during the year ended December 31, 2023, all Section 16(a) filing requirements applicable to our officers, directors and ten percent (10%) stockholders were satisfied in a timely fashion,
EXECUTIVE COMPENSATION
17 unchanged sentences
In setting cash compensation levels, we favor a balance in which base salaries are generally targeted at slightly below the peer average and a bonus opportunity that is targeted at slightly above the average.
−Removed: Effective January 16, 2023, we decreased the base compensation of Mr.
+Added: Effective July 1, 2024, we restored the 2023 based compensation of Mr.
DePasquale, Mr.
Sullivan and Ms.
−Removed: Welch as part of the revised budget for the year.
−Removed: Effective March 1, 2022, we increased the base compensation of Mr.
+Added: Effective January 16, 2023, we decreased the base compensation of Mr.
DePasquale, Mr.
Sullivan and Ms.
+Added: Welch as part of the revised budget for the year.
Performance-based bonuses have historically been based upon the achievement of certain revenue milestones established by the compensation committee.
1 unchanged sentence
We also include an equity component as part of our compensation package because we believe that equity-based compensation aligns the long-term interests of our named executive officers with those of stockholders.
−Removed: In 2022 and 2023, we issued restricted stock awards to each of our named executive officers in recognition of the revenue growth of the Company in 2021 and successful integration of Portal Guard, and revenue growth of the Company in 2022 and successful integration of Swivel Secure, respectively.
+Added: In 2024 and 2023, we issued restricted stock awards to each of our named executive officers in recognition of the revenue growth of the Company in 2023 and revenue growth of the Company in 2022 and successful integration of Swivel Secure, respectively.
These cash and equity compensation components of pay are supplemented by various benefit plans that provide health, life, accident, disability and severance benefits, most of which are the same as the benefits provided to all of our US based employees.
30 unchanged sentences
Calculated based on the closing market price of the Company’s common stock on December 31, 2024 of $1.71 per share.
+Added: 24,000 shares vest in three equal annual installments commencing July 31, 2025.
+Added: 1,945 shares vest in two equal annual installments commencing August 29, 2025.
+Added: 22,500 shares vest in three equal annual installments commencing July 31, 2025.
+Added: 1,667 shares vest in two equal annual installments commencing August 29, 2025.
+Added: 22,500 shares vest in three equal annual installments commencing July 31, 2025.
+Added: 1,667 shares vest in two equal annual installments commencing August 29, 2025
Narrative Disclosure to Outstanding Equity Awards at Fiscal Year End Table
22 unchanged sentences
Options issued to executive officers outside of the Plans contain change in control provisions substantially similar to those contained in the Plans.
+Added: Our 2023 Stock Incentive Plan (the “2023 Plan”) provides for the Board or the Compensation Committee, as applicable, to accelerate the of vesting of unvested options and termination of any restriction or forfeiture provisions applicable to restricted stock awards upon a “Change in Control” of the Company.
+Added: A Change in Control is defined in the 2023 Plan to include (i) a sale or transfer of substantially all of the Company’s assets;
+Added: (ii) a merger or consolidation to which the Company is a party and after which the prior stockholders of the Company hold less than 50% of the combined voting power of the surviving corporation’s outstanding securities;
+Added: (iii) the incumbent directors cease to constitute at least a majority of the Board of Directors;
+Added: (iv) any person becomes directly or indirectly the beneficial owner of 40% of the combined voting power of our outstanding securities;
+Added: or (v) a change in control of the Company which would otherwise be reportable under Section 13 or 15(d) of the Exchange Act.
Our employment agreement with Mr.
4 unchanged sentences
DePasquale his base salary and benefits earned but unpaid through the date of termination, and any prorated bonus earned during the then current bonus year, plus two times his then current base salary.
+Added: Action to Recover Erroneously Awarded Compensation
+Added: In preparing our year-end 2023 consolidated financial statements, we determined that certain errors were made which required the restatement of our previously issued financial statements for the interim periods occurring within the year ended December 31, 2023.
+Added: These errors resulted in the overstatement of accounts receivable and revenue, understatements of certain allowances for accounts receivable and certain reserves for inventory, and an understatement of net loss and total stockholders’ equity.
+Added: This restatement is reflected in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on June 5, 2024 and amended on June 20, 2024.
+Added: Our executive officers did not receive any incentive-based compensation in 2023 that was subject to recovery.
+Added: Accordingly, no recovery was required or sought from any of our executive officers under our Clawback Policy, which is filed as Exhibit 97.1 to this Annual Report on Form 10-K.
+Added: Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
+Added: During 2024, we did not grant any stock options as part of our equity compensation program.
+Added: If stock options are granted in the future, we intend to not grant stock options or similar awards in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock, such as a significant positive or negative earnings announcement, and not time the public release of such information based on stock option grant dates.
DIRECTOR COMPENSATION
The following table sets forth for each director, information regarding their compensation for the year ended December 31, 2024:
−Removed: Bush, III (3)
−Removed: Pieter Knook (4)
Emmanuel Alia (4)
2 unchanged sentences
The aggregate fair value of the common stock issued was calculated based on the closing price of our common stock on the date of issuance in accordance with FASB ASC 718.
−Removed: Bush resigned from the Board of Directors effective November 8, 2023.
−Removed: Knook resigned from the Board of Directors effective May 13, 2023
At December 31, 2024, Mr.
2 unchanged sentences
Alia held options to purchase 18 shares of common stock and held 6,365 shares of restricted common stock.
−Removed: Williams joined the Board of Directors on June 2, 2023.
At December 31, 2024 Mr.
1 unchanged sentence
Narrative Disclosure to Director Compensation Table
−Removed: During 2023, we had a policy to pay each non-employee director $3,000 per board meeting, $1,000 per telephonic board meeting, and $1,000 per board committee meeting attended.
+Added: During 2024, we had a policy to pay each non-employee director $3,000 per board meeting, and $1,000 per board committee meeting attended.
Fees for attendance at regular quarterly board meetings held during the first three quarters of each fiscal year are paid through the issuance of common stock and payments for the last meeting of the year are paid in cash or, at the option of the director, in shares of common stock.
−Removed: All of our directors elected to receive payment in common stock for the last board meeting in 2023.
+Added: All of our directors elected to receive payment in common stock for the first and second board meeting in 2024.
All directors will be indemnified by us for actions associated with being a director to the fullest extent permitted under Delaware law.
1 unchanged sentence
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
−Removed: The following table sets forth, as of May 31, 2024 information with respect to the securities holdings of all persons that we, pursuant to filings with the SEC and our stock transfer records, have reason to believe may be deemed the beneficial owner of more than 5% of our common stock.
+Added: The following table sets forth, as of April 21, 2025 information with respect to the securities holdings of all persons that we, pursuant to filings with the SEC and our stock transfer records, have reason to believe may be deemed the beneficial owner of more than 5% of our common stock.
The following table also sets forth, as of such date, the beneficial ownership of our common stock by all of our current executive officers and directors, both individually and as a group.
−Removed: The beneficial owners and number of securities beneficially owned have been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as awarded, and, in accordance therewith, include all shares of our common stock that may be acquired by such beneficial owners within 60 days of June 4, 2024 upon the exercise or conversion of any options, warrants or other convertible securities.
+Added: The beneficial owners and number of securities beneficially owned have been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as awarded, and, in accordance therewith, include all shares of our common stock that may be acquired by such beneficial owners within 60 days of April 21, 2025 upon the exercise or conversion of any options, warrants or other convertible securities.
This table has been prepared based on 5,814,041.
7 unchanged sentences
Beneficial Owner
−Removed: Armistice Capital, LLC
+Added: Fiber Food Systems, Inc.
+Added: 530 Technology Drive, Suite 100
+Added: Irvine, CA 92618
+Added: Streeterville Capital LLC
+Added: 303 East Wacker Drive, Suite 1040
+Added: Chicago, IL 60601
Unless otherwise indicated, the address of each person listed below is c/o BIO-key International, Inc., 101 Crawfords Corner Rd, Suite 4116, Holmdel, NJ 07733
Includes 232 shares issuable on exercise of options, 9,167 shares issuable upon exercise of warrants, and 28,120 shares of restricted stock of which 25,297 remain subject to vesting.
−Removed: Includes 348 of shares issuable upon exercise of options and 3,565 shares of restricted stock of which 2,779 remain subject to vesting.
−Removed: Includes 174 of shares issuable upon exercise of options and 1,203 shares of restricted stock of which 834 remain subject to vesting.
−Removed: Includes 348 of shares issuable on exercise of options, 12,667 shares issuable upon exercise of warrants, and 3,565 shares of restricted stock of which 2,779 remain subject to vesting.
−Removed: Includes 470 of shares issuable on exercise of options and 278 shares of restricted stock of which 186 remain subject to vesting.
+Added: Includes 174 shares issuable upon exercise of options and 26,064 shares of restricted stock of which 24,166 remain subject to vesting.
+Added: Includes 87 shares issuable upon exercise of options and 10,203 shares of restricted stock of which 9,371 remain subject to vesting.
+Added: Includes 174 shares issuable on exercise of options, 12,667 shares issuable upon exercise of warrants, and 26,064 shares of restricted stock of which 24,166 remain subject to vesting.
+Added: Includes 36 shares issuable on exercise of options and 6,365 shares of restricted stock of which 6,272 remain subject to vesting.
+Added: Includes 18 shares issuable on exercise of options and 6,365 shares of restricted stock of which 6,272 remain subject to vesting.
Includes 6,365 shares of restricted stock of which 6,272 remain subject to vesting.
−Removed: Includes 278 of shares of restricted stock of which 278 remain subject to vesting.
−Removed: Includes 464 of shares issuable on exercise of options and 787 shares of restricted stock of which 464 remain subject to vesting.
+Added: Includes 232 shares issuable on exercise of options and 3,036 shares of restricted stock of which 2,435 remain subject to vesting.
The address of Kelvin is Flat C, 27/F, Block 5, Grand Pacific Views, Siu Lam, Hong Kong N7.
−Removed: Armistice Capital, LLC (“Armistice Capital”) is the investment manager of Armistice Capital Master Fund Ltd.
−Removed: (the “Master Fund”), the direct holder of the 121,494 shares of common stock, and pursuant to an Investment Management Agreement, Armistice Capital exercises voting and investment power over the securities held by the Master Fund and thus may be deemed to beneficially own the securities held by the Master Fund.
−Removed: Steven Boyd, as the managing member of Armistice Capital, may be deemed to beneficially own the securities held by the Master Fund.
−Removed: The Master Fund specifically disclaims beneficial ownership of the securities directly held by it by virtue of its inability to vote or dispose of such securities as a result of its Investment Management Agreement with Armistice Capital.
−Removed: The address of Armistice Capital, LLC is 510 Madison Avenue, 7th Floor, New York, NY 10022.
+Added: Based on information contained in a Schedule 13G filed with the SEC on January 15, 2025 and other information known to the Company.
+Added: Streeterville Capital LLC (“Streeterville”) is the direct holder of 340,000 shares of common stock.
+Added: Streeterville Management LLC and John M.
+Added: Fife indirectly beneficially own these shares.
+Added: Streeterville has sole voting and dispositive power over the shares.
EQUITY COMPENSATION PLAN INFORMATION
17 unchanged sentences
Options issued under the 2023 Plan vest pursuant to the terms of stock option agreements with the recipients.
−Removed: In the event of a change in control, certain awards issued under this plan may be subject to additional acceleration of vesting as may be provided in the participants’ written agreement.
+Added: In the event of a change in control, certain awards issued under this plan may be subject to additional acceleration of vesting as may be provided in the participants’ written agreement or as determined by the Board or Compensation Committee.
The 2023 Plan expires on December 13, 2033, unless terminated earlier.
−Removed: No awards have yet been granted under the 2023 Plan.
+Added: Awards have been granted for 185,194 shares under the 2023 Plan in 2024.
of securities
9 unchanged sentences
Equity compensation plans not approved by security holders
−Removed: Consists of shares of common stock issuable upon the exercise of options outstanding as of December 31, 2023 under the 2015 Plan.
+Added: Consists of shares of common stock issuable upon the exercise of options outstanding as of December 31, 2024 under the 2015 Plan and the 2023 Plan.
Excludes employee stock purchase rights accruing under the ESPP.
13 unchanged sentences
Sullivan purchased 12,667 shares of common stock and a warrant to purchase 12,667 shares of common stock for a total purchase price of $39,000, and his spouse purchased 3,173 shares of common stock and a warrant to purchase 3,173 shares of common stock for a total purchase price of $9,993.
+Added: Collaboration with Fiber Food Systems, Inc .
+Added: On November 27, 2024, we entered into a securities purchase agreement with Fiber Food Systems, Inc.
+Added: (“Fiber Food”) pursuant to which we purchased from Fiber Food 5,000,000 shares (the “Boumarang Shares”) of common stock of Boumarang, Inc., an early-stage private technology company developing sustainable long-range drone technology for commercial applications, in exchange for 595,000 shares of the Company’s common stock.
+Added: As a result of the forgoing transaction, Fiber Food become the beneficial owner of in excess of 5% of the Company’s outstanding shares of common stock.
+Added: The purchase agreement with Fiber Food contemplates collaboration between the parties regarding potential strategic and commercial transactions, including acquiring assets or equity interests in other operating companies, integrating our identity access management solutions into Fiber Food’s offerings, and introducing us to its customers, affiliates and business contacts who are potential users of our solutions, in each case pursuant to future definitive agreements on terms to be negotiated by the parties.
+Added: In the event that at any time during the nine-month period after the closing of the transaction we value the Boumarang Shares at less than $5,000,000 on our balance sheet, we have the right to cause Fiber Food to repurchase the Boumarang Shares from us in exchange for the return of the shares of Company common stock issued in exchange for the Boumarang Shares.
+Added: As of the date of this report, we have engaged in discussions with Fiber Food and Boumarang regarding the contemplated collaboration but no definitive agreements have been executed.
+Added: The purchase agreement also contains a standstill which prohibits the Company, Fiber Food, Boomerang and their respective affiliates and representatives for a period of two years, from, among other things, initiating any business combination, restructuring, tender offer, proposal to seek representation on the board of directors, or any proxy solicitation, instigating, encouraging or assisting any third party from doing any of the forgoing, or acquiring any debt or equity securities of any other party.
Director Independence
3 unchanged sentences
PRINCIPAL ACCOUNTANT FEES AND SERVICES
−Removed: The following table shows fees for professional services and audit fees billed to us by Bush and Associates CPA for the audit of our annual consolidated financial statements for the year ended December 31, 2023.
−Removed: The following table also shows fees for professional services and audit fees billed to us by Marcum LLC for review of our financial statements for the first, second and third quarters of 2023 and the second and third quarters of 2022, and audit of our financial statements for the year ended December 31, 2022.
−Removed: The table also includes the review of our financial statements for the first quarter 2022 by Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
−Removed: (“RMSBG”), prior to RMSBG’s merger with Marcum:
+Added: Change in Independent Registered Public Accounting Firm
+Added: As previously disclosed, on April 24, 2024, the Audit Committee approved the engagement of Bush & Associates CPA (“Bush & Associates”) as the Company’s independent registered public accounting firm and on April 23, 2024, dismissed Marcum LLP (“Marcum”), as the Company’s independent registered public accounting firm.
+Added: Marcum was retained to serve as the Company’s independent registered public accounting firm on July 20, 2022.
+Added: The audit report of Marcum on the Company’s consolidated financial statements as of and for the fiscal year ended December 31, 2022 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles except that the report included an explanatory paragraph raising substantial doubt about the Company’s ability to continue as a going concern.
+Added: Marcum did not audit the Company’s consolidated financial statements as of and for the fiscal year ended December 31, 2021.
+Added: During the two most recent fiscal years ended December 31, 2023 and 2022, and the subsequent interim period through April 23, 2024, there were (i) no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference thereto in its report on the Company’s consolidated financial statements for the year ended December 31, 2022, and (ii) no “reportable events” as such term is defined in Item 304(a)(1)(v) of Regulation S-K except that:
+Added: (A) as previously reported in Item 9A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company reported a material weakness in its internal control over financial reporting for the fiscal year ended December 31, 2022, relating to Company’s review and control procedures over the income tax provision in the Company’s financial statement which were not operating at a level of precision to prevent or detect a potential material misstatement in the Company’s consolidated financial statements and a lack of control over the Company’s foreign subsidiaries with respect to the filing of required tax returns on a timely basis;
+Added: and (B) as previously reported in the Company's Current Report on Form 8-K filed with the U.S.
+Added: Securities and Exchange Commission on April 22, 2024, the Company concluded on April 16, 2023 that its previously issued consolidated financial statements for the three months ended March 31, 2023, the three and six months ended June 30, 2023, and the three and nine months ended September 30, 2023 included in the Company’s previously filed Quarterly Reports on Form 10-Q for such periods should no longer be relied upon.
+Added: These reportable events were discussed among the Audit Committee and Marcum.
+Added: Marcum has been authorized by the Company to respond fully to the inquiries of Bush & Associates concerning these reportable events.
+Added: The Company previously disclosed this information in its Current Report on Form 8-K filed with the SEC on April 30, 2024, provided Marcum with a copy of the disclosures, and requested that Marcum furnish it with a letter addressed to the SEC stating whether or not it agrees with the Company’s statements therein.
+Added: A copy of the letter dated April 29, 2024 was filed as an exhibit to such Form 8-K.
+Added: During the two most recent fiscal years ended December 31, 2023 and 2022, and the subsequent interim period through April 24, 2024, neither the Company, nor anyone on its behalf, consulted Bush & Associates regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of the Company, and no written report or oral advice was provided to the Company by Bush &Associates that Bush & Associates concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue;
+Added: or (ii) any matter that was the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
+Added: Audit and Non-Audit Fees
+Added: The following table shows fees for professional services and audit fees billed to us by Bush & Associates for the audit of our annual consolidated financial statements for the years ended December 31, 2024 and 2023 and for review of our financial statements included in our quarterly reports in 2024.
+Added: The following table also shows fees for professional services and audit fees billed to us by Marcum LLC for review of our financial statements included in our quarterly reports in 2023, services in connection with the audit of our financial statements for the year ended December 31, 2023, and for providing various consents in 2023 and 2024:
Audit-Related Fees
17 unchanged sentences
Report of Independent Registered Public Accounting Firm (Bush and Associates CPA., PCAOB ID:6797)
−Removed: Report of Independent Registered Public Accounting Firm (Marcum LLP, PCAOB ID:688)
Consolidated Balance Sheets as of December 31, 2024 and 2023
9 unchanged sentences
Report of Independent Registered Public Accounting Firm (Bush and Associates CPA., PCAOB ID:
−Removed: Report of Independent Registered Public Accounting Firm (Marcum LLC., PCAOB ID:688) 40
−Removed: Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations and Comprehensive Loss—Years ended December 31, 2024 and 2023 43
7 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the retrospective adjustments related to the reverse stock split discussed in Note A, the accompanying consolidated balance sheet of BIO-key International, Inc.
−Removed: (the “Company”) as of December 31, 2022.
−Removed: Additionally, we have audited the accompanying consolidated balance sheet of BIO-key International, Inc.
−Removed: and Subsidiaries (the “Company”) as of December 31, 2023, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).
−Removed: In our opinion, the financial statements and the retrospective adjustments related to the reverse stock split present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the accompanying consolidated balance sheet of BIO-key International, Inc.
+Added: and Subsidiaries (the “Company”) as of December 31, 2023 and 2024, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).
+Added: In our opinion, the financial statements and the retrospective adjustments related to the reverse stock split present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2024, and results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company's ability to continue as a Going Concern
23 unchanged sentences
Henderson, Nevada
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: To the Shareholders and Board of Directors of
−Removed: BIO-key International, Inc.
−Removed: Opinion on the Financial Statements
−Removed: We have audited, before the effects of the retrospective adjustments related to the reverse stock split discussed in Note A, the accompanying consolidated balance sheet of BIO-key International, Inc.
−Removed: (the “Company”) as of December 31, 2022, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).
−Removed: In our opinion, before the effects of the retrospective adjustments related to the reverse stock split discussed in Note A, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
−Removed: We were not engaged to audit, review, or apply any procedures to the effects of the retrospective adjustments related to the reverse stock split discussed in Note A and, accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied.
−Removed: Those retrospective adjustments were audited by other auditors.
−Removed: Going Concern
−Removed: The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
−Removed: As disclosed in Note A of the financial statements, the Company has suffered substantial net losses and negative cash flows from operations in recent years and is dependent on debt and equity financing to fund its operations, all of which raise substantial doubt about the Company’s ability to continue as a going concern.
−Removed: Management’s plans regarding these matters are disclosed in Note A.
−Removed: The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
−Removed: Basis for Opinion
−Removed: These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on these financial statements based on our audit.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
−Removed: Accordingly, we express no such opinion.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: /s/ Marcum LLP
−Removed: We served as the Company’s auditor from 2010 to 2024
−Removed: Saddle Brook, New Jersey
+Added: April 23, 2025
BIO-key International, Inc.
20 unchanged sentences
73,372 36,905
+Added: Investments 5,000,000 -
Intangible assets, net
7 unchanged sentences
1,278,732 1,305,848
−Removed: Convertible note payable
Government loan – BBVA Bank, current portion
9 unchanged sentences
Deferred tax liability
−Removed: 22,998 170,281
Government loan – BBVA Bank, net of current portion
25 unchanged sentences
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
−Removed: Years ended December 31,
−Removed: $ 2,218,885 $ 1,789,720
−Removed: 4,342,010 4,584,052
−Removed: 1,194,010 646,486
Total revenues
−Removed: 7,754,905 7,020,258
Costs and other expenses
Cost of services
−Removed: 861,936 722,152
Cost of license fees
−Removed: 1,174,919 906,417
Cost of hardware
−Removed: 700,231 411,001
Cost of hardware reserve
−Removed: 3,586,500 400,000
Total costs and other expenses
−Removed: 6,323,586 2,439,570
−Removed: 1,431,319 4,580,688
Operating expenses
Selling, general and administrative
−Removed: 7,862,710 9,364,887
Research, development and engineering
−Removed: 2,394,926 3,252,236
−Removed: Reversal of earnout payable – Swivel acquisition
−Removed: - ( 500,000 )
−Removed: Impairment of goodwill
Total operating expenses
−Removed: 10,257,636 14,504,316
Operating loss
−Removed: ( 8,826,317 ) ( 9,923,628 )
Other income (expense)
2 unchanged sentences
Loss on foreign currency transactions
−Removed: Investment-debt security reserve
−Removed: - ( 452,821 )
−Removed: Loan transaction costs
−Removed: - ( 1,147,456 )
+Added: Loan fee amortization
Change in fair value of convertible note
−Removed: 396,203 ( 396,203 )
Interest expense
−Removed: ( 218,270 ) ( 10,462 )
Total other income (expense)
−Removed: 170,466 ( 2,006,709 )
Loss before provision for income tax benefit
−Removed: ( 8,655,851 ) ( 11,930,337 )
Provision for income tax benefit
−Removed: 134,014 20,434
−Removed: $ ( 8,521,837 ) $ ( 11,909,903 )
Comprehensive loss:
−Removed: $ ( 8,521,837 ) $ ( 11,909,903 )
Other comprehensive loss- Foreign translation adjustment
−Removed: 265,423 ( 242,602 )
Comprehensive loss
−Removed: $ ( 8,256,414 ) $ ( 12,152,505 )
Basic and Diluted Loss per Common Share
−Removed: $ ( 15.21 ) $ ( 27.26 )
Weighted Average Shares Outstanding:
Basic and Diluted
−Removed: 560,278 436,821
All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023.
8 unchanged sentences
Issuance of common stock for directors’ fees
−Removed: 2,202 - 76,043 - - 76,043
Issuance of restricted common stock to employees
−Removed: 15,444 1 ( 1 ) - - -
Forfeiture of restricted stock
−Removed: ( 583 ) - - - - -
−Removed: Issuance of common stock pursuant to Swivel purchase agreement
−Removed: 14,948 2 600,001 - - 600,003
−Removed: Issuance of common stock for note issuance fees
−Removed: 38,889 4 699,996 - - 700,000
−Removed: Issuance of warrant in conjunction with note payable
−Removed: - - 94,316 - 94,316
+Added: Exercise of warrants
+Added: Issuance of warrants
+Added: Issuance of stock for securities purchase agreements
Issuance of common stock for employee stock purchase plan
−Removed: 3,364 - 56,380 - - 56,380
Share based compensation for employee stock purchase plan
−Removed: - - 18,787 - - 18,787
Foreign currency translation adjustment
−Removed: - - ( 242,602 ) - ( 242,602 )
Share-based compensation
−Removed: - - 293,077 - - 293,077
−Removed: - - - - ( 11,909,903 ) ( 11,909,903 )
+Added: Issuance costs
Balance as of December 31, 2023
1 unchanged sentence
Issuance of common stock for directors’ fees
−Removed: 3,078 - 39,007 - - 39,007
Issuance of restricted common stock to employees
−Removed: 16,404 1 ( 1 ) - - -
Forfeiture of restricted stock
−Removed: ( 3,752 ) - ( 3,105 ) - - ( 3,105 )
Exercise of warrants
−Removed: 177,889 18 302 - - 320
Issuance of warrants
−Removed: - - 3,403,322 - - 3,403,322
Issuance of stock for securities purchase agreements
−Removed: 283,472 29 892,909 - - 892,938
Issuance of common stock for employee stock purchase plan
−Removed: 2,947 - 17,478 - - 17,478
Share based compensation for employee stock purchase plan
−Removed: - - 4,343 - - 4,343
Foreign currency translation adjustment
−Removed: - - - 265,423 - 265,423
Share-based compensation
−Removed: - - 225,487 - - 225,487
Issuance costs
−Removed: - - ( 561,367 ) - - ( 561,367 )
−Removed: - - - - ( 8,521,837 ) ( 8,521,837 )
Balance as of December 31, 2024
7 unchanged sentences
CASH FLOW FROM OPERATING ACTIVITIES:
−Removed: $ ( 8,521,837 ) $ ( 11,909,903 )
Adjustments to reconcile net loss to cash used for operating activities:
−Removed: 75,136 43,794
−Removed: Impairment of goodwill
−Removed: Reversal of earnout payable – Swivel acquisition
−Removed: - ( 500,000 )
Amortization of intangible assets and write-off
−Removed: 354,558 298,113
−Removed: Amortization of resalable software license rights
−Removed: Loan transaction costs
+Added: Interest payable on Note
Loss on foreign currency
−Removed: Reserve for investment security
Reserve for inventory
−Removed: 3,586,500 400,000
−Removed: Reserve for note receivable
Allowance for doubtful account
−Removed: 750,000 360,000
Amortization of debt discount
Amortization of capitalized contract costs
−Removed: 171,291 106,624
Share based and warrant compensation for employees and consultants
−Removed: 226,725 311,864
Stock based fees to directors
−Removed: 39,007 76,043
Bad debt expense
−Removed: 100,000 130,111
Change in fair value of convertible note
−Removed: ( 396,203 ) 396,203
Deferred income tax benefit
−Removed: ( 134,014 ) ( 20,434 )
Amortization of operating lease right-of-use assets
−Removed: 160,449 155,353
Change in operating assets and liabilities:
Accounts receivable
−Removed: ( 428,742 ) ( 339,383 )
Due from factor
Capitalized contract costs
−Removed: ( 118,028 ) ( 140,681 )
−Removed: 402,129 106,291
+Added: Right of use asset
Prepaid expenses and other
−Removed: ( 21,465 ) ( 46,655 )
Accounts payable
−Removed: 57,725 239,144
Income tax payable
Accrued liabilities
−Removed: 275,561 167,614
Deferred revenue
−Removed: ( 71,288 ) ( 120,078 )
Operating lease liabilities
−Removed: ( 168,376 ) ( 165,276 )
Net cash used for operating activities
−Removed: ( 3,793,456 ) ( 6,229,034 )
CASH FLOWS FROM INVESTING ACTIVITIES:
−Removed: Purchase of Swivel Secure, net of cash acquired of $ 729,905
−Removed: - ( 623,578 )
−Removed: Receipt of cash from note receivable
Capital expenditures
−Removed: ( 1,000 ) ( 82,040 )
Net cash used for investing activities
−Removed: ( 1,000 ) ( 696,618 )
CASH FLOWS FROM FINANCING ACTIVITIES:
1 unchanged sentence
Repayment of convertible notes
−Removed: ( 2,200,000 ) -
Proceeds from the exercise of warrants
Costs incurred for issuance of common stock
−Removed: ( 561,367 ) -
−Removed: Proceeds from issuance of convertible notes
−Removed: Costs incurred for issuance of convertible note
−Removed: - ( 155,140 )
+Added: Proceeds from issuance of note payable
+Added: Repayment of note payable
Repayment of government loan
−Removed: ( 119,251 ) -
Proceeds from Employee Stock Purchase Plan
−Removed: 17,478 56,380
Net cash (used in) provided by financing activities
−Removed: 1,433,440 1,903,240
Effect of exchange rate changes
−Removed: 236,894 ( 96,112 )
NET DECREASE IN CASH AND CASH EQUIVALENTS
−Removed: ( 2,124,122 ) ( 5,118,524 )
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
−Removed: 2,635,522 7,754,046
CASH AND CASH EQUIVALENTS, END OF YEAR
−Removed: $ 511,400 $ 2,635,522
All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023.
3 unchanged sentences
Cash paid during the year for:
−Removed: $ 218,270 $ 10,462
Noncash investing and financing activities:
−Removed: Accounts receivable acquired from Swivel Secure
−Removed: $ - $ 702,886
−Removed: Equipment acquired from Swivel Secure
−Removed: Other assets acquired from Swivel Secure
−Removed: Intangible assets acquired from Swivel Secure
−Removed: $ - $ 762,860
−Removed: Goodwill resulting from the acquisition from Swivel Secure
−Removed: $ - $ 1,258,087
−Removed: Accounts payable and accrued expenses acquired from Swivel Secure
−Removed: $ - $ 431,884
−Removed: Government loan acquired from Swivel Secure
−Removed: $ - $ 544,000
−Removed: Deferred tax liability from the acquisition of Swivel Secure
−Removed: $ - $ 190,715
−Removed: Common stock issued for acquisition of Swivel Secure
−Removed: $ - $ 600,004
−Removed: Common stock issued for acquisition of note payable
−Removed: $ - $ 700,000
−Removed: Issuance of warrant for acquisition of note payable
Operating lease right-of-use asset and liability for new lease
−Removed: $ - $ 105,893
All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023.
29 unchanged sentences
Gains or losses arising from changes in the exchange rates used in the translation of such transactions and from the remeasurement of the monetary balance sheet items are recorded as gain (loss) on foreign currency transactions.
+Added: In order to mitigate the losses and improve cash flow, the Company is working on the following initiatives.
+Added: Our EMEA subsidiary is now only selling our BIO-key and PortalGuard solutions that does not carry the previous 50% cost of sales.
+Added: We have agents actively seeking other markets to sell our inventory for the Nigerian projects.
+Added: We continue to lower expenses if possible and keep our current monthly expenses at the current level of approximately $ 812,000 .
+Added: We now have an investment that we can liquidate to fund operations (See Note H) and to pay the required Note Payable payments (See Note J).
The functional currency of Swivel Secure Europe, SA is the Euro.
82 unchanged sentences
The annual goodwill impairment test will be performed as of December 31st of each year.
−Removed: Refer Note K for more information regarding the impairment of goodwill in 2022.
+Added: Refer Note G for more information regarding the impairment of goodwill in 2022.
Intangible assets acquired in a business combination are recorded at their estimated fair values at the date of acquisition.
99 unchanged sentences
An option to terminate is considered unless it is reasonably certain we will not exercise the option.
−Removed: The Fair Value Measurement Option
−Removed: The Company has elected the fair value measurement option for convertible debt with embedded derivatives that require bifurcation, and record the entire hybrid financing instrument at fair value under the guidance of ASC 825, Financial Instruments .
−Removed: As a result, the convertible promissory note was recorded at fair value upon issuance and will subsequently be remeasured at each reporting date until settled or converted.
−Removed: The Company recognized the note initially at fair value, which exceeded the proceeds received resulting in a day one loss that has been recognized in net loss.
−Removed: The Company reports interest expense, including accrued interest, related to the convertible debt under the fair value option, separately from within the change in fair value of the convertible debt in the accompanying consolidated statement of operations.
−Removed: Fair Value Measurements
−Removed: Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date.
−Removed: GAAP establishes a three -tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
−Removed: The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
−Removed: These tiers include:
−Removed: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities;
−Removed: Quoted prices in markets that are not active or inputs which are observable either directly or indirectly for substantially the full term of the asset or liability;
−Removed: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e.
−Removed: supported by little or no market activity).
−Removed: The Company issued a convertible note which included an original issue discount, conversion features and a detachable warrant, as further discussed in Note M.
−Removed: The detachable warrant represents a freestanding, separable equity-linked financial instrument recorded at fair value.
−Removed: The fair value of the detachable warrant was calculated using a Black-Scholes valuation model.
−Removed: The Company elected the fair value option for the convertible debt which was determined based on significant unobservable inputs including the likelihood of default, the estimated date at which the default could take place, and the present value discount rate, which causes it to be classified as a Level 3 measurement within the fair value hierarchy.
−Removed: The fair value option requires recognition at fair value upon issuance and on each balance sheet date thereafter.
−Removed: Changes in the estimated fair value are recognized as change in fair value of convertible note in the consolidated statements of operations.
−Removed: As a result of applying the fair value option, direct costs and fees related to the issuance of the convertible note were expensed and not deferred.
−Removed: The Company estimated the fair value of the convertible note using a probability-weighted discounted cash flow model with the following assumptions and significant terms of the convertible note at December 22, 2022:
−Removed: Face amount - $ 2,200,000
−Removed: Nominal interest rate – 10 % - 12 %
−Removed: Default interest rate – 18 %
−Removed: Increase in principal upon a default – 30 %
−Removed: Present value discount rate – 15.18 %
−Removed: Likelihood of default – estimated to be 50 % at the extended maturity date
−Removed: The following table shows the changes in fair value measurements for the convertible note using significant unobservable inputs (Level 3 ) during the year ended December 31, 2023 :
−Removed: Beginning balance
−Removed: Purchases and issuances
−Removed: ( 2,200,000 )
−Removed: Day one change in value of hybrid instrument
−Removed: Ending balance
Recent Accounting Pronouncements
26 unchanged sentences
Total deferred revenue (contract liability) was approximately $ 970,000 and $ 443,000 at December 31, 2024 and 2023 , respectively.
+Added: The contract liability is derived by an 18 % carve-out on subscription orders which is based on industry standards and our current maintenance and support charge for perpetual licenses.
+Added: Services revenue decreased $ 1,110,379 from year ended December 31, 2023 to December 31, 2024 which was largely attributed to one customer with a 70 % cost the services.
+Added: License fees increased $ 847,297 from year ended December 31, 2023 to December 31, 2024 which a trend that we expect to continue.
Transaction Price Allocated to the Remaining Performance Obligations
3 unchanged sentences
Deferred revenue represents the Company’s remaining performance obligations related to prepaid support and maintenance, all of which is expected to be recognized from one to five years.
−Removed: NOTE C — SWIVEL SECURE EUROPE, SA ACQUISITION
−Removed: On March 8, 2022, the Company completed the acquisition of 100 % of the issued and outstanding capital stock of Swivel Secure based in Madrid, Spain, pursuant to the terms of a stock purchase agreement.
−Removed: The aggregate purchase price consisted of a base purchase price of $ 1.75 million, subject to closing adjustments based on the closing date working capital, indebtedness and unpaid transaction expenses, and an earn-out of $ 500,000 .
−Removed: The earn-out was payable based on Swivel Secure generating $ 3,000,000 of revenue and $ 1,000,000 of operating profit during an earn-out period commencing on the closing date and ending on January 31, 2023, which was not attained.
−Removed: At the closing, the Company made a cash payment of $ 1.27 million and issued 14,948 shares of common stock of which 4,983 shares were held back by the Company to secure certain indemnification obligations under the stock purchase agreement.
−Removed: The shares of Company common stock were priced at $ 2.23 , the contractual 20 day volume-weighted average price of the Company’s common stock immediately prior to the payment date as reported on the Nasdaq Capital Market.
−Removed: The business combination has been accounted for as an acquisition and, in accordance with ASC 805.
−Removed: The Company recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date.
−Removed: The following table summarizes the purchase price allocation, with no earnout payment:
−Removed: Purchase consideration:
−Removed: Total cash paid, including working capital adjustment
−Removed: Earnout payable
−Removed: Common stock issued
−Removed: Total purchase price consideration
−Removed: Fair value of assets acquired and liabilities assumed:
−Removed: Cash and cash equivalents
−Removed: Accounts receivable
−Removed: Equipment acquired
−Removed: Intangible assets
−Removed: Total estimated assets acquired
−Removed: Accounts payable and accrued expenses
−Removed: Government loan
−Removed: Deferred tax liability
−Removed: Total liabilities assumed
−Removed: Total estimated fair value of assets acquired and liabilities assumed
−Removed: The fair value of the assets acquired and liabilities assumed was less than the purchase price, resulting in the recognition of goodwill.
−Removed: The goodwill reflected the value of the synergies the Company expected to realize and the assembled workforce.
−Removed: Refer to Note K for more information regarding the impairment of goodwill.
−Removed: The significant intangible asset identified in the purchase price allocation discussed above was Customer Relationships.
−Removed: To value the Customer Relationships, the Company utilized the Excess Earnings Method, which isolates the value of the specific intangible asset by discounting its income stream to present value.
−Removed: The government loan was issued through BBVA Bank during the COVID- 19 pandemic.
−Removed: The loan bears interest at the rate of 1.75 % per annum and is payable in monthly installments of approximately $ 11,900 inclusive of interest from May 2022 through April 2026.
−Removed: The installment payments have been paid monthly as per the schedule, as of the date of this report.
−Removed: The following table presents the final fair values and useful lives of the identifiable intangible assets acquired:
−Removed: Estimated useful
−Removed: Customer relationships
−Removed: Total identifiable intangible assets
−Removed: As discussed above, the earnout payable was not achieved.
−Removed: As such, the Company reversed the earnout payable of $ 500,000 and recognized the income on the reversal of the earnout payable.
−Removed: NOTE D — FAIR VALUES OF FINANCIAL INSTRUMENTS
+Added: NOTE C — FAIR VALUES OF FINANCIAL INSTRUMENTS
Cash and cash equivalents, accounts receivable, due from factor, accounts payable and accrued liabilities are carried at, or approximate, fair value because of their short-term nature.
The carrying value of the Company’s notes and loan payables approximated fair value as the interest rates related to the financial instruments approximated market.
−Removed: NOTE E — CONCENTRATION OF RISK
+Added: Warrants were valued using the Black-Scholes model.
+Added: The volatility for warrants were based on the five -year term of the warrants.
+Added: We also substituted the Bloomberg one year volatility resulting in approximately $10,000 less in the sensitivity analysis.
+Added: NOTE D — CONCENTRATION OF RISK
Financial instruments which potentially subject the Company to risk primarily consist of cash, and cash equivalents, investment in debt security, and accounts receivables.
1 unchanged sentence
The exposure to the Company is solely dependent upon daily bank balances and the respective strength of the financial institutions.
−Removed: The Company was not in excess of coverage at December 31, 2023.
−Removed: The Company was in excess of coverage of approximately $ 2,000,000 December 31, 2022.
+Added: The Company was not in excess of coverage at December 31, 2024 and December 31, 2023.
The Company has not incurred any losses on these accounts.
2 unchanged sentences
The Company analyzes historical bad debts and contract losses, customer concentrations, and customer credit-worthiness when evaluating the adequacy of the allowances.
+Added: For the year ended December 31, 2024 one customer accounted for 24 % of total revenue and 4 % of accounts receivable.
For the year ended December 2023 , three customers accounted for 34 % of total revenue.
−Removed: For the year ended December 2022 , no customer accounted for greater than 10% of total revenue.
−Removed: At December 31, 2023 , three customers accounted for 66 % of the total accounts receivable.
−Removed: At December 31, 2022 , one customer accounted for 35 % of total accounts receivable.
−Removed: NOTE F — NOTE RECEIVABLE
−Removed: During the third quarter of 2020, the Company loaned $ 295,000 as an advance to Technology Transfer Institute (“TTI”) to aid in fulfilling the African contracts.
−Removed: The note did not bear any interest if paid within the nine ( 9 ) monthly installments beginning December 31, 2020.
−Removed: The note bore a default rate of 5 %.
−Removed: Due to the ongoing delays in payment, the Company reserved $ 186,000 of the note as an allowance.
−Removed: On February 17, 2022, the Company amended the note to modify the payment terms to provide for lower monthly payments, with an updated maturity date on or before December 6, 2023.
−Removed: On May 5, 2022, the Company amended the note to modify the payment terms to eight biweekly installments of $ 1,000 beginning February 25, 2022, nineteen consecutive monthly installments of $ 15,000 beginning on July 6, 2022, and $ 2,000 on or before February 6, 2024.
−Removed: The payments are behind schedule.
−Removed: Due to the delay in payments, the Company has increased the allowance for the remainder of the balance owed under the note in 2022.
−Removed: The Company is continuing to pursue payment with an outside collection agency.
−Removed: A member of the Company's board of directors served as Chief Executive Officer of TTI until August 12, 2020.
−Removed: Note receivable
−Removed: $ - $ 195,000
−Removed: Repayment of note
−Removed: Allowance for doubtful account
−Removed: - ( 186,000 )
−Removed: Note receivable, net of allowance
−Removed: Current portion, net of allowance
−Removed: Noncurrent portion, net of allowance
−Removed: NOTE G — INVENTORY
+Added: At December 31, 2024 , two customers accounted for 36 % of the total accounts receivable.
+Added: At December 31, 2023 , three customers accounted for 66 % of total accounts receivable.
+Added: NOTE E — INVENTORY
Inventory is stated at the lower of cost, determined on a first in, first out basis, or realizable value.
1 unchanged sentence
The Company also reserves for excess quantities, slow moving goods, and for other impairment of value based upon assumptions of future demand and market conditions.
−Removed: The reserve on inventory in 2022 and 2023 is due to slow moving inventory purchased for projects in Nigeria.
+Added: The reserve on inventory in 2023 and 2024 is due to slow moving inventory purchased for projects in Nigeria and other slow moving inventory.
The Company is looking into other markets and opportunities to sell or return the product.
+Added: The total inventory below accounts for selective product that ships quarterly to customers worldwide and through Amazon.
Inventory is comprised of the following as of December 31:
7 unchanged sentences
$ 378,307 $ 445,740
−Removed: NOTE H — RESALABLE SOFTWARE LICENSES RIGHTS
−Removed: On December 31, 2015, the Company purchased third -party software licenses in the amount of $ 180,000 in anticipation of a large pending deployment that has yet to materialize.
−Removed: The Company was amortizing the total cost at the greater of the actual unit cost per license sold or straight-line amortization over 10 years.
−Removed: Since the license purchase, the actual per unit cost (actual usage) of such license rights in the cumulative amount of $ 141,190 has been charged to cost of sales.
−Removed: Since the Company did not receive any sales for the license in 2021 or 2022, it accelerated the amortization for the balance of the license in 2022, leaving a carrying balance of $ 0 as of both December 31, 2023 and 2022 .
−Removed: A total of $ 48,752 was charged to cost of sales during the year ended December 31, 2022.
−Removed: NOTE I — INVESTMENT IN DEBT SECURITY
−Removed: The Company purchased a 4,000,000 Hong Kong dollar denominated Bond Certificate with a financial institution in Hong Kong in September 2020 bearing interest at 5 % per annum.
−Removed: The Bond Certificate translated to $ 512,821 U.S.
−Removed: Dollars, based on the exchange rate at the purchase date.
−Removed: The investment was originally recorded at amortized cost and was scheduled to mature in June 2021.
−Removed: The Company never received the proceeds and accrued interest from the investment and as such, wrote off the investment during 2022 as the bond issuer defaulted on repayment, and the Company had no recourse.
−Removed: NOTE J — EQUIPMENT AND LEASEHOLD IMPROVEMENTS
+Added: NOTE F — EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements consisted of the following as of December 31:
11 unchanged sentences
Amounts are recorded in selling, general, and administrative expense as well as in cost of services.
−Removed: NOTE K — INTANGIBLE ASSETS AND GOODWILL
+Added: Additions for the years ending 12/31/2024 and 12/31/23 were $ 13,047 and $ 1,000 , respectively.
+Added: There have been no write-offs or adjustments for the years ending 12/31/2024 and 12/31/2023.
+Added: NOTE G — INTANGIBLE ASSETS AND GOODWILL
Intangible assets consisted of the following as of December 31:
13 unchanged sentences
Years ending December 31
−Removed: The Company concluded the amounts in goodwill had been fully impaired and accordingly wrote-off the entire balance in full as at December 31, 2022.
−Removed: NOTE L — ACCRUED LIABILITIES
+Added: The Company concluded the amounts in goodwill had been fully impaired and accordingly wrote-off the entire balance in full for the Swivel Secure Europe LTD acquisition, due the reversal of the earnout payable based on the 2022 revenue achievement as at December 31, 2022.
+Added: NOTE H - INVESTMENTS
+Added: Equity Investment in Privately Held Company
+Added: On November 27, 2024, the Company purchased 5,000,000 shares (the “Boumarang Shares”) of common stock of Boumarang, Inc., an early-stage private technology company developing sustainable long-range drone technology for commercial applications.
+Added: The Boumarang Shares represent approximately 7.92 % of the issued and outstanding shares of Boumarang, Inc.
+Added: and the Company has no corporate governance or control rights.
+Added: The Boumarang Shares were purchased from Fiber Food Systems, Inc.
+Added: (“Fiber Food”), an early-stage company engaged in developing global food security solutions, in consideration of the issuance of 595,000 shares of the Company’s common stock.
+Added: Fiber Food is not a principal stockholder of Boumarang and has no corporate governance or control rights.
+Added: The purchase agreement between the Company and Fiber Food contemplates collaboration between the parties regarding potential strategic and commercial transactions, including acquiring assets or equity interests in other operating companies, integrating the Company’s identity access management solutions into Fiber Food’s offerings, and introducing the Company to its customers, affiliates and business contacts who are potential users of the Company’s solutions, in each case pursuant to future definitive agreements on terms to be negotiated by the parties.
+Added: The Company has engaged in discussions with Fiber Food and Boumarang regarding the contemplated collaboration, but no definitive agreements have been executed.
+Added: In the event that at any time during the nine -month period after the closing of the transaction the Company values the Boumarang Shares at less than $ 5,000,000 on its balance sheet, the Company has the right to cause Fiber Food to repurchase the Boumarang Shares from the Company in exchange for the return of the shares of Company common stock issued in exchange for the Boumarang Shares.
+Added: The purchase agreement also contains a standstill which prohibits the Company, Fiber Food, Boomerang and their respective affiliates and representatives for a period of two years, from, among other things, initiating any business combination, restructuring, tender offer, proposal to seek representation on the board of directors, or any proxy solicitation, instigating, encouraging or assisting any third party from doing any of the forgoing, or acquiring any debt or equity securities of any other party.
+Added: The Boumarang Shares constitute an investment in a privately held company for which there is no trading market and are carried at fair value.
+Added: Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
+Added: When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use in pricing the asset or liability, such as inherent risk, non-performance risk and credit risk.
+Added: The Company follows ASC Topic 820 – “Fair Value Measurement,” which establishes a three -level valuation hierarchy for disclosure of fair value measurements.
+Added: The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.
+Added: The three levels are defined as follows:
+Added: Quoted prices (unadjusted) for identical assets or liabilities in active markets.
+Added: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived from observable market data by correlation or other means.
+Added: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
+Added: The Boumarang Shares are classified as a Level 3 asset and have been valued based on a combination of recent sales of Boumarang common stock to third parties and a third party valuation applying a discounted cash flow analysis which included discounts for lack of control and lack of marketability, small company risk premium, and specific company risk premium based on Boumarang being an early-stage pre-revenue company.
+Added: The lack of control and marketability discounts were based on published studies and transfer restrictions contained in Boumarang’s corporate governance documents.
+Added: Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Boumarang Shares may fluctuate from period to period and the fair value of the Boumarang Shares may differ significantly from the values that would have been used had a ready market existed for such shares and may differ materially from the values that the Company may ultimately realize.
+Added: The early-stage pre-revenue status and unproven technology of Boumarang raise uncertainties that could impact the recoverability of the investment in the Boumarang Shares.
+Added: ASC 321 - 10 - 35 requires annual impairment testing for equity securities without readily determinable fair values.
+Added: NOTE I — ACCRUED LIABILITIES
Accrued liabilities consisted of the following as of December 31:
10 unchanged sentences
41,021 91,136
−Removed: NOTE M — CONVERTIBLE NOTE PAYABLE
+Added: $ 1,278,732 $ 1,305,848
+Added: For the years ended 12/31/2024 from 12/31/2023, there were increases in compensation costs related to commission payments due of approximately, $ 223,000 and increases in employee expenses reimbursement due to timing of reimbursements of approximately $ 30,000 .
+Added: These increases were offset by decreases for the years ended 12/31/2024 from 12/31/2023 of approximately $ 28,000 for a lower vacation time accrual, approximately $ 104,000 for lower legal and accounting fees, approximately $ 97,000 for taxes, approximately $ 1,135 for sales tax, and approximately $ 50,000 for miscellaneous accrued expenses.
+Added: NOTE J — NOTE PAYABLE
+Added: Securities Purchase Agreement dated June 24, 2024
+Added: On June 24, 2024, the Company entered into and closed a note purchase agreement (the “Purchase Agreement”) which provided for the issuance of a $ 2,360,000 principal amount senior secured promissory note (the “2024 Note”).
+Added: The 2024 Note carries an original issue discount of $ 350,000 and the Company agreed to pay $ 10,000 to the Lender to cover its transaction costs, which were deducted from the proceeds of the 2024 Note resulting in a total of $ 2,000,000 being funded to the Company at closing.
+Added: The proceeds will be used for general working capital.
+Added: The principal amount of the 2024 Note is due eighteen months ( 18 ) following the date of issuance.
+Added: Interest under the 2024 Note accrues at a rate of nine percent ( 9 %) per annum.
+Added: All repayments of principal due under the 2024 Note will be subject to an exit fee of seven percent ( 7 %) of the principal amount being repaid (the “Exit Fee”).
+Added: Commencing six months after the date of issuance of the Note (the “Redemption Start Date”), Lender shall have the right to redeem up to $ 270,000 of principal amount under the 2024 Note each month which amount plus the Exit Fee will be due and payable three ( 3 ) business days after Lender’s delivery of a redemption notice to the Company.
+Added: At the end of each month following the Redemption Start Date, if the Company has not reduced the outstanding balance under the 2024 Note by at least $ 270,000 , then by the fifth ( 5th ) day of the following month, the Company must either pay to Lender the difference between $ 270,000 and the amount, if any, redeemed in such month plus the Exit Fee, or the outstanding balance due under the Note will automatically increase by one percent ( 1 %).
+Added: The 2024 Note is secured by a lien on substantially all of the Company’s assets and properties and the Company’s obligations under the Note are guaranteed by Pistol Star, Inc., a wholly owned subsidiary of the Company.
+Added: The 2024 Note can be prepaid in whole or in part without penalty at any time.
+Added: In the event that the Company receives any proceeds in connection with any fundraising or financing transaction (including any warrant exercises), it will be required to make a mandatory prepayment equal to the lesser of (i) forty percent ( 40 %) of the amount raised in such transaction and (ii) the full amount due under the 2024 Note.
+Added: The 2024 Note provides for customary events of default, including, among other things, the event of non-payment of principal, interest, fees or other amounts, a representation or warranty proving to have been incorrect when made, failure to perform or observe covenants within a specified period of time, the bankruptcy or insolvency of the Company or of all or a substantial part of its property, and monetary judgment defaults of a specified amount.
+Added: Upon the occurrence of an Event of Default, Lender may ( i) cause interest on the outstanding balance to accrue at an interest rate equal to the lesser of twenty two ( 22 %) or the maximum rate permitted under applicable law, and (ii) accelerate all amounts due under the 2024 Note plus an amount equal to (a) fifteen percent ( 15 %) of the amount due under the 2024 Note for each default that is considered a major trigger event (as defined), and (b) five percent ( 5 %) of the amount due under the 2024 Note for each occurrence of any default that is considered a minor trigger event (as defined), in any case not to exceed twenty five percent ( 25 %).
+Added: The Company received gross proceeds of approximately $ 1.9 million in connection with a financing transaction (see Note N Warrants).
+Added: In accordance with the terms of the 2024 Note, on October 1, 2024, 40 % of the proceeds received, or approximately $ 762,600 , was used to prepay amounts due under the 2024 Note.
+Added: Subsequent to the period ending December 31, 2024, the Company entered into two Exchange Agreements with the holder of the Note and agreed to partition the original Note two new Promissory Notes in the original principal amounts of $ 629,000 and $ 205,000 , respectively, reducing the outstanding principal amount of the original Note to approximately $ 738,400 .
+Added: NOTE K — CONVERTIBLE NOTE PAYABLE
Securities Purchase Agreement dated December 22, 2022
5 unchanged sentences
In connection with the issuance of the Note, the Company issued to the investor 38,889 shares of Common Stock (the “Commitment Shares”) valued at $ 18.00 per share and a warrant (the “Warrant”) to purchase 11,112 shares of common stock (the “Warrant Shares”) at an exercise price of $ 54.00 per share, exercisable commencing on the date of issuance with a term of five years.
−Removed: The warrant was valued at $ 94,316 (see Note P.
+Added: The warrant was valued at $ 94,316 (see Note N).
On October 31, 2023 the Company repaid $ 1,400,000 of principal due under the Note, and on December 21, 2023 the Company repaid the remaining principal balance of $ 800,000 due under the Note.
As of December 31, 2023, the Note was paid in full.
−Removed: NOTE N — LEASES
+Added: NOTE L — LEASES
The Company’s leases office space in New Jersey, Minnesota, New Hampshire, Madrid and Hong Kong with lease termination dates in 2025 and 2027.
22 unchanged sentences
imputed interest
−Removed: NOTE O — COMMITMENTS AND CONTINGENCIES
+Added: NOTE M — COMMITMENTS AND CONTINGENCIES
Distribution Agreement
−Removed: Swivel Secure has a distribution agreement with Swivel Secure Limited (“SSL”).
+Added: Swivel Secure had a distribution agreement with Swivel Secure Limited (“SSL”).
Terms of the agreement include the following:
3 unchanged sentences
If Swivel Secure fails to meet such minimum level of orders in any year, the exclusive distribution rights will terminate and Swivel Secure will serve as a non-exclusive distributer of SSL Products.
−Removed: The Company expects the revenue targets to continue to be met based on historical performance and increasing distribution by Swivel Secure.
+Added: The Company and Swivel Secure Limited terminated the Distribution Agreement in the fourth quarter 2024.
+Added: The Company made a business decision to that our PortalGuard and WEB-key solutions be sold versus the Swivel Secure Limited solutions to increase gross profit by close to 50%.
+Added: The termination of the agreement did not result in any penalties or inventory returns.
From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business.
As of December 31, 2024 , the Company was not a party to any pending lawsuits.
−Removed: NOTE P — EQUITY
+Added: NOTE N — EQUITY
Preferred Stock
7 unchanged sentences
Issuances of Common Stock
−Removed: On December 22, 2022, the Company issued the Commitment Shares.
−Removed: See Note M - Convertible Note Payable for more information.
−Removed: On March 8, 2022, the Company issued 14,948 shares of common stock of which 4,983 shares were held back by the Company to secure certain indemnification obligations under the Swivel Secure stock purchase agreement.
−Removed: The shares of Company common stock were issued at a total cost of $ 600,004 , priced at $ 40.14 , based on the contractual 20 -day volume-weighted average price of the Company’s common stock immediately prior to the payment date as reported on the Nasdaq Capital Market.
On June 18, 2021, the stockholders approved the 2021 Employee Stock Purchase Plan.
3 unchanged sentences
During 2024 and 2023 , 2.641 , and 17,478 shares respectively were issued under the ESPP to employees, which resulted in a $ 775 , and $ 4,343 non-cash compensation expense respectively for the Company
+Added: On December 22, 2022, the Company issued the Commitment Shares.
+Added: See Note K - Convertible Note Payable for more information.
Issuances of Restricted Stock
8 unchanged sentences
During the 2024 and 2023 years, the Company issued 12,048 and 3,078 shares of common stock respectively to its directors in lieu of payment of board fees, valued at $ 18,005 and $ 39,007 respectively.
+Added: Warrants Issued with a Warrant Exercise Agreement:
+Added: On September 12, 2024, the Company entered into a Warrant Exercise Agreement ("inducement agreement") with an existing institutional investor for the immediate exercise of certain outstanding warrants that the Company issued on October 30, 2023.
+Added: Pursuant to the warrant inducement agreement, the investor agreed to exercise outstanding warrants to purchase an aggregate of 1,030,556 shares of the Company's common stock at an amended exercise price of $ 1.85 .
+Added: The gross proceeds from the exercise of the warrants was approximately $ 1.9 million, prior to deducting placement agent fees and estimated offering expenses.
+Added: In consideration for the immediate exercise of the warrants, the Company also agreed to issue to the investor unregistered Series A Warrants to purchase an aggregate of 1,030,556 shares of the Company's common stock and unregistered Series B Warrants to purchase an aggregate of 1,030,556 shares of the Company's common stock, each with an exercise price of $ 1.85 per share.
+Added: The Series A Warrants and Series B Warrants share substantially the same terms, are immediately exercisable and will expire five years from the date of issuance.
Warrants Issued with Convertible Note:
−Removed: See Note M - Convertible Note Payable for the warrant issued with a convertible note in 2022.
+Added: See Note K - Convertible Note Payable for the warrant issued with a convertible note in 2022.
Valuation Assumptions for Warrants:
8 unchanged sentences
The volatility for each issuance is determined based on the review of the experience of the weighted average of historical daily price changes of the Company’s common stock over the expected exercise period.
+Added: The five -year volatility is higher than the one -year rate from Bloomberg of 245 %, based on several reverse-splits of BIO-key's stock over the five -year period.
The risk-free rate is based on the U.S.
4 unchanged sentences
2,534,148 3.15
+Added: ( 177,890 ) 0.0018
Outstanding, as of December 31, 2023
6 unchanged sentences
There were no in-the-money warrants exercisable as of December 31, 2024, 2023 and 2022 .
−Removed: NOTE Q — STOCK OPTIONS
+Added: NOTE O — STOCK OPTIONS
2023 Stock Incentive Plan
3 unchanged sentences
Options issued under the 2023 Plan vest pursuant to the terms of stock option agreements with the recipients.
−Removed: In the event of a change in control, certain awards issued under this plan may be subject to additional acceleration of vesting as may be provided in the participants’ written agreement.
+Added: In the event of a change in control, certain awards issued under this plan may be subject to additional acceleration of vesting as may be provided in the participants’ written agreement or as determined by the Board or Compensation Committee.
The 2023 Plan expires on December 13, 2033, unless terminated earlier.
−Removed: No awards have yet been granted under the 2023 Plan.
+Added: In 2024 the Company issued 177,433 restricted shares to employees of which 7,817 were forfeited.
+Added: The Company also issued 7,761 shares to the Board of Directors for payments of Board fees.
2015 Stock Option Plan
14 unchanged sentences
( 151 ) — ( 151 94.44
+Added: ( 1,548 ) ( 1,895 ) 256.30
Outstanding, as of December 31, 2023
22 unchanged sentences
The total intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $ 0 as no options were exercised in either year.
−Removed: The total fair value of shares vested during the years ended December 31, 2023 and 2022 was $ 18,310 and $ 100,668 , respectively.
+Added: The total fair value of shares vested during the years ended December 31, 2024 and 2023 was $0 ( none vested) and $ 18,310 .
+Added: respectively.
As of December 31, 2024, there was no future forfeiture adjusted compensation costs related to nonvested stock options.
−Removed: NOTE R — INCOME TAXES
+Added: NOTE P — INCOME TAXES
The components of net loss consist of the following:
12 unchanged sentences
Change in valuation allowance
−Removed: ( 1,297,000 )
Provision for income tax expense (benefit)
$ ( 22,998 ) $ ( 134,014 )
−Removed: Significant components of deferred tax assets and liabilities are as follows at December 31, 2023 and 2022 (in thousands):
+Added: Significant components of deferred tax assets and liabilities are as follows at December 31, 2024 and 2023 :
Accrued compensation
18 unchanged sentences
Operating lease liabilities
−Removed: Operating lease right-of-use assets
1,554,541 1,748,235
+Added: Operating lease right-of-use assets
Net operating loss and research and credit carryforwards
3 unchanged sentences
Net deferred tax liability
−Removed: $ - $ ( 170,000 )
The Company has a valuation allowance against the full amount of its net deferred taxes due to the uncertainty of realization of the deferred tax assets due to operating loss history of the Company.
11 unchanged sentences
State taxes, net of federal benefit
+Added: 0.82 ( 1.41 )
Permanent differences
+Added: ( 1.84 ) 1.97
Expiration of net operating loss and research credit carryforwards
3 unchanged sentences
( 7.23 ) ( 5.84 )
+Added: ( 0.41 ) ( 1.05 )
+Added: 0.14 ( 9.08 )
Valuation allowance
10 unchanged sentences
As a result, management could not calculate the amount of net operating loss carryforwards that are available to offset future taxable income.
+Added: We estimate that the potential penalties for non-filing will be minimal due to the losses.
+Added: The Company is currently working on the filings and expects to be current by December 31, 2025.
The Company's subsidiary in Hong Kong has not filed its required returns in several years.
1 unchanged sentence
As a result, management could not calculate the amount of net operating loss carryforwards are available to offset future taxable income.
+Added: We estimate that the potential penalties for non-filing will be minimal due to the losses.
+Added: The Company will be working on the filings during 2025 and expects to be current in 2026.
The Company believes it is not subject to any tax audit risk beyond those periods.
6 unchanged sentences
The Company made no matching contributions during the years ended December 31, 2024 and 2023 .
−Removed: NOTE T — EARNINGS PER SHARE (EPS)
−Removed: The following table summarizes the weighted average securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive.
−Removed: Years ended December 31,
−Removed: Stock options
−Removed: Items excluded from the diluted per share calculation because the exercise price was greater than the average market price of the common shares:
+Added: The plan passed its 2023 annual non-discrimination test, and expects to pass the 2024 annual non-discrimination test.
+Added: NOTE R — EARNINGS PER SHARE (EPS)
+Added: Items excluded from the diluted per share calculation because the exercise price was greater than the average market price of the common shares, and they were also excluded from diluted earnings per share due to anti-dilution:
Years ended December 31,
2 unchanged sentences
2,773,500 279,938
−Removed: NOTE U — QUARTERLY FINANCIAL DATA (UNAUDITED AND RESTATED)
+Added: NOTE S — QUARTERLY FINANCIAL DATA (UNAUDITED AND RESTATED)
The Company is providing restated quarterly unaudited consolidated financial information for interim periods occurring within the year ended December 31, 2023.
−Removed: The need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing its fiscal year-end 2023 consolidated financial statements.
+Added: The need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing its year-end 2023 consolidated financial statements.
In the course of the audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2023, the Company determined that certain errors were made which require the restatement of the Company’s previously issued financial statements for the interim periods occurring within the year ended December 31, 2023.
These errors resulted in the overstatement of accounts receivable and revenue, understatements in certain allowances for accounts receivable and certain reserves for inventory, and an understatement of net loss and total stockholders’ equity which errors may also impact other amounts included in the financial statements.
−Removed: The Company attributes the errors principally to a material weakness in internal controls over the recording and processing of revenues, allowances for accounts receivable and certain reserves for inventory, which the Company is working to remediate in fiscal year 2024.
+Added: The Company attributes the errors principally to a material weakness in internal controls over the recording and processing of revenues, allowances for accounts receivable and certain reserves for inventory, which the Company worked to remediate in 2024.
+Added: We have put newly trained management in control of our EMEA invoice processing and revenue recognition process.
+Added: Additionally, we have added more inventory analysis in our quarterly closing process.
The restated consolidated balance sheet line items for the first, second and third fiscal quarters of 2023 are as follows:
83 unchanged sentences
( 3.07 ) ( 4.12 ) ( 4.67 ) ( 6.67 ) ( 7.74 ) ( 10.79 )
−Removed: NOTE V — SUBSEQUENT EVENTS
−Removed: On January 4, 2024, the Company issued 347,000 shares of common stock upon the exercise of prefunded warrants.
−Removed: On January 5, 2024, the Company issued 142,000 shares of common stock upon the exercise of prefunded warrants.
−Removed: On January 12, 2024, the Company issued 158,000 shares of common stock upon the exercise of prefunded warrants.
−Removed: On February 15, 2024, 243 shares of restricted common stock were forfeited by employees who left the Company before the lapse of the restriction period applicable to such shares.
−Removed: On March 21, 2024, 73 shares of restricted common stock were forfeited by employees who left the Company before the lapse of the restriction period applicable to such shares.
+Added: NOTE T — SUBSEQUENT EVENTS
+Added: On January 8, 2025, the Company issued 14,970 shares of common stock in repayment of $ 25,000 of the principal due on the 2024 Note.
+Added: On January 10, 2025, 679 shares of restricted common stock were forfeited by employees who left the Company before the lapse of the restriction period applicable to such shares.
+Added: On January 10, 2025, 5,000 shares of restricted common stock were forfeited by employees who left the Company before the lapse of the restriction period applicable to such shares.
+Added: On January 15, 2025, the Company entered into a warrant exercise agreement under which the counterparty agreed to exercise outstanding warrants to purchase 2,061,112 shares of common stock at an exercise price of $ 1.85 per share resulting in gross proceeds of approximately $ 3.8 million, prior to deducting placement agent fees and estimated offering expenses.
+Added: In connection with this transaction, the Company issued additional warrants to purchase an aggregate 3,091,668 shares of common stock at an exercise price of $ 2.15 per share.
+Added: On January 15, 2025, the Company issued 149,635 shares of common stock in repayment of $ 205,000 of the principal due on the 2024 Note.
+Added: On January 15, 2025, the Company issued 340,000 shares of common stock in repayment of $ 629,000 of the principal due on the 2024 Note.
+Added: On January 17, 2025, the Company issued 431,000 shares of common stock upon the exercise of warrants.
+Added: On January 23, 2025, the Company issued 427,112 shares of common stock upon the exercise of warrants.
+Added: On February 14, 2025, the Company issued 241,000 shares of common stock upon the exercise of warrants.
+Added: On March 13, 2025, the Company issued 491,000 shares of common stock upon the exercise of warrants.
On March 20, 2025, the Company issued 8,913 shares of common stock to its directors in payment of board fees.
−Removed: On May 6, 2024, 186 shares of restricted common stock were forfeited by an employee who left the Company before the lapse of the restriction period applicable to such shares.
+Added: On March 20, 2025, the Company issued 2,500 shares of restricted stock to new employees which vest over three -years.
+Added: The forgoing issuances of common stock after December 31, 2024 total 2,106,130 shares representing a 56 % increase in the Company's outstanding shares of common stock since December 31, 2024, less forfeitures.
+Added: On March 28, 2025, 1,893 shares of restricted common stock were forfeited by an employee who left the Company before the lapse of the restriction period applicable to such shares.
EXHIBIT INDEX
32 unchanged sentences
Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K filed with the SEC on December 21, 2023)
+Added: Form of Series A Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company’ s Current Report on Form 8-K filed September 16, 2024)
+Added: Form of Series B Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company’ s Current Report on Form 8-K filed September 16, 2024)
+Added: Form of Series A Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company’ s Current Report on Form 8-K filed January 16, 2025)
+Added: Form of Series B Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company’ s Current Report on Form 8-K filed January 16, 2025)
BIO-key International, Inc.
−Removed: Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.5 to the annual report on From 10-K filed with the SEC on April 1, 2022
+Added: Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.5 to the annual report on Form 10-K filed with the SEC on April 1, 2022
Employment Agreement by and between BIO-key International, Inc.
44 unchanged sentences
and Dillon Hill Investment Company LLC (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed with the SEC on December 21, 2023)
+Added: Note Purchase Agreement dated June 24, 2024 by and between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed June 28, 2024)
+Added: $2,360,000 Secured Promissory Note dated June 24, 2024 (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed June 28, 2024)
+Added: Security Agreement dated June 24, 2024 by and between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.3 to the Company’ s Current Report on Form 8-K filed June 28, 2024)
+Added: Intellectual Property Security Agreement dated June 24, 2024 by and between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.4 to the Company’ s Current Report on Form 8-K filed June 28, 2024)
+Added: Guaranty dated June 24, 2024 by and between Pistol Star, Inc.
+Added: and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.5 to the Company’ s Current Report on Form 8-K filed June 28, 2024)
+Added: Form of Warrant Exercise Agreement, dated September 12, 2024, by and between the Company and the Investor (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed September 16, 2024)
+Added: Securities Purchase Agreement dated November 27, 2024, by and among BIO-key International, Inc., Fiber Food Systems, Inc.
+Added: and Boumarang Inc.
+Added: (incorporated by refence to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed December 3, 2024)
+Added: Form of Warrant Exercise Agreement, dated January 15, 2025, by and between BIO-key International, Inc.
+Added: and the Investor (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed January 16, 2025)
+Added: Exchange Agreement, dated January 15, 2025, by and between BIO-key International, Inc.
+Added: and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed January 16, 2025)
+Added: Exchange Agreement, dated January 15, 2025, by and between BIO-key International, Inc.
+Added: and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.3 to the Company’ s Current Report on Form 8-K filed January 16, 2025)
+Added: Insider Trading Policy
List of subsidiaries of BIO-key International, Inc.
Consent of Bush and Associates CPA
−Removed: Consent of Marcum LLP
+Added: Power of Attorney (included on signature page hereto)
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
1 unchanged sentence
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
−Removed: Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
+Added: Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
+Added: Clawback Policy dated October 2, 2023
Inline XBRL Instance
12 unchanged sentences
BIO-KEY INTERNATIONAL, INC.
+Added: April 23, 2025
/s/ MICHAEL W.
1 unchanged sentence
(Principal Executive Officer)
+Added: Each person whose signature appears below constitutes and appoints Michael W.
+Added: DePasquale and Cecilia Welch, or either of them, as such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and any documents related to this report and filed pursuant to the Securities Exchange Act of 1934, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
+Added: This power of attorney shall be governed by and construed with the laws of the State of Delaware and applicable federal securities laws.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on the dates indicated.
2 unchanged sentences
(Principal Executive Officer)
+Added: April 23, 2025
/s/ CECILIA WELCH
Chief Financial Officer (Principal Financial and Accounting Officer)
+Added: April 23, 2025
Cecilia Welch
+Added: April 23, 2025
/s/ WONG KWOK FONG
+Added: April 23, 2025
Wong Kwok Fong
/s/ CAMERON WILLIAMS
+Added: April 23, 2025
Cameron Williams
−Removed: /s/ MANNY ALIA
+Added: /s/ EMMANUEL ALIA
+Added: April 23, 2025
+Added: Emmanuel Alia
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.