What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-06-12 compared with 2025-04-23 · 43 added, 32 removed, 150 unchanged (33% of the section changed)

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

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

As of April 21, 2025 the number of stockholders of record of our common stock was 170.

Our common stock currently trades on the OTC Markets under the symbol “BKYI”.

As of June 10, 2026, the number of stockholders of record of our common stock was 171.

We have not paid any cash dividends on our common stock to-date and have no intention of paying any cash dividends on our common stock in the foreseeable future.

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This discussion is provided as a supplement to and should be read in conjunction with our consolidated financial statements for the years ended December 31, 2025 and 2024 and the accompanying notes included elsewhere in this Report.

All share totals reported herein have been adjusted to reflect our 1-for-18 reverse stock split, which was effective December 21, 2023.

All share totals reported herein have been adjusted to reflect our 1-for-10 reverse stock split, which was effective April 30, 2026.

We are a leading identity access management (IAM) platform provider for the enterprise and large-scale customer and civil ID solutions.

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Research, development and engineering

Impairment of investment

Total operating expenses

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Revenue decreased $922,016 or 142% to $5,937,555 in 2025 as compared to $6,929,571 in 2024.

This reduction was due largely to our exit from our distribution agreement with Swivel Secure Limited (SLL) and transition to selling BIO-key branded solutions in the EMEA market and to the factors discussed below.

This reduction was due largely to a significant contract renewal with a foreign retail bank that benefited 2024 that did not recur in 2025 and due to our exit from our distribution agreement with Swivel Secure Limited (SLL) and transition to selling BIO-key branded solutions in the EMEA market and to the factors discussed below.

For the years ended December 31, 2025, and 2024, service revenues included approximately $1,060,000 and $1,017,000, respectively, of recurring maintenance and support revenue, and approximately $112,000 and $91,000, respectively, of non-recurring custom services revenue.

Recurring service revenue decreased 15% in 2024 due to the loss of one large customer service agreement.

Non-recurring custom services decreased 91% in 2024 due to a large product customization and upgrade for a Swivel Secure customer without a similar customization in 2024.

Recurring service revenue increased 4% in 2025 due to the growing customer base.

Non-recurring custom services increased 23% in 2025 due to several new customers requiring supported deployments.

We expect the service fees to increase from the current levels as we expand our deployments worldwide.

For the year ended December 31, 2024 and 2023 license revenue increased $847,360 or 20% to $5,189,370, as several long-term customers expanded their license deployments in addition to several new customer deployments.

We expect this trend to continue into 2025.

Hardware sales decreased by $562,315, or 47%, to $631,695 in 2024 from $1,194,010 in 2023.

The decrease was attributable largely to fourth quarter 2023 sales to an international defense agency that did not reoccur in 2024.

For the years ended December 31, 2025 and 2024 license revenue decreased $1,766,070 or 34% to $3,423,300, due largely to a significant contract renewal with a foreign retail bank that benefited 2024 hat did not recur in 2025, and due to the ramp up of BIO-key EMEA selling only BIO-key product.

Hardware sales increased by $710,453, or 112%, to $1,342,148 in 2025 from $631,695 in 2024.

The increase was attributable to several long-term and new customers expanding their purchase of biometric cybersecurity solutions combined with selling some of fully reserved inventory from the African project.

Costs of goods sold

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License fees for the year ended December 31, 2025 decreased $279,676, or approximately 47%, to $309,829 from $589,505 due primarily to decreased license revenue and related license fees payable for third-party software distributed by Swivel Secure.

Hardware costs for the year ended December 31, 2024 decreased $183,620, or approximately 26%, to $516,611 from $700,231 in 2023.

The decrease was associated with the decreased hardware sales and hardware mix.

Hardware reserve costs for the year ended December 31, 2024 decreased $3,799,505 due to sales of slow-moving inventory after a complete reserve of slow-moving inventory purchased for projects in Nigeria, and for other older inventory in 2023.

We are continuing to explore other markets and opportunities to sell the slow-moving inventory.

Gross profit increased to $5,640,186 in 2024 from $1,431,319 in 2023, due to a $3,000,000 hardware reserve taken in 2023, the impact of growth in higher-margin license sales, and a reduction in lower-margin services and hardware revenue.

Hardware costs for the year ended December 31, 2024 increased $672,853, or approximately 130%, to $1,189,464 from $516,611 in 2024.

The increase was associated with the increased hardware sales and hardware mix.

Hardware reserve costs for the year ended December 31, 2025 increased $300,395, or approximately 141% from $(213,005) to $(513,400) which represented a removal of the entire reserve for sales of slow-moving inventory purchased for projects in Nigeria, and for other older inventory.

We were successful in our efforts to sell the slow-moving inventory.

Gross profit decreased to $4,564,518 in 2025 from $5,640,186 in 2024, due to lower license fee revenue, and an increase in lower-margin services and hardware revenue.

Our strategic decision to exit the SSL agreement and offer only BIO-key branded solutions in the EMEA market contributed to lower costs to support deployments, including software license fees incurred in connection with sales of Swivel Secure offerings using SLL solutions rather than BIO-key’s internally developed software solutions.

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Selling, general and administrative

Selling, general and administrative costs for year ended December 31, 2024 were $7,140,147 in 2024 compared to $7,862,710 representing a 9% decrease from 2023.

The decrease was due to proactive cost reductions including reductions in headquarters expenses, sales personnel costs, marketing show expenses, and audit fees which were partially offset by an increase in professional services, principally related to financing activities in 2024.

Selling, general and administrative costs for year ended December 31, 2025 were $6,282,232 compared to $7,140,147 in 2024, representing an 12% decrease.

The decrease was due to a reorganization of sales personnel costs, lower marketing show expenses, and audit fees which were partially offset by an increase in professional services, principally related to financing activities in 2025.

Research, development and engineering

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Included in the increase were higher personnel costs associated with wages and benefits for engineering employees to support new product development.

Impairment of investment

For the year ended December 31, 2025 impairment of investment was $2,500,000 compared with $0 representing a 100% increase from 2024.

The amount of $2,500,000 represents a 50% impairment of the investment based on expected revenue that has not occurred to date.

Other income (expense)

Interest income

Gain from sale of asset

Foreign currency loss

Loan transaction costs

Change in fair value of convertible note

Interest expense

The amounts for other income (expense) for the year ended December 31, 2025 consisted of interest income of $3,787, interest expense of $60,793 on the note payable and the government loan through the BBVA bank, and a loan fee amortization amount of $256,833.

The amounts for the year ended December 31, 2023, consisted of interest income of $11,533, a gain from the sale of a PistolStar domain asset, change in loan transactions costs for payment of the convertible note payable as we elected to value the convertible note under the fair value option, and interest expense of $218,270 on the convertible note payable and the government loan through the BBVA bank.

Reflecting increased gross profit and lower operating expenses, net loss improved to $(4,300,692) in 2024 from a net loss of $(8,521,837) in 2023.

The amounts for the year ended December 31, 2024, consisted of interest income of $110, interest expense of $175,755 on the note payable and the government loan through the BBVA bank, and a loan fee amortization amount of $124,000.

Reflecting decreased gross profit and an impairment expense, net loss increased to $(7,157,946) in 2025 from a net loss of $(4,300,692) in 2024.

LIQUIDITY AND CAPITAL RESOURCES

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Net positive cash flows related to non-cash expenses of approximately $3,568,000.

Net negative cash flows related to changes in lease liabilities, accounts payable, deposits and accrued liabilities in the aggregate amount of approximately $605,000 and our net loss for the period.

Net negative cash flows related to changes in accounts receivable, lease liabilities, accounts payable, deferred revenue and prepaid expenses in the aggregate amount of approximately $984,000 and our net loss for the period.

Investing activities overview

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Fi nancing activities overview

Approximately $3,908,000 was provided by financing activities during the year ended December 31, 2024 consisting of the proceeds advanced under a secured note, proceeds from the exercise of warrants, and $3,740 from sales of common stock under our employee stock purchase plan.

Approximately $7,967,000 was provided by financing activities during the year ended December 31, 2025 consisting of the proceeds of $1,000,000 advanced under a secured note, proceeds from the exercise of warrants totaling approximately $6,500,000, and $10,076 from sales of common stock under our employee stock purchase plan.

These amounts were offset by a partial repayment of note payable, repayment of a government loan, and costs associated with the issuance of our securities.

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The following sets forth our primary sources of capital during the previous two years:

On January 15, 2025, we entered into a warrant exercise agreement with an existing institutional investor (the “Investor”) to exercise certain outstanding warrants to purchase an aggregate of 2,061,112 shares of common stock at an exercise price of $1.85 per share which were originally issued to the Investor on September 13, 2024.

On October 27, 2025, we entered into and closed a warrant exercise agreement with an existing institutional investor to exercise certain outstanding warrants to purchase an aggregate of 3,091,668 shares of common stock.

The warrants were originally issued on January 15, 2025 and had an exercise price of $2.15 per share.

In consideration for the immediate exercise of these warrants, we issued new unregistered warrants to purchase up to an aggregate of 6,183,336 shares of common stock at an exercise price of $1.02.

We realized gross proceeds of approximately $3.1 million, prior to deducting placement agent fees and estimated offering expenses.

On September 30, 2025, we entered into and closed a note purchase agreement which provided for the issuance of a $1,130,000 principal amount senior secured promissory note (the "2025 Note").

This resulted in gross proceeds of approximately $1,000,000 after deducting estimated offering expenses, and the original issue discount.

The 2025 Note is due eighteen months (18) following the date of issuance, accrues interest at a rate of nine percent (9%) per annum, and commencing six months after the date of issuance, the lender shall have the right to redeem up to $135,000 of principal amount each month.

In connection with the October 27, 2025 warrant exercise agreement described above, we prepaid approximately $450,000 of the amount due under the 2025 Note.

As of the date of this report, the outstanding principal amount due under the 2025 Note is approximately $675,000.

For a more complete description of the 2025 Note, please see Note J to our Consolidated Financial Statements included in Part II Item 8 of this report.

On January 15, 2025, we entered into a warrant exercise agreement with an existing institutional investor to exercise certain outstanding warrants to purchase an aggregate of 206,112 shares of common stock at an exercise price of $18.50 per share which were originally issued to the Investor on September 13, 2024.

In consideration for the exercise of these warrants, we issued new warrants to the investor to purchase an aggregate 309,167 shares of common stock at an exercise price of $21.50 per share.

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This resulted in gross proceeds of approximately $1,826,000 after deducting placement agent fees, estimated offering expenses, and the original issue discount.

The 2024 Note is due eighteen months (18) following the date of issuance, accrues interest at a rate of nine percent (9%) per annum, and commencing six months after the date of issuance of, the lender shall have the right to redeem up to $270,000 of principal amount each month.

The 2024 Note was due eighteen months (18) following the date of issuance, accrues interest at a rate of nine percent (9%) per annum, and commencing six months after the date of issuance of, the lender shall have the right to redeem up to $270,000 of principal amount each month.

In connection with the warrant exercise agreements described above, we prepaid approximately $762,600 of the amount due under the 2024 Note.

Pursuant to a series of exchange agreements in January 2025, the lender exchanged $859,000 principal amount due under the 2024 Note for 50,461 shares of common stock.

As of the date of this report, the outstanding principal amount due under the 2024 Note is $738,400.

As of the date of this report, the 2024 Note is fully paid.

For a more complete description of the 2024 Note, please see Note J to Our Consolidated Financial Statements included in Part II Item 8 of this report.

On November 20, 2023, we completed a private placement of shares of common stock and warrants resulting in net proceeds of approximately $435,000, after deducting placement agent fees and estimated offering expenses.

On October 30, 2023, we completed a public offering of shares of common stock and warrants resulting in net proceeds of approximately $3.3 million, after deducting placement agent fees and estimated offering expenses.

We used approximately $2.2 million of the net proceeds to repay the outstanding amount due under outstanding convertible note payable.

We entered into an accounts receivable factoring arrangement with a financial institution (the “Factor”) which has been extended to October 2026 and may be discontinued at that time.

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At December 31, 2025, our total cash and cash equivalents were approximately $2,694,000, as compared to $438,000 at December 31, 2024.

As of the date of this report, our total cash and cash equivalents are approximately $3,000,000.

As discussed above, we have historically financed our operations through access to the capital markets by issuing secured and convertible debt securities, convertible preferred stock, common stock, and through factoring receivables.

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During 2025, we generated approximately $5,900,000 of revenue, which did not generate enough cash to fully fund our average monthly cash requirements.

The 2024 Note is due on or about December 24, 2025 and we are subject to monthly redemptions request at the option of the lender.

We also have approximately $2.9 million of inventory (currently reserved) purchased for projects in Nigeria.

We continue to explore other markets and opportunities to sell or return the product to generate additional cash.

We continue to explore other markets and opportunities to sell or return the product to continue to generate additional cash.

If we are unable to generate sufficient revenue and positive cash flow from operations or liquidation of existing inventory to fund current operations and execute our business plan, we will need to obtain additional third-party financing during the next twelve months.

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Allowances for Accounts Receivable

New Accounting Pronouncements

See Note A Item 16, “ Recent Adopted Accounting Pronouncements ” and Note A Item 17, “ Recent Issued Accounting Pronouncements ,” of the Consolidated Financial Statements for additional information about new accounting pronouncements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See financial statements appearing at pages 42-65 of this Annual Report on Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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.

What changed 10-K

Item 5. Market for Registrant’s Common Equity