BIO KEY INTERNATIONAL INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are 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 recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. 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. Based on the evaluation of our disclosure controls and procedures as of December 31, 2025, 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 Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, the risk. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 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, 2025, based upon the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2025 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. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this Annual Report on Form 10-K. Changes in Internal Control Over Financial Reporting During 2025, there have been no changes to our internal control over financial reporting. ITEM 9B. OTHER INFORMATION During the three months ended December 31, 2025, 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. Because this Annual Report on Form 10 -K is being filed within four business days from the date of the reportable event noted below, we have elected to make the following disclosure in this Annual Report on Form 10 -K instead of in a Current Report on Form 8 -K under Item 2.06 - Material Impairments. The following disclosure is intended to satisfy the requirements of Item 2.06 of Form 8 -K. On June 10, 2026, in connection with preparing audited financial statements for the fiscal year ended December 31, 2025, the Company completed its annual impairment testing of the value of its investment in shares of common stock of Boumarang, Inc. (the “Boumarang Shares”). The valuation of the Boumarang Shares was based on an independent valuation report prepared by a third party which valued the Boumarang Shares at $5.000,000 as of December 31, 2025. The valuation was based in part on the anticipated revenues of Boumarang which have not been achieved as of June 10, 2006. As a result, the Company determined to record a 50% impairment of its investment in Boumarang Shares which resulted in a material charge for impairment of $2.5 million under U.S. generally accepted accounting principles. This noncash impairment charge is reflected in the Company’s audited financial statements for the fiscal year ended December 31, 2025. The Company does not anticipate that this charge will result in material future cash expenditures. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not Applicable. 26 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following sets forth certain information about each director and executive officer of the Company. NAME AGE POSITIONS HELD Michael W. DePasquale 71 Chairman of the Board of Directors and Chief Executive Officer Cameron Williams (a)* (b) (c) 79 Director Robert J. Michel (a) (b)*(c) 69 Director Wong Kwok Fong (Kelvin) 62 Director and Vice-Chairman of the Board of Directors Emmanuel Alia (b) (c)* 61 Director Cecilia C. Welch 66 Chief Financial Officer Mira K. LaCous 64 Chief Technology Officer James D. Sullivan 58 Vice President of Strategy and Compliance, Chief Legal Officer (a) Compensation Committee Member (b) Audit Committee Member (c) Nominating Committee Member * Indicates chair of committee Set forth below is a brief description of the background and business experience of our directors and executive officers for the past five years. Directors Michael W. DePasquale has served as our Chief Executive Officer and a Director since January 3, 2003, and Chairman of the Board since January 29, 2014. He served as Co-Chief Executive Officer of the Company from July 2005 to August 2006. Mr. DePasquale brings more than 30 years of executive management, sales and marketing experience to the Company. Mr. DePasquale has held executive management positions with McGraw-Hill, Digital Equipment Corporation, and other companies in the software and professional services industries. Mr. DePasquale earned a Bachelor of Science degree from the New Jersey Institute of Technology. He serves as the Vice Chairman on the Board of Directors of the International Biometrics and Identification Industry Association. We believe Mr. DePasquale’s qualifications to sit on the board of directors include his extensive executive management experience in the technology sector and biometric industry expertise which strengthen the board’s collective qualifications, skills and experience. Cameron E. Williams was appointed Director of the Company on June 2, 2023. Mr. Williams has over 40 years of financial and executive management experience. Since 2014, he has served as the principal of CEW Advisory Services, a consulting firm he founded which provides strategic planning and related services to the consumer lending industry. He previously founded CEW Solutions which provided fraud investigation services to insurance companies, law firms, and third -party administrators. From 2007 to 2009, Mr. Williams served as COO of Asta Funding, Inc., a publicly traded diversified financial services company where he was responsible for the sourcing and financial analysis of distressed consumer assets. From 1998 to 2007, Mr. Williams served as President of Popular Financial Holdings, an affiliate of Popular, Inc., a $36 billion banking organization. Mr. Williams began his career in the banking industry holding financial management positions with Security Pacific Financial Services, BankAmerica Financial, Inc., and Security Pacific Financial Services System, Inc. Mr. Williams earned a Bachelor’s in Accounting and completed graduate coursework at San Diego State University. We believe Mr. Williams’ extensive financial and executive management experience in a variety of industries strengthens the Board’s collective qualifications, skills, and experience. 27 Table of Contents Robert J. Michel has served as a Director of the Company since April 10, 2017. He has over 30 years of accounting and financial management experience. Since September, 2018, he has served as the Chief Financial Officer of Daxor Corporation (Nasdaq: DXR), a medical device manufacturing company specializing in blood volume analysis. Prior to Daxor, from November, 2017 until September 2018, Mr. Michel served as the CFO of Roadway Moving, Inc., a transportation, moving and storage company located in New York City. Mr. Michel spent 15 years at Asta Funding, Inc. (Nasdaq: ASFI), a diversified financial services company, including serving as its Chief Financial Officer from 2009 until 2017 where he was responsible for all financial matters and SEC reporting. Mr. Michel is a certified public accountant, earned an MBA in Taxation from St. John’s University, and a BS in Business Administration from Villanova University. We believe Mr. Michel’s qualifications to sit on the board of directors include his substantial experience in accounting and financial management for public companies which provide the board with a deep knowledge of financial and SEC reporting and strengthen the board’s collective qualifications, skills, and experience. Wong Kwok Fong (Kelvin) has served as a Director of the Company since December 4, 2015, as Managing Director of our Hong Kong Subsidiary since August 2016, and as Vice-Chairman of the Board of Directors since March 2019. He is the co-founder of China Goldjoy Group (previously World Wide Touch Technology Holdings Limited), a company listed on The Stock Exchange of Hong Kong. From 1997 until August, 2015, Mr. Wong served as the Chairman of China Goldjoy Group and served as its Chief Technology Officer through October 2016. During this time, Kelvin played a significant role in the substantial growth of the business. Kelvin brings over 25 years of senior management experience in manufacturing, supply chain, and marketing functions in the electronics and technology industries, including establishing manufacturing plants in Hong Kong and China, and building an extensive network in the electronics and technology industries. We believe Kelvin’s qualifications to sit on the board of directors include his substantial experience in the technology industry, including biometrics and payment systems, and serving the Asian markets, which broaden and strengthen the board’s collective qualifications, skills, and experience. Emmanuel Alia was appointed Director of the Company on April 3, 2020. Since 2018, Mr. Alia has been providing management consulting services as an advisor to businesses seeking market entry strategies to emerging markets such as Africa and the Caribbean. From 2011 to 2018, Mr. Alia served as an Executive Director at the Corporate and Investment division of JPMorgan, and as a Senior Vice-President at CHASE Bank’s Consumer and Community Banking specializing in the financial and banking services industry and opportunities in Africa. During Mr. Alia’s tenure with JPMorgan, he served as head of Wholesale Operations in the Receivables Operations of the Global banking operations in the US and Canada, head of Retail Banking in the Greater Detroit area, and head of branches in the New York and New Jersey areas. For two years Mr. Alia was co-chair of the Black Organizational Leadership Development, an employee networking group in JPMorgan that works with firm’s leadership to strengthen the firm’s message, strategies and community outreach globally. Mr. Alia received a Bachelor of Arts in Accounting from Southeastern University and a Master’s of Business Administration (MBA) from Cornell University. We believe Mr. Alia’s qualifications to sit on the board of directors include his extensive industry experience and connection and networking abilities in the African communities and markets which further broaden and strengthen the board’s collective qualifications, skills, and experience. Executive Officers Cecilia C. Welch has served as the Chief Financial Officer of the Company since December 21, 2009. Ms. Welch joined the Company in 2007 as Corporate Controller. Prior to joining the Company, Ms. Welch has held senior financial management positions in various industries, including software and manufacturing. Ms. Welch has a bachelor’s degree in accounting from Franklin Pierce University. Mira K. LaCous has served as Chief Technology Officer of the Company since March 13, 2014, as Senior Vice President of Technology & Development since 2012, and as our Vice President of Technology and Development since 2000. Ms. LaCous has over 35 years of product/project management, solution architecture, software development, team leadership and customer relations experience, with a background that includes successfully bringing numerous innovative products and technologies to market, including automated voice response systems, automated building control systems, software piracy protection, internet training materials and testing, WYSIWYG page layout and design software, image scanning / recognition software and systems, biometric security systems and algorithms, automated national ID systems using biometrics, and mobile applications with secure frameworks. Ms. LaCous has been a speaker at multiple events/conferences and has worked with teams around the globe bringing biometric technology deployments to life. Ms. LaCous is the author of eight ( 8 ) US patented technologies, multiple international patents and lead the engineering team in developing other patents and inventive technologies. Ms. LaCous earned a bachelor’s degree in Computer Science, with mathematics and physics from North Dakota State University. 28 Table of Contents James D. Sullivan has served as BIO-key’s Senior Vice President of Strategy and Compliance and BIO-key’s Chief Legal Officer since February 2020, as Senior Vice President of Strategy and Business Development from April 2012 through December 2018, and the dual role as Senior Vice President of Global Sales from August 2015 through December of 2016. Mr. Sullivan is a recognized expert in privacy, cybersecurity, and biometric authentication for workforce and consumer applications. During his twenty years with the Company, Mr. Sullivan has directly worked with dozens of the Company’s customers, including AT&T, Israel Defense Forces, LexisNexis, NCR and Omnicell, as well as large-scale biometric-centered identity management projects that interface daily with millions of corporate and consumer users. Mr. Sullivan earned a Juris Doctor with Honors from Georgia State University College of Law, is a member of the Georgia Bar, and enrolled to practice before the IRS. Mr. Sullivan has an undergraduate degree in Computer Science from Brown University and has over 26 years of experience in IT projects and implementation, including directly working with security and identity management solutions at the Company, Computer Associates, Platinum Technology, and Memco Software. Audit Committee of the Board of Directors Our audit committee is comprised of Cameron Williams (Chair), Robert J. 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. Our independent registered public accounting firm has unrestricted access to our audit committee. Our board of directors has determined that Robert J. Michel qualifies as an “audit committee financial expert,” as such term is defined in Item 407 of Regulation S-K. Our audit committee operates under a written charter that is reviewed annually. The charter is available on our website at www.bio-key.com . Code of Ethics We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our Code of Ethics is designed to deter wrongdoing and promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in our other public communications; (iii) compliance with applicable governmental laws, rules, and regulations; (iv) the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (v) accountability for adherence to the code. We intend to disclose amendments or waivers of the Code of Ethics on our website within four business days. 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. 29 Table of Contents Insider Trading Policy 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. 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. Our Insider Trading Policy is filed with the SEC and incorporated by reference herein to Exhibit 19.1 to our Annual Report on Form 10 -K for the year ended December 31, 2024. Term of Office Our directors are elected at the annual meeting of stockholders and hold office until the annual meeting of the stockholders next succeeding his or her election, or until his or her prior death, resignation or removal in accordance with our bylaws. 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. ITEM 11. EXECUTIVE COMPENSATION The following table sets forth a summary of the compensation paid to or accrued by our chief executive officer and the two most highly compensated executive officers other than our chief executive officer, for the fiscal years ended December 31, 2025 and 2024 : SUMMARY COMPENSATION TABLE Stock All Other Name and Principal Salary Awards Compensation Total Position Year ($) ($) ( 1 ) ($) ( 2 ) ($) Michael W. DePasquale 2025 312,875 33,750 199 346,824 Chief Executive Officer 2024 285,000 24,000 491 309,491 Cecilia C. Welch 2025 225,312 26,250 518 252,080 Chief Financial Officer 2024 199,500 22,500 - 222,000 James D. Sullivan 2025 252,135 30,000 162,186 ( 3 ) 144,321 Chief Legal Officer 2024 223,250 22,500 79,429 ( 4 ) 325,179 ( 1 ) The aggregate grant date fair value of the restricted shares is calculated by the multiplying the quantity of shares issued by the closing trading price of the shares on the date of issuance calculated under FASB ASC 718. ( 2 ) Consists of life insurance premiums paid by the Company except as otherwise noted. ( 3 ) Consists of $161,389 of sales commissions and $797 of life insurance premiums paid by the Company. ( 4 ) Consists of $78,632 of sales commissions and $797 of life insurance premiums paid by the Company. Narrative Disclosure to Summary Compensation Table Compensation for our executives is comprised of three main components: base salary, annual performance-based cash bonus, and long-term equity awards. We do not target a specific weighting of these three components or use a prescribed formula to establish pay levels. Rather, the board of directors and compensation committee considers changes in the business, external market factors and our financial position each year when determining pay levels and allocating between long-term and current compensation for the named executive officers. Cash compensation is comprised of base salary and an annual performance-based cash bonus opportunity. The compensation committee generally seeks to set a named executive officer’s targeted total cash compensation opportunity within a range that is the average of the applicable peer company and/or general industry compensation survey data, adjusted as appropriate for individual performance and internal pay equity and labor market conditions. 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. In 2025, we increased the base compensation of our executive officers based on their collective efforts in managing key accounts, completing a series of financing transactions over the past two years, and the fact that base compensation levels had not been increased since 2022. Effective July 1, 2024, we restored the 2023 based compensation of Mr. DePasquale, Mr. Sullivan and Ms. Welch. Effective January 16, 2023, we decreased the base compensation of Mr. DePasquale, Mr. Sullivan and Ms. 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. The committee believes that this higher emphasis on performance-based cash bonuses places an appropriate linkage between a named executive officer’s pay, his or her individual performance, and the achievement of specific business goals by placing a higher proportion of annual cash compensation at risk, thereby aligning executive opportunity with the interests of stockholders. 30 Table of Contents 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. In 2025 and 2024, we issued restricted stock awards to each of our named executive officers. 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. Employment Agreements On March 26, 2010, we entered into an employment agreement, effective as of March 25, 2010, with Michael W. DePasquale to serve as our Chief Executive Officer until March 24, 2011. The agreement automatically renews for subsequent one -year terms, unless the employment relationship is terminated by either party, or modified in accordance with the terms and conditions of the agreement. Since 2018, Mr. DePasquale’s annual base salary has been $275,000, subject to adjustment by the compensation committee. In addition to the base salary, a “Performance Bonus” may be awarded to Mr. DePasquale on the basis of the Company achieving certain corporate and strategic performance goals, as determined by the compensation committee in its sole discretion. The employment agreement contains standard and customary confidentiality, non-solicitation and “work made for hire” provisions as well as a covenant not to compete which prohibits Mr. DePasquale from doing business with any current or prospective customer of the Company or engaging in a business competitive with that of the Company during the term of his employment and for the one -year period thereafter. This agreement also contains a number of termination and change in control provisions as described under the captions “ Termination Arrangements ” and “ Change in Control Arrangements ” below. On April 5, 2017, we entered into an employment agreement with James Sullivan. The agreement automatically renews for subsequent one -year terms, unless terminated by the Company upon at least two months prior written notice which is treated as termination without cause. Since 2021, Mr. Sullivan’s annual base salary has been $225,000, subject to adjustment by the compensation committee. The agreement contains standard and customary confidentiality, technical invention provisions as well as non-competition and non-solicitation covenants which prohibit Mr. Sullivan from doing business with any current or prospective customer of the Company or engaging in any business competitive with that of the Company during the term or his employment and for the one -year period thereafter. The agreement also contains a number of termination provisions as described under the caption “ Termination Agreements ” below. On May 15, 2013, we entered into an employment agreement with Cecilia Welch to serve as the Chief Financial Officer of the Company until May 2014. The agreement automatically renews for subsequent one -year terms, unless the employment relationship is terminated by either party, or modified in accordance with the terms and conditions of the agreement. The employment agreement contains standard and customary confidentiality, technical invention provisions, as well as a covenant not to compete, which prohibits Ms. Welch from doing business with any current or prospective customer of the Company or engaging in a business competitive with that of the Company during the term of her employment and for the one -year period thereafter. This agreement also contains a number of termination provisions as described in “Termination and Change in Control Arrangements” in this Item. Stock Option Grants and Restricted Stock Awards In the event of any change in the outstanding shares of our common stock by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the board deems to be similar circumstances, the number and kind of shares subject to outstanding options and restricted stock awards, and the exercise price of such options shall be appropriately adjusted. Restricted Furthermore, option agreements and restricted stock award agreements contain change of control provisions as described under the caption “ Change in Control Provisions ” below. 31 Table of Contents OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END The following table sets forth for each named executive officer, information regarding outstanding equity awards (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026) at December 31, 2025 . Option Awards Stock Awards Market value Number of Number of of securities shares or shares of underlying units units of unexercised Option of stock that stock that options exercise Option have not have not exercisable price expiration vested vested Name (#) ($) date (#) ($)( 1 ) Michael W. DePasquale 24 1,699.20 3/21/2026 6,165 - - ( 2 ) Cecilia C. Welch 18 1,699.20 3/21/2026 5,055 - - ( 3 ) James D. Sullivan 18 1,699.20 3/21/2026 5,556 - - ( 4 ) ( 1 ) Calculated based on the closing market price of the Company’s common stock on December 31, 2025 of $5.40 per share. ( 2 ) 4,500 shares vest in three equal annual installments commencing September 2, 2026. 1,600 shares vest in two equal annual installments commencing July 31, 2026, and 65 shares vest in one annual installment commencing August 29, 2026. ( 3 ) 3,500 shares vest in three equal annual installments commencing September 2, 2026. 1,500 shares vest in two equal annual installments commencing July 31, 2026, and 55 shares vest in one annual installment commencing August 29, 2026. ( 4 ) 4,000 shares vest in three equal annual installments commencing September 2, 2026.1,500 shares vest in two equal annual installments commencing July 31, 2026, and 167 shares vest in one annual installment commencing August 29, 2026 Narrative Disclosure to Outstanding Equity Awards at Fiscal Year End Table The following are the material terms of each agreement, contract, plan or arrangement that provide for payments to one or more of our named executive officers at, following or pursuant to their resignation, retirement or termination, or in connection with a change in control of the Company. Termination Arrangements We may terminate our employment agreement with Mr. DePasquale at any time with or without cause. In the event of termination by us without cause, we will continue to pay Mr. DePasquale his then current base salary for the greater of nine months from the date of such termination or the number of months remaining until the end of the term of the agreement. We may terminate our employment agreement with Mr. Sullivan at any time with or without cause. In the event of termination by us without cause, we will continue to pay Mr. Sullivan his then current base salary, plus earned commissions, for the greater of six months from the date of such termination or the number of months remaining until the end of the term of the agreement. We may terminate our employment agreement with Ms. Welch at any time with or without cause. In the event of termination by us without cause, we will continue to pay Ms. Welch her then current base salary for the greater of six months from the date of such termination or the number of months remaining until the end of the term of the Agreement. 32 Table of Contents Change in Control Provisions Our 2015 Equity Incentive Plan (the “Plan”) provides for the acceleration 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. A Change in Control is defined in the Plans to include (i) a sale or transfer of substantially all of the Company’s assets; (ii) the dissolution or liquidation of the Company; (iii) 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; (iv) the incumbent directors cease to constitute at least a majority of the Board of Directors; or (v) a change in control of the Company which would otherwise be reportable under Section 13 or 15 (d) of the Exchange Act. In the event of a “Change In Control” the Plan provides for the immediate vesting of all options issued thereunder and termination of all forfeiture provisions applicable to restricted stock award issued thereunder. Options issued to executive officers outside of the Plans contain change in control provisions substantially similar to those contained in the Plans. 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. 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; (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; (iii) the incumbent directors cease to constitute at least a majority of the Board of Directors; (iv) any person becomes directly or indirectly the beneficial owner of 40% of the combined voting power of our outstanding securities; 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. DePasquale contains a change in control provision that is triggered if Mr. DePasquale is not offered continued employment with us or any successor, or within five years following such Change of Control, we or any successor terminate Mr. DePasquale’s employment without cause. If this occurs, then we will pay Mr. 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. Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information During 2025, we did not grant any stock options as part of our equity compensation program. 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. 33 Table of Contents DIRECTOR COMPENSATION The following table sets forth for each director, information regarding their compensation for the year ended December 31, 2025 : Stock Awards Total Name ( 1 ) ($) ( 2 ) ($) Robert J. Michel ( 3 ) 700 29,502 Emmanuel Alia ( 4 ) 600 20,500 Cameron Williams ( 5 ) 700 33,502 ( 1 ) Mr. DePasquale and Kelvin Wong have been omitted from the above table because they do not receive any additional compensation for serving on our Board of Directors. ( 2 ) 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. ( 3 ) At December 31, 2025 , Mr. Michel held options to purchase 4 shares of common stock and held 742 shares of restricted common stock. ( 4 ) At December 31, 2025 , Mr. Alia held options to purchase 2 shares of common stock and held 742 shares of restricted common stock. ( 5 ) At December 31, 2025 Mr. Williams held 742 shares of restricted common stock. Narrative Disclosure to Director Compensation Table During 2025, we changed our policy to increase the board fees payable to each non-employee to $3,500 per board meeting. The Directors still receive $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. All of our directors elected to receive payment in common stock for the first board meeting in 2025. All directors will be indemnified by us for actions associated with being a director to the fullest extent permitted under Delaware law. We reimburse each of our non-employee directors for their reasonable expenses incurred in connection with attending meetings of the board of directors and related committees. 34 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth, as of June 10, 2026 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 (as adjusted to reflect our 1-for-10 reverse stock split, which was effective April 30, 2026). 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 10, 2026 upon the exercise or conversion of any options, warrants or other convertible securities. This table has been prepared based on 1,085,360 outstanding shares. Amount and Nature Percentage of Beneficial of Name and Address of Beneficial Owner (1) Ownership Class Directors and Executive Officers Michael W. DePasquale 11,445 (2) 1.1 % Cecilia C. Welch 5,940 (3) * Mira K. LaCous 3,826 (4) * James D. Sullivan 11,003 (5) 1.0 % Robert J. Michel 2,359 (6) * Emmanuel Alia 2,135 (7) * Cameron E. Williams 2,195 (8) * Wong Kwok Fong (Kelvin) 3,525 (9) * All officers and directors as a group (eight (8) persons) 42,428 3.9 % Beneficial Owner Fiber Food Systems, Inc 59,500 5.5 % * Less than 1% (1) 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 (2) Includes 917 shares issuable upon exercise of warrants, and 73,13 shares of restricted stock of which 6,165 remain subject to vesting. (3) Includes 6,107 shares of restricted stock of which 5,055 remain subject to vesting. (4) Includes 3,522 shares of restricted stock of which 3,119 remain subject to vesting. (5) Includes 1,267 shares issuable upon exercise of warrants, and 6,608 shares of restricted stock of which 5,556 remain subject to vesting. (6) Includes 2 shares issuable on exercise of options and 906 shares of restricted stock of which 742 remain subject to vesting. (7) Includes 2 shares issuable on exercise of options and 906 shares of restricted stock of which 742 remain subject to vesting. (8) Includes 906 shares of restricted stock of which 742 remain subject to vesting. (9) Includes 504 shares of restricted stock of which 359 remain subject to vesting. The address of Kelvin is Flat C, 27/F, Block 5, Grand Pacific Views, Siu Lam, Hong Kong N7. 35 Table of Contents EQUITY COMPENSATION PLAN INFORMATION The following table sets forth, as of December 31, 2025, information with respect to securities authorized for issuance under equity compensation plans (as adjusted to reflect our 1-for-10 reverse stock split, which was effective April 30, 2026). On January 27, 2016, the stockholders approved the 2015 Equity Incentive Plan, which was amended on June 13, 2019, by vote of stockholders, and amended and restated by vote of stockholders on June 18, 2021 (as amended and restated, the “2015 Plan”). The 2015 Plan reserved 4,384 shares of common stock for issuance of options, restricted stock, and other equity-based awards to employees, officers, directors, and consultants of the Company. Options are issued at exercise prices which may not be below 100-110% of fair market value and have terms not to exceed ten years. Options issued under the 2015 Plan vest pursuant to the terms of stock option agreements with the recipients. In the event of a change in control, certain stock awards issued under this plan may be subject to additional acceleration of vesting as may be provided in the participants’ written agreement. The 2015 Plan expired in December 2025. In addition to options issued under the 2015 Plan, we have issued options to purchase common stock to employees, officers, directors and consultants outside of the plan. The terms of these outstanding options are substantially similar to the provisions of the 2015 Plan and options issued thereunder. In the event of change in control, as defined, certain of the non-plan options outstanding vest immediately. On June 18, 2021, the stockholders approved the 2021 Employee Stock Purchase Plan (“ESPP”). Under the terms of this plan, 4,384 shares of common stock are reserved for issuance and sale to employees and officers of the Company at a purchase price equal to 85% of the lower of the closing price of our common stock as reported on the Nasdaq Capital Market on the first day or the last day of the offering period. Eligible employees are granted an option to purchase shares of common stock funded by payroll deductions. The Board may suspend or terminate the plan at any time, otherwise the plan expires June 17, 2031. On August 8, 2025, at the Annual Meeting, a proposal was approved to amend the plan to reserve an additional 70,000 shares of common stock. In 2025, the Company issued 2,126 shares to employees. On December 14, 2023, the stockholders approved the 2023 Stock Incentive Plan. The 2023 Plan reserves 33,334 shares of common stock for issuance of options, restricted stock, and other equity-based awards to employees, officers, directors, consultants, advisors and independent contractors of the Company. Options are issued at exercise prices which may not be below 100% of fair market value (or 110% of the fair market value if, at the time the option is granted, the participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of our stock) and have terms not to exceed ten years. Options issued under the 2023 Plan vest pursuant to the terms of stock option agreements with the recipients. 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. On August 8, 2025, at the Annual Meeting, a proposal was approved to amend the plan to reserve an additional 70,000 shares of common stock. In 2025, the Company issued 28,050 restricted shares to employees of which 3,026 were forfeited. The Company also issued 2,316 shares to the Board of Directors for payments of Board fees. Number of securities remaining available for Number of future issuance securities to be Weighted- under equity issued average compensation upon exercise exercise price plans of outstanding of outstanding (excluding options, options, securities warrants and warrants and reflected in rights rights column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 196 (1)(2) $ 1,453.15 129,258 (3) Equity compensation plans not approved by security holders — -, — Total 196 (1)(2) $ 1,453.15 129,258 (3) (1) Consists of shares of common stock issuable upon the exercise of options outstanding as of December 31, 2025 under the 2015 Plan and the 2023 Plan. (2) Excludes employee stock purchase rights accruing under the ESPP. (3) Amount includes 58,007 shares of common stock available as of December 31, 2025 for future issuance under the 2023 Plan, and 71,251 shares of common stock available as of December 31, 2025 for future issuance under the ESPP. 36 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Standstill Agreement with Principal Stockholders Pursuant to separate securities purchase agreements dated October 29, 2015 and November 11, 2015 with Wong Kwok Fong (Kelvin), we issued and sold shares of series A-1 stock to Kelvin which were subsequently converted into shares of our common stock. The forgoing agreements contain a standstill provision (the “Standstill”) which prohibits Kelvin either alone or together with any other person, from acquiring additional shares of our common stock or any of our assets, soliciting proxies, or seeking representation on our board of directors. Kelvin is the Co-Chairman of the board of directors and an executive officer. Collaboration with Fiber Food Systems, Inc . On November 27, 2024, we entered into a securities purchase agreement with Fiber Food Systems, Inc. (“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. 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. 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. 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. 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. 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 As required under the NASDAQ Marketplace Rules, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Our board considered certain relationships between our directors and us when determining each director’s status as an “independent director” under Rule 5605(a)(2) of the NASDAQ Marketplace Rules. Based upon such definition and SEC regulations, we have determined that Robert Michel, Emmanuel Alia, and Cameron Williams, are “independent” under NASDAQ standards. 37 Table of Contents ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit and Non-Audit Fees The following table shows fees for professional services and audit fees billed to us by Bush & Associates CPA, our independent registered public accounting firm, for the audit of our annual consolidated financial statements for the years ended December 31, 2025 and 2024 and for review of our financial statements included in our quarterly reports in 2024: 2025 2024 Audit Fees $ 125,000 $ 105,000 Audit-Related Fees - 24,602 Tax Fees 23,000 - Other Fees - - Total Fees $ 148,000 $ 129,602 Audit Fees consist of fees billed for professional services rendered for the audit of our financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by our auditors in connection with statutory and regulatory filings or engagements. Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and which are not reported under audit fees. These fees relate primarily to services provided in connection with registration of securities and review of documents filed with the SEC. Tax Fees consist of fees billed for professional services for tax compliance assistance rendered during the fiscal year. 38 Table of Contents Audit Committee Pre-Approval Procedures The audit committee approves the engagement of our independent auditors to render audit and non-audit services before they are engaged. All of the fees for 2025 and 2024 shown above were pre-approved by the audit committee. The audit committee pre-approves all audit and other permitted non-audit services provided by our independent auditors. Pre-approval is generally provided for up to one year, is detailed as to the particular category of services and is subject to a monetary limit. Our independent auditors and senior management periodically report to the audit committee the extent of services provided by the independent auditors in accordance with the pre-approval, and the fees for the services performed to date. The audit committee may also pre-approve particular services on a case-by-case basis. Our audit committee will not approve engagements of our independent registered public accounting firm to perform non-audit services for us if doing so will cause our independent registered public accounting firm to cease to be independent within the meaning of applicable SEC rules. In addition, our audit committee considers, among other things, whether our independent registered public accounting firm is able to provide the required services in a more or less effective and efficient manner than other available service providers. PART IV ITEM 15. – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following documents are filed as part of this Report. Portions of Item 15 are submitted as separate sections of this Report: (1) Financial statements filed as part of this Report: Report of Independent Registered Public Accounting Firm (Bush and Associates CPA., PCAOB ID:6797) Consolidated Balance Sheets as of December 31, 2025 and 2024 Consolidated Statements of Operations—Years ended December 31, 2025 and 2024 Consolidated Statements of Stockholders’ Equity—Years ended December 31, 2025 and 2024 Consolidated Statements of Cash Flows—Years ended December 31, 2025 and 2024 Notes to Consolidated Financial Statements—December 31, 2025 and 2024 (2) Financial statement schedules: Not applicable. (3) The exhibits listed in the Exhibits Index are filed as part of this Report 39 Table of Contents ITEM 16. – FORM 10-K SUMMARY None. FINANCIAL STATEMENTS The following financial statements of BIO-key International, Inc. are included herein at the indicated page numbers: Report of Independent Registered Public Accounting Firm ( Bush and Associates CPA. , PCAOB ID: 6797 ) 41 Consolidated Balance Sheets —Years ended December 31, 2025 and 2024 42 Consolidated Statements of Operations and Comprehensive Loss—Years ended December 31, 2025 and 2024 43 Consolidated Statements of Stockholders’ Equity —Years ended December 31, 2025 and 2024 44 Consolidated Statements of Cash Flows—Years ended December 31, 2025 and 2024 45 Supplementary Disclosures of Cash Flow Information—Years ended December 31, 2025 and 2024 46 Notes to the Consolidated Financial Statements—December 31, 2025 and 2024 47 40 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholder and the Board of Directors of BIO-key International, Inc. Holmdel, NJ Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of BIO-key International, Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2025, 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”). 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, 2024 and 2025, 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 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. 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. Management’s plans regarding these matters are disclosed in Note A. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. 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. Accordingly, we express no such opinion. 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. 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. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters. /s/Bush & Associates CPA LLC We have served as the Company’s auditor since 2024. Henderson, Nevada June 12, 2026 41 Table of Contents BIO-key International, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, 2025 2024 ASSETS Cash and cash equivalents $ 2,694,663 $ 437,604 Accounts receivable, net 1,220,822 718,229 Due from factor - 74,170 Inventory, net of reserve 370,879 378,307 Prepaid expenses and other 251,323 278,648 Total current assets 4,537,687 1,886,958 Equipment and leasehold improvements, net 67,751 140,198 Capitalized contract costs, net 311,591 409,426 Deposits and other assets 7,976 7,976 Operating lease right-of-use assets 47,953 73,372 Investment 2,500,000 5,000,000 Intangible assets, net 830,357 1,097,630 Total non-current assets 3,765,628 6,728,602 TOTAL ASSETS $ 8,303,315 $ 8,615,560 LIABILITIES Accounts payable $ 507,357 $ 818,186 Accrued liabilities 1,333,930 1,278,732 Note payable 604,102 1,525,977 Government loan – BBVA Bank, current portion 50,530 132,731 Deferred revenue – current 572,513 773,267 Operating lease liabilities, current portion 27,728 24,642 Total current liabilities 3,096,160 4,553,535 Deferred revenue, net of current portion 62,584 196,237 Deferred tax liability 16,500 - Government loan – BBVA Bank, net of current portion - 44,762 Operating lease liabilities, net of current portion 21,266 48,994 Total non-current liabilities 100,350 289,993 TOTAL LIABILITIES 3,196,510 4,843,528 Commitments (Note L) STOCKHOLDERS’ EQUITY Common stock — authorized, 170,000,000 shares; issued and outstanding; 1,085,360 and 371,696 of $ .0001 par value at December 31, 2025 and December 31, 2024, respectively 109 37 Additional paid-in capital 141,497,741 133,030,607 Accumulated other comprehensive loss 74,803 49,290 Accumulated deficit ( 136,465,848 ) ( 129,307,902 ) TOTAL STOCKHOLDERS’ EQUITY 5,106,805 3,772,032 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 8,303,315 $ 8,615,560 All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-10 reverse stock split, which was effective April 30, 2026. The accompanying notes are an integral part of these statements. 42 Table of Contents BIO-key International, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 2025 2024 Revenues Services $ 1,172,107 $ 1,108,506 License fees 3,423,300 5,189,370 Hardware 1,342,148 631,695 Total revenues 5,937,555 6,929,571 Costs and other expenses Cost of services 387,144 396,274 Cost of license fees 309,829 589,505 Cost of hardware 1,189,464 516,611 Cost of hardware reserve ( 513,400 ) ( 213,005 ) Total costs and other expenses 1,373,037 1,289,385 Gross Profit 4,564,518 5,640,186 Operating expenses Selling, general and administrative 6,282,232 7,140,147 Research, development and engineering 2,609,893 2,511,080 Operating expenses before impairment of investment 8,892,125 9,651,227 Impairment of investment 2,500,000 - Total operating expenses 11,392,125 9,651,227 Operating loss ( 6,827,607 ) ( 4,011,041 ) Other income (expense) Interest income 3,787 110 Loss on foreign currency transactions - ( 13,004 ) Loan fee amortization ( 256,833 ) ( 124,000 ) Interest expense ( 60,793 ) ( 175,755 ) Total other income (expense) ( 313,839 ) ( 312,649 ) Loss before provision for income taxes (tax benefits) ( 7,141,446 ) ( 4,323,690 ) Provision for income taxes (tax benefits) ( 16,500 ) 22,998 Net loss $ ( 7,157,946 ) $ ( 4,300,692 ) Comprehensive loss: Net loss $ ( 7,157,946 ) $ ( 4,300,692 ) Other comprehensive income – Foreign translation adjustment 25,513 26,469 Comprehensive loss $ ( 7,132,433 ) $ ( 4,274,223 ) Basic and Diluted Loss per Common Share $ ( 10.77 ) $ ( 20.88 ) Weighted Average Shares Outstanding: Basic and Diluted 664,770 205,977 All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-10 reverse stock split, which was effective April 30, 2026. The accompanying notes are an integral part of these statements. 43 Table of Contents BIO-key International, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY Accumulated Additional Other Common Stock Paid-in Comprehensive Accumulated Shares (1) Amount Capital Income (Loss) Deficit Total Balance as of December 31, 2023 103,426 $ 10 $ 126,047,945 $ 22,821 $ ( 125,007,210 ) $ 1,063,566 Issuance of common stock for directors’ fees 1,205 - 18,006 - - 18,006 Issuance of restricted common stock to employees 17,896 2 ( 2 ) - - - Forfeiture of restricted stock ( 917 ) - - - - ( 1 ) Exercise of warrants 190,322 19 1,908,080 - - 1,908,099 Issuance of stock for securities purchase agreements 59,500 6 4,999,994 - - 5,000,000 Issuance of common stock for employee stock purchase plan 264 - 3,690 - - 3,690 Share based compensation for employee stock purchase plan - - 775 - - 775 Foreign currency translation adjustment - - - 26,469 - 26,469 Share-based compensation - - 224,470 - - 224,470 Issuance costs - - ( 172,350 ) - - ( 172,350 ) Net loss - - - - ( 4,300,692 ) ( 4,300,692 ) Balance as of December 31, 2024 371,696 $ 37 $ 133,030,607 $ 49,290 $ ( 129,307,902 ) $ 3,772,032 Issuance of common stock for directors’ fees 2,314 - 20,004 - - 20,004 Issuance of restricted common stock to employees 28,300 3 ( 3 ) - - - Forfeiture of restricted stock ( 3,025 ) - - - Exercise of warrants 515,278 52 6,966,506 - - 6,966,558 Issuance of stock for repayment of debt 168,672 17 1,786,974 - - 1,786,991 Issuance of common stock for employee stock purchase plan 2,125 - 10,076 - - 10,076 Share based compensation for employee stock purchase plan - - 2,250 - - 2,250 Foreign currency translation adjustment - - - 25,513 - 25,513 Share-based compensation - - 144,321 - 144,321 Issuance costs - - ( 462,994 ) - - ( 462,994 ) Net loss - - - - ( 7,157,946 ) ( 7,157,946 ) Balance as of December 31, 2025 1,085,360 $ 109 $ 141,497,741 $ 74,803 $ ( 136,465,848 ) $ 5,106,805 All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-10 reverse stock split, which was effective April 30, 2026. The accompanying notes are an integral part of these statements. 44 Table of Contents BIO-key International, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2025 2024 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ ( 7,157,946 ) $ ( 4,300,692 ) Adjustments to reconcile net loss to cash used for operating activities: Depreciation 84,458 93,026 Amortization of intangible assets and write-off 267,273 304,983 Interest payable on Note 58,282 164,589 Loss on foreign currency - 13,004 Reserve for inventory ( 513,400 ) ( 213,005 ) Allowance for credit losses ( 250,000 ) ( 372,532 ) Amortization of debt discount 261,833 124,000 Amortization of capitalized contract costs 173,062 175,900 Impairment of investment 2,500,000 - Share based and warrant compensation for employees and consultants 146,571 225,245 Stock based fees to directors 20,004 18,006 Bad debt expense 15,000 100,000 Deferred income tax benefit 16,500 ( 22,998 ) Amortization of operating lease right-of-use assets 25,419 79,521 Change in operating assets and liabilities: Accounts receivable ( 252,593 ) 855,829 Due from factor 74,170 25,150 Capitalized contract costs ( 75,227 ) ( 355,520 ) Deposits - ( 7,976 ) Right of use asset - ( 115,988 ) Inventory 520,828 280,438 Prepaid expenses and other 27,325 85,523 Accounts payable ( 310,629 ) ( 502,987 ) Income tax payable - 15,000 Accrued liabilities 55,198 ( 42,116 ) Deferred revenue ( 334,407 ) 526,240 Operating lease liabilities ( 20,410 ) ( 66,712 ) Net cash used for operating activities ( 4,668,689 ) ( 2,914,072 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 12,012 ) ( 13,047 ) Net cash used for investing activities ( 12,012 ) ( 13,047 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the exercise of warrants 6,966,558 1,908,099 Costs incurred for issuance of common stock ( 462,994 ) ( 172,350 ) Proceeds from issuance of note payable 1,000,000 2,000,000 Repayment of note payable ( 455,000 ) ( 762,611 ) Repayment of government loan ( 146,393 ) ( 150,024 ) Proceeds from Employee Stock Purchase Plan 10,076 3,740 Net cash (used in) provided by financing activities 6,912,247 2,826,854 Effect of exchange rate changes 25,513 26,469 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,257,059 ( 73,796 ) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 437,604 511,400 CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,694,663 $ 437,604 All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-10 reverse stock split, which was effective April 30, 2026. The accompanying notes are an integral part of these statements. 45 Table of Contents SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION Years ended December 31, 2025 2024 Cash paid during the year for: Interest $ 60,793 $ 175,755 Noncash investing and financing activities: Operating lease right-of-use asset and liability for new lease $ - $ 79,521 Issuance of common stock for repayment of debt 1,786,991 - All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-10 reverse stock split, which was effective April 30, 2026. The accompanying notes are an integral part of these statements. 46 Table of Contents BIO-key International, Inc. and Subsidiaries NOTES TO THE FINANCIAL STATEMENTS December 31, 2025 and 2024 NOTE A — THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business The Company, founded in 1993, develops and markets proprietary fingerprint identification biometric technology and software solutions enterprise-ready identity access management solutions to commercial, government and education customers throughout the United States and internationally. The Company was a pioneer in developing automated, finger identification technology that supplements or compliments other methods of identification and verification, such as personal inspection identification, passwords, tokens, smart cards, ID cards, PKI (public key infrastructure), credit cards, passports, driver’s licenses, OTP or other form of possession or knowledge-based credentialing. Additionally, advanced BIO-key® technology has been, and is, used to improve both the accuracy and speed of competing finger-based biometrics. Going Concern and Basis of Presentation The Company has historically financed operations through access to the capital markets by issuing convertible debt securities, convertible preferred stock, common stock, and through factoring receivables. As of the date of this report, the Company does have enough cash for twelve months of operations. However, the history of losses, the negative cash flow from operations, and the dependence by the Company on its ability to obtain additional financing to fund its operations after the current cash resources are exhausted raises doubt about the Company's ability to continue as a going concern. The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern, and assumes continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon the Company’s ability to increase its revenue and meet its financing requirements on a continuing basis and become profitable in its future operations. The Company has lowered expenses through decreasing spending in marketing, and research and development. In order to mitigate the losses and improve cash flow, the Company is working on the following initiatives. The EMEA subsidiary is now only selling BIO-key and PortalGuard solutions that do not carry the previous license fee of 50% cost of sales. Agents are actively seeking other markets to sell our inventory for the Nigerian projects. The Company continues to lower expenses with a view to keeping current monthly expenses at the current level of approximately $ 750,000 . The Company has an investment that it can liquidate to fund operations (See Note H) and to pay the required Note Payable payments (See Note J). We expect that the growth in revenue will alleviate our going concern within the next twelve months. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Reverse Stock Split On April 30, 2026, subsequent to the balance sheet date, the Company effected a 1‑for‑10 reverse stock split of its common stock. All share and per share amounts, including shares underlying options, warrants and other convertible securities, have been retroactively adjusted for all periods presented to reflect this reverse stock split Foreign Currency The Company accounts for foreign currency transactions pursuant to ASC 830, Foreign Currency Matters ("ASC 830” ). The functional currency of the Company is the U. S. dollar, which is the currency of the primary economic environment in which it operates. In accordance with ASC 830, monetary balances denominated in or linked to foreign currency are stated on the basis of the exchange rates prevailing at the applicable balance sheet date. For foreign currency transactions included in the statement of operations, the exchange rates applicable on the relevant transaction dates are used. 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. The functional currency of Swivel Secure Europe, SA is the Euro. Under ASC 830, all assets and liabilities are translated into U. S. dollars using the current exchange rate at the end of each fiscal period. Revenues and expenses are translated using the average exchange rates prevailing throughout the respective periods. All transaction gains and losses from the measurement of monetary balance sheet items denominated in Euros are reflected in the statement of operations as appropriate. Translation adjustments are included in accumulated other comprehensive loss. The functional currency of BIO-key Africa is the Naira, however, the majority of the Company's transactions are U. S. dollars. Under ASC 830, all assets and liabilities are translated into U. S. dollars using the current exchange rate at the end of each fiscal period. An adjustment will be made for the current value of our bank account in Naira currency if the amount materially changes. The functional currency of BIO-key Hong Kong is the HKD (Hong Kong dollar). Under ASC 830, all assets and liabilities are translated into U. S. dollars using the current exchange rate at the end of each fiscal period. An adjustment will be made for the current value of our bank account in Yen currency if the amount materially changes. Summary of Significant Accounting Policies A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows: 1. Principles of Consolidation The accompanying consolidated financial statements include the accounts of BIO-key International, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). Intercompany accounts and transactions have been eliminated in consolidation. 47 Table of Contents 2. Use of Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission (SEC). These accounting principles require the Company to make certain estimates, judgments and assumptions. The Company believes that the estimates, judgments and assumptions upon which it relies are reasonable based upon information available to it at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to accounts receivable, inventory, intangible assets and goodwill, fair value of convertible note payable, and income taxes. 3. Revenue Recognition In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps: ● Identify the contract with a customer ● Identify the performance obligations in the contract ● Determine the transaction price ● Allocate the transaction price to performance obligations in the contract ● Recognize revenue when or as the Company satisfies a performance obligation All of the Company's performance obligations, and associated revenues, are generally transferred to customers at a point in time, with the exception of support and maintenance, and professional services, which are generally transferred to the customer over time. Software licenses Software license revenue consists of fees for perpetual and subscription licenses for one or more of the Company’s biometric fingerprint solutions or identity access management solutions. Revenue is recognized at a point in time once the software is available to the customer for download. Software license contracts are generally invoiced in full on execution of the arrangement. Hardware Hardware revenue consists of fees for associated equipment sold with or without a software license arrangement, such as servers, locks and fingerprint readers. Customers are not obligated to buy third party hardware from the Company, and may procure these items from a number of suppliers. Revenue is recognized at a point in time once the hardware is shipped to the customer. Hardware items are generally invoiced in full on execution of the arrangement. Support and Maintenance Support and maintenance revenue consists of fees for unspecified upgrades, telephone assistance and bug fixes. The Company satisfies its support and maintenance performance obligation by providing “stand-ready” assistance as required over the contract period. The Company records deferred revenue (contract liability) at time of prepayment until the term of the contract begins. Revenue is recognized over time on a ratable basis over the contract term. Support and maintenance contracts are one to five years in length and are generally invoiced in advance at the beginning of the term. Support and Maintenance revenue for subscription licenses is carved out of the total license cost at 18% and recognized on a ratable basis over the license term. Professional Services Professional services revenues consist primarily of fees for deployment and optimization services, as well as training. The majority of the Company’s consulting contracts are billed on a time and materials basis, and revenue is recognized based on the amount billable to the customer in accordance with practical expedient ASC 606 - 10 - 55 - 18. For other professional services contracts, the Company utilizes an input method and recognizes revenue based on labor hours expended to date relative to the total labor hours expected to be required to satisfy its performance obligation. Contracts with Multiple Performance Obligations Some contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The standalone selling prices are determined based on overall pricing objectives, taking into consideration market conditions and other factors, including the value of the contracts, the cloud applications sold, customer demographics, geographic locations, and the number and types of users within the contracts. 48 Table of Contents The Company considered several factors in determining that control transfers to the customer upon shipment of hardware and availability of download of software. These factors include that legal title transfers to the customer, the Company has a present right to payment, and the customer has assumed the risks and rewards of ownership. Accounts receivable from customers are typically due within 30 days of invoicing. The Company does not record a reserve for product returns or warranties as amounts are deemed immaterial based on historical experience. Costs to Obtain and Fulfill a Contract Costs to obtain and fulfill a contract are predominantly sales commissions earned by the sales force and are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over a period of benefit determined to be four years. The period of benefit was determined averaging customer life (churn rate) and historical renewal rates. We continue to monitor the four -year period as facts and circumstances change. These costs are included as capitalized contract costs on the balance sheet. The period of benefit was determined by taking into consideration customer contracts, technology, and other factors based on historical evidence. Amortization expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Deferred Revenue Deferred revenue includes customer advances and amounts that have been paid by customers for which the contractual maintenance terms have not yet occurred. The majority of these amounts are related to maintenance contracts for which the revenue is recognized ratably over the applicable term, which generally is 12 - 60 months. Contracts greater than 12 months are segregated as long term deferred revenue. Maintenance contracts include provisions for unspecified when-and-if available product updates and customer telephone support services. See Note B. 4. Business Combinations In accordance with ASC 805, Business Combinations (ASC 805 ), the Company recognizes the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. Determining these fair values requires management to make significant estimates and assumptions, especially with respect to intangible assets. The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair value. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net acquisition date fair value of the assets acquired and the liabilities assumed and represents the expected future economic benefits arising from other assets acquired that are not individually identified and separately recognized. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, its estimates are inherently uncertain and subject to refinement. Assumptions may be incomplete or inaccurate, and unanticipated events or circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill to the extent that it identifies adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations. 5. Goodwill and acquired intangible assets Goodwill is not amortized, but is evaluated for impairment annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company has determined that there is a single reporting unit for the purpose of conducting this goodwill impairment assessment. For purposes of assessing potential impairment, the Company estimates the fair value of the reporting unit, based on the Company’s market capitalization, and compares this amount to the carrying value of the reporting unit. If the Company determines that the carrying value of the reporting unit exceeds its fair value, an impairment charge would be required. The annual goodwill impairment test will be performed as of December 31st of each year. Intangible assets acquired in a business combination are recorded at their estimated fair values at the date of acquisition. The Company amortizes acquired definite-lived intangible assets over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis. 6. Cash Equivalents Cash equivalents consist of liquid investments with original maturities of three months or less. At December 31, 2025 and 2024 , cash equivalents consisted of a money market account. 49 Table of Contents 7. Accounts Receivable Accounts receivable are carried at original amount less an estimate made for credit losses based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful receivables by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible. Accounts receivable at December 31, 2025 and 2024 consisted of the following: December 31, 2025 2024 Accounts receivable $ 1,604,075 $ 1,351,482 Allowance for Credit Losses ( 383,253 ) ( 633,253 ) Accounts receivable, net of allowances for Credit Losses $ 1,220,822 $ 718,229 Bad debt expenses (if any) are recorded in selling, general, and administrative expense. The allowance for credit losses for the years ended December 31, 2025 and 2024 is as follows: Balance at Beginning of Year Charged to Costs and Expenses Deductions from Reserves Balance at End of Year Year ended December 31, 2025 Allowance for Credit Losses $ 633,253 $ - $ ( 250,000 ) $ 383,253 Year ended December 31, 2024 Allowance for Credit Losses $ 1,005,785 $ 16,265 $ ( 388,797 ) $ 633,253 8. Equipment and Leasehold Improvements, Intangible Assets and Depreciation and Amortization Equipment and leasehold improvements are stated at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over the estimated service lives, principally using straight-line methods. Leasehold improvements are amortized over the shorter of the life of the improvement or the lease term, using the straight-line method. The estimated useful lives used to compute depreciation and amortization for financial reporting purposes are as follows: Years Equipment and leasehold improvements Equipment 3 - 5 Furniture and fixtures 3 - 5 Software 3 Leasehold improvements life or lease term Intangible assets other than goodwill consist of patents, trade name, proprietary software, and customer relationships. Patent costs are capitalized until patents are awarded. Upon award, such costs are amortized using the straight-line method over their respective economic lives. If a patent is denied, all costs are charged to operations in that year. Trade names, proprietary software, and customer relationships are amortized over the economic useful life. 9. Impairment or Disposal of Long Lived Assets, including Intangible Assets The Company reviews long-lived assets, including intangible assets subject to amortization, whenever events or changes in circumstances indicate that the carrying amount of such an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate. If such assets are considered impaired, the impairment to be recognized is equal to the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. In assessing recoverability, the Company must make assumptions regarding estimated future cash flows and discount factors. If these estimates or related assumptions change in the future, the Company may be required to record impairment charges. Intangible assets with determinable lives are amortized over their estimated useful lives, based upon the pattern in which the expected benefits will be realized, or on a straight-line basis, whichever is greater. Impairment expenses in 2025 and 2024 . were $ 2,500,000 and $ 0 . respectively. 10. Advertising Expense The Company expenses the costs of advertising as incurred. Advertising expenses for 2025 and 2024 were approximately $ 287,000 and $ 353,000 , respectively. 11. Research and Development Expenditures Research and development expenses include costs directly attributable to the conduct of research and development programs primarily related to the development of our software products and improving the efficiency and capabilities of our existing software. Such costs include salaries, payroll taxes, employee benefit costs, materials, supplies, depreciation on research equipment, services provided by outside contractors, and the allocable portions of facility costs, such as rent, utilities, insurance, repairs and maintenance, depreciation and general support services. All costs associated with research and development are expensed as incurred. 50 Table of Contents 12. Earnings Per Share of Common Stock ( “ EPS ” ) The Company’s EPS is calculated by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted EPS includes the effect from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options and warrants, when the effect of their inclusion is dilutive. See Note Q. All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1 -for- 10 reverse stock split, which was effective April 30, 2026. 13. Accounting for Stock-Based Compensation The Company accounts for share based compensation in accordance with the provisions of ASC 718 - 10, “Compensation — Stock Compensation,” which requires measurement of compensation cost for all stock awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The majority of its share-based compensation arrangements vest over a three year vesting schedule. The Company expenses its share-based compensation under the ratable method, which treats each vesting tranche as if it were an individual grant. The fair value of stock options is determined using the Black-Scholes valuation model and requires the input of certain assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (the “expected option term”), the estimated volatility of its common stock price over the option’s expected term, the risk-free interest rate over the option’s expected term, and the Company’s expected annual dividend yield. Changes in these subjective assumptions can materially affect the estimate of fair value of stock-based compensation and consequently, the related amount recognized as an expense in the consolidated statements of operations. As required under the accounting rules, the Company reviews its valuation assumptions at each grant date and, as a result, the Company is likely to change its valuation assumptions used to value employee stock-based awards granted in future periods. The values derived from using the Black-Scholes model are recognized as expense over the service period, net of estimated forfeitures (the number of individuals that will ultimately not complete their vesting requirements). The estimation of stock awards that will ultimately vest requires significant judgment. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. Actual results, and future changes in estimates, may differ substantially from current estimates. Options and warrants to outsiders are accounted for under ASC 718. The following table presents share-based compensation expenses included in the Company’s consolidated statements of operations: Year ended December 31, 2025 2024 Selling, general and administrative $ 139,131 $ 201,100 Research, development and engineering 27,444 42,150 $ 166,575 $ 243,250 51 Table of Contents 14. Income Taxes The provision for, or benefit from, income taxes includes deferred taxes resulting from the temporary differences in income for financial and tax purposes using the liability method. Such temporary differences result primarily from the differences in the carrying value of assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income within the carryback, carryforward period available under tax law. The Company evaluates, on a quarterly basis whether, based on all available evidence, if it is probable that the deferred income tax assets are realizable. Valuation allowances are established when it is more likely than not that the tax benefit of the deferred tax asset will not be realized. The evaluation, as prescribed by ASC 740 - 10, “Income Taxes,” includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. Because of the Company’s historical performance and estimated future taxable income, a full valuation allowance has been established. The Company accounts for uncertain tax provisions in accordance with ASC 740. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. See Note O. 15 . Leases In accordance with ASC 842, Leases (ASC 842 ), the Company records a right-of-use (ROU) asset and a lease liability on the balance sheet for all leases with terms longer than 12 months and classifies them as either operating or finance leases. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present and the classification of the lease including whether the contract involves the use of a distinct identified asset, whether the Company obtains the right to substantially all the economic benefit from the use of the asset, and whether the Company has the right to direct the use of the asset. Leases with a term greater than one year are recognized on the balance sheet as ROU assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less under practical expedient in paragraph ASC 842 - 20 - 25 - 2. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration, and to account for the lease and non-lease components as a single lease component. Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. The implicit rate within our operating leases are generally not determinable and, therefore, the Company uses the incremental borrowing rate at the lease commencement date to determine the present value of lease payments. The determination of the Company’s incremental borrowing rate requires judgment. The Company determines the incremental borrowing rate for each lease using our estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The operating lease ROU asset also includes any lease prepayments, offset by lease incentives. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain we will exercise that option. An option to terminate is considered unless it is reasonably certain we will not exercise the option. See Note K. 52 Table of Contents 16. Recently Adopted Accounting Pronouncements Effective January 1, 2025. The Company adopted ASU 2023 - 09, “ Improvements to Income Tax Disclosures ” (“ASU 2023 - 09” ) to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The adoption of this standard did not have to a material impact on the Company’s consolidated financial statements but expanded the disclosures required. 17. Recently Issued Accounting Pronouncements In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023 - 06, “ Disclosure Improvements: Codification Amendments in Response to the SEC ’ s Disclosure Update and Simplification Initiative ” (“ASU 2023 - 06” ). This ASU incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“ASC”). The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of ASC Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the ASC with the SEC’s regulations. The ASU has an unusual effective date and transition requirements since it is contingent on future SEC rule setting. If the SEC fails to enact required changes by June 30, 2027, this ASU is not effective for any entities. Early adoption is not permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures. In November 2024, the FASB issued ASU 2024 - 03, "Disaggregation of Income Statement Expenses (“DISE”)" ("ASU 2024 - 03" ) which applies to all public entities and requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. Public entities must adopt the new standard prospectively for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption and retrospective application are permitted. The Company is currently evaluating the impact of ASU 2024 - 03 on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standard, if currently adopted, would have a material effect on the accompanying consolidated financial statements. NOTE B — REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the years ended December 31, 2025 and 2024 : North December 31, America Africa EMESA* Asia 2025 License fees $ 1,726,401 $ 526,465 $ 1,170,434 $ - $ 3,423,300 Hardware 115,052 653 997,273 229,170 1,342,148 Services 829,756 254,648 84,609 3,094 1,172,107 Total revenues $ 2,671,209 $ 781,766 $ 2,252,316 $ 232,264 $ 5,937,555 53 Table of Contents North December 31, America Africa EMESA* Asia 2024 License fees $ 2,410,624 $ 1,490,256 $ 1,282,176 $ 6,314 $ 5,189,370 Hardware 154,931 - 391,764 85,000 631,695 Services 898,686 162,467 47,353 - 1,108,506 Total revenues $ 3,464,241 $ 1,652,723 $ 1,721,293 $ 91,314 $ 6,929,571 * EMESA – Europe, Middle East, South America Revenue recognized during the year ended December 31, 2025 from amounts included in deferred revenue at the beginning of the year was approximately $ 455,000 . Revenue recognized during the year ended December 31, 2024 from amounts included in deferred revenue at the beginning of the year was approximately $ 508,000 . Total deferred revenue (contract liability) was approximately $ 635,000 and $ 970,000 at December 31, 2025 and 2024 , respectively. 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. Transaction Price Allocated to the Remaining Performance Obligations ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. The guidance provides certain practical expedients that limit this requirement, which the Company’s contracts meet as follows: ● The performance obligation is part of a contract that has an original expected duration of one year or less, in accordance with ASC 606 - 10 - 50 - 14. 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. 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. 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. The Company maintains its cash and cash equivalents with various financial institutions, which, at times may exceed insured limits. The exposure to the Company is solely dependent upon daily bank balances and the respective strength of the financial institutions. The Company was not in excess of coverage at December 31, 2025 and 2024. The Company has not incurred any losses on these accounts. The Company extends credit to customers on an unsecured basis in the normal course of business. The Company’s policy is to perform an analysis of the recoverability of its receivables at the end of each reporting period and to establish allowances where appropriate. The Company analyzes historical bad debts and contract losses, customer concentrations, and customer credit-worthiness when evaluating the adequacy of the allowances. For the year ended December 31, 2025 , two customers accounted for 26 % of total revenue. For the year ended December 2024 , one customer accounted for 24 % of total revenue. At December 31, 2025 , two customers accounted for 43 % of the total accounts receivable. At December 31, 2024 , two customers accounted for 36 % of total accounts receivable. 54 Table of Contents NOTE E — INVENTORY Inventory is stated at the lower of cost, determined on a first in, first out basis, or realizable value. The Company periodically evaluates inventory items and establishes reserves for obsolescence accordingly. 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. The reserve on inventory in 2025 and 2024 is due to slow moving inventory, including inventory purchased for projects in Nigeria. The Company is looking into other markets and opportunities to sell or return the product. 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: 2025 2024 Finished goods $ 2,880,593 $ 4,098,513 Fabricated assemblies 750,381 53,289 Reserve on finished goods ( 3,260,095 ) ( 3,773,495 ) Total inventory $ 370,879 $ 378,307 NOTE F — EQUIPMENT AND LEASEHOLD IMPROVEMENTS Equipment and leasehold improvements consisted of the following as of December 31: 2025 2024 Equipment $ 791,140 $ 1,016,802 Furniture and fixtures 201,679 225,978 Software - 49,143 Leasehold improvements 44,106 44,106 1,036,925 1,336,029 Less accumulated depreciation and amortization ( 969,174 ) ( 1,195,831 ) Total $ 67,751 $ 140,198 Depreciation was $ 84,458 and $ 93,026 for 2025 and 2024 , respectively. Amounts are recorded in selling, general, and administrative expense as well as in cost of services. NOTE G — INTANGIBLE ASSETS Intangible assets consisted of the following as of December 31: 2025 2024 Trade name $ 130,000 $ 130,000 Proprietary software 420,000 420,000 Customer relationships 1,692,583 1,692,583 Patents and patents pending 287,248 365,080 2,529,831 2,607,663 Less accumulated amortization ( 1,699,751 ) ( 1,510,310 ) Total $ 830,080 $ 1,097,353 55 Table of Contents Aggregate amortization expense for 2025 and 2024 was approximately $ 267,273 and $ 304,983 , respectively. Estimated minimum amortization expense based on straight line amortization of the software license rights for each of the next five years and thereafter approximates the following: Years ending December 31 2026 $ 224,000 2027 223,000 2028 141,000 2029 117,000 2030 14,000 Thereafter 111,080 Total $ 830,080 NOTE H - INVESTMENTS Equity Investment in Privately Held Company 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. The Boumarang Shares represent approximately 7.69 % of the issued and outstanding shares of Boumarang, Inc. and the Company has no corporate governance or control rights. The Boumarang Shares were purchased from Fiber Food Systems, Inc. (“Fiber Food”), an early-stage company engaged in developing global food security solutions, in consideration of the issuance of 59,500 shares of the Company’s common stock (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026). Fiber Food is not a principal stockholder of Boumarang and has no corporate governance or control rights. 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. The purchase agreement 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. In April of 2025, Boumarang acquired all intellectual property rights to the Wavedrone platform from Shore House IVF, a technology developer based in the Faroe Islands, for $ 3.5 million acquisition which was executed entirely in Boumarang common stock. The Boumarang Shares constitute an investment in a privately held company for which there is no trading market and are carried at fair value. 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. 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. The Company follows ASC Topic 820 – “Fair Value Measurement,” which establishes a three -level valuation hierarchy for disclosure of fair value measurements. 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. The three levels are defined as follows: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2: 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. Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). 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. The lack of control and marketability discounts were based on published studies and transfer restrictions contained in Boumarang’s corporate governance documents. 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. 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. ASC 321 - 10 - 35 requires annual impairment testing for equity securities without readily determinable fair values. In April of 2026 the Company received an updated independent valuation report with a December 31, 2025 valuation of $ 2.00 per share. The independent report referenced revenue beginning in 2026 as the basis of the valuation, which has not occurred to date. As a result, management has recorded a 50 % impairment of investment. 56 Table of Contents NOTE I — ACCRUED LIABILITIES Accrued liabilities consisted of the following as of December 31: 2025 2024 Compensation $ 388,072 $ 549,217 Compensated absences 344,917 299,152 Accrued legal and accounting fees 221,600 161,000 Taxes 15,986 55,986 Employee expenses reimbursement 145,209 154,209 Sales tax payable 27,434 18,147 Other 190,712 41,021 Total $ 1,333,930 $ 1,278,732 For the years ended December 31, 2025 from December 31, 2024, there were decreases in compensation costs related to commission payments due of approximately, $ 161,000 and decreases in employee expenses reimbursement due to timing of reimbursements of approximately $ 9,000 . These decreases were offset by increases for the years ended December 31, 2025 and December 31, 2024 of approximately $ 46,000 for a higher vacation time accrual, approximately $ 25,000 for higher legal and accounting fees, approximately $ 9,000 for sales tax, and approximately $ 157,000 for miscellaneous accrued expenses. 57 Table of Contents NOTE J — NOTES PAYABLE Securities Purchase Agreement dated September 30, 2025 On September 30, 2025, the Company entered into and closed a note purchase agreement with the Lender which provided for the issuance of a $ 1,130,000 principal amount senior secured promissory note (the “2025 Note”). The 2025 Note carries an original issue discount of $ 125,000 and the Company agreed to pay $ 5,000 to the Lender to cover its transaction costs, which were deducted from the proceeds of the 2025 Note resulting in a total of $ 1,000,000 being funded to the Company at closing. The proceeds are being used for general working capital. The principal amount of the 2025 Note is due 18 months following the date of issuance. Interest under the 2025 Note accrues at a rate of nine percent ( 9 %) per annum. All repayments of principal due under the 2025 Note will be subject to an exit fee of seven percent ( 7 %) of the principal amount being repaid (the “Exit Fee”). Commencing six months after the date of issuance of the 2025 Note (the “Redemption Start Date”), Lender shall have the right to redeem up to $ 135,000 of principal amount under the 2025 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. At the end of each month following the Redemption Start Date, if the Company has not reduced the outstanding balance under the 2025 Note by at least $ 135,000 , then by the fifth ( 5th ) day of the following month, the Company must either pay to Lender the difference between $ 135,000 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 %). As of September 30, 2025, there have been no redemptions by the Lender. The 2025 Note is secured by a lien on substantially all of the Company’s assets and properties and the Company’s obligations under the 2025 Note are guaranteed by Pistol Star, Inc., a wholly owned subsidiary of the Company (Pistol). The 2025 Note can be prepaid in whole or in part without penalty at any time. 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 2025 Note. The 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. At December 31, 2025 the Company was not in default of any covenants. In connection with the October 27, 2025 warrant exercise agreement described in Note M, the Company prepaid approximately $ 455,000 of the amount due under the 2025 Note. At December 31, 2025, the principal balance due for the 2025 note was $ 545,000 . Securities Purchase Agreement dated June 24, 2024 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”). The 2024 Note carried 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. The proceeds were used for general working capital. The principal amount of the 2024 Note was originally due eighteen months ( 18 ) following the date of issuance. Interest under the 2024 Note accrues at a rate of nine percent ( 9 %) per annum. 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”). 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. The 2024 Note was secured by a lien on substantially all of the Company’s assets and properties and the Company’s obligations under the Note were guaranteed by Pistol. The 2024 Note could be prepaid in whole or in part without penalty at any time. In the event that the Company received any proceeds in connection with any fundraising or financing transaction (including any warrant exercises), it would 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. The Company received gross proceeds of approximately $ 2.0 million in connection with a financing transaction (see Note M Warrants). 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. Between January and September 2025, the Company entered into a number of Exchange Agreements with the holder of the 2024 Note pursuant to which it partitioned from the 2024 Note new promissory notes in the aggregate principal amount of $ 1,459,000 reducing the outstanding principal amount of the 2024 Note to approximately $ 338,400 . On October 27, 2025, the Company entered into two Exchange Agreements (the “Exchange Agreements”) with the Lender. Pursuant to the Exchange Agreements, the Company and Lender agreed to (i) partition from the 2024 Note two new Promissory Notes (the “Partitioned Notes”) in the original principal amounts of $ 261,841 and $ 66,150 , respectively, (ii) cause the outstanding balance of the 2024 Note to be reduced by $ 327,991 , the aggregate principal amount of the Partitioned Notes, and (iii) exchange the Partitioned Notes for an aggregate of 42,903 shares of the Company’s Common Stock (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026). As a result of the Exchange Agreements, the 2024 Note has been paid in full. 58 Table of Contents NOTE K — LEASES The Company’s leases office space in New Jersey, Minnesota, New Hampshire, Madrid and Hong Kong with lease termination dates in 2026 and 2027. The property leased in China is paid monthly as used, without a formal agreement. The following tables present the components of lease expense and supplemental balance sheet information related to the operating leases were: Year ended Year ended December 31, December 31, 2025 2024 Lease cost Operating lease cost $ 28,195 $ 45,787 Total lease cost $ 28,195 $ 45,787 Balance sheet information Operating lease right-of-use assets $ 47,953 $ 73,372 Operating lease liabilities, current portion $ 27,728 $ 24,642 Operating lease liabilities, non-current portion 21,266 48,994 Total operating lease liabilities $ 48,994 $ 73,636 Weighted average remaining lease term (in years) – operating leases 1.67 2.67 Weighted average discount rate – operating leases 5.50 % 5.50 % Supplemental cash flow information related to leases were as follows: Cash paid for amounts included in the measurement of operating lease liabilities $ 47,640 $ 63,914 Maturities of operating lease liabilities were as follows as of December 31, 2023: 2026 $ 29,267 2027 22,477 2028 - Total future lease payments $ 51,744 Less: imputed interest ( 3,791 ) Total $ 47,953 59 Table of Contents NOTE L — CONTINGENCIES Litigation 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, 2025 , the Company was not a party to any pending lawsuits. NOTE M — EQUITY 1. Preferred Stock Within the limits and restrictions provided in the Company’s Certificate of Incorporation, the Board of Directors has the authority, without further action by the shareholders, to issue up to 5,000,000 shares of preferred stock, $. 0001 par value per share, in one or more series, and to fix, as to any such series, any dividend rate, redemption price, preference on liquidation or dissolution, sinking fund terms, conversion rights, voting rights, and any other preference or special rights and qualifications. 2. Common Stock Holders of common stock have equal rights to receive dividends when, as and if declared by the Board of Directors, out of funds legally available therefor. Holders of common stock have one vote for each share held of record and do not have cumulative voting rights. Holders of common stock are entitled, upon liquidation of the Company, to share ratably in the net assets available for distribution, subject to the rights, if any, of holders of any preferred stock then outstanding. Shares of common stock are not redeemable and have no preemptive or similar rights. All outstanding shares of common stock are fully paid and nonassessable. Employee Stock Purchase Plan On June 18, 2021, the stockholders approved the 2021 Employee Stock Purchase Plan ("ESPP"). Under the terms of this plan, 4,384 shares of common stock were reserved for issuance to employees and officers of the Company at 85 % of the lower of the closing price of the common stock as reported on the Nasdaq Capital Market at the first day or the last day of the offering period. Eligible employees are granted an option to purchase shares under the plan funded by payroll deductions. The Board may suspend or terminate the plan at any time, otherwise the plan expires June 17, 2031. On August 8, 2025, at the Company’s Annual Stockholders Meeting (“Annual Meeting”), a proposal was approved to amend the plan to reserve an additional 70,000 shares of common stock. During 2025 and 2024, 2,126 , and 264 shares, respectively, were issued under the ESPP to employees, (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026) which resulted in a $ 2,250 and $ 775 non-cash compensation expense, respectively. Issuances of Restricted Stock Restricted stock consists of shares of common stock that are subject to restrictions on transfer and risk of forfeiture until the fulfillment of specified conditions. The fair value of nonvested shares is determined based on the market price of the Company's common stock on the grant date. Restricted stock is expensed ratably over the term of the restriction period. The Company issued 28,300 shares of restricted common stock to certain employees of the Company and 3,025 of shares of restricted common stock were forfeited during the year ended December 31, 2025. The Company issued 17,896 shares of restricted common stock to certain employees of the Company and 917 of shares of restricted common stock were forfeited during the year ended December 31, 2024 ( as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026). These shares vest in equal annual installments over a three -year period from the date of grant. Restricted stock compensation for the years ended December 31, 2025 and 2024 was $ 144,321 and $ 224,470 , respectively. Issuances to Directors, Executive Officers & Consultants During the 2025 and 2024 years, the Company issued 2,314 and 1,205 shares of common stock respectively to its directors in lieu of payment of board fees, valued at $ 20,004 and $ 18,006 respectively (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026). 60 Table of Contents Warrants Warrants Issued with a Warrant Exercise Agreement: On October 27, 2025, the Company entered into and closed a warrant exercise agreement (the “Warrant Exercise Agreement”) with an existing institutional investor (the “Investor”) to exercise certain outstanding warrants to purchase an aggregate of 309,167 shares of the Company’s common stock (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026), which were originally issued to the Investor on January 15, 2025 ( the “Existing Warrants”). Pursuant to the Warrant Exercise Agreement, the exercise price of the Existing Warrants was reduced from $ 21.50 per share to $ 10.20 per share. In consideration for the exercise of the Existing Warrants, subject to compliance with the beneficial ownership limitations included in the Existing Warrants, the Investor received new unregistered warrants to purchase up to an aggregate of 618,334 shares of the Company’s Common Stock (the “New Warrants”). The New Warrants have substantially the same terms, are immediately exercisable at an exercise price of $ 10.20 per share and will expire five years from the date of issuance. The Company agreed to file a resale registration statement covering the public resale of the shares of Common Stock issuable upon exercise of the New Warrants with the SEC, and to use commercially reasonable efforts to have such Resale Registration Statement declared effective by the SEC within 90 calendar days following the date of the Warrant Exercise Agreement. The New Warrants include a beneficial ownership limitation that prevents the Investor from beneficially owning more than 4.99 % of the Company’s outstanding common stock at any time. The gross proceeds to the Company under the Warrant Exercise Agreement were approximately $ 3.1 million, prior to deducting placement agent fees and estimated offering expenses. The Company intends to use the net proceeds for working capital and general corporate purposes, including repayment of a portion of the Company’s outstanding secured note. Maxim Group LLC acted as the exclusive placement agent to the Company and the Company agreed to pay Maxim an aggregate cash fee equal to 6.0 % of the gross proceeds received by the Company under the Warrant Exercise Agreement. On January 15, 2025, the Company entered into a warrant exercise agreement (the "January Warrant Exercise Agreement") with the Investor to exercise certain outstanding warrants to purchase an aggregate of 206,111 shares of the Company’s common stock (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026) at an exercise price of $ 18.50 per share which were originally issued to the Investor on September 13, 2024 ( the "Existing 2024 Warrants"). In consideration for the exercise of the Existing 2024 Warrants, subject to compliance with the beneficial ownership limitations included in the existing warrants, the Investor received new unregistered warrants which were amended and exercised in full pursuant to the Warrant Exercise Agreement which is more fully described in the preceding paragraph. The Company realized gross proceeds under the January Warrant Exercise Agreement of approximately $ 3.8 million, prior to deducting placement agent fees and estimated offering expenses. Net proceeds are being used for working capital and general corporate purposes, including repayment of a portion of the 2024 Note. 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. Pursuant to the Inducement Agreement, the investor agreed to exercise outstanding warrants to purchase an aggregate of 103,056 shares of the Company's common stock (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026) at an amended exercise price of $ 18.50 . The gross proceeds from the exercise of the warrants were approximately $ 1.9 million, prior to deducting placement agent fees and estimated offering expenses. In consideration for the immediate exercise of the warrants, the Company issued new unregistered warrants which were amended and exercised in full pursuant to the January Warrant Exercise Agreement which is more fully described in the preceding paragraph. Valuation Assumptions for Warrants: The Company records the warrants at their fair value which is determined using the Black-Scholes valuation model on the date of the grant. The fair value of the warrants issued in 2025 and 2024 were estimated with the following assumptions: Years ended December 31, 2025 2024 Weighted average risk-free interest rate 3.84 % 3.34 % Weighted average exercise price $ 10.20 $ 18.50 Weighted average exercise period 5 5 Weighted average Volatility of stock price 451 % 577 % 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. The five -year volatility is higher than the one -year rate from Bloomberg, 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. Treasury yield curve in effect at the time of grant for periods corresponding with the years to maturity. A summary of warrant activity (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026) is as follows: Weighted Weighted average average remaining Aggregate Total exercise life intrinsic Warrants price (in years) value Outstanding, as of December 31, 2023 262,649 1,049.50 4.37 — Granted 206,111 18.50 Exercised ( 190,322 ) 10.20 Forfeited — — Expired ( 1,389 ) — Outstanding, as of December 31, 2024 277,049 $ 109.90 4.19 — Granted 927,500 10.20 Exercised ( 515,278 ) 10.20 Forfeited — — Expired ( 24,521 ) 1,007.70 Outstanding, as of December 31, 2025 664,750 $ 12.40 4.70 — 61 Table of Contents The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $ 5.40 , $ 17.10 , and $ 30.00 as of December 31, 2025, 2024 and 2023 , respectively, which would have been received by the warrant holders had all warrant holders exercised their options as of that date. There were no in-the-money warrants exercisable as of December 31, 2025, 2024 and 2023 . NOTE N — STOCK OPTIONS 2023 Stock Incentive Plan On December 14, 2023, the stockholders approved the 2023 Stock Incentive Plan. The 2023 Plan initially reserved 33,333 shares of common stock for issuance of options, restricted stock, and other equity based awards to employees, officers, directors, consultants advisors and independent contractors of the Company. Options are issued at exercise prices which may not be below 100 % of fair market value (or 110 % of the fair market value if, at the time the option is granted, the participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of our stock) and have terms not to exceed ten years. Options issued under the 2023 Plan vest pursuant to the terms of stock option agreements with the recipients. 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. On August 8, 2025, at the Annual Meeting, a proposal was approved to amend the plan to reserve an additional 70,000 shares of common stock. In 2025, the Company issued 28,300 restricted shares to employees of which 3,026 were forfeited. The Company also issued 2,316 shares to the Board of Directors for payments of Board fees. 2015 Stock Option Plan On January 27, 2016, the stockholders approved the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan initially reserved 1,042 shares of common stock for issuance of options, restricted stock, and other equity based awards to employees, officers, directors, and consultants of the Company. In 2021, the stockholders approved an amendment to the 2015 to increase the shares of common stock authorized for issuance under the 2015 Plan from 1,042 shares to 4,383 shares together with other technical changes. The term of stock options granted under the 2015 Plan, may not exceed ten years, exercise prices may not be below 100 - 110 % of fair market value, and vesting occurs over time periods set forth in written agreements with the recipients. In the event of a change in control, certain stock awards issued under the 2015 Plan may be subject to additional acceleration of vesting as may be provided in the participants’ written agreement. The 2015 Plan expired in December 2025. Non-Plan Stock Options Periodically, the Company has granted options outside of the 2015 Plan to various employees and consultants. In the event of change in control, as defined, certain of the non-plan options outstanding vest immediately. Stock Option Activity Information summarizing option activity is as follows: Weighted Weighted average Number of Options average remaining Aggregate 2015 Non Total exercise life intrinsic Plan Plan price (in years) value Outstanding, as of December 31, 2023 454 472 926 $ 3,112.00 0.96 $ 0 Granted — — — — Exercised — — — — Forfeited ( 35 ) — ( 35 ) 936.00 Expired ( 119 ) ( 472 ) ( 591 ) 3,805.10 Outstanding, as of December 31, 2024 300 — 300 $ 1,973.10 1.14 $ 0 Granted — — — — Exercised — — — — Forfeited — — — — Expired ( 104 ) — ( 104 ) 2,822.40 Outstanding, as of December 31, 2025 196 — 196 $ 1,453.15 0.69 $ 0 Vested or expected to vest at December 31, 2025 — $ — — $ 0 Exercisable at December 31, 2025 — $ — — $ 0 62 Table of Contents The options outstanding and exercisable at December 31, 2025 were in the following exercise price ranges (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026): Options Outstanding Options Exercisable Weighted Weighted Weighted average average average Number of exercise remaining Number exercise Range of exercise prices shares price life (in years) exercisable price $ 936.00 - 1,699.20 196 $ 1,453.15 0.69 196 $ 1,453.15 The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $ 5.40 , $ 17.10 , and $ 30.00 as of December 31, 2025, 2024 and 2023 , respectively, which would have been received by the option holders had all option holders exercised their options as of that date. There were no in-the-money options exercisable as of December 31, 2025, 2024 and 2023 . The weighted average fair value of options granted during the years ended December 31, 2025 and 2024 was $ 0 as no options were granted in either year. The total intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was $ 0 as no options were exercised in either year. The total fair value of shares vested during the years ended December 31, 2025 and 2024 was $0 as no options vested in either year. As of December 31, 2024, there was no future forfeiture adjusted compensation costs related to nonvested stock options. NOTE O — INCOME TAXES For financial reporting purposes, the net pre-tax book loss for the United States and foreign entities, in the aggregate, was: Year ended Year ended December 31, December 31, 2025 2024 United States $ ( 6,179,476 ) $ ( 2,767,752 ) Hong Kong ( 74,045 ) ( 222,901 ) Nigeria ( 164,518 ) ( 223,426 ) Spain ( 723,407 ) ( 1,109,611 ) Portugal - - Total $ ( 7,141,446 ) $ ( 4,323,690 ) 63 Table of Contents There was no provision for current federal, foreign or state taxes for both of the years ended December 31, 2025 and 2024 as a result of taxable losses incurred in these jurisdictions. The provision for income taxes (tax benefits) benefits consists of the following: Year ended Year ended December 31, December 31, 2025 2024 Current Federal and States $ - $ - Foreign: Subtotal - $ - Deferred: Federal and States Foreign 16,500 ( 22,998 ) Subtotal 16,500 ( 22,998 ) Provision for income tax expense (benefit) $ 16,500 $ ( 22,998 ) There were no payments made in relation to income taxes for the year ending December 31, 2025. Significant components of deferred tax assets and liabilities are as follows at December 31, 2025 and 2024 : December 31, December 31, 2025 2024 Accrued compensation $ 140,490 $ 154,457 Allowance for credit losses 20,626 20,513 Research and development expenses 724,038 1,261,601 Capital loss carry forward 114,885 114,251 Right-of-use operating lease assets ( 5,979 ) ( 16,346 ) Operating lease liabilities - 16,406 Stock-based compensation 54,258 34,299 Equipment and leasehold improvements ( 1,951 ) ( 6,268 ) Impairment of investment 712,500 - Intangible assets - Foreign ( 89,000 ) - Allowance for credit losses - Foreign 72,500 - Inventory reserve 589,271 781,213 Other 1,006 1,000 Tax credits 1,116,119 1,554,541 Net operating loss and research and credit carryforwards 11,686,140 11,824,622 Valuation allowance ( 15,083,017 ) ( 15,740,289 ) Net deferred tax liability $ - $ - The Company recorded a valuation allowance equal to its net deferred taxes due to the uncertainty of realization of the deferred tax assets due to operating loss history of the Company. The Company currently provides a valuation allowance against deferred taxes when it is more likely than not that some portion, or all of its deferred tax assets will not be realized. The valuation allowance could be reduced or eliminated based on future earnings and future estimates of taxable income. With a full valuation allowance, any change in the deferred tax asset or liability is fully offset by a corresponding change in the valuation allowance. At December 31, 2025 and 2024 , the Company provided a valuation allowance on its net deferred tax assets of $ 15,083,017 and $ 15,740,289 respectively. As of December 31, 2025 , the Company has U.S. federal net operating loss carryforwards of approximately $ 53.3 million. Approximately $ 19.6 million are subject to expiration between 2026 and 2037, and $ 33.7 million net operating loss carryforwards have no expiration date. These net operating loss carryforwards could be subject to the limitations under Section 382 of the Internal Revenue Code due to changes in the equity ownership of the Company. In addition, the Company has net operating loss carry forwards from various states of approximately $ 12.5 million which expire from 2026 through 2045. 64 Table of Contents A reconciliation of the effective tax rate on loss from operations and the US federal statutory rate is presented below for the years ended December 31, 2025 and 2024. Year ended December 31, 2025 Federal statutory income tax rate $ ( 1,673,013 ) 21 % State taxes, net of federal benefit - - Permanent differences Amortization of intangible assets 33,242 ( 0.7 ) Restricted Stock units 26,334 ( 0.6 ) Others 2,918 ( 0.1 ) Expiration of net operating loss and research credit carryforwards 1,848,627 ( 40.5 ) Foreign rate differential - all 187,823 (4.1) True ups and other 175,955 ( 3.9 ) Valuation allowance ( 585,386 ) 28.5 - Effective tax rate $ 16,500 ( 0.4 )% The rate reconciliation above has been adjusted to be presented in compliance with the guidance under ASU 2023 - 09. The Company has adopted this guidance on a prospective basis. As previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU 2023 - 09, the following is a reconciliation of our income tax rate computed using the federal statutory rate to our actual income tax rate. Year ended December 31, 2024 Federal statutory income tax rate 21 % State taxes, net of federal benefit 0.82 Permanent differences ( 1.84 ) Expiration of net operating loss and research credit carryforwards ( 46.14 ) Foreign rate differential ( 7.23 ) Rate change ( 0.41 ) Other 0.14 Valuation allowance 33.98 Effective tax rate 0.32 % On July 4, 2025, the One Big Beautiful Bill was enacted ("OBBBA"), introducing significant and wide-ranging changes to the U.S. federal tax system. Significant components include restoration of 100% accelerated tax depreciation on qualifying property including expansion to cover qualified production property. Another major aspect includes the return to immediate expensing of domestic research and experimental expenditures ("R&E") which in some cases may include retroactive application back to 2021 for businesses with gross receipts of less than $31 million or accelerated tax deductions of R&E that was previously capitalized for larger businesses. The legislation also reinstates EBITDA-based interest deductions for tax purposes and makes several business tax incentives permanent. Less favorable business provisions include limitations on tax deductions for charitable contributions. In accordance with ASC 740, the Company recognized the effects of the OBBBA in the period that included the enactment date. The Company continues to evaluate the ongoing effects of the OBBBA, including the interaction of the enacted provisions with its existing tax attributes and elections. The Company has not been audited by the Internal Revenue Service (“IRS”) or any states in connection with income taxes. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company has not filed its required returns for fiscal 2024 as of the date of this report. Management believes that when the returns are filed, the taxes that will be owed will not be material due to the losses incurred during the year. The Company is currently working on the filings and expects to file these returns in April 2026. The Company estimates that the potential penalties for non-filing will be minimal due to the losses incurred. The periods from 2021 through 2025 remain open to examination by the IRS and state jurisdictions. The Company's subsidiary in Nigeria has not filed its required returns since inception. Management believes that when the returns are filed, no taxes will be owed due to the losses incurred during those periods. The Company is not subject to minimum tax during the first four years of operations. As a result, management could not calculate the amount of net operating loss carryforwards that are available to offset future taxable income. Potential penalties for non-filing are estimated to be minimal due to the losses. The Company expects to be current by December 31, 2026. The Company's subsidiary in Hong Kong has not filed its required returns in several years. Management believes that when the returns are filed, no taxes will be owed due to losses incurred during those periods. As a result, management could not calculate the amount of net operating loss carryforwards are available to offset future taxable income. Potential penalties for non-filing are expected to be minimal due to the losses. The Company expects to be current in 2026. 65 Table of Contents The Company's subsidiary in Portugal has not filed its required returns since inceptions. Management believes that when the returns are filed, no taxes will be owed due to losses incurred during those periods. As a result, management could not calculate the amount of net operating loss carryforwards are available to offset future taxable income. We estimate that the potential penalties for non-filing will be minimal due to the losses. The Company will be working on the filings during 2026. The Company believes it is not subject to any tax audit risk beyond those periods. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense incurred during the years ended December 31, 2025 and 2024 . NOTE P — SAVINGS PLAN The Company has established a savings plan under section 401 (k) of the Internal Revenue Code. All employees of the Company, after completing one day of service, are eligible to enroll in the 401 (k) plan. Participating employees may elect to defer a portion of their salary on a pre-tax basis up to the limits as provided by the IRS Code. The Company is not required to match employee contributions but may do so at its discretion. The Company made no matching contributions during the years ended December 31, 2025 and 2024 . The plan passed its 2024 annual non-discrimination test and expects to pass the 2025 annual non-discrimination test. NOTE Q — EARNINGS PER SHARE (EPS) 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 (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026): : Years ended December 31, 2025 2024 Stock options 196 300 Warrants 664,750 277,049 Total 664,946 277,349 NOTE R — SEGMENTS The Company operates as one operating segment. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM used consolidated revenues, gross profit and loss before provision for income taxes to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the need to allocate its budget to operating expenses and invest in additional equipment. The segment assets are equal to the assets presented in the consolidated balance sheets. The significant expenses that are regularly provided to the CODM are disclosed in the consolidated statements of operations as a part of the condensed consolidated net loss. See the consolidated financial statements for all financial information regarding the Company’s operating segment. See Note B for the Company’s revenues by geographic region. The Company’s long-lived tangible assets are recognized on the Consolidated Balance Sheet are located in New Hampshire and Hong Kong. The Company’s operating lease right-of use assets recognized on the Consolidated Balance Sheet are located in Minnesota NOTE S — SUBSEQUENT EVE NTS On February 17, 2026, 250 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 (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026). On March 19, 2026, the Company issued 250 shares of restricted stock to a new employee which vest over three -years (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026). The forgoing issuances of common stock after December 31, 2025 total 250 shares representing a 0 % increase in the Company's outstanding shares of common stock since December 31, 2025, including forfeitures (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026. On April 20, 2026, the Company held a Special Meeting of stockholders at which our stockholders approved a reverse split of our outstanding shares of common stock. After the Special Meeting, the Board set the reverse stock split ratio at 1 -for- 10 , and on April 28, 2026, the Company filed a Certificate of Amendment with the Secretary of State of the State of Delaware to effect the reverse stock split which became effective at 5:00 p.m., Eastern Time, on April 29, 2026. The Common Stock began trading on the Nasdaq Capital Market on a split-adjusted basis on April 30, 2026 under a new CUSIP number, 09060C606 (as adjusted to reflect our 1 -for- 10 reverse stock split, which was effective April 30, 2026). On May 6, 2026, the Company received notice from the Nasdaq Capital Market that the Company’s common stock would be suspended from trading on the Nasdaq Capital Market at the opening of business on May 13, 2026 due to the Company’s failure to regain compliance with the $1.00 minimum bid requirement and failure to timely file its periodic reports with the SEC The Company has scheduled an appeal of such determination to Nasdaq’s Hearings Panel and a hearing has been scheduled for June 16, 2026. Effective with the opening of trading on May 13, 2026, the Company’s common stock has been traded on OTC Markets. On June 5, 2026, the Company received notice from the Nasdaq Stock Market stating that the Company had not yet filed its Quarterly Report on Form 10 -Q for the period ended March 31, 2026 with the SEC as required by applicable Nasdaq Listing Rules, that this served as an additional basis for delisting the Company’s common stock from the Nasdaq Capital Market, and would be considered in determining the Company’s continued listing on the Nasdaq Capital Market. 66 Table of Contents EXHIBIT INDEX Exhibit Exhibit No. 2.1 Stock Purchase Agreement by and among the Company, Thomas J. Hoey, and PistolStar, Inc. dated June 6, 2020 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the SEC on July 7, 2020) 2.2 Stock Purchase Agreement by and among the Company, Alex Rocha and Swivel Secure Europe, SA dated February 2, 2022 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the SEC on February 3, 2022) 2.3 Amendment No. 1 to Stock Purchase Agreement by and among the Company, Alex Rocha and Swivel Secure Europe, SA dated March 4, 2022 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the SEC on March 9, 2022) 3.1 Certificate of Incorporation of BIO-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed with the SEC on January 5, 2005) 3.2 Bylaws (incorporated by reference to Exhibit 3.3 to the current report on Form 8-K, filed with the SEC on January 5, 2005) 3.3 Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Appendix A to the definitive proxy statement, filed with the SEC on January 18, 2006) 3.4 Certificate of Amendment of Certificate of Incorporation of Bio-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed with the SEC on March 31, 2015) 3.5 Certificate of Elimination of BIO-key International, Inc. filed October 6, 2015 (incorporated by reference to Exhibit 3.5 to the registration statement on Form S-1 File No. 333-208747 filed with the SEC on December 23, 2015) 3.6 Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed with the SEC on November 2, 2015) 3.7 Certificate of Designation of Preferences, Rights and Limitations of Series B-1 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the quarterly report on Form 10-Q, filed with the SEC on November 16, 2015) 3.8 Certificate of Amendment of Certificate of Incorporation of Bio-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed with the SEC on December 28, 2016) 3.9 Certificate of Amendment of Certificate of Incorporation of Bio-Key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed with the SEC on November 19, 2020) 3.10 Certificate of Amendment to Certificate of Incorporation of BIO-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K filed with the SEC on December 19, 2023) 3.11 Certificate of Amendment to Certificate of Incorporation of BIO-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K filed with the SEC on April 29, 2026) 4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the registration statement on Form SB-2, File No. 333-16451) 4.2 Common Stock Purchase Warrant dated May 6, 2020 (incorporated by reference to Exhibit 10.7 to the quarterly report on Form 10-Q filed with the SEC on June 8, 2020) 4.3 Common Stock Purchase Warrant dated June 29, 2020 (incorporated by reference to Exhibit 10.3 to the current report on Form 8-K filed with the SEC on July 1, 2020) 4.4 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.3 to Amendment No. 1 to the Registration Statement on Form S-1/A, filed with the SEC on July 17, 2020) 67 Table of Contents 4.5 Form of Warrant (incorporated by reference to Exhibit 4.2 to Amendment No. 1 to the Registration Statement on Form S-1/A, filed with the SEC on July 17, 2020) 4.6 Form of Common Warrant (incorporated by reference to Exhibit 4.9 to Amendment No. 1 to Registration Statement on Form S-1 filed with the SEC on October 26, 2023) 4.7 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.10 to Amendment No. 1 to the Registration Statement on Form S-1, filed with the SEC on October 26, 2023) 4.8 Form of Warrant Agency Agreement (incorporated by reference to Exhibit 4.11 to Amendment No. 1 to the Registration Statement on Form S-1, filed with the SEC on October 26, 2023) 4.9 Form of Common Warrant (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed with the SEC on December 21, 2023) 4.10 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) 4.11 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) 4.12 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) 4.13 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) 4.14 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) 4.15 BIO-key International, Inc. 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 10.1*** Employment Agreement by and between BIO-key International, Inc. and Mira LaCous dated November 20, 2001 (incorporated by reference to Exhibit 10.39 to the current report on Form 8-K, filed with the SEC on January 22, 2002) 68 Table of Contents 10.2*** Employment Agreement, effective March 25, 2010, by and between the Company and Michael W. DePasquale (incorporated by reference to Exhibit 10.93 to the annual report on Form 10-K, filed with the SEC on March 26, 2010) 10.3*** Employment Agreement by and between BIO-key International, Inc. and Cecilia Welch dated May 15, 2013 (incorporated by reference to Exhibit 10.42 to the annual report on Form 10-K, filed with the SEC on March 31, 2014) 10.4*** Employment Agreement by and between BIO-key International, Inc. and James Sullivan dated April 5, 2017 (incorporated by reference to Exhibit 10.42 to the annual report on Form 10-K, filed with the SEC on March 29, 2021) 10.5 First Amendment to Lease Agreement by and between BIO-key International, Inc. and BRE/DP MN LLC dated September 12, 2013 (incorporated by reference to Exhibit 10.44 to the annual report on Form 10-K, filed with the SEC on March 31, 2014) 10.6*** BIO-key International, Inc. 2015 Equity Incentive Plan (incorporated by reference to Appendix B to the definitive proxy statement filed with the SEC on December 15, 2015) 10.7 Software License Purchase Agreement Dated November 11, 2015 by and among BIO-key Hong Kong Limited, Shining Union Limited, WWTT Technology China, Golden Vast Macao Commercial Offshore Limited, Giant Leap International Limited (incorporated by reference to Exhibit 10.36 to the registration statement on Form S-1 File No. 333-208747 filed with the SEC on December 23, 2015) 10.8*** Form Non-Plan Option Agreement between the Company and certain of its directors, officers, employees and contractors (incorporated by reference to Exhibit 10.4 to the quarterly report on Form 10-Q filed with the SEC on May 15, 2017) 10.9 Securities Purchase Agreement dated May 23, 2018 by and between the Registrant and Giant Leap International Limited (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K, filed with the SEC on May 30, 2018) 10.10 Securities Purchase Agreement dated May 23, 2018 by and between the Registrant and Micron Technology Development Limited (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K, filed with the SEC on May 30, 2018) 10.11 Securities Purchase Agreement dated May 31, 2018 by and between the Registrant and Wong Kwok Fong (Kelvin) (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K, filed with the SEC on June 4, 2018) 10.12 GLP 2nd Amendment to Lease dated July 27, 2018 (incorporated by reference to Exhibit 10.26 to the annual report on Form 10-K, filed with the SEC on April 1, 2019) 10.13 Marlen 4th Amendment to Lease dated June 2, 2018 (incorporated by reference to Exhibit 10.27 to the annual report on Form 10-K, filed with the SEC on April 1, 2019) 69 Table of Contents 10.14 Common Stock Purchase Warrant dated July 10, 2019 (incorporated by reference to Exhibit 10.5 to the quarterly report on Form 10-Q, filed with the SEC on August 14, 2019) 10.15 Sales Incentive Agreement with Technology Transfer Institute dated March 25, 2020. (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q, filed with the SEC on June 8, 2020) 10.16 Form of Technology Transfer Institute Warrant. (incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q, filed with the SEC on June 8, 2020) 10.17 Common Stock Purchase Warrant dated May 6, 2020. (incorporated by reference to Exhibit 10.7 to the quarterly report on Form 10-Q, filed with the SEC on June 8, 2020) 10.18*** Form of Restricted Stock Award Agreement under the BIO-key International, Inc. Amended & Restated 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K, filed with the SEC on August 28, 2020) 70 Table of Contents 10.19*** BIO-key International, Inc. 2021 Employee Stock Purchase Plan (incorporated by reference to Appendix A to the definitive proxy statement filed with the SEC on May 4, 2021) 10.20*** BIO-key International, Inc. Amended and Restated 2015 Equity Incentive Plan (incorporated by reference to Appendix B to the definitive proxy statement filed with the SEC on May 4, 2021) 10.21 Management Services Agreement dated March 8, 2022 by and among Swivel Aman-FZCO, Swivel Secure Europe, SA, and Alex Rocha (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q filed with the SEC on May 23, 2022) 10.22 Option Agreement dated March 8, 2022 by and between the Company and Alex Rocha (incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q filed with the SEC on May 23, 2022) 10.23 Distribution Agreement dated October 23, 2020 by and between Swivel Secure Europe, SA and Swivel Secure Limited (incorporated by reference to Exhibit 10.3 to the quarterly report on Form 10-Q filed with the SEC on May 23, 2022) + 10.24 Deed of Variation dated January 26, 2022 by and between Swivel Secure Europe, SA and Swivel Secure Limited (incorporated by reference to Exhibit 10.4 to the quarterly report on Form 10-Q filed with the SEC on May 23, 2022) + 10.25 Securities Purchase Agreement dated December 22, 2022 by and between the Company and AJB Capital Investments, LLC (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed with the SEC on December 23, 2022) 10.26 Common Stock Purchase Warrant, dated December 22, 2022 (incorporated by reference to Exhibit 10.3 to the current report on Form 8-K filed with the SEC on December 23, 2022) 10.27 $2,200,000 Senior Secured Promissory Note, dated December 22, 2022 (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K filed with the SEC on December 23, 2022) 10.28 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.39 to Amendment No. 1 to Registration Statement on Form S-1 filed with the SEC on October 26, 2023) 10.29*** BIO-key International, Inc. 2023 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed with the SEC on December 19, 2023) 10.30 Securities Purchase Agreement, dated as of December 20, 2023, by and between BIO-key International, Inc. 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) 10.31 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) 10.32 $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) 10.33 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) 10.34 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) 10.35 Guaranty dated June 24, 2024 by and between Pistol Star, Inc. 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) 10.36 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) 10.37 Securities Purchase Agreement dated November 27, 2024, by and among BIO-key International, Inc., Fiber Food Systems, Inc. and Boumarang Inc. (incorporated by refence to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed December 3, 2024) 10.38 Form of Warrant Exercise Agreement, dated January 15, 2025, by and between BIO-key International, Inc. and the Investor (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed January 16, 2025) 10.39 Exchange Agreement, dated January 15, 2025, by and between BIO-key International, Inc. 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) 71 Table of Contents 10.40 Exchange Agreement, dated January 15, 2025, by and between BIO-key International, Inc. 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) 10.41 Amendment No. 1 to the BIO-key International, Inc. 2023 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 20, 2025) 10.42 Amendment No. 1 to the BIO-key International, Inc. 2021 Employe Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 20, 2025) 10.43 Note Purchase Agreement dated September 30, 2025 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 October 3, 2025) 10.44 $1,130,000 Secured Promissory Note dated September 30, 2025 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 3, 2025) 10.45 Security Agreement dated September 30, 2025 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 October 3, 2025) 10.46 Intellectual Property Security Agreement dated September 30, 2025 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 October 3, 2025) 10.47 Guaranty dated September 30, 2025 by and between Pistol Star, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed October 3, 2025) 10.48 Form of Warrant Exercise Agreement, dated October 27, 2025, by and between BIO-key International, Inc. and the Investor (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed October 30, 2025) 10.49 Exchange Agreement, dated October 27, 2025, by and between BIO-key International, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 30, 2025) 10.50 Exchange Agreement, dated October 27, by and between BIO-key International, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 30, 2025) 10.51 Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed October 30, 2025) 19.1 Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K filed on April 23, 2025) 21.1* List of subsidiaries of BIO-key International, Inc. 23.1* Consent of Bush and Associates CPA 24.1* Power of Attorney (included on signature page hereto) 31.1* Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1 Clawback Policy dated October 2, 2023 (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K filed on April 23, 2025) 101.INS* Inline XBRL Instance 101.SCH* Inline XBRL Taxonomy Extension Schema 101.CAL* Inline XBRL Taxonomy Extension Calculation 101.DEF* Inline XBRL Taxonomy Extension Definition 101.LAB* Inline XBRL Taxonomy Extension Labels 101.PRE* Inline XBRL Taxonomy Extension Presentation 104 Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) * filed herewith ** Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted sections have been filed separately with the Securities and Exchange Commission. *** Management compensatory plan. + Certain portions of this exhibit (indicated by “[***]”) have been omitted as the Company has determined that such portions are (a) not material and (b) would likely cause competitive harm to the Company if publicly disclosed. 72 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BIO-KEY INTERNATIONAL, INC. Date: June 12, 2026 By: /s/ MICHAEL W. DEPASQUALE Michael W. DePasquale CHIEF EXECUTIVE OFFICER (Principal Executive Officer) Each person whose signature appears below constitutes and appoints Michael W. 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. 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. Signature Title Date /s/ MICHAEL W. DEPASQUALE Chairman of the Board of Directors, Chief Executive Officer and Director (Principal Executive Officer) June 12, 2026 Michael W. DePasquale /s/ CECILIA WELCH Chief Financial Officer (Principal Financial and Accounting Officer) June 12, 2026 Cecilia Welch /s/ROBERT J. MICHEL Director June 12, 2026 Robert J. Michel /s/ WONG KWOK FONG Director June 12, 2026 Wong Kwok Fong /s/ CAMERON WILLIAMS Director June 12, 2026 Cameron Williams /s/ EMMANUEL ALIA Director June 12, 2026 Emmanuel Alia 73