# EDGAR Filing Document

**Accession Number:** 0001019034
**File Stem:** 0001437749-25-035227
**Filing Date:** 2025-11
**Character Count:** 115649
**Document Hash:** ac8838a19ebf1a645f40a8fa813c4220
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-035227.hdr.sgml**: 20251114

**ACCESSION NUMBER**: 0001437749-25-035227

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 62

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251114

**DATE AS OF CHANGE**: 20251114

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BIO KEY INTERNATIONAL INC
- **CENTRAL INDEX KEY:** 0001019034
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 411761861
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-13463
- **FILM NUMBER:** 251487629

**BUSINESS ADDRESS:**
- **STREET 1:** 101 CRAWFORDS CORNER RD
- **STREET 2:** SUITE 4116
- **CITY:** HOLMDEL
- **STATE:** NJ
- **ZIP:** 07733
- **BUSINESS PHONE:** 7323591100

**MAIL ADDRESS:**
- **STREET 1:** 101 CRAWFORDS CORNER RD
- **STREET 2:** SUITE 4116
- **CITY:** HOLMDEL
- **STATE:** NJ
- **ZIP:** 07733

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SAC TECHNOLOGIES INC
- **DATE OF NAME CHANGE:** 19961115

?xml version='1.0' encoding='ASCII'? bkyi20250930_10q.htm

[**Table of Contents**](#toc)

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-Q**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended September 30, 2025**

**or**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the Transition Period from** &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **to**

**Commission file number 1-13463**

**BIO-KEY INTERNATIONAL, INC.**

(Exact Name of Registrant as Specified in Its Charter)

---

| | |
|:---|:---|
| **Delaware** | **41-1741861** |
| (State or Other Jurisdiction of Incorporation of Organization) | (IRS Employer Identification Number) |

---

**101 CRAWFORDS CORNER ROAD, SUITE 4116, HOLMDEL, NJ 07733**

(Address of Principal Executive Offices) (Zip Code)

**(732) 359-1100**

(Registrant's telephone number, including area code)

Securities registered pursuance to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol** | **Name of each exchange on which**<br> **registered** |
| Common Stock, par value $0.0001 per share | BKYI | Nasdaq Capital Market |

---

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | |
|:---|:---|
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☒ | Smaller Reporting Company ☒ |
|  | Emerging growth company ☐ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Number of shares of Common Stock, $.0001 par value per share, outstanding as of November 13, 2025, is 10,836,618.

------

[**Table of Contents**](#toc)

**BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES**

**INDEX**

---

| | |
|:---|:---|
| [PART I. FINANCIAL INFORMATION](#Part1) | [3](#Part1) |
| [Item 1— Financial Statements:](#bs) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024](#bs) | [3](#bs) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025 and 2024 (Unaudited)](#income) | [4](#income) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024](#equity)[(Unaudited)](#income) | [5](#equity) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (Unaudited)](#cashflows) | [7](#cashflows) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Notes to Condensed Consolidated Financial Statements](#notes) | [9](#notes) |
| [Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations.](#mda) | [17](#mda) |
| [Item 3—Quantitative and Qualitative Disclosures about Market Risk.](#quantandqual) | [24](#quantandqual) |
| [Item 4—Controls and Procedures.](#controls) | [24](#controls) |
| [PART II. OTHER INFORMATION](#part2) | [25](#part2) |
| [Item 1—Legal Proceedings.](#legalpro) | [25](#legalpro) |
| [Item 1A—Risk Factors.](#item1a) | [25](#item1a) |
| [Item 2—Unregistered Sales of Equity Securities and Use of Proceeds.](#unregsales) | [25](#unregsales) |
| [Item 3—Defaults upon Senior Securities.](#defaults) | [25](#defaults) |
| [Item 4—Mine Safety Disclosures.](#mine) | [25](#mine) |
| [Item 5—Other Information.](#otherinfo) | [25](#otherinfo) |
| [Item 6—Exhibits.](#Exhibits) | [25](#Exhibits) |
| [Signatures](#Signatures) | [26](#Signatures) |

---

------

[**Table of Contents**](#toc)

**PART I -- FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS**

**BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  | **(Unaudited)** |  |
| **ASSETS** |  |  |
| Cash and cash equivalents | $2039853 | $437604 |
| Accounts receivable, net | 959503 | 718229 |
| Due from factor |  | 74170 |
| Inventory | 394176 | 378307 |
| Prepaid expenses and other | 352375 | 278648 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets | 3745907 | 1886958 |
| Equipment and leasehold improvements, net | 82557 | 140198 |
| Capitalized contract costs, net | 335877 | 409426 |
| Deposits and other assets | 7976 | 7976 |
| Operating lease right-of-use assets | 54433 | 73372 |
| Investments | 5000000 | 5000000 |
| Intangible assets, net | 886563 | 1097630 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-current assets | 6367406 | 6728602 |
| **TOTAL ASSETS** | $10113313 | $8615560 |
| **LIABILITIES** |  |  |
| Accounts payable | $655647 | $818187 |
| Accrued liabilities | 1214377 | 1278732 |
| Note payable, current | 319834 | 1525977 |
| Government loan – BBVA Bank, current portion | 88115 | 132731 |
| Deferred revenue, current | 659627 | 773267 |
| Operating lease liabilities, current portion | 26522 | 24642 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities | 2964122 | 4553536 |
| Deferred revenue, long term | 75146 | 196237 |
| Note payable, long term | 1000000 |  |
| Government loan – BBVA Bank – net of current portion |  | 44762 |
| Operating lease liabilities, net of current portion | 28967 | 48994 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-current liabilities | 1104113 | 289993 |
| **TOTAL LIABILITIES** | 4068235 | 4843529 |
| Commitments and Contingencies |  |  |
| **STOCKHOLDERS' EQUITY** |  |  |
| Common stock — authorized, 170,000,000 shares; issued and outstanding; 7,313,423 and 3,715,483 of $.0001 par value at September 30, 2025 and December 31, 2024, respectively | 731 | 372 |
| Additional paid-in capital | 138180051 | 133030271 |
| Accumulated other comprehensive income | 40988 | 49290 |
| Accumulated deficit | (132176692) | (129307902) |
| **TOTAL STOCKHOLDERS' EQUITY** | 6045078 | 3772031 |
| **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | $10113313 | $8615560 |

---

See accompanying notes to the condensed consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3

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[**Table of Contents**](#toc)

**BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
| Revenues |  |  |  |  |
| Services | $268113 | $267371 | $862707 | $764062 |
| License fees | 917951 | 1441011 | 2822796 | 4165669 |
| Hardware | 363642 | 436422 | 1168269 | 537562 |
| Total revenues | 1549706 | 2144804 | 4853772 | 5467293 |
| Costs and other expenses |  |  |  |  |
| Cost of services | 80702 | 110723 | 297147 | 322957 |
| Cost of license fees | 74077 | 146732 | 233450 | 443384 |
| Cost of hardware | 434834 | 207655 | 1080109 | 260684 |
| Cost of hardware - reserve | (231625) |  | (509040) |  |
| Total costs and other expenses | 357988 | 465110 | 1101666 | 1027025 |
| Gross profit | 1191718 | 1679694 | 3752106 | 4440268 |
| Operating expenses |  |  |  |  |
| Selling, general and administrative | 1400288 | 1607925 | 4453362 | 5332764 |
| Research, development and engineering | 683620 | 652174 | 1915422 | 1850929 |
| Total operating expenses | 2083908 | 2260099 | 6368784 | 7183693 |
| Operating loss | (892190) | (580405) | (2616678) | (2743425) |
| Other income (expense) |  |  |  |  |
| Interest income | 515 | 2 | 2610 | 53 |
| Loan fee amortization | (60000) | (60000) | (180000) | (64000) |
| Interest expense | (13174) | (98556) | (74722) | (108823) |
| Total other income (expense), net | (72659) | (158554) | (252112) | (172770) |
| Loss before provision for income tax | (964849) | (738959) | (2868790) | (2916195) |
| Provision for income taxes |  |  |  |  |
| Net loss | $(964849) | $(738959) | $(2868790) | $(2916195) |
| Comprehensive loss: |  |  |  |  |
| Net loss | $(964849) | $(738959) | $(2868790) | $(2916195) |
| Other comprehensive income (loss) – foreign currency translation adjustment | (73910) | 89933 | (8302) | 51878 |
| Comprehensive loss | $(1038759) | $(649026) | $(2877092) | $(2864317) |
| **Basic and diluted loss per common share** | $(0.15) | $(0.39) | $(0.50) | $(1.69) |
| **Weighted average common shares outstanding:** |  |  |  |  |
| Basic and diluted | 6587534 | 1889694 | 5754077 | 1726716 |

---

See accompanying notes to the condensed consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4

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[**Table of Contents**](#toc)

**BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS**' **EQUITY** 

**(Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | ***Accumulated*** |  |  |
|  |  |  | ***Additional*** | ***Other*** |  |  |
|  | ***Common Stock*** | ***Common Stock*** | ***Paid-in*** | ***Comprehensive*** | ***Accumulated*** |  |
|  | ***Shares*** | ***Amount*** | ***Capital*** | ***Income (Loss)*** | ***Deficit*** | ***Total*** |
| **Balance as of January 1, 2025** | **3715483** | $**372** | $**133030271** | $**49290** | $**(129307902)** | $**3772031** |
| Issuance of common stock for directors' fees | 8913 | 1 | 9001 |  | *-* | 9002 |
| Issuance of restricted stock to employees | 2500 |  |  |  |  |  |
| Issuance of common stock for repayment of debt | 504605 | 50 | 858950 |  |  | 859000 |
| Restricted stock forfeited | (7572) |  |  |  |  |  |
| Exercise of warrants | 1590112 | 159 | 3812898 |  |  | 3813057 |
| Foreign currency translation adjustment | *-* |  |  | 6803 |  | 6803 |
| Share-based compensation | *-* |  | 52488 |  |  | 52488 |
| Issuance costs | *-* |  | (248783) |  |  | (248783) |
| Net loss | *-* |  |  |  | (736545) | (736545) |
| **Balance as of March 31, 2025** | **5814041** | $**582** | $**137514825** | $**56093** | $**(130044447)** | $**7527053** |
| Issuance of common stock for directors' fees | 14223 | 1 | 11001 |  |  | 11002 |
| Issuance of common stock for repayment of debt | 498437 | 50 | 399950 |  |  | 400000 |
| Restricted stock forfeited | (18176) | (2) | 2 |  |  |  |
| Issuance of restricted common stock to employees and directors | 68000 | 7 | (7) |  |  |  |
| Share-based compensation for employee stock plan | 1251 |  | 876 |  |  | 876 |
| Foreign currency translation adjustment | *-* |  |  | 58805 |  | 58805 |
| Share-based compensation | *-* |  | 21837 |  |  | 21837 |
| Exercise of warrants | 471000 | 47 | (47) |  |  |  |
| Net loss | *-* |  |  |  | (1167396) | (1167396) |
| **Balance as of June 30, 2025** | **6848776** | $**685** | $**137948437** | $**114898** | $**(131211843)** | $**6852177** |
| Issuance of common stock for directors' fees | *-* |  |  |  |  |  |
| Issuance of common stock for repayment of debt | 254647 | 25 | 199975 |  |  | 200000 |
| Issuance of restricted common stock to employees and directors | 210000 | 21 | (21) |  |  |  |
| Foreign currency translation adjustment | *-* |  |  | (73910) |  | (73910) |
| Share-based compensation | *-* |  | 31660 |  |  | 31660 |
| Net loss | *-* |  |  |  | (964849) | (964849) |
| **Balance as of September 30, 2025** | **7313423** | $**731** | $**138180051** | $**40988** | $**(132176692)** | $**6045078** |

---

See accompanying notes to the condensed consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5

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[**Table of Contents**](#toc)

**BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS**' **EQUITY** 

**(Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | ***Accumulated*** |  |  |
|  |  |  | ***Additional*** | ***Other*** |  |  |
|  | ***Common Stock*** | ***Common Stock*** | ***Paid-in*** | ***Comprehensive*** | ***Accumulated*** |  |
|  | ***Shares*** | ***Amount*** | ***Capital*** | ***Income (Loss)*** | ***Deficit*** | ***Total*** |
| **Balance as of January 1, 2024** | **1032777** | $**103** | $**126047851** | $**22821** | $**(125007210)** | $**1063565** |
| Issuance of common stock for directors' fees | 4287 |  | 9003 |  |  | 9003 |
| Restricted stock forfeited | (316) | *-* | *-* | *-* | *-* | *-* |
| Exercise of prefunded warrants | 777666 | 78 | 1322 |  |  | 1400 |
| Foreign currency translation adjustment | *-* |  |  | (62275) |  | (62275) |
| Share-based compensation | *-* |  | 47790 |  |  | 47790 |
| Issuance costs | *-* |  | (13470) |  |  | (13470) |
| Net loss | *-* |  |  |  | (510285) | (510285) |
| **Balance as of March 31, 2024** | **1814414** | $**181** | $**126092496** | $**(39454)** | $**(125517495)** | $**535728** |
| Restricted stock forfeited | (186) |  |  |  |  |  |
| Issuance of common stock for Employee Stock Purchase Plan | 1390 | 1 | 1938 |  |  | 1939 |
| Share-based compensation for Employee Stock Purchase Plan | *-* |  | 456 |  |  | 456 |
| Foreign currency translation adjustment | *-* |  |  | 24220 |  | 24220 |
| Share-based compensation | *-* |  | 48315 |  |  | 48315 |
| Net loss | *-* |  |  |  | (1666950) | (1666950) |
| **Balance as of June 30, 2024** | **1815618** | $**182** | $**126143205** | $**(15234)** | $**(127184445)** | $**(1056292)** |
| Restricted stock forfeited | (849) |  |  |  |  |  |
| Issuance of restricted common stock to employees and directors | 168963 | 17 | (17) |  |  |  |
| Share-based compensation | *-* |  | 66053 |  |  | 66053 |
| Foreign currency translation adjustment | *-* |  |  | 89933 |  | 89933 |
| Exercise of prefunded warrants | 95000 | 9 | 162 |  |  | 171 |
| Exercise of warrants | 1030556 | 103 | 1906425 |  |  | 1906528 |
| Issuance costs | *-* |  | (134392) |  |  | (134392) |
| Net loss | *-* |  |  |  | (738959) | (738959) |
| **Balance as of September 30, 2024** | **3109288** | $**311** | $**127981436** | $**74699** | $**(127923404)** | $**133042** |

---

See accompanying notes to the condensed consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6

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[**Table of Contents**](#toc)

**BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | ***Nine Months Ended September 30,*** | ***Nine Months Ended September 30,*** |
|  | ***2025*** | ***2024*** |
| **CASH FLOW FROM OPERATING ACTIVITIES:** |  |  |
| Net loss | $(2868790) | $(2916195) |
| **Adjustments to reconcile net loss to net cash used for operating activities:** |  |  |
| Depreciation | 65014 | 69115 |
| Amortization of intangible assets | 211067 | 233269 |
| Amortization of capitalized contract costs | 134214 | 128953 |
| Amortization of note payable | 180000 | 64000 |
| Interest payable on note | 72855 |  |
| Reserve for inventory |  | (98875) |
| Operating leases right-of-use assets | 18939 | (58950) |
| Share and warrant-based compensation for employees and consultants | 105985 | 162614 |
| Stock based directors' fees | 20004 | 9003 |
| Bad debts | 15000 |  |
| **Change in assets and liabilities:** |  |  |
| Accounts receivable | 8725 | (398753) |
| Allowance for credit losses | (250000) |  |
| Due from factor | 74170 | 50302 |
| Capitalized contract costs | (60665) | (329743) |
| Inventory | (15869) | (7975) |
| Resalable software license rights |  | 58796 |
| Prepaid expenses and other | (73727) | (18695) |
| Accounts payable | (162009) | 248640 |
| Accrued liabilities | (64355) | (51433) |
| Deferred revenue | (234731) | 517246 |
| Operating lease liabilities | (13915) | (60827) |
| Net cash used in operating activities | (2838088) | (2399508) |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| Capital expenditures | (7373) | (23047) |
| Net cash used in investing activities | (7373) | (23047) |
| **CASH FLOW FROM FINANCING ACTIVITIES:** |  |  |
| Proceeds for exercise of warrants | 3813057 | 2000000 |
| Offering costs | (248783) | (147862) |
| Proceeds from note payable | 1000000 | 1908099 |
| Receipt of cash from employee stock purchase plan | 876 | 1939 |
| Repayment of government loan | (109137) | (101762) |
| Net cash provided by financing activities | 4456013 | 3660414 |
| Effect of exchange rate changes | (8303) | 51878 |
| **NET INCREASE IN CASH AND CASH EQUIVALENTS** | 1602249 | 1289737 |
| **CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD** | 437604 | 511400 |
| **CASH AND CASH EQUIVALENTS, END OF PERIOD** | $2039853 | $1801137 |

---

See accompanying notes to the condensed consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7

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[**Table of Contents**](#toc)

**BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES**

 **CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

 **(Unaudited)**

SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION

---

| | | |
|:---|:---|:---|
|  | ***Nine Months Ended September 30,*** | ***Nine Months Ended September 30,*** |
|  | ***2025*** | ***2024*** |
| **Cash paid for:** |  |  |
| &nbsp;&nbsp;&nbsp; Interest | $1865 | $8130 |
| **Noncash financing activities** |  |  |
| Issuance of common stock for repayment of debt | $1459000 | $- |

---

See accompanying notes to the condensed consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8

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[**Table of Contents**](#toc)

**BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**September 30, 2025 (Unaudited)**

*1.* NATURE OF BUSINESS AND BASIS OF PRESENTATION

*Nature of Business*

BIO-key International, Inc. and its wholly-owned subsidiaries (collectively, the "Company" or "BIO-key"), 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, 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.

*Basis of Presentation*

The accompanying unaudited interim condensed consolidated financial statements include the accounts of BIO-key and include all normal and recurring adjustments which are necessary for a fair presentation in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim consolidated financial statements and Rule *8*-*03* of Regulation S-*X* promulgated by the Securities and Exchange Commission (the "SEC"). The operating results for interim periods are *not* necessarily indicative of results that *may* be expected for any other interim period or for the full year ended *December 31, 2025.* Pursuant to such rules and regulations, certain financial information and footnote disclosures normally included in the financial statements have been condensed or omitted. Intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all necessary adjustments, consisting only of those of a recurring nature, and disclosures to present fairly the Company's financial position and the results of its operations and cash flows for the periods presented. These unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements and the related notes thereto included in the Company's Annual Report on Form *10*-K for the fiscal year ended *December 31, 2024,* filed with the SEC on *April 23, 2025,* from which the accompanying condensed consolidated balance sheet dated *December 31, 2024* was derived.

*Foreign Currencies*

The Company accounts for foreign currency transactions pursuant to Accounting Standards Codification ("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,* 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 income (loss).

*Recently Adopted Accounting Pronouncements*

Effective *January 1, 2024,* the Company adopted ASU *2020*-*06, Debt - Debt with Conversion and Other Options (Subtopic *470*-*20*) and Derivatives and Hedging - Contracts in Entity*'*s Own Equity (Subtopic *815*-*40*)* ("ASU *2020*-*06"*) to simplify accounting for certain financial instruments. ASU *2020*-*06* eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU *2020*-*06* amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The adoption of ASU *2020*-*06* did *not* have a material effect on the consolidated financial statements of the Company.

Effective *January 1, 2024,* the Company adopted ASU *2023*-*07, Segment Reporting (Topic *280*):* "*Improvements to Reportable Segment Disclosures*" ("ASU *2023*-*07"*) to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The adoption of ASU *2023*-*07* did *not* have a significant impact on the Company's consolidated financial statements. See Note *16* – Segment Information.

*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 *December 2023,* the FASB issued 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. This ASU applies to all entities subject to income taxes. This ASU will be effective for public companies for annual periods beginning after *December 15, 2024 (*year ended *December 31, 2025* for the Company). The adoption of this standard is *not* expected to a material impact on the Company's consolidated financial statements and disclosures.

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In *November 2024,* the FASB issued ASU *2024*-*03,* "*Income Statement: Reporting Comprehensive Income— Expense Disaggregation Disclosures*," which requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses. This ASU is effective for fiscal years beginning after *December 15, 2026* and for interim periods within fiscal years beginning after *December 15, 2027.* Early adoption is permitted. The amendments *may* be applied either (*1*) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (*2*) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this guidance to determine the impact it *may* have on its consolidated financial statements disclosures.

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.

*2.* GOING CONCERN

In accordance with ASU *No. 2014*-*15, Disclosure of Uncertainties about an Entity*'*s Ability to Continue as a Going Concern (Subtopic *205*-*40*)*, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within *one* year after the date that the consolidated financial statements are issued.

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 addition, the Company has purchased inventory for projects in Nigeria, which have been delayed in deployment, and has slowly been selling into other markets to generate additional cash. 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.

*3.* REVENUE FROM CONTRACTS WITH CUSTOMERS

***Disaggregation of Revenue***

The following table summarizes revenue from contracts with customers for the *three*-month periods ended *September 30, 2025* and *September 30, 2024*:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***North*** |  |  |  | ***September 30,*** |
|  | ***America*** | ***Africa*** | ***EMESA\**** | ***Asia*** | ***2025*** |
| Services | $204536 | $63482 | $95 | $- | $268113 |
| License fees | 471471 |  | 446480 |  | 917951 |
| Hardware | 5692 |  | 217500 | 140450 | 363642 |
| Total Revenues | $681699 | $63482 | $664075 | $140450 | $1549706 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***North*** |  |  |  | ***September 30,*** |
|  | ***America*** | ***Africa*** | ***EMESA\**** | ***Asia*** | ***2024*** |
| Services | $188181 | $34753 | $44437 | $- | $267371 |
| License fees | 738838 | 223703 | 478470 |  | 1441011 |
| Hardware | 52897 |  | 361525 | 22000 | 436422 |
| Total Revenues | $979916 | $258456 | $884432 | $22000 | $2144804 |

---

The following table summarizes revenue from contracts with customers for the *nine*-month periods ended *September 30, 2025* and *September 30, 2024*:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***North*** |  |  |  | ***September 30,*** |
|  | ***America*** | ***Africa*** | ***EMESA\**** | ***Asia*** | ***2025*** |
| Services | $630517 | $191116 | $37980 | $3094 | $862707 |
| License fees | 1170729 | 525094 | 1126973 |  | 2822796 |
| Hardware | 73987 |  | 876692 | 217590 | 1168269 |
| Total Revenues | $1875233 | $716210 | $2041645 | $220684 | $4853772 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***North*** |  |  |  | ***September 30,*** |
|  | ***America*** | ***Africa*** | ***EMESA\**** | ***Asia*** | ***2024*** |
| Services | $618421 | $98430 | $47211 | $- | $764062 |
| License fees | 1797707 | 1490255 | 877707 |  | 4165669 |
| Hardware | 140598 |  | 361764 | 35200 | 537562 |
| Total Revenues | $2556726 | $1588685 | $1286682 | $35200 | $5467293 |

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\*EMESA – Europe, Middle East, South America

*Deferred Revenue*

Deferred revenue includes customer advances and amounts that have been paid by customer 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. At *September 30, 2025* and *December 31, 2024*, amounts in deferred revenue were approximately $735,000 and $970,000, respectively. Revenue recognized during the *three* months and *nine* months ended *September 30, 2025* from amounts included in deferred revenue as of *December 31, 2024* was approximately $82,000 and $404,000, respectively. Revenue recognized during the *three* and *nine* months ended *September 30, 2024* from amounts included in deferred revenue at *December 31, 2023* was approximately $51,000 and $482,000, respectively.

*4.* 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 credit losses by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history, current economic conditions and other relevant factors, including specific reserves for certain accounts. Accounts receivable are written off when deemed uncollectible.

Accounts receivable at *September 30, 2025* and *December 31, 2024* consisted of the following:

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| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Accounts receivable | $1342757 | $1351482 |
| Allowance for credit losses | (383254) | (633253) |
| Accounts receivable, net of allowances for credit losses | $959503 | $718229 |

---

Bad debt expenses are recorded in selling, general, and administrative expense.

*5.* SHARE-BASED COMPENSATION

The following table presents share-based compensation expenses included in the Company's unaudited condensed interim consolidated statements of operations:

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| | | |
|:---|:---|:---|
|  | ***Three Months Ended September 30,*** | ***Three Months Ended September 30,*** |
|  | ***2025*** | ***2024*** |
| Selling, general and administrative | $24920 | $53117 |
| Research, development and engineering | 6740 | 12936 |
|  | $31660 | $66053 |

---

---

| | | |
|:---|:---|:---|
|  | ***Nine Months Ended September 30,*** | ***Nine Months Ended September 30,*** |
|  | ***2025*** | ***2024*** |
| Selling, general and administrative | $87466 | $140142 |
| Research, development and engineering | 18519 | 31475 |
|  | $105985 | $171617 |

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*6.* INVENTORY

Inventory is stated at the lower of cost, determined on a *first* in, *first* out basis, or net 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 is due to slow moving inventory purchased for projects in Nigeria, and slow-moving inventory elsewhere. The Company has been selling these units in small quantities and continues to explore other markets and opportunities to sell the product. Inventory is comprised of the following as at *September 30, 2025* and *December 31, 2024*:

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| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Finished goods | $3605342 | $4098513 |
| Fabricated assemblies | 53289 | 53289 |
| Reserve on finished goods | (3264455) | (3773495) |
| Total inventory | $394176 | $378307 |

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*7.* INVESTMENTS

<u>Equity Investment in Privately Held Company</u> 

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 7.92% 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 595,000 shares of the Company's common stock. Fiber Food is *not* a principal stockholder of Boumarang, Inc. 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 Company has engaged in discussions with Fiber Food and Boumarang, Inc. regarding the contemplated collaboration, but *no* definitive agreements have been executed. Under the purchase agreement, the Company had the right to cause Fiber Food to repurchase the Boumarang Shares from the Company in exchange for the return of the shares of Company common stock issued in exchange for the Boumarang Shares if at any time during the *nine*-month period after the closing of the transaction the Company valued the Boumarang Shares at less than $5,000,000 on its balance sheet. This repurchase right has expired. 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.

The Company accounts for the investment under ASC *321, Investments - Equity Securities*. 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 *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, Inc. raise uncertainties that could impact the recoverability of the investment in the Boumarang Shares.

ASC *321*-*10*-*35 Equity Securities - Subsequent Measurement* requires annual impairment testing for equity securities without readily determinable fair values.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *12*

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*8.* COMMITMENTS AND CONTINGENCIES

<u>Litigation</u>

From time to time, the Company *may* be involved in litigation relating to claims arising out of our operations in the normal course of business. As of *September 30, 2025*, the Company was *not* a party to any pending lawsuits.

*9.* LEASES

The Company's leases office space in New Jersey, Minnesota, New Hampshire, Madrid and Hong-Kong with lease termination dates in *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:

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| | | |
|:---|:---|:---|
|  | ***3 Months ended*** | ***3 Months ended*** |
|  | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** |
| **Lease cost** |  |  |
| Total lease cost | $6979 | $9702 |

---

---

| | | |
|:---|:---|:---|
|  | ***9 Months ended*** | ***9 Months ended*** |
|  | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** |
| **Lease cost** |  |  |
| Total lease cost | $20937 | $38808 |

---

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
| **Balance sheet information** | ***2025*** | ***2024*** |
| Operating right-of-use assets | $54433 | $73372 |
| Operating lease liabilities, current portion | $26522 | $24642 |
| Operating lease liabilities, non-current portion | 28967 | 48994 |
| &nbsp;&nbsp;&nbsp; Total operating lease liabilities | $55489 | $73636 |
| Weighted average remaining lease term (in years) – operating leases | 1.92 | 2.67 |
| Weighted average discount rate – operating leases | 5.50% | 5.50% |
| Cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2025 and 2024: | $35397 | $40622 |

---

Maturities of operating lease liabilities were as follows as of *September 30, 2025*:

---

| | |
|:---|:---|
| 2025 (3 months remaining) | $7258 |
| 2026 | 29267 |
| 2027 | 22477 |
| &nbsp;&nbsp;&nbsp; Total future lease payments | $59002 |
| Less: imputed interest | (4569) |
| &nbsp;&nbsp;&nbsp; Total | $54433 |

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*10.* NOTES PAYABLE

<u>Note Purchase Agreement dated *June 24, 2024*</u>

On *June 24, 2024,* the Company entered into and closed a note purchase agreement with Streeterville Capital, LLC (the "Lender") which provided for the issuance of a $2,360,000 principal amount senior secured promissory note (the *"2024* Note"). The *2024* Note carries an original issue discount of $350,000 and the Company agreed to pay $10,000 to the lender (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 due *18* months following the date of issuance. Interest under the *2024* Note accrued at a rate of *nine* percent (9%) per annum. All repayments of principal due under the *2024* Note were 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 *2024* Note (the "Redemption Start Date"), Lender has 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. At the end of each month following the Redemption Start Date, if the Company had *not* reduced the outstanding balance under the *2024* Note by at least $270,000, then by the *fifth* (*5th*) day of the following month, the Company must either pay to Lender the difference between $270,000 and the amount, if any, redeemed in such month plus the Exit Fee, or the outstanding balance due under the Note will automatically increase by *one* percent (1%). As of *September 30, 2025,* there were *no* redemptions by the Lender.

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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 *2024* Note were guaranteed by Pistol Star, Inc. ("Pistol"), a wholly owned subsidiary of the Company. 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.

In the *third* quarter of *2024,* the Company received gross proceeds of approximately $1.9 million in connection with a financing transaction (see Note *12* Stockholders' Equity). In accordance with the terms of the *2024* Note, 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 *$1,434,000* reducing the outstanding principal amount of the *2024* Note to approximately $338,400. All of the partitioned notes were subsequently exchanged for shares of common stock. (see Note *17* Subsequent Events).

<u>Note Purchase Agreement dated *September 30, 2025*</u>

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 will be 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. 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.

*11.* EARNINGS (LOSS) PER SHARE - COMMON STOCK ("EPS")

The Company's basic EPS is calculated using net income (loss) available to common shareholders and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes the effect from potential issuance of common stock, such as stock issuable pursuant to the exercise of stock options and warrants and the assumed conversion of preferred stock.

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:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months ended*** | ***Three Months ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
| Stock options | 1857 | 3007 | 1857 | 3007 |
| Warrants | 3995685 | 2739362 | 3995685 | 2739362 |
| Total | 3997542 | 2742369 | 3997542 | 2742369 |

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*12.* STOCKHOLDERS' EQUITY

*<u>Issuances of Common Stock</u>*

During the *nine*-month periods ended *September 30, 2025*, and *2024*, there have *not* been any shares of common stock issued to anyone outside the Company, except as noted in this Note *12.*

On *June 18, 2021,* the stockholders approved the Employee Stock Purchase Plan. Under the terms of this plan, 43,334 shares of common stock are reserved for issuance to employees and officers of the Company at a purchase price equal to 85% of the lower of the closing price of the common stock on the *first* day or the last day of the offering period as reported on the Nasdaq Capital Market. Eligible employees are granted an option to purchase shares under the plan funded by payroll deductions. The Company *may* suspend or terminate the plan at any time, otherwise the plan expires *June 17, 2031.* On *June 30, 2025,* 1,251 shares were issued to employees which resulted in a $876 non-cash compensation expense for the Company. On *June 28, 2024,* 1,390 shares were issued to employees which resulted in a $456 non-cash compensation expense for the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *14*

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*<u>Issuances of Restricted Stock</u>*

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. Nonvested stock is expensed ratably over the term of the restriction period.

During the *nine*-month periods ended *September 30, 2025* and *2024*, the Company issued 280,500 and 168,963 shares of restricted common stock, respectively, to certain employees and directors. These shares vest in equal annual installments over a three-year period from the date of grant and had a fair value on the date of issuance of $213,645 and $31,200, respectively.

During the *nine*-month periods ended *September 30, 2025* and *2024*, 25,748 and 1,351 shares of restricted common stock were forfeited, respectively.

Share based compensation for the *nine*-month periods ended *September 30, 2025* and *2024*, was $125,989 and $171,67, respectively.

*<u>Issuances to Directors</u>*

During the *nine*-month periods ended *September 30, 2025*, and *2024*, the Company issued 22,136 and 4,287, shares of common stock to its directors in lieu of payment of board and committee fees valued at $20,002 and $9,003, respectively.

*<u>Employees</u>*<u>'</u>*<u>exercise options</u>*

During the *nine*-month periods ended *September 30, 2025* and *2024*, no employee stock options were exercised.

<u>Warrants</u>

On *January 15, 2025,* the Company entered into 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 2,061,112 shares of the Company's common stock at an exercise price of $1.85 per share which were originally issued to the Investor on *September 13, 2024 (*the "Existing Warrants"). 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 Series A warrants to purchase up to an aggregate of 1,545,834 shares of the Company's common stock (the "Series A Warrants") and new unregistered Series B warrants to purchase up to an aggregate of 1,545,834 shares of the Company's common stock (the "Series B Warrants", and together with the "Series A Warrants, the "New Warrants"). The New Warrants have substantially the same terms, are immediately exercisable at an exercise price of $2.15 per share, and will expire five years from the date of issuance. The New Warrants each 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 Company realized gross proceeds under the 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.

There were 777,666 prefunded warrants exercised during the *nine*-month period ended *September 30, 2024* and the Company received proceeds of approximately $1,600.

<u>Partitioned Notes</u>

During the *nine*-month period ended *September 30, 2025,* partitioned notes in the aggregate principal amount of $600,000 were exchanged for 753,084 shares of common stock (See Note *10* Note Payable).

*13.* 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 government loan payable approximates fair value as the interest rate related to the financial instruments approximated market.

*14.* MAJOR CUSTOMERS AND ACCOUNTS RECEIVABLE

During each of the *three*-month periods ended *September 30, 2025*, and *2024*, two customers accounted for 42% and three customers accounted for 47% of the revenue, respectively.

Two customers accounted for 45% of current accounts receivable at *September 30, 2025*. At *December 31, 2024*, two customers accounted for 36% of current accounts receivable.

*15.* INCOME TAXES

**United States, Hong Kong and Nigeria**

The Company recorded no income tax expense for the *three* and *nine* months ended *September 30, 2025* and *2024* because the estimated annual effective tax rate was zero. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company's annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating loss carry forwards, and available tax planning alternatives.

As of *September 30, 2025* and *December 31, 2024*, the Company provided a full valuation allowance against its net deferred tax assets since the Company believes it is more likely than *not* that its deferred tax assets will *not* be realized.

**Spain**

Due to the current loss for the *nine* months ended *September 30, 2025*, the Company did not record income taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *15*

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|:---|:---|
| *16* | SEGMENT INFORMATION |

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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 condensed 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 condensed consolidated financial statements for all financial information regarding the Company's operating segment.

See Note *4* for the Company's revenues by geographic region.

The Company's long-lived tangible assets are recognized on the Condensed Consolidated Balance Sheet are located in New Hampshire and Hong Kong. The Company's operating lease right-of use assets recognized on the Condensed Consolidated Balance Sheet are located in Minnesota.

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|:---|:---|
| *17* | SUBSEQUENT EVENTS |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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 3,091,668 shares of the Company's common stock, 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 $2.15 per share to $1.02 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 6,183,336 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 $1.02 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 *October 27, 2025,* the Company entered into *two* Exchange Agreements (the "Exchange Agreements") with the Lender, to whom the Company previously issued the *2024* Note in the original principal amount of $2,360,000. 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 429,027 shares of the Company's Common Stock. As a result of the Exchange Agreements, the *2024* Note has been paid in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In connection with the *October 27, 2025* warrant exercise agreement described above, the Company prepaid approximately $455,000 of the amount due under the *2025* Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On *November 6, 2025,* the Company issued 2,500 shares of restricted stock to a new employee with three-year vesting. All the shares were issued at $0.63 the closing price of the Company's common stock on *November 6, 2025,* as reported on the Nasdaq Capital Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *16*

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**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words "anticipate," "believe," "should," "estimate," "will," "may," "future," "plan," "intend" and "expect" and similar expressions generally identify forward-looking statements. These statements are not guarantees of future performance or events and are subject to risks and uncertainties that may cause actual results to differ materially from those included within or implied by such forward-looking statements. These risks and uncertainties include, without limitation, our history of losses and limited revenue; our ability to raise additional capital; our ability to continue as a going concern; our ability to protect our intellectual property; changes in business conditions; changes in our sales strategy and product development plans; changes in the marketplace; continued services of our executive management team; security breaches; competition in the biometric technology and identity access management industries; market acceptance of biometric products generally and our products under development; our ability to convert sales opportunities to customer contracts; our ability to expand into Asia, Africa and other foreign markets; our ability to migrate Swivel Secure customers to BIO-key and Portal Guard offerings; our ability to execute definitive agreements with Fiber Food Systems and/or its customers to utilize our access management solutions; our ability to integrate our solutions into any of Fiber Food System's offerings; fluctuations in foreign currency exchange rates; the duration and extent of continued hostilities in Ukraine and its impact on our European customers; the impact of tariffs and other trade barriers which may make it more costly for us to import inventory from China and Hong Kong and certain product components from South Korea; delays in the development of products, the commercial, reputational and regulatory risks to our business that may arise as a consequence of the restatement of our financial statements including any consequences of non-compliance with the Securities and Exchange Commission ("SEC") and Nasdaq periodic reporting requirements; our temporary loss of the use of a Registration Statement on Form S-3 to register securities in the future; any disruption to our business that may occur on a longer-term basis should we be unable to maintain effective controls over financial reporting, statements of assumption underlying any of the foregoing, and numerous other matters of national, regional and global scale, including those set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 and other filings with the SEC. These factors are not intended to represent a complete list of the general or specific factors that may affect us. It should be recognized that other factors, including general economic factors and business strategies, may be significant, presently or in the future. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

**ITEM 2. MANAGEMENT**'**S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*This Management*'*s Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to and should be read in conjunction with our unaudited condensed consolidated financial statements and related information contained herein and our audited financial statements as of December 31, 2024.*

**Overview**

BIO-key International, Inc. (the "Company," "BIO-key," "we," or "us") is a leading identity access management, or IAM, platform provider for the enterprise and large-scale customer and civil ID solutions. Built to leverage BIO-key's world-class biometric core platform among seventeen strong authentication factors, BIO-key PortalGuard and hosted PortalGuard IDaaS platforms that enable our customers to securely and easily assure that only the right people can access the right systems. PortalGuard goes beyond traditional multifactor authentication (MFA) solutions by addressing functional gaps, such as allowing roving users to biometrically authenticate at any workstation without using their phones or tokens eliminating unauthorized account delegation, detecting duplicate users, and accommodating in-person identification.

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Our customers use BIO-key every day to securely access a variety of cloud, mobile and web applications, on-premise and cloud-based servers from all of their devices. Employees, contractors, students and faculty sign in through PortalGuard to seamlessly and securely access the applications they need to do their important work, without relying on personal phone use or per-user tokens. Organizations use our platform to securely collaborate with their supply chain and partners, and to provide their customers with flexible, resilient user experiences online or in-person.

Large-scale customer and civil ID customers use our scalable biometric management platform and FBI-certified scanner hardware to manage enrollment, de-duplication and authentication for millions of users. One large bank has enrolled and identifies over 21.7 million of their customers using BIO-key fingerprint biometrics in branches on a daily basis.

PortalGuard and Identity-Bound Biometrics, or IBB, deliver unique value to enterprises who find that mainstream MFA solutions do not adequately address their workforce use cases. PortalGuard operates as a single MFA user experience, providing a wide set of authentication choices to meet every use case. We sell our branded biometric and Fast Identity Online, or FIDO, authentication hardware as accessories to our IAM platforms, so that customers can have a single vendor providing all components of their IAM solution. We do not mandate the use of BIO-key hardware with our software and services. Our National Institute of Standards, and Technology, or NIST, certified fingerprint biometric platform is unique in that it supports interoperable mixing and matching combinations of different manufactures' fingerprint scanners in a deployment, so that the right scanner can be selected for the right use case, without mandating the use of a particular scanner.

Security-conscious software developers leverage our platform APIs and federation interfaces to securely and efficiently embed biometric and MFA identity capabilities into their software. Our approach to IDaaS allows our customers to efficiently scale their security and identity infrastructures to protect both internal cloud workforce- and external customer-facing applications.

In 2022, we expanded our product offerings and customer base when we acquired Swivel Secure, a Madrid, Spain based provider of IAM solutions. Until the fourth quarter of 2024, Swivel Secure was the exclusive distributer of AuthControl Sentry, AuthControl Enterprise, and AuthControl MSP product line in Europe, Africa and the Middle East, or EMEA, excluding the United Kingdom and Ireland. Swivel Secure, now operates as BIO-key EMEA and maintains a direct sales force with offices in Madrid, Spain and Lisbon, Portugal, and sells only BIO-key products.

&nbsp;&nbsp;&nbsp;&nbsp;

We operate a software as a service, or SaaS, business model with customers subscribing to term use of our software for annual recurring revenue. We sell our products directly through our field and inside sales teams, as well as indirectly through our network of channel partners including resellers, system integrators, master agents and other distribution partners. Our subscription fees include a term license of hosted or on-premise product and technical support and maintenance of our platform. We base subscription fees primarily on the products used and the number of users enrolled in our platform. We generate subscription fees pursuant to noncancelable contracts with a weighted average duration of approximately one year.

**Strategic Outlook**

We plan to have a more significant role in the IAM market which continues to expand. We plan to continue to offer customers a suite of authentication options that complement our biometric solutions. The more well-rounded offerings of authentication options will allow customers to customize their approach to authentication all under one umbrella.

We expect to grow our business within government services and highly-regulated industries in which we have historically had a strong presence including financial services, higher education, and healthcare. We believe that continued heightened security and privacy requirements in these industries, and as colleges and universities continue operating in remote environments, we will generate increased demand for security solutions, including biometrics. In addition, we expect that the compatible, yet superior portable biometric user experience offered by our technology for Windows 10 users will accelerate the demand for our computer network log-on solutions and fingerprint readers. Through value add-offerings via direct sales, resellers, and strategic partnerships with leading higher education platform providers, we will continue to grow our installed base.

Our primary sales strategies are focused on (i) increased marketing efforts into the IAM market, (ii) dedicated pursuit of large-scale identification projects across the globe and (iii) growing our channel alliance program which we have grown to more than eighty-five participants and continues to generate incremental revenues.

A second component of our growth strategy is to pursue strategic acquisitions of select businesses and assets in the IAM space. In furtherance of this strategy, we are active in the industry and regularly evaluate businesses that we believe will either provide an entry into new market verticals or be synergistic with our existing operations and in either case, be accretive to earnings. We cannot provide any assurance as to whether we will be able to complete any acquisition and if completed, successfully integrate any business we acquire into our operations.

**Recent Developments**

The current trend of continued remote work environments increases the risk of unauthorized users, phishing attacks, and hackers who are eager to take advantage of the challenges of securing remote workers. A growing trend of security incidents that highlight potential cybersecurity vulnerabilities, additional regulatory requirements, and increasingly stringent Cyber Insurance underwriting standards that mandate enhanced security solutions has resulted in many businesses requiring MFA for their employees, partners and customers to access their business systems and data. We believe that biometrics should continue to play a key role in remote user authentication.

**Critical Accounting Policies and Estimates**

For detailed information regarding our critical accounting policies and estimates, see our financial statements and notes thereto included in this Report and in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates from those disclosed in our most recent Annual Report on Form 10-K.

**Recent Accounting Pronouncements**

For detailed information regarding recent account pronouncements, see Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

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**RESULTS OF OPERATIONS**

**THREE MONTHS ENDED September 30, 2025 AS COMPARED TO September 30, 2024**

**<u>Consolidated Results of Operations</u>** <u>-</u> **<u>Percent Trend</u>**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended September 30,** | **Three Months Ended September 30,** |
|  | **2025** | **2024** |
| **Revenues** |  |  |
| Services | 17% | 13% |
| License fees | 59% | 67% |
| Hardware | 24% | 20% |
| Total Revenues | 100% | 100% |
| **Costs and other expenses** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of services | 5% | 5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of license fees | 5% | 7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of hardware | 28% | 10% |
| Cost of hardware - reserve | -15% | 0% |
| Total Cost of Goods Sold | 23% | 22% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross profit | 77% | 78% |
| **Operating expenses** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general and administrative | 90.36% | 75% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research, development and engineering | 44.11% | 30% |
| Total Operating Expenses | 134% | 105% |
| **Operating loss** | -57% | -27% |
| Other expense | -5% | -7% |
| Loss before provision for income tax | -62% | -34% |
| Provision for income tax | 0% | 0% |
| **Net loss** | -62% | -34% |

---

***<u>Revenues and cost of goods sold</u>***

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |  |  |  |  |
|  | **September 30,** | **September 30,** | **September 30,** |  |  |  |  |
|  | **2025** |  | **2024** |  | **$ Change** | **% Change** |  |
| *Revenues* |  | |  | |  |  | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service | $268113 |  | $267371 |  | $742 | 0 | % |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; License | 917951 |  | 1441011 |  | (523060) | -36 | % |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hardware | 363642 |  | 436422 |  | (72780) | -17 | % |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total Revenue* | $1549706 |  | $2144804 |  | $(595098) | -28 | % |

---

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |  |  |  |  |
|  | **September 30,** | **September 30,** |  |  |  |  |
|  | **2025** | **2024** |  | **$ Change** | **% Change** |  |
| *Cost of Goods Sold* |  |  | |  |  | |
| Service | $80702 | $110723 |  | $(30021) | -27 | % |
| License | 74077 | 146732 |  | (72655) | -50 | % |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hardware | 434834 | 207655 |  | 227179 | 109 | % |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hardware - reserve | (231625) |  |  | (231625) | 100 | % |
| Total COGS | $357988 | $465110 |  | $(107122) | -23 | % |

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***<u>Revenues</u>***

For the three months ended September 30, 2025, and 2024, service revenues included approximately $263,000 and $214,000, respectively, of recurring maintenance and support revenue, and approximately $5,000 and $53,000 respectively, of non-recurring custom services revenue. Recurring service revenue increased $49,000 or 23% in 2025 which was due to the timing of renewals of service agreements. Non-recurring custom services decreased 90% due to an upgrade for one large customer in 2024. Overall, service revenues remained flat at $268,113 as compared to $267,371 in the corresponding period in 2024.

For the three months ended September 30, 2025, license revenue decreased $523,060 or 36% to $917,951 from $1,441,011 in the corresponding period in 2024, as several long-term customers expanded their license deployments in the corresponding period in 2024.

For the three months ended September 30, 2025, hardware sales decreased 17% to $363,642 from $436,422 in the corresponding period in 2024. The decrease was one new customer large deploy, several new customer deploys of fully reserved inventory in the 2025 period, and to one long-term customer expanding its purchase of biometric cybersecurity solutions in the 2024 period.

***<u>Costs and other expenses</u>***

For the three months ended September 30, 2025, cost of service decreased $30,021 or 27% to $80,702 from $110,723 in the three months ended September 30, 2024, due to an upgrade for one large customer for the 2024 period. For the three months ended September 30, 2025, license fees decreased to $74,077 from $146,732 in the three months ended September 30, 2024, due to the absence of license fees for third-party software included in our previous Swivel Secure product offerings. For the three months ended September 30, 2025, hardware costs decreased to net cost of $203,209 (after giving effect to the $231,625 reversal of the reserve for inventory) from $207,655 in the three months ended September 30, 2024, for a net decrease of 2%

***<u>Selling, general and administrative</u>***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |  |  |
|  | **September 30,** | **September 30,** |  |  |
|  | **2025** | **2024** | **$ Change** | **% Change** |
| **Selling, general and administrative** | $1400288 | $1607925 | $(207637) | -13% |

---

Selling, general and administrative expenses for the three months ended September 30, 2025, decreased 13% from $1,607,925 in the corresponding period in 2024 to $1,400,288 in the current quarter. The decreases included reductions in administration and professional services fees, and non-recurring write-off of administration fees.

***<u>Research, development and engineering</u>***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |  |  |
|  | **September 30,** | **September 30,** |  |  |
|  | **2025** | **2024** | **$ Change** | **% Change** |
| **Research, development, and engineering** | $683620 | $652174 | $31446 | 5% |

---

For the three months ended September 30, 2025, research, development, and engineering costs increased 5% to $683,620 compared to $652,174 in the corresponding period in 2024. The increase consisted primarily of professional services and personnel costs, offset by a decrease in rent costs.

***<u>Other income (expense)</u>***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |  |  |
|  | **September 30,** | **September 30,** |  |  |
|  | **2025** | **2024** | **$ Change** | **% Change** |
| Interest income | $515 | $2 | $513 | 25650% |
| Loan fee amortization | (60000) | (60000) |  | 0% |
| Interest expense | (13174) | (98556) | 85382 | 87% |
| **Other income (expense)** | $(72659) | $(158554) | $85895 | 54% |

---

Other income (expense) for the three months ended September 30, 2025 consisted of interest income of $515, interest expense of $13,174 on the note payable and the government loan through the BBVA bank, and a loan fee amortization amount of $60,000. Other income (expense) for the three months ended September 30, 2024 consisted of interest income of $2 and interest expense of $98,556 comprised of approximately $4,200 on the government loan through the BBVA bank and the balance on the 2024 Note, and a loan fee amortization amount of $60,000.

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**Nine MONTHS ENDED September 30, 2025 AS COMPARED TO September 30, 2024**

**<u>Consolidated Results of Operations</u>** <u>-</u> **<u>Percent Trend</u>**

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** |
| **Revenues** |  |  |
| Services | 18% | 14% |
| License fees | 58% | 76% |
| Hardware | 24% | 10% |
| Total Revenues | 100% | 100% |
| **Costs and other expenses** |  |  |
| Cost of services | 6% | 6% |
| Cost of license fees | 5% | 8% |
| Cost of hardware | 22% | 5% |
| Cost of hardware - reserve | -10% | 0% |
| Total Cost of Goods Sold | 23% | 19% |
| Gross profit | 77% | 81% |
| **Operating expenses** |  |  |
| Selling, general and administrative | 92% | 98% |
| Research, development and engineering | 39% | 34% |
| Total Operating Expenses | 131% | 131% |
| **Operating loss** | -54% | -50% |
| Other expense | -5% | -4% |
| Loss before provision for income tax | -59% | -53% |
| Provision for income tax | 0% | 0% |
| **Net loss** | -59% | -53% |

---

***<u>Revenues and cost of goods sold</u>***

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |  |  |  |  |
|  | **September 30,** | **September 30,** |  |  |  |  |
|  | **2025** | **2024** |  | **$ Change** | **% Change** |  |
| *Revenues* |  |  | |  |  | |
| Service | $862707 | $764062 |  | $98645 | 13 | % |
| License | 2822796 | 4165669 |  | (1342873) | -32 | % |
| Hardware | 1168269 | 537562 |  | 630707 | 117 | % |
| *Total Revenue* | $4853772 | $5467293 |  | $(613521) | -11 | % |
| *Cost of Goods Sold* |  |  | |  |  | |
| Service | 297147 | 322957 |  | (25810) | -8 | % |
| License | 233450 | 443384 |  | (209934) | -47 | % |
| Hardware | 1080109 | 260684 |  | 819425 | 314 | % |
| Hardware - reserve | (509040) |  |  | (509040) | 100 | % |
| *Total COGS* | $1101666 | $1027025 |  | $74641 | 7 | % |

---

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***<u>Revenues</u>***

For the nine months ended September 30, 2025, and 2024, service revenues included approximately $799,000 and $681,000, respectively, of recurring maintenance and support revenue, and approximately $64,000 and $83,000 respectively, of non-recurring custom services revenue. Recurring service revenue increased approximately $117,000 or 17% in 2025 which was due to the updated support for a large customer service agreement. Non-recurring custom services decreased 22% due to an upgrade for one large customer in 2024. Overall, service revenues increased 13% to $862,707 from $764,062 in the corresponding period in 2024.

For the nine months ended September 30, 2025, license revenue decreased $1,342,873 or 32% to $2,822,796 from $4,165,669 in the corresponding period in 2024, due to the ramp up of BIO-key EMEA selling only BIO-key product which has been accelerating in 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; For the nine months ended September 30, 2025, hardware sales increased 117% to $1,168, 2697 from $537,562 in the corresponding period in 2024. The increase was due to several long-term and new customers expanding their purchase of biometric cybersecurity solutions combined with selling some of fully reserved inventory initially for the African project.

***<u>Costs of goods sold</u>***

For the nine months ended September 30, 2025, cost of service decreased $25,810 or 8% to $297,147 from $322,957 in the nine months ended September 30, 2024, due to the costs associated with the upgrade for one large customer. For the nine months ended September 30, 2025, license fees decreased to $233,450 from $443,384 in the nine months ended September 30, 2024, due to the absence of license fees for third-party software included in our previous Swivel Secure product offerings. For the nine months ended September 30, 2025, hardware costs increased to a net cost of $571,069 (after giving effect to the $509,040 reversal of the reserve for inventory) from $260,684 in the nine months ended September 30, 2024, related to increased hardware revenue which included sales of a portion of our fully reserved inventory.

***<u>Selling, general and administrative</u>***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |  |  |
|  | **September 30,** | **September 30,** |  |  |
|  | **2025** | **2024** | **$ Change** | **% Change** |
| **Selling, general and administrative** | $4453362 | $5332764 | $(879402) | -16% |

---

Selling, general and administrative expenses for the nine months ended September 30, 2025, decreased 16% from $5,332,764 in the corresponding period in 2024 to $4,453,362 in the current quarter. The decreases included reductions in administration, administrative write-offs, sales personnel costs, and professional services fees.

***<u>Research, development and engineering</u>***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |  |  |
|  | **September 30,** | **September 30,** |  |  |
|  | **2025** | **2024** | **$ Change** | **% Change** |
| **Research, development and engineering** | $1915422 | $1850929 | $64493 | 3% |

---

For the nine months ended September 30, 2025, research, development, and engineering costs increased 3% to $1,915,422 compared to $1,850,929 in the corresponding period in 2024. The increase consisted primarily of professional services and personnel costs, offset by a decrease in rent costs.

***<u>Other income (expense)</u>***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |  |  |
|  | **September 30,** | **September 30,** |  |  |
|  | **2025** | **2024** | **$ Change** | **% Change** |
| Interest income | $2610 | $53 | $2557 | 4825% |
| Loan fee amortization | (60000) | (64000) | 4000 | 1500% |
| Interest expense | (74722) | (108823) | 34101 | 31% |
| **Other income (expense)** | $(132112) | $(172770) | $40658 | 24% |

---

Other income (expense) for the nine months ended September 30, 2025 consisted of interest income of $2,610, interest expense of $74,722 on the note payable and the government loan through the BBVA bank, and a loan fee amortization amount of $60,000. Other income (expense) for the nine months ended September 30, 2024 consisted of interest income of $53 and interest expense of $108,823 consisting of approximately $8,100 on the government loan through the BBVA bank and the balance for interest accrued on the 2024 Note, as defined below, and a loan fee amortization amount of $64,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22

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**LIQUIDITY AND CAPITAL RESOURCES**

**Cash Flows**

***Operating activities overview***

Net cash used in operations during the nine months ended September 30, 2025 was $2,838,088. Items of note included:<br>

● Net positive cash flows related to adjustments for non-cash expenses of approximately $823,000. 

● Net positive cash flows related to accounts receivable and amount due from factor of approximately $83,000. 

● Negative cash flows related to changes in allowance for doubtful receivables, accounts payable, capitalized contract costs, inventory, prepaid expenses, deferred revenues, and accrued liabilities of approximately $875,000, due to working capital management.

***Financing activities overview***

Net cash provided by financing activities during the nine months ended September 30, 2025 was $4,456,013 which included $3,813,057 of proceeds from the exercise of warrants, and $876 from the purchase of shares in the Employee Stock Purchase Plan, which was offset by repayment of $109,137 of the government loan through the BBVA bank and $248,783 for offering costs.

***Investing activities overview***

Net cash used in investing activities during the nine months ended September 30, 2025 consisted of capital expenditures of $7,373 for computers.

**Liquidity and Capital Resources**

Since our inception, our capital needs have been met mainly through proceeds from the sale of equity and debt securities, and revenue. We expect capital expenditures to be less than $100,000 during the next twelve months.

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

On September 30, 2025, we entered into and closed a note purchase agreement which provided for the issuance of a $1,130,000 principal amount senior secured promissory note (the "2025 Note"). This resulted in gross proceeds of approximately $1,000,000 after deducting estimated offering expenses, and the original issue discount. The 2024 Note is due eighteen months (18) following the date of issuance, accrues interest at a rate of nine percent (9%) per annum, and commencing six months after the date of issuance of, the lender shall have the right to redeem up to $135,000 of principal amount each month. In connection with the October 27, 2025 warrant exercise agreement described above, we prepaid approximately $450,000 of the amount due under the 2025 Note. As of the date of this report, the outstanding principal amount due under the 2025 Note is approximately $675,000. For a more complete description of the 2025 Note, please see Note 10 to Our Condensed Consolidated Financial Statements included in Part I Item 1 of this report.

On January 15, 2025, we entered into a warrant exercise agreement with an existing investor (the "Investor") to exercise certain outstanding warrants to purchase an aggregate of 2,061,112 shares of common stock, at an exercise price of $1.85 per share which were originally issued to the Investor on September 12, 2024 (the "Existing Warrants"). 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 warrants to purchase up to an aggregate of 3,091,668 shares of Common Stock ("New Warrants"). The New Warrants have substantially the same terms, are immediately exercisable at an exercise price of $2.15 per share and will expire five years from the date of issuance. The gross proceeds to the Company were approximately $3.8 million, prior to deducting placement agent fees and estimated offering expenses.

On September 12, 2024, we entered into a warrant exercise agreement with the Investor to exercise certain outstanding warrants to purchase an aggregate of 1,030,556 shares of common stock. The warrants were originally issued to the Investor on October 31, 2023 and had an original exercise price of $3.15 per share. In consideration for the immediate exercise of the warrants, we reduced the exercise price of the warrants to $1.85 per share and issued to the Investor unregistered Series A Warrants to purchase an aggregate of 1,030,556 shares of common stock and unregistered Series B Warrants to purchase an aggregate of 1,030,556 shares of common stock, each with an exercise price of $1.85 per share. The Series A and Series B warrants share substantially the same terms, are immediately exercisable and will expire five years from the date of issuance. The forgoing transaction resulted in gross proceeds of approximately $1.9 million prior to deducting placement agent fees and estimated offering expenses.

On June 24, 2024, we entered into and closed a note purchase agreement which provided for the issuance of a $2,360,000 principal amount senior secured promissory note (the "2024 Note"). This resulted in gross proceeds of approximately $1,826,000 after deducting placement agent fees, estimated offering expenses, and the original issue discount. The 2024 Note is due eighteen months (18) following the date of issuance, accrues interest at a rate of nine percent (9%) per annum, and commencing six months after the date of issuance of, the lender shall have the right to redeem up to $270,000 of principal amount each month. In connection with the September 12, 2024 warrant exercise agreement described above, we prepaid approximately $762,600 of the amount due under the 2024 Note. As of the date of this report, the loan has been paid in full. For a more complete description of the 2024 Note, please see Note 10 to Our Condensed Consolidated Financial Statements included in Part I Item 1 of this report.

We entered into an accounts receivable factoring arrangement with a financial institution (the "Factor") which has been extended to October 31, 2026 and may be discontinued at that time. Pursuant to the terms of the arrangement, from time to time, we sell to the Factor a minimum of $150,000 per quarter of certain of our accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor remits 35% of the foreign and 75% of the domestic accounts receivable balance to us, with the remaining balance, less fees, forwarded to us once the Factor collects the full accounts receivable balance from the customer. In addition, from time to time, we receive over advances from the Factor. Factoring fees range from 2.75% to 15% of the face value of the invoice factored and are determined by the number of days required for collection of the invoice. We expect to continue to use this factoring arrangement periodically to assist with our general working capital requirements due to contractual requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23

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***Liquidity outlook***

At September 30, 2025, our total cash and cash equivalents were $2,039,853, as compared to $437,604 at December 31, 2024. At September 30, 2025, we had a working capital of approximately $782,000. On October 27, 2025, we enhanced our liquidity by closing a warrant exchange agreement resulting in net proceeds of approximately $2,500,000, after deduction of placement fees and repayment of certain indebtedness.

As discussed above, we have historically financed our operations through access to the capital markets by issuing secured and convertible debt securities, convertible preferred stock, common stock, warrants, and through factoring receivables. We currently require approximately $830,000 per month to conduct our operations, a monthly amount that we have been unable to consistently achieve through revenue generation. We also have approximately $2.8 million of inventory (currently reserved) initially purchased for projects in Nigeria. We continue to explore other markets and opportunities to sell the product to generate additional cash. If we are unable to generate sufficient revenue to fund current operations and execute our business plan, we will need to obtain additional third-party financing. Unless we generate sufficient positive cash flow from operations or liquidation of existing inventory, we expect that we will need to obtain additional financing during the next twelve months to support operations.

Our long-term viability and growth will depend upon the successful commercialization of our technologies and our ability to obtain adequate financing. To the extent that we require such additional financing, no assurance can be given that any form of additional financing will be available on terms acceptable to us, that adequate financing will be obtained to meet our needs, or that such financing would not be dilutive to existing stockholders. If available financing is insufficient or unavailable or we fail to continue to generate sufficient revenue, we may be required to further reduce operating expenses, delay the expansion of operations, be unable to pursue merger or acquisition candidates, or in the extreme case, not continue as a going concern.

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

As a smaller reporting company, we are not required to provide the information required by this Item.

**ITEM 4. CONTROLS AND PROCEDURES**

*Evaluation of 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 September 30, 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 September 30, 2025, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

*Changes in Internal Control Over Financial Reporting*

There have been no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 24

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**PART II. OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of this report, we are not a party to any pending lawsuits.

**ITEM 1A. RISK FACTORS**

As a smaller reporting company, we are not required to provide the information required by this Item.

Investors are encouraged to consider the risks described in our 2024 Form 10-K, our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in this Report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

On September 17, 2025, we issued 254,647 shares of the Company's Common Stock to one accredited investor in exchange for an outstanding promissory note in the principal amount of $200,000. The forgoing shares were issued pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), provided by Section 3(a)(9) under the Securities Act, without payment of placement agent fees or other remuneration to any person.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES** 

Not applicable.

**ITEM *5.* OTHER INFORMATION**

During the *three* months ended *September 30, 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.

**ITEM 6. EXHIBITS**

---

| | |
|:---|:---|
| **Exhibit** <br> **No.** | **Description** |
| 31.1 | [Certificate of CEO of Registrant required under Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended](ex_856391.htm) |
| 31.2 | [Certificate of CFO of Registrant required under Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended](ex_856392.htm) |
| 32.1 | [Certificate of CEO of Registrant required under 18 U.S.C. Section 1350](ex_856393.htm) |
| 32.2 | [Certificate of CFO of Registrant required under 18 U.S.C. Section 1350](ex_856394.htm) |
| 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 (formatted as Inline XBRL and contained in Exhibit 101). |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25

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**SIGNATURES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements 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.** |
| Dated: November 14, 2025 | /s/ Michael W. DePasquale |
|  | Michael W. DePasquale |
|  | Chief Executive Officer |
|  | (Principal Executive Officer) |
| Dated: November 14, 2025 | /s/ Cecilia C. Welch |
|  | Cecilia C. Welch |
|  | Chief Financial Officer |
|  | (Principal Financial Officer) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION**

I, Michael W. DePasquale, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of BIO-key International, Inc. (the "Company");

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

---

| | |
|:---|:---|
| Dated: November 14, 2025 | |
|  | <u>/s/ Michael W. DePasquale</u> |
|  | Michael W. DePasquale |
|  | Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION**

I, Cecilia C. Welch, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of BIO-key International, Inc. (the "Company");

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

---

| | |
|:---|:---|
| Dated: November 14, 2025 | |
|  | <u>/s/ Cecilia C. Welch</u> |
|  | Cecilia C. Welch |
|  | Chief Financial Officer |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**<br> **18 U.S.C. SECTION 1350,**<br> **AS ADOPTED PURSUANT TO**<br> **SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of BIO-key International, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael W. DePasquale, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| BIO-KEY INTERNATIONAL, INC. | BIO-KEY INTERNATIONAL, INC. |
| By: | <u>/s/ Michael W. DePasquale</u> |
|  | Michael W. DePasquale |
|  | Chief Executive Officer |
| Dated: November 14, 2025 | Dated: November 14, 2025 |

---

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO**<br> **18 U.S.C. SECTION 1350,**<br> **AS ADOPTED PURSUANT TO**<br> **SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of BIO-key International, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Cecilia Welch, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| BIO-KEY INTERNATIONAL, INC. | BIO-KEY INTERNATIONAL, INC. |
| By: | <u>/s/ Cecilia C. Welch</u> |
|  | Cecilia C. Welch |
|  | Chief Financial Officer |
| Dated: November 14, 2025 | Dated: November 14, 2025 |

---