true 0001019034

 0001019034

 2023-01-01
 2023-12-31

 0001019034

 2023-06-30

 0001019034

 2024-06-04

 --12-31FY2023

 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K/A

 (Amendment No. 1)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 FOR THE FISCAL YEAR ENDED December 31, 2023

 OR

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

 FOR THE TRANSITION PERIOD FROM ___ 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 or organization)

 (IRS Employer

 Identification Number)

 101 CRAWFORDS CORNER ROAD, SUITE 4116, HOLMDEL, NJ 07753

 (Address of principal executive offices) (Zip Code)

 ( 732) 359-1100

 Registrant's telephone number, including area code.

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

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 Common Stock, $0.0001 par value per share

 BKYI

 Nasdaq Capital Market

 Securities registered pursuant to Section 12(g) of the Act: None

 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

 Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

 As of June 30, 2023 (the last business day of the registrant's most recently completed second fiscal quarter), the aggregate market value of the registrant's common stock held by non-affiliates was $ 6,303,798 based upon the closing price for shares of the registrant's post-split common stock of $13.50 as reported by the Nasdaq Stock Market on that date.

 As of June 4, 2024 the registrant had 1,814,228 shares of common stock outstanding.

 EXPLANATORY NOTE

 This Amendment No. 1 (the " Amendment No. 1 ") to the Annual Report on Form 10-K of BIO-key International, Inc. (the " Company ") for the year ended December 31, 2023, originally filed with the Securities and Exchange Commission on June 5, 2024, is being filed solely to correct a typographical error in the report of Marcum LLP, the Company's independent auditor for the fiscal year ended December 31, 2022. The typographical error that was corrected concerns the date of the Auditor's Report of Marcum LLP, which referenced June 5, 2024 instead of June 1, 2023 due to an inadvertent oversight in the EDGAR preparation process. Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, we have repeated the entire text of Item 8 of the Form 10-K in this Amendment No. 1. However, there have been no changes to the text of such item other than the change in the date of the Auditor's Report of Marcum LLP.

 The Company is including in this Amendment No. 1 currently dated certifications from its Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1 and 31.2 and Exhibits 32.1 and 32.2, respectively. As a result, Item 15 "Exhibits and Financial Statement Schedules" has also been modified.

 Except as expressly set forth above, this Amendment No. 1 speaks as of the original filing date of the Form 10-K, and does not reflect events that may have occurred subsequent to that date, nor does it modify or update in any way disclosure made in the original Form 10-K.

 Item 8

 Financial Statements and Supplementary Data

 Item 15

 Exhibits and Financial Statement Schedules

 Item 16

 Form 10-K Summary

 Signatures

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 FINANCIAL STATEMENTS

 The following financial statements of BIO-key International, Inc. are included herein at the indicated page numbers:

 Report of Independent Registered Public Accounting Firm (Bush and Associates CPA., PCAOB ID: 6797)

 Report of Independent Registered Public Accounting Firm (Marcum LLC., PCAOB ID:688)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations and Comprehensive Loss—Years ended December 31, 2023 and 2022

 Consolidated Statements of Stockholders' Equity —Years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows—Years ended December 31, 2023 and 2022

 Supplementary Disclosures of Cash Flow Information—Years ended December 31, 2023 and 2022

 Notes to the Consolidated Financial Statements—December 31, 2023 and 2022

 Report of Independent Registered Public Accounting Firm

 To the Shareholder and the Board of Directors of

 BIO-key International, Inc. Holmdel, NJ

 Opinion on the Financial Statements

 We have audited the retrospective adjustments related to the reverse stock split discussed in Note A, the accompanying consolidated balance sheet of BIO-key International, Inc. (the "Company") as of December 31, 2022. Additionally, we have audited the accompanying consolidated balance sheet of BIO-key International, Inc. and Subsidiaries (the "Company") as of December 31, 2023, and the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements and the retrospective adjustments related to the reverse stock split present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 Substantial Doubt about the Company's ability to continue as a Going Concern

 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in Note A of the financial statements, the Company has suffered substantial net losses and negative cash flows from operations in recent years and is dependent on debt and equity financing to fund its operations, all of which raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are disclosed in Note A. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 Critical Audit Matters

 Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters.

 /s/ Bush & Associates CPA LLC

 We have served as the Company's auditor since 2024.

 Henderson, Nevada

 June 5, 2024

 Report of Independent Registered Public Accounting Firm

 To the Shareholders and Board of Directors of

 BIO-key International, Inc. Holmdel, NJ

 Opinion on the Financial Statements

 We have audited, before the effects of the retrospective adjustments related to the reverse stock split discussed in Note A, the accompanying consolidated balance sheet of BIO-key International, Inc. (the "Company") as of December 31, 2022, the related consolidated statements of operations, changes in stockholders' equity and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, before the effects of the retrospective adjustments related to the reverse stock split discussed in Note A, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 We were not engaged to audit, review, or apply any procedures to the effects of the retrospective adjustments related to the reverse stock split discussed in Note A and, accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied. Those retrospective adjustments were audited by other auditors.

 Going Concern

 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in Note A of the financial statements, the Company has suffered substantial net losses and negative cash flows from operations in recent years and is dependent on debt and equity financing to fund its operations, all of which raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are disclosed in Note A. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 /s/ Marcum LLP

 Marcum LLP

 We served as the Company's auditor from 2010 to 2024

 Saddle Brook, New Jersey

 June 1, 2023

 CONSOLIDATED BALANCE SHEETS

 2023

 2022

 ASSETS

 Cash and cash equivalents

 $

 511,400

 $

 2,635,522

 Accounts receivable, net

 1,201,526

 1,522,784

 Due from factor

 99,320

 49,500

 Inventory, net of reserve

 445,740

 4,434,369

 Prepaid expenses and other

 364,171

 342,706

 Total current assets

 2,622,157

 8,984,881

 Equipment and leasehold improvements, net

 220,177

 107,413

 Capitalized contract costs, net

 229,806

 283,069

 Deposits and other assets

 -

 8,712

 Operating lease right-of-use assets

 36,905

 197,355

 Intangible assets, net

 1,407,990

 1,762,825

 Total non-current assets

 1,894,878

 2,359,374

 TOTAL ASSETS

 $

 4,517,035

 $

 11,344,255

 LIABILITIES

 Accounts payable

 $

 1,316,014

 $

 1,108,279

 Accrued liabilities

 1,305,848

 1,009,123

 Convertible note payable

 -

 2,596,203

 Government loan – BBVA Bank, current portion

 138,730

 120,000

 Deferred revenue - current

 414,968

 462,418

 Operating lease liabilities, current portion

 159,665

 Total current liabilities

 3,213,389

 5,455,688

 Deferred revenue, net of current portion

 28,296

 52,134

 Deferred tax liability

 22,998

 170,281

 Government loan – BBVA Bank, net of current portion

 188,787

 326,767

 Operating lease liabilities, net of current portion

 -

 Total non-current liabilities

 240,081

 587,011

 TOTAL LIABILITIES

 3,453,470

 6,042,699

 Commitments (Note O)

 STOCKHOLDERS' EQUITY

 Common stock — authorized, 170,000,000 shares; issued and outstanding; 1,032,777 and 552,739 of $.0001 par value at December 31, 2023 and December 31, 2022, respectively

 Additional paid-in capital

 126,047,851

 122,029,476

 Accumulated other comprehensive loss

 22,821

)

 Accumulated deficit

 (125,007,210

)

 (116,485,373

)

 TOTAL STOCKHOLDERS' EQUITY

 1,063,565

 5,301,556

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 $

 4,517,035

 $

 11,344,255

 All BIO-key shares issued and outstanding for all periods reflect BIO-key's 1-for-18 reverse stock split, which was effective December 21, 2023.

 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 2023

 2022

 Revenues

 Services

 $

 2,218,885

 $

 1,789,720

 4,342,010

 4,584,052

 Hardware

 1,194,010

 646,486

 7,754,905

 7,020,258

 Costs and other expenses

 Cost of services

 861,936

 722,152

 Cost of license fees

 1,174,919

 906,417

 Cost of hardware

 700,231

 411,001

 Cost of hardware reserve

 3,586,500

 400,000

 Total costs and other expenses

 6,323,586

 2,439,570

 Gross Profit

 1,431,319

 4,580,688

 Operating expenses

 Selling, general and administrative

 7,862,710

 9,364,887

 Research, development and engineering

 2,394,926

 3,252,236

 Reversal of earnout payable – Swivel acquisition

 -

 (500,000

)

 Impairment of goodwill

 -

 2,387,193

 Total operating expenses

 10,257,636

 14,504,316

 Operating loss

 (8,826,317

)

 (9,923,628

)

 Other income (expense)

 Interest income

 11,533

 Gain from sale of asset

 20,000

 -

 Loss on foreign currency transactions

 (39,000

)

 -

 Investment-debt security reserve

 -

 (452,821

)

 Loan transaction costs

 -

 (1,147,456

)

 Change in fair value of convertible note

 396,203

 (396,203

)

 Interest expense

 (218,270

)

 (10,462

)

 Total other income (expense)

 170,466

 (2,006,709

)

 Loss before provision for income tax benefit

 (8,655,851

)

 (11,930,337

)

 Provision for income tax benefit

 134,014

 20,434

 $

)

 $

)

 Comprehensive loss:

 $

)

 $

)

 Other comprehensive loss- Foreign translation adjustment

 265,423

)

 Comprehensive loss

 $

 (8,256,414

)

 $

 (12,152,505

)

 Basic and Diluted Loss per Common Share

 $

 (15.21

)

 $

 (27.26

)

 Weighted Average Shares Outstanding:

 Basic and Diluted

 560,278

 436,821

 All BIO-key shares issued and outstanding for all periods reflect BIO-key's 1-for-18 reverse stock split, which was effective December 21, 2023.

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY

 Accumulated

 Additional

 Other

 Common Stock

 Paid-in

 Comprehensive

 Accumulated

 Shares (1)

 Amount

 Capital

 Income (Loss)

 Deficit

 Total

 Balance as of December 31, 2021

 478,475

 $

 $

 120,190,877

 $

 -

 $

 (104,575,470

)

 $

 15,615,455

 Issuance of common stock for directors' fees

 2,202

 -

 76,043

 -

 -

 76,043

 Issuance of restricted common stock to employees

 15,444

 (1

)

 -

 -

 -

 Forfeiture of restricted stock

 (583

)

 -

 -

 -

 -

 -

 Issuance of common stock pursuant to Swivel purchase agreement

 14,948

 600,001

 -

 -

 600,003

 Issuance of common stock for note issuance fees

 38,889

 699,996

 -

 -

 700,000

 Issuance of warrant in conjunction with note payable

 -

 -

 94,316

 -

 94,316

 Issuance of common stock for employee stock purchase plan

 3,364

 -

 56,380

 -

 -

 56,380

 Share based compensation for employee stock purchase plan

 -

 -

 18,787

 -

 -

 18,787

 Foreign currency translation adjustment

 -

 -

)

 -

)

 Share-based compensation

 -

 -

 293,077

 -

 -

 293,077

 -

 -

 -

 -

)

)

 Balance as of December 31, 2022

 552,739

 $

 $

 122,029,476

 $

)

 $

 (116,485,373

)

 $

 5,301,556

 Issuance of common stock for directors' fees

 3,078

 -

 39,007

 -

 -

 39,007

 Issuance of restricted common stock to employees

 16,404

 (1

)

 -

 -

 -

 Forfeiture of restricted stock

 (3,752

)

 -

 (3,105

)

 -

 -

 (3,105

)

 Exercise of warrants

 177,889

 -

 -

 Issuance of warrants

 -

 -

 3,403,322

 -

 -

 3,403,322

 Issuance of stock for securities purchase agreements

 283,472

 892,909

 -

 -

 892,938

 Issuance of common stock for employee stock purchase plan

 2,947

 -

 17,478

 -

 -

 17,478

 Share based compensation for employee stock purchase plan

 -

 -

 4,343

 -

 -

 4,343

 Foreign currency translation adjustment

 -

 -

 -

 265,423

 -

 265,423

 Share-based compensation

 -

 -

 225,487

 -

 -

 225,487

 Issuance costs

 -

 -

 (561,367

)

 -

 -

 (561,367

)

 -

 -

 -

 -

)

)

 Balance as of December 31, 2023

 1,032,777

 $

 $

 126,047,851

 $

 22,821

 $

 (125,007,210

)

 $

 1,063,565

 All BIO-key shares issued and outstanding for all periods reflect BIO-key's 1-for-18 reverse stock split, which was effective December 21, 2023.

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 2023

 2022

 CASH FLOW FROM OPERATING ACTIVITIES:

 $

)

 $

)

 Adjustments to reconcile net loss to cash used for operating activities:

 Depreciation

 75,136

 43,794

 Impairment of goodwill

 -

 2,387,193

 Reversal of earnout payable – Swivel acquisition

 -

 (500,000

)

 Amortization of intangible assets and write-off

 354,558

 298,113

 Amortization of resalable software license rights

 -

 48,752

 Loan transaction costs

 -

 1,147,456

 Loss on foreign currency

 39,000

 -

 Reserve for investment security

 -

 452,821

 Reserve for inventory

 3,586,500

 400,000

 Reserve for note receivable

 -

 186,000

 Allowance for doubtful account

 750,000

 360,000

 Amortization of debt discount

 -

 -

 Amortization of capitalized contract costs

 171,291

 106,624

 Share based and warrant compensation for employees and consultants

 226,725

 311,864

 Stock based fees to directors

 39,007

 76,043

 Bad debt expense

 100,000

 130,111

 Change in fair value of convertible note

 (396,203

)

 396,203

 Deferred income tax benefit

 (134,014

)

 (20,434

)

 Amortization of operating lease right-of-use assets

 160,449

 155,353

 Change in operating assets and liabilities:

 Accounts receivable

 (428,742

)

 (339,383

)

 Due from factor

 (49,820

)

 -

 Capitalized contract costs

 (118,028

)

 (140,681

)

 Inventory

 402,129

 106,291

 Prepaid expenses and other

 (21,465

)

 (46,655

)

 Accounts payable

 57,725

 239,144

 Income tax payable

 (121,764

)

 Accrued liabilities

 275,561

 167,614

 Deferred revenue

 (71,288

)

 (120,078

)

 Operating lease liabilities

 (168,376

)

 (165,276

)

 Net cash used for operating activities

 (3,793,456

)

 (6,229,034

)

 CASH FLOWS FROM INVESTING ACTIVITIES:

 Purchase of Swivel Secure, net of cash acquired of $729,905

 -

 (623,578

)

 Receipt of cash from note receivable

 -

 9,000

 Capital expenditures

 (1,000

)

 (82,040

)

 Net cash used for investing activities

 (1,000

)

 (696,618

)

 CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from public offerings

 4,296,260

 -

 Repayment of convertible notes

 (2,200,000

)

 -

 Proceeds from the exercise of warrants

 -

 Costs incurred for issuance of common stock

 (561,367

)

 -

 Proceeds from issuance of convertible notes

 -

 2,002,000

 Costs incurred for issuance of convertible note

 -

 (155,140

)

 Repayment of government loan

 (119,251

)

 -

 Proceeds from Employee Stock Purchase Plan

 17,478

 56,380

 Net cash (used in) provided by financing activities

 1,433,440

 1,903,240

 Effect of exchange rate changes

 236,894

 (96,112

)

 NET DECREASE IN CASH AND CASH EQUIVALENTS

 (2,124,122

)

 (5,118,524

)

 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

 2,635,522

 7,754,046

 CASH AND CASH EQUIVALENTS, END OF YEAR

 $

 511,400

 $

 2,635,522

 All BIO-key shares issued and outstanding for all periods reflect BIO-key's 1-for-18 reverse stock split, which was effective December 21, 2023.

 SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION

 2023

 2022

 Cash paid during the year for:

 Taxes

 $

 -

 $

 25,682

 Interest

 $

 218,270

 $

 10,462

 Noncash investing and financing activities:

 Accounts receivable acquired from Swivel Secure

 $

 -

 $

 702,886

 Equipment acquired from Swivel Secure

 $

 -

 $

 65,640

 Other assets acquired from Swivel Secure

 $

 -

 $

 20,708

 Intangible assets acquired from Swivel Secure

 $

 -

 $

 762,860

 Goodwill resulting from the acquisition from Swivel Secure

 $

 -

 $

 1,258,087

 Accounts payable and accrued expenses acquired from Swivel Secure

 $

 -

 $

 431,884

 Government loan acquired from Swivel Secure

 $

 -

 $

 544,000

 Deferred tax liability from the acquisition of Swivel Secure

 $

 -

 $

 190,715

 Common stock issued for acquisition of Swivel Secure

 $

 -

 $

 600,004

 Common stock issued for acquisition of note payable

 $

 -

 $

 700,000

 Issuance of warrant for acquisition of note payable

 $

 -

 $

 94,316

 Operating lease right-of-use asset and liability for new lease

 $

 -

 $

 105,893

 All BIO-key shares issued and outstanding for all periods reflect BIO-key's 1-for-18 reverse stock split, which was effective December 21, 2023.

 NOTES TO THE FINANCIAL STATEMENTS

 December 31, 2023 and 2022

 NOTE A — THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Nature of Business

 The Company, founded in 1993, develops and markets proprietary fingerprint identification biometric technology and software solutions enterprise-ready identity access management solutions to commercial, government and education customers throughout the United States and internationally. The Company was a pioneer in developing automated, finger identification technology that supplements or compliments other methods of identification and verification, such as personal inspection identification, passwords, tokens, smart cards, ID cards, PKI (public key infrastructure), credit cards, passports, driver's licenses, OTP or other form of possession or knowledge-based credentialing. Additionally, advanced BIO-key technology has been, and is, used to improve both the accuracy and speed of competing finger-based biometrics.

 Going Concern and Basis of Presentation

 The Company has historically financed operations through access to the capital markets by issuing convertible debt securities, convertible preferred stock, common stock, and through factoring receivables. As of the date of this report, the Company does not have enough cash for twelve months of operations. The history of significant losses, the negative cash flow from operations, the limited cash resources on hand 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 substantial doubt about the Company's ability to continue as a going concern. 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 is, therefore looking into other markets and opportunities to sell or return the product to generate additional cash.

 The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("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. The Company has suffered substantial net losses and negative cash flows from operations in recent years and is dependent on debt and equity financing to fund its operations all of which raise substantial doubt about the Company's ability to continue as a going concern. 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 accompanying 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 in existence.

 Reverse Stock Split

 All references to issued and outstanding shares for all periods reflect the 1-for-18 reverse stock split, which was effective December 21, 2023. As a result, all share numbers for all periods, including the number of shares underlying warrants, options, and other convertible securities, and all exercise prices applicable to such warrants, options and convertible securities have been adjusted retrospectively to reflect the 1-for-18 reverse stock split.

 Foreign Currency

 The Company accounts for foreign currency transactions pursuant to ASC 830, Foreign Currency Matters ("ASC 830"). The functional currency of the Company is the U.S. dollar, which is the currency of the primary economic environment in which it operates. In accordance with ASC 830, monetary balances denominated in or linked to foreign currency are stated on the basis of the exchange rates prevailing at the applicable balance sheet date. For foreign currency transactions included in the statement of operations, the exchange rates applicable on the relevant transaction dates are used. Gains or losses arising from changes in the exchange rates used in the translation of such transactions and from the remeasurement of the monetary balance sheet items are recorded as gain (loss) on foreign currency transactions.

 The functional currency of Swivel Secure Europe, SA is the Euro. Under ASC 830, all assets and liabilities are translated into U. S. dollars using the current exchange rate at the end of each fiscal period. Revenues and expenses are translated using the average exchange rates prevailing throughout the respective periods. All transaction gains and losses from the measurement of monetary balance sheet items denominated in Euros are reflected in the statement of operations as appropriate. Translation adjustments are included in accumulated other comprehensive loss.

 Summary of Significant Accounting Policies

 A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

 1. Principles of Consolidation

 The accompanying consolidated financial statements include the accounts of BIO-key International, Inc. and its wholly-owned subsidiaries (collectively, the "Company"). Intercompany accounts and transactions have been eliminated in consolidation.

 2. Use of Estimates

 Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission (SEC). These accounting principles require us to make certain estimates, judgments and assumptions. The Company believes that the estimates, judgments and assumptions upon which it relies are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to accounts receivable, inventory, intangible assets and goodwill, fair value of convertible note payable, and income taxes.

 3. Revenue Recognition

 In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:

 Identify the contract with a customer

 Identify the performance obligations in the contract

 Determine the transaction price

 Allocate the transaction price to performance obligations in the contract

 Recognize revenue when or as the Company satisfies a performance obligation

 All of the Company's performance obligations, and associated revenues, are generally transferred to customers at a point in time, with the exception of support and maintenance, and professional services, which are generally transferred to the customer over time.

 Software licenses

 Software license revenue consists of fees for perpetual and subscription licenses for one or more of the Company's biometric fingerprint solutions or identity access management solutions. Revenue is recognized at a point in time once the software is available to the customer for download. Software license contracts are generally invoiced in full on execution of the arrangement.

 Hardware

 Hardware revenue consists of fees for associated equipment sold with or without a software license arrangement, such as servers, locks and fingerprint readers. Customers are not obligated to buy third party hardware from the Company, and may procure these items from a number of suppliers. Revenue is recognized at a point in time once the hardware is shipped to the customer. Hardware items are generally invoiced in full on execution of the arrangement.

 Support and Maintenance

 Support and maintenance revenue consists of fees for unspecified upgrades, telephone assistance and bug fixes. The Company satisfies its support and maintenance performance obligation by providing "stand-ready" assistance as required over the contract period. The Company records deferred revenue (contract liability) at time of prepayment until the term of the contract begins. Revenue is recognized over time on a ratable basis over the contract term. Support and maintenance contracts are one to five years in length and are generally invoiced in advance at the beginning of the term. Support and Maintenance revenue for subscription licenses is carved out of the total license cost at 18% and recognized on a ratable basis over the license term.

 Professional Services

 Professional services revenues consist primarily of fees for deployment and optimization services, as well as training. The majority of the Company's consulting contracts are billed on a time and materials basis, and revenue is recognized based on the amount billable to the customer in accordance with practical expedient ASC 606-10-55-18. For other professional services contracts, the Company utilizes an input method and recognizes revenue based on labor hours expended to date relative to the total labor hours expected to be required to satisfy its performance obligation.

 Contracts with Multiple Performance Obligations

 Some contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The standalone selling prices are determined based on overall pricing objectives, taking into consideration market conditions and other factors, including the value of the contracts, the cloud applications sold, customer demographics, geographic locations, and the number and types of users within the contracts.

 The Company considered several factors in determining that control transfers to the customer upon shipment of hardware and availability of download of software. These factors include that legal title transfers to the customer, the Company has a present right to payment, and the customer has assumed the risks and rewards of ownership.

 Accounts receivable from customers are typically due within 30 days of invoicing. The Company does not record a reserve for product returns or warranties as amounts are deemed immaterial based on historical experience.

 Costs to Obtain and Fulfill a Contract

 Costs to obtain and fulfill a contract are predominantly sales commissions earned by the sales force and are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over a period of benefit determined to be four years. These costs are included as capitalized contract costs on the balance sheet. The period of benefit was determined by taking into consideration customer contracts, technology, and other factors based on historical evidence. Amortization expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

 Deferred Revenue

 Deferred revenue includes customer advances and amounts that have been paid by customers for which the contractual maintenance terms have not yet occurred. The majority of these amounts are related to maintenance contracts for which the revenue is recognized ratably over the applicable term, which generally is 12-60 months. Contracts greater than 12 months are segregated as long term deferred revenue. Maintenance contracts include provisions for unspecified when-and-if available product updates and customer telephone support services. At December 31, 2023 and 2022, amounts in deferred revenue were approximately $443,000 and $515,000, respectively.

 4. Business Combinations

 In accordance with ASC 805, Business Combinations (ASC 805), the Company recognizes the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. Determining these fair values requires management to make significant estimates and assumptions, especially with respect to intangible assets.

 The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair value. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net acquisition date fair value of the assets acquired and the liabilities assumed and represents the expected future economic benefits arising from other assets acquired that are not individually identified and separately recognized. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, its estimates are inherently uncertain and subject to refinement. Assumptions may be incomplete or inaccurate, and unanticipated events or circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill to the extent that it identifies adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

 5. Goodwill and acquired intangible assets

 Goodwill is not amortized, but is evaluated for impairment annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company has determined that there is a single reporting unit for the purpose of conducting this goodwill impairment assessment. For purposes of assessing potential impairment, the Company estimates the fair value of the reporting unit, based on the Company's market capitalization, and compares this amount to the carrying value of the reporting unit. If the Company determines that the carrying value of the reporting unit exceeds its fair value, an impairment charge would be required. The annual goodwill impairment test will be performed as of December 31st of each year. Refer Note K for more information regarding the impairment of goodwill in 2022.

 Intangible assets acquired in a business combination are recorded at their estimated fair values at the date of acquisition. The Company amortizes acquired definite-lived intangible assets over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis.

 6. Cash Equivalents

 Cash equivalents consist of liquid investments with original maturities of three months or less. At December 31, 2023 and 2022, cash equivalents consisted of a money market account.

 7. Accounts Receivable

 Accounts receivable are carried at original amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful receivables by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible.

 Accounts receivable at December 31, 2023 and 2022 consisted of the following:

 2023

 2022

 Accounts receivable

 $

 2,207,311

 $

 2,096,569

 Allowance for doubtful accounts

 (1,005,785

)

 (573,785

)

 Accounts receivable, net of allowances for doubtful accounts

 $

 1,201,526

 $

 1,522,784

 Bad debt expenses (if any) are recorded in selling, general, and administrative expense.

 The allowance for doubtful accounts for the years ended December 31, 2023 and 2022 is as follows:

 Balance at Beginning of Year

 Charged to Costs and Expenses

 Deductions from Reserves

 Balance at End of Year

 Year ended December 31, 2023 Allowance for Doubtful Accounts

 $

 573,785

 $

 750,000

 $

 (318,000

)

 $

 1,005,785

 Year ended December 31, 2022 Allowance for Doubtful Accounts

 $

 213,785

 $

 360,000

 $

 -

 $

 573,785

 8. Equipment and Leasehold Improvements, Intangible Assets and Depreciation and Amortization

 Equipment and leasehold improvements are stated at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over the estimated service lives, principally using straight-line methods. Leasehold improvements are amortized over the shorter of the life of the improvement or the lease term, using the straight-line method.

 The estimated useful lives used to compute depreciation and amortization for financial reporting purposes are as follows:

 Years

 Equipment and leasehold improvements

 Equipment

 3 - 5

 Furniture and fixtures

 3 - 5

 Software

 Leasehold improvements

 life or lease term

 Intangible assets other than goodwill consist of patents, trade name, proprietary software, and customer relationships. Patent costs are capitalized until patents are awarded. Upon award, such costs are amortized using the straight-line method over their respective economic lives. If a patent is denied, all costs are charged to operations in that year. Trade names, proprietary software, and customer relationships are amortized over the economic useful life.

 9. Impairment or Disposal of Long Lived Assets, including Intangible Assets

 The Company reviews long-lived assets, including intangible assets subject to amortization, whenever events or changes in circumstances indicate that the carrying amount of such an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate. If such assets are considered impaired, the impairment to be recognized is equal to the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. In assessing recoverability, the Company must make assumptions regarding estimated future cash flows and discount factors. If these estimates or related assumptions change in the future, the Company may be required to record impairment charges. Intangible assets with determinable lives are amortized over their estimated useful lives, based upon the pattern in which the expected benefits will be realized, or on a straight-line basis, whichever is greater. There were no impairments in 2023 and 2022.

 10. Advertising Expense

 The Company expenses the costs of advertising as incurred. Advertising expenses for 2023 and 2022 were approximately $340,000 and $842,000, respectively.

 11. Research and Development Expenditures

 Research and development expenses include costs directly attributable to the conduct of research and development programs primarily related to the development of our software products and improving the efficiency and capabilities of our existing software. Such costs include salaries, payroll taxes, employee benefit costs, materials, supplies, depreciation on research equipment, services provided by outside contractors, and the allocable portions of facility costs, such as rent, utilities, insurance, repairs and maintenance, depreciation and general support services. All costs associated with research and development are expensed as incurred.

 12. Earnings Per Share of Common Stock ( " EPS ")

 The Company's EPS is calculated by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted EPS includes the effect from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options and warrants, when the effect of their inclusion is dilutive. All BIO-key shares issued and outstanding for all periods reflect BIO-key's 1-for-18 reverse stock split, which was effective December 21, 2023.

 13. Accounting for Stock-Based Compensation

 The Company accounts for share based compensation in accordance with the provisions of ASC 718-10, "Compensation — Stock Compensation," which requires measurement of compensation cost for all stock awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The majority of its share-based compensation arrangements vest over a three year vesting schedule. The Company expenses its share-based compensation under the ratable method, which treats each vesting tranche as if it were an individual grant. The fair value of stock options is determined using the Black-Scholes valuation model and requires the input of certain assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (the "expected option term"), the estimated volatility of its common stock price over the option's expected term, the risk-free interest rate over the option's expected term, and the Company's expected annual dividend yield. Changes in these subjective assumptions can materially affect the estimate of fair value of stock-based compensation and consequently, the related amount recognized as an expense in the consolidated statements of operations. As required under the accounting rules, the Company reviews its valuation assumptions at each grant date and, as a result, the Company is likely to change its valuation assumptions used to value employee stock-based awards granted in future periods. The values derived from using the Black-Scholes model are recognized as expense over the service period, net of estimated forfeitures (the number of individuals that will ultimately not complete their vesting requirements). The estimation of stock awards that will ultimately vest requires significant judgment. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. Actual results, and future changes in estimates, may differ substantially from current estimates. Options and warrants to outsiders are accounted for under ASC 718.

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

 2023

 2022

 Selling, general and administrative

 $

 209,134

 $

 310,017

 Research, development and engineering

 56,598

 77,890

 $

 265,732

 $

 387,907

 14. Income Taxes

 The provision for, or benefit from, income taxes includes deferred taxes resulting from the temporary differences in income for financial and tax purposes using the liability method. Such temporary differences result primarily from the differences in the carrying value of assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income within the carryback, carryforward period available under tax law. The Company evaluates, on a quarterly basis whether, based on all available evidence, if it is probable that the deferred income tax assets are realizable. Valuation allowances are established when it is more likely than not that the tax benefit of the deferred tax asset will not be realized. The evaluation, as prescribed by ASC 740-10, "Income Taxes," includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. Because of the Company's historical performance and estimated future taxable income, a full valuation allowance has been established.

 The Company accounts for uncertain tax provisions in accordance with ASC 740. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

 15. Leases

 In accordance with ASC 842, Leases (ASC 842), the Company records a right-of-use (ROU) asset and a lease liability on the balance sheet for all leases with terms longer than 12 months and classifies them as either operating or finance leases.

 At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present and the classification of the lease including whether the contract involves the use of a distinct identified asset, whether the Company obtains the right to substantially all the economic benefit from the use of the asset, and whether the Company has the right to direct the use of the asset. Leases with a term greater than one year are recognized on the balance sheet as ROU assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less under practical expedient in paragraph ASC 842-20-25-2. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration, and to account for the lease and non-lease components as a single lease component.

 Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. The implicit rate within our operating leases are generally not determinable and, therefore, the Company uses the incremental borrowing rate at the lease commencement date to determine the present value of lease payments. The determination of the Company's incremental borrowing rate requires judgment. The Company determines the incremental borrowing rate for each lease using our estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The operating lease ROU asset also includes any lease prepayments, offset by lease incentives.

 An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain we will exercise that option. An option to terminate is considered unless it is reasonably certain we will not exercise the option.

 16. The Fair Value Measurement Option

 The Company has elected the fair value measurement option for convertible debt with embedded derivatives that require bifurcation, and record the entire hybrid financing instrument at fair value under the guidance of ASC 825, Financial Instruments. As a result, the convertible promissory note was recorded at fair value upon issuance and will subsequently be remeasured at each reporting date until settled or converted. The Company recognized the note initially at fair value, which exceeded the proceeds received resulting in a day one loss that has been recognized in net loss. The Company reports interest expense, including accrued interest, related to the convertible debt under the fair value option, separately from within the change in fair value of the convertible debt in the accompanying consolidated statement of operations.

 17. Fair Value Measurements

 Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

 Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities;

 Level 2: Quoted prices in markets that are not active or inputs which are observable either directly or indirectly for substantially the full term of the asset or liability; and

 Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

 The Company issued a convertible note which included an original issue discount, conversion features and a detachable warrant, as further discussed in Note M. The detachable warrant represents a freestanding, separable equity-linked financial instrument recorded at fair value. The fair value of the detachable warrant was calculated using a Black-Scholes valuation model. The Company elected the fair value option for the convertible debt which was determined based on significant unobservable inputs including the likelihood of default, the estimated date at which the default could take place, and the present value discount rate, which causes it to be classified as a Level 3 measurement within the fair value hierarchy. The fair value option requires recognition at fair value upon issuance and on each balance sheet date thereafter. Changes in the estimated fair value are recognized as change in fair value of convertible note in the consolidated statements of operations. As a result of applying the fair value option, direct costs and fees related to the issuance of the convertible note were expensed and not deferred.

 The Company estimated the fair value of the convertible note using a probability-weighted discounted cash flow model with the following assumptions and significant terms of the convertible note at December 22, 2022:

 1. Face amount - $2,200,000

 2. Nominal interest rate – 10% - 12%

 3. Default interest rate – 18%

 4. Increase in principal upon a default – 30%

 5. Present value discount rate – 15.18%

 6. Likelihood of default – estimated to be 50% at the extended maturity date

 The following table shows the changes in fair value measurements for the convertible note using significant unobservable inputs (Level 3) during the year ended December 31, 2023:

 Beginning balance

 $

 2,596,203

 Purchases and issuances

 (2,200,000

)

 Day one change in value of hybrid instrument

 (396,203

)

 Ending balance

 $

 -

 18. Recent Accounting Pronouncements

 In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), referred to herein as ASU 2016- 13, which significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct writedown of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is adopted by the Company, the allowance for credit losses must be adjusted for management's current estimate at each reporting date. The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit losses on trade receivables under ASU 2016-13. ASU 2016-13 is effective for the Company for annual periods, including interim periods within those annual periods, beginning on January 1, 2023. The Company has adopted the accounting standard.

 NOTE B — REVENUE FROM CONTRACTS WITH CUSTOMERS

 Disaggregation of Revenue

 The following table summarizes revenue from contracts with customers for the years ended December 31, 2023 and 2022:

 North

 America

 Africa

 EMESA*

 Asia

 2023

 $

 1,971,348

 $

 552,630

 $

 1,801,381

 $

 16,651

 $

 4,342,010

 Hardware

 147,815

 1,013,295

 32,900

 1,194,010

 Services

 1,116,935

 101,816

 981,848

 18,286

 2,218,885

 $

 3,236,098

 $

 654,446

 $

 3,796,524

 $

 67,837

 $

 7,754,905

 North

 America

 Africa

 EMESA*

 Asia

 2022

 $

 1,856,814

 $

 517,161

 $

 2,124,088

 $

 85,989

 $

 4,584,052

 Hardware

 422,275

 25,833

 19,914

 178,464

 646,486

 Services

 1,270,067

 83,306

 436,293

 1,789,720

 $

 3,549,156

 $

 626,300

 $

 2,580,295

 $

 264,507

 $

 7,020,258

 * EMESA – Europe, Middle East, South America

 Revenue recognized during the year ended December 31, 2023 from amounts included in deferred revenue at the beginning of the year was approximately $467,000. Revenue recognized during the year ended December 31, 2022 from amounts included in deferred revenue at the beginning of the year was approximately $489,000. Total deferred revenue (contract liability) was approximately $443,000 and $515,000 at December 31, 2023 and 2022, respectively.

 Transaction Price Allocated to the Remaining Performance Obligations

 ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. The guidance provides certain practical expedients that limit this requirement, which the Company's contracts meet as follows:

 The performance obligation is part of a contract that has an original expected duration of one year or less, in accordance with ASC 606-10-50-14.

 Deferred revenue represents the Company's remaining performance obligations related to prepaid support and maintenance, all of which is expected to be recognized from one to five years.

 NOTE C — SWIVEL SECURE EUROPE, SA ACQUISITION

 On March 8, 2022, the Company completed the acquisition of 100% of the issued and outstanding capital stock of Swivel Secure based in Madrid, Spain, pursuant to the terms of a stock purchase agreement. The aggregate purchase price consisted of a base purchase price of $1.75 million, subject to closing adjustments based on the closing date working capital, indebtedness and unpaid transaction expenses, and an earn-out of $500,000. The earn-out was payable based on Swivel Secure generating $3,000,000 of revenue and $1,000,000 of operating profit during an earn-out period commencing on the closing date and ending on January 31, 2023, which was not attained. At the closing, the Company made a cash payment of $1.27 million and issued 14,948 shares of common stock of which 4,983 shares were held back by the Company to secure certain indemnification obligations under the stock purchase agreement. The shares of Company common stock were priced at $2.23, the contractual 20 day volume-weighted average price of the Company's common stock immediately prior to the payment date as reported on the Nasdaq Capital Market.

 The business combination has been accounted for as an acquisition and, in accordance with ASC 805. The Company recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The following table summarizes the purchase price allocation, with no earnout payment:

 Purchase consideration:

 Total cash paid, including working capital adjustment

 $

 1,273,483

 Earnout payable

 500,000

 Common stock issued

 600,004

 Total purchase price consideration

 $

 2,373,487

 Fair value of assets acquired and liabilities assumed:

 Cash and cash equivalents

 $

 729,905

 Accounts receivable

 702,886

 Equipment acquired

 65,640

 Other assets

 20,708

 Intangible assets

 762,860

 Goodwill

 1,258,087

 Total estimated assets acquired

 3,540,086

 Accounts payable and accrued expenses

 431,884

 Government loan

 544,000

 Deferred tax liability

 190,715

 Total liabilities assumed

 1,166,599

 Total estimated fair value of assets acquired and liabilities assumed

 $

 2,373,487

 The fair value of the assets acquired and liabilities assumed was less than the purchase price, resulting in the recognition of goodwill. The goodwill reflected the value of the synergies the Company expected to realize and the assembled workforce. Refer to Note K for more information regarding the impairment of goodwill.

 The significant intangible asset identified in the purchase price allocation discussed above was Customer Relationships. To value the Customer Relationships, the Company utilized the Excess Earnings Method, which isolates the value of the specific intangible asset by discounting its income stream to present value.

 The government loan was issued through BBVA Bank during the COVID-19 pandemic. The loan bears interest at the rate of 1.75% per annum and is payable in monthly installments of approximately $11,900 inclusive of interest from May 2022 through April 2026. The installment payments have been paid monthly as per the schedule, as of the date of this report.

 The following table presents the final fair values and useful lives of the identifiable intangible assets acquired:

 Estimated useful

 life

 Amount

 (in years)

 Customer relationships

 $

 762,860

 Total identifiable intangible assets

 $

 762,860

 As discussed above, the earnout payable was not achieved. As such, the Company reversed the earnout payable of $500,000 and recognized the income on the reversal of the earnout payable.

 NOTE D — FAIR VALUES OF FINANCIAL INSTRUMENTS

 Cash and cash equivalents, accounts receivable, due from factor, accounts payable and accrued liabilities are carried at, or approximate, fair value because of their short-term nature. The carrying value of the Company's notes and loan payables approximated fair value as the interest rates related to the financial instruments approximated market.

 NOTE E — CONCENTRATION OF RISK

 Financial instruments which potentially subject the Company to risk primarily consist of cash, and cash equivalents, investment in debt security, and accounts receivables.

 The Company maintains its cash and cash equivalents with various financial institutions, which, at times may exceed insured limits. The exposure to the Company is solely dependent upon daily bank balances and the respective strength of the financial institutions. The Company was not in excess of coverage at December 31, 2023. The Company was in excess of coverage of approximately $2,000,000 December 31, 2022. The Company has not incurred any losses on these accounts.

 The Company extends credit to customers on an unsecured basis in the normal course of business. The Company's policy is to perform an analysis of the recoverability of its receivables at the end of each reporting period and to establish allowances where appropriate. The Company analyzes historical bad debts and contract losses, customer concentrations, and customer credit-worthiness when evaluating the adequacy of the allowances.

 For the year ended December 31, 2023 three customers accounted for 34% of total revenue. For the year ended December 2022, no customer accounted for greater than 10% of total revenue.

 At December 31, 2023, three customers accounted for 66% of the total accounts receivable. At December 31, 2022, one customer accounted for 35% of total accounts receivable.

 NOTE F — NOTE RECEIVABLE

 During the third quarter of 2020, the Company loaned $295,000 as an advance to Technology Transfer Institute ("TTI") to aid in fulfilling the African contracts. The note did not bear any interest if paid within the nine (9) monthly installments beginning December 31, 2020. The note bore a default rate of 5%. Due to the ongoing delays in payment, the Company reserved $186,000 of the note as an allowance. On February 17, 2022, the Company amended the note to modify the payment terms to provide for lower monthly payments, with an updated maturity date on or before December 6, 2023. On May 5, 2022, the Company amended the note to modify the payment terms to eight biweekly installments of $1,000 beginning February 25, 2022, nineteen consecutive monthly installments of $15,000 beginning on July 6, 2022, and $2,000 on or before February 6, 2024. The payments are behind schedule. Due to the delay in payments, the Company has increased the allowance for the remainder of the balance owed under the note in 2022. The Company is continuing to pursue payment with an outside collection agency. A member of the Company's board of directors served as Chief Executive Officer of TTI until August 12, 2020.

 2023

 2022

 Note receivable

 $

 -

 $

 195,000

 Repayment of note

 -

 (9,000

)

 Allowance for doubtful account

 -

 (186,000

)

 Note receivable, net of allowance

 -

 -

 Current portion, net of allowance

 $

 -

 $

 -

 Noncurrent portion, net of allowance

 $

 -

 $

 -

 NOTE G — INVENTORY

 Inventory is stated at the lower of cost, determined on a first in, first out basis, or realizable value. The Company periodically evaluates inventory items and establishes reserves for obsolescence accordingly. The Company also reserves for excess quantities, slow moving goods, and for other impairment of value based upon assumptions of future demand and market conditions. The reserve on inventory in 2022 and 2023 is due to slow moving inventory purchased for projects in Nigeria. The Company is looking into other markets and opportunities to sell or return the product.

 Inventory is comprised of the following as of December 31:

 2023

 2022

 Finished goods

 $

 4,373,056

 $

 4,764,643

 Fabricated assemblies

 59,184

 69,726

 Reserve on finished goods

 (3,986,500

)

 (400,000

)

 Total inventory

 $

 445,740

 $

 4,434,369

 NOTE H — RESALABLE SOFTWARE LICENSES RIGHTS

 On December 31, 2015, the Company purchased third-party software licenses in the amount of $180,000 in anticipation of a large pending deployment that has yet to materialize. The Company was amortizing the total cost at the greater of the actual unit cost per license sold or straight-line amortization over 10 years. Since the license purchase, the actual per unit cost (actual usage) of such license rights in the cumulative amount of $141,190 has been charged to cost of sales. Since the Company did not receive any sales for the license in 2021 or 2022, it accelerated the amortization for the balance of the license in 2022, leaving a carrying balance of $0 as of both December 31, 2023 and 2022. A total of $48,752 was charged to cost of sales during the year ended December 31, 2022.

 NOTE I — INVESTMENT IN DEBT SECURITY

 The Company purchased a 4,000,000 Hong Kong dollar denominated Bond Certificate with a financial institution in Hong Kong in September 2020 bearing interest at 5% per annum. The Bond Certificate translated to $512,821 U.S. Dollars, based on the exchange rate at the purchase date. The investment was originally recorded at amortized cost and was scheduled to mature in June 2021. The Company never received the proceeds and accrued interest from the investment and as such, wrote off the investment during 2022 as the bond issuer defaulted on repayment, and the Company had no recourse.

 NOTE J — EQUIPMENT AND LEASEHOLD IMPROVEMENTS

 Equipment and leasehold improvements consisted of the following as of December 31:

 2023

 2022

 Equipment

 $

 1,012,958

 $

 825,058

 Furniture and fixtures

 225,978

 225,978

 Software

 49,143

 49,143

 Leasehold improvements

 34,903

 34,903

 1,322,982

 1,135,082

 Less accumulated depreciation and amortization

 (1,102,805

)

 (1,027,669

)

 Total

 $

 220,177

 $

 107,413

 Depreciation was $75,136 and $43,794 for 2023 and 2022, respectively. Amounts are recorded in selling, general, and administrative expense as well as in cost of services.

 NOTE K — INTANGIBLE ASSETS AND GOODWILL

 Intangible assets consisted of the following as of December 31:

 2023

 2022

 Trade name

 $

 130,000

 $

 130,000

 Proprietary software

 420,000

 420,000

 Customer relationships

 1,692,860

 1,692,860

 Patents and patents pending

 365,080

 365,080

 2,607,940

 2,607,940

 Less accumulated amortization

 (1,199,950

)

 (845,115

)

 Total

 $

 1,407,990

 $

 1,762,825

 Aggregate amortization expense for 2023 and 2022 was approximately $355,000 and $298,000, respectively. Estimated minimum amortization expense based on straight line amortization of the software license rights for each of the next five years and thereafter approximates the following:

 Years ending December 31

 2024

 $

 311,000

 2025

 $

 267,000

 2026

 $

 224,000

 2027

 $

 223,000

 2028

 $

 141,000

 Thereafter

 $

 241,990

 Total

 $

 1,407,990

 Goodwill

 The Company concluded the amounts in goodwill had been fully impaired and accordingly wrote-off the entire balance in full as at December 31, 2022.

 NOTE L — ACCRUED LIABILITIES

 Accrued liabilities consisted of the following as of December 31:

 2023

 2022

 Compensation

 $

 326,007

 $

 377,958

 Compensated absences

 327,252

 378,874

 Accrued legal and accounting fees

 264,976

 110,008

 Taxes

 152,986

 7,000

 Employee expenses reimbursement

 124,209

 114,209

 Sales tax payable

 19,282

 17,594

 Other

 91,136

 3,480

 Total

 $

 1,305,848

 $

 1,009,123

 NOTE M — CONVERTIBLE NOTE PAYABLE

 Securities Purchase Agreement dated December 22, 2022

 On December 22, 2022, the Company entered into and closed a securities purchase agreement (the "Purchase Agreement") which issued a $2,200,000 principal amount senior secured promissory note (the "Note"). At closing, a total of $2,002,000 was funded, with the proceeds to be used for general working capital.

 The principal amount of the Note was due six months following the date of issuance, subject to one six-month extension by the Company. Interest under the Note accrues at a rate of 10% per annum, payable monthly through month six and at the rate of 12% per annum in months seven through twelve, payable monthly. The Note is secured by a lien on substantially all of the Company's assets and properties can be prepaid in whole or in part without penalty at any time.

 In connection with the issuance of the Note, the Company issued to the investor 38,889 shares of Common Stock (the "Commitment Shares") valued at $18.00 per share and a warrant (the "Warrant") to purchase 11,112 shares of common stock (the "Warrant Shares") at an exercise price of $54.00 per share, exercisable commencing on the date of issuance with a term of five years. The warrant was valued at $94,316 (see Note P. #3).

 On October 31, 2023 the Company repaid $1,400,000 of principal due under the Note, and on December 21, 2023 the Company repaid the remaining principal balance of $800,000 due under the Note.

 As of December 31, 2023, the Note was paid in full.

 NOTE N — LEASES

 The Company's leases office space in New Jersey, Minnesota, New Hampshire, Madrid and Hong Kong with lease termination dates in 2023 and 2024. 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:

 2023

 2022

 Lease cost

 Operating lease cost

 $

 166,161

 $

 254,649

 Total lease cost

 $

 166,161

 $

 254,649

 Balance sheet information

 Operating right-of-use assets

 $

 36,905

 $

 197,355

 Operating lease liabilities, current portion

 $

 $

 159,665

 Operating lease liabilities, non-current portion

 -

 Total operating lease liabilities

 $

 $

 197,494

 Weighted average remaining lease term (in years) – operating leases

 0.67

 0.96

 Weighted average discount rate – operating leases

 5.50

 %

 5.50

 %

 Supplemental cash flow information related to leases were as follows:

 Cash paid for amounts included in the measurement of operating lease liabilities

 $

 213,783

 $

 259,558

 Maturities of operating lease liabilities were as follows as of December 31, 2023:

 2024

 $

 38,808

 2025

 -

 Total future lease payments

 $

 38,808

 Less: imputed interest

 (979

)

 Total

 $

 NOTE O — COMMITMENTS AND CONTINGENCIES

 Distribution Agreement

 Swivel Secure has a distribution agreement with Swivel Secure Limited ("SSL"). Terms of the agreement include the following:

 1.

 The initial term of the agreement ends on January 31, 2027 and will be automatically extended for additional one-year terms thereafter unless either party provides written notice to the other party not later than 30 days before the end of the term that it does not wish to extend the term.

 2.

 SSL appoints Swivel Secure as the exclusive distributor of SSL's products, to market, sell and distribute in the EMEA (Europe, Middle East and Africa), excluding the United Kingdom and Republic of Ireland, for a defined discount on the sale price.

 3.

 Swivel Secure is expected to generate a certain minimum level of orders of SSL products each year during the term of the agreement. If Swivel Secure fails to meet such minimum level of orders in any year, the exclusive distribution rights will terminate and Swivel Secure will serve as a non-exclusive distributer of SSL Products.

 The Company expects the revenue targets to continue to be met based on historical performance and increasing distribution by Swivel Secure.

 Litigation

 From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business. As of December 31, 2023, the Company was not a party to any pending lawsuits.

 NOTE P — EQUITY

 1. Preferred Stock

 Within the limits and restrictions provided in the Company's Certificate of Incorporation, the Board of Directors has the authority, without further action by the shareholders, to issue up to 5,000,000 shares of preferred stock, $.0001 par value per share, in one or more series, and to fix, as to any such series, any dividend rate, redemption price, preference on liquidation or dissolution, sinking fund terms, conversion rights, voting rights, and any other preference or special rights and qualifications.

 2. Common Stock

 Holders of common stock have equal rights to receive dividends when, as and if declared by the Board of Directors, out of funds legally available therefor. Holders of common stock have one vote for each share held of record and do not have cumulative voting rights.

 Holders of common stock are entitled, upon liquidation of the Company, to share ratably in the net assets available for distribution, subject to the rights, if any, of holders of any preferred stock then outstanding. Shares of common stock are not redeemable and have no preemptive or similar rights. All outstanding shares of common stock are fully paid and nonassessable.

 Issuances of Common Stock

 On December 22, 2022, the Company issued the Commitment Shares. See Note M - Convertible Note Payable for more information.

 On March 8, 2022, the Company issued 14,948 shares of common stock of which 4,983 shares were held back by the Company to secure certain indemnification obligations under the Swivel Secure stock purchase agreement. The shares of Company common stock were issued at a total cost of $600,004, priced at $40.14, based on the contractual 20-day volume-weighted average price of the Company's common stock immediately prior to the payment date as reported on the Nasdaq Capital Market.

 On June 18, 2021, the stockholders approved the 2021 Employee Stock Purchase Plan. Under the terms of this plan, 43,834 shares of common stock are reserved for issuance to employees and officers of the Company at 85% of the lower of the closing price of the common stock as reported on the Nasdaq Capital Market at the first day or the last day of the offering period. Eligible employees are granted an option to purchase shares under the plan funded by payroll deductions. The Board may suspend or terminate the plan at any time, otherwise the plan expires June 17, 2031. During 2023 and 2022, 2,947, and 3,364 shares respectively were issued under the ESPP to employees, which resulted in a $4,343, and $18,787 non-cash compensation expense respectively for the Company.

 Issuances of Restricted Stock

 Restricted stock consists of shares of common stock that are subject to restrictions on transfer and risk of forfeiture until the fulfillment of specified conditions. The fair value of nonvested shares is determined based on the market price of the Company's common stock on the grant date. Restricted stock is expensed ratably over the term of the restriction period.

 The Company issued 16,404 shares of restricted common stock to certain employees of the Company and 3,752 of shares of restricted common stock were forfeited during fiscal year 2023. The Company issued 15,444 shares of restricted common stock to certain employees of the Company and 583 of shares of restricted common stock were forfeited during fiscal year 2022. These shares vest in equal annual installments over a three-year period from the date of grant.

 Restricted stock compensation for the years ended December 31, 2023 and 2022 was $205,517 and $218,552, respectively.

 Issuances to Directors, Executive Officers & Consultants

 During the 2023 and 2022 years, the Company issued 3,078 and 2,202 shares of common stock respectively to its directors in lieu of payment of board fees, valued at $39,007 and $76,043 respectively.

 Warrants

 Warrants Issued with Convertible Note:

 See Note M - Convertible Note Payable for the warrant issued with a convertible note in 2022.

 Valuation Assumptions for Warrants:

 The Company records the warrants at their fair value which is determined using the Black-Scholes valuation model on the date of the grant. The fair value of the warrants issued in 2023 and 2022 were estimated with the following assumptions:

 Years ended

 2023

 2022

 Weighted average risk-free interest rate

 4.63

 %

 3.70

 %

 Weighted average exercise price

 $

 3.15

 $

 3.00

 Weighted average exercise period

 Weighted average Volatility of stock price

 %

 108.60

 %

 The volatility for each issuance is determined based on the review of the experience of the weighted average of historical daily price changes of the Company's common stock over the expected exercise period. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the years to maturity.

 A summary of warrant activity is as follows:

 remaining

 Aggregate

 Total

 exercise

 life

 intrinsic

 Warrants

 price

 (in years)

 value

 Outstanding, as of December 31, 2021

 260,525

 106.42

 3.48

 —

 Granted

 11,112

 54.00

 Exercised

 —

 —

 Forfeited

 —

 —

 Expired

 (965

)

 518.40

 Outstanding, as of December 31, 2022

 270,672

 $

 104.95

 2.59

 —

 Granted

 2,534,148

 3.15

 Exercised

 (177,890

)

 0.0018

 Forfeited

 —

 —

 Expired

 (438

)

 —

 Outstanding, as of December 31, 2023

 2,626,492

 $

 19.09

 4.37

 —

 The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company's closing stock price of $3.00, $10.62, and $39.78 as of December 31, 2023, 2022 and 2021, respectively, which would have been received by the warrant holders had all warrant holders exercised their options as of that date. There were no in-the-money warrants exercisable as of December 31, 2023, 2022 and 2021.

 NOTE Q — STOCK OPTIONS

 2023 Stock Incentive Plan

 On December 14, 2024, the stockholders approved the 2023 Stock Incentive Plan. The 2023 Plan reserves 333,334 shares of common stock for issuance of options, restricted stock, and other equity based awards to employees, officers, directors, consultants advisors and independent contractors of the Company. Options are issued at exercise prices which may not be below 100% of fair market value (or 110% of the fair market value if, at the time the option is granted, the participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of our stock) and have terms not to exceed ten years. Options issued under the 2023 Plan vest pursuant to the terms of stock option agreements with the recipients. In the event of a change in control, certain awards issued under this plan may be subject to additional acceleration of vesting as may be provided in the participants' written agreement. The 2023 Plan expires on December 13, 2033, unless terminated earlier. No awards have yet been granted under the 2023 Plan.

 2015 Stock Option Plan

 On January 27, 2016, the stockholders approved the 2015 Equity Incentive Plan (the "2015 Plan"). The 2015 Plan initially reserved 10,417 shares of common stock for issuance of options, restricted stock, and other equity based awards to employees, officers, directors, and consultants of the Company. In 2021, the stockholders approved an amendment to the 2015 to increase the shares of common stock authorized for issuance under the 2015 Plan from 10,417 shares to 43,834 shares together with other technical changes. The term of stock options granted under the 2015 Plan, may not exceed ten years, exercise prices may not be below 100-110% of fair market value, and vesting occurs over time periods set forth in written agreements with the recipients. In the event of a change in control, certain stock awards issued under the 2015 Plan may be subject to additional acceleration of vesting as may be provided in the participants' written agreement. The 2015 Plan expires in December 2025.

 Non-Plan Stock Options

 Periodically, the Company has granted options outside of the 2015 Plan to various employees and consultants. In the event of change in control, as defined, certain of the non-plan options outstanding vest immediately.

 Stock Option Activity

 Information summarizing option activity is as follows:

 Number of Options

 remaining

 Aggregate

 2015

 Non

 Total

 exercise

 life

 intrinsic

 Plan

 Plan

 price

 (in years)

 value

 Outstanding, as of December 31, 2021

 5,072

 6,771

 11,843

 $

 299.61

 3.03

 $

 Granted

 —

 —

 —

 —

 Exercised

 —

 —

 —

 —

 Forfeited

 —

 —

 —

 —

 Expired

 —

 (530

)

 (530

)

 311.11

 Outstanding, as of December 31, 2022

 5,072

 6,241

 11,313

 $

 299.07

 2.07

 $

 Granted

 —

 —

 —

 —

 Exercised

 —

 —

 —

 —

 Forfeited

 (151

)

 —

 (151

)

 94.44

 Expired

 (1,548

)

 (348

)

 (1,896

)

 256.30

 Outstanding, as of December 31, 2023

 3.373

 5,893

 9,266

 $

 311.16

 0.96

 $

 Vested or expected to vest at December 31, 2023

 9,266

 $

 311.16

 0.96

 $

 Exercisable at December 31, 2023

 9,266

 $

 311.16

 0.96

 $

 The options outstanding and exercisable at December 31, 2023 were in the following exercise price ranges:

 Options Outstanding

 Options Exercisable

 Number of

 exercise

 remaining

 Number

 exercise

 Range of exercise prices

 shares

 price

 life (in years)

 exercisable

 price

 $93.60 - 169.92

 2,205

 $

 136.65

 2.85

 2,205

 $

 136.65

 $169.93 - 504.00

 7,061

 365.66

 0.38

 7,061

 365.66

 $93.60 - 504.00

 9,266

 9,266

 The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company's closing stock price of $3.00, $10.62, and $39.78 as of December 31, 2023, 2022 and 2021, respectively, which would have been received by the option holders had all option holders exercised their options as of that date. There were no in-the-money options exercisable as of December 31, 2023, 2022 and 2021.

 The weighted average fair value of options granted during the years ended December 31, 2023 and 2022 was $0 as no options were granted in either year. The total intrinsic value of options exercised during the years ended December 31, 2023 and 2022 was $0 as no options were exercised in either year. The total fair value of shares vested during the years ended December 31, 2023 and 2022 was $18,310 and $100,668, respectively.

 As of December 31, 2023, there was no future forfeiture adjusted compensation costs related to nonvested stock options.

 NOTE R — INCOME TAXES

 The components of net loss consist of the following:

 2023

 2022

 United States

 $

 (7,279,970

)

 $

 (10,416,593

)

 Hong Kong

 (627,146

)

 (458,839

)

 Nigeria

 (203,700

)

 (143,499

)

 Spain

 (411,021

)

 (890,972

)

 Total

 $

)

 $

)

 There was no provision for current federal, foreign or state taxes for both of the years ended December 31, 2023 and 2022 as a result of taxable losses incurred in these jurisdictions. The provision for income tax benefits consist of the following (in thousands):

 2023

 2022

 Current – federal,

 $

 -

 $

 -

 state

 foreign

 40,986

 Deferred- Federal

 1,175,000

 States

 122,000

 Foreign

 (175,000

)

 (20,434

)

 Total

 (134,014

)

 1,276,566

 Change in valuation allowance

 (1,297,000

)

 Provision for income tax expense (benefit)

 $

 (134,014

)

 $

 (20,434

)

 Significant components of deferred tax assets and liabilities are as follows at December 31, 2023 and 2022 (in thousands):

 2023

 2022

 Accrued compensation

 $

 112,201

 $

 113,000

 Allowance for doubtful accounts

 90,405

 169,000

 Research and development expenses

 1,017,551

 633,000

 Capital loss carry forward

 114,251

 114,000

 Stock-based compensation

 32,408

 456,000

 Equipment and leasehold improvements

 (12,353

)

 (19,000

)

 Intangible assets - US

 -

 341,000

 Intangible assets - Foreign

 (145,000

)

 (170,000

)

 Reserve - Foreign

 150,000

 -

 Inventory reserve

 828,668

 89,000

 Interest expense

 -

 44,000

 Operating lease liabilities

 -

 44,000

 Other

 1,000

 -

 Tax credits

 1,748,235

 -

 Operating lease right-of-use assets

 (44,000

)

 Net operating loss and research and credit carryforwards

 13,277,118

 15,248,000

 Valuation allowance

 (17,214,690

)

 (17,188,000

)

 Net deferred tax liability

 $

 -

 $

 (170,000

)

 The Company has a valuation allowance against the full amount of its net deferred taxes due to the uncertainty of realization of the deferred tax assets due to operating loss history of the Company. The Company currently provides a valuation allowance against deferred taxes when it is more likely than not that some portion, or all of its deferred tax assets will not be realized. The valuation allowance could be reduced or eliminated based on future earnings and future estimates of taxable income. With a full valuation allowance, any change in the deferred tax asset or liability is fully offset by a corresponding change in the valuation allowance. At December 31, 2023 and 2022, the Company provided a valuation allowance on its net deferred tax assets of $17,239,173 and $17,188,000, respectively.

 As of December 31, 2023, the Company has U.S. federal net operating loss carryforwards of approximately $60.3 million. Approximately $39.7 million are subject to expiration between 2024 and 2037, and $18.6 million net operating loss carryforwards have no expiration date. These net operating loss carryforwards could be subject to the limitations under Section 382 of the Internal Revenue Code due to changes in the equity ownership of the Company. In addition, the Company has net operating loss carry forwards from various states of approximately $5.3 million which expire from 2026 through 2042.

 A reconciliation of the effective income tax rate on operations reflected in the statements of operations to the US federal statutory income tax rate is presented below.

 2023

 2022

 Federal statutory income tax rate

 %

 %

 State taxes, net of federal benefit

 (1.41

)

 0.9

 Permanent differences

 1.97

 (4.7

)

 Expiration of net operating loss and research credit carryforwards

 (7.84

)

 (5.7

)

 Expiration and forfeiture of stock options

 -

 (0.3

)

 foreign rate differential

 (5.84

)

 rate change

 (1.05

)

 Other

 (9.08

)

 (0.5

)

 Valuation allowance

 (0.24

)

 (10.9

)

 Effective tax rate

 (2.5

)%

 (0.2

)%

 The Company has not been audited by the Internal Revenue Service ("IRS") or any states in connection with income taxes. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The periods from 2019 through 2022 remain open to examination by the IRS and state jurisdictions.

 The Company's subsidiary in Nigeria has not filed its required returns since inception. Management believes that when the returns are filed, no taxes will be owed due to the losses incurred during those periods. The Company is not subject to minimum tax during the first four years of operations. As a result, management could not calculate the amount of net operating loss carryforwards that are available to offset future taxable income.

 The Company's subsidiary in Hong Kong has not filed its required returns in several years. Management believes that when the returns are filed, no taxes will be owed due to losses incurred during those periods. As a result, management could not calculate the amount of net operating loss carryforwards are available to offset future taxable income.

 The Company believes it is not subject to any tax audit risk beyond those periods. The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense incurred during the years ended December 31, 2023 and 2022.

 NOTE S

 The Company has established a savings plan under section 401(k) of the Internal Revenue Code. All employees of the Company, after completing one day of service, are eligible to enroll in the 401(k) plan. Participating employees may elect to defer a portion of their salary on a pre-tax basis up to the limits as provided by the IRS Code. The Company is not required to match employee contributions but may do so at its discretion. The Company made no matching contributions during the years ended December 31, 2023 and 2022.

 NOTE T — EARNINGS PER SHARE (EPS)

 The following table summarizes the weighted average securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive.

 2023

 2022

 Stock options

 -

 -

 Warrants

 1,913,566

 -

 Total

 1,913,566

 -

 Items excluded from the diluted per share calculation because the exercise price was greater than the average market price of the common shares:

 2023

 2022

 Stock options

 9,266

 11,313

 Warrants

 270,234

 270,672

 Total

 279,500

 281,985

 NOTE U — QUARTERLY FINANCIAL DATA (UNAUDITED AND RESTATED)

 The Company is providing restated quarterly unaudited consolidated financial information for interim periods occurring within the year ended December 31, 2023.

 The need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing its fiscal year-end 2023 consolidated financial statements. In the course of the audit of the Company's consolidated financial statements for the fiscal year ended December 31, 2023, the Company determined that certain errors were made which require the restatement of the Company's previously issued financial statements for the interim periods occurring within the year ended December 31, 2023. These errors resulted in the overstatement of accounts receivable and revenue, understatements in certain allowances for accounts receivable and certain reserves for inventory, and an understatement of net loss and total stockholders' equity which errors may also impact other amounts included in the financial statements. The Company attributes the errors principally to a material weakness in internal controls over the recording and processing of revenues, allowances for accounts receivable and certain reserves for inventory, which the Company is working to remediate in fiscal year 2024.

 The restated consolidated balance sheet line items for the first, second and third fiscal quarters of 2023 are as follows:

 Originally Reported

 Adjustment

 Restated

 Three Months Ended

 Three Months Ended

 Three Months Ended

 March 31, 2023

 March 31, 2023

 March 31, 2023

 Accounts receivable, net

 $

 3,362,203

 $

 3,178,785

 $

 2,799,218

 $

)

 $

 (1,100,000

)

 $

 (1,300,000

)

 $

 2,462,203

 $

 2,078,785

 $

 1,499,218

 Inventory

 4,427,815

 4,384,098

 4,289,213

 (500,000

)

 (1,500,000

)

 (2,500,000

)

 3,927,815

 2,884,098

 1,789,213

 Total current assets

 8,936,084

 8,531,330

 7,820,339

)

)

)

 7,536,084

 5,931,330

 4,020,339

 Accumulated deficit

 (116,773,695

)

 (118,196,573

)

 (118,834,397

)

)

)

)

 (118,173,695

)

 (120,796,573

)

 (122,634,397

)

 Total Stockholders' Equity

 5,156,755

 3,845,091

 3,314,451

)

)

)

 3,756,755

 1,245,091

 (485,549

)

 Total Liabilities and Stockholders' Equity

 11,106,057

 10,583,245

 9,749,380

)

)

)

 9,706,057

 7,983,245

 5,949,380

 The restated line items of the consolidated statements of comprehensive income for the three-month periods ended March 31, 2023, June 30, 2023, and September 30, 2023 are as follow:

 Originally Reported

 Adjustment

 Restated

 Q1

 Q2

 Q3

 Q1

 Q2

 Q3

 Q1

 Q2

 Q3

 $

 2,478,556

 $

 1,235,771

 $

 950,015

 $

)

 -

 -

 $

 1,578,556

 $

 1,235,771

 $

 950,015

 3,083,767

 1,928,929

 1,817,108

)

 -

 -

 2,183,767

 1,928,929

 1,817,108

 Cost of hardware - Reserve

 -

 -

 -

 500,000

 500,000

 Total costs and other expenses

 820,274

 606,111

 476,604

 500,000

 1,320,274

 1,606,111

 1,476,604

 Gross profit

 2,263,493

 1,322,818

 1,340,504

)

 (1,000,000

)

 (1,000,000

)

 863,493

 322,818

 340,504

 Selling, general and administrative

 1,931,732

 1,943,164

 1,547,376

 -

 1,931,732

 2,143,164

 1,747,376

 Total Operating Expenses

 2,621,891

 2,501,345

 2,106,062

 -

 2,621,891

 2,701,345

 2,306,062

 Operating loss

 (358,398

)

 (1,178,527

)

 (765,558

)

)

)

)

 (1,758,398

)

 (2,378,527

)

 (1,965,558

)

 Loss before provision for income tax

 (288,322

)

 (1,279,878

)

 (638,013

)

)

)

)

 (1,688,322

)

 (2,479,878

)

 (1,838,013

)

 (288,322

)

 (1,422,878

)

 (637,824

)

)

)

)

 (1,688,322

)

 (2,479,878

)

 (1,838,013

)

 Comprehensive Net loss

 (288,322

)

 (1,422,878

)

 (637,824

)

)

)

)

 (1,688,322

)

 (2,479,878

)

 (1,838,013

)

 Comprehensive loss

 (216,176

)

 (1,402,994

)

 (602,460

)

)

)

)

 (1,616,176

)

 (2,459,994

)

 (1,802,649

)

 Basic and Diluted Loss per Common Share

 (0.52

)

 (2.56

)

 (1.12

)

 (2.52

)

 (2.16

)

 (2.11

)

 (3.04

)

 (4.45

)

 (3.22

)

 The restated line items of the consolidated statements of comprehensive income for the six-month period ended June 30, 2023 and nine-month period ended September 30, 2023 are as follows:

 Originally Reported

 Adjustment

 Restated

 $

 3,714,327

 $

 4,664,341

 $

)

 $

)

 $

 2,814,327

 $

 3,764,341

 5,012,696

 6,829,804

)

)

 4,112,696

 5,929,804

 Cost of hardware - reserve

 -

 -

 1,500,000

 2,500,000

 1,500,000

 2,500,000

 Total costs and other expenses

 1,426,385

 1,902,989

 1,500,000

 2,500,000

 2,926,385

 4,402,989

 Gross profit

 3,586,311

 4,926,815

 (2,400,000

)

 (3,400,000

)

 1,186,311

 1,526,815

 Selling, general and administrative

 3,874,896

 5,422,272

 400,000

 4,074,896

 5,822,272

 Total Operating Expenses

 5,123,237

 7,229,298

 400,000

 5,323,237

 7,629,298

 Operating loss

 (1,536,926

)

 (2,302,483

)

)

)

 (4,136,926

)

 (6,102,483

)

 Loss before provision for income tax

 (1,568,200

)

 (2,206,212

)

)

)

 (4,168,200

)

 (6,006,212

)

 (1,711,200

)

 (2,349,023

)

)

)

 (4,311,200

)

 (6,149,023

)

 Comprehensive net loss

 (1,711,200

)

 (2,349,023

)

)

)

 (4,311,200

)

 (6,149,023

)

 Comprehensive loss

 (1,619,170

)

 (2,221,629

)

)

)

 (4,219,170

)

 (6,021,629

)

 Basic and Diluted Loss per Common Share

 (3.07

)

 (4.12

)

 (4.67

)

 (6.67

)

 (7.74

)

 (10.79

)

 NOTE V — SUBSEQUENT EVENTS

 On January 4, 2024, the Company issued 347,000 shares of common stock upon the exercise of prefunded warrants.

 On January 5, 2024, the Company issued 142,000 shares of common stock upon the exercise of prefunded warrants.

 On January 12, 2024, the Company issued 158,000 shares of common stock upon the exercise of prefunded warrants.

 On February 15, 2024, 243 shares of restricted common stock were forfeited by employees who left the Company before the lapse of the restriction period applicable to such shares.

 On March 21, 2024, 73 shares of restricted common stock were forfeited by employees who left the Company before the lapse of the restriction period applicable to such shares.

 On March 27, 2024, the Company issued 4,287 shares of common stock to its directors in payment of board fees.

 On May 6, 2024, 186 shares of restricted common stock were forfeited by an employee who left the Company before the lapse of the restriction period applicable to such shares.

 ITEM 15. – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a) The following documents are filed as part of this Report. Portions of Item 15 are submitted as separate sections of this Report:

 (1) Financial statements filed as part of this Report:

 Report of Independent Registered Public Accounting Firm (Bush and Associates CPA., PCAOB ID:6797)

 Report of Independent Registered Public Accounting Firm (Marcum LLP, PCAOB ID:688)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations—Years ended December 31, 2023 and 2022

 Consolidated Statements of Stockholders' Equity—Years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows—Years ended December 31, 2023 and 2022

 Notes to Consolidated Financial Statements—December 31, 2023 and 2022

 (b) The exhibits listed in the Exhibits Index immediately preceding such exhibits are filed as part of this Report

 EXHIBIT INDEX

 Exhibit

 Exhibit

 No.

 2.1

 Stock Purchase Agreement by and among the Company, Thomas J. Hoey, and PistolStar, Inc. dated June 6, 2020 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the SEC on July 7, 2020)

 2.2

 Stock Purchase Agreement by and among the Company, Alex Rocha and Swivel Secure Europe, SA dated February 2, 2022 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the SEC on February 3, 2022)

 2.3

 Amendment No. 1 to Stock Purchase Agreement by and among the Company, Alex Rocha and Swivel Secure Europe, SA dated March 4, 2022 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the SEC on March 9, 2022)

 3.1

 Certificate of Incorporation of BIO-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed with the SEC on January 5, 2005)

 3.2

 Bylaws (incorporated by reference to Exhibit 3.3 to the current report on Form 8-K, filed with the SEC on January 5, 2005)

 3.3

 Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Appendix A to the definitive proxy statement, filed with the SEC on January 18, 2006)

 3.4

 Certificate of Amendment of Certificate of Incorporation of Bio-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed with the SEC on March 31, 2015)

 3.5

 Certificate of Elimination of BIO-key International, Inc. filed October 6, 2015 (incorporated by reference to Exhibit 3.5 to the registration statement on Form S-1 File No. 333-208747 filed with the SEC on December 23, 2015)

 3.6

 Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed with the SEC on November 2, 2015)

 3.7

 Certificate of Designation of Preferences, Rights and Limitations of Series B-1 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the quarterly report on Form 10-Q, filed with the SEC on November 16, 2015)

 3.8

 Certificate of Amendment of Certificate of Incorporation of Bio-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed with the SEC on December 28, 2016)

 3.9

 Certificate of Amendment of Certificate of Incorporation of Bio-Key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed with the SEC on November 19, 2020)

 3.10

 Certificate of Amendment to Certificate of Incorporation of BIO-key International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K filed with the SEC on December 19, 2023)

 4.1

 Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the registration statement on Form SB-2, File No. 333-16451)

 4.2

 Common Stock Purchase Warrant dated May 6, 2020 (incorporated by reference to Exhibit 10.7 to the quarterly report on Form 10-Q filed with the SEC on June 8, 2020)

 4.3

 Common Stock Purchase Warrant dated June 29, 2020 (incorporated by reference to Exhibit 10.3 to the current report on Form 8-K filed with the SEC on July 1, 2020)

 4.4

 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.3 to Amendment No. 1 to the Registration Statement on Form S-1/A, filed with the SEC on July 17, 2020)

 4.5

 Form of Warrant (incorporated by reference to Exhibit 4.2 to Amendment No. 1 to the Registration Statement on Form S-1/A, filed with the SEC on July 17, 2020)

 4.6

 Form of Common Warrant (incorporated by reference to Exhibit 4.9 to Amendment No. 1 to Registration Statement on Form S-1 filed with the SEC on October 26, 2023)

 4.7

 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.10 to Amendment No. 1 to the Registration Statement on Form S-1, filed with the SEC on October 26, 2023)

 4.8

 Form of Warrant Agency Agreement (incorporated by reference to Exhibit 4.11 to Amendment No. 1 to the Registration Statement on Form S-1, filed with the SEC on October 26, 2023)

 4.9

 Form of Common Warrant (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed with the SEC on December 21, 2023)

 4.10

 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K filed with the SEC on December 21, 2023)

 4.11

 BIO-key International, Inc. Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.5 to the annual report on From 10-K filed with the SEC on April 1, 2022

 10.1

 Employment Agreement by and between BIO-key International, Inc. and Mira LaCous dated November 20, 2001 (incorporated by reference to Exhibit 10.39 to the current report on Form 8-K, filed with the SEC on January 22, 2002)

 10.2

 Employment Agreement, effective March 25, 2010, by and between the Company and Michael W. DePasquale (incorporated by reference to Exhibit 10.93 to the annual report on Form 10-K, filed with the SEC on March 26, 2010)

 10.3

 Employment Agreement by and between BIO-key International, Inc. and Cecilia Welch dated May 15, 2013 (incorporated by reference to Exhibit 10.42 to the annual report on Form 10-K, filed with the SEC on March 31, 2014)

 10.4

 Employment Agreement by and between BIO-key International, Inc. and James Sullivan dated April 5, 2017 (incorporated by reference to Exhibit 10.42 to the annual report on Form 10-K, filed with the SEC on March 29, 2021)

 10.5

 First Amendment to Lease Agreement by and between BIO-key International, Inc. and BRE/DP MN LLC dated September 12, 2013 (incorporated by reference to Exhibit 10.44 to the annual report on Form 10-K, filed with the SEC on March 31, 2014)

 10.6

 BIO-key International, Inc. 2015 Equity Incentive Plan (incorporated by reference to Appendix B to the definitive proxy statement filed with the SEC on December 15, 2015)

 10.7

 Software License Purchase Agreement Dated November 11, 2015 by and among BIO-key Hong Kong Limited, Shining Union Limited, WWTT Technology China, Golden Vast Macao Commercial Offshore Limited, Giant Leap International Limited (incorporated by reference to Exhibit 10.36 to the registration statement on Form S-1 File No. 333-208747 filed with the SEC on December 23, 2015)

 10.8

 Form Non-Plan Option Agreement between the Company and certain of its directors, officers, employees and contractors (incorporated by reference to Exhibit 10.4 to the quarterly report on Form 10-Q filed with the SEC on May 15, 2017)

 10.9

 Securities Purchase Agreement dated May 23, 2018 by and between the Registrant and Giant Leap International Limited (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K, filed with the SEC on May 30, 2018)

 10.10

 Securities Purchase Agreement dated May 23, 2018 by and between the Registrant and Micron Technology Development Limited (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K, filed with the SEC on May 30, 2018)

 10.11

 Securities Purchase Agreement dated May 31, 2018 by and between the Registrant and Wong Kwok Fong (Kelvin) (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K, filed with the SEC on June 4, 2018)

 10.12

 GLP 2nd Amendment to Lease dated July 27, 2018 (incorporated by reference to Exhibit 10.26 to the annual report on Form 10-K, filed with the SEC on April 1, 2019)

 10.13

 Marlen 4th Amendment to Lease dated June 2, 2018 (incorporated by reference to Exhibit 10.27 to the annual report on Form 10-K, filed with the SEC on April 1, 2019)

 10.14

 Common Stock Purchase Warrant dated July 10, 2019 (incorporated by reference to Exhibit 10.5 to the quarterly report on Form 10-Q, filed with the SEC on August 14, 2019)

 10.15

 Sales Incentive Agreement with Technology Transfer Institute dated March 25, 2020. (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q, filed with the SEC on June 8, 2020)

 10.16

 Form of Technology Transfer Institute Warrant. (incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q, filed with the SEC on June 8, 2020)

 10.17

 Common Stock Purchase Warrant dated May 6, 2020. (incorporated by reference to Exhibit 10.7 to the quarterly report on Form 10-Q, filed with the SEC on June 8, 2020)

 10.18

 Form of Restricted Stock Award Agreement under the BIO-key International, Inc. Amended & Restated 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K, filed with the SEC on August 28, 2020)

 10.19

 BIO-key International, Inc. 2021 Employee Stock Purchase Plan (incorporated by reference to Appendix A to the definitive proxy statement filed with the SEC on May 4, 2021)

 10.20

 BIO-key International, Inc. Amended and Restated 2015 Equity Incentive Plan (incorporated by reference to Appendix B to the definitive proxy statement filed with the SEC on May 4, 2021)

 10.21

 Management Services Agreement dated March 8, 2022 by and among Swivel Aman-FZCO, Swivel Secure Europe, SA, and Alex Rocha (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q filed with the SEC on May 23, 2022)

 10.22

 Option Agreement dated March 8, 2022 by and between the Company and Alex Rocha (incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q filed with the SEC on May 23, 2022)

 10.23

 Distribution Agreement dated October 23, 2020 by and between Swivel Secure Europe, SA and Swivel Secure Limited (incorporated by reference to Exhibit 10.3 to the quarterly report on Form 10-Q filed with the SEC on May 23, 2022) +

 10.24

 Deed of Variation dated January 26, 2022 by and between Swivel Secure Europe, SA and Swivel Secure Limited (incorporated by reference to Exhibit 10.4 to the quarterly report on Form 10-Q filed with the SEC on May 23, 2022) +

 10.25

 Securities Purchase Agreement dated December 22, 2022 by and between the Company and AJB Capital Investments, LLC (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed with the SEC on December 23, 2022)

 10.26

 Common Stock Purchase Warrant, dated December 22, 2022 (incorporated by reference to Exhibit 10.3 to the current report on Form 8-K filed with the SEC on December 23, 2022)

 10.27

 $2,200,000 Senior Secured Promissory Note, dated December 22, 2022 (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K filed with the SEC on December 23, 2022)

 10.28

 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.39 to Amendment No. 1 to Registration Statement on Form S-1 filed with the SEC on October 26, 2023)

 10.29***

 BIO-key International, Inc. 2023 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed with the SEC on December 19, 2023)

 10.30

 Securities Purchase Agreement, dated as of December 20, 2023, by and between BIO-key International, Inc. and Dillon Hill Investment Company LLC (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed with the SEC on December 21, 2023)

 21.1

 List of subsidiaries of BIO-key International, Inc. (incorporated by reference to exhibit 21.1 to the annual report on Form 10-K filed with the SEC on June 5, 2024)

 23.1

 Consent of Bush and Associates CPA (incorporated by reference to exhibit 23.1 to the annual report on Form 10-K filed with the SEC on June 5, 2024)

 23.2

 Consent of Marcum LLP (incorporated by reference to exhibit 23.2 to the annual report on Form 10-K filed with the SEC on June 5, 2024)

 31.1*

 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2*

 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1*

 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 32.2*

 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 * filed herewith

 ** Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted sections have been filed separately with the Securities and Exchange Commission.

 *** Management compensatory plan.

 + Certain portions of this exhibit (indicated by "[***]") have been omitted as the Company has determined that such portions are (a) not material and (b) would likely cause competitive harm to the Company if publicly disclosed.

 ITEM 16. – FORM 10-K SUMMARY

 None.

 SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 BIO-KEY INTERNATIONAL, INC.

 Date: June 20, 2024

 By:

 /s/ MICHAEL W. DEPASQUALE

 Michael W. DePasquale

 CHIEF EXECUTIVE OFFICER

 (Principal Executive Officer)