Material Agreement Form 8 K

Item 1.01 Entry into a Material Definitive Agreement.

Warrant Exercise Agreement

On January 15, 2025, BIO-key International, Inc. (the "Company") entered into a warrant exercise agreement (the "Warrant Exercise Agreement") with an existing institutional investor (the "Investor") to exercise certain outstanding warrants to purchase an aggregate of 2,061,112 shares of the Company's common stock, $0.0001 par value per share (the "Common Stock"), at an exercise price of $1.85 per share which were originally issued to the Investor on September 13, 2024 (the "Existing Warrants").

In consideration for the exercise of the Existing Warrants, subject to compliance with the beneficial ownership limitations included in the Existing Warrants, the Investor received new unregistered Series A warrants to purchase up to an aggregate of 1,545,834 shares of the Company's Common Stock (the "Series A Warrants") and new unregistered Series B warrants to purchase up to an aggregate of 1,545,834 shares of the Company's Common Stock (the "Series B Warrants", and together with the "Series A Warrants, the "New Warrants").

The New Warrants have substantially the same terms, are immediately exercisable at an exercise price of $2.15 per share, and will expire five years from the date of issuance. The Company agreed to file a resale registration statement covering the public resale of the shares of Common Stock issuable upon exercise of the New Warrants with the Securities and Exchange Commission (the "SEC"), and to use commercially reasonable efforts to have such Resale Registration Statement declared effective by the SEC within 90 calendar days following the date of the Warrant Exercise Agreement. The New Warrants each include a beneficial ownership limitation that prevents the Investor from beneficially owning more than 4.99% of the Company's outstanding common stock at any time.

The gross proceeds to the Company under the Warrant Exercise Agreement will be approximately $3.8 million, prior to deducting placement agent fees and estimated offering expenses. The closing of the Warrant Exercise Agreement will be on January 16, 2025. The Company intends to use the net proceeds for working capital and general corporate purposes, including repayment of a portion of the Company's outstanding secured note.

Maxim Group LLC ("Maxim") acted as the exclusive placement agent to the Company pursuant to a Placement Agency Agreement between the Company and Maxim, dated January 15, 2025. As compensation for such services, the Company agreed to pay Maxim an aggregate cash fee equal to 6.0% of the gross proceeds received by the Company under the Warrant Exercise Agreement.

The foregoing descriptions of the Warrant Exercise Agreement and the New Warrants are not complete and are qualified in their entirety by reference to the full text of the form of Warrant Exercise Agreement and the forms of the Series A Warrant and Series B Warrant, copies of which are attached hereto as Exhibits 10.1, 4.1 and 4.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.

Streeterville Exchange Agreements

On January 15, 2025, the Company entered into and closed two Exchange Agreements (the "Exchange Agreements") with Streeterville Capital, LLC ("Lender"), to whom the Company previously issued that certain Secured Promissory Note, dated June 24, 2024, in the original principal amount of $2,360,000 (the "Original Note").

Pursuant to the Exchange Agreements, the Company and Lender agreed to (i) partition from the Original Note two new Promissory Notes (the "Partitioned Notes") in the original principal amounts of $629,000 and $205,000, respectively (collectively, the "Exchange Amounts"), (ii) cause the outstanding balance of the Original Note to be reduced by $834,000, the aggregate principal amount of the Partitioned Notes, and (iii) exchange (the "Exchange") the Partitioned Notes for an aggregate of 489,635 shares (the "Exchange Shares") of the Company's Common Stock. As a result of the Exchange Agreements, the current outstanding principal amount due under the Original Note has been reduced to approximately $738,400.

The foregoing description of the Exchange Agreements are not complete and are qualified in their entirety by reference to the full text of the Exchange Agreements, copies of which are attached hereto as Exhibits 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.