[8-K] BIO KEY INTERNATIONAL INC Reports Material Event

Rhea-AI Filing Summary

BIO-key International, Inc. entered into a $1,130,000 senior secured promissory note with Streeterville Capital on September 30, 2025, which carried an original issue discount of $125,000 and transaction costs of $5,000, resulting in $1,000,000 funded at closing to be used for general working capital. The Note matures in 18 months and accrues interest at 9% per annum.

The Note is secured by a lien on substantially all assets, permits prepayment without penalty, and requires a mandatory prepayment equal to the lesser of 40% of amounts raised in future financings or the full outstanding Note. Beginning six months after issuance the lender may redeem up to $135,000 per month; if monthly reductions fall short, the company must pay the shortfall plus a 7% exit fee or the outstanding balance will automatically increase by 1%. Events of default allow the lender to increase interest to up to 22% and impose additional default charges up to 25%. The Note also contains covenants requiring timely SEC filings and maintenance of the Nasdaq listing.

Positive

• $1,000,000 net proceeds provided immediate working capital
• Note is prepayable without penalty, allowing early refinancing opportunities
• Transaction secured by lien on substantially all assets, enabling access to capital

Negative

• Original issue discount of $125,000 plus $5,000 fees reduced funding and increased effective cost
• Exit fee of 7% and monthly redemption mechanics (up to $135,000) create recurring cash outflow obligations
• Default remedies permit interest up to 22% and default charges up to 25%, raising downside repayment risk
• Mandatory prepayment of 40% of future financings may limit proceeds available for growth

Insights

Corporate Finance Analyst

TL;DR: The transaction provides immediate $1,000,000 liquidity but at material near-term cost and cash‑flow constraints.

The company received $1,000,000 net from a $1,130,000 note after a $125,000 OID and $5,000 fee, giving short-term working capital.

Repayment terms—18‑month maturity, 9% interest, a 7% exit fee, and monthly redemption mechanics beginning at month six for up to $135,000—create predictable cash outflows and could pressure liquidity if fundraising is delayed.

Debt & Restructuring Counsel

TL;DR: Security, mandatory prepayment, and steep default remedies increase creditor protections and downside cost.

The Note is secured by a lien on substantially all assets and includes a mandatory prepayment clause of up to 40% of future financing proceeds, strengthening lender recovery.

Default provisions permit interest to rise to 22% and add up to 25% in default charges, which materially raises the cost of distress and could amplify repayment burden on covenant breaches.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 30, 2025

BIO-key International, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation) 1-13463 (Commission File Number) 41-1741861 (I.R.S. Employer Identification No.)

101 Crawfords Corner Road

Suite 4116

Holmdel, NJ 07733

(Address of principal executive offices) (Zip Code)

(732) 359-1100

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c))

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	BKYI	Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 1.01 Entry into a Material Definitive Agreement.

The information provided in Item 2.03 is hereby incorporated by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On September 30, 2025, BIO-key International, Inc. (the “Company,” “we” or “us”) entered into and closed a note purchase agreement (the “Purchase Agreement”) with Streeterville Capital, LLC, an existing lender of the Company (the “Lender”), which provided for the issuance of a $1,130,000 principal amount senior secured promissory note (the “Note”). The Note carries an original issue discount of $125,000 and the Company agreed to pay $5,000 to the Lender to cover its transaction costs, which were deducted from the proceeds of the Note resulting in a total of $1,000,000 being funded to the Company at closing. The proceeds will be used for general working capital.

The principal amount of the Note is due eighteen months following the date of issuance. Interest under the Note accrues at a rate of nine percent (9%) per annum. All repayments of principal due under the Note will be subject to an exit fee of seven percent (7%) of the principal amount being repaid (the “Exit Fee”). Commencing six months after the date of issuance of the Note (the “Redemption Start Date”), Lender shall have the right to redeem up to $135,000 of principal amount under the Note each month which amount plus the Exit Fee will be due and payable three (3) trading days of Lender’s delivery of a redemption notice to the Company. At the end of each month following the Redemption Start Date, if the Company has not reduced the outstanding balance under the Note by at least $135,000, then by the fifth (5^th) day of the following month, the Company must either pay to Lender the difference between $135,000 and the amount, if any, redeemed in such month plus the Exit Fee, or the outstanding balance due under the Note will automatically increase by one percent (1%) as of such fifth (5^th) day.

The Note is secured by a lien on substantially all of the Company’s assets and properties and can be prepaid in whole or in part without penalty at any time. In the event that the Company receives any proceeds in connection with any fundraising or financing transaction (including any warrant exercises), it will be required to make a mandatory prepayment equal to the lesser of (i) forty percent (40%) of the amount raised in such transaction and (ii) the full amount due under the Note.

The Note provides for customary events of default, including, among other things, the event of non-payment of principal, interest, fees or other amounts, a representation or warranty proving to have been incorrect when made, failure to perform or observe covenants within a specified period of time, the bankruptcy or insolvency of the Company or of all or a substantial part of its property, and monetary judgment defaults of a specified amount. Upon the occurrence of an Event of Default, Lender may (i) cause interest on the outstanding balance to accrue at an interest rate equal to the lesser of twenty two (22%) or the maximum rate permitted under applicable law, and (ii) accelerate all amounts due under the Note plus an amount equal to (a) fifteen percent (15%) of the amount due under the Note for each default that is considered a major trigger event (as defined), and (b) five percent (5%) of the amount due under the Note for each occurrence of any default that is considered a minor trigger event (as defined), in any case not to exceed twenty five percent (25%).

The Note also contains certain covenants, including the Company timely filing all reports with the SEC and maintaining the listing of its common stock on the Nasdaq Stock Market.

The foregoing descriptions of the Purchase Agreement, Note, and related transaction documents do not purport to be complete and are qualified in their entirety by reference to the complete text of such agreements, copies of which are filed as exhibits to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d)	Exhibits.
Exhibit No.	Description
10.1	Note Purchase Agreement dated September 30, 2025 by and between the Company and Streeterville Capital, LLC
10.2	$1,130,000 Secured Promissory Note dated September 30, 2025
10.3	Security Agreement dated September 30, 2025 by and between the Company and Streeterville Capital, LLC.
10.4	Intellectual Property Security Agreement dated September 30, 2025 by and between the Company and Streeterville Capital, LLC
10.5	Guaranty dated September 30, 2025 by and between Pistol Star, Inc. and Streeterville Capital, LLC
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BIO-KEY INTERNATIONAL, INC.
Date: October 3, 2025
	By:	/s/ Cecilia C. Welch
		Cecilia C. Welch
		Chief Financial Officer

FAQ

What did BIO-key (BKYI) borrow and how much did it receive?

BIO-key executed a $1,130,000 senior secured note with a $125,000 original issue discount and $5,000 fee, receiving $1,000,000 at closing.

What are the interest rate and maturity on the BKYI promissory note?

The Note accrues interest at 9% per annum and matures 18 months from issuance.

Are there any special repayment or prepayment requirements?

Yes. Lender can redeem up to $135,000 monthly starting six months after issuance; the company must also make a mandatory prepayment equal to the lesser of 40% of any financing proceeds or the full Note amount.

What collateral and covenants secure the BKYI Note?

The Note is secured by a lien on substantially all assets. Covenants include timely SEC filings and maintaining the Nasdaq listing.

What penalties apply on default under the note?

On default the lender can increase interest up to 22% and impose additional charges up to 25% of amounts due, depending on trigger events.