Company: BKYI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001437749-25-035227
Chunk: 15

Company: BIO KEY INTERNATIONAL INC
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 15
---
 the Company’s assets and properties and the Company’s obligations under the 2024 Note were guaranteed by Pistol Star, Inc. (“Pistol”), a wholly owned subsidiary of the Company. The 2024 Note could be prepaid in whole or in part without penalty at any time.  In the event that the Company received any proceeds in connection with any fundraising or financing transaction (including any warrant exercises), it would be required to make a mandatory prepayment equal to the lesser of (i) forty percent (40%) of the amount raised in such transaction and (ii) the full amount due under the 2024 Note.
    
   In the third quarter of 2024, the Company received gross proceeds of approximately $1.9 million in connection with a financing transaction (see Note 12 Stockholders' Equity). In accordance with the terms of the 2024 Note, 40% of the proceeds received, or approximately $762,600, was used to prepay amounts due under the 2024 Note. 
    
   Between  January and  September 2025, the Company entered into a number of Exchange Agreements with the holder of the 2024 Note pursuant to which it partitioned from the 2024 Note new promissory notes in the aggregate principal amount of $1,434,000 reducing the outstanding principal amount of the 2024 Note to approximately $338,400. All of the partitioned notes were subsequently exchanged for shares of common stock. (see Note 17 Subsequent Events).
    
   Note Purchase Agreement dated  September 30, 2025
    
   On  September 30, 2025, the Company entered into and closed a note purchase agreement with the Lender which provided for the issuance of a $1,130,000 principal amount senior secured promissory note (the “2025 Note”). The 2025 Note carries an original issue discount of $125,000 and the Company agreed to pay $5,000 to the Lender to cover its transaction costs, which were deducted from the proceeds of the 2025 Note resulting in a total of $1,000,000 being funded to the Company at closing. The proceeds will be used for general working capital.
    
   The principal amount of the 2025 Note is due 18 months following the date of issuance. Interest under the 2025 Note accrues at a rate of nine percent (9%) per annum.