Exhibit 10.27

                               AMENDMENT NO. 1 TO
                             NOTE PURCHASE AGREEMENT

         AMENDMENT  NO. 1 TO NOTE  PURCHASE  AGREEMENT  dated  October  31, 2003
(the  "Amendment")  by  and  between  Bio-key  International,  Inc., a Minnesota
corporation (the "Company"), and The Shaar Fund, Ltd. (the "Investor").

                                   WITNESSETH:

         WHEREAS,  the Company and Investor  (collectively,  the  "Parties") are
parties to that  certain Note  Purchase  Agreement  dated  January 27, 2003 (the
"Note Purchase Agreement"); and

         WHEREAS,  the Parties have agreed to amend the Note Purchase  Agreement
to, among other things, provide additional funding to the Company.

         NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements set forth in this Amendment and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the Parties hereby agree as follows:

         1. Amendments to Note Purchase Agreement.

                  (a) Section  1.2(a) of the Note  Purchase  Agreement is hereby
amended to include the following additional language:

                  "Subject to the terms and  conditions  set forth  herein,  the
                  Investor  shall loan up to Two Million Five  Hundred  Thousand
                  ($2,500,000)  Dollars of additional  funding (the  "Additional
                  Funding")  to  the  Company.   Investor   shall   provide  the
                  Additional Funding to the Company by advancing to the Company,
                  subject to the  conditions set forth in Sections 1(b) and 1(c)
                  of the Note Purchase  Agreement,  $300,000 on November 1, 2003
                  and  $200,000  on the  first  day  of  each  month  commencing
                  December 1, 2003 and terminating October 1, 2004."

                  (b)  Section  2(a) of the Note  Purchase  Agreement  is hereby
amended to include the following additional language:

                  "The  Additional  Funding  shall  be  evidenced  by a  secured
                  convertible  promissory note (the  "Additional  Funding Note")
                  payable  to the  order of the  Investor  or its  assignee,  in
                  substantially  the form attached to this  Amendment as Exhibit
                  A."

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                  (c)      Section 7 of the Note  Purchase  Agreement  is hereby
amended to include the following additional language:

                  "The  Investor  hereby WAIVES the  application  of any and all
                  provisions  of the Prior  Securities  which  would  reduce the
                  conversion  ratio or conversion  price applicable to the Prior
                  Securities  as a  result  of the  issuance  of the  Additional
                  Funding Note or the issuance of shares of capital stock of the
                  Company  upon  conversion  thereof,  such  that  the  forgoing
                  issuances shall not effect the conversion ratios or conversion
                  prices applicable to any of the Prior Securities."

                  (d)  Section  10 of the  Note  Purchase  Agreement  is  hereby
amended by deleting  proviso (i) and deleting  proviso (ii) and  replacing  them
with the following:

                  "(i)  that such  Additional  Registration  Statement  shall be
                  required  to be filed  sixty (60) days after the date on which
                  Investor  provides written notice to the Company of its demand
                  that the Additional  Registration  Statement be filed with the
                  SEC and shall be declared effective within two hundred and ten
                  (210)  days  after  such  written  notice;  and (ii) that such
                  Additional  Registration Statement shall include the shares of
                  common  stock  issuable  upon   conversion  of  the  Note  and
                  Additional  Funding  Note  and  all  other  securities  of the
                  Company owned by the Investor,  unless such shares are covered
                  by a different registration statement."

         2. Miscellaneous.

                  (a)  Capitalized  terms used and not defined herein shall have
the meanings assigned to them in the Note Purchase Agreement.

                  (b) Each of the Company and Investor  represents and  warrants
that its  signatory  hereto has the full  power  and authority  to execute  this
Amendment  in  the  name  of  and on  behalf  of the  Company  or  Investor,  as
applicable.

                  (c) All  terms of the Note  Purchase  Agreement  shall  remain
unaltered and in full force and effect except as modified by this Amendment.

                  (d) This Amendment may be delivered via facsimile and executed
in  counterpart,  each of which shall be deemed to be an  original,  and both of
which shall constitute one and the same instrument.

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<PAGE>


                  IN WITNESS WHEREOF,  the Parties have caused this Amendment to
be duly executed as of the day, month and year first above written.



                                          BIO-KEY INTERNATIONAL, INC.


                                          By: /s/ Gary Wendt
                                              -----------------
                                              Name: Gary Wendt
                                              Title: Chief Financial Officer


                                          THE SHAAR FUND LTD

                                          By: LEVINSON CAPITAL
                                              MANAGEMENT, INC.

                                          By: /s/  Sam Levinson
                                              ------------------
                                              Director



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