BIO-key International, Inc. (NASDAQ: BKYI) has entered into a warrant inducement agreement with an existing institutional investor, expecting to raise approximately $2.5 million in gross proceeds, according to a press release statement.

Under the agreement, the investor will exercise outstanding warrants, originally issued on Oct. 28, 2025, to purchase 618,334 shares of common stock at a reduced exercise price of $4.06 per share. The gross proceeds are expected before deducting placement agent fees and other offering expenses.

In exchange for the warrant exercise, BIO-key agreed to issue new unregistered warrants to the investor to purchase an aggregate of 1,236,668 shares of common stock, also at an exercise price of $4.06 per share. The new warrants will become exercisable upon receipt of stockholder approval in accordance with applicable Nasdaq rules and will carry a five-year exercise term from the date of that approval.

BIO-key said it plans to file a registration statement with the Securities and Exchange Commission covering the resale of shares issuable upon exercise of the new warrants.

Maxim Group LLC is acting as the exclusive placement agent for the transaction.