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): December 31, 2005

 

BIO-key International, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-13463

 

41-1741861

(State or other jurisdiction of
incorporation)

 

(Commission File Number)

 

(I.R.S. Employer Identification No.)

 

3349 Highway 138, Building D, Suite B

Wall, NJ 07719

(Address of principal executive offices)

 

(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 (see General Instruction A.2 below):

 

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

 

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

 

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

 

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

 

 


 

Item 1.01.                                          Entry into a Material Definitive Agreement.

 

On December 31, 2005, the Board of Directors of BIO-key International, Inc. (the “Company”) approved the acceleration of vesting of certain of the outstanding options to purchase shares of the Company’s common stock with option exercise prices greater than the fair market value of the Company’s common stock on such date.  The acceleration applies to all such options outstanding as of December 31, 2005 under the Company’s 1996 Stock Option Plan, 1999 Stock Option Plan and 2004 Stock Option Plan, except for options held by the Company’s executive officers subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, and the members of the Company’s Board of Directors.  Options to purchase up to approximately 4.1million shares of the Company’s common stock, or approximately 58% of the total shares of the Company’s common stock subject to outstanding options, with a weighted average exercise price of approximately $1.17 and varying remaining vesting schedules, are expected to be subject to this acceleration and become immediately vested and exercisable as of December 31, 2005.  The number of shares, exercise prices and other terms of the options subject to the acceleration remain unchanged.

 

As a result of this acceleration, the Company expects to reduce its exposure to the effects of the Financial Accounting Standards Board’s Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS 123R), which requires companies to recognize stock-based compensation expense associated with stock options based on the fair value method. The Company currently estimates a reduction in stock-based compensation expense associated with this acceleration of approximately $330 thousand for fiscal year 2006 and approximately $334 thousand for fiscal year 2007.

 

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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: December 31, 2005

 

 

By:

/s/ Francis J. Cusick

 

 

 

Name: Francis J. Cusick

 

 

Title: Chief Financial Officer

 

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