Company: BKYI
Filing Date: 2025-04-23
Form Type: 10-K
Source: 0001437749-25-012824
Chunk: 347

Company: BIO KEY INTERNATIONAL INC
Filing Date: 2025-04-23
Form: 10-K
Item: Item 7A
Chunk 347
---
 1,030,556 shares of the Company's common stock, each with an exercise price of $1.85 per share. The Series A Warrants and Series B Warrants share substantially the same terms, are immediately exercisable and will expire five years from the date of issuance. 
    
   Warrants Issued with Convertible Note:
    
   See Note K - Convertible Note Payable for the warrant issued with a convertible note in 2022.
    
   Valuation Assumptions for Warrants:
    
   The Company records the warrants at their fair value which is determined using the Black-Scholes valuation model on the date of the grant. The fair value of the warrants issued in 2023 and 2022 were estimated with the following assumptions:

       Years ended  
   December 31,  
   2024    2023  
 Weighted average risk-free interest rate   3.34%  4.63%
 Weighted average exercise price  $1.85  $3.15 
 Weighted average exercise period   5   5 
 Weighted average Volatility of stock price    577 %  817%

   The volatility for each issuance is determined based on the review of the experience of the weighted average of historical daily price changes of the Company’s common stock over the expected exercise period. The five-year volatility is higher than the one-year rate from Bloomberg of 245%, based on several reverse-splits of BIO-key's stock over the five-year period. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the years to maturity.
    
   A summary of warrant activity is as follows:

               Weighted      
       Weighted    average      
       average    remaining    Aggregate  
   Total    exercise    life    intrinsic  
   Warrants    price    (in years)    value  
                 
 Outstanding, as of December 31, 2022   270,672   104.95   2.59   — 
 Granted   2,534,148   3.15         
 Exercised   (177,890)  0.0018         
 Forfeited   —   —         
 Expired   (438)  —