Company: BKYI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001437749-25-035227
Chunk: 12

Company: BIO KEY INTERNATIONAL INC
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 12
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 at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use in pricing the asset or liability, such as inherent risk, non-performance risk and credit risk. The Company follows ASC 820, – Fair Value Measurement, which establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows:
    
   Level 1:    Quoted prices (unadjusted) for identical assets or liabilities in active markets.
    
   Level 2:   Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived from observable market data by correlation or other means.
    
   Level 3:   Inputs for the asset or liability that are not based on observable market data (unobservable inputs).     The Boumarang Shares are classified as a Level 3 asset and have been valued based on a combination of recent sales of Boumarang common stock to third parties  and a third party valuation applying a discounted cash flow analysis which included discounts for lack of control and lack of marketability, small company risk premium, and specific company risk premium based on Boumarang being an early-stage pre-revenue company. The lack of control and marketability discounts were based on published studies and transfer restrictions contained in Boumarang’s corporate governance documents.   Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Boumarang Shares  may fluctuate from period to period and the fair value of the Boumarang Shares  may differ significantly from the values that would have been used had a ready market existed for such shares and  may differ materially from the values that the Company  may ultimately realize. The early-stage pre-revenue status and unproven technology of Boumarang, Inc. raise uncertainties that could impact the recoverability of the investment in the Boumarang Shares.
    
   ASC 321-10-35 Equity Securities - Subsequent Measurement requires annual impairment testing for equity securities without readily determinable fair