Company Participation - BIO-key International, Inc. will participate in the Aegis Capital Corp. 2025 Virtual Conference on May 22, 2025, and the Maxim Virtual Tech Conference on June 4, 2025 [1][2] Conference Details - The Aegis Capital presentation is scheduled for May 22, 2025, from 11:30 to 11:55 a.m. ET, with a webcast link provided [2] - The Maxim conference will feature a fireside chat with Maxim Analyst Jack Vander Aarde on June 4, 2025, at 11:00 a.m. ET, requiring M-Vest membership for access [2] Company Overview - BIO-key is a provider of biometric-centric, multi-factor identity and access management (IAM) software, securing access for over 40 million users [4] - The company offers various authentication options, including phoneless, tokenless, and passwordless biometric solutions, through its PortalGuard IAM solution [4]

Core Insights - BIO-key International, Inc. has formed a strategic partnership with Cloud Distribution Co. to enhance its presence in the Middle East market, particularly in Saudi Arabia and the UAE [1][4] - Cloud Distribution Co. will allocate dedicated resources, including a Pre-Sales Engineer, a Business Development Manager, and a Project Manager, to support BIO-key's expansion efforts [2] - The partnership aims to deliver BIO-key's advanced Identity and Access Management (IAM) and biometric authentication solutions to enterprises and public institutions in the region [1][3] Company Overview - BIO-key is a leader in Identity and Access Management (IAM) and biometric authentication solutions, securing access for over 40 million users [6] - The company offers a range of authentication options, including phoneless, tokenless, and passwordless biometric solutions, through its PortalGuard IAM platform [6][8] - Cloud Distribution Co. is a prominent Value-Added Distributor in the Middle East, focusing on cybersecurity and infrastructure solutions, and is part of the Ideal Group [5]

Financial Data and Key Metrics Changes - Q1 2025 revenue increased by 10% to $1.6 million compared to Q4 2024, but decreased year-over-year due to a $1.2 million revenue from a financial services customer in Q1 2024 [5][16] - Gross profit margin remained healthy at 83%, with a reduction in SG&A expenses by 23% year-over-year [8][17] - Net loss for Q1 2025 increased to approximately $737,000 or $0.16 per share, compared to a loss of $573,000 or $0.32 per share in the prior year [17][18] Business Line Data and Key Metrics Changes - Service revenues increased to approximately $73,000 from $213,000 in Q1 2024, while recurring support service revenue rose by 37% to $265,000 [16] - Hardware revenue significantly increased to $236,000 in Q1 2025 from $18,000 in Q1 2024, driven by increased purchases of fingerprint biometric scanners [17] Market Data and Key Metrics Changes - The company is seeing solid traction in key verticals such as defense and financial services, with significant interest in identity bound biometric solutions [9][12] - The National Bank of Egypt began integrating BIO key's PortalGuard IAM platform, which could lead to further revenue opportunities [9][10] Company Strategy and Development Direction - The company is refocusing efforts on BIO key branded solutions in the EMEA region, transitioning away from Swivel Secure license solutions, which is expected to enhance margins [12][15] - There is a strong emphasis on passwordless, phoneless, and tokenless authentication solutions, which are anticipated to drive growth in 2025 and beyond [14][32] Management's Comments on Operating Environment and Future Outlook - Management noted that enterprises are beginning to recognize the limitations of legacy authentication methods, leading to increased demand for more secure IAM solutions [13][32] - The company expects to achieve improved top and bottom line results, supported by a growing base of recurring revenue [14][41] Other Important Information - The cash position increased to over $3 million, reflecting proceeds from warrant exercises [8][18] - The company has reduced its note payable by more than half, improving its balance sheet [8] Q&A Session Summary Question: Clarification on the large customer revenue and future expectations - The large customer is now the company's single largest customer, with an expected renewal of approximately $3 million over a two-year period starting in Q1 2026 [21][23] Question: Breakdown of Q1 2025 revenue sources - Revenue was a mix from service and maintenance, new customer revenue, and upgrades to the installed base [26][27] Question: Contribution of Wyoming Department of Education and National Bank of Egypt to Q2 revenue - Both were Q1 events, with potential for ongoing opportunities from the National Bank of Egypt [28] Question: Update on PassKey U solution - The PassKey solution is gaining traction and can be layered on existing security infrastructures [29][30] Question: Outlook on defense budget increases in EMEA - There are significant opportunities due to increased defense budgets in countries like Germany and Spain [33][34] Question: Expectations for cash burn and accounts receivable - Cash burn is expected to decrease, and accounts receivable levels are being managed carefully [58][60] Question: Clarification on government defense ministries as customers - The company serves government defense ministries directly, not contractors [64] Question: Update on inventory and tariffs - Inventory in China is not significantly affecting prices, and the company is actively pursuing the sale of written-off inventory [73]

Financial Data and Key Metrics Changes - In Q1 2025, the company's revenue increased by 10% to $1.6 million compared to Q4 2024, but decreased year-over-year due to a $1.2 million revenue from a financial services customer in Q1 2024 [5][17] - Gross profit remained strong at 83%, with a reduction in SG&A expenses by 23% year-over-year [7][18] - The net loss for Q1 2025 increased to approximately $737,000 or $0.16 per share, compared to a loss of $573,000 or $0.32 per share in the prior year [18][19] Business Line Data and Key Metrics Changes - Service revenues in Q1 2025 increased to approximately $73,000 from $213,000 in Q1 2024, while recurring support service revenue rose by 37% to $265,000 [17] - Hardware revenue saw a significant increase to $236,000 in Q1 2025 from $18,000 in Q1 2024, driven by increased purchases of fingerprint biometric scanners [18] Market Data and Key Metrics Changes - The company is experiencing solid traction in key verticals such as defense and financial services, with notable projects like the integration of BIO key's PortalGuard IAM platform by the National Bank of Egypt [9][10] - The Wyoming Department of Education deployed PortalGuard iDAS to support up to 20,000 end users, contributing to the company's growth in the education sector [11] Company Strategy and Development Direction - The company is focusing on expanding its BIO key branded solutions in the EMEA region, transitioning away from lower-margin Swivel Secure services [12][16] - There is a strategic emphasis on passwordless, phoneless, and tokenless authentication solutions, which are expected to drive growth and improve margins [14][32] Management's Comments on Operating Environment and Future Outlook - Management noted that there is increasing recognition among enterprises and governments of the limitations of legacy authentication methods, leading to a growing demand for more secure IAM solutions [13][32] - The company aims for sequential growth throughout 2025, despite potential seasonality challenges in Q3 due to the August holiday in Europe [41][42] Other Important Information - The cash position improved significantly to over $3 million, reflecting proceeds from warrant exercises [7][19] - The company reduced its note payable by more than half, enhancing its balance sheet and supporting growth opportunities [8] Q&A Session Summary Question: Clarification on the large customer and future revenue expectations - The large customer is now the company's single largest customer, with an expected renewal of approximately $3 million over a two-year period starting in Q1 2026 [22][24] Question: Contribution of other customers to Q1 revenue - Revenue in Q1 2025 was a mix from various sources, including service and maintenance revenue, new customer revenue, and upgrades to the installed base [27][28] Question: Outlook for the second quarter and seasonality - Management expects to grow sequentially, with Q2 showing potential for continued growth despite typical seasonality challenges in Q3 [41][42] Question: Insights on operating expenses and margin outlook - The company aims to maintain gross margins in the 80% range and is focused on controlling operating expenses [47][48] Question: Update on defense contracts and international opportunities - The company is engaged with government defense ministries, with potential for sizable recurring revenue opportunities [64][66]

Revenue Performance - Q1'25 revenue decreased to $1.6M from $2.2M in Q1'24, a decline of approximately 26% year-over-year[10] - License fee revenue fell to $1.1M in Q1'25 from $1.95M in Q1'24, reflecting a significant impact from a $1.2M contract in Q1'24[10] - Service revenues increased by 28% to $272.6K in Q1'25 from $213.1K in Q1'24, driven by a 37% rise in recurring maintenance and support revenue[11] - Hardware sales surged to $235.8K in Q1'25 from $17.6K in Q1'24, attributed to increased purchases of fingerprint biometric scanners[12] Financial Metrics - Gross margin for Q1'25 was 82.6%, down from 86.3% in Q1'24, due to lower revenue and higher lower-margin hardware sales[13] - Operating expenses decreased by 17.7% to $1.97M in Q1'25 from $2.39M in Q1'24, with SG&A expenses down 23%[14] - Net loss for the three months ended March 31, 2025, was $736,545, compared to a net loss of $510,285 for the same period in 2024, reflecting a 44.3% increase in losses[25] - Total current liabilities decreased to $3,465,616 from $4,553,536, a reduction of 24%[23] - Total stockholders' equity increased to $7,527,053 from $3,772,031, showing a growth of 99%[23] - Deferred revenue increased to $928,291 from $773,267, indicating a growth of 20.1%[23] - Net cash used in operating activities was $835,312, compared to a net cash provided of $297,084 in the prior year, indicating a shift in cash flow dynamics[25] Cash Position - Cash position improved to $3.1M as of March 31, 2025, compared to $438K at the end of 2024[16] - Cash and cash equivalents rose significantly to $3,133,752, up from $437,604, marking a 615.5% increase[25] - The company reported a net increase in cash and cash equivalents of $2,696,148 for the period, compared to an increase of $179,049 in the previous year[25] - Proceeds from the exercise of warrants amounted to $3,813,057, a significant increase compared to $1,400 in the previous year[25] Growth Expectations - The company expects significant revenue growth from a long-term financial services customer starting in 2026 due to expanded deployments[2] - BIO-key is focusing on expanding its presence in the EMEA region, anticipating improved revenue and margins in 2025[8] - The company serves over 100 institutions with more than 4M end users in the state, local, and educational markets[6] Asset Management - Total assets increased to $11,183,676 from $8,615,560, representing a growth of 29.5% year-over-year[23] - Inventory levels decreased slightly to $357,842 from $378,307, a decline of 5.4%[23]

Financial Performance - For the three months ended March 31, 2025, total revenues decreased by 26% to $1,607,159 from $2,181,203 in the same period in 2024[88]. - Service revenues increased by 28% to $272,598, while license revenues decreased by 44% to $1,098,758, and hardware sales surged by 1236% to $235,803[88][90][91]. - The cost of goods sold decreased by 7% to $279,498, with service costs down by 29% and license fees down by 51%[88][92]. - Selling, general and administrative expenses decreased by 23% to $1,372,524 from $1,782,973 in the corresponding period in 2024[93]. - Research, development, and engineering costs decreased by 2% to $595,775 compared to $607,521 in the same period in 2024[94]. Cash Flow and Financing - Net cash used in operations during the three months ended March 31, 2025, was $835,312[97]. - Net cash provided by financing activities was $3,529,227, primarily from the exercise of warrants totaling $3,813,057[97]. - On January 15, 2025, the company entered into a warrant exercise agreement resulting in gross proceeds of approximately $3.8 million from the exercise of 2,061,112 shares at an exercise price of $1.85 per share[100]. - On September 12, 2024, the company reduced the exercise price of certain warrants to $1.85 per share, generating gross proceeds of approximately $1.9 million from the exercise of 1,030,556 shares[101]. - The company issued a $2,360,000 principal amount senior secured promissory note, resulting in gross proceeds of approximately $1,826,000 after deductions[102]. - As of March 31, 2025, the company had total cash and cash equivalents of $3,133,752, compared to $437,604 at December 31, 2024, and working capital of approximately $1,124,000[105]. - The company requires approximately $812,000 per month to conduct operations, which has not been consistently achieved through revenue generation[105]. - The company has entered into an accounts receivable factoring arrangement, selling a minimum of $150,000 per quarter of accounts receivable on a non-recourse basis[104]. - Negative cash flows related to changes in accounts receivable, accounts payable, and accrued liabilities amounted to approximately $583,000 due to working capital management[103]. - The company may need to obtain additional third-party financing within the next twelve months if sufficient revenue is not generated[106]. Strategic Plans - The company plans to continue expanding its role in the IAM market and expects increased demand for security solutions in government services and highly-regulated industries[80][81]. - The company aims to pursue strategic acquisitions in the IAM space to enhance its market presence and operational synergies[83]. - The company anticipates capital expenditures to be less than $100,000 during the next twelve months[99]. - The company has approximately $3.4 million of inventory reserved for projects in Nigeria and is exploring other markets to generate additional cash[105]. - The company is dependent on the successful commercialization of its technologies and obtaining adequate financing for long-term viability and growth[106].

Core Insights - BIO-key International, Inc. reported a sequential revenue increase of approximately 10% in Q1'25 compared to Q4'24, but a year-over-year revenue decline of 25% due to a significant contract from a financial services customer in Q1'24 that did not recur at the same level in Q1'25 [2][11] - The company maintains a healthy gross margin of 83% in Q1'25 and has significantly reduced its selling, general, and administrative expenses by 23% year-over-year [3][14] - The cash position improved to $3.1 million as of March 31, 2025, reflecting proceeds from warrant exercises [3][16] Financial Performance - Total revenues decreased to $1,607,159 in Q1'25 from $2,181,203 in Q1'24, primarily due to the impact of the previous year's contract [11] - License fee revenue fell to $1,098,758 in Q1'25 from $1,950,434 in Q1'24, while service revenues increased to $272,598 from $213,122 [11][12] - Hardware sales saw a significant increase to $235,803 in Q1'25 from $17,647 in Q1'24, attributed to higher purchases of biometric scanners [13] Operational Highlights - The company is experiencing growing traction for its identity-bound biometric solutions in defense and financial services sectors, emphasizing the importance of secure authentication [4][5] - BIO-key has established a solid presence in the state, local, and educational (SLED) markets, serving over 100 institutions with over 4 million end users [6] - A strategic partnership with California's Education Technology Joint Powers Authority was executed, allowing BIO-key's solutions to be used in 195 K-12 schools, benefiting over 2.6 million students [7] Market Strategy - The company is refocusing efforts on selling high-margin BIO-key branded products in the EMEA region, expecting to return to growth and enhanced margins in 2025 [8][9] - There is increasing interest in passwordless, phoneless, and tokenless authentication solutions, which address significant security and usability challenges [5][10] - BIO-key aims to leverage endorsements from national and international defense organizations to enhance business development efforts [4] Balance Sheet and Cash Flow - As of March 31, 2025, total current assets improved to $4.6 million, with cash and cash equivalents at $3.1 million [16][24] - The company reduced its operating expenses to $1,968,299 in Q1'25 from $2,390,494 in Q1'24, contributing to a net loss of $736,545, which is an increase from a net loss of $510,285 in Q1'24 [15][14] - The cash flow from financing activities showed a net increase of $3,529,227, primarily due to proceeds from warrant exercises [26]

Core Viewpoint - BIO-key International, Inc. reported a sequential revenue increase of approximately 10% in Q1'25, but a year-over-year revenue decline of 25% due to a significant contract from a financial services customer in Q1'24 that did not recur at the same level in Q1'25 [2][9] Financial Performance - Total revenues decreased to $1,607,159 in Q1'25 from $2,181,203 in Q1'24, primarily due to the impact of a $1.2 million contract in Q1'24 [9] - License fee revenue fell to $1,098,758 in Q1'25 from $1,950,434 in Q1'24, reflecting the variance from the long-term financial services customer and the transition from third-party products to BIO-key products in EMEA [9] - Service revenues increased to $272,598 in Q1'25 from $213,122 in Q1'24, with a 37% increase in recurring maintenance and support revenue [10] - Hardware sales surged to $235,803 in Q1'25 from $17,647 in Q1'24, driven by increased purchases of fingerprint biometric scanners [11] - Gross profit decreased to $1,327,661 in Q1'25 from $1,881,560 in Q1'24, with gross margins of 82.6% compared to 86.3% in the previous year [11] Cost Management - Operating expenses were reduced by $422,195 to $1,968,299 in Q1'25 from $2,390,494 in Q1'24, with SG&A expenses decreasing by 23% [12] - The company achieved a cash position of $3.1 million as of March 31, 2025, reflecting proceeds from warrant exercises [3][14] Market Position and Strategy - The company is experiencing growing traction for its identity-bound biometric solutions in defense/security and financial services, emphasizing the need for high-security authentication [3][4] - BIO-key has established a solid presence in the state, local, and educational (SLED) markets, serving over 100 institutions with over 4 million end users [5] - A strategic partnership with California's Education Technology Joint Powers Authority was executed, making PortalGuard an approved solution for 195 K-12 schools, which will comply with California's Phone-Free Schools Act [6] Future Outlook - The company is optimistic about growth in EMEA markets, expecting to return to growth and enhanced margins over the remainder of 2025 [7][8] - There is an increasing interest in passwordless, phoneless, and tokenless IAM solutions, positioning the company well for improved financial performance in 2025 [8]

Group 1 - BIO-key International, Inc. will host its first quarter 2025 investor call on May 16th at 10 a.m. ET, with results released after market close on May 15th [1] - The conference call will be led by Mike DePasquale, Chairman & CEO, and Cecilia Welch, CFO, and will include a Q&A session [1] - The company specializes in Identity and Access Management solutions, focusing on biometric capabilities for secure access [3] Group 2 - BIO-key's IAM software secures access for over 40 million users, offering various authentication options including phoneless, tokenless, and passwordless methods [3] - The PortalGuard IAM solution is available both as a hosted and on-premise option, providing cost-effective and secure access to critical information and applications [3]

Core Points - BIO-key International, Inc. received a notification from Nasdaq regarding non-compliance with Listing Rule 5250(c)(1) due to the late filing of its Annual Report on Form 10-K for the year ended December 31, 2024 [1] - The company filed its Form 10-K on April 23, 2025, and subsequently regained compliance with Nasdaq rules on April 24, 2025 [2] - BIO-key specializes in biometric-centric identity and access management solutions, securing access for over 40 million users with options for passwordless, phoneless, and tokenless authentication [3] Company Overview - BIO-key provides innovative IAM solutions that are cost-effective, easy to deploy, and secure, catering to diverse use cases [3] - The company's PortalGuard IAM solution can be hosted in the cloud or on-premise, facilitating secure access to computers, information, applications, and high-value transactions [3]