Core Insights - BIO-key International, Inc. will host its third quarter investor call on November 14th at 10 a.m. ET, with results released before market opening [1] - The call will be led by Mike DePasquale, Chairman & CEO, and Cecilia Welch, CFO, and will include a Q&A session [1] Company Overview - BIO-key is a leader in Identity and Access Management (IAM) and biometric authentication technologies, securing access for over 40 million users [3] - The company offers a multi-factor identity and access management software that includes phoneless, tokenless, and passwordless biometric options [3] - Its PortalGuard IAM solution is available in both cloud-hosted and on-premise formats, providing cost-effective and secure access to various applications and transactions [3]

Core Insights - BIO-key International, Inc. has secured a significant deployment with a major defense-sector security organization in the Middle East, enhancing its presence in high-assurance government and defense environments [1][2]. Group 1: Deployment Details - The contract is one of BIO-key's largest security-sector deployments in the region, aimed at strengthening access security and streamlining credential management through biometric-based authentication without reliance on mobile devices or hardware tokens [2]. - The deployment is facilitated by a strategic partnership with Cloud Distribution, a Saudi-based Value-Added Distributor, which combines BIO-key's IAM solutions with local cybersecurity expertise [3]. Group 2: Strategic Commitment - The deployment underscores BIO-key's commitment to supporting national security and critical infrastructure protection in the Middle East, reflecting the trust in its technology for securing sensitive environments [4]. Group 3: Company Overview - BIO-key is a leader in biometric-centric, multi-factor identity and access management (IAM) software, securing access for over 40 million users and offering various authentication options, including phoneless, tokenless, and passwordless solutions [5].

Core Insights - BIO-key International, Inc. has entered into a warrant inducement agreement with an institutional investor to exercise outstanding warrants, resulting in the purchase of 3,091,668 shares at a reduced price of $1.02 per share, generating approximately $3.1 million in gross proceeds [1][3] Group 1: Warrant Inducement Agreement - The investor will exercise Series A and Series B Warrants to purchase 3,091,668 shares at $1.02 per share [1] - In exchange, the company will issue unregistered New Warrants for 6,183,336 shares at the same exercise price of $1.02, which are immediately exercisable and expire in five years [3] - The company plans to file a registration statement with the SEC for the resale of shares from the New Warrants [3] Group 2: Company Overview - BIO-key is focused on biometric authentication and Identity and Access Management (IAM) solutions, securing access for over 40 million users [4] - The company offers various authentication methods, including phoneless, tokenless, and passwordless options, through its PortalGuard IAM solution [4]

Core Insights - BIO-key International, Inc. has partnered with IT2Trust to enhance its presence in the Nordic market, focusing on delivering advanced Identity and Access Management (IAM) solutions with local expertise and cybersecurity leadership [1][2][5] Company Overview - BIO-key is a leader in biometric authentication and IAM solutions, securing access for over 40 million users with a range of authentication options including phoneless, tokenless, and passwordless methods [6] - IT2Trust is a prominent distributor of IT security and networking solutions in Scandinavia, providing consulting, training, and support services to strengthen digital resilience and compliance for enterprises and public organizations [5] Partnership Details - The collaboration will enable IT2Trust to distribute and support BIO-key's full portfolio of IAM and biometric authentication products, enhancing identity protection and regulatory compliance across Denmark, Sweden, Norway, and Finland [2][3] - This partnership is seen as a natural progression in BIO-key's European growth strategy, combining local market knowledge with global innovation to help organizations protect their data and digital future [5] Product Offerings - BIO-key's IAM solutions include PortalGuard, a comprehensive platform supporting multi-factor authentication (MFA), single sign-on (SSO), and centralized access management [8] - Other products include Passkey:YOU™, a FIDO2-compliant passwordless solution, and Identity-Bound Biometrics (IBB), which binds access to the individual rather than the device [8]

Core Insights - BIO-key International, Inc. has launched the EcoID III USB Fingerprint Scanner, enhancing its market position in biometric-centric Identity and Access Management (IAM) solutions [1][4] - The EcoID III features advanced capabilities such as liveness detection, FBI FAP 20 certification, and interoperability with over thirty existing fingerprint scanners [1][6] - The product aims to provide a cost-effective solution for organizations seeking high-quality biometric authentication [4] Product Features - The EcoID III offers robust liveness detection and anti-spoofing measures to prevent presentation attacks [6] - It ensures reliable performance in various environmental conditions, including bright sunlight and wet environments [6] - The scanner supports faster image capture with user guidance and allows for 360-degree finger placement for ease of use [6] - Encrypted device-to-host communication is included for enhanced security [6] Market Impact - The introduction of EcoID III is expected to make high-quality biometric solutions more accessible to a wider range of organizations [4] - BIO-key's solutions, including Identity-Bound Biometrics and PortalGuard IAM, are designed to facilitate a passwordless, phoneless, and tokenless future across various sectors [7][8]

Core Insights - BIO-key International, Inc. is participating in two major cybersecurity events, GITEX Global 2025 in Dubai and 19ENISE in León, Spain, showcasing its biometric-centric Identity and Access Management (IAM) solutions [1][2][3] Group 1: Event Participation - GITEX Global is a premier technology and AI marketplace in the Middle East, featuring over 6,800 companies and 200,000+ attendees from 180 countries, making it an ideal platform for BIO-key to demonstrate its IAM leadership [3][4] - 19ENISE is recognized as Spain's leading cybersecurity forum, bringing together over 4,000 attendees and 173 international speakers, emphasizing cross-border collaboration in the cybersecurity industry [5][6][7] Group 2: Technology Demonstration - BIO-key will showcase its Identity-Bound Biometrics (IBB), PortalGuard IAM, and Passkey:YOU™ solutions, promoting a passwordless, phoneless, and tokenless future for organizations in various sectors [2][8] - The company's technology aims to enhance digital identity security while reducing authentication friction and costs [2][8] Group 3: Strategic Goals - BIO-key's participation in these events underscores its commitment to helping organizations achieve NIST2 compliance and protect critical infrastructure through its biometric IAM technologies [8] - The leadership team will engage with customers and partners to expand collaborations across the EMEA region [8][9]

Core Insights - BIO-key International, Inc. is participating in two major cybersecurity events, GITEX Global 2025 in Dubai and 19ENISE in León, Spain, showcasing its biometric-centric Identity and Access Management (IAM) solutions [1][2][3] Group 1: Event Participation - GITEX Global is a premier technology and AI marketplace in the Middle East, featuring over 6,800 companies and 200,000+ attendees from 180 countries, making it an ideal platform for BIO-key to demonstrate its IAM leadership [3][4] - 19ENISE is recognized as Spain's leading cybersecurity forum, bringing together over 4,000 in-person attendees and 173 international speakers, emphasizing cross-border collaboration in the cybersecurity industry [5][6][7] Group 2: Technology Demonstration - BIO-key will showcase its Identity-Bound Biometrics (IBB), PortalGuard® IAM, and Passkey:YOU™ solutions, promoting a passwordless, phoneless, and tokenless future for organizations in various sectors [2][8] - The company's technology aims to enhance digital identity security while reducing authentication friction and costs, thereby transforming the user experience [2][8] Group 3: Strategic Importance - Participation in these events underscores BIO-key's commitment to supporting organizations in achieving NIST2 compliance and enhancing digital trust through its biometric IAM technologies [8] - The leadership team will engage with customers, partners, and cybersecurity leaders to expand collaborations across the EMEA region [8]

Core Insights - BIO-key International, Inc. specializes in biometric authentication solutions but faces significant challenges in capital utilization [1][6] - The company's Return on Invested Capital (ROIC) is -50.67%, which is substantially lower than its Weighted Average Cost of Capital (WACC) of 10.09% [2][6] - The negative ROIC indicates that BIO-key is not generating sufficient returns to cover its cost of capital, with a ROIC to WACC ratio of -5.02 [2][6] Peer Comparison - Boxlight Corporation and Safe & Green Holdings Corp. also report negative ROICs of -30.16% and -34.34%, respectively, with WACCs of 20.91% and 22.78% [3][6] - Their ROIC to WACC ratios of -1.44 and -1.51 suggest similar inefficiencies in capital utilization [3] - Senmiao Technology Limited and Sintx Technologies, Inc. exhibit even worse performance, with ROICs of -622.64% and -175.44%, respectively, indicating severe challenges in capital efficiency [4] Positive Outlier - SuperCom Ltd. demonstrates a positive ROIC of 2.63% and a WACC of 7.11%, with a ROIC to WACC ratio of 0.37, positioning it as a more effective user of capital compared to its peers [5][6]

Core Points - BIO-key International, Inc. held its Second Quarter 2025 Earnings Conference Call on August 13, 2025, featuring key executives including Chairman and CEO Michael W. DePasquale and CFO Cecilia C. Welch [1][3]. Group 1 - The conference call was hosted by Bill Jones from Investor Relations, indicating a structured approach to investor communication [2][3]. - The call included forward-looking statements that are subject to risks and uncertainties, highlighting the company's commitment to transparency regarding potential future performance [4]. Group 2 - Michael W. DePasquale initiated the call with brief remarks, setting the stage for a financial review by CFO Ceci Welch [5].

Part I: Financial Information [Financial Statements](index=4&type=section&id=Item%201%E2%80%94%20Financial%20Statements%3A) This section presents the unaudited condensed consolidated financial statements for Q2 2025 and 2024, showing increased revenue, reduced net loss, and improved cash and equity from financing activities Condensed Consolidated Balance Sheets | Financial Metric | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | $4,035,230 | $1,886,958 | | Total Assets | $10,516,551 | $8,615,560 | | **Liabilities & Equity** | | | | Total Current Liabilities | $3,531,910 | $4,553,536 | | Total Liabilities | $3,664,374 | $4,843,529 | | Total Stockholders' Equity | $6,852,177 | $3,772,031 | Condensed Consolidated Statements of Operations | Metric (Q2) | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Total Revenues | $1,696,907 | $1,141,286 | | Gross Profit | $1,232,727 | $879,014 | | Operating Loss | $(1,083,850) | $(1,654,086) | | Net Loss | $(1,167,396) | $(1,666,950) | | Basic and Diluted Loss per Share | $(0.20) | $(1.00) | Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,715,324) | $(1,123,533) | | Net cash used in investing activities | $(6,048) | $(1,869) | | Net cash provided in financing activities | $3,493,505 | $1,912,408 | | **Net Increase in Cash** | **$1,837,741** | **$748,951** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide critical context, including a 'Going Concern' warning, disaggregated revenue showing strong EMESA hardware sales, significant customer concentration, and details on financing activities - The company's history of significant losses, negative cash flow from operations, and dependence on obtaining additional financing raises **substantial doubt** about its ability to continue as a going concern[29](index=29&type=chunk)[30](index=30&type=chunk) - In Q2 2025, revenue from the EMESA region (Europe, Middle East, South America) grew significantly to **$969,437** from **$235,987** in Q2 2024, primarily driven by hardware sales[31](index=31&type=chunk) - The company has significant customer concentration, with two customers accounting for **47%** of Q2 2025 revenue and **49%** of current accounts receivable at June 30, 2025[68](index=68&type=chunk) - In January 2025, the company raised approximately **$3.8 million** in gross proceeds through a warrant exercise agreement with an institutional investor[64](index=64&type=chunk) [Management's Discussion and Analysis (MD&A)](index=23&type=section&id=Item%202%E2%80%94Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q2 2025 performance, highlighting a 49% revenue increase driven by hardware sales, narrowed operating loss, and reiterates the 'going concern' risk due to ongoing financing needs - The company's strategic outlook focuses on expanding its role in the **Identity Access Management (IAM)** market, particularly within government, financial services, higher education, and healthcare[82](index=82&type=chunk)[83](index=83&type=chunk) - The company requires approximately **$812,000** per month for operations and expects to need additional financing within the next twelve months unless it can generate sufficient positive cash flow[117](index=117&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section details Q2 2025 results, showing a 49% revenue increase driven by hardware sales, and a smaller operating loss due to decreased expenses Revenue (Q2 2025 vs Q2 2024) | Revenue (Q2 2025 vs Q2 2024) | $ Change ($) | % Change | | :--- | :--- | :--- | | Service | $38,427 | 14% | | License | $31,862 | 4% | | Hardware | $485,332 | 581% | | **Total Revenue** | **$555,621** | **49%** | - Selling, general and administrative (SG&A) expenses for Q2 2025 decreased by **13%** to **$1.68M** from **$1.94M** in Q2 2024, due to reductions in administration, sales personnel costs, and professional services fees[95](index=95&type=chunk) Revenue (H1 2025 vs H1 2024) | Revenue (H1 2025 vs H1 2024) | $ Change ($) | % Change | | :--- | :--- | :--- | | Service | $97,904 | 20% | | License | $(819,814) | -30% | | Hardware | $703,487 | 696% | | **Total Revenue** | **$(18,423)** | **-1%** | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved due to warrant exercises, but ongoing operational cash burn and insufficient resources necessitate additional financing for the next twelve months - Net cash provided by financing activities was **$3.5M** for the six months ended June 30, 2025, primarily from **$3.8M** in proceeds from the exercise of warrants[109](index=109&type=chunk) - The company has approximately **$3.1 million** of fully reserved inventory purchased for delayed projects in Nigeria and is exploring other markets to sell the product and generate cash[117](index=117&type=chunk) - The company's long-term viability depends on the successful commercialization of its technologies and its ability to obtain adequate financing, as current resources are insufficient to fund operations for the next twelve months[118](index=118&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203%E2%80%94Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) As a smaller reporting company, BIO-key is not required to provide disclosures regarding market risk - The company is not required to provide information regarding market risk as it qualifies as a smaller reporting company[119](index=119&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204%E2%80%94Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[120](index=120&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[121](index=121&type=chunk) Part II: Other Information [Legal Proceedings](index=35&type=section&id=Item%201%E2%80%94Legal%20Proceedings.) As of the report date, the company is not a party to any pending lawsuits - The company is not currently a party to any pending lawsuits[123](index=123&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202%E2%80%94Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During Q2 2025, the company issued common stock in two transactions to an accredited investor, exchanging shares for $400,000 in promissory notes - On May 30, 2025, the company issued 259,403 shares of common stock in exchange for a **$200,000** promissory note[125](index=125&type=chunk) - On June 9, 2025, the company issued 239,034 shares of common stock in exchange for a **$200,000** promissory note[126](index=126&type=chunk) [Other Items (1A, 3, 4, 5, 6)](index=35&type=section&id=Other%20Items) This section confirms that as a smaller reporting company, Risk Factors are not required, and reports no defaults on senior securities or changes in Rule 10b5-1 trading plans - As a smaller reporting company, BIO-key is not required to provide Risk Factors in its 10-Q[124](index=124&type=chunk) - The company reports no defaults upon senior securities[127](index=127&type=chunk)