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]

Customer Base and Market Expansion - As of December 31, 2024, BIO-key has over 600 customers across multiple industries using its identity and access management solutions [19]. - The acquisition of PistolStar on June 30, 2020, expanded BIO-key's customer base in the state and local government and higher education sectors [22]. - The company expanded its operations into Europe, Africa, and the Middle East by acquiring Swivel Secure Europe, serving over 300 customers in the region [23]. - The collaboration with Fiber Food Systems, Inc. aims to explore identity access management use cases in the food industry, potentially creating new commercial opportunities [24]. - The PortalGuard IAM product line has hundreds of active customers and is being enhanced with additional capabilities [62]. - The company has partnered with over 85 resellers and distribution partners to expand its market reach [43]. Technology and Product Offerings - BIO-key's PortalGuard IDaaS provides 17 multi-factor authentication options, including biometric methods like fingerprint and facial recognition [27]. - BIO-key's biometric technology is utilized in large-scale identity projects, including government ID initiatives and healthcare organizations [39]. - The company is a Microsoft Partner, with its fingerprint scanners qualified to support Windows Hello and Windows Hello for Business [40]. - BIO-key's WEB-key platform supports over 30 fingerprint scanners interchangeably, enhancing its scalability for government agencies [16]. - The company’s biometric authentication process addresses gaps in existing IAM technology, particularly in user authentication and account sharing [41]. - The company’s intellectual property includes numerous patents related to biometric technology, with some expiring between 2025 and 2039 [47][48][52][57]. - The company is actively involved in industry privacy workgroups to influence biometric privacy regulations and ensure compliance [71]. Financial Performance and Challenges - The company generated approximately $7.0 million in revenue during 2024, which is below the average monthly requirement of $812,000 [84]. - The company has a history of significant losses and negative cash flow, raising substantial doubt about its ability to continue as a going concern [81]. - Total revenue decreased by $825,334 or 11% to $6,929,571 in 2024 compared to $7,754,905 in 2023, primarily due to the exit from the distribution agreement with Swivel Secure Limited [169]. - License revenue increased by $847,360 or 20% to $5,189,370 in 2024, driven by expansions from several long-term customers and new deployments [171]. - Service revenue decreased by 50% to $1,108,506 in 2024, with recurring service revenue down 15% due to the loss of a large customer service agreement [168][170]. - Hardware sales dropped by $562,315 or 47% to $631,695 in 2024, largely due to a lack of repeat sales to an international defense agency [171]. - Net loss improved to $(4,300,692) in 2024 from $(8,521,837) in 2023, reflecting increased gross profit and lower operating expenses [179]. - Monthly operational cash requirement is approximately $812,000, which was not consistently met through revenue generation [192]. Operational Risks and Regulatory Challenges - The company has identified a material weakness in internal control over financial reporting, leading to a restatement of financial statements for 2023 [78]. - The company faces intense competition from both established biometric companies and startups, which may hinder its ability to keep pace with technological changes [93]. - The company is subject to multiple regulatory challenges, including privacy, security, and data use regulations, which could adversely affect its operations [105]. - Cybersecurity threats, including ransomware and sophisticated attacks, pose significant risks to the integrity of the company's systems and customer data [106]. - Compliance with evolving privacy and data protection laws is critical, as failures could lead to significant liabilities and loss of customer trust [110]. - The company faces risks in international expansion due to potential challenges in protecting its intellectual property rights globally [102]. Strategic Direction and Future Outlook - The company aims to pursue strategic acquisitions in the IAM space to support growth and enhance earnings [42]. - The company plans to expand its role in the IAM market and continue offering a suite of authentication options to enhance customer experience [160]. - Strategic acquisitions in the IAM space are being pursued to enter new market verticals and synergize with existing operations [163]. - The company expects increased demand for security solutions in government services and highly-regulated industries, driven by heightened security and privacy requirements [161]. Governance and Leadership - Michael W. DePasquale has been the CEO since January 3, 2003, and has over 30 years of executive management experience in the technology sector [211]. - Cecilia C. Welch serves as the Chief Financial Officer, indicating a strong financial leadership within the company [210]. - The company has a diverse board of directors with extensive experience in various industries, enhancing its strategic decision-making capabilities [210]. - The board includes members with backgrounds in software, professional services, and biometric industries, which aligns with the company's focus [211]. - The company is actively involved in the International Biometrics and Identification Industry Association, reflecting its commitment to industry standards and innovation [211].

Core Insights - BIO-key International, Inc. has announced a strategic partnership with Arrow ECS Iberia to enhance the availability of its Identity and Access Management (IAM) solutions in Spain and Portugal [1][2][8] - The partnership aims to address the increasing demand for regulatory-compliant security solutions in the Iberian market, focusing on phoneless, tokenless, and passwordless authentication [2][7] - The partnership will be officially presented at the Arrow ECS Event on April 2, 2025, in Lisbon, where BIO-key will showcase its advanced IAM solutions to over 800 partners and cybersecurity experts [3][4] Company Overview - BIO-key specializes in biometric-centric, multi-factor IAM software, securing access for over 40 million users [11] - The company offers a range of authentication options, including Multi-factor Authentication (MFA), Single Sign-On (SSO), and Identity-Bound Biometrics (IBB) [9][11] - BIO-key's solutions are designed to be cost-effective, easy to deploy, and compliant with European regulations such as NIS2 and GDPR [4][9] Partnership Details - Arrow ECS Iberia will support the adoption of BIO-key's IAM solutions through its extensive reseller network and market knowledge [6][8] - The partnership is expected to enhance security for enterprises in key industries, including financial services, healthcare, and public sector [7][8] - Arrow ECS Iberia is recognized as a leader in IT security distribution, making it an ideal partner for BIO-key in the region [8]

Financial Data and Key Metrics Changes - The company reported a revenue decline of 11% to $6.9 million in 2024, primarily due to the exit from a low-margin service agreement [10][25] - High-margin software license fee revenue increased by 20% to $5.2 million in 2024, contributing to an adjusted gross margin of 78%, up from 64% in 2023 [10][30] - Operating expenses were reduced by 6% to $9.7 million in 2024, leading to a net loss improvement to $4.3 million or $2.85 per share, compared to a net loss of $8.5 million or $21.21 per share in 2023 [11][30] Business Line Data and Key Metrics Changes - License fee revenue in Q4 2024 increased by 77% to $1 million, while lower-margin services revenue decreased by 28% to $344,000 [27] - Hardware revenue declined significantly by 88% to $94,000 in Q4 2024, reflecting a lack of large expansion orders compared to the previous year [27][30] Market Data and Key Metrics Changes - The company is seeing increased demand for its passwordless, phoneless, and tokenless authentication solutions, particularly in the Middle East and Asia [14][20] - A notable contract was secured with a foreign financial services client worth $910,000, enhancing the company's presence in the financial sector [15] Company Strategy and Development Direction - The company has exited low-margin software and services relationships to focus on core solutions like PortalGuard IAM and identity-bound biometrics, which offer higher gross margins [9][10] - There is a strategic focus on expanding into emerging markets, including IoT solutions and partnerships with innovative technology developers [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing encouraging order activity and customer interest in their solutions [12][20] - The company anticipates a return to growth and improved profitability in 2025, with a focus on managing operating costs and investing in R&D [23][49] Other Important Information - The company reduced its outstanding debt to approximately $730,000 from $1.5 million at the end of 2024, strengthening its financial position [7] - The company launched PortalGuard IDAS on the AWS marketplace, enhancing its subscription-based business model [22] Q&A Session Summary Question: Clarification on 10-K filing and restatements - The company confirmed that the 10-K is expected to be filed on Monday and that there are no new restatements beyond those previously disclosed [34][35] Question: Changes in revenue expectations for 2024 - Management explained that the exit from the Swivel Secure business resulted in a revenue delta of about $800,000 to $900,000 for the full fiscal year, impacting overall revenue expectations [39][41] Question: Outlook for hardware and services revenue - Management indicated that growth is expected in both hardware and services revenue in 2025, with hardware sales becoming more integrated into contracts [55] Question: Details on the $910,000 contract - A significant portion of the $910,000 contract will be recognized in Q1 2025, with about $250,000 recognized in Q4 2024 [57] Question: Update on Nigerian ID plans - Management noted ongoing discussions with the World Bank regarding ID plans in Nigeria, with potential for future sales of hardware [68][72]

Financial Data and Key Metrics Changes - The company improved its gross profit by 8% to $5.4 million in 2024, resulting in an adjusted gross margin of 78% compared to 64% in 2023 [10][30] - The net loss for 2024 improved to $4.3 million or $2.85 per share from a net loss of $8.5 million or $21.21 per share in 2023 [30] - Cash burn was reduced by 23% to $2.9 million in 2024 from $3.8 million in 2023 [11] Business Line Data and Key Metrics Changes - High-margin software license fee revenue increased by 20% to $5.2 million in 2024, while service revenue declined to $1.1 million from $2.2 million in 2023 [10][26] - In Q4 2024, license fee revenue increased by 77% to $1 million, while lower-margin services decreased by 28% to $344,000 [27] Market Data and Key Metrics Changes - The company is seeing growing demand for its passwordless, phoneless, and tokenless authentication solutions, particularly in the Middle East and Asia [14][20] - The company secured a $910,000 contract with a foreign financial services client to implement biometric identification technology [15] Company Strategy and Development Direction - The company exited low-margin software and services relationships to focus on core solutions like PortalGuard IAM and identity-bound biometrics, which have stronger technology and higher gross margins [9][10] - The company is exploring future business opportunities in emerging markets, including IoT solutions and drone technology [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing encouraging order activity and customer interest in their solutions [12][20] - The company expects to return to growth and improve profitability in 2025, with a focus on managing operating costs and investing in R&D [23][49] Other Important Information - The company reduced its outstanding debt to approximately $730,000 from $1.5 million at the end of 2024 [7] - The company launched PortalGuard IDAS on the AWS marketplace, enhancing its subscription-based business model [22] Q&A Session Summary Question: Clarification on 10-K filing and restatements - The company confirmed that the 10-K is expected to be filed on Monday and that there are no new restatements [35] Question: Changes in revenue expectations for 2024 - Management explained that the transition from the Swivel Secure business caused a revenue delta of about $800,000 to $900,000 for the full fiscal 2024 [39] Question: Outlook for hardware and service revenue - Management expects growth in both hardware and service revenue in 2025, with hardware sales becoming more integrated into contracts [55] Question: Details on the $910,000 contract - A significant portion of the $910,000 contract will be recognized in Q1 of 2025, with about $250,000 recognized in Q4 2024 [57] Question: Update on Nigeria ID plans - Management noted ongoing discussions with the World Bank regarding ID plans in Nigeria, but no specific updates on contracts [68]