Q1 2025 BIO-key International Inc Earnings Call

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Okay.

Operator: Good morning, everyone.

Good morning, everyone.

Operator: Thank you for standing by and welcome to BIO-key International's first quarter 2025 conference call. Story Management's prepared remarks, all participants will be in listen-only mode. Afterwards, listeners will be invited to participate in a question and answer session.

Speaker Change: Thank you for standing by and welcome to Bio key Internationals first quarter 2025 conference call.

Speaker Change: During managements prepared remarks, all participants will be in listen only mode.

Speaker Change: Afterwards listeners will be invited to participate in a question and answer session.

Operator: As a reminder, this conference is being recorded today, Friday, May 16, 2025.

Speaker Change: As a reminder, this conference is being recorded today Friday May 16 2025.

William Jones: I will now turn the call over to Bill Jones, Investment Relations. You may proceed, sir.

Speaker Change: I will now turn the call over to Bill Jones Investor Relations you May proceed Sir.

Bill Jones: Thank you Rocco.

William Jones: Thank you, Rocco. Hosting today are BIO-keys Chairman and CEO Mike DePasquale and CFO Cece Welch.

Speaker Change: Hosting today are <unk>, chairman and CEO, Mike D Pasquale and CFO Cc Welch.

William Jones: As a reminder, today's conference call and webcast and answers to investor questions include forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially from current expectations. Words including anticipate, believe, estimate, expect, plan, and project, or similar words, generally identify and express such forward-looking statements.

Speaker Change: As a reminder, today's conference call and webcast and answers to Investor questions include forward looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially from current expectations words, including anticipate believe estimate expect plan ample.

Speaker Change: Jack.

Speaker Change: Similar words generally identifier and express such forward looking statements.

William Jones: These forward-looking statements are made based on beliefs, assumptions, and information currently available to management today, pursuant to the safe harbor provisions of the Private of the risks and uncertainties that affect future performance of BIO-key, please see risk factors in the company's annual report as filed on Form 10-K with the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on forward-looking statements which speak only as of today. The company undertakes no obligation to revise or disclose revisions to forward-looking statements to reflect circumstances or events that may occur during today's conference call.

Speaker Change: These forward looking statements are made based on beliefs assumptions and information currently available to management today pursuant to the Safe Harbor provisions of the private Securities Litigation Reform Act of $19 95 for a more complete description of the risks and uncertainties that affect future.

<unk> performance of bio key please see risk factors in the company's annual report filed on Form 10-K with the Securities Exchange Commission.

Speaker Change: And as a function not to place undue reliance on forward looking statements, which speak only as of today. The company undertakes no obligation to revise or disclosed revision to forward looking statements to reflect.

Speaker Change: For instance, or events that may occur after today's conference call.

Michael DePasquale: Now I will turn the call over to Mike to begin. Mike. Thanks, Bill. And thank you all for joining today's call.

Mike: Now I will turn the call over to Mike to begin Mike.

Mike: Thanks, Bill and thank you all for joining today's call. After my remarks, I'll turn the call over to C. C for a financial overview and then we will open the call for Investor questions.

Michael DePasquale: After my remarks, I'll turn the call over to Cece for a financial overview. And then we will open the call for investor questions. Our Q125 revenue rose 10% to $1.6 million versus Q4-24 as we continue our transition to selling high margin BIO-key branded products in the EMEA region. Our year-over-year revenue comparison, however, was impacted by $1.2 million in revenue in Q1 last year for a two-year follow-on contract with a financial services customer. Importantly, the same customer has upgraded their engagement to include our more advanced one-to-many biometric authentication solution, resulting in Q1 2025 revenue of $690,000.

Mike: Our Q1, 'twenty five revenue rose, 10% to $1 6 million versus Q4, 'twenty four as we continue our transition to selling high margin Baidu keep branded products in the EMEA region.

Mike: Our year over year revenue comparison, however was impacted by $1.2 million in revenue in Q1 last year for a two year follow on contract with a financial services customer importantly, the same customer has upgraded their engagement to include our more advanced.

Mike: One to many biometric authentication solution.

Mike: <unk> in Q1, 'twenty five revenue up $690000, but accounting for much of our year over year revenue decrease.

Michael DePasquale: But accounting for much of our year-over-year revenue decrease. This enhanced fingerprint-only biometric ID system requires no card or account number for client identification, just a fingerprint scan. The solution will shave 30 seconds from each client interaction, providing increased security and an improved customer experience, while also delivering substantial long-term personnel savings for our customer. This is a very compelling use case that should offer BIO-key significant new revenue opportunities across a whole new plethora of opportunities, again, in the same industries and others as well. Importantly, based on the customer's expanded deployment of our identity-bound biometric technology, we expect revenue from this customer to more than double to approximately $3 million for the next two-year license period, starting in Q1-26, up from the $1.2 million in Q1-24.

This enhanced fingerprint only biometric IV system requires no card or account number for client identification just the fingerprint scanner.

Mike: The solution will shape 30 seconds from each client interaction, providing increased security and an improved customer experience. While also delivering substantial long term personnel savings for our customer. This is a very compelling use case that should offer bio key significant new revenue opportunities.

Mike: Across our whole new plethora of opportunities again in the same industry and others as well importantly, based on the customer's expanded deployment of our identity bound biometric technology, we expect revenue from this customer to more than double to approximately.

Mike: <unk> $3 million for the next two year license period, starting in Q1 26 up from the $1 $2 million. In Q1 24 that is very very positive and represents nearly half of what our total revenue number was last year.

Michael DePasquale: That is very, very positive and represents nearly half of what our total revenue number was last year. Our gross profit remained healthy in Q1 at 83% due to our high-margin software-as-a-service model, and we were able to reduce our SG&A expense by 23% year-over-year. Our cash position increased substantially in Q125 to over $3 million, reflecting proceeds from wiring exercises early in the quarter. We also reduced our note payable by more than half from year-end 2024 to a balance of approximately $762K on the original $2.3M note.

Mike: Our gross profit remained healthy in Q1 at 83% due to our high margin software as a service model and we were able to reduce our SG&A expense by 23% year over year.

Mike: Our cash position increased substantially in Q1, 'twenty five to over $3 million, reflecting proceeds from warrant exercises early in the quarter.

Mike: We also reduced our note payable by more than half from year end 2024 to a balance of approximately 762 K on the original $2 3 million dollar note.

Michael DePasquale: These balance sheet improvements provide solid support for the company as we pursue new growth opportunities. We're seeing solid traction for our identity-bound biometric solutions in key verticals such as defense and financial services, both of which require the highest levels of security and privacy. These customers are drawn by our unique ability to authenticate the individual seeking data or network access, rather than alternate solutions that rely on alternate factors far more prone to being compromised. We now support secure biometric authentication for multiple foreign, national, and international defense and police organizations who trust BIO-key solutions, and we are working to build on these powerful endorsements in our business development efforts.

Mike: These balance sheet improvements provides solid support for the company as we pursue new growth opportunities.

Mike: We're seeing solid traction for our identity bound biometric solutions in key verticals, such as defense and financial services, both of which require the highest levels of security and privacy.

Mike: These customers are drawn by our unique ability to authenticate the individuals seeking data or network access rather than alternate solutions that rely on alternate factors far more prone to being compromised.

Mike: We now support secure biometric authentication for multiple foreign National and International Defense and police organizations, who trust <unk> solutions and we are working to build on these powerful endorsement and our business development efforts.

Michael DePasquale: During the first quarter, the National Bank of Egypt began integrating BIO-key's industry-leading PortalGuard IAM platform. The project was led by our partner, RIA Information Technology, leveraging PortalGuard's advanced IAM, MFA, and SSO capabilities to secure the digital identities of the bank's 30,000 employees.

Mike: During the first quarter the National Bank of Egypt began integrating <unk> industry, leading portal guard I E M platform the.

Mike: The project was led by our partner riot information technology, leveraging portal guides advanced I E. M F. A MFA and SSO capabilities to secure their digital identities of the bank's 30000 employees.

Michael DePasquale: Down the road, we believe there's significant upside potential for this solution to be rolled out to the bank's end-users as the bank gains more experience with our solution and we work to progress that relationship. We're also working to build our base in the government sector, which includes federal agencies as well as state, local, and education, or SLED markets. Domestically, we serve over 100 educational institutions with over 4 million in use. These customers value BIO-key security, ease of use, and flexibility, including our support for 17 different authentication factors. which together provide a compelling solution with an attractive return on investment.

Mike: Down the road, we believe there's significant upside potential for this solution to be rolled out to the banks and users.

Mike: As the bank gained more experience with our solution and we work to progress that relationship.

Mike: We're also working to build our base in the government sector, which includes federal agencies as well as state local and education or sled markets.

Mike: Domestically, we serve over 100 educational institutions with over 4 million end users. These customers value bio key security and ease of use and flexibility, including our support for 17 different authentication factors, which together provide a compelling solution with an attractive return.

Mike: Turn on investment.

Michael DePasquale: Given increasing bans on the use of cell phones in schools, there's a growing interest in our passwordless, phoneless, and tokenless authentication solutions to meet pressing security and usability challenges. In Q125, the Wyoming Department of Education deployed Portal Guard IDAS to support up to 20,000 end-users. Additionally, many of our existing college and university customers are migrating from our on-prem solution to PortalGuard iDAS, further expanding our base of recovering revenue. Also during Q1, we executed a strategic partnership and joint purchase agreement with California's EdTech Joint Powers Authority, enabling PortalGuard to become an approved solution for 195 K-12 schools and school districts that serve over 2.6 million students in California.

Mike: Giving increasing bands on the use of cell phones and schools.

Mike: A growing interest in our password list boneless and token lists authentication solutions to meet pressing security and usability challenges.

Mike: In Q1, 'twenty five the Wyoming Department of Education deployed portal Guard I'd ask to support up to 20000 end users. Additionally, many of our existing college and University customers are migrating from our on Prem solution to Porto God I Dash further <unk>.

Mike: Spanning our base of recurring revenue.

Mike: Also during Q1, we executed a strategic partnership and joint purchase agreement with California's Ed Tech Joint Powers authority, enabling portal guard to become an approved solution for 195, K 12 schools and school districts that serve over $2 6 million student.

In California.

Michael DePasquale: Member schools are able to access the JPA website to easily purchase and deploy approved solutions.

Mike: Member schools are able to access the J P. A website to easily purchase and deploy approve solutions.

Michael DePasquale: We believe BIO-key is uniquely positioned to comply with the California phone-free schools regulations which limit or prohibit smartphone use in schools by July of 2026. Whereas most competing solutions rely on phone authenticators or hardware security neither of which are practical solutions in school.

We believe bio key is uniquely positioned to comply with the California phone free schools regulations, which limit or prohibit smartphone Houston schools by July of 'twenty 'twenty six.

Mike: Whereas most competing solutions rely on phone authentication authenticators or hardware security keys, neither of which are practical solutions in school. So this could be a significant opportunity for us.

Michael DePasquale: So this could be a significant opportunity for us. From a strategic standpoint, we are particularly encouraged about the growth opportunities in the EMEA regions of Europe, the Middle East and Africa, where we have been seeing improving traction and a particular interest in our differentiated identity bound biometrics capability. We have refocused our efforts on BIO-key branded solutions in those markets, following our transition away from swivel secure license solutions and services, beginning in the latter half of 2024. While this transition has resulted in some challenging year over year revenue comparisons, it has focused our sales and marketing efforts, while providing us greater control and much stronger margin profile.

Mike: From a strategic standpoint, we are particularly encouraged about the growth opportunities in the EMEA regions of Europe, the Middle East and Africa, where we had been seeing improving traction and of particular interest in our differentiated identity bound biometrics capabilities, we have refocused our efforts on <unk>.

Mike: Branded solutions in those markets following our transition away from swivel secure license solutions and services beginning in the latter half of 2024, while this transition has resulted in some challenging year over year revenue comparisons. It has focused our sales and marketing efforts, while providing us.

Mike: Greater control and much stronger margin profiles.

Michael DePasquale: We expect our expanding EMEA group to return to growth with enhanced margins as we progress through 2025. For many years, we've been highlighting the growing IT security risks and demonstrated vulnerabilities of many widely deployed IAM solutions, and yet we have been amazed by the limited forward movement by enterprises to address these risks. The good news is that we are finally starting to see governments and enterprises taking action to protect their data and networks with more powerful, more strong IAM solutions like our Identity-Bound Biometrics. From our vantage point, C-suites and boards around the world are increasingly recognizing the limitations of legacy authentication methods relying on passwords, PINs, tokens, cards, or mobile devices.

Mike: We expect our expanding EMEA group to return to growth with enhanced margins as we progress through 2025.

Mike: For many years, we've been highlighting the growing security risks and demonstrated vulnerabilities of mentally many widely deployed I E M solutions and yet we have been amazed by the limited forward movement by enterprises to address these risks. The good news is that we are finally, starting to see governments.

Mike: And enterprises, taking action to protect their data and networks with more powerful more strong I E M solutions like our identity bound biometrics.

Mike: From our vantage point C suites and boards around the world are increasingly recognizing the limitations of legacy legacy authentication methods relying on passwords pins tokens cards or mobile devices as well as the risks vulnerabilities and the cost of inaction.

Michael DePasquale: as well as the risks, vulnerabilities, and the cost of inaction. We are seeing this in our discussions with customers, prospects, and our channel alliance partners, and more importantly, in customer action, including some of the world's most sophisticated defense agents. that we are serving.

Mike: We are seeing this in our discussions with customers prospects and our challenge Channel Alliance partners and more importantly in customer action, including some of the world's most sophisticated defense agencies.

Mike: That we are serving.

Michael DePasquale: BIO-key offers a powerful suite of IAM solutions that meet these challenges and we expect the move to passwordless, boneless and tokenless authentication solutions will offer continued opportunity for us to grow and gain traction in 2025 and beyond.

Mike: <unk> offers a powerful suite of I E M solutions that meet these challenges and we expect the move to password list boneless and token with dedication solutions will offer continued opportunity for us to grow and gain traction in 2025 and beyond.

Michael DePasquale: Given this backdrop, our improved balance sheet, and our expanding base of recurring I-DAS revenue, We feel BIO-key is well positioned to achieve improved top and bottom line results. Given our size and variable timing of large customer orders and renewals, we expect our financial performance to fluctuate quarter-to-quarter as it has been.

Mike: Given this backdrop, our improved balance sheet and our expanding base of recurring I Das revenue, we feel <unk> is well positioned to achieve improved top and bottom line results.

Mike: Given our size and variable timing of large customer orders and renewals, we expect our financial performance to fluctuate quarter to quarter as it has been.

Michael DePasquale: but supported by this growing base of recurring revenue, which is over $6 million right now, we think we're going to become more stable.

Mike: But supported by this growing base of recurring revenue, which is over $6 million right. Now we think we're going to become more stable.

Speaker Change: Now I will hand, the call over to CFO to our CFO Cc Welch to our review of our financial position and then we will open the call to questions.

Cecilia Welch: Now, I will hand the call over to CFO, to our CFO, Ceci Welch, to review our financial position, and then we'll open the call to questions. Thank you, Mike. Our results were released after the market closed yesterday, along with the filing of our Now let me review some of the operating highlights.

Speaker Change: D C.

C.C. Welch: Thank you Mike.

C.C. Welch: Our results were released after the market closed yesterday, along with the filing of our 10-Q now let me review some of the operating highlights.

Cecilia Welch: As mentioned, we exited the EMEA swivel secure services agreement as related to royalty structure and fees created a fairly low margin business and we reallocated resources towards the BIO-key branded business. While the termination has created some revenue headwinds in the later half of 2024 and Q1 2025, it will strengthen our business longer term, focusing our activities on BIO-key solutions with superior capabilities and enhanced margins. As Mike discussed, our Q1 revenue comparison was impacted by roughly half a million year-over-year decrease in revenue recorded in a financial services customer. The decrease resulted in the timing of revenue recognition from the customer that is actually expanding their deployment of BIO-key technology.

C.C. Welch: As mentioned, we exited EMEA swivel secure services agreement as it related to royalty structure and he's created a fairly low margin business and we reallocated resources towards the biotech branded business.

C.C. Welch: While the termination has created some revenue headwinds in the later half of 2024 in Q1 2025.

C.C. Welch: It will strengthen our business longer term focusing our activities on Iot solutions with superior capabilities and enhanced margins.

C.C. Welch: As Mike discussed our Q1 revenue comparison was impacted by roughly half a million year over year decrease in revenue recorded in our financial services customer.

C.C. Welch: The decrease resulted from the timing of revenue recognition from the customer that is actually expanding their deployment of Iot technology.

Cecilia Welch: Given that impact and the transition to BIO-key solutions, our EMEA territories in our AMIA territories. Our Q125 revenue decreased to $1.6 million in Q125 compared with $2.2 million in Q120-24. Q125 service revenues increased to approximately $273,000 from $213,000 in Q124. Recurring support service revenue increased 37% to $265,000. due to the incremental support services for a large customer. Non-recurring service revenue decreased by 12%.

C.C. Welch: Given that impact and the transition to biotech solutions Army of territory.

C.C. Welch: In our EMEA territory.

C.C. Welch: Our Q1 'twenty five revenue decreased one to $1 6 million in Q1, 25, compared with $2 2 million in Q1 2024.

C.C. Welch: Q1, 25 service revenues increased to approximately 273000 from 213000 in Q1 24.

C.C. Welch: Recurring support service revenue increased to 37% to 265.

C.C. Welch: Yeah.

C.C. Welch: <unk> thousand due to the incremental support services for a large customer service agreement.

C.C. Welch: Nonrecurring services revenue decreased by 12.

C.C. Welch: <unk> thousand during the integrated wind.

Cecilia Welch: Microsoft Office Word MSWordDoc Word.Document.8 down of a civil secure customer. Hardware revenue increased to $236,000 in Q125 from $18,000 in Q124. do largely to increase purchases of fingerprint biometric scanners to support expanded deployment of our identity-bound biometric solutions. Gross margin declined to $1.3 million in Q1 2025. from 1.9 in Q1-24, principally due to the decrease in total revenue, as well as the modest decline in gross margin to 82.6% in Q1-25 versus 86.3% in Q1-24, reflecting an increase in low margin hardware as a percentage of revenue in the respective period. BIO-key reduced operating expenses by approximately 18%, or $422,000, to $2,000,000 in Q1-25, primarily due to reduction in SG&A expenses of 23%, or $410,000, reflecting lower admin expenses, sales personnel costs, and professional service fees.

C.C. Welch: Down of a security.

C.C. Welch: It all secure customer.

C.C. Welch: Hardware revenue increased to 236000 in Q1 25 from 18000 in Q1 24.

C.C. Welch: Likely to increase purchases of fingerprint biometric scanners to support expanded deployment of identity bond biometric solutions gross margin declined to $1 3 million in Q1 25.

C.C. Welch: From one nine in Q1, 'twenty four principally due to the decrease in total revenue as well as a modest decline in gross margin to 82, 6% in Q1 25 versus 86, 3% in Q1 2012, reflecting an increase in lower margin hardware as a percentage of.

C.C. Welch: Revenue in the respective periods.

C.C. Welch: Iot reduced operating expenses by approximately 18% or 422000.

C.C. Welch: Two 2 million in Q1, 'twenty five primarily due to reduction in SG&A expenses of 23% to 410000.

C.C. Welch: The lower admin expenses sales personnel costs and professional service fees.

Cecilia Welch: Reflecting lower revenues partially offset by lower operating costs, BIO-key's Q125 net loss increased to approximately $737,000 or $0.16 per share versus a loss of $573,000 or $0.32 per share in the prior year period.

C.C. Welch: Reflecting lower revenues.

C.C. Welch: It was partially offset by lower operating costs <unk> Q1, 'twenty five net loss increased to approximately 737000 or 16 cents per share.

C.C. Welch: A loss of 573000 about 32% in the prior year period.

C.C. Welch: Her share amounts are based on $4 7 million weighted average shares outstanding in Q1, 25 compared to $1 6 million weighted average shares outstanding in Q1, 'twenty four principally reflecting the share increase pursuant to the warrant exercise.

C.C. Welch: 'twenty 'twenty.

C.C. Welch: Q1 2025.

Cecilia Welch: In January 2025, the exercise of warrants priced at $1.85 per share generated gross proceeds of approximately $3.8 million before agent fees and offering expenses. As of March 31st, 2025, BIO-key has current assets of $4.6 million, including $3.1 million of cash up from the current the current assets of $1.9 million, including $4 million in cash.

C.C. Welch: In January 25 exercisable.

C.C. Welch: Exercise of warrants priced at $8 85 per share generated gross proceeds of approximately $3 8 million before agencies and offering expenses.

C.C. Welch: As of March 31st 2025, biotech has current assets of $4 6 million, including $3 1 million of cash up from the parent.

C.C. Welch: Current assets of $1 9 million, including $4 million in Clos.

Cecilia Welch: This concludes my prepared remarks.

C.C. Welch: This concludes my prepared remarks, operator, please prepare for Q&A session.

Operator: Operator, please prepare for Q&A session. Thank you.

C.C. Welch: Thank you.

Operator: If you would like to ask a question, please press star then 1 on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from queue, please press star then 2. Once again, ladies and gentlemen, that's star then 1 if you have a question.

Speaker Change: Wanted to ask a question. Please press Star then one on your color for key pad.

Speaker Change: My question has already been addressed you'd like to remove yourself from queue. Please press Star then two.

Speaker Change: Once again, ladies and gentlemen that started I wonder if you have a question.

Operator: And we'll pause for just a moment to assemble our roster.

Speaker Change: We'll pause for just a moment to assemble our roster.

Speaker Change: And today's first question comes from Jack Vander Ark with Maxim Group. Please go ahead.

Jack Aarde: And today's first question comes from Jack Vandersarb with Maxim Group. Please go ahead. Okay, good morning. Great. I appreciate the update, guys. Thanks for taking my questions. So, Mike, that large customer that you referenced contributed $690,000 in the first quarter of this year. Last year, I guess it was 1.2 million in the first quarter, 24. And you mentioned the upgraded, I believe, and you also expect them to renew, I guess, at a larger contract of $3 million over a two-year period. I think you said as of 1Q26. So a couple things. Is that correct, 1Q26?

Speaker Change: Okay. Good morning, Great I appreciate the update guys.

Speaker Change: Thanks for taking my question, so Mike that large customer that you referenced contributed $690000 in the first quarter of this year last year did I guess it was $1 2 million in the first quarter 'twenty four and you mentioned the upgraded I believe in <unk>.

Speaker Change: You also expect them to renew I guess at any larger contract of $3 million over a two year period I think you said.

Speaker Change: As of <unk> 26.

Speaker Change: So a couple of things is that correct well into 'twenty six and then do you expect any other revenue this year from that customer.

Jack Aarde: And then do you expect any other revenue this year from that customer? And is this your single largest customer?

Speaker Change: And is this your single largest customer.

Michael DePasquale: great great so thanks Jack and good morning. So yes it is now our single largest customer so we'll get that out of the way they've upgraded to our latest technology which is fundamentally doubled the ARR so on an annual basis they went from about 600-700 thousand dollars to approximately 1.4 or 1.5 million dollars and so we've been working with this customer for many many years this upgrade which is what they paid for in the first quarter right on an annual basis about 700 thousand dollars in Q1 will now represent in Q1 of 26 right so fundamentally 9 months from now give or take about a 3 million dollar renewal and if they do a 2 year that will be 3 million dollars they'll pay up front if they do an annual contract it may be a little bit more and it will be paid annually but it will be at least a million and a half dollars.

Speaker Change: Well good question great great. So.

Speaker Change: Thanks, Jack and good morning, So yes. It is now our single largest customer so we'll get that out of the way.

Speaker Change: They've upgraded to our latest technology, which is fundamentally doubled the AAR or so on an annual basis.

Speaker Change: They went from about 600 to $700000 to approximately one point for $1.5 million and so we've been working with this customer for many many years this upgrade.

Speaker Change: Which is what they paid for in the first quarter right on an annual basis about $700000 in Q1.

Speaker Change: We will now represent in Q1 up 26, right. So fundamentally nine months from now give or take about a 3 million dollar renewal and if they do a two year that'll be $3 million they'll pay upfront.

Speaker Change: If they do an annual contract it may be a little bit more and it will be paid annually, but it will be at least a million and a half dollars in a in a R. R and revenue in cash the bio key and obviously, it's all margin it's all software so.

Michael DePasquale: in ARR and revenue and cash to BIO-key and obviously it's, you know, all margin, it's all software. So, uh, very, very positive.

Speaker Change: Very positive.

Speaker Change: Okay, Great and then maybe just to follow up on the 125 revenue. So just trying to get a sense of the rest of the attribution there.

Jack Aarde: Okay, great. And then maybe just to follow up on the 1Q25 revenue. So just trying to get a sense of the rest of the attribution there. So outside of 690K, that leaves about another 900,000 of revenue generated in the quarter. So what was the bulk of this? Was it Wyoming Department of Education? Was it National Bank of Egypt? Was it kind of half and half there? Or was there a bunch of other fragmented or little revenues as well? Just how I understand the rest of the revenue. James Sullivan, BIO-key Intl Yeah, yeah, it's a mix.

Speaker Change: So outside of 690 K that leaves about another 900000 of revenue generated in the quarter.

Speaker Change: So what what was the bulk of this was it was at Wyoming Department of Education was at National Bank of Egypt was it kind of half and half there or was there a bunch of other fragmented or little revenues as well just so I understand the rest of the revenue yeah. Yeah. It's a mix. So we have we have service and maintenance.

James Sullivan: So you know, we have, we have service and maintenance revenue. We have new customer revenue like Wyoming and National Bank of Egypt. We have upgrades to our, you know, install base, as I mentioned in my prepared remarks, right, we're moving customers from on prem into up into our IDAS, which is an upsell generates more revenue for us. And again, commits customers to sometimes multi year contracts. So it was really a mix of everything.

Speaker Change: Maintenance revenue, we have new customer revenue like Wyoming and National Bank of Egypt.

Speaker Change: We have upgrades.

Speaker Change: To our installed base as I mentioned in my prepared remarks, right. We're moving customers from on Prem into up into our I Das, which is an up sell generates more revenue for us and again commits.

Speaker Change: Customers too sometimes multiyear contracts. So it was really a mix of everything.

Speaker Change: Okay great.

Unknown Attendee: Okay, great. And can you just touch on two, is the Wyoming, will the Wyoming Department of Education National and the National Bank of Egypt, will these contribute to 2Q revenue, or were these 1Q events? Unknown Attendee They were 1Q events. and you know, Egypt, there might be some, you know, continuing opportunity, right for upgrades, enhancements and all that stuff. But Wyoming, I believe, signed a multi year agreement. And the revenue for that opportunity was taken in the first quarter. Obviously, there's deferral, there's some deferred revenue on that we carve out of contracts for support, but fundamentally, it's Q1.

Speaker Change: Can you just touch on too is the Wyoming, well, the Wyoming Department of education National in the National Bank of Egypt, well. These contribute to <unk> revenue or are these <unk> events. They were one Q events.

Speaker Change: And.

Speaker Change: Egypt, there might be some continuing opportunity right for upgrades enhancements and all that stuff, but Ah Wyoming I believe.

Speaker Change: Signed a multi year agreements.

Speaker Change: And the revenue for that opportunity was taken in the first quarter, obviously, there's deferral, there's some deferred revenue on that.

Speaker Change: That we carved out of contracts for support but.

Speaker Change: Fundamentally it's Q1 event.

Speaker Change: Okay great.

Jack Aarde: Okay, great.

Michael DePasquale: Um, and then I haven't really heard it explicitly mentioned, and maybe I apologize if I missed this, but can you maybe just touch on on PASS-QU again, that solution you announced originally back in June of 2024. What's the latest with PASS-QU? Well, passkeys are getting pretty widely adopted across the board. And the unique value that we provide with our passkey solution is that a biometric can become a passkey and it can be a FIDO authenticator, right? So it's very, very unique difference from someone using a passkey with a phone or their computer. So it's something that we can sell to virtually any customer, no matter what current security infrastructure they may be using.

Speaker Change: And then.

Speaker Change: I haven't really heard anything explicitly mentioned and maybe I apologize if I missed this but can you maybe just touch on past key you again that solution you announced originally back in June of 2024.

Speaker Change: The latest pass key U.

Speaker Change: While past dues are getting pretty widely adopted across the board and the unique value that we provide with our <unk> solution is that.

Speaker Change: A biometric can become a passkey and it can be a fido authenticator right. So it's very very unique difference from.

Speaker Change: From someone using a pass key with a phone or their computer. So it's something that we can sell to virtually any customer no matter what.

Speaker Change: Current security infrastructure, they may be using so they may be using something from sailpoint or for drop or even after or paying or duo we can layer on our pasty solution on top of that in areas in their enterprise or their government agency, where they can't use a phone.

Michael DePasquale: So they may be using something from SailPoint or ForgeRock or even Opta or Ping or Duo. We can layer on our passkey solution on top of that in areas in their enterprise or their government agency where they can't use a phone. They can't use a hardware token because it's not allowed or it's just not practical, like on the manufacturing floor or in the call center where you don't want anyone using a cell phone or mobile phone there, right? You literally disable the network inside a call center. So we have something here that's very, very unique and that can be applied across the board throughout, again, enterprise and government opportunities.

Speaker Change: They can't use our hardware token because it's not allowed or it's just not practical like on the manufacturing floor or in the call Center, where you don't want anyone using a cell phone or mobile phone their right you're literally disable the network inside of call Center. So we <unk>.

Speaker Change: Have something here thats very very unique and that can be applied across the board in throughout again enterprise and government opportunities and we're starting to see some really good traction and interest for it and we think that has a really good is a really good play for us going forward.

Michael DePasquale: And we're starting to see some really good traction and interest for it. And we think that has a really good, it is a really good play for us going forward.

Speaker Change: But I think the biggest opportunity for us is really it's almost amazing to me because I've been at this for 20 years.

Michael DePasquale: But I think the biggest opportunity for us is really, and it's almost amazing to me because I've been at this for 20 years, the core technology that we developed. over the last 20 plus years is now being widely, widely viewed as the most secure and most convenient option for enterprises and government agencies. they realized that provisioning using mobile phones, not having control over the networks, present a huge security risk. that, you know, herein lies a really big opportunity.

Speaker Change: The core technology that we developed.

Speaker Change: Over the last 20 plus years is now being widely widely viewed as the most secure and most convenient option for enterprises and government agencies, they realized that provisioning keys, using mobile phones, not having control over their networks.

Speaker Change: Present, a huge security risk and.

Speaker Change: Herein lies a really big opportunity the second thing is.

Michael DePasquale: The second thing is. Think about all of, especially in EMEA, all of the countries. that are being somewhat forced, right, by our actions here in the U.S. to step up. their defense and security posture and the money that's being allocated to do that. I believe in Germany they said they would spend a trillion dollars over the next 10 years enhancing their defense. In Spain, just two weeks ago, our managing director was at a conference there with the former Prime Minister of Spain and the new regime there, and they are going to double their defense budgets in the coming quarters through this year and into next year and beyond.

Speaker Change: Think about.

Speaker Change: All of especially in EMEA.

Speaker Change: All of the countries now that are being.

Speaker Change: Somewhat forced right by our actions here in the U S to step up their defense and security posture.

Speaker Change: And the money that's being allocated to do that I believe in Germany. They said they would spend a trillion dollars over the next 10 years enhancing their defense in Spain, just two weeks ago, our managing director was at a conference there are with the former prime.

Speaker Change: Stir of Spain, and the new regime, there and they are going to double their defense budgets in the coming you know.

Speaker Change: Quarters through this year and into next year and beyond so that is a huge opportunity we built a really nice base.

Michael DePasquale: So that is a huge opportunity. We built a really nice base of defense related. Security related agencies and now we can really take advantage of that and leverage that and we have a very strong team and a very strong partner network in Europe to be able to do that.

Speaker Change: <unk> defense related security related.

Speaker Change: Agencies and now we can really take advantage of that and leverage that and we have a very strong team and a very strong partner network in Europe to be able to do that.

Speaker Change: Okay.

Jack Aarde: Okay. That's really interesting, Mike. I could probably ask a bunch more questions on that front, but maybe I'll ask you, how do you see those opportunities in different regions, different governments, stepping up their budgets for defense? How do you see those opportunities, the magnitude of those potential opportunities, compared to, say, the largest customer that we talked about that's going to renew on a three-year contract, or a $3 million contract coming up in 1Q26, or like the Bank of Egypt? How do you see those opportunities? I mean, are these real game-changers, in your view, from a revenue scale?

Speaker Change: Okay, that's really interesting Mike.

Speaker Change: I could probably ask a bunch of more questions on that front, but maybe maybe I'll ask you how do you see those opportunities.

Speaker Change: In different regions different governments stepping up their budgets for defense.

Speaker Change: Do you see those opportunities.

Speaker Change: The magnitude of those potential opportunities compare to say the largest customer that we talked about that's going to renew on a three year contract alright, a $3 million contract coming up in <unk> 26, or like the bank of Egypt, How did you see those opportunities.

Speaker Change: These real game changers in your view.

Speaker Change: From a revenue scale.

Unknown Attendee: Any idea of how Unknown Attendee, Jack Aarde, Cecilia Welch, Michael DePasquale, James Sullivan, BIO-key Unknown Attendee, Jack Aarde, Cecilia Welch, Michael DePasquale, James Sullivan, BIO-key Intl Yeah, well, first of all, pretty quickly, you'll hear more about that from us as we're able to obviously discuss them, you know, one of the biggest challenges in that space is secrecy, right? It's very, very difficult to talk about those and those agencies are typically not desirous of disclosing that. But we have a defense ministry that's done millions with us over the last probably three or so years, and we think they can do millions with us over the next year or two.

Speaker Change: And in any any idea of like how.

Speaker Change: Attainable. They are how quickly you can maybe penetrate some of those opportunities.

Speaker Change: Well first of all pretty quickly you'll hear more about that from us as we're able to obviously discuss them you know one of the biggest challenges in that spaces secrecy right. It's very very difficult to talk about those things and those agencies are typically not desirous of disclosing that.

Speaker Change: But we Havent defense Ministry, that's done millions with us over the last probably three or so years and we think they can do millions with us over the next year or two the size of these deals you know some of them in small countries could be.

Michael DePasquale: The size of these deals, you know, some of them in small countries could be a half a billion dollars to start or larger. They're typically recovering revenue. They are mostly including our biometric technology, which means there's potential for not only recovering software, but also hardware sales. And if you look at our, you know, gross margins, blended gross margins, you know, we're 82% this quarter. That's with hardware. So these are sizable opportunities, game changers. And I think they could dramatically change the profile of the company. If you look at what we've been able to do in the context of scaling our expenses now, given we've invested very, very heavily in development, in developing our technology, you know, a little bit of scale here gets us to our endgame of profitability very, very quickly.

Speaker Change: I have a million dollars to start or or larger.

Speaker Change: They're typically recurring revenue they are mostly including our biometric technology, which means there is potential for not only recurring software, but also hardware sales and if you look at our gross margins blended gross margins were 82% this quarter, that's with hardware so.

Speaker Change: These are sizable opportunities game changers, and I think they could dramatically change the profile of the company. If you look at what we've been able to do in the context of scaling our expenses now given we've invested very very heavily in development in developing our technology.

Speaker Change: You know a little bit of scale here gets us to our end game of profitability very very quickly. So I think these are the kinds those are the kinds of opportunities that can get us there this year.

Jack Aarde: So I think these are the kinds, those are the kinds of opportunities that can get us there this year. Okay, no, I appreciate that.

Speaker Change: Okay.

Speaker Change: Appreciate that fantastic.

Jack Aarde: Fantastic. Um, and then, you know, I know you don't provide guidance, but you were halfway through the second quarter.

Speaker Change: And then.

Speaker Change: I know you don't provide guidance, but we're halfway through the second quarter.

Jack Aarde: I'm wondering if A couple of questions here on the outlook. Are there any large renewals, kind of like you had, or repeat purchase orders, renewals, kind of like we just talked about that, that large defense ministry customer? Are there any of those in the second quarter or for the rest of this year that are coming up that are worth noting?

Speaker Change: Wondering if.

Questions here on the outlook.

Speaker Change: Are there any large renewals kind of like you had or repeat purchase orders renewals kind of like we just talked about about that large.

Speaker Change: Defense measured customer.

Speaker Change: Are there any of those in the second quarter or for the rest of this year that are coming up that are worth noting.

Jack Aarde: And then the second part of my question is, do you have any just general comments on the second quarter, seasonality wise, or how it looks compared to last year? Uh, what your expectations are. Good.

Speaker Change: And then the second question part of my question is do you have any just general comments on the second quarter.

Speaker Change: Seasonality wise or how it looks compared to last year.

Speaker Change: Or what your expectations are good.

Michael DePasquale: Okay, so on the guidance thing, you're right, we haven't provided guidance. But here's what I will say. And this applies to the second quarter, and beyond, we're going to grow. And, you know, our goal and objective is to sequentially grow our business. And we have a model. Now, we have a really good base of customers. And we have a very strong pipeline of opportunities, albeit, you know, it's got to close, right? There's some very, very large deals, there's a better position than we probably have ever been to be able to continue to grow this business on a sequential basis.

Speaker Change: Good okay. So on the guidance thing Youre right, we havent provided guidance, but here's what I will say and this applies to the second quarter and beyond we're going to grow and our goal and objective is to sequentially grow our business and we have a model now we have a really good base of customers and we have a very.

Speaker Change: Strong pipeline of opportunities, albeit you know it's got a close right. There are some very very large deals there's a whole bunch of smaller ones, but I think we're in a better position than we probably have ever been to be able to continue to grow this business on a sequential basis seasonality wise typically our third quarter.

Michael DePasquale: Seasonality wise, typically, our third quarter, because of the Unknown Attendee, Jack Aarde, Cecilia Welch, Michael DePasquale, James Sullivan, BIO-key This year and to get ourselves to profitability. That's our goal in a Okay, great. So you expect, it sounds like you expect, I know it's not formal guidance, but just as a reasonable barometer here for investors, you're expecting sequential growth throughout the rest of this year. So Q2, Q3, Q4 should kind of kick up as we go forward each quarter. Or it could be lumpy, maybe, but that's kind of a good framework to think about. Absolutely.

Speaker Change: Order because of the <unk>.

Speaker Change: <unk>.

Speaker Change: Because it would be August session in in EMEA right in Europe in particular right August is a very very slow months in Europe. So typically from a seasonality perspective, you might see some challenge in the third quarter, but other than that I think our goal and objective is to sequentially grow this business.

Speaker Change: This year and to get ourselves.

Speaker Change: To profitability, that's our goal and objective.

Speaker Change: Okay, great to see you expect it sounds like you expect I know, it's not formal guidance, but just as a reasonable barometer here for investors you are expecting sequential growth throughout the rest of this year. So Q2, Q3, Q4 should kind of kicked up.

Speaker Change: As we go forward each quarter or well.

Speaker Change: It could be lumpy, maybe but that's kind of a good framework to think about absolutely. That's our goal and objective and again I put the caveat in for the seasonality and you know in Europe right just in the third quarter, but short of that I think that's that's a fair statement and it's a fair perspective.

Michael DePasquale: That's our goal and objective. And again, I put the caveat in for the seasonality and, you know, in Europe, right, just in the third quarter. But short of that, I think that's, that's a fair statement. And it's a fair perspective on our objective. and our plan for this year.

Speaker Change: On our objectives.

Speaker Change: And our plan for this year.

Jack Aarde: Okay. Great.

Michael: Okay, Great and then if I can just sneak one more in there Michael this has been very helpful. So.

Jack Aarde: And then if I can just sneak one more in there, Michael. This has been very helpful. So you guys did a great job controlling the OPEX. Operating expenses definitely dipped down quite a bit, and yet you still achieved that sequential growth, and the gross margins held up very strong, especially on the hardware line even, too. So that's good to see.

Michael: You guys did a great job controlling the opex operating expenses definitely dipped down quite a bit and.

Michael: And yet you're still you still achieve that sequential growth.

Michael: In the gross margins held up very strong, especially on the hardware line even too.

Michael: So.

Michael: That's good to see what's your confidence with your margins and your kind of operating expense control outlook. It is this is Q1, a good baseline of what to expect going forward as well with that sequential growth.

Michael DePasquale: What's your confidence with your margins and your kind of operating expense control outlook? Is Q1 a good baseline of what to expect going forward as well with that sequential growth? Well, on the gross margin side, I can say that, you know, this is where we like to be, right? We certainly want to be in that 80% range, or higher, right? And that may depend on some very large, right, we get a very, very large software, you know, ARR contract that could go up a little bit higher, but we'd like to be in that range.

Michael: Well on the gross margin side I can say that you know this is this is where we like to be right. We certainly want to be in that 80% range, so or higher right and that may depend on some very large right you'll get a very very large software.

Michael: Our contract it could go up a little bit higher, but we'd like to be in that range in.

Michael: In the context of our expenses wheat.

Cecilia Welch: In the context of expenses, we, you know, maybe I'll ask CC to answer that. I mean, do you believe that the Q1 is a good, is a good measure of where we'll be? I mean, we are very, very diligent in the context of controlling all of our expenses all the way around. We We're spending money where we believe we're going to get a return, and not a long-term return, a short-term return, or a medium-term return. but anyway Yes, Mike. And I agree that's relatively a good rate. You know, we have a couple of shows planned and that bumps it up a little bit.

Speaker Change: Maybe I'll ask <unk> to answer that I mean, do you believe that Q1 is a good.

Speaker Change: It's a good measure of where it will be I mean, we are very very diligent in the context of controlling all of our expenses all the way around and we've.

C.C. Welch: We're spending money, where we believe we're going to get a return and not a long term return on a short term return or a medium term return, but anyway C C.

Speaker Change: Hi, Yes, Mike and I agree with that are relatively a good rate you know we have a couple of shows plan and that bumped it up a little bit.

Cecilia Welch: We also have, you know, a good commission plan in place. So, you know, that will rise with the tide. And then again, we have our annual meeting, which also bumps up some of our costs. But we've been really trying to range things in, you know, these services versus hiring. So we've been, I think, really focused on that and it's paid off. Great.

C.C. Welch: We also have.

C.C. Welch: But commission plan in place so that will ride rise with the tide and then and we have our annual meeting, which also bumped up some of our.

C.C. Welch: Costs that we've been really trying to rein things then.

C.C. Welch: You know new services versus hiring.

C.C. Welch: So we've been I think.

C.C. Welch: Really focused on that and it's paid off.

C.C. Welch: Great.

Cecilia Welch: So just real quick, a follow up to that. Do you think the second quarter has some of those one-off or, you know, seasonal kind of events or shows that might, will that incremental tick up happen in the second quarter or would it happen in the third quarter? Well, the second quarter we have one shelf, so it's not it won't be a big tick and the meeting is usually in the third quarter. That's what we have planned right now, but I'm not expecting, you know, a big tick. Unknown Attendee, Jack Aarde, Cecilia Welch, Michael DePasquale, James Sullivan, BIO-key Got it.

C.C. Welch: Just just real quick a follow up to that do you think the second quarter has some of those.

C.C. Welch: A one off or seasonal kind of events of shows that might well.

C.C. Welch: That incremental tick up happened in the second quarter of what had happened in the third quarter.

C.C. Welch: Well the second quarter, we have one cell so it's not it won't be a big tick.

C.C. Welch: And the meeting is usually in the third quarter.

C.C. Welch: That's what we have planned right now, but I'm not expecting you know a big.

C.C. Welch: $200000 increase or anything like that we relatively relatively you know we get a booth, we get from travel so it's not a huge bump but it will.

C.C. Welch: Got it okay very helpful guys. Thank you C. C. Thank you Michael I appreciate the time.

Jack Aarde: Okay. Very helpful, guys. Thank you, Cece. Thank you, Michael. I appreciate the time. Great. Thanks, Jack.

Speaker Change: Great. Thanks, Jack.

Speaker Change: Thank you and our next question today comes from Dan kind of as a private investor. Please go ahead.

Dan Kampis: And our next question today comes from Dan Kampis, a private investor. Please go ahead. guys, you know, the improvement in balance. That's quite impressive. Thank you.

Speaker Change: Oh, Hey, guys.

Speaker Change: The improvement in the balance sheet is actually quite impressive.

Speaker Change: Just to.

Cecilia Welch: to ask another question on the, uh, Dropped to 1.37 million 2021. Was there a drop in headcount? How did you, uh... 5% drop. Uh, CeCe? Yes, there was a change in headcount there. Like I said, we did some services versus that. We definitely reduced our marketing expenses and Oh, and we changed our audit firm, which made a big difference, too, for what we're getting versus what we're paying. and some rents. We lowered our rent expenses for our Eagan and our New Jersey, which again made huge differences. Cut one out and one in half. Got it, got it.

Speaker Change: To ask another question on the S G E which.

Speaker Change: Dropped to 1.3 dollars 7 million.

Speaker Change: And.

Speaker Change: It was at 3.05 in December 2022, it hasn't been this low since June 2021 was there a drop in head count how did you manage that's kind of what does that 55% drop in a couple of years.

C C.

Speaker Change: Yes, there was a change in head count.

Speaker Change: There are like I said, we did some services versus that we definitely reduce our marketing expenses.

Speaker Change: And.

Speaker Change: Oh.

Speaker Change: And we changed our audit firm, which made a big difference to for what we're getting person.

Speaker Change: Thanks.

Speaker Change: And some rents we've lowered our rent expenses for or Ian and I are in New Jersey.

Speaker Change: Which again made a huge difference.

Speaker Change: One out in one and a half.

Speaker Change: Got it got it thank you.

Unknown Attendee: Also, Deferred Revenue looks to be at a... 5-year high, from what I can tell, an increasing, uh, do you expect that increase to be as significant Is that an indicator of increasing business, or is... Intl Unknown Attendee, Jack Aarde, Cecilia Welch, Michael DePasquale, James Sullivan, BIO-key You read that we are converting a lot of one-year contracts for a lot of our schools into three- and five-year contracts. So we recognize some of the revenue up front, and then the rest is deferred over that for support maintenance, you know, according to GAAP, basically, so I am it is not because of we're not performing something.

Speaker Change: Also.

Speaker Change: Revenue looks to be at a at least a five year high from what I can tell and increasing.

Speaker Change: Uh huh.

Speaker Change: Do you expect.

Speaker Change: That increase to continue is that an indicator of increasing business or is there some.

Speaker Change: All delivery or.

Speaker Change: How do I read that.

Speaker Change: You read that we are converting a lot of one year contracts for a lot of our schools in two three and five year contracts.

Nathan: So we recognize the revenue upfront and then the rest is deferred over that for support Nathan.

Speaker Change: According to GAAP basically so it.

Nathan: It is not because of we're not performing something it's definitely because of.

Unknown Attendee: It's definitely because of increasing the longevity and the size of some of the contracts.

Nathan: Increasing the longevity and the size of some of the contracts.

Nathan: Good.

Nathan:

Nathan: Talking about cash burn.

Cecilia Welch: about the cash burn. It was, I think, $835K in this quarter and $1.8M over the last year. Meanwhile, you're So it looks like about 1.3 million of the 1.8 cash burned in October. down. Do you expect to continue paying down your payables that way? I'm trying to get a feel for your expected cash. No, we were not in a good cash position at the end of the year to pay them. And when we were, we did pay them. So we are basically 45-day payment terms with most of our suppliers. So I don't expect that high of a burn in either one of the accrued liabilities or payables.

Nathan: It was I think 835 K in this quarter and 1.8 million over the last two quarters.

Nathan: Meanwhile, your.

Nathan: Accounts payable and accrued liabilities I think came down from I don't know between two and 3 million to about 1.6.

Nathan: So it looks like about <unk>.

Nathan: $1.3 million of the 1.8 cash burn and operations work.

Nathan: He came from paying these down do you expect to continue paying down your payables that way I'm trying to get a feel for your expected cash burn over the next couple of quarters.

Nathan: No we were not in a good cash position at the end of the year to pay them and when we were we did pay them. So we are basically 45 day payment.

Nathan: With most of our suppliers.

Nathan: So I don't expect that high of a burn in either one of the accrued liability door.

Nathan: <unk>.

Okay. So we might see then.

Cecilia Welch: so Let's see then, decreased cash flow. Depending on collections on AR, I would hope so. I think you've got, I think that $900K in current debt is... By the end of the year, do you have any feeling when that We're working on several different things that we will definitely pay it off by the term, but we, as you've seen, we've been paying some down. You know, as we raise money or as money comes in. So they're very happy with us. They've actually been done some conversion of stock for payment of the loan. So we have several opportunities and they're a great company to work with.

Nathan: Decreased cash burn then in the next couple of quarters.

Nathan: Yes, depending on collections on a L.

Nathan: Okay.

Nathan:

Nathan: I think you've got I think that 900 K in current debt is due by the end of the year do you have any feeling when.

Nathan: That will get paid off.

Nathan: We're working on several different things that we will definitely paid off by the term that we as you've seen we've been paying some down.

Nathan:

Nathan: You know as you raise money or as money comes in so.

Nathan: They're very happy with us, it's actually been from conversion of stock for <unk>.

Nathan: Payment of the law.

Nathan: So.

Nathan: We have several opportunities and they.

Nathan: They're a great company to work with so I have.

Cecilia Welch: So I have Expectations of paying it back in time, if not before.

Nathan: Expectations are paying it back in time, if not before.

Nathan: Okay last question along this line as are the accounts receivable.

Cecilia Welch: The last question along this line is, the accounts receivable are... low range relative to the last four years. Susanna Harbinger, the cash Uh, no, we've, uh... had on AR, which we've kept at the level that it was basically. We've also had some payments of some larger monies that came in, which contributed to the cash at the end of the quarter. We expect them — it just depends on when the orders come in, really, you'll see it go up and down. And also remember there's a reserve on it, as well.

Nathan: Are.

Nathan: In a low range relative to the last four years.

Nathan: Is that a harbinger that cash burn will increase in the second quarter by any chance.

Nathan: I know we've.

Nathan: And.

Nathan: Reserve on an E R, which we've kept at the level that it was basically.

Nathan: We've also had some payments of some larger money that came in which contributed to.

You know the cash.

Nathan: At the end of the quarter so well.

Nathan: Well like what do you expect them. It just depends on the orders come in or you'll see it go up and down and also remember there was a reserve on it as well.

Nathan: Okay. Thanks.

Michael DePasquale: Mike. You mentioned supporting a number of national and international organizations. State International Defense The latter, absolutely. It's government defense ministries. Some of those opportunities come through partners in the EMEA region. Typically they do, right, because these defense agencies and enterprises always buy through some reseller, distributor, partner, evaluated reseller, whatever. But the answer is no, it is directly related to government defense. Ministries, not contract. What is the I know there was an international one. And you've had one ongoing that I think you mentioned has been worth millions of dollars or a million dollars a year. How does this new one sort of relate relative to the older one in terms of expected income?

Nathan: Like.

Nathan: You said yourself you.

Speaker Change: You mentioned supporting a number of National International Defense and police organizations in your release I think when you say International Defense Agency do you mean like a defense contractor or do you mean like government defense Ministry like I don't know the British Ministry of defense or French armed forces Ministry or something like that.

The latter absolutely it's.

Speaker Change: It's defense Ministry Government Defense ministries, some of those opportunities come through partners in the EMEA region typically they do right because these defense agencies and enterprises always buy through some reseller distributor partner value added reseller or whatever so but the answer is no.

Speaker Change: It is it is directly related to government.

Speaker Change: Offense ministries not contractors.

Speaker Change: I see.

Speaker Change: And.

Speaker Change: What is the.

Speaker Change: I know there was a a international one that you.

Speaker Change: And and you've had that one ongoing that I think you mentioned has been worth millions of dollars a million dollars a year how does this new one.

Speaker Change: Sort of.

Speaker Change: Related relative to the older one in terms of expected.

Speaker Change: Income do you expect it to kind of grow to meet the other one or is it a smaller contractor.

Michael DePasquale: Do you expect it to kind of grow to meet the other one? Well, sometimes they start off small and then they grow and develop, but, um... We have not announced, um... It's very, very difficult. I mentioned this before, so I'm not going to repeat myself. Very difficult to get. These agencies to allow us to discuss anything that we're doing for them. directly, right? So it's always a kind of a blind announcement. And even that's a challenge, depending upon the type of agency and what we're actually engaged or involved in with them. But we have in motion right now.

Speaker Change: Well, sometimes they start off small and then they grow and develop but.

Speaker Change: We have not announced.

Speaker Change: You know the it's very very difficult I've mentioned this before so I'm not going to repeat myself very difficult to get.

Speaker Change: These agencies to allow us to discuss anything that we're doing for them.

Speaker Change: Directly right. So it's always a kind of a blind announcement and even that's a challenge.

Speaker Change: Depending upon the type of agency and what we're actually engaged or involved in with them but.

Speaker Change: We have.

Speaker Change: A number of these in motion right now some closed.

Michael DePasquale: Some close. and more.

Speaker Change: And more in the works.

Speaker Change: I see well the release said that you saw happen in four days does that mean that the scope is smaller in size are.

Michael DePasquale: Well, the release said that the install happened in four days, does that mean that the scope Smaller in size, uh... No. It just means that, um... The partner that we work with on that opportunity and BIO-key were able to very quickly deploy our portal guard technology, including the biometric in-in-in... You know, some of these IAM deployments take months. and we were able to deploy in date. So that was the point we were trying to make in the release.

Speaker Change: That's it.

Speaker Change: It just means that.

Speaker Change: The partner that we work with on that opportunity.

Speaker Change: And <unk>, we're able to very quickly deploy our portal guard technology, including the biometrics.

Speaker Change: In days.

Speaker Change: Some of these iam's appointments take.

Speaker Change: Months, and we were able to deploy in days. So that was the point, we were trying to make and in the release.

Speaker Change: Yeah I think.

Michael DePasquale: Any update on your investment in boomerang No, nothing to speak of at this point. I know that they are heavily involved in acquiring other technologies and also, I guess, getting their prototypes moved to production, but beyond that, I really don't have uh... any update on sale of some of your written Yes, aggressively pursuing. So we hope to move a substantial chunk of that inventory. That's our goal. I think most of the hardware it was not that There was some of that, but the bulk of it was our traditional fingerprinting. scanner technology that we sell to our enterprise and government type.

Speaker Change: Hmm.

Speaker Change: Any update on your investment in a boomerang.

Speaker Change: No nothing to speak of at this point I know that they are.

Speaker Change: Heavily involved in.

Speaker Change: Acquiring other technologies and also a I guess getting there.

Speaker Change: Prototypes move to production, but beyond that I really don't have any update.

Speaker Change: Okay.

Speaker Change: Any update on.

Speaker Change: The sale of some of your written off inventory.

Speaker Change: Yes aggressively pursuing so we hope to to move a substantial chunk of that inventory.

Speaker Change: Pretty soon.

Speaker Change: Our goal and objective.

Speaker Change: I see I think most of the hardware in the first quarter was not that inventory right. Because there was there was some of that but the bulk of it was our traditional fingerprint.

Speaker Change: Scanner technology that we sell to our enterprise and government type customers.

Speaker Change: Oh yeah.

Michael DePasquale: Yeah, and talking about that. I think at some point you had that a lot of inventory in China. Is that inventory still in China or? And are the tariffs affecting the price? The answer on the tariffs affecting the price of our readers, no, and we do have some inventory in China, although I don't think it's significant, but we do have inventory, parts and pieces. components that we used to build our ECO-ID and our Sideswipe and Sideswipe.

Speaker Change: Looking about that.

Speaker Change: I think at some point do you have that a lot of inventory in China.

Speaker Change: Is that inventory still in China or.

Speaker Change: And are the tariffs affecting the price of your.

Speaker Change: Our readers.

Speaker Change: The answer on the tariffs affecting the price of our readers now.

Speaker Change: And we do have some inventory in China, Although I don't think it's significant but we do have inventory of parts and pieces components that we have.

Speaker Change: I used to build our eco I D in our side swipe inside touch readers.

Speaker Change: Okay, I think I got one last question maybe on.

Unknown Attendee: Okay, I think I got...

Speaker Change: Valuation.

Unknown Attendee: Valuation Just like your stockholders' equities, about $7.5 million that's about $1.60 a share, your stock is trading for half that. Cash is at 3.1 million. Chair. So, The market seems to be assigning a value of about a million dollars to your company, excluding cash. I think the assumption being made there, if I can... market is that your equity in cash Zero by the end of the year. The facts do not... portray that. It's the only thing I can say, you know, I can't I can't control the market nor understand the dynamics right up and down.

Speaker Change: It looks like your stockholders equity is about.

$7 5 million.

Speaker Change: Oh, and $4 7 million shares that's about $1 60, a share your stock is trading for half that.

Speaker Change: Cash is at $3 1 million, which is incredible.

Speaker Change: That's about 66 cents a share.

Speaker Change: So.

Speaker Change: The market seems to be assigning a value of about a million dollars to.

Your company excluding cash.

Speaker Change: I think the assumption being made there if I could see them for the market is that your equity in casual trend towards zero by the end of the year and you'll have to raise additional capital what would you say to an investor who had that view.

Speaker Change:

Speaker Change: The facts do not.

Speaker Change: Portray that it's the only thing I can say you know I can't.

Speaker Change: I can't control the market, nor understand the dynamics right up and down I mean, you've seen our our stock trade.

Michael DePasquale: I mean, you've seen our our stock trade. hundreds of millions of shares, you know, on an announcement and then rise, you know, exponentially and then come back down. I don't know what to say, I don't control that, but the facts don't bear that thesis, so.

Speaker Change: Hundreds of millions of shares you know on an announcement and then rise.

Speaker Change: Exponentially and then come back down.

Speaker Change: No.

Speaker Change: I don't know what to say I don't control that but the facts don't bear that VC. So.

Speaker Change: No that's it.

Unknown Attendee: That's it.

Unknown Attendee: Bye. I appreciate it. I appreciate the time.

Speaker Change: Yes.

Speaker Change: I appreciate it and I appreciate the time, thanks, he sees things Mike.

Dan: Thank you Dan.

Unknown Attendee: Thank you, Dan.

Operator: And as a reminder, if you'd like to ask a question, please press star then 1.

Speaker Change: As a reminder to ask a question. Please press Star then one.

Speaker Change: Okay.

Speaker Change: Showing no further questions in Q&A session has ended.

Operator: Showing no further questions, the Q&A session has ended.

Michael DePasquale: Now I'll ask Mike DePasquale to provide closing remarks. Thank you everyone for your time today and for joining the call. You may reach out to our IR team whose contact information is in today's press release. with any follow-up, actually yesterday's press release, with any follow-up questions.

Mike: I'll ask Mike to pass to <unk>.

Speaker Change: Provide closing remarks.

Speaker Change: Thank you everyone for your time today and for joining the call you.

Speaker Change: You may reach out to our IR team, whose contact information is in today's press release with any follow up actually Yesterdays press release with any follow up questions also look for us at two upcoming conferences first at the ages capital Virtual conference on Thursday May 22nd and then at <unk>.

Michael DePasquale: Also, look for us at two upcoming conferences. First, at the Aegis Capital Virtual Conference on Thursday, May 22, and then at Maxim Group's 2025 Virtual Tech Conference on Wednesday, June 4, both at 11am, by the way. We expect to participate virtually and be available for investor meetings for both. We look forward to updating you on our Q2 call this summer, and will provide interim news and updates via press release. Thank you again, and have a great weekend. Thanks, everybody.

Speaker Change: Some groups 2025 virtual Tech conference on Wednesday June 4th.

Speaker Change: Both at 11, a M by the way.

Speaker Change: We expect to participate virtually and be available for investor meetings for both.

Speaker Change: We look forward to updating you on our Q2 call. This summer and we will provide interim news and updates via press release. Thank you again and have a great weekend.

Speaker Change: Thanks, everybody. This concludes today's conference call.

Operator: This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Speaker Change: Thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: [music].