Q4 2025 BIO-key International Inc Earnings Call

March 31, 2026

Operator: Good morning, everyone. Thank you for standing by, and welcome to BIO-key International's 2025 Year-End Conference Call. During 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. As a reminder, this conference is being recorded today, Tuesday, 31 March 2026. I will now turn the call over to William Jones, Investor Relations. You may proceed.

Speaker #1: Good morning everyone . Thank you for standing by . And welcome to BIO KEY INTERNATIONAL INC 2025 year end conference call . During 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 As a reminder , this conference is being recorded today , Tuesday , March 31st , 2026 .

Speaker #1: I will now turn the call over to Bill Jones , Investor Relations . You may proceed .

William Jones: Thank you, Gary. Hosting today are BioKey's Chairman and CEO, Mike DePasquale, and its CFO, Cecilia Welch. As a reminder, today's call and webcast, as well as answers to investor questions, include forward-looking statements that are subject to risks and uncertainties, which may cause actual results to differ materially from current expectations. Words like anticipate, believe, expect, and project, or similar words, identify and express forward-looking statements. These statements are made based on beliefs, assumptions, and information currently available to management as of today and pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act. For a more complete description of the risks and uncertainties that affect future performance, please see Risk Factors in the company's annual report, Form 10-K, with the SEC. Listeners are cautioned not to place undue reliance on forward-looking statements made as of today.

Bill Jones: Thank you, Gary. Hosting today are BioKey's Chairman and CEO, Mike DePasquale, and its CFO, Cecilia Welch. As a reminder, today's call and webcast, as well as answers to investor questions, include forward-looking statements that are subject to risks and uncertainties, which may cause actual results to differ materially from current expectations. Words like anticipate, believe, expect, and project, or similar words, identify and express forward-looking statements. These statements are made based on beliefs, assumptions, and information currently available to management as of today and pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act. For a more complete description of the risks and uncertainties that affect future performance, please see Risk Factors in the company's annual report, Form 10-K, with the SEC. Listeners are cautioned not to place undue reliance on forward-looking statements made as of today.

Speaker #2: Thank you . Gary . Hosting today are bio chairman and CEO Mike Dipasquale . And CFO CC Welsh . As a reminder , today's call and webcast , as well as answers to investor questions , include forward looking statements that are subject to risks and uncertainties , which may cause actual results to differ materially from current expectations .

Speaker #2: Words like anticipate , believe , expect , and project or similar words identify and express forward looking statements . These statements are made based on beliefs , assumptions and information currently available to management .

Speaker #2: As of today and pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act For a more complete description of the risks and uncertainties that affect future performance , please see Risk Factors in the company's Annual report on Form 10-K with the SEC Listeners are cautioned not to place undue reliance on forward looking statements made as of today .

William Jones: The company makes no obligation to revise or disclose revisions to forward-looking statements to reflect circumstances or events occurring after this call. Now, I will turn the call over to Mike to begin. Mike.

Bill Jones: The company makes no obligation to revise or disclose revisions to forward-looking statements to reflect circumstances or events occurring after this call. Now, I will turn the call over to Mike to begin. Mike.

Speaker #2: The company makes no obligation to revise or disclose revisions to forward-looking statements to reflect circumstances or events occurring after this call. Now I will turn the call over to Mike to begin.

Speaker #2: Mike .

Mike DePasquale: Thanks, Bill, and thank you all for joining us today. After my remarks and CC's financial overview, we will open the call to investor questions. As highlighted in today's press release, we had a broad base of achievements in 2025 that positioned BIO-key for improved top-line and bottom-line performance in 2026 and future periods. Kicking off the year, we now anticipate Q1 2026 revenue of approximately $2.2 million, representing a 37% increase over Q1 in 2025, and a larger sequential improvement over Q4 2025 as well. We also expect a substantial improvement in our Q1 2026 bottom line performance exceeding each of our fiscal 2025 quarters.

Speaker #3: Thanks , Bill , and thank you all for joining us today After my remarks on CCS financial overview , we will open the call to investor questions as highlighted in today's press release , we had a broad base of achievements in 2025 that positioned biotech for improved top line and bottom line performance in 2026 .

Speaker #3: In future periods . Kicking off the year , we now anticipate Q1 26 revenue of approximately $2.2 million , representing a 37% increase over Q1 and 2025 , and a larger sequential improvement over Q4 25 , as well .

Speaker #3: We also expect a substantial improvement in our Q1 26 bottom line performance , exceeding each of our fiscal 25 quarters . And although we were disappointed by our 2025 revenue performance , we are now seeing much more urgency and focus from our customers and prospects to take action in better securing access to mission critical systems , particularly in the military and defense , financial services , and regulated industries Our 2025 Revenue comparison versus 2024 was also impacted by two significant factors totaling roughly $2 million .

Mike DePasquale: Although we were disappointed by our 2025 revenue performance, we are now seeing much more urgency and focus from our customers and prospects to take action in better securing access to mission-critical systems, particularly in the military and defense, financial services, and regulated industries. Our 2025 revenue comparison versus 2024 was also impacted by two significant factors totaling roughly $2 million. The first related to a $1.5 million two-year license renewal with a foreign national bank, the bulk of which was recorded in 2024. This caused roughly an $800,000 decrease in recognized revenue related to this customer in 2025 versus 2024.

Speaker #3: The first , related to a $1.5 million , two year license renewal with a foreign national bank . The bulk of which was recorded in 2024 .

Speaker #3: This caused roughly an $800,000 decrease in recognized revenue related to this customer in 2025 versus 2024, despite revenue recognition timing related to this customer.

Mike DePasquale: Despite revenue recognition timing related to this customer, the relationship continues to grow nicely, and earlier this month, they executed an expanded one-year license renewal of over $1 million for 2026, which represents an approximately 30% increase in revenue over the previous contract. Our year-over-year revenue comparison also reflected the completion in 2025 of our strategic transition to selling only BIO-key-branded solutions in the EMEA region. As anticipated, this transition is beginning to benefit our gross margin and growth prospects as we rebuild our EMEA pipeline with BIO-key-only solutions and sales opportunities that carry substantially higher net margins. While these factors led to lower year-over-year software license revenues, both hardware and services revenues grew in 2025 due to the expansion of our customer base and licensed endpoints.

Speaker #3: The relationship continues to grow nicely , and earlier this month , they executed an expanded one year license renewal of over $1 million for 2026 , which represents an approximately 30% increase in revenue over the previous contract Our year over year revenue comparison also reflected the completion in 2025 of our strategic transition to selling only Biokey branded solutions in the EMEA region .

Speaker #3: As anticipated, this transition is beginning to benefit our gross margin and growth prospects as we rebuild our EMEA pipeline with BIO-key-only solutions and sales opportunities that carry substantially higher net margins.

Speaker #3: While these factors led to lower year over year software license , both hardware and services revenues grew in 2025 due to the expansion of our customer base and licensed and endpoints Turning to our outlook , let me review key trends in the enterprise Authentication market that support our optimism for 2026 .

Mike DePasquale: Turning to our outlook, let me review key trends in the enterprise authentication market that support our optimism for 2026. First is the increasing need for secure access to digital platforms and protection against growing cybersecurity threats, which is driving rapid growth in the authentication solutions market. Global sales are estimated to be $23 billion in 2025 and projected to reach almost $100 billion by 2035, representing a compound annual growth of almost 16%. As cybercrime becomes more sophisticated, we expect businesses and governments to increasingly embrace advanced authentication technologies, such as those that BIO-key provides, to safeguard sensitive information and maintain customer trust. This surge in demand for enhanced authentication solutions is being driven by the widespread adoption of digital services, e-commerce, online banking, and the growing use of mobile devices.

Speaker #3: First is the increasing need for secure access to digital platforms and protection against growing cybersecurity threats , which is driving rapid growth in the authentication solutions market Global sales are estimated to be $23 billion in 2025 , and projected to reach almost 100 billion by 2035 , representing a compound compound annual growth of almost 16% .

Speaker #3: As cybercrime becomes more sophisticated , we expect businesses and governments to increasingly embrace advanced authentication technologies , such as those at Biokey , provides to safeguard sensitive information and maintain customer trust .

Speaker #3: This surge in demand for enhanced authentication solutions is being driven by the widespread adoption of digital services , e-commerce , online banking , and the growing use of mobile devices , authentication solutions , including biometrics , MFA , digital certificates are all crucial to ensure that only authorized individuals gain access to private information or systems , a key gap we fill is that mainstream MFA solutions offer only device assisted authentication , whereas our Portal Guard platform is a complete MFA offering with Phoneless and Tokenless authentication that leverages biometrics .

Mike DePasquale: Authentication solutions, including biometrics, MFA, digital certificates, are all crucial to ensure that only authorized individuals gain access to private information or systems. A key gap we fill is that mainstream MFA solutions offer only device-assisted authentication. Whereas our PortalGuard platform is a complete MFA offering with phoneless and tokenless authentication that leverages biometrics. Our Passkey:YOU solution provides WEB-key secured, hosted FIDO2 passkey authentication for tokenless, phoneless, and passwordless authentication with biometric efficiency. By year-end 2026, passwordless authentication will be the default for workforce access across almost every enterprise. The shift is being driven by the increased vulnerability of passwords to phishing, credential reuse, and account takeover attacks. More than 70% are already moving towards passwordless adoption, and about three-quarters of enterprises expect to invest in passkeys or passwordless tools this year.

Speaker #3: Our passkey use solution provides web key secured , hosted Fido2 passkey authentication for Tokenless , Phoneless , and passwordless authentication with biometric efficiency .

Speaker #3: By the year end 2026 , passwordless authentication will be the default for workforce access across almost every enterprise . The shift is being driven by the increased vulnerability of passwords to phishing credential reuse , and account takeover attacks .

Speaker #3: More than 70% are already moving towards passwordless adoption, and about three-quarters of enterprises expect to invest in passkeys or passwordless tools.

Speaker #3: This year . Biometric authentication , adoption is expected to continue to grow , particularly in the most sensitive and high valued use cases in the regulated spaces , such as military and defense financial services and healthcare , where we all have already seen growing adoption The traction we see is also aided by more supportive regulatory frameworks in many foreign jurisdictions , as well as by escalating geopolitical risks , which we're all aware of .

Mike DePasquale: Biometric authentication adoption is expected to continue to grow, particularly in the most sensitive and high-value use cases in the regulated spaces such as military and defense, financial services, and healthcare, where we all have already seen growing adoption. The traction we see is also aided by more supportive regulatory frameworks in many foreign jurisdictions, as well as by escalating geopolitical risks, which we're all aware of. AI-driven threats are forcing security leaders to rethink how access decisions are made, emphasizing the need for much more resilient identity strategies where biometrics can play a pivotal role as opposed to conventional methods that are most vulnerable to AI-powered attacks. Authentication technologies are converging towards unified access for workforce, partner, and privileged access under single strategic foundations. Our PortalGuard, Passkey:YOU, and biometric solutions provide infinite flexibility in deploying to any component of a company's employee population despite infrastructure and job function.

Speaker #3: AI-driven threats are forcing security leaders to rethink how access decisions are made, emphasizing the need for much more resilient identity strategies where biometrics can play a pivotal role, as opposed to conventional methods that are most vulnerable to AI-powered attacks.

Speaker #3: Authentication technologies are converging towards unified access for workforce , partner and privileged access under single strategic foundations . Our Portal Guard , Passkey , and biometric solutions provide infinite flexibility in deploying to any component of a company's employee population .

Speaker #3: Despite infrastructure and job function , phones and tokens are no longer necessary , and with 16 types of auth factors , one size no longer fits all , these significant shifts in how enterprises approach authentication with a focus on security , convenience , compliance , and evolving regulations .

Mike DePasquale: Phones and tokens are no longer necessary, and with 16 types of auth factors, one size no longer fits all. These significant shifts in how enterprises approach authentication with a focus on security, convenience, compliance, and evolving regulations play directly to our strengths. In 2025, we launched our Defense & Intelligence Cybersecurity Initiative, which is discussed in today's press release. We also highlight several recent contract wins and momentum we are seeing in the defense and financial sectors, as well as significant new partnerships both domestically and internationally. Since that's in the press release, I won't repeat it here, but we can certainly address any questions regarding any of those areas in the Q&A session. In terms of our continuing investment in R&D and new product development, in Q4, BIO-key formally introduced the new FBI FAP 20 certified EcoID III fingerprint scanner.

Speaker #3: Play directly to our strengths . In 2025 , we launched our defense and intelligence cyber security Initiative , which is discussed in today's press release .

Speaker #3: We also highlight several recent contract wins and momentum we are seeing in the defense and financial sectors, as well as significant new partnerships, both domestically and internationally.

Speaker #3: Since that's in the press release , I won't repeat it here , but we can certainly address any questions regarding any of those areas in the Q and A session .

Speaker #3: In terms of our continuing investment in R&D and new product development in Q4 , Biokey formally introduced the new FBI FAP 20 certified eco ID three fingerprint scanner , echo ID three is our most advanced reader , which pairs encrypted device to host communication with liveness detection .

Mike DePasquale: EcoID III is our most advanced reader, which pairs encrypted device-to-host communication with liveness detection for faster, more secure authentication. EcoID III is primarily for highly regulated industries and the most sensitive Zero Trust environments such as defense and banking. We are also finishing up work on our most significant update ever for our PortalGuard identity platform, version 7.0. This includes a major platform monetization, significant new configurability and flexibility, and improved lower cost deployment capabilities. It is currently undergoing comprehensive third-party security testing for an expected release during Q2. Our updated product offerings and unique biometric capabilities give us a sustainable competitive advantage, particularly as I discussed in the regulated industries, due to those strict compliance standards. Our defense and banking niches, in particular, have significant global upside in 2026 and beyond.

Speaker #3: For faster , more secure authentication . Eco ID three is primarily for highly regulated industries , and the most sensitive zero trust environments , such as defense and banking .

Speaker #3: We're also finishing up work on our most significant update ever for our Portal Guard identity platform . Version seven zero . This includes a major platform monetization , significant new configurability , and flexibility , and improved lower cost deployment capabilities .

Speaker #3: It is currently undergoing comprehensive third party security testing for an expected release during the second quarter . Our updated product offerings and unique biometric capabilities give us a sustainable competitive advantage , particularly as I discussed in the Regulated industries , due to those strict compliance standards , our defense and banking niches in particular , have significant global upside .

Speaker #3: In 2026 and beyond, today, our business is predominantly subscription based, and we continue to utilize a partner-centric model in which roughly 50% of our new U.S.

Mike DePasquale: Today, our business is predominantly subscription-based, and we continue to utilize a partner-centric model in which roughly 50% of our new US business and nearly 100% of our international business is sold through a network of sales channel partners, including Amazon and TD SYNNEX, which we have built relationships with over the last few years. Turning to overhead and cost, in 2025, we were able to reduce our total SG&A expense by almost $800,000 or 11% and total operating expenses by 7%. This mission continues, and we are optimistic about the potential benefits of AI adoption in our processes to drive even further operational efficiency, productivity, and lower cost. These initiatives play an important role along with our growth efforts to progress the company toward our goal of reaching breakeven and profitability in 2026.

Speaker #3: Business and nearly 100% of our international business is sold through a network of sales channel partners, including Amazon and TD SYNNEX, which we have built relationships with over the last few years.

Speaker #3: Turning to overhead and cost in 2025, we were able to reduce our total G&A expense by almost $800,000, or 11%, and total operating expenses by 7%.

Speaker #3: This mission continues , and we are optimistic about the potential benefits of AI adoption in our processes to drive even further operational efficiency , productivity , and lower cost .

Speaker #3: These initiatives play an important role, along with our growth efforts, to progress the company toward our goal of reaching break-even and profitability in 2026.

Mike DePasquale: Finally, we also made great strides in strengthening our financial position in 2025, ending the year with $2.7 million in cash, up more than $2 million from 2024, and increasing our book value to $7.6 million versus $3.8 million at the end of 2024. Our current cash position and expected cash receipts provide a solid working capital base to support our growth plans for 2026. We're off to a strong start this year with building momentum in several key verticals. We expect top line expansion combined with expense management to meaningfully advance our goal of reaching our target again of breakeven and profitability this year. We are well-positioned in terms of financial liquidity to fund our growth plans.

Speaker #3: Finally , we also made great strides in strengthening our financial position in 2025 , ending the year with $2.7 million in cash , up more than 2 million from 2024 and increasing our book value to 7.6 million , versus 3.8 million at the end of 2024 .

Speaker #3: Our current cash position and expected cash receipts provide a solid working capital base to support our growth plans for 2026. We're off to a strong start this year, with building momentum in several key verticals.

Speaker #3: We expect top line expansion, combined with expense management, to meaningfully advance our goal of reaching our target of break-even and profitability again this year.

Speaker #3: And we are well positioned in terms of financial liquidity to fund our growth plans . Given the growing adoption of bio keys , flexible , passwordless , tokenless and phoneless authentication solutions that we are seeing , we expect 2026 to be a very exciting and productive year for our company and for our shareholders .

Mike DePasquale: Given the growing adoption of BIO-key's flexible passwordless, tokenless, and phoneless authentication solutions that we are seeing, we expect 2026 to be a very exciting and productive year for our company and for our shareholders. We're entering the most exciting chapter in our company's history, one defined by innovation, strategic expansion, and relentless focus on delivering value to our customers and our shareholders. Significant growth and profitability are in sight, and with the right team, technology, and partnerships in place, we are poised to deliver long-term shareholder value. Now let me turn the call over to Cece for a review of the financials.

Speaker #3: We're entering the most exciting chapter in our company's history, one defined by innovation, strategic expansion, and relentless focus on delivering value to our customers and our shareholders.

Speaker #3: Significant growth in profitability are in sight , and with the right team , technology and partnerships in place , we are poised to deliver long term shareholder value .

Speaker #3: Now, let me turn the call over to CC for a review of the financials.

Cecilia Welch: Thank you, Mike. We released our results this morning, so let me provide a quick review. Reflecting the factors Mike addressed earlier, the total 2025 revenues decreased 12% to $6.1 million versus $6.9 million in 2024. 2025 revenue did benefit from over 100% increase in hardware revenues to $1.3 million in 2025, largely due to increased purchases of our biometric solutions. Service revenue increased 6% to $1.2 million due to BIO-key's growing customer base and new customer deployments. In Q4 2025, license fee revenue decreased 26%, hardware revenue increased 85%, and service revenues decreased 10%, reflecting the factors Mike discussed, as well as the timing of deployment.

Cece Welch: Thank you, Mike. We released our results this morning, so let me provide a quick review. Reflecting the factors Mike addressed earlier, the total 2025 revenues decreased 12% to $6.1 million versus $6.9 million in 2024. 2025 revenue did benefit from over 100% increase in hardware revenues to $1.3 million in 2025, largely due to increased purchases of our biometric solutions. Service revenue increased 6% to $1.2 million due to BIO-key's growing customer base and new customer deployments. In Q4 2025, license fee revenue decreased 26%, hardware revenue increased 85%, and service revenues decreased 10%, reflecting the factors Mike discussed, as well as the timing of deployment.

Speaker #4: Thank you . Mike . We released our results this morning . So let me provide a quick review reflecting the factors . Mike addressed earlier .

Speaker #4: The total 2025 revenues decreased 12% to $6.1 million versus $6.9 million in 2020. For 2025, revenue did benefit from an over 100% increase in hardware revenues to $1.3 million in 2025, largely due to increased purchases of our biometric solutions, and service revenue increased 6% to $1.2 million due to a growing customer base and new customer deployments in Q4 25.

Speaker #4: License fee revenue decreased 26%. Hardware revenue increased 85%, and service revenues decreased 10%, reflecting the factors we discussed as well as the timing of deployment.

Cecilia Welch: Our 2025 gross margin was 77.5% as compared to 81.4% in 2024, primarily due to the mix of software fees, license fee revenue, and hardware revenue as a percent of total revenues. Gross margins on license fee improved 91% in 2025 from 88% in 2024, reflecting the benefit of selling branded product versus third-party products in the EMEA region. In 2025, we reduced our SG&A costs by 11% due to proactive cost management, including reorganization of sales personnel, reducing marketing show expenses, and lower audit fees, partially offset by higher professional fees related to BIO-key's financing activities. We will continue to focus on cost reduction opportunities as we move forward in 2026. Research and development engineering costs increased 4% in 2025 due to support the new product development, as Mike discussed.

Cece Welch: Our 2025 gross margin was 77.5% as compared to 81.4% in 2024, primarily due to the mix of software fees, license fee revenue, and hardware revenue as a percent of total revenues. Gross margins on license fee improved 91% in 2025 from 88% in 2024, reflecting the benefit of selling branded product versus third-party products in the EMEA region. In 2025, we reduced our SG&A costs by 11% due to proactive cost management, including reorganization of sales personnel, reducing marketing show expenses, and lower audit fees, partially offset by higher professional fees related to BIO-key's financing activities. We will continue to focus on cost reduction opportunities as we move forward in 2026. Research and development engineering costs increased 4% in 2025 due to support the new product development, as Mike discussed.

Speaker #4: Our 2025 gross margin was 77.5% as compared to 81.4% in 2020 . For primarily due to the mix of software fee , license fee , revenue and hardware revenue .

Speaker #4: As a percent of total revenues . Gross margins on license fee improved 91% in 2025 , from 88% in 2024 , reflecting the benefit of selling branded product versus third party products in the EMEA region in 2025 , we reduced our costs by 11% due to proactive cost management , including reorganization of sales personnel , reducing marketing , show expenses and lower audit fees , partially offset by higher professional fees related to financing activities .

Speaker #4: We will continue to focus on cost reduction and reduction opportunities as we move forward in 2026. Research and development engineering costs increased 4% in 2025 due to supporting the new product developments.

Speaker #4: As Mike discussed . As a result , operating expenses decreased 7% overall in 2025 . Lower operating costs helped to offset the impact of lower revenue in 2025 , as Byatt's net loss increased to 4.6 million , or $0.69 per share , from 4.3 million , or $2.09 per share , in 2024 .

Cecilia Welch: As a result, operating expenses decreased 7% overall in 2025. Lower operating costs helped to offset the impact of lower revenue in 2025, as BIO-key's net loss increased to $4.6 million or $0.69 per share from $4.3 million or $2.09 per share in 2024. BIO-key's Q4 2025 net loss increased to $1.7 million or $0.19 per share as compared to the $1.4 million in 2024 or $0.46 per share. Weighted average common shares outstanding, which reflect warrant exercises and other financial activities, are provided in today's press release. As of December 31, 2025, BIO-key had current assets of $4.6 million, including cash of $2.7 million, as compared to the prior year-end of $1.9 million, which included $438,000 of cash.

Cece Welch: As a result, operating expenses decreased 7% overall in 2025. Lower operating costs helped to offset the impact of lower revenue in 2025, as BIO-key's net loss increased to $4.6 million or $0.69 per share from $4.3 million or $2.09 per share in 2024. BIO-key's Q4 2025 net loss increased to $1.7 million or $0.19 per share as compared to the $1.4 million in 2024 or $0.46 per share. Weighted average common shares outstanding, which reflect warrant exercises and other financial activities, are provided in today's press release. As of December 31, 2025, BIO-key had current assets of $4.6 million, including cash of $2.7 million, as compared to the prior year-end of $1.9 million, which included $438,000 of cash.

Speaker #4: Q 425 net loss increased to 1.7 million , or $0.19 per share , as compared to the 1.4 million in 2024 , or $0.46 per share .

Speaker #4: Weighted average common shares outstanding , which reflect warrant exercises and other financial activities , are provided in today's press release . As of December 31st , 2025 , had current assets of 4.6 million , including cash of 2.7 million as compared to the prior year end of 1.9 million , which included 438,000 of cash accounts receivable increased 73% to 1.2 million at December 31st , 2025 , from 718,000 at the end of 2024 .

Cecilia Welch: Accounts receivable increased 73% to $1.2 million at 31 December 2025, from $718,000 at the end of 2024. Our book value increased to $7.6 million at year-end 2025 from $3.8 million at the close of 2024. We plan to file the 10-K within the next week. With that, operator, let's please proceed to the question and answer session.

Cece Welch: Accounts receivable increased 73% to $1.2 million at 31 December 2025, from $718,000 at the end of 2024. Our book value increased to $7.6 million at year-end 2025 from $3.8 million at the close of 2024. We plan to file the 10-K within the next week. With that, operator, let's please proceed to the question and answer session.

Speaker #4: And our book value increased to 7.6 million at year end 2025 from 3.8 million at the close of 2024 . We plan to file the 10-K within the next week with that .

Speaker #4: Operator: Let's please proceed to the question and answer session.

Operator: We will now begin the question-and-answer session. To ask a question, you may press Star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star then two. At this time, we will pause momentarily to assemble our roster. Our first question today is from Jack Vander Aarde with Maxim Group. Please go ahead.

Speaker #1: We will now begin the question and answer session to ask a question . You may press star . Then one on your telephone keypad .

Speaker #1: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

Speaker #1: At this time, we will pause momentarily to assemble our roster. Our first question today is from Jack Van Dorati with Maxim Group.

Speaker #1: Please go ahead .

Jack Vander Aarde: Okay, great. Good morning. Hi, Mike. Thanks for taking my questions.

Speaker #5: Okay , great . Good morning . Hi , Mike . Thanks for taking my questions .

Mike DePasquale: Good morning, Jack.

Speaker #3: Good morning Jack .

Jack Vander Aarde: Mike, I think you already addressed it pretty well. I just want to also just kind of get a little more clarity on the 2025 revenue was a little softer than you initially expected, but obviously great to see you're targeting a strong Q1 2026 with, you know, $2.2 million in revenue. That's fantastic. Just trying to better understand the 2025 result. One of the reasons mentioned was due largely to a significant contract renewal with a foreign retail bank in 2024 that didn't benefit 2025. Can you just maybe speak to this a little bit further? Is this an active customer? Are they due for an expansion or renewal in 2026? Just help me better understand that particular customer.

Speaker #5: So , Mike , I think I just you . Already addressed it pretty well . I just want to also just kind of get a little more clarity on the 2025 revenue was a little softer than you initially expected .

Speaker #5: But obviously, great to see you're targeting a strong first quarter '26 with, you know, $2.2 million in revenue. That's fantastic. Just trying to better understand the 2025 result.

Speaker #5: So, one of the reasons mentioned was due largely to a significant contract renewal with a foreign retail bank in 2024. That didn't benefit 2025.

Speaker #5: Can you just maybe speak to this a little bit further? Is this an active customer? Are they due for an expansion or renewal in 2026?

Speaker #5: Just help me better understand that particular customer.

Mike DePasquale: Yeah. In my comments, Jack. By the way, good morning. In my comments, I mentioned that they did renew for one year at over $1 million. About a 30% increase in value of that contract. It was a two-year contract that we closed in 2024. We took the revenue all in 2024 for that two years. That's why, again, in 2025, obviously it wasn't repeatable. That's what I was trying to say. You're looking for a little more color on 2025. I would sum it up this way, outside of the comments that I made in the prepared session.

Speaker #3: Yeah . So and in my comments , Jack , by the way , good morning . In my comments , I mentioned that they did renew for one year at over $1 million .

Speaker #3: So, about a 30% increase in the value of that contract. So, it was a two-year contract that we closed in 2024. We took the revenue all in 2024 for that two years.

Speaker #3: So that's why again , in 2025 , obviously it wasn't repeatable . So that's what I was trying to say . But you're you're looking for a little more color on 2025 .

Speaker #3: And I would sum it up this way: Outside of the comments that I made in, in the prepared session, we went through a significant transition in our EMEA division that took a little bit longer than we expected.

Mike DePasquale: We went through a significant transition in our EMEA division that took a little bit longer than we expected, but quite frankly, is going to have a huge benefit for us here too in 2026 and going forward because of two things. Number one, we're selling BIO-key-only solutions with and including our biometrics, which are getting very, very good visibility, especially within the regulated industries, and that's banking, defense, you know, healthcare, that kind of thing. The second piece is the reason this again took a little bit longer. The deal size in EMEA is, you know, some of the deals are seven-figure, but most of them are in the high hundreds of thousands of dollars. So they're larger deals. They're all through channel partners. They're typically with larger customers. The benefits are incredible when they close.

Speaker #3: But quite frankly, it is going to have a huge benefit for us here too, in 2026 and going forward, because of two things.

Speaker #3: Number one , we're selling bio key only solutions with and including our biometrics , which are getting very , very good visibility , especially within the regulated industries .

Speaker #3: And that's banking , defense , you know , healthcare , that kind of thing . The second piece is the reason this again , took a little bit longer .

Speaker #3: The deal size in EMEA is , you know , some of the deals are seven figure , but most of them are in the high hundreds of thousands of dollars .

Speaker #3: So, they're larger deals. They're all through channel partners. They're typically with larger customers, and the benefits are incredible when they close.

Mike DePasquale: That took us a little bit longer to get over the chasm in 2025, and I think that's why we underperformed our expectations there. Most of it was timing, but we are very bullish and very encouraged about 2026, and we will take advantage of that benefit. That should get us to our goal and objective of break-even profitability and obviously being cash flow positive this year.

Speaker #3: But that took us a little bit longer to get over the chasm in 2025. And I think that's why we underperformed our expectations there.

Speaker #3: Most of it was timing , but we are very bullish and very encouraged about 2026 , and we will take advantage of that benefit , and that should get us to our goal and objective of break even profitability .

Speaker #3: And obviously being cash flow positive this year .

Jack Vander Aarde: Okay, great. No, I really appreciate that extra color, Mike. That actually makes a lot of sense. Then just to be extra crystal clear, is this in the press release you did? You referenced all these various specific deals, and highlights. Is this the customer that I'm looking at, or is this a different one under the financial sector? You secured a $1.04 million one-year license renewal with the foreign bank. Is this that customer from 2024 or is this a separate entity?

Speaker #5: Okay , great . Know that . I really appreciate that extra color . Mike . That actually makes a lot of sense . And then just , just to be extra crystal clear , is this in the press release , you did , you referenced all these , these various specific deals and highlights ?

Speaker #5: Is this the customer that I'm looking at, or is this a different one under the financial sector? You secured a 1.0, 4,000,001-year license renewal with the foreign bank.

Speaker #5: Was this— is this that customer from 2024, or is this a separate entity?

Mike DePasquale: No, that's that customer.

Speaker #3: No, that's that customer.

Jack Vander Aarde: Okay, great. Okay. Thank you for just connecting the dots there.

Speaker #5: Okay, great. Okay. Thank you for connecting the dots there.

Mike DePasquale: No problem.

Speaker #3: No problem .

Jack Vander Aarde: Mike, let's talk about Q1 because this is definitely a point of emphasis. I just, you know, it popped out to me. You know, here we are. We're basically at the last day of Q1 as of today, so it sounds like you have a pretty good read-through on that $2.2 million target. Is this any of the slippage from Q4 that slipped into Q1? I guess one. And then two, do you have a good sense of the mix of that revenue? Is it mostly license revenue? How do I think about that? Is it growth across all three segments?

Speaker #5: And then and then Mike , let's talk about the first quarter because this is definitely a point of emphasis . I just , you know , it popped out to me , you know , here we are .

Speaker #5: We're basically at the last day of the first quarter as of today. So it sounds like you have a pretty good read-through on that $2.2 million target.

Speaker #5: Is this any of this ? I guess one , any of the slippage from the fourth quarter that slipped into the first quarter .

Speaker #5: And then two , do you have a good sense of of the mix of that revenue ? Is it mostly license revenue ? How do I think about that ?

Speaker #5: And is it growth across all three segments ?

Mike DePasquale: Well, the majority will likely be license revenue, but there's also some strong hardware revenue as well, but very good margins. As you know, our blended gross margins are always, you know, never lower than the high 70s% all the way up through the low 80s%. Depending upon that mix, you know you're gonna be looking at an 80+% , if not more, gross margin across the board. Whether it's hardware or software combined, that's what you can expect.

Speaker #3: Well , the majority will will likely be licensed revenue , but there's also some strong hardware revenue as well . But very good margins .

Speaker #3: As you know , our blended gross margins are always , you know , never lower than the high 70s , all the way up through the low 80s .

Speaker #3: So depending upon that mix , you know , you're going to be looking at an 80 plus percent , if not more gross margin across the board , whether it's hardware or software combined , that's what you can expect .

Jack Vander Aarde: Excellent. Okay, that's helpful. You know, just maybe if we just touch on some of these large deals you're seeing in some. You know, it sounds like you're seeing more urgency, as you mentioned, from customers across. You started listing a segment here and there, and then you started basically covering all your segments it seems. Where would you say if you could just highlight like maybe a handful of potential maybe deals that aren't in stone yet, but things that are kind of in the background that you're working on that could really move the needle. Would you say that these opportunities are in Europe and they're in your military and defense sector, primarily financial services primarily, or is it really all over the board?

Speaker #5: Excellent . Okay . That's helpful . And then , you know , just maybe if we just touch on some of these large deals you're seeing in some , you know , it sounds like you're seeing more urgency , as you mentioned , from customers across , you started listing a segment here and there .

Speaker #5: And then you started basically covering all your segments . It seems that we're where would you say if you could just highlight like maybe a handful of , of potential , maybe , maybe deals that aren't in stone yet , but things are kind of in the background that you're working on that could really move the needle .

Speaker #5: Would you say that these , these opportunities are in Europe and they're in your defense , your military and defense sector , primarily the financial banking , financial services , primarily , or is it really all over the board ?

Jack Vander Aarde: Where are you seeing the largest needle mover opportunities that maybe you haven't talked about explicitly yet?

Speaker #5: Where are you seeing the largest needle opportunities that maybe you haven't talked about explicitly yet?

Mike DePasquale: Well, you know, for sure, and we've discussed this before, we've developed quite a niche in defense and in government right now that including and incorporating our biometrics is getting significant uptake. I don't have to remind you of the geopolitical scenario we're dealing with and certainly the sense of urgency around security. Within that, within our niche, we have a sub-niche which is focused on intelligence and information. That's top priority. Our solutions not only provide the level of security that's required, but convenience, availability, and scalability, and that is critical and important in those segments. We're seeing the business on a global basis, and the expansion will be on a global basis. It will be in EMEA, in Europe, and in the Middle East.

Speaker #3: Well , you know for sure . And we've discussed this before . We've developed quite a niche in defense and in government right now that including in incorporating our biometrics is getting significant uptake .

Speaker #3: So I don't have to remind you of the geopolitical scenario we're dealing with . And certainly the sense of urgency around security with within that within our niche , we have a sub niche , which is focused on intelligence and information .

Speaker #3: And so that's top , top priority . And our solutions , not only provide the level of security that's required , but convenience and availability and scalability .

Speaker #3: And that is critical, and important in those segments. We're seeing the business on a global basis, and the expansion will be on a global basis.

Speaker #3: It will be in EMEA , in Europe and in the Middle East . We have a couple of very large opportunities in South America right now that we're working with some very large partners , notorious partners , and the relationship that we announced just a couple of weeks ago with TD cynics , as you know , they're one of the largest resellers and vars in their global .

Mike DePasquale: We have a couple of very large opportunities in South America right now that we're working with some very large partners, notorious partners. The relationship that we announced a couple of weeks ago with TD SYNNEX. As you know, they're one of the largest resellers and VARs. They're global, but certainly here in the US, and they're very focused on the state, local, and federal business, and they are going to help us, as a force multiplier, grow our business there as well. It's across the board. I mean, we have opportunities, for example, in the gambling space, right? To secure access to information in banking, in both large national banks as well as some regional banks as well.

Speaker #3: But certainly here in the U . S and they're very focused on the state , local and federal business . And they are going to help us as a force multiplier , grow our business there as well .

Speaker #3: So it's across the board . I mean , we have opportunities , for example , in the in the gambling space , right , to secure access to information in banking , in both large national banks as well as some regional banks as well in healthcare , some national ministries , all the way down to hospitals .

Mike DePasquale: In healthcare, some national ministries all the way down to hospitals. As you know, we've been in that business for a long time. You know, we cut across every sector of the economy, but certainly in the regulated space, that's where I see continued growth. Let's put it this way, if you're a defense or a government contractor right now, your business is going to blossom and grow. Each of those contractors, forget about the government themselves, has to secure at the NIST level, right? They have to secure and meet the compliance hurdles that are required to do business with the government, and that's a huge opportunity for us. That's why our relationship with TD SYNNEX, I think, is going to blossom and be significant here domestically.

Speaker #3: As you know , we've been in that business for a long time . So , you know , we we cut across every sector of the economy , but certainly in the regulated space , that's where I see continued growth .

Speaker #3: And it's not , let's put it this way , if you're a defense or a government contractor right now , your business is going to blossom and grow .

Speaker #3: And each of those contractors forget about the government themselves , has to secure at the highest level , right ? They have to secure and meet the compliance hurdles that are required to , to do business with the government .

Speaker #3: And that's a huge opportunity for us. And that's why our relationship with TD Synnex, I think, is going to blossom and be significant here domestically.

Jack Vander Aarde: Fantastic. I appreciate that, Mike. That's all I have for you. Wish you best of luck, and I'll look forward to speaking soon.

Speaker #5: Fantastic. I appreciate that, Mike. That's all I have for you. Wish you the best of luck and look forward to speaking soon.

Mike DePasquale: Very good. Thank you, Jack.

Speaker #3: Very good . Thank you Jack .

Operator: Again, if you have a question, please press Star then one. The next question is from Dan Kamis, a private investor. Please go ahead.

Speaker #1: Again , if you have a question , please press star . Then one the next question is from Dan Camus , a private investor .

Speaker #1: Please go ahead .

Dan Kamis: Hello, guys.

Speaker #6: Hello , guys .

Mike DePasquale: Hi, Dan.

Dan Kamis: Hey. Were your expenses in Q1 about the same as Q4?

Speaker #3: Hi , Dan .

Speaker #6: Hey. Where are your expenses in the first quarter? About the same as the fourth quarter.

Mike DePasquale: Well, we haven't reported the quarter, so I can't comment on, you know, the exact numbers for expense and so forth. We did and do believe, you know, our revenue is gonna be in the range that we predicted. I certainly, you know, Q1 should be similar to all of the other quarters. Sometimes events like, for example, when we attend a large event and we spend money perhaps there, it could be a little bit higher. We are relaunching our website right now and planning to do so early in Q2. You know, there might be some expense associated with that, but other than that, we're pretty stable.

Speaker #3: Well we haven't we haven't reported the quarter . So I , I can't comment on , you know , the exact numbers for expense and so forth .

Speaker #3: We did . And do believe , you know , our revenue is going to be in the range that we predicted . But I , you know , certainly the first quarter , you know , should be similar to all of the other quarters .

Speaker #3: Sometimes events , like , for example , when we attend the large event and we spend money , perhaps there , it could be a little bit higher .

Speaker #3: We are relaunching our website right now and planning to do so early in the second quarter . So , you know , there might be some expense associated with that .

Speaker #3: But other than that, we're pretty stable.

Dan Kamis: Okay, we should see pretty significant improvement in cash flow in Q1, it sounds like. Should we expect, or can you give us any clue as to what to expect for expenses in R&D in 2026?

Speaker #6: Okay , so so we should see pretty significant improvement in cash flow in the first quarter . Sounds like should we expect or can you give us any clue as to what to expect for expenses in R&D ?

Speaker #6: In 2026 ?

Mike DePasquale: I think I mentioned in my prepared remarks that we're about to launch one of the most significant upgrades and enhancements for our PortalGuard platform, version seven. So a lot of that money has already been spent. You know, we've been working on this for nearly a year and a half, 2 years. I would think our R&D expenses are gonna be relatively stable. I don't expect them to grow significantly. We're really hoping, and we have a very intensive initiative going on within the company to assess AI-related tools, and we have contracts with a number of them. We're assessing where and how we can use those, not only within all facets of the business, but within development to do two things.

Speaker #3: We're at , I think I mentioned in my prepared remarks that we're about to launch one of the the most significant upgrades and enhancements for our Portal Guard platform Version seven .

Speaker #3: So a lot of that money is already been spent . We've , you know , we've been working on this for nearly a year and a half , two years .

Speaker #3: And so I, I would think our R&D expenses are going to be relatively stable. I don't expect them to grow significantly.

Speaker #3: And we're really hoping and we have a , a , a very intensive initiative going on within the company to assess AI related tools .

Speaker #3: And we , we have contracts with a number of them . And we're assessing where and how we can use those , not only within all facets of the business , but within development to , to do two things .

Mike DePasquale: Number one, become more efficient and more productive, but ultimately reduce cost and increase our time to market.

Speaker #3: Number one, become more efficient and more productive. But ultimately, reduce costs and increase our time to market.

Dan Kamis: I see. Anything revolutionary about this version, or is it a marginal improvement, an upgrade in your offerings that you can talk about?

Speaker #6: I don’t see anything revolutionary about this version, or is it a marginal improvement and upgrade in your offerings that you can?

Speaker #7: Talk ?

Mike DePasquale: It's significant, and we'll be announcing that shortly. Especially for partners, Dan, where some of our larger partners want to be able to control, to mix and match, and to deploy because everything is subscription now. To be able to deploy licenses, pull them back if, for example, the customer you know, decides to cancel, and to utilize those licenses in other you know, accounts and so forth. The ability to have multi-tenant management for those partners is a really big deal, and that's you know, part and parcel of what we're doing here, among many other enhancements for security, the incorporation of mobile technologies, a whole host of different options and availability. A lot of this focused on making our partners more involved in the dashboard and management of the solution set.

Speaker #3: It's it's significant and we'll be announcing that that shortly , especially for partners . Dan , where some of our larger partners want to be able to control , to mix and match and to deploy because everything is subscription now , to be able to deploy licenses , pull them back .

Speaker #3: If , for example , the customer , you know , decides to cancel and to utilize those licenses in other other , you know , accounts and so forth .

Speaker #3: So the ability to have multi-tenant Management for those partners is a really big deal . And that's , you know , part and parcel of what we're doing here amongst many other enhancements for security .

Speaker #3: The incorporation of mobile technologies , a whole host of of different options and availability . But a lot of this focused on making our partners more involved in the dashboard and management of the solution set .

Dan Kamis: I see. Is there anything, I guess, in that 30% increase you mentioned in the $1 million foreign bank renewal that you're particularly excited about, or was it just more licenses or?

Speaker #6: I see. Is there anything, I guess, in that 30% increase you mentioned in the $1 million foreign bank renewal that you're particularly excited about, or was it just more licenses, or...

Mike DePasquale: Excited about a couple of items. Number one, obviously the growth and the increase in the user population, but also the assessment of our more advanced technologies, like one-to-many, that could dramatically change the way they operate and increase the size of this contract, as we continue through this year and into next. I'm very excited about that opportunity. I think it's revolutionary because it could be one of the largest deploys of this type and this nature in the world. We're enthused about that. There's a lot of growth potential ahead for that as well.

Speaker #3: Excited about a couple of items ? Number one , obviously the growth and the increase in the user population , but also the assessment of our more advanced technologies like one to many that could dramatically change the way they operate and increase the size of this contract .

Speaker #3: As we continue through this year and into next . So I'm very excited about that opportunity . And I think it's revolutionary because it it could be one of the largest deploys of , of this type .

Speaker #3: And this nature in the world . So , so we're enthused about that . There's a lot of growth potential ahead for that as well .

Dan Kamis: Are you saying that you're gonna be scrubbing their database on a one-to-many basis?

Speaker #6: Are you saying that you're going to be scrubbing their database on a one-to-many basis?

Mike DePasquale: No. You know, they already do that. I mean, that's parochial. I'm talking about some more advanced use of the technology.

Speaker #3: No , no , no , I , I , I , you know , they , they do that . I mean , that that's , that's parochial .

Speaker #3: I'm talking about some, some more advanced use of the technology.

Dan Kamis: Oh, okay. I guess we'll be hearing about that then.

Speaker #6: Oh, okay. I guess we'll be hearing about that then.

Mike DePasquale: Hopefully.

Speaker #7: Hopefully

Dan Kamis: You said it's a good start toward our goal of achieving breakeven results in early 2026. I'm just trying to clarify that statement in your release. Are you saying that there's a potential for breakeven in Q2, or were you just saying that you basically reduced your cash burn in Q1?

Speaker #6: It's you said it's a good start toward our goal of achieving break even results in early 2026 . Are you saying there's a I'm just trying to clarify that statement in your release .

Speaker #6: Are you saying that there's a potential for breakeven in the second quarter, or were you just saying that you basically reduced your cash burn in the first quarter?

Mike DePasquale: I think, you know, we're saying that our goal this year, right, is to be breakeven or profitable and to be cash flow positive, and that's our objective. You know, when we get there, I can't specifically say, but it's—we should be there in the early part of 2026. That's our goal and objective.

Speaker #3: I , I think , you know , we're saying that our goal this year , right , is to be break even or profitable and to be cash flow positive .

Speaker #3: And that's our objective . And , you know , when we get there , I , I can't specifically say , but it's , it's , I , we should be there in the early part of 2026 .

Speaker #3: That's our goal and objective.

Dan Kamis: I mean early.

Mike DePasquale: Again, it's not that sophisticated, right? You can look at our-

Speaker #6: And I mean ,

Speaker #3: Again , it , it , it's not that sophisticated , right ? You can look at our expenses in the , you know , I'm saying $2 million range , right .

Dan Kamis: All right.

Mike DePasquale: ... expenses in the you know, I'm saying $2 million range, right? Give or take, right? Could be higher, could be a little bit lower. You can look at our revenue in the $2 to, you know, $3 million range. You can look at our gross margins in the 80% range, and you can figure it out. You know, that, again, that's our goal and objective, right? To get there, to be there. I believe we have, as I mentioned and closed in my prepared comments, I believe we have the team, we have the partners, we have the product, and now we have, I'll call it a very captive market, especially again in our niche and on the regulated side, to be able to get there.

Speaker #3: Give or take . Right . Could be higher , could be a little bit lower . You can look at our revenue in the two to $3 million range .

Speaker #3: You can look at our gross margins in the 80% range . And you can figure it out . So you know , again that's our goal and objective , right ?

Speaker #3: To to get there , to be there . And I believe we have , as I mentioned in closed in my prepared comments , I believe we have the team , we have the partners , we have the product .

Speaker #3: And now we have , I'll call it a very captive market , especially again , in our niche and on the regulated side , to be able to get there .

Dan Kamis: Got it. Any evidence in Q1? I mean, I think one big has always been US businesses adopting passwordless adoption. You're indicating there's a significant move in that direction. I'm just wondering if there's any evidence in Q1 that US businesses are willing to purchase from BIO-key rather than their usual large competitors.

Speaker #6: Got it , got it . Any evidence in the first quarter ? I mean , I think one bug has always been U .

Speaker #6: Businesses are adopting passwordless authentication. I mean, you're indicating there's a significant move in that direction. I'm just wondering if there's any evidence in the first quarter that U.S.—

Speaker #6: Businesses are willing to purchase from BIO-key rather than their usual large competitors?

Mike DePasquale: Yes.

Dan Kamis: And-

Speaker #3: Yes , yes , no doubt new business . No question . Yes . And again , that partnership look , you know , Synnex is a large company .

Mike DePasquale: Yes. No doubt. New business, no question. Yes. Again, that partnership, look, you know, Synnex is a large company. They're a large public company. You can look them up. They're very enthused about offering our solutions and technology, especially in their public sector business. I mean, that's a very strong proof point that we can expand and them as a force multiplier, right? With the customer base they have, nevertheless, the partner network they have, you know, we should see significant growth in that business.

Speaker #3: They're a large public company. You can look them up. They're very enthused about offering our solutions and technology, especially in their public sector business.

Speaker #3: So I mean , that's a very strong proof point that we can expand and them as a force multiplier , right . With the customer base , they have nevertheless the partner network , they have , you know , we should see significant growth in that business .

Dan Kamis: Well, along that line, I think recently when you've mentioned a partner announcement, there's usually been some underlying deal that supports it. Is that what's going on with TD SYNNEX? Or-

Speaker #6: Well, along that line, I think recently when you mentioned a partner announcement, there's usually been some underlying deal that supports it.

Speaker #6: Is that what's going on with the T D cynics?

Mike DePasquale: Yeah. We have a whole series of deals going with them, and you know, you'll hear more about it as we're able to announce them.

Speaker #3: Yeah , we have we have a whole series of deals going with them . And you know , you'll hear more about it as we're able to announce them .

Dan Kamis: All right. That sounds good. Can you say anything about your ARR? Where is that running in Q1? Or, are we still between $6 million and $7 million?

Speaker #6: All right . That sounds good . Can you say anything about your a r r r where's that running in in the first quarter or are we still between 6 and 7 million ?

Mike DePasquale: Yeah, we're in that range. You know, again, other than our legacy customers, we have a handful of legacy customers; for the most part, our business is a subscription business. Even those legacy customers, we're migrating them, especially now that we have new and enhanced features and products; we have a good reason to be able to migrate them. That sector of our business is definitely substantial. Multi-year deals are our total focus. Even when we're on-prem, we can be subscription, and we can be multi-year and still fit within the confines of their requirements. That's another really big advantage that we bring to the table, and that's why I believe, in the regulated industries, we're doing so well, where many, especially international, clients do not want hosted solutions.

Speaker #3: Yeah . We're in that range . You know , again we've transitioned other than our legacy customers , we have a handful of legacy customers for the most part , our business is a subscription business .

Speaker #3: And even those legacy customers , where , you know , we're migrating those , migrating them , especially now that we have new and enhanced features and products , we have a good reason to be able to migrate them .

Speaker #3: So that sector of our business is , is definitely substantial and multi-year deals are , are , are our total focus . And so even when we're on prem , we can be subscription and we can be multi-year and still fit within the confines of their requirements .

Speaker #3: So that's another really big advantage that we bring to the table . And that's why I believe in the regulated industries . We're doing so well where many , especially international clients , do not want hosted solutions .

Mike DePasquale: You know, everything here is kinda moving to the web, right? To AWS or Oracle or, you know, Azure, no question, here domestically. However, internationally, there's still a penchant for storing and housing customer data on-prem, and we can go both ways. We can offer our customers the opportunity to do it either way, and more importantly, and this is a new feature in Version 7.0, to be able to do both at the same time and to be able to transition seamlessly. That's a powerful differentiator for us.

Speaker #3: So , you know , everything here is kind of moving to the web , right ? To , to , to AWS or Oracle or , you know , Azure .

Speaker #3: No question here . Domestically , however , internationally , there's still a penchant for storing and housing customer data on prem . And we can go both ways .

Speaker #3: So we can offer our customers the opportunity to do it either way . And more importantly , and this is a new feature in version seven , to be able to do both at the same time and to be able to transition seamlessly .

Speaker #3: So that's a powerful, powerful differentiator for us.

Dan Kamis: Got it. A couple more, I think. Any changes in the Boumarang asset or any news on that?

Speaker #6: Got it. A couple more. I think—any changes in the boomerang asset or any news on that?

Mike DePasquale: No. I know they have an S-1 filed now, which I think is public information. They've done a couple of acquisitions of a like product, and that's really all I have at this point. I have no other information.

Speaker #3: No, I know they have an S-1 filed now, which I think is public information. And looking at it, they've done a couple of acquisitions of like product, and that's really all I have at this point.

Speaker #3: I have no other information.

Dan Kamis: No change in that asset value at all.

Speaker #6: So no change in that asset value at all .

Mike DePasquale: No.

Speaker #8: No .

Dan Kamis: Last question is, I think you probably have about 10 business days to get the stock above a buck to forestall a reverse split. At this point, is there anything you think that could still forestall such a split?

Speaker #6: Last question is, I think probably you have about ten business days to get the stock above a buck before you have to stall or reverse split.

Speaker #6: At this point, is there anything you think that could still forestall such a split?

Mike DePasquale: Yeah. You know, that's a great question. I didn't even think about quite honestly, the proxy that's out there. Obviously belt and suspenders, right? We're not gonna risk the potential to lose our Nasdaq listing, right? That's not gonna happen. Obviously the board, it was prudent for us to file the proxy. We have until early May, I think the first week of May, to have the stock trade for 10 consecutive days over a dollar. If that happened, we certainly would not do the reverse split, but if we need to, we certainly will. Our shareholder meeting is scheduled late April. I'm hoping that in the next month that we're gonna be able to find our way clear to seeing the stock trade up.

Speaker #3: Yeah . You know , that's a great question . I didn't even think about quite , quite honestly , the proxy that's out there , obviously belt and suspenders , right .

Speaker #3: We're not going to risk the potential to lose our Nasdaq listing. Right? That's not going to happen. So obviously, the Board felt it was prudent for us to file the proxy.

Speaker #3: We have until early May—I think the first week of May—to have the stock trade for ten consecutive days over a dollar.

Speaker #3: If that happened , we certainly would not do the reverse split . But if we need to , we certainly will . And so our shareholder meeting is scheduled late April .

Speaker #3: I'm hoping that in the next month we're going to be able to find our way clear to seeing the stock trade up.

Mike DePasquale: As you know, this geopolitical scenario hasn't been kind to anyone. It doesn't matter who you are, what space, what industry, it's been broad-based and it's a difficult market, so who knows? We certainly are in a position to do whatever we need to do to protect ourselves, especially now as the wind is at our back and we're feeling much more optimistic about, you know, significant scale of our business going forward. I hope we don't have to do it, Dan, but if we do, we will.

Speaker #3: But as you know , this geopolitical scenario hasn't been kind to anyone . And it doesn't matter who you are , what space , what industry it's been broad , broad based and it's a difficult market .

Speaker #3: So who knows . But we certainly are in a position to do whatever we need to do to protect ourselves , especially now as the wind is at our back and we're feeling much more optimistic about , you know , significant scale of our business going forward .

Speaker #3: So I , I hope we don't have to do it , Dan . But if we do , we will .

Dan Kamis: Okay. Well, sounds like the Q1 was a really good job and I hope moving forward we'll have some more good news. Thank you.

Speaker #6: Okay . Well , sounds like the first quarter is , was it was a really good job and I hope moving forward we'll have some more good news .

Mike DePasquale: Great. Thank you.

Speaker #6: Thank you .

Speaker #3: Great .

Speaker #8: Thank you .

Operator: Showing no further questions, this concludes the question and answer session. I'll ask Mike DePasquale to provide any closing remarks.

Speaker #1: Showing no further questions. This concludes the question and answer session. I'll ask Michael DePasquale to provide any closing remarks.

Mike DePasquale: Thank you again for joining today's call. We genuinely appreciate your interest in BIO-key, and I look forward to updating investors on our progress on our Q1 call in May. In the interim, we'll update investors via press release of significant developments. If you have any questions, please reach out to our IR team, whose contact information is in today's press release. With that, operator, please conclude the conference. Thank you, everyone, and have a great day.

Speaker #3: Thank you again for joining today's call. We genuinely appreciate your interest in BIO-key, and I look forward to updating investors on our progress on our Q1 call in May.

Speaker #3: In the interim, we'll update investors via press release of significant developments. If you have any questions, please reach out to our IR team.

Speaker #3: Whose contact information is in today's press release . With that operator , please conclude the conference . Thank you , everyone , and have a great day .

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Q4 2025 BIO-key International Inc Earnings Call

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