BIO-key International, Inc.

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Bio-key International's first quarter 2021 conference call. During management's prepared remarks today, all participants will be in a 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, Friday, May 14, 2021. I would now like to turn the call over to Kimberly Johnson, BioKeys Vice President of Product. Please begin.

Thank you, and thank you for joining us this morning. With me on today's call are BioKeys Chairman and CEO Mike DePasquale, Chief Revenue Officer Fred Corcentino, and CFO CeCe Welch. I'd like to remind everyone that today's conference call and webcast may contain forward-looking statements that are subject to certain risks and uncertainties that may cause actual results to differ materially from those projected on the basis of these statements. Words such as estimate, project, expect, anticipate, believe, think, plan, may, or will, or similar words typically identify and express forward-looking statements. Such forward-looking statements are made based on management's beliefs and assumptions. made using information currently available, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For a complete description of these and other risk factors that may affect the future performance of Bio-key, please see Risk Factors in the company's annual report filed on Form 10-K and in other filings with the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on forward-looking statements which speak only as of today's date. The company undertakes no obligation to revise or disclose revisions to such forward-looking statements to reflect events or circumstances that may occur after today. Now, I will turn the call over to Mike DePasquale.

Thank you, Kim, and good morning, and thank you all for joining our call today. Let me first congratulate Kim on her being named by CRN, formerly known as Computer Reseller News, to their Woman of the IT Channel Power 100 list. The list recognizes the strengths, vision, and achievement of female leaders from vendors, distributors, and solution providers in the IT channel. So we are proud that Kim's leadership is being acknowledged in our industry and grateful for the contribution she is making to BioKey's success. Kim will say a few words about our marketing progress momentarily. On our last call, I said that we had never been more enthusiastic and opportunistic about BioKey's future. And our Q1 results demonstrate the momentum we are gaining across the business, the foundations of which we began laying last year. To date in 2021, We continue to see customer dialogues and business activity gradually moving towards more normalized levels following COVID-related disruptions. The silver lining of the pandemic, however, was its impact on rapidly moving enterprises of all types into a remote work-from-home model around the globe. We believe the work-from-anywhere or remote and hybrid work and study trends are largely here to stay. The rapid increase in demand for off-premises access to mission-critical data and applications outside the firewall has created unprecedented IT security and administration challenges. Bio-key helps enterprises meet these challenges with attractively priced identity and access management solutions that support over 16 different multi-factor authentication options including our patented industry-leading biometric capabilities. Biometrics are our core strength and a differentiator for Bio-key in the marketplace and we continue to believe that biometric factors provide the highest levels of authentication security and access reporting and will increasingly be utilized to defend against network intruders. We are also differentiated by our central biometric management system capabilities which are scalable to any size platform such as those required in mobile communication networks, large bank networks, and even on a national level such as for civil ID programs. As business activity gradually normalizes, we are ramping our sales and marketing initiatives and engaging with a growing list of customer prospects that can benefit from our solutions both directly and through our growing network of channel alliance partners. Reflecting the progress we are making in expanding and strengthening our business, our Q1 revenue rose more than 260% over Q1 last year and 78% sequentially over the fourth quarter. Part of that growth resulted from the initial launch of our African contracts, but even excluding these revenues, Our core business grew 13% sequentially over Q4 2020. We saw improving demand really across the business in the first quarter, including for our PortalGuard solution and particularly for our new cloud-hosted version, PortalGuard IDaaS, or Identity as a Service, that we launched in Q4. PortalGuard IDaaS is an ideal solution for today's where enterprises and institutions are increasingly moving their IT infrastructure to the cloud to benefit from less resource and asset-intensive model. Remote access challenges complicate cybersecurity for companies of various sizes across all industries. While multi-factor authentication is an essential part of any identity and access management strategy, organizations such as NIST, the National Institutes for Standards and Technology as well as the FBI have made very clear statements that traditional methods such as passwords and phone-based messages such as SMS codes and one-time password generators are very vulnerable to hackers and cyber attacks. These vulnerabilities increase the likelihood of losing control over access to mission-critical data as end users can share a credential or enroll additional users into their phones, for example, without the relying party's consent. Further, tokens have lifestyle costs, can be lost, and present other challenges. According to the 2020 Verizon Data Breach Investigation Report, 81% of hacking-related breaches leverage stolen or weak passwords. These findings support the adoption of passwordless workflows using phone apps secured with user-controlled device-based biometrics or other factors. While more secure than passwords, account sharing, unauthorized delegation, and SIM swapping have innate challenges that make it unsuitable for robust enterprise-level security. With that, I'd like to turn it over to Fred. Oh, excuse me. I have a couple more paragraphs that I want to go through. To advance the breadth of our biometric capabilities, earlier this week, we launched MobileAuth with Palm Positive. We made that announcement on Monday. That's a mobile app that brings seamless biometric authentication to iOS and Android mobile devices. MobileAuth is an easy-to-use app that requires no special hardware. as it leverages the device camera to capture biometric data for authentication into cloud-hosted assets. We are very excited about this innovative new technology as it expands our support into mainstream portable devices and enables true cloud-based authentication of the individual seeking access versus device-level authentication based on factors that are not known to the network. Also, the startup of our African projects in Q1 contributed to our strong first quarter performance, with revenue of $680,000 related to initial fingerprint hardware shipments to support biometric enrollment in Nigeria. We expect increasing activities from these contracts throughout 2021, and at the same time, we work to develop other opportunities in neighboring countries and across Africa. Importantly, we are very well-funded to execute on our growth strategies and fully tap the sales potential of our expanded team, enhance product portfolio, and growing partner relationships. Our financial strength allows us to make prudent investments in our business, including potential partnerships, tuck-in acquisitions, new product development, as well as to fund additional sales and marketing resources and initiatives. Fred will discuss some of our growth plans, and CeCe will review our Q1 financials. We expect the positive trends experienced in Q1 to build over the balance of 2021, supported by our contract backlog and growing pipeline of opportunities, our growing base of recurring revenue, and the improving outlook for IP security solutions, particularly in North America, Africa, and Asia. We continue to anticipate revenues of $8 to $12 million for full fiscal 2021, with potential upside mainly related to our African business, as well as some other opportunities. The midpoint of this range would represent growth of over 250% versus fiscal 2020, and depending on the mix of hardware and software revenue, would likely position us for profitability for the full year. Now, I will turn the call over to Fred to highlight a few key developments and revenue opportunities that we see in our business. Fred?