BIO-key International, Inc.

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Bio-key International's full-year 2021 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 29, 2022. I would now like to turn the call over to Kimberly Biddings, BioKey's Vice President of Product. Please proceed.

Great, thank you, and thank you for joining our call this morning. With me today are BioKey's Chairman and CEO, Mike DePasquale, Alex Rocha, BioKey's newly appointed President of BioKey EMEA, and our CFO, CeCe Welch. I will remind everyone that today's conference call and webcast 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, will, or similar words typically identify and express forward-looking statements. Such forward-looking statements are made based on management's beliefs and assumptions 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 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 future events or circumstances that occur after today. With that, I will turn the call over to Mike DePasquale. Mike?

Thanks, Kim, and good morning, and thank you for joining today's call. After my prepared remarks, I will turn the call back to Kim to review some of our sales and marketing initiatives, followed by Alex Rocha, to discuss our expanded opportunity in Europe, the Middle East, and Africa following our acquisition of Swivel Secure Europe earlier this month. And then CeCe will close with financial highlights. In 2021, we grew our revenues 80%, reduced our net loss by approximately 50%, and substantially strengthened our suite of product offerings and our global reach. With the Swivel Secure acquisition, We now have 60 employees and management to support our growth around the globe, including a multicultural team that speaks 12 languages and mans a 24-7 security operations center in Lisbon, Portugal. We advanced our core identity and access management business, launched a range of new solutions, expanded our channel partner program to over 100 partners, and commenced deployments for our large-scale civil ID-related contracts in Africa. Additionally, we forged a master agent referral program with Intellisys to offer PortalGuard as the first IAM platform in their extensive network. We also expanded deployments of our cloud-hosted PortalGuard iDAF solution, which supports 16 multi-factor authentication methods, including BioKey's advanced biometric solutions or identity-bound biometrics. We are achieving solid new customer engagement in higher education, enterprise, finance, and government verticals, forming a growing base of recurring software subscription revenue that we will look to build on in years to come. PortalGuard iDesk revenue currently accounts for approximately 80% of our total software and services revenue. Our continued investment in innovation and new product development enabled the launch of several new products and upgrades, including Mobile POS Pro, a handheld point-of-sale mobile commerce terminal with biometric ID verification targeted for deployments in Africa. We also introduced a line of FIDO2 compliance security keys for expanded authentication options. and launched our new EcoID2 compact USB fingerprint scanner with NIST-tested algorithms. Additionally, we debuted our single sign-on or SSO concierge solution, which eliminates the need for passwords for thick client applications. These enhanced solutions position BioKey to address a broader array of customer needs with state-of-the-art technologies. Bio-key also earned a number of industry awards and accolades in 2021 for our technology and solutions. Our company was also certified as a great place to work for the first time in our history. And also for the first time, Kim Biddings, who will speak momentarily and who gave the intro, was included in CRN's 2021 Woman of the Channel Power 100 list. We began initial hardware shipments on our large-scale Africa projects in 2021 after a range of external delays. These projects continue to represent very large revenue opportunities for our company, and there are increasing signs of growing momentum in 2022. We are currently supplying our Pocket 10 biometric fingerprint readers in a partnership with Specta, an online lending platform owned by Sterling Bank Nigeria. These departments are part of Nigeria's National Identity Management Commission's mandated citizen enrollment program. Subsequent to the end of the year, we acquired Swivel Secure Europe for approximately $2.25 million. The transaction substantially expands our international team, operations, customer base, and growth potential. and should make an important contribution to our 2022 performance and beyond. The CEO of Swivel Secure, Alex Rocha, has joined BioKey to lead our EMEA business and shortly he will discuss this significant growth opportunity for our company. The war in Ukraine and resulting sanctions have increased fears of significant potential cyber attacks on U.S. critical infrastructure. The U.S. Cybersecurity and Infrastructure Security Agency, or CISA, which is part of the U.S. Department of Homeland Security, recently issued an unusual shields-up warning to businesses that says they should be prepared to defend against cyberattacks potentially originating from Russia. The agency said every organization, large and small, must be prepared to respond to disruptive cyberactivity. The warning also indicated that state and local government entities were in the crosshairs of the attackers. This continues a history of CISA warnings about vulnerable password and other non-biometric credentials. Also in the past few weeks, two competitors in the IAM and authentication space were themselves hacked. What differentiates BioKey from these competitors is our expertise and our patented biometric technology. We have long held the belief that identity-bound biometrics, or our IBB, must be part of a robust multi-factor and holistic cyber defense. These recent breaches underscore the importance of IBB, which remains the only method of verifying the actual individual behind a transaction or data inquiry. Considering this backdrop and the progress we have made, we have never been more optimistic about our company's prospects. Between our PortalGuard business and Swivel Secure, we now serve an installed base of over 500 valued IAM customers. Our business is now predominantly recurring subscription-based revenue. In 2021, 40% of our new PortalGuard business was sold through partners. and virtually all of Swivel Secure's business is sourced via partners. In 2022, we expect more than 50% of our revenues to come from the channel and this partner-centric trend should continue going forward. Excluding Africa and hardware equipment, we expect 70% of our 2022 revenue will be contracted annual recurring revenue. Reflecting the growth drivers, we are initiating full-year 2022 revenue guidance in the range of $10 to $13 million, which would represent approximately a doubling of revenue relative to 2021. Within this range, we anticipate potentially break-even operations depending on our mix of hardware and higher-margin software revenues. Valuations for IAM and multi-factor authentication companies are some of the highest in the security sector. As we execute our growth strategy, we believe the market will recognize our progress. My focus is in ensuring that the momentum we have built continues into 2022 and beyond. With that, I'll turn the call back over to Kim.