BIO-key International, Inc.

Good morning, everyone. Thank you for standing by. And welcome to the BioKey International first quarter 2024 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, August 15, 2024. I would like to turn the call over now to Bill Jones with Investor Relations. Please go ahead.

Thank you, Rocco. Our hosts today are BioKeys Chairman and CEO Mike DiPasquale and CFO C.C. Welsh. As a reminder, today's conference call and webcast, as well as answers to investor questions, include forward-looking statements which are subject to certain risks and uncertainties that can cause actual realized results to differ from those currently expected. Words such as anticipate, believe, estimate, expect, plan, project, or similar words generally express and identify forward-looking statements. Such forward-looking statements are made based on management's beliefs and assumptions using information currently available as of today pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. For a complete description of these and other risks that may affect future performance of the company, please see Risk Factors in the company's annual report as filed on Form 10-K with the SEC. Listeners are cautioned not to place undue reliance on forward-looking statements which speak as of today's date only. BioKey undertakes no obligation to revise or disclose revisions to forward-looking statements to reflect circumstances or events that occur after today. Now, let us hand the conference to Mike to begin.

Thanks, Bill, and good morning, and thank you for all joining our call today. I'm pleased to report our Q2 results on time this quarter, issuing our Q2 release and filing our 10Q after the close yesterday. I feel we are back to our normal reporting cadence and I'm really happy to report that. After my remarks, CC will provide a brief overview of our financial performance, and then we'll open the call to investor questions. Due to factors outside of our control, Q2 revenue of $1.1 million fell below year-ago revenue of approximately $1.9 million, principally as a result of delays we experienced in the completion of approximately $450,000 and software license contracts in our EMEA business. Q2 was also impacted by lower services revenue related to customizations and upgrades for one large customer project in 2023 that didn't occur in 2022, in 2024 Q2. Importantly, our portal guard identity and access management franchise continued to grow supported by deployments and project expansions in healthcare and the public sector, as our installed base and new customers take advantage of the unique technical advances we've made over the past year. Recent deployments include the city of Williamsburg, Virginia, which enhanced its Zero Trust framework with Biokeys Identity Bound Biometrics, or IBB. For those who are not familiar, Zero Trust is a security paradigm that challenges the traditional notion that people and devices within a network can be inherently trusted. Instead, Zero Trust emphasizes continuous verification of trustworthiness in order to ensure maximum security. That's where BioKey's cutting-edge biometric technology comes into play. IVB puts each individual user at the center of cybersecurity. IVB is used for authentication and identification centrally storing biometric data in a secure way, preventing it from being stolen or reused, in order to create a unique biometric identity that is used in an ongoing basis to verify identity of the person taking action. Generally, we're talking about biometrics in the form of fingerprints or palm scans, but our systems are also compatible with facial voice and iris recognition as well. The core benefit of IBB is that it establishes trust and accountability that are rooted in a person's biometric identity so that organizations can be assured of each individual's genuine presence with full transparency and, more importantly, audit capabilities. By developing a zero-trust framework that uses BioKey's IBB, enterprises benefit from decreased susceptibility to attacks because our IBB authentication factors cannot be forgotten, shared, exchanged, stolen or forged. Enterprise-controlled enrollment prevents account handovers and ensures only approved individuals can use account privileges. BioKey IBB also eliminates the potential for a single point of failure by removing physical devices as potential vulnerabilities. As it is possible with local or device-based biometrics, such as those used on most cell phones. Importantly, we believe our patented technology and systems also provide superior flexibility and ease of use, as well as a lower total cost of ownership for zero-trust environments and other use cases, which include passwordless workflows, remote workforces, customer IAM, roving users, and shared workstations, such as in call centers. and in any workplace environment where mobile devices are not permitted. Given these advantages, BioKey has built a strong niche in highly regulated environments such as healthcare, banking, defense, and the government or public sector. In Q2, two notable clients, the University of Iowa Hospital and Dayton Children's Hospital, both expanded their BioKey portal guard deployments, and the Los Angeles LBTQ Center implemented a BioKey badge tap authentication solution, further demonstrating the versatility and flexibility of our systems to meet specific needs and use cases. Underscoring the strength of our solutions, BioKey received the Global InfraSec Hot Company Multi-Factor Authentication Award from Cyber Defense Magazine during the RSA conference this May in San Francisco. On our last call, we discussed our latest product innovation, PassTU. We launched this product in the second quarter, and initial customer reaction has been very favorable, with a number of Fortune 500 prospects interested in the solution. The beauty of PassTU is that it specifically addresses underserved workplace scenarios that involve roving users who share workstations, and more importantly, supports passwordless, and tokenless authentication. Mainstream authentication methods are based on something you have, such as your cell phone that receives a PIN or hosts an authenticator app or a phone-based passkey or a hardware token such as a YubiKey. However, device-based solutions are not ideal for workplace applications like on the manufacturing floor, in retail environments, call centers, healthcare, hospitality, or anywhere where roaming users require secure device access, particularly as workplaces often prohibit the use of phones due to safety, data privacy, or personal distraction. This leaves FIDO keys as an other option. However, outfitting hundreds or thousands of workers with a $25 to $80 per user FIDO token that have a 25% annual replacement rate can be cost-prohibitive and impractical for many enterprises. Passkey U brings BioKey's biometric authentication to a hosted Passkey in the form of software, not hardware, allowing users to unlock their hosted Passkey with the touch of a finger at any of those shared workstations. Workers carry nothing, and Passkey U provides unmatched, secure, phone-less, token-less, and password-less authentications. PASCU also easily integrates into existing Zero Trust frameworks and including our competitor and partner IAM platforms such as Microsoft, Entra, Okta, Ping, and Duo without requiring any special configuration and includes high margin annual recovering revenues. In 2023, we began a strategy to partner with larger IAM providers like these, as well as SailPoint and ForgeRock. PaaS TU represents a powerful differentiated tool we can bring to these large platforms to better serve their customers' needs. So again, we believe PaaS TU has enormous market potential due to its ability to solve some of the most challenging IAM use cases. And the fact that it fits with already installed security infrastructures that I just mentioned. We fully expect that it will take time for our partners and customers to vet this new solution. So while we don't expect any significant contribution to our results this year, we are excited about the potential for this unique solution going forward. Today, we made an announcement that brings our PortalGuard iDesk platform and IBB authentication solutions to the Amazon Web Services marketplace. and that solution has gone live today. The Marketplace provides a digital catalog where customers can discover, purchase, and deploy software solutions designed to run on the AWS cloud services. By making our solutions available on the AWS Marketplace, prospective customers will be able to quickly and seamlessly purchase PortalGuard and our IBB solutions from anywhere around the globe. This is a force multiplier with a captive audience and great expectations to generate strong recovering revenues in the coming quarters. I've mentioned in the past, BioKey solutions are increasingly essential for enterprises who want or require cyber insurance or to meet new SEC cybersecurity risk management and reporting rules and government-mandated CISA regulations. These frameworks are really driving enterprises to prioritize spending on securing access to their IT systems and their data and information. So despite our lower-than-expected revenues this quarter, we remain very encouraged by the growing enterprise awareness of the importance of implementing secure, zero-trust, device-less IAM solutions, which form the core of BioKey's offerings. We remain focused on driving revenue growth and progressing our business to profitability and positive cash flow over the next several quarters. Importantly, we continue to grow our business of high margin annual recovering revenues that have solid potential to build on our base moving forward. Given our size, our financial performance will likely remain variable on a quarter-to-quarter basis and on a year-over-year basis due to the size and timing of customer contracts and commitments. And I'll make a comment here. Our average sales value, prospects' average sales value is going up significantly. And so that's a good thing in the context of larger deals, greater revenue opportunity. But sometimes it also means a lengthy or a longer sales process. And so despite quarterly variability, we remain confident in our ability to drive sequential growth on a full year basis in 2024. And we continue to seek and implement cost reduction opportunities to support our path to profitability and positive operating cash flow. We're also working to identify potential strategic opportunities to leverage our core expertise, products, and corporate assets and create value for our shareholders. We're spending a fair amount of time in this regard And given that we do not believe that our market cap of approximately $2.5 million adequately reflects the value of our technology, products, and customer base of approximately $6 million in high margin ARR, our strategic value is much higher. And so, again, even just the strategic value of our NASDAQ platform is significantly higher. For these and other reasons, we are optimistic regarding the future of our company, and we are grateful for the patience and support of all of our shareholders. Now let me turn the call to CeCe to review the financials before we take questions.