BIO-key International, Inc.

for standing by, and welcome to BioKey International's 2024 Fourth Quarter 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, Thursday, March 27, 2025. I will now turn the call over to Bill Jones, Investor Relations. You may proceed. Thank you, Rocco.

Today, our hosts are BioKeys Chairman and CEO, Mike DiPasquale, and its CFO, C.C. Welch. As a reminder, today's conference call and webcast, as well as answers to investor questions, include forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially from current expectations. Words including anticipate, believe, estimate, expect, plan, project, or similar words generally express and identify forward-looking statements. Such statements are made based on management's beliefs, assumptions, and 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 risks that may affect future performance of the company, Please see risk factors in the company's annual report filed on Form 10-K with the Securities and Exchange Commission. We caution listeners not to place undue reliance on forward-looking statements which speak only as of today. The company undertakes no obligation to revise or disclose forward revisions to forward-looking statements to reflect circumstances and events that occur after today's call. I will now turn the conference over to Mike to begin. Mike?

Thanks, Bill. Good morning, and thank you for joining today's call. After my prepared remarks, I will turn the call over to CeCe for a financial overview, and then we will open the call to investor questions. As highlighted in today's release, we substantially strengthen the margins, profitability, and strategic potential of our business in 2024, putting us in a far stronger position to grow and and move the business to profitability and positive cash flow. Also, after the close of 2024, we substantially strengthened our financial position with approximately $3.8 million in proceeds from a Warren exercise. Also, at the same time, we were able to reduce our outstanding debt to approximately $730,000 from approximately $1.5 million at the end or close of 2024 to what is now currently approximately $730,000. This puts us in a much stronger position to continue to execute on our growth plans. We accomplished most of this by continuing to expand our base of customers and repeat customers. and by exiting our low-margin software and services relationship with Swivl Secure to focus our full efforts on core BioKey solutions such as PortalGuard IAM and our identity-bound biometrics. These solutions have far stronger technology, competitive positioning, and customer value, and also deliver far higher gross margin contributions than the third-party solutions that played a helpful role for us in building our presence in Europe, the Middle East, and Africa. Our efforts enabled us to increase high-margin software license fee revenue by 20% to $5.2 million in 2024, and excluding the impact of hardware reserves in both periods, 2024 gross profit rose 8% to $5.4 million for an adjusted gross margin of 78%, compared to an adjusted margin of 64% in 2023. The business transition did, however, result in the loss of lower margin services revenue, which offset the growth in license fees and contributed to an 11% decline in revenue to $6.9 million in 2024. We were also able to further reduce operating expenses by 6% in 2024, and we were able to trim our cash burn by 23% to 2.9 million in 2024 from 3.8 million in 2023. With this transition behind us, we entered 2025 in a much stronger position to drive top-line growth and to bring more of that revenue to the bottom line. Importantly, we are already seeing very encouraging order activity and customer interest in our solutions so far in 2025, and that underscores our optimism for the business this year and in the future. Though we have long spoken of expanding breadth of cybersecurity vulnerabilities, actual breaches and the limitations of many widely used identity and access management solutions, many of the IT teams we speak with are recognizing the urgent need for them to deploy stronger and more user-friendly and cost-effective solutions to protect their systems and data. There's a growing recognition of the inherent vulnerabilities, growing costs, and usability challenges of widely deployed current authentication methods that rely on passwords, mobile phones, or tokens. 2024 was the first year of the SEC's new cybersecurity risk management and reporting rules for public filers, elevating the importance of these issues with senior management and directors, in addition to compliance requirements for cyber insurance policies. This growing awareness is helping customers appreciate the substantial value we have built over the past years in forging our flexible suite of passwordless, phoneless, and tokenless authentication solutions. On top of increasing cybersecurity demands and high-profile incidents, the shortage of cybersecurity talent is also challenging organizational ability to prevent or respond to cyberattacks and threats. This current backdrop, though scary, is proving ideal in supporting the secure and cost-effective solutions we offer. And as a result, we are seeing very encouraging interest and demand for our solutions in mission-critical national defense, financial services, and education applications. We're also seeing growing strength in Europe, the Middle East, and the Asia region, or EMEA countries. where the security and value of our passwordless, phoneless, and tokenless authentication solutions enabled by our unique biometric capabilities are gaining growing recognition and adoption. As an example, in late 2024, we secured a 910,000 contract with a longtime foreign financial services client to implement our most secure, and user-friendly one-to-many biometric identification technology across its branches. The client has already enrolled fingerprint biometrics for over 25 million of its customers and is now upgrading our fingerprint-only identification technology, which enables our client to positively identify each individual from its universe of enrolled customers solely via a fingerprint scan. This enhanced solution is expected to trim approximately 30 seconds from each of their customer interactions, resulting in an improved customer experience, as well as a substantial long-term savings for them. Another example is our longstanding relationship with one of the world's most esteemed defense ministries, which substantially expanded its deployment of our biometric solutions in 2024, a trend we expect to continue. We currently provide authentication security for over 80,000 ministry personnel and expect the size of this deployment to double or triple in the coming years as work under a new three-year procurement arrangement that was initiated in Q3 2024 has begun. For perspective, this customer has already contributed a total of over 3.3 million in hardware and license revenue to date. Similarly, We referenced in today's release the partnership we forged with the National Bank of Egypt and our partner, Raya Information Technology, to integrate our PortalGuard IAM platform and with their leading industry governance solution. This project will initially secure the digital access and identities of the bank's 30,000 employees, and we believe there's a future potential to expand the deployments ultimately to its millions of customers. Turning to the U.S., we have built a very strong presence in education to over 100 institutions representing 300 individual single opportunities, serving over 4 million end users. We continue to build our presence in this market to new colleges and universities that are adding PortalGuard, their PortalGuard platform, to their use case. So far in 2025, the Wyoming Department of Education deployed Portal Guard IDAS, and we recently executed a strategic partnership with California Education Technology Joint Powers Authority, which guides IT solution procurement for 195 K-12 schools and districts, serving over 2.5 million students. This new relationship positions BioKey to provide our IAM solutions to those member schools. As we also referenced in today's release, we have been working to see future business opportunities in emerging markets, including food and food safety, Internet of Things solutions, drone technology, and autonomous vehicles. We partnered with Fiber Food Systems, Inc., and exchanged Bayuki shares to secure a stake in an innovative drone technology developer, Boomerang, Inc., which will surely require strong identity and access management solutions. The equity exchange strengthened our balance sheet and also led to a strategic collaboration seeking to integrate our biometric technology in aerospace, defense, healthcare, logistics, and smart cities applications in development by Gwynn Partners, an engineering and design firm. These initiatives are in the early stages and will take time to develop. but we believe they represent exciting potential commercial opportunities for BioKey down the road. On the current business front, 2025 is off to a solid start, and we feel well positioned to deliver improved top and bottom line performance. We've transitioned our EMEA focus to BioKey solutions and are seeing meaningful signs of customer engagement, particularly in Europe and the Middle East. Globally, we are also seeing growing appreciation for the value of our unique passwordless, boneless, and tokenless IAM solutions and core biometric technology, all of which underscores our optimism. We also continue to focus on opportunities to reduce cost and lower our break-even level. At the same time, we seek to drive growing sales through our channel alliance partner program and our internal sales teams. In addition, we launched PortalGuard IDAS on the AWS marketplace last fall, enabling AWS customers to seamlessly purchase and integrate PortalGuard into their enterprise. Today, our business is predominantly subscription-based and partner-centric, as roughly 50% of our new PortalGuard business is sold through partners, while nearly all of our EMEA business is partner-based. As a result of these initiatives, and with approximately two-thirds of our revenue derived from contracted ARR, we are very confident that BioKey will return to growth and deliver improved profitability in 2025. With that overview, I would like to turn the call over to our CFO, Cece Wells, to review the financials before we take investor questions. Cece?