BIO-key International, Inc.

Good morning, everyone. Thank you for standing by. And welcome to BioKey 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, March 31, 2026. I will now turn the call over to Bill Jones, Investor Relations. You may proceed.

Bill Jones Thank you, Gary. Hosting today are BioKeys Chairman and CEO, Mike DiPasquale, and its CFO, C.C. 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. 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. 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?

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 Bioki for improved top-line and bottom-line performance in 2026 and future periods. Kicking off the year, we now anticipate Q1 26 revenue of approximately $2.2 million, representing a 37% increase over Q1 in 2025 and a larger sequential improvement over Q4 25 as well. 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. 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. Despite revenue recognition timing related to this customer, the relationship continues to grow nicely, and earlier this month, they executed and 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 regions. As anticipated, this transition is beginning to benefit our gross margin and growth prospects as we rebuild our EMEA pipeline with BioKey-only solutions and sales opportunities that carry substantially higher net margins. 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 endpoints. 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 BioKey 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. 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 phone-less and token-less authentication that leverages biometrics. Our PassKey used solution provides WebKey-secured hosted FIDO2 PassKey authentication for token-less, phone-less, and password-less authentication with biometric efficiency. 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. More than 70% are already moving towards passwordless adoption, and about three quarters of enterprises expect to invest in pass keys or passwordless tools this year. 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 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 portal guard PASTE and biometric solutions provide infinite flexibility in deploying to any component of a company's employee population despite infrastructure and job functions. 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 and 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, BioKey formally introduced the new FEI FAP20 certified EcoID3 fingerprint scanner. EcoID3 is our most advanced reader which pairs encrypted device-to-host communication with liveness detection for faster, more secure authentication. EcoID3 is primarily for highly regulated industries and the most sensitive zero-trust environments, such as defense and banking. We're also finishing up work on our most significant update ever for our Portal Guard 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 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 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 US business and nearly 100% of our international business is sold through a network of sales channel partners, including Amazon and TD Cynics, 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. 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 and several key verticals. We expect top-line expansion combined with expense management to meaningfully advance our goal of reaching our target again of break-even and profitability this year. And we are well-positioned in terms of financial liquidity to fund our growth plans. Given the growing adoption of BioKey's flexible, passwordless, tokenless, and phone-less 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.