Good morning, ladies and gentlemen. Thank you for standing by, and welcome to BIO-key International's First Quarter 2022 Conference Call. During management's prepared remarks all participants will be 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, Monday, May 16, 2022. I would now like to turn the call over to Kimberly Biddings, BIO-key's Vice President of Product. Please proceed.

Thank you, and thank you for joining our call this morning. With me today are BIO-key's Chairman and CEO, Mike DePasquale; and our CFO, Ceci Welch. I'll 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. Good morning and thank you for joining our call today. After my remarks this morning, I will turn the call back to Kim to review some of our marketing and sales initiatives. Ceci will provide financial highlights for the quarter, and then we'll open the call for your questions. BIO-key's license revenue rose 205% over Q1 2021 and 267% from Q4. Our performance reflected continued growth in our installed base of customers as well as an initial contribution from Swivel Secure, which we acquired in March 2022. Our gross profit margin rose to 82.6% in the quarter, up from 59.4% in Q1, 2021, reflecting the year-over-year increase in our annual recurring revenue or ARR from software licenses, which is a core focus and value driver for BIO-key. Beginning in Q2, our consolidated results will reflect the full quarterly benefit from the addition of Swivel Secure, which generated $3.1 million of revenue in calendar 2021. We are still working on the acquisition accounting entries for the balance sheet. So you will see a notice from us later today that we will file our 10-K a little bit later this week. The acquisition -- I'm sorry, 10-Q later this week. The acquisition will make an important contribution to our 2022 performance as it significantly expands our international team, our operations, our customer base and our growth potential. We are still in the early stages of integration process and will provide updates on this effort in future periods. We continue to advance our core identity and access management business, both through inside sales efforts as well as with our growing Channel Alliance Program, CAP, as we call it, now accounts for approximately 50% of new sales. Our PortalGuard solution continues to gain momentum within county and municipal government agencies, higher education…

Great, thank you Mike. As Mike touched on, and to remind those who may be new to our company, our award-winning PortalGuard IAM solution provides secure and efficient identity and access management for applications on an enterprise-wide basis. Our cloud solution addresses significant IT security challenges, including those posed by remote work or study while also supporting a broad range of authentication factors. Our new and improved MobileAuth is the only multifactor authentication mobile app to integrate strong identity-bound biometrics or IBB, with other authentication modalities. In terms of marketing, one area of focus today is on developing our messaging about the power of identity-bound biometric solutions. First, we believe that security should be centered around people as the only universal constant in a world of unpredictable variability. Second, we deliver solutions that verify the person, which are also easy to use and trusted for secure access anywhere. And third, we integrate these IBB capabilities into our large-scale civil ID and IAM solutions, including PortalGuard and MobileAuth. In addition to IBB, we are developing messaging to guide our content creation and resonate with key target markets, including credit unions and banks. As far as other marketing initiatives, to touch on a few, we completed several media interviews in Q1, including with Mergermarket, Authority Magazine, CTO Sessions and Cybernews. And we've had recent content submissions in key industry publications, including PaymentsJournal, SecurityWeek, Cybernews, IDG Connect, Dark Reading, Help Net Security and Authority Magazine. In terms of marketing and lead generation, we recently hosted two webinars including a case study on why one banking customer adopted biometric to move away from passwords. The other highlighted the 2022 cybersecurity predictions from a panel of IT professionals. Separately and to continue to strengthen our existing customer relationships, we launched a monthly MasterClass webinar series…

Thank you, Kim. BIO-key's Q1 2022 revenue increased to $1.94 million from $1.89 million in Q1 2021, driven by 205% increase in software license fees as well as an increase in services revenue, which more than offset the decline in the hardware revenue. Q1 2021 included $680,000 in hardware revenue related to the initial product shipments for the large scale ID project in Africa. Gross profit grew to $1.6 million in Q1, 2022 from $1.1 million in Q1, 2021 due mainly to the increase in higher margin license fee revenue as a percentage of total revenue in the current year period. Operating expenses increased to $2.6 million in Q1, 2022 from $2 million in Q1, 2021 due to a $400,000 increase in research, development and engineering expense for upgraded MobileAuth and IDaaS solution and the $300,000 increase in SG&A and other expenses associated with the Swivel Secure Europe purchase. The company reported a Q1, 2022 operating loss of $1 million versus $800,000 in Q1 2021 as greater profit - gross profit was more than offset by higher operating expenses incurred to support our growth. BIO-key reported a Q1, 2022 net loss available to common shareholders of $1 million or $0.12 per share as, compared to a net loss of $900,000 or $0.11 per share in Q1, 2021. Total other income was $131 in Q1, 2022 versus an expense of $15,400 in Q1, 2021. BIO-key ended the quarter with $13.6 million of current assets, including $5.8 million of cash and cash equivalents, $2 million of accounts receivable and $5 million in inventory. Net working capital was $10.1 million and the book value of stockholders' equity was $15.3 million or $1.82 per share. In Q1, 2022, we invested approximately $550,000 in net working capital to support our growth and $1.1 million of net acquired cash related to our Swivel Secure Europe. Thus far, we have managed our supply chain without any negative impact to our business, and we have invested as necessary in preparations for the increasing business volume. And now I believe we can turn the call back to the operator for investor questions.

Our first question comes from Jack Vander Aarde with Maxim Group. Please go ahead.

Hey guys sorry, I was on mute there. Great good morning, and really appreciate the quarterly update great results. Thanks for taking my questions. I'll start with a few top line questions. But Ceci, just an FYI , I will finish with a question on what stock compensation was for the quarter, so let you go, maybe see if you can collect that as we wait for the 10-Q to come out later this week or next week? So Michael, let me start with the first question great to see revenue picking up. It sounds like Swivel Secure is playing a strong partner as well. But that acquisition did - and this is a positive. That acquisition closed I believe, late in the quarter in early March. So - if you have it on you, can you maybe talk about how much of that licensing revenue was organic? It seems like it would be quite a bit versus how much was from Swivel Secure in the first quarter?

Yes good morning Jack, I think I can. So we closed the Swivel transaction, first - late in the first, early second week of March. So we were able to grab about 22 days of revenue from Swivel. And that represented about $360,000, give or take. So a very strong organic growth in software license revenue and of course, a small - well, medium-sized contribution from Swivel.

Great, no, that's encouraging to hear and happy to hear the color there. So we'll get a - I guess, the second quarter, we'll get the first full impact of Swivel Secure under the helm, which would be a good - another further uptick, I guess, just mechanically speaking. And then as - if I just switch gears to Nigeria, your comments on Nigeria? Do you expect an increasing ramp of shipments of hardware and software, I believe, eventually, in Nigeria in the coming months? Just couple of follow-ups there, did anything get shipped in the first quarter of 2022 or was it kind of closed down to that part? And then do you expect the shipments to begin ramping in the second quarter or is this more of a second half of 2022 event?

Okay, so small contribution of hardware sales in Q1, nothing significant. We do expect revenue in Q2. We've already generated some revenue in Q2, and we expect that again to ramp more significantly in the second half. So that's where we're at, at this point.

Great, that's helpful. Okay and then over 50%, I heard of new bookings are coming from the channel alliance program. Can you just remind me how many channel alliance partners you have currently? And can you remind me of any growth targets for that channel program?

Well, we're - we expect that the company, given that Swivel in Europe generates nearly 100% of their business through partners, you can expect that the majority, if not all of our business probably through the end of this year into the beginning of next year will come through our channel partner program for sure. So we're heading in that direction. It is a force multiplier. It's a way for us to become much more efficient and to get greater levels of visibility in the market and greater coverage across the board. And we expect this to be a global phenomenon. So that's number one. For sure, we're heading in that direction. In terms of the number of partners, that number continues to grow significantly because Intelisys alone has 8,000 vendor participants in their program. So as we get more engaged with them, the number of partners that could potentially be representing our solutions is upwards of 5,000 to 10,000. Right now, today, I believe we have connected, touched and integrated some 200 to 400 partners, including MSPs that are representing our products across the country and now again, if you add in Swivel across the globe.

That's fantastic to hear, great. And then let's see, maybe if I just - I remind myself to go back to Ceci. Ceci, any update on what is total stock comp was in the first quarter?

Yes, thanks for the heads up, Jack. As the share-based compensation was approximately $110,000 for the quarter.

And that's for - if you allocate that to both R&D and SG&A, that's the total about $110,000?

That's the total, yes.

Okay excellent. Okay guys well that's it from me really happy to see these results. Congrats to you guys. And I'll hop back in the queue.

Thank you, thank you Jack.

At this time, the Q&A session has ended. I would now like to turn the call back over to Mike DePasquale for any closing remarks.

Thank you. Well, I just want to thank each and every one of you for joining today's call. We look forward to updating you on our Q1 call in May, which will come in May - in August, which will come around pretty quickly. In the meantime, we will participate in two virtual Investor Conferences in May, the H.C. Wainwright Conference and the Inflection Partners Conference, both occurring after the week of May 25. As always, we will continue to provide regular news updates with press releases as developments occur with the business. Once again, thank you for your time today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.