What changed in this filing

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Item 1. Business

2023-06-01 compared with 2022-04-01 · 69 added, 94 removed, 190 unchanged (46% of the section changed)

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“we,”

or “us”) is a leading identity and access management (IAM) platform provider enabling secure work-from-anywhere for enterprise, education, and government customers. 

Our vision is to enable any organization to secure streamlined and passwordless workforce, customer, citizen and student access to any online service, workstation, or mobile application, without a requirement to use tokens or phones. 

or “us”) is a leading identity and access management (IAM) platform provider enabling secure work-from-anywhere for enterprise, education, and government customers using secure multi-factor authentication (MFA). 

Our products include PortalGuard®

and PortalGuard Identity-as-a-Service (IDaaS) enterprise IAM, WEB-key®

biometric civil and large-scale ID infrastructure, and high-quality, low-cost accessory hardware to provide a full and complete solution for identity-innovating customers.

biometric civil and large-scale ID infrastructure, MobileAuth®

mobile phone authentication application for iOS and Android, and high-quality, low-cost accessory fingerprint scanner and FIDO-compliant hardware to provide a full and complete solution for identity-innovating customers.

BIO-key PortalGuard empowers organizations to maximize the power of cloud, mobile and web technologies by securing users’

identities and connecting them with the applications they rely on, while keeping cyber-intruders and unauthorized delegates (proxy) out.

Millions of users trust BIO-key®

identities and connecting them with the applications they rely on, while keeping cyber-intruders and unauthorized delegates (proxy users) out.

Competing MFA solutions require a phone or token for every user authentication use case, but this is expensive and ineffective for workforce users who cannot use a phone in their workplace, or who rove among workstations or share kiosks for access to information systems.

BIO-key’s exclusive Identity-Bound Biometrics (IBB) authentication methods address this by making biometric identification based available at any end point device, making the user their own credential, not their phone or a token.

Our customers trust BIO-key®

to secure access to a variety of cloud, mobile and web applications, on-premise and cloud-based hypervisor servers from all of their devices.

Employees and contractors sign into BIO-key PortalGuard to seamlessly and securely access the applications of need to do their work, and customers sign into BIO-key PortalGuard to access online services. 

Organizations use PortalGuard to securely collaborate and communicate with their partners and to provide their customers with flexible, resilient user experiences online and while using mobile devices.

Employees and contractors sign into BIO-key PortalGuard to seamlessly and securely access the applications needed to do their work, and customers sign into BIO-key PortalGuard to access online services. 

PortalGuard can operate standalone as a comprehensive MFA, Single Sign On, and Self-Service Password Reset solution, directly authenticating for Windows sign in and application access, or as an upgraded MFA user experience within an enterprise IAM framework such as Microsoft, Okta, Ping or ForgeRock.

BIO-key’s WEB-key is a scalable biometric service management platform, incorporating key functions for regulatory compliance, enrollment, authentication or identification, and integrity in a multi-tenant private or public cloud delivery platform. 

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We also deliver biometric software integration application programming interfaces, or APIs, allowing software developers to leverage our platform to securely and efficiently embed biometric multi-factor authentication, or MFA, into their own products. 

This allows software developers to focus on their core functionality while BIO-key ensures users enter the application without requiring they carry their phone or any token.

This allows software developers to focus on their core functionality while BIO-key ensures users enter the application without requiring them to carry their phone or any token.

Even the most security-focused organizations are suffering breaches as a result of human error or improper conduct.

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It enables any user to connect to any device, cloud or application, all with a simple, customizable, intuitive and consumer-friendly user experience. 

We utilize server-secured biometrics to support roving users without requiring them to carry their phone or a token.

We utilize server-secured Identity-Bound Biometrics to support roving users without requiring them to carry their phone or a token.

As of December 31, 2022, more than 600 customers across multiple industries use BIO-key to secure and manage access for users around the world.

Development of Business

We were founded in 1993 to develop and market advanced fingerprint biometric technology and related security software solutions.

BIO-key was founded in 1993 to develop and market advanced fingerprint biometric technology and related security software solutions.

First incorporated as BBG Engineering, the company was renamed SAC Technologies in 1994 and renamed BIO-key International, Inc.

Our principal executive office is located at 3349 Highway 138, Building A, Suite E, Wall, New Jersey 07719. 

We were pioneers in developing automated, finger identification technology that supplements or compliments other methods of identification and verification, such as personal inspection identification, passwords, tokens, smart cards, ID cards, credit card, passports, driver’s licenses, or other form of possession or knowledge-based credentialing.

Our advanced technology has been, and is, used to improve both the accuracy and speed of competing fingerprint biometrics in some of the largest biometric systems in the world.

BIO-key was a pioneer in developing automated finger identification technology that supplements or compliments other methods of identification and verification, such as personal inspection identification, passwords, tokens, smart cards, ID cards, credit card, passports, driver’s licenses, or other form of possession or knowledge-based credentialing.

Our advanced technology and is used to improve both the accuracy and speed of fingerprint biometrics in some of the largest biometric systems in the world.

On June 30, 2020, we enhanced our product offering by acquiring PistolStar, Inc.

(“PistolStar”) for $2.5 million. 

(“PistolStar”). 

PistolStar provides enterprise-ready identity access management solutions to commercial, government and education customers throughout the United States and internationally. 

PistolStar develops and markets our PortalGuard line of software and services.  

On March 8, 2022, we expanded our sales and support operation into Europe, Africa and the Middle East (“EMEA”) by acquiring Swivel Secure Europe, SA for up to $2.25 million.

Swivel Secure Europe is a Madrid, Spain based provider of IAM solutions serving  over 300 customers through a network of  dozens of channel partners throughout EMEA.

On March 8, 2022, we expanded our sales and support operation into Europe, Africa and the Middle East (“EMEA”) by acquiring Swivel Secure Europe, SA.

Swivel Secure Europe is a Madrid, Spain based provider of IAM solutions serving over 300 customers through a network of dozens of channel partners throughout EMEA.

Swivel Secure Europe is the exclusive distributer of AuthControl®

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It provides identical capabilities in both a SaaS (PortalGuard IDaaS) or on-premise (PortalGuard) delivery model.

PortalGuard integrates BIO-key’s Identity Bound Biometric biometric (IBB) authentication as a first-class authentication options that are not tied to a device or “what you have”

authentication, allowing relying parties to positively identify who is accessing their systems, not the device they might have handed off.  

PortalGuard integrates BIO-key’s Identity Bound Biometric (IBB) authentication as what-you-are authentication options that are not tied to a device or “what you have”

authentication, allowing our customers to positively identify who is accessing their systems, not the device they might have handed off to another user.  

Our three-way IAM neutrality consists of:

seventeen MFA authentication factor choices, including our server-secured IBB, via fingerprint scanners, or using a palm scan, facial selfie, or voice biometric via a mobile phone.

seventeen MFA authentication factor choices, including our server-secured IBB via fingerprint scanners, or using a palm scan, facial selfie, or voice biometric via our MobileAuth app on a mobile phone;

open user directory choices including on premise, hybrid or full-Azure Active Directory, LDAP, IBM Domino, or custom SQL user directory;

multiple single sign on, or SSO, federation options, including SAML, OIDC, CAS and WS-Fed.

The forgoing allows our customers to combine and authenticate legacy and future technologies and to securely connect users to the technology that they choose.

and  

multiple single sign on, or SSO, federation options, including SAML, Open ID Connect (OIDC), OAUTH, CAS and WS-Fed.

These capabilities allow our customers to combine and authenticate legacy and future technologies and to securely connect users to the technology that they choose.

We design transparent compatibility of the BIO-key PortalGuard IDaaS with on-premise infrastructures and public and hybrid clouds.

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We also offer a full line of easy to use finger scanners for both enterprise and consumer markets. 

Our SideSwipe®, EcoID®

and SidePass®

Our PIV Pro, SidePass®, EcoID II®

and SideSwipes®

finger readers can be used on any laptop, tablet or other device which contains a USB A or C port.

 We market and sell these fingerprint scanners through distributors and directly to end users via Amazon.

Impact of COVID-19

The COVID-19 outbreak has led us to migrate to a remote business model for our sales, marketing, administrative and executive teams. 

Research and development and production have adjusting to the situation to maintain production as best as possible considering the conditions and regulations. 

Our transition to remote work was highly successful, and our teams operated efficiently using our own IAM software to authenticate video conferencing applications and other collaboration tools. 

The COVID-19 pandemic has extended sales cycles and delayed deployments in most markets in which we operate, particularly in Africa. 

We continue to conduct business daily, some still from home, and others in office occasionally, as we are actively closing transactions throughout the continuing climate, with no changes to personnel.

AuthControl Sentry;

AuthControl Enterprise;

AuthControl MSP

Swivel Secure is the exclusive distributer of AuthControl Sentry, AuthControl Enterprise, and AuthControl MSP product line in Europe, Africa and the Middle East, or EMEA, excluding the United Kingdom and Ireland. 

These solutions include a patented one-time-code extraction technology, helping enterprises manage the increasing data security risks posed by cloud services and bring your own device policies.

Fingerprint Readers

Our series of compact fingerprint readers, we from both commercial companies use SidePass®, SideSwipe®

or EcoID II®

to replace their Windows passwords and enable Windows Hello for Business without replacing or upgrading laptops or tablets.

Identity and Access Management, User Multi-Factor Authentication, Single Sign On, Privilege Entitlement and Access Control

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However, we are witnessing a change in the landscape as organizations within all industries and of all sizes are embracing biometric technology and MFA as a security and workflow solution.

Championed by the millions of users that have been successfully introduced to biometrics by companies such as Apple and Samsung, today’s users have witnessed the security and convenience benefits of biometric technology in their phones and welcome the same user experience to access applications without passwords.

More recently, in connection with the acquisition of PistolStar we have developed a large customer base in the higher education vertical.

Colleges and universities throughout the United States use our PortalGuard single sign on platform.

As colleges and universities continue to operate in remote environments, we have seen additional demand for our solutions.

Upon introducing a series of compact fingerprint readers, we saw an immediate increase in inquiries from both commercial companies seeking an alternative to passwords, and from consumers recognizing that they could use SidePass, SideSwipe or EcoID to replace their Windows passwords and enable Windows Hello without replacing or upgrading laptops or tablets.

In October 2015, we established BIO-key Hong Kong for purposes of establishing relationships and conducting business is the Asia Pacific Region.

Through our Hong Kong subsidiary, we support the growing demand for secure identification and authentication in the region.

Millions of users have been successfully using biometrics in phones from Apple and Samsung and they welcome the same user experience to access applications without passwords or tokens.

Our acquisition of PistolStar added a large customer base in the state and local government and higher education (SLED) vertical.

Colleges and universities throughout the United States use our PortalGuard MFA and SSO platform.

As governments, colleges and universities continue to operate in remote environments, we have seen additional demand for our solutions.

We believe there is potential for significant market growth in the following key areas:

Corporate network access control, corporate campuses, computer networks, and applications.

Enterprise MFA for access to computer networks, and applications.

Large scale identification projects, especially in Africa and the surrounding regions.

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Consumer mobile credentialing, including mobile payments, credit and payment card programs, data and application access, and commercial loyalty programs. 

Demand for BIO-key hardware products from Windows 10 users and Fortune 500 companies.

Demand for BIO-key hardware products from Windows Hello for Business users and Fortune 2000 companies.

Government services and highly regulated industries including, Medicare, Medicaid, Social Security, drivers' licenses, campus and school ID, passports/visas.

New remote authentication challenges, including those created by the COVID-19 pandemic.

Remote authentication challenges, including those created by the remote work shift resulting from the pandemic.

Business Model

Our business model is focused on the following key areas:

Frequent announcements of supply chain breaches, ransomware attacks, and administrative access compromises highlight the shortcomings of mainstream MFA and security approaches, which leave far too much responsibility on end-users to comply with cyber-hygiene policies. BIO-key’s biometric authentication process prevents human error and human nature from undermining secure authentication, while making the end user’s access easier than ever. The current climate of broad enterprise adoption of MFA to replace passwords presents opportunities for us to leverage our unique differentiators and exploit the gaps in existing IAM technology approaches. One of those gaps is the challenge of authenticating users that “rove” among workstations.

Enterprise needs are not being met by mainstream MFA’s phone app or token approach.

Supply chain breaches, ransomware attacks, and administrative access compromises highlight the shortcomings of mainstream MFA and security approaches, which leave far too much responsibility on end-users to comply with cyber-hygiene policies. BIO-key’s biometric authentication process prevents human error and human nature from undermining secure authentication, while making the end user’s access easier than ever. The current climate of broad enterprise adoption of MFA to replace passwords presents opportunities for us to leverage our unique differentiators and exploit the gaps in existing IAM technology approaches. One of those gaps is the challenge of authenticating users that “rove” among workstations.

A second gap is preventing unauthorized account sharing and delegation.

We will continue to prioritize securing agreements with OEM customers.

We continue to prioritize securing agreements with OEM customers.

The history of success supporting NCR, McKesson, Omnicell, and LexisNexis provides an established footprint that we intend to build upon.

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Additionally, the financial services industry, including banks and credit unions has grown substantially.

In 2021, we continued to grow our Channel Alliance Partner program (CAP) focused on partnering with select value added resellers, integrators, and resellers.

We added Intellisys and other master agent distributors to our partners.  We partner with leading application, managed service and infrastructure vendors, such as Insight, NGEN, Amazon Web Services, UCROO Campus, Software House International (SHI), Virtual Graffiti, Atlassian, and ProCirrus. 

We are a Microsoft Partner and our line of compact fingerprint scanners has been tested and qualified by Microsoft to support Windows Hello and Windows Hello for Business.

In 2022, we continued to grow our Channel Alliance Partner program (CAP) focused on partnering with select value added resellers, integrators, and distributors.

We partner with leading application, managed service and infrastructure vendors, such as Intelisys, Insight, NGEN, Amazon Web Services, Pathify (formerly UCROO Campus), Software House International (SHI), Virtual Graffiti, Atlassian, and ProCirrus. 

We are a Microsoft Partner and our line of compact fingerprint scanners has been tested and qualified by Microsoft to support Windows Hello and Windows Hello for Business. 

Hardware products generated 9% of our revenue in 2022.

EcoID has emerged as our most popular scanner for enterprise deployments.

EcoID II® has emerged as our most popular scanner for enterprise deployments.

For customers that require the highest level of security, PIV-Pro is a FIPS compliant fingerprint scanner, suitable for highly regulated industries and organizations that want a best-in-class solution.

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We are committed to continue to aggressively grow this program in 2023.

We partner with leading application, managed service and infrastructure vendors, such as Insight, NGEN, Amazon Web Services, Pathify (formerly Ucroo Campus), Software House International (SHI), Virtual Graffiti, Atlassian, and ProCirrus.

We partner with leading application, managed service and infrastructure vendors, such as Intelisyss, Insight, NGEN, Amazon Web Services, Pathify (formerly UCROO Campus), Software House International (SHI), Virtual Graffiti, Atlassian, and ProCirrus.

We offer our software under a SaaS term license and generate annual recurring revenue (ARR) primarily by selling multi-year subscriptions to our software.

We employ a customer success team, focused on customer satisfaction and early remediation. 

In 2020, we announced two contracts with our partner Technology Transfer Institute for large-scale identification projects in Nigeria.

We received our first purchase, related to this project, which we shipped in the first quarter of 2021.

The COVID-19 pandemic has and may continue to delay the rollout of these programs. 

Intellectual Property Rights

We develop and own significant intellectual property and believe that our intellectual property is fundamental to our biometric and IAM product operation:

We own patented technologies and trade secrets developed or acquired by us.

In May 2005, the U.S.

Patent & Trademark Office issued patent 6,895,104 for our Vector Segment fingerprint technology (VST), our core biometric analysis and identification technology. With the payment of all maintenance fees, this patent will expire on March 4, 2023.

On October 3, 2006, we announced that our patent for a biometric authentication security framework had been granted by the U.S.

Patent & Trademark Office.

The patent No.

7,117,356 was issued to us for a biometric authentication security framework that enhances commercial and civil biometric use.

Our authentication security framework protects privacy and security of cloud or network-based authentications while also facilitates ease of use of biometric systems.

The technology that this patent is based on is the foundation for the authentication security incorporated in our WEB-key product line.

WEB-key is a mature enterprise authentication solution that functions in a wide variety of application environments.

The solution supports a variety of implementation alternatives including card technologies for “two-factor”

authentication and also supports “single-factor”

authentication.

Partners and customers implementing our WEB-key software to provide convenient and secure user identity include a number of institutions including the Allscripts Healthcare Solutions, Computer Associates Site Minder, Oracle Access Manager and many other enterprise and solutions-based systems.

With the payment of all maintenance fees, this patent will expire on May 20, 2023.

We develop and own significant intellectual property and believe that our intellectual property is fundamental to our biometric and IAM product operation: We own patented technologies and trade secrets developed or acquired by us.

On December 26, 2006, we were issued US patent No.

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With the payment of all maintenance fees, this patent will expire on January 3, 2025.

On August 19, 2008, we were issued US patent No.

7,415,605 for our “Biometric Identification Network Security”

The solution protected under this patent provides a defense against hackers and system attacks, while leveraging the industry standard Trusted Platform Module (TPM) specification for encryption key management.

With the payment of all maintenance fees, this patent will expire on May 20, 2023.

On November 18, 2008, we were issued US patent No.

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With the payment of all maintenance fees, this patent will expire on October 25, 2025.

On May 26, 2009, we were issued US patent No.

7,539,331 for our “Image Identification System”

method for improving the performance and reliability of image analysis within an image identification system.

With the payment of all maintenance fees, this patent will expire on March 22, 2022.

On November 8, 2011, we were issued US Patent No.

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On April 20, 2021, we were issued U.S.

10,984,085 for “Biometric Recognition for Uncontrolled Acquisition Environments”, expected to be deployed in mobile devices, the patent provides a method of continuous capture of the users biometric data before the need of the authentication or enrollment, as well as during an active session with a user, to assure the user has not changed. 

We have also been granted parallel patents to the US Patent portfolio to certain of our patents in many foreign countries offering protection of our intellectual property rights around the world.

We have registered our trademarks “BIO-key”, “True User Identification”, “Intelligent Image Indexing”, “WEB-key”, “SideSwipe”, “SidePass”, “EcoID”, “PistolStar®”, “PortalGuard”, “MobileAuth”, and “PASSIVEKEY®”

and “PISTOLSTAR®”.

with the U.S.

Patent & Trademark Office, as well as many foreign countries, protecting our companies name and key technology offering names.

Through our subsidiary PistolStar, we own the following additional registered trademarks:

“PortalGuard®”, “PASSIVEKEY®”, and “PISTOLSTAR®”.

We also acquired the following unregistered trademarks:

“PortalGuard Nebula TM ”, “Password Power TM ”

and “Scooch TM ”.

Patent & Trademark Office, as well as many foreign countries, protecting the names of our companies and our key technology offerings.

We also own the following unregistered trademarks:

“PortalGuard Nebula™”, “Password Power™”

and “Scooch™”.

Copyrights and trade secrets

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In future periods our R&D efforts will remain focused on updating and advancing our core software products including PortalGuard and PortalGuard IDaaS, MobileAuth, WEB-key and VST.

These products are critical to support the anticipated growth in enterprise IAM and large-scale ID projects.

The IAM MFA and SSO market has many providers of solutions in either standalone or IAM suite delivery models. We believe that our unique differentiator in this market is the incorporation of an unparalleled server-secured biometric authentication capability among our 17 authentication factors. There are numerous companies involved in the development, manufacturing and marketing of fingerprint biometrics products to commercial, government, law enforcement and prison markets.

These products are critical to support the anticipated growth in enterprise IAM.

The IAM, MFA and SSO market is characterized by multiple solution providers of solutions in either standalone or IAM suite delivery models. We believe that our unique differentiator in this market is the incorporation of an unparalleled server-secured biometric authentication capability among our 17 authentication factors. There are numerous companies involved in the development, manufacturing and marketing of fingerprint biometrics products to commercial, government, law enforcement and prison markets.

These companies include, but are not limited to, IDEMIA, Thales, NEC, Neurotechnology, and Innovatrics.

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After attempting to create a more sophisticated password, or more efficient token or PIN, it has become apparent that each of these methods are easily compromised, and the downside risks are significant.

We have also seen FIDO-compliant keys enter the market, led by Yubico’s YubiKey, a USB key that acts as a credential for access. 

Keys alone do not meet the needs of large organizations for which key sharing and lost keys are concerns. 

We have introduced a line of low-cost USB keys and they do not offer the security benefits of biometric technology as they can be easily lost or stolen and replacement costs / managing the product becomes a growing expense.

We have also seen FIDO-compliant keys enter the market, led by Yubico’s YubiKey, a hardware token device that acts as a credential for access. 

FIDO officially recommends enterprises purchase two or more keys for every user, to prevent lockout in the event of a lost or misplaced FIDO token. 

These hardware tokens alone do not meet the needs of large organizations for which key sharing and lost keys are concerns, establishing the opportunity for our Identity Bound Biometric differentiation.

Where FIDO is needed, we offer a line of equivalent function and quality, but lower-cost FIDO 2.0 keys.

With respect to competing biometrics technologies, each has its strengths and weaknesses and none has emerged as a market leader:

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Human Capital Resources

As of the date of this report, we employed fifty-one individuals on a full-time basis as follows:

(i) twenty-two in engineering, customer support, and research and development;

As of the date of this report, we employed fifty-two individuals consisting of fifty-one individuals on a full-time basis as follows:

(i) twenty in engineering, customer support, and research and development;

(ii) nine in finance and administration;

and (iii) twenty in sales and marketing.

We also have one employee who provides engineering services and one employee who provides administrative services, both on a part-time basis, and two part-time factory contractors in China.

and (iii) twenty-two in sales and marketing.

We also have two part time employees, one who provides engineering services, and one who provides administrative services, and two factory contractors in China.

None of our employees are represented by a labor union and we believe that our relationship with our employees is good.

Available Information

We maintain a website with the address www.BIO-key.com.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available on our website, without charge, as soon as reasonably practicable after they are filed electronically with the SEC.

The SEC also maintains a website that contains reports, proxy and information statements and other information statements and other information regarding issuers who file electronically with the SEC.

The SEC’s website address is www.sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business