BIO-Key International, Inc. (BKYI.OB-OTC: BB)
Interview with:
Mike DePasquale, CEO and Director
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advanced identification solutions and information services to both the private sector and government, including law enforcement departments, and public safety agencies.


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Since passwords are no longer secure enough to positively authenticate individuals for access to critical information BIO-Key International’s biometric technology is more and more attracting the attention of major corporations and law enforcement agencies

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BIO-Key International, Inc.

3349 Highway 138
Bldg. D, Suite A,
Wall, NJ  07719
Phone: 732-359-1100

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Mike DePasquale
CEO and Director

Walter Banks, Publisher
June 16, 2005

Michael DePasquale- Chief Executive Officer/Director

Mr. DePasquale brings more than 20 years of successful executive and sales and marketing experience to BIO-key. Most recently, he was President and CEO of Prism eSolutions a company specializing in professional consulting services and online solutions for ISO-9001/14000 certification for customers in manufacturing, healthcare and government markets. Mr. DePasquale has also served as Group Vice President for WRC Media, Vice President of Sales and Marketing with McGraw-Hill; and as Director of Marketing and as Sales Group Manager with Digital Equipment Corporation.

Company Profile:
BIO-key International, Inc., develops and delivers advanced identification solutions and information services to both the private sector and government, including law enforcement departments, and public safety agencies. BIO-key’s biometric finger identification technology accurately identifies and authenticates users in a variety of enterprise applications. Today, over 2,500 police, fire and emergency services departments in North America depend on BIO-key solutions, making BIO-key the leading supplier of mobile and wireless solutions for public safety worldwide

CEOCFO: Mr. DePasquale, will you tell us how long you have been with the company and any changes that have occurred?
Mr. DePasquale: “I assumed the responsibility as CEO of BIO-key in January of 2003, so I have been on-board just over two years.  Back in 2003, BIO-key was a development stage company focused solely on a biometric technology. The company had not yet formally introduced the technology to the market. They had built a number of relationships with large strategic partners like Oracle and Intel, but had not delivered the technology to the market and had no proof points that the technology would perform as expected. Our goal was to move the company from a development stage entity to a runtime run-rate going business. In a matter of six to nine months into my tenure, we were able to do that. We made a commitment to begin to generate revenue for the company in our 3rd Quarter of 2003 and continue to grow revenue each quarter thereafter”

CEOCFO: Can you break down your different product areas and their applicable markets?
Mr. DePasquale: “Today BIO-key through two major acquisitions made in 2004, is the largest provider of mobile data solutions for the law enforcement market in North America and the largest provider of fire records management solutions on the globe. Some of the largest cities in North America utilize our solutions, for example New York, Los Angeles, Calgary, Toronto, LA, and San Francisco. With that, we are also a leading provider of patented finger identification technologies, particularly what we call “one too many” finger matching where we can identify individuals in a large population without any other identifier but simply a single scan of their finger. We have matured this technology over the last ten years. We have also co-developed along with Oracle, the indexing software, to build large databases and identify individuals in those large databases in very short periods of time i.e. under five seconds for a population of one million prints. That is our market position today. We sell and market our technologies to every industry sector in our economy, such as banking, healthcare, finance, government applications through many of the large systems integrators. We have partnerships with Northrop Grumman, Lockheed Martin and Hewlett-Packard that deliver fully integrated and complete systems for public safety agencies and other departments of the government.”

CEOCFO: Do you have the resources to manage the two different areas of your business?
Mr. DePasquale: “There is a strong synergy between our two product offerings; our public safety offerings and biometrics. The reason we went so aggressively after the two acquisitions we made last year was that we saw a tremendous opportunity to provide public safety agencies the ability to not only secure their data and information with biometrics, but to also identify individuals in the field on a real-time basis. There are strong synergies between our biometric solutions set and our public safety solutions and we have a host of sales resources that focus again on law enforcement agencies and on the fire and EMS markets. The other vertical, which is what I believe to be the most opportunistic side of our business, is the commercial biometrics marketplace and we have a separate sales group that handles that segment. They focus on system integrators, partners, application providers, which sell and market solutions for healthcare, banking and finance, education and data provisioning. That is a separate vertical for us in terms of marketing, but there are very strong synergies between our biometric technology and our public safety offerings”

CEOCFO: Do you have one sales team or two separate sales teams?
Mr. DePasquale: “We have a public safety sales team and we have a commercial marketing team so we have two separate sales teams.”

CEOCFO: Is this worldwide or North America?
Mr. DePasquale: “We market our biometric technology globally. Most of our public safety business is North America.”

CEOCFO: Will you explain what the potential is for biometrics?
Mr. DePasquale: “We are in two highly potential markets because we address two of the most pressing issues that are facing our country today. First, there is homeland security, our public safety solutions allow first responders to share and aggregate information and communicate across the country. One good example of this is a contract and a program we have with the National Sheriffs Association through the Pegasus Research Foundation. This is where they built a secure data network to allow sheriffs agencies and departments around the country to share critical information on homeland security issues. It is secured by Bio-key’s biometrics. An individual cannot add or remove information off the network unless they are authorized to do so. This is a perfect example of how using biometrics to secure data and information is so critical to homeland security. The second most pressing issue facing our country is identity theft and fraud. This is where our biometrics especially on the commercial side fits very well. Identity theft and fraud is a $300 billion dollar global issue. Over the last few months, you have read and heard about the data breaches with companies like ChoicePoint who happens to be a partner of ours, Lexus Nexus and Bank of America. Passwords are no longer secure enough to positively authenticate individuals for access to critical information. As long as the issue of identity theft and fraud continue to plague our nation, we are going to continue to move from a password based authentication model to some form of biometrics, and that is going to happen very quickly over the next two years.”

CEOCFO: So every corporation that has a password-oriented authentication, is a potential client of yours?
Mr. DePasquale: “Absolutely! We are focused on the commercial side in healthcare and finance and banking as well as Civil ID applications such as population registration and credentialing. If you read The Wall Street Journal or New York Times or watch television, you will see that IBM is running ads with the laptop and notebook computers that have integrated finger-scanning devices in them. Microsoft is marketing a keyboard and a mouse with an integrated finger reader in it. They have announced recently that they are no longer investing large sums of money in password authentication development. We are starting to see drivers and some of the largest corporations in technology, evolving to the use of biometrics. We are also seeing some very pressing issues that are facing large corporations, particularly the data provision, that say that passwords are just not secure enough today. In order to have a full and complete audit trail, and to know who accessed information at any one point in time, it is going to require some physical characteristic of their body.  I can take your password and access your systems and applications. No one would ever know if it was you or I who breached the system. With our finger biometric solution you must place your finger on the scanner which provides for a full and complete audit trail of who accessed that information.”

CEOCFO: Is this product affordable for most corporations that you are trying to deal with?
Mr. DePasquale: “That is another driver that we have seen take a dramatic change in the past twelve months. The hardware providers are getting tremendous economies of scale now and they are reducing the size of the sensors and increasing the performance. The price performance curve is starting to accelerate. We are seeing a dramatic decrease in the price of the hardware; that is going to accelerate the business. The advantage that BIO-key has is that we are device-independent. We are the only company in the industry today that can enroll and identify individuals on multiple devices. It really does not make a difference if you purchase a scanner from AuthenTech, UPEK or one from a company called Crossmatch. You can enroll on one and identify on another so that is a unique sustainable advantage for our company. If you talk about affordability, the price of our solution depends on the magnitude of the deployment and so depending upon the number of enrollees, it can start in the $30.00 range and go all the way to the $3.00 range if we are talking about enrollments in the millions. There is definitely a very strong affordability factor in the technology today and that is going to continue to evolve and only get better.”

CEOCFO: You save clients money by not having to use cards!
Mr. DePasquale: “Not having to use cards and not having to reset passwords and manage their authentication processes on an hourly or daily basis. This technology can reduce the cost of management and support of authentication models within corporations or government agencies.”

CEOCFO: How much is lost by banks every year based on breach of information?
Mr. DePasquale:
“The Gartner Group says it was a $300 billion-dollar global issue in 2003. I have not seen the 2004 numbers yet, but the problem is not going to go away. Just over the past few months, you have heard about the issues, these things have likely been going on for a long time and it is only now that it is becoming visible to the public. Protecting your identity and your transactions on the internet, in real-time in supermarkets and department stores is going to be a big issue. The credit card industry is turning sideways over the coming year; right now, if you were going to steal my credit card, go out and have lunch, given that I did not report it stolen, you are more then likely going to get approval and authentication on the card and you are going to have a nice lunch or dinner. There will be payment made to the establishment because they have an approval code. I am going to be responsible only for $50.00 of the total because that is the limit on my liability, and the credit card processor in the middle is going to pay the difference. As we approach the end of the year, the processors are changing the model. Unless the establishment gets a two-factor identification, meaning that they take your credit card and then they ask you for proof of identity, if the establishment does not do that and the transaction goes bad, the individual who’s card was stolen is responsible for $50.00, but the establishment will pay for the fraudulent transaction and the processor will not. We are starting to see a dramatic change in authentication and identification requirements and finger biometrics fit magnificently well.”

CEOCFO: Will you tell us what separates you from your competitors?
Mr. DePasquale: “What separates us from the competition is clearly the technology that we bring to market. It is the ability to identify individuals in large populations with a single scan of their finger in a five-second response time. Secondly, device independence and the fact that we are not tied to any one hardware vendor or any one platform. We can provide companies and government agencies with investment protection; if they deploy our technology, it is the most accurate biometric system that exists in the world today. It is scalable and platform and device independent. That is a strong set of competitive advantages. On the public safety side, we are the largest provider of mobile data solutions in law enforcement; we have over forty-seven state interfaces built to access data in forty-seven states. We have over forty interfaces built to the major CAD and record-management companies like Lockheed Martin and Northrop Grumman, so we can interface with virtually any of those systems, providing a sustainable competitive advantage and a huge footprint advantage. On the fire records management side, we are the largest provider on the globe. We have the most sophisticated solutions both for a client server environment as well as the Web”

CEOCFO: Will you tell us about your financial position?
Mr. DePasquale: “We just filed our first quarter 10-Q about a week-and-a-half ago. The company at this point is continuing to develop and grow our revenues on a quarter-by-quarter basis. We provided guidance to generate 30% sequential growth in revenue in our second quarter of this year and are also on track to become profitable and to become cash flow positive in the second half of this FY.”

CEOCFO: Is there float out there for potential investors and do you spend much time pursuing investors?
Mr. DePasquale: “There is plenty of stock out in the market. We have just about 43 million shares outstanding and we have reasonable volume on a daily basis and average about 300 thousand shares a day. If investors are interested in our company, or interested in this space and our leadership position, they should consider us.  In terms of investor relations, we have mostly internal resources focused on that today; I spend a considerable amount of time with institutional investors. We continue to drive our relationships in that manner. It is mostly through presentations, events and engagements of which our team is involved.”

CEOCFO: In closing, what would you like to say to potential investors?
Mr. DePasquale: “I would say that we at BIO-key are addressing two very critical issues that are facing our nation, our society and the world at this point. We have technology, solutions and services to address those issues. Clearly, the market in biometrics is at an inflection point and I believe that we are going to see that within a five-year period that there will be no money passing hands, no transactions from a financial perspective or even on the healthcare front, that happen without some form of biometrics. Finger biometrics are about 70% of the market, they are the least invasive and today with BIO-keys technology and algorithms, they are accurate to within one and 200 million, which makes us the most accurate biometric on the planet”


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“Not having to use cards and not having to reset passwords and manage their authentication processes on an hourly or daily basis. This technology can reduce the cost of management and support of authentication models within corporations or government agencies.” - Mike DePasquale


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