FB

You recently announced the availability of your Identity Match Fingerprint Identification Solution. Can you elaborate on that for us?

MD

Yes, Identity Match is the first product offering that BIO-key is making available that integrates our public safety solution set with our advanced biometric finger identification technology. What we have built is a solution that can be deployed at a local law enforcement agency that allows them to manipulate and manage all the fingerprints that they have in a single integrated data base. The system will also allow officers the capability to match latent prints and identify individuals in real time right in their agency or on the street via a mobile and wireless device. So it is not a replacement for their AFIS systems, to the contrary, actually it is a system and a solution that augments and provides them local capability to manage the identification of individuals right in their own geography. The benefit here is that the local law enforcement agency can take advantage of the information they collect, allowing them to get instantaneous results on a fingerprint search in their own database.

FB

That starts to answers my second question, which is -- when we last spoke you had mentioned that you saw good synergy between the biometric products that you offer and also your first responder solutions. You mentioned that you might start integrating those two areas, so this sounds like the first step in that process?

MD

It is; as we bring together public safety solutions, biometrics as well as wireless capability the next step is offering an extension of that solution out to the field on a mobile and wireless device. We are starting to see -- from a hardware perspective, that the device manufacturers are coming up with some very advanced functionality that includes finger sensor technology. So we believe that over time, virtually every officer in the field will have the ability to not only access all types of critical information, both criminal justice as well as public records information, they will also have the ability to "on the spot" identify an individual through a variety of mobile hand held wireless devices. Along those lines, there is also a strong requirement for secure access to that information beyond a PIN or a password and finger biometrics are the perfect solution!!

FB

Does that tie in with your recent announcement about Authentec and BIO-key and the new strategic initiative?

MD

It does! As you know BIO-key provides a universal science and matching technology that is both sensor and platform independent. So we work very closely with Authentec, Fujitsu, CrossMatch, UPEK and a whole myriad of sensor manufacturers because again, we can provide and offer the capability to enrol on one particular sensor device and identify on another. So you are going to see additional relationships like that evolve and you are also going to see this capability become a standard in the marketplace. In the criminal justice law enforcement, as well as the commercial marketplace, we are going to require platform independence and sensor independence because we want to utilize the appropriate hardware for the appropriate situation. Let me give an example; in a high traffic application like US-Visit we require a ruggedized heavy-duty optical device manufactured by Cross Match. On the other hand, in the commercial space with a "low traffic" application we may utilize a less expensive yet very capable Authentec, Fujitsu, UPEK or Validity sensor to identify individuals or to authenticate them for a particular application.

FB

You mention commercial markets and our recent Year in Review indicated that many companies thought that the biometric industry had gained very solid growth and acceptance in 2005, especially in the commercial markets area. Can you give us your thoughts on that?

MD

Absolutely! I am very enthused about the potential and also the progress that BIO-key has made in the commercial marketplace. We have a number of major deployments that have started and are being rolled out today in different segments. I believe, and I have always believed that the commercial marketplace holds far more potential and opportunity than what we are seeing even today in the government side. In fact, it is unfortunate, but many of the government programs not only here in the United States but internationally have slowed down. Obviously there is an awful lot of politics that go on with these huge national ID programs and so it is a very difficult business to predict. Once the commercial marketplace begins to adopt biometrics, and I am seeing significant inflection in that area, we are going to start to see what is the potential for explosive growth.

FB

I couldn't agree more and we hear that comment a lot now that biometrics are available in libraries, in schools and in a number of different commercial areas. The consumer market is becoming aware and readily adapting to the technology.

MD

And we've seen, Peter, inflection in a couple of areas. For example, as you know, Pay by Touch successfully raised nearly 200 million dollars over the last four or five months focused on biometric initiatives in the retail space. We are seeing the banking and the finance industries begin to look beyond the token and beyond other secure authentication methodologies to the use of biometrics in areas of banking which may touch the consumer in the next few years. We are also seeing a significant adoption of biometrics for use inside the banking industry and that is how it will start -- it will start inside and then it will turn consumer focussed over time. In health care we're starting to see the acceleration in the use of biometrics and that's not just a security issue that's really a convenience issue. The ability again to access patient records and information with simply the scan of a finger as opposed to entering an 8-digit or a 10-digit password that needs to be changed every 30 days. So those are the things that are going to drive this industry! We are also seeing that virtually every single hardware manufacturer has incorporated finger-scanning devices into their platforms. That is again a huge inflection. We haven't necessarily felt this as explosive yet, but in the next year to 18 months when those devices are deployed pervasively, and when they become commonplace and part of the architecture of a laptop, a notebook or a tablet computer, I believe that will accelerate the use and the growth of finger biometrics market wide.

FB

Not to mention cell phones, PDA's -- the whole wireless environment!

MD

Absolutely! In fact the whole appliance marketplace has the potential to explode. Authentic has been very successful in marketing their finger scanning and sensing devices for use in cell phones globally. We haven't seen that hit here in the US in a big way, but the wave is coming, and I agree with you 100% the ability to access information and to access it in a secure infrastructure clearly will require a biometric. You know that has been BIO-key's vision and our strategy around incorporating our biometric technology with our public safety solutions. Access to critical information on mobile and wireless devices is becoming commonplace and as first responders have or carry some type of PDA or smart phone, if it's lost or stolen we have to be sure that some one else can't access that critical information, and biometrics are the perfect solution for that.

FB

You recently joined the Federation for Identity and Cross Credentialing System or FIXS. Can you provide a brief overview of this new organization and the benefits you hope to see from joining?

MD

We have been involved in this program prior to the FIXS organization being formed when it was called the Digital Cross Credentialing Program. BIO-key has worked in association with Northrop Grumman for a number of years and the original goal that was laid out for the DCICS program was to allow contractors that had required access to military facilities the ability to credential once and then to verify as they travel around to different facilities. Before this program, if I required access to Wright-Patterson Air Force Base, I would have to credential at the base and then obviously I could then access that base in the future as long as I was authorized. If I travelled to Fort Monmouth in New Jersey, I would have to re-credential at Fort Monmouth in New Jersey, and then again with authorization, have access to that base in the future. The DCICS project and the FIXS projects goal today, is to integrate technologies to allow for a uniform authentication solution that would travel across all DoD facilities and all consultants and contractors who are working on behalf of the government, and by the way, many of the individuals who work on a contract basis change companies. They move perhaps from Northrop Grumman to Lockheed, or to CSC, and with this universal credentialing solution they won't have to go through the re-credentialing process each time they make a move. So this is a significant project, a significant program and one that we believe has very short term and significant applicability, including biometrics.

FB

What lies ahead for Bio Key for 2006 and beyond?

MD

2006 again will be a year where we see significant commercial as well as government deployments of our finger biometric technologies. I know that most of us felt that each of the past 4 years was going to be the year of the Biometric and we started saying that back in 2003 but I really do believe and feel -- and of course we have the revenue now lining up to prove that this will be the year that Biometrics makes its entry into the marketplace in a major way and BIO-key's vertical focus supporting Law Enforcement, Fire Safety and biometrics will provide and incredible platform for growth in 2006 and beyond.

FB

Well thank you very much Mike, for taking the time to speak with us.

MD

My pleasure Peter.

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