November 2010 Newsletter

Dear Bud,

Over the past 5 years we have been focused on strengthening our position as one of the premiere suppliers of the industry's most accurate and scalable fingerprint matching technology, while building partnerships with major solution providers in the financial, healthcare, education and government/civil markets.  As a result, BIO-key's biometric identification is now an integral part of solutions offered by LexisNexis, McKesson Healthcare, Allscripts, MorphoTrak, the FBI, the US Courts, AT&T and many others.

 The perfect storm is brewing!

Sales for mobile devices, such as the Apple iPhone and other smartphones are exploding. According to a recent Gartner report, Q3 2010 worldwide smartphone sales grew by a whopping 96% compared to the same period last year which means that we're witnessing the industry's fastest growth rate since the mid-2000s!

The increased level of convenience that these devices offer is changing the way business is conducted overnight. Doctors now have a powerful handheld device to access electronic health records and consumers can access bank accounts and their stock portfolios to run sophisticated analytics in the palm of their hand. This mobile access represents huge potential business opportunities for medical providers, financial institutions and virtually every other market; but as reported in eweek.com, "The mobile device itself cannot be considered to be trusted, devices are lost and stolen all the time."

 Fortunately there is a convenient method to secure these devices as well as the information and applications they access- fingerprint biometrics. BIO-key's proven fingerprint biometric identity solutions have been, and are being deployed by our partners on desktops, laptops and tablets to establish the identity of individuals accessing their applications. And our identity solutions can easily be adapted to smartphone applications!

 Over the past 9 months we have made significant progress in expanding our business and, more importantly, gaining traction with current and new large partners that are selling our biometric solutions as part of their core product offering.  Below is a compilation of our more significant 2010 achievements. Equally important to these successes is the fact that all of our partners can "weather the perfect storm that's brewing" by adding our secure convenient user identification to mobile applications and take advantage of the market opportunities that mobile devices offer!

 Mike DePasquale

Michael W. DePasquale
CEO
BIO-key International

 Healthcare

• McKesson, our longest standing healthcare OEM customer, continues to gain market share at the expense of competitors with McKesson's FastEntry™ biometric capability, which allows them to positively ID any user with just a touch of their finger. 
• The DEA issued its much-anticipated e-Prescription two-factor rules for dispensing controlled substances which includes biometrics. The "biometric module" requirements in the regulation are almost identical to our WEB-key platform, giving us a great head start in competing for this brand new market.
•  Eclipsys, a healthcare information technology provider was recently acquired by our partner Allscripts who has integrated our fingerprint ID into their solution. The Wall Street Journal reported that the new combined company will reach one of every three U.S. doctors and one-third of all U.S. hospitals with 200 or more beds. As a result, our addressable market to the combined organization includes more than 180,000 physicians, 1,500 hospitals and 10,000 post acute care organizations.
• Medflow, a new BIO-key partner, specializes in Ophthalmic Electronic Medical Records (EMR) solutions. This integration of our biometric identity solution provides medical professionals the ability to establish identity at any point in the patient care process, improving patient safety and protecting their privacy. Currently over 350 clinics are using Medflow solutions.
• Genesis Healthcare is our first customer whose solution includes the integration of BIO-key into EPIC EMR (Epic is a software provider for mid-size and large medical groups, hospitals and integrated healthcare organizations) and Authasas network logon (Authasas is a provider of strong authentication middleware for Microsoft Windows® and Citrix environments) for integration into Genesis's Enterprise Single Sign On (ESSO). 
•  The integration of BIO-key's identification solution into EPIC's Hyperspace EMR product has been completed. We now have an identity solution for the 225 customers (hospitals & clinics) and 200,000 physicians using EPIC products.
•  Jackson Madison County General Hospital, TN purchased our biometric solution for 3,000 users for network logon and integration into their ESSO.
• My LifePlan extended their contract, validating the need for BIO-key solutions; "Biometric identification is key to safeguard our members' identity and speed-up access to MyChoice in case of an emergency."
• As reflected from the above, relationships with our existing ESSO partners continue to grow stronger and our pipeline of opportunities is building. Our existing relationship with IBM (we are integrated into their TAM ESSO solution) is gaining momentum with several new global opportunities with IBM being pursued.

Government

• US Courts has expanded their installation of their ESSO solution for use in Federal Probation and Pretrial Services Office's fingerprint enabled identity management kiosks.
•  The FBI NGI AFIS implementation of the fused Morpho/BIO-key fingerprint algorithm is being initially deployed on November 12th and will be the premiere global reference for high speed, large scale finger biometrics.

Financial

• BIO-key has been working for years with the Financial Services Technology Consortium (FSTC), comprised of representatives from all the major financial institutions in the US (BofA, Citi, Wells, Chase, and others).  In August, the FSTC issued an RFI for biometric services.  This important milestone is indicative of their realization that biometrics has widespread commercial applicability in banking. Not only did BIO-key respond directly to the RFI, but two of our partners, AT&T and LexisNexis, also responded with their BIO-key based authentication services offerings.  With such marquee name partners promoting BIO-key as part of their solutions, we are well positioned to participate in the expected growth that will come in this untapped market.
   
• The explosion of mobile devices for use in banking applications is a key driver for banks' increased interest in biometric identity solutions. Mobile devices represent the "killer app" for biometrics.  BofA is on record stating that they expect to be using fingerprint biometrics on smartphones within a few years, making BIO-key's investment in mobile initiatives appear to be very prescient.  A recent Unisys survey reported that two thirds of all respondents listed fingerprint as the preferred means to verify identity for credit card transactions, ahead of all other options, including photo, signature, and other means.
   
• BNP Paribas Bank, an existing BIO-key customer, recently purchased additional licenses for employee authentication to their applications.

Marketing Initiatives:

We ramped up our market presence significantly in Q2 and Q3 to ensure that BIO-key identity solutions are well known among our partners' user bases. In Q2 & Q3 we participated in 9 events, five of which were new to BIO-key in 2010. These new events were;

• The Burton Group Catalyst Conference,  July 26^th-30^th , San Diego, California where we unveiled our Enterprise-Ready Biometric Identity Platform.
• HealthCare-ID User Conference,Sep. 14-15 in Chicago where we jointly presented with ITXM on how our biometrics are used to positively identify ITXM donors.  The Red Cross and other customers were in attendance.
• Blood Centers of America Conference, Sep. 19^th-21^st, Chicago. BIO-key was the only supplier presenting at the BCA IT Networking Conference.
• Panasonic Healthcare Mobile Technology Symposium, Sep. 19^th-21^st, San Antonio, Texas. Panasonic is a leading provider of mobile computing devices with integrated fingerprint scanners.
• Eclipsys User Network Conference, Oct 10^th-13^th, San Diego CA. As result of the recent merger of our partner Allscripts and Eclipsys, we were invited to participate.