BIO-key(R) Issues Open Letter to Sh...(ntenance fees allows for additional lice...)

In February, we announced that the Indiana Blood Center ("IBC") committed to deploying our WEB-key(R) technology to enhance the convenience and security of identifying blood donors. With this commitment, the IBC became the first in its industry to adopt WEB-key in confirming the identity of donors. The IBC's commitment to us has also led other blood centers to consider deploying identity assurance platforms in order to ensure privacy and security.

In addition to these two wins, we announced earlier in the year our ongoing involvement in the world's largest biometric deployment. We have enrolled over eighty-five million Bangladeshi citizens since project deployment through our WEB-key technology and we are pleased to have received recognition -- along with our partners, Tiger IT and the Bangladesh Army -- from the UN on the scope and effectiveness of the program. A follow-on contract for the biometric-based solution was awarded in the fourth quarter of 2007. We believe continued growth in our biometric business will lead to improvements in our gross margins. Additionally, since our business is based on sales of high margin software and services, we believe securing additional large contracts -- such as our recent $2 million biometric contract -- enhances our ability to deliver near-term and consistent profitability.

With respect to our Law Enforcement business, we recently initiated a program to market our mobile access public safety solutions -- primarily PocketCop(R) -- alongside RIM, Sprint, AT&T, Verizon Wireless and Dobson Communications, among others. Our open-source, network independent PocketCop solution presents an attractive selling point to our partners in this initiative. Our strategy of marketing our solutions jointly with the wireless technology provider and/or handset manufacturer provides a number of compelling benefits, including c
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