SOURCE: ImageWare Systems, Inc.

ImageWare Systems, Inc.

March 16, 2015 16:05 ET

ImageWare Systems Issues Corporate Update

SAN DIEGO, CA--(Marketwired - Mar 16, 2015) - ImageWare Systems, Inc. (OTCQB: IWSY) (ImageWare), a leader in mobile and cloud-based, multi-modal biometric identity management solutions, has issued financial results for the fourth quarter and full year ended December 31, 2014, as well as provided a corporate update to highlight the company's progress since its last update on November 17, 2014.

Operational Highlights

  • Partnered with Extenua to create the first end-to-end, enterprise secure, cloud storage data encryption and multi-modal biometric identity management platform for office and mobile devices.

  • Partnered with Agility to sell biometric solutions to their clients throughout the Middle East Gulf Coast region and other parts of the world where Agility operates.

  • Joined CA Technologies' Tech Partner Program with an "Advanced Partner" membership status, integrating GoVerifyID™ with CA Single Sign-On, CA Identity Manager and CA Advanced Authentication.

  • Appointed Jeff Harris as senior vice president of sales and marketing, who joins the company having previously served as a senior consultant to Cisco and Checkpoint Systems.

  • Closed a registered direct offering of convertible preferred stock for $9.9 million in net proceeds after the extinguishment of debt.

Fourth Quarter 2014 Financial Results

Total revenues in the fourth quarter of 2014 were $1.2 million compared to $928,000 in the same year-ago quarter due to increased royalty revenue from the company's channel partners. 

Gross margin in the fourth quarter of 2014 was 79.0% compared to 72.2% in the year-ago quarter. The increase was primarily due to the higher royalty revenue, which contributes gross margin at 100%.

Net loss in the fourth quarter of 2014 was $1.9 million or ($0.02) per basic share, compared to a net loss of $1.8 million or $(0.02) per basic share in the year-ago quarter.

At December 31, 2014, cash and cash equivalents totaled $218,000 compared to $2.4 million at December 31, 2013. Total debt was $1.3 million compared to no debt at December 31, 2013. 

On February 6, 2015, ImageWare completed a registered direct offering of convertible preferred stock for $12.0 million. The company used approximately $2.0 million of the proceeds to repay all outstanding debt, and will use the remaining net proceeds of approximately $9.9 million for research and development, and other general corporate purposes.

Management Commentary

"The past several months have seen the continuation of a transition period for our company, as many of our partners remain in the testing or implementation phase with our biometric technology," said Jim Miller, chairman and CEO of ImageWare. "With that being said, all of our agreements remain in place and are progressing, albeit not at the pace we had expected.

"Nevertheless, we continue to execute strategic steps that move us closer to our goal of becoming a SAAS-based leader in multi-modal biometrics. Such steps include our agreement to join CA Technologies' Tech Partner Program with an 'Advanced Partner' membership status. This partnership, which is our seventh commercial agreement, will allow our patented biometric products to be integrated with the CA family of identity and access management solutions.

"Last week, we partnered with Agility to sell biometric solutions, like CloudID® and GoVerifyID®, to their partners and clients throughout the Middle East Gulf Coast region and in other parts of the world. Our first priority is to target airport and customs brokerage venues where Agility operates, as well as other commercial opportunities in the region. ImageWare will receive a one-time technology transfer fee and ongoing license revenues for software and services sold in the region. We anticipate the joint venture to be operational in the second quarter.

"Just today, we announced our partnership with Extenua to create the first end-to-end, enterprise secure, cloud storage, data encryption and multi-modal biometric identity management platform for office and mobile devices. Extenua is a pioneering developer of enterprise security software that simplifies the use and access of ubiquitous cloud storage. Our GoVerifyID solution will be integrated with their Cloud2Drive product to help enterprises both large and small face security challenges posed with cloud storage."

Miller continued: "Finally, we closed a financing that allowed us to fully repay our debt and improve our liquidity. We are now financially positioned to focus squarely on advancing our products and partnerships to capitalize on the fast-growing biometric market. We look forward to these important strategic steps manifesting themselves into material recurring revenue and additional partnerships in 2015."

Conference Call

ImageWare will hold a conference call today at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its fourth quarter and full year 2014 results. The company's Chairman and CEO Jim Miller and CFO Wayne Wetherell will host the conference call, followed by a question and answer period.

Date: Monday, March 16, 2015
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-888-220-8474
International dial-in number: 1-913-312-1450
Conference ID: 2633383

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=113531 and via the investor relations section of ImageWare's website at www.iwsinc.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through April 16, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 2633383

About ImageWare Systems, Inc.

ImageWare Systems, Inc. (OTCQB: IWSY) is a leading developer of mobile and cloud-based identity management solutions, providing biometric, secure credential and law enforcement technologies. Scalable for worldwide deployment, ImageWare's biometric product line includes a multi-biometric engine that is hardware and algorithm independent, enabling the enrollment and management of unlimited population sizes. ImageWare's identification products are used to manage and issue secure credentials, including national IDs, passports, driver's licenses, smart cards and access control credentials. ImageWare's digital booking products provide law enforcement with integrated mug shot, fingerprint livescan and investigative capabilities. ImageWare is headquartered in San Diego, CA, with offices in Portland, OR, Washington, D.C., and Ottawa, Ontario. For more information on ImageWare Systems, Inc., please visit www.iwsinc.com.

Forward Looking Statements

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "if", "should" and "will" and similar expressions as they relate to ImageWare Systems, Inc. ("ImageWare") are intended to identify such forward-looking statements. ImageWare may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see "Risk Factors" in ImageWare's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and its other reports filed with the Securities and Exchange Commission under the Securities 3 Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

 
IMAGEWARE SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, except share and per share data)
 
         
  December 31,     December 31,
  2014     2013
Assets:            
  Cash $ 218     $ 2,363
  Accounts receivable, net   266       302
  Inventories   916       505
  Other current assets   86       148
  Property and equipment, net   211       245
  Other assets   153       395
  Intangible assets, net   144       172
  Goodwill   3,416       3,416
Total Assets $ 5,410     $ 7,546
             
Liabilities and Shareholders' Equity (Deficit):            
  Current liabilities $ 3,299     $ 3,127
  Derivative liabilities   -       57
  Convertible line of credit to related party, net of discount   1,311       -
  Pension obligation   1,834       1,031
  Shareholders' equity (deficit)   (1,034 )     3,331
Total Liabilities and Shareholders' Equity (Deficit) $ 5,410     $ 7,546
             
             
             
IMAGEWARE SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except share and per share amounts)
 
                       
  Three Months Ended     Year Ended  
  December 31,     December 31,  
  2014     2013     2014     2013  
Revenues                              
  Product $ 557     $ 273     $ 1,634     $ 2,686  
  Maintenance   683       655       2,525       2,618  
Total Revenues   1,240       928       4,159       5,304  
                               
Cost of Revenue                              
  Product   62       70       257       319  
  Maintenance   199       188       735       771  
                               
Gross Profit   979       670       3,167       4,214  
    79 %     72 %     76 %     79 %
Operating Expenses                              
  General & administrative   958       818       3,818       3,378  
  Sales and marketing   690       632       2,471       2,129  
  Research and development   1,104       1,006       4,495       3,869  
  Depreciation and amortization   45       48       179       125  
    Total Operating Expenses   2,797       2,504       10,963       9,501  
                               
Loss from operations   (1,818 )     (1,834 )     (7,796 )     (5,287 )
                               
Interest (income) expense, net   128       74       416       221  
Change in fair value of derivative liabilities   -       97       -       4,776  
Other (income) expense, net   (8 )     (212 )     (297 )     (443 )
                               
Income (loss) from continuing operations before income taxes   (1,938 )     (1,793 )     (7,915 )     (9,841 )
                               
Income taxes   10       3       25       8  
                               
Income (loss) from continuing operations   (1,948 )     (1,796 )     (7,940 )     (9,849 )
                               
Net income (loss) $ (1,948 )   $ (1,796 )   $ (7,940 )   $ (9,849 )
Preferred dividends   (13 )     (13 )     (51 )     (51 )
Net income (loss) available to common shareholders $ (1,961 )   $ (1,809 )   $ (7,991 )   $ (9,900 )
                               
Per share data - basic                              
  Net income (loss) from continuing operations $ (0.02 )   $ (0.02 )   $ (0.09 )   $ (0.12 )
  Preferred dividends   -       -       -       -  
  Basic income (loss) per share available to common shareholders $ (0.02 )   $ (0.02 )   $ (0.09 )   $ (0.12 )
                               
Basic weighted-average common shares   93,384,834       85,594,118       91,795,971       81,231,962  
                               

Contact Information

  • Investor Relations:
    Liolios Group, Inc.
    Cody Slach
    Tel 1-949-574-3860
    Email Contact