SOURCE: ImageWare Systems, Inc.

ImageWare Systems, Inc.

November 14, 2013 16:05 ET

ImageWare Systems Reports Third Quarter 2013 Results

SAN DIEGO, CA--(Marketwired - Nov 14, 2013) -   ImageWare Systems, Inc. (OTCQB: IWSY) (ImageWare), a leader in mobile and cloud-based, multi-modal biometric identity management solutions, reported financial results for the third quarter ended September 30, 2013.

Third Quarter 2013 Operational Highlights

  • Awarded $2.2 million contract to expand biometric identity management services for the U.S. Department of Veteran Affairs.
  • Awarded a U.S. federally sponsored pilot program for iris recognition with 20 state and local law enforcement agencies.
  • Selected to provide complete identity management and booking system for the city of Fredericton, New Brunswick.
  • Introduced GoMobile Interactive™, the industry's first biometric mobile identity management platform for the iPhone and Android operating systems.

Third Quarter 2013 Financial Results

Total revenues in the third quarter of 2013 increased 167% to $2.5 million from $938,000 in the third quarter of 2012. The increase was primarily due to approximately $1.5 million received in August for software licenses in connection with a $2.2 million contract with the U.S. Department of Veteran Affairs.

Gross margin in the third quarter of 2013 increased significantly to 88.0%, compared to 72.7% in the third quarter of 2012. The increase was primarily due to the increased software license revenues.

Net income in the third quarter of 2013 also improved significantly to $326,000 or $0.00 per diluted share, compared to a net loss of $2.7 million or $(0.04) per diluted share in the third quarter of 2012.

At September 30, 2013, cash and cash equivalents totaled $3.5 million, compared to $1.0 million at June 30, 2013 and $4.2 million at December 31, 2012. The company continues to carry no debt and currently maintains a $2.5 million unsecured line of credit.

Management Commentary

"Our strong third quarter results were primarily due to the $2.2 million contract we secured with our largest customer, the U.S. Department of Veteran Affairs," said Jim Miller, chairman and CEO of ImageWare. "This key contract drove our first cash flow positive quarter in nearly five years.

"The biometric identity solutions we are providing the VA, which are in strict compliance with U.S. government standards, serve as a working model for facilitating more rapid commercial sector adoption. In fact, we recently announced a contract award from our second commercial customer, Global Payout, which further endorses the turnkey use of our solutions in our target markets. Along with our technology partner, Fujitsu, we continue to explore many significant opportunities and look forward to a worldwide expansion model. As such, we are currently in discussions with several potential clients regarding licensing opportunities and will continue to target large enterprise businesses and emerging applications.

"Due to external factors not related to our portion of the contract, we're now anticipating the completion date of our LAX deployment to be shifted from the fourth quarter to early 2014. More than ever, we are confident the steps we are taking to advance and position our cloud, SaaS and mobile offerings in the commercial and consumer marketplace will provide increasing shareholder value, with better visibility and a strengthening recurring revenue stream."

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 third quarter 2013 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: Thursday, November 14, 2013
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-877-941-4774
International dial-in number: 1-480-629-9760
Conference ID: 4648785

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=106733 and via ImageWare's investor relations section 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 December 14, 2013.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4648785

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., 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, 2012, its quarterly reports on Form 10-Q for the quarter ended March 31 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)
 
    September 30,   December 31,
    2013   2012
Assets:        
  Cash   $ 3,468   $ 4,225
  Accounts receivable, net     314     328
  Inventories     488     262
  Other current assets     52     86
  Property and equipment, net     187     150
  Other assets     473     44
  Intangible assets, net     179     200
  Goodwill     3,416     3,416
Total Assets   $ 8,577   $ 8,711
             
Liabilities and Shareholders' Equity:            
  Current liabilities   $ 3,874   $ 3,651
  Derivative liabilities     406     2,244
  Pension obligation     442     401
  Other long-term liabilities     0     72
  Shareholders' equity     3,855     2,343
Total Liabilities and Shareholders' Equity   $ 8,577   $ 8,711
             
             
             
IMAGEWARE SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except share and per share amounts)
(Unaudited)
 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
Revenues                        
  Product   $ 1,842     $ 257     $ 2,413     $ 898  
  Maintenance     654       681       1,962       2,127  
Total Revenues     2,496       938       4,375       3,025  
                                 
Cost of Revenue                                
  Product     90       49       249       184  
  Maintenance     209       207       585       748  
                                 
Gross Profit     2,197       682       3,541       2,093  
      88 %     73 %     81 %     69 %
Operating Expenses                                
  General & administrative     888       749       2,560       2,580  
  Sales and marketing     512       461       1,497       1,277  
  Research and development     946       798       2,861       2,291  
  Depreciation and amortization     29       17       77       44  
    Total Operating Expenses     2,375       2,025       6,995       6,192  
                                 
Loss from operations     (178 )     (1,343 )     (3,454 )     (4,099 )
                                 
Interest (income) expense, net     73       5       148       14  
Change in fair value of derivative liabilities     (470 )     1,378       4,679       6,473  
Other (income) expense, net     (123 )     (2 )     (231 )     (327 )
                                 
Income (loss) from continuing operations before income taxes     342       (2,724 )     (8,050 )     (10,259 )
                                 
Income taxes     3       2       5       6  
                                 
Income (loss) from continuing operations     339       (2,726 )     (8,055 )     (10,265 )
                                 
Net income (loss)   $ 339     $ (2,726 )   $ (8,055 )   $ (10,265 )
Preferred dividends     (13 )     (13 )     (38 )   $ (38 )
Net income (loss) available to common shareholders   $ 326     $ (2,739 )   $ (8,093 )   $ (10,303 )
                                 
Per share data - basic                                
  Net income (loss) from continuing operations   $ -     $ (0.04 )   $ (0.10 )   $ (0.15 )
  Preferred dividends     -       -       -       -  
  Basic income (loss) per share available to common shareholders   $ -     $ (0.04 )   $ (0.10 )   $ (0.15 )
                                 
Basic weighted-average common shares     83,750,636       70,308,374       79,751,523       68,991,196  
                                 
Diluted income (loss) per share   $ -     $ (0.04 )   $ (0.10 )   $ (0.15 )
Diluted weighted-average common shares     93,352,192       70,308,374       79,751,523       68,991,196  

Contact Information

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

    ImageWare Media Contact:
    Tony Fisch
    Tony Fisch Consulting
    Tel 1-323-461-7878
    Email Contact