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ImageWare Systems Issues Corporate Update

SAN DIEGO, CA--(Marketwired - Aug 9, 2016) - ImageWare Systems, Inc. (ImageWare or IWS) ( OTCQB : IWSY ), a leader in mobile and cloud-based, multi-modal biometric identity management solutions, has issued financial results for the second quarter ended June 30, 2016, as well as a corporate update to highlight the company's progress since its last quarterly update on May 10, 2016.

Operational Highlights

  • Partnered with Fujitsu RunMyProcess to provide turnkey integration of ImageWare's GoVerifyID® for solutions developed on the RunMyProcess platform used by Fortune 1000 companies in 45 nations.
  • Licensed GoVerifyID to Telos Corporation for use with HPE Aruba ClearPass, which is being sold on Amazon Web Services (AWS) as well as Telos' own private and secure Telos Ghost™ cloud.
  • Commenced sales efforts with HPE Aruba Clear pass reseller network.
  • Launched IWS Biometric authentication service with partner AWS and TransUnion to provide turnkey biometric service.
  • GoVerifyID successfully integrated with CA Technologies security products.
  • Appointed Dot Hill veteran and current Seagate Technology Executive Vice President Dana Kammersgard to board of directors.

Management Commentary
"Biometrics is now forecasted to be a $30 billion-plus market over the next few years and we continued to make progress with our various commercial partners to be ready to address this market," said Jim Miller, ImageWare's chairman and CEO. "This included an expansion of our partnership with Fujitsu to provide turnkey integration of GoVerifyID onto Fujitsu's RunMyProcess platform, enabling digital transformation for leading companies around the world. We also signed an agreement with Telos Corporation, which is the first reseller agreement signed through our partnership with Aruba. Telos will now become a reseller of GoVerifyID in conjunction with their sales and distribution of HPE Aruba ClearPass.

"To help expand our footprint in the commercial market, we recently appointed technology veteran Dana Kammersgard to the board of directors, who brings extensive industry expertise to ImageWare. We look forward to leveraging his deep industry contacts, as well as his proven ability in taking small organizations and growing them into leaders of their respective industries."

"Subsequent to the quarter," continued Miller, "we signed a five-year OEM agreement with a major mobile ID management provider, bringing multi-modal biometric user authentication to the identity governance and administration market. Given the growing commercial adoption for biometrics across a wide range of industries, we continue to believe we are well positioned to grow and scale our business in the out years."

Second Quarter 2016 Financial Results
Total revenues in the second quarter of 2016 were $1.0 million compared to $1.7 million in the same year-ago quarter. The difference is primarily due to the impact of non-recurring revenue recognized in 2015 upon completion of a major identity management project for Los Angeles World Airports.

Gross margin in the second quarter of 2016 increased significantly to 72.4% compared to 52.9% in the year-ago quarter, primarily due to 2015 containing an uncharacteristically high cost of professional services revenue incurred with the project discussed above.

Net loss in the second quarter of 2016 was $2.1 million or $(0.02) per basic share, compared to $1.8 million or $(0.02) per basic share in the year-ago quarter.

On June 30, 2016, cash and cash equivalents totaled $0.3 million compared to $3.4 million on December 31, 2015. Total debt was $1.5 million compared to no debt at December 31, 2015. Subsequent to the quarter, the company borrowed an additional $0.5 million and now has approximately $3.5 million available on its existing line of credit.

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 second quarter 2016 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: Tuesday, August 9, 2016
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-888-504-7960
International dial-in number: 1-719-325-2341
Conference ID: 4356802

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=120606 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 September 9, 2016.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4356802

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, 2015 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. 

 
CONSOLIDATED BALANCE SHEETS
 
    June 30,     December 31,
    2016     2015
Assets:              
  Cash   $ 327     $ 3,352
  Accounts receivable, net     274       349
  Inventories     74       46
  Other current assets     185       69
  Property and equipment, net     141       162
  Other assets     31       98
  Intangible assets, net     112       117
  Goodwill     3,416       3,416
Total Assets   $ 4,560     $ 7,609
               
Liabilities and Shareholders' Equity (Deficit):              
  Current liabilities   $ 3,036     $ 2,406
  Convertible line of credit to related party net of discount     -       -
  Pension obligation     1,592       1,511
  Shareholders' equity (deficit)     (68 )     3,692
Total Liabilities and Shareholders' Equity (Deficit)   $ 4,560     $ 7,609
               
               
   
SELECTED COMPARATIVE FINANCIAL HIGHLIGHTS  
In thousands, except share and per share amounts  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2016     2015     2016     2015  
Revenues                                
  Product   $ 356     $ 1,022     $ 759     $ 1,400  
  Maintenance     640       673       1,280       1,287  
Total Revenues     996       1,695       2,039       2,687  
                                 
Cost of Revenue                                
  Product     56       589       130       663  
  Maintenance     219       209       424       420  
                                 
Gross Profit     721       897       1,485       1,604  
      72 %     53 %     73 %     60 %
Operating Expenses                                
  General & administrative     899       788       1,905       1,704  
  Sales and marketing     743       717       1,416       1,368  
  Research and development     1,318       1,114       2,631       2,148  
  Depreciation and amortization     35       41       70       83  
    Total Operating Expenses     2,995       2,660       6,022       5,303  
                                   
Loss from operations     (2,274 )     (1,763 )     (4,537 )     (3,699 )
                                 
Interest (income) expense, net     36       (2 )     46       435  
Other (income) expense, net     (200 )     -       (200 )     (46 )
                                 
Income (loss) from continuing operations before income taxes     (2,110 )     (1,761 )     (4,383 )     (4,088 )
                                 
Income taxes     4       6       6       8  
                                 
Income (loss) from continuing operations     (2,114 )     (1,767 )     (4,389 )     (4,096 )
                                 
Net income (loss)   $ (2,114 )   $ (1,767 )   $ (4,389 )   $ (4,096 )
Preferred dividends     (309 )     (302 )     (657 )     (506 )
Net income (loss) available to common shareholders   $ (2,423 )   $ (2,069 )   $ (5,046 )   $ (4,602 )
                                 
Per share data - basic                                
  Net income (loss) from continuing operations   $ (0.02 )   $ (0.02 )   $ (0.05 )   $ (0.04 )
  Preferred dividends     (0.01 )     -       -       (0.01 )
  Basic income (loss) per share available to common shareholders   $ (0.03 )   $ (0.02 )   $ (0.05 )   $ (0.05 )
                                 
Basic weighted-average common shares     94,298,567       93,674,349       94,185,967       93,595,433