ImageWare® Systems Reports 2017 Q4 and Year-End Financial Results

SAN DIEGO, March 19, 2018 (GLOBE NEWSWIRE) — ImageWare® Systems, Inc. (OTCQB:IWSY), a leader in mobile and cloud-based, multi-modal biometric identity management solutions, reported financial results for fourth quarter and year ended December 31, 2017. The revenue for both periods primarily reflects our legacy business.

Q4 Summary of Results

  • Revenue for the fourth quarter ended December 31, 2017 increased 32% to $1,221,000 from $925,000 in the fourth quarter 2016.
  • Gross profit for the quarter was $975,000 (80%) as compared with $641,000 (69%).
  • Net loss was $2.4 million in the quarter compared with $2.7 million in the fourth quarter 2016.

Year-End Summary of Results

  • Revenue for the year ended December 31, 2017 increased 14% to $4.3 million as compared with $3.8 million for the year ended 2016.
  • Gross profit for 2017 was $3.3 million (77%) compared with $2.7 million (72%) in 2016.
  • Net loss for the year was $13.7 million in 2017 as compared with $10.9 million in 2016.
  • Cash at year-end 2017 was $7.3 million as compared with $1.6 million at year-end 2016.

Recent Significant Events

  • ImageWare entered a new large and lucrative vertical – the healthcare market
    • Life Med ID is our newest marketing and sales partner using GoVerifyID® to provide multi-modal biometric authentication to patient identity in healthcare.
    • Fujitsu has added the IWS pillphone® to its sales and marketing agreement with ImageWare and has introduced its own healthcare product for patient-physician engagement. In addition to connecting a medical care team to patients, the application secures communications using the Biometrics-as-a-Service™ (BIOaaS™) platform from Fujitsu, which provides secure multi-modal biometrics for patient identity verification without requiring passwords. Our GoVerifyID (GVID) is the multi-modal component in this solution.
  • Fujitsu extended its sales and marketing agreement with ImageWare to include Australia.
  • Fujitsu licensed ImageWare’s GVID technology for use across additional countries in the Americas.
  • CDW made its first sale of ImageWare’s GVID enterprise product in the financial services market.

Jim Miller, Chairman and CEO of ImageWare Systems said, “Revenues in 2017 continued to reflect primarily our legacy business, however, we made great strides in the year toward transitioning the company to a recurring revenue model. We look forward to seeing meaningful revenues begin from the recurring model as early as the second quarter of 2018. Feedback we are receiving from our sales partners show they have every expectation of sales beginning to ramp in that timeframe.

“We saw our first sales under that model in Q1 from CDW. Fujitsu is building its sales force along with developing its customer support capability, which is essential for enterprise and consumer rollouts. Thus far, we have trained more than 150 Fujitsu employees in these functions. These milestones, when combined with other initiatives and healthcare’s higher per-user/per-month price point, give us a high level of confidence that we are on the right track toward profitability and cash flow breakeven,” Miller concluded.

2017 Year-End Financial Results Conference Call   
The Company will host an investor conference call on Monday, March 19, 2018 at 1:30pm PT (4:30pm ET).The Participant Dial-In Number for the conference call is Domestic/International 1-778-327-3988. Participants should dial in to the call at least five minutes before 1:30pm PT (4:30pm ET) on March 19, 2018. The call can also be accessed “live” online at http://public.viavid.com/index.php?id=128607.

A replay of the recorded call will be available for 90 days on the Company’s website (https://iwsinc.com/about/investors/). You can also listen to a replay of the call by dialing toll-free 1-844-512-2921 (international only – 1-412-317-667) starting March 19, 2018, at 7:30pm ET through March 26, 2018 at 11:59 pm ET. Please use PIN Number 10004429.

About ImageWare® Systems, Inc.
ImageWare Systems, Inc. is a leading developer of mobile and cloud-based identity management solutions, providing patented biometric authentication solutions for the enterprise. Biometric technology uses unique physical characteristics to authenticate a person’s identity. The company delivers next-generation biometrics as an interactive and scalable cloud-based solution. ImageWare brings together cloud and mobile technology to offer multi-factor authentication for smartphone users, for the enterprise, and across industries. 

ImageWare’s products support multi-modal biometric authentication including, but not limited to, any individual use or combination of face, voice, fingerprint, iris, palm, and more. All the biometrics can be combined with or used as replacements for authentication and access control tools, including tokens, digital certificates, passwords, and PINS, to provide the ultimate level of assurance, accountability, and ease of use for corporate networks, web applications, mobile devices, and PC desktop environments.

ImageWare is headquartered in San Diego, California, with offices in Portland, Oregon, Ottawa, Ontario, and Mexico City, Mexico. To learn more about ImageWare, visit https://iwsinc.com/ and follow us on Twitter, LinkedIn, YouTube, and Facebook.

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. are intended to identify such forward-looking statements. ImageWare may from time to time update 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, 2017 and its other reports filed with the Securities and Exchange Commission under the Securities 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.

Investor Relations Contact:                       
Harvey Bibicoff, CEO                                
Bibicoff + MacInnis, Inc.                                                    
818.379.8500    harvey@bibimac.com

 
ImageWare Systems, Inc.
SELECTED COMPARATIVE FINANCIAL HIGHLIGHTS
In thousands, except share and per share amounts
                     
        Three Months Ended December 31,
  Year Ended December 31,
         
        2017   2016   2017   2016
Revenues                    
  Product       $    509     $    281     $    1,614     $    1,249  
  Maintenance         712       644       2,679       2,563  
Total Revenues         1,221       925       4,293       3,812  
                     
Cost of Revenue                    
  Product         44       81       152       243  
  Maintenance         202       203       839       827  
                     
Gross Profit         975       641       3,302       2,742  
           80 %     69 %     77 %     72 %
Operating Expenses                  
  General & administrative       1,137       912       4,192       3,722  
  Sales and marketing       697       888       2,816       3,021  
  Research and development       1,515       1,400       5,953       5,332  
  Depreciation and amortization     14       26       68       129  
     Total Operating Expenses     3,363       3,226       13,029       12,204  
                     
Loss from operations       (2,388 )     (2,585 )     (9,727 )     (9,462 )
                     
Interest (income) expense, net     149       109       591       245  
Other (income) expense, net       0         –        (125 )     (201 )
                     
Income (loss) from continuing operations
before income taxes
  (2,537 )     (2,694 )     (10,193 )     (9,506 )
                     
Income taxes         (134 )     11       (124 )     21  
                     
Income (loss) from continuing operations     (2,403 )       (2,705 )       (10,069 )       (9,527 )
                     
Net income (loss)     $   (2,403 )   $   (2,705 )   $   (10,069 )   $   (9,527 )
                     
Preferred dividends         (825 )       (361 )       (2,400 )       (1,347 )
Preferred stock exchange         –          –          (1,245 )       –   
Net income (loss) available to common
shareholders
$   (3,228 )   $   (3,066 )   $   (13,714 )   $   (10,874 )
                     
Per share data – basic                  
  Net income (loss) from continuing
operations
$   (0.03 )   $   (0.03 )   $   (0.11 )   $   (0.10 )
  Preferred dividends         –          –          (0.03 )       (0.02 )
  Preferred stock exchange         –          –          (0.01 )       –   
  Basic income (loss) per share available to
common shareholders
$   (0.03 )   $   (0.03 )   $   (0.15 )   $    (0.12 )
                     
Basic weighted-average common shares     93,624,074         94,779,243        92,816,723        94,426,783  
                               

ImageWare Systems, Inc.  CONSOLIDATED BALANCE SHEETS      
             
        December 31,   December 31,
        2017   2016
Assets:            
  Cash       $   7,317   $   1,586  
  Accounts receivable, net       458     287  
  Inventories         79     23  
  Other current assets       163     135  
  Property and equipment, net     43     93  
  Other assets         35     34  
  Intangible assets, net       93     106  
  Goodwill         3,416     3,416  
Total Assets       $   11,604   $   5,680  
             
Liabilities and Shareholders’ Deficit:        
  Current liabilities     $   2,658   $   2,516  
  Convertible line of credit to related party net of discount     5,774       2,528  
  Pension obligation       2,024     1,895  
  Shareholders’ equity (deficit)     1,148     (1,259 )
Total Liabilities and Shareholders’ Equity (Deficit) $   11,604   $   5,680  
             

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