ImageWare Reports Fourth Quarter and Full Year 2020 Results

SAN DIEGO, April 20, 2021 /PRNewswire/ — ImageWare® Systems, Inc. (OTCQB: IWSY) («ImageWare» or «the Company»), a leader in biometric identification and…

SAN DIEGO, April 20, 2021 /PRNewswire/ — ImageWare® Systems, Inc. (OTCQB: IWSY) («ImageWare» or «the Company»), a leader in biometric identification and authentication, today reported financial results for the fourth quarter and full year ended December 31, 2020.

Recent Operational Highlights

  • Appointed former FBI senior executive and security expert Lauren C. Anderson to the Company’s Board of Directors. The current Board of Directors consists of four members, three of whom are independent.
  • Introduced the first-ever biometric-based Zero Trust Network Access solution in collaboration with Safe-T Data A.R Ltd.
  • Launched ImageWare Authenticate, a software solution that enables customers to seamlessly integrate biometric multifactor authentication into existing business and consumer applications.
  • Appointed AJ Naddell as Vice President, Go-To-Market and Portfolio Strategy to help ensure ImageWare’s delivery of existing mission critical offerings and drive future customer needs.
  • Closed over $12 million private placement of Series D Convertible Preferred Stock, led by funds and accounts managed by Nantahala Capital Management with additional participation from both institutional investors and existing accredited investors.

Management Commentary

«While the past twelve months have been nothing short of transformative for our business, we are still in the middle of an ongoing progression that will take some time before we can realize our vision for ImageWare 2.0,» said Company Chair, President, and CEO Kristin Taylor. «The fourth quarter presented its own challenges, both from an internal execution standpoint as well as the external economic environment, but I am confident we have and are taking the necessary steps to keep moving in the right direction. Recognizing the many moving parts and long-term initiatives we have in process, our financial results will continue to fluctuate in the near term before translating to sustainable, improved sales. Demand for cybersecurity solutions within the public safety, federal government and enterprise verticals continue to grow, and we are working to build a team, solutions, and strategy to capitalize on this opportunity while addressing an essential need in the modern world.»

Sales Strategy Overview   

Taylor added: «While our sales for the quarter were challenged, we did generate meaningful annualized improvements. We are currently implementing proactive changes to support our long-term growth plans and believe we have a solid foundation on which to build going forward. These changes include upgrading our sales force and leadership team, refining our focus to expand market share and product footprint, implementing a business partner program, attending hyperlocal events, having a targeted business development program to senior executives in specific industries and regions, and enhancing our legacy product offerings to support integration into our product strategy. With these initiatives in place, we expect to see improved bookings and sales results beginning in the second half of 2021.»

Fourth Quarter 2020 Financial Results

Revenue for the fourth quarter of 2020 decreased 20% to $786,000 compared to $979,000 in the same year-ago period. The decrease in sales was due to primarily to the expiration of a certain royalty arrangement and lower professional service revenue due to the timing of the completion of certain projects, which was offset by higher maintenance revenue.

Gross profit for the fourth quarter of 2020 decreased 21% to $647,000 (82.3% of revenue) compared to $817,000 (83.4% of revenue) in the same year-ago period. The decrease was primarily due to lower revenues of approximately $193,000.

Operating expense for the fourth quarter of 2020 decreased 18% to $3.1 million compared to $3.8 million in the same year-ago period. The decrease in operating expense was primarily due to the revamping of the Company’s engineering and sales departments.

Loss from operations for the fourth quarter of 2020 improved to $2.5 million compared to $3.0 million in the same year-ago period. The improvement was primarily due to the reduction in operating expenses previously noted.

Net income (loss) available to common shareholders for the fourth quarter of 2020 improved to $979,000, or $0.01 per share, compared with $4.5 million, or $(0.05) per share in the same year-ago period.

Full Year 2020 Financial Results

Revenue for the full year 2020 increased 36% to $4.8 million compared to $3.5 million in 2019. The increase in sales was primarily due to an increase in product revenue related to the completion of certain projects, partially offset by a slight decline in maintenance revenue.

Gross profit for the full year 2020 increased 24% to $3.5 million (73.9% of revenue) compared to $2.9 million (81.7% of revenue) in 2019. The increase in gross profit was primarily due to the increase in product revenues. The decrease in gross margin was due to an increase in cost of revenue for both product and maintenance.

Operating expense for the full year 2020 decreased 15% to $12.8 million compared to $15.1 million in 2019. The decrease in operating expense was primarily due to a decrease in research and development and sales and marketing expense, offset by an increase in general and administrative expenses.

Loss from operations for the full year 2020 improved to $9.3 million compared to $12.2 million in 2019. The improvement was primarily due to the increase in revenues combined with the reduction in operating expenses previously noted.

Net income (loss) available to common shareholders for the full year 2020 improved to $(10.9) million, or $(0.08) per share, compared with $(17.3) million, or $(0.17) per share in 2019.

Conference Call

ImageWare management will hold a conference call today (April 20, 2021) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

U.S. dial-in: 855-327-6837

International dial-in: 631-891-4304                               

Please call the conference telephone number 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 Gateway Investor Relations at 949-574-3860.

A telephonic replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through April 27, 2021.

U.S. replay number: 844-512-2921

International replay number: 412-317-6671

Replay ID: 10014047

About ImageWare® Systems, Inc.      

Founded in 1987, ImageWare provides defense-grade biometric identification and authentication for access to your data, products, services or facilities. We are experts in biometric authentication and considered a preeminent patent holder of multimodal IP, having many of the most-cited patents in the industry. Our patented IWS Biometric Engine® (BE) is the most accurate and fastest biometrics matching engine in the industry, capable of our patented fusion of multiple biometrics. Part of our heritage is in law enforcement, having built the first state-wide digital booking platform for United States local law enforcement – and more than three decades of experience in the challenging government sector creating biometric smart cards and logical access for millions of individuals. We are a «biometrics first» company, leveraging unique human characteristics to provide unparalleled accuracy for identification while protecting your identity. For more information, 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. 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.   Factors that may cause the projections to change or differ may include, but are not limited to, the ability to of the Company to continue to grow revenue, the ability to decrease operating expenses and continue to grow profit margins, and the Company’s ability to continue to achieve positive cash flow given the Company’s existing and anticipated operating and other costs.  For a discussion of additional risks and uncertainties, see «Risk Factors» in ImageWare’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 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.

Media Contact: 

Jessica Belair

ImageWare Systems, Inc.

(310) 717-0877

jbelair@iwsinc.com

Investor Contact:

Tom Colton

Gateway Investor Relations

949-574-3860

IWSY@gatewayir.com

ImageWare® Systems, Inc.

Consolidated Statements of Operations


SELECTED COMPARATIVE FINANCIAL HIGHLIGHTS







In thousands, except share and per share amounts











Three Months Ended


Twelve Months Ended


December 31,


December 31,


2020


2019



2020


2019


Revenues










  Product

$                           102


$                           331



$              2,231


$                  923


  Maintenance

684


648



2,554


2,583


Total Revenues

786


979



4,785


3,506












Cost of Revenue










  Product

19


60



800


218


  Maintenance

120


102



448


425












Gross Profit

647


817



3,537


2,863



82%


83%



74%


82%


Operating Expenses










  General & administrative

1,227


822



4,102


3,614


  Sales and marketing

697


1,013



2,936


3,937


  Research and development

1,203


1,974



5,706


7,488


  Depreciation and amortization

18


18



72


71


     Total Operating Expenses

3,145


3,827



12,816


15,110












Loss from operations

(2,498)


(3,010)



(9,279)


(12,247)












Interest (income) expense, net

(29)


(10)



102


(90)


Change in fair value of derivative liabilities

(1,883)


(251)



(2,252)


(696)


Other components of net periodic pension expense

9


(4)



115


109


Other expense

(2)




2


1












Loss from continuing operations before income taxes

(593)


(2,745)



(7,246)


(11,571)












Income taxes

8


9



7


10












Loss from continuing operations

(601)


(2,754)



(7,253)


(11,581)












Net loss

$                         (601)


$                      (2,754)



$             (7,253)


$          (11,581)












Preferred dividends

1,580


(1,703)



(3,695)


(5,670)


Net income (loss) available to common shareholders

$                           979


$                      (4,457)



$          (10,948)


$          (17,251)












Per share data – basic










   Basic income (loss) per share available to common shareholders

$                          0.01


$                        (0.05)



$               (0.08)


$               (0.17)












Basic weighted-average common shares

133,341,134


108,946,982



133,346,309


104,372,048


 

ImageWare® Systems, Inc.

Consolidated Balance Sheets



December 31,


December 31,


2020


2019

Assets:




  Cash

$                       8,345


$                       1,030

  Accounts receivable, net

577


657

  Inventories

40


615

  Other current assets

196


243

  Property and equipment, net

155


216

  Other assets

458


257

  Operating lease right-of-use assets

1,557


1,906

  Intangible assets, net

58


70

  Goodwill

3,416


3,416

Total Assets

$                     14,802


$                       8,410





Liabilities and Shareholders’ Deficit:




  Current liabilities excluding derivative liabilities

$                       4,379


$                       3,828

  Derivative liabilities

24,128


369

  Note payable – bank, net of current portion

653


  Pension obligation

2,531


2,256

  Lease liabilities – long term

1,297


1,716

  Other long-term liabilities

65


118

  Mezzanine equity

1,572


8,884

  Shareholders’ deficit

(19,823)


(8,761)

Total Liabilities and Shareholders’ Deficit

$                     14,802


$                       8,410

 

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SOURCE ImageWare Systems, Inc.