ImageWare Reports First Quarter 2021 Results

Rhea-AI Summary

ImageWare Systems, Inc. (OTCQB: IWSY) reported a 8% revenue decline to $733,000 for Q1 2021, down from $796,000 in Q1 2020, primarily due to decreased product sales. Gross profit fell by 9% to $614,000, reflecting lower revenues. Operating expenses decreased by 17% to $3.3 million, leading to a reduced loss from operations of $2.6 million. The net loss available to common shareholders improved to $4.1 million, or $(0.02) per share, compared to $(4.5) million or $(0.04) per share in the prior year. The company ended the quarter with $5.1 million in cash.

Positive

• Operating expenses decreased by 17%, demonstrating effective cost reduction initiatives.
• Loss from operations improved from $3.3 million to $2.6 million year-over-year.

Negative

• Revenue decreased by 8% compared to Q1 2020, primarily due to a decline in product revenue.
• Gross profit fell 9% to $614,000, indicating challenges in maintaining profitability.
• Cash and cash equivalents decreased from $8.3 million at the end of 2020 to $5.1 million.

SAN DIEGO, June 2, 2021 /PRNewswire/ -- ImageWare® Systems, Inc. (OTCQB: IWSY) ("ImageWare" or "the Company"), a leader in biometric identification and authentication, today reported financial results for the first quarter ended March 31, 2021.

Recent Operational Highlights

• 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.

Management Commentary
"We are continuing to work through several major operational, technical and personnel-related hurdles, but we remain encouraged by the steady progress we are seeing within some of our roadmap initiatives designed to return ImageWare to long-term, sustainable growth," said Company Chair, President, and CEO Kristin Taylor. "With the additional funds from our recent financing, we're now able to support increased sales and marketing efforts within our key areas of focus, including the public safety, federal government and enterprise verticals, which should begin translating into new sales later this year. We also recorded the first official sale for our Law Enforcement 2.0 platform, and  we anticipate going live with this new product in the coming months. With an improved senior leadership team, revamped go-to-market strategies and near product launches on the horizon, ImageWare is well-positioned for the coming quarters, which should translate to incrementally improved operating results throughout the balance of the year and beyond."

Sales Strategy Overview   
Taylor added: "We have implemented a comprehensive program to align our marketing approach for the law enforcement/public safety, federal government and enterprise verticals, respectively, with unique, industry-specific strategies. Customer onboarding has been our key use case for adoption in financial services, real estate, education, telecommunications, and state agencies; law enforcement and public safety at the state, local, and federal level remain key for ImageWare. As restrictions ease and COVID-19 vaccinations are being administered nationwide, we are increasing our focus on in-person meetings and hands-on demonstrations at hyperlocal events, which have historically been major sales drivers for our industry. Our efforts to-date have already translated to an initial uptick in Marketing Qualified Leads, and we are confident that our new approach will translate to new sales going forward."

First Quarter 2021 Financial Results
Revenue for the first quarter of 2021 decreased 8% to $733,000 compared to $796,000 in the same year-ago period. The decrease in sales was due primarily to a decline in product revenue, which was offset by a slight increase in maintenance revenue.

Gross profit for the first quarter of 2021 decreased 9% to $614,000 (83.8% of revenue) compared to $677,000 (85.1% of revenue) in the same year-ago period. The decrease was primarily due to lower revenues of approximately $63,000.

Operating expense for the first quarter of 2021 decreased 17% to $3.3 million compared to $3.9 million in the same year-ago period. The decrease in operating expense was primarily due to effective cost reduction initiatives.

Loss from operations for the first quarter of 2021 reduced to $2.6 million compared to $3.3 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 first quarter of 2021 improved to $(4.1) million, or $(0.02) per share, compared with $(4.5) million, or $(0.04) per share in the same year-ago period.

At quarter-end, the Company had $5.1 million in cash and cash equivalents, compared to $8.3 million on December 31, 2020.

Conference Call
ImageWare management will hold a conference call today (June 2, 2021) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results, followed by a question and answer period.

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 through June 9, 2021.

U.S. replay number: 844-512-2921
International replay number: 412-317-6671
Replay ID: 10014858

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
				March 31,
				2021		2020
Revenues
Product				$                            56		$                         150
Maintenance				677		646
Total Revenues				733		796
Cost of Revenue
Product				9		21
Maintenance				110		98
Gross Profit				614		677
				84%		85%
Operating Expenses
General & administrative				1,347		983
Sales and marketing				724		1,058
Research and development				1,168		1,868
Depreciation and amortization				18		18
Total Operating Expenses				3,257		3,927
Loss from operations				(2,643)		(3,250)
Interest (income) expense, net				-		24
Change in fair value of derivative liabilities				(1,172)		(197)
Loss on extinguishment of derivative liabilities				335		-
Other components of net periodic pension expense				54		47
Other expense				25		-
Loss from continuing operations before income taxes				(1,885)		(3,124)
Income taxes				-		-
Loss from continuing operations				(1,885)		(3,124)
Net loss				$                     (1,885)		$                    (3,124)
Preferred dividends				(2,255)		(1,374)
Net loss available to common shareholders				$                     (4,140)		$                    (4,498)
Per share data - basic
Basic income (loss) per share available to common shareholders				$                       (0.02)		$                       (0.04)
Basic weighted-average common shares				245,829,914		116,196,197
ImageWare® Systems, Inc. Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETS
				March 31,		December 31,
				2021		2020
Assets:
Cash				$                       5,056		$                      8,345
Accounts receivable, net				493		577
Inventories				88		40
Other current assets				625		196
Property and equipment, net				112		155
Other assets				525		458
Operating lease right-of-use assets				1,462		1,557
Intangible assets, net				55		58
Goodwill				3,416		3,416
Total Assets				$                    11,832		$                    14,802
Liabilities and Shareholders' Deficit:
Current liabilities excluding derivative liabilities				$                       4,299		$                      4,379
Derivative liabilities				22,850		24,128
Note payable - bank, net of current portion				464		653
Pension obligation				2,518		2,531
Lease liabilities - long term				1,178		1,297
Other long-term liabilities				65		65
Mezzanine equity				3,391		1,572
Shareholders' deficit				(22,933)		(19,823)
Total Liabilities and Shareholders' Deficit				$                    11,832		$                    14,802

 

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SOURCE ImageWare Systems, Inc.

FAQ

What were ImageWare's Q1 2021 revenue results?

ImageWare reported a revenue of $733,000 for Q1 2021, an 8% decline from $796,000 in Q1 2020.

How did ImageWare's net loss change in Q1 2021?

The net loss available to common shareholders improved to $(4.1) million, or $(0.02) per share, compared to $(4.5) million, or $(0.04) per share in Q1 2020.

What was the decline in ImageWare's gross profit for Q1 2021?

Gross profit decreased by 9% to $614,000 in Q1 2021, compared to $677,000 in Q1 2020.

How much cash did ImageWare have at the end of Q1 2021?

At the end of Q1 2021, ImageWare had $5.1 million in cash and cash equivalents.

What are the key focus areas for ImageWare's sales strategy?

ImageWare is focusing on law enforcement, federal government, and enterprise verticals for sales.