Imageware (AMEX:IW)
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ImageWare® Systems, Inc. (AMEX:IW), a leading
developer and provider of identity management solutions, reported
preliminary financial results for the fourth quarter and year ended Dec.
31, 2007.
“In 2007, we continued our focus on building
relationships with major systems integrators, which produced important
wins with GE Security, Unisys, Boeing, Motorola, and others,”
stated Jim Miller, ImageWare’s chairman and
chief executive officer. “Our efforts have
begun to deliver results. Today we announced new orders totaling $3.5
million from multiple customers, the majority of which were received in
the last two weeks. We expect $1.3 million of the related revenue to be
recognized in the first quarter with the remainder recognized in the
second and third quarters of 2008. However, the fourth quarter 2007
government budget freeze affected our fourth quarter and full year 2007
results and delayed the positive impact of our efforts and success.”
Miller added, “These recent orders, the fruit
of our expanded relationships with major systems integrators and
government organizations, validate our strategy and prove our ability to
integrate our solution into large-scale biometric projects. Demand
continues for our identity management solutions and showcases our
interoperable and cross-functional solutions. After completing the Sol
Logic, Inc. integration and introducing the IWS™
Mediator™ in February, we are experiencing
sooner than expected high demand for our real-time voice recognition and
multi-lingual translation technology. We look forward to delivering more
of our solutions as we broaden our customer base and increase our
offerings to existing customers.”
Total net revenues for the fourth quarter 2007 were $1.9 million,
compared to $2.4 million for the fourth quarter 2006 due primarily to
lower product revenue recognition in the quarter. During 2007, the
company implemented its plan to shift from a direct sales model to an
indirect model through partnering, which resulted in lower sales and
marketing costs. These changes, combined with lower stock based
compensation expense and lower consulting and professional services
expenditures, reduced operating expenses to $2.5 million in the fourth
quarter 2007, compared to $2.8 million in the fourth quarter of 2006.
This resulted in an improved net loss available to common shareholders
for the fourth quarter of 2007 of $1.4 million, compared to $1.6 million
in the fourth quarter of 2006. Net loss per share was $0.08 for the
fourth quarter, compared to a net loss per share of $0.11 in the fourth
quarter of 2006.
For the full year 2007, total net revenues were $8.5 million, compared
to $10.2 million for 2006. 2007 gross margins improved to 70 percent, up
from 67 percent for 2006. The company reduced operating expenses by $1.5
million, with the largest reduction of $920,000 in sales and marketing
costs. Net loss available to common shareholders for 2007 was $5.9
million, which included $1.2 million of preferred dividends, or $0.39
per share, as compared to $6.0 million, or $0.44 per share, for 2006.
As of Dec. 31, 2007, ImageWare Systems had cash of $1.0 million.
Financial Guidance
Miller concluded, “We experienced more
activity in the last two weeks of the first quarter of 2008 than we have
in the company’s history, resulting in a
March 31, 2008 backlog of $2.9 million. In summary, we have set the
stage for a stronger year, and we estimate revenues for the 2008 first
quarter to be approximately $2.3 million.”
Recent and Fourth Quarter 2007 Customer Developments
Selected by GE Security for its FUPAC (Florida Uniform Port Access
Credential) project.
Won a one-year, multiple-award initial task order contract from Boeing
Integrated Defense Systems unit.
Signed a three-year, royalty-based, worldwide OEM agreement with GE
Security as an integral part of its identity management solution
offerings.
Signed a two-year, non-exclusive distribution agreement with iBilt
Technologies Ltd., a New Delhi based end-to-end IT solutions provider
for government IT business.
Recent and Fourth Quarter 2007 Product Developments
Acquired the assets of Sol Logic, Inc., a leader in real-time voice
recognition and language translation technology.
Launched IWS™ Mediator™,
a suite of multilingual translation, collaborative and integrated
multimodal biometric capabilities.
Awarded patent for a multimodal biometric identification or
authentication system.
Received technology excellence and superior performance recognition
for the IWS™ Biometric Engine®
platform in conjunction with the Technology-to-Sea Excellence Award to
the Navy’s Tactical Biometric Collection
and Matching System (TBCMS) team.
Received Minutiae interoperability Exchange (MINEX) Certification from
the National Institute of Standards and Technology (NIST) for the IWS™
Biometric Engine®.
Awarded a certificate of completion for HSPD-12 Vendor Evaluation as a
member of the Science Applications International Corporation (SAIC)
team.
Conference call information
A conference call on ImageWare’s
fourth-quarter and year-end earnings will be conducted today. The
conference call will be conducted at 1:30 p.m. Pacific Time (4:30 p.m.
Eastern Time) and will be available to all interested parties by dialing
877-407-9210 in the U.S. or 201-689-8049, if outside of the U.S. The
call will also be available through a live audio web broadcast at www.iwsinc.com/investors.cfm.
The call will be archived and available for replay from the investor
relations page of ImageWare’s web site at www.iwsinc.com
until June 30, 2008. The call will also be available for replay until
April 2, 2008 by calling 877-660-6853 in the U.S. or 201-612-7415, if
outside of the U.S. To access the call, all parties will need the
following replay pass codes: Account #286 and Conference ID # 280040.
About ImageWare Systems, Inc.
ImageWare Systems, Inc. (AMEX:IW) is a leading developer and provider of
identity management solutions, providing biometric, secure credential,
law enforcement and digital imaging technologies. Scalable for worldwide
deployment, the Company'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 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, with offices in Washington DC and Canada. For more
information visit www.iwsinc.com.
Safe Harbor Statement
This news release may contain forward-looking statements made
pursuant to the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995.
While these statements are meant to convey to the public the company's
progress, business opportunities and growth prospects, readers are
cautioned that such forward-looking statements represent management's
opinion. While management believes such representation to be true and
accurate based on the information available to the company, actual
results may differ materially from those described. The company's
operations and business prospects are always subject to risks and
uncertainties. Important facts that may cause actual results to differ
are set forth in the company’s periodic
filings with the U.S. Securities and Exchange Commission.
IMAGEWARE SYSTEMS, INC.
SELECTED COMPARATIVE FINANCIAL HIGHLIGHTS
In thousands, except share and per share amounts
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2007
2006
2007
2006
Revenues
Product
$
955
$
1,481
$
5,652
$
7,606
Maintenance
911
900
2,836
2,584
Total Revenues
1,866
2,381
8,488
10,190
Cost of Revenue
Product
389
528
1,380
2,216
Maintenance
295
307
1,166
1,133
Gross Profit
1,182
1,546
5,942
6,841
63
%
65
%
70
%
67
%
Operating Expenses
General & administrative
877
1,094
3,865
4,365
Sales and marketing
674
825
2,647
3,567
Research and development
928
780
3,669
3,678
Depreciation and amortization
58
59
258
304
Total Operating Expenses
2,537
2,758
10,439
11,914
Income (loss) from operations
(1,355
)
(1,212
)
(4,497
)
(5,073
)
Interest (income) expense, net
(21
)
226
215
564
Other (income) expense, net
(16
)
(8
)
23
(119
)
Income (loss) from continuing operations before income taxes
(1,318
)
(1,430
)
(4,735
)
(5,518
)
Income taxes
0
0
0
0
Income (loss) from continuing operations
(1,318
)
(1,430
)
(4,735
)
(5,518
)
Discontinued operations:
Gain (loss) from operations of discontinued Digital Photography
Component (including gain on disposal of Digital Photography
component)
33
(62
)
50
(408
)
Income tax benefit (expense)
0
0
0
0
Gain (loss) on discontinued operations
33
(62
)
50
(408
)
Net income (loss)
$
(1,285
)
$
(1,492
)
$
(4,685
)
$
(5,926
)
Preferred dividends
$
(95
)
$
(72
)
$
(1,171
)
$
(111
)
Net loss available to common shareholders
$
(1,380
)
$
(1,564
)
$
(5,856
)
$
(6,037
)
Per share data - basic
Net income (loss) from continuing operations
$
(0.08
)
$
(0.11
)
$
(0.31
)
$
(0.41
)
Discontinued operations
$
0.00
$
(0.00
)
$
0.00
$
(0.03
)
Preferred dividends
$
(0.00
)
$
(0.00
)
$
(0.08
)
$
(0.00
)
Basic loss per share available to common shareholders
$
(0.08
)
$
(0.11
)
$
(0.39
)
$
(0.44
)
Basic common shares
16,924,422
13,626,280
15,070,308
13,592,841
IMAGEWARE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
December 31,
2007
2006
Assets:
Cash
$
1,044,242
$
938,553
Accounts receivable, net
424,739
1,721,892
Inventories
130,342
57,990
Other current assets
440,459
137,609
Property and equipment, net
287,989
351,700
Other assets
718,213
784,459
Intangible assets, net
2,436,576
141,294
Goodwill
4,452,042
3,415,647
Total Assets
$
9,934,602
$
7,549,144
Liabilities and Shareholders' Equity:
Current liabilities
$
5,268,953
$
5,212,961
Pension obligation
1,138,911
1,016,293
Shareholders' equity
3,526,738
1,319,890
Total Liabilities and Shareholders' Equity
$
9,934,602
$
7,549,144