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Share Name | Share Symbol | Market | Type |
---|---|---|---|
ImageWare Systems Incorporated (CE) | USOTC:IWSY | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
Delaware
|
|
33-0224167
|
(State or Other Jurisdiction of Incorporation or
|
|
(IRS Employer Identification No.)
|
Organization)
|
|
|
Large accelerated filer
|
[ ]
|
Accelerated filer
|
[X]
|
Non-accelerated filer
|
[ ]
|
Smaller reporting company
|
[ ]
|
|
|
Emerging growth company
|
[ ]
|
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|
|
Three
Months Ended
March
31,
|
|
|
2018
|
2017
|
Revenue:
|
|
|
Product
|
$
97
|
$
273
|
Maintenance
|
619
|
655
|
|
716
|
928
|
Cost
of revenue:
|
|
|
Product
|
26
|
54
|
Maintenance
|
222
|
208
|
Gross
profit
|
468
|
666
|
|
|
|
Operating
expense:
|
|
|
General and
administrative
|
1,206
|
967
|
Sales and
marketing
|
861
|
761
|
Research and
development
|
1,799
|
1,541
|
Depreciation and
amortization
|
12
|
21
|
|
3,878
|
3,290
|
Loss from
operations
|
(3,410
)
|
(2,624
)
|
|
|
|
Interest expense,
net
|
173
|
100
|
Other income,
net
|
—
|
—
|
Loss before income
taxes
|
(3,583
)
|
(2,724
)
|
Income tax
expense
|
—
|
3
|
Net
loss
|
(3,583
)
|
(2,727
)
|
Preferred
dividends
|
(769
)
|
(507
)
|
Net loss available
to common shareholders
|
$
(4,352
)
|
$
(3,234
)
|
|
|
|
Basic
and diluted loss per common share - see Note 3:
|
|
|
Net
loss
|
$
(0.04
)
|
$
(0.03
)
|
Preferred
dividends
|
(0.01
)
|
(0.01
)
|
Basic and diluted
loss per share available to common shareholders
|
$
(0.05
)
|
$
(0.04
)
|
Basic and diluted
weighted-average shares outstanding
|
94,333,663
|
91,864,174
|
|
Three
Months Ended
March
31,
|
|
|
2018
|
2017
|
Net
loss
|
$
(3,583
)
|
$
(2,727
)
|
Other comprehensive
income (loss):
|
|
|
Foreign currency
translation adjustment
|
(27
)
|
(17
)
|
Comprehensive
loss
|
$
(3,610
)
|
$
(2,744
)
|
|
Three
Months Ended
March
31,
|
|
|
2018
|
2017
|
Cash
flows from operating activities
|
|
|
Net
loss
|
$
(3,583
)
|
$
(2,727
)
|
Adjustments to
reconcile net loss to net cash used by operating
activities:
|
|
|
Depreciation
and amortization
|
12
|
21
|
Amortization
of debt issuance costs and beneficial conversion
feature
|
59
|
40
|
Stock-based
compensation
|
335
|
274
|
Provision
for losses on accounts receivable
|
—
|
15
|
Change
in assets and liabilities
|
|
|
Accounts
receivable
|
269
|
(32
)
|
Inventory
|
(10
)
|
(20
)
|
Other
assets
|
(56
)
|
(12
)
|
Accounts
payable
|
(22
)
|
(25
)
|
Deferred
revenue
|
(138
)
|
(86
)
|
Accrued
expense
|
285
|
(63
)
|
Pension
obligation
|
35
|
15
|
Total
adjustments
|
769
|
127
|
Net cash used in
operating activities
|
(2,814
)
|
(2,600
)
|
|
|
|
Cash
flows from investing activities
|
|
|
Purchase of
property and equipment
|
(7
)
|
(1
)
|
Net
cash used in in investing activities
|
(7
)
|
(1
)
|
|
|
|
Cash
flows from financing activities
|
|
|
Proceeds from
exercised stock options
|
88
|
7
|
Proceeds from line
of credit
|
—
|
1,500
|
Net cash provided
by financing activities
|
88
|
1,507
|
|
|
|
Effect of exchange
rate changes on cash
|
(26
)
|
(17
)
|
Net
decrease in cash
|
(2,759
)
|
(1,111
)
|
|
|
|
Cash at beginning
of period
|
7,317
|
1,586
|
|
|
|
Cash at end of
period
|
$
4,558
|
$
475
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Cash paid for
interest
|
$
—
|
$
—
|
Cash paid for
income taxes
|
$
—
|
$
—
|
Summary of non-cash
investing and financing activities:
|
|
|
Beneficial
conversion feature on related party lines of credit
|
$
10
|
$
125
|
Stock
dividends on Convertible Preferred Stock
|
$
756
|
$
494
|
Conversion
of Convertible Preferred Stock into Common Stock
|
$
4
|
$
—
|
|
Three
Months Ended
March
31,
|
|
Net
Revenue
|
2018
|
2017
|
(dollars
in thousands)
|
|
|
|
|
|
Software and
royalties
|
$
84
|
$
189
|
Hardware and
consumables
|
1
|
47
|
Services
|
12
|
37
|
Maintenance
|
619
|
655
|
Total
revenue
|
$
716
|
$
928
|
(Amounts
in thousands except share and per share amounts)
|
Three Months Ended
March
31,
|
|
|
2018
|
2017
|
Numerator for basic
and diluted loss per share:
|
|
|
Net
loss
|
$
(3,583
)
|
$
(2,727
)
|
Preferred
dividends
|
(769
)
|
(507
)
|
Net loss available
to common shareholders
|
$
(4,352
)
|
$
(3,234
)
|
|
|
|
Denominator for
basic and dilutive loss per share — weighted-average shares
outstanding
|
94,333,663
|
91,864,174
|
Net
loss
|
$
(0.04
)
|
$
(0.03
)
|
Preferred
dividends
|
(0.01
)
|
(0.01
)
|
Basic and diluted
loss per share available to common shareholders
|
$
(0.05
)
|
$
(0.04
)
|
Potential
Dilutive Securities
|
Three Months Ended
March
31,
|
|
|
2018
|
2017
|
|
|
|
Related party lines
of credit
|
5,325,651
|
3,450,940
|
Convertible
redeemable preferred stock
|
26,630,458
|
11,710,102
|
Stock
options
|
7,273,431
|
6,491,931
|
Warrants
|
230,000
|
175,000
|
Total potential
dilutive securities
|
39,459,540
|
21,827,973
|
Fiscal Year Ended December 31,
|
Estimated
Amortization
Expense
($ in
thousands)
|
2018
(nine months)
|
$
9
|
2019
|
12
|
2020
|
12
|
2021
|
12
|
2022
|
12
|
Thereafter
|
33
|
Totals
|
$
90
|
($ in thousands)
|
March 31,
2018
|
December 31,
2017
|
Lines
of Credit with Related Parties
|
|
|
8%
convertible lines of credit. Face value of advances under lines of
credit $6,000 at March 31, 2018 and December 31, 2017. Discount on
advances under lines of credit is $179 at March 31, 2018
and $226 at December 31, 2017. Maturity date is December 31,
2018.
|
$
5,821
|
$
5,774
|
|
|
|
Total
lines of credit to related parties
|
5,821
|
5,774
|
Less
current portion
|
(5,821
)
|
(5,774
)
|
Long-term
lines of credit to related parties
|
$
—
|
$
—
|
|
Common Stock
|
Shares
outstanding at December 31, 2017
|
94,167,836
|
Shares
issued as payment of stock dividend on Series A
Preferred
|
472,562
|
Shares
issued pursuant to conversion of Series A Preferred
|
391,304
|
Shares
issued pursuant to option exercises
|
83,169
|
Shares
outstanding at March 31, 2018
|
95,114,871
|
|
Warrants
|
Weighted- Average
Exercise Price
|
Balance
at December 31, 2017
|
230,000
|
$
0.91
|
Granted
|
—
|
—
|
Expired/Canceled
|
—
|
—
|
Exercised
|
—
|
—
|
Balance
at March 31, 2018
|
230,000
|
$
0.91
|
|
Options
|
Weighted-Average
Exercise Price
|
Balance
at December 31, 2017
|
6,093,512
|
$
1.23
|
Granted
|
1,303,000
|
$
1.76
|
Expired/Cancelled
|
(39,912
)
|
$
1.34
|
Exercised
|
(83,169
)
|
$
1.05
|
Balance
at March 31, 2018
|
7,273,431
|
$
1.32
|
|
Three Months Ended
March 31,
|
|
|
2018
|
2017
|
Cost
of revenue
|
$
5
|
$
5
|
General
and administrative
|
216
|
164
|
Sales
and marketing
|
60
|
55
|
Research
and development
|
54
|
50
|
Total
|
$
335
|
$
274
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible at
the measurement date for identical, unrestricted assets or
liabilities.
|
Level 2
|
Applies to assets or liabilities for which there are inputs other
than quoted prices included within Level 1 that are observable for
the asset or liability such as quoted prices for similar assets or
liabilities in active markets; quoted prices for identical assets
or liabilities in markets with insufficient volume or infrequent
transactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived
principally from, or corroborated by, observable market
data.
|
Level 3
|
Prices or valuation techniques that require inputs that are both
significant to the fair value measurement and unobservable
(supported by little or no market activity).
|
|
Fair Value at March 31, 2018
|
|||
($ in thousands)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Assets:
|
|
|
|
|
Pension
assets
|
$
1,852
|
$
1,852
|
$
—
|
$
—
|
Totals
|
$
1,852
|
$
1,852
|
$
—
|
$
—
|
|
Fair Value at December 31, 2017
|
|||
($ in thousands)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Assets:
|
|
|
|
|
Pension
assets
|
$
1,806
|
$
1,806
|
$
—
|
$
—
|
Totals
|
$
1,806
|
$
1,806
|
$
—
|
$
—
|
($ in thousands)
|
|
2018
(nine months)
|
$
444
|
2019
|
283
|
2020
|
290
|
2021
|
271
|
2022
|
271
|
Thereafter
|
46
|
Total
|
$
1,605
|
|
Three
Months Ended
March
31,
|
|
|
|
Net
Product Revenue
|
2018
|
2017
|
$
Change
|
%
Change
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
Software and
royalties
|
$
84
|
$
189
|
$
(105
)
|
(56
)%
|
Percentage of total
net product revenue
|
87
%
|
69
%
|
|
|
Hardware and
consumables
|
$
1
|
$
47
|
$
(46
)
|
(98
)%
|
Percentage of total
net product revenue
|
1
%
|
17
%
|
|
|
Services
|
$
12
|
$
37
|
$
(25
)
|
(68
)%
|
Percentage of total
net product revenue
|
12
%
|
14
%
|
|
|
Total net product
revenue
|
$
97
|
$
273
|
$
(176
)
|
(64
)%
|
|
Three Months Ended
March 31,
|
|
|
|
Maintenance Revenue
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Total
maintenance revenue
|
$
619
|
$
655
|
$
(36
)
|
(5
)%
|
|
Three Months Ended
March 31,
|
|
|
|
Cost of Product Revenue:
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Software
and royalties
|
$
5
|
$
11
|
$
(6
)
|
(55
)%
|
Percentage
of software and royalty product revenue
|
6
%
|
6
%
|
|
|
Hardware
and consumables
|
$
6
|
$
37
|
$
(31
)
|
(84
)%
|
Percentage
of hardware and consumables product revenue
|
600
%
|
79
%
|
|
|
Services
|
$
15
|
$
6
|
$
9
|
150
%
|
Percentage
of services product revenue
|
125
%
|
16
%
|
|
|
Total
product cost of revenue
|
$
26
|
$
54
|
$
(28
)
|
(52
)%
|
Percentage
of total product revenue
|
27
%
|
20
%
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
Maintenance cost of revenue
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Total
maintenance cost of revenue
|
$
222
|
$
208
|
$
14
|
7
%
|
Percentage
of total maintenance revenue
|
36
%
|
32
%
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
Product
gross profit
|
2018
|
2017
|
$
Change
|
%
Change
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
Software and
royalties
|
$
79
|
$
178
|
$
(99
)
|
(56
)%
|
Percentage of
software and royalty product revenue
|
94
%
|
94
%
|
|
|
Hardware and
consumables
|
$
(5
)
|
$
10
|
$
(15
)
|
(150
)%
|
Percentage of
hardware and consumables product revenue
|
(500
)%
|
21
%
|
|
|
Services
|
$
(3
)
|
$
31
|
$
(34
)
|
(110
)%
|
Percentage of
services product revenue
|
(25
)%
|
84
%
|
|
|
Total product gross
profit
|
$
71
|
$
219
|
$
(148
)
|
(68
)%
|
Percentage of total
product revenue
|
73
%
|
80
%
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
Maintenance gross profit
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Total
maintenance gross profit
|
$
397
|
$
447
|
$
(50
)
|
(11)
%
|
Percentage
of total maintenance revenue
|
70
%
|
68
%
|
|
|
●
|
Increase
in personnel related expense of approximately $2,000;
|
●
|
Increases in professional services of approximately $180,000 which
includes higher Board of Director fees of approximately $27,000 due
to two additional members, higher patent-related fees of
approximately $11,000, higher auditing fees of approximately
$123,000, higher contractor fees of approximately $20,000, and
higher general corporate expenses of approximately $10,000 offset
by lower legal fees of approximately $6,000 and lower investor
relations fees of approximately $5,000;
|
●
|
Increase in travel, insurances, licenses, dues, rent, and office
related costs of approximately $32,000; and
|
●
|
Increase in stock-based compensation expense of approximately
$25,000.
|
●
|
Increase in personnel related expense of approximately $122,000
driven primarily by headcount increases;
|
●
|
Decrease in contractor and contract services of approximately
$17,000 resulting from decreased utilization of certain sales
consultants of approximately $28,000 offset by increased marketing
dues and subscription expense and contract services of
approximately $11,000;
|
●
|
Increase in travel, trade show expense and office related expense
of approximately $14,000;
|
●
|
Decrease
in advertising expense of approximately $33,000;
|
●
|
Increase
in stock-based compensation expense of approximately $5,000;
and
|
●
|
Increase in our Mexico sales office expense and other of
approximately $9,000.
|
●
|
Increase in personnel related expense of approximately $33,000 due
to headcount increases;
|
●
|
Increase in contractor fees and contract services of approximately
$165,000 for services related to the accelerated development of
mobile identity management applications;
|
●
|
Increase
in stock based-compensation expense of approximately $4,000;
and
|
●
|
Increase in office related expense and engineering tools and
supplies of approximately $56,000.
|
|
Payment Due by Year
|
||||
|
Total
|
Less than
1 Year
|
1-3 Years
|
3-5 Years
|
More than
5 Years
|
Operating
lease obligations
|
$
1,605
|
444
|
844
|
317
|
—
|
Lines
of credit payable to related parties
|
$
6,657
|
6,657
|
—
|
—
|
—
|
Total
|
$
8,262
|
7,101
|
844
|
317
|
—
|
●
|
1,508 square feet in Ottawa, Province of Ontario, Canada, at a cost
of approximately $3,000 per month until the expiration of the lease
on March 31, 2021. This lease was renewed in April 2016 for a
five-year period ending on March 31, 2021. Renewal terms were
substantially unchanged from the existing lease;
|
●
|
9,720 square feet in Portland, Oregon, at a cost of approximately
$21,000 per month until the expiration of the lease on December 31,
2021. This lease was renewed in September 2017 resulting in an
additional 1,675 feet, increase from approximately $18,000 to
approximately $21,000 per month and the extension of the term from
October 2018 to December 2021; and
|
●
|
425 square feet of office space in Mexico City, Mexico, at a cost
of approximately $3,000 per month, on a month-to-month basis until
terminated by either party.
|
($ in thousands)
|
|
2018
(nine months)
|
$
444
|
2019
|
$
283
|
2020
|
$
290
|
2021
|
$
271
|
2022
|
$
271
|
Thereafter
|
$
46
|
Total
|
$
1,605
|
(a)
|
|
EXHIBITS
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Certification of the Principal Executive Officer pursuant to Rule
13a-14(a) and 15d-14(a)
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Certification of the Principal Financial and Accounting Officer
pursuant to Rule 13a-14(a) and 15d-14(a)
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Certification by the Principal Executive Officer and Principal
Financial and Accounting Officer pursuant to 18 U.S.C. 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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101.LAB
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XBRL Taxonomy Extension Label Linkbase
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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Date: May 10, 2018
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IMAGEWARE SYTEMS, INC
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By:
/s/ S. James
Miller
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S. James Miller
Chief Executive Officer, Chairman
and Director
(Principal Executive
Officer)
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Date: May 10, 2018
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By:
/s/ Wayne
Wetherell
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Wayne Wetherell
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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1 Year ImageWare Systems (CE) Chart |
1 Month ImageWare Systems (CE) Chart |
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