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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
|
[ ]
|
|
|
Page
|
|
|
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|
|
|
|
|
1
|
||
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
|
|
5
|
|
|
21
|
||
|
34
|
||
|
34
|
||
|
|
|
|
|
|||
|
|
|
|
|
35
|
||
|
35
|
||
|
35
|
||
|
35
|
||
|
35
|
||
|
35
|
||
|
35
|
||
|
|
|
|
36
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Net
loss
|
$
(2,284
)
|
$
(2,547
)
|
$
(5,869
)
|
$
(5,276
)
|
Other
comprehensive income (loss):
|
|
|
|
|
Foreign
currency translation adjustment
|
43
|
(61
)
|
15
|
(78
)
|
Comprehensive
loss
|
$
(2,241
)
|
$
(2,608
)
|
$
(5,854
)
|
$
(5,354
)
|
|
Six Months Ended
June 30,
|
|
|
2018
|
2017
|
Cash flows from operating activities
|
|
|
Net
loss
|
$
(5,869
)
|
$
(5,276
)
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
|
|
Depreciation
and amortization
|
24
|
38
|
Amortization
of debt issuance costs and beneficial conversion
feature
|
122
|
97
|
Provision
for losses on accounts receivable
|
—
|
15
|
Stock-based
compensation
|
708
|
550
|
Warrants
issued in lieu of cash as compensation for services
|
9
|
—
|
Gain
from sale of trademark
|
—
|
(50
)
|
Change
in assets and liabilities
|
|
|
Accounts receivable
|
(118
)
|
(60
)
|
Inventory
|
60
|
(30
)
|
Other assets
|
(44
)
|
(21
)
|
Accounts payable
|
(67
)
|
(82
)
|
Deferred revenue
|
(464
)
|
(438
)
|
Accrued expense
|
389
|
192
|
Pension obligation
|
14
|
60
|
Total
adjustments
|
633
|
271
|
Net
cash used in operating activities
|
(5,236
)
|
(5,005
)
|
|
|
|
Cash flows from investing activities
|
|
|
Purchase
of property and equipment
|
(7
)
|
(1
)
|
Proceeds
received from sale of trademark
|
—
|
50
|
Net
cash provided by (used in) investing activities
|
(7
)
|
49
|
|
|
|
Cash flows from financing activities
|
|
|
Proceeds
from exercised stock options
|
149
|
227
|
Proceeds
from lines of credit, net
|
—
|
3,350
|
Dividends
paid
|
(25
)
|
(25
)
|
Net
cash provided by financing activities
|
124
|
3,552
|
|
|
|
Effect
of exchange rate changes on cash
|
15
|
(78
)
|
|
|
|
Net
decrease in cash
|
(5,104
)
|
(1,482
)
|
|
|
|
Cash
at beginning of period
|
7,317
|
1,586
|
|
|
|
Cash
at end of period
|
$
2,213
|
$
104
|
|
|
|
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
convertible related party lines of credit
|
$
21
|
$
281
|
Stock
dividend on Convertible Redeemable Preferred Stock
|
$
1,464
|
$
996
|
Conversion
of Convertible Preferred Stock into Common Stock
|
$
4
|
$
—
|
(Amounts in thousands except share and per share
amounts)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Numerator
for basic and diluted loss per share:
|
|
|
|
|
Net
loss
|
$
(2,284
)
|
$
(2,547
)
|
$
(5,869
)
|
$
(5,276
)
|
Preferred
dividends
|
(720
)
|
(514
)
|
(1,489
)
|
(1,021
)
|
|
|
|
|
|
Net
loss available to common shareholders
|
$
(3,004
)
|
$
(3,061
)
|
$
(7,358
)
|
$
(6,297
)
|
|
|
|
|
|
Denominator
for basic and dilutive loss per share – weighted-average
shares outstanding
|
95,161,570
|
92,539,230
|
94,749,904
|
92,203,567
|
|
|
|
|
|
Net
loss
|
$
(0.02
)
|
$
(0.03
)
|
$
(0.06
)
|
$
(0.06
)
|
Preferred
dividends
|
(0.01
)
|
(0.00
)
|
(0.02
)
|
(0.01
)
|
|
|
|
|
|
Basic
and diluted loss per share available to common
shareholders
|
$
(0.03
)
|
$
(0.03
)
|
$
(0.08
)
|
$
(0.07
)
|
Potential
Dilutive securities
|
Three and
Six Months Ended
June
30,
|
|
|
2018
|
2017
|
|
|
|
Related party lines
of credit
|
5,432,579
|
5,016,236
|
Convertible
redeemable preferred stock
|
26,629,507
|
11,709,151
|
Stock
options
|
7,341,093
|
6,171,555
|
Warrants
|
270,000
|
175,000
|
Total potential
dilutive securities
|
39,673,179
|
23,071,942
|
Fiscal Year Ended December 31,
|
Estimated
Amortization
Expense
($ in
thousands)
|
2018
(six months)
|
$
6
|
2019
|
12
|
2020
|
12
|
2021
|
12
|
2022
|
12
|
Thereafter
|
33
|
Totals
|
$
87
|
($ in thousands)
|
June 30,
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 June 30, 2018 and December 31, 2017. Discount on
advances under lines of credit is $129 at June 30, 2018
and $226 at December 31, 2017. Maturity date is December 31,
2018.
|
$
5,871
|
$
5,774
|
|
|
|
Total
lines of credit to related parties
|
5,871
|
5,774
|
Less
current portion
|
(5,871
)
|
(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
|
1,121,258
|
Shares
issued pursuant to conversion of Series A Preferred
|
391,304
|
Shares
issued pursuant to option exercises
|
148,757
|
Shares
outstanding at June 30, 2018
|
95,829,155
|
|
Warrants
|
Weighted- Average
Exercise Price
|
Balance
at December 31, 2017
|
230,000
|
$
0.91
|
Granted
|
40,000
|
1.46
|
Expired/Canceled
|
—
|
—
|
Exercised
|
—
|
—
|
Balance
at June 30, 2018
|
270,000
|
$
1.00
|
|
Options
|
Weighted-Average
Exercise Price
|
Balance
at December 31, 2017
|
6,093,512
|
$
1.23
|
Granted
|
1,455,500
|
$
1.71
|
Expired/Cancelled
|
(59,162
)
|
$
1.39
|
Exercised
|
(148,757
)
|
$
1.00
|
Balance
at June 30, 2018
|
7,341,093
|
$
1.33
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Cost
of revenue
|
$
5
|
$
5
|
$
11
|
$
10
|
General
and administrative
|
246
|
165
|
462
|
329
|
Sales
and marketing
|
63
|
55
|
123
|
110
|
Research
and development
|
58
|
50
|
112
|
101
|
|
|
|
|
|
Total
|
$
372
|
$
275
|
$
708
|
$
550
|
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 June 30, 2018
|
|||
($ in thousands)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Assets:
|
|
|
|
|
Pension
assets
|
$
1,754
|
$
1,754
|
$
—
|
$
—
|
Totals
|
$
1,754
|
$
1,754
|
$
—
|
$
—
|
|
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
(six months)
|
$
274
|
2019
|
282
|
2020
|
289
|
2021
|
271
|
2022
|
271
|
Thereafter
|
46
|
Total
|
$
1,433
|
|
Three Months Ended
June 30,
|
|
|
|
Net Product Revenue
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Software
and royalties
|
$
871
|
$
319
|
$
552
|
173
%
|
Percentage
of total net product revenue
|
74
%
|
78
%
|
|
|
Hardware
and consumables
|
$
122
|
$
39
|
$
83
|
213
%
|
Percentage
of total net product revenue
|
10
%
|
10
%
|
|
|
Services
|
$
189
|
$
49
|
$
140
|
286
%
|
Percentage
of total net product revenue
|
16
%
|
12
%
|
|
|
Total
net product revenue
|
$
1,182
|
$
407
|
$
775
|
190
%
|
|
Three Months Ended
June 30,
|
|
|
|
Maintenance Revenue
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Total
maintenance revenue
|
$
703
|
$
653
|
$
50
|
8
%
|
|
Three Months Ended
June 30,
|
|
|
|
Cost of Product Revenue:
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Software
and royalties
|
$
2
|
$
6
|
$
(4
)
|
(67)
%
|
Percentage
of software and royalty product revenue
|
0
%
|
2
%
|
|
|
Hardware
and consumables
|
$
77
|
$
18
|
$
59
|
328
%
|
Percentage
of hardware and consumables product revenue
|
63
%
|
46
%
|
|
|
Services
|
$
60
|
$
12
|
$
48
|
400
%
|
Percentage
of services product revenue
|
32
%
|
24
%
|
|
|
Total
product cost of revenue
|
$
139
|
$
36
|
$
103
|
286
%
|
Percentage
of total product revenue
|
12
%
|
9
%
|
|
|
Maintenance cost of revenue
|
Three Months Ended
June 30,
|
|
|
|
(dollars in thousands)
|
2018
|
2017
|
$
Change
|
%
Change
|
Total
maintenance cost of revenue
|
$
167
|
$
214
|
(47
)
|
(22
)%
|
Percentage
of total maintenance revenue
|
24
%
|
33
%
|
|
|
|
Three
Months Ended
June
30,
|
|
|
|
Product
gross profit
|
2018
|
2017
|
$
Change
|
%
Change
|
(dollars
in thousands)
|
|
|
|
|
Software and
royalties
|
$
869
|
$
313
|
$
556
|
178
%
|
Percentage of
software and royalty product revenue
|
100
%
|
98
%
|
|
|
Hardware and
consumables
|
$
45
|
$
21
|
$
24
|
114
%
|
Percentage of
hardware and consumables product revenue
|
37
%
|
54
%
|
|
|
Services
|
$
129
|
$
37
|
$
92
|
249
%
|
Percentage of
services product revenue
|
68
%
|
76
%
|
|
|
Total product gross
profit
|
$
1,043
|
$
371
|
$
672
|
181
%
|
Percentage of total
product revenue
|
88
%
|
91
%
|
|
|
Maintenance gross profit
|
Three
Months Ended
June
30,
|
|
|
|
(dollars in thousands)
|
2018
|
2017
|
$
Change
|
%
Change
|
|
|
|
|
|
Total
maintenance gross profit
|
$
536
|
$
439
|
$
97
|
22
%
|
Percentage
of total maintenance revenue
|
76
%
|
67
%
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
Net Product Revenue
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Software
and royalties
|
$
955
|
$
508
|
$
447
|
88
%
|
Percentage
of total net product revenue
|
74
%
|
74
%
|
|
|
Hardware
and consumables
|
$
122
|
$
86
|
$
36
|
42
%
|
Percentage
of total net product revenue
|
10
%
|
13
%
|
|
|
Services
|
$
202
|
$
86
|
$
116
|
135
%
|
Percentage
of total net product revenue
|
16
%
|
13
%
|
|
|
Total
net product revenue
|
$
1,279
|
$
680
|
$
599
|
88
%
|
|
Six Months Ended
June 30,
|
|
|
|
Maintenance Revenue
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Total
maintenance revenue
|
$
1,322
|
$
1,309
|
$
13
|
1
%
|
|
Six Months Ended
June 30,
|
|
|
|
Cost of Product Revenue:
|
2018
|
2017
|
$ Change
|
% Change
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Software
and royalties
|
$
8
|
$
17
|
$
(9
)
|
(53)
%
|
Percentage
of software and royalty product revenue
|
1
%
|
3
%
|
|
|
Hardware
and consumables
|
$
82
|
$
55
|
$
27
|
49
%
|
Percentage
of hardware and consumables product revenue
|
67
%
|
64
%
|
|
|
Services
|
$
75
|
$
18
|
$
57
|
317
%
|
Percentage
of services product revenue
|
37
%
|
21
%
|
|
|
Total
product cost of revenue
|
$
165
|
$
90
|
$
75
|
83
%
|
Percentage
of total product revenue
|
13
%
|
13
%
|
|
|
Maintenance cost of revenue
|
Six Months Ended
June 30,
|
|
|
|
(dollars in thousands)
|
2018
|
2017
|
$
Change
|
%
Change
|
Total
maintenance cost of revenue
|
$
390
|
$
423
|
(33
)
|
(8
)%
|
Percentage
of total maintenance revenue
|
30
%
|
32
%
|
|
|
|
Six
Months Ended
June
30,
|
|
|
|
Product
gross profit
|
2018
|
2017
|
$
Change
|
%
Change
|
(dollars
in thousands)
|
|
|
|
|
Software and
royalties
|
$
947
|
$
491
|
$
456
|
93
%
|
Percentage of
software and royalty product revenue
|
99
%
|
97
%
|
|
|
Hardware and
consumables
|
$
40
|
$
30
|
$
10
|
33
%
|
Percentage of
hardware and consumables product revenue
|
33
%
|
35
%
|
|
|
Services
|
$
127
|
$
68
|
$
59
|
87
%
|
Percentage of
services product revenue
|
63
%
|
79
%
|
|
|
Total product gross
profit
|
$
1,114
|
$
589
|
$
525
|
89
%
|
Percentage of total
product revenue
|
87
%
|
87
%
|
|
|
Maintenance gross profit
|
Six
Months Ended
June
30,
|
|
|
|
(dollars in thousands)
|
2018
|
2017
|
$
Change
|
%
Change
|
|
|
|
|
|
Total
maintenance gross profit
|
$
932
|
$
886
|
$
46
|
5
%
|
Percentage
of total maintenance revenue
|
70
%
|
68
%
|
|
|
|
Payment Due by Year
|
||||
|
Total
|
Less than
1 Year
|
1-3 Years
|
3-5 Years
|
More than
5 Years
|
Operating
lease obligations
|
$
1,433
|
274
|
842
|
317
|
—
|
Lines
of credit payable to related parties
|
$
6,791
|
6,791
|
—
|
—
|
—
|
Total
|
$
8,224
|
7,065
|
842
|
317
|
—
|
($ in thousands)
|
|
2018
(six months)
|
$
274
|
2019
|
$
282
|
2020
|
$
289
|
2021
|
$
271
|
2022
|
$
271
|
Thereafter
|
$
46
|
Total
|
$
1,433
|
(a)
|
|
EXHIBITS
|
|
|
|
|
Certification of the Principal Executive Officer pursuant to Rule
13a-14(a) and 15d-14(a)
|
|
|
Certification of the Principal Financial and Accounting Officer
pursuant to Rule 13a-14(a) and 15d-14(a)
|
|
|
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
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
Date: August 9, 2018
|
|
IMAGEWARE SYTEMS, INC
|
|
|
|
|
|
By:
/s/ S. James
Miller
|
|
|
S. James Miller
Chief Executive Officer, Chairman
and Director
(Principal Executive
Officer)
|
|
|
|
Date: August 9, 2018
|
|
By:
/s/ Wayne
Wetherell
|
|
|
Wayne Wetherell
Chief Financial Officer
(Principal Financial and Accounting
Officer)
|
1 Year ImageWare Systems (CE) Chart |
1 Month ImageWare Systems (CE) Chart |
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