ImageWare® Reports Third Quarter and Nine-Months Results

SAN DIEGO, Nov. 23, 2020 /PRNewswire/ -- ImageWare^® Systems, Inc. (OTCQB: IWSY), a leader in biometric identification and authentication, today reported financial results for the third quarter and nine-month period ended September 30, 2020.

Q3 Highlights

• Chris Dickson named VP of Sales to utilize his technical background to form and lead new sales strategies to achieve our aggressive revenue goals
• BioIntellic™ - the first new release by the new development team - is our standalone, highly scalable anti-spoofing detection feature (embedded in the Biometric Engine) to ensure secure onboarding
• BioIntellic bolsters our joint offering with our existing proofing partner in the African market, Contactable, and also supports our existing MTN business as well as drives new business in the African region and beyond
• Generated $1.2 million in orders from an existing contract with the U.S. Department of Veterans Affairs to provide smart badge technology along with a new contract for professional services to expand user functionality
• Restructured certain senior securities as an important first step in executing our strategic business and financing plan
• Closed a $2.2 million equity advance in the quarter as the first tranche of an $11.56 million Series D Preferred capital raise (closed on November 12^th), supporting our plans for substantial growth
• Implemented further cost cutting measures to reduce burn rate

Kristin A. Taylor, Chair, President and CEO, said, "Our talented and dedicated team members are the backbone of our accomplishments. While working remotely during the pandemic, they continue to excel and thrive. I applaud their many accomplishments and on-going contributions.

"Our recently completed $11.56 million capital raise provides us with the means and the runway to continue building and growing ImageWare 2.0 to achieve meaningful success for our investors on our way to becoming cash flow positive," concluded Taylor.

Momentum

• Growing sales pipeline
• Q3 added 79 net-new opportunities (including 56 new opportunities in Law Enforcement
• This increase compares with Q2 in which we added 67 net-new opportunities (including 45 new opportunities in Law Enforcement)
• New bookings
• Q3 new bookings increased 28% to $2,014,933 as compared with $1,573,140 in the same period last yea
• The 70 bookings included 46 new/upsell plus 24 renewals
• We are moving historic customers and new bookings to a subscription model (typically 12 months) for which revenue will be recognized ratably over the year
• New bookings represent new contracts signed in the period and will be recognized as revenue over the life of the contract.
• In October, we completed a new QuickCapture Mobile software product that resides on the Laxton Chameleon 5 and 8 devices. QuickCapture Mobile will be an inherent part of our final Law Enforcement 2.0
• This powerful solution allows officers, public safety and military personnel in the field to have dynamic data on a perpetrator in the palm of their hands
• We have shown more than 15 QuickCapture Mobile demonstrations in the past 30 days to agencies with keen interest
• New hires
• Actively interviewing and hiring new technical software sales candidates
• We are now successfully showcasing products and new developments in monthly webinars to new and existing customers.
• Existing customers present the greatest opportunities for immediate revenue given their long history of working with ImageWare and appreciation of our 24/7 support
• IP monetization - in September we established Phase One with a new IP business unit as part of our monetization and broader patent plan
• Actively pursuing licensing and anticipate first revenues from these efforts in 2021
• Next week the team completes the multiphase upgrade for GoVerifyID® (GVID) enterprise-ready authentication product to expand usefulness and Cloud-based biometrics MFA (multi-factor authentication)
• Enables sales to double down
• A new self-service portal (enabling end-users to test, purchase and provision GVID in an automated way) will be released in early 202
• Development to continue to work on a Zero Trust product for remote workers
• Continued refresh of the components of the Identity Platform (Cloud and mobile-capable)
• Progressing with the upgrade of the corporate website for launch early next year

Sales Strategy Overview    
ImageWare's sales team is delivering growth through strong renewals, and critical momentum with new business. Our renewed sales strategy and focus continue to yield increasing results. A direct result of the COVID-19 pandemic, we are seeing increasing cybersecurity demand from the new and burgeoning remote workforce.

The integration work in our Identity Platform is expected to be completed in Q2. Our recent successful demonstration was very well received – and we have existing customers who have expressed particular interest. 

The lucrative enterprise market remains a key priority for us as we focus resources to target future customers in financial services, retail, manufacturing, education and healthcare.

Third Quarter Results

• Revenue for the third quarter ended September 30, 2020 grew 215% to $2,471,000 compared with $785,000 for the third quarter of 2019.
• The increase was driven primarily by services revenue for smart badge technology, services integration and training for the US Department of Veterans' Affairs.
• Gross profit for the third quarter 2020 grew 152% to $1,633,000, or 66%, versus $647,000, or 82%, in the same period last year.
• The lower margin in Q3 2020 is attributable to the one-time impact of additional services costs incurred for one particular customer.
• Net loss narrowed to ($626,000) for the third quarter 2020 compared with a loss of ($2,665,000) in the same period last year.
• Net loss per share narrowed to ($0.02) for the third quarter ended 2020 versus ($0.04) in the same period in 2019.

Nine-Month Results

• Revenue for the nine months ended September 30, 2020 increased 37% to $3,999,000 compared with $2,527,000 for the nine-month period in 2019.
• Gross profit for the nine months ended 2020 was $2,890,000, or 72%, versus $2,046,000, or 81%, in the same period last year. The lower margin in the nine months ended 2020 is primarily attributable to the one-time costs associated with the customer previously mentioned.
• Net loss narrowed to ($6,781,000) for the nine months ended 2020 compared with a loss of ($9,235,000) in the same period last year.
• Net loss per share narrowed to ($0.09) for the nine months ended 2020 versus ($0.13) in the same period in 2019.

Conference Call Details

For web access to listen to the update and replay, please visit: https://www.iwsinc.com/company/investor-relations/. The replay will be available for at least 90 days.

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 statewide 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. 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. For a discussion of such risks and uncertainties, see "Risk Factors" in ImageWare's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 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.

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SOURCE ImageWare Systems, Inc.