ImageWare Systems Issues Corporate Update

SAN DIEGO, CA -- (Marketwired) -- 08/10/15 -- ImageWare Systems, Inc. (OTCQB: IWSY) (ImageWare), a leader in mobile and cloud-based, multi-modal biometric identity management solutions, has issued financial results for the second quarter ended June 30, 2015, as well as a corporate update to highlight the company's progress since its last quarterly update on May 11, 2015.

Operational Highlights

• Awarded patents by the Canadian Intellectual Property Office and Patent Office of Australia for technology used in ImageWare's multi-modal Biometric Engine® product.
• Signed agreement with OnlineAuction.com to provide ImageWare's patented GoVerifyID® mobile biometric security software to 200,000 online auction members, beginning August 2015.
• Signed a three year licensing agreement with Lockheed Martin (NYSE: LMT) under which ImageWare will integrate its patented Biometric Engine into the Lockheed Martin cloud-based multimodal biometric IDHaystack® Identity as a Service Platform.

Management Commentary

"ImageWare's strategy to target large IT service providers and deliver security for their cloud and mobile customers remains on track," said Jim Miller, ImageWare's chairman and CEO. "Ultimately our model is dependent upon our partners, and we have formed very significant relationships with Fujitsu, TransUnion, CA Technologies, IBM, Deutsche Telekom, Agility, Extenua, and more recently, with Lockheed Martin and Online Auction. All of these partners have now moved from the testing to integration phase and some are even moving to the launch of aggressive marketing campaigns.

"These companies see and live in the same world as we do -- a world that saw 50% of all organizations experience some form of data breach in the last 12 months, with two-thirds of those breaches involving the compromise of pins and passwords. So we have the right products in the right place at precisely the right time. We believe that we are now at the start of large consumer adoption and that our technology will be front and center as that rollout commences."

Second Quarter 2015 Financial Results

Total revenues in the second quarter of 2015 increased 81% to $1.7 million compared to $0.9 million in the second quarter of 2014, primarily due to the recognition of revenue for the biometric identification project for Los Angeles World Airports (LAX).

Gross margin in the second quarter of 2015 was 52.9% compared to 75.2% in the second quarter of 2014. The decrease was due to the LAX project, which was drawn out over a significantly longer period than was originally expected.

Net loss in the second quarter of 2015 was $1.8 million or ($0.02) per basic share, compared to a net loss of $2.1 million or ($0.02) per basic share in the second quarter of 2014.

At June 30, 2015, cash and cash equivalents totaled $6.4 million compared to $0.2 million at December 31, 2014. The increase is a result of the company's convertible preferred offering completed in February 2015.

Conference Call

ImageWare will hold a conference call today at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its second quarter 2015 results. The company's Chairman and CEO Jim Miller and CFO Wayne Wetherell will host the conference call, followed by a question and answer period.

Date: Monday, August 10, 2015 Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time) Toll-free dial-in number: 1-800-289-0498 International dial-in number: 1-913-312-0382 Conference ID: 9108573

Please call the conference telephone number 5-10 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 Liolios Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=115644 and via ImageWare's investor relations section at www.iwsinc.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time today through September 10, 2015.

Toll-free replay number: 1-877-870-5176 International replay number: 1-858-384-5517 Replay ID: 9108573

About ImageWare Systems, Inc.

ImageWare Systems, Inc. (OTCQB: IWSY) is a leading developer of mobile and cloud-based identity management solutions, providing biometric, secure credential and law enforcement technologies. Scalable for worldwide deployment, ImageWare'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's 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, CA, with offices in Portland, OR, Washington, D.C., and Ottawa, Ontario. For more information on ImageWare Systems, Inc., 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. ("ImageWare") are intended to identify such forward-looking statements. ImageWare may from time to time update these 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, 2014 and its other reports filed with the Securities and Exchange Commission under the Securities 3 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.

                          IMAGEWARE SYSTEMS, INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
              (In Thousands, except share and per share data)

                                                   June 30,    December 31,
                                                     2015          2014
                                                ------------- -------------
Assets:
  Cash                                          $       6,448 $         218
  Accounts receivable, net                                313           266
  Inventories                                             473           916
  Other current assets                                     79            86
  Property and equipment, net                             184           211
  Other assets                                            110           153
  Intangible assets, net                                  131           144
  Goodwill                                              3,416         3,416
                                                ------------- -------------
Total Assets                                    $      11,154 $       5,410
                                                ============= =============

Liabilities and Shareholders' Equity:
  Current liabilities                           $       1,851 $       3,299
  Convertible line of credit to related party
   net of discount                                          -         1,311
  Pension obligation                                    1,844         1,834
  Shareholders' equity (deficit)                        7,459        (1,034)
                                                ------------- -------------
Total Liabilities and Shareholders' Equity      $      11,154 $       5,410
                                                ============= =============



                          IMAGEWARE SYSTEMS, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (In Thousands, except share and per share amounts)
                                (Unaudited)

                            Three Months Ended         Six Months Ended
                                 June 30,                  June 30,
                         ------------------------  ------------------------
                             2015         2014         2015         2014
                         -----------  -----------  -----------  -----------
Revenues
  Product                $     1,022  $       281  $     1,400  $       715
  Maintenance                    673          656        1,287        1,285
                         -----------  -----------  -----------  -----------
Total Revenues                 1,695          937        2,687        2,000

Cost of Revenue
  Product                        589           48          663          118
  Maintenance                    209          184          420          365
                         -----------  -----------  -----------  -----------

Gross Profit                     897          705        1,604        1,517
                                  53%          75%          60%          76%
Operating Expenses
  General &
   administrative                788          873        1,704        1,890
  Sales and marketing            717          596        1,368        1,214
  Research and
   development                 1,114        1,152        2,148        2,181
  Depreciation and
   amortization                   41           46           83           88
                         -----------  -----------  -----------  -----------
    Total Operating
     Expenses                  2,660        2,667        5,303        5,373

                         -----------  -----------  -----------  -----------
Loss from operations          (1,763)      (1,962)      (3,699)      (3,856)

Interest (income)
 expense, net                     (2)         105          435          184
Other (income) expense,
 net                               0           (5)         (46)        (289)

                         -----------  -----------  -----------  -----------
Income (loss) from
 continuing operations
 before income taxes          (1,761)      (2,062)      (4,088)      (3,751)

Income taxes                       6           12            8           12

                         -----------  -----------  -----------  -----------
Income (loss) from
 continuing operations        (1,767)      (2,074)      (4,096)      (3,763)

Net income (loss)        $    (1,767) $    (2,074) $    (4,096) $    (3,763)
Preferred dividends             (302)         (13)        (506)         (25)
                         -----------  -----------  -----------  -----------
Net income (loss)
 available to common
 shareholders            $    (2,069) $    (2,087) $    (4,602) $    (3,788)
                         ===========  ===========  ===========  ===========

Per share data - basic
  Net income (loss) from
   continuing operations $     (0.02) $     (0.02) $     (0.04) $     (0.04)
  Preferred dividends              -            -        (0.01)           -
                         -----------  -----------  -----------  -----------
  Basic income (loss)
   per share available
   to common
   shareholders          $     (0.02) $     (0.02) $     (0.05) $     (0.04)
                         ===========  ===========  ===========  ===========

Basic weighted-average
 common shares            93,674,349   91,930,400   93,595,433   90,293,758

Investor Relations: 

Liolios Group, Inc.
Cody Slach
Tel 1-949-574-3860
Email Contact

Source: ImageWare Systems, Inc.

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