ImageWare Systems Reports 2005 First Quarter Results.SAN DIEGO San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. -- ImageWare Systems, Inc. (AMEX AMEX See: American Stock Exchange :IW), a world leading developer and provider of identity management solutions, today reported financial results for the first quarter ended March 31, 2005. For the quarter ended March 31, 2005 total revenues were $2.8 million, an increase of approximately 22% from $2.3 million reported for the first quarter of 2004. The increase from the prior year is due to increases in revenues of $1.0 million from ImageWare's (IWS See iPlanet Web Server. ) identification segment due primarily to sales of the core technology, the IWS(TM) Biometric Engine. The net loss for the quarter decreased to $0.9 million, or $0.10 per share, compared with a net loss of $2.3 million, or $0.21 per share for the same period last year. The decrease in the net loss is due to a $1.3 million reduction in interest expenses. The loss from operations totaled $1.2 million in the quarter as compared to $1.0 million in the first quarter of 2004. The increase is due to planned escalation es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. in selling expenses for additional headcount and stepped up selling activities and lower gross margins in the quarter compared to last year due to product mix. "It is becoming ever more apparent that the domestic and world markets for ID management solutions are beginning to move toward wholesale adoption of biometric technologies," said Jim Miller Jim Miller may refer to any of the following individuals:
Mr. Miller added, "We have taken much of the risk out of the decisions related to the adoption of biometrics in that we offer a platform which is agnostic ag·nos·tic n. 1. a. One who believes that it is impossible to know whether there is a God. b. One who is skeptical about the existence of God but does not profess true atheism. 2. with regard to the choice of biometrics and related technology and we enable the user to change from one biometric technology to another or add additional biometrics without having to move to a new system or lose the functionality of the data they have already built." Miller also noted that in recent months ImageWare has improved its competitive position in the identity management market with the following developments: --The launch of IWS(TM) Desktop Security, a comprehensive authentication (1) Verifying the integrity of a transmitted message. See message integrity, e-mail authentication and MAC. (2) Verifying the identity of a user logging into a network. management infrastructure software tool specifically designed to provide enterprise networks with advanced authentication mechanisms. IWS Desktop Security will be integrated into our biometric, secure credential credential verb To determine or verify titles, qualifications, documents, completion of required training, and continuing education, in those persons who function in a professional or official capacity–eg, ER physician, neurosurgeon, etc. Cf Credentials. and law enforcement offerings and will provide organizations with a comprehensive security solution that is customizable while securing the identity of the entire system. IWS Desktop Security represents a key component in our strategy to empower empower verb To encourage or provide a person with the means or information to become involved in solving his/her own problems government and private sector organizations with infrastructure tools that have the ability to combine identification and verification capabilities with additional layers of authentication and authorization. --An agreement with NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. Personal Products, Ltd. to cooperatively co-develop integrated Trusted Platform Module In computing, Trusted Platform Module (TPM) is both the name of a published specification detailing a microcontroller that can store secured information, as well as the general name of implementations of that specification, often called "TPM chip" or "TPM Security Device" (Dell). (TPM (1) See TP monitor. (2) (Transactions Per Minute) The number of transactions processed within one minute. See TPS. (3) (Trusted Platform M ) security solutions for the Japanese Enterprise market. Both companies will work collaboratively to integrate our authentication security technology into NEC's TPM and fingerprint fingerprint, an impression of the underside of the end of a finger or thumb, used for identification because the arrangement of ridges in any fingerprint is thought to be unique and permanent with each person (no two persons having the same prints have ever been sensor embedded Inserted into. See embedded system. computer product lines. The companies will also undertake joint marketing initiatives in order to develop new business opportunities together through new and existing business relationships, distributors and systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. in Japan. --The attainment of additional FBI certifications of the Company's IWS(TM) Law Enforcement identity management solution, which includes the IWS(TM) Biometric Engine, providing integrated fingerprint and palmprint biometric management for civil and law enforcement use. These additional certifications were obtained using Identix and Cross Match livescan devices. We recently announced our initial FBI certification using Smiths Heimann's Livescan device. Attaining this certification represents compliance with FBI's Integrated Automated Fingerprint Identification System The Integrated Automated Fingerprint Identification System (IAFIS) is a national fingerprint and criminal history system maintained by the Federal Bureau of Investigation (FBI). (IAFIS IAFIS Integrated Automated Fingerprint Identification System (FBI) IAFIS International Association of Food Industry Suppliers ) Image Quality Specifications (IQS IQS Initial Quality Study (JD Power and Associates) IQS Initial Quality Survey IQS Integrated Quality Services IQS Institute of Quantity Surveyors IQS Intelligent Query Service ) and allows ImageWare to be the first company to integrate and certify cer·ti·fy v. cer·ti·fied, cer·ti·fy·ing, cer·ti·fies v.tr. 1. a. To confirm formally as true, accurate, or genuine. b. livescan devices from all three livescan vendors. About ImageWare Systems, Inc. ImageWare Systems, Inc. (AMEX:IW) is a world 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 CREDENTIALS, international law. The instruments which authorize and establish a public minister in his character with the state or prince to whom they are addressed. If the state or prince receive the minister, he can be received only in the quality attributed to him in his credentials. , including national IDs, passports, driver licenses, smart cards Example of widely used contactless smart cards are Hong Kong's Octopus card, Paris' Calypso/Navigo card and Lisbon' LisboaViva card, which predate the ISO/IEC 14443 standard. The following tables list smart cards used for public transportation and other electronic purse applications. and access control credentials. ImageWare's digital booking products provide law enforcement with integrated mug shot, fingerprint Livescan and investigative capabilities. The Company also provides comprehensive digital workflow In print publishing, using the computer to lay out text and illustrations prior to creating film negatives for every page or going directly to plate. Prior to digital workflow, the typesetting and pre-press stages were far more time consuming and labor-intensive. solutions for the professional photography industry. ImageWare is headquartered in San Diego, with offices in Canada and Germany. For more information visit www.iwsinc.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Statements in this press release that are not strictly historical in nature are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These statements include, but are not limited to, references to the proposed financing, the anticipated use of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of the proposed financing, and expectations regarding future operating results. Forward-looking statements involve known or unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements, or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to: the risk that the equity investment does not close as anticipated; the risk that the Company's target markets will not grow as expected; risks related to our ability to achieve and sustain profitability and generate cash internally or to obtain adequate capital for operations from outside sources; risks related to our acquisition strategies and the integration of acquired companies; risks associated with our dependence on a small number of large sales to customers with political purchasing constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. ; risks related to our lengthy sales cycle; our reliance on third-party systems integrators and on third-party technology licenses; fluctuations in our operating results; continued new product introductions and market acceptance of our new products; new product introductions by competitors; technological changes in the our industry; uncertainties regarding intellectual property rights. For a discussion of these and other factors which may cause our actual events or results to differ from those projected, please refer to the Company's most recent annual report on Form 10-KSB and quarterly reports on Form 10-QSB, as well as other subsequent filings with the Securities and Exchange commission.
SELECTED COMPARATIVE FINANCIAL HIGHLIGHTS
In thousands, except share and per share amounts
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Three Months Ended
March 31,
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2005 2004
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Revenues
Product $2,315 $1,814
Maintenance 495 444
Total Revenues 2,810 2,258
Cost of Revenue
Product 845 460
Maintenance 268 221
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Gross Profit 1,697 1,577
60% 70%
Operating Expenses
General & administrative 1,083 1,126
Sales and marketing 941 656
Research and development 691 633
Depreciation and amortization 159 186
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Total Operating Expenses 2,874 2,601
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Loss from operations (1,177) (1,024)
Interest (income) expense, net (6) 1,291
Other (income) expense, net (44) (20)
Loss from continuing operations before income ------------------
taxes (1,127) (2,295)
Income taxes - -
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Loss from continuing operations (1,127) (2,295)
Discontinued operations:
Gain (loss) from operations of discontinued Digital
Imaging Asia Pacific Component (including gain of
$233 in 2005) 223 (10)
Income tax benefit (expense) - 0
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Gain (loss) on discontinued operations 223 (10)
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Net loss $(904) $(2,305)
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Per share data -- basic and diluted
Net loss from continuing operations (0.10) (0.21)
Discontinued operations $0.02 $(0.00)
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Net loss per common share $(0.08) $(0.21)
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Basic and diluted common shares 12,036,104 11,210,019
CONSOLIDATED BALANCE SHEET
In thousands
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March 31,
2005
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Assets:
Cash $1,928
Restricted cash and cash equivalents 106
Accounts receivable, net 1,890
Inventories 840
Other current assets 272
Property and equipment, net 517
Other assets 785
Intangible assets, net 689
Goodwill 4,661
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Total Assets $11,688
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Liabilities and Shareholders' Equity:
Current liabilities $3,180
Pension obligation 800
Stockholders' equity 7,708
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Total Liabilities and Shareholders' Equity $11,688
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