In The Boardroom With...
Mr. Jim Miller
Chairman and CEO
ImageWare Systems, Inc.
Updated November 14, 2013
ImageWare Systems, Inc. (OTCQB: IWSY) (ImageWare), a leader in mobile and cloud-based, multi-modal biometric identity management solutions, reported financial results for the third quarter ended September 30, 2013.
Third Quarter 2013 Operational Highlights
- Awarded $2.2 million contract to expand biometric identity management services for the U.S. Department of Veteran Affairs.
- Awarded a U.S. federally sponsored pilot program for iris recognition with 20 state and local law enforcement agencies.
- Selected to provide complete identity management and booking system for the city of Fredericton, New Brunswick.
- Introduced GoMobile Interactive™, the industry's first biometric mobile identity management platform for the iPhone and Android operating systems.
Third Quarter 2013 Financial Results
Total revenues in the third quarter of 2013 increased 167% to $2.5 million from $938,000 in the third quarter of 2012. The increase was primarily due to approximately $1.5 million received in August for software licenses in connection with a $2.2 million contract with the U.S. Department of Veteran Affairs.
Gross margin in the third quarter of 2013 increased significantly to 88.0%, compared to 72.7% in the third quarter of 2012. The increase was primarily due to the increased software license revenues.
Net income in the third quarter of 2013 also improved significantly to $326,000 or $0.00 per diluted share, compared to a net loss of $2.7 million or $(0.04) per diluted share in the third quarter of 2012.
At September 30, 2013, cash and cash equivalents totaled $3.5 million, compared to $1.0 million at June 30, 2013 and $4.2 million at December 31, 2012. The company continues to carry no debt and currently maintains a $2.5 million unsecured line of credit.
"Our strong third quarter results were primarily due to the $2.2 million contract we secured with our largest customer, the U.S. Department of Veteran Affairs," said Jim Miller, chairman and CEO of ImageWare. "This key contract drove our first cash flow positive quarter in nearly five years.
"The biometric identity solutions we are providing the VA, which are in strict compliance with U.S. government standards, serve as a working model for facilitating more rapid commercial sector adoption. In fact, we recently announced a contract award from our second commercial customer, Global Payout, which further endorses the turnkey use of our solutions in our target markets. Along with our technology partner, Fujitsu, we continue to explore many significant opportunities and look forward to a worldwide expansion model. As such, we are currently in discussions with several potential clients regarding licensing opportunities and will continue to target large enterprise businesses and emerging applications.
"Due to external factors not related to our portion of the contract, we're now anticipating the completion date of our LAX deployment to be shifted from the fourth quarter to early 2014. More than ever, we are confident the steps we are taking to advance and position our cloud, SaaS and mobile offerings in the commercial and consumer marketplace will provide increasing shareholder value, with better visibility and a strengthening recurring revenue stream."
Updated October 25, 2013
Global Payout, Inc. (GOHE) has signed an agreement with ImageWare Systems, Inc. (IWSY) ("IWS"), the leader in cloud based multi-modal biometric identity management solutions, whereby ImageWare will provide its patented GoCloudID™ Software as a Service (SaaS) platform, which will enable a fully-validated, feature-rich, security solution that will run on top of the Fujitsu Cloud IaaS Trusted Public S5 platform. Global Payout and ImageWare will enable secure access services for users of Global Payout's Consolidated Payment Gateway. The MoneyTrac Consolidated Payment Gateway (CPG) provides clients with both off-the-shelf and customized payment options through a worldwide payment solutions platform tied to banks, card associations and payment processors. Working through processors and banking relationships, the CPG provides a custom, one-stop solution for access and payments to international and domestic bank accounts, debit cards and other payment systems in more than 120 countries through desktop and mobile devices.
Multi-modal biometrics are being adopted by industries requiring limited access to restricted areas – such as in the transportation, utility, and governmental markets. The financial services and banking industry has begun adopting the technology for use in the banking, payment processing, and eCommerce sectors. By including ImageWare Systems GoCloudID with ID document capture, and biometric authentication, Global Payout is delivering the next generation method to automate and verify the "know your customer"(KYC) process.
In 2012 the United States saw more than 12 million identity fraud victims at a dollar cost of $21 billion. In fact, an identity is stolen every three seconds. "Worldwide mobile payments are expected to become a $400 billion market by 2015," said, Jim Miller, CEO of ImageWare Sytems. "We are pleased to work with Fujitsu to offer Global Payout clients worldwide, with the additional level of, and the IT security industry's most reliable form of identity theft protection for accessing their gateway accounts through desktop and mobile devices."
"Our MoneyTrac Consolidated Payment Gateway platform enables our multinational business clients to efficiently make payouts to their employees, contractors, and affiliates through a single management console," says Bill Rochfort, president and executive vice president of sales and marketing, Global Payout. "Working with ImageWare Systems, our gateway solution can now offer a second level of access authentication to each individual's electronic wallet account, reinforcing the accurate identification of the end-user."
ImageWare's services will be delivered for a onetime enrollment fee per new customer and a monthly subscription fee basis that will vary per customer). Services are to be delivered via Fujitsu's global data center networks, with the Fujitsu platform providing full configured, on-demand IT infrastructure for the ImageWare CloudID SaaS.
"We are pleased to be able to provide authentication and verification over the Fujitsu Cloud IaaS Trusted Public S5 platform from ImageWare Systems to Global Payout customers around the world," said David Berry, executive vice president, infrastructure services, Fujitsu America. "Our cloud platform addresses the needs of the enterprise, service providers and consumers by enabling the deployment of a secure, agile and reliable could-based identity management solution."
Updated September 2013
ImageWare Systems, Inc. (OTCQB: IWSY) (ImageWare), a leader in mobile and cloud-based, multi-modal biometric identity management solutions, has received an order from the city of Fredericton, New Brunswick, Canada for a complete identity management and booking system, which includes mug photo, signature and fingerprint capture.
ImageWare's LE Web thin client will allow officers and administrative employees' access to record details and the full suite of investigative tools from various locations.
"Our basic identity management and booking system products continue to experience strong demand," said Jim Miller, chairman and CEO of ImageWare. "One of the unique features is that it will be provided in both French and English, which demonstrates the portability of our turnkey solutions in both international and domestic markets. We are proud to play a role in enhancing security for the city of Fredericton and look forward to similar agreements in the future."
The City of Fredericton will also be utilizing ImageWare's EPI Designer for LE reporting software. This allows users to create unique reports, agency-defined lineups, wristbands and employee/inmate badges for an unlimited number of full-color, dual-sided report and card designs, complete with barcoding or encoded magnetic strips.
The system will be connected to the city's record management system and will allow for submission of criminal fingerprints to the Royal Canadian Mounted Police as well as fingerprint processing for civilian applications.
Under the terms of the agreement, ImageWare will receive approximately $125,000 in revenue.
Updated September 2013
ImageWare Systems, Inc. (OTCQB: IWSY) (ImageWare), a leader in mobile and cloud-based, multi-modal biometric identity management solutions, has been awarded a contract for software and services in support of a paid pilot from an undisclosed United States federal agency to implement iris recognition throughout 20 state and local law enforcement agencies.
Acting as a subcontractor to Iris ID, ImageWare will supply its QuickCapture™ application to public safety agencies participating in the one-year iris recognition pilot. ImageWare's QuickCapture will be used to manage multiple types of Electronic Biometric Transmission Specification (EBTS) transactions, including enrollment, identity verification and investigative searches. During the course of the pilot, ImageWare's solution will be implemented in over 20 agencies to evaluate the use of iris recognition, primarily in correction facilities.
"Although much of our attention has turned towards the mobile and cloud markets, significant opportunities still exist within our installed base of government and law enforcement clients," said Jim Miller, chairman and CEO of ImageWare. "The solutions we are providing, which are in compliance with U.S. government standards, serve as a working model for commercial sector standards and adoption."
Under the terms of the agreement, ImageWare will complete the delivery of its QuickCapture application in the fourth quarter of 2013.
Updated August 2013
ImageWare Systems, Inc. (OTCQB: IWSY) (ImageWare), a leader in cloud-based, multi-modal biometric identity management solutions, has been awarded a $2.2 million contract by the U.S. Department of Veteran Affairs (VA) to expand its personal identity verification (PIV) credentialing capabilities.
Under the terms of the agreement, ImageWare will deliver software licenses during the third quarter of 2013, whereby the company will receive approximately $1.5 million in revenue. Additionally, ImageWare will receive service revenue valued at approximately $650,000 that will be recognized proportionally over the next year.
ImageWare's biometric identity management solution was first installed with the VA in 2007. The solution provides large-scale, agency-wide biometric identity and credential management capabilities, such as biometrically enabled PIV credentials that are in compliance with U.S. government standards. As part of the system expansion, the VA will also be adopting ImageWare's patented, hardware and algorithm independent Biometric Engine® 2.0, enabling the enrollment and management of unlimited population sizes.
"The U.S. Government has confirmed multi-modal biometric identity management as the only way to move forward as it offers a greater level of security and reliability," said Jim Miller, chairman and CEO of ImageWare. "ImageWare's proven track record of government experience executing best-of-breed patented, fully compliant biometric solutions will drive the standards for commercial adoption. We are honored to continue working with the VA and expand our services in support of their mission. As we look forward, I am confident we will introduce similar solutions to our global enterprise customers and solution provider partners."
Updated July 2013
ImageWare Systems, Inc. (OTCQB: IWSY), a leader in cloud-based, multi-modal biometric identity management solutions, has introduced its mobile biometric identity management platform, GoMobile Interactive™ (GMI).
Based upon acquired patented messaging platform technology combined with ImageWare's patented Biometric Engine®, GMI allows global business, service and content providers to offer users biometric security for their products, services and content on the Android or iPhone operating systems. GMI includes a standalone application that can be used as a turnkey solution, as well as a software development kit, enabling integration with existing mobile applications for Android and iPhone.
"According to The Gartner Group, worldwide mobile payments will become a $400 billion market by 2015 and 67% of users cite they have 'no trust that their bank details would be secure' with mobile payments," said Jim Miller, chairman and CEO of ImageWare Systems. "GoMobile Interactive is designed to alleviate this risk in a simple, seamless manner by combining unique messaging capabilities with our proven biometric technology to provide unprecedented security for mobile smartphones."
"However, according to the Federal Reserve," continued Miller, "almost 40% of Americans have already used smart mobile devices for banking and purchases. This mission-critical data being accessed via mobile devices has created the need for multi-modal biometrics to become as ubiquitous as the smartphones used to access the data. Until now, storing, securing and accessing data has been a major challenge."
Targeted verticals for the product include mobile banking and value transfer, retail, healthcare and entertainment services. By supporting multi-modal biometrics on a mobile device, ImageWare is able to offer an out-of-band security solution that is far superior to traditional password or PIN protection, which are now failing and costing businesses billions of dollars.
In addition, the GoMobile Interactive service supports dynamic information gathering, allowing clients to learn about their users through the use of interactive surveys that can be optionally secured using biometrics.
Updated May 2013
ImageWare Systems, Inc. (OTCQB: IWSY) a leader in cloud identity management, and valued partner Emida, a leader in the global prepayment and value transfer market, entered into an agreement whereby ImageWare Systems will provide Emida its patented CloudID™ software-as-a-service (SaaS) platform, which will enable a fully-validated, feature-rich security solution that will run on top of Fujitsu's Global Cloud Platform (FGCP). Smartphone users, service providers and merchants will have unprecedented identity and value exchange protection for financial transactions.
"According to the Digital Journal, identity is stolen every three seconds in the United States and businesses alone lost $21 billion in 2012," said Jim Miller, chairman and CEO of ImageWare Systems. "Password protection can no longer protect us from identity theft, which is a major issue in mobile security. We are extremely pleased to partner with Emida Technologies and Fujitsu to offer one of, if not the first, services to deliver smartphone user identity, value transfer and purchase protection for service providers, merchants and consumers."
"Emida endeavors to consistently bring to market new and better value transfer products and services that benefit our customers around the world," said Shane Belovsky, CEO of Emida. "We work with best-in-class partners like ImageWare who soundly develop thought-leading patented technologies. We are confident that ImageWare's security management products, coupled with Emida's trusted innovations, will help to revolutionize the prepaid landscape."
Updated April 2013
SecurityStockWatch.com: Thank you again for joining us today. Congratulations on the recent announcement regarding Fujitsu. Care to elaborate?
Jim Miller: Fujitsu and Imageware see the intersection of three fast moving trends, Mobile, Cloud and Biometrics, creating both a need and an opportunity . As more products, goods, services and data are stored in the Cloud and increasingly accessed through mobile devices security is a paramount concern. We live in a world where Identity theft happens every 3 seconds so security is no longer an "option" it is a necessity. Fujitsu and ImageWare have come together to provide a solution to these needs.
Our new CloudID(tm) product suite provides our clients with a full, end to end or modular identity management product suite for mobile or desktop. These products are provisioned via a web portal ,anchored by the patented IWS Biometric Engine(R) and distributed on a very cost effective basis via the secure, world class global reach of the Fujitsu Global Cloud Platform to provide the first of its kind Cloud ID Software as a Service and Platform as a Service offering.
ImageWare Systems recently announced that, "In March 2013, ImageWare entered into a contract with Fujitsu under which ImageWare will deploy a cloud-based, multi-modal biometric identity management offering that will be delivered on the Fujitsu Global Cloud Platform (FGCP). ImageWare's CloudID™ product suite, anchored by its patented, multi-modal Biometric Engine® (BE) 2.0, will be offered on the FGCP, which is expected to be one of the world's largest cloud platforms.
As part of the agreement, ImageWare's products will be licensed on a service or transactional basis. The solution is expected to be introduced in North America in the second quarter of 2013, with plans to collaborate on a global expansion model in the near future, and will target large enterprise businesses and emerging applications. The agreement, which is in addition to ImageWare's previously announced three-year software license agreement with Fujitsu's NuVola Private Cloud Platform, is expected to significantly increase revenues while providing greater stability and forward-looking visibility.
"Our goal to establish a leadership position in biometric-based identity management for the cloud is becoming a reality," said Jim Miller, chairman and CEO of ImageWare. "By working with a leading IT innovator such as Fujitsu, ImageWare is able to quickly and efficiently enter the cloud-based arena and gain access to a broader base of clients in the commercial market. The launch of ImageWare's products on the FGCP is a significant step for us and we look forward to a potential worldwide deployment in the near future. Further, by licensing our products on a service or transactional basis, we expect to see a significant improvement in our revenue model and eliminate our historically lumpy sales that have been difficult to predict."
ImageWare also continued to advance the development of its biometric-secured mobile transaction technology, building upon the wireless push technology and related patents it acquired from VOCEL in the second quarter of 2012. In December 2012, the company released the first demonstration models of this mobile technology to key potential corporate users and is currently in licensing discussions with several clients.
Integrating wireless push technology with ImageWare's biometric solutions provides the missing security link facing a growing number of enterprises and government agencies using mobile platforms to transact business or interact with their users. The solution is applicable for healthcare, law enforcement, banking and retail, or any organization requiring highly-reliable and flexible identity verification of their mobile users.
Miller concluded: "Our strategy to diversify ImageWare's revenue stream and decrease our dependency upon larger government projects is beginning to gain traction. Although we will continue to pursue government contracts, our SaaS, mobile and cloud offerings in the commercial and consumer markets will provide us with a more stable, recurring revenue stream and a clearer picture of ImageWare's long-term opportunity."
For the complete interview with Jim Miller, ImageWare Systems, Chairman and CEO:www.securitystockwatch.com/Interviews/in_Boardroom_IMW.html
For more information:
IWS CloudID™: http://iwsinc.com/products/next-generation-iws-cloudid-product-suite/
ImageWare Systems Solutions: http://www.iwsinc.com/markets/overview
ImageWare Systems Products: http://www.iwsinc.com/products/overview2
For ImageWare Systems Investors: http://www.iwsinc.com/about-iws/investors/overview1
For more information: www.iwsinc.com (OTCQB: IWSY)
SSW: It's a pleasure to chat with you again today, Jim. It's been several years since our first interview with you and congratulations on the progress you have achieved with ImageWare, Systems, Inc. (IWS)!
Before we drill down into the most recent important events at IWS, let's discuss IWS solutions. One will read on www.IWSinc.com that ImageWare, "….is a leading developer of 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." Please give us an overview of the solutions IWS brings to market.
Jim Miller: ImageWare® Systems, Inc., ("IWSY") has spent the last decade delivering patented, highly innovative, advanced identity management solutions emphasizing biometrics, public safety, secure credentialing and controlled access. Our company is currently in the midst of a significant transformation as we leverage our proven expertise of successfully implementing device and algorithm-independent, multi-biometric and card management solutions to introduce our next generation product offerings. IWS started with a clean slate and re-engineered our technology to create highly modularized, Enterprise Class, multi-biometric identity management and advanced credentialing platform software optimized for biometric matching performance and configuration flexibility. Our next generation biometric identity management and advanced credentialing platform includes 1) A set of configurable, server-based software modules designed to add or enhance biometric identity management and credential issuance capabilities to existing applications or support the development of these capabilities in new end-to-end applications, 2) A set of configurable business service layer software modules designed to enable existing or new applications to leverage the capabilities of the biometric identity management and advanced credentialing platform, and 3) A set of configurable client-based applications that provide out-of-the-box biometric enrollment, identification and verification, as well as card printing and encoding capabilities designed to enable rapid development and deployment of biometric identity management and advanced credentialing platform.
SSW:We understand you recently introduced version 2.0 of your flagship Biometric Engine and that this represents an evolutionary leap in physical security identification at airports, seaports and other critical points-of-access. Care to elaborate?
Jim Miller: The Biometric Engine® or BE 2.0 is the first release and the anchor component of our next generation biometric identity management and advanced credentialing platform. The BE 2.0-based server platform will enable rapid development and deployment of highly-configurable, cost effective, "Future Proof" modular, physical and logical security identification solutions. This game-changing approach means that IWS clients who need to secure critical access points such as borders, airports, seaports and electronic commerce transactions can obtain physical and logical security through an identification solution designed to continuously adapt to evolving market requirements, technology advancements, and specific customer needs.
BE 2.0 addresses the requirements for the highest level of multi-modal and multi-factor authentication. We have designed solutions that are in compliance with international standards, "Future Proof" (or agnostic to rapidly changing hardware and algorithms) while at the same time able to support legacy systems.
SSW: What are your target markets and what is your perspective on the market drivers and value proposition for ImageWare solutions in these challenging economic times?
Jim Miller: The Biometric Identity market is being increasingly driven by the desire of public sector and commercial entities to provide efficient, cost effective, trusted and reliable identification infrastructures. We believe the most significant market opportunities to help build these infrastructures with our next generation product line are in the following target markets:
- Airport/Seaport MultiBiometic Screening and Credentialing
- Large Scale Civil ID - (i.e. MultiBiometic Screening and Credentialing for borders and eIDs)
- E&M Commerce (i.e. Digital ID Transactions)
Our proven market vision and legacy expertise of innovating patented software-based, multi-biometric and advanced card-based identity solutions, with all its challenges and struggles, has advanced our understanding of biometric-based identity, uniquely qualifying us to define and deliver the software foundation for next generation biometric identification infrastructures.
The future will be dictated by mobile applications and operating in the "Cloud." Mobile applications, Cloud and SaaS initiatives will, in many instances, require authentication of the end-user. Smart card standard data models have focused on multi-modal biometrics and this standardization helps drive the market.
While we agree that the anonymous user experience is a positive aspect of the Internet, there are transactions (i.e. e-medical records, legal contracts, financial transactions, national intelligence, collaboration in the areas of academic research as well as pharmaceutical, aerospace and defense industries) that require the authentication of parties involved. The Federal NSTIC or National Strategy for Trusted Identity in Cyberspace which addresses the need for a trusted identity ecosystem is actively engaging in efforts to promote and secure the economic vitality of cyber commerce.
ICAO and NIST standards have been developed that recognize biometrically enabled authentication to be among the strongest levels of assurance for identity validation.
SSW: Congratulations on the recent win with Los Angeles World Airports. Without divulging any proprietary or confidential information, of course, can you share with us more about the solutions IWS delivered here?
Jim Miller: Los Angeles World Airport is the flagship deployment for our next generation biometric identity management and advanced credentialing platform. When this solution is fully implemented-which we expect by Q4 2012-it will not only deliver a state of the art biometric-based airport credentialing solution, but will also ensure that the Los Angeles World Airports can adapt this credentialing solution to meet developing needs and evolving technology capabilities, thus "Future Proofing" their investment for the long term. Our BE 2.0 platform allows our clients to treat biometrics as a "plug-and-play" model while safeguarding the underlying data. Our recent selection in Ecuador to provide biometric credentials for the country's seaports is a replication of this implementation in the Spanish language.
SSW: Your Case Studies ( www.iwsinc.com/support/case-studies ) speak volumes about the leadership position IWS has achieved in your space. Are there any other "wins" or success stories you'd like to discuss?
Jim Miller: Our work with the US Veterans Administration, one of the largest providers of health care services in the world, is particularly instructive.
HSPD-12 requires federal agencies to provide biometrically enabled credentials to all employees and contractors to secure both the physical and logical access to federal facilities and computer systems. IWS continues to support one of the largest HSPD-12 deployments to date at the Department of Veterans Affairs. Our software is deployed throughout 245 VA medical centers nationwide and the solution suite was recently extended to the 80 mobile detachments used to serve rural VA facilities.
IWS client and server-side components for biometric verification are a key factor in authenticating VA staff and contractors for secure login to VA computers.
IWS customer support provides ongoing maintenance and upgrades to products deployed within the VA infrastructure.
SSW: IWS truly has an impressive list of best-of-breed strategic partners including HP, IBM, Oracle, and Unisys, just to name a few. Can you give us some color about the nature of these strategic relationships?
Jim Miller: IWS's strategic relationships are critical to our marketplace success. We work closely with our partners to ensure that we fully understand market requirements and continue to deliver industry-leading solutions. We are currently in discussions with a number of new partners aligned with our next generation goals and expect some strategically significant announcements over the next few months. As our partners recognize the power of a patented platform specifically optimized for biometrics which allows for the "agnostic" use of hardware and algorithms, you will see an increase in the number of strategic partner arrangements we have.
SSW: How about a quick patent update? We see that IWS has recently been awarded four patents in the U.S., Canada, China and Australia. Please tell us more.
Jim Miller: The IWS patent portfolio which now consists of 9 US patents and four in foreign countries is indicative of our invention, innovation and leadership in the field of multi-modal biometrics and analysis using a seamlessly integrated software platform that is agnostic to choice of biometric modality and hardware. We also hold the US patent on multi-modal biometric fusion. We are always pleased when patent offices around the world recognize that innovation with the award of a patent. Recently, we have added four new patents in the field of mobile communications which will allow us to accelerate our entry into the commercial sector and provide industry-leading solutions to better secure mobile-based transactions particularly in the health care and financial transaction markets. We are already seeing traction in those areas and are excited at this rapidly developing market for our products.
SSW: Let's turn to some recent, significant, and positive financial developments. We understand IWS recently completed a $10.0 million equity financing which enabled IWS to eliminate all long-term debt and existing Series C and D Preferred Stock. Do you have the working capital you need now to execute your business plan?
Jim Miller: We do, and it's full speed ahead as we move into the marketing and sales phase of our next generation biometric identity management and advanced credentialing platform. We are excited about the future and we think ImageWare's current and future customers are going to like what they see coming their way!
SSW: Thank you very much for your time, Jim.