In The Boardroom With...

Mr. Jim Miller
Chairman and CEO
ImageWare Systems, Inc.

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: ImageWareŽ 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.