ImageWare Systems, Inc. (NASDAQOTH:IWSY)

CAPS Rating: No stars

The Company is in the field of emerging markets for software-based identity management solutions, providing governments, public safety and justice agencies, and commercial enterprises with biometric, secure credential and law enforcement technologies.


Player Avatar TSIF (99.96) Submitted: 3/6/2014 3:57:58 PM : Underperform Start Price: $2.24 IWSY Score: +10.78

ImageWare Systems dances between $1.60 and $2.20 and I flagged it for some reason for more research, but didn't have time or motive to do it. I set my limit at $2.25 and didn't get back to it. I see I now am the proud wearer of teh ImageWare downthumb. After more research, or reviewing the initial, this appears to be a security wannabe. There have been several of these that float around for a few years. Security is a huge market and little players may find a niche, or may get bought out, but this is unlikely.

Until they succeed with a product someone wants, they are buring $5M-$8M a year and have $3M between stock issues. The Book value is $0.05 a share, which sounds about right. Yes, they are in a market niche where their $191M market cap would seem like chump change IF they had soemthing someone wanted, but until they do, it should be much less. They proport to be in schools, law enforcement, and governement offices in a dozen countries, but annual revenue is $4M and declining. Sales expenses are more than Revenue. They did have a large $2M contract with the VA, but that doesn't leave much for the rest of the sales overhead. They are in an undisclosed pilot with an unnamed customer. Insiders are selling and the only large holder is Goldman Capital Management, not to be confused by Goldman Sachs. Goldman Capital is owned by one of the directors who has 17M shares.

10Q, 14NOV 2013
For the nine months ended September 30, 2013, the Company issued 3,577,779 shares of its common stock and received net proceeds of approximately $2,014,000 from the exercise of warrants for cash

I can find no redeeming qualities, and no reason for a spike, other than that one often finds a spike for some strange reason just before a dilutive stock issue. With a $2.5M open line of credit with a shareholder at 8% interest redeemable in stock for $0.95 each, more financing may not be needed, but why not generate some if possible.

Could book several orders in the same quarter, show near break even and spike.

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