Filed Pursuant to Rule 424(b)(5)
Registration No. 333-225935
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 10, 2018)
5,954,545 Shares
We are
offering
5,954,545
shares of
our common stock, $0.01 par value per share, at a public offering
price of $
1.10
per share
pursuant to this prospectus supplement and the accompanying
prospectus.
Our
common stock is currently listed for quotation on the OTCQB
Marketplace under the symbol “IWSY.” The last reported
sales price of our common stock on April 29, 2019 was $1.35 per
share.
Investing in our common stock involves a high degree of risk.
Please read the information contained in and incorporated by
reference under the heading “
Risk
Factors
” beginning on
page S-5 of this prospectus supplement and beginning on page 5 of
the accompanying prospectus, the section captioned
“
Item
1A—Risk Factors
” in
our most recently filed Annual Report on Form 10-K for the year
ended December 31, 2018, which is incorporated by reference into
this prospectus supplement, and under similar headings in the other
documents that are filed after the date hereof and incorporated by
reference into this prospectus supplement.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
________________________________________________________________
Prospectus Supplement dated April 29, 2019
IMAGEWARE SYS
T
EMS, INC.
TAB
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PROSPECTUS SUPPLEMENT
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S-12
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S-12
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S-12
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PROSPECTUS
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ABOUT THI
S PR
O
SPECTUS
SUPPLEMENT
This document is in two parts, this prospectus
supplement and the accompanying prospectus, both of which are part
of a registration statement on Form S-3 that we filed with the
Securities and Exchange Commission (the “
SEC
”) using a “shelf” registration
process.
The two parts of this document include: (i) this
prospectus supplement, which describes the specific details
regarding this offering of shares of our common stock; and (ii) the
accompanying base prospectus, which provides a general description
of the securities we may offer, some of which may not apply to this
offering. Generally, when we refer to this
“prospectus,” we are referring to both documents
combined. If information in this prospectus supplement is
inconsistent with the accompanying base prospectus, you should rely
on this prospectus supplement. You should read this prospectus
supplement together with the additional information described below
under the heading “
Where You Can Find More
Information
” and
“
Incorporation of Certain
Information by Reference
.”
We
have not authorized any other person to provide you with any
information that is different. We are offering to sell, and seeking
offers to buy, our securities only in jurisdictions where offers
and sales are permitted. The distribution of this prospectus
supplement and the accompanying prospectus and the offering of the
securities in certain jurisdictions may be restricted by law.
Persons outside the United States who come into possession of this
prospectus supplement and/or the accompanying prospectus must
inform themselves about, and observe any restrictions relating to,
the offering of the securities and the distribution of this
prospectus supplement and/or the accompanying prospectus outside
the United States. This prospectus supplement and the accompanying
prospectus do not constitute, and may not be used in connection
with, an offer to sell, or a solicitation of an offer to buy, any
securities offered by this prospectus supplement and the
accompanying prospectus by any person in any jurisdiction in which
it is unlawful for such person to make such an offer or
solicitation.
We
further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in the accompanying
prospectus were made solely for the benefit of the parties to such
agreement, including, in some cases, for the purpose of allocating
risk among the parties to such agreements, and should not be deemed
to be a representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of
the date when made. Accordingly, such representations, warranties
and covenants should not be relied on as accurately representing
the current state of our affairs.
Unless the context otherwise requires, we use the
terms “
ImageWare
Systems
,” the
“
Company
,” “
we
,” “
us
” and “
our
” in this prospectus supplement and
accompanying prospectus to refer to ImageWare Systems, Inc. and its
subsidiaries on a consolidated basis.
PRO
S
PEC
TUS
SUPPLEMENT SUMMARY
This summary highlights selected information contained elsewhere in
this prospectus supplement and the accompanying prospectus, and in
the documents we incorporate by reference. This summary does not
contain all of the information you should consider before investing
in our securities. You should read this entire prospectus
supplement and the accompanying prospectus carefully, especially
the risks of investing in our securities discussed under
“Risk Factors” beginning on page S-5 of this
prospectus supplement and under similar headings in our Annual
Report on Form 10-K for the year ended December 31, 2018,
which report is incorporated by reference in this prospectus
supplement, along with our consolidated financial statements and
notes to the consolidated financial statements and the other
information incorporated by reference in this prospectus supplement
and the accompanying prospectus, before making an investment
decision.
Company Overview
We
are a pioneer and leader in the emerging market for biometrically
enabled software-based identity management solutions. Using those
human characteristics that are unique to us all, we create software
that provides a highly reliable indication of a person’s
identity. Our “flagship” product is our patented IWS
Biometric Engine®. Scalable for small city business or
worldwide deployment, our IWS Biometric Engine is a multi-biometric
software platform that is hardware and algorithm independent,
enabling the enrollment and management of unlimited population
sizes. It allows a user to utilize one or more biometrics on a
seamlessly integrated platform. Our products are used to manage and
issue secure credentials, including national IDs, passports, driver
licenses and access control credentials. Our products also provide
law enforcement with integrated mug shot, LiveScan fingerprint and
investigative capabilities. We also provide comprehensive
authentication security software using biometrics to secure
physical and logical access to facilities or computer networks or
Internet sites. Biometric technology is now an integral part of all
markets we address and all of our products are integrated into the
IWS Biometric Engine.
Our
biometric technology is a core software component of an
organization’s security infrastructure and includes a
multi-biometric identity management solution for enrolling,
managing, identifying and verifying the identities of people by the
physical characteristics of the human body. We develop, sell and
support various identity management capabilities within government
(federal, state and local), law enforcement, commercial
enterprises, and transportation and aviation markets for
identification and verification purposes. Our IWS Biometric Engine
is a patented biometric identity management software platform for
multi-biometric enrollment, management and authentication, managing
population databases of virtually unlimited sizes. It is hardware
agnostic and can utilize different types of biometric algorithms.
It allows different types of biometrics to be operated at the same
time on a seamlessly integrated platform. It is also offered as an
SDK based search engine, enabling developers and system integrators
to implement a biometric solution or integrate biometric
capabilities into existing applications without having to derive
biometric functionality from pre-existing applications. The IWS
Biometric Engine combined with our secure credential platform, IWS
EPI Builder, provides a comprehensive, integrated biometric and
secure credential solution that can be leveraged for high-end
applications such as passports, driver licenses, national IDs, and
other secure documents.
Our
law enforcement solutions enable agencies to quickly capture,
archive, search, retrieve, and share digital images, fingerprints
and other biometrics as well as criminal history records on a
stand-alone, networked, wireless or web-based platform. We develop,
sell and support a suite of modular software products used by law
enforcement and public safety agencies to create and manage
criminal history records and to investigate crime. Our IWS Law
Enforcement solution consists of five software modules: Capture and
Investigative modules, which provide a criminal booking system with
related databases as well as the ability to create and print mug
photo/SMT image lineups and electronic mugbooks; a Facial
Recognition module, which uses biometric facial recognition to
identify suspects; a Web module, which provides access to centrally
stored records over the Internet in a connected or wireless
fashion; and a LiveScan module, which incorporates LiveScan
capabilities into IWS Law Enforcement providing integrated
fingerprint and palm print biometric management for civil and law
enforcement use. The IWS Biometric Engine is also available to our
law enforcement clients and allows them to capture and search using
other biometrics such as iris or DNA.
Our
secure credential solutions empower customers to create secure and
smart digital identification documents with complete ID systems. We
develop, sell and support software and design systems which utilize
digital imaging and biometrics in the production of photo
identification cards, credentials and identification systems. Our
products in this market consist of IWS EPI Suite and IWS EPI
Builder. These products allow for the production of digital
identification cards and related databases and records and can be
used by, among others, schools, airports, hospitals, corporations
or governments. We have added the ability to incorporate multiple
biometrics into the ID systems with the integration of IWS
Biometric Engine to our secure credential product
line.
Our enterprise authentication software includes
the IWS Desktop Security product, which is a comprehensive
authentication management infrastructure solution providing added
layers of security to workstations, networks and systems through
advanced encryption and authentication technologies. IWS Desktop
Security is optimized to enhance network security and usability,
and uses multi-factor authentication methods to protect access,
verify identity and help secure the computing environment without
sacrificing ease-of-use features such as quick login. Additionally,
IWS Desktop Security provides an easy integration with various
smart card-based credentials including the Common Access Card
(“
CAC
”), Homeland Security Presidential Directive
12 (“
HSPD-12
”), Personal Identity Verification
(“
PIV
”) credential, and Transportation Worker
Identification Credential (“
TWIC
”) with an organization’s access
control process. IWS Desktop Security provides the crucial
end-point component of a Logical Access Control System
(“
LACS
”), and when combined with a Physical Access
Control System (“
PACS
”), organizations benefit from a complete
door to desktop access control and security
model.
Company Information
ImageWare Systems, Inc., a Delaware corporation,
was founded in February 1987. Our principal executive offices are
located at 13500 Evening Creek Drive N, Suite 550, San Diego,
California 92128, and our telephone number is (858) 673-8600. Our
website address is
www.iwsinc.com
.
The information contained on our website is not part of this
prospectus supplement or the accompanying prospectus. We have
included our website address as a factual reference and do not
intend it to be an active link to our website.
Risks Associated with Our Business
Our business is subject to a number of risks of
which you should be aware before making an investment decision.
These risks are discussed more fully in the section titled
“
Item
1A—Risk Factors
”
sections in our Annual Report on Form 10-K for the year ended
December 31, 2018, which is incorporated by reference in this
prospectus supplement. These risks include the
following:
●
We
have incurred significant operating losses since inception and
cannot assure you that we will ever achieve or sustain
profitability;
●
We
depend upon a small number of large system sales and we may fail to
achieve one or more large system sales in the future;
●
Our
lengthy sales cycle may cause us to expend significant resources
for as long as one year in anticipation of a sale to certain
customers, yet we still may fail to complete the sale;
●
A
significant number of our customers and potential customers are
government agencies that are subject to unique political and
budgetary constraints and have special contracting requirements,
which may affect our ability to obtain new and retain current
government customers;
●
We
are dependent upon third parties for the successful integration of
our products, and/or the launch of our products. Any delay in the
integration of our products, or the launch of third party products
may materially affect our results from operations and financial
condition;
●
If
the patents we own or license, or our other intellectual property
rights, do not adequately protect our products and technologies, we
may lose market share to our competitors and our business,
financial condition and results of operations would be adversely
affected; and
●
We
will need to raise substantial additional funds in the future, and
these funds may not be available on acceptable terms or at all. A
failure to obtain this necessary capital when needed could force us
to delay, limit, scale back or cease some or all
operations.
Issuer
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ImageWare Systems, Inc.
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Securities
offered by us in this offering
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5,954,545
shares of common stock.
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Public
offering price
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$
1.10
per share
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Common
stock outstanding immediately before this offering
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99,260,214
shares
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Common
stock outstanding immediately after this offering
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105,214,759
shares (assuming the sale of all shares covered
by this prospectus supplement).
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Manner
of offering
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We are offering the shares of our common stock directly to certain
institutional investors with the assistance of a financial advisor,
Needham & Company. See “
Plan of
Distribution
” on page
S-11.
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Use of
proceeds
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We currently intend to use the proceeds from this offering
for research and development, working
capital needs, capital expenditures and other general corporate
purposes.
See
“
Use
of Proceeds
” on page
S-7.
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Risk
factors
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Investing in our securities involves significant risks. Please read
the information contained in or incorporated by reference under the
heading “
Risk
Factors
” beginning on
page S-5 of this prospectus supplement, and under similar headings
in other documents filed after the date hereof and incorporated by
reference into this prospectus supplement and the accompanying
prospectus.
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OTCQB Marketplace symbol
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“
IWSY
”
|
The
number of shares of common stock to be outstanding immediately
after this offering is based on
99,260,214
shares of our common stock
outstanding as of
April 29
,
2019.
Unless we specifically state
otherwise, the share information in this prospectus supplement
excludes:
●
7,213,759
shares of common stock issuable upon the exercise
of stock options at a weighted average exercise price of $1.35 per
share;
●
1,813,856
shares of common stock issuable upon exercise of
outstanding warrants, with a weighted average exercise price of
$0.19 per share; and
●
32,839,731
shares of common stock issuable upon conversion
of the Company’s Series A Convertible Redeemable Preferred
Stock,
●
47,286
shares of common stock issuable upon conversion of
the Company’s Series B Convertible Redeemable Preferred
Stock,
●
10,079,452
shares of common stock issuable upon conversion
of the Company’s Series C Convertible Redeemable Preferred
Stock,
●
457,332
shares of common stock reserved for future issuance
under the
Company’s 1999 Stock
Option Plan
.
An
investment in our securities involves a high degree of risk. You
should consider the risks, uncertainties and assumptions discussed
below, together with all of the other information contained or
incorporated by reference in this prospectus supplement and the
accompanying prospectus, including our Annual Report on Form 10-K
for the fiscal year ended December 31, 2018, filed with the
Securities and Exchange Commission on March 28, 2019.
It is not possible to predict or
identify all such risks. Consequently, we could also be affected by
additional factors that are not presently known to us or that we
currently consider to be immaterial to our
operations.
The occurrence of any
of these known or unknown risks might cause you to lose all or part
of your investment in the offered securities.
Risks Related to this Offering
We may not raise enough capital from the sale of our securities to
address our short-term cash flow needs or adequately fund and
execute our developing growth strategy.
We
may be unable to successfully complete all of the anticipated uses
of the net proceeds of this offering. The financial notes to our
Annual Report on Form 10-K for the year ended December 31, 2018,
contain an explanatory paragraph expressing substantial doubt about
our ability to continue as a going concern. Even considering this
offering, we might not be able to address our short-term cash flow
needs and continue operations. Furthermore, we might be unable to
execute our developing growth strategy as planned and our
prospects, business, financial condition, and results of operations
could be adversely affected, all of which would have a negative
impact the return on your investment in our common
stock.
Management will have broad discretion as to the use of the proceeds
from this offering and may not use the proceeds
effectively.
Our
management will have broad discretion in the application of the net
proceeds from this offering and could spend the proceeds in ways
that may not improve our results of operations or enhance the value
of our securities. Our failure to apply these funds effectively
could have a material adverse effect on our business and cause the
price of our common stock to decline.
We may be required to raise additional financing by issuing new
securities with terms or rights superior to those of our existing
shareholders, or at a price per share that is less than the price
per share paid by investors in this offering, which could adversely
affect the market price of shares of our common stock and our
business.
We
will require additional financing to fund future operations,
including our research, development, sales and marketing
activities. We may not be able to obtain financing on favorable
terms, if at all. If we raise additional funds by issuing equity
securities, we may sell shares or other securities in any other
offering at a price per share that is less than the price per share
paid by investors in this offering. Additionally, if we raise
additional funds by issuing equity securities, the percentage
ownership of our current shareholders will be reduced, and, if the
equity securities issued are preferred shares, the holders of the
new preferred shares may have rights superior to those of our
existing securityholders, which could adversely affect rights of
our existing securityholders and the market price of our common
stock. If we raise additional funds by issuing debt securities, the
holders of those debt securities would have some rights senior to
those of our existing securityholders, and the terms of these debt
securities could impose restrictions on operations and create a
significant interest expense for us which could have a materially
adverse effect on our business.
Purchasers in this offering will experience immediate and
substantial dilution in the book value of their
investment.
Because the public offering price per share is
substantially higher than the book value per share of our common
stock, you will suffer substantial dilution in the net tangible
book value of the common stock you purchase in this offering. After
giving effect to the sale by us of 5,954,545 shares of our common
stock at a public offering price of $1.10 per share, and after
deducting the underwriting discount and estimated offering expenses
payable by us, you will suffer immediate and substantial dilution
of $1.03 per share in the net tangible book value of the common
stock you purchase in this offering. To the extent outstanding
options, warrants or other derivative securities are ultimately
exercised or converted, or if we issue equity-based awards to our
employees under our 1999 Plan Stock Option Plan, there will be
further dilution to investors who purchase shares in this offering.
In addition, if we issue additional equity securities or derivative
securities, investors purchasing shares in this offering will
experience additional dilution. For a further description of the
dilution that you will experience immediately after this offering,
see “
Dilution
” on page S-10.
Sales of a
substantial number of shares of our common stock, or the perception
that such sales may occur, may adversely impact the price of our
common stock
.
Sales of a substantial number of shares of our
common stock in the public market could occur at any time. These
sales, or the perception that such sales may occur, may adversely
impact the price of our common stock, even if there is no
relationship between such sales and the performance of our
business. As of April 29, 2019, we had
99,260,214 shares of common stock outstanding, as
well as stock options to purchase an aggregate of
7,213,759 shares of our common stock
at a weighted average exercise price of $1.35 per share,
outstanding warrants to purchase up to an aggregate of
1
,813,856 shares of our common stock
at a weighted average exercise price of $0.19 per share, 32,839,731
shares of common stock issuable upon conversion of our Series A
Redeemable Preferred Stock, 47,286 shares of common stock issuable
upon conversion of our Series B Convertible Redeemable Preferred
Stock, 10,079,452 shares of common stock issuable upon conversion
of our Series C Convertible Redeemable Preferred Stock and 457,332
shares of common stock reserved for issuance under our 1999 Stock
Option Plan. The exercise of such outstanding derivative securities
may result in further dilution of your
investment.
CAU
T
IONARY NOTES REGA
RDING FORWARD-LOOKING
STATEMENTS
This
prospectus supplement and the accompanying prospectus contains
forward-looking statements that involve substantial risks and
uncertainties. All statements contained in this prospectus
supplement and the accompanying prospectus other than statements of
historical facts, including statements regarding our strategy,
future operations, future financial position, future revenue,
projected costs, prospects, plans, objectives of management and
expected market growth, are forward-looking statements. These
statements involve known and unknown risks, uncertainties and other
important factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements.
The
words “anticipate,” “believe,”
“estimate,” “expect,” “intend,”
“may,” “plan,” “predict,”
“project,” “target,”
“potential,” “will,” “would,”
“could,” “should,” “continue,”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. These forward-looking statements include,
among other things, statements about:
●
the
availability of capital to satisfy our working capital
requirements;
●
the
accuracy of our estimates regarding expenses, future revenues and
capital requirements;
●
anticipated
trends and challenges in our business and the markets in which we
operate;
●
our
ability to anticipate market needs or develop new or enhanced
products to meet those needs;
●
our
expectations regarding market acceptance of our
products;
●
the
success of competing products by others that are or become
available in the market in which we sell our products;
●
our
ability to protect our confidential information and intellectual
property rights;
●
our
ability to manage expansion into international
markets;
●
our
ability to maintain or broaden our business relationships and
develop new relationships with strategic alliances, suppliers,
customers, distributors or otherwise;
●
developments
in the U.S. and foreign countries; and
●
other risks and uncertainties, including those
described under
the section titled
“
Item 1A—Risk
Factors
,” in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2018,
which risk factors are incorporated herein by
reference.
These
forward-looking statements are only predictions and we may not
actually achieve the plans, intentions or expectations disclosed in
our forward-looking statements, so you should not place undue
reliance on our forward-looking statements. Actual results or
events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make.
We have based these forward-looking statements largely on our
current expectations and projections about future events and trends
that we believe may affect our business, financial condition and
operating results. We have included important factors in the
cautionary statements included in this prospectus, as well as
certain information incorporated by reference into this prospectus,
that could cause actual future results or events to differ
materially from the forward-looking statements that we make. Our
forward-looking statements do not reflect the potential impact of
any future acquisitions, mergers, dispositions, joint ventures or
investments we may make.
You
should read this prospectus with the understanding that our actual
future results may be materially different from what we expect. We
do not assume any obligation to update any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required by applicable law.
We
estimate that the net proceeds from the sale of shares of our
common stock offered under this prospectus supplement will be
approximately $
6.125 million
if
we sell the maximum amount of common stock offered hereby, after
deducting the estimated offering expenses payable by us. However,
this is a best efforts offering with no minimum, and we may not
sell all or any of these shares; as a result, we may receive
significantly less in net proceeds.
We intend to use the net proceeds of this offering
for working capital and other general corporate purposes, including
payment to our financial advisor, Needham & Company, of
$425,000 for their service as our financial advisor for the
offering.
We may also use a portion of the net proceeds to
invest in or acquire businesses or technologies that we believe are
complementary to our own, although we have no current plans,
commitments or agreements with respect to any acquisitions as of
the date of this prospectus supplement.
This
expected use of our net proceeds from this offering represents our
intentions based upon our current plans and business conditions,
which could change in the future as our plans and business
conditions evolve. The amounts and timing of our actual
expenditures may vary significantly depending on numerous factors,
including the progress of our product candidate development, the
status of and results from clinical trials, as well as any
collaborations that we may enter into with third parties for our
product candidates, and any unforeseen cash needs.
As a
result, our management will retain broad discretion over the
allocation of the net proceeds from this offering, and investors
will be relying on the judgment of our management regarding the
application of the net proceeds from this offering. The timing and
amount of our actual expenditures will be based on many factors,
including cash flows from operations and the anticipated growth of
our business. Pending these uses, we expect to invest the net
proceeds in short-term, interest bearing obligations, certificates
of deposit or direct or guaranteed obligations of the United
States. The goal with respect to the investment of these net
proceeds is capital preservation and liquidity so that such funds
are readily available to fund our operations.
Based
on the planned use of proceeds described above, we believe that the
net proceeds from this offering and our existing cash, cash
equivalents and marketable securities will be sufficient to enable
us to fund our operating expenses and capital expenditure
requirements into the first quarter of 2020. We have based this estimate on
assumptions that may prove to be incorrect, and we could use our
available capital resources sooner than we currently
expect.
PR
I
CE RANGE OF
OUR COMMON STOCK
Market Information
Our
common stock does not trade on an established securities exchange.
Our common stock is quoted under the symbol “IWSY” on
the OTCQB marketplace. Any OTCQB marketplace quotations reflect
inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual
transactions.
The
following table sets forth the high and low sale prices for our
common stock for each quarter in 2019, 2018 and 2017:
2019 Fiscal Quarters
|
|
|
First
Quarter
|
$
1.80
|
$
0.75
|
Second
Quarter (through April 29, 2019)
|
$
1.60
|
$
1.21
|
2018 Fiscal Quarters
|
|
|
First
Quarter
|
$
2.24
|
$
1.50
|
Second
Quarter
|
$
1.90
|
$
1.08
|
Third
Quarter
|
$
1.44
|
$
0.86
|
Fourth
Quarter
|
$
1.01
|
$
0.55
|
2017 Fiscal Quarters
|
|
|
First
Quarter
|
$
1.39
|
$
0.98
|
Second
Quarter
|
$
1.24
|
$
0.81
|
Third
Quarter
|
$
1.50
|
$
0.83
|
Fourth
Quarter
|
$
1.62
|
$
1.25
|
Holders
As of April 29, 2019, we had approximately
201
registered holders of
record of our common stock.
A
significant number of our shares of common stock were held in
street name and, as such, we believe that the actual number of
beneficial owners of our common stock is significantly
higher.
We
have never declared or paid cash dividends on our common stock. We
currently intend to retain all available funds and any future
earnings for use in the operation of our business and do not
anticipate paying any cash dividends on our common stock in the
foreseeable future. Any future determination to declare cash
dividends on our common stock will be made at the discretion of our
Board of Directors and will depend on our financial condition,
results of operations, capital requirements, general business
conditions and other factors that our Board of Directors may deem
relevant.
Our Series A Convertible Preferred Stock
(“
Series A
Preferred
”), Series B
Convertible Redeemable Stock (“
Series B
Preferred
”) and our
Series C Convertible Redeemable Preferred Stock
(“
Series C
Preferred
”) each accrue
dividends that are payable on a quarterly basis. Both the Series A
Preferred and the Series C Preferred accrue dividends at a rate of
8% per annum if paid in cash and 10% per annum if paid by the
issuance of shares of common stock. Our Series B Preferred accrues
dividends at a rate of $0.2125 per share per annum, payable in
equal semiannual installments of $0.10625 per
share.
If
you purchase shares of our common stock in this offering, you will
experience dilution to the extent of the difference between the
public offering price per share and our as adjusted net tangible
book value per share immediately after this offering.
Net
tangible book value is total assets minus the sum of liabilities
and intangible assets. Net tangible book value per share is net
tangible book value divided by the total number of shares of common
stock outstanding. As of December 31, 2018, our net tangible book
value was approximately $1.6 million, or approximately $0.02 per
share.
After
giving effect to our receipt of approximately $6.125 million of
estimated net proceeds after deducting estimated offering expenses
payable by us, from our sale of 5,954,545 shares of common stock in
this offering at a public offering price of $1.10 per share,
our pro forma net tangible book value as of December 31, 2018,
would have been approximately $7.8 million, or $0.07 per share.
This amount represents an immediate increase in net tangible book
value of $0.05 per share of our common stock to existing
stockholders and an immediate dilution in net tangible book value
of $1.03 per share of our common stock to new investors
purchasing shares of common stock in this offering.
The following table illustrates this dilution on a per share basis
to new investors:
Public
offering price per share:
|
|
$
1.10
|
Net
tangible book value per share as of December 31, 2018
|
$
0.02
|
|
Increase
in net tangible book value per share after this
offering
|
$
0.05
|
|
|
|
|
Pro
forma net tangible book value per share after this
offering
|
|
$
0.07
|
|
|
|
Dilution
in pro forma net tangible book value per share to new investors in
this offering
|
|
$
1.03
|
The
foregoing discussion and table do not take into account further
dilution to new investors that could occur upon the exercise of
outstanding options or warrants having a per share exercise price
less than the combined public offering price in this offering. To
the extent that we raise additional capital through the sale of
equity or convertible debt securities after this offering, the
issuance of those securities could result in further dilution to
our stockholders.
The
table and discussion above are based on 98,223,632 shares of our
common stock outstanding as of December 31, 2018, and excludes as
of that date the following:
●
7,227,248
shares of common stock issuable upon the exercise
of stock options as of
December 31,
2018
at a weighted average exercise price of $1.34 per
share;
●
1,813,856
shares of common stock issuable upon exercise of
outstanding warrants, with a weighted average exercise price of
$0.19 per share; and
●
32,580,000
shares of common stock issuable upon conversion
of the Company’s Series A Convertible Redeemable Preferred
Stock,
●
46,029
shares of common stock issuable upon conversion of
the Company’s Series B Convertible Redeemable Preferred
Stock,
●
10,000,000
shares of common stock issuable upon conversion
of the Company’s Series C Convertible Redeemable Preferred
Stock,
●
730,677
shares of common stock reserved for future issuance
under the
Company’s 1999 Stock
Option Plan
as of
December 31,
2018
.
We plan to issue and sell 5,954,545 shares of our
common stock directly to participating institutional investors (the
“
Investors
”), subject to certain limitations,
including the number or dollar amount of shares registered under
the registration statement to which the offering relates. A copy of
the subscription form executed by each Investor is attached
as
Appendix
A
to this prospectus
supplement. We expect to deliver the shares of common stock
directly to the investor on or about May 1,
2019.
The
public offering price per share of common stock in this offering is
$1.10. The offering price and other terms of the shares were
negotiated between us and the investor, in consultation with the
financial advisor based on the trading of our common stock prior to
the offering, among other things. Other factors considered in
determining the public offering price of the shares of our common
stock we are offering include the history and prospects of the
Company, the stage of development of our business, our business
plans for the future and the extent to which they have been
implemented, an assessment of our management, general conditions of
the securities markets at the time of the offering and such other
factors as were deemed relevant.
We
have engaged a financial advisor, Needham & Company, to assist
with the coordination and closing of this offering, which will
receive a set fee of $425,000 for its services.
LEG
AL MATTERS
Certain
legal matters in connection with this offering will be passed upon
for us by Disclosure Law Group, a Professional Corporation, of San
Diego, California.
Our consolidated
financial statements appearing in our Annual Report on Form 10-K
for the year ended December 31, 2018, and the effectiveness of
our internal control over financial reporting as of
December 31, 2018, have been audited by Mayer Hoffman McCann
P.C.
of San Diego,
California
, an independent
registered public accounting firm, as set forth in their reports
thereon. Such consolidated financial statements are incorporated
herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and
auditing.
WHERE
YOU CAN
F
I
ND
MORE INFORMATION
We are a public company and file annual, quarterly
and special reports, proxy statements and other information with
the SEC. You may read and copy any document we file at the
SEC’s public reference room at 100 F Street, NE, Washington,
D.C. 20549. You can request copies of these documents by writing to
the SEC and paying a fee for the copying cost. Please call the SEC
at 1-800-SEC-0330 for more information about the operation of the
public reference room. Our SEC filings are also available, at no
charge, to the public at the SEC’s web site
at
http://www.sec.gov
.
INCORPORATION OF C
E
RT
AIN INFORMATION BY
REFERENCE
The following documents filed by us with the SEC are incorporated
by reference in this prospectus:
●
|
Annual
Report on Form 10-K for the fiscal year ended December 31, 2018,
filed on March 28, 2019;
|
●
|
Current
Report on Form 8-K, filed February 1, 2019;
|
●
|
Current
Report on Form 8-K, filed February 19, 2019; and
|
●
|
The
description of our common stock contained in the Registration
Statement on Form 8-A filed pursuant to Section 12(b) of the
Exchange Act on March 21, 2000, including any amendment or report
filed with the SEC for the purpose of updating this
description.
|
We
also incorporate by reference all documents we file pursuant to
Section 13(a), 13(c), 14 or 15 of the Exchange Act (other than any
portions of filings that are furnished rather than filed pursuant
to Items 2.02 and 7.01 of a Current Report on Form 8-K) after the
date of the initial registration statement of which this prospectus
supplement and accompanying prospectus are a part and prior to
effectiveness of such registration statement. All documents we file
in the future pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this prospectus supplement and
accompanying prospectus and prior to the termination of the
offering are also incorporated by reference and are an important
part of this prospectus.
Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this registration statement to the
extent that a statement contained herein or in any other
subsequently filed document which also is or deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this registration statement.
We
will provide to each person, including any beneficial owner, to
whom a prospectus is delivered, a copy of any or all of the
information that has been incorporated by reference in the
prospectus supplement and accompanying prospectus but not delivered
with the prospectus supplement or accompanying prospectus. You may
request a copy of these filings, excluding the exhibits to such
filings which we have not specifically incorporated by reference in
such filings, at no cost, by writing to or calling us
at:
ImageWare Systems, Inc.
Attn: Corporate Secretary
13500 Evening Creek Drive N., Suite 550
San Diego, CA 92128
(858) 673-8600
This
prospectus supplement and accompanying prospectus is part of a
registration statement we filed with the SEC. You should only rely
on the information or representations contained in this prospectus
and any accompanying prospectus supplement. We have not authorized
anyone to provide information other than that provided in this
prospectus and any accompanying prospectus supplement. We are not
making an offer of the securities in any state where the offer is
not permitted. You should not assume that the information in this
prospectus or any accompanying prospectus supplement is accurate as
of any date other than the date on the front of the
document.
ImageWare Systems, Inc.
Subscription Form
Subscriber’s
name (the “
Subscriber
”):
|
_____________________________________________________
|
|
|
Subscriber’s
address
|
_____________________________________________________
|
|
_____________________________________________________
|
|
|
Subscriber’s
social security or federal tax identification number:
|
_____________________________________________________
|
|
|
Brokerage
firm (for delivering shares):
|
_____________________________________________________
|
|
|
Account
number at brokerage firm:
|
_____________________________________________________
|
|
|
DTC
participant number:
|
_____________________________________________________
|
|
|
Number
of shares of common stock, par value $0.001 per share (the
“
Shares
”)
subscribed for:
|
______________________________________________________
|
|
|
Amount
Owed for Shares:
|
____________________________________
($_____ per share)
|
Wire
Information:
|
|
|
|
|
Date of
Wire: ___________________
|
|
|
|
|
|
Fed
Reference No.: ______________
|
Subscriber agrees and acknowledges that the Shares subscribed for
shall be issued as of the date of acceptance of this Subscription
Form by ImageWare Systems, Inc., and delivered to Subscriber within
two (2) business days thereafter.
Representations, Warranties, Agreements:
1.
By executing and returning this form, the Subscriber represents,
warrants and agrees that:
1.1
He/she/it
is the Subscriber, or has full power and authority to act on behalf
of and bind the Subscriber in subscribing as set forth herein and
making these representations, warranties and
agreements.
1.2
The
shares are being offered pursuant to the Shelf Registration
Statement on Form S-3, filed by ImageWare Systems, Inc.
(“
ImageWare
”) on June 28, 2018 and declared effective
by the Securities and Exchange Commission (the
“
SEC
”) on July 10, 2018 (File No. 333- 225935)
(the “
Registration
Statement
”) and the
prospectus supplement and accompany prospectus (the
“
Prospectus
”) filed with the SEC on April 29, 2019
(available at
http://iwsinc.com
under
Investor Relations/ Preferred Stock Offering, or by email
to
wwetherell@iwsinc.com
).
1.3
The
Subscriber has had full opportunity to read and review the
Prospectus and the documents incorporated therein by reference, and
consult with an attorney regarding such Prospectus and additional
documentation.
1.4
The
information provided herein and these representations, warranties
and agreements are accurate and complete, and shall remain so until
the undersigned notifies ImageWare otherwise.
2.
By accepting this form, ImageWare represents, warrants and agrees
that:
2.1
ImageWare has been duly organized and is validly existing as an
entity in good standing under the laws of its jurisdiction of
organization. ImageWare has the full corporate power and authority
to own its properties and conduct its business as currently being
carried on and as described in the Prospectus.
2.2
Upon receipt of an executed copy of this form by the Subscriber and
acceptance of the executed form by ImageWare, ImageWare agrees that
it will become obligated to issue the Shares to the Subscriber,
which agreement will be a valid and binding agreement by ImageWare.
In addition, the Shares, when issued in the manner described in the
Prospectus, will be validly issued, fully paid and
nonassessable.
2.3
Issuance of the Shares by ImageWare to the Subscriber in the manner
described in the Prospectus will not conflict with any law,
organizational document, or material contract
of ImageWare.
2.4
No stop order suspending the effectiveness of the Registration
Statement or any part thereto or any post-effective amendment
thereto has been issued, and no proceeding for that purpose ahs
been initiated or, to ImageWare’s knowledge, initiated by the
Securities and Exchange Commission.
Contact
information, if we have any questions:
|
__________________________________
|
(Phone)
|
|
|
|
|
_________________________________
|
(Email)
|
Signature:
|
|
______________________________
|
|
|
By:___________________________
|
|
|
Date:__________________________
|
Agreed
and accepted by ImageWare Systems, Inc.
|
______________________________
|
|
By:___________________________
|
|
Date:__________________________
|
Subscription Instructions:
|
Account name
|
ImageWare
Systems, Inc.
|
|
2.
|
Execute the subscription form (being sure to include the date of
the wire and the wire Fed. Ref. No.) and email the form
to rcharest@disclosurelawgroup.com.
|
$
25,000,000
COMMON STOCK
PREFERRED STOCK
WARRANTS
UNITS
From time to time, we may offer and sell, in one or more offerings,
up to $25,000,000 of any combination of the securities described in
this prospectus. We may also offer securities as may be issuable
upon conversion, repurchase, exchange or exercise of any securities
registered hereunder, including any applicable anti-dilution
provisions.
We will provide the specific price and number of securities issued
in supplements to this prospectus. You should read this prospectus
and the accompanying prospectus supplement carefully before you
invest.
This prospectus provides a general description of the securities we
may offer from time to time. Each time we offer securities, we will
provide specific terms of the securities offered in a supplement to
this prospectus. We may also authorize one or more free writing
prospectuses to be provided to you in connection with an offering.
The prospectus supplement and any related free writing prospectus
may also add, update or change information contained in this
prospectus. You should carefully read this prospectus, the
applicable prospectus supplement and any related free writing
prospectus, as well as any documents incorporated by reference,
before you invest in any of the securities being
offered.
Our common stock is currently listed for quotation on the OTCQB
Marketplace under the symbol “IWSY.” The last reported
sales price of our common stock on June 27, 2018 was $1.28 per
share.
We may offer and sell our securities to or through one or more
agents, underwriters, dealers or other third parties, or directly
to one or more purchasers on a continuous or delayed basis. If
agents, underwriters or dealers are used to sell our securities, we
will name them and describe their compensation in a prospectus
supplement. The price to the public of our securities and the net
proceeds we expect to receive from the sale of such securities will
also be set forth in a prospectus supplement. For additional
information on the methods of sale, you should refer to the section
entitled “
Plan of
Distribution
” in this
prospectus.
Our business and investing in our
securities involves significant risks. You should review carefully
the risks and uncertainties referenced under the heading
“
Risk
Factors
” on page 5
of this prospectus, as well as those contained in
the applicable prospectus supplement and any related free writing
prospectus, and in the other documents that are incorporated by
reference into this prospectus or the applicable prospectus
supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is July 10, 2018
IMAG
EWARE SYSTEMS, INC.
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This prospectus is part of a registration statement filed with the
Securities and Exchange Commission
(the “
SEC
”), using a “shelf” registration
process. Under this shelf registration process, we may sell
the securities described in this prospectus in one or more
offerings. This prospectus provides you with a general
description of the securities which may be offered. Each time
we offer securities for sale, we will provide a prospectus
supplement that contains information about the specific terms of
that offering. Any prospectus supplement may also add or update
information contained in this prospectus. You should read both
this prospectus and any prospectus supplement together with
additional information described below under
“
Where You Can Find More
Information
” and
“
Incorporation of Certain
Information by Reference
.”
You should rely only on the information contained or incorporated
by reference in this prospectus, and in any prospectus
supplement. We have not authorized any other person to provide
you with different information. If anyone provides you with
different or inconsistent information, you should not rely on
it. We are not making offers to sell or solicitations to buy
the securities described in this prospectus in any jurisdiction in
which an offer or solicitation is not authorized, or in which the
person making that offer or solicitation is not qualified to do so
or to anyone to whom it is unlawful to make an offer or
solicitation. You should not assume that the information in
this prospectus or any prospectus supplement, as well as the
information we file or previously filed with the SEC that we
incorporate by reference in this prospectus or any prospectus
supplement, is accurate as of any date other than its respective
date. Our business, financial condition, results of operations
and prospects may have changed since those dates.
This prospectus contains summaries of certain provisions contained
in some of the documents described herein, but reference is made to
the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of
some of the documents referred to herein have been filed, will be
filed or will be incorporated by reference as exhibits to the
registration statement of which this prospectus is a part, and you
may obtain copies of those documents as described below under the
heading “
Where You Can Find More
Information.
”
This summary highlights information
contained elsewhere in this prospectus. This summary does not
contain all the information you should consider before buying our
securities. You should read the following summary together with the
more detailed information appearing in this prospectus, including
the section titled “Risk Factors” on page
5
, before deciding whether to purchase shares of
our securities.
All brand names or trademarks appearing in this report are the
property of their respective holders. Unless the context requires
otherwise, references in this report to “ImageWare,”
“ImageWare Systems,” the “Company,”
“we,” “us,” and “our” refer to
ImageWare Systems, Inc., a Delaware corporation.
Overview
We develop mobile and cloud-based identity management solutions
providing biometric, secure credential and law enforcement
technologies. Our patented biometric product line includes our
flagship product, the IWS Biometric Engine®, a hardware and
algorithm independent multi-biometric engine that enables the
enrollment and management of unlimited population sizes. Our
identification products are used to manage and issue secure
credentials, including national IDs, passports, driver licenses and
access control credentials. Our digital booking products provide
law enforcement with integrated mug shots, fingerprint LiveScan and
investigative capabilities. We also provide comprehensive
authentication security software using biometrics to secure
physical and logical access to facilities or computer networks or
internet sites. We are headquartered in San Diego, California,
with offices in Portland, Oregon, Mexico, and Ottawa,
Ontario.
We are also a leading developer of mobile and cloud-based identity
management solutions providing patented biometric authentication
solutions for the enterprise. We deliver next-generation biometrics
as an interactive and scalable cloud-based solution. We bring
together cloud and mobile technology to offer multi-factor
authentication for smartphone users, for the enterprise, and across
industries. We have introduced a set of mobile and cloud solutions
to provide biometric user authentication, including the
GoVerifyID® mobile application and cloud-based SaaS solutions.
These solutions include GoMobile Interactive
(“
GMI
”), which provides patented, secure, dynamic
messaging. More recently we have introduced GoVerifyID®
Enterprise Suite, which provides turnkey integration with Microsoft
Windows, Microsoft Active Directory, and security products from CA,
HPE, IBM, and SAP. These solutions are marketed and sold to
businesses across many industries. For the healthcare industry, we
also developed and market a patented, FDA-Cleared,
biometrically-secured, enterprise-level platform for patient
engagement and medication adherence.
Historically, we have marketed our products to government entities
at the federal, state and local levels; however, the emergence of
cloud based computing, a mobile market that demands increased
security and interoperable systems, and the proven success of our
products in the government markets, has enabled us to enlarge our
target market focus to include the emerging consumer and
non-government enterprise marketplace.
Our biometric technology is a core software component of an
organization’s security infrastructure and includes a
multi-biometric identity management solution for enrolling,
managing, identifying and verifying the identities of people by the
physical characteristics of the human body. We develop, sell and
support various identity management capabilities within government
(federal, state and local), law enforcement, commercial
enterprises, and transportation and aviation markets for
identification and verification purposes. Our IWS Biometric Engine
is a patented biometric identity management software platform for
multi-biometric enrollment, management and authentication, managing
population databases of virtually unlimited sizes. It is hardware
agnostic and can utilize different types of biometric
algorithms. It allows different types of biometrics to be
operated at the same time on a seamlessly integrated
platform. It is also offered as a Software Development Kit
(“
SKD
”) based search engine, enabling developers
and system integrators to implement a biometric solution or
integrate biometric capabilities into existing applications without
having to derive biometric functionality from pre-existing
applications. The IWS Biometric Engine combined with our
secure credential platform, IWS EPI Builder, provides a
comprehensive, integrated biometric and secure credential solution
that can be leveraged for high-end applications such as passports,
driver licenses, national IDs, and other secure
documents.
Our law enforcement solutions enable agencies to quickly capture,
archive, search, retrieve, and share digital images, fingerprints
and other biometrics as well as criminal history records on a
stand-alone, networked, wireless or web-based platform. We develop,
sell and support a suite of modular software products used by law
enforcement and public safety agencies to create and manage
criminal history records and to investigate crime. Our IWS Law
Enforcement solution consists of five software modules: Capture and
Investigative modules, which provide a criminal booking system with
related databases as well as the ability to create and print mug
photo/SMT image lineups and electronic mug-books; a Facial
Recognition module, which uses biometric facial recognition to
identify suspects; a Web module, which provides access to centrally
stored records over the Internet in a connected or wireless
fashion; and a LiveScan module, which incorporates LiveScan
capabilities into IWS Law Enforcement providing integrated
fingerprint and palm print biometric management for civil and law
enforcement use. The IWS Biometric Engine is also available to
our law enforcement clients and allows them to capture and search
using other biometrics such as iris or DNA.
Our secure credential solutions empower customers to create secure
and smart digital identification documents with complete ID
systems. We develop, sell and support software and design systems
which utilize digital imaging and biometrics in the production of
photo identification cards, credentials and identification systems.
Our products in this market consist of IWS EPI Suite and IWS EPI
Builder. These products allow for production of digital
identification cards and related databases and records and can be
used by, among others, schools, airports, hospitals, corporations
or governments. We have added the ability to incorporate multiple
biometrics into the ID systems with the integration of IWS
Biometric Engine to our secure credential product
line.
Our GoVerifyID products support multi-modal biometric
authentication including, but not limited to, face, voice,
fingerprint, iris, palm, and more. All the biometrics can be
combined with or used as replacements for authentication and access
control tools, including tokens, digital certificates, passwords,
and PINS, to provide the ultimate level of assurance,
accountability, and ease of use for corporate networks, web
applications, mobile devices, and PC desktop environments.
GoVerifyID provides patented multi-modal biometric identity
authentication that can be used in place of passwords or as a
strong second factor authentication method. GoVerifyID is provided
as a cloud-based Software-as-a-Service (“
SaaS
”) solution; thereby, eliminating complex IT
deployment of biometric software and eliminating startup costs.
GoVerifyID works with existing mobile devices, eliminating the need
for specialized biometric scanning devices typically used with most
biometric solutions.
GoVerifyID was built to work seamlessly with our patented
technology portfolio, including GoMobile Interactive®, the
secure dynamic messaging system, and the ultra-scalable IWS
Biometric Engine that provides anonymous biometric matching and
storage. GoVerifyID is secure, simple to use, and designed to
provide instant identity authentication by engaging with the
biometric capture capabilities of each user’s mobile device.
GoVerifyID also provides a fully open SDK for organizations that
require the utmost in flexibility.
Our GoVerifyID Enterprise Suite for Windows easily and seamlessly
integrates with a user’s existing Microsoft
ecosystem/infrastructure to support the user’s extended
workforce. GoVerifyID Enterprise Suite secures corporate networks
from end-to-end – both applications and data – on
client, server, and cloud systems with flexible user login policies
to address varied trust requirements. Our GoVerifyID Enterprise
Suite works with the smart devices that the workforce already uses,
including iOS/Android smartphones and tablets.
Our GoVerifyID Enterprise Suite for Windows provides biometric
authentication for the Microsoft ecosystem that secures enterprise
security without compromising agility, productivity, or user
experience. Its comprehensive architecture offers biometric
authentication for the complete range of enterprise stakeholders,
delivering secure enterprise applications and workspaces to
internal employees, partners, suppliers and vendors, even
customers. Out-of-band authentication is provided via universally
available devices, such as smartphones and tablets. In-band
authentication can be enabled via fingerprint readers, iris
scanners, and any Windows Biometric Framework compatible device.
The server component provides easy centralized management of
biometric authentication policies for all users, using a standard
Snap-In to the Microsoft Management Console. It provides greater
user assurance and Single Sign-On (“
SSO
”) convenience for all corporate systems and
cloud applications. There is no compromise in agility or user
experience.
GoVerifyID Enterprise Suite also provides options for seamless
integration with leading Enterprise Identity and Access Management
(“
IAM
”) solutions including CA SSO, IBM Security
Access Manager (“
ISAM
”), SAP Cloud Platform, and HPE’s
Aruba ClearPass. These turnkey integrations provide multi-modal
biometric authentication to replace or augment passwords for use
with enterprise and consumer class systems.
Our pillphone® Platform:
●
Improves
medication adherence and manages chronic conditions by enriching
the relationship between the care team and the patient via its
enterprise level, mobile communication platform;
●
Digitally
connects healthcare providers with patients and provides support
when the patients are outside of the medical facility;
●
Streamlines
workflows and improves care team communication and collaboration
with the patient by offering personalized, two-way interactive,
secure messaging and real-time remote medication monitoring;
and
●
Enhances
the human connection of the care team that is essential for quality
patient-centered care.
Risk Factors
Our business is subject to substantial risk. Please carefully
consider the section titled “
Risk
Factors
” on page 5
of this prospectus for a discussion of
the factors you should carefully consider before deciding to
purchase securities that may be offered by this
prospectus.
Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business
operations. You should be able to bear a complete loss of your
investment.
Corporate Information
We were incorporated in the state of Delaware in 2005, and
previously incorporated in California in 1987 as a California
corporation. Our principal place of business is located at 10815
Rancho Bernardo Road, Suite 310, San Diego, California 92127. Our
telephone number is (858) 673-8600. We maintain a corporate website
at
http://www.iwsinc.com
.
The
information contained on our website is not, and should not be
interpreted to be, a part of this prospectus.
Investing in our securities involves a high degree of risk. Before
deciding whether to purchase any of our securities, you should
carefully consider the risks and uncertainties described under
“
Risk
Factors
” in our Annual
Report on Form 10-K for the fiscal year ended
December 31, 2017, any subsequent Quarterly Report on
Form 10-Q and our other filings with the SEC, all of which are
incorporated by reference herein. If any of these risks actually
occur, our business, financial condition and results of operations
could be materially and adversely affected and we may not be able
to achieve our goals, the value of our securities could decline and
you could lose some or all of your investment. Additional risks not
presently known to us or that we currently deem immaterial may also
impair our business operations. If any of these risks occur, the
trading price of our securities could decline materially and you
could lose all or part of your investment
.
CAUTIONARY NOTES REGA
R
DING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
substantial risks and uncertainties. All statements contained in
this prospectus other than statements of historical facts,
including statements regarding our strategy, future operations,
future financial position, future revenue, projected costs,
prospects, plans, objectives of management and expected market
growth, are forward-looking statements. These statements involve
known and unknown risks, uncertainties and other important factors
that may cause our actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements.
The words “anticipate,” “believe,”
“estimate,” “expect,” “intend,”
“may,” “plan,” “predict,”
“project,” “target,”
“potential,” “will,” “would,”
“could,” “should,” “continue,”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. These forward-looking statements include,
among other things, statements about:
●
the
availability of capital to satisfy our working capital
requirements;
●
the
accuracy of our estimates regarding expenses, future revenues and
capital requirements;
●
anticipated
trends and challenges in our business and the markets in which we
operate;
●
our
ability to anticipate market needs or develop new or enhanced
products to meet those needs;
●
our
expectations regarding market acceptance of our
products;
●
the
success of competing products by others that are or become
available in the market in which we sell our products;
●
our
ability to protect our confidential information and intellectual
property rights;
●
our
ability to manage expansion into international
markets;
●
our
ability to maintain or broaden our business relationships and
develop new relationships with strategic alliances, suppliers,
customers, distributors or otherwise;
●
developments
in the U.S. and foreign countries; and
●
other risks and uncertainties, including
those
described under Item
1A, “
Risk
Factors
,” in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2017,
which risk factors are incorporated herein by
reference
.
These forward-looking statements are only predictions and we may
not actually achieve the plans, intentions or expectations
disclosed in our forward-looking statements, so you should not
place undue reliance on our forward-looking statements. Actual
results or events could differ materially from the plans,
intentions and expectations disclosed in the forward-looking
statements we make. We have based these forward-looking statements
largely on our current expectations and projections about future
events and trends that we believe may affect our business,
financial condition and operating results. We have included
important factors in the cautionary statements included in this
prospectus, as well as certain information incorporated by
reference into this prospectus, that could cause actual future
results or events to differ materially from the forward-looking
statements that we make. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers,
dispositions, joint ventures or investments we may
make.
You should read this prospectus with the understanding that our
actual future results may be materially different from what we
expect. We do not assume any obligation to update any
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by applicable
law.
Unless we state otherwise in an accompanying prospectus supplement,
we intend to use the net proceeds from the sale of the securities
offered by us under this prospectus and any related prospectus
supplement for general corporate purposes including, but not
limited to, capital expenditures, repayment of indebtedness, and
additions to working capital. We cannot currently allocate
specific percentages of the net proceeds that we may use for the
purposes specified above. When a particular series of securities is
offered, the prospectus supplement relating to that series will set
forth our intended use for the net proceeds we receive from the
sale of those securities. Pending the application of the net
proceeds, we intend to invest the net proceeds in short- and
intermediate-term, interest-bearing obligations, investment-grade
instruments, certificates of deposit or direct or guaranteed
obligations of the U.S. government.
DESCRIPTION OF SECUR
I
TIES THAT MAY BE OFFERED
General
Our certificate of incorporation, as amended (our
“
Charter
”), authorizes the issuance of up to
175,000,000 shares of our common stock, $0.01 par value per share,
and 4,000,000 shares of preferred stock, $0.01 par value per
share.
As of June 27, 2018 we had
95,180,459
shares
of common stock issued and outstanding. Our authorized but unissued
shares of common stock are available for issuance without action by
our stockholders. All shares of common stock now outstanding are
fully paid and non-assessable. In addition, our Board of Directors
has designated two series of preferred stock, Series A Convertible
Preferred (“
Series A
Preferred
”) and Series B
Convertible Redeemable Stock (“
Series B
Preferred
”). As of June
27, 2018, there were 31,021 designated shares of Series A
Preferred, 30,571 of which are issued and outstanding, and 750,000
shares designated as Series B Preferred, of which 239,400 shares
are issued and outstanding.
We may elect or be required to amend our Charter to increase the
number of shares of common stock authorized for issuance prior to
completing sales of shares of our common stock, or securities
convertible and/or exchangeable into shares of our common stock
described in this prospectus.
Transfer Agent
The transfer agent and registrar for our common stock is
Computershare Trust Company, N.A. The transfer agent and
registrar’s address is 250 Royall Street, Canton,
Massachusetts 02021.
Common Stock
This section describes the general terms of our common stock that
we may offer from time to time. For more detailed information, a
holder of our common stock should refer to our Charter and our
bylaws, copies of which are filed with the SEC as exhibits to the
registration statement of which this prospectus is a
part.
Except as otherwise expressly provided in our Charter, or as
required by applicable law, all shares of our common stock have the
same rights and privileges and rank equally, share ratably and are
identical in all respects as to all matters, including, without
limitation, those described below. All outstanding shares of common
stock are fully paid and nonassessable.
The holders of our common stock have equal ratable rights to
dividends from funds legally available, when, as and if declared by
our Board of Directors. To date, we have not paid any
dividends on our common stock. Holders of common stock are also
entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation,
dissolution or winding up of the affairs. The holders of our common
stock have no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions
applicable to our common stock.
Each holder of common stock is entitled to one vote for each share
of common stock held on all matters submitted to a vote of the
stockholders, including the election of directors.
The holders of shares
of common stock do not have cumulative voting rights, which means
that the holders of more than 50% of such outstanding shares,
voting for the election of directors, can elect all of the
directors to be elected, if they so choose and in such event, the
holders of the remaining shares will not be able to elect any of
our directors. The holders of 50% percent of the outstanding
common stock constitute a quorum at any meeting of shareholders,
and the vote by the holders of a majority of the outstanding shares
are required to effect certain fundamental corporate changes, such
as liquidation, merger or amendment of our
Charter.
Preferred Stock
This section describes the general terms and provisions of our
outstanding shares of preferred stock, as well as preferred stock
that we may offer from time to time. The applicable prospectus
supplement will describe the specific terms of the shares of
preferred stock offered through that prospectus supplement, which
may differ from the terms we describe below. We will file a
copy of the certificate of designation that contains the terms of
each new series of preferred stock with the SEC each time we issue
a new series of preferred stock, and these certificates of
designation will be incorporated by reference into the registration
statement of which this prospectus is a part. Each certificate of
designation will establish the number of shares included in a
designated series and fix the designation, powers, privileges,
preferences and rights of the shares of each series as well as any
applicable qualifications, limitations or restrictions. A holder of
our preferred stock should refer to the applicable certificate of
designation, our Charter and the applicable prospectus supplement
(and any related free writing prospectus that we may authorize to
be provided to you) for more specific information.
Our Board of Directors has the authority, without action by our
stockholders to designate and issue preferred stock in one or more
series and to designate the rights, preferences and privileges of
each series, which may be greater than the rights of our common
stock. It is not possible to state the actual effect of the
issuance of any shares of our preferred stock upon the rights of
holders of our common stock until our Board of Directors determines
the specific rights of the holders of our preferred stock. However,
the effects might include, among other things:
●
restricting
dividends on our common stock;
●
diluting
the voting power of our common stock;
●
impairing
the liquidation rights of our common stock; or
●
delaying
or preventing a change in control of our Company without further
action by our stockholders.
Series A Preferred
On September 15, 2017, our Board designated 31,021 shares of our
authorized but unissued shares of preferred stock as Series A
Preferred.
S
hares
of Series A Preferred accrue dividends at a rate of 8% per annum if
paid in cash, and 10% per annum if paid by the issuance of shares
of our common stock. Each share of Series A Preferred has a
liquidation preference of $1,000 per share and is convertible, at
the option of the holder, into that number of shares of the
Company’s common stock equal to the Liquidation Preference,
divided by $1.15. Each holder of the Series A Preferred is entitled
to vote on all matters, together with the holders of our common
stock, on an as converted basis.
The holders of Series A Preferred may elect to convert shares of
Series A Preferred into shares of our common stock
(“
Conversion
Shares
”) at any time. In
the event the volume-weighted average price
(“
VWAP
”) of the our common stock is at least $2.15
per share for at least 20 consecutive trading days, we may elect to
convert one-half of the shares of Series A Preferred issued and
outstanding, on a pro-rata basis, into Conversion Shares, or, if
the VWAP of our Common Stock is at least $2.15 for 80 consecutive
trading days, we may convert all issued and outstanding shares of
Series A Preferred into Conversion Shares. In addition, in the
event of a Change of Control, we will have the option to redeem all
issued and outstanding shares of Series A Preferred for 115% of the
Liquidation Preference per share.
The Company had 30,571 shares of Series A Preferred outstanding as
of June 27, 2018 and cumulative undeclared dividends of
approximately $720,000.
Series B Preferred
In April 1995, our Charter was amended to designate 750,000
shares of Series B Preferred stock for issuance. Every 5.275
shares of Series B Preferred is convertible into one share of our
common stock.
The holders of Series B Preferred are entitled to cumulative
preferred dividends payable at the rate of $0.2125 per share, per
annum, subject to legally available funds. Shares of Series B
Preferred and accrued but unpaid dividends are convertible at the
option of the holder into shares of common stock at a conversion
price equal to the original Series B Preferred issue price, as
adjusted to prevent dilution.
The holders of Series B Preferred, on an as-converted basis, have
the same voting rights per share as common stock;
provided,
however,
that the holders of
Series B Preferred have a special right to elect one director if
the Company defaults in the payment of any dividend to the holders
of Series B Preferred. The holders of Series B Preferred are
entitled to initial distributions of $2.50 per share of Series B
Preferred outstanding, upon liquidation and in preference to common
shares and any other series of preferred stock plus all
accrued but unpaid dividends.
The Company presently has the right to redeem all or some of the
outstanding shares of Series B Preferred at a price equal to the
original issue price, plus all accrued but unpaid
dividends.
The Company had 239,400 shares of Series B Preferred outstanding as
of June 27, 2018, and cumulative undeclared dividends of
approximately $8,000.
Warrants
The following description, together with the additional information
we include in any applicable prospectus supplements or free writing
prospectus, summarizes the material terms and provisions of the
warrants that we may offer under this prospectus. Warrants may be
offered independently or together with common stock or preferred
stock offered by any prospectus supplement or free writing
prospectus, and may be attached to or separate from those
securities. While the terms we have summarized below will generally
apply to any future warrants we may offer under this prospectus, we
will describe the particular terms of any warrants that we may
offer in more detail in the applicable prospectus supplement or
free writing prospectus. The terms of any warrants we offer under a
prospectus supplement or free writing prospectus may differ from
the terms we describe below.
In the event that we issue warrants, we will issue the warrants
under a warrant agreement, which we will enter into with a warrant
agent to be selected by us. Forms of these warrant agreements and
forms of the warrant certificates representing the warrants, and
the complete warrant agreements and forms of warrant certificates
containing the terms of the warrants being offered, will be filed
as exhibits to the registration statement of which this prospectus
is a part or will be incorporated by reference from reports that we
file with the SEC. We use the term “warrant agreement”
to refer to any of these warrant agreements. We use the term
“warrant agent” to refer to the warrant agent under any
of these warrant agreements. The warrant agent will act solely as
an agent of ours in connection with the warrants and will not act
as an agent for the holders or beneficial owners of the
warrants.
The following summaries of material provisions of the warrants and
the warrant agreements are subject to, and qualified in their
entirety by reference to, all the provisions of the warrant
agreement applicable to a particular series of warrants. We urge
you to read the applicable prospectus supplements or free writing
prospectus related to the warrants that we sell under this
prospectus, as well as the complete warrant agreements that contain
the terms of the warrants.
General
We will describe in the applicable prospectus supplement or free
writing prospectus the terms relating to a series of warrants. If
warrants for the purchase of common stock or preferred stock are
offered, the prospectus supplement or free writing prospectus will
describe the following terms, to the extent
applicable:
●
the
offering price and the aggregate number of warrants
offered;
●
the
total number of shares that can be purchased if a holder of the
warrants exercises them and, in the case of warrants for preferred
stock, the designation, total number and terms of the series of
preferred stock that can be purchased upon exercise;
●
the
designation and terms of any series of preferred stock with which
the warrants are being offered and the number of warrants being
offered with each share of common stock or preferred
stock;
●
the
date on and after which the holder of the warrants can transfer
them separately from the related common stock;
●
the
number of shares of common stock or preferred stock that can be
purchased if a holder exercises the warrant and the price at which
such common stock or preferred stock may be purchased upon
exercise, including, if applicable, any provisions for changes to
or adjustments in the exercise price and in the securities or other
property receivable upon exercise;
●
the
terms of any rights to redeem or call, or accelerate the expiration
of, the warrants;
●
the
date on which the right to exercise the warrants begins and the
date on which that right expires;
●
federal
income tax consequences of holding or exercising the warrants;
and
●
any
other specific terms, preferences, rights or limitations of, or
restrictions on, the warrants.
Exercise of Warrants
Each holder of a warrant is entitled to purchase the number of
shares of common stock or preferred stock, as the case may be, at
the exercise price described in the applicable prospectus
supplement or free writing prospectus. After the close of business
on the day when the right to exercise terminates (or a later date
if we extend the time for exercise), unexercised warrants will
become void.
A holder of warrants may exercise them by following the general
procedure outlined below:
●
delivering
to the warrant agent the payment required by the applicable
prospectus supplement or free writing prospectus to purchase the
underlying security;
●
properly
completing and signing the reverse side of the warrant certificate
representing the warrants; and
●
delivering
the warrant certificate representing the warrants to the warrant
agent within five business days of the warrant agent receiving
payment of the exercise price.
If you comply with the procedures described above, your warrants
will be considered to have been exercised when the warrant agent
receives payment of the exercise price, subject to the transfer
books for the securities issuable upon exercise of the warrant not
being closed on such date. After you have completed those
procedures and subject to the foregoing, we will, as soon as
practicable, issue and deliver to you the common stock or preferred
stock that you purchased upon exercise. If you exercise fewer than
all of the warrants represented by a warrant certificate, a new
warrant certificate will be issued to you for the unexercised
amount of warrants. Holders of warrants will be required to pay any
tax or governmental charge that may be imposed in connection with
transferring the underlying securities in connection with the
exercise of the warrants.
Amendments and Supplements to the Warrant Agreements
We may amend or supplement a warrant agreement without the consent
of the holders of the applicable warrants to cure ambiguities in
the warrant agreement, to cure or correct a defective provision in
the warrant agreement, or to provide for other matters under the
warrant agreement that we and the warrant agent deem necessary or
desirable, so long as, in each case, such amendments or supplements
do not materially adversely affect the interests of the holders of
the warrants.
Warrant Adjustments
Unless the applicable prospectus supplement or free writing
prospectus states otherwise, the exercise price of, and the number
of securities covered by, a common stock warrant or a preferred
stock warrant will be adjusted proportionately if we subdivide or
combine our common stock or preferred stock, as applicable. In
addition, unless the prospectus supplement or free writing
prospectus states otherwise, if we, without receiving
payment:
●
issue
capital stock or other securities convertible into or exchangeable
for common stock or preferred stock, or any rights to subscribe
for, purchase or otherwise acquire any of the foregoing, as a
dividend or distribution to holders of our common stock or
preferred stock;
●
pay
any cash to holders of our common stock or preferred stock other
than a cash dividend paid out of our current or retained earnings
or other than in accordance with the terms of the preferred
stock;
●
issue
any evidence of our indebtedness or rights to subscribe for or
purchase our indebtedness to holders of our common stock or
preferred stock; or
●
issue
common stock or preferred stock or additional stock or other
securities or property to holders of our common stock or preferred
stock by way of spinoff, split-up, reclassification, combination of
shares or similar corporate rearrangement,
then the holders of common stock warrants and preferred stock
warrants, as applicable, will be entitled to receive upon exercise
of the warrants, in addition to the securities otherwise receivable
upon exercise of the warrants and without paying any additional
consideration, the amount of stock and other securities and
property such holders would have been entitled to receive had they
held the common stock or preferred stock, as applicable, issuable
under the warrants on the dates on which holders of those
securities received or became entitled to receive such additional
stock and other securities and property.
Except as stated above or as otherwise set forth in the applicable
prospectus supplement or free writing prospectus, the exercise
price and number of securities covered by a common stock warrant
and preferred stock warrant, and the amounts of other securities or
property to be received, if any, upon exercise of such warrants,
will not be adjusted or provided for if we issue those securities
or any securities convertible into or exchangeable for those
securities, or securities carrying the right to purchase those
securities or securities convertible into or exchangeable for those
securities.
Holders of common stock warrants and preferred stock warrants may
have additional rights under the following
circumstances:
●
certain
reclassifications, capital reorganizations or changes of the common
stock or preferred stock, as applicable;
●
certain
share exchanges, mergers, or similar transactions involving us and
which result in changes of the common stock or preferred stock, as
applicable; or
●
certain
sales or dispositions to another entity of all or substantially all
of our property and assets.
If one of the above transactions occurs and holders of our common
stock or preferred stock are entitled to receive stock, securities
or other property with respect to or in exchange for their
securities, the holders of the common stock warrants and preferred
stock warrants then outstanding, as applicable, will be entitled to
receive upon exercise of their warrants the kind and amount of
shares of stock and other securities or property that they would
have received upon the applicable transaction if they had exercised
their warrants immediately before the transaction.
Units
This section outlines some of the provisions of the units and the
unit agreements. This information may not be complete in all
respects and is qualified entirely by reference to the unit
agreement with respect to the units of any particular series. The
specific terms of any series of units will be described in the
applicable prospectus supplement or free writing prospectus. If so
described in a particular prospectus supplement or free writing
prospectus, the specific terms of any series of units may differ
from the general description of terms presented below.
As specified in the applicable prospectus supplement, we may issue
units consisting of one or more shares of common stock, shares of
preferred stock, warrants or any combination of such
securities.
The applicable prospectus supplement will specify the following
terms of any units in respect of which this prospectus is being
delivered:
●
the
terms of the units and of any of the shares of common stock, shares
of preferred stock, or warrants comprising the units, including
whether and under what circumstances the securities comprising the
units may be traded separately;
●
a
description of the terms of any unit agreement governing the
units;
●
if
appropriate, a discussion of material U.S. federal income tax
considerations; and
●
a
description of the provisions for the payment, settlement, transfer
or exchange of the units.
DESCRIPTION OF CERT
AIN PROVISIONS OF DELAWARE LAW
AND
OUR CHARTER AND BYLAWS
Certain provisions of Delaware law, our Charter and bylaws
discussed below may have the effect of making more difficult or
discouraging a tender offer, proxy contest or other takeover
attempt. These provisions are expected to encourage persons seeking
to acquire control of our company to first negotiate with our Board
of Directors. We believe that the benefits of increasing our
ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure our company outweigh
the disadvantages of discouraging these proposals because
negotiation of these proposals could result in an improvement of
their terms.
Delaware Anti-Takeover Law.
We are subject to Section 203 of the Delaware General
Corporation Law. Section 203 generally prohibits a public
Delaware corporation from engaging in a “business
combination” with an “interested stockholder” for
a period of three years after the date of the transaction in which
the person became an interested stockholder, unless:
●
prior
to the date of the transaction, the Board of Directors of the
corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an
interested stockholder;
●
upon
consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding
specified shares; or
●
at or
subsequent to the date of the transaction, the business combination
is approved by the Board of Directors and authorized at an annual
or special meeting of stockholders, and not by written consent, by
the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested
stockholder.
Section 203 defines a “business combination” to
include:
●
any
merger or consolidation involving the corporation and the
interested stockholder;
●
any
sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 10% or more of the assets of the corporation to or
with the interested stockholder;
●
subject
to exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder;
●
subject
to exceptions, any transaction involving the corporation that has
the effect of increasing the proportionate share of the stock of
any class or series of the corporation beneficially owned by the
interested stockholder; or
●
the
receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided
by or through the corporation.
In general, Section 203 defines an “interested
stockholder” as any person that is:
●
the
owner of 15% or more of the outstanding voting stock of the
corporation;
●
an
affiliate or associate of the corporation who was the owner of 15%
or more of the outstanding voting stock of the corporation at any
time within three years immediately prior to the relevant date;
or
●
the
affiliates and associates of the above.
Under specific circumstances, Section 203 makes it more
difficult for an “interested stockholder” to effect
various business combinations with a corporation for a three-year
period, although the stockholders may, by adopting an amendment to
the corporation’s certificate of incorporation or bylaws,
elect not to be governed by this section, effective 12 months after
adoption.
Our Charter and bylaws do not exclude us from the restrictions of
Section 203. We anticipate that the provisions of
Section 203 might encourage companies interested in acquiring
us to negotiate in advance with our Board of Directors since the
stockholder approval requirement would be avoided if a majority of
the directors then in office approve either the business
combination or the transaction that resulted in the stockholder
becoming an interested stockholder.
Charter and Bylaws.
Provisions of our Charter and bylaws may delay or discourage
transactions involving an actual or potential change of control or
change in our management, including transactions in which
stockholders might otherwise receive a premium for their shares, or
transactions that our stockholders might otherwise deem to be in
their best interests. Therefore, these provisions could adversely
affect the price of our common stock. Among other things, our
Charter and bylaws:
●
permit
our Board of Directors to issue up to 4,000,000 shares of preferred
stock, with any rights, preferences and privileges as they may
designate (including the right to approve an acquisition or other
change of control);
●
provide
that the authorized number of directors may be changed only by the
vote of a majority of the Company’s shareholders at a
properly convened annual meeting, or by the written consent of a
majority of the Company’s shareholders, or by the Board of
Directors;
●
provide
that all vacancies, including newly created directorships, may,
except as otherwise required by law, be filled by the affirmative
vote of a majority of directors then in office, even if less than a
quorum;
●
provide
that stockholders seeking to present proposals before a meeting of
stockholders or to nominate candidates for election as directors at
a meeting of stockholders must provide advance notice in writing,
and also specify requirements as to the form and content of a
stockholder’s notice; and
●
do not
provide for cumulative voting rights (therefore allowing the
holders of a majority of the shares of common stock entitled to
vote in any election of directors to elect all of the directors
standing for election, if they should so choose).
We may sell the securities described in this prospectus to or
through underwriters or dealers, through agents, or directly to one
or more purchasers. A prospectus supplement or supplements (and any
related free writing prospectus that we may authorize to be
provided to you) will describe the terms of the offering of the
securities, including, to the extent applicable:
●
the
name or names of any underwriters, dealers or agents, if
applicable;
●
the
purchase price of the securities and the proceeds we will receive
from the sale;
●
any
over-allotment options under which underwriters may purchase
additional securities from us;
●
any
agency fees or underwriting discounts and other items constituting
agents’ or underwriters’ compensation;
●
any
public offering price;
●
any
discounts or concessions allowed or re-allowed or paid to dealers;
and
●
any
securities exchange or market on which the securities offered in
the prospectus supplement may be listed.
Only those underwriters identified in such prospectus supplement
are deemed to be underwriters in connection with the securities
offered by the prospectus supplement.
If underwriters are used in the sale, they will acquire the
securities for their own account and may resell the securities from
time to time in one or more transactions at a fixed public offering
price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the securities will be
subject to the conditions set forth in the applicable underwriting
agreement. We may offer the securities to the public through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Subject to certain conditions,
the underwriters will be obligated to purchase all of the
securities offered by the prospectus supplement. Any public
offering price and any discounts or concessions allowed or
reallowed or paid to dealers may change from time to time. We may
use underwriters with whom we have a material relationship. We will
describe in the prospectus supplement that names the underwriter,
the nature of any such relationship.
We may sell securities directly or through agents we designate from
time to time. We will name any agent involved in the offering and
sale of securities, and we will describe any commissions we will
pay the agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, our agent will act on a best-efforts
basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by
certain types of institutional investors to purchase securities
from us at the public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. We will
describe the conditions to these contracts and the commissions we
must pay for solicitation of these contracts in the prospectus
supplement.
We may provide agents and underwriters with indemnification against
civil liabilities related to this offering, including liabilities
under the Securities Act of 1933, as amended, or contribution with
respect to payments that the agents or underwriters may make with
respect to these liabilities. Agents and underwriters may engage in
transactions with, or perform services for, us in the ordinary
course of business.
Any underwriters or agents that are qualified market makers on the
OTCQB Marketplace may engage in passive market making transactions
in the securities on the OTCQB Marketplace in accordance with
Regulation M under the Exchange Act, during the business day prior
to the pricing of the offering, before the commencement of offers
or sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified as
passive market makers. In general, a passive market maker must
display its bid at a price not in excess of the highest independent
bid for such security; if all independent bids are lowered below
the passive market maker’s bid, however, the passive market
maker’s bid must then be lowered when certain purchase limits
are exceeded. Passive market making may stabilize the market price
of the securities at a level above that which might otherwise
prevail in the open market and, if commenced, may be discontinued
at any time.
In compliance with guidelines of the Financial Industry Regulatory
Authority, Inc. (“
FINRA
”), the maximum consideration or discount to
be received by any FINRA member or independent broker dealer may
not exceed 8% of the aggregate amount of the securities offered
pursuant to this prospectus and any applicable prospectus
supplement.
Certain legal matters in connection with this offering will be
passed upon for us by Disclosure Law Group, a Professional
Corporation, of San Diego, California.
Our consolidated financial statements appearing in our Annual
Report on Form 10-K for the year ended December 31, 2017, and
the effectiveness of our internal control over financial reporting
as of December 31, 2017, have been audited by Mayer Hoffman
McCann P.C.
of San Diego,
California
, an independent
registered public accounting firm, as set forth in their reports
thereon. Such consolidated financial statements are incorporated
herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and
auditing.
WHERE YOU CAN FI
N
D MORE
INFORMATION
We are a public company and file annual, quarterly and special
reports, proxy statements and other information with the
SEC
. You may read and copy any
document we file at the SEC’s public reference room at 100 F
Street, NE, Washington, D.C. 20549. You can request copies of these
documents by writing to the SEC and paying a fee for the copying
cost. Please call the SEC at 1-800-SEC-0330 for more information
about the operation of the public reference room. Our SEC filings
are also available, at no charge, to the public at the SEC’s
web site at
http://www.sec.gov
.
INCORPORATION
OF
CERT
A
IN INFORMATION BY
REFERENCE
The following documents filed by us with the SEC are incorporated
by reference in this prospectus:
●
|
Annual
Report on Form 10-K for the fiscal year ended December 31, 2017,
filed on March 19, 2018;
|
●
|
Quarterly
Report on Form 10-Q for the quarter ended March 31, 2018 filed on
May 10, 2018;
|
●
|
Current
Report on Form 8-K, filed February 13, 2018; and
|
●
|
The
description of our common stock contained in the Registration
Statement on Form 8-A filed pursuant to Section 12(b) of the
Exchange Act on March 21, 2000, including any amendment or report
filed with the SEC for the purpose of updating this
description.
|
We also incorporate by reference all documents we file pursuant to
Section 13(a), 13(c), 14 or 15 of the Exchange Act (other than any
portions of filings that are furnished rather than filed pursuant
to Items 2.02 and 7.01 of a Current Report on Form 8-K) after the
date of the initial registration statement of which this prospectus
is a part and prior to effectiveness of such registration
statement. All documents we file in the future pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus and prior to the termination of the offering are
also incorporated by reference and are an important part of this
prospectus.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this registration statement to the
extent that a statement contained herein or in any other
subsequently filed document which also is or deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this registration statement.
We will provide to each person, including any beneficial owner, to
whom a prospectus is delivered, a copy of any or all of the
information that has been incorporated by reference in the
prospectus but not delivered with the prospectus. You may request a
copy of these filings, excluding the exhibits to such filings which
we have not specifically incorporated by reference in such filings,
at no cost, by writing to or calling us at:
ImageWare Systems, Inc.
Attn: Corporate Secretary
10815 Rancho Bernardo Road, Suite 310
San Diego, California 92127
(858) 673-8600
This prospectus is part of a registration statement we filed with
the SEC. You should only rely on the information or representations
contained in this prospectus and any accompanying prospectus
supplement. We have not authorized anyone to provide information
other than that provided in this prospectus and any accompanying
prospectus supplement. We are not making an offer of the securities
in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any accompanying
prospectus supplement is accurate as of any date other than the
date on the front of the document.
5,954,545
Shares of Common Stock
_______________________________
Prospectus Supplement
_______________________________
Needham & Company
April 29, 2019
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