10-K/A 1 a07-6044_510ka.htm 10-K/A

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 3)

x                              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2006.

o                                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period               to               .

Commission File Number

IMAGEWARE SYSTEMS, INC.

(Exact name of Registrant as Specified in its Charter)

Delaware

 

33-0224167

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

 

10883 Thornmint Road, San Diego, California

 

92127

(Address of Principal Executive Offices)

 

(Zip Code)

 

(Registrant’s telephone number, including area code):  (858) 673-8600

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Name of Each Exchange

Title of Each Class

 

on Which Registered

Common Stock, $0.01 par value

 

American Stock Exchange

Warrants to Purchase Common Stock

 

American Stock Exchange

 

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o     No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes x     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o     Accelerated filer o     Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing sales price of the issuer’s Common Stock on June 30, 2006, as reported on the American Stock Exchange was approximately $22,555,987. Excluded from this computation were 388,315 shares of Common Stock held by all current executive officers and directors and 1,586,987 shares held by each person who is known by the registrant to own 5% or more of the outstanding Common Stock. Share ownership information of certain persons known by the issuer to own greater than 5% of the outstanding Common Stock for purposes of the preceding calculation is based solely on information on Schedule 13G filed with the Commission and is as of June 30, 2006. Exclusion of shares held by any person or entity should not be construed to indicate that such person or entity possesses the power, directly or indirectly, to direct or cause the direction of the management or the policies of the Registrant.

The number of shares of the registrant’s common stock outstanding as of May 6, 2007 was 14,680,623.

DOCUMENTS INCORPORATED BY REFERENCE

None.

 



EXPLANATORY NOTE

This Amendment No. 3 on Form 10-K/A amends the Registrant’s Annual Report on Form 10-K, as filed by the Registrant on April 17, 2007 (the “Initial Form 10-K”), as amended by Amendment No. 1 to the Initial Form 10-K, as filed by the Registrant on April 30, 2007 (the “Amendment No. 1”) and Amendment No. 2 to the Initial Form 10-K, as filed by the Registrant on May 7, 2007 (the “Amendment No. 2”). This Amendment No. 3 is being filed solely to amend (i) Item 5 to consolidate the information previously provided under Item 5 in the Initial Form 10-K and Amendment No. 2 in accordance with Item 5 of Form 10-K and (ii) Item 12 to consolidate the information previously provided in the Initial Form 10-K, Amendment No. 1 and Amendment No. 2 in accordance with Item 12 of Form 10-K. The required certifications are included with this amendment as Exhibits 31.1 and 31.2 of this Amendment No. 3.

TABLE OF CONTENTS

PART II

 

 

 

 

Item 5.

 

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

 

PART III

 

 

 

 

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

 

PART IV

 

 

 

 

Item 15.

 

Exhibits and Financial Statement Schedules

 

 

Signatures

 

 

 

 

Exhibit Index

 

 

 

 

 

2



PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Common Stock trades under the symbol “IW” on the American Stock Exchange.

The following table sets forth the high and low sales prices per share for our Common Stock as reported by the American Stock Exchange for each quarter in 2005 and 2006:

2005 Fiscal Quarters

 

 

 

High

 

Low

 

First Quarter

 

$

3.380

 

$

2.190

 

Second Quarter

 

$

3.890

 

$

3.000

 

Third Quarter

 

$

3.390

 

$

2.150

 

Fourth Quarter

 

$

2.250

 

$

1.520

 

 

2006 Fiscal Quarters

 

 

 

High

 

Low

 

First Quarter

 

$

2.540

 

$

1.350

 

Second Quarter

 

$

2.560

 

$

1.580

 

Third Quarter

 

$

2.300

 

$

1.110

 

Fourth Quarter

 

$

2.250

 

$

1.200

 

 

There is no public trading market for our preferred stock.

Holders

As of March 25, 2007, there were approximately 2,400 holders of record of our Common Stock.

Dividends

We have never declared or paid dividends on our Common Stock and do not anticipate paying any cash dividends on our shares of Common Stock in the foreseeable future. We are obligated to pay cumulative cash dividends on shares of Series B Preferred Stock from legally available funds at the annual rate of $0.2125 per share, payable in two semi-annual installments of $0.10625 each, which cumulative dividends must be paid prior to payment of any dividend on our Common Stock.  The holders of our Series C Preferred Stock are entitled to receive cumulative dividends, at the option of the Company, payable (i) in common stock upon conversion of the Series C Preferred Stock, or (ii) in cash after the payment of cash dividends to the holders of our Series B Preferred Stock at the rate of 8% per annum (as a percentage of stated value per share).  As of December 31, 2006, the Company had cumulative undeclared dividends of approximately $9,000 relating to our Series B Preferred Stock and approximately $25,000 relating to our Series C Preferred Stock.

Repurchases

We did not repurchase any shares of our common stock during fiscal 2006.

Stock Performance Graph

The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934 except to the extent that we specifically incorporate it by reference into such filing.

3



The following performance graph compares ImageWare Systems, Inc.’s cumulative 5-year total shareholder return relative to the cumulative total returns of the S&P 500 Index and the AMEX Computer Technology Index.  The graph tracks the performance of a $100 investment in our common stock and each of the referenced indexes from January 1, 2001 through December 31, 2006.  The comparisons in the graph below are based on historical data and are not intended to forecast the possible performance of our common stock.

 

 

 

Dec. 31, 2001

 

Dec. 31, 2002

 

Dec. 31, 2003

 

Dec 31, 2004

 

Dec. 31, 2005

 

Dec. 31, 2006

 

ImageWare

 

$

100.00

 

$

44.27

 

$

43.54

 

$

44.12

 

$

28.45

 

$

24.67

 

S&P 500

 

$

100.00

 

$

76.63

 

$

96.85

 

$

105.56

 

$

108.73

 

$

123.54

 

AMEX Computer Technology Index

 

$

100.00

 

$

78.42

 

$

114.00

 

$

133.38

 

$

137.81

 

$

161.24

 

 

PART III

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the ownership of the Company’s common stock as of April 15, 2007 by: (i) each director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than five percent of its common stock.

 

 

Beneficial Ownership(1)

 

Name and Address of Beneficial Owner

 

 

 

Number of
Shares

 

Percent of
Class

 

S. James Miller, Jr.(2)

 

584,406

 

3.9

%

John Callan(3)

 

64,145

 

 

*

Patrick Downs(4)

 

68,032

 

 

*

G. Steve Hamm (5)

 

11,940

 

 

*

John Holleran(6)

 

22,533

 

 

*

David Loesch(7)

 

35,936

 

 

*

Wayne Wetherell(8)

 

263,265

 

1.8

%

William Willis (9)

 

141,500

 

 

*

Charles AuBuchon (10)

 

117,000

 

 

*

David Harding(11)

 

33,400

 

 

*

 

4



 

David Carey(12)

 

8,336

 

 

*

Gruber & McBaine Capital Management LLC
50 Osgood Place
San Francisco, CA(13)

 

3,673,045

 

25.2

%

Total Shares Held By Directors And Executive Officers

 

1,350,492

 

8.8

%

*                                         Less than one percent.

(1)                                  This table is based upon information supplied by officers, directors and principal shareholders and Form S-3 filed with the SEC on April 23, 2007. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the shareholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 14,543,341 shares of common stock outstanding on April 15, 2007, calculated on an as-converted basis and adjusted as required by rules promulgated by the SEC. Unless otherwise indicated, the address for each listed shareholder is c/o ImageWare Systems, Inc. 10883 Thornmint Road, San Diego, CA 92127.

(2)                                  Mr. Miller serves as Chairman of the Board of Directors and Chief Executive Officer of the Company. Includes 269,908 options exercisable within 60 days of the date reported and vesting of 9,141 shares within 60 days of the date reported.

(3)                                  Includes 24,145 options exercisable within 60 days of the date reported.

(4)                                  Includes 25,381 options exercisable within 60 days of the date reported.

(5)                                  Includes 11,940 options exercisable within 60 days of the date reported.

(6)                                  Includes 21,871 options exercisable within 60 days of the date reported.

(7)                                  Includes 26,936 options exercisable within 60 days of the date reported.

(8)                                  Includes 122,536 options exercisable within 60 days of the date reported and vesting of 4,383 shares within 60 days of the date reported.

 (9)                               Includes 141,500 options exercisable within 60 days of the date reported.

(10)                            Includes 97,000 options exercisable within 60 days of the date reported.

(11)                            Includes 33,400 options exercisable within 60 days of the date reported.

(12)                            Includes 3,336 options exercisable within 60 days of the date reported.

(13)                            Includes 635,864 shares issuable upon the exercise of warrants.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth additional information as of December 31, 2006 with respect to the shares of common stock that may be issued upon the exercise of options and other rights under our existing equity compensation plans and arrangements.  The information includes the number of shares covered by, and the weighted average exercise price of, outstanding options and other rights and the number of shares remaining available for future grants, excluding the shares to be issued upon exercise of outstanding options and other rights.

5



Equity Compensation Plan Information

Plan category

 

 

 

Number of securities to be issued
upon exercise of outstanding
options, warrants and rights

 

Weighted-average exercise price of
outstanding options, warrants and
rights

 

Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a))

 

 

 

(a)

 

(b)

 

(c)

 

Equity compensation plans approved by security holders:

 

 

 

 

 

 

 

1994 Employee Stock Option Plan

 

43,770

 

$2.15

 

—

 

1999 Stock Award Plan amended and restated as of June 7, 2005

 

1,291,572

 

$2.07

 

90,899

 

Equity compensation plans not approved by security holders:

 

 

 

 

 

 

 

2001 Equity Incentive Plan

 

420,606

 

$2.67

 

—

 

Total

 

1,755,948

 

$2.20

 

90,899

 

 

Description of Equity Compensation Plans Not Approved by Security Holders.

2001 Equity Incentive Plan.

On September 12, 2001, the Company’s Board of Directors adopted the 2001 Equity Incentive Plan (the “2001 Plan”). Under the terms of the 2001 Plan, the Company may issue stock awards to employees, directors and consultants of the Company, and such stock awards may be given for non-statutory stock options (options not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended), stock bonuses, and rights to acquire restricted stock. The number of options issued and outstanding and the number of options remaining available for future issuance are shown in the table above.

The 2001 Plan is administered by the Board of Directors or a Committee of the Board as provided in the 2001 Plan. Options granted under the 2001 Plan shall not be less than 85% of the market value of the Company’s common stock on the date of the grant, and, in some cases, may not be less than 110% of such fair market value. The term of options granted under the 2001 Plan as well as their vesting are determined by the Board and to date, options have been granted with a ten year term and vesting over a three year period. While the Board may suspend or terminate the 2001 Plan at any time, if not terminated earlier, it will terminate on the day before its tenth anniversary of the date of adoption.

6



PART IV

Item 15.   Exhibits and Financial Statement Schedules

(b)    Exhibits

 

                           The following exhibits are filed herewith:

 

Exhibit
Number

 

Description

31.1

 

Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a).

31.2

 

Certification of the Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) and 15d-14(a).

 

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

IMAGEWARE SYSTEMS, INC.

May 9, 2007

 

By:

 

/s/ Wayne G. Wetherell

 

 

 

 

Wayne G. Wetherell

 

 

 

 

Chief Financial Officer

 

7



EXHIBIT INDEX

Exhibit
Number

 

Description

31.1

 

Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a).

31.2

 

Certification of the Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) and 15d-14(a).

 

8