Imageware Systems Inc (OTCMKTS:IWSY) Is Back Online

It’s been 45 days since Imageware Systems Inc (OTCMKTS:IWSY) came up with their latest press release on May 10 and that’s quite a lot of time in Pennyland. How much exactly?

Take Northumberland Resources Inc (OTCMKTS:NHUR), for example. During the same period they went from $0.95 per share, all the way to $1.81, then down to $0.66 and after an impressive 25% run from yesterday, up to $1.03. Biozoom Inc (OTCBB:BIZM) is another company that illustrates the volatility of penny stocks perfectly. Between May 10 and yesterday the ticker experienced nothing short of a roller coaster ride going from $1.10 up to the 52-week high of $4.50 and then down to yesterday’s close of $3.25.

That said, IWSY did move quite a lot after their latest press release as well. On May 10 they stood at around $1.47 per share and at one point, they reached as high as $2.44 but after some hesitation they settled at $2.17. As you might have imagined, the volume was also pretty high, but there is one major difference between BIZM and NHUR and IWSY. While the former two received an extensive (and expensive) promotional coverage, we have yet to intercept any emails about IWSY. There seems to be no landing pages and hard mailers, as well, which is quite perplexing.

Even so, the prolonged excitement leads us to believe that there is someone out there raising awareness around the ticker. Having gone through message boards, websites and all sorts of articles we stumbled upon this one published on a website called StockGumshoe.com and according to the author, Mr. Travis Johnson, IWSY are featured in a report written by Louise Basesese and Wall Street Daily. Is that a bad thing, however?

Well, if IWSY do follow in BIZM‘s and NHUR‘s footsteps, then we reckon that when all is said and done, the management team will have to face the anger of the shareholders, but that said, Mr. Basenese doesn’t appear to be one of the regular pumpers who issue reports full of optimistic promises about penny stock ventures with a dubious past and an even more dubious future. Not least because IWSY are, in fact, a serious company with real operations and the contract that they signed with Fujitsu should be enough of a proof.

Things are not all rosy, though. In our previous articles, we wrote about IWSY‘s financials and we mentioned that although they are a lot better off than most of the small cap ventures that we deal with on these pages, there is still a lot to be desired.

Things get even more disturbing when you compare the results featured in their latest 10-Q to the ones from the previous periods. Below you can find the most important figures from the reports for the first quarter of 2013 and the third quarter of 2012 put side by side:

• cash: $2.2 million (Q1 2013) vs $5.3 million (Q3 2012)
• current assets: $3.2 million (Q1 2013) vs $6.6 million (Q3 2012)
• current liabilities: $3.4 million (Q1 2013) vs $3.8 million (Q3 2012)
• quarterly revenue: $856 thousand (Q1 2013) vs $938 thousand (Q3 2012)
• quarterly net loss: $2.7 million (Q1 2013) vs $2.7 million (Q3 2012)

You can see that while they’ve managed to decrease the liabilities by a little bit, the revenues have also shrunk and they used quite a lot of cash over the six months between the reports. The movement from the last couple of weeks wouldn’t have been surprising if there was, for example a press release stating that IWSY have managed to deal with all these problems, but there seems to be no such thing. In any case, awareness seems to be raised and while this might not be a bad thing in its own right, you can never be 100% sure with penny stocks. That’s why research, due diligence and a lot of caution are advised.