UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): ~~December~~June 293, ~~2021~~2022

IMAGEWARE SYSTEMS, INC.

(Exact name of Registrant as specified in its Charter)

Delaware	001-15757	33-0224167
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

11440 W. Bernardo Court, Suite 300 San Diego, California 92127
(Address of principal executive offices)

(858) 673-8600
(Registrant’s Telephone Number)

Not Applicable
(Former name or address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol(s)	Name of exchange on which registered
None	IWSY	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2) ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Item 1.01. Entry Into a Material Definitive Agreement.

On December 29, 2021 (the "Closing Date"), ImageWare Systems, Inc. (the "Company") entered into a Term Loan and Security Agreement (the "Agreement") with certain funds and separate accounts managed by Nantahala Capital Management, LLC (collectively, "Nantahala"), as lenders, and the other lenders set forth on the signature pages thereto (together with Nantahala, the "Lenders"), pursuant to which the Lenders will provide to the Company a secured term loan credit facility in an aggregate amount of up to $2.5 million (the "Credit Facility"). All loans (each a "Loan", and collectively, the "Loans") under the Credit Facility will bear interest at a rate of 12% for the initial six months after the Closing Date, and at 17% thereafter until the maturity date of 12 months from the Closing Date (the "Maturity Date"). All amounts borrowed by the Company under the Credit Facility are secured by a first-priority lien on all the assets of the Company. On the Closing Date, the Company received in initial draw-down on the Credit Facility of $0.6 million. The Company expects to use the proceeds from the Credit Facility for working capital requirements and corporate purposes.

~~The~~On ~~Company~~June ~~may~~3, ~~prepay~~2022 ~~amounts~~(the ~~borrowed~~"Exchange ~~under~~Date"), ~~the~~ImageWare ~~Credit~~Systems, ~~Facility~~Inc. in(the ~~whole~~"Company") orentered ininto ~~part~~an Exchange Agreement, atAmendment aand ~~price~~Waiver ~~equal~~(the to“Exchange ~~105%~~Agreement”) ofwith ~~the~~certain ~~principal~~funds ~~amount~~and ~~borrowed~~separate ~~under~~accounts ~~the~~managed ~~Credit~~by ~~Facility~~Nantahala ~~(including~~Capital ~~any~~Management, ~~interest~~LLC ~~capitalized~~(collectively, ~~thereon~~"Nantahala")~~. Upon~~, ~~the~~which ~~occurrence~~amended ~~of:~~and ~~(I)~~supplemented ~~any~~that ~~Debt~~certain ~~Issuances,~~Term ~~Dispositions,~~Loan orand ~~Equity~~Security ~~Interests~~Agreement (~~each~~ as ~~defined~~amended inand supplemented, the "Loan Agreement"), dated December 29, 2021, by and between the Company ~~must~~and ~~prepay~~Nantahala, ~~the~~pursuant ~~Loans~~to inwhich anNantahala ~~aggregate~~was ~~amount~~to ~~equal~~provide to the ~~lesser~~Company ~~of (~~a) ~~the~~secured ~~outstanding~~term ~~principal~~loan ~~balance~~credit ~~outstanding~~facility ~~under~~in an aggregate amount of up to $2,500,000 (the "Credit Facility"). Pursuant ~~(including~~to ~~any~~the ~~interest~~Exchange ~~capitalized thereon)~~Agreement, ~~and~~the ~~(b)~~Company ~~100%~~received ofan ~~the~~upsized ~~Net~~Delayed ~~Cash~~Draw ~~Proceeds~~Loan (as defined in the Loan Agreement) ~~received~~in ~~thereunder;~~the ~~and~~amount of $550,000 (IIthe “Upsized Draw Loan”), aincreasing ~~Change~~the ofoutstanding ~~Control~~principal ~~(as~~amount ~~defined~~due inunder the Loan Agreement), ~~the~~to ~~Company~~$2,600,000, ~~must~~in ~~prepay~~exchange ~~the~~for, ~~Loans~~among inother anthings, ~~aggregate~~a ~~amount~~fee ~~equal~~payable to Nantahala in the ~~lesser~~amount of $150,000 (ythe “PIK Fee”), to be paid-in-kind by increasing the total outstanding principal ~~balance~~amount ~~outstanding~~ under the Credit Facility (~~including~~collectively, ~~any~~the ~~interest~~“Loans”) ~~capitalized~~to ~~thereon)~~approximately $2,857,895 ~~and~~ (zthe “Principal”), ~~105~~which Principal reflects all Loans to date under the Credit Facility, the 5% oforiginal issue discount, the ~~Net~~Upsized ~~Cash~~Draw ~~Proceeds~~Loan ~~received~~and inthe ~~connection~~payment ~~therewith~~of the PIK Fee.

~~Pursuant~~As tofurther ~~the~~consideration ~~Agreement,~~for ~~at any time after~~ the ~~Closing~~Upsized ~~Date,~~Draw ~~each~~Loan ~~Lender~~and ~~shall have~~ the ~~right,~~waiver ~~but~~of ~~not~~certain ~~the~~minimum ~~obligation,~~cash onrequirements ~~mutually~~required ~~agreed~~under ~~upon~~the terms, toof ~~exchange~~the ~~each~~Loan ~~such~~Agreement, ~~Lender’s~~Nantahala ~~pro~~exchanged ~~rata~~certain ~~portion of~~ shares of the Company’s Series D Convertible Preferred Stock, par value $0.01 per share ("“Series D Preferred"”), held by ~~such~~Nantahala, ~~Lender~~with ~~for~~ a ~~mutually~~stated ~~agreed~~value ~~upon~~equal ~~portion of any subsequent Delayed Draw Loan (as defined in the Agreement) (an "Exchange"). Upon the Company's receipt by a Lender of a notice stating a Lender's intent~~ to ~~participate in an Exchange~~$2,600,000 ~~the~~(plus ~~Company~~all isaccrued ~~required~~and tounpaid ~~offer~~dividends toon ~~all~~such ~~holders of~~ Series D Preferred), ~~the~~for ~~opportunity,~~additional ~~but~~loans ~~not~~under ~~the~~and ~~obligation,~~pursuant to ~~exchange~~the ~~each~~terms ~~such holder’s pro rata portion~~ of ~~shares of~~ the ~~Company's~~Loan ~~Series~~Agreement. As Da ~~Preferred~~result, ~~held~~the byaggregate ~~such~~Principal ~~holder~~due ~~for~~and ~~participation~~owing into ~~any~~Nantahala ~~subsequent~~under ~~Delayed~~the ~~Draw~~ Loan, ~~upon~~Agreement ~~substantially~~is ~~similar~~approximately ~~terms~~$5,480,895, aspayable ~~those~~on ~~provided~~or inbefore ~~the~~December ~~applicable~~29, ~~notice of Exchange by a Lender~~2022.

~~The~~As ~~Agreement~~required ~~contains~~by ~~customary~~the ~~events~~Loan ofAgreement, ~~default~~the ~~(each~~remaining anbeneficial ~~“Event~~owners of ~~Default”).~~Series IfD anPreferred ~~Event~~(“Other ofHolders”) ~~Default~~will ~~occurs,~~be ~~all~~offered ~~amounts due and payable under~~ the ~~Credit~~ability ~~Facility~~to ~~shall~~exchange ~~incur~~their ~~interest~~shares ~~at the current rate~~ of ~~interest~~Series ~~plus~~D ~~4%.~~Preferred ~~The~~for ~~Agreement~~additional ~~further~~loans ~~contains:~~under ~~(i)~~the ~~customary~~terms ~~representations, warranties and covenants~~ of the ~~Company,~~Loan ~~including~~Agreement ~~among~~on ~~others,~~a ~~covenants~~pro-rata ~~by the Company regarding title to the Company's Assets~~basis, ~~the~~up ~~Company's rights~~ to ~~its~~a ~~intellectual~~maximum ~~property,~~principal ~~the~~amount ~~Company's use~~ of ~~the proceeds received thereunder~~$1, ~~tax liabilities~~113,000, ~~and~~in ~~status~~consideration offor ~~the~~making ~~Company's~~loans ~~material~~to ~~contracts; and (ii) customary indemnification provisions whereby~~ the Company ~~will~~in ~~indemnify~~an ~~the~~amount ~~Lenders~~equal ~~for~~to ~~certain~~the ~~losses~~stated ~~arising~~value ~~out~~ of ~~inaccuracies~~Series ~~in,~~D orPreferred ~~breaches~~exchanged ~~of,~~by ~~the~~such ~~representations,~~Other ~~warranties~~Holders ~~and covenants of~~ (the ~~Company,~~“Exchange ~~and certain other matters~~Offer”).

The foregoing description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by the full text of the Exchange Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein. The Exchange Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company. In particular, the assertions embodied in the representations and warranties contained in the Agreement are qualified by information in the confidential disclosure schedules (the "Disclosure Schedules") provided the Company in connection with consummation of the transactions contemplated by the Agreement. These Disclosure Schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties and certain covenants set forth in the Agreement. Moreover, certain representations and warranties in the Exchange Agreement were used for the purposes of allocating risk between the Company and ~~the Lenders~~Nantahala, rather than establishing matters of fact. Accordingly, the representations and warranties in the Exchange Agreement should not be relied on as characterization of the actual state of facts regarding the Company.

~~Item~~For more information on the Loan Agreement, please see the Company’s Current Report on Form 8~~.01 Other~~-K, ~~Events~~filed with the United States Securities and Exchange Commission on January 4, 2022.

OnThis ~~January~~Current 4,Report ~~2022,~~on ~~the~~Form ~~Company~~8-K ~~issue~~does anot ~~press~~constitute ~~release~~an ~~announcing~~offer to sell or the ~~Agreement~~solicitation of an offer to buy any Company securities, and ~~Credit~~shall ~~Facility~~not ~~(the~~constitute ~~“Press~~an ~~Release”). A~~offer, ~~copy~~solicitation ofor ~~the~~sale ~~Press~~in ~~Release~~any isjurisdiction ~~attached~~in ~~hereto~~which assuch ~~Exhibit~~offering, 99solicitation or sale would be unlawful.1.

~~Forward~~Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-~~Looking~~Balance ~~Statements~~Sheet Arrangement of a Registrant.

~~Statements~~See inItem the Press Release that are forward looking involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance that may be suggested in the Press Release1. Such factors may include, but are not limited to, the ability to of the Company to continue to grow revenue, the Company's ability to continue to achieve positive cash flow given the Company's existing and anticipated operating and other costs, the Company’s ability to access the full amount of the Credit Line, and whether the Company will have access to additional necessary capital besides the Credit Facility01. Many of these risks and uncertainties are beyond the Company's control. Reference is made to the discussion of risk factors detailed in the Company's filings with the Securities and Exchange Commission including its reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

Item 3.02. Unregistered Sale of Equity Securities.

See Item 1.01.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibit Index

Exhibit No.		Description
10.1*		~~Loan~~Exchange ~~and~~Agreement, ~~Security~~Amendment ~~Agreement~~and Waiver, dated ~~December~~June 293, ~~2021,~~ among ImageWare Systems, Inc., and certain funds and separate accounts managed by Nantahala Capital Management, LLC, and the other lenders set forth on the signature pages thereto.*
99.1		Press Release Dated January 4, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Certain non-material exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The registrant hereby undertakes to furnish supplemental copies of the omitted schedules and exhibits upon request by the SEC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	IMAGEWARE SYSTEMS, INC.
Date: January 4, 2022	By:	/s/ Kristin Taylor
Date: June 8, 2022	By:	/s/ Kristin Taylor
		Kristin Taylor
		Chief Executive Officer

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