Item 1.01. Entry Into a Material Definitive Agreement.

Issuance of Secured Promissory Notes

On August 2, 2022, ImageWare Systems, Inc., sold and issued certain secured promissory notes with an aggregate value of $675,000 to certain accredited investors (each a "Note", and collectively, the "Notes"). Each Note (i) had a guaranteed interest rate of 10% of the principal amount of each respective Note, (ii) is secured by certain accounts receivable of the Company (the "Receivables"), and (iii) are due and payable within three business days of the Company's receipt of the Receivables. The Notes were sold in reliance upon an exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.

Amendment to Loan and Security Agreement

In connection with the issuance of the Notes, effective August 2, 2022 the Company entered into a Partial Release of Collateral and Amendment to No. 3 to the Loan and Security Agreement (as amended and supplemented, the "Amended Loan Agreement"), by and between the Company and certain funds and separate accounts managed by Nantahala Capital Management, LLC (collectively, "Nantahala"). Pursuant to the Amended Loan Agreement, Nantahala released its security interest in the Company's right, title and interest in and to the Receivables. In consideration for the release, the Company agreed to, among other things, use the proceeds from the Receivables first to repay the Notes, and thereafter pursuant to a budget agreed upon by the Company and Nantahala.

The foregoing description of the Notes and the Amended Loan Agreement do not purport to be complete and are qualified in their entirety by the full text of Form of Note and Amended Loan Agreement, a copy of which are filed as Exhibit 10.1 and 10.2 hereto, respectively, and are incorporated by reference herein. The Form of Note and Amended Loan Agreement have been attached to provide investors with information regarding their terms. It is not intended to provide any other factual information about the Company.

For more information on the Amended Loan Agreement, please see (i) the Company's Current Report on Form 8-K, filed with the United States Securities and Exchange Commission ("SEC") on January 4, 2022, (ii) the Company's Current Report on Form 8-K, filed with the SEC on June 8, 2022; and (iii) the Company's Current Report on Form 8-K, filed with the SEC on July 15, 2022.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibit Index



Exhibit No.   Description
  10.1        Form of Secured Promissory Note, issued by ImageWare Systems, Inc.
  10.2  *     Partial Release of Collateral and Amendment to No. 3 to the Loan and
              Security Agreement, effective August 2, 2022, 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.*
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.

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses