SAN DIEGO, CA, September 17, 2008 - ImageWare® Systems, Inc. (OTC BB: IWSY), a leading developer and provider of identity management solutions, reported financial results for the second quarter ended June 30, 2008.

Jim Miller, ImageWare’s chairman and chief executive officer, stated, “For those of you that have followed ImageWare you will recall that we have, for some time, been chasing a number of what we consider to be significant near-term business opportunities that would change ImageWare’s financial picture. We have continued to make progress toward reeling these opportunities in; however, we have been surprised and frustrated with the time it has taken. These opportunities have not gone away. They have progressed to advanced stages of discussion and negotiation and represent sales to government end users in the both the United States and several foreign countries. In most cases, the sales would be through integrator partners and, in some cases, they will be direct to end users. Based on current advice from partners and customers, we believe in the remainder of 2008 we will deliver significant and dramatic improvement in the form of new contracts and vested partnerships.”

Total net revenues for the second quarter 2008 were $1.7 million, compared to $1.8 million for the second quarter 2007. Second quarter 2008 operating expenses totaled $2.4 million, compared to $2.5 million in the second quarter 2007 Net loss available to common shareholders for the second quarter totaled $1.4 million, compared to $1.5 million in the second quarter of 2007. Net loss per share available to common shareholders was $0.08 for the second quarter, compared to $0.10 in the second quarter of 2007.

Total backlog was $3.7 million at June 30, 2008, including product orders of $2.6 million and maintenance and support backlog of $1.1 million. This compared to total backlog of $4.3 million at March 31, 2008, including product backlog $3.1 million and maintenance backlog $1.2 million, and $1.8 million at year end December 31, 2007, including product backlog 867,000 and maintenance backlog 883,000.

Capital Raise
Miller added, “This month we completed a small equity financing that we believe will provide us with sufficient funding to close one or more of these opportunities. In addition, the opportunities we are pursuing include up-front payments that would further enhance our working capital position.“

On August 29, 2008, the board of authorized the sale of 1,500 shares of the company's Series D 8% Convertible Preferred Stock at a stated value of $1,000 per share for aggregate gross proceeds of $1,500,000. On September 5, 2008, the company entered into a Securities Purchase Agreement with certain accredited investors selling an aggregate of 765 shares of Series D Preferred Stock for aggregate gross proceeds of $765,000 and issuing warrants to purchase up to an aggregate of 1,530,000 shares of common stock with an exercise price of $0.50 per share, which may be exercised at any time from February 28, 2009 until February 28, 2014. The warrants contain a cashless exercise feature. At any time on or before September 20th, the company may sell up to the balance of the authorized shares of preferred stock and warrants.

About ImageWare Systems Inc.
ImageWare Systems, Inc. is a leading developer and provider of identity management solutions, providing biometric, secure credential, law enforcement and digital imaging technologies. Scalable for worldwide deployment, the Company's biometric product line includes a multi-biometric engine that is hardware and algorithm independent, enabling the enrollment and management of unlimited population sizes. ImageWare's identification products are used to manage and issue secure credentials including national IDs, passports, driver licenses, smart cards and access control credentials. ImageWare's digital booking products provide law enforcement with integrated mug shot, fingerprint Livescan and investigative capabilities. ImageWare is headquartered in San Diego, with offices in Washington DC and Canada. For more information visit www.iwsinc.com.

Safe Harbor Statement
This news release may contain forward-looking statements made pursuant to the “safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995. While these statements are meant to convey to the public the company's progress, business opportunities and growth prospects, readers are cautioned that such forward-looking statements represent management's opinion. While management believes such representation to be true and accurate based on the information available to the company, actual results may differ materially from those described. The company's operations and business prospects are always subject to risks and uncertainties. Important facts that may cause actual results to differ are set forth in the company’s periodic filings with the U.S. Securities and Exchange Commission.