2nd Quarter Revenue Increased 23% Over Same Period in 2001

SAN DIEGO, CA, August 13, 2002 - ImageWare Systems, Inc. (AMEX:IW) today reported financial results for the second quarter and six months ended June 30, 2002.

Total revenues for the 2002-second quarter ended June 30, increased 23% to $4.3 million from $3.5 million in the year ago quarter. Net loss for the second quarter was $1.1 million, or $0.21 per share, compared with a net loss of $2.0 million, or $0.42 per share, for the same period a year ago. Per share calculations for the 2002-second quarter are based on approximately 5.5 million average shares outstanding, compared with 4.9 million average shares in the 2001-second quarter. Total gross profit for the 2002-second quarter improved to $2.5 million, or 57 percent of revenues, from $2.0, or 56 percent of revenues, for the same period in 2001.

For the six months ended June 30, 2002, total revenues increased 27 percent to $8 million from $6.3 million reported for the same period in 2001. Net loss for the period declined to $2.6 million, or $.49 per share for the first six months of 2002, compared with a net loss of $2.9 million, or $.65 per share, for the same period in 2001. Per share calculations for year to date 2002 are based on approximately 5.5 million average shares outstanding, compared with 4.5 million shares for the same period in 2001. Total gross profit for the six months ended June 30 increased 29% to $4.5 million, or 57 percent of revenues in 2002, from $3.5 million, or 55 percent of revenues for the same period 2001.

The company said its backlog of product orders as of June 30, 2002 was approximately $1.2 million compared to $846,000 as of June 30, 2001.

"During the second quarter we continued to work to position ImageWare for participation in the widely anticipated growth in the markets we serve," said ImageWare CEO, Jim Miller. " These efforts were evidenced through our announced signing of an exclusive $1million distribution agreement with CIPI, our launching of our ID badging product in Asia and the announcement of our flagship law enforcement product, CCS, as PDA accessible. In addition, we believe having established a quality financial partner such as Perseus, which provided ImageWare with $2 million in working capital in the quarter, will help us to take advantage of additional opportunities as they materialize," added Miller. "In the second quarter we also continued to see the results of cost reduction measures taken in late 2001 and early 2002."

About ImageWare Systems, Inc.
ImageWare Systems, Inc. (AMEX:IW), 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. The Company also provides comprehensive digital workflow solutions for the professional photography industry. 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.

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