SAN DIEGO, CA, November 5, 2002 - ImageWare Systems, Inc. (AMEX: IW) today reported financial results for the third quarter and nine months ended September 30, 2002.

Total revenues for the 2002-third quarter ended September 30, increased 8% to $4.7 million from $4.3 million in the year ago quarter. Net loss for the third quarter decreased 45% to $964,000, or $0.18 per share, compared with a net loss of $1.7 million, or $0.35 per share, for the same period a year ago. Per share calculations for the 2002-third quarter are based on approximately 5.5 million average shares outstanding, compared with 5.2 million average shares in the 2001-third quarter. Total gross profit for the 2002-third quarter improved to $2.7 million, or 57 percent of revenues, from $2.3 million, or 52 percent of revenues, for the same period in 2001.

For the nine months ended September 30, 2002, total revenues increased 19 percent to $12.7 million from $10.6 million reported for the same period in 2001. Net loss for the period declined to $3.6 million, or $.66 per share for the first nine months of 2002, compared with a net loss of $4.6 million, or $.99 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 4.8 million shares for the same period in 2001. Total gross profit for the nine months ended September 30 increased 25% to $7.2 million, or 57 percent of revenues in 2002, from $5.8 million, or 54 percent of revenues for the same period 2001.

The company said its backlog of product orders as of September 30, 2002 was approximately $1.0 million compared to $2.3 million as of September 30, 2001.

On company milestones in the third quarter, ImageWare's chairman and CEO, Jim Miller stated, "In the third quarter we continued to make significant progress in positioning ImageWare as the leader in the markets it serves.

"On the international front, we were awarded both the Singapore and Indonesian driver's license projects and enabled the first trans-boarder exchange of criminal information through the implementation of our software in the Mexican Federal Prison System. Our heightened focus on the government sector was evidenced in the implementation of our secure credential and ID solutions into the FAA, North American Air Defense Command and Nellis Air Force Base. This is in addition to implementing our professional photography software in malls across America through our contract with Santa Plus and providing the Milwaukee Police Department with the ability to view criminal records via a handheld PDA and conduct facial recognition searches.

"Our technology has also continued to evolve to meet the needs of the marketplace. We Web-enabled both our enterprise ID management and facial recognition software; incorporated smart chip and hand, face, iris and fingerprint biometric capabilities into our secure credential solutions; and brought criminal mugshots to police officers in the field by making our Crime Capture System accessible via a PDA.

"These accomplishments illustrate ImageWare's commitment to set the standard of excellence and generate increasing revenues in our marketplaces," added Miller.

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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