UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
                                  ANNUAL REPORT

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

For the fiscal year ended       September 30, 2001
                         -------------------------------------------------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from ______________________ to ______________________

Commission File Number:               0-18856
                       ---------------------------------------------------------


                              VISIONICS CORPORATION
             (Exact name of registrant as specified in its charter)

            Delaware                                     41-1545069
            --------                                     ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

5600 Rowland Road, Minnetonka, Minnesota    55343         (952) 932-0888
---------------------------------------------------       --------------
(Address of principal executive offices) (Zip Code)  (Registrant's telephone
                                                    number, including area code)

Securities registered pursuant to Section 12(b) of the Act:   None
                                                            --------------------

Securities registered pursuant to Section 12(g) of the Act:   Common Stock, $.01
                                                              par value
                                                            --------------------

                                                              Common Stock
                                                              purchase rights
                                                            --------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days. [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate the number of shares of each of the issuer's classes of Common Stock,
as of the latest practicable date.

     Common Stock, $.01 par value       November 30, 2001 - 28,425,355 shares
     ----------------------------       -------------------------------------
               (Class)                            (Outstanding)

The aggregate market value of Common Stock held by non-affiliates as of November
30, 2001: $324,564,654

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the proxy statement for the 2002 Annual Meeting of
Stockholders to be held during the first half of calendar 2002 have been
incorporated by reference in response to Items 10, 11, 12 and 13 of Part III.


                                       1
<PAGE>


                                TABLE OF CONTENTS
                                    FORM 10-K


                                                                            Page
                                                                            ----

                                     PART I

Item  1.  Business                                                             3

Item  2.  Properties                                                           9

Item  3.  Legal Proceedings                                                   10

Item  4.  Submission of Matters to a Vote of Security Holders                 10

                                     PART II

Item  5.  Market for the Registrant's Common Equity and Related Stockholder
          Matters                                                             11

Item  6.  Selected Financial Data                                             11

Item  7.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                               13

Item  8.  Consolidated Financial Statements and Supplementary Data            27

Item  9.  Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure                                                46

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant                  46

Item 11.  Executive Compensation                                              46

Item 12.  Security Ownership of Certain Beneficial Owners and Management      46

Item 13.  Certain Relationships and Related Transactions                      46

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K      47


                                       2
<PAGE>


                                     PART I

ITEM 1.     BUSINESS

GENERAL

     Effective February 16, 2001, Digital Biometrics, Inc. merged with Visionics
Corporation, now named Visionics Technology Corporation. Effective with the
merger, Digital Biometrics, Inc. changed its name to Visionics Corporation.

     Visionics Corporation ("Visionics" or "Company") is in the business of
empowering identification through the use of biometrics, the science of
identifying individuals by measuring distinguishable physical or behavioral
characteristics. The Company is a leading provider of biometric technologies and
identification information systems that employ "biometric" technology.
Biometrics is used to determine physical access or logical access. Our biometric
identification technology, systems and information technology services enable
customers to identify individuals for physical or logical access; help
commercial employers and government agencies to conduct background checks on
applicants for employment or permits; or verify identity for the purposes of
issuing identification documents, conducting transactions, or conducting
criminal investigations. Our product and service offerings include
computer-based face recognition, fingerprinting, and photographic systems,
software tools, multi-media data storage and communications servers, and the
systems integration and software development services required to deploy and use
these systems.

     We have evolved from essentially a single-product live scan hardware
supplier to an identification information systems company. We have two
established product lines and two product lines in various stages of
development.

     FINGERPRINT LIVE SCAN - These systems combine patented, high-resolution
optics and specialized hardware and software with industry-standard computers.
They capture, digitize and transmit forensic-grade fingerprint images and
related data to large-scale databases. The database systems, along with
fingerprint matching algorithms, are maintained on equipment supplied by other
vendors called Automated Fingerprint Identification Systems ("AFIS"). Images
submitted to these databases must be in compliance with federally mandated image
quality standards. If an AFIS finds a match, the Company's systems will receive
a return message of the identity and background of the individual being checked.
Visionics' live scan systems are normally configured in network environments.
The integration of our systems into complex information networks is frequently
crucial to the delivery of the appropriate information to meet a customer's
requirements. Our TENPRINTER(R) and FingerPrinter CMS live scan systems are used
by government agencies, law enforcement, airports, banks and other commercial
institutions in the U.S. to identify suspects and manage information on
individuals, and help commercial employers and government agencies to conduct
background checks on applicants for employment or permits.

     FACEIT(R) FACE RECOGNITION - FaceIt(R) is an award-winning facial
recognition software engine that allows computers to rapidly and accurately
detect and recognize faces. FaceIt(R) is a core technology that enables a broad
range of products and applications built by developers and partners (original
equipment manufacturers "OEMs", value-added resellers "VARs" and system
integrators). These include enhanced CCTV systems, identity fraud applications
and authentication systems for information security, access control, travel,
banking and e-commerce. Our FaceIt(R) technology product offerings include
software development toolkits, run-time licenses and application software.
FaceIt(R) technology partners include IBM Informix and EDS.


                                       3
<PAGE>


     IDENTIFICATION BASED INFORMATION SYSTEM ("IBIS") - IBIS is a patented
wireless, real-time mobile identification system that combines expertise in
biometric capture and connectivity. The system is capable of capturing
photographs and forensic quality fingerprints for transmission to law
enforcement and other legacy databases. IBIS is comprised of software tools,
multi-media data storage and communications servers, and the systems integration
and software development services that are required to implement identification
management systems. A complete management reporting database and audit trail is
included. The IBIS system has been undergoing testing in Hennepin County,
Minnesota and in the cities of Redlands and Ontario in California.

     BIOMETRIC NETWORK PLATFORM ("BNP") - The BNP is a development stage
technology framework for building scalable biometric solutions. The BNP is made
up of the following:

     Biometric Network Appliances ("BNAs") - BNAs are individual hardware
components within the BNP platform. Each component is dedicated to performing a
specific task such as capturing a facial image, creating a biometric template,
and matching the images against a database. Each BNA within a network contains
programming logic for connecting to each other or to standard security and
information systems. Today the BNAs are enabled by the Company's FaceIt(R)
technology, however, eventually we intend to support other biometrics including
fingerprint.

     Application-Specific Business Logic - While the BNAs are dedicated to
performing one specific task surrounding identification, the business logic
tells what action should be taken based on either a match being made or not. For
example, in some applications, a positive match may allow someone to gain access
to an area, while in another application, it may restrict access of the person
identified.

     By combining the different BNAs with application-specific business logic, a
wide range of scalable solutions - such as large database searching,
surveillance and enterprise security - can be easily built. The Company has
developed an off-the-shelf system based on the BNP, called FaceIt(R) ARGUS, for
surveillance applications in order to meet market demand and help promote the
BNP concept overall. The Company expects its partners to develop other scalable
applications using the BNAs by creating their own application-specific business
logic.

     During fiscal 2001, approximately 85% of the Company's revenues were
derived from sales of live scan fingerprinting systems and related products and
services and 15% from face recognition license fees, products and services.
Approximately 85% of customer accounts receivable at September 30, 2001 were
from government agencies, of which 54% was from three customers. For the last
three fiscal years, revenue from one customer accounted for 26% of total
revenues in 2001, revenue from two customers accounted for 32% of total revenues
in 2000, and revenue from two customers accounted for 38% of total revenues in
1999. Export revenues were 6%, 2% and 4% of total revenues, respectively, for
those three fiscal years.

OTHER

     Visionics' sales have historically included large purchases by a relatively
small number of customers. This concentration of sales among few relatively
large customers is expected to continue in the foreseeable future. Furthermore,
the nature of government markets and procurement processes is expected to result
in continued quarter-to-quarter fluctuations in Visionics' revenues and
earnings, which are and will continue to be difficult to predict.

     Visionics was incorporated in Minnesota in 1985 under the name C.F.A.
Technologies, Inc., was reincorporated in Delaware in 1986 and changed its name
to Digital Biometrics, Inc. in 1990 and to Visionics Corporation in February
2001. The Company is co-headquartered at One Exchange Place, Jersey City, New
Jersey 07302 and 5600 Rowland Road, Minnetonka, Minnesota 55343, and its
telephone numbers are (201) 332-9213 and (952) 932-0888, respectively.


                                       4
<PAGE>


MARKETS

     The markets for empowering identification are evolving. As is often the
case with new technologies, government sectors are the first adopters.
Fingerprint identification for employees, applicants and criminals seems to be
well accepted. In addition to forensic quality fingerprinting, there appears to
be a growing need for all types of biometric identification for controlling
physical and, to a lesser extent, logical access. However, this is not a
well-established market and customers are trying to distinguish between the
capabilities of various biometric technologies including non-forensic quality
fingerprinting, iris-scanning, and facial recognition. Large-scale adoption of
biometrics has been limited because each technology suffers from limiting
factors that, to date, have not met customer expectations for many large-scale
applications. Competition for market share has not been alternative biometrics,
but rather, traditional methods like keys, cards, security personnel, PIN codes,
proximity cards, or a combination thereof. Key to biometric adoption is
accuracy, cost and convenience. Accuracy is generally defined by "False
Acceptance Rate" ("FAR"), accepting someone you did not intend to accept, and by
"False Rejection Rate" ("FRR"), rejecting someone you did not intend to reject.
Although non-forensic quality fingerprint systems are inexpensive, the low cost
sensors have suffered from accuracy problems. While this can be solved with
higher cost sensors, customers have been unwilling to buy these in significant
quantities. Iris scanning is extremely accurate, but has not had large-scale
adoption due to inconvenience and high costs. Facial recognition has not had
large-scale adoption because of accuracy limitations. While facial recognition
suffers from accuracy problems primarily due to environmental conditions, in
certain applications it competes with the human ability to remember faces and,
consequently, can offer a unique solution for many applications. The market size
for biometrics will be determined by the customer's unwillingness to accept
alternatives that can be shared (such as cards, personal identification number
("PIN") codes, etc.) and advancements made in biometric technologies including
accuracy, costs and convenience. Today Visionics focuses primarily on the
following markets:

Law Enforcement

     State and local law enforcement agencies have adopted live scan as a
standard method for submitting fingerprints to an Automated Fingerprint
Identification System ("AFIS"). Many small agencies still do "paper-and-ink"
fingerprinting, but we expect this to change as communication networks become
more readily available and their costs are reduced. Live scan systems are
generally priced between $30,000 and $80,000 per unit, but a customer must also
pay for the network connections and ongoing system maintenance. Live scan has
been widely adopted within the U.S. and future sales will be derived from deeper
market penetration into smaller agencies and from replacing older units already
fielded. While there is an international market for live scan, the Company does
not see this as a significant market due to language, connectivity, and database
issues.

     We expect the majority of IBIS sales to be derived from these customers as
well and to follow a similar adoption pattern to live scan where larger agencies
deploy it first before smaller agencies consider adoption. We expect the
majority of earlier adopters will require federal or state funding. An initial
installation of IBIS may cost between $300,000 to $800,000 for a limited number
of handheld units depending on existing wireless communication infrastructure
and the type of AFIS an agency may have. It is anticipated that, once an IBIS
system is established within an area, additional handheld units may be added
without significant infrastructure investment. The initial handheld units are
expensive to produce and may require additional engineering to reduce production
costs and to assess the features and functionality. The Company will undertake
this effort after assessing results and feedback from early adopters.
Eventually, we expect IBIS sales to meet or exceed live scan sales.


                                       5
<PAGE>


     FaceIt(R) is sold to these customers through our partners in conjunction
with mug-shot database systems. It enables the customer to do a search against
the database to try and establish someone's identity. We are paid a royalty for
each application sold depending on the size of the database. We expect
individual sales to be between $25,000 and $250,000. This application is
relatively new and it is difficult to determine its market potential.

     The BNP based, ARGUS surveillance system, is of interest to these
customers. It can provide real time identification in surveillance operations.
Since ARGUS was introduced on October 1, 2001, it is difficult to determine its
potential within this market.

Federal Government

     The Company is currently selling all its product lines to various branches
of the federal government. Some of the larger customers today include the
Immigration and Naturalization Services ("INS"), U.S. Customs, Department of
Justice, Defense Advanced Research Agency ("DARPA"), U.S. State Department,
United State Postal Service, and Department of Transportation. Our systems are
used to enable such applications as employee background checks, applicant
processing and criminal identification. Additionally, we are participating in
DARPA's "Human I.D. at a Distance" program which is advancing the state of the
art in facial recognition systems.

     Given the events of September 11, 2001, we see acceleration in the growth
of this market. For example, the Federal Aviation Administration ("FAA") has
accelerated its requirements to do fingerprint background checks for all airport
employees. Congress has passed various pieces of legislation providing for
testing and deploying biometric technologies. We see higher interest in
biometric solutions from airports, ports, border patrol, customs, etc. There is
a clear need for more positive identification. The Company is working closely
with potential customers to define specific applications and solutions. This is
clearly an important and emerging market. We expect this market will spur growth
across all Visionics' product lines.

Commercial Entities

     There is a growing need to provide identification systems in various
commercial businesses. Unlike the government sector, large-scale adoption of
identification systems by commercial entities will be driven by providing the
customer with a clearly defined return on investment ("ROI").

     FINANCIAL INSTITUTIONS - Financial institutions including banks, securities
firms, insurance companies, are all doing more automated employee background
checks. We are also seeing an interest from this customer base in the ARGUS
facial surveillance systems for certain applications. Additionally, these
customers seem willing to pilot biometric solutions, particularly for logical
access, but at the present time Visionics does not feel it has a solution that
will meet most customers combined criteria involving cost, convenience and
accuracy.

     GAMING INDUSTRY - Visionics offers both employee and customer
identification systems to the gaming industry. Gaming industry firms use live
scan to perform employee background checks. Facial systems are used to identify
card cheats by comparing them against existing databases.

     NUCLEAR POWER - Employee background checks are important in nuclear power
plants. In addition, these entities are considering FaceIt(R) ARGUS in response
to the events of September 11. It is more difficult to provide a clear ROI on
FaceIt(R) ARGUS since it is a prevention tool analogous to putting in a
sprinkler system for reducing the costs from a fire - the cost savings is only
known on an after-the-fact basis.


                                       6
<PAGE>


     OTHER - The Company has seen interest from hospitals resulting from to the
Healthcare Insurance Portability and Accountability Act ("HIPAA") legislation in
providing a logical access solution. Additionally, hospitals and pharmaceutical
companies have shown interest in doing employee fingerprint background checks.
Schools have shown increasing levels of interest in conducting employee
background checks and several have considered piloting FaceIt(R) ARGUS
surveillance systems as part of a physical access control system. Retailers,
malls, large buildings, various public venues such as sports stadiums are
considering whether or not a biometric solution can enhance their business.
Again, the ROI is more difficult to prove when a system is purchased as a
prevention tool. Visionics will work with specific companies to establish
reference implementations and help the customer establish the potential
benefits.

International

     Visionics has a small office in the United Kingdom. Most of Visionics'
international sales are FaceIt(R) software through strategic partners.
Currently, we sell very little hardware outside the United Sates due to language
considerations. Looking forward we see a strong international market that may
embrace biometrics more readily in the long-term. However, the events of
September 11, 2001 have made expanding our international presence a secondary
focus behind the United States. We will therefore continue to pursue
international opportunities, primarily through our strategic partners.

DISTRIBUTION CHANNELS

     The Company uses a combination of direct sales, value-added resellers and
partners.

Direct

     The Company has a direct sales force to sell its live scan and IBIS
products. The customer base is relatively small and known. The live scan and
IBIS technology integrates into network systems and requires knowledge of the
application and customers' systems. For certain initial implementations of the
BNP, the Company will also use a direct sales force. The purpose of this is to
push market adoption and obtain reference implementations. This will help
establish the market and help partners and resellers see the value of the
system.

Reseller

     The Company has established resellers to assist in the sale of BNPs within
certain markets. It is anticipated that BNP-based solutions (such as FaceIt(R)
ARGUS) will be part of a security solution and often will need to be integrated
with other equipment and into an existing system. The reseller channel will
provide the customer contact and the necessary systems integration skills.
Resellers purchase products from the Company at a discount off Visionics' list
pricing.

Partners

     Visionics' strategic partners use the FaceIt software developer kit to
develop specific applications. Visionics anticipates that the partners will
develop application specific business logic to combine with BNA's for various
applications. We expect some partners will invest in additional hardware
encapsulation of the FaceIt(R) software for specific application. Partners pay a
license fee for use of the technology based on, for example, the number of
software seats sold or the size of the database being used. License fees can
range from a low of a few dollars per unit for a screen saver application on
laptops to nearly $1 million, as in the case where we granted an unlimited use
license for Mexican voter registration.


                                       7
<PAGE>


COMPETITION

     In the live scan business we have four primary competitors: Identix
(Trading on the NASDAQ: IDNX), Printrak (part of Motorola), Heimann (a German
subsidiary of Rheinmetall AG) and Crossmatch (privately-held). All the companies
meet Image Quality Standards established by the Federal Bureau of Investigation
and, consequently, this is a very competitive market. We believe our competitive
advantage is our existing installed base and a highly responsive customer
service/maintenance organization. We are the largest provider of live scan
equipment.

     IBIS is a patented mobile wireless fingerprint capture and photo system.
The market for such a device is in its infancy and, therefore, our competition
is not well defined. Some of the live scan competitors have smaller devices
capturing fingerprints, but not the combination of photo and finger.

     Facial recognition is an emerging market. As such, today no one has
substantial sales in this market. The primary competitor today is Viisage
Technologies (Trading on the NASDAQ: VISG) who's primary customers have been
government agencies with particular penetration in Departments of Motor
Vehicles. We believe our competitive advantage is the BNP allowing large
database searches from multiple cameras linked together through existing
networks or the Internet.

     While we do not see any other significant competitor today, many companies
appear to be working on similar technology. We believe the advanced stage of our
development along with our relative size gives us a competitive advantage over
any additional company they may emerge.

ASSEMBLY, INSTALLATION AND MAINTENANCE

     Visionics' hardware products are assembled from purchased components at its
facility in Minnetonka, Minnesota. The time required for delivery of standard
products averages approximately 30 to 45 days from the date the purchase order
is received. Delivery of non-standard products with customer-unique features
and/or functionality will vary depending upon the level of engineering
development required.

     Visionics employees perform virtually all installations of Visionics' live
scan products. Installation frequently requires implementation by Visionics
employees into customer network configurations, many of which are complex. We
expect to train partners and resellers to install BNAs.

     Visionics offers various levels of maintenance service for its equipment,
which are provided primarily by Company employees. Maintenance service contracts
are typically sold separately from the hardware and software products.

SUPPLIERS

     Visionics buys substantially all system components from outside suppliers
for assembly and testing by Visionics. Some of these components are designed by
Visionics and are custom manufactured to its specifications. Visionics may
specify parts used in such components. Visionics inspects and tests incoming
parts and components, and conducts test and burn-in procedures on assembled
finished products. Certain components used in manufacturing the Company's live
scan systems are currently supplied by a single vendor to obtain volume
economies. Secondary sources are available but would take several months to
bring into production. Delays in product deliveries to customers could occur
until the secondary sources are secured.

INFORMATION TECHNOLOGY SERVICES

     Visionics has offered software development and integration services to a
limited number of customers directly and through its wholly owned subsidiary,
Integral Partners, Inc. There were no integration services generated from
Integral Partners, Inc. in fiscal 2001 or 2000. Integral Partners, Inc. had
sales of $259,000 in fiscal 1999 for systems integration consulting in
commercial applications unrelated to identification. Integral Partners, Inc. was
dissolved on September 29, 2000.


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<PAGE>


PROPRIETARY TECHNOLOGY

     Visionics owns federally registered trademarks for the marks FaceIt,
FaceIt, Security with a Human Face, TENPRINTER, Visionics and Your Face is Your
Password. Visionics has applied for trademark registration for Empowering
Identification, Face the Future, FaceGrabber, FaceIt ARGUS, FaceIt Sentinel and
IBIS.

     Visionics owns several U. S. patents and has U. S. patent applications
pending with respect to the technology currently employed in its products.
Visionics has also filed for patent protection in several foreign countries.
Although additional features of Visionics' products may be patentable, Visionics
has chosen to preserve these features as trade secrets rather than applying for
patent protection. Visionics has entered into confidentiality agreements with
all its employees and independent consultants who have access to confidential
information.

EMPLOYEES

     On November 30, 2001, the Company employed 199 persons on either a
full-time or part-time basis, none of whom is represented by a union. Of these
persons, seven have general management responsibilities and the remainder
perform sales, marketing, engineering, customer service, assembly, or
administrative functions. The Company utilizes additional individuals to perform
services on a part-time or consulting basis as needed. Personnel will be hired
in the future as the Company deems necessary. The Company believes that its
employee relations are good.

     All Visionics employees have executed agreements that provide for the
ownership by the Company of inventions developed using the Company's resources.

ITEM 2.     PROPERTIES

     Visionics does not own any real estate. The Company is co-headquartered in
Minnesota and New Jersey. The Company's Minnesota office and manufacturing
facility is located in approximately 55,000 square feet of space in an
industrial park at 5600 Rowland Road in Minnetonka. The space is occupied under
a lease expiring on March 31, 2008, and is believed to be adequate for the
Company's current business needs.

     The Company leases approximately 10,000 square feet of space at One
Exchange Place, Jersey City, New Jersey. This space is occupied under a lease
expiring in May 2006.

     The Company leases approximately 8,000 square feet of space in a facility
in Maple Grove, Minnesota under an operating lease expiring in June 2003. The
Company subleases this office space to a third party.


                                       9
<PAGE>


     The Company has a customer service and sales office in Ontario, California,
in approximately 5,600 square feet of space in an industrial office park. This
space is occupied under a lease expiring in May 2002. The Company has a
sixty-nine month lease agreement for a different facility of approximately 9,600
square feet of space in Ontario, California with an estimated commencement date
of March 1, 2002.

     Visionics Ltd., a wholly owned subsidiary, is located at Cirencester
Business Park, Love Lane, Cirencester, Gloucestershire in the United Kingdom
operating as a sales office. The Company has a sixty-month lease agreement for
this facility that expires in 2006.

ITEM 3.     LEGAL PROCEEDINGS

     There are no material lawsuits pending or, to the Company's knowledge,
threatened against Visionics Corporation.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     As disclosed in the Company's filing of Form 10-Q on August 14, 2001, the
Company held its Annual Meeting of Stockholders on July 26, 2001. Proxies for
such meeting were solicited pursuant to Regulation 14A under the Securities
Exchange Act of 1934 as amended. At the meeting, sufficient favorable votes were
cast to approve the following management proposal:

     *    Adopt an Amendment to the 1998 Stock Option Plan to increase the
          number of shares of common stock authorized for issuance thereunder
          from 1,400,000 to 3,400,000. The results of the vote on this proposal
          were 12,728,935 shares voted for approval; 1,367,201 shares voted
          against; 153,627 shares abstaining and no broker non-votes.


                                       10
<PAGE>


                                     PART II

ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
            MATTERS

     MARKET INFORMATION. The Company's common stock is traded on The Nasdaq
National Market under the symbol "VSNX." High and low closing price information
for each quarter for the past two fiscal years is as follows:

                                                                High       Low
                                                                ----       ---
                  Fiscal Year ended September 30, 2001
                       First Quarter                          $ 6.75     $ 2.94
                       Second Quarter                           6.47       3.94
                       Third Quarter                            6.40       3.69
                       Fourth Quarter                          13.91       4.27

                  Fiscal Year ended September 30, 2000
                       First Quarter                          $ 4.63     $ 2.75
                       Second Quarter                           9.13       3.81
                       Third Quarter                            7.63       3.50
                       Fourth Quarter                           6.25       3.88

     As of November 30, 2001, the Company had an aggregate of approximately
25,400 record holders and beneficial holders of its common stock. The closing
price of its common stock on November 30, 2001, as reported by The Nasdaq
National Market System was $12.70.

     DIVIDEND POLICY. The Company has never paid a dividend on its common stock
and it is not anticipated that dividends will be paid in the foreseeable future.
The Company intends to retain any profits for operating purposes.

     TRANSFER AGENT. The Transfer Agent and Registrar for the Company's common
stock is Wells Fargo Bank, Minneapolis, Minnesota.


ITEM 6.     SELECTED FINANCIAL DATA

     The following selected financial data of the Company as of and for each of
the years in the five-year period ended September 30, 2001 has been derived from
the Company's consolidated financial statements. The selected financial data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the audited consolidated
financial statements and notes thereto included elsewhere in this Form 10-K.
Effective February 16, 2001, Digital Biometrics, Inc. ("DBI") merged with
Visionics Corporation ("Subsidiary" or "VTC"). In connection with the merger,
DBI changed its name to Visionics Corporation, (the "Company" or "Visionics").
The accompanying financial statements reflect the combined results of DBI and
Visionics Corporation under the pooling of interests method of accounting for
all periods presented. The presentation has the effect of including Subsidiary's
results of operations for the three months ended December 31, 1999 in the
consolidated statements of operations for both the years ended September 30,
2000 and 1999. VTC had revenues of approximately $400,000 and a net loss of
approximately $440,000 for the three months ended December 31, 1999. The fiscal
years ended September 30, 1999, 1998 and 1997 for DBI have been combined with
the calendar years of VTC and Visionics Ltd.


                                       11
<PAGE>


<TABLE>
<CAPTION>
                                                                          YEAR ENDED SEPTEMBER 30,
                                              --------------------------------------------------------------------------------
                                                  2001             2000             1999             1998             1997
                                                  ----             ----             ----             ----             ----
<S>                                           <C>              <C>              <C>              <C>              <C>
STATEMENT OF OPERATIONS DATA:

Revenues                                      $ 30,473,060     $ 25,575,060     $ 24,822,564     $ 13,214,436     $ 12,558,147
Cost of revenues                                19,285,372       15,477,688       15,255,563        8,980,053        8,811,271
Cost of revenues - non-recurring charges                --               --               --               --        1,529,118
                                              --------------------------------------------------------------------------------
   Gross margin                                 11,187,688       10,097,372        9,567,001        4,234,383        2,217,758
                                              --------------------------------------------------------------------------------

Expenses:
   Selling, general and development             13,481,998       11,058,234        9,507,355        9,102,321        8,044,853
   Non-recurring charges                         2,111,761          300,162               --               --          330,319
                                              --------------------------------------------------------------------------------
     Total expenses                             15,593,759       11,358,396        9,507,355        9,102,321        8,375,172
                                              --------------------------------------------------------------------------------

Income (loss) from operations                   (4,406,071)      (1,261,024)          59,646       (4,867,938)      (6,157,414)
Other income (expense)                             173,520          355,618         (130,849)        (684,377)         (80,560)
                                              --------------------------------------------------------------------------------

Loss before income taxes                        (4,232,551)        (905,406)         (71,203)      (5,552,315)      (6,237,974)
Provision for (benefit of) income taxes            123,054          (37,538)          56,974         (123,000)              --
                                              --------------------------------------------------------------------------------

Loss before accounting change                   (4,355,605)        (867,868)        (128,177)      (5,429,315)      (6,237,974)
Cumulative effect of change in accounting
   principle                                    (1,435,652)              --               --               --               --
                                              --------------------------------------------------------------------------------

Net loss                                      $ (5,791,257)    $   (867,868)    $   (128,177)    $ (5,429,315)    $ (6,237,974)
                                              ================================================================================

Net loss per common share                     $      (0.24)    $      (0.04)    $      (0.01)    $      (0.29)    $      (0.40)
                                              ================================================================================

Weighted average common shares                  23,677,228       22,840,110       21,002,687       18,623,263       15,654,478
                                              ================================================================================

<CAPTION>
                                                                            AS OF SEPTEMBER 30,
                                              --------------------------------------------------------------------------------
                                                  2001             2000             1999             1998             1997
                                                  ----             ----             ----             ----             ----
<S>                                           <C>              <C>              <C>              <C>              <C>
BALANCE SHEET DATA:

Cash, cash equivalents and restricted cash    $  9,797,687     $  3,623,574     $  6,302,473     $  3,971,638     $  1,915,335
Accounts receivable, net                         6,704,761        9,779,796        7,713,327        4,546,995        5,161,356
Inventory                                        5,999,894        3,900,754        2,972,998        2,848,421        2,294,593
Working capital                                 12,131,156        9,746,190        9,534,228        6,940,295        6,068,705
Total assets                                    25,415,879       19,905,803       19,158,763       13,091,427       10,827,140
Long-term obligations                            1,115,006          543,850        1,099,063        1,059,957               --
Total liabilities                               11,939,039        8,370,872        8,807,285        5,701,418        3,655,981
Stockholders' equity                            13,476,840       11,534,931       10,351,478        7,390,009        7,171,159
</TABLE>

The Company has paid no cash dividends on its common stock.


                                       12
<PAGE>


ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

GENERAL

     As more fully described in the subsection appearing below titled "Risk
Factors," this report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These include statements regarding
intent, belief or current expectations of the Company and its management and are
made in reliance upon the "safe harbor" provisions of the Securities Litigation
Reform Act of 1995. Shareholders and prospective investors are cautioned that
any such forward-looking statements are not guarantees of future performance and
involve a number of risks and uncertainties that may cause the Company's actual
results to differ materially from the results discussed in the forward-looking
statements. The Company undertakes no obligation to publicly update these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.

     The principal business of Visionics Corporation is the development,
manufacture, marketing and integration of computer-based products and services
for the identification of individuals. The Company's products enable the
association of human action with their identity through biometrics. The Company
is a leading provider of identification information systems that employ
"biometric" technology, which is the science of identifying individuals by
measuring distinguishing biological characteristics. Visionics' biometric
identification systems and information technology services enable law
enforcement and other government agencies to identify and manage information
about individuals, and help commercial employers and government agencies to
conduct background checks on applicants for employment or permits. Visionics'
offerings include computer-based face recognition, fingerprinting and
photographic systems, software tools, multi-media data storage and
communications servers, and the systems integration and software development
services required to implement identification management systems. The Company
also provides maintenance and support services for its product offerings.

     The Company generally recognizes product revenue on the date of
installation, although recognition may from time to time occur at a different
time based on the terms of specific customer contracts. Software license revenue
is recognized when all of the following conditions have been satisfied:
completion of a written license arrangement; delivery of the software with no
significant post delivery obligations of the Company; the license fee is fixed
or determinable; and payment is due within one year and collection is probable.
Revenue for professional service contracts and systems integration service is
recognized using the percentage of completion method, completed contract method
or on a time-and-materials basis. Revenues from maintenance and repair contracts
are recognized over the life of the contract on a straight-line basis. Service
revenues are recognized when the related services are performed. The Company's
standard terms of sale are payment due net in thirty days, f.o.b. Visionics.
Terms of sale and shipment for certain procurements by municipal or other
government agencies may, however, be subject to negotiation which consequently
may affect the Company's timing and criteria for revenue recognition.

RESULTS OF OPERATIONS

MERGER

         Effective February 16, 2001, Digital Biometrics, Inc. ("DBI") merged
with Visionics Corporation. In connection with the merger, DBI changed its name
to Visionics Corporation, (the "Company" or "Visionics"). The accompanying
financial statements reflect the combined results of DBI and Visionics


                                       13
<PAGE>


Corporation under the pooling of interests method of accounting. The
presentation has the effect of including VTC's and Visionics Ltd.'s results of
operations for the three months ended December 31, 1999 in the consolidated
statements of operations for both the years ended September 30, 2000 and 1999.
VTC had revenues of approximately $400,000 and a net loss of approximately
$440,000 for the three months ended December 31, 1999. The fiscal years ended
September 30, 1999, 1998 and 1997 for DBI have been combined with the calendar
years of VTC and Visionics Ltd. The Company incurred $2,011,000 and $300,162 of
merger related expense in the years ended September 30, 2001 and 2000,
respectively, which were recorded as non-recurring charges.

SAB 101 IMPACT

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101") which provides the staff's views in
applying generally accepted accounting principles to selected revenue
recognition issues. In October 2000, the SEC provided interpretive guidance for
SAB 101. Effective October 1, 2000 the Company changed its method of accounting
for certain identification systems revenue based on the guidance provided in
SAB101. Since most of the equipment the Company sells includes installation
provided by the Company a significant portion of revenue recognition is deferred
until installation, particularly where the equipment is integrated to an outside
network. Prior to October 1, 2000 the Company generally recognized product
revenue on the date of shipment for orders which were f.o.b. origin and upon
delivery for f.o.b. destination. The Company recorded a $1,436,000 cumulative
effect of accounting change in the three-month period ended December 31, 2000.
Under change in accounting principle, $3,890,000 of revenue recorded in periods
prior to October 1, 2000 was recorded as revenue again as the equipment was
installed in 2001. Deferred revenue at September 30, 2001 includes $3,371,000
for live scan identification systems that have shipped prior to year-end but
have not yet been installed. There were no accrued installation costs at
September 30, 2001 since installation costs are recorded as cost of revenue when
incurred. This compares to $481,000 of accrued installation costs at September
30, 2000 under the previous method of revenue recognition. Accrued warranty
costs are recorded at time of revenue recognition. Accrued warranty costs at
September 30, 2001 of $135,000 compare to $302,000 at September 30, 2000. The
decrease is due to the change in accounting which defers revenue and cost
recognition until the installation has occurred as compared to at date of
shipment in the earlier fiscal year.

     Total deferred revenue at September 30, 2001, current and long-term
portions, increased $4,287,000 from September 30, 2000. The increase was
primarily due to $3,371,000 of deferred revenue resulting from revenue
recognition under SAB101 and the remainder from an increase in live scan
maintenance contracts covering future periods. Billings for maintenance contract
coverage periods vary by customer and are difficult to predict.

FISCAL 2001 COMPARED TO FISCAL 2000

     Total revenue in 2001 of $30,473,000 increased 19% from 2000 revenue of
$25,575,000. The increase in total revenue was due primarily to a 56% increase
or $2,841,000 in live scan maintenance revenue, a 69% increase or $1,218,000 in
FaceIt license revenue and a 70% increase or $612,000 in FaceIt service revenue.
The increase in live scan identification systems revenue to $18,093,000 in 2001
from $17,867,000 in 2000 resulted from a 20% increase in the number of live scan
systems included in revenue, partially offset by product mix, volume discounts
and a decrease in integration and professional services revenue including custom
software development. Live scan maintenance revenue increased to $7,914,000 in
2001 from $5,074,000 in 2000, due primarily to a larger installed base of live
scan systems covered by maintenance agreements. The Company expects
year-over-year growth in the live scan business, including the new
identification based information system ("IBIS") of 25 to 35 percent.


                                       14
<PAGE>


     The growth in FaceIt license revenue to $2,978,000 in 2001 from $1,760,000
in 2000 is primarily due to a one-time license fee for use of FaceIt software
for voter registration in Mexico and, to a lesser extent, an increase in revenue
generated from its subsidiary in the United Kingdom. The increase in FaceIt
service revenue to $1,487,000 in 2001 from $476,000 in 2000 was primarily due to
a large government contract to develop an application encapsulating the
Company's technology. There was not a similarly large contract in fiscal 2000.
The Company expects the service portion of the facial recognition business to
grow 10 to 20 percent, with year-over-year revenue growth to be in excess of 250
percent for the remainder of the facial recognition business.

     The Company expects year-over-year total revenue growth of 35 to 50 percent
with a slower growth rate in the first half of fiscal 2002 and accelerating
above 50 percent for the second half.

     Revenue from one customer in 2001 accounted for 26% of total revenue.
Revenue from two customers in 2000 accounted for 32% of total revenue.

     Total gross margin for 2001 and 2000 was 37% and 39%, respectively, of
total revenue.

     Gross margin on live scan identification systems revenue was 36% in 2001
compared to 37% in 2000. The decrease was due primarily to product mix and
volume discounts. Gross margin in fiscal 2000 benefited from a reduction in
accrued installation costs applicable to a favorable change in an equipment
installation obligation and lower per-unit warranty costs. Looking forward to
fiscal 2002, the Company expects live scan margins, including the new IBIS
product, to be in a similar range to the 36% in fiscal 2001.

     Live scan maintenance margin for 2001 and 2000 was 23% and 29% of
maintenance and support revenue, respectively. The decrease in maintenance
margin is due mainly to an increase of maintenance infrastructure costs to
accommodate the growing installed base of live scan systems. The Company expects
live scan maintenance margin to be closer to the 29% range achieved in fiscal
2000 by late fiscal 2002.

     FaceIt license margin decreased to 83% in 2001 from 90% in 2000 due
primarily to an increase in amortization of software development costs. In
fiscal 2002, the Company will offer both FaceIt software licenses as well as the
biometric network platform ("BNP") which is a hardware encapsulation of the
FaceIt software. Management expects the combined FaceIt license and product
business, which includes BNP, to be a 45 to 55 percent margin business in fiscal
2002.

     Gross margin on FaceIt services decreased to 23% in 2001 from 46% in 2000.
The decrease in margin is due primarily to most of the services provided in
fiscal 2001 were for government contracts which have lower billable rates than
commercial rates, along with an increase in personnel to accommodate the
increase in custom development service contracts and potential opportunities.

     Sales, general and development expenses for 2001 and 2000 were 44% and 43%,
respectively, of total revenue.

     Sales and marketing expenses for fiscal 2001 increased to $4,669,000 (15%
of total revenue) from $3,567,000 (14% of total revenue) in fiscal 2000. The
increase is due primarily to an increase in personnel-related costs, costs
associated with a subsidiary in the United Kingdom which commenced operations
during part of fiscal 2000 and an increase in operating costs associated with
new product marketing. The Company expects sales and marketing expenses to be 14
to 16 percent of total revenue for fiscal 2002.


                                       15
<PAGE>


     Engineering and development expenses for fiscal 2001 increased to
$5,047,000 (17% of total revenue) from $3,872,000 (15% of total revenue) in
fiscal 2000. The increase is due primarily to an increase in new product
development costs related to IBIS, the biometric network platform and other new
products. No software development costs were capitalized during 2001 compared to
$375,000 in 2000. Engineering expenses for fiscal 2001 and 2000 are net of
$326,000 and $495,000, respectively, of costs related to a federal government
funded demonstration project grant. The Company expects engineering and
development expenses to be 13 to 15 percent of total revenue for fiscal 2002.

     General and administrative expenses for fiscal 2001 increased to $3,766,000
(12% of total revenue) from $3,620,000 (14% of total revenue) in fiscal 2000.
The decrease in general and administrative expenses as a percentage of total
revenue is due primarily to the increase in revenue. The increase in absolute
dollars of general and administrative expenses is due primarily to an increase
in personnel-related costs and professional services. The Company expects
general and administrative expenses as a percentage of total revenue to continue
to decrease for fiscal 2002.

     Non-recurring charges for the years ended September 30, 2001 and 2000 were
$2,112,000 and $300,000, respectively. These costs consist primarily of legal
and other professional services costs associated with the merger transaction
with its subsidiary, Visionics Technology Corporation. Fiscal 2001 charges
include $101,000 for accrued costs for the remaining lease commitments, net of
anticipated sublease receipts, for a company-leased facility. An unrelated third
party cancelled a sublease of the facility during fiscal 2001. A new sublease
agreement was effected with another third party during the beginning of fiscal
2002.

     Interest and dividend income decreased to $204,000 in fiscal 2001 from
$364,000 in fiscal 2000 due to lower average cash balances. Interest expense for
fiscal 2001 and 2000 was $7,000 and $9,000, respectively. Other expense included
$13,000 related to costs associated with TRAK 21 Development, LLC, a joint
venture with Lakes Gaming, Inc.

     The provision for income taxes of $123,000 for fiscal 2001 is due primarily
to foreign taxes related to the license revenue applicable to a sale in Mexico
and, to a lesser extent, state income taxes. The benefit of income taxes in the
amount of $38,000 in fiscal 2000 relates to reversal of income taxes accrued
prior to the merger.

     The Company incurred a net loss of $5,791,000, or $0.24 per share loss for
the year ended September 30, 2001, as compared to a net loss of $868,000, $0.04
per share loss, for the same prior-year period. The cumulative effect of the
change in accounting principle resulted in a $0.06 per share loss for fiscal
2001. The effect on the current-year period for the non-recurring charges of
$2,112,000 equates to a $0.09 per share loss. The effect on fiscal 2000 for the
non-recurring charges of $300,000 equates to a $0.01 per share loss.

FISCAL 2000 COMPARED TO FISCAL 1999

     Total revenue in 2000 of $25,575,000 increased 3% from 1999 revenue of
$24,823,000. The increase in total revenue was due primarily to a 36% increase
in live scan maintenance revenue and a 20% increase in FaceIt license revenue,
partially offset by a decrease in the number of live scan systems sold and a 24%
decline in FaceIt service revenue. The decrease in live scan identification
systems revenue to $17,867,000 in 2000 from $18,214,000 in 1999 resulted from a
decrease in the number of live scan systems sold, partially offset by an
increase in integration and professional services revenue including custom
software development. Live scan maintenance revenue increased to $5,074,000 in
2000 from $3,726,000 in 1999, due primarily to a larger installed base of live
scan systems covered by maintenance agreements and, to a lesser extent,
increases in contract renewal rates. The growth in FaceIt license revenue to


                                       16
<PAGE>


$1,760,000 in 2000 from $1,473,000 in 1999 is a result of the Company's larger
product offering and expanding customer base. FaceIt service revenue in 1999 of
$1,151,000 benefited from a large contract to assist a commercial customer with
developing an application encapsulating the Company's technology. There was not
a similarly large commercial contract in fiscal 2000 resulting in FaceIt service
revenue decreasing to $875,000 as compared to fiscal 1999.

     Revenue from two customers in 2000 accounted for 32% of total revenue.
Revenue from two customers in 1999 accounted for 38% of total revenue.

     Total gross margins for 2000 and 1999 were 39% of revenue.

     Gross margin on live scan identification systems revenue was 37% in 2000
compared to 34% in 1999. This improvement is due primarily to lower levels of
warranty and installation costs resulting from a favorable negotiation
pertaining to a customer contract requirement, economies of scale of
infrastructure costs and a favorable geographical concentration of systems. The
favorable contract negotiation and improved efficiencies resulted in a $421,000
reduction of the estimated accrued costs at September 30, 1999.

     Live scan maintenance margin for 2000 and 1999 was 29% and 25% of
maintenance and support revenue, respectively. The improvement in maintenance
margins is due mainly to a 36% increase in maintenance revenue from the larger
installed base and, to a lesser extent, reduced costs resulting from the
establishment of regional customer service operations, and $150,000 of accrued
costs in the prior year to implement Year 2000 compliant software for customers
with maintenance contracts.

     FaceIt license margin decreased to 90% in 2000 from 97% in 1999 due
primarily to an increase in amortization of software development costs.

     Gross margin on FaceIt services decreased to 46% in 2000 from 77% in 1999
due primarily to the decrease in commercial service revenues that carried a
higher margin the earlier year.

     Sales, general and development expenses for 2000 and 1999 were 43% and 38%,
respectively, of total revenue. The increase in sales, general and development
expenses is due primarily to an increase in personnel-related costs, new product
development costs and promotional activities for new products, partially offset
by a decrease in engineering expenses associated with Integral Partners, Inc.
and an increase in billable professional services. Throughout 1999 and 2000, the
Company continued increasing its staffing levels to establish its business
partnerships, its marketing channels and pursue market opportunities. Sales and
marketing expenses for fiscal 1999 are net of a $157,000 allowance for doubtful
accounts reserve adjustment as a result of improved accounts receivable
collections. Engineering expenses for the years ending September 30, 2000 and
1999 are net of $495,000 and $384,000, respectively, of costs related to a
federal government funded demonstration project grant.

     Non-recurring charges in fiscal 2000 include $300,000 of legal and other
professional services costs associated with the merger transaction with
Subsidiary.

     Interest and dividend income increased to $364,000 in fiscal 2000 from
$180,000 in fiscal 1999 due to higher average cash balances. Interest expense
decreased to $9,000 in fiscal 2000 from $299,000 in fiscal 1999 primarily due to
a $125,000 non-cash charge during the prior year for the intrinsic value of the
beneficial conversion feature of convertible debentures, conversion of
convertible debentures and no borrowings on the line of credit during the
current year.

     Income tax benefit of $38,000 for fiscal 2000 compares to a provision for
income taxes of $57,000 in fiscal 1999. This reduction in income taxes is due
primarily to the increased loss in fiscal 2000. The income tax benefit is low in
relationship to the Company's loss before income taxes because the Company is in
a net operating loss carryforward position for tax purposes.


                                       17
<PAGE>


     The Company incurred a net loss for fiscal 2000 of $868,000, or $.04 loss
per share, as compared to a net loss of $128,000, or $.01 loss per share, for
fiscal 1999.

INFLATION

     The Company does not believe inflation has significantly impacted revenues
or expenses.

BACKLOG

     On September 30, 2001, the Company's backlog of orders for products,
licenses, maintenance and services was approximately $15,981,000, as compared to
a backlog of approximately $10,971,000 at September 30, 2000. Backlog includes
billings to customers shown on the balance sheet as deferred revenue.

NET OPERATING LOSS CARRYFORWARDS

     At September 30, 2001, the Company had carryforwards of net operating
losses of approximately $42,861,000 that may allow the Company to reduce future
income taxes that would otherwise be payable. The carryforwards are subject to
the limitation provisions of Internal Revenue Code sections 382 and 383. These
sections provide limitations on the availability of net operating losses and
credits to offset current taxable income and related income taxes when an
ownership change has occurred. The Company's initial public offering in December
1990 resulted in an ownership change pursuant to these provisions and,
accordingly, the use of approximately $3,300,000 of the above carryforwards is
subject to an annual limitation, estimated at $350,000. At this time the
remaining net operating loss limitation with respect to the 1990 ownership
change is approximately $375,000. Any future ownership change could create a
limitation with respect to loss carryforwards not currently subject to an annual
limitation. Approximately $4,793,000 of the $42,861,000 net operating loss
carryforwards relates to compensation associated with the exercise of
non-qualified stock options which, when realized, would result in approximately
$1,917,000 credited to additional paid-in capital.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

     For the period from the Company's inception in 1985 through September 30,
2001, the Company's cumulative deficit was $46,749,000. On a consolidated annual
basis, the Company has not yet generated its first net income.

     At September 30, 2001, the Company had $9,717,000 in cash and cash
equivalents and $81,000 of restricted cash. Subsequent to year-end, the Company
closed on a private placement offering of common stock and warrants. A total of
1,801,800 shares were sold to accredited investors at a price of $11.10 each.
Net proceeds to the Company approximated $19 million. Historically, the Company
has been reliant on the availability of outside capital to sustain its
operations. Management believes that cash, cash equivalents, and other working
capital provided from operations, together with available financing sources, are
sufficient to meet current and foreseeable operating requirements of the
Company's business as it has existed historically. The merger of Visionics and
Digital Biometrics, Inc. has substantially increased the Company's need for
capital, necessitating that the Company seek further financing. To fully exploit
the opportunities presented by the merger, such as joint product development,
the acquisition of additional technologies and the entry into new markets,
additional capital will be required. There can be no assurance, however, that
the financing necessary to pursue the combined companies business plan will be
available on terms acceptable or favorable to the Company, or on any terms.


                                       18
<PAGE>


     Furthermore, management may from time to time determine that the
competitive position of Visionics may be enhanced through substantial and
increased investments in product and technology development programs and/or
marketing initiatives. Management may determine to make such investments despite
its assessment that gross margin during the investment period will be less than
the expenses to be incurred, thus resulting in an anticipated loss during the
period.

ANALYSIS OF CASH FLOWS FROM OPERATIONS

     Net cash used in operating activities was reduced to $32,000 for fiscal
2001 from $2,490,000 for 2000. This favorable change resulted primarily from
accelerated collections of accounts receivable and an increase in deferred
revenue, partially offset by the magnitude of the net loss incurred during
fiscal 2001 and an increase in Visionics' investment in inventory.

     Net cash used in investing activities was $1,177,000 for fiscal 2001
compared to $1,278,000 for 2000. The decrease was due primarily to a decrease in
capitalized software development costs, partially offset by an increase in
purchases of property and equipment to accommodate investment in the business.

     Net cash provided by financing activities was $7,295,000 for fiscal 2001
compared to $1,089,000 for fiscal 2000. Cash from financing activities was
provided primarily from a $5,444,000 private placement of common stock in fiscal
2001 and the exercise of stock options during both fiscal years.

     Effective January 1, 2000, the Company established an inventory and
receivables financing line of credit for the lesser of eligible inventory and
receivables or $2,000,000 with Associated Bank Minnesota. Borrowings under this
line of credit are secured by all the assets of the Company. The line bears
interest at a rate of 0.5% (one half percent) above the prime rate. The line
will expire on March 31, 2003. There were no borrowings outstanding under this
line at September 30, 2001.

     Risks related to the Company's ability to maintain adequate working capital
and liquidity include the continued availability of credit under the Company's
line of credit, the availability of vendor credit, and payment by customers of
accounts receivable at such times and in such amounts as to enable the Company
to meet its payment obligations. Additional financing may be required if sales
and operating results are different from those currently forecasted. The Company
has identified potential sources for such additional financing in the event that
it is required; however, there can be no assurance that such sources will
provide the Company with additional financing on terms that are acceptable or
favorable to the Company, or on any terms.

ISSUANCE OF 8% CONVERTIBLE SUBORDINATED DEBENTURES AND WARRANTS

     On December 1, 1997 the Company entered into a convertible subordinated
debenture purchase agreement with a private investor providing for the Company's
issuance and sale of up to $2,500,000 aggregate principal amount of 8%
Convertible Subordinated Debentures ("1997 Convertible Debentures") in tranches
of $500,000 each. The first four tranches were funded during fiscal 1998. The
fifth tranche was funded in November 1998.

     Through 2000, the Company issued 2,435,770 shares of common stock for the
conversion of the $2,500,000 principal amount of 1997 Convertible Debentures
plus $113,458 of accrued interest at an average conversion price of $1.07 per
share.


                                       19
<PAGE>


PRIVATE PLACEMENTS

     On October 11, 2001, the Company closed on a private placement offering of
common stock and warrants. A total of 1,801,800 shares of the Company's common
stock were sold to accredited investors at a price of $11.10 each. Net proceeds
to the Company approximated $19 million. The Company issued a warrant to
purchase up to 36,036 shares of common stock at an exercise price of $16.86 per
share to an investment-banking firm as partial compensation for services
rendered in the private placement.

     On June 29, 2001 the Company closed on a private placement offering of
common stock and warrants. A total of 1,302,862 shares of the Company's common
stock were sold to accredited investors at a price of $4.50 each with total net
proceeds to the Company of approximately $5.4 million. In addition, the Company
issued warrants for 325,715 shares at an exercise price of $5.66 per share and
325,715 warrants at $6.79 per share to the purchasers for no additional
consideration. These warrants are callable when the Company's stock price
exceeds 150 percent of the warrant price for twenty consecutive trading days.
The Company issued additional warrants to purchase up to 26,057 shares of common
stock at an exercise price of $7.81 per share to an investment banking firm as
partial compensation for services rendered in the private placement.

     The Company completed two private placement offerings of common stock and
warrants during fiscal 1999. An aggregate of 694,996 shares were sold to
accredited investors at prices from $1.3138 to $1.6579 per share with total net
proceeds to the Company of approximately $900,000. Warrants to purchase up to an
aggregate of 694,996 shares of common stock at the same per share prices were
granted to the purchasers for no additional consideration, of which an aggregate
of 453,729 shares were issued upon exercises as of September 30, 2000. The
Company issued additional warrants to purchase up to 69,500 shares of common
stock at exercise prices from $1.3269 to $1.6728 per share to an
investment-banking firm as partial compensation for services rendered in the
private placement offerings.

NEW ACCOUNTING PRONOUNCEMENTS

     In August 2001, the Financial Accounting Standards Board issued FASB
Statement No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED
ASSETS (Statement 144), which supersedes both FASB Statement No. 121, ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF (Statement 121) and the accounting and reporting provisions of APB Opinion
No. 30, REPORTING THE RESULTS OF OPERATIONS--REPORTING THE EFFECTS OF DISPOSAL
OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL AND INFREQUENTLY
OCCURRING EVENTS AND TRANSACTIONS (Opinion 30), for the disposal of a segment of
a business (as previously defined in that Opinion). Statement 144 retains the
fundamental provisions in Statement 121 for recognizing and measuring impairment
losses on long-lived assets held for use and long-lived assets to be disposed of
by sale, while also resolving significant implementation issues associated with
Statement 121. For example, Statement 144 provides guidance on how a long-lived
asset that is used as part of a group should be evaluated for impairment,
establishes criteria for when a long-lived asset is held for sale, and
prescribes the accounting for a long-lived asset that will be disposed of other
than by sale. Statement 144 retains the basic provisions of Opinion 30 on how to
present discontinued operations in the income statement but broadens that
presentation to include a component of an entity (rather than a segment of a
business).

     The Company will adopt Statement 144 effective October 1, 2001. Management
does not expect the adoption of Statement 144 for long-lived assets held for use
to have a material impact on the Company's financial statements because the
impairment assessment under Statement 144 is largely unchanged from Statement
121. The provisions of the Statement for assets held for sale or other disposal
generally are required to be applied prospectively after the adoption date to
newly initiated disposal activities. Therefore, management cannot determine the
potential effects that adoption of Statement 144 will have on the Company's
financial statements.


                                       20
<PAGE>


     During 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes new standards for recognizing all derivatives as either assets or
liabilities, and measuring those instruments at fair value. SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133," changed the effective date to fiscal
years beginning after June 15, 2000. There was no impact on the Company's
financial statements with the adoption of this standard in the quarter ended
December 31, 2000.

RISK FACTORS

     Information or statements provided by the Company from time to time,
including statements contained in this Form 10-K, may contain certain
"forward-looking statements," including comments regarding anticipated future
operations, market opportunities, operating results and financial performance of
the Company. The Company's future operating performance and share prices are
influenced by many factors, including factors that may be treated in
forward-looking statements. The Company cautions readers that any
forward-looking statements made by the Company or any of its representatives in
this Form 10-K or in any other reports, filings, press releases, speeches or
other comments, are not a guarantee of future performance. Any such
forward-looking statements are subject to risks and uncertainties that may cause
actual results to differ materially from those which may be projected on the
basis of such forward-looking statements. Furthermore, the Company assumes no
obligation to update such forward-looking statements.

     Among the risks and uncertainties that may affect future performance are
those described below. These risk factors are being set forth pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act") with the intention of obtaining the benefits of the "safe harbor"
provisions of the Reform Act for such forward-looking statements.

OUR RELIANCE ON GOVERNMENTAL AGENCY CUSTOMERS HAS PRODUCED VOLATILITY IN
REVENUES AND EARNINGS.

     Our performance in any one reporting period is not necessarily indicative
of sales trends or future operating or earnings performance. During most
quarters, our revenues are concentrated in a relatively small number of large
customers, the majority of which are government agencies. We are subject to
significant quarter-to-quarter fluctuations in revenue, which are frequently
very difficult to predict. Such revenue volatility makes management of inventory
levels, cash flow and profitability inherently difficult. Factors which lead to
revenue fluctuations include variations in the availability of large
procurements and variations in our success in winning such procurements. In the
event we are successful in winning such procurements, there may be planned
unevenness in shipping schedules, as well as potential delays and schedule
changes in the timing of deliveries and recognition of revenue, or cancellation
of such procurements. Also, law enforcement and other government agencies are
subject to political, budgetary, purchasing and delivery constraints which we
expect may continue to result in quarterly and annual revenues and operating
results which may be irregular and difficult to predict.


                                       21
<PAGE>


THE SEPTEMBER 11, 2001 TERRORIST ATTACKS HAS INCREASED FINANCIAL EXPECTATIONS
THAT MAY NOT MATERIALIZE.

     The September 11, 2001 terrorist attacks have created an increase in demand
for our Company's products, however, we are uncertain whether the level of
demand will be as high as anticipated. Additionally, it is uncertain what, if
any, solutions will be adopted as a result of the terrorism and whether the
Company will be a part of the ultimate solution. Additionally, should the
Company's products be considered as a part of the security solution, it is
unclear what the level and how quickly funding may be made available. These
factors may adversely impact the Company and create unpredictability in revenues
and operating results.

OUR FINANCIAL PERFORMANCE MAY BE ADVERSELY AFFECTED BY COMPETITION; ANTICIPATED
GROWTH IN THE MARKETS FOR OUR PRODUCTS AND SERVICES MAY NOT MATERIALIZE.

     Markets for our products and services are characterized by significant and
increasing competition. Our financial results may be adversely affected by the
actions of existing and future competitors, including the development of new
technologies, the introduction of new products, and price reductions by such
competitors to gain or retain market share. Adverse consequences to us may
include the diminution of revenues and revenue opportunities, price reductions,
and the need to incur additional costs to respond to the actions of competitors.

     Furthermore, our expectations of future opportunities and investments to
capitalize on such opportunities are based on assumptions about growth in the
size of the market for identification systems and related products and services.
As this is a relatively new market, such assumptions and forecasts are
inherently difficult to make, and actual market growth may be substantially
different than we currently anticipate. Market growth depends on many factors,
including factors not within our control, including, but not limited to, market
acceptance of our technology, international market expansion, growth in
applicant processing markets, and replacement cycles for products currently in
use.

WE MAY BE UNABLE TO DEVELOP NEW PRODUCTS AND SERVICES AS ANTICIPATED.

     We intend to grow in part through the introduction of new products and
services in current and new markets. There can be no assurance that such new
products and services can be developed in a timely fashion, within allotted
budgets, or at all, nor can there be any assurance that such new products and
services will be accepted by the intended customers at profitable price levels
or at all. Additionally, there can be no assurances the facial recognition
products introduced will meet the technological demands customers may have.

WE MAY BE UNABLE TO UPGRADE OUR PRODUCTS AND DEVELOP AND INCORPORATE NEW
TECHNOLOGIES AS REQUIRED TO EFFECTIVELY COMPETE IN OUR INDUSTRY.

     We compete in markets characterized by continual and rapid technological
change. Frequently, our technical development programs require assessments to be
made of the future directions of technology and technology markets generally,
which are inherently risky and difficult to predict. Failure to choose correctly
among technical alternatives may result in material adverse effects on our
competitive position, revenues, required spending levels and profitability.

     The competitive nature of our markets requires continual investment in
upgrading of our product and service offerings. There can be no assurance that
the pace of our development efforts will be sufficient to maintain
competitiveness.

     Continued participation by us in the market for live scan systems which are
linked to forensic-quality databases under the jurisdiction of governmental
agencies may require the investment of our resources in upgrading of our
products and technology for us to compete and to meet regulatory and statutory
standards. There can be no assurance that such resources will be available to us
or that the pace of product and technology development established by management
will be appropriate to the competitive requirements of the marketplace.


                                       22
<PAGE>


OUR ONGOING SUCCESS IS DEPENDENT UPON THE CONTINUED AVAILABILITY OF CERTAIN KEY
EMPLOYEES.

     We are dependent in our operations on the continued availability of the
services of our employees, many of whom are individually key to our current and
future success, and the availability of new employees to implement our growth
plans. The market for skilled employees is highly competitive, especially for
employees in technical fields. While our compensation programs are intended to
attract and retain the employees required for us to be successful, there can be
no assurance that we will be able to retain the services of all of our key
employees or a sufficient number to execute on our plans, nor can there be any
assurances that we will be able to continue to attract new employees as
required.

PARTS AND SUBASSEMBLIES USED IN OUR MANUFACTURING OPERATIONS MAY NOT BE
AVAILABLE WHEN NEEDED.

     Certain components and subassemblies used in the manufacture of our systems
are sourced from single suppliers. In the event that these suppliers are unable
to provide us with our requirements, or were to change pricing significantly,
our results of operations could be materially and adversely affected.

WE MAY NEED ADDITIONAL FINANCING WHICH MAY NOT BE AVAILABLE TO US ON REASONABLE
TERMS OR ANY TERMS.

     To fully exploit the opportunities presented by our merger with Visionics
Technology Corporation (formerly Visionics Corporation) in February 2001, such
as joint product development and entry into new markets, additional capital may
be required. There can be no assurance, however, that the financing necessary to
pursue our business plan will be available on terms acceptable or favorable to
us, or on any terms. If we fail to obtain such financing, our business prospects
and the market price of our common stock may be materially adversely affected.

     Management believes that cash, cash equivalents and other working capital
provided from operations, together with available financing sources, are
sufficient to meet current operating requirements of our business. However,
risks related to our ability to maintain adequate working capital and liquidity
include the continued availability of credit under our line of credit which
expires on March 31, 2003, the continued availability of vendor credit as needed
and payment by customers of accounts receivable at such times and in such
amounts as to enable us to meet our payment obligations. In the event that the
above or other liquidity risks materialize, we may be unable to sustain our
operations from the sources of working capital available to us.

OUR SUCCESS DEPENDS IN PART ON THE EFFORTS AND SUCCESS OF THIRD PARTIES OVER
WHICH WE HAVE NO CONTROL.

     In addition to our direct marketing activities, we market our products and
services through various distributions and other cooperative relationships with
third parties such as automated fingerprint identification system ("AFIS")
suppliers and systems integrators. In many cases, the sale of our products or
services is dependent on the success of such third parties in winning contested
procurements, in executing on their own responsibilities under agreements with
customers and in doing so in a timely manner, and in the effectiveness of their
selling efforts on behalf of our products. At times, such third-party
distributors may offer products of our competitors as well.


                                       23
<PAGE>


OUR RESULTS OF OPERATIONS ARE SUBJECT TO GOVERNMENTAL CREDIT, FUNDING AND OTHER
RELATED FACTORS.

     We extend substantial credit to federal, state and local governments in
connection with sales of our products and services. Sales to sizeable customers
requiring large and sophisticated networks of live scan systems and peripheral
equipment often include technical requirements which may not be fully known at
the time requirements are specified by the customer. In addition, contracts may
specify performance criteria that must be satisfied before the customer accepts
the products and services. Collection of accounts receivable may be dependent on
completion of customer requirements, which may be unpredictable, subject to
change by the customer, and not fully understood at the time of acceptance of
the order, and may involve investment of additional resources. These investments
of additional resources are accrued when amounts can be estimated but may be
uncompensated and negatively impact profit margins and our liquidity.
Furthermore, in many instances, customer procurements are dependent on the
availability or continued availability of state or federal government grants and
general tax funding. Such funding may be subject to termination at any time at
the sole discretion of the government body providing or receiving such funds.
Additionally, without regard to termination of funding, government agencies both
domestically and internationally may successfully assert the right to terminate
business or funding relationships with us at their sole discretion without
adequate or any compensation or recourse for us.

OTHER FACTORS ALSO CONTRIBUTE TO VOLATILITY IN OUR OPERATING RESULTS.

     In addition to potential volatility due to market characteristics just
described, our financial results may be affected by many other factors which are
difficult to predict, including but not limited to: changes in the mix of
products sold; changes in the availability and pricing of components and
subassemblies; increases required in development and marketing expenses to
address opportunities or competitive pressures in the market; and unforeseen
legal expenses.

     Particularly noteworthy is the need to invest in planned technical
development programs to maintain and enhance our competitiveness, and to develop
and launch new products and services. To improve the manageability and
likelihood of success of such programs requires the development of budgets,
plans and schedules for the execution of these programs and the adherence to
such budgets, plans and schedules. The majority of such program costs are
payroll and related staff expenses, and secondarily materials, subcontractors,
promotional expenses and the like. These costs are very difficult to adjust in
response to short-term fluctuations in our revenues, compounding the difficulty
of achieving profitability in the event of a revenue downturn.

     Furthermore, management may from time to time determine that our
competitive position may be enhanced through substantial and increased
investments in product and technology development programs and/or marketing
initiatives. Management may determine to make such investments despite its
assessment that gross profit during the investment period will be less than the
expenses to be incurred, thus resulting in an anticipated loss during the
period. Such planned losses may be particularly difficult to manage in light of
the volatility of our revenue stream discussed above.

WE ARE EXPOSED TO MARKET RISKS.

     We are exposed to certain market risks with our $2 million line of credit
of which there were no borrowings outstanding at September 30, 2001. The line
bears interest at a rate of one half percent (0.5%) above the prime rate. We are
subject to foreign currency exposure, primarily with the British Pound and the
Euro. Our exposure to foreign currency fluctuations is not significant and
primarily related to our translation adjustment to convert our United Kingdom
subsidiary into U.S. dollars.


                                       24
<PAGE>


THE MARKETS FOR VISIONICS TECHNOLOGY'S PRODUCTS MAY BE ADVERSELY AFFECTED BY
LEGISLATION DESIGNED TO PROTECT PRIVACY RIGHTS.

     From time to time, facial recognition and other biometrics technologies
have been the focus of organizations and individuals seeking to curtail or
eliminate the use of these technologies on the grounds that these technologies
may be used to diminish personal privacy rights. In the event that such
initiatives result in restrictive legislation, the market for facial recognition
products may be adversely affected.


       RISKS RELATING TO THE MERGER WITH VISIONICS TECHNOLOGY CORPORATION

WE MAY NOT REALIZE THE ANTICIPATED BENEFITS OF THE MERGER WITH VISIONICS
TECHNOLOGY.

     The anticipated benefits of the merger may not be achieved unless certain
operations of Visionics and Visionics Technology are successfully integrated,
including aspects of the two companies' research and development and marketing
operations. The continued transition to a combined company will require
substantial management attention and the process of coordination of the
operations, especially research and development and marketing, may be
complicated by the necessity of combining personnel in different locations with
disparate business backgrounds and corporate cultures. In addition, combining
the two organizations could cause the interruption of, or a loss of momentum in,
the activities of either or both of the companies' businesses. Any difficulties
experienced in the transition process and any loss of or interruption in
business as a result of the diversion of resources to pursue the integration of
the organizations could have an adverse effect on the combined operations.

     Even if we are successful in integrating our operations with those of
Visionics Technology, all or many of the anticipated benefits of the merger may
not be realized. Our board of directors believes the merger will permit the
combined company to achieve a level of success neither company was capable of
attaining on its own. However, there can be no assurance that the merger will
enhance our profitability or otherwise benefit our stockholders. In the event
that the merger benefits fail to materialize, the market price of our common
stock may be materially adversely affected.

COSTS INCURRED IN CONNECTION WITH THE VISIONICS TECHNOLOGY MERGER WILL HAVE AN
ADVERSE EFFECT ON OUR PROFITABILITY.

     We incurred approximately $2.0 million of merger-related costs and expenses
during fiscal 2001. We accounted for the merger using the pooling of interests
method, pursuant to which all such direct costs and expenses related to the
merger will be immediately charged against our earnings rather than capitalized
and amortized to expense over an extended period. Consequently, our near-term
profitability has been adversely affected.

WE EXPECT TO INCUR SIGNIFICANT COSTS AND EXPENSES TO INTEGRATE THE OPERATIONS OF
VISIONICS TECHNOLOGY WITH OUR OPERATIONS, NEGATIVELY AFFECTING OUR SHORT-TERM
PROFITABILITY.

     We anticipate that the process of integrating the two companies' operations
will require the immediate investment of substantial resources. Financial
benefits flowing from the merger, if any, are not expected to be realized
sometime in fiscal 2002 or later. Consequently, the integration process will
likely have an adverse effect on our short-term profitability and, potentially,
the market price of our common stock.


                                       25
<PAGE>


VISIONICS TECHNOLOGY'S CUSTOMERS MAY PERCEIVE THE MERGER AS COMPETITIVELY
THREATENING.

     Visionics Technology's customers are primarily original equipment
manufacturers, application developers and system integrators who license
Visionics Technology's enabling technology. Excluding these sales, we sell our
products and services directly to end users, primarily law enforcement agencies.
Some of Visionics Technology's customers may mistakenly perceive our sales
practices as a competitive threat to their businesses and withdraw from further
interaction with Visionics Technology, adversely affecting the business and
prospects of the combined company.


                                       26
<PAGE>


ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Visionics Corporation:

     We have audited the accompanying consolidated balance sheets of Visionics
Corporation and subsidiaries as of September 30, 2001 and 2000, and the related
consolidated statements of operations, stockholders' equity and comprehensive
income (loss), and cash flows for each of the years in the three-year period
ended September 30, 2001. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Visionics Corporation and subsidiaries as of September 30, 2001 and 2000, and
the results of their operations and their cash flows for each of the years in
the three-year period ended September 30, 2001, in conformity with accounting
principles generally accepted in the United States of America.

     As discussed in Note 1 to the consolidated financial statements, effective
October 1, 2000, the Company changed its method of accounting for revenue
recognition based on guidance provided in SEC Staff Accounting Bulletin No. 101
(SAB 101), "Revenue Recognition in Financial Statements."



                                        KPMG LLP

Minneapolis, Minnesota
November 12, 2001


                                       27
<PAGE>


                     VISIONICS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                    2001             2000
                                                                                ------------     ------------
<S>                                                                             <C>              <C>
ASSETS
     Cash and cash equivalents                                                  $  9,716,772     $  3,623,574
     Restricted cash                                                                  80,915               --
     Accounts receivable, less allowance for doubtful accounts of $266,000
         and $150,800, respectively                                                6,704,761        9,779,796
     Inventory                                                                     5,999,894        3,900,754
     Prepaid expenses and other costs                                                452,847          269,088
                                                                                ------------     ------------
         Total current assets                                                     22,955,189       17,573,212

     Property and equipment                                                        4,775,102        3,986,750
         Less accumulated depreciation and amortization                           (3,052,603)      (2,616,184)
                                                                                ------------     ------------
                                                                                   1,722,499        1,370,566
                                                                                ------------     ------------

     Capitalized software costs, net of accumulated amortization of $294,338
         and $138,543, respectively                                                  683,635          839,430
     Other assets, net of accumulated amortization of $71,435 and $82,501,
         respectively                                                                 54,556           46,285
     Other assets                                                                         --           76,310
                                                                                ------------     ------------
                                                                                $ 25,415,879     $ 19,905,803
                                                                                ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
     Accounts payable                                                           $  1,690,642     $  2,093,384
     Deferred revenue                                                              7,653,552        3,956,270
     Other accrued expenses                                                        1,460,576        1,760,280
     Current installments of notes payable                                            16,857           15,071
     Current installments of capital lease obligations                                 2,406            2,017
                                                                                ------------     ------------
         Total current liabilities                                                10,824,033        7,827,022

     Deferred revenue, excluding current portion                                   1,101,614          511,976
     Notes payable, excluding current installments                                    12,258           28,334
     Capital lease obligations, less current installments                              1,134            3,540
                                                                                ------------     ------------
         Total liabilities                                                        11,939,039        8,370,872
                                                                                ------------     ------------

Stockholders' equity:
     Preferred stock, undesignated, par value $.01 per share, 5,000,000
         shares authorized, none issued                                                   --               --
     Common stock, $.01 par value.  Authorized, 40,000,000 shares; issued
         and outstanding 25,431,298 and 23,115,781 shares, respectively              254,313          231,158
     Additional paid-in capital                                                   60,090,870       52,355,044
     Deferred compensation                                                          (126,250)         (93,750)
     Accumulated deficit                                                         (46,748,577)     (40,957,320)
     Accumulated other comprehensive income (loss)                                     6,484             (201)
                                                                                ------------     ------------
         Total stockholders' equity                                               13,476,840       11,534,931
                                                                                ------------     ------------
Commitments and contingencies (notes 15, 16, and 17)                            $ 25,415,879     $ 19,905,803
                                                                                ============     ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       28
<PAGE>


                     VISIONICS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                               2001             2000             1999
                                                           ------------     ------------     ------------
<S>                                                        <C>              <C>              <C>
Revenue:
     Live scan identification systems                      $ 18,093,286     $ 17,866,769     $ 18,214,126
     Live scan maintenance                                    7,914,479        5,073,699        3,726,404
     Integral Partners                                               --               --          258,720
     FaceIt licenses                                          2,978,392        1,760,056        1,472,729
     FaceIt services                                          1,486,903          874,536        1,150,585
                                                           ------------     ------------     ------------
         Total revenue                                       30,473,060       25,575,060       24,822,564
                                                           ------------     ------------     ------------

Cost of revenue:
     Live scan identification systems                        11,583,539       11,202,458       12,034,849
     Live scan maintenance                                    6,055,975        3,616,927        2,776,740
     Integral Partners                                               --               --          142,767
     FaceIt licenses                                            494,999          182,030           42,079
     FaceIt services                                          1,150,859          476,273          259,128
                                                           ------------     ------------     ------------
         Total cost of revenue                               19,285,372       15,477,688       15,255,563
                                                           ------------     ------------     ------------
     Gross margin                                            11,187,688       10,097,372        9,567,001
                                                           ------------     ------------     ------------

Operating expenses:
     Selling, general and development                        13,481,998       11,058,234        9,507,355
     Non-recurring charges                                    2,111,761          300,162               --
                                                           ------------     ------------     ------------
         Total expenses                                      15,593,759       11,358,396        9,507,355
                                                           ------------     ------------     ------------

Income (loss) from operations                                (4,406,071)      (1,261,024)          59,646

Other income (expense):
     Interest and dividend income                               204,042          363,772          180,381
     Interest expense                                            (6,972)          (8,870)        (299,397)
     Other income (expense)                                     (23,550)             716          (11,833)
                                                           ------------     ------------     ------------
         Total other income (expense)                           173,520          355,618         (130,849)
                                                           ------------     ------------     ------------

Loss before income taxes                                     (4,232,551)        (905,406)         (71,203)
Provision for (benefit of) income taxes                         123,054          (37,538)          56,974
                                                           ------------     ------------     ------------

Loss before accounting change                                (4,355,605)        (867,868)        (128,177)
Cumulative effect of change in accounting principle          (1,435,652)              --               --
                                                           ------------     ------------     ------------
Net loss                                                   $ (5,791,257)    $   (867,868)    $   (128,177)
                                                           ============     ============     ============
Net loss per common share - basic and assuming dilution
-------------------------------------------------------
Loss before accounting change                              $      (0.18)    $      (0.04)    $      (0.01)
Cumulative effect of change in accounting principle               (0.06)              --               --
                                                           ------------     ------------     ------------
Net loss per common share                                  $      (0.24)    $      (0.04)    $      (0.01)
                                                           ============     ============     ============

Weighted average common shares outstanding - basic and
    assuming dilution                                        23,677,228       22,840,110       21,002,687
                                                           ============     ============     ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       29
<PAGE>


                     VISIONICS CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                              Common Stock       Additional    Deferred                      Other
                                         ----------------------    Paid-in      Comp-       Accumulated  Comprehensive
                                           Shares       Amount     Capital     ensation       Deficit     Income (Loss)     Total
                                         ------------------------------------------------------------------------------------------
<S>                                      <C>          <C>        <C>          <C>          <C>            <C>           <C>
Balance September 30, 1998               19,880,546   $ 198,805  $47,682,098  $  (91,500)  $(40,399,394)  $        --   $ 7,390,009

Restricted stock awards                      43,200         432       53,568     (54,000)            --            --            --
Amortization of deferred compensation            --          --           --      70,000             --            --        70,000
Exercise of stock options and warrants      423,966       4,240      603,359          --             --            --       607,599
Stock award for retirement plan              87,897         879      119,979          --             --            --       120,858
Debt conversions                          1,123,874      11,239    1,219,743          --             --            --     1,230,982
Private placements                          694,996       6,950      880,581          --             --            --       887,531
Issuance of stock options and warrants
    as payment for services received             --          --       35,134          --             --            --        35,134
Issuance of warrants in connection with
    convertible debentures                       --          --       12,600          --             --            --        12,600
Intrinsic value of beneficial conversion
    feature of convertible debentures            --          --      125,000          --             --            --       125,000
Foreign currency translation adjustment          --          --           --          --             --           (58)          (58)
Net loss                                         --          --           --          --       (128,177)           --      (128,177)
                                                                                                                        -----------
Total comprehensive loss                                                                                                   (128,235)
                                         ------------------------------------------------------------------------------------------
Balance September 30, 1999               22,254,479     222,545   50,732,062     (75,500)   (40,527,571)          (58)   10,351,478

Restricted stock awards                      10,269         102       76,398     (76,500)            --            --            --
Amortization of deferred compensation            --          --           --      58,250             --            --        58,250
Exercise of stock options and warrants      675,853       6,759    1,191,247          --             --            --     1,198,006
Stock-based compensation                         --          --       18,000          --             --            --        18,000
Stock award for retirement plan              45,855         459      154,302          --             --            --       154,761
Debt conversions                            116,369       1,164      151,760          --             --            --       152,924
Issuance of stock, stock options and
    warrants as payment for services
    received                                 12,956         129       31,275          --             --            --        31,404
Foreign currency translation adjustment          --          --           --          --             --          (143)         (143)
Net loss                                         --          --           --          --       (867,868)           --      (867,868)
                                                                                                                        -----------
Total comprehensive loss                                                                                                   (868,011)
Adjustment to conform fiscal year end
    of pooled acquisition                        --          --           --          --        438,119            --       438,119
                                         ------------------------------------------------------------------------------------------
Balance September 30, 2000               23,115,781     231,158   52,355,044     (93,750)   (40,957,320)         (201)   11,534,931

Restricted stock awards                      13,450         134       89,866     (90,000)            --            --            --
Amortization of deferred compensation            --          --           --      57,500             --            --        57,500
Exercise of stock options and warrants      925,282       9,253    1,858,913          --             --            --     1,868,166
Stock-based compensation                         --          --       57,925          --             --            --        57,925
Stock award for retirement plan              73,923         739      217,326          --             --            --       218,065
Private placement                         1,302,862      13,029    5,430,493          --             --            --     5,443,522
Issuance of stock, stock options and
    warrants as payment for services
    received                                     --          --       81,303          --             --            --        81,303
Foreign currency translation adjustment          --          --           --          --             --         6,685         6,685
Net loss                                         --          --           --          --     (5,791,257)           --    (5,791,257)
                                                                                                                        -----------
Total comprehensive loss                                                                                                 (5,784,572)
                                         ------------------------------------------------------------------------------------------
Balance September 30, 2001               25,431,298   $ 254,313  $60,090,870  $ (126,250)  $(46,748,577)  $     6,484   $13,476,840
                                         ==========================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       30
<PAGE>


                     VISIONICS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                   2001             2000             1999
                                                                               ------------     ------------     ------------
<S>                                                                            <C>              <C>              <C>
Cash flows from operating activities:
       Net loss                                                                $ (5,791,257)    $   (867,868)    $   (128,177)
       Adjustments to reconcile net loss to net cash (used in) provided by
           operating activities:
               Provision for doubtful accounts receivable                           115,200           22,213         (157,088)
               Stock-based compensation                                             196,728          107,654          105,134
               Depreciation and amortization                                        811,006          802,687          603,899
               Amortization of software development costs                           155,795           99,290           42,079
               Write-off of intangible assets                                           607               --           14,694
               Deferred income taxes                                                     --         (162,000)          45,000
               (Gain) loss on disposal of property and equipment                      4,724             (716)          11,833
               Interest expense amortization for the intrinsic value of the
                   beneficial conversion feature of convertible debentures               --               --          125,000
               Interest expense on debentures converted into common stock                --           12,350           75,737
               Adjustment to conform fiscal year end of pooled acquisition               --          438,119               --
         Changes in operating assets and liabilities:
               Restricted cash                                                      (80,915)              --               --
               Accounts receivable                                                2,959,835       (2,088,682)      (3,009,244)
               Inventory                                                         (2,099,140)        (927,756)        (124,577)
               Prepaid expenses and other expenses                                 (107,449)        (112,451)            (289)
               Accounts payable and accrued expenses                               (484,381)      (1,100,566)       1,708,261
               Deferred revenue                                                   4,286,920        1,298,418        2,251,537
               Income taxes payable                                                      --          (11,000)          11,000
                                                                               ------------     ------------     ------------
         Net cash (used in) provided by operating activities                        (32,327)      (2,490,308)       1,574,799
                                                                               ------------     ------------     ------------

Cash flows from investing activities:
         Purchase of property and equipment                                      (1,153,774)        (862,997)        (573,367)
         Proceeds from disposal of property and equipment                             1,090           12,794            5,878
         Patents, trademarks, copyrights, licenses and software                     (23,857)        (427,595)        (442,663)
                                                                               ------------     ------------     ------------
         Net cash used in investing activities                                   (1,176,541)      (1,277,798)      (1,010,152)
                                                                               ------------     ------------     ------------

Cash flows from financing activities:
         Net line of credit payments                                                     --               --         (111,962)
         Proceeds from notes payable                                                     --           49,142               --
         Repayment of notes payable                                                 (14,290)          (5,737)              --
         Principal payments on capital lease obligations                             (2,017)        (152,061)         (67,033)
         Exercise of warrants and stock options                                   1,868,166        1,198,006          607,599
         Proceeds from common stock issued in private placements                  5,443,522               --          887,531
         Issuance of convertible debentures                                              --               --          450,111
                                                                               ------------     ------------     ------------
         Net cash provided by financing activities                                7,295,381        1,089,350        1,766,246
                                                                               ------------     ------------     ------------

Effect of exchange rates on cash                                                      6,685             (143)             (58)
                                                                               ------------     ------------     ------------

Increase (decrease) in cash and cash equivalents                                  6,093,198       (2,678,899)       2,330,835

Cash and cash equivalents at beginning of year                                    3,623,574        6,302,473        3,971,638
                                                                               ------------     ------------     ------------

Cash and cash equivalents at end of year                                       $  9,716,772     $  3,623,574     $  6,302,473
                                                                               ============     ============     ============

Supplemental disclosure of cash flow information:
         Cash paid during the year for interest                                $      6,972     $      7,159     $     65,628
         Cash paid during the year for income taxes                                 123,054           49,000               --
                                                                               ============     ============     ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       31
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  NATURE OF BUSINESS

     The Company is a provider of enabling technology, platforms, products,
services and systems for biometric identification, with a specific focus on
facial recognition and forensic-quality fingerprint identification.

(b)  PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

     The accompanying consolidated financial statements include the accounts of
the Company, its wholly owned subsidiary Visionics Technology Corporation
("VTC") located in New Jersey, and its wholly owned British subsidiary,
Visionics Ltd., which commenced operations during fiscal 2000. All material
intercompany accounts and transactions have been eliminated in consolidation.

     The accompanying financial statements reflect the combined results of DBI
and Visionics Corporation under the pooling of interests method of accounting.
The presentation has the effect of including VTC's and Visionics Ltd.'s results
of operations for the three months ended December 31, 1999 in the consolidated
statements of operations for both the years ended September 30, 2000 and 1999.
VTC had revenues of approximately $400,000 and a net loss of approximately
$440,000 for the three months ended December 31, 1999. The Company recorded a
$438,119 adjustment in fiscal 2000 to reduce accumulated deficit to conform to
VTC's year-end to that of the Company. The fiscal years ended September 30, 1999
and 1998 for DBI have been combined with the calendar years of VTC and Visionics
Ltd. The Company incurred $2,010,322 and $300,162 of merger related expense in
the years ended September 30, 2001 and 2000, respectively, which were recorded
as non-recurring charges.

(c)  USE OF ESTIMATES

     The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

(d)  STATEMENTS OF CASH FLOWS

CASH AND CASH EQUIVALENTS:

     For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments and certificates of deposit purchased with an
original maturity date of three months or less to be cash equivalents.


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Fiscal 2001

     The Company has recorded compensation expense in the accompanying
consolidated statement of operations for the year ended September 30, 2001 in
the amount of $57,925 pertaining to grants of options to employees below the
estimated fair value of the Company's common stock during fiscal 2000.

     Effective with their election at the annual stockholders' meeting held on
July 26, 2001, the Company granted 13,450 shares of restricted common stock to
its non-employee directors. The grant resulted in $90,000 in additional common
stock issued and an equal amount of deferred compensation expense that is being
amortized on a straight-line basis over the three-year vesting period.

     On December 31, 2000, the Company issued 73,923 shares of common stock to
satisfy the Company's fiscal 2000 discretionary matching to employees electing
participation in the Company's 401(k) retirement plan. The issuance increased
common stock and additional paid-in capital by $218,065 and reduced accrued
compensation by the same amount.


                                       32
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal 2000

     Effective with his appointment to the Company's Board of Directors on
December 14, 1999, the Company granted 1,125 shares of restricted common stock
to a non-employee director. The grant resulted in $4,500 in additional common
stock issued and an equal amount of deferred compensation expense that is being
amortized on a straight-line basis over the three-year vesting period.

     On December 31, 1999, the Company issued 45,855 shares of common stock to
satisfy the Company's fiscal 2000 discretionary matching to employees electing
participation in the Company's 401(k) retirement plan. The issuance increased
common stock and additional paid-in capital by $154,761 and reduced accrued
compensation by the same amount.

     Effective with their election at the annual stockholders' meeting held on
February 8, 2000, the Company granted 9,144 shares of restricted common stock to
its non-employee directors. The grant resulted in $72,000 in additional common
stock issued and an equal amount of deferred compensation expense that is being
amortized on a straight-line basis over the three-year vesting period.

     For the fiscal year ended September 30, 2000, the Company issued 116,369
shares of common stock for the conversion of the remaining principal aggregating
$150,000 of the 1997 Convertible Debentures plus $12,252 of accrued interest.

     During the fiscal year ended September 30, 2000, the Company acquired
property and equipment in the amount of $7,249 in exchange for capital leases.

     In March 2000, the Company issued 12,956 shares of common stock for
services provided. Compensation expense in the amount of $8,750 representing the
estimated fair value of common shares issued has been included in the
consolidated statement of operations for the year ended September 30, 2000.

     During the year ended September 30, 2000, the Company issued options to
acquire 12,955 shares of the Company's common stock with an exercise price of
$.68 per share for services provided. The Company has recorded compensation
expense in the amount of $3,000 related to the granting of these options for the
year ended September 30, 2000.

     During the year ended September 30, 2000, the Company granted a total of
273,625 options to employees having an exercise price of $1.35 per share when
the estimated fair value of the Company's common stock was $1.95 to $3.09 per
share. Consequently, the Company has recorded compensation expense in the
accompanying consolidated statement of operations for the year ended September
30, 2000 in the amount of $18,000.

Fiscal 1999

     On October 1, 1998, the Company issued a warrant in payment for services
rendered in securing employment of an employee of its wholly owned subsidiary,
Integral Partners, Inc. The warrant entitles the holder to purchase 15,000
shares of the Company's common stock exercisable at the price of $2.60 per
share. The warrant was valued at $20,000.

     On December 31, 1998 and March 16, 1999, the Company issued an aggregate of
87,897 shares of common stock to satisfy the Company's fiscal 1999 discretionary
matching to employees electing participation in the Company's 401(k) retirement
plan. The issuance increased common stock and additional paid-in capital by
$120,858 and reduced accrued compensation by the same amount.

     Effective with their election at the annual stockholders' meeting held on
March 16, 1999, the Company granted 43,200 shares of restricted common stock to
its non-employee directors. The grant resulted in $54,000 in additional common
stock issued and an equal amount of deferred compensation expense that is being
amortized on a straight-line basis over the three-year vesting period.


                                       33
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     For the fiscal year ended September 30, 1999, the Company issued 1,123,874
shares of common stock for the conversion of principal aggregating $1,250,000 of
the 1997 Debentures plus $75,737 of accrued interest.

     During the fiscal year ended September 30, 1999, the Company acquired
property and equipment in the amount of $69,664 in exchange for capital leases.

(e)  CAPITALIZED SOFTWARE DEVELOPMENT COSTS

     Research and development costs consist principally of salaries and benefits
paid to the Company's employees in the development of software products. The
Company's policy is to expense all research and development costs as incurred
until technological feasibility is established. Commencing with the
establishment of technological feasibility and concluding at the time the
product is ready for market, software development costs are capitalized.
Technological feasibility is defined as being established when product design
and a working model of the software product has been completed and tested. The
costs of those products that have met the technological feasibility criteria
have been capitalized. Annual amortization of capitalized software development
costs is calculated as the greater of the amount computed using (a) the ratio of
actual revenue from a product to the total of current and anticipated related
revenues from the product or (b) the economic life of the product, estimated to
be five years, on a straight-line basis.

(f)  REVENUE RECOGNITION

     SOFTWARE LICENSES - Revenue from software licenses is recognized when all
of the following conditions have been satisfied: completion of a written license
arrangement; delivery of the software with no significant post delivery
obligations of the Company; the fee is fixed or determinable; and payment is due
within one year and collection is probable. Revenue from sublicense arrangements
with resellers is recognized upon shipment of the software, if there are no
significant post-delivery obligations, the reseller is creditworthy, and if the
terms of arrangement are such that the payment terms are not subject to price
adjustment, are non-cancelable and non-refundable. Revenue from sublicensing
arrangements with significant post contract customer support ("PCS") (in excess
of one year), including enhancements and upgrades, where significant vendor
specific objective evidence does not exist to allocate the fee to the software
and PCS, is recognized along with the PCS ratably over the period during which
PCS is expected to be provided. Revenue from consulting services is recognized
as work is performed.

     EQUIPMENT - Revenue from product sales is usually recognized upon
installation, although recognition may from time to time occur at a different
time based on the terms of specific customer contracts.

     SERVICES - Revenue for professional and systems integration services is
recognized using the percentage of completion method, completed contract method
or on a time-and-materials basis. Revenue from maintenance and repair contracts
is recognized over the period of the agreement. Service revenue is recognized
when the related service is performed.

     Deferred revenue represents amounts that the Company has billed to
customers pursuant to contractual terms and does not meet the Company's policy
for recognizing revenue.

     The Company sometimes receives grant funding. If the grant is to pursue
technological advances where the Company will be investing its own monies
simultaneously with the grant funding, the funds are recorded as an offset to
the development costs. If the grant received represents full funding, the
funding is recorded as revenue and the associated costs as cost of sales using
the percentage of completion contract accounting method.

(g)  FOREIGN CURRENCY TRANSLATION

     Assets and liabilities of the foreign subsidiary are translated at the
exchange rate in effect at the balance sheet date. Revenues, costs, and expenses
are translated using an average exchange rate. Gains and losses resulting from
translation are accumulated as a separate component of accumulated other
comprehensive income (loss) in stockholders' equity. Gains and losses resulting
from foreign currency transactions are included in the consolidated financial
statements.


                                       34
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(h)  PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost. Depreciation of property and
equipment is computed using the double-declining balance and straight-line
methods over the estimated useful lives of the assets, generally 3 to 7 years.
Leasehold improvements are amortized over the shorter of the estimated useful
life of the assets or the term of the lease. Expenditures for major renewals or
betterment that extend the useful lives of equipment are capitalized.
Expenditures for maintenance and repairs are charged to expense as incurred.

(i)  PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

     Costs associated with patents, trademarks and copyrights are capitalized
and amortized over 60 months or the remaining life of the patent, trademark or
copyright, whichever is shorter. The cost of software licenses related to
purchased software are capitalized and amortized over 36 months or the life of
the license, whichever is shorter. Accumulated amortization at September 30,
2001 and 2000 was $71,435 and $82,501, respectively. Management periodically
assesses the amortization period and recoverability of the carrying amount of
intangible assets based upon an estimation of their value and future benefits of
the recorded asset. Management has concluded that the carrying amount of the
intangible assets is realizable.

(j)  LONG-LIVED ASSETS

     The Company reviews its long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net undiscounted cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell.

(k)  WARRANTY COSTS

     Estimated product warranty costs for live scan systems are accrued when the
revenue is recognized. Revenue for live scan systems is usually recognized at
time of installation.

(l)  ADVERTISING COSTS

     Advertising costs are expensed as incurred and aggregated $26,000, $36,000
and $26,000, respectively, for the years ended September 30, 2001, 2000 and
1999.

(m)  ENGINEERING AND DEVELOPMENT ARRANGEMENTS

     Engineering and development costs are expensed as incurred. Engineering and
development expenses for fiscal 2001 and 2000 are net of approximately $326,000
and $495,000, respectively of costs related to a federally funded demonstration
project grant administered by Hennepin County of Minnesota.

(n)  LOSS PER SHARE

     Basic loss per share excludes dilution and is computed by dividing the net
loss by the weighted average number of common shares outstanding during the
period. Diluted loss per share includes dilutive stock options and warrants
determined by the treasury stock method and dilutive convertible securities.
Because the Company suffered a net loss for the years ended September 30, 2001,
2000, and 1999, the effects of potential common shares were not included in the
calculation as their effects would be anti-dilutive.


                                       35
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(o)  INCOME TAXES

     The Company uses the asset and liability method of accounting for income
taxes. Deferred tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the financial statement
carrying amount and tax basis of assets and liabilities. The Company provides
for deferred taxes at the enacted tax rate that is expected to apply when the
temporary differences reverse.

(p)  STOCK-BASED COMPENSATION

     The Company uses the intrinsic-value method for determining the amount of
compensation to be recorded for employee stock grants and the fair value method
for determining the amount of compensation to be recorded for non-employee
grants. Pro forma disclosures of net loss and loss per share are presented as if
the fair-value method had been applied in measuring compensation cost for
employee stock grants.

(q)  SEGMENTS OF AN ENTERPRISE

     The Company operates in one business segment: the identification
information systems segment.

(r)  NEW ACCOUNTING PRONOUNCEMENTS

     In August 2001, the Financial Accounting Standards Board issued FASB
Statement No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED
ASSETS (Statement 144), which supersedes both FASB Statement No. 121, ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF (Statement 121) and the accounting and reporting provisions of APB Opinion
No. 30, REPORTING THE RESULTS OF OPERATIONS--REPORTING THE EFFECTS OF DISPOSAL
OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL AND INFREQUENTLY
OCCURRING EVENTS AND TRANSACTIONS (Opinion 30), for the disposal of a segment of
a business (as previously defined in that Opinion). Statement 144 retains the
fundamental provisions in Statement 121 for recognizing and measuring impairment
losses on long-lived assets held for use and long-lived assets to be disposed of
by sale, while also resolving significant implementation issues associated with
Statement 121. For example, Statement 144 provides guidance on how a long-lived
asset that is used as part of a group should be evaluated for impairment,
establishes criteria for when a long-lived asset is held for sale, and
prescribes the accounting for a long-lived asset that will be disposed of other
than by sale. Statement 144 retains the basic provisions of Opinion 30 on how to
present discontinued operations in the income statement but broadens that
presentation to include a component of an entity (rather than a segment of a
business).

     The Company will adopt Statement 144 effective October 1, 2001. Management
does not expect the adoption of Statement 144 for long-lived assets held for use
to have a material impact on the Company's financial statements because the
impairment assessment under Statement 144 is largely unchanged from Statement
121. The provisions of the Statement for assets held for sale or other disposal
generally are required to be applied prospectively after the adoption date to
newly initiated disposal activities. Therefore, management cannot determine the
potential effects that adoption of Statement 144 will have on the Company's
financial statements.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101") which provides the staff's views in
applying generally accepted accounting principles to selected revenue
recognition issues. In October 2000, the SEC provided interpretive guidance for
SAB 101. Effective October 1, 2000 the Company changed its method of accounting
for certain identification systems revenue based on the guidance provided in
SAB101. Since most of the equipment the Company sells includes installation
provided by the Company a significant portion of revenue recognition is deferred
until installation, particularly where the equipment is integrated to an outside
network. Prior to October 1, 2000 the Company generally recognized product
revenue on the date of shipment for orders which were f.o.b. origin and upon
delivery for f.o.b. destination. The Company recorded a $1,436,000 cumulative
effect of accounting change in the three-month period ended December 31, 2000.
Under change in accounting principle, $3,890,000 of revenue recorded in periods
prior to October 1, 2000 was recorded as revenue again as the equipment was
installed in 2001.


                                       36
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4)  SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK

     The Company extends credit to substantially all of its customers.
Approximately 85% and 93%, respectively, of customer accounts receivable at
September 30, 2001 and 2000 were from government agencies, of which 54% was from
three customers at September 30, 2001 and 33% was from one customer at September
30, 2000. For the years ended September 30, 2001, 2000 and 1999, revenue from
one customer in 2001 accounted for 26%, revenue from two customers in 2000
accounted for 32%, and revenue from two customers in 1999 accounted for 38%,
respectively, of total revenue. Export revenues were 6%, 2% and 4% of total
revenues, for the years ended September 30, 2001, 2000 and 1999, respectively.

     Accounts receivable at September 30, 2001 and 2000 include $1,079,576 and
$850,568, respectively, of costs in excess of billings under a federal
government funded development project administered by Hennepin County of
Minnesota. Restricted cash of $80,915 at September 30, 2001 relates to an escrow
account established per the terms of a contract with Hennepin County of
Minnesota.

(5)  INVENTORY

     Inventory is valued at standard cost which approximates the lower of
first-in, first-out ("FIFO") cost or market. Inventory consists of the
following:

                                                          September 30,
                                                      2001             2000
                                                  ------------    ------------

           Components and subassemblies           $  3,595,310    $  3,210,121
           Work in process                             556,279         217,211
           Finished goods                            1,848,305         473,422
                                                  ------------    ------------
                                                  $  5,999,894    $  3,900,754
                                                  ============    ============

(6)  PROPERTY AND EQUIPMENT

     Property and equipment, including equipment under capital lease, is
comprised of the following:

                                                          September 30,
                                                      2001            2000
                                                  ------------    ------------

           Leasehold improvements                 $    600,330    $    295,220
           Office furniture and equipment            2,043,457       1,763,470
           Manufacturing equipment and tooling         496,394         493,376
           Customer service equipment                  708,495         605,254
           Engineering equipment                       871,630         774,648
           Vehicles                                     54,796          54,782
                                                  ------------    ------------
                                                  $  4,775,102    $  3,986,750
                                                  ============    ============


                                       37
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7)  CAPITALIZED SOFTWARE DEVELOPMENT COSTS

     Capitalized software development costs consist of the following:

                                                           September 30,
                                                       2001            2000
                                                   ------------    ------------

        Capitalized software development costs     $    977,973    $    977,973
        Less accumulated depreciation                  (294,338)       (138,543)
                                                   ------------    ------------
                                                   $    683,635    $    839,430
                                                   ============    ============

     Amortization of capitalized software development costs in the amount of
$155,795, $99,290 and $42,079 for the years ended September 30, 2001, 2000 and
1999, respectively, is included in costs of license in the accompanying
consolidated statements of operations.

(8)  OTHER ACCRUED EXPENSES

     Other accrued expenses consists of:

                                                           September 30,
                                                       2001            2000
                                                   ------------    ------------

        Accrued salaries, bonuses and commissions  $    523,286    $    343,958
        Accrued vacation                                411,809         306,955
        Accrued installation costs                           --         480,500
        Accrued warranty costs                          135,332         301,570
        Other accrued expenses                          390,149         327,297
                                                   ------------    ------------
                                                   $  1,460,576    $  1,760,280
                                                   ============    ============

(9)  NOTES PAYABLE

     Notes payable at September 30, 2001 and 2000 in the amounts of $29,115 and
$43,405 consists of amounts due pursuant to the financing of certain vehicles
owned by the Company. The notes are payable over a three-year period in monthly
installments of approximately $1,650 including interest at rates per annum of
12% to 13%. Aggregate principal maturities of the notes for the years ending
September 30 are as follows: 2002 - $16,857; and 2003 - $12,258.

(10) LINE OF CREDIT

     The Company has an inventory and receivables financing line of credit for
the lesser of eligible inventory and receivables or $2,000,000. Borrowings under
this line of credit are secured by all the assets of the Company. The line bears
interest at a rate of 0.5% (one half percent) above the prime rate. The line
will expire on March 31, 2003. There were no borrowings under this line at
September 30, 2001.

(11) CONVERTIBLE DEBENTURES

     On December 1, 1997 the Company entered into a convertible subordinated
debenture purchase agreement ("Purchase Agreement") with a private investor,
providing for the Company's issuance and sale of up to an aggregate of
$2,500,000 of 8% Convertible Subordinated Debentures (the "1997 Debentures") in
tranches of $500,000 each. In connection with the Purchase Agreement, the
Company has issued to the purchaser of the debentures warrants to purchase
75,000 shares of common stock at $2.50 per share. Net proceeds to the Company
were used for working capital, business development and other general corporate
purposes.


                                       38
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Through 2000, the Company issued 2,435,770 shares of common stock for the
conversion of the $2,500,000 principal amount of 1997 Convertible Debentures
plus $113,458 of accrued interest at an average conversion price of $1.07 per
share.

(12) STOCKHOLDERS' EQUITY

STOCK OPTIONS

     In order to attract and retain employees and directors, while preserving
cash resources, the Company has, since its inception, utilized stock option
awards issued through various stock option plans and employment arrangements.

     As of September 30, 2001, options to purchase 3,123,434 shares of common
stock were issued and outstanding to employees and directors and options to
purchase 27,591 shares were issued and outstanding to contractors. Of these
grants, 1,684,195 shares were exercisable at September 30, 2001.

     During fiscal 2001, 2000 and 1999, the Company granted options to acquire
an aggregate of 0, 12,955 and 25,000, respectively, to non-employees and
recorded non-cash expense of $81,303, $22,654 and $15,134, respectively, in each
fiscal year.

     Details of the status of stock options as of and for each of the years the
three-year period ended September 30, 2001 are shown in the table below:

<TABLE>
<CAPTION>
                                                  Shares                         Weighted-
                                                   Under                          Average
                                                  Option       Price Range    Exercise Price
                                               ------------   -------------   --------------
<S>                                              <C>          <C>                <C>
        Unexercised options outstanding -
             September 30, 1998                  2,189,052    $0.19 - 13.63      $1.96

        Options granted                            606,316     0.68 -  2.94       1.30
        Options exercised                         (144,551)    0.19 -  2.06       1.76
        Options forfeited                         (377,125)    0.29 - 13.63       1.94
--------------------------------------------------------------------------------------------
        Unexercised options outstanding -
             September 30, 1999                  2,273,692     0.19 -  9.50       1.80

        Options granted                          1,657,962     0.68 -  7.88       3.11
        Options exercised                         (282,790)    0.19 -  2.56       1.72
        Options forfeited                         (188,620)    0.19 -  1.25       1.29
--------------------------------------------------------------------------------------------
        Unexercised options outstanding -
             September 30, 2000                  3,460,244     0.19 -  9.50       2.47

        Options granted                            660,775     4.00 -  6.69       5.66
        Options exercised                         (831,624)    0.19 -  4.50       2.04
        Options forfeited                         (138,370)    0.68 -  7.88       4.65
--------------------------------------------------------------------------------------------
        Unexercised options outstanding -
             September 30, 2001                  3,151,025    $0.19 -  9.50      $3.15
                                               ============
</TABLE>

     At September 30, 2001, the weighted average exercise price and weighted
average remaining contractual life of outstanding options was $3.15 and 6.34
years, respectively.


                                       39
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following table summarizes information with respect to options
outstanding and exercisable as of September 30, 2001:

<TABLE>
<CAPTION>
                                        OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
                              --------------------------------------   ---------------------------------------
                                            WEIGHTED                                  WEIGHTED
                                             AVERAGE       WEIGHTED                    AVERAGE       WEIGHTED
       RANGE OF                             REMAINING      AVERAGE                    REMAINING      AVERAGE
       EXERCISE                NUMBER OF   CONTRACTUAL     EXERCISE      NUMBER OF   CONTRACTUAL     EXERCISE
        PRICES                  SHARES     LIFE (YEARS)     PRICE         SHARES     LIFE (YEARS)     PRICE
   -----------------------------------------------------------------   ---------------------------------------
<S>         <C>               <C>              <C>          <C>         <C>             <C>          <C>
    $0.00 - $0.99               553,773        7.70         $ 0.65        498,387       7.76         $ 0.64
    $1.00 - $1.99               823,198        6.38           1.60        564,589       5.69           1.68
    $2.00 - $2.99               271,102        5.93           2.37        259,769       5.84           2.35
    $3.00 - $3.99               230,500        6.63           3.40        100,167       6.17           3.32
    $4.00 - $4.99               588,929        5.85           4.42        153,617       5.50           4.47
    $5.00 - $5.99               245,273        6.18           5.41         34,333       5.95           5.25
    $6.00 - $6.99               353,250        5.87           6.26             --         --             --
    $7.00 - $7.99                77,500        3.81           7.88         65,833       3.53           7.88
    Over $8.00                    7,500        0.38           9.50          7,500       0.38           9.50
                          -------------- ---------------------------   ----------- ---------------------------
                              3,151,025        6.34         $ 3.15      1,684,195       6.23         $ 2.18
                          ==========================================   =======================================
</TABLE>

     The Company applies APB Opinion No. 25 in accounting for options granted to
employees and directors under its stock option plans and, accordingly, no
compensation cost has been recognized for its stock options granted to its
employees or directors in the financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net loss would have changed to the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
                                                   2001              2000           1999
                                               ----------------------------------------------
<S>                                             <C>              <C>              <C>
           Net loss - as reported               $ 5,791,257      $   867,868      $ 128,177
           Net loss - pro forma                 $ 8,532,978      $ 2,212,954      $ 788,627
           Net loss per share - as reported          $ 0.24           $ 0.04         $ 0.01
           Net loss per share - pro forma            $ 0.36           $ 0.10         $ 0.04
</TABLE>

     Principal assumptions used in applying the option valuation model were as
follows:

<TABLE>
<CAPTION>
                                                   2001              2000           1999
                                               ----------------------------------------------
<S>                                             <C>               <C>             <C>
           Risk-free interest rate              3.36-5.89%        5.00-6.00%      5.00-5.20%
           Expected life, in years                 5-8               5-10            5-10
           Expected volatility                     100%             80-89%           138%
           Expected dividend yield                  0%                0%              0%
</TABLE>

WARRANTS

     The Company has warrants outstanding at September 30, 2001, for the
purchase of 1,168,846 shares of its common stock. All the warrants are
exercisable and expire at various times through June 28, 2006. The exercise
prices per share range from $1.66 to $7.81. The Company recorded a non-cash
expense of $20,000 in fiscal 1999 relating to one of the warrants.

SHAREHOLDER RIGHTS PLAN

     In May 1996, the Board of Directors adopted a shareholder rights plan. The
shareholder rights plan is designed to enable the Company and its Board of
Directors to develop and preserve long-term value for stockholders and to
protect stockholders in the event an attempt is made to acquire control of the
Company without an offer of fair value to all stockholders. Under the
shareholder rights plan, each stockholder of record beginning at the close of
business on May 22, 1996, will receive as a dividend one right for each share of
Visionics common stock held. The rights expire on April 30, 2006.


                                       40
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13) PRIVATE PLACEMENTS

Fiscal 2002

     On October 11, 2001, the Company closed on a private placement offering of
common stock and warrants. A total of 1,801,800 shares were sold to accredited
investors at a price of $11.10 each. Proceeds to the Company approximated $19
million before legal, accounting and filing fees. The Company issued a warrant
to purchase up to 36,036 shares of common stock at an exercise price of $16.86
per share to an investment-banking firm as partial compensation for services
rendered in the private placement. The warrant expires on October 11, 2006.

Fiscal 2001

     On June 29, 2001 the Company closed on a private placement offering of
common stock and warrants. A total of 1,302,862 shares were sold to accredited
investors at a price of $4.50 each with total net proceeds to the Company of
approximately $5.4 million. In addition, the Company issued warrants for 325,715
shares at an exercise price of $5.66 per share and 325,715 warrants at $6.79 per
share to the purchasers for no additional consideration. These warrants are
callable when the Company's stock price exceeds 150 percent of the warrant price
for twenty consecutive trading days. The Company issued additional warrants to
purchase up to 26,057 shares of common stock at an exercise price of $7.81 per
share to an investment banking firm as partial compensation for services
rendered in the private placement. All warrants issued in connection with this
private placement expire on June 28, 2006.

Fiscal 1999

     On January 8, 1999 the Company closed on a private placement offering of
common stock and warrants. A total of 422,219 shares were sold to accredited
investors at a price of $1.6579 each with total net proceeds to the Company of
approximately $600,000. Warrants to purchase up to an aggregate of 422,219
shares at an exercise price of $1.6579 per share were granted to the purchasers
for no additional consideration. The Company issued an additional warrant to
purchase up to 42,222 shares of common stock at an exercise price of $1.6728 per
share to an investment-banking firm as partial compensation for services
rendered in the private placement. All warrants issued in connection with this
private placement expire on January 8, 2004.

     On March 31, 1999 the Company closed on a private placement offering of
common stock and warrants. A total of 272,777 shares were sold to accredited
investors at a price of $1.3138 each with total net proceeds to the Company of
approximately $300,000. Warrants to purchase up to an aggregate of 272,777
shares at an exercise price of $1.3138 per share were granted to the purchasers
for no additional consideration. The Company issued an additional warrant to
purchase up to 27,278 shares of common stock at an exercise price of $1.3269 per
share to an investment-banking firm as partial compensation for services
rendered in the private placement. All warrants issued in connection with this
private placement expire on March 29, 2004.


                                       41
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(14) INCOME TAXES

     Income tax expense (benefit) attributable to loss from operations consists
of the following:

<TABLE>
<CAPTION>
                                                            Years ended September 30,
                                                 ----------------------------------------------
                                                     2001             2000             1999
                                                 ------------     ------------     ------------
<S>                                              <C>              <C>              <C>
     Current:
              Federal                            $         --     $    (54,643)    $     11,974
              State                                    27,329          (15,895)              --
              Foreign                                  95,725           33,000               --
                                                 ------------     ------------     ------------
                                                      123,054          (37,538)          11,974
                                                 ------------     ------------     ------------

     Deferred:
              Federal                                      --               --           63,000
              State                                        --               --          (18,000)
                                                 ------------     ------------     ------------
                                                           --               --           45,000
                                                 ------------     ------------     ------------
     Total income tax expense (benefit)          $    123,054     $    (37,538)    $     56,974
                                                 ============     ============     ============
</TABLE>

     The income tax expense (benefit) differed from the amount computed by
applying the U.S. federal income tax rate of 34% to loss before income taxes as
a result of the following:

<TABLE>
<CAPTION>
                                                            Years ended September 30,
                                                 ----------------------------------------------
                                                     2001             2000             1999
                                                 ------------     ------------     ------------
<S>                                              <C>              <C>              <C>
Computed "expected" tax benefit                  $ (1,480,906)    $   (307,838)    $    (24,209)
State income tax, net of federal benefit               18,037          (52,393)          (4,167)
Change in valuation allowance                       1,695,890          549,689          149,300
Foreign withholding tax                                95,725           33,000               --
Foreign tax credit available                          (95,725)         (33,000)              --
Research and development tax credit available        (142,000)        (175,000)        (148,170)
Other                                                  32,033          (51,996)          84,220
                                                 ------------     ------------     ------------
                                                 $    123,054     $    (37,538)    $     56,974
                                                 ============     ============     ============
</TABLE>


                                       42
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities as of September 30, 2001 and
September 30, 2000 is presented below:

<TABLE>
<CAPTION>
                                                              2001             2000
                                                          ------------     ------------
<S>                                                       <C>              <C>
Deferred tax assets:
         Net operating loss carryforward                  $ 17,134,729     $ 14,725,116
         Capital loss carryforward                              75,291           75,291
         Tax credits                                         1,467,725        1,230,000
         Accounts payable and accrued expenses                 368,631          377,841
         Deferred revenue                                      863,265          329,904
         Accounts receivable allowance                         106,335           50,000
         Inventory capitalization                               67,706           47,000
         Depreciation and amortization                          29,638               --
         Other                                                 163,254          411,000
                                                          ------------     ------------
                   Total gross deferred tax assets          20,276,574       17,246,152
         Valuation allowance                               (20,071,436)     (16,690,689)
                                                          ------------     ------------

                  Net deferred tax assets                      205,138          555,463
                                                          ------------     ------------

Deferred tax liabilities:
         Accounts receivable                                    77,510          204,188
         Capitalized software development costs                127,628          335,268
         Depreciation and amortization                              --           16,007
                                                          ------------     ------------
                  Total gross deferred tax liabilities         205,138          555,463
                                                          ------------     ------------
                  Net deferred tax asset (liability)      $         --     $         --
                                                          ============     ============
</TABLE>

     Based on the level of historical taxable income and projections for future
taxable income over the periods in which the deferred tax assets are deductible,
management does not believe that it is more likely than not the Company will
realize the full benefits of these deductible differences. Accordingly, the
Company has provided a valuation allowance against the net deferred tax assets
as of September 30, 2001 and September 30, 2000. As of September 30, 2001, the
Company has reported net operating loss carryforwards, research and development
tax credits and foreign tax credits of approximately $42,861,000, $1,339,000 and
$128,725, respectively. These carryforwards expire at various times from the
year 2002 through 2021.

     The aforementioned carryforwards are subject to the limitation provisions
of Internal Revenue Code sections 382 and 383. These sections provide
limitations on the availability of net operating losses and credits to offset
current taxable income and related income taxes when an ownership change has
occurred. Any future ownership change could create a limitation with respect to
loss carryforwards not currently subject to an annual limitation. Approximately
$4,793,000 of the $42,861,000 net operating loss carryforwards relates to
compensation associated with the exercise of non-qualified stock options which,
when realized, would result in approximately $1,917,000 credited to additional
paid-in capital.


                                       43
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(15) LEASE COMMITMENTS

     The Company is obligated under a capital lease for certain equipment that
expires in 2003. At September 30, 2001, the gross amount of property and
equipment and related accumulated amortization recorded under this capital lease
was $9,525 and $6,668 respectively. Amortization of assets held under capital
leases is included with depreciation expense.

     Future minimum lease payments under non-cancelable operating leases (with
initial or remaining lease terms in excess of one year) and future minimum
capital lease payments as of September 30, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                          Capital           Operating
       Year ending September 30                                            leases             leases
       ------------------------------------------------------------------------------------------------
<S>                                                                         <C>            <C>
       2002                                                                 $ 2,844        $ 1,366,606
       2003                                                                   1,185          1,453,264
       2004                                                                      --          1,403,814
       2005                                                                      --          1,410,380
       Thereafter                                                                --          3,444,019
                                                                         ------------------------------
           Total minimum lease payments                                       4,029        $ 9,078,083
                                                                                         ==============
       Less amount representing interest (at 17.7%)                             489
                                                                         -----------
       Present value of net minimum capital lease payments                    3,540
       Less current installments of obligations under capital lease           2,406
                                                                         -----------
       Obligations under capital lease, excluding current installments      $ 1,134
                                                                         ===========
</TABLE>

     The Company leases office space in Jersey City, New Jersey under an
operating lease that expires on May 31, 2006. Annual base rent under the lease
agreement is approximately $244,000 and is included in the table above. The
additional increase in rent expense has been included in the table above.

     The Company leases its primary office and production facility in
Minnetonka, Minnesota, under an operating lease that expires in March 2008.
Annual base rent under the lease agreement increases from approximately $559,000
to $620,000 over the remaining term of the lease and is included in the table
above. In addition, the Company is obligated to pay a pro rata share for
property taxes, maintenance and other operating expenses which is also included
in the table above.

     The Company leases a facility in Maple Grove, Minnesota under an operating
lease that expires in June 2003. Annual base rent under the lease agreement is
approximately $77,200 and the Company is obligated to pay a pro rata share for
property taxes, maintenance and other operating expenses. The Company subleases
this office space to another company.

     The Company leases a sales and service office in Ontario, California under
an operating lease that expires in May 2002. Annual base rent under the lease
agreement is approximately $57,100 and is included in the table above.

     The Company entered into a sixty-nine month lease agreement with an
estimated commencement date of March 1, 2002 for its sales and service office in
Ontario, California. Annual base rent under the lease agreement increases from
approximately $152,000 to $165,000 and is included in the table above. In
addition, the Company is obligated to pay a pro rata share for property taxes,
maintenance and other operating expenses which is not included in the table
above since the amount is not yet determined.

     The Company leases general office equipment under operating leases that
expire at various times through August 2006.

     Rent expense under these leases for the years ended September 30, 2001,
2000 and 1999 amounted to $1,003,069, $856,790 and $634,545, respectively. The
office space leases provide for escalations based upon the general operating
costs incurred by the lessor. Each lease is renewable for defined periods at the
"Market Value Rent" at the time of renewal.


                                       44
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(16) CONTINGENCIES

     The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.

(17) RETIREMENT PLANS

     The Company currently sponsors two profit sharing and savings plans. One
plan is for Visionics Corporation (the "Company") employees and the other is for
Visionics Technology Corporation (the "Subsidiary") employees.

     The Company has a profit sharing and savings plan classified as a defined
contribution plan and qualifying under Section 401(k) of the Internal Revenue
Code. The Retirement Plan allows employees to defer a portion of their annual
compensation through pre-tax contributions to the Retirement Plan. Participants
may borrow against their accounts to a maximum of $50,000 or one-half of their
vested aggregate account. At the discretion of the Board of Directors, the
Company may make matching contributions up to an amount equal to 50% of the
contributions made by each employee, subject to a maximum contribution for each
employee of 5% of compensation. The Board may also make other discretionary
contributions to the Retirement Plan. Matching contributions at September 30,
2001 and 2000 resulted in accrued compensation expense of $206,636 and $192,806
for the Company, respectively. Matching contributions have been paid through the
issuance of Company common stock.

     The Subsidiary sponsors a 401(k) profit sharing plan. Employees are
eligible to participate after three months of employment and having obtained age
21. At its discretion, the Subsidiary may make contributions which are allocated
to eligible participants. Participants are fully vested in all amounts credited
to their account. Participants may borrow against their accounts to a maximum of
$50,000 or one-half of their vested aggregate account. Subsidiary contributions
for the years ended September 30, 2001, 2000 and 1999 were $74,661, $64,997 and
$52,612, respectively.

     For the years ended September 30, 2001, 2000 and 1999, the Company and
Subsidiary combined incurred $232,269, $285,626 and $190,557 respectively, of
expense related to these plans.


                                       45
<PAGE>


ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

     The Company has not changed its independent auditors nor has the Company
had any disagreements with its independent auditors on matters of accounting or
financial disclosure.


                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11.    EXECUTIVE COMPENSATION
ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information called for by Items 10, 11, 12 and 13 is incorporated by
reference from the Registrant's definitive proxy statement pursuant to
Regulation 14A. The Registrant's definitive proxy statement will be filed with
the Commission within 120 days after the end of the fiscal year.


                                       46
<PAGE>


                                     PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

(a)  1.   Consolidated Financial Statements
               Independent Auditors' Report
               Consolidated Balance Sheets: September 30, 2001 and 2000
               Consolidated Statements of Operations: Years ended September 30,
                   2001, 2000 and 1999
               Consolidated Statements of Stockholders' Equity and Comprehensive
                   Income (Loss): Years ended September 30, 2001, 2000 and 1999
               Consolidated Statements of Cash Flows: Years ended September
                   30, 2001, 2000 and 1999
               Notes to Consolidated Financial Statements

     2.   Exhibits

          3.1  The Company's Articles of Incorporation, as amended (incorporated
               by reference to Exhibit 3.1 to the Registrant's Registration
               Statement on Form S-1, effective March 11, 1993, File No.
               33-58650 (the "1993 Form S-1"), and to Exhibit 3.1 to the
               Registrant's Report on Form 10-Q for the quarter ended March 31,
               1998).

          3.2  The Company's Bylaws, as amended (incorporated by reference to
               Exhibit 3.2 to the Registrant's Report on Form 10-K for the year
               ended September 30, 1997 (the "1997 Form 10-K")).

          4.1  Specimen Common Stock Certificate (incorporated by reference to
               the Registrant's Registration Statement on Form S-1, effective
               August 14, 1991, File No. 33-41080).

          4.2  8% Convertible Subordinated Debenture Due December 1, 2000 dated
               December 1, 1997, between the Company and KA Investments LDC
               (incorporated by reference to Exhibit 4.2 to the 1997 10-K) and
               schedule of substantially identical documents executed by the
               Company (incorporated by reference to Exhibit 4.2 to the
               Registrant's Report on Form 10-K (the "1998 10-K")) and not filed
               pursuant to Instruction 2 to Item 601 of Regulation S-K.

          4.3  Rights Agreement dated May 2, 1996 between the Company and Wells
               Fargo Bank, Minnesota, National Association, as Rights Agent
               (incorporated by reference to Exhibit 4.3 to the Registrant's
               Registration Statement on Form 8-A filed with the Securities and
               Exchange Commission on May 9, 1996, File No. 0-18856).

          4.4  Convertible Subordinated Debenture Purchase Agreement dated
               December 1, 1997 between the Company and KA Investments LDC
               (incorporated by reference to Exhibit 10.1 to the 1997 Form
               10-K).

          4.5  Warrant dated December 1, 1997 between the Company and KA
               Investments LDC for the purchase of 15,000 shares of the
               Company's common stock (incorporated by reference to Exhibit 10.2
               to the 1997 10-K) and schedule of substantially identical
               documents executed by the Company (incorporated by reference to
               Exhibit 4.5 to the 1998 Form 10-K) and not filed pursuant to
               Instruction 2 to Item 601 of Regulation S-K.


                                       47
<PAGE>


          4.6  Registration Rights Agreement dated December 1, 1997 between the
               Company and KA Investments LDC (incorporated by reference to
               Exhibit 10.10 to the 1997 Form 10-K).

         10.1  Warrant dated December 1, 1997 between the Company and Miller
               Johnson & Kuehn, Inc. for the purchase of 125,000 shares of the
               Company's common stock (incorporated by reference to Exhibit 10.3
               to the 1997 Form 10-K).

         10.2  Warrant dated March 18, 1997, between the Company and C. McKenzie
               Lewis III for the purchase of 8,000 shares of the Company's
               common stock (incorporated by reference to Exhibit 10.4 to the
               1997 Form 10-K).

         10.3  Agreement and General Release dated October 31, 1997 between the
               Company and Glenn M. Fishbine (incorporated by reference to
               Exhibit 10.11 to the 1997 Form 10-K).

         10.4  General Credit and Security Agreement dated September 29, 1998
               between the Company and SPECTRUM Commercial Services
               (incorporated by reference to Exhibit 10.4 to the 1998 Form
               10-K).

         10.5  First Amended Revolving Note dated October 15, 1998 of the
               Company payable to SPECTRUM Commercial Services, amending and
               restating Revolving Note dated as of September 29, 1998
               (incorporated by reference to Exhibit 10.5 to the 1998 Form
               10-K).

         10.6  Lease for Company premises dated November 7, 1989 (incorporated
               by reference from the Company's Registration Statement on Form
               S-18, effective December 6, 1990, File No. 33-36939C).

         10.7  Amendment to Lease for Company Premises dated March 11, 1996
               (incorporated by reference to Exhibit 10.14 to the 1997 Form
               10-K).

         10.8  1990 Stock Option Plan, as amended (incorporated by reference to
               Exhibit 99.1 to the Registrant's Report on Form 10-Q for the
               quarter ended March 15, 1997).

         10.9  1992 Restricted Stock Plan (incorporated by reference from the
               Company's 1993 Form S-1).

        10.10  1998 Stock Option Plan (incorporated by reference from Exhibit 10
               to the Company's Report on Form 10-Q for the quarter ended March
               31, 1998).

        10.11  Form of Director Indemnification Agreement entered into between
               the Company and outside directors (incorporated by reference to
               Exhibit 10.17 to the 1997 Form 10-K).

        10.12  Loan Agreement dated November 19, 1999 between the Company and
               Riverside Bank (incorporated by reference from Exhibit 10.12 to
               the Company's Report on Form 10-Q for the quarter ended December
               31, 1999).

        10.13  Commercial Security Agreement dated November 19, 1999 between the
               Company and Riverside Bank (incorporated by reference from
               Exhibit 10.13 to the Company's Report on Form 10-Q for the
               quarter ended December 31, 1999).

        10.14  Promissory Note, dated November 19, 1999, made by the Company in
               favor of Riverside Bank (incorporated by reference from Exhibit
               10.14 to the Company's Report on Form 10-Q for the quarter ended
               December 31, 1999).


                                       48
<PAGE>


        10.15  Loan Agreement dated November 19, 2000 between the Company and
               Associated Bank Minnesota (incorporated by reference to Exhibit
               10.15 to the 2000 Form 10-K).

        10.16  Amendment to Lease for Company Premises dated November 21, 2000
               (incorporated by reference to Exhibit 10.16 to the 2000 Form
               10-K).

         21.1  Subsidiaries of the Registrant.

         23.1  Consent of KPMG LLP.

(b)  REPORTS ON FORM 8-K.

          The Company filed a report on Form 8-K with the Securities and
     Exchange Commission on July 3, 2001 announcing that it closed on a private
     placement offering of common stock and warrants on June 29, 2001. A total
     of 1,302,862 shares were sold to accredited investors at a price of $4.50
     each with total net proceeds to the Company of approximately $5.4 million.
     In addition, the Company issued warrants for 325,715 shares at an exercise
     price of $5.66 per share and 325,715 warrants at $6.79 per share to the
     purchasers for no additional consideration. The warrants are callable when
     the Company's stock price exceeds 150 percent of the warrant price for
     twenty consecutive trading days. The Company issued additional warrants to
     purchase up to 26,057 shares of common stock at an exercise price of $7.81
     per share to an investment-banking firm as partial compensation for
     services rendered in the private placement.


                                       49
<PAGE>


                                   SIGNATURES

     PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS FORM 10-K TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN MINNETONKA,
MINNESOTA, ON THIS 27TH DAY OF DECEMBER 2001.

VISIONICS CORPORATION
---------------------
     (REGISTRANT)              /s/ Joseph J. Atick
                               -------------------
                                 Joseph J. Atick
                      President and Chief Executive Officer

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
FORM 10-K HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED.

SIGNATURE                   TITLE
---------                   -----


/s/ Joseph J. Atick                                           December 27, 2001
-------------------------                                     -----------------
Joseph J. Atick             Chairman of the Board of          Date
                            Directors, President and
                            Chief Executive Officer
                            (Principal Executive Officer)


/s/ Robert F. Gallagher                                       December 27, 2001
-------------------------                                     -----------------
Robert F. Gallagher         Chief Financial Officer           Date
                            (Principal Accounting Officer)


/s/ Jason Choo                                                December 27, 2001
-------------------------                                     -----------------
Jason Choo                  Director                          Date


/s/ John E. Haugo                                             December 27, 2001
-------------------------                                     -----------------
John E. Haugo               Director                          Date


/s/ George Latimer                                            December 27, 2001
-------------------------                                     -----------------
George Latimer              Director                          Date


/s/ John E. Lawler                                            December 27, 2001
-------------------------                                     -----------------
John E. Lawler              Director                          Date


/s/ C. McKenzie Lewis III                                     December 27, 2001
-------------------------                                     -----------------
C. McKenzie Lewis III       Director                          Date


                                       50