<PAGE>


     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 2001
================================================================================

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

                                   FORM 10QSB/A

                                   AMENDMENT 1
                        --------------------------------

(Mark One)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2000

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 For the transition period from _____________________ to _______________________

                        Commission file number 333-93131

                             IMAGEWARE SYSTEMS, INC.
           (Name of small business issuer as specified in its charter)

                 CALIFORNIA                               33-0224167
      (State or other jurisdiction of                   (IRS Employer
       incorporation or organization)                 Identification No.)

                              10883 THORNMINT ROAD
                               SAN DIEGO, CA 92127
                    (Address of principal executive officers)

                                 (858) 673-8600
                           (Issuer's telephone number)

                                 NOT APPLICABLE
      (Former name, former address and former fiscal year, if changed since
                                  last report)

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

         State the number of shares outstanding of each of the issuer's classes
         of common equity, as of the latest practicable date: As of May 12,
         2000 the number of outstanding shares of the Registrant's common stock,
         par value $.01, was 3,311,348.

================================================================================


<PAGE>


================================================================================

                             IMAGEWARE SYSTEMS, INC.
                                      INDEX

<TABLE>
<CAPTION>

                                                                                        Page No.
                                                                                        --------
<S>                                                                                     <C>
RESTATEMENT                                                                                    3

PART I   FINANCIAL INFORMATION

         ITEM 1.           FINANCIAL STATEMENTS (UNAUDIDTED)                                   3


                  Condensed Consolidated Balance Sheet as of March 31, 2000                    3

                  Condensed Consolidated Statements of Operations for the three                4
                        months ended March 31, 2000 and 1999

                  Condensed Consolidated Statement of Cash Flows for the three                 5
                        months ended March 31, 2000 and 1999

                  Notes to Condensed Consolidated Financial Statements                         6


         ITEM 2.           MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS                                           8


PART II  OTHER INFORMATION

         ITEM 1            LEGAL PROCEEDINGS                                                  12

         ITEM 2            CHANGES IN SECURITIES                                              12

         ITEM 3            DEFAULTS ON SENIOR SECURITIES                                      12

         ITEM 4            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                12

         ITEM 5            OTHER INFORMATION                                                  12

         ITEM 6            EXHIBITS AND REPORTS ON FORM 8-K                                   12

</TABLE>

                                        2
<PAGE>


RESTATEMENT

The undersigned registrant hereby amends its Quarterly Report on Form 10-QSB for
the quarter ended March 31, 2000 to amend Items 1 and 2 of Part 1 in its
entirety.

The Company is restating the financial statements filed with the Company's
Form 10-QSB for the three month period ending March 31, 2000 to delay the
recording of the Company's initial public offering (IPO) until the offering
proceeds were received by the Company. On March 30, 2000, the Securities and
Exchange Commission declared the Company's registration statement effective
and the registered securities were offered to the public on March 31, 2000,
and the offering terminated on the same day, with the sale of all registered
securities. The IPO proceeds were received on April 5, 2000. This restatement
essentially moves the accounting for the stock proceeds receivable and equity
entries in the last week of March to cash and equity entries in the first
week of April and has no impact on the Company's revenues, gross margins,
operating expenses or cash flow in that period.

The Company is restating the financial statements filed with the Company's
Form 10-QSB for the three month period ending March 31, 2000 to revise the
accounting for a loan issued in November of 1999. The loan contained a
beneficial conversion feature, which required that a portion of the loan
proceeds be allocated to equity. Subsequent to issuance, the amount of the
beneficial conversion feature should have been recognized as interest expense
through the loan conversion date. The restatement will increase interest
expense and the net loss by $889,000. This change has no impact on the
Company's revenues, gross margins, operating expenses, working capital or
cash flows.

These items are further explained in Note 2, Note 4 and Note 5 to these
Condensed Consolidated Financial Statements.

PART I   FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                             IMAGEWARE SYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                     ASSETS

<TABLE>
<CAPTION>

                                                                 MARCH 31, 2000
                                                                 --------------
                                                                  (UNAUDITED)
<S>                                                              <C>
Current Assets:
     Cash                                                              235
     Accounts Receivable, net                                        2,790
     Inventory                                                           9
     Other Assets                                                    1,059
                                                                  -----------
                       Total Current Assets                          4,093

Property and Equipment, net                                            193
Intangible assets - net                                              1,634
                                                                  -----------
                         TOTAL ASSETS                                5,920
                                                                  ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts Payable                                                2,174
     Deferred Revenue                                                  761
     Accrued expenses                                                2,586
     Deferred compensation                                             300
     Accrued interest                                                  515
     Notes payable to bank                                             500
     Notes payable to related parties                                2,661
                                                                  ----------

                               Total Current liabilities             9,497

Stockholders' equity (deficit):
     Common Stock at par value                                          12
     Preferred Stock                                                     4
     Additional paid in capital                                     17,489
     Accumulated Deficit                                           (21,082)
                                                                  -----------

                  Total stockholders' equity (deficit)              (3,577)

                                                                  -----------
                 TOTAL LIABILITIES AND EQUITY                        5,920
                                                                  ===========

</TABLE>

      See accompanying notes to condensed consolidated financial statements

                                        3
<PAGE>


                             IMAGEWARE SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                       THREE MONTHS ENDED
                                                            MARCH 31,
                                                     2000              1999
                                                   --------          --------
<S>                                                <C>               <C>
REVENUES:
  Product                                            1,427               753
  Maintenance                                          272               357
  License and other                                     33                38
                                                   -----------------------------
                                                     1,732             1,148
Cost of revenue:
  Product                                              556               238
  Maintenance                                          307               207
                                                   -----------------------------
Gross profit                                           869               703
                                                   -----------------------------

Operating Expenses:
General and Administrative                             639               376
Sales and marketing                                    400               214
Research & Development                                 323               304
Depreciation and amortization                          244               271
                                                   -----------------------------
                                                     1,606             1,165

Loss from Operations                                  (737)             (462)

Interest expense, net                                1,060                88
                                                   -----------------------------

Loss before income taxes                            (1,797)             (550)

Tax provision                                            -                 -
                                                   -----------------------------
Net Loss                                            (1,797)             (550)
                                                   =============================

Net Loss per common share - see note 2             $ (1.56)         $  (0.64)

Basic and diluted common shares                    1,161,802          899,081

</TABLE>

      See accompanying notes to condensed consolidated financial statements

                                        4
<PAGE>


                             IMAGEWARE SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                            (IN THOUSANDS; UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                    THREE MONTHS ENDED MARCH 31,
                                                                    ----------------------------
                                                                      2000                 1999
                                                                      ----                 ----
<S>                                                             <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                      $    (1,797)        $       (550)
    Adjustments to reconcile net loss to net cash
    used by operating activities:
        Depreciation and amortization                                   244                  271
        Deferred revenue                                                (92)                 (51)
        Non-cash interest on convertible debt                           889                    -
Change in assets and liabilities
            Accounts receivable, net                                    130                 (277)
            Inventory                                                   103                  (55)
            Other current assets                                        (51)                (203)
            Accounts payable                                            488                  241
            Accrued expenses                                             94                  177
            Accrued interest                                            139                   52
                                                        -----------------------------------------

               Total adjustments                                      1,944                  155
                                                        -----------------------------------------

                Net cash provided (used) by
                  operating activities                                  147                 (395)
                                                        -----------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                                    (24)                  (1)
                                                        -----------------------------------------

                Net cash provided (used) by
                  investing activities                                  (24)                  (1)
                                                        -----------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of notes payable                                56                  500
  Repayment of loans                                                   (100)
                                                        -----------------------------------------

                Net cash provided by financing activities               (44)                 500
                                                        -----------------------------------------

                Net increase in cash                                     79                  104

Cash at beginning of period                                             156                   46
                                                        -----------------------------------------

                Cash at end of period                            $      235           $      150
                                                        -----------------------------------------

SUPPLEMENTAL CASH FLOWS INFORMATION:
    Cash paid for interest                                       $        9           $       36
                                                        -----------------------------------------

</TABLE>

      See accompanying notes to condensed consolidated financial statements

                                        5
<PAGE>


                             IMAGEWARE SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1. BASIS OF PRESENTATION

The preparation of financial statements in conformity with generally accepted
accounting principles 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
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

The accompanying condensed consolidated unaudited financial statements of
ImageWare Systems, Inc. (ImageWare or the Company) have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission regarding
interim financial reporting. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with
consolidated financial statements for the year ended December 31, 1999 and notes
thereto included in the Company's SB-2 registration statement dated March 30,
2000. In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments, consisting of only normal
recurring items, necessary for a fair presentation of the Company's financial
position as of March 31, 2000 and its results of operations for the three months
ended March 31, 2000 and 1999, respectively. These condensed consolidated
unaudited financial statements are not necessarily indicative of the results to
be expected for the entire year.


                                       6
<PAGE>


RESTATEMENT

The first quarter balance sheet has been restated as follows:

<TABLE>
<CAPTION>

                                             March 31, 2000
                                                   AS                        AS
                                                REPORTED                  RESTATED
                                           -------------------        ------------------
<S>                                        <C>                        <C>
Stock proceeds receivable                              13,538                         -
Total current assets                                   16,805                     4,093
Other Assets                                              233                     1,059
Total Assets                                           18,632                     5,920

Accrued Expenses                                        2,512                     2,586
Common stock                                               30                        12
Additional paid in capital                             29,369                    17,489
Accumulated Deficit                                   (20,194)                  (21,082)
Total Stockholders equity (deficit)                     9,209                    (3,577)
Total Liabilities and equity (deficit)                 18,632                     5,920

</TABLE>

In connection with the Company's initial public offering, on March 30, 2000,
the Securities and Exchange Commission declared the Company's registration
statement effective and the registered securities were offered to the public
on March 31, 2000 and the offering terminated on the same day, with the sale
of all the registered securities. The offering proceeds were received by the
Company on April 5, 2000, therefore, the effect of the IPO on the balance
sheet was not recorded until receipt of the offering proceeds.

The first quarter results have been restated as follows:

<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED
                                                           March 31, 2000
                                                   AS                        AS
                                                REPORTED                  RESTATED
                                           -------------------        ------------------
<S>                                        <C>                        <C>
Interest expense, net                              $  171,000               $ 1,060,000
Loss from Operations                               $ (908,000)              $(1,797,000)
Net Loss                                           $ (908,000)              $(1,797,000)
Basic loss per share                               $    (0.79)              $     (1.56)

</TABLE>

During the quarter ended March 31, 2000, the Company recorded an expense of
$889,000 due to the convertibility feature embedded in a debt instrument. The
value of this beneficial conversion feature was measured using its intrinsic
value, i.e. the excess of the aggregrate fair value of the common stock into
which the debt is convertible over the proceeds allocated to the security. The
intrinsic value of the beneficial conversion feature of approximately $10
million exceeded the proceeds allocated to the debt of approximately $899,000;
therefore the Company limited recognition of the beneficial conversion feature
to approximately $899,000 of proceeds allocated to the debt. The Company
accreted the entire amount of the beneficial conversion feature as interest
expense over the period beginning on the date of issuance, November 10, 1999 and
ending on the date the note became immediately convertible, April 1, 2000, using
the effective interest rate method.

Note 2. EARNINGS PER COMMON SHARE

Effective November 29, 1999, the Company declared a 5.275-for-1 reverse stock
split of common stock. All references to the number of shares, per share
amounts, conversion amounts and stock option data of the Company's common stock
have been restated to reflect this reverse stock split for all periods
presented.

Basic earnings per common share is calculated by dividing net income (loss)
available to common shareholders for the period by the weighted-average number
of common shares outstanding during the period. Diluted earnings per common
share is calculated by dividing net income (loss) available to common
shareholders for the period by the weighted-average number of common shares
outstanding during the period, increased to include, if dilutive, the number of
additional common shares that would have been outstanding if the potential
common shares had been issued. The dilutive effect of outstanding stock options
is included in the calculation of diluted earnings per common share using the
treasury stock method. During the period ended March 31, 1999 and 2000, the
Company has excluded all convertible preferred stock and outstanding stock
options from the calculation of diluted loss per share, as their effect would
have been antidilutive.

The following table sets forth the computation of basic and diluted loss per
share for the periods ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>

                                                                               2000                    1999
             <S>                                                         <C>                    <C>
             Numerator
                  Net loss                                               $       (1,797)        $         (550)
                  Less Series B preferred dividends                                 (21)                   (21)
                                                                         ---------------        ----------------

                  Loss available to common shareholders                  $       (1,818)        $         (571)
                                                                         ================       ===============

             Denominator

                  Weighted-average shares outstanding                         1,161,802                899,081
                                                                         ================       ===============

                  Basic and diluted earnings per share                   $        (1.56)        $        (0.64)
                                                                         ================       ===============

</TABLE>


                                       7
<PAGE>


NOTE 3. RELATED PARTY TRANSACTIONS.

On March 30, 2000, two officers of the Company loaned ImageWare $58,000
pursuant to short-term promissory notes. This debt was incurred to meet
working capital needs. The entire amount of the notes was due on the date the
Company closed its IPO. The loan was paid in full on April 5, 2000.

NOTE 4. INITIAL PUBLIC OFFERING

On March 31, 2000, the Company completed an IPO of 1,875,000 units, (units
consist of one share of common stock and a warrant to purchase one share of
common stock) at $8.00 per unit. Net proceeds to ImageWare aggregated
approximately $13.5 million. This issuance of securities is not reflected in
the March 31, 2000 condensed consolidated financial statements as the
proceeds were received by the Company subsequent to this date on April 5,
2000.

On May 2, 2000 the Company received approximately $2.0 million in additional net
proceeds from the exercise of the over allotment option by the underwriter to
sell an additional 281,250 units. The company utilized approximately $3.1
million of the proceeds to reduce notes payable in the second quarter of 2000.

NOTE 5.  NOTES PAYABLE

In November 1999, the Company issued a convertible promissory note for
$1,250,000 at an interest rate of 10%, due the earlier of February 10, 2001 or
five days following the closing of an IPO, to an individual affiliated with
Atlus Co. (which beneficially owns approximately 31% of the Company's common
shares outstanding). Under the terms of the note, the principal amount is fixed
in Japanese yen and shall be repaid in U.S. dollars at a fixed (104.55 Japanese
yen per U.S. dollar) conversion rate established on the date of issuance. If the
principal and interest has not been paid prior to April 1, 2000, the note
becomes convertible to common stock at $1.00 per share. In conjunction with the
note, the Company issued the individual a warrant to purchase 125,000 shares of
common stock for $6.00 per share. The Company has recorded the note net of a
discount equal to the fair value allocated to the warrants issued of
approximately $361,000.

The Company recorded a charge of $889,000 for the beneficial conversion feature
embedded in this debt instrument. The value of the beneficial conversion feature
was measured using its intrinsic value, i.e., the excess of the aggregate fair
value of the common stock into which the debt is convertible over the proceeds
allocated to the security. The intrinsic value of the beneficial conversion
feature of approximately $10 million exceeded the proceeds allocated to the debt
of approximately $889,000; therefore, the Company limited recognition of the
beneficial conversion feature to the approximately $889,000 of proceeds
allocated to the debt. The Company accreted the entire amount of the beneficial
conversion feature as interest expense over the period from the date of
issuance, November 10, 1999, to the date the note becomes immediately
convertible, April 1, 2000 using the effective interest rate method.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.

Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risk and uncertainties.
ImageWare Systems, Inc.'s ("ImageWare" or "the Company") future results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include but are not limited to: fluctuations in
the Company's operating results, continued new product introductions by the
Company, market acceptance of the Company's new product introductions, new
product introductions by competitors, technological changes in the digital
imaging industry, uncertainties regarding intellectual property rights and the
other factors referred to herein including, but not limited to, the items
discussed under "Risk Factors" in the Company's SB-2 registration statement
dated March 30, 2000.

The following discussion should be read in conjunction with the consolidated
financial statements included elsewhere within this quarterly report.
Fluctuations in annual and quarterly results may occur as a result of factors
affecting demand for the Company's products such as the timing of the Company's


                                       8
<PAGE>


and competitors' new product introductions and the Company's customers'
political and budgetary constraints. Due to such fluctuations, historical
results and percentage relationships are not necessarily indicative of the
operating results for any future period.

OVERVIEW

ImageWare Systems, Inc. develops, sells and supports a suite of modular software
products used by law enforcement and public safety agencies to manage criminal
history records and to investigate crime. Its software systems and associated
hardware enable its customers to quickly capture, archive, search, retrieve and
share digital photographs and criminal history records.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 AND 2000

REVENUES. Product revenues increased 90% from $0.8 million for the three months
ended March 31, 1999 to $1.4 million for the corresponding period in 2000. The
increase reflected the further purchases of the Crime Capture System by new and
existing customers, combined with system upgrades by several of the Company's
UNIX -based customers who adopted the Windows-based Crime Capture System. The
backlog of product orders as of March 31, 2000 was approximately $2.2 million.

Customer service revenues decreased 24% from $0.4 million for the three months
ended March 31, 1999 to $0.3 million for the corresponding period in 2000. In
1999, the Company offered its UNIX-based customers incentives to upgrade to the
Windows-based Crime Capture System. As part of the upgrade incentives, the
customers received reduced maintenance fees in 1999, a portion of which carried
over into 2000 due primarily to the timing of the installations late in 1999
with 90 day warranties. These price reductions were justified based upon the
need to consolidate the number of versions of systems the Company would have to
support and to avoid the cost of bringing the older installations into Y2K
compliance. The Company does not expect to offer similar price reductions in the
future and expects customer service revenues to increase along with its expanded
installed base.

COST OF REVENUES. Cost of products and maintenance increased 94% from $0.4
million, or 39% of revenue, for the three months ended March 31, 1999 to $0.9
million, or 50% of revenue for the corresponding period in 2000. Cost of product
revenues increased from 32% of product revenues for the three months ended March
31, 1999 to 39% of product revenues for the corresponding period in 2000. Costs
of products can vary as a percentage of product revenue from quarter to quarter
depending upon product mix and the hardware content included in systems


                                       9
<PAGE>


installed during a given period. Costs of maintenance revenue increased $0.1
million as the Company increased staffing levels to maintain optimal service to
its expanding installed base.

GROSS MARGINS. Total gross margins increased from $0.7 million, or 61% of
revenues, for the three month period ended March 31, 1999 to $0.9 million, or
50% of revenues for the corresponding period in 2000. Gross margins related to
product sales increased from $0.5 million, or 68% of revenues, to $0.9 million
or 61% of revenues for the corresponding period in 2000. Gross margins related
to maintenance revenues decreased from $150,000 for the three months ended March
31, 1999 to a negative $35,000 for the corresponding period in 2000 due to
increased staffing levels and the impact of the upgrades of the Company's UNIX
based customers on maintenance revenue.

OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating, general and
administrative expenses are comprised primarily of salaries for administrative
personnel, legal and professional services, occupancy and communication costs.
Such expenses increased 70% from $0.4 million for the three months ended March
31, 1999 to $0.6 million for the corresponding period in 2000 due primarily to
costs related to the Company's initial public offering of its common stock and
bonus compensation paid in April 2000.

SALES AND MARKETING. Sales and marketing expenses consist primarily of the
salaries, commissions, other incentive compensation, employee benefits and
travel expenses of the Company's sales force. Such expenses increased 87% from
$0.2 million for the three months ended March 31, 1999 to $0.4 million for the
corresponding period in 2000 due primarily to increased salaries, higher
commissions and incentive bonuses as the Company enlarged and restructured its
sales force to better capture market opportunities.

RESEARCH AND DEVELOPMENT. Research and development costs consist primarily of
salaries, employee benefits and outside contractors for new product development,
product enhancements and custom integration work. Such expenses were $0.3
million in both 1999 and 2000. The Company expects to continue to invest in the
development of products for which it believes there is a need in the market;
however, there can be no assurance that research and development programs
invested in by the Company will be successful or that products resulting from
such programs will achieve market acceptance.

INTEREST EXPENSE. The Company recorded total interest expense of $1,060,000
during the three months ended March 31, 2000 of which $889,000 relates to the
accretion of a beneficial conversion feature embedded in the Company's
convertible promissory note issued in November 1999, as more fully explained
in Note 5 to these Condensed Consolidated Financial Statements.

Exclusive of this charge, interest expense increased 93% from approximately
$89,000 for the three months ended March 31, 1999 to $171,000 for the same
period in 2000. The increase reflects the cost of additional debt that the
Company incurred to fund operations in 1999 and the first three months of 2000.

LIQUIDITY AND CAPITAL RESOURCES. Since inception, the Company has funded
operations primarily from proceeds from the sale of stock and borrowings from
individuals and financial institutions. On March 31, 2000, the Company completed
an IPO of 1,875,000 units, (units consist of one share of common stock and a
warrant to purchase one share of common stock) at $8.00 per unit. Net proceeds
to ImageWare aggregated approximately $13.5 million. The IPO proceeds were
received by the Company on April 5, 2000. On May 2, 2000 the Company received
approximately $2.0 million in additional net proceeds from the exercise of the
over allotment option by the underwriter to sell an additional 281,250 units.

As of March 31, 2000 ImageWare had total current assets of $4.1 million and
total current liabilities of $9.5 million, or negative working capital of $5.4
million.

Net cash generated from operating activities was $147,000 for the three months
ending March 31, 2000. The Company used cash to fund the net loss for the three
months ended March 31, 2000 of $1,797,000. The company generated cash of
$182,000 from reductions in current assets, $629,000 from increases in current
liabilities (excluding debt) and $1,133,000 from non cash expenses
(depreciation, amortization and non cash interest) during the three months
ending March 31, 2000.


                                       10
<PAGE>


The Company's believes that with the receipt of funds from the Company's initial
public offering, such funds being received by the Company on April 5, 2000, that
the funds held in cash and cash equivalents and funds provided by operation will
be sufficient to finance its working capital requirements for at least the next
twelve months.

The Company is currently considering strategic transactions and alternatives
with the goal of maximizing stockholder value. These transactions may include a
variety of different business arrangements, including acquisitions, strategic
partnerships, joint ventures and business combinations. Such transactions create
a number of risks for the Company, including the risk that such transactions may
not be consummated on favorable terms or at all, the risk that such transactions
may not enhance stockholder value and may adversely affect the business or the
trading price of the Company's stock and the risk that any such transaction may
require the Company to incur non-recurring or other charges and may pose
significant integration challenges and/or management and business disruptions.


                                       11
<PAGE>


PART II  OTHER INFORMATION

         ITEM 1.  LEGAL PROCEEDINGS
                  The Company is currently not a party to any material legal
                  proceedings.

         ITEM 2.  CHANGES IN SECURITIES

                  On March 30, 2000, the Securities and Exchange Commission
                  declared the Company's Amendment No. 2 of the Registration
                  Statement on Form SB-2 (333-93131) effective under the
                  Securities Act of 1933, as amended. The registered securities
                  were offered to the public on March 31, 2000, and the offering
                  terminated on the same day, with the sale of all of the
                  registered securities. The managing underwriters of the
                  offering were Paulson Investment Company, Inc. and I-Bankers
                  Securities, Inc. This issuance of securities is not reflected
                  in the March 31, 2000 condensed consolidated financial
                  statements pending receipt of the offering proceeds. These
                  proceeds were received by the Company on April 5, 2000.

                  As of March 31, 2000, the Company sold 1,875,000 of the
                  2,156,250 units registered for an aggregate offering price for
                  the amount sold of $15,000,000. The aggregate price of the
                  offering amount registered was $17,250,000. Each unit consists
                  of one share of common stock and one public warrant to
                  purchase an additional share of common stock. The common stock
                  and public warrants traded only as a unit until May 1, 2000,
                  when the units separated and the common stock and warrants
                  began trading separately.

         ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
                  Not Applicable.

         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  Not Applicable

         ITEM 5.  OTHER INFORMATION
                  Not Applicable.

         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
                  Not Applicable.


                                       12
<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                              IMAGEWARE SYSTEMS, INC.

                              By: /s/ Wayne Wetherell
                                 ---------------------------------------------
                                      Wayne Wetherell, Chief Financial Officer

                              Date: April 2, 2001


                                       13