BC FORM 51-901F

QUARTERLY REPORT

Incorporated as part of:	Schedules B & C

ISSUER DETAILS:



|Name of Issuer           | IMAGIS TECHNOLOGIES INC.                                           
|------------------------ | -------------------------------------------------------------------
|For Quarter Ended        | December 31, 2001                                                  
|Date of Report           | March 20, 2002                                                     
|Issuer Address           | 1300 - 1075 West Georgia Street
Vancouver, British Columbia
V6E 3C9
|Issuer Fax Number        | (604) 684-4601                                                     
|Issuer Telephone Number  | (604) 684-2449                                                     
|Contact Name             | Sandra Buschau                                                     
|Contact Position         | Vice President, Investor Relations                                 
|Contact Telephone Number | (604) 684-2449                                                     
|Contact Email Address    | sandy@imagistechnologies.com                                       
|Web Site Address         | www.imagistechnologies.com                                         

CERTIFICATE

THE THREE SCHEDULES REQUIRED TO COMPLETE THIS REPORT ARE
ATTACHED AND THE DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF
DIRECTORS.  A COPY OF THIS REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO
REQUESTS IT.

|Iain Drummond    | "Iain Drummond" | 02/03/20              
|---------------- | --------------- | ----------------------
|Name of Director | Sign (typed)    | Date Signed (YY/MM/DD)
|                 |                 |                       
|Ross Wilmot      | "Ross Wilmot"   | 02/03/20              
|Name of Director | Sign (typed)    | Date Signed (YY/MM/DD)

---

SCHEDULE B:     SUPPLEMENTARY
INFORMATION

1.     Analysis of
expenses:

a)     Cost of materials

|Services   | 85,641  
|---------- | --------
|Supplies   | 76,468  
|Consulting | 13,742  
|Total      | $175,851

(b)     Administration expenses

|Bank charges and interest, net               | (8,730)   
|-------------------------------------------- | ----------
|Consulting fees                              | 100,040   
|Foreign exchange                             | 2,882     
|Office and rent                              | 538,291   
|Management fees                              | 59,700    
|Salaries and benefits                        | 185,744   
|Professional fees                            | 124,436   
|Shareholder relations and regulatory
filings | 630,202   
|Travel and entertainment                     | 348,559   
|Total                                        | $1,981,124

2.     Related party
transactions:

|Wages and benefits for two officers               | $260,722
|------------------------------------------------- | --------
|Management fees for one director and two
officers | 83,700  
|Total                                             | $344,422

3.     Summary of securities
issued and options granted during the period ended December 31, 2001

a)     Summary of securities issued
during the period:

|Date
of
Issue | Type
of
Security | Type
of
Issue     | Number
or
Amount | Price | Total
Proceeds
|------------- | ---------------- | ----------------- | ---------------- | ----- | --------------
|10/05/01      | Common           | Warrant exercise  | 10,000           | $1.10 | $11,000       
|10/15/01      | Common           | Warrant exercise  | 99,000           | $1.10 | $108,900      
|10/16/01      | Common           | Warrant exercise  | 46,500           | $1.10 | $51,150       
|10/16/01      | Common           | Option exercise   | 5,000            | $1.00 | $5,000        
|10/22/01      | Common           | Option exercise   | 8,500            | $1.00 | $8,500        
|10/23/01      | Common           | Option exercise   | 100,000          | $1.50 | $150,000      
|10/23/01      | Common           | Option exercise   | 5,000            | $1.00 | $5,000        
|10/24/01      | Common           | Warrant exercise  | 380,000          | $1.10 | $418,000      
|10/29/01      | Common           | Option exercise   | 100,000          | $1.50 | $150,000      
|10/30/01      | Common           | Warrant exercise  | 115,000          | $1.10 | $126,500      
|11/01/01      | Common           | Warrant exercise  | 45,000           | $1.10 | $49,500       
|11/08/01      | Common           | Warrant exercise  | 49,500           | $1.10 | $54,450       
|11/08/01      | Common           | Option exercise   | 6,000            | $1.00 | $6,000        
|11/09/01      | Common           | Private placement | 229,332          | $2.17 | $497,650      
|11/09/01      | Common           | Option exercise   | 18,667           | $1.00 | $18,667       
|11/13/01      | Common           | Warrant exercise  | 250,000          | $1.10 | $275,000      
|11/26/01      | Common           | Warrant exercise  | 6,000            | $1.10 | $6,600        
|12/06/01      | Common           | Warrant exercise  | 30,000           | $1.10 | $33,000       

---

3.     Summary of securities
issued and options granted during the period ended December 31, 2001,
continued

a)     Summary of securities issued
during the period, continued:

|Date
of
Issue | Type
of
Security | Type
of
Issue    | Number
or
Amount | Price | Total
Proceeds
|------------- | ---------------- | ---------------- | ---------------- | ----- | --------------
|12/12/01      | Common           | Option exercise  | 8,000            | $1.00 | $8,000        
|12/13/01      | Common           | Option exercise  | 5,000            | $1.00 | $5,000        
|12/13/01      | Common           | Warrant exercise | 61,000           | $1.10 | $67,100       
|12/17/01      | Common           | Warrant exercise | 110,000          | $1.10 | $121,000      

b)     Options/warrants granted
during the period:

|Date of
Grant | Type
of
Issue | Number    | Name           | Exercise
Price | Expiry
Date
|------------- | ------------- | --------- | -------------- | -------------- | -----------
|12/19/01      | Option        | 60,000    | Altaf Nazerali | $2.20          | 12/19/06   
|12/19/01      | Option        | 160,000   | Oliver Revell  | $2.20          | 12/19/06   
|11/09/01      | Warrant       | 1,657,012 | Various        | $2.55          | 11/09/02   
|11/09/01      | Warrant       | 101,382   | Canaccord      | $2.17          | 11/09/02   

4.     Summary of securities as at
December 31, 2001

a)     Authorized share capital:
100,000,000 common shares without par value

b)     Number and recorded value for
shares issued and outstanding:

|Issued and outstanding     | No. of shares | Amount     
|-------------------------- | ------------- | -----------
|Balance, December 31, 2001 | 16,419,131    | $10,142,041

c)     Description of options,
warrants and convertible securities outstanding:

Options

|Number of common shares
issuable | Exercise Price | Date of Expiry              
|-------------------------------- | -------------- | ----------------------------
|                                 |                |                             
|230,000                          | $0.30          | July 6, 2003                
|1,183,664                        | $1.00          | Various to August 30, 2006  
|540,000                          | $1.50 to $2.90 | Various to December 19, 2006
|1,953,664                        |                |                             

Warrants

|Number of common shares
issuable | Exercise Price | Date of Expiry          
|-------------------------------- | -------------- | ------------------------
|                                 |                |                         
|400,000                          | $1.25          | February 23, 2003       
|50,000                           | $4.00          | June 16, 2002           
|274,000                          | $1.10          | Various to May 6, 2003  
|114,666                          | $2.17          | November 9, 2002        
|713,840                          | $2.17          | Subject to qualification
|1,552,506                        |                |                         

---

4.     Summary of securities as
at December 31, 2001, continued

c)     Description of options,
warrants and convertible securities outstanding:

Convertible Securities

On November 9, 2001, 1,427,682 special warrants were sold at
a price of $2.17 per special warrant, each of which entitles the holder, upon
exercise and without payment of further consideration, to acquire one common
share of the Company and one-half of one common share purchase warrant (the
"Warrants") of the Company.  Each whole warrant will entitle the
holder to purchase one common share of the Company at a price of $2.55 for a
period of one year from the date the underlying shares are qualified for
resale.

d)     Total Number of Shares in
Escrow

266,669 shares are being held in escrow.  These shares will
be released on February 23, 2002.

5.     List of directors and
officers as of March 20, 2002:

Oliver "Buck" Revell - Chairman and a Director
Iain Drummond - President, Chief Executive Officer and a Director
Ross Wilmot - Vice President, Finance and Chief Financial Officer
Sandra Buschau - Vice President, Investor Relations
Altaf Nazerali - Director
Robert Gordon - Director
Rory Godinho - Secretary and a Director
Frederick Clarke - Director
Andy Amanovich - Chief Technology Officer
Roy Trivett - Director

---

SCHEDULE C:     MANAGEMENT
DISCUSSION

DESCRIPTION OF BUSINESS

Forward Looking Statements:

Statements in this Annual Report on Form 10-KSB,
including those concerning Imagis Technologies Inc.'s (the "Company")
expectations of results of the  Company's operations in future periods, the
amount and timing of revenues and earnings in future periods, future sales,
gross profits, sales and marketing expenses, technical services expenses,
technology development expenses, administration expenses, product introductions
and cash requirements include certain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. As
such, the Company's actual results may vary materially from expectations as a
result of certain factors including, but not limited to, the failure of the
market for the Company's products to grow as anticipated; the success of certain
strategic alliances among the Company and certain third parties; product pricing
or other initiatives of the Company's competitors; the possibility that the
Company's other customers defer purchasing decisions due to economic or other
conditions or will purchase products offered by the Company's competitors;
product development, product pricing or other initiatives of the Company's
competitors; variations in the level of orders which can be affected by general
economic conditions and in the markets served by the Company's customers;
international economic and political climates; difficulties or delays in the
functionality or performance of the Company's products; the Company's timing of
future product releases or improvements; the Company's failure to respond
adequately to either changes in technology or customer preferences; changes in
pricing; the Company's ability to manage growth; risk of nonpayment of accounts
receivable; changes in budgeted costs and the factors listed in this Annual
Report.  See "Risk Factors."

In some cases, you can identify forward-looking
statements by the Company's use of  words such as "may,"
"will," "should," "could," "expect,"
"plan," "intend," "anticipate,"
"believe," "estimate," "predict,"
"potential" or "continue" or the negative or other
variations of these words, or other comparable words or phrases.

Although the Company believes the expectations reflected in
its forward-looking statements are reasonable, it cannot guarantee future
results, levels of activity, performance or achievements or other future events.
The Company is under no duty to update any of our forward-looking statements
after the date of this filing. You should not place undue reliance on
forward-looking statements.

Unless otherwise indicated, all references herein are to
Canadian Dollars.

About Imagis

Imagis Technologies Inc. is a developer and marketer of
software applications and advanced biometric facial recognition software
solutions both as products and as a Software Development Kit.  These
applications provide a range of security solutions in various industry sectors
including airports, law enforcement, customs, immigration and other government
agencies, and gaming.  The Company currently has well over a hundred
installations, including Toronto's Pearson International Airport, the world's
16th busiest airport.  The Company markets its products through a
network of business partners located in North America, Asia, Europe and Latin
America, and has installations in the US, Canada, Mexico and the UK.

ID-2000 - Image Detection and Biometric Facial
Recognition

This software technology has enabled the Company to enter the
biometric market.

ID-2000 is a facial recognition software system designed for
the law enforcement, airport security, gaming and security industries that
captures an offender's image, typically via a video camera, and then creates a
biometric code that can be compared to other encoded images in a database.
ID-2000 allows an individual in a database to be identified in seconds, using
only an image or photograph as the search criterion.  Matching records will be
displayed as a list, together with their associated thumbnail images.  From
this, any record can be selected and full details, together with a full size
image, will be displayed.  Extensive linkages enable the database to be mined to
display details, such as aliases, known associates and vehicles, as well as
images of other distinguishing features, such as marks, scars and tattoos.
Where appropriate, details such as previous crimes or gang memberships can also
be displayed.  ID-2000 also works with Casino-ID and Envisage for use in the
gaming and security sectors.

ID-2000 is also available as a Software Development Kit, or
SDK, which is designed to enable developers at the Company's business partners
to integrate its facial recognition capabilities into their own
applications.

---

In addition, the Company has adapted its facial recognition
software to include the identification of non-facial objects in background
imagery and personally identifiable markings, such as tattoos.  The biometric
solution purchased by the UK's National Crime Squad will be used to crack down
on international online child pornography.  The ability of law enforcement
agencies to identify background imagery, as well as victims and perpetrators, is
an important factor in preparing for and solving missing persons
investigations.

Secure-ID (Airport Security)

Secure-ID is designed to use ID-2000 to scan the faces of
travellers entering or leaving an airport, isolate individual faces, encode them
and match them against a database of serious criminals or known terrorists.  A
variation on the system is already in use at Toronto's Pearson International
Airport, where the Royal Canadian Mounted Police have successfully used it to
identify wanted individuals trying to enter Canada.

Secure-ID uses standard surveillance cameras and requires no
manual intervention.  While it is possible to identify individuals in a crowd,
cameras should be positioned where they can obtain clear images, such as the
check-in desk, metal detector, gate and so on.  Where there is a possible match,
a monitor in the security office will display the image of the passenger,
together with the image of the possible match in the database.  The security
officer at the screen will visually compare the two images and, if they match,
take appropriate action.

CABS - Computerized Arrest & Booking System

CABS is an integrated information and imaging system
developed for the Royal Canadian Mounted Police ("RCMP") and other law
enforcement agencies.  CABS currently has separate modules for offenders,
non-offenders, staff and evidence.  The offender module automates booking
activities and reports, the production of mugshots and the generation of
line-ups.  Pictures of criminal suspects, as well as their marks, scars, tattoos
and fingerprints, are all captured in the offender module of CABS.  The
non-offender module provides an electronic database of persons, such as teachers
and day-care providers, who are required to be registered with the police.  The
staff module provides for the creation and management of staff identification.
The evidence module provides for electronic management of photographs of
evidence obtained in connection with a criminal arrest.

The CABS system is designed to collect the same information
that would be recorded manually during a traditional booking situation and to
store all of the information and photo images that are required in connection
with arresting and prisoner reports.  Compared to manual bookings, CABS offers
the following advantages:

- captures more information than manual booking systems and
allows the information to be retrieved quickly from multiple locations;
- allows offender information to be used for multiple inquiries and report
generating purposes;
- generates automated line-ups based on user-specified criteria;
- provides a variety of required reports and other documents with the
offender's photograph;
- allows the collection and retrieval of photographs of the offender,
including identifying physical marks such as tattoos, scars and other
markings;
- creates a database of offender information for access in the case of
subsequent arrests or for generation of suspect lists;
- can be integrated with livescan electronic fingerprinting systems and with
other computer software systems; and
- integrates with key dispatch systems, digital composite drawing programs and
digital fingerprint systems to provide a complete police information management
system.

CABS advanced data sharing capabilities allow different
authorities to access decentralised information.  The Company has recently
implemented its first regional data sharing system.  This allows RCMP
detachments to share live information entered by their individual detachments.
The major advantage of this data sharing system is that it allows one detachment
to search a larger database containing offender information when booking a
suspect, increasing the probability that the booking officer will discover prior
arrests for the same individual.  The RCMP does not retain any ownership
interest or residual rights over the CABS system.

Overview

Revenue for software and services has historically accounted
for a substantial portion of the Company's revenue.  Typically, the Company
enters into a fixed price contract with a customer for the licensing of selected
software products and the provision of specific services.  The Company generally
recognizes total revenue for software and services associated with a contract
using percentage of completion method based on the total costs incurred over the
total estimated costs to complete the contract.

---

The Company's revenue is dependent, in large part, on
significant contracts from a limited number of customers.  As a result, any
substantial delay in the Company's completion of a contract, the inability of
the Company to obtain new contracts or the cancellation of an existing contract
by a customer could have a material adverse effect on the Company's results of
operations.  The loss of certain contracts could have a material adverse effect
on the Company's business, financial condition, operating results and cash
flows.  As a result of these and other factors, the Company's results of
operations have fluctuated in the past and may continue to fluctuate from
period-to-period.

Recent events have increased awareness of and interest in
products that have law enforcement or other security applications.  There can be
no assurance, however, that such trends will continue or will result in
increased sales of the Company's products and services.

Results of Operations for the year ended December 31, 2001
Compared to December 31, 2000:

Revenues

The Company's overall revenues for the year 2001 rose 90% to
$2,080,704 over the year 2000 revenue level of $1,097,719. However, sales of the
Company's software products increased 108% to $1,519,925 in 2001 from the prior
year amount of $729,127. The gain in software sales revenue includes higher
revenues earned on sales of the Company's CABS and ID-2000 products to law
enforcement agencies, initial sales in the last quarter of its new ID-2000 SDK
version, and revenues of $453,208 for the sale of the Company's Casino-ID
software, a version of the Company's CABS product adapted for casinos, to a
US-based reseller for worldwide distribution. These gains are attributed to an
increased awareness of the Company and its software products as a result of the
Company's greater marketing efforts during 2001.

Support and service revenues rose $79,811 or 29% to $356,441
in 2001 from the year 2000 amount of $276,630. Software support revenues
included in this revenue category rose $44,182 or 39% to $157,254 in 2001 from
$113,072 in the prior year. The remainder of the gain was essentially all
derived from fees earned from a service contract, which has now been completed.
The Company intends to concentrate its focus exclusively on its software product
sales and development where higher gross margins on sales are realized and is
not seeking further such service contract income going forward.

Other revenues were $112,376 or 122% higher at $204,338 in
the 2001 fiscal year, up from the prior year 2000 amount of $91,962. Other
revenue in 2001 represents recoveries of costs for materials used in
installations of the Company's software products, but in prior years, it also
included cost recoveries for hardware also purchased in conjunction with
specific installations. No revenue from the recovery of hardware purchase costs
was earned in 2001, whereas in 2000, the Company earned approximately $44,000
from such recoveries.

Operating Costs

Total operating costs rose in 2001 to $5,101,408, an
increase of 24% over the year 2000 level of $4,107,750. The increase is due
primarily to significantly higher expenditures incurred by the Company's
technology development group for added development work on the Company's ID-2000
products and higher administration costs incurred primarily to increase market
awareness of the Company and its products in the United States and
internationally, and for corporate and product branding.

Costs of materials and services

Costs of materials and services for the year 2001 were
$175,851, up fractionally from the prior year amount of $173,136. The primary
reason for the increase is materials required for the Alameda installation.
This was partially offset by the elimination in 2001 of costs for hardware
components previously purchased for customers in 2000 and prior years, which
amounted to approximately $128,000 in 2000. No purchased hardware costs were
incurred in 2001.

Sales and marketing

Sales and marketing costs for the year 2001 of $923,010 were
16% lower than those in 2000 year of $1,102,140. The costs include staff
salaries, travel, marketing materials and facility expenses including
communications. The lower 2001-year level reflects a restraint in travel imposed
throughout the first half of the year due to cash constraints in that period
coupled with lower costs of printed product marketing materials. In 2000,
unusually high costs for such marketing materials were incurred related to the
initial launch of the Company's ID-2000 facial recognition software. Management
plans to add several sales and marketing staff in 2002 and

---

to significantly expand its sales and marketing programs to
further increase awareness of the Company's software products in North America
and worldwide where biometric security applications are needed.  As a
consequence, management expects that sales and marketing costs will rise
significantly over the 2001 level.

Technical services

Costs for the technical services function were higher at
$732,906, up 19% over the year 2000 amount of $613,915. The technical services
function manages all product installations, either performing the installation
directly or assisting and supporting the installation made by one of the
Company's partners. Costs were higher in 2001 due to the direct involvement of a
number of technical services staff in the Alameda installation due to its
breadth of scope and technical complexity, and the increased function costs
reflect primarily additional travel costs of the installation team on site.
Generally, the Company relies on its sales partners for installation support.
However, should sales occur where a partner is unable to fulfill this support
function, the Company may need to again dedicate staff and incur travel and
other related costs to assist the customer, resulting in higher technical
services costs.

Technology development

The technology development function expenditures for 2001
rose 37% to $1,215,945 over the year 2000 comparable amount of $888,837.
Technology development costs include principally salaries, which represent 60%
of the total 2001 function costs. The increase in 2001 is due to higher salary
costs incurred for additional technical staff, and higher lease costs from the
significant expansion of the leased space to accommodate this larger development
group. For 2002, the Company intends to add several more development staff to
further increase the functionality of its existing products, but also to start
development work on a number of pattern recognition applications, which have
recently been identified. One such application is an extension to the
requirements of the Company's sale to the National Crime Squad (UK) to provide
scene analysis, an application unrelated to facial imaging but one which the
Company's core software is capable of delivering. These additions to staff are
expected to cause 2002 costs to increase above the 2001 expenditures.

Administration

Administration costs for the year 2001, which amounted to
$1,981,124, are 76% higher than those incurred in 2000 of $1,125,571.
Administration costs include administration staff salaries and travel, facility
costs, professional and consultant fees and shareholder and regulatory costs.
The significant cost increase in the current year reflects a 192% increase in
travel, and other corporate costs associated with an extensive general market
awareness and overall branding program undertaken directly by the Company's
executive with the aid of consultants, and deemed essential to position the
Company's products against those of its competitors in the intensified market
sectors of airport and government security in the United States and
internationally. All other administration costs were comparable to those
incurred in the prior year with some increases to support costs related to the
higher 2001 level of activity.

Net Loss for the Period

The Company incurred a net loss overall for the year
amounting to $3,020,704 or $0.21 per share, which is only fractionally higher
than the loss in 2000 of $3,010,031 or $0.26 per share.  Under U.S. GAAP
accounting requirements, additional costs, primarily related to stock-based
compensation to directors, officers, staff and consultants, amounting to
$150,111 would be incurred and, accordingly, the U.S. GAAP net loss would be
$3,170,815, or $0.22 per share, as compared to the prior year comparable net
loss of $4,730,508 or $0.41 per share.

Comparison of Results of Operations for the three months ended September
30, 2001 and 2000:

Revenues:

The Company's revenues for the quarter ended September 30,
2001 were $261,583, compared to $151,757 for the quarter ended September 30,
2000, which represents an increase of approximately 72%.  Sales of the Company's
software increased approximately 342% to $136,000 for the quarter ended
September 30, 2001, compared to only $30,750 for the quarter ended September 30,
2000.  The increase reflects increased sales of the Company's biometric ID-2000
product in the current year.  The Company's biometric ID-2000 was introduced in
2000 and sales were minimal in that year.  Support and services revenues were
$125,583 for the quarter ended September 30, 2001, which is slightly better when
compared to $121,007 for the quarter ended September 30, 2000.

---

Operating expenses:

The Company's operating expenses for the quarter ended
September 30, 2001 were $910,339, compared to $966,027 for the quarter ended
September 30, 2000, which represents an decrease of approximately 6%, primarily
due to lower sales and marketing costs.  Operating expenses include cost of
materials and services, sales and marketing, technical services, technology
development, administration, amortization and interest.

Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the quarter ended
September 30, 2001 were $42,746, compared to $47,309 for the quarter ended
September 30, 2000, which represents an decrease of approximately 10%. These
costs represent materials purchased in the quarter related to the Alameda
installation.

Sales and marketing:

The Company's sales and marketing costs for the quarter ended
September 30, 2001 were $180,021, compared to $257,936 for the quarter ended
September 30, 2000, which represents a decrease of approximately 30%. This
decrease resulted primarily from lower travel, tradeshow exhibit and marketing
material costs.   The Company expects that costs will increase somewhat in the
fourth quarter as a result of completion of a financing on November 9, 2001.

Technical services:

The Company's technical services costs for the quarter ended
September 30, 2001 were $156,920, compared to $159,805 for the quarter ended
September 30, 2000, representing a 2% reduction this quarter.  The technical
services group oversees and assists the Company's strategic partners with the
installation of Imagis' products and also provides users any technical support
they may require under annual support contracts. Technical services costs
include salaries, facilities and travel.

Technology Development:

The Company's technology development costs for the quarter
ended September 30, 2001 were $294,245, compared to $223,482 for the quarter
ended September 30, 2000, which represents an increase of approximately 32%.
This increase over the prior period reflects costs associated with several
additions to staff over the prior period and higher infrastructure costs
incurred for additional space and equipment for these new staff members.  During
the current year, the Company completed the conversion of its core technology
into a software development kit (SDK) format that permits a far broader range of
applications of this facial recognition software. In addition, the group is
developing greater functionality in the ID-2000 product for release in the
fourth quarter of this year.

Administration:

The Company's administration costs for the quarter ended
September 30, 2001 were $229,585, which is 10% lower than the costs of $255,327
incurred in the quarter ended September 30, 2000. Administrative costs include
staff salaries, professional fees, facility and support costs, and shareholder
and regulatory costs. The reduction is primarily the result of lower consulting
and travel costs in 2001. All other costs were essentially in line with the
prior year period.

Amortization:

The Company's amortization costs for the quarter ended
September 30, 2001 were $5,214, compared to $22,168 for the quarter ended
September 30, 2000. This decrease in amortization expense reflects a strategy,
following the acquisition of Imagis-Cascade, to lease all new equipment. The
Company's existing fixed assets are almost fully depreciated at this time.

Interest:

The Company's interest costs for the quarter ended September
30, 2001 were $1,608, compared to no such costs for the quarter ended September
30, 2000.   The interest costs are related to advances from related parties.

---

Net Loss for the Period:

The Company's net loss for the quarter ended September 30,
2001 was $648,756, or $0.04 per share, compared to $814,270, or $0.07 per share,
for the quarter ended September 30, 2000.

Comparison of Results of Operations for the nine-month periods ended
September 30, 2001 and 2000:

Revenues:

The Company's revenues for the nine-month period ended
September 30, 2001 were $1,359,044, compared to $605,538 for the nine-month
period ended September 30, 2000, which represents an increase of approximately
124%.  Sales of the Company's software increased approximately 236% to $985,092
for the nine-month period ended September 30, 2001, compared to $292,513 for the
nine-month period ended September 30, 2000.  As noted in the commentary for the
three-month period, the increase reflects increased sales of the Company's
biometric ID-2000 product in the current year.  ID-2000 was introduced in 2000
and sales were minimal in that year.  Support and services increased
approximately 19% to $373,952 for the nine-month period ended September 30,
2001, compared to $313,025 for the nine-month period ended September 30, 2000,
due to increased annual support revenues from the Company's growing customer
base.

Operating expenses:

The Company's operating expenses increased for the nine-month
period ended September 30, 2001 to $2,935,574, compared to $2,874,882 for the
nine-month period ended September 30, 2000, which represents an increase of
approximately 2%, essentially attributable to significantly higher technology
development expenditures.

Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the nine-month period
ended September 30, 2001 were $112,213, compared to $101,908 for the nine-month
period ended September 30, 2000. These costs are incurred primarily for outside
services in conjunction with the support provided to users. As noted above, the
costs for the nine months in 2001 include approximately $40,000 for purchases
related to the Alameda.

Sales and marketing:

The Company's sales and marketing costs for the nine-month
period ended September 30, 2001 were $635,456, compared to $868,125 for the
nine-month period ended September 30, 2000, which represents a decrease of
approximately 27%. This decrease resulted primarily from lower travel, tradeshow
exhibit and marketing material costs.   The Company completed a financing on
November 9, 2001 to raise additional working capital to significantly expand its
sales and marketing efforts and also the development of its technology.

Technical services:

The Company's technical services costs for the nine-month
period ended September 30, 2001 were $549,351, compared to $462,260 for the
nine-month period ended September 30, 2000, which represents an increase of
approximately 19%.  The higher costs during the current period reflect the
travel costs incurred in support of the installation of the Company's Alameda
County sale.

Technology Development:

The Company's technology development costs for the nine-month
period ended September 30, 2001 were $823,767, compared to $607,636 for the
nine-month period ended September 30, 2000, which represents an increase of
approximately 36%. This increase in the current year reflects costs for several
additions to staff and higher infrastructure costs incurred for additional space
and equipment.

Administration:

The Company's administration costs for the nine-month period
ended September 30, 2001 were $758,023, compared to $777,896 for the nine-month
period ended September 30, 2000. Costs for travel were significantly higher in
2001, however, the increase was offset by lower consulting costs and
professional fees.  All other costs were essentially in line with the prior year
period.

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Amortization:

The Company's amortization costs for the nine-month period
ended September 30, 2001 were $13,524, compared to $57,057 for the nine-month
period ended September 30, 2000. This decrease reflects the Company's use of
operating leases for virtually all of its equipment needs. The Company's
existing fixed assets are substantially depreciated at this time.

Interest:

The Company's interest costs for the nine-month period ended
September 30, 2001 were $43,240, compared to no such costs for the nine-month
period ended September 30, 2000.

Net Loss for the Period:

The Company's net loss for the nine-month period ended
September 30, 2001 was $1,576,530, or $0.11 per share, compared to $2,269,344,
or $0.20 per share, for the nine-month period ended September 30, 2000.

Comparison of Results of Operations for the three months ended June 30,
2001 and 2000:

Revenues:

The Company's revenues for the quarter ended June 30, 2001
were $743,625, compared to $258,646 for the quarter ended June 30, 2000, which
represents an increase of approximately 188%.  Sales of the Company's software
increased approximately 288% to $656,047 for the quarter ended June 30, 2001,
compared to $169,021 for the quarter ended June 30, 2000.  Support and services
were $87,578 and were virtually unchanged for the quarter ended June 30, 2001
when compared to $89,625 for the quarter ended June 30, 2001, even though 2001
revenues from support contracts actually rose by approximately $20,000 as a
result of the overall increased number of installations.  This gain, however,
was offset by lower revenues from other sources.

Operating Costs:

The Company's operating costs decreased for the quarter ended
June 30, 2001 to $1,023,511, compared to $1,087,811 for the quarter ended June
30, 2000, which represents an decrease of approximately 6%.  Operating costs
include cost of materials and services, sales and marketing, technical
services, technology development, administration, amortization and interest.

Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the quarter ended June
30, 2001 were $35,619, compared to $27,574 for the quarter ended June 30, 2000,
which represents an increase of approximately 29%.

Sales and marketing:

The Company's sales and marketing costs for the quarter ended
June 30, 2001 were $195,013, compared to $386,295 for the quarter ended June 30,
2000, which represents an decrease of approximately 50%. This decrease resulted
primarily from lower travel, tradeshow exhibit and marketing material costs.

Technical services:

The Company's technical services costs for the quarter ended
June 30, 2001 were $217,413, compared to $152,507 for the quarter ended June 30,
2000, which represents an increase of approximately 43%.  The technical services
group oversees and assists the Company's strategic partners with the
installation of Imagis' products and also provides users any technical support
they may require under annual support contracts. Costs include salaries,
facilities and travel. The increase during the current period reflects the
travel costs incurred in support of the installation of the Company's Alameda
County sale.

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Technology Development:

The Company's technology development costs for the quarter
ended June 30, 2001 were $255,879, compared to $208,936 for the quarter ended
June 30, 2000, which represents an increase of approximately 22%. This increase
over the prior period reflects costs associated with several additions to staff
over the prior period and higher infrastructure costs incurred for additional
space and equipment for such new staff.  During the year, the Company completed
the conversion of its core technology into a software development kit (SDK)
format that permits a far broader range of applications of this facial
recognition software.

Administration:

The Company's administration costs for the quarter ended June
30, 2001 were $306,453, compared to $299,814 for the quarter ended June 30,
2000. Administrative costs include staff salaries, professional fees, facility
and support costs, and shareholder and regulatory costs. Costs for travel were
higher in the 2001 quarter, however, the increase was offset by lower consulting
costs. All other costs were essentially in line with the prior year period.

Amortization:

The Company's amortization costs for the quarter ended June
30, 2001 were $3,534, compared to $12,685 for the quarter ended June 30, 2000.
This decrease in amortization expenses reflects a strategy, following the
acquisition of Imagis-Cascade, to lease all new equipment. The Company's
existing fixed assets are almost fully depreciated at this time.

Interest:

The Company's interest costs for the quarter ended June 30,
2001 were $9,600, compared to no such costs for the quarter ended June 30, 2000.
The interest costs are related to the debt portion of the convertible loan.

Net Loss for the Period:

The Company's net loss for the quarter ended June 30, 2001
was $279,886, or $0.02 per share, compared to $829,165, or $0.07 per share, for
the quarter ended June 30, 2000.

Comparison of Results of Operations for the six-month periods ended June
30, 2001 and 2000:

Revenues:

The Company's revenues for the six-month period ended June
30, 2001 were $1,097,461, compared to $453,781 for the six-month period ended
June 30, 2000, which represents an increase of approximately 142%.  Sales of the
Company's software increased approximately 224% to $849,092 for the six-month
period ended June 30, 2001, compared to $261,763 for the six-month period ended
June 30, 2000.  Support and services increased approximately 29% to $248,369 for
the six-month period ended June 30, 2001, compared to $192,018 for the six-month
period ended June 30, 2001.

Operating Costs:

The Company's operating costs increased for the six-month
period ended June 30, 2001 to $2,025,235, compared to $1,908,855 for the
six-month period ended June 30, 2000, which represents an increase of
approximately 6%.

Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the six-month period
ended June 30, 2001 were $69,467, compared to $54,599 for the six-month period
ended June 30, 2000. These costs are incurred primarily for outside services in
conjunction with the support provided to users. During the six-month period
ended June 30, 2000, costs included $35,750 for equipment purchases made on
behalf of, and resold to customers in conjunction with, installations. The
Company discontinued such purchases in 2000 and now relies on its business
partners to provide any requisite equipment required by customers.

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Sales and marketing:

The Company's sales and marketing costs for the six-month
period ended June 30, 2001 were $455,435, compared to $610,189 for the six-month
period ended June 30, 2000, which represents an decrease of approximately 25%.
This decrease resulted primarily from lower travel, tradeshow exhibit and
marketing material costs.

Technical services:

The Company's technical services costs for the six-month
period ended June 30, 2001 were $392,431, compared to $302,455 for the six-month
period ended June 30, 2000, which represents an increase of approximately 30%.
The higher costs during the current period reflect the travel costs incurred in
support of the installation of the Company's Alameda County sale.

Technology Development:

The Company's technology development costs for the six-month
period ended June 30, 2001 were $529,522, compared to $384,154 for the six-month
period ended June 30, 2000, which represents an increase of approximately 38%.
This increase in the current year reflects costs for several additions to staff
and higher infrastructure costs incurred for additional space and equipment.

Administration:

The Company's administration costs for the six-month period
ended June 30, 2001 were $528,438, compared to $522,569 for the six-month period
ended June 30, 2000. Costs for travel were significantly higher in the 2001,
however, the increase was offset by lower consulting costs and professional
fees.  All other costs were essentially in line with the prior year period.

Amortization:

The Company's amortization costs for the six-month period
ended June 30, 2001 were $8,310, compared to $34,889 for the six-month period
ended June 30, 2000. This decrease reflects the Company's use of operating
leases for all its equipment needs. The Company's existing fixed assets are
almost fully depreciated at this time.

Interest:

The Company's interest costs for the six-month period ended
June 30, 2001 were $41,632, compared to no such costs for the six-month period
ended June 30, 2000.

Net Loss for the Period:

The Company's net loss for the six-month period ended June
30, 2001 was $927,774, or $0.07 per share, compared to $1,455,074, or $0.13 per
share, for the six-month period ended June 30, 2000.

Comparison of Results of Operations for the three months ended March 31,
2001 and March 31, 2000:

Revenues:

The Company's revenues for the quarter ended March 31, 2001
were $353,836, compared to $195,135 for the quarter ended March 31, 2000, which
represents an increase of approximately 81%. Sales of the Company's software
increased approximately 108% to $193,045 for the quarter ended March 31, 2001,
compared to $92,742 for the quarter ended March 31, 2000. Support and service
revenues increased approximately 57% to $160,791 for the quarter ended March 31,
2001, compared to $102,393 for the quarter ended March 31, 2000.

Operating Costs:

The Company's operating costs increased for the quarter ended
March 31, 2001 to $1,001,724, compared to $821,044 for the quarter ended March
31, 2000, which represents an increase of approximately 22%. Operating costs
include cost of materials and services, sales and marketing, technical services,
technology development, administration, amortization and interest.

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Cost of Materials and Services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the quarter ended March
31, 2001 were $33,848, compared to $27,025 for the quarter ended March 31, 2000,
which represents an increase of approximately 25%. This increase reflects costs
associated with the higher support revenues earned to date.

Sales and Marketing:

The Company's sales and marketing costs for the quarter ended
March 31, 2001 were $260,422, compared to $223,894 for the quarter ended March
31, 2000, which represents an increase of approximately 16%. This increase is
attributable to higher salary costs reflecting additions to staff over the prior
year. Travel and trade show costs also rose slightly due to the increase in
staff over the prior year level.

Technical Services:

The Company's technology services costs for the quarter ended
March 31, 2001 were $175,018, compared to $149,948 for the quarter ended March
31, 2000, which represents an increase of 17%. This increase reflects staff
additions to the technical services group. The technical services group assists
the Company's strategic partners in the installation of its products and also
provides clients with all technical support they may require under the Company's
annual support contracts, and includes costs for salaries, facilities and
travel.

Technology Development:

The Company's technology development costs for the quarter
ended March 31, 2001 were $273,643, compared to $175,218 for the quarter ended
March 31, 2000, which represents an increase of 56%. This increase over the
prior period reflects several additions to staff that were necessary, primarily
to continue the development of ID-2000. Recently, the Company completed the
conversion of its core technology into a software development kit (SDK) format
which permits a far broader range of applications of this facial recognition
software. Staff salaries accounted for approximately 73% of the total costs of
this function with the remainder attributable to support facilities.

Administration:

The Company's administration costs for the quarter ended
March 31, 2001 were $221,985, compared to $222,755 for the quarter ended March
31, 2000. Administrative costs include staff salaries, professional fees,
facility and support costs, shareholder and regulatory costs. Costs in each
category were generally consistent with the prior year period, except for
professional fees and travel costs which were higher in 2001. These increases,
however, were more than offset by a foreign exchange gain of $34,993 realized in
the quarter.

Amortization:

The Company's amortization costs for the quarter ended March
31, 2001 were $4,776, compared to $22,204 for the quarter ended March 31, 2000.
The decline in amortization costs reflects the Company's decision, following the
acquisition of Imagis Cascade, to initiate a lease-financing program for all
purchases of new equipment and, as a consequence, the Company's existing fixed
assets are almost fully depreciated at this time.

Interest:

The Company's interest costs for the quarter ended March 31,
2001 were $32,032, compared to no such costs for the quarter ended March 31,
2000. The interest costs are related to the debt portion of the convertible
loan.

SUBSEQUENT EVENTS

The Company has received an aggregate of $134,415 in respect
of 133,165 stock options that were exercised at various prices up to March 19,
2002.

The Company has received an aggregate of $313,257 in respect
of 149,077 warrants that were exercised at a price of $1.10 up to November 13,
2001.

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On February 8, 2002, the Company issued 37,500 shares to Roth
Capital Partners as part of the agreement signed with Roth on December 13,
2001.

The Company has issued 551,037 common shares upon conversion
of special warrants.

On January 18, 2002, the Company granted 50,000 warrants to
Pembridge Venture Partners as part of the agreement signed with Pembridge on
January 3, 2002.

On March 4, 2002, the Company granted stock options to five
employees to purchase 80,000 common shares at a price of $3.40 per share,
expiring March 4, 2007.  In addition, the Company granted stock options to Roy
Trivett to purchase 250,000 common shares at a price of $3.40 per share,
expiring March 4, 2007 in consideration of his appointment to the Company's
board of directors.

FINANCINGS, PRINCIPAL PURPOSES AND MILESTONES

On November 9, 2001, the Company completed a brokered private
placement of $3,098,070 and a non-brokered private placement of $497,650.

Under the brokered private placement, the Company issued
1,427,682 special warrants at a price of $2.17 per special warrant, with each
special warrant being convertible into one common share and one-half of a
non-transferable share purchase warrant.  Each whole warrant entitles the holder
thereof to acquire an additional common share for a period of one year from the
date the underlying shares are qualified for resale (the "Qualification
Date") at a price of $2.55 per share.  Thomson Kernaghan & Co.
("Thomson Kernaghan) placed 920,770 special warrants and Canaccord Capital
Corporation ("Canaccord") placed 506,912 special warrants.

Thomson Kernaghan and Canaccord were paid a cash commission
of 8% of the gross proceeds received by the Company from the sale of the special
warrants and has issued agent's compensation options entitling them to
collectively purchase 142,768 common shares at a price of $2.17 per share for a
period of one year following the Qualification Date.

Under the non-brokered private placement, the Company issued
229,332 units at a price of $2.17 per unit, with each unit comprised of one
common share and one half of a warrant.  Each whole warrant entitles the holder
thereof to acquire an additional common share at a price of $2.55 per share for
a term expiring on November 9, 2002.

The Company intends to use the proceeds of the offering to
expand its sales and marketing activities, to add additional developers to its
research and development department and to accelerate its business opportunities
in the law enforcement, airport and security markets.

LIQUIDITY AND SOLVENCY

The Company's liquidity improved significantly in 2001, with
its cash on hand increasing from an opening position of $59,497 to the closing
balance at December 31, 2001 of $200,659 in cash and short-term investments
amounting to $2,560,000.  There were no short-term investments in 2000.  The
increase was realized through the exercise of the Company's options and
warrants, and the completion of three financings in the year. Funds derived in
the year from the exercise of options amounted to $395,834 and from the
exercise of warrants amounted to $1,523,700.

With respect to financing, in its first round, a private
placement, the Company issued 1,501,000 units priced at $1 per unit, each unit
convertible into one common share and one full warrant convertible into another
common share at a price of $1.10. This yielded proceeds of $1,501,000 to the
Company. The second financing, completed early in the fourth quarter, was also a
unit private placement, in this case for the issue of 229,332 units priced at
$2.17 per unit. Each unit consisted of one common share and a half warrant, with
two half warrants converting into one common share at an exercise price of
$2.55, and this netted cash of $497,650 to the Company. These two financings
provided an aggregate cash infusion to the Company of $1,998,650. The third
financing was completed shortly after the second and involved the sale of
1,427,682 special warrants also priced at $2.17 per special warrant, and yielded
net proceeds of $2,822,061. Each special warrant is convertible into one common
share and one half warrant on similar terms to those of the private placement
unit and at a price of $2.55. In total, during 2001 the Company raised
approximately $6.7 million.

These new funds were used primarily to sustain the Company's
operating loss for the year of $3,020,704. With the stronger cash position, the
Company was also able to extinguish its related party loans amounting to
$1,072,317, to make short-term deposits

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amounting to $2,560,000 and to acquire additional computer
equipment at a cost of $24,772. After the loss for the year adjusted for
non-cash items and these disbursements, the Company had a net gain in cash in
the year of $141,162 and when added to the cash on hand at the beginning of the
year of $59,497, cash at December 31, 2001 available for future operations,
exclusive of the additional funds on deposit of $2,560,000, aggregated the
above-noted amount of $200,659.

At present with this operating capital and two major
outstanding order commitments, management believes the Company is capable of
sustaining its operations throughout the remainder of the year with no further
financing requirements. However as noted above, its business plan for 2002
anticipates continuing product development work in both its traditional
biometric applications and in new development of non-biometric applications, In
addition, the Company recently identified other areas in discussions with its
newest strategic partner, the Sanyo Semiconductor Company, and consequently sees
the need to continue to add development staff.

From a marketing perspective, a number of international
opportunities have arisen and the Company's plan calls for added emphasis in
advancing awareness of its products internationally, and additional sales and
marketing staff are planned for this undertaking. Taking into account these
various new opportunities, the Company may consider additional financing this
year to funds its 2002 operations.