EXHIBIT 99.2

# BC FORM
51-901F

QUARTERLY REPORT

## Incorporated
as part of: Schedules B & C

## ISSUER DETAILS:

|Name of Issuer | IMAGIS TECHNOLOGIES INC.
|-------------- | ------------------------

|For Quarter Ended | September 30, 2002
|----------------- | ------------------

|Date of Report | November 13, 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 | Michael O'Connor
|------------ | ----------------

|Contact Position | Director of Investor Relations
|---------------- | ------------------------------

|Contact Telephone Number | (604) 684-2449
|------------------------ | --------------

|Contact Email Address | michaelo@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
        Name of Director | "Iain Drummond"
        Sign (typed) | ****
        Dated Signed (YY/MM/DD)
|-------------------------------------- | ------------------------------------ | ------------------------------------

|Altaf Nazerali
        Name of Director | "Altaf Nazerali"
        Signed (typed) | ****
        Dated Signed (YY/MM/DD)
|--------------------------------------- | --------------------------------------- | ------------------------------------

---

SCHEDULE B:  
SUPPLEMENTARY INFORMATION

|1. | Analysis
of expenses      
|-- | --------------------------
|   |                           
|a) | Cost
of materials         
|   |                           
|   | Supplies and services     
|   | Customs, duty and freight 
|   | Consulting and commissions
|   |                           
|   | Total                     
|   |                           

|b) | Administration expenses                     
|-- | --------------------------------------------
|   |                                             
|   | Bank charges
and interest, net              
|   | Consulting fees                             
|   | Foreign exchange                            
|   | Office and rent                             
|   | Insurance                                   
|   | Management fees                             
|   | Salaries and benefits                       
|   | Stock based compensation                    
|   | Professional fees                           
|   | Shareholder relations and regulatory filings
|   | Travel and entertainment                    
|   |                                             
|   | Total                                       
|   |                                             

|2. | Related
party transactions                    
|-- | ----------------------------------------------
|   |                                               
|   | Salaries for four officers                    
|   | Consulting fee paid to directors              
|   | Management fees for five officers or directors
|   |                                               
|   | Total                                         
|   |                                               

|3. | Summary
of securities issued and options granted during the three month period ended September
30, 2002
|-- | -------------------------------------------------------------------------------------------------------

|a) | Summary
of securities issued during the period:
|-- | -----------------------------------------------

|Date 
   of 
Issue | Type
   of 
Security | Type 
of 
Issue | Number
 or 
Amount | Price             | Total 
Proceeds
|------------------ | -------------------- | --------------- | ------------------ | ----------------- | ---------------
|07/08/02           |                      | Common          |                    | Private placement |                
|07/12/02           |                      | Common          |                    | Option exercise   |                
|09/06/02           |                      | Common          |                    | Option exercise   |                

|b) | Options/warrants granted
during the period:
|-- | -------------------------------------------

|Date of 
  Grant | Type
   of 
Issue | Number   | Name | Exercise
Price | Expiry
Date
|---------------- | ----------------- | -------- | ---- | -------------- | -----------
|07/08/02         |                   | Warrants |      | 291,667        |            
|06/30/02         |                   | Option   |      | 195,000        |            
|07/31/02         |                   | Option   |      | 385,000        |            
|08/31/02         |                   | Option   |      | 300,000        |            

---

|3. | Summary
of securities as at September 30, 2002
|-- | ----------------------------------------------

|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
Balance September 30, 2002 | No. of shares
19,354,370 | Amount
$15,691,401
| | ------------------------------------------------- | ------------------------ | ------------------

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

| | Options | 
| | ------- | 

| | Number of common shares issuable | Exercise Price | Date of Expiry
| | -------------------------------- | -------------- | --------------

| | 155,000 | $0.30 | July 6, 2003
| | ------- | ----- | ------------

| | 962,999 | $1.00 | Feb. 25, 2004 to Aug. 30, 2006
| | ------- | ----- | ------------------------------

| | 534,500 | $1.50 to $2.35 | Sept. 2, 2005 to May 14, 2006
| | ------- | -------------- | -----------------------------

| | 418,495 | $2.24 to $2.97 | Feb. 8, 2004 to March 4, 2007
| | ------- | -------------- | -----------------------------

| | 200,000 | $2.35 | May 15, 2007
| | ------- | ----- | ------------

| | 580,000 | $2.35 | June 30, 2007 to July 31, 2007
| | ------- | ----- | ------------------------------

| | 300,000 | $1.50 | Aigist 31, 2007
| | ------- | ----- | ---------------

| | 3,150,994 |  | 
| | --------- |  | 

| | Warrants | 
| | -------- | 

| | Number of common shares issuable | Exercise Price | Date of Expiry
| | -------------------------------- | -------------- | --------------

| | 133,334 | $1.25 | February 23, 2003
| | ------- | ----- | -----------------

| | 114,666 | $2.25 | November 9, 2002
| | ------- | ----- | ----------------

| | 508,218 | $2.55 | November 9, 2002
| | ------- | ----- | ----------------

| | 15,633 | $2.17 | November 9, 2002
| | ------ | ----- | ----------------

| | 50,000 | $2.20 | January 18, 2004
| | ------ | ----- | ----------------

| | 291,667 | $2.28 | July 24, 2004
| | ------- | ----- | -------------

| | 1,113,518 |  | 
| | --------- |  | 

---

|3. | Summary
of securities issued as of September 30, 2002, 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.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As at September 30,
2002, 576,037 of these special warrants remained unconverted.

|4. | List of directors and officers as of November 12, 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
Altaf Nazerali - Director
Rory Godinho - Secretary
Andy Amanovich - Chief Technology Officer
Roy Trivett - Director
Richard Katrusiak - Vice President Sales
Murray Jamieson - Vice President Product Development
Robert Gordon - Director
Deepak Chopra - Director
Treyton Thomas - Director

---

## SCHEDULE C:
MANAGEMENT DISCUSSION

## DESCRIPTION OF
BUSINESS

# Forward-Looking
Statements:

Statements in this Quarterly report
about the Companys future results, levels of activity, performance, goals or
achievements or other events constitute forward-looking statements. These statements
involve known or unknown risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in such forwardlooking
statements. These factors include, among others, those described in connection with the
forward-looking statements, and the factors described under the heading Risk
Factors in Exhibit 99.1 to this Quarterly Report, which is hereby incorporated by
reference. 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. Moreover, neither the Company nor anyone else assumes responsibility for the
accuracy or completeness of such forward- looking statements. 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 U.S., 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 list, 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, which incorporates these
features, will be used to crack down on international online child pornography.

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 in the United States
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.

Comparison of results of
operations for the three months ended March 31, 2002 and 2001:

# Revenues

The Companys total revenues
increased 200% to $1,061,865 for the first quarter ended March 31, 2002 over the
comparable prior year first quarter level of $353,836. The higher revenues were directly
attributable to higher software sales revenues while other revenues declined in the
quarter from the prior year amounts.

Sales of the Companys software
products rose 410% to $985,954 in the first quarter of this year as compared to $193,045
in 2001. The large gain in software sales revenues this year arose primarily from the
inclusion of approximately 60% of the revenues earned to March 31, 2002, through the
Companys U.K. business partner, Serco PLC, as a result of a significant order.

Support and services revenues for the
first quarter of 2002, at $59,830, were 48% lower than those in the comparable quarter in
2001 of $114,696. The lower 2002 level masks a 14% gain in annual support contract
revenues this year over the 2001 first quarter amount. The overall decline resulted from
reduced revenues derived from contract services this year, and is solely attributable to
the completion of a single special contract that the Company commenced in 2000 directly
for BCIT, rather than through a partner, which concluded in mid-2001. As stated last year,
the Company is not seeking such contract work but intends to remain focused on both
development and more profitable sales of its software products.

Other revenues were $16,081 for the
first quarter of 2002, down from $46,095 earned in the first quarter of 2001. These
revenues are earned from the sale of components, which are provided in conjunction with
the installation or ongoing support of the Companys products, and the level of sales
varies from period to period.

# Operating costs

Operating costs totaled $2,201,367
for the first quarter in 2002, which is 120% higher than the total 2001 first quarter
expenditures of $1,001,724. The higher costs over the prior year first quarter resulted
from increases in staff in most functions, greater travel for both sales and marketing and
technical support, and exceptional corporate costs included in the administration
category. Operating costs include cost of materials, sales and marketing, technical
Services, technology development, administration, interest and amortization.

### Costs of
materials and services

The costs of materials and services
are incurred in conjunction with the support services that the Company provides to
customers. These costs amounted to $10,289 in the first quarter of 2002, down 70% from the
costs incurred in the first quarter of 2001 of $33,848.

---

# Sales and marketing

Sales and marketing costs for the
first quarter of 2002, at $557,748, were 114% higher than the comparable period in 2001 of
$260,422. The increase is attributable to higher costs incurred for new sales and
marketing representatives in the US, Europe and the Far East, all engaged on a contract
basis in the past few months. There were no sales and marketing representatives on
contract prior to this time and hence no comparable 2001 costs. In addition, travel and
trade show costs for both staff and representatives rose 195% due to the increase in the
number of staff members traveling and overall increase in sales and marketing activity
this year over that in the prior year when funds were limited. The Company intends to
further increase its sales and marketing team during the year and, therefore, expects that
quarterly sales and marketing costs will increase in future quarters as a result.

Technical services

Costs for the technical services
group were $239,397 in the first quarter of this year, which is 37% higher than the
comparable 2001 first quarter costs of $175,018. The 2002 increase reflects primarily a
51% increase in travel costs in support of the installation in Alameda County, California
(Alameda), necessitated by the technical aspects of the application. The
technical services group generally assists the Companys strategic partners in their
installation of its products and also provides clients with any technical support that
they may require under annual support contracts. These costs primarily include expenses
related to salaries, facilities and travel. While the function costs have increased over
the prior year, costs for future quarters are expected to be in line with the first
quarter level.

# Technology development

Technology development costs for the
first quarter ended March 31, 2002 were $369,706, which is 35% higher than the 2001
comparable costs of $273,643. The increase over the prior period reflects a number of
additions to staff and higher travel costs incurred during the quarter. The Company added
to its development staff throughout 2001 and continues to increase its development group
capability. During the quarter, the group finalized for commercial release Version 8 of
its ID-2000 facial recognition software, and is providing special support and enhancements
for both the Alameda and National Crime Squad applications. Technology development costs
are expected to remain at this level throughout the year.

# Administration

Administration costs for the first
quarter of 2002 were $997,178, which is 349% higher than for the comparable quarter in
2001 of $221,985. Administrative costs include staff salaries and related benefits and
travel, professional fees, facility and support costs, shareholder, regulatory and
investor relations costs and special financial advisory costs incurred related to the
Companys corporate strategies and a special corporate privatization proposal
received in the quarter.

While staff costs remained comparable
to those of the prior year, generally all other categories were higher due the increased
level of corporate activity this year. Facilities costs rose approximately 50%,
professional fees rose over 300%, and shareholder, regulatory and investor relations costs
rose approximately 200%, the increase primarily reflecting the Companys continued
corporate branding efforts worldwide. The Companys financial advisory services costs
incurred in the 2002 first quarter aggregated approximately $208,000, including a non-cash
component with an imputed value of $78,750, for 37,500 common shares granted as partial
compensation to one of the Companys advisors. No comparable financial advisory costs
were incurred in the 2001 first quarter. The Companys administrative costs are
expected to decline to some degree from the first quarter level since such one-time costs
as the non-cash share issuance will not recur. Additionally, the Company incurred non-cash
costs in 2002 of $145,031 for stock-based compensation as a result of stock options and
warrants that were issued as compensation to non-employees. There were no comparable costs
incurred in the 2001 first quarter.

# Interest and amortization

Interest was earned this year on the
additional funds on deposit amounting to $4,827 whereas in the prior comparable quarter,
the Company incurred an expense of $32,032 related to outstanding advances that were
liquidated late in 2001. Amortization in the first quarter of 2002 amounted to $31,876 as
compared to $4,776 for the first quarter of 2001. The increase in amortization expense
reflects recent purchasing of equipment whereas in the past, the Company leased most of
its equipment to minimize cash outflows from month to month and software purchases that
were expensed in the period.

---

### Net loss for the
period

Overall, the Company incurred a net
loss for the 2002 first quarter of $1,139,502 or $.07 per share, which is 75% higher than
the net loss incurred in the first quarter of 2001 of $647,888 or $.05 per share. While
revenues rose 200% this period, significantly higher operating costs incurred in virtually
all categories to build the Company aggressively served to offset the revenue gain.

Comparison of Results of
Operations for the three months ended June 30, 2002 and June 30, 2001:

# Revenues

Imagis total revenues increased
33% to $991,740 for the second quarter ended June 30, 2002 over the comparable prior year
second quarter level of $745,204. The higher revenues were primarily attributable to
higher software sales revenues, while support and services revenues declined in the
quarter from the prior year amount.

Sales of the Companys software
products rose 41% to $922,622 in the second quarter of this year as compared to $656,047
for the second quarter in 2001. The increase in software sales revenues this year
primarily reflects the revenue generated from the licensing contract with Zixsys Inc.
(Zixsys) announced in May of this year.

Support and services revenues for the
second quarter of 2002 were $51,821 and were 41% lower than those in the comparable
quarter in 2001 of $87,578. The lower 2002 level resulted from reduced revenues derived
from contract services this year, and is solely attributable to the completion of a single
special contract the Company had taken on in 2000 directly rather than through a partner
and which concluded mid-2001. As stated last year, the Company is not seeking such
contract work but intends to remain focused on both development and more profitable sales
of its software products.

Other revenues were $17,297 for the
second quarter of 2002, whereas comparable revenues of only $1,579 were earned in the
second quarter of the prior year. These revenues represent primarily interest earned on
short-term investments.

# Operating Expenses

Operating expenses totaled $2,649,612
for the second quarter in 2002, which is 158% higher than the 2001 second quarter
operating expenses of $1,025,090. The higher costs over the prior year second quarter
resulted from increases in permanent and contracted staff, greater travel in sales and
marketing and administration, and exceptional corporate costs included in the
administrative category. Operating costs include cost of materials and services, sales and
marketing, technical services, technology development, administration, interest and
amortization.

# Cost of Materials and
Services

The costs of materials and services
are incurred in conjunction with the support services that the Company provides to
customers. These costs amounted to $143,172 in the second quarter of 2002, which is
significantly higher than the level in the second quarter of 2001 of $35,619. The higher
costs reflect a one-time purchase amounting to approximately $71,700 of a component
software package required for the installation at Alameda, and a withholding tax charge of
$49,000 applied to the Zixsys revenues.

# Sales and Marketing

Sales and marketing expenses for the
second quarter of 2002 were $836,177, and were 329% higher than those in the comparable
period in 2001 of $195,013. The increase is attributable to higher costs incurred for new
sales representatives in the US, Europe and the Far East, all engaged on a contract basis
in the past few months. There were no contracted sales representatives prior to this time,
and hence no comparable 2001 contract costs. In addition, travel and trade show costs for
both staff and these representatives rose approximately 280% due to the increase in the
number traveling and overall activity this year over that in the prior year when funds
were limited. The Company may increase its sales team further in the year through
additions to its contract sales group should the need arise but no further additions are
currently contemplated. Consequently, the Company expects that quarterly sales and
marketing expenses will continue at approximately the current level in future quarters.

---

# Technical Services

Costs for the technical services
group were $209,822 in the second quarter of this year, which is 3% lower than the
comparable 2001 second quarter costs of $217,413. The costs in both years reflect
primarily the travel costs in support of the Alameda installation, necessitated by the
technical aspects of the application. This installation is now completed and in the 30-day
acceptance period. The technical services group generally assists the Companys
strategic partners in their installation of Imagis products and also provides
clients any technical support they may require under annual support contracts, and
includes primarily costs for salaries, facilities and travel. As the Alameda project is
essentially complete at this time, costs for future quarters are expected to trend lower
than the second quarter level.

# Technology Development

The technology development expenses
for the second quarter of 2002 were $413,011, which is 61% higher than the 2001 comparable
costs of $255,879. The increase over the prior period reflects a number of additions to
staff and higher travel costs incurred this year. The Company has been adding to its
development staff throughout 2001 and continues to increase its development group
capability. Along with its regular project development assignments, the group is providing
special support and enhancements to the UK National Crime Squad application. Technology
development expenses are expected to remain at this approximate level throughout the
remainder of the year.

# Administration

Administrative costs for the second
quarter of 2002 were $1,014,145, which is 229% higher than for the comparable quarter in
2001 of $308,032. Administrative costs include staff salaries and related benefits and
travel, consulting and professional fees, facility and support costs, shareholder,
regulatory and investor relations costs and 2002 special financial advisory costs incurred
related to the Companys corporate strategies, which includes the new strategic
partnership achieved with OSI Systems, Inc. and a special corporate privatization proposal
received in the first quarter.

While staff costs remained comparable
to those of the prior year, generally all other categories were higher due the higher
level of corporate activity this year. Facility and support costs generally rose
approximately 140% due to the overall permanent and contracted staff growth over the prior
year, travel rose 49%, consulting and professional fees rose approximately 500%, and
shareholder, regulatory and investor relations costs rose approximately 60%. This last
increase primarily reflects the Companys continued corporate branding efforts
worldwide with greater focus during the second quarter in United States. The
Companys financial advisory services costs, incurred in the second quarter 2002 and
included in consulting and professional fees, aggregated approximately $241,000 or 73% of
total consulting and professional fees expense. No comparable financial advisory costs
were incurred in the 2001 second quarter. The Companys administrative costs are
expected to decline to some degree from the second quarter level since the contracted
advisory services are concluded now.

# Interest and Amortization

Interest expense incurred this year
related to financing of equipment amounted to $8,499, down slightly from the level in the
prior comparable quarter of $9,600. Amortization in the second quarter of 2002 amounted to
$24,786 as compared to $3,534 for the second quarter of 2001. The increase in amortization
expense reflects recent purchases of equipment, whereas in the past the Company leased
most of its equipment to minimize initial cash outflows.

# Net Loss for the Period

Overall, the Company incurred a net
loss for the 2002 second quarter of $1,657,872 or $.09 per share, which is 492% higher
than the net loss incurred in the second quarter of 2001 of $279,886 or $.02 per share.
While revenues rose 33% in the quarter, significantly higher operating costs incurred in
sales and marketing, technology development and administration significantly offset the
revenue gain.

---

Comparison of Results of
Operations for the six months ended June 30, 2002 and June 30, 2001:

# Revenues

Imagis total revenues for the
first six months increased 87% to $2,053,605 over the comparable prior year first half
revenues of $1,100,262. As was the case for the second quarter, the higher revenues were
primarily attributable to higher software sales, while other revenue categories were lower
in the half than the prior year amounts.

Sales of the Companys software
products rose 125% to $1,908,576 in the first six months of this year as compared to
$849,092 for the first six months in 2001. The increase in software sales revenues this
year primarily resulted from revenues generated from the Alameda and NCS installations and
the Zixsys licensing contract announced in the second quarter of this year.

Support and services revenues for the
first half of 2002 were $111,651, which is 47% lower than those in the comparable period
in 2001 of $210,095. As noted for the quarter, the lower 2002 level resulted from reduced
revenues derived from contract services this year, different from 2001 when revenues were
also derived from a special contract the Company had undertaken. First half 2002 revenues
from support contracts were virtually unchanged from those earned in the first half of
2001.

Other revenues were $33,378 for the
six months this year, whereas revenues of $41,075 were earned in the first half of the
prior year. These revenues represent both interest earned on short-term cash investments
and miscellaneous replacement parts sales.

# Operating Expenses

Operating expenses totaled $4,850,979
for the first six months in 2002, which is 139% higher than the 2001 first half costs of
$2,028,036. The higher costs over the prior year first half resulted from increases in
staff, greater travel for sales and marketing and administration, and exceptional
corporate finance costs included in the administrative category.

# Cost of Materials and
Services

The costs of materials and services
amounted to $153,461 in the first half of 2002, which is 121% higher than the level in the
first half of 2001 of $69,467. As for the quarterly results, the higher costs reflect
primarily the one time expenditure in the second quarter of $71,700 for software related
to Alameda, and a withholding tax charge of $49,000 applied on the Zixsys revenues.

# Sales and Marketing

Sales and marketing expenses for the
first six months of 2002 were $1,393,925, which is 206% higher than for the comparable
six-month period in 2001 of $455,435. Of the increase, approximately $313,000 represents
costs incurred for new sales and marketing representatives located throughout the world.
There were no sales and marketing representatives on contract prior to this time, and
hence no comparable 2001 costs. In addition, travel and trade show costs for both staff
and representatives rose approximately 153% due to the increase in the number traveling
and overall activity this year over that in the prior year.

# Technical Services

Costs for the technical services
group were $449,219 for the first half of this year, which is 14% higher than the
comparable 2001 first half costs of $392,431. As noted for the quarter, the costs in both
years reflect primarily the travel costs in support of the Alameda installation,
necessitated by the very technical aspects of the application. The installation ultimately
involved full system integration of Imagis software with 31 regional detachments
operating under varying legacy database systems.

# Technology Development

The Technology development expenses
for the first six months of 2002 were $782,717, which is 48% higher than the 2001
comparable expenses of $529,522. The increase over the prior period reflects a number of
additions to permanent staff and higher travel costs incurred this year.

---

# Administration

Administrative expenses for the first
six months of 2002 were $2,011,323, which is 281% higher than the expenses incurred in the
comparable six months in 2001 of $531,239. The overall increase can be attributed to a
number of factors. Facility costs rose approximately 105%, travel rose 102%, consulting
and professional fees rose approximately 290%, and shareholder, regulatory and investor
relations costs rose approximately 80%, the increase primarily reflecting the
Companys continued corporate branding efforts worldwide with greater focus during
the second quarter in United States. As noted above, the Companys financial advisory
services costs, incurred in the 2002 second quarter and included in consulting and
professional fees, aggregated approximately $241,000 which represents 40% of total
consulting and professional fees expense. No comparable financial advisory costs were
incurred in the first half of 2001.

# Interest and Amortization

Interest expense for the first half
this year for financed capital equipment amounted to $3,672, down 91% from the level in
the prior comparable six-month period of $41,632. Amortization for the first six months of
2002 amounted to $56,662 as compared to $8,310 for the first six months of 2001. The
increase in amortization expense reflects recent purchasing of equipment, whereas in the
past the Company leased most of its equipment to minimize cash outflows at the time of
purchase.

# Net Loss for the Period

Overall, the Company incurred a net
loss for the first six months of 2002 of $2,797,374 or $.16 per share, which is 202%
higher than the net loss incurred in the first six months of 2001 of $927,774 or $.07 per
share. As was the case for the second quarter, while revenues rose 87% in the first half,
the higher operating costs incurred in sales and marketing, technology development and
particularly administration significantly offset this revenue gain.

Comparison of Results of
Operations for the three months ended September 30, 2002 and September 30, 2001:

# Revenues

Imagis total revenues increased
160% to $679,509 for the third quarter ended September 30, 2002 over the comparable prior
year third quarter level of $261,583. The higher revenues were primarily attributable to
higher software sales revenues. Sales of the Companys software products rose 286% to
$525,351 in the third quarter of this year as compared to $136,000 for the third quarter
in 2001. The increase in software sales revenues this year is due to the UKs
National Crime Squad installation and the overall increased number of customers.

Support and services revenues for the
third quarter of 2002 were $104,688 and were 16% lower than those in the comparable
quarter in 2001 of $124,333. The lower 2002 level resulted from reduced revenues derived
from contract services this year, and is solely attributable to the completion of a single
special contract the Company had taken on in 2000 directly rather than through a partner
and which concluded mid-2001. As stated last year, the Company is not seeking such
contract work but intends to remain focused on both development and more profitable sales
of its software products. The support revenues are increasing as sales revenues increase
and the deferred revenue of $451,898 recorded as at September 30, 2002 consists solely of
ongoing support contracts. Other revenues were $49,470 for the third quarter of 2002,
whereas comparable revenues of only $1,250 were earned in the second quarter of the prior
year. The increase is primarily due to a $34,551 recovery of interest on an account
receivable from a customer. The balance of these revenues represents primarily interest
earned on short-term investments.

# Operating Expenses

Operating expenses totaled $2,322,875
for the third quarter in 2002, which is 155% higher than the 2001 third quarter operating
expenses of $910,339. The higher costs over the prior year third quarter resulted from
increases in permanent and contracted staff, greater travel in sales and marketing and
administration, and exceptional corporate costs included in the administrative category.
Operating costs include cost of materials and services, sales and marketing, technical
services, technology development, administration, stock based compensation, interest and
amortization.

---

# Cost of Materials and
Services

The costs of materials and services
are incurred in conjunction with the support services that the Company provides to
customers. These costs amounted to $21,118 in the third quarter of 2002, which is
significantly lower than the level in the third quarter of 2001 of $42,746. The lower
costs result from the completion of the installation at Alameda, which installation
increased these costs significantly in 2001.

# Sales and Marketing

Sales and marketing expenses for the
third quarter of 2002 were $803,626, and were 346% higher than those in the comparable
period in 2001 of $180,021. The increase is attributable to higher costs incurred for new
sales representatives in the US, Europe and the Far East engaged on a contract basis in
2002 and additions to salaried sales staff. The sales representatives cost increased
212%. There were no contracted sales representatives prior to this time, and hence no
comparable 2001 contract costs. In addition, travel and trade show costs for both staff
and these representatives rose approximately 306% due to the increase in the amount of
traveling and overall activity this year over that in the prior year when funds were
limited. The Company may increase its sales team further in the year should the need arise
but no further additions are currently contemplated. Consequently, the Company expects
that quarterly sales and marketing expenses will continue at approximately the current
level in future quarters.

# Technical Services

Costs for the technical services
group were $195,819 in the third quarter of this year, which is 25% higher than the
comparable 2001 third quarter costs of $156,920. The costs in 2001 year reflect primarily
the travel costs in support of the Alameda installation, necessitated by the technical
aspects of the application. This installation is now completed. The increased costs in
2002 reflect the increase in software sales and include the costs incurred to complete the
Alameda project. The technical services group generally assists the Companys
strategic partners in their installation of Imagis products and also provides
clients with any technical support they may require under annual support contracts, and
includes primarily costs for salaries, facilities and travel. Costs for future quarters
will be dependent on the sales levels achieved by the Company.

# Technology Development

The technology development expenses
for the third quarter of 2002 were $356,955, which is 21% higher than the 2001 comparable
costs of $294,245. The increase over the prior period reflects a number of additions to
staff and higher travel costs incurred this year. The Company has been adding to its
development staff throughout 2002 and continues to increase its development group
capability. Along with its regular project development assignments, the group is providing
special support and enhancements to the UK National Crime Squad application. Technology
development expenses are expected to remain at this approximate level throughout the
remainder of the year.

# Administration

Administrative costs for the third
quarter of 2002 were $763,685, which is 232% higher than for the comparable quarter in
2001 of $229,585. Administrative costs include staff salaries and related benefits and
travel, consulting and professional fees, facility and support costs, shareholder,
regulatory and investor relations costs and 2002 special financial advisory costs incurred
related to the Companys corporate strategies, which includes the new strategic
partnership achieved with OSI Systems, Inc. and a special corporate privatization proposal
received in the first quarter.

Generally all categories were higher
due to the higher level of corporate activity this year. Staff costs rose 69% due to the
addition of staff. Facility and support costs rose 144% over the prior year due to the
overall staff growth and use of contract support staff. Travel rose 78% due to management
staff travel associated with financing and business alliances. Consulting and professional
fees rose approximately 1000%, primarily due to an increase in legal costs of $124,618 and
financial advisory consulting costs of $66,650. These costs represent 70% of the total
consulting and professional fees and there were no comparable costs in the prior
years quarter. Shareholder, regulatory and investor relations costs rose
approximately 1000%. This last increase primarily reflects the Companys continued
corporate branding efforts worldwide, and totals $75,711, there were no significant
comparable costs in the prior years quarter. The Companys administrative costs
have declined from the second quarter level due to no longer using the financial advisory
services and contract support staff, and management is taking steps to further reduce
these costs

---

# Stock based compensation

Stock based compensation for the
third quarter was $128,337 and consists of the estimated fair market value of options
granted to non-employees, based on the Black-Scholes model. The policy of recording stock
based compensation was adopted as of January 1, 2002 consequently there is no comparable
figure for the prior years quarters.

# Interest and Amortization

Interest expense incurred this year
related to financing of equipment amounted to $1,232, down slightly from the level in the
prior comparable quarter of $1,608. Amortization in the third quarter of 2002 amounted to
$52,103 as compared to $5,214 for the third quarter of 2001. The increase in amortization
expense reflects recent purchases of equipment.

# Net Loss for the Period

Overall, the Company incurred a net
loss for the 2002 third quarter of $1,643,367 or $.09 per share, which is 153% higher than
the net loss incurred in the third quarter of 2001 of $648,756 or $.04 per share. While
revenues rose 160% in the quarter, significantly higher operating costs incurred in sales
and marketing, technology development, stock based compensation, and administration
significantly offset the revenue gain.

Comparison of Results of
Operations for the nine months ended September 30, 2002 and September 30, 2001:

# Revenues

Imagis total revenues for the
nine months increased 101% to $2,733,114 over the comparable prior year nine-month
revenues of $1,359,044. As was the case for the third quarter, the higher revenues were
primarily attributable to higher software sales. Sales of the Companys software
products rose 147% to $2,433,927 in the first nine months of this year as compared to
$985,092 for the first nine months in 2001. The increase in software sales revenues this
year primarily resulted from revenues generated from the Alameda and NCS installations,
the Zixsys licensing contract announced in the second quarter of this year, and the
overall increase in the number of customers.

Support and services revenues for the
nine months were $216,339, which is 35% lower than those in the comparable period in 2001
of $334,428. As noted for the quarter, the lower 2002 level resulted from reduced revenues
derived from contract services this year, as opposed to 2001 when revenues were also
derived from a special contract the Company had undertaken. The nine-month revenues from
support contracts in 2002 were higher than those earned in the same period of 2001 and as
noted for the quarter, the deferred revenue of $451,898 recorded as at September 30, 2002
consists solely of ongoing support contracts.

Other revenues were $82,848 for the
nine months of this year, whereas revenues of $39,524 were earned in the nine months of
the prior year. The increase is primarily due to a $34,551 recovery of interest on an
account receivable from a customer. The balance of these revenues represents both interest
earned on short-term cash investments and miscellaneous replacement parts sales.

# Operating Expenses

Operating expenses totaled $7,173,855
for the nine months in 2002, which is 144% higher than the 2001 nine-month costs of
$2,935,574. The increase in costs over the prior period resulted from increases in staff,
greater travel for sales and marketing and administration, and exceptional corporate
finance costs included in the administrative category. Operating costs include cost of
materials and services, sales and marketing, technical services, technology development,
administration, stock based compensation, interest and amortization.

# Cost of Materials and
Services

The costs of materials and services
amounted to $174,579 in the nine months of 2002, which is 56% higher than the level in the
nine months of 2001 of $112,213. The higher costs reflect primarily a withholding tax
charge of $49,000 applied on the Zixsys revenues.

---

# Sales and Marketing

Sales and marketing expenses for the
nine months of 2002 were $2,197,551, which is 246% higher than for the comparable
nine-month period in 2001 of $635,456. Of the $1,562,095 increase, approximately $737,000
represents costs incurred for new sales and marketing representatives located throughout
the world, both on a salaried and contract basis. There were no sales and marketing
representatives on contract prior to this time, and hence no comparable 2001 costs. In
addition, travel and trade show costs for both staff and representatives rose
approximately $220,000 or 65% due to the increase in the number traveling and overall
activity this year over that in the prior year, and advertising and marketing efforts
increased by $145,000 or 350%.

# Technical Services

Costs for the technical services
group were $645,038 for the nine months of this year, which is 17% higher than the
comparable 2001 costs of $549,351. As noted for the quarter, the costs in both years
reflect primarily the travel costs in support of the Alameda installation, necessitated by
the very technical aspects of the application. The installation ultimately involved full
system integration of Imagis software with 34 regional detachments operating under
varying legacy database systems.

# Technology Development

The Technology development expenses
for the nine months of 2002 were $1,139,672, which is 38% higher than the 2001 comparable
expenses of $823,767. The increase over the prior period reflects a number of additions to
permanent staff and higher travel costs incurred this year.

# Administration

Administrative expenses for the nine
months of 2002 were $2,627,827, which is 247% higher than the expenses incurred in the
comparable nine months in 2001 of $758,023. Generally all categories were higher due the
higher level of corporate activity this year. Staff, facility and support costs rose 106%
over the prior year due to the overall staff growth and use of contract support staff.
Travel rose 111% due to management staff travel associated with financing and business
alliances. Consulting and professional fees rose approximately 845%, primarily due to an
increase in legal costs of $145,000 and financial advisory consulting costs of $548,811.
No comparable financial advisory costs were incurred in the nine months of
2001.Shareholder, regulatory and investor relations costs rose approximately 639%. This
last increase primarily reflects the Companys continued corporate branding efforts
worldwide. The Companys administrative costs have declined during the third quarter
from the second quarter level due to no longer using the financial advisory services and
contract support staff, and management is taking steps to further reduce these costs.

# Interest and Amortization

Interest expense for the nine months
of this year for financed capital equipment amounted to $4,904, down 89% from the level in
the prior comparable nine-month period of $43,240. Amortization for the first nine months
of 2002 amounted to $108,765 as compared to $13,524 for the first nine months of 2001. The
increase in amortization expense reflects recent purchasing of equipment.

# Stock based compensation

Stock based compensation for the nine
months was $275,519 and consists of the estimated fair market value of warrants and
options granted to non-employees, based on the Black-Scholes model. The policy of
recording stock based compensation was adopted as of January 1, 2002 consequently there is
no comparable figure for the prior years quarters.

# Net Loss for the Period

Overall, the Company incurred a net
loss for the nine months of 2002 of $4,440,741 or $0.25 per share, which is 182% higher
than the net loss incurred in the first nine months of 2001 of $1,576,530 or $0.11 per
share. As was the case for the third quarter, while revenues rose 101% during the nine
months, the significantly higher operating costs incurred in sales and marketing,
technology development, stock based compensation, and particularly administration
significantly offset this revenue gain.

---

## SUBSEQUENT EVENTS

|(a) | On October 1, 2002, 21,505 common stock purchase options were exercised for
          total proceeds to the Company of $63,870.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(b) | On November 1, 2002, 5,000 common stock purchase options were exercised for
          total proceeds to the Company of $5,000.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(c) | On November 8, 2002, 6,667 common stock purchase options were exercised for
          total proceeds to the Company of $10,001.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(d) | On November 9, 2002, 576,037 special warrants were converted to common shares at
          a deemed price of $2.17 per special warrant for total deemed proceeds to the
          Company of $1,250,000.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

## FINANCINGS,
PRINCIPAL PURPOSES AND MILESTONES

On July 8, 2002, the Company received
$1,750,000 US from OSI Systems Inc. for 1,166,667 shares at a price of $1.50 US ($2.28
CDN). OSI Systems also received 291,667 share purchase warrants (expiring July 7, 2004)
entitling them to purchase 291,677 common shares of the Company for $1.50 US. The proceeds
of this financing will be used both for general working capital requirements and for
specific projects identified in the share purchase agreement.

## LIQUIDITY AND
SOLVENCY

# Liquidity and Capital
Resources

The Companys cash on hand at
the beginning of the year, including funds on deposit, aggregated $2,760,659. During the
first nine months of 2002, the Company received additional funds of $1,368,374 from the
exercise of both stock options and warrants. In total, 272,670 options and 606,757
warrants were exercised which resulted in aggregate proceeds to the Company of $266,755
and $1,101,619, respectively. On July 8, 2002, the Company also completed a private
placement of 1,166,667 common shares, described below, that resulted in net proceeds to
the Company of $2,418,424 after commissions and share issue costs. The total received for
the issuance of common shares was $3,786,798.

The Company used these funds
primarily to finance its operating loss for the nine-month period. The impact on cash of
the loss of $4,440,741, after adjustment for non-cash items and changes to other working
capital accounts in the period, primarily an increase in trade and accrued accounts
receivable aggregating $1,163,162, resulted in a negative cash flow from operations of
$4,860,208. The Company also used funds to purchase capital equipment amounting to
$276,642, and to purchase a software application license for $236,395 during the period.

To meet the requirements of the
adjusted loss coupled with the equipment and software application license purchases, a
call on the Companys short-term cash deposits amounting to $1,839,495 was made.

In summary, the Companys cash
position rose by $253,049 from $200,659 at the beginning of the year to $453,708 at
September 30, 2002, and additional funds on deposit declined from $2,560,000 at January 1,
2002, to $720,505 at the period end. The increase of $253,049 resulted from the additions
to cash from the share issuances and the call on the Companys invested funds netted
against the demands on cash for the operations and the capital expenditures incurred
during the first nine months of this year.

On July 8, 2002, pursuant to a
subscription agreement, the Company issued to OSI Systems Inc. 1,166,667 common shares and
291,667 warrants, each warrant to purchase one common share exercisable until July 8,
2004, at an exercise price of US$1.50 per share, at an aggregate purchase price of
US$1,750,000. The subscription agreement provides, among other things, for an adjustment
to the purchase price through the issuance of additional shares if the Company issues
common shares or other securities convertible into or exercisable for common shares in
another financing (with some exceptions) prior to July 9, 2003, at a price less than
US$1.50 per share. The warrants provide for a similar adjustment as to the number of
warrants and exercise price in the event of such an issuance.

Pursuant to the subscription
agreement, the Company also agreed to designate one nominee of OSI to our Board of
Directors, and OSI has designated Deepak Chopra, its Chief Executive Officer and a
director, who was subsequently appointed as a director of Imagis. As a result of its
purchase of the shares and warrants, OSI has become a principal shareholder of Imagis.

---

In connection with OSIs
purchase of shares and warrants, on July 8, 2002, the Company entered into the following
additional agreements with OSI:

|i. |  | Product Development and Marketing Agreement. Under this agreement, the
               Company formed a strategic alliance with OSI to develop mutually agreed
               integrated airport and transportation security products using its facial
               recognition technologies and OSIs security products. The Company
               agreed to form an internal transportation security group and commit a minimum of US$250,000 to develop these products and operate this group. Imagis will
               receive a royalty for all sales made by OSI of products developed under
               this agreement.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ii. |  | Software Developer Services Agreement. Under this agreement, Imagis agreed to
               engage, and OSI agreed to make available, the services of software
               engineers and equipment in OSIs software development facility in
               Hyderabad, India. The Company agreed to pay to OSI a minimum of
               US$250,000 during the term of the agreement, which expires on June 30, 2003,
               provided that if the aggregate amount paid to OSI on such date is less
               than US$250,000, the agreement can be extended for six months.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|iii. |  | Joint Venture Letter of Intent. Under this letter of intent, upon OSIs
               establishment of a Brazilian entity to oversee marketing, sales, service
               and assembly and marketing of OSIs products, in Brazil and the
               establishment of an office in Brazil, Imagis will invest US$250,000 for
               a 20% equity ownership in that entity.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the second quarter of this
year the Company entered into a strategic alliance agreement with Sanyo Semiconductor
Company and Intacta Technologies Inc. to form Zixsys Inc. (formerly known as SecurityART
Inc.). Zixys will integrate the hardware and software technologies of all three companies
and thereafter market security products for use in airports, buildings, laboratories,
document authentication and verification for passports, visas and ID cards. During the
quarter ended September 30, 2002 Imagis acquired the rights to Intacta Technologies
Inc.s royalties payable under the strategic alliance agreement for
consideration of US$150,000.

There can be no assurance that the
relationships with OSI or Zixsys or the integration of technologies with OSI or Zixys will
prove to be successful in the future or will result in any material revenue for the
Company.

As indicated at year-end, management
continues to believe that based on current projections, the Company will be able to
sustain its operations through the remainder of the year with its present resources.
Thereafter, the Company will be required to seek additional financing to fund its
operations.

There is no assurance that the
Company will be able to secure financing or that such financing will be obtained on terms
favorable to the Company. Failure to obtain adequate financing could result in significant
delays in development of new products and a substantial curtailment of Imagis
operations.