<PAGE>
================================================================================

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

                                   FORM 10-QSB

(Mark One)

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

         For the quarterly period ended September 30, 2003
                                        -------------------

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

         For the transition period from                 to
                                        ---------------    ---------------

         Commission file Number 000-30090
                                ---------


                            IMAGIS TECHNOLOGIES INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

    British Columbia, Canada                    Not Applicable
---------------------------------            -------------------
  (State or other jurisdiction                  (IRS Employer
of incorporation or organization)            Identification No.)

             1630 - 1075 West Georgia Street, Vancouver, BC, Canada
             ------------------------------------------------------
                    (Address of principal executive offices)

                                 (604) 684-2449
                           ---------------------------
                           (Issuer's telephone number)

As of November 14, 2003 21,398,097 common shares of the Company were issued and
outstanding.

Transitional Small Business Disclosure Format (Check one): Yes [ ]  No [X]

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

<PAGE>

                            IMAGIS TECHNOLOGIES INC.

                                   FORM 10-QSB

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

                                      INDEX


PART I      FINANCIAL INFORMATION
  Item 1.   Financial Statements                                               1
  Item 2.   Management's Discussion and Analysis or Plan of Operations        17
  Item 3.   Controls and Procedures                                           24

PART II     OTHER INFORMATION
  Item 1.   Legal Proceedings                                                 25
  Item 2.   Changes in Securities                                             25
  Item 3.   Defaults Upon Senior Securities                                   25
  Item 4.   Submission of Matters to a Vote of Security Holders               25
  Item 5.   Other Information                                                 25
  Item 6.   Exhibits and Reports on Form 8-K                                  25

<PAGE>

                    NOTE REGARDING FORWARD-LOOKING STATEMENTS

Except for statements of historical fact, certain information contained herein
constitutes "forward-looking statements," including without limitation
statements containing the words "believes," "anticipates," "intends," "expects,"
and words of similar import, as well as all projections of future results.

Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results or achievements of the
Issuer to be materially different from any future results or achievements of the
Issuer expressed or implied by such forward-looking statements. Such factors
include, but are not limited to the following: the Issuer's limited operating
history; the Issuer's need for additional financing; the Issuer's history of
losses; the Issuer's dependence on a small number of customers; risks involving
new product development; competition, management of growth and integration;
risks of technological change; the Issuer's dependence on key personnel; risks
involving lengthy sales cycles; marketing relationships and third-party
suppliers; the Issuer's ability to protect its intellectual property rights;
risks associated with exchange rate fluctuations; risks of software defects;
risks associated with product liability; the directors' and officers'
involvement in other projects; the Issuer's strategic alliances with Sanyo
Semiconductor Company and Intacta Technologies Inc. ("Intacta") to form Zixsys
Inc.; the Issuer's agreements with OSI Systems Inc. ("OSI"); the volatility of
the Issuer's share price; risks associated with certain shareholders' exercising
control over certain matters; and the other risks and uncertainties described in
Exhibit 99.1 of this Form 10-QSB.

Although the Issuer believes that expectations reflected in these
forward-looking statements are reasonable, the Issuer cannot guarantee future
results, levels of activity, performance, achievements or other future events.
Moreover, neither the Issuer nor anyone else assumes responsibility for the
accuracy and completeness of these forward-looking statements. The Issuer is
under no duty to update any of these forward-looking statements after the date
of this report. You should not place undue reliance on these forward-looking
statements.


<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The Company's financial statements for the three and nine month periods ended
September 30, 2003 are included in response to Item 1. The financial statements
should be read in conjunction with Management's Discussion and Analysis or Plan
of Operations (Part 1, Item 2) and other financial information included
elsewhere in this Form 10-QSB.

                            IMAGIS TECHNOLOGIES INC.
                                 BALANCE SHEETS
                 AS AT SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
                         (EXPRESSED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
                                                 SEPTEMBER 30,
                                                     2003           DECEMBER 31,
                                                  (UNAUDITED)           2002
                                                 -------------      ------------
<S>                                              <C>               <C>
ASSETS

CURRENT ASSETS
   Cash and cash equivalents                     $     42,645      $    547,831
   Accounts receivable                                676,973           437,770
   Prepaid expenses and deposit                        18,157            75,537
                                                 ------------      ------------
                                                      737,775         1,061,138
                                                 ------------      ------------
   Equipment (note 3)                                 237,233           328,402

   Other assets (note 4)                              459,250           306,231
                                                 ------------      ------------
                                                 $  1,434,258      $  1,695,771
                                                 ------------      ------------
LIABILITIES AND SHAREHOLDERS' DEFICIENCY

CURRENT LIABILITIES
   Accounts payable and accrued liabilities      $  2,244,687      $    648,901
   Credit facility (note 5)                           490,238                --
   Advances payable (note 6)                          326,996                --
   Capital lease obligations                           23,604            19,123
   Deferred revenue                                   132,956           339,485
                                                 ------------      ------------
                                                    3,218,481         1,007,509
                                                 ------------      ------------
LONG-TERM LIABILITIES
   Capital lease obligations                           25,814            41,720
                                                 ------------      ------------
                                                       25,814            41,720
                                                 ------------      ------------
SHAREHOLDERS' DEFICIENCY
    Share capital (note 7)                         17,857,631        17,361,118
    Special warrants                                   50,000                --
    Subscriptions received                            103,500                --
    Contributed surplus                               420,435           427,453
    Deficit                                       (20,241,603)      (17,142,029)
                                                 ------------      ------------
                                                   (1,810,037)          646,542
                                                 ------------      ------------
                                                 $  1,434,258      $  1,695,771
                                                 ------------      ------------
</TABLE>


Operations (note 1)
Subsequent events (note 9)
Commitments (note 10)

See accompanying notes to financial statements.


                                       1

<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                      STATEMENTS OF OPERATIONS AND DEFICIT
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                 SEPTEMBER 30,                         SEPTEMBER 30,
                                        -------------------------------       -------------------------------
                                          2003               2002              2003                2002
                                        ------------       ------------       ------------       ------------
<S>                                     <C>                <C>                <C>                <C>
Revenues:
   Software sales                       $    361,533       $    525,351       $    686,013       $  2,433,927
   Support and services                      135,010            104,688            398,251            216,339
   Other                                          69             49,470              7,685             82,848
                                        ------------       ------------       ------------       ------------
                                             496,612            679,509          1,091,949          2,733,114
                                        ------------       ------------       ------------       ------------
Expenses:
   Administration                            372,689            892,022          1,676,449          2,903,346
   Amortization                               53,743             52,103            181,460            108,765
   Bad debt expense                           71,501                 --            117,433                 --
   Cost of materials                         200,926             21,118            203,940            174,579
   Interest                                   22,773              1,232             41,964              4,904
   Sales and marketing                       249,070            803,627          1,139,056          2,197,551
   Technology development                    141,331            356,955            505,822          1,139,672
   Technical services                         78,621            195,819            325,399            645,038
                                        ------------       ------------       ------------       ------------
                                           1,190,654          2,322,876          4,191,523          7,173,855
                                        ------------       ------------       ------------       ------------

Loss for the period                         (694,042)        (1,643,367)        (3,099,574)        (4,440,741)

Deficit, beginning of period             (19,547,561)       (12,988,010)       (17,142,029)       (10,190,636)
                                        ------------       ------------       ------------       ------------

Deficit, end of period                  $(20,241,603)      $(14,631,377)      $(20,241,603)      $(14,631,377)
                                        ------------       ------------       ------------       ------------

Loss per share - basic and diluted      $      (0.03)      $      (0.09)      $      (0.15)      $      (0.25)
                                        ------------       ------------       ------------       ------------

Weighted average number of
shares outstanding                        21,142,720         19,194,075         20,766,650         17,881,068
                                        ------------       ------------       ------------       ------------
</TABLE>


See accompanying notes to financial statements.



                                       2
<PAGE>


                            IMAGIS TECHNOLOGIES INC.
                            STATEMENTS OF CASH FLOWS
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                       SEPTEMBER 30,                       SEPTEMBER 30,
                                              -----------------------------       -----------------------------
                                                  2003              2002             2003               2002
                                              -----------       -----------       -----------       -----------
<S>                                           <C>               <C>               <C>               <C>
Cash provided by (used in):

Operations:
   Loss for the period                        $  (694,042)      $(1,643,367)      $(3,099,574)      $(4,440,741)
   Items not involving cash:
     Amortization                                  53,743            52,103           181,460           108,765
     Stock-based compensation                        (689)          128,337            (7,019)          354,269
     Accrued interest                              13,952                --            23,072                --
   Changes in non-cash operating working
   capital:
     Accounts receivable                         (312,366)       (1,116,373)         (239,203)       (1,163,162)
     Accrued revenue receivable                    85,277           362,296                --                --
     Advances to related parties                       --           (25,395)               --           (25,395)
     Prepaid expenses and deposit                   6,153          (280,753)           57,380          (291,545)
     Accounts payable and accrued                 727,437           153,704         1,798,292           204,888
     liabilities
     Deferred revenue                             (78,260)          155,571          (206,529)          392,714
                                              -----------       -----------       -----------       -----------
                                                 (198,795)       (2,213,877)       (1,492,121)       (4,860,207)
                                              -----------       -----------       -----------       -----------
Investments:
   Purchase of equipment                           (1,134)          (71,459)           (8,195)         (276,642)
   Purchase of other assets                            --          (236,395)               --          (236,395)
   Short-term investments                              --           198,662                --         1,839,495
   Deferred acquisition costs                          --                --          (231,674)               --
                                              -----------       -----------       -----------       -----------
                                                   (1,134)         (109,192)         (239,869)        1,326,458
                                              -----------       -----------       -----------       -----------
Financing:
   Advances under credit facility                  12,908                --           515,622                --
   Repayments of credit facility                       --                --           (46,384)               --
   Issuance of common shares for cash                  --         2,712,501           296,038         4,028,375
   Share issue costs                               (2,031)         (240,518)           (2,031)         (241,577)
   Issuance of special warrants for cash           50,000                --            50,000                --
   Subscriptions received                          28,500                --            28,500                --
   Advances payable                               115,000                --           324,924                --
   Debentures payable                                  --                --            75,000                --
   Capital lease obligations                       (5,228)               --           (14,865)               --
                                              -----------       -----------       -----------       -----------
                                                  199,149         2,471,983         1,226,804         3,786,798
                                              -----------       -----------       -----------       -----------
Increase (decrease) in cash                          (780)          148,914          (505,186)          253,049
Cash and cash equivalents, beginning of
period                                             43,425           304,794           547,831           200,659
                                              -----------       -----------       -----------       -----------
Cash and cash equivalents, end of period      $    42,645       $   453,708       $    42,645       $   453,708
                                              ===========       ===========       ===========       ===========
</TABLE>


                                       3
<PAGE>


                            IMAGIS TECHNOLOGIES INC.
                      STATEMENTS OF CASH FLOWS (CONTINUED)
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

<TABLE>
<S>                                                <C>            <C>             <C>            <C>
Supplementary information and disclosures:

   Interest paid                                   $  8,821       $   1,232       $ 18,892       $    4,904

   Issuance of common shares on conversion of            --        (164,258)            --        1,683,812
   special warrants

   Conversion of debentures payable to share        (75,000)             --        (75,000)              --
   subscriptions

   Equipment acquired under capital lease                --              --          3,440               --
</TABLE>

See accompanying notes to financial statements.


                                       4
<PAGE>


                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

1.   OPERATIONS:

     Imagis Technologies Inc. (the "Company") was incorporated under the Company
     Act (British Columbia) on March 23, 1998. The Company operates in a single
     segment, being the development and sale of software applications and
     advanced biometric facial recognition software solutions.

     These financial statements have been prepared on a going concern basis
     which includes the assumption that the Company will be able to realize its
     assets and settle its liabilities in the normal course of business. At
     September 30, 2003, the Company has a working capital deficiency of
     $2,480,706 and has not made all its required payments under its credit
     facility (note 5). For the nine month period ended September 30, 2003, the
     Company has incurred a loss from operations of $3,099,574 and a deficiency
     in operating cash flow of $1,492,121. In addition, the Company has incurred
     significant operating losses and net utilization of cash in operations in
     all prior periods. Accordingly, the Company will require continued
     financial support from its shareholders and creditors until it is able to
     generate sufficient cash flow from operations on a sustained basis. Failure
     to obtain ongoing support of its shareholders and creditors may make the
     going concern basis of accounting inappropriate, in which case the
     Company's assets and liabilities would need to be recognized at their
     liquidation values. These financial statements do not include any
     adjustment due to this going concern uncertainty.

2.   SIGNIFICANT ACCOUNTING POLICIES:

     The Company prepares its financial statements in accordance with generally
     accepted accounting principles in Canada and, except as set out in Note 13,
     also comply, in all material respects, with accounting principles generally
     accepted in the United States. The financial statements reflect the
     following significant accounting policies:

     (a) Cash equivalents:

         The Company considers all highly liquid investments with a term to
         maturity of three months or less when purchased to be cash equivalents.
         Investments having a term in excess of three months but less than one
         year are classified as short-term investments.

     (b) Equipment:

         Equipment is recorded at cost and is amortized over its estimated
         useful life on a straight-line basis at the following annual rates:

<TABLE>
<CAPTION>
         -----------------------------------------------------------------------
         ASSET                                                              RATE
         -----------------------------------------------------------------------
         <S>                                                                <C>
         Computer hardware                                                   30%
         Furniture and fixtures                                              20%
         Software                                                           100%
         -----------------------------------------------------------------------
</TABLE>

     (c) Other Assets:

         Other assets include patents and a license. These assets are recorded
         at cost and are amortized over their estimated useful life on a
         straight-line basis at the following annual rates:

<TABLE>
<CAPTION>
         -----------------------------------------------------------------------
         ASSET                                                             RATE
         -----------------------------------------------------------------------
         <S>                                                               <C>
         Patents                                                           33.3%
         License                                                           33.3%
         -----------------------------------------------------------------------
</TABLE>


         Included in other assets is $251,723 representing costs incurred by the
         Company through September 30, 2003 (December 31, 2002 - $20,048)
         relating to a proposed acquisition (See Note 9).


                                       5
<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

2.   SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

     (d) Revenue recognition:

         (i)    Software sales revenue:

                The Company recognizes revenue consistent with Statement of
                Position 97-2, "Software Revenue Recognition". In accordance
                with this Statement, revenue is recognized, except as noted
                below, when all of the following criteria are met; persuasive
                evidence of a contractual arrangement exists, title has passed,
                delivery and customer acceptance has occurred, the sales price
                is fixed or determinable and collection is reasonably assured.
                Funds received in advance of meeting the revenue recognition
                criteria are recorded as deferred revenue.

                When a software product requires significant production,
                modification or customization, the Company generally accounts
                for the arrangement using the percentage-of-completion method of
                contract accounting. Progress to completion is measured by the
                proportion that activities completed are to the activities
                required under each arrangement. When the current estimate on a
                contract indicates a loss, a provision for the entire loss on
                the contract is made. In circumstances where amounts recognized
                as revenue under such arrangements exceed the amount invoiced,
                the difference is recorded as accrued revenue receivable.

                When software is sold under contractual arrangements that
                includes post contract customer support ("PCS"), the elements
                are accounted for separately if vendor specific objective
                evidence ("VSOE") of fair value exists for all undelivered
                elements. VSOE is identified by reference to renewal
                arrangements for similar levels of support covering comparable
                periods. If such evidence does not exist, revenue on the
                completed arrangement is deferred until the earlier of (a) VSOE
                being established or (b) all of the undelivered elements are
                delivered or performed, with the following exceptions: if the
                only undelivered element is PCS, the entire fee is recognized
                ratably over the PCS period, and if the only undelivered element
                is service, the entire fee is recognized as the services are
                performed.

                The Company provides for estimated returns and warranty costs,
                which to date have been nominal, on recognition of revenue.

         (ii)   Support and services revenue:

                Up front payments for contract support and services revenue are
                deferred and are amortized to revenue over the period that the
                support and services are provided.

     (e) Use of estimates:

         The preparation of financial statements in accordance with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the amounts reported or disclosed in the
         financial statements. Actual amounts may differ from these estimates.

     (f) Foreign currency:

         Monetary assets and liabilities denominated in foreign currencies are
         translated into Canadian dollars at exchange rates in effect at the
         balance sheet date. Revenues and expenses are translated using rates in
         effect at the time of the transactions. Foreign exchange gains and
         losses are included in income.


                                       6
<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

2.   SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

     (g) Income taxes:

         The Company uses the asset and liability method of accounting for
         income taxes. Under the asset and liability method, future tax assets
         and liabilities are recognized for the future tax consequences
         attributable to differences between the financial statement carrying
         amounts of existing assets and liabilities and their respective tax
         bases. Future tax assets and liabilities are measured using enacted tax
         rates expected to apply to taxable income in the years in which those
         temporary differences are expected to be recovered or settled. The
         effect on future tax assets and liabilities of a change in tax rates is
         recognized in income in the period that includes the date of
         substantive enactment. To the extent that it is not considered to be
         more likely than not that a future tax asset will be realized, a
         valuation allowance is provided.

     (h) Unaudited interim financial information:

         The information reported herein as at September 30, 2003 and for the
         three and nine month periods ended September 30, 2003 and 2002 is
         unaudited. However, such financial information reflects all adjustments
         (consisting solely of normal recurring adjustments) necessary for a
         fair presentation of the results for the periods presented. The
         unaudited interim financial statements are prepared using accounting
         policies consistent with and should be read in conjunction with the
         Company's financial statements as at and for the year ended December
         31, 2002 which are included in the Company's 2002 Annual Report on Form
         10-KSB. Certain comparative figures have been reclassified to conform
         to the presentation adopted in the current reporting period. Results
         for the interim periods ended September 30, 2003 are not necessarily
         indicative of what the results will be for the complete 2003 fiscal
         year.

     (i) Stock-based compensation:

         Effective January 1, 2002, the Company adopted the new recommendations
         of the Canadian Institute of Chartered Accountants with respect to the
         accounting for stock-based compensation and other stock-based payments.
         The new recommendations require direct awards of stock, stock
         appreciation rights or awards that call for the settlement in cash or
         other assets awarded to employees and the cost of the service received
         as consideration to be measured and recognized based on the fair value
         of the equity instruments issued. Compensation expense is recorded over
         the period of related employee service, usually the vesting period of
         the equity instrument awarded. The new recommendations permit the
         measurement of compensation expense for stock option grants to
         employees and directors that are not direct awards of stock, stock
         appreciation rights or otherwise call for settlement in cash or other
         assets by an alternative method and to provide pro forma disclosure of
         the financial results using the fair value method. The Company has
         elected to adopt an alternative method and continue with its policy of
         not recognizing compensation expense for stock options granted to
         employees. The Company recognizes compensation expense for
         non-employees based on the estimated fair value of the equity
         instruments issued and recognizes stock based compensation under
         Canadian GAAP.

         Had compensation expense for employees been determined based on the
         fair value method, the Company's net loss and net loss per share for
         the three and nine month periods ended September 30, 2003 and 2002,
         would have been adjusted to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                         SEPTEMBER 30,                        SEPTEMBER 30,
                                                 ----------------------------       ------------------------------
                                                    2003              2002              2003               2002
                                                 ---------         ----------       -----------          ---------
         <S>                                     <C>               <C>              <C>                 <C>
         Net loss -  as reported                 $(694,042)        (1,643,367)      $(3,099,574)        (4,440,741)
         Net loss -  pro forma                    (990,208)        (1,976,579)       (3,897,907)        (5,285,428)

         Net loss per share -  as reported       $   (0.03)             (0.09)      $     (0.15)             (0.25)
         Net loss per share - pro forma              (0.05)             (0.10)            (0.19)             (0.30)
                                                 ---------         ----------       -----------          ---------
</TABLE>



                                       7
<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

2.   SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

     (i) Stock-based compensation, continued:

         The pro forma amounts exclude the effect of stock options granted prior
         to January 1, 2002. The fair value of each stock option grant was
         estimated on the date of grant using the Black-Scholes option pricing
         model using the following average inputs: volatility - 120%, risk free
         interest rate - 5%, option term - 5 years, and dividend yield - nil.

         The weighted average fair value of employee stock options granted
         during 2002 is $2.05 per share purchase option. No stock options were
         granted during the nine months ended September 30, 2003.

     (j) Loss per share:

         Loss per share is calculated using the weighted average number of
         shares outstanding during the reporting period. This average includes
         common shares issued in a reporting period from their date of issuance.
         Diluted per share amounts are calculated by the treasury stock method
         whereby the assumed proceeds of dilutive exercisable instruments are
         applied to repurchase common shares at the average market price for the
         period. The resulting net issuance is included in the weighted average
         number for purposes of the diluted per share calculation. As all
         outstanding shares and warrants are anti-dilutive, there is no
         difference between basic and diluted loss per share.

     (k) Comparative figures:

         Certain comparative figures have been reclassified to conform to the
         presentation adopted in the current quarter.

3.   EQUIPMENT:

<TABLE>
<CAPTION>
         ------------------------------------------------------------------------------------------
                                                                 ACCUMULATED             NET BOOK
         AT SEPTEMBER 30, 2003               COST ($)          AMORTIZATION ($)           VALUE ($)
         ------------------------------------------------------------------------------------------
         <S>                                 <C>                    <C>                    <C>
         Computer hardware                   349,850                209,501                140,349
         Furniture and fixtures              171,110                 74,835                 96,275
         Software                            112,868                112,259                    609
         ------------------------------------------------------------------------------------------
                                             633,828                396,595                237,233
         ------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
         ------------------------------------------------------------------------------------------
                                                                 ACCUMULATED             NET BOOK
         AT DECEMBER 31, 2002                COST ($)          AMORTIZATION ($)           VALUE ($)
         ------------------------------------------------------------------------------------------
         <S>                                 <C>                    <C>                    <C>
         Computer hardware                   342,369                155,878                186,491
         Furniture and fixtures              168,782                 54,764                114,018
         Software                            111,041                 83,148                 27,893
         ------------------------------------------------------------------------------------------
                                             622,192                293,790                328,402
         ------------------------------------------------------------------------------------------
</TABLE>


4.   OTHER ASSETS:

<TABLE>
<CAPTION>
         ------------------------------------------------------------------------------------------
                                                                 ACCUMULATED             NET BOOK
         AT SEPTEMBER 30, 2003               COST ($)          AMORTIZATION ($)           VALUE ($)
         ------------------------------------------------------------------------------------------
         <S>                                 <C>                   <C>                    <C>
         Patents                              78,227                21,730                  56,497
         License                             236,395                85,365                 151,030
         Deferred acquisition costs          251,723                    --                 251,723
         ------------------------------------------------------------------------------------------
                                             566,344               107,095                 459,250
         ------------------------------------------------------------------------------------------
</TABLE>



                                       8
<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

4.   OTHER ASSETS, CONTINUED:

<TABLE>
<CAPTION>
         ------------------------------------------------------------------------------------------
                                                                 ACCUMULATED             NET BOOK
         AT DECEMBER 31, 2002                COST ($)          AMORTIZATION ($)           VALUE ($)
         ------------------------------------------------------------------------------------------
         <S>                                 <C>                      <C>                  <C>
         Patents                              78,227                   2,173                76,054
         License                             236,395                  26,266               210,129
         Deferred acquisition costs           20,048                      --                20,048
         ------------------------------------------------------------------------------------------
                                             334,670                  28,439               306,231
         ------------------------------------------------------------------------------------------
</TABLE>


5.   CREDIT FACILITY:

     During the nine month period ended September 30, 2003, the Company received
     cash pursuant to a loan agreement with a previous director of the Company
     in the amount of $367,000 and made repayments in the amount of $20,000.
     Also included in this loan are various expenses paid by the former director
     on behalf of the Company in the amount of $148,622 of which $26,384 has
     been repaid. The loan has accrued interest in the amount of $21,000 and
     remains unpaid as at September 30, 2003. The loan bears interest at a rate
     of prime plus 5% per annum and is secured by a General Security Agreement
     over the assets of the Company, and a Source Code Escrow Agreement that
     requires the Company to deposit into escrow its source codes together with
     a license to commercialize the source codes on a non-exclusive, world-wide,
     royalty-free basis for a period of five years, to be released only in the
     event that Imagis ceases operations or enters bankruptcy proceedings. The
     loan arrangement under which the credit facility was drawn expired on May
     31, 2003. However, the Company and the lender have agreed to settle
     $396,750 of this amount through the issuance of special warrants under the
     same terms as those of the current private placement, see note 9. The
     settlement would remove the General Security Agreement over the assets of
     the Company. Subsequent to September 30, 2003, the Company has repaid the
     balance of the funds owed under the Credit Facility in cash.

6.   ADVANCES PAYABLE:

     The Company has been advanced an amount of $324,996. Of this amount
     $178,881 is from directors of the Company. These advances are non-interest
     bearing, are unsecured and have no set date for repayment. An unrelated
     party has advanced $146,115, of this amount $85,000 is accruing interest at
     a rate of 12% per annum totaling $2,072 at September 30, 2003. The Company
     has reached agreements to settle $319,000 of these advances through the
     issuance of special warrants with the remainder to be repaid in cash, see
     Note 9.

7.   SHARE CAPITAL:

     (a) Authorized:

         100,000,000 common shares without par value



                                       9
<PAGE>


                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

7.   SHARE CAPITAL, CONTINUED:

     (b) Issued:


<TABLE>
<CAPTION>
                                                               NUMBER
                                                             OF SHARES         AMOUNT
                                                             ----------      -----------
         <S>                                                 <C>             <C>
         BALANCE, DECEMBER 31, 2001                          16,419,131       10,142,041
                                                             ----------      -----------
         Issued during year:
              On private placement                            1,166,667        2,660,001
              Options exercised                                 375,110          423,193
              Warrants exercised                                894,776        1,571,090
              Issued on conversion of special warrants        1,427,682        3,098,070
              Issued as bonus for consulting agreement           37,500           78,750
              Issued as bonus in consideration of loan           10,000           19,000
              Issued as bonus to a director and officer          20,000           25,000
          Share issuance costs                                       --         (656,027)
                                                             ----------      -----------
         BALANCE, DECEMBER 31, 2002                          20,350,866      $17,361,118
                                                             ----------      -----------
         Issued during the period:
              Options exercised                                 195,505          129,370
              Warrants exercised                                133,334          166,668
              Issued in settlement of accounts payable          718,392          202,506
         Share issuance costs                                        --           (2,031)
                                                             ----------      -----------
         BALANCE, SEPTEMBER 30, 2003                         21,398,097      $17,857,631
                                                             ----------      -----------
</TABLE>


     (c) Escrowed shares:

         As at December 31, 2001, 266,669 common shares were being held in
         escrow. These common shares were released from escrow on February 23,
         2002.

     (d) Special warrants:

         (i)    On November 9, 2001, 1,427,682 Special Warrants were sold at a
                price of $2.17 per Special Warrant (gross proceeds less offering
                costs equaled $2,822,861), each of which entitled 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.
                These Special Warrants were not issued as compensation for
                services rendered. Each whole Warrant entitled the holder to
                purchase one common share of the Company at a price of $2.55.
                During 2002, all special warrants were converted into common
                shares and the Company reduced the exercise price on 288,018
                share purchase warrants from $2.55 to $1.63 and 220,200 share
                purchase warrants from $2.55 to $1.81.

                The securities issued pursuant to the brokered private placement
                and all underlying securities were subject to resale
                restrictions that expired on March 9, 2002.


                                       10
<PAGE>


                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

7.   SHARE CAPITAL, CONTINUED:

     (d) Special warrants, continued:

         (ii)   In September 2003 the Company reached agreement for a proposed
                private placement of up to $800,000. The private placement will
                consist of up to 4,637,681 Special Warrants at $0.1725 per
                Special Warrant. Each Special Warrant will be exercisable, for
                no additional consideration, into Units consisting of one common
                share and one share purchase warrant. Each warrant will entitle
                the holder for two years from the date of issue of the special
                warrants to acquire one additional common share in the capital
                of Imagis at an exercise price of $0.23 in the first year and
                $0.253 in the second year. The Special Warrants will be
                convertible at the holders' option at any time for an eighteen
                month period and will convert automatically at the end of the
                eighteen months. The Company will not be required to meet any
                conditions prior to conversion. Finder's fees will be paid on a
                portion of the private placement of 7.5% in cash and 7% in
                broker's warrants at $0.23 per share. As at September 30, 2003
                the Company has issued 289,855 Special Warrants for net proceeds
                of $50,000. Subsequent to September 30, 2003, the Company closed
                the private placement, see Note 9(b).

     (e) Warrants:

         At December 31, 2002 and September 30, 2003, the following warrants
         were outstanding:

<TABLE>
<CAPTION>
         ------------------------------------------------------------------------------------------------
         DECEMBER 31,                                       SEPTEMBER 30,  EXERCISE
             2002        GRANTED    EXERCISED    EXPIRED        2003         PRICE         EXPIRY DATE
         ------------------------------------------------------------------------------------------------
           <S>             <C>      <C>         <C>            <C>          <C>         <C>
           133,334         --       (133,334)       --           --          $1.25      February 23, 2003
           220,200         --          --       (220,200)        --          $1.81        March 9, 2003
            15,633         --          --        (15,633)        --          $1.81        March 9, 2003
            50,000         --          --           --          50,000       $2.20       January 18, 2004
           291,667         --          --           --         291,667      US$1.50        July 8, 2004
           105,000         --          --           --         105,000      US$1.80       July 24, 2004
         ------------------------------------------------------------------------------------------------
           815,834         --       (133,334)   (235,833)      446,667
         ================================================================================================
</TABLE>

         The Company has agreed, subject to regulatory approval, that the
         exercise price of the warrants for the purchase of 291,667 shares,
         issued in conjunction with a private placement will be reduced from
         US$1.50 to the same price per share as that afforded the investors
         under the Company's next equity offering.

         As at September 30, 2003 the Company had issued 289,855 special
         warrants. Each special warrant is convertible into one common share and
         one warrant that entitles the holder to purchase an additional common
         share for $0.23 in the first year and $0.253 in the second year.

     (f) Options:

         The Company has granted stock options to certain employees, directors,
         officers, advisors, and consultants to buy an aggregate of 4,795,000
         (2002 - 4,795,000) common shares of the Company at prices ranging from
         $0.30 to $3.75 (2002 - $0.30 to $3.75). Of the 4,795,000 options
         granted, at September 30, 2003, 1,169,064 have been cancelled and
         1,308,619 have been exercised (December 31, 2002 - 674,998 and
         1,113,114 respectively). All options expire five years from the date of
         grant with the exception of 100,000 options issued during 2002 to a
         consultant that expire two years from the date of grant. A summary of
         the status of the Company's stock options at September 30, 2003 and
         December 31, 2002 and changes during the periods ended on those dates
         is presented below:

<TABLE>
<CAPTION>

                                                   SEPTEMBER 30, 2003                  DECEMBER 31, 2002
                                             -----------------------------------------------------------------------
                                                SHARES     WEIGHTED AVERAGE        SHARES        WEIGHTED AVERAGE
                                                            EXERCISE PRICE                        EXERCISE PRICE
         -----------------------------------------------------------------------------------------------------------
         <S>                                 <C>                <C>              <C>                  <C>
         OUTSTANDING, BEGINNING OF PERIOD    3,006,888          $1.68            1,953,664            $1.15
         -----------------------------------------------------------------------------------------------------------
            Granted                              --               --             1,610,000             2.23
            Exercised                         (195,505)          0.66             (375,110)            1.13
            Cancelled                         (494,066)          1.88             (181,666)            1.86
         -----------------------------------------------------------------------------------------------------------
         OUTSTANDING, END OF PERIOD          2,317,317          $1.73            3,006,888            $1.68
         -----------------------------------------------------------------------------------------------------------
</TABLE>


                                       11
<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

7.   SHARE CAPITAL, CONTINUED:

     (f) Options, continued:

         At December 31, 2002 and September 30, 2003, the following options were
         outstanding:

<TABLE>
<CAPTION>
         -------------------------------------------------------------------------------------------------------
         DECEMBER 31,                                       SEPTEMBER 30,   EXERCISE
             2002        GRANTED   EXERCISED   CANCELLED         2003        PRICE          EXPIRY DATE
         -------------------------------------------------------------------------------------------------------
          <S>              <C>     <C>         <C>            <C>            <C>         <C>
           155,000         --      (155,000)       --             --         $0.30          July 6, 2003
            50,000         --         --        (25,000)        25,000       $1.00       February 25, 2004
            45,000         --         --           --           45,000       $1.00         March 25, 2004
            60,000         --         --        (60,000)          --         $1.00         July 19, 2004
           196,999         --      (19,000)     (60,333)       117,666       $1.00        January 19, 2005
           546,666         --         --           --          546,666       $1.00        August 30, 2006
            15,000         --         --        (15,000)          --         $2.35       September 2, 2005
            15,000         --         --           --           15,000       $2.35        November 2, 2005
           160,000         --         --           --          160,000       $2.20       December 19, 2006
            15,000         --         --        (15,000)          --         $2.06        December 5, 2005
            27,000         --         --        (12,000)        15,000       $1.99       December 20, 2005
            8,400          --         --        (8,400)           --         $1.50       December 20, 2005
           245,833         --         --        (23,333)       222,500       $1.50          May 14, 2006
           305,000         --         --        (35,000)       270,000       $2.35         March 4, 2007
            56,990         --      (21,505)        --           35,485       $2.97        February 8, 2004
            10,000         --         --           --           10,000       $2.24        January 31, 2007
           170,000         --         --        (40,000)       130,000       $2.35          May 15, 2007
           155,000         --         --        (85,000)        70,000       $2.35         June 30, 2007
           385,000         --         --        (65,000)       320,000       $2.35         July 31, 2007
           300,000         --         --           --          300,000       $1.50        August 31, 2007
            85,000         --         --        (50,000)        35,000       $2.35        October 31, 2007
         -------------------------------------------------------------------------------------------------------
          3,006,888        --      (195,505)   (494,066)      2,317,317
         =======================================================================================================
</TABLE>


8.   RELATED PARTY TRANSACTIONS NOT DISCLOSED ELSEWHERE ARE AS FOLLOWS:

     (a) Included in administration expense is $nil (2002 - $233,550) for
         payments made to a company with a director in common for services
         rendered to the Company.



                                       12
<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)


9.   SUBSEQUENT EVENTS:

     (a) Pursuant to a Letter of Intent dated December 6, 2002 and an
         Arrangement Agreement dated February 14, 2003 the Company has agreed to
         acquire 100% of the issued and outstanding shares of Briyante Software
         Corp. ("Briyante"), a software development company. The arrangement
         agreement was approved by the shareholders of Briyante at an annual and
         special general meeting held on March 17, 2003 and by an order of the
         Supreme Court of British Columbia on March 20, 2003. Subsequently the
         Company agreed to the postponement, pending amendments to the terms, of
         the acquisition of Briyante. The agreement to amend the terms was
         brought about by the Company determining that it did not have
         sufficient working capital for the combined entity, as a result of a
         poor financial environment. The Arrangement Agreement expired on May
         31, 2003. On October 3, 2003, the Company and Briyante entered into a
         revised Arrangement Agreement to proceed with the acquisition of
         Briyante by the Company under the following terms:

         (i)    The Company will acquire all outstanding shares of Briyante in
                exchange for shares of the Company. Briyante shareholders will
                receive 1.4 common shares of the Company in exchange for each
                common share of Briyante;

         (ii)   The closing of the acquisition is subject to the Company raising
                a minimum $800,000, before finders' fees or commissions, of new
                capital by way of an equity financing. As at October 31, 2003
                the Company has raised the required amount;

         (iii)  The Company has agreed that the Briyante shareholders may
                nominate two directors for election at the Company's AGM; and

         (iv)   The closing is also subject to a number of customary conditions,
                including court, regulatory, and shareholder approval.
                Briyante's shareholders will be asked to vote on the Definitive
                Agreement at a Special Meeting that has been scheduled for
                November 21, 2003. The Company's shareholders will also vote on
                the arrangement November 21, 2003, at the Company's Annual
                General Meeting (AGM). If the Briyante acquisition is approved
                by both companies' shareholders, the Company's shareholders will
                also be asked to approve a post-acquisition share consolidation
                on a 4.5 old shares for 1 new share basis.

     (b) Subsequent to September 30, 2003 the Company closed the proposed
         private placement of up to $800,000. The private placement was
         oversubscribed by 574,348 Special Warrants and consists of a total of
         5,212,029 Special Warrants at $0.1725 per Special Warrant, for gross
         proceeds of $899,075. Finders' fees are payable totaling $39,900 for
         net proceeds of $859,175. Each Special Warrant will be exercisable, for
         no additional consideration, into Units consisting of one common share
         and one share purchase warrant. Each warrant will entitle the holder
         for two years from the date of issue of the special warrants to acquire
         one additional common share in the capital of Imagis at an exercise
         price of $0.23 in the first year and $0.253 in the second year. The
         Special Warrants will be convertible at the holders' option at any time
         for an eighteen month period and will convert automatically at the end
         of the eighteen months. The Company will not be required to meet any
         conditions prior to conversion. The private placement was closed in
         tranches consequently the automatic conversion date will fall on a
         number of dates between March 29, 2005 and April 30, 2005. The share
         purchase warrants will expire on a number of dates between September
         29, 2005 and October 30, 2005.

     (c) Subsequent to September 30, 2003 the Company settled $790,750 in debt
         including $396,750 of the Credit Facility (see Note 5), advances
         payable of $319,000 (see Note 6), and the $75,000 Series A Subordinated
         Debenture. The debt was settled through the issuance of 4,584,058
         Special Warrants under the same terms as those of the private placement
         described above, with the exception of debt settled with non-arms
         length parties. The special warrants issued to non-arms length parties
         will be converted only into common shares and no warrants. The debt
         settlement removed the existing General Security Agreements over the
         assets of the Company associated with the Credit Facility and Series A
         Debenture. The Company has repaid the balance of the funds owing under
         the Credit Facility in cash.


                                       13
<PAGE>


                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

10.  COMMITMENTS:

     The Company is committed to the following lease payments over the next five
     years:

<TABLE>
<CAPTION>
     ------------------------------------------------------------------------------------------
                                              EQUIPMENT                   BUILDING
                                        ------------------------------------------
                 PERIOD                 CAPITAL       OPERATING          OPERATING       TOTAL
     -----------------------------------------------------------------------------
     <S>                                 <C>           <C>                <C>           <C>
     October 1 to December 31, 2003       7,783         9,802              30,338        47,923
                  2004                   31,131        24,528             121,350       177,009
                  2005                   13,412         3,361              60,675        77,448
                  2006                       --         2,928                  --         2,928
                  2007                       --         1,708                  --         1,708
     ------------------------------------------------------------------------------------------
                                         52,326        42,327             212,363       307,016
     ==========================================================================================
</TABLE>

     The Company has entered into the following commitments with OSI Systems Inc
     ("OSI"):

     (a) The Company has entered into a strategic alliance to develop and market
         integrated airport and security products. The Company has committed to
         expend a minimum of USD$125,000 by July 8, 2004 on product development
         and the operation of an Airport Security Group to market the products.

     (b) The Company has committed to engage OSI to provide software development
         services. The Company has agreed to expend a minimum of USD$125,000,
         based on hourly rates charged at 85% of fair market value, prior to
         December 31, 2004.

     (c) The Company has entered into a Letter of Intent to form a joint venture
         for the purpose of establishing a manufacturing and marketing operation
         in Brazil. The Company has agreed to invest USD$250,000 cash in the
         joint venture in order to acquire a 20% interest. This investment is
         contingent upon the Company's joint venture partner fulfilling certain
         obligations prior to July 8, 2004.

     (d) The Company has agreed that, subject to regulatory approval, to modify
         the exercise price of the warrants issued to OSI in conjunction with a
         private placement for the purchase of 291,667 shares. The Company has
         agreed to reduce the exercise price from USD$1.50 (CDN$2.28) to the
         same price per share as that afforded the investors under the next
         equity offering of the Company. As at October 31, 2003 OSI has not
         chosen to exercise this right.

11.  FINANCIAL INSTRUMENTS AND RISK MANAGEMENT:

     (a) Fair values:

         The fair value of the Company's financial instruments, represented by
         cash, accounts receivable, accrued revenue receivable, accounts payable
         and accrued liabilities, credit facility, advances payable, and
         debentures, approximates their carrying values due to their ability to
         be promptly liquidated or their immediate or short term to maturity.
         Based on current interest rates relative to those implicit in the
         leases, the fair value of capital lease obligations is estimated to not
         be materially different from their carrying values.

     (b) Credit risk:

         The Company is exposed to credit risk only with respect to uncertainty
         as to timing and amount of collectability of accounts receivable. The
         Company's maximum credit risk is the carrying value of accounts
         receivable.

     (c) Foreign currency risk:

         Foreign currency risk is the risk to the Company's earnings that arises
         from fluctuations in foreign currency exchange rates, and the degree of
         volatility of these rates. Management has not entered into any foreign
         exchange contracts to mitigate this risk.


                                       14
<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

12.  SEGMENTED INFORMATION:

     The Company operates in a single segment, the development and sale of
     software. Management of the Company makes decisions about allocating
     resources based on this one operating segment.

     Substantially all revenue is derived from sales to customers located in
     Canada, the United States, the United Kingdom and Japan. Geographic
     information is as follows:

<TABLE>
<CAPTION>
                                NINE MONTHS ENDED        NINE MONTHS ENDED
                                SEPTEMBER 30, 2003       SEPTEMBER 30, 2002
                                ------------------       ------------------
     <S>                             <C>                      <C>
     Canada                             80,493                  231,168
     United States                     861,787                  872,080
     United Kingdom                     62,245                1,040,323
     Japan                                  --                  485,640
     Other                              87,424                  103,903
                                     ---------                ---------
                                     1,091,949                2,733,114
</TABLE>


     Substantially all of the Company's fixed assets are in Canada.

     Major customers, representing 10% or more of total sales, include:

<TABLE>
<CAPTION>
                        NINE MONTHS ENDED       NINE MONTHS ENDED
                        SEPTEMBER 30, 2003      SEPTEMBER 30, 2002
                        ------------------      ------------------
     <S>                      <C>                   <C>
     Customer A               249,733                 541,687
     Customer B                 6,883               1,024,341
     Customer C                    --                 485,317
     Customer D               401,337                      --
</TABLE>


13.  UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES:

     These financial statements have been prepared in accordance with generally
     accepted accounting principles in Canada ("Canadian GAAP") which differ in
     certain respects with accounting principles generally accepted in the
     United States ("U.S. GAAP"). Material issues that could give rise to
     measurement differences to these consolidated financial statements are as
     follows:

     (a) Stock-based compensation:

         For Canadian and United States GAAP purposes, subsequent to December
         31, 2001 the Company calculates the fair value of each award made to
         non-employees using the Black-Scholes model and amortizes the fair
         value to expense as the services are provided and the options are
         earned.

         With respect to employee awards, for U.S. GAAP purposes an enterprise
         recognizes or, at its option, discloses the impact of the fair value of
         stock options and other forms of stock-based compensation in the
         determination of income. The Company has elected under US GAAP to
         continue to measure compensation cost for stock options granted to
         employees by the intrinsic value method. For Canadian GAAP purposes the
         Company has chosen to continue with its policy of not recognizing
         compensation expense for employee awards.

         In addition, during the year ended December 31, 2001 and 2002, the
         Company repriced certain employee options and consequently, under US
         GAAP, such options are accounted for as variable options and net
         increases in the underlying common shares market price since the
         repricing date are recognized as compensation cost until the options
         are exercised, expire or forfeited. For Canadian GAAP purposes, the
         Company does not recognize any compensation cost in respect of repriced
         employee awards.


                                       15
<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (EXPRESSED IN CANADIAN DOLLARS)
                      (UNAUDITED - PREPARED BY MANAGEMENT)

13.  UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, CONTINUED:

     (b) Beneficial conversion option:

         During the year ended December 31, 2000, the Company issued convertible
         debentures with detachable warrants attached. For Canadian GAAP
         purposes, the issuance is considered to be of a compound debt and
         equity instrument and the proceeds were allocated between the two
         elements based on their relative fair values. For U.S. GAAP purposes,
         this allocation results in a beneficial conversion option as the fair
         value of the shares issuable on conversion of the debt is in excess of
         the value at which such shares would be issuable based on the reduced
         carrying value of the debt element. This beneficial conversion option
         was amortized over the period to the first conversion date.

     (c) Warrant issuance for services:

         During the year ended December 31, 2000, the Company issued 200,000
         warrants having an exercise price of $3.50 each for services rendered.
         In accordance with the Company's accounting policies, for Canadian GAAP
         purposes no value was assigned to these warrants. For U.S. GAAP
         purposes, the fair value of these warrants would be determined based on
         an option pricing model and recognized as the services are provided.

     The effect of these accounting differences on deficit, net loss, loss per
     share and future income taxes under United States accounting principles are
     as follows:

<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,
                                                          2003                   2002
                                                      -------------          ------------
     <S>                                              <C>                    <C>
     Deficit, Canadian GAAP                           $(20,241,603)          $(17,142,029)
     Cumulative stock based compensation (a)            (1,332,073)            (1,295,024)
     Beneficial conversion options (b)                    (208,200)              (208,200)
     Warrants issued for services (c)                     (722,000)              (722,000)
                                                      ------------           ------------
     Deficit, U.S. GAAP                               $(22,503,876)          $(19,367,253)
                                                      ------------           ------------
</TABLE>

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED                NINE MONTHS ENDED
                                                          SEPTEMBER 30,                    SEPTEMBER 30,
                                                    -------------------------       ---------------------------
                                                       2003           2002              2003            2002
                                                    ---------     -----------       -----------     -----------
     <S>                                            <C>           <C>               <C>             <C>
     Loss for the period, Canadian GAAP             $(694,042)    $(1,643,367)      $(3,099,574)    $(4,440,741)
     Stock-based compensation (a)                     (12,787)        179,156           (37,049)       (209,477)
                                                    ---------     -----------       -----------     -----------
     Loss for the period, U.S. GAAP                  (706,829)     (1,464,211)       (3,136,623)     (4,650,218)
                                                    ---------     -----------       -----------     -----------
     Loss per share, U.S. GAAP - basic
     and diluted                                    $   (0.03)    $     (0.07)      $     (0.15)    $     (0.25)
                                                    ---------     -----------       -----------     -----------
</TABLE>



                                       16
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

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 over one hundred and forty installations of its software
products.

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 world
events and concerns regarding security 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.

CRITICAL ACCOUNTING POLICES

On December 12, 2001, the Securities and Exchange Commission issued a cautionary
advice regarding the disclosure of critical accounting policies. Critical
accounting policies are those that management believes are both most important
to the portrayal of the Company's financial conditions and results, and that
require difficult, subjective, or complex judgements, often as a result of the
need to make estimates about the effects of matters that involve uncertainty.

We believe the "critical" accounting policies we use in preparation of our
financial statements are as follows:

Revenue recognition

(i)      Software sales revenue:

         The Company recognizes revenue consistent with Statement of Position
         97-2, "Software Revenue Recognition". In accordance with this
         Statement, revenue is recognized, except as noted below, when all of
         the following criteria are met: persuasive evidence of a contractual
         arrangement exists, title has passed, delivery and customer acceptance
         has occurred, the sales price is fixed or determinable and collection
         is reasonably assured. Funds received in advance of meeting the revenue
         recognition criteria are recorded as deferred revenue.

         When a software product requires significant production, modification
         or customization, the Company generally accounts for the arrangement
         using the percentage-of-completion method of contract accounting.
         Progress to completion is measured by the proportion that activities
         completed are to the activities required under each arrangement. When
         the current estimate on a contract indicates a loss, a provision for
         the entire loss on the contract is made. In circumstances where amounts
         recognized as revenue under such arrangements exceed the amount
         invoiced, the difference is recorded as accrued revenue receivable.



                                       17
<PAGE>

         When software is sold under contractual arrangements that includes post
         contract customer support ("PCS"), the elements are accounted for
         separately if vendor specific objective evidence ("VSOE") of fair value
         exists for all undelivered elements. VSOE is identified by reference to
         renewal arrangements for similar levels of support covering comparable
         periods. If such evidence does not exist, revenue on the completed
         arrangement is deferred until the earlier of (a) VSOE being established
         or (b) all of the undelivered elements are delivered or performed, with
         the following exceptions: if the only undelivered element is PCS, the
         entire fee is recognized ratably over the PCS period, and if the only
         undelivered element is service, the entire fee is recognized as the
         services are performed.

         The Company provides for estimated returns and warranty costs, which to
         date have been nominal, on recognition of revenue.

(ii)     Support and services revenue:

         Up front payments for contract support and services revenue are
         deferred and are amortized to revenue over the period that the support
         and services are provided.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO
SEPTEMBER 30, 2002:

REVENUES

Imagis' total revenues decreased 27% to $496,612 for the quarter ended September
30, 2003 over the comparable prior year level of $679,509. However, revenues
increased 56% over the second quarter revenues of $317,829, following a second
quarter increase of 15% over the first quarter 2003 level of $277,508. The lower
revenues as compared to 2002 were attributable to lower software sales revenues.

Revenues from the sales of software products declined 31% to $361,533 this year
as compared to $525,351 for 2002. The quarter ending September 30, 2002 included
$196,150 in revenue from the Serco installation, this order was received during
2001 and the revenue was recorded as the installation progressed and was
completed in 2002.

Support and services revenues for 2003 were $135,010 and were 29% higher than in
2002 of $104,688. The support revenues are increasing as the sales revenues
increased during 2002 and the deferred revenue of $132,956 recorded as at
September 30, 2003 consists solely of ongoing support contracts.

Other revenues were $69 for 2003, whereas comparable revenues of $49,470 were
earned in the prior year. These revenues were primarily earned through interest
revenue and fluctuate with the Company's cash balances. The 2002 figure was
unusually high due to a large interest charge applied to an outstanding customer
account.

OPERATING COSTS

Operating expenses totaled $1,190,654 for 2003, which is 49% lower than the 2002
operating expenses of $2,322,876. The lower costs over the prior period resulted
from significant decreases in the areas of administration, sales and marketing,
technology development, and technical services. The cost of materials of
$200,926 consists solely of the cost of purchasing the software licenses for the
previously announced Contra Costa installation from Briyante Software Corp. With
the expected completion of the acquisition of Briyante at the end of November
2003 this cost will not be incurred in the future. Management has implemented
significant cost reduction strategies during the final quarter of 2002 and
through April 2003. The month of May 2003 was the first month that fully
realized all of the cost reductions. The current operating expense rate has
stabilized at approximately $3,500,000 per annum, with an expected expense level
of approximately $5,000,000 for fiscal 2003.

ADMINISTRATION

Administrative costs for 2003 were $372,689, which is 58% lower than for 2002 of
$892,022. Administrative costs include staff salaries and related benefits and
travel, stock based compensation, consulting and professional fees, facility and
support costs, shareholder, regulatory and investor relations costs.

Generally all categories were lower due to the effects of cost reducing
strategies, in particular a significant reduction in travel costs and the use of
outside consultants. The Company's administrative costs have declined since the
second quarter of 2002, primarily due to no longer using financial advisory
services and contract support staff.


                                       18
<PAGE>

BAD DEBT EXPENSE

The bad debt expense in 2003 of $71,501 consists of two customers that defaulted
on payment for software licenses. There was no comparable expense during the
same period in 2002.

INTEREST AND AMORTIZATION

Interest expense incurred this year related to financing of equipment and
miscellaneous interest amounted to $7,524, up from the prior year of $1,232.
Overall interest expense also increased from $1,232 to $22,773 due to $15,249 in
interest charged on the Company's credit facility, advances and debenture.
Amortization in 2003 amounted to $53,743 consistent with $52,103 for 2002.

COST OF MATERIALS

Cost of materials during 2003 of $200,926 consisted solely of one-time costs
associated with the Contra Costa installation due to the cost of purchasing the
software licenses from Briyante Software Corp. With the expected completion of
the acquisition of Briyante at the end of November 2003 this cost will not be
incurred in the future. There was no comparable expense in 2002.

SALES AND MARKETING

Sales and marketing expenses for 2003 were $249,070, and were 69% lower than in
2002 of $803,627. Imagis significantly increased its sales and marketing efforts
during 2002 in order to increase market awareness of the Company and its
products and capitalize on expected increased sales opportunities. These
expected opportunities did not fully materialize. The Company has now decreased
its sales team and streamlined its associated travel and marketing costs as part
of its strategy of utilizing a more targeted marketing and sales strategy. No
further decreases are currently contemplated. Sales and marketing costs will be
increased if management identifies specific opportunities that require an
increase in resources but only in the event that identifiable revenues exist.

TECHNOLOGY DEVELOPMENT

The technology development expenses for 2003 were $141,331, which is 60% lower
than the 2002 comparable costs of $356,955. Recurring expenses were reduced
through a reduction in staff and overhead costs. Technology development expenses
are expected to increase by approximately $150,000 per quarter with the addition
of staff associated with the Briyante acquisition. Management expects that the
increased revenues achieved as a result of the sale of new products acquired
with Briyante will more than offset the increased costs.

TECHNICAL SERVICES

Costs for the technical services group were $78,621 this year, which is 60%
lower than the comparable 2002 costs of $195,819. 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. The reduction is due to cost reductions in all
areas. Costs for future quarters will be dependent on the sales levels achieved
by the Company.

NET LOSS FOR THE PERIOD

Overall, the Company incurred a net loss for the third quarter of 2003 of
$694,042 or $0.03 per share, which is 58% lower than the net loss incurred
during the third quarter of 2002 of $1,643,367 or $0.09 per share. Even though
the Company experienced reduced revenues during the period the loss was
dramatically reduced through management's cost reduction strategies. Management
believes that the Company will be able to achieve break even operations during
the first quarter of 2004. This has been moved out from the initial estimate of
break even operations being achieved during the final quarter of 2003 due to the
delay in completing the acquisition of Briyante. The revenues realized through
the sale of Briyante software will not be fully recognizable by Imagis until
after completion of the acquisition.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO
SEPTEMBER 30, 2002:

REVENUES

Imagis' total revenues decreased 60% to $1,091,949 for the nine months ended
September 30, 2003 over the comparable prior year level of $2,733,114. The lower
revenues were attributable to lower software sales revenues.


                                       19
<PAGE>

Revenues from the Company's software products declined 72% to $686,013 this year
as compared to $2,433,927 for 2002. The period ending September 30, 2002
included $1,024,341 in revenue from the Serco installation, $459,017 from the
Company's Alameda installation and $483,091 from the Zixsys license sale. The
only comparable large contract during the same period this year is the Contra
Costa installation of $401,337. The Alameda and Serco orders were received
during 2001 and the revenue was recorded as the installations progressed and
were completed in 2002.

Support and services revenues for 2003 were $398,251 and were 84% higher than in
2002 of $216,339. The support revenues are increasing as the sales revenues
increased during 2002.

Other revenues were $7,685 for 2003, whereas comparable revenues of $82,848 were
earned in the prior year. These revenues were primarily earned through interest
revenue and fluctuate with the Company's cash balances. The 2002 figure was
unusually high due to a large interest charge applied to an outstanding customer
account.

OPERATING COSTS

Operating expenses totaled $4,191,523 for 2003, which is 42% lower than the 2002
operating expenses of $7,173,855. The 2003 expenses include a one-time charge of
USD$250,000 (CDN$366,950) incurred as a management fee owing to OSI Systems Inc.
("OSI") in consideration of renegotiating the terms of the agreements with OSI;
a one-time expense recovery of $100,000 relating to sub-contracted software
development expensed during 2002; and a one-time cost of materials charge of
$200,926 due to the cost of purchasing the software licenses for the previously
announced Contra Costa installation from Briyante Software Corp. With the
expected completion of the acquisition of Briyante at the end of November 2003
this cost will not be incurred in the future. Excluding these items, the
operating expenses for 2003 were $3,723,647, which represents a 48% reduction in
expenses over the prior year. The lower costs over the prior period resulted
from significant decreases in the areas of administration, sales and marketing,
and technology development and technical services. Management has implemented
significant cost reduction strategies during the final quarter of 2002 and
through April 2003. The month of May of 2003 was the first month that fully
realized all of the cost reductions. The current operating expense rate has
stabilized at approximately $3,500,000 per annum, with an expected expense level
of approximately $5,000,000 for fiscal 2003.

ADMINISTRATION

Administrative costs for 2003 were $1,676,449, which is 42% lower than for 2002
of $2,903,346. These costs include the one-time management fee of USD$250,000
(CDN$366,950) described above. Excluding this charge, the administrative costs
were $1,309,499, which represents a 55% reduction from the prior year.
Administrative costs include staff salaries and related benefits and travel,
stock based compensation, consulting and professional fees, facility and support
costs, shareholder, regulatory and investor relations costs.

Generally all categories were lower due to the effects of cost reducing
strategies, in particular a significant reduction in travel costs and the use of
outside consultants. Also during the period, there was a stock based
compensation recovery of $7,019 as opposed to an expense of $275,519 during
2002. The Company's administrative costs have declined since the second quarter
of 2002, primarily due to no longer using financial advisory services and
contract support staff.

BAD DEBT EXPENSE

The bad debt expense in 2003 of $117,433 consists of three customers that
defaulted on payment for software licenses and one customer that defaulted on
payment of reimbursable expenses. There was no comparable expense during the
same period in 2002.

INTEREST AND AMORTIZATION

Interest expense incurred this year primarily related to financing of equipment
and miscellaneous interest charges amounted to $17,149. This is primarily due to
the acquisition of equipment during 2002. Overall interest expense also
increased $24,815 due to interest charged on the Company's credit facility,
advances and debenture. Amortization in 2003 amounted to $181,460 as compared to
$108,765 for 2002. The increase in amortization expense reflects purchases of
equipment and the amortization expense associated with the acquisition of the
Intacta license.


                                       20
<PAGE>

COST OF MATERIALS

Cost of materials during 2003 of $203,940 consisted primarily of one-time costs
associated with the Contra Costa installation due to the cost of purchasing the
software licenses from Briyante Software Corp. With the expected completion of
the acquisition of Briyante at the end of November 2003 this cost will not be
incurred in the future. Cost of materials during 2002 of $174,579 consisted of
one-time costs associated with the Alameda installation and Zixsys license.

SALES AND MARKETING

Sales and marketing expenses for 2003 were $1,139,056, and were 48% lower than
in 2002 of $2,197,551. Imagis significantly increased its sales and marketing
efforts during 2002 in order to increase market awareness of the Company and its
products and capitalize on expected increased sales opportunities. These
expected opportunities did not fully materialize. The Company has now decreased
its sales team and streamlined its associated travel and marketing costs as part
of its strategy of utilizing a more targeted marketing and sales strategy. No
further decreases are currently contemplated. Sales and marketing costs will be
increased if management identifies specific opportunities that require an
increase in resources but only in the event that identifiable revenues exist.

TECHNOLOGY DEVELOPMENT

The technology development expenses for 2003 were $505,822, which is 56% lower
than the 2002 comparable costs of $1,139,672. The 2003 total includes a $100,000
recovery of software consulting fees relating to sub-contracted software
development expensed during the fourth quarter of 2002. Recurring expenses were
reduced to $605,822 through a reduction in staff and overhead costs. Technology
development expenses are expected to increase by approximately $150,000 per
quarter with the addition of staff associated with the Briyante acquisition.
Management expects that the increased revenues achieved as a result of the sale
of new products acquired with Briyante will more than offset the increased
costs. Any additional increases will only occur when specific sales
opportunities are identified.

TECHNICAL SERVICES

Costs for the technical services group were $325,399 this year, which is 50%
lower than the comparable 2002 costs of $645,038. 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. The reduction is due to cost reductions in all
areas. Costs for future quarters will be dependent on the sales levels achieved
by the Company.

NET LOSS FOR THE PERIOD

Overall, the Company incurred a net loss for the first nine months of 2003 of
$3,099,574 or $0.15 per share, which is 30% lower than the net loss incurred
during the first nine months of 2002 of $4,440,741 or $0.25 per share. Even
though the Company experienced reduced revenues during the period the loss was
reduced through management's cost reduction strategies. Management believes that
the Company will be able to achieve break even operations during the first
quarter of 2004. This has been moved out from the initial estimate of break even
operations being achieved during the final quarter of 2003 due to the delay in
completing the acquisition of Briyante. The revenues realized through the sale
of Briyante software will not be fully recognizable by Imagis until after
completion of the acquisition.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash on hand at the beginning of the period aggregated $547,831.
During the period, the Company received additional funds of $296,038 from the
exercise of both stock options and warrants. In total, 195,505 options and
133,334 warrants were exercised which resulted in aggregate proceeds to the
Company of $129,370 and $166,668, respectively. The Company also received
USD$100,000 (CDN$148,710) and $176,214 in unsecured advances. The Company has
settled advances payable of $319,000 through the issuance of 1,849,275 Special
Warrants under the terms described below.

Under a credit facility the Company received cash pursuant to a loan agreement
with a previous director of the


                                       21
<PAGE>

Company in the amount of $367,000 and made repayments in the amount of $20,000.
Also included in this loan are various expenses paid by the former director on
behalf of the Company in the amount of $148,622 of which $26,384 has been
repaid. The loan has accrued interest in the amount of $21,000 and the total of
$490,238 remains unpaid as at September 30, 2003. The loan bore interest at the
prime rate plus 2% per annum and was secured by a General Security Agreement
over the assets of the Company, and a Source Code Escrow Agreement that required
the Company to deposit into escrow its source codes together with a license to
commercialize the source codes on a non-exclusive, world-wide, royalty-free
basis for a period of five years, to be released only in the event that the
Company ceases operations or enters bankruptcy proceedings. The loan arrangement
under which the credit facility was drawn expired on May 31, 2003. Subsequent to
September 30, 2003 the Company settled $396,750 of the Credit Facility through
the issuance of 2,300,000 Special Warrants under the terms described below. The
balance of the credit facility was repaid in cash.

During the period ended September 30, 2003, the Company received $75,000 through
the issuance of a debenture. This debenture bore interest at prime plus 2% per
annum, required interest to be paid monthly and was repayable on November 30,
2004. The debenture was secured by the assets of the Company but was
subordinated to the credit facility loan agreement. Subsequent to September 30,
2003 the Company entered into an agreement to settle the debenture through the
issuance of 434,782 Special Warrants under the terms described below.

The Company also received a total of $78,500 in subscriptions for special
warrants pursuant to the private placement described below.

The Company used these funds primarily to finance its operating loss for the
period. The impact on cash of the loss of $3,099,574, after adjustment for
non-cash items and changes to other working capital accounts in the period,
resulted in a negative cash flow from operations of $1,492,121. The Company also
used funds to purchase capital equipment amounting to $8,195, repaid capital
leases of $14,865, paid share issue costs of $2,031 related to a private
placement completed in 2002, and deferred acquisition costs of $231,674 related
to its proposed acquisition of Briyante Software Corp. The deferred acquisition
costs consist primarily of legal costs associated with the acquisition and
advances made to Briyante under the terms of the acquisition agreement.

In summary, the Company's cash position declined by $505,186 from $547,831 at
the beginning of the period to $42,645 at September 30, 2003.

Pursuant to a Letter of Intent dated December 6, 2002 and an Arrangement
Agreement dated February 14, 2003 the Company has agreed to acquire 100% of the
issued and outstanding shares of Briyante Software Corp. ("Briyante"), a
software development Company. The arrangement agreement was approved by the
shareholders of Briyante at an annual and special general meeting held on March
17, 2003 and by an order of the Supreme Court of British Columbia on March 20,
2003. Subsequently the Company agreed to the postponement, pending amendments to
the terms, of the acquisition of Briyante. The agreement to amend the terms was
brought about by the Company determining that it did not have sufficient working
capital for the combined entity, as a result of a poor financial environment
over the past nine months. The Arrangement Agreement expired on May 31, 2003. On
October 3, 2003, the Company and Briyante entered into a revised Arrangement
Agreement to proceed with the acquisition of Briyante by the Company under the
following terms:

     (i)    The Company will acquire all outstanding shares of Briyante in
            exchange for shares of the Company. Briyante shareholders will
            receive 1.4 common shares of the Company in exchange for each common
            share of Briyante;

     (ii)   The closing of the acquisition is subject to the Company raising a
            minimum $800,000, before finders' fees or commissions, of new
            capital by way of an equity financing. As at October 31, 2003 the
            Company has raised the required amount, see below;

     (iii)  The Company has agreed that the Briyante shareholders may nominate
            two directors for election at the Company's AGM; and

     (iv)   The closing is also subject to a number of customary conditions,
            including court, regulatory, and shareholder approval. Briyante's
            shareholders will be asked to vote on the Definitive Agreement at a
            Special Meeting that has been scheduled for November 21, 2003. The
            Company's shareholders will also vote on the arrangement November
            21, 2003, at the Company's Annual General Meeting (AGM). If the
            Briyante acquisition is approved by both companies' shareholders,
            the Company's shareholders will also be asked to approve a
            post-acquisition share consolidation on a 4.5 old shares for 1 new
            share basis.


                                       22
<PAGE>

Management of the Company continues its organizational restructuring and
refocusing of its sales, marketing, and development efforts and as a result has
laid off non-core employees from its global operations. The Company has also
closed its Victoria, B.C office and consolidated its operations into its
Vancouver, B.C. head office, and implemented significant general administrative
expense reduction measures, in order to substantially reduce the Company's
monthly operating expenses. May of 2003 was the first month that fully realized
all of the cost reductions and management believes that the Company will be able
to achieve break even operations during the first quarter of 2004.

The Company did not have sufficient cash flow from operations to fund its
operations beyond September 2003 and in recognition of this situation, the
Company entered into the following agreements:

     (a)  The Company entered into an agreement to issue an aggregate of 613,868
          common shares at a deemed price of $0.2925 per share in settlement of
          $179,557 of debt owed to two arms-length creditors. The Company also
          agreed to issue common shares to its landlord in payment of the lease
          on its Vancouver head office through December 2003. The shares are to
          be issued on the first of each month based on the formula of the
          number of shares being equal to the monthly rent of $11,475 divided by
          the weighted average share price of the previous month less the
          maximum allowable discount under the rules of the TSX Venture
          Exchange. The Company issued a further 47,378 shares in payment of the
          August rent and 57,146 shares in payment of the September rent under
          this agreement.

     (b)  Subsequent to September 30, 2003 the Company closed the announced
          private placement of up to CDN $800,000. The private placement was
          oversubscribed by 574,348 Special Warrants and consists of a total of
          5,212,029 Special Warrants at $0.1725 per Special Warrant, for gross
          proceeds of $899,075. Finders' fees are payable totaling $39,900 for
          net proceeds of $859,175. Each Special Warrant will be exercisable,
          for no additional consideration, into Units consisting of one common
          share and one share purchase warrant. Each warrant will entitle the
          holder for two years from the date of issue of the special warrants to
          acquire one additional common share in the capital of Imagis at an
          exercise price of $0.23 in the first year and $0.253 in the second
          year. The Special Warrants will be convertible at the holders' option
          at any time for an eighteen month period and will convert
          automatically at the end of the eighteen months. The Company will not
          be required to meet any conditions prior to conversion. The private
          placement was closed in tranches consequently the automatic conversion
          date will fall on a number of dates between March 29, 2005 and April
          30, 2005. The share purchase warrants will expire on a number of dates
          between September 29, 2005 and October 30, 2005.

     (c)  Subsequent to September 30, 2003 the Company settled $790,750 in debt
          including $396,750 of the Credit Facility, advances payable of
          $319,000, and the $75,000 Series A Subordinated Debenture. The debt
          was settled through the issuance of 4,584,058 Special Warrants under
          the same terms as those of the private placement described above, with
          the exception of debt settled with non-arms length parties. The
          1,002,899 special warrants issued to non-arms length parties will be
          converted only into common shares and no warrants. The debt settlement
          removed the existing General Security Agreements over the assets of
          the Company associated with the Credit Facility and Series A
          Debenture. The Company has repaid the balance of the funds owing under
          the Credit Facility in cash.

Management of the Company will be continuing to seek additional financing and
may complete an additional private placement if investment funds are available.
The Company will not be proceeding with the proposed Secured Convertible
Debenture issues described in its June 30, 2003 quarterly 10Q filing.

There is no assurance that the Company will be able to complete any financing or
that any financing will be obtained on terms favorable to the Company. The
failure to obtain adequate financing could result in a substantial curtailment
of Imagis' operations.


                                       23
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

     (a)  Evaluation of Disclosure Controls and Procedures

          Under the supervision and with the participation of the Company's
          management, including the Company's Chief Executive Officer and Vice
          President Finance, the Company evaluated the effectiveness of the
          design and operation of its disclosure controls and procedures (as
          defined in Rule 13a-15(e) under the Securities Exchange Act of 1934,
          as amended (the "Exchange Act")) as of the end of the period covered
          by this report (the "Evaluation Date"). Based upon that evaluation,
          the Chief Executive Officer and Vice President Finance concluded that,
          as of the Evaluation Date, the Company's disclosure controls and
          procedures were effective in timely alerting them to the material
          information relating to the Company (or its consolidated subsidiaries)
          required to be included in reports the Company files or submits under
          the Exchange Act.

     (b)  Changes in Internal Control over Financial Reporting

          During the period covered by this report, there was no change in the
          Company's internal control over financial reporting (as defined in
          Rule 13a-15(f) under the Exchange Act) that has materially affected,
          or is reasonably likely to materially affect, the Company's internal
          control over financial reporting.



                                       24
<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of the date of this report, the Company is not a party to any legal
proceedings, the adverse outcome of which, in management's opinion, individually
or in the aggregate, would have a material effect on the Company's results of
operations or financial position.

ITEM 2. CHANGES IN SECURITIES

     (a)  None

     (b)  None

     (c)  The Company issued 339,906 common shares to a company in a private
          transaction outside the United States. The common shares were issued
          to settle $91,799 of trade payables owed to the company. The common
          shares were issued in reliance upon an exclusion from registration
          available under Regulation S ("Regulation S") promulgated under the
          Securities Act of 1933, as amended (the "Securities Act").

          The Company issued 378,486 common shares to a company in a private
          transaction in the United States. The common shares were issued to
          settle $110,707 of trade payables owed to the company. The common
          shares were issued in reliance upon an exclusion from registration
          available under Regulation S ("Regulation S") promulgated under the
          Securities Act of 1933, as amended (the "Securities Act").

     (d)  None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

No matters were submitted to a vote of security holders during the quarter ended
September 30, 2003.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

The following exhibits are filed (or incorporated by reference herein) as part
of this Form 10-QSB:

      EXHIBIT
      NUMBER     DESCRIPTION
      -------    -----------
      3.1(1)     Articles of Incorporation
      4.1(1)     Shareholder Agreement dated February 23, 1999 among the
                 Original Shareholders and the Former Imagis Shareholders
      4.2(5)     Registration rights agreement dated July 8, 2002 between Imagis
                 and OSI
      10.1(1)*   Employment Agreement dated February 23, 1999 between the Issuer
                 and Iain Drummond
      10.2(2)*   Imagis Technologies Inc. 2000 Stock Option Plan
      10.3(3)    Form of Unit Subscription Agreement
      10.4(4)    Software Assets Sale and Assignment Agreement dated October 31,
                 2001 between Imagis and API Technologies, LLC.
      10.5(5)    Subscription Agreement dated July 8, 2002 between Imagis and
                 OSI
      10.6(5)    Letter of Intent dated July 8, 2002 between Imagis and OSI
      10.7(5)    Product Development and Marketing Agreement dated July 8, 2002
                 between Imagis and OSI
      10.8(5)    Software Developer Services Agreement dated July 8, 2002
                 between Imagis and OSI
      10.9(6)    Purchase Agreement dated August 30, 2002 between Imagis and
                 Intacta for certain data encoding technologies
      10.10(6)   Agreement to amend the terms of Item 10.9 dated October 8, 2002
      10.11(6)   Agreement to amend the terms of Item 10.9 and 10.10 dated
                 October 9, 2002


                                       25
<PAGE>

      EXHIBIT
      NUMBER     DESCRIPTION
      -------    -----------
      10.12(6)   Agreement between Imagis and Intacta for the purchase of
                 Intacta patents dated November 1, 2002
      10.13(6)*  Consulting Agreement between Imagis and Altaf Nazerali dated
                 October 1, 2002
      10.14(6)   Agreement between Imagis and Briyante for the development of a
                 query application dated July 30, 2002
      10.15(7)   Revolving Line of Credit dated February 23, 2003 between Imagis
                 and Altaf Nazerali
      10.16(7)   Amended and Restated Loan Agreement: Revolving Line of Credit
                 dated April 15, 2003 between Imagis and Altaf Nazerali
      10.17(7)   General Security Agreement dated April 15, 2003 between Imagis
                 and Altaf Nazerali
      10.18(7)   Grid Promissory Note dated February 21, 2003 between Imagis and
                 Altaf Nazerali
      10.19(7)   Grid Promissory Note Amended and Restated dated April 15, 2003
                 between Imagis and Altaf Nazerali
      10.20(7)   Source Code License Agreement dated April 15, 2003 between
                 Imagis and Altaf Nazerali
      10.21(7)   Source Code Escrow Agreement dated April 15, 2003 between
                 Imagis and Altaf Nazerali
      10.22(8)   Debenture agreement between the Company and 414826 B.C. Ltd
                 dated May 30, 2003
      10.23*     Consulting Agreement dated July 15, 2003 between Imagis and Roy
                 Trivett
      31.1       Section 302 Certifications
      32.1       Section 906 Certifications
      99.1       Risk Factors
      99.2       Form 51-901F as required by the British Columbia Securities
                 Commission

* Indicates a management contract or compensatory plan or arrangement

     (1) Previously filed as part of Imagis' Registration Statement on Form
         10-SB (File No. 000-30090).

     (2) Previously filed as part of Imagis' Annual Report on Form 10-KSB for
         the year ended December 31, 2000.

     (3) Previously filed as part of Imagis' Quarterly Report on Form 10-QSB for
         the period ended June 30, 2001.

     (4) Previously filed as part of Imagis' Quarterly Report on Form 10-QSB for
         the period ended March 31, 2002.

     (5) Previously filed as part of Imagis' Current Report on Form 8-K filed on
         December 19, 2002.

     (6) Previously filed as part of Imagis' Annual Report on Form 10-KSB for
         the year ended December 31, 2002.

     (7) Previously filed as part of Imagis' Quarterly Report on Form 10-QSB for
         the period ended March 31, 2003.

     (8) Previously filed as part of Imagis' Quarterly Report on Form 10-QSB for
         the period ended June 30, 2003.

(b)  Reports on Form 8-K

     On July 15, 2003, the Company filed on Form 8-K under Items 5 and 7 a press
     release attached as an exhibit thereto. The press release announced that
     the Company had entered into a Memorandum of Understanding with Briyante
     Software Corp to proceed with the acquisition of Briyante by Imagis under
     the following revised terms:

         (i)    Imagis will acquire all outstanding shares of Briyante in
                exchange for shares of Imagis, such that former shareholders of
                Briyante will own 40% of the outstanding share capital of Imagis
                before the additional issuances to debt holders described below;

         (ii)   Imagis and Briyante intend to raise capital by way of a debt
                offering (the "Debt") to fund the operations of Imagis and
                Briyante, the target for such offering being an aggregate amount
                of $1.63 million. The previously announced line of credit and
                debentures will be included in the aggregate amount;

         (iii)  As part of the Acquisition, the holders of the Debt will be
                offered a limited-time opportunity to convert the Debt for
                common shares of Imagis (post-acquisition). The total number of
                shares issuable will be such that if the targeted maximum amount
                of $1.63 million in Debt is converted into equity, the holders
                of the Debt will be issued 21% of the equity of Imagis
                (post-acquisition), with the current shareholders of Imagis and
                Briyante being diluted on a pro rata basis. If the total amount
                of Debt converted is more or less than $1.63 million, the total
                number of shares issuable to holders of the Debt who convert
                will be adjusted pro rata; and

         (iv)   Following the Acquisition and the conversion of the Debt into
                shares of Imagis, the common shares of Imagis will be
                consolidated on a basis acceptable to Imagis and Briyante
                (currently proposed to be approximately ten for one).

     Imagis also announced the appointment of Mr. Roy Trivett as President and
     Chief Executive Officer and that Mr. Iain Drummond, the previous President
     and CEO of Imagis, will remain with the company as Vice President and
     Managing Director, International. The Company also announced that upon
     completion of the Acquisition of Briyante, Mr. Al Kassam, the President and
     CEO of Briyante, will join Imagis as Director and serve in the role of Vice
     President, Technology and Development and Chief Technology Officer. Imagis
     also



                                       26
<PAGE>

     announced that Mr. Wayne Smith, previously Chief Financial Officer, will be
     taking on expanded responsibilities and will serve as Chief Operating
     Officer and Vice President, Finance.

     On August 7, 2003, the Company filed on Form 8-K under Items 5 and 7 a
     press release attached as an exhibit thereto. The press release announced
     that the Company had agreed to issue 613,868 common shares to settle
     $179,556.50 of trade payables.

     On September 26, 2003, the Company furnished on Form 8-K under Item 9 a
     press release attached as an exhibit thereto. The Company announced it has
     reached agreement for a proposed combination brokered and non-brokered
     private placement of up to CDN $800,000. The private placement will consist
     of up to 4,637,681 Special Warrants at $0.1725 per Special Warrant. Each
     Special Warrant will be exercisable, for no additional consideration, into
     Units consisting of one common share and one share purchase warrant. Each
     warrant will entitle the holder for two years from the date of issue of the
     special warrants to acquire one additional common share in the capital of
     Imagis at an exercise price of $0.23 in the first year and $0.253 in the
     second year. The Special Warrants will be convertible at the holders'
     option at any time for an eighteen month period and will convert
     automatically at the end of the eighteen months. The Company will not be
     required to meet any conditions prior to conversion. The brokered portion
     of the private placement will pay a commission of 7.5% in cash and 7% in
     broker's warrants at $0.23 per share. The private placement is subject to
     regulatory approval. The Company also announced that it is seeking
     regulatory approval to settle $790,750 in existing debt including the
     previously announced Secured Line of Credit, Series A Subordinated
     Debenture, and other advances. The debt will be settled through the
     issuance of 4,584,058 Special Warrants under the same terms as those of the
     private placement described above, with the exception of debt settled with
     non-arms length parties. The special warrants issued to non-arms length
     parties will be converted only into common shares and no warrants. The
     proposed debt settlement will remove the existing General Security
     Agreements over the assets of the Company associated with the Line of
     Credit and Series A Debenture. The Company will not be proceeding with the
     proposed Secured Convertible Debenture issues described in its recent June
     30, 2003 quarterly 10Q filing. Information furnished pursuant to Item 9 on
     Form 8-K shall not be deemed filed under the Securities Exchange Act of
     1934, as amended.


                                       27
<PAGE>

                                   SIGNATURES

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

                                       IMAGIS TECHNOLOGIES INC.


Date: November 14, 2003
                                       /s/ Wayne Smith
                                       ---------------------------------------
                                       Wayne Smith
                                       Vice President Finance,
                                          Chief Operating Officer
                                       (Principal Financial and Accounting
                                          Officer and Duly Authorized Officer)

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