UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

---

FORM 10-QSB

---

(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2002

OR

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

For the transition period from  to

Commission file Number: 000-30090

---

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

---

British Columbia, Canada(State or other jurisdiction of
incorporation or organization)

Not Applicable(I.R.S. Employer
Identification No.)


1300  1075 West Georgia Street
Vancouver, British Columbia
V6E 3C9(Address of principal executive offices)

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

---

As of November 13, 2002, 19,963,579
Common Shares were issued and outstanding.

Traditional Small
Business Disclosure Format (Check one):    Yes   ̈  No  x



---

IMAGIS TECHNOLOGIES INC.
FORM 10-QSB
For the quarterly period ended June 30, 2002

|                             |  |                                                                                                                        |  | Page No.
|---------------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | --------
|PART IFINANCIAL INFORMATION |  |                                                                                                                       
|Item 1.                      |  | Financial Statements                                                                                                   |  |         
|                             |  | Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001                                              |  | 1       
|                             |  | Statements of Operations and Deficit (unaudited) for the three and six
month periods ended September 30, 2002 and 2001 |  | 2       
|                             |  | Statements of Cash Flows (unaudited) for the three and six month
period ended September 30, 2002 and 2001              |  | 3       
|                             |  | Notes to Financial Statements                                                                                          |  | 5       
|Item 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                  |  | 15      
|Item 3.                      |  | Controls and Procedures                                                                                                |  | 23      
|PART IIOTHER INFORMATION    |  |                                                                                                                       
|Item 1.                      |  | Legal Proceedings                                                                                                      |  | 24      
|Item 2.                      |  | Changes in Securities and Use of Proceeds                                                                              |  | 24      
|Item 3.                      |  | Defaults Upon Senior Securities                                                                                        |  | 24      
|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      
|Signatures                   |  | 27                                                                                                                    
|Certifications               |  | 28                                                                                                                    

i

---

## PART
I  FINANCIAL INFORMATION

## ITEM
1.  FINANCIAL STATEMENTS

The following unaudited financial statements
for the three and nine month periods ended September 30, 2002 are included in response to
Item 1 and have been compiled by management.

The financial statements should be
read in conjunction with the Managements Discussion and Analysis and other financial
information included elsewhere in this Form 10QSB.

# IMAGIS TECHNOLOGIES INC.
BALANCE SHEETS 
AS AT SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
(expressed in Canadian dollars)

|                                         | Sept. 30
        2002 | Dec. 31,
        2001
|---------------------------------------- | --------------------- | ---------------------
|                                         |                       |                      
|
|Current assets:                          |                       |                      
|Cash and cash equivalents                |                       | $      453,708       
|Short-term investments                   |                       | 720,505              
|Accounts receivable                      |                       | 1,618,424            
|Advance to related party                 |                       | 25,395               
|Prepaid expenses and deposit             |                       | 301,306              
|                                         |                       |                      
|                                         |                       | 3,119,338            
|Equipment, net                           |                       | 219,715              
|Other assets                             |                       | 236,395              
|                                         |                       |                      
|                                         |                       | $   3,575,448        
|                                         |                       |                      
|LIABILITIES AND SHAREHOLDERS' EQUITY     |                      
|Current liabilities                      |                      
|Accounts payable and accrued liabilities |                       | $      649,758       
|Deferred revenue                         |                       | 451,898              
|                                         |                       |                      
|                                         |                       | 1,101,656            
|                                         |                       |                      
|Shareholders' equity:                    |                      
|Share capital (note 3)                   |                       | 15,691,401           
|Special warrants                         |                       | 1,138,249            
|Contributed surplus                      |                       | 275,519              
|Deficit                                  |                       | (14,631,377          
|                                         |                       |                      
|                                         |                       | 2,473,792            
|                                         |                       |                      
|                                         |                       | $   3,575,448        
|                                         |                       |                      

See accompanying notes to financial
statements.

1

---

# IMAGIS
TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(expressed in Canadian dollars)
(Unaudited  Prepared by Management)

|                                | Three months ended
        September 30, | Nine months ended
        September 30,
|------------------------------- | ---------------------------------------- | ---------------------------------------
|
|                                |                                          |                                        
|Revenues:                       |                                          |                                        
|Software sales                  |                                          | $      525,351                         
|Support and services            |                                          | 104,688                                
|Other                           |                                          | 49,470                                 
|                                |                                          |                                        
|                                |                                          | 679,509                                
|                                |                                          |                                        
|Expenses:                       |                                         
|Cost of materials               |                                          | 21,118                                 
|Sales and marketing             |                                          | 803,626                                
|Technical services              |                                          | 195,819                                
|Technology development          |                                          | 356,955                                
|Administration, including stock |                                         
|based compensation of $128,337  |                                         
|($nil) and $275,519 ($nil)      |                                          | 892,022                                
|Interest                        |                                          | 1,232                                  
|Amortization                    |                                          | 52,103                                 
|                                |                                          |                                        
|                                |                                          | 2,322,875                              
|                                |                                          |                                        
|                                |                                          | (1,643,367                             
|Loss for the period             |                                         
|                                |                                          |                                        
|Deficit, beginning of period    |                                          | (12,988,010                            
|                                |                                          |                                        
|                                |                                          |                                        
|Deficit, end of period          |                                          | $(14,631,377                           
|                                |                                          |                                        
|                                |                                          |                                        
|Loss per share                  |                                          | $         (0.09                        
|                                |                                          |                                        
|Weighted average number of      |                                         
|Shares outstanding              |                                          | 19,194,075                             
|                                |                                          |                                        

See accompanying notes to financial
statements.

2

---

# IMAGIS
TECHNOLOGIES INC. 
STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(expressed in Canadian dollars)
(Unaudited  Prepared
by Management)

|                                      | Three months ended
        September 30, | Nine months ended
        September 30,
|------------------------------------- | ---------------------------------------- | ---------------------------------------
|
|                                      |                                          |                                        
|Cash provided by (used for):          |                                          |                                        
|Net loss                              |                                          | $(1,643,367                            
|Items not involving the use of cash:  |                                         
|Amortization                          |                                          | 52,103                                 
|Stock-based compensation              |                                          | 128,337                                
|Accrued interest                      |                                          | --                                     
|Common shares issued for services     |                                          | --                                     
|Changes in non-cash operating working |                                         
|capital:                              |                                         
|Accounts receivable                   |                                          | (1,116,373                             
|Accrued revenue receivable            |                                          | 362,296                                
|Advances to related parties           |                                         
|Prepaids                              |                                          | (25,395                                
|Accounts payable and accrued          |                                          | (280,753                               
|liabilities                           |                                          | 153,703                                
|Deferred revenue                      |                                          | 155,571                                
|                                      |                                          |                                        
|                                      |                                          | (2,213,878                             
|                                      |                                          |                                        
|Cash flows from investing activities: |                                         
|Purchase of equipment                 |                                          | (71,459                                
|Purchase of other assets              |                                          | (236,395                               
|Short-term investments                |                                          | 198,662                                
|                                      |                                          |                                        
|                                      |                                          | (109,192                               
|                                      |                                          |                                        
|Cash flows from financing activities: |                                         
|Issuance of common shares for cash    |                                          | 2,712,501                              
|Share issue costs                     |                                          | (240,518                               
|Receipt of advances payable in        |                                         
|advance of private placement          |                                          | --                                     
|Repayment of advances payable         |                                          | --                                     
|Repayment of obligation under         |                                         
|capital lease                         |                                          | --                                     
|Loan from related parties             |                                          | --                                     
|                                      |                                          |                                        
|                                      |                                          | 2,471,983                              
|                                      |                                          |                                        
|Increase (decrease) in cash for       |                                         
|the period                            |                                          | 148,914                                
|Cash and cash equivalents, beginning  |                                         
|of period                             |                                          | 304,794                                
|                                      |                                          |                                        
|Cash and cash equivalents, end of     |                                         
|period                                |                                          | $    453,709                           
|                                      |                                          |                                        

See accompanying notes to financial
statements.

3

---

# IMAGIS
TECHNOLOGIES INC.
STATEMENTS OF CASH FLOWS (continued)
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(expressed in Canadian dollars)
(Unaudited  Prepared by Management)

Supplementary information and
  disclosure of non-cash 
  financing and   investing activities:

|                                   |  |             |   |   
|---------------------------------- |  | ----------- | - | --
|Interest paid                      |  | $     1,232 |   | $5
|Non-cash transactions not reported | 
|above:                             | 
|Issuance of common shares on       | 
|conversion of special warrants     |  | (164,258    | ) | --
|Issuance of common shares for      | 
|services rendered                  |  | --          |   | --

See accompanying notes to financial
statements

4

---

# 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. The Companys assets are based in Canada. In the nine month
period ended September 30, 2002, three customers represented approximately 37%, 19%, and
18% of total revenues (December 31, 2001  two customers represented approximately
40% and 20% of total revenues).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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. For the nine month period ended September 30, 2002, the
Company has incurred a loss from operations of $4,440,741 and a deficiency in operating
cash flow of $4,860,208. 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 8, 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:
| | -------------------------------------------------------------------------------------------------------------------------------------

|Asset                  | Rate
|---------------------- | ----
|Software               |     
|Computer hardware      |     
|Furniture and fixtures |     

5

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(expressed in Canadian dollars)
(Unaudited  Prepared by Management)

2.         Significant accounting policies:

| | (c)        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.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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:
| | ----------------------------------------

| | Contract
support and services revenue is deferred and is amortized to revenue ratably over the
period that the support and services are provided.
| | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)        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.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)        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

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(expressed in Canadian dollars) 
(Unaudited  Prepared by Management)

2.         Significant accounting policies:

| | (f)         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
deferred tax asset will be realized, a valuation allowance is provided.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g)        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 nine months ended September 30,
2002, would have been adjusted to the pro forma amounts indicated below:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  | Three months
        ended
        September 30, 2002 | Nine months
        ended
        September 30, 2002
|--------------------------------- | ----------------------------------------------------- | ----------------------------------------------------
|                                  |                                                       |                                                     
|Net loss -  as reported           |                                                       | $   (1,643,367                                      
|Net loss -  pro forma             |                                                       | (1,680,566                                          
|Net loss per share -  as reported |                                                       | $            (0.09                                  
|Net loss per share - pro forma    |                                                       | (0.09                                               

| | 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
weighted average fair value of employee stock options granted during the three months
ended September 30, 2002 was $1.54 per share purchase option.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

7

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(expressed in Canadian dollars) (Unaudited 
Prepared by Management)

2.         
Significant accounting policies:

| | (h)        Loss per share:
| | --------------------------

| | Loss
per share is calculated using the weighted average number of shares outstanding during
the reporting period. This average includes outstanding 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)        Unaudited interim financial information:
| | ---------------------------------------------------

| | The
information reported herein as at September 30, 2002 and for the three and nine month
periods ended September 30, 2002 and 2001 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, 2001 which are included in the Companys 2001 Annual
Report on Form 10-KSB. Certain comparative figures have been reclassified to conform with
the presentation adopted in the current reporting period. Results for the interim periods
ended September 30, 2002 are not necessarily indicative of what the results will be for
the complete 2002 fiscal year.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 3.         
Share capital:

| | (a)        Authorized:
| | ----------------------

| | 100,000,000
common shares without par value
| | -------------------------------------------

| | (b)        Issued:
| | ------------------

8

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(expressed in Canadian dollars) 
(Unaudited  Prepared by Management)

# 3.         
Share capital, continued:

|                                                 | Number
     of shares | Amount    
|------------------------------------------------ | --------------------- | ----------
|Balance, December 31, 2000                       |                       | 12,965,965
|Issued during the period for cash:               |                      
|On private placement                             |                       | 1,730,332 
|Options exercised                                |                       | 295,834   
|Warrants exercised                               |                       | 1,407,000 
|Issued for services related to private placement |                       | 20,000    
|Share issuance costs                             |                       | --        
|Balance, December 31, 2001                       |                       | 16,419,131
|Issued during the period for cash:               |                      
|On private placement                             |                       | 1,166,667 
|Options exercised                                |                       | 272,670   
|Warrants exercised                               |                       | 606,757   
|Issued on conversion of special warrants         |                       | 851,645   
|Issued as bonus for consulting agreement         |                       | 37,500    
|Share issuance costs                             |                       | --        
|Balance, September 30, 2002                      |                       | 19,354,370

See Note 4

| | (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:
| | ----------------------------

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

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

| | Earnings
per share calculations do not include the underlying common shares to outstanding Special
Warrants.
| | ------------------------------------------------------------------------------------------------------------

9

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(expressed in Canadian dollars) 
(Unaudited  Prepared by Management)

# 3.         
Share capital, continued:

| | (e)              Warrants:
| | --------------------------

|         
|---------
|
|         
|266,666  
|133,334  
|50,000   
|274,000  
|114,666  
|713,840  
|--       
|--       
|--       
|1,552,506
|         

| | As
at September 30, 2002, the Company has committed to issuing 105,000 warrants as part of a
commission to a third party relating to the issuance during the quarter of 1,166,667
common shares of the Company. These warrants have not been issued as at September 30,
2002.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f)        Options:
| | -------------------

|         
|---------
|
|         
|230,000  
|1,183,664
|540,000  
|--       
|--       
|--       
|--       
|1,953,664
|         

10

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(expressed in Canadian dollars) 
(Unaudited  Prepared by Management)

# 3.         
Share capital, continued:

| | (f)        Options
(continued)
| | ------------------------------

| | Effective
June 30, 2002, the Company amended the exercise price of 560,000 options with exercise
prices ranging from $2.65 to $3.50 to $2.35. As a result of the amendment, the Company
must apply modification accounting to these stock options. The Company has recorded
additional compensation expense relating to the repriced options.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 4.         
Related party transactions not disclosed
elsewhere are as follows:

|(a) |  | included
in accounts payable and accrued liabilities is $19,820 which is due to
               directors, officers and companies with a director and/or officer in
common.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | included
in administration expense for the nine month period ended September 30                is
$233,550 for payments made to a company with a director in common for
               services rendered to the Company.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | included
in administration expense for the nine month period ended September 30                is
$50,000 paid to a director of the Company, in consideration for financial and
               business consulting services. As part of this arrangement the Company has
also                agreed to issue 15,000 common shares subject to regulatory approval.
These                shares have not been issued as at September 30, 2002. As at
September 30, 2002,                the shares had not been issued.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) |  | the
Company has agreed to issue 20,000 common shares to a director and officer
               of the Company subject to regulatory approval as a discretionary bonus for
the                2000 and 2001 fiscal years as part of his compensation package. As at
September                30, 2002, these shares had not been issued.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) |  | the
Company has agreed, subject to regulatory approval, to issue 10,000 common
               shares to a company which is related to the Company by way of a common
director.                The shares are to be issued in consideration of a loan of
$150,000 made to the                Company in 2001. As at September 30, 2002 these
shares had not been issued.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) |  | the
Company has entered into the following commitments with a company related by
               virtue of having a director in common:
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------

|(i) |  | the
Company has entered into a strategic alliance to develop and market
               integrated airport and security products with the related company. The
Company                has committed to expend a minimum of USD$250,000 on product
development and the                operation of an Airport Security Group to market the
products.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) |  | the
Company has committed to engage the related company to provide software
               development services. The Company has agreed to expend a minimum of
USD$250,000,                based on hourly rates charged at 85% of fair market value,
prior to December 31,                2003.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) |  | 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.
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) |  | On
September 4, 2002 the Company acquired a license to certain software
               applications related to their use in certain specified business fields
from a                company related by virtue of having a director in common. The
Company paid                USD$150,000 (CDN$236,395, recorded in Other Assets) cash in
consideration of the                license. The license expires on the latter of August
31, 2017 and the expiry                date of the last patent of the underlying
software. The cost of the license will                be amortized against earnings from
the applications over its expected useful                life.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(expressed in Canadian dollars) 
(Unaudited  Prepared by Management)

# 5.
         
Commitments:

|(a) |  | The
Company has operating leases for certain of its office premises that covers
               the period through to June 2005. The minimum annual lease payments for the
               fiscal years ended December 31 are as follows:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2002 |  | $  30,351 | 
|---- |  | --------- | 
|2003 |  | 121,404   | 
|2004 |  | 121,404   | 
|2005 |  | 60,702    | 

6.
         
Subsequent events:

|(a) |  | On
October 1, 2002, 21,505 common shares were issued pursuant to the exercise of
               options for total proceeds to the Company of $63,869.85.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | On
November 1, 2002, 5,000 common shares were issued pursuant to the exercise of
               options for total proceeds to the Company of $5,000.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | On
November 8, 2002, 6,667 common shares were issued pursuant to the exercise of
               options for total proceeds to the Company of $10,001.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

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

12

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(expressed in Canadian dollars) 
(Unaudited  Prepared by Management)

### 7.
          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).
See note 12 of the Companys 2001 Annual Report on Form 10-KSB for a qualitative
description of material differences between Canadian and U.S. GAAP. The effect of these
accounting differences on deficit, loss and loss per share under United States accounting
principles are as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    | September 30,
        2002 | December 31,
        2001
|----------------------------------- | -------------------------- | -------------------------
|Deficit, Canadian GAAP              |                            | $(14,631,377             
|Cumulative stock based compensation |                            | (1,264,089               
|Beneficial conversion options       |                            | (208,200                 
|Warrants issued for services        |                            | (722,000                 
|                                    |                            |                          
|Deficit, U.S. GAAP                  |                            | $(16,825,666             
|                                    |                            |                          

|                          | Three months ended
        September 30, | Nine months ended
        September 30,
|------------------------- | ---------------------------------------- | ---------------------------------------
|
|Loss for the period,      |                                          |                                        
|Canadian GAAP             |                                          | $(1,643,367                            
|Stock-based               |                                         
|compensation              |                                          | 179,156                                
|                          |                                          |                                        
|Loss for the period, U.S. |                                         
|GAAP                      |                                          | (1,464,211                             
|                          |                                          |                                        
|Loss per share, U.S.      |                                         
|GAAP                      |                                          | $       (0.07                          
|                          |                                          |                                        

8.         Recent
accounting pronouncements:

| | During
2001, the Financial Accounting Standards Board issued four new pronouncements:
| | -------------------------------------------------------------------------------------

| | Statement
141, Business Combinations, requires the purchase method of accounting for all
business combinations and applies to all business combinations initiated after June 30,
2001 and to all business combinations accounted for by the purchase method that are
completed after June 30, 2001.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Statement
142, Goodwill and Other Intangible Assets, requires that goodwill as well as other
indefinite life intangible assets be tested annually for impairment and is effective for
fiscal years beginning after December 15, 2001.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Statement
143, Accounting for Asset Retirement Obligations, requires entities to record the
fair value of a liability for an asset retirement obligation in the period in which it is
incurred and a corresponding increase in the carrying amount of the related long-lived
asset and is effective for fiscal years beginning after June 15, 2001.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---

# IMAGIS
TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS 
(expressed in Canadian dollars) 
(Unaudited  Prepared by Management)

# 8.         
Recent accounting pronouncements
(continued):

| | Statement
144, Accounting for the Impairment or Disposal of Long-Lived Assets, provides that
long-lived assets to be disposed of by sale be measured at the lower of carrying amount
or fair value less cost to sell, whether reported in continuing operations or in
discontinued operations to include all components of an entity with operations that can
be distinguished from the rest of the entity and that will be eliminated from the ongoing
operations of the entity in a disposal transaction. Statement 144 is effective for fiscal
years beginning after December 15, 2001.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Currently,
the Company does not believe that the impact of these accounting pronouncements would be
material to the financial results.
| | --------------------------------------------------------------------------------------------------------------------------------------

14

---

# Item 2.
Managements Discussion and Analysis or Plan of Operations

# Forward-Looking
Statements:

Statements in this Quarterly report
about the Companys future results, levels of activity, performance, goals or
achievements or other events constitute forward-looking statements. These statements
involve known or unknown risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in such forwardlooking
statements. These factors include, among others, those described in connection with the
forward-looking statements, and the factors described under the heading Risk
Factors in Exhibit 99.1 to this Quarterly Report, which is hereby incorporated by
reference.

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

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

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

# About Imagis

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

ID-2000  Image
Detection and Biometric Facial Recognition

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

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

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

In addition, the Company has adapted
its facial recognition software to include the identification of non-facial objects in
background imagery and personally identifiable markings, such as tattoos. The biometric
solution purchased by the UKs National Crime Squad, which incorporates these
features, will be used to crack down on international online child pornography.

15

---

Secure-ID (Airport
Security)

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

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

CABS  
Computerized Arrest & Booking System

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

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

| | captures
more information than manual booking systems and allows the information to be retrieved
quickly from multiple locations;
|- | ---------------------------------------------------------------------------------------------------------------------------------

| | allows
offender information to be used for multiple inquiries and report generating purposes;
|- | ---------------------------------------------------------------------------------------------

| | generates
automated line-ups based on user-specified criteria;
|- | --------------------------------------------------------------

| | provides
a variety of required reports and other documents with the offenders photograph;
|- | ------------------------------------------------------------------------------------------

| | allows
the collection and retrieval of photographs of the offender, including identifying
physical marks such as tattoos, scars and other markings;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | creates
a database of offender information for access in the case of subsequent arrests or for
generation of suspect lists;
|- | ---------------------------------------------------------------------------------------------------------------------------

| | can
be integrated with livescan electronic fingerprinting systems and with other computer
software systems; and
|- | ---------------------------------------------------------------------------------------------------------------

| | integrates
with key dispatch systems, digital composite drawing programs and digital fingerprint
systems to provide a complete police information
management system.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

16

---

# Overview

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

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

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

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

# Revenues

Imagis total revenues increased
160% to $679,509 for the third quarter ended September 30, 2002 over the comparable prior
year third quarter level of $261,583. The higher revenues were primarily attributable to
higher software sales revenues.

Sales of the Companys software
products rose 286% to $525,351 in the third quarter of this year as compared to $136,000
for the third quarter in 2001. The increase in software sales revenues this year is due to
the UKs National Crime Squad installation and the overall increased number of
customers.

Support and services revenues for the
third quarter of 2002 were $104,688 and were 16% lower than those in the comparable
quarter in 2001 of $124,333. The lower 2002 level resulted from reduced revenues derived
from contract services this year, and is solely attributable to the completion of a single
special contract the Company had taken on in 2000 directly rather than through a partner
and which concluded mid-2001. As stated last year, the Company is not seeking such
contract work but intends to remain focused on both development and more profitable sales
of its software products. The support revenues are increasing as sales revenues increase
and the deferred revenue of $451,898 recorded as at September 30, 2002 consists solely of
ongoing support contracts.

Other revenues were $49,470 for the
third quarter of 2002, whereas comparable revenues of only $1,250 were earned in the
second quarter of the prior year. The increase is primarily due to a $34,551 recovery of
interest on an account receivable from a customer. The balance of these revenues
represents primarily interest earned on short-term investments.

# Operating Expenses

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

17

---

# Cost of Materials and
Services

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

# Sales and Marketing

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

# Technical Services

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

# Technology Development

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

# Administration

Administrative costs for the third
quarter of 2002 were $892,022, which is 289% higher than for the comparable quarter in
2001 of $229,585. 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 and 2002 special financial
advisory costs incurred related to the Companys corporate strategies, which includes
the new strategic partnership achieved with OSI Systems, Inc. and a special corporate
privatization proposal received in the first quarter.

18

---

Generally all categories were higher
due to the higher level of corporate activity this year. Staff costs rose 69% due to the
addition of staff. Facility and support costs rose 144% over the prior year due to the
overall staff growth and use of contract support staff. Travel rose 78% due to management
staff travel associated with financing and business alliances. Consulting and professional
fees rose approximately 1000%, primarily due to an increase in legal costs of $124,618 and
financial advisory consulting costs of $66,650. These costs represent 70% of the total
consulting and professional fees and there were no comparable costs in the prior
years quarter. Shareholder, regulatory and investor relations costs rose
approximately 1000%. This last increase primarily reflects the Companys continued
corporate branding efforts worldwide, and totals $75,711, there were no significant
comparable costs in the prior years quarter.Stock based compensation for the
third quarter was $128,337 and consists of the estimated fair market value of options
granted to non-employees, based on the Black-Scholes model. The policy of recording stock
based compensation was adopted as of January 1, 2002 consequently there is no comparable
figure for the prior years quarters.

The Companys administrative
costs have declined from the second quarter level due to no longer using the financial
advisory services and contract support staff, and management is taking steps to further
reduce these costs

# Interest and Amortization

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

# Net Loss for the Period

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

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

# Revenues

Imagis total revenues for the
nine months increased 101% to $2,733,114 over the comparable prior year nine-month
revenues of $1,359,044. As was the case for the third quarter, the higher revenues were
primarily attributable to higher software sales.

Sales of the Companys software
products rose 147% to $2,433,927 in the first nine months of this year as compared to
$985,092 for the first nine months in 2001. The increase in software sales revenues this
year primarily resulted from revenues generated from the Alameda and NCS installations,
the Zixsys licensing contract announced in the second quarter of this year, and the
overall increase in the number of customers.

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

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

# Operating Expenses

Operating expenses totaled $7,173,855
for the nine months in 2002, which is 144% higher than the 2001 nine-month costs of
$2,935,574. The increase in costs over the prior period resulted from increases in staff,
greater travel for sales and marketing and administration, and exceptional corporate
finance costs included in the administrative

1

---

category.    
          Operating costs include cost of materials and services, sales and marketing,
          technical services, technology development, administration, stock based
          compensation, interest and amortization.

# Cost of Materials and
Services

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

# Sales and Marketing

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

# Technical Services

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

# Technology Development

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

# Administration

Administrative expenses for the nine
months of 2002 were $2,627,827, which is 247% higher than the expenses incurred in the
comparable nine months in 2001 of $758,023. Generally all categories were higher due the
higher level of corporate activity this year. Staff, facility and support costs rose 106%
over the prior year due to the overall staff growth and use of contract support staff.
Travel rose 111% due to management staff travel associated with financing and business
alliances. Consulting and professional fees rose approximately 845%, primarily due to an
increase in legal costs of $145,000 and financial advisory consulting costs of $548,811.
No comparable financial advisory costs were incurred in the nine months of
2001.Shareholder, regulatory and investor relations costs rose approximately 639%. This
last increase primarily reflects the Companys continued corporate branding efforts
worldwide. Stock based compensation for the nine months was $275,519 and consists of the
estimated fair market value of warrants and options granted to non-employees, based on the
Black-Scholes model. The policy of recording stock based compensation was adopted as of
January 1, 2002 consequently there is no comparable figure for the prior years
quarters.

The Companys administrative
costs have declined during the third quarter from the second quarter level due to no
longer using the financial advisory services and contract support staff, and management is
taking steps to further reduce these costs.

# Interest and Amortization

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

20

---

# Net Loss for the Period

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

# Liquidity and Capital
Resources

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

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

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

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

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

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

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

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

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

21

---

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

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

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

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

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

# Recent accounting
pronouncements

During 2001, the Financial Accounting
Standards Board issued four new pronouncements:

Statement 141, Business
Combinations, requires the purchase method of accounting for all business combinations
and applies to all business combinations initiated after June 30, 2001 and to all business
combinations accounted for by the purchase method that are completed after June 30, 2001.

Statement 142, Goodwill and Other
Intangible Assets, requires that goodwill as well as other indefinite life intangible
assets be tested annually for impairment and is effective for fiscal years beginning after
December 15, 2001.

Statement 143, Accounting for
Asset Retirement Obligations, requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is incurred and a
corresponding increase in the carrying amount of the related long-lived asset and is
effective for fiscal years beginning after June 15, 2001.

Statement 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, provides that long-lived assets to be
disposed of by sale be measured at the lower of carrying mount or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations to include
all components of an entity with operations that can be distinguished from the rest of the
entity and that will be eliminated from the ongoing operations of the entity in a disposal
transaction. Statement 144 is effective for fiscal years beginning after December 15,
2001.

Currently, the Company does not
believe that the impact of these accounting pronouncements would be material to the
financial results.

# Critical Accounting
Policies

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:

22

---

Revenue recognition

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.

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.

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.

Support and services
revenue:

Contract support and services revenue
is deferred and is amortized to revenue ratably over the period that the support and
services are provided.

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.

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 equity instruments 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. Alternatively, 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 follow an alternative method and
continue with the former accounting policy of recognizing no compensation expense when
stock options are granted to employees because the Company grants stock options with an
exercise price based on the market price at the date of the grant. The Company recognizes
compensation expense for consultants based on the fair value of the equity instruments
issued.

# Item 3. Controls and
Procedures

(a)    
          Evaluation of disclosure controls and procedures.

| | Under
the supervision and with the participation of management, including the Chief Executive
Officer and Chief Financial Officer, the Company evaluated the effectiveness of the
design and operation of its disclosure controls and procedures (as defined in Rule
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended) as of a
date (the Evaluation Date) within 90 days prior to the filing date of this
report.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

---

| | Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that, as of the Evaluation Date, the Companys disclosure controls and procedures
were effective in alerting them to the material information relating to us (or our
consolidated subsidiaries) required to be included in our periodic SEC filings and Form
8-K reports.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)    
          Changes in internal controls.

| | There
were no significant changes made in our internal controls or, to our knowledge, in other
factors that could significantly affect these controls subsequent to the date of their
evaluation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

---

# PART II

# Item 1. Legal
Proceedings.

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. From time to time, the Company may be
involved in litigation relating to claims arising out of its operations in the normal
course of business.

# Item 2. Changes in
Securities.

|a) | None
|-- | ----

|b) | None
|-- | ----

|c) | The
Company issued 105,000 common shares upon the exercise of stock options by
                    two (2) persons in private transactions outside the United States for
gross                     proceeds to the Company of $52,500. The options were exercised
on the following                     dates for the following amounts: July 12, 2002  30,000
options for gross                     proceeds to the Company of $30,000; and September
6, 2002  75,000 options                     for gross proceeds to the Company of
$22,500. The common shares were issued in                     reliance upon an exclusion
from the registration requirements of U.S. federal                     and state
securities laws available under Regulation S (Regulation                     S)
promulgated under the Securities Act of 1933, as amended (the                     Securities
Act).
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On July
8, 2002, the Company issued 1,166,667 common shares to a U.S. company in reliance upon an
exemption from the registration requirements of U.S. federal securities laws pursuant to
Section 4(2) of the Securities Act that resulted in gross proceeds to the Company of
$2,660,000. As part of this financing, the Company also issued a warrant entitling the
holder to purchase 291,667 shares at $2.28 per share. These warrants expire on July 7,
2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the
quarter, the Company granted stock options exercisable to acquire 300,000 common shares
at an exercise price of $2.35 per share to a director of the Company who is located in
the United States. The options were granted to an accredited investor (as
defined in Rule 501(a) of Regulation D (Regulation D) promulgated under the
Securities Act) in reliance upon an exemption from the registration requirements of U.S.
federal and state securities laws available under Rule 506 of Regulation D.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the
quarter, the Company granted stock options exercisable to acquire 580,000 common shares
at exercise prices ranging from $1.50 to $2.35 to certain employees, directors and
consultants who were non-U.S. persons and were located outside the United States. The
options were granted in reliance upon an exclusion from the registration requirements of
U.S. federal and state securities laws available under Regulation S.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

d)    
          None

# Item 3.  
Defaults Upon Senior Securities.

None

25

---

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

At the Companys Annual General
Meeting on June 28, 2002, shareholders approved the following nominations and proposals:

A total of 6,989,455 shares were
present in person or by proxy at the Annual Meeting.

|                                                                                                             | Votes
        For | Votes 
        Against | Votes 
        Withheld*
|------------------------------------------------------------------------------------------------------------ | ----------------- | ---------------------- | ------------------------
|To fix the number of directors at seven                                                                      |                   | 6.891,866              |                         
|To pass an ordinary resolution of disinterested shareholders to approve the
amendment to the Company's stock |                   | 5,828,817              |                         
|To appoint and remunerate KPMG LLP, Chartered Accountants                                                    |                   | 6,918,457              |                         
|Nominations for director:                                                                                    |                  
|Iain Drummond                                                                                                |                   | 6,910,181              |                         
|Altaf Nazerali                                                                                               |                   | 6,337,492              |                         
|Rory Godinho                                                                                                 |                   | 6,373,492              |                         
|Oliver "Buck" Revell                                                                                         |                   | 6,909,181              |                         
|Robert Gordon                                                                                                |                   | 6.903,081              |                         
|Roy Trivett                                                                                                  |                   | 6.369,356              |                         

* includes abstentions
and broker non-votes.

## Item 5.  Other
Information

None.

## Item 6.  
Exhibits and Reports Filed on Form 8-K

|a) | Exhibits
|-- | --------

| | ExhibitNumber | 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(1) | Escrow Agreement for a Venture Capital Pool Issuer dated July 3, 1998 among Colloquium
Capital Corp., CIBC Mellon Trust Company and Sandra Buschau, Altaf Nazerali,
Shafiq Nazerali, Rory Godinho and Ross Wilmot
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.3(1) | Warrant dated February 25, 1999 issued to Iain Drummond
| | ------ | -------------------------------------------------------

| | 4.4(1) | Warrant dated February 25, 1999 issued to Armitage & Associates
| | ------ | ---------------------------------------------------------------

| | 4.5(6) | Form of Share Purchase Warrant
| | ------ | ------------------------------

| | 10.1(1)* | Incentive Stock Option Agreements dated July 7, 1998 between Imagis and each of Sandra E. Buschau,
Altaf Nazerali and Ross Wilmot
| | -------- | ---------------------------------------------------------------------------------------------------------------------------------

| | 10.2(1) | Confidentiality and Non-Competition Agreement dated February 23, 1999 among Imagis,
the Former Imagis Shareholders and the principals of the Former Imagis Shareholders
| | ------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.3(1) | Revenue Assignment Agreement dated December 15, 1998 among Imagis, Pacific,
Imagis Solutions (US) Incorporated and Imagis North
West Solutions Inc
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.4(1) | Agency Agreement dated March 29, 1999 among Imagis and the Agents
| | ------- | -----------------------------------------------------------------

| | 10.5(1) | Subscription Agreement dated January 26, 1999 between Imagis and Pacific Cascade Consultants Ltd.
| | ------- | -------------------------------------------------------------------------------------------------

| | 10.6(1) | Subscription Agreement dated January 26, 1999 between Imagis and First Capital Invest Corp.
| | ------- | -------------------------------------------------------------------------------------------

| | 10.7(1)* | Incentive Stock Option Agreements dated February 25, 1999 and March 25, 1999
between Imagis and certain directors, employees and service providers of Imagis
or affiliates or subsidiaries thereof
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.8(1)* | Consulting Services Agreement effective February 25, 1999 between Imagis and
Shafiq Nazerali-Walji
| | -------- | --------------------------------------------------------------------------------------------------

26

---

| | ExhibitNumber | Description
| | ------------- | -----------

| | 10.9(1)* | Employment Agreement dated February 23, 1999 between the Issuer and Iain Drummond
| | -------- | ---------------------------------------------------------------------------------

| | 10.10(1) | Technology Purchase Agreement dated March 6, 1998 among Imagis Technologies Ltd.,
Imagis Cascade Technologies Inc. and Penelope
Walker, Richard Graham and William Hawkes
| | -------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.11(1) | Technology Purchase Agreement dated March 6, 1998 among Imagis, Imagis Cascade
Consultants, Inc. and Former Imagis Shareholders
| | -------- | -------------------------------------------------------------------------------------------------------------------------------

| | 10.12(1) | Share Purchase Agreement dated December 14, 1998 among Imagis, Imagis Cascade and the
Former Imagis Shareholders
| | -------- | ----------------------------------------------------------------------------------------------------------------

| | 10.13(1) | Confidentiality and Standstill Agreement dated October 6, 1998 among Colloquium Capital Corp.,
Imagis Cascade Technologies Inc. and Former Imagis Shareholders
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.14(1) | Loan Agreement dated October 15, 1999 between Imagis and Rexton Corporation
| | -------- | ---------------------------------------------------------------------------

| | 10.15(1) | Agreement dated May 1, 2000 between Imagis and Somerset Financial Group Inc.
| | -------- | ----------------------------------------------------------------------------

| | 10.16(2) | Agreement dated August 15, 2000 between Imagis and GPC Communications
| | -------- | ---------------------------------------------------------------------

| | 10.17(3) | Agreement dated August 21, 2000 between Imagis and Fleishman-Hillard Canada Inc.
| | -------- | --------------------------------------------------------------------------------

| | 10.18(4)* | Imagis Technologies Inc. 2000 Stock Option Plan
| | --------- | -----------------------------------------------

| | 10.19(4) | Agreement dated October 11, 2000 between Imagis and Orion Scientific Systems Inc.
| | -------- | ---------------------------------------------------------------------------------

| | 10.20(5)* | Imagis Technologies Inc. 1999 Stock Option Plan
| | --------- | -----------------------------------------------

| | 10.21(6) | Form of Unit Subscription Agreement
| | -------- | -----------------------------------

| | 10.22(2) | Convertible Note Subscription Agreement dated October 1, 1999
| | -------- | -------------------------------------------------------------

| | 10.23(7) | Software Assets Sale and Assignment Agreement dated October 31, 2001 between
Imagis and API Technologies, LLC.
| | -------- | --------------------------------------------------------------------------------------------------------------

| | 99.1 | Risk Factors
| | ---- | ------------

| | 99.2 | Form 51-901F as required by the British Columbia Securities Commission
| | ---- | ----------------------------------------------------------------------

---

| | (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, 1999.
| | --- | ------------------------------------------------------------------------------------------------------

| | (3) | Previously filed
as part of Imagis' Quarterly Report on Form 10-QSB for the period ended September 30, 2000
| | --- | -----------------------------------------------------------------------------------------------------------

| | (4) | Previously filed as part
of Imagis' Annual Report on Form 10-KSB for the year ended December 31, 2000.
| | --- | ------------------------------------------------------------------------------------------------------

| | (5) | Previously filed
as part of Imagis' Quarterly Report on Form 10-QSB for the period ended March 31, 2001.
| | --- | --------------------------------------------------------------------------------------------------------

| | (6) | Previously filed
as part of Imagis' Quarterly Report on Form 10-QSB for the period ended June 30, 2001.
| | --- | -------------------------------------------------------------------------------------------------------

| | (7) | Previously filed
as part of Imagis' Quarterly Report on Form 10-QSB for the period ended March 31, 2002.
| | --- | --------------------------------------------------------------------------------------------------------

27

---

|b) | Reports on Form 8K
|-- | -------------------

| | On
July 29, 2002, the Company filed a Form 8-K relating to nine press releases. The first
press release was dated June 4, 2002, in which the Company advised that it knows of no
material changes that would account for the recent decline in the trading price of the
Companys shares. The second press release was dated June 10, 2002, in which the
Company announced that its CABS system had been purchased by another detachment of the
RCMP in British Columbia. The third press release was dated July 3, 2002, in which the
Company announced that its partner, API Gaming Inc., had completed the first installation
of Imagis ID-2000 facial recognition technology in a South Korean casino. The
fourth press release was dated July 9, 2002, in which the Company announced that it had
entered into a private placement with OSI Systems, Inc. The fifth press release was also
dated July 9, 2002, in which the Company announced the appointment of Messrs. Deepak
Chopra and Treyton L. Thomas to the Board of Directors of the Company. At the same time
the Company announced the resignations of Messrs. Fred Clarke and Rory Godinho. The sixth
release was dated July 10, 2002, in which the Company announced that its CABS software
had been purchased by another detachment of the RCMP in Alberta. The seventh news release
was dated July 16, 2002, in which the Company announced the appointment of Mr. Richard
Katrusiak to its management team in the position of Vice President, Sales. The eighth
press release was dated July 23, 2002, in which the Company announced that its ID-2000
facial recognition technology had been purchased by New Zealand customs. The ninth press
release was dated July 24, 2002, in which the Company announced that it had signed an
authorized seller agreement with Datacard Group, a global leader in card issuance systems
and secure identity solutions.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
August 21, 2002, the Company filed a Form 8-K relating to two press releases. The first
press release was dated August 12, 2002, in which the Company announced that the Company
and Microsoft are to present a joint demonstration of a new integrated justice system at
2002 APCO Conference. The second press release was dated August 14, 2002, and announced
growth in revenues for the six months ending June 30, 2002. It also announced that: both
the CEO and CFO of the Company have each executed a Certification pursuant to the
requirements set forth in section 906 of the Sarbanes-Oxley Act of 2002; that the Company
had launched a new integrated justice system which utilizes Microsoft .NET technology;
the Company has signed a reseller agreement with Datacard Group; and that New Zealand
customs had purchased the Companys software for the purpose of investigating the
use of facial recognition to apply against its core CUSMOD border management system.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28

---

# SIGNATURES

Pursuant to the
requirements of the Securities Exchange Act of 1934, the Issuer has duly caused
this Quarterly Report to be signed on its behalf by the undersigned thereunto
duly authorized.

Dated:  November 13, 2002

| | IMAGIS TECHNOLOGIES INC.
| | ------------------------

| | /s/ Wayne Smith
Wayne SmithChief Financial Officer
(Principal Financial and Accounting Officer and Duly
Authorized Officer)
| | ---------------------------------------------------------------------------------------------------------------------------

29

---

# CERTIFICATION

I, Wayne Smith, certify
that:

|1. |  | I have reviewed this quarterly report on Form 10-QSB of Imagis Technologies
               Inc.;
|-- |  | ------------------------------------------------------------------------------------------------

|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
               statement of a material fact or omit to state a material fact necessary to make
               the statements made, in light of the circumstances under which such statements
               were made, not misleading with respect to the period covered by this quarterly
               report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based on my knowledge, the financial statements, and other financial information
               included in this quarterly report, fairly present in all material respects the
               financial condition, results of operations and cash flows of the registrant as
               of, and for, the periods presented in this quarterly report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | The registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | designed
such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated
subsidiaries,                is made known to us by others within those entities,
particularly during the                period in which this quarterly report is being
prepared;
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | evaluated
the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
               quarterly report (the Evaluation Date); and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | presented
in this quarterly report our conclusions about the effectiveness of                the
disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | The registrants other certifying officers and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the audit
               committee of registrants board of directors (or persons performing
               the equivalent functions):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | all
significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record,
process,                summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls;
and
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | any
fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls;
and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | The registrants other certifying officers and I have indicated in this
               quarterly report whether or not there were significant changes in internal
               controls or in other factors that could significantly affect internal controls
               subsequent to the date of our most recent evaluation, including any corrective
               actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:  
November 13, 2002 | /s/ Wayne Smith 
Wayne Smith
Chief Financial Officer
(Principal Financial and Accounting Officer)
|------------------------- | -------------------------------------------------------------------------------------------------

---

# CERTIFICATION

I, Iain Drummond, certify
that:

|1. |  | I have reviewed this quarterly report on Form 10-QSB of Imagis Technologies
               Inc.;
|-- |  | ------------------------------------------------------------------------------------------------

|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
               statement of a material fact or omit to state a material fact necessary to make
               the statements made, in light of the circumstances under which such statements
               were made, not misleading with respect to the period covered by this quarterly
               report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based on my knowledge, the financial statements, and other financial information
               included in this quarterly report, fairly present in all material respects the
               financial condition, results of operations and cash flows of the registrant as
               of, and for, the periods presented in this quarterly report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | The registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | designed
such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated
subsidiaries,                is made known to us by others within those entities,
particularly during the                period in which this quarterly report is being
prepared;
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | evaluated
the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
               quarterly report (the Evaluation Date); and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | presented
in this quarterly report our conclusions about the effectiveness of                the
disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | The registrants other certifying officers and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the audit
               committee of registrants board of directors (or persons performing
               the equivalent functions):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | all
significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record,
process,                summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls;
and
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | any
fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls;
and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | The registrants other certifying officers and I have indicated in this
               quarterly report whether or not there were significant changes in internal
               controls or in other factors that could significantly affect internal controls
               subsequent to the date of our most recent evaluation, including any corrective
               actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:  
November 13, 2002 | /s/ Iain Drummond 
Iain Drummond
Chief Executive Officer
(Principal Executive Officer)
|------------------------- | --------------------------------------------------------------------------------------

---

# CERTIFICATION PURSUANT
TO18 U.S.C. § 1350,
AS ADOPTED PURSUANT TOSECTION 
906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly
Report of Imagis Technologies Inc. (the Company) on Form 10-QSB for the period
ended September 30, 2002 as filed with the Securities and Exchange Commission on the date
hereof (the Report), I, Wayne Smith, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

|(1) |  | The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
           Exchange Act of 1934; and
|--- |  | --------------------------------------------------------------------------------------------------------------------------------

|(2) |  | The
information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | /s/ Wayne Smith 
Wayne Smith
Chief Financial Officer
(Principal Financial and Accounting Officer)
November 13, 2002
| | -------------------------------------------------------------------------------------------------------------------

---

# CERTIFICATION PURSUANT
TO18 U.S.C. § 1350,
AS ADOPTED PURSUANT TOSECTION 
906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly
Report of Imagis Technologies Inc. (the Company) on Form 10-QSB for the period
ended September 30, 2002 as filed with the Securities and Exchange Commission on the date
hereof (the Report), I, Iain Drummond, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

|(1) |  | The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
           Exchange Act of 1934; and
|--- |  | --------------------------------------------------------------------------------------------------------------------------------

|(2) |  | The
information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | /s/ Iain Drummond 
Iain Drummond
Chief Executive Officer
(Principal Executive Officer)
November 13, 2002
| | --------------------------------------------------------------------------------------------------------