ImageWare Systems Reports First Quarter 2008 Results

SAN DIEGO--(Business Wire)--
ImageWare(R) Systems, Inc. (OTCBB: IWSY), a leading developer and
provider of identity management solutions, reported financial results
for the first quarter ended March 31, 2008.

Jim Miller, ImageWare's chairman and chief executive officer,
stated, "In the first quarter Unisys Canada announced ImageWare's
Multi-Biometric Identity Management solution would be the foundation
of a new system to replace the existing application for the Canadian
Air Transport Security Authority (CATSA) Restricted Area
Identification Card (RAIC) system. This contract to supply, integrate
and manage a new identification management system, using fingerprint
and iris biometric technology to instantly verify identities of
100,000 airport workers at 29 airports throughout Canada will run for
two years, followed by two additional two-year option periods. As
such, we expect to recognize approximately $2.0 million over the next
10 months from this project, and believe there is longer term
potential for additional license revenue.

"The increased activity we are seeing around HSPD-12 makes us
confident our scalable, vendor neutral, open-architected platform and
interoperable technologies offer the right solutions to meet the
demands of the market trying to meet stringent standards for large
biometric projects for corporations and government. While the industry
is experiencing slower than anticipated deployments, we continue to
work closely with our prime systems integrator partners on bids and
large-scale projects such as the CATSA contract," Miller concluded.

Total net revenues for the first quarter 2008 were $1.4 million,
compared to $1.3 million for the first quarter 2007. Revenues were
lower than the $2.3 million preliminary estimate for the quarter due
to certain contractual terms requiring the company to defer
recognition on over $1 million in software licenses shipped in the
quarter. However, ImageWare was able to invoice against the shipment
for payment. First quarter 2008 operating expenses totaled $2.9
million, compared to $3.1 million in the first quarter 2007. The loss
from operations in the first quarter 2008 totaled $1.9 million,
compared to loss from operations of $2.2 million in the first quarter
2007. Net loss for the first quarter totaled $1.9 million, compared to
net loss of $2.4 million in the first quarter of 2007. Net loss per
share available to common shareholders was $0.22 for the first
quarter, of which $0.11 per share was attributable to preferred stock
dividends, compared to net loss per share available to common
shareholders of $0.21 in the first quarter of 2007, of which $0.03 per
share was attributable to preferred stock dividends.

The backlog of product orders at March 31, 2008 was $3.1 million,
compared to $867,000 at year end December 31, 2007.

First Quarter and Recent Corporate Highlights

-- Received new orders totaling $3.5 million in the first quarter
2008 from multiple customers for its biometric identity
management, secure credential and law enforcement solutions.

-- Received technology excellence and superior performance
recognition for the IWS(TM) Biometric Engine(R) platform in
conjunction with the Technology-to-Sea Excellence Award to the
Navy's Tactical Biometric Collection and Matching System
(TBCMS) team.

-- Selected by GE Security for its FUPAC (Florida Uniform Port
Access Credential) project.

-- Won a one-year, multiple-award initial task order contract
from Boeing Integrated Defense Systems unit.

-- Signed a three-year, royalty-based, worldwide OEM agreement
with GE Security as an integral part of its identity
management solution offerings.

-- Launched IWS(TM) Mediator(TM), a suite of multilingual
translation, collaborative and integrated multimodal biometric
capabilities.

-- Received Minutiae interoperability Exchange (MINEX)
Certification from the National Institute of Standards and
Technology (NIST) for the IWS(TM) Biometric Engine(R).

-- Signed a two-year, non-exclusive distribution agreement with
iBilt Technologies Ltd., a New Delhi based end-to-end IT
solutions provider for government IT business.

Conference Call Information

A conference call on ImageWare's first-quarter results will be
conducted today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) and
will be available to all interested parties by dialing 877-407-9210 in
the U.S. or 201-689-8049, if outside of the U.S. The call will also be
available through a live audio web broadcast at
www.iwsinc.com/investors.cfm.

The call will be archived and available for replay from the
investor relations page of ImageWare's web site at www.iwsinc.com
until August 19, 2008. The call will also be available for replay
until May 22, 2008 by calling 877-660-6853 in the U.S. or
201-612-7415, if outside of the U.S. To access the call, all parties
will need the following replay pass codes: Account #286 and Conference
ID # 280040.

About ImageWare Systems, Inc.

ImageWare Systems, Inc. is a leading developer and provider of
identity management solutions, providing biometric, secure credential,
law enforcement and digital imaging technologies. Scalable for
worldwide deployment, the Company's biometric product line includes a
multi-biometric engine that is hardware and algorithm independent,
enabling the enrollment and management of unlimited population sizes.
ImageWare's identification products are used to manage and issue
secure credentials including national IDs, passports, driver licenses,
smart cards and access control credentials. ImageWare's digital
booking products provide law enforcement with integrated mug shot,
fingerprint Livescan and investigative capabilities. ImageWare is
headquartered in San Diego, with offices in Washington DC and Canada.
For more information visit www.iwsinc.com.

Safe Harbor Statement

This news release may contain forward-looking statements made
pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. While these statements are meant to
convey to the public the company's progress, business opportunities
and growth prospects, readers are cautioned that such forward-looking
statements represent management's opinion. While management believes
such representation to be true and accurate based on the information
available to the company, actual results may differ materially from
those described. The company's operations and business prospects are
always subject to risks and uncertainties. Important facts that may
cause actual results to differ are set forth in the company's periodic
filings with the U.S. Securities and Exchange Commission.

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IMAGEWARE SYSTEMS, INC.
SELECTED COMPARATIVE FINANCIAL HIGHLIGHTS

In thousands, except share and per share amounts
----------------------------------------------------------------------

Three Months Ended
March 31,
---------------------------
2008 2007
---------------------------
Revenues
Product $ 777 $ 709
Maintenance 606 627
---------------------------
Total Revenues 1,383 1,336

Cost of Revenue
Product 139 185
Maintenance 315 294
---------------------------

Gross Profit 929 857
67% 64%
Operating Expenses
General & administrative 1,101 1,143
Sales and marketing 667 694
Research and development 897 1,186
Depreciation and amortization 201 61
---------------------------
Total Operating Expenses 2,866 3,084

------------- ------------
Loss from operations (1,937) (2,227)

Interest (income) expense, net (5) 243
Other (income) expense, net (28) (38)

------------- ------------
Loss from operations before income taxes (1,904) (2,432)

Income taxes 0 0

------------- ------------
Net loss $ (1,904) $ (2,432)
Preferred dividends $ (1,878) $ (433)
------------- ------------
Net loss available to common shareholders $ (3,782) $ (2,865)
============= ============

Per share data - basic
Net income (loss) from continuing
operations $ (0.11) $ (0.18)
Preferred dividends $ (0.11) $ (0.03)
------------- ------------
Basic loss per share available to common
shareholders $ (0.22) $ (0.21)
============= ============

Basic common shares 17,836,698 13,763,224

IMAGEWARE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
In thousands
----------------------------------------------------------------------

March 31, December 31,
2008 2007
------------- ------------
Assets:
Cash $ 301 $ 1,044
Accounts receivable, net 633 425
Inventories 225 130
Other current assets 493 441
Property and equipment, net 259 288
Other assets 780 718
Intangible assets, net 2,290 2,437
Goodwill 3,416 4,452
------------- ------------
Total Assets $ 8,397 $ 9,935
============= ============

Liabilities and Shareholders' Equity:
Current liabilities $ 5,760 $ 5,269
Pension obligation 1,201 1,139
Shareholders' equity 1,436 3,527
------------- ------------
Total Liabilities and Shareholders' Equity $ 8,397 $ 9,935
============= ============
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ImageWare Systems, Inc.
Wayne Wetherell, 858-673-8600
or
Investor Relations Contact:
Lippert/Heilshorn & Associates
Christiane Pelz / Cathy Mattison, 415-433-3777
cpelz@lhai.com / cmattison@lhai.com

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