ImageWare Systems Closes $3.1 Million Financing

SAN DIEGO - ImageWare Systems, Inc., a world leading developer and provider of identity management solutions, today announced that it has entered into an agreement to sell shares of common stock and warrants to purchase common stock in a private placement. The company expects to net (after fees and expenses) approximately $2.8 million from the private placement which involved the sale of units consisting of one share of common stock and a warrant to purchase 0.38 shares of common stock. Each unit was priced at $2.58. The warrants will have a five-year term and an exercise price of $3.45 per share. A select group of prominent, independent institutional investors, most of whom are adding to existing positions in ImageWare's stock, led this financing.

"These funds will provide ImageWare additional balance sheet strength to aggressively pursue our target markets," said Jim Miller, ImageWare's chairman and CEO. "We are especially pleased to be able to secure this funding largely from existing shareholders of ImageWare that know our company well and appreciate the company's positioning in the markets we serve."

As a result of the transaction, ImageWare will issue approximately 1,203,489 new shares of common stock and warrants to purchase up to approximately 491,625 shares of common stock. The company expects to use the net proceeds of the private placement for working capital. The company is obligated to file a registration statement in connection with the resale of all 1,695,114 shares of common stock.