24
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                    QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                       or

                   TRANSITION REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                           Commission file No. 0-12641

                                                [GRAPHIC OMITED]

                        IMAGING TECHNOLOGIES CORPORATION
             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S>                                                             <C>
DELAWARE . . . . . . . . . . . . . . . . . . . . . . . . . . .             33-0021693
(State or other jurisdiction of incorporation or organization)  (IRS Employer ID No.)
</TABLE>
                               17075 VIA DEL CAMPO
                           SAN DIEGO, CALIFORNIA 92127
                    (Address of principal executive offices)

       Registrant's Telephone Number, Including Area Code:  (858) 451-6120

Check  whether  the registrant (1) has filed all reports required to be filed by
Section  13  or  15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports),  and  (2) has been subject to such filing requirements for the past 90
days.
                                   Yes X   No

The number of shares outstanding of the registrant's common stock as of November
22,  2002  was  93,777,896.

<PAGE>

PART  I  -  FINANCIAL  INFORMATION

ITEM  1.  CONSOLIDATED  FINANCIAL  STATEMENTS

Consolidated  Balance  Sheets
     September  30,  2002  (unaudited)  and  June  30,  2002  (audited)     2

Consolidated  Statements  of  Operations
     Three  months  ended  September  30,  2002  and  2001  (unaudited)     3

Consolidated  Statements  of  Cash  Flows
     Three  months  ended  September  30,  2002  and  2001  (unaudited)     4

Notes  to  Consolidated  Financial  Statements.     5

ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
                CONDITION  AND  RESULTS  OF  OPERATIONS     10

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT
                MARKET  RISK     20

ITEM  4.  CONTROLS  AND  PROCEDURES

PART  II  -  OTHER  INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS     21

ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS     21

ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES     22

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS     22

ITEM  5.  OTHER  INFORMATION     22

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K     22

SIGNATURES          23

CERTIFICATION     24

<PAGE>
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      SEPTEMBER 30, 2002 AND JUNE 30, 2002
                        (in thousands, except share data)
<TABLE>
<CAPTION>
<S>                                                            <C>          <C>                <C>               <C>
ASSETS
                                                                                                       9/30/02   6/30/02
Current assets. . . . . . . . . . . . . . . . . . . . . . . .  (unaudited)  audited
     Cash                                                                   $             22   $            43
     Accounts receivable                                                                 255               629
     Inventories                                                                         141               151
     Prepaid expenses and other                                                           46                33
                                                                            -----------------  ----------------
          Total current assets                                                           464               856

Property and Equipment, net                                                              183               212
Workers' compensation deposit and other assets                                           112               112
                                                                            -----------------  ----------------

 Total assets                                                               $            759   $         1,180
                                                                            =================  ================

LIABILITIES AND SHAREHOLDERS' NET CAPITAL DEFICIENCY
Current liabilities
     Borrowings under bank notes payable                                    $          3,295   $         3,295
     Short-term notes payable, including amounts due to
        related parties                                                                2,871             2,796
     Convertible debentures                                                            1,073               803
     Accounts payable                                                                  7,583             7,343
     PEO payroll taxes and other payroll deductions                                    1,213               690
     PEO accrued worksite employee                                                       350               644
     Other accrued expenses                                                            6,367             6,036
                                                                            -----------------  ----------------
          Total current liabilities                                                   22,752            21,607
                                                                            -----------------  ----------------

Shareholders' deficiency
     Series A preferred stock, $1,000 par value, 7,500 shares
        authorized, 420.5 shares issued and outstanding                                  420               420
     Common stock, $0.005 par value, 500,000,000 shares
        authorized; 21,929,365 shares issued and outstanding
        at June 30, 2002; 30,580,013 at September 30, 2002                               153               110
     Common stock warrants                                                               475               475
     Paid-in capital                                                                  79,935            79,492
     Shareholder loans                                                                     -                 -
     Accumulated deficit                                                            (102,976)         (100,924)
                                                                            -----------------  ----------------
          Total shareholders' deficiency                                             (21,993)          (20,427)
                                                                            -----------------  ----------------
 Total liabilities and shareholders' deficiency                             $            759   $         1,180
                                                                            =================  ================

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
                        (in thousands, except share data)
                                  (unaudited)
<TABLE>
<CAPTION>
<S>                                                  <C>              <C>
                                                               2002             2001
Revenues
     Sales of products. . . . . . . . . . . . . . .  $          486   $        1,057
     Software, licenses and royalties . . . . . . .             138               21
     PEO services . . . . . . . . . . . . . . . . .           2,822                -
                                                     ---------------  ---------------
                                                              3,446            1,078
                                                     ---------------  ---------------
Costs and expenses
     Cost of products sold. . . . . . . . . . . . .             235              598
     Cost of licenses and royalties . . . . . . . .              21                -
     Cost of PEO services . . . . . . . . . . . . .           2,572                -
                                                     ---------------  ---------------
 Total cost of revenues . . . . . . . . . . . . . .           2,828              598
                                                     ---------------  ---------------

Operating expenses:
     Selling, general, and administrative . . . . .           2,053            1,413
     Research  and development. . . . . . . . . . .               -               72
                                                     ---------------  ---------------
                                                              2,053            1,485
                                                     ---------------  ---------------

Loss from operations. . . . . . . . . . . . . . . .          (1,435)          (1,005)
                                                     ---------------  ---------------

Other income (expense):
     Interest and finance costs, net. . . . . . . .            (621)            (177)
     Other. . . . . . . . . . . . . . . . . . . . .               4                -
                                                     ---------------  ---------------
                                                               (617)            (177)
                                                     ---------------  ---------------

Loss before income taxes. . . . . . . . . . . . . .          (2,052)          (1,182)

Income tax benefit (expense). . . . . . . . . . . .               -                -
                                                     ---------------  ---------------

Net loss. . . . . . . . . . . . . . . . . . . . . .  $       (2,052)  $       (1,182)
                                                     ===============  ===============

Earnings (loss) per common share
     Basic. . . . . . . . . . . . . . . . . . . . .  $        (0.08)  $        (0.14)
                                                     ===============  ===============
     Diluted. . . . . . . . . . . . . . . . . . . .  $        (0.08)  $        (0.14)
                                                     ===============  ===============

Weighted average common shares. . . . . . . . . . .          24,662            8,549
                                                     ===============  ===============
Weighted average common shares - assuming dilution.          24,662            8,549
                                                     ===============  ===============

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
                        (in thousands, except share data)
                                  (unaudited)
<TABLE>
<CAPTION>
<S>                                                          <C>              <C>
                                                                       2002             2001
                                                             ---------------  ---------------
Cash flows from operating activities
-----------------------------------------------------------
   Net loss . . . . . . . . . . . . . . . . . . . . . . . .  $       (2,052)  $       (1,182)
-----------------------------------------------------------  ---------------  ---------------
   Adjustments to reconcile net loss to net
     cash used by operating activities
-----------------------------------------------------------
        Depreciation and amortization . . . . . . . . . . .              29               16
-----------------------------------------------------------  ---------------  ---------------
        Stock issued for services . . . . . . . . . . . . .             295               73
-----------------------------------------------------------  ---------------  ---------------
        Amortization of debt discount . . . . . . . . . . .             200                -
-----------------------------------------------------------  ---------------  ---------------
        Value of services for exercise price of warrants. .             166                -
-----------------------------------------------------------  ---------------  ---------------
        Value attributed to warrants issued for services. .              70                -
-----------------------------------------------------------  ---------------  ---------------
        Changes in operating assets and liabilities
-----------------------------------------------------------
           Accounts receivable. . . . . . . . . . . . . . .             374             (516)
-----------------------------------------------------------  ---------------  ---------------
           Inventories. . . . . . . . . . . . . . . . . . .              10              (90)
-----------------------------------------------------------  ---------------  ---------------
           Prepaid expenses and other . . . . . . . . . . .             (13)             (14)
-----------------------------------------------------------  ---------------  ---------------
           PEO liabilities. . . . . . . . . . . . . . . . .             229                -
-----------------------------------------------------------  ---------------  ---------------
           Accounts payable and accrued expenses. . . . . .             571              787
-----------------------------------------------------------  ---------------  ---------------
               Net cash used by operating activities. . . .            (121)            (926)
-----------------------------------------------------------  ---------------  ---------------

Cash flows from investing activities
-----------------------------------------------------------
   Capital expenditures . . . . . . . . . . . . . . . . . .               -                -
-----------------------------------------------------------  ---------------  ---------------
               Net cash from (used by) investing activities               -                -
-----------------------------------------------------------  ---------------  ---------------

Cash flows from financing activities
-----------------------------------------------------------
   Net borrowings under bank notes payable. . . . . . . . .               -             (300)
-----------------------------------------------------------  ---------------  ---------------
   Issuance of other notes payable. . . . . . . . . . . . .              75            1,227
-----------------------------------------------------------  ---------------  ---------------
   Net proceeds from issuance of common stock . . . . . . .              25                -
-----------------------------------------------------------  ---------------  ---------------
               Net cash from financing activities . . . . .             100              927
-----------------------------------------------------------  ---------------  ---------------

Net increase (decrease) in cash . . . . . . . . . . . . . .             (21)               1
-----------------------------------------------------------  ---------------  ---------------
   Cash, beginning of period. . . . . . . . . . . . . . . .              43               35
-----------------------------------------------------------  ---------------  ---------------
   Cash, end of period. . . . . . . . . . . . . . . . . . .  $           22   $           36
-----------------------------------------------------------  ===============  ===============

Supplemental disclosure of cash flow information
   Cash paid during the period for interest . . . . . . . .  $            -   $            -
-----------------------------------------------------------  ---------------  ---------------
   Cash paid during the period for income taxes . . . . . .  $            -   $            -
-----------------------------------------------------------  ---------------  ---------------

See Notes to Consolidated Financial Statements.
-----------------------------------------------------------
</TABLE>
<PAGE>
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002
                                   (unaudited)

NOTE  1.  BASIS  OF  PRESENTATION

The  accompanying  unaudited  consolidated  condensed  financial  statements  of
Imaging Technologies Corporation and Subsidiaries (the "Company" or "ITEC") have
been  prepared  pursuant  to the rules of the Securities and Exchange Commission
(the  "SEC")  for  quarterly  reports on Form 10-Q and do not include all of the
information  and  note  disclosures  required  by  generally accepted accounting
principles.  These  financial  statements and notes herein are unaudited, but in
the  opinion  of  management,  include  all  the adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the Company's
financial  position,  results  of  operations,  and  cash  flows for the periods
presented.  These  financial  statements  should be read in conjunction with the
Company's  audited  financial  statements  and notes thereto for the years ended
June  30,  2002,  2001, and 2000 included in the Company's Annual Report on Form
10-K  filed  with  the  SEC.  Interim  operating  results  are  not  necessarily
indicative  of  operating  results for any future interim period or for the full
year.

NOTE  2.  GOING  CONCERN  CONSIDERATIONS

The  accompanying  consolidated financial statements have been prepared assuming
that  the  Company  will continue as a going concern. For the three months ended
September  30,  2002, the Company experienced a net loss of $2,052,000 and as of
September  30,  2002,  the  Company had a negative working capital deficiency of
$22,288,000  and  had  a  negative  shareholders' deficiency of $21,993,000.  In
addition,  the  Company is in default on certain note payable obligations and is
being  sued  by  numerous  trade  creditors  for nonpayment of amounts due.  The
Company  is  also  deficient in its filings and its payments relating to payroll
tax  liabilities.  These conditions raise substantial doubt about its ability to
continue  as  a  going  concern.

On  August  20,  1999,  at  the  request of Imperial Bank, the Company's primary
lender,  the  Superior  Court of San Diego appointed an operational receiver who
took  control of the Company's day-to-day operations on August 23, 1999. On June
21,  2000, in connection with a settlement agreement reached with Imperial Bank,
the  Superior  Court  of  San  Diego  issued an order dismissing the operational
receiver.

On October 21, 1999, Nasdaq notified the Company that it no longer complied with
the  bid  price  and  net  tangible  assets/market  capitalization/net  income
requirements  for  continued listing on The Nasdaq SmallCap Market. At a hearing
on  December  2,  1999, a Nasdaq Listing Qualifications Panel also raised public
interest  concerns  relating to the Company's financial viability. The Company's
common  stock was delisted from The Nasdaq Stock Market effective with the close
of  business  on  March  1,  2000. As a result of being delisted from The Nasdaq
SmallCap  Market,  shareholders may find it more difficult to sell common stock.
This  lack  of liquidity also may make it more difficult to raise capital in the
future.  Trading  of  the  Company's  common  stock  is  now  being  conducted
over-the-counter  through the NASD Electronic Bulletin Board and covered by Rule
15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers
who  recommend  these securities to persons other than established customers and
accredited  investors  must make a special written suitability determination for
the  purchaser  and  receive  the purchaser's written agreement to a transaction
prior  to  sale.  Securities are exempt from this rule if the market price is at
least  $5.00  per  share.

The Securities and Exchange Commission adopted regulations that generally define
a  "penny  stock"  as  any  equity security that has a market price of less than
$5.00  per  share.  Additionally,  if  the  equity security is not registered or
authorized  on  a  national securities exchange or the Nasdaq and the issuer has
net  tangible assets under $2,000,000, the equity security also would constitute
a  "penny  stock."  Our  common  stock does constitute a penny stock because our
common  stock  has a market price less than $5.00 per share, our common stock is
no longer quoted on Nasdaq and our net tangible assets do not exceed $2,000,000.
As  our  common  stock  falls  within  the  definition  of  penny  stock,  these
regulations  require the delivery, prior to any transaction involving our common
stock,  of a disclosure schedule explaining the penny stock market and the risks
associated  with  it.  Furthermore,  the  ability  of broker/dealers to sell our
common  stock  and  the  ability of shareholders to sell our common stock in the
secondary  market  would  be  limited. As a result, the market liquidity for our
common  stock  would  be  severely  and  adversely  affected.  We can provide no
assurance that trading in our common stock will not be subject to these or other
regulations  in  the  future,  which  would negatively affect the market for our
common  stock.

In  order  for  the  Company to continue in existence, it must obtain additional
funds  to  provide  adequate working capital to finance operations, and begin to
generate  positive  cash  flows  from its operations. During the past two fiscal
years  the  Company  has raised approximately $3 million through the issuance of
convertible  debentures.  The  Company  is  currently in the process of filing a
registration statement to register shares underlying the convertible debentures.
In  order  for  the  Company  to  raise  additional  funds through a convertible
debenture, the Company must get it current registration statement filed with the
SEC  declared  effective.  However,  there  can be no assurance that the Company
will  be  able to complete any additional debt or equity financings on favorable
terms  or at all, or that any such financings, if completed, will be adequate to
meet  the  Company's capital requirements including compliance with the Imperial
Bank  settlement agreement. Any additional equity or convertible debt financings
could  result in substantial dilution to the Company's shareholders. If adequate
funds  are  not  available,  the  Company  may  be  required to delay, reduce or
eliminate some or all of its planned activities, including any potential mergers
or  acquisitions. The Company's inability to fund its capital requirements would
have  a  material  adverse effect on the Company. The Company is also looking at
making  strategic  acquisitions  of  companies  that  have  positive cash flows.
Specifically,  the  Company  has  letters  of  intent  to  acquire a controlling
interest  in Quik Pix, Inc., a controlling interest in Greenland Corporation and
has  entered  into  an  agreement  to  acquire  Dream  Canvas,  Inc., a Japanese
corporation  that  has  developed  machines  currently  used  for  the automated
printing  of  custom  stickers,  popular  in  the  Japanese consumer market. The
Company  has  also  reduced  is  personnel  and moved its corporate office in an
effort  to  reduce operating costs.  The financial statements do not include any
adjustments  that  might  result  from  the  outcome  of  this  going  concern
uncertainty.

NOTE  3.  EARNINGS  (LOSS)  PER  COMMON  SHARE

Basic  earnings  (loss)  per common share ("Basic EPS") excludes dilution and is
computed  by  dividing  net  income (loss) available to common shareholders (the
"numerator")  by  the  weighted average number of common shares outstanding (the
"denominator")  during  the  period.  Diluted  earnings  (loss) per common share
("Diluted  EPS")  is  similar  to  the  computation of Basic EPS except that the
denominator  is increased to include the number of additional common shares that
would  have  been  outstanding  if the dilutive potential common shares had been
issued. In addition, in computing the dilutive effect of convertible securities,
the  numerator  is  adjusted  to  add  back  the  after-tax  amount  of interest
recognized  in  the period associated with any convertible debt. The computation
of  Diluted  EPS does not assume exercise or conversion of securities that would
have  an anti-dilutive effect on net earnings (loss) per share. The following is
a  reconciliation  of  Basic  EPS  to  Diluted  EPS:
<TABLE>
<CAPTION>
<S>                          <C>               <C>          <C>

                             EARNINGS (LOSS)   SHARES       PER-SHARE
                                  (NUMERATOR)  (NUMERATOR)  AMOUNT
                             ----------------  -----------  -----------
SEPTEMBER 30, 2001
     Net loss . . . . . . .  $    (1,182,000)
        Preferred dividends           (6,000)
                             ----------------
     Basic and diluted EPS.  $    (1,188,000)    8,549,250  $    (0.14)
                             ================  ===========  ===========

SEPTEMBER 30, 2002
     Net loss . . . . . . .  $    (2,052,000)
        Preferred dividends           (6,000)
                             ----------------
     Basic and diluted EPS.  $    (2,058,000)   24,662,000  $    (0.08)
                             ================  ===========  ===========
</TABLE>

NOTE  4.  INVENTORIES
<TABLE>
<CAPTION>
<S>                          <C>                <C>
                             SEPT.  30, 2002    JUNE 30, 2002
                             -----------------  -----------------

Materials and supplies. . .  $        256,000   $        261,000
Finished goods. . . . . . .           160,000            165,000
     Less inventory reserve          (275,000)          (275,000)
                             -----------------  -----------------
                             $        141,000   $        151,000
                             =================  =================
</TABLE>

NOTE  5.  RECENT  ACCOUNTING  PRONOUNCEMENTS

In July 2001, the FASB issued SFAS No. 141 "Business Combinations." SFAS No. 141
supersedes  Accounting  Principles  Board  ("APB")  No. 16 and requires that any
business  combinations  initiated  after  June  30,  2001  be accounted for as a
purchase;  therefore,  eliminating the pooling-of-interest method defined in APB
16. The statement is effective for any business combination initiated after June
30,  2001  and  shall  apply  to  all business combinations accounted for by the
purchase method for which the date of acquisition is July 1, 2001 or later.  The
Company  has  implemented this pronouncement and has concluded that the adoption
has  no  material  impact  to  the  financial  statements.

In  July  2001, the FASB issued SFAS No. 142,  "Goodwill and Other Intangibles."
SFAS  No. 142 addresses the initial recognition; measurement and amortization of
intangible  assets  acquired  individually or with a group of other assets  (but
not those acquired in a business combination) and   addresses   the amortization
provisions  for  excess  cost  over  fair  value  of  net assets   acquired   or
intangibles   acquired   in  a  business combination. The statement is effective
for  fiscal  years  beginning  after December 15, 2001, and is effective July 1,
2001 for any intangibles acquired in a business combination initiated after June
30,  2001. The Company has implemented this pronouncement and has concluded that
the  adoption  has  no  material  impact  to  the  financial  statements.

In October 2001, the FASB recently   issued SFAS No.  143, "Accounting for Asset
Retirement  Obligations," which requires companies to record the fair value of a
liability  for  asset  retirement  obligations  in  the period in which they are
incurred. The statement applies to a company's legal obligations associated with
the retirement of a tangible long-lived asset that results from the acquisition,
construction,  and  development  or through the normal operation of a long-lived
asset.  When a liability is initially recorded, the company would capitalize the
cost,  thereby  increasing  the  carrying  amount  of  the  related  asset.  The
capitalized asset retirement cost is depreciated over the life of the respective
asset  while the liability is accreted to its present value.  Upon settlement of
the  liability,  the obligation is settled at its recorded amount or the company
incurs  a  gain  or  loss. The statement is effective for fiscal years beginning
after  June  30,  2002.  The  Company has implemented this pronouncement and has
concluded  that the adoption has no material impact to the financial statements.

In  October  2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment
or  Disposal  of Long-Lived Assets".  Statement 144 addresses the accounting and
reporting  for  the  impairment or disposal of long-lived assets.  The statement
provides  a single accounting model for long-lived assets to be disposed of. New
criteria   must  be  met  to classify the asset as an asset held-for-sale.  This
statement  also focuses on reporting the effects of a disposal of a segment of a
business.  This statement is effective for fiscal years beginning after December
15,  2001. The Company has implemented this pronouncement and has concluded that
the  adoption  has  no  material  impact  to  the  financial  statements.

In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections."  This  Statement  rescinds  FASB Statement No. 4, "Reporting Gains
and  Losses  from  Extinguishment  of Debt", and an amendment of that Statement,
FASB  Statement  No.  64,  "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements"  and  FASB  Statement No. 44, "Accounting for Intangible Assets of
Motor  Carriers".  This  Statement amends FASB Statement No. 13, "Accounting for
Leases",  to  eliminate  an  inconsistency  between  the required accounting for
sale-leaseback  transactions  and  the  required  accounting  for  certain lease
modifications  that  have  economic  effects  that are similar to sale-leaseback
transactions. The Company does not expect the adoption to have a material impact
to  the  Company's  financial  position  or  results  of  operations.

In  June  2002,  the  FASB  issued  Statement  No.  146,  "Accounting  for Costs
Associated with Exit or Disposal Activities." This Statement addresses financial
accounting  and  reporting  for  costs associated with exit or          disposal
activities  and  nullifies  Emerging Issues Task Force ("EITF") Issue No.  94-3,
"Liability   Recognition  for  Certain  Employee  Termination Benefits and Other
Costs  to  Exit  an  Activity  (including  Certain  Costs  Incurred  in  a
Restructuring)."  The  provisions  of  this  Statement are effective for exit or
disposal  activities  that  are  initiated  after  December 31, 2002, with early
application  encouraged.  The  Company  does  not  expect the adoption to have a
material  impact  to  the Company's financial position or results of operations.

NOTE  6.  CONVERTIBLE  NOTES  PAYABLE

On  December  12,  2000,  the  Company  entered into a Convertible Note Purchase
Agreement  with  Amro International, S.A., Balmore Funds, S.A. and Celeste Trust
Reg.  Pursuant  to  this  agreement,  the Company sold to each of the purchasers
convertible  promissory  notes  in  the  aggregate  principal amount of $850,000
bearing  interest  at the rate of eight percent (8%) per annum, due December 12,
2003, each convertible into shares of the Company's common stock. Interest shall
be  payable, at the option of the purchasers, in cash or shares of common stock.
At  any time after the issuance of the notes, each note is convertible into such
number  of  shares of common stock as is determined by dividing (a) that portion
of the outstanding principal balance of the note as of the date of conversion by
(b)  the  lesser  of (x) an amount equal to seventy percent (70%) of the average
closing bid prices for the three (3) trading days prior to December 12, 2000 and
(y)  an  amount equal to seventy percent (70%) of the average closing bid prices
for  the  three (3) trading days having the lowest closing bid prices during the
thirty  (30)  trading  days  prior  to  the  conversion  date.  The  Company has
recognized  interest  expense  of $364,000 relating to the beneficial conversion
feature  of  the above notes. Additionally, the Company issued a warrant to each
of the purchasers to purchase 502,008 shares of the Company's common stock at an
exercise  price  equal  to  $1.50  per  share.  The  purchasers may exercise the
warrants  through  December  12,  2005.  During  fiscal  2001,  notes payable of
$675,000  was  converted  into  the  Company's  common  stock.

On July 26, 2001, the Company entered into a convertible note purchase agreement
with  certain  investors whereby the Company sold to the investors a convertible
debenture  in  the  aggregate principal amount of $1,000,000 bearing interest at
the  rate  of  eight percent (8%) per annum, due July 26, 2004, convertible into
shares  of our common stock. Interest is payable, at the option of the investor,
in  cash or shares of our common stock. The note is convertible into such number
of  shares  of our common stock as is determined by dividing (a) that portion of
the  outstanding  principal balance of the note by (b) the conversion price. The
conversion  price  equals  the lesser of (x) $1.30 and (y) 70% of the average of
the  3  lowest  closing  bid  prices  during  the  30  trading days prior to the
conversion  date.  Additionally, we issued a warrant to the investor to purchase
769,231  shares  of  our  common  stock  at an exercise price equal to $1.30 per
share.  The  investor  may  exercise  the  warrant  through  July  26, 2006.  In
accordance  with  EITF 00-27, the Company first determined the value of the note
and  the  fair  value  of the detachable warrants issued in connection with this
convertible  debenture.  The proportionate value of the note and the warrants is
$492,000  and  $508,000, respectively.  The value of the note was then allocated
between  the  note and the preferential conversion feature, which amounted to $0
and  $492,000,  respectively.

On  September  21,  2001,  the  Company entered into a convertible note purchase
agreement  with  an  investor  whereby  we  sold  to  the investor a convertible
promissory  note  in the aggregate principal amount of $300,000 bearing interest
at the rate of eight percent (8%) per annum, due September 21, 2004, convertible
into  shares  of  our  common  stock.  Interest is payable, at the option of the
investor,  in  cash  or shares of our common stock. The note is convertible into
such  number of shares of our common stock as is determined by dividing (a) that
portion  of  the outstanding principal balance of the note by (b) the conversion
price.  The  conversion price equals the lesser of (x) $0.532 and (y) 70% of the
average  of  the 3 lowest closing bid prices during the 30 trading days prior to
the  conversion  date.  Additionally,  we  issued  a  warrant to the investor to
purchase  565,410 shares of our common stock at an exercise price equal to $0.76
per share. The investor may exercise the warrant through September 21, 2006.  In
December  2001, $70,000 of this note was converted into 209,039 shares of common
stock  and  in  the first quarter of fiscal 2003, the debenture holder requested
that  the  conversion  be rescinded.  The Company honored the request and shares
have  been returned and the outstanding principal balance due under the note has
been  increased  to  $300,000.  In accordance with EITF 00-27, the Company first
determined  the  value of the note and the fair value of the detachable warrants
issued  in  connection with this convertible debenture.  The proportionate value
of  the note and the warrants is $106,000 and $194,000, respectively.  The value
of  the note was then allocated between the note and the preferential conversion
feature  which  amounted  to  $0  and  $194,000,  respectively.

On  November  7,  2001,  the  Company  entered  into a convertible note purchase
agreement  with  an  investor  whereby  we  sold  to  the investor a convertible
promissory  note  in the aggregate principal amount of $200,000 bearing interest
at  the  rate of eight percent (8%) per annum, due November 7, 2004, convertible
into  shares  of  our  common  stock.  Interest is payable, at the option of the
investor,  in  cash  or shares of our common stock. The note is convertible into
such  number of shares of our common stock as is determined by dividing (a) that
portion  of  the outstanding principal balance of the note by (b) the conversion
price.  The  conversion price equals the lesser of (x) $0.532 and (y) 70% of the
average  of  the 3 lowest closing bid prices during the 30 trading days prior to
the  conversion  date.  Additionally,  we  issued  a  warrant to the investor to
purchase  413,534 shares of our common stock at an exercise price equal to $0.76
per  share.  The investor may exercise the warrant through November 7, 2006.  In
accordance  with  EITF 00-27, the Company first determined the value of the note
and  the  fair  value  of the detachable warrants issued in connection with this
convertible  debenture.  The proportionate value of the note and the warrants is
$92,000  and  $108,000,  respectively.  The value of the note was then allocated
between  the  note and the preferential conversion feature, which amounted to $0
and  $92,000,  respectively.

On  January  22,  2002,  the  Company  entered  into a convertible note purchase
agreement  with  an  investor  whereby  we  sold  to  the investor a convertible
promissory  note  in the aggregate principal amount of $500,000 bearing interest
at  the  rate of eight percent (8%) per annum, due January 22, 2003, convertible
into  shares  of  our  common  stock.  Interest is payable, at the option of the
investor,  in  cash  or shares of our common stock. The note is convertible into
such  number of shares of our common stock as is determined by dividing (a) that
portion  of  the outstanding principal balance of the note by (b) the conversion
price.  The  conversion price equals the lesser of (x) $0.332 and (y) 70% of the
average  of  the 3 lowest closing bid prices during the 30 trading days prior to
the  conversion  date.  Additionally,  we  issued  a  warrant to the investor to
purchase  3,313,253  shares  of  our  common stock at an exercise price equal to
$0.332  per  share.  The  investor  may exercise the warrant through January 22,
2009.  In  accordance with EITF 00-27, the Company first determined the value of
the note and the fair value of the detachable warrants issued in connection with
this  convertible  debenture.  The  proportionate  value  of  the  note  and the
warrants is $101,000 and $399,000, respectively.  The value of the note was then
allocated  between  the  note  and  the  preferential  conversion feature, which
amounted  to  $0  and  $101,000,  respectively.

All  the  convertible  debentures  are  shown  as  a  current  liability  in the
accompanying  consolidated  balance  sheets  since each debenture is convertible
into  common  stock  at  any  time.

NOTE  7.  STOCK  ISSUANCES

Amendment  To  The  Certificate  Of  Incorporation.
---------------------------------------------------

On September 28, 2001, the Company's shareholders authorized an amendment to the
Certificate  of Incorporation to: (i) effect a stock combination (reverse split)
of  the Company's common stock in an exchange ratio to be approved by the Board,
ranging  from one (1) newly issued share for each ten (10) outstanding shares of
common  stock  to  one  (1) newly issued  share for each twenty (20) outstanding
shares  of  common  stock  (the  "Reverse  Split");  and  (ii)  provide  that no
fractional  shares  or  scrip representing fractions of a share shall be issued,
but  in  lieu  thereof,  each  fraction  of  a  share that any shareholder would
otherwise be entitled to receive shall be rounded up to the nearest whole share.
There  will  be  no  change  in the number of the Company's authorized shares of
common  stock  and  no  change  in  the  par  value  of a share of Common Stock.

On  August  9,  2002, the Company's board of directors approved and effected a 1
for  20  reverse  stock  split.  All  share  and  per  share  data  have  been
retroactively  restated  to  reflect  this  stock  split.

During  the  quarter  ended  September  30,  2002, the Company issued a total of
8,859,688  shares  of common stock.  Of the shares issued, 2,830,000 were issued
for  the  exercise  of  warrants  given  to  consultants  for legal and business
services.  The  exercise  price  of  these  warrants  totaled  $191,000 of which
$25,000  was  paid  in  cash  and  the  remaining $166,000 was paid via services
rendered.  The  remaining  6,029,688 were shares issued to consultants for legal
and  business  services.  The Company also canceled 209,039 shares in connection
with  the  rescission  of  the  conversion  of  $70,000  of  debt  (see  Note 6)

NOTE  8.  SEGMENT  INFORMATION

During  the  period ended September 30, 2002, the Company managed and internally
reported the Company's business as four (4) reportable segments: (1)     imaging
products  and  accessories;  (2)  imaging  software;  (3)  e-commerce;  and  (4)
professional  employer  organization
<TABLE>
<CAPTION>
<S>                      <C>          <C>          <C>         <C>          <C>

PERIOD ENDED. . . . . .  PEO          IMAGING      IMAGING
SEPT. 30, 2002. . . . .  BUSINESS     PRODUCTS     SOFTWARE    E-COMMERCE   TOTAL

    Revenues. . . . . .  $2,822,000   $  486,000   $ 138,000   $         -  $ 3,446,000
    Cost of revenues. .   2,572,000      235,000      21,000             -    2,828,000
    Operating expenses.     588,000    1,141,000     324,000     2,053,000
    Operating (loss). .    (338,000)    (890,000)   (207,000)            -   (1,435,000)
</TABLE>

Additional  information  regarding revenue by products and service groups is not
presented  for  the prior fiscal year period ended September 30, 2001 because it
is  currently  impracticable  to  do  so  due  to various reorganizations of the
Company's  accounting systems. A comprehensive accounting system was implemented
during  fiscal  2002  that enables the Company to report such information in the
future.

As  of and during the period ended September 30, 2002, no customer accounted for
more  than  10%  of  consolidated  accounts  receivable  or  total  consolidated
revenues.

ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION
                AND  RESULTS  OF  OPERATIONS

     The  following  discussion  and analysis should be read in conjunction with
the  consolidated  financial statements and notes thereto appearing elsewhere in
this  Quarterly  Report  on  Form 10-Q. The discussion of the Company's business
contained in this Quarterly Report on Form 10-Q may contain certain projections,
estimates  and  other  forward-looking statements that involve a number of risks
and uncertainties, including those discussed below at "Risks and Uncertainties."
While  this  outlook  represents  management's  current  judgment  on the future
direction  of  the  business,  such  risks  and uncertainties could cause actual
results  to  differ  materially from any future performance suggested below. The
Company  undertakes  no  obligation  to  release  publicly  the  results  of any
revisions to these forward-looking statements to reflect events or circumstances
arising  after  the  date  hereof.

OVERVIEW

     Imaging  Technologies Corporation develops and distributes imaging software
and  distributes  digital imaging products. The Company sells a range of imaging
products  for  use  in  graphics  and publishing, digital photography, and other
niche  business  and  technical  markets.  The  Company's  core technologies are
related  to  the  design  and  development of software products that improve the
accuracy  of  color  reproduction.

     In  November  2001,  we  embarked  on  an expansion program to provide more
services  to  help  with  tasks  that  have  negatively  impacted  the  business
operations  of  its  existing and potential customers. To this end, the Company,
through  strategic  acquisitions,  became  a  professional employer organization
("PEO").

     ITEC  now  provides comprehensive personnel management services through its
wholly-owned  SourceOne  Group  and  EnStructure  subsidiaries.  Each  of  these
subsidiaries  provides a broad range of services, including benefits and payroll
administration,  health  and workers' compensation insurance programs, personnel
records  management, and employer liability management to small and medium-sized
businesses.

     In  May 2002, ITEC entered into an agreement to acquire Dream Canvas, Inc.,
a  Japanese  corporation  that  has  developed  machines  currently used for the
automated  printing of custom stickers, popular in the Japanese consumer market.
We  expect  to  complete  the  acquisition in the second quarter of fiscal 2003.

     In  July  2002,  ITEC  entered  into  an  agreement  to acquire controlling
interest  in  Quik  Pix,  Inc.  ("QPI").  QPI  shares are traded on the National
Quotation  Bureau  Pink Sheets under the symbol QPIX. We anticipate closing this
transaction  in  the  second  quarter  of  fiscal  2003.

     In  August  2002,  ITEC  entered  into  an agreement to acquire controlling
interest in Greenland Corporation. Greenland shares are traded on the Electronic
Bulletin  Board under the symbol GRLC. We anticipate closing this transaction in
the  second  quarter  of  fiscal  2003.

     As  of  the  end  of  fiscal  2002,  the  Company's  business  continues to
experience  operational  and  liquidity  challenges.  Accordingly,  year-to-year
financial  comparisons may be of limited usefulness now and for the next several
periods  due  to  anticipated changes in the Company's business as these changes
relate  to  potential  acquisitions of new businesses, changes in product lines,
and  the  potential  for  discontinuing  certain  components  of  the  business.

     The  Company's  current strategy is: (1) to expand its PEO business; (2) to
commercialize  its  own  technology,  which  is embodied in its ColorBlind Color
Management  software and other products obtained through strategic acquisitions,
(3)  to  market imaging products, including products from other manufacturers to
its  customers,  and  (4) to continue to operate and improve e-commerce sites in
order  to  sell  imaging  products to resellers and other imaging professionals.

     To  successfully  execute  its  current  strategy, the Company will need to
improve  its  working  capital position. The report of the Company's independent
auditors  accompanying the Company's June 30, 2002 financial statements includes
an  explanatory  paragraph  indicating  there  is  a substantial doubt about the
Company's ability to continue as a going concern, due primarily to the decreases
in  the  Company's  working capital and net worth. The Company plans to overcome
the  circumstances  that  impact our ability to remain a going concern through a
combination  of  achieving  profitability,  raising  additional  debt and equity
financing,  and  renegotiating  existing  obligations.

     Since the removal of the court appointed operational receiver in June 2000,
the  Company has been able to reestablish relationships with some past customers
and  distributors  and  to  establish  relationships  with  new  customers.
Additionally,  the Company has been working to reduce costs though the reduction
in  staff  and the suspension of certain research and development programs, such
as  the  design  and  manufacture of controller boards and printers. The Company
began  a  program  to  reduce  its  debt  through  debt  to  equity conversions.
Management  continues to pursue the acquisition of businesses that will grow the
Company's  business.

     There  can  be  no  assurance,  however,  that  the Company will be able to
complete  any additional debt or equity financings on favorable terms or at all,
or  that  any  such  financings,  if  completed,  will  be  adequate to meet the
Company's  capital  requirements.  Any  additional  equity  or  convertible debt
financings  could  result in substantial dilution to the Company's shareholders.
If  adequate  funds  are  not  available,  the Company may be required to delay,
reduce  or  eliminate  some  or  all  of  its  planned activities, including any
potential  mergers  or acquisitions. The Company's inability to fund its capital
requirements  would  have  a  material  adverse  effect on the Company. Also see
"Liquidity and Capital Resources." and "Risks and Uncertainties - Future Capital
Needs."

Restructuring  and  New  Business  Units
----------------------------------------

     During  fiscal 1999, the Company began the development of an e-commerce web
site designed to offer computer and imaging hardware, software, and consumables.
The  Internet  address is www.dealseekers.com. These operations are still in the
                          -------------------
development  stage.

     From  August  20,  1999 until June 21, 2000, the Company had been under the
control of an operational receiver appointed by the Court pursuant to litigation
between  the  Company  and Imperial Bank. The litigation has been dismissed, and
Company  management  has  reassumed control. Accordingly, Company management did
not  have  operational  control  for  nearly  all  of  fiscal  2000.

     In  July 2001, the Company suspended its printer controller development and
manufacturing  operations  in  favor of selling products from other companies to
its  customers.

Acquisition  and  Sale  of  Business  Units
-------------------------------------------

     In  December  2000,  the  Company  acquired  all  of  the  shares  of
EduAdvantage.com,  Inc.,  an  internet  sales  organization  that sells computer
hardware  and  software products to educational institutions and other customers
via  its  websites: www.eduadvantage.com and www.soft4u.com. During fiscal 2001,
the Company began integrating EduAdvantage operations. However, these operations
have  not  been  profitable  and  management  is  evaluating  the future of this
business  unit.

     In October 2001, the Company acquired certain assets, for stock, related to
the  Company's  office  products  and services business activities, representing
$250,000  of  inventories,  fixed  assets,  and  accounts  receivable.

     In  November  2001, the Company acquired SourceOne Group, Inc. and operates
it  as  a  wholly-owned  subsidiary.  SourceOne provides PEO services, including
benefits  and payroll administration, health and workers' compensation insurance
programs,  personnel  records  management,  and employer liability management to
small  and  medium-sized  businesses.

     In  March 2002, ITEC acquired all of the outstanding shares of EnStructure,
Inc.  ("EnStructure), a PEO company, for restricted common stock of the Company.
The  purchase  price  may  be  increased  or  decreased based upon EnStructure's
representations  of  projected  revenues  and  profits, which are defined in the
acquisition  agreement,  which  was exhibited as part of the Company's Form 8-K,
dated  March 28, 2002.     EnStructure is operated as a wholly-owned subsidiary.

     In  May 2002, ITEC entered into an agreement to acquire Dream Canvas, Inc.,
a  Japanese  corporation  that  has  developed  machines  currently used for the
automated  printing of custom stickers, popular in the Japanese consumer market.
We  expect  to  complete  the  acquisition in the second quarter of fiscal 2003.

     In  July  2002,  ITEC  entered  into  an  agreement  to acquire controlling
interest  in  Quik  Pix,  Inc.  ("QPI").  QPI  shares are traded on the National
Quotation  Bureau  Pink Sheets under the symbol QPIX. We anticipate closing this
transaction  in  the  second  quarter  of  fiscal  2003.

     In  August  2002,  ITEC  entered  into  an agreement to acquire controlling
interest in Greenland Corporation. Greenland shares are traded on the Electronic
Bulletin  Board under the symbol GRLC. We anticipate closing this transaction in
the  second  quarter  of  fiscal  2003.

SIGNIFICANT  ACCOUNTING  POLICIES  AND  ESTIMATES

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations discusses the Company's consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets  and liabilities at the date of the financial statements and the reported
amounts  of  revenues  and  expenses during the reporting period. On an on-going
basis, management evaluates its estimates and judgments, including those related
to  allowance  for  doubtful  accounts, value of intangible assets and financing
operations.  Management  bases  its  estimates  and  judgments  on  historical
experiences  and  on  various  other  factors that are believed to be reasonable
under  the  circumstances,  the  results  of  which  form  the  basis for making
judgments  about  the  carrying  value  of  assets  and liabilities that are not
readily  apparent  from  other  sources.  Actual  results  may differ from these
estimates  under  different  assumptions  or  conditions.  The  most significant
accounting  estimates  inherent  in  the  preparation of the Company's financial
statements  include  estimates  as  to the appropriate carrying value of certain
assets  and  liabilities  which  are  not  readily  apparent from other sources,
primarily  allowance  for  doubtful  accounts and estimated fair value of equity
instruments.  These  accounting  policies  are described at relevant sections in
this  discussion  and  analysis  and  in the notes to the consolidated financial
statements  included in our Annual Report on Form l0-K for the fiscal year ended
June  30,  2002.

RESULTS  OF  OPERATIONS  NET  REVENUES

     Revenues  were  $3.4  million  and  $1.1  million  for  the  quarters ended
September  30,  2002  and 2001, respectively. The substantial (209%) increase in
sales  was due primarily to the Company's PEO business, which was not present in
the  prior  year  period.

Imaging  Products
-----------------

     Sales  of  imaging  products,  including  software,  were $624,000 and $1.1
million  for  the  quarterly  period  ended  September  30,  2002  and  2001,
respectively.  Sales  of  imaging  products  declined  by $571,000 or 54% in the
period  ended September 30, 2002 as compared to the prior year period due to the
Company's  lack  of working capital to purchase inventory. The Company's lack of
sufficient working capital has had, and may continue to have, a negative adverse
effect  on  imaging  products  sales.

The  Company  had  license  fees  or  royalties  of $138,000 in the period ended
September  30,  2002  compared  to  license fees and royalties of $21,000 in the
prior  year  period.  These  revenues,  however,  are expected to decline in the
future  due  to  the  Company's  focus  on  product  sales and the Company's PEO
operations  as  opposed  to  technology  licensing  activities.

PEO  Services
-------------

     PEO  revenues  were  $2.8 million for the quarter ended September 30, 2002.
The Company entered this business segment through acquisitions in November 2001.
Consequently,  there  were  no  reported  PEO revenues in the prior year period.

     Shortly  after  the  acquisition  of  SourceOne  Group, we lost most of the
customer  base,  due  to  a  number  of factors, including increases in workers'
compensation  insurance  premiums  and  customers  who  elected  to  allow their
contracts  with  us  to  expire.  Consequently,  we have been rebuilding our PEO
business  without  the  benefit  of  customers  acquired  in  the acquisition of
SourceOne  Group.  (Also  see  "Risk  Factors"  related  to  the  Company's  PEO
business.)

COST  OF  PRODUCTS  SOLD

Imaging  Products
-----------------

     Costs  of  imaging  products sold, including software, were $256,000 (41%of
sales) and $598,000 (57% of sales) for the quarters ended September 30, 2002 and
20010,  respectively.  The  increase in gross margin in 2002 as compared to 2001
was  primarily  due  to  changes  in the types of products sold. Notably, in the
period ended September 30, 2002 as compared with the prior year period, software
sales  increased  557%.

PEO  Services
-------------

     Costs  of  PEO  services  were  $2.6  million (91% of PEO revenues) for the
period  ended  September  30,  2002.  The Company began providing these services
pursuant  to  acquisitions in the current fiscal year. Accordingly, there are no
comparative results for the prior year periods. (Also see "Risk Factors" related
to  the  Company's  PEO  business.)

SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES

     Selling,  general  and  administrative  expenses  were $2.1 million (60% of
total  revenues)  and  $  1.4  million (128% of total revenues) for the quarters
ended  September  30, 2002 and 2001, respectively. While such expenses increased
by  $700,000  (50%)  for  the period ended September 30, 2002 as compared to the
previous  year,  they have decreased as a percentage of total revenues. Selling,
general  and  administrative expenses consisted primarily of general corporation
functions,  salaries,  facilities, and fees for professional services, including
legal  expenses. The increase in selling, general and administrative expenses in
the  period  ended September 30, 2002 as compared to the year-earlier period was
due  primarily  to  costs  associated with the Company's PEO business, including
promotional  costs  and  salaries.  However,  management  continues  to pare its
overall  operating  expenses,  including reductions in personnel and facilities.

RESEARCH  AND  DEVELOPMENT

     There  were  no  research  and development expenses during the period ended
September  30,  2002  compared to $72,000 (7% of total revenues) for the quarter
ended  September 30, 2001. The decrease in expenses in 2002 compared to 2001 was
due  to  ongoing  shortages  in  working  capital.

LIQUIDITY  AND  CAPITAL  RESOURCES

     Historically,  the  Company  has  financed its operations primarily through
cash  generated  from  operations,  debt  financing, and from the sale of equity
securities.

     In  the  near-term, the Company must rely on generating the majority of its
cash  from borrowings and the sale of equity securities. To address these needs,
the  Company has, and plans to continue to sell both equity and debt securities.
The Company continues to work toward producing profitable and cash-flow-positive
operations  in  order  to reduce its dependence upon equity and debt financings.

     During  the  period ended September 30, 2002, the Company placed $75,000 of
notes  payable  debt in order to finance operations. Without additional funding,
through both equity and debt financing in the near future, sufficient to satisfy
the  creditors  of  the  Company,  as  well as providing working capital for the
Company,  the  Company  will  have to further curtail its operations or cease to
operate.  The  Company  continues  to  actively  work  with  entities capable of
providing  such  funding.

     As  of  September  30,  2002,  the  Company had negative working capital of
approximately  $22.3  million  compared  to  $20.8  million  of negative working
capital at June 30, 2002, a decrease of approximately $1.5 million. The decrease
is  primarily  due  to  the  operating  loss  for  the  period.

     Net cash used in operating activities was $121,000 during the quarter ended
September  30, 2002, compared to $926,000 during the quarter ended September 30,
2001,  due  primarily  to  increases  in  operating expenses associated with the
Company's  PEO  business.

     No cash was used in investing activities during the quarter ended September
30,  2002,  or  in  the  prior  year  period.

     Net  cash  from  financing activities was $100,000 during the quarter ended
September  30,  2002,  compared to $927,000 during the year-earlier quarter. The
decrease  was  due  primarily  to  a  reduction in the amount of debt and equity
securities  sold  during  the  period  ended  September 30, 2002 compared to the
year-earlier  period,  which  has been the principal source of liquidity for the
Company.

     The  Company's  5%  convertible  preferred  stock (which ranks prior to the
Company's  common  stock) carries cumulative dividends, when and as declared, at
an  annual  rate  of $50.00 per share. The aggregate amount of such dividends in
arrears  at  September  30,  2002,  was  approximately  $336,000.

The  Company  has  no  material  commitments  for  capital  expenditures.

     The  Company's  capital  requirements depend on numerous factors, including
market  acceptance of the products we sell, the resources the Company devotes to
marketing  and  selling  products  and  services, and other factors. The Company
anticipates  that its capital requirements will increase in future periods as it
continues  to  increase  its  sales  and  marketing  efforts.  The report of the
Company's  independent  auditors  accompanying  the  Company's  June  30,  2002
financial  statements  includes  an  explanatory paragraph indicating there is a
substantial  doubt  about  the Company's ability to continue as a going concern,
due  primarily  to the decreases in the Company's working capital and net worth.
If  adequate  funds  are  not  available,  the Company may be required to delay,
reduce  or  eliminate  some  or  all  of  its  planned activities. The Company's
inability  to fund its capital requirements would have a material adverse effect
on  the  Company.  See  "Risks  and  Uncertainties--Future  Capital  Needs."

RISKS  AND  UNCERTAINTIES  FUTURE  CAPITAL  NEEDS

IF  WE  ARE  UNABLE  TO SECURE FUTURE CAPITAL, WE WILL BE UNABLE TO CONTINUE OUR
OPERATIONS.

If  we  are  unable  to secure future capital, we will be unable to continue our
operations.  Our  business has not been profitable in the past and it may not be
profitable  in  the  future.  We may incur losses on a quarterly or annual basis
for  a  number  of  reasons,  some  within  and  others outside our control. See
"Potential Fluctuation in Our Quarterly Performance." The growth of our business
will  require  the commitment of substantial capital resources. If funds are not
available  from  operations,  we  will  need  additional funds. We may seek such
additional  funding  through  public  and  private  financing, including debt or
equity  financing.  Adequate funds for these purposes, whether through financial
markets  or  from other sources, may not be available when we need them. Even if
funds are available, the terms under which the funds are available to us may not
be  acceptable  to  us.  Insufficient  funds  may require us to delay, reduce or
eliminate  some  or  all  of  our  planned  activities.

IF  OUR  QUARTERLY  PERFORMANCE  CONTINUES  TO FLUCTUATE, IT MAY HAVE A NEGATIVE
IMPACT  ON  OUR  BUSINESS.

Our  quarterly  operating  results  can  fluctuate  significantly depending on a
number  of factors, any one of which could have a negative impact on our results
of operations.  The factors include: (1) the timing of product announcements and
subsequent  introductions  of  new  or  enhanced  products  by  us  and  by  our
competitors;  (2) the availability and cost of inventory; (3) the timing and mix
of shipments of our products; (4) the market acceptance of our new products; (5)
our  ability  to  retain  our  existing  PEO  customers  and  to recruit new PEO
customers; (6) seasonality; (7) currency fluctuations; (8) changes in our prices
and  in our competitors' prices; (9) the timing of expenditures for staffing and
related support costs; (10) the extent and success of advertising; (11) research
and  development  expenditures; and (12) changes in general economic conditions.

We  may  experience significant quarterly fluctuations in revenues and operating
expenses  as we introduce new products. In addition, our inventory purchases and
spending  levels  are based upon our forecast of future demand for our products.
Accordingly,  any  inaccuracy  in  our  forecasts  could  adversely  affect  our
financial  condition and results of operations. Demand for our products could be
adversely  affected  by  a  slowdown in the overall demand for computer systems,
printer  products or digitally printed images. Our failure to complete shipments
during  a  quarter  could  have  a  material  adverse  effect  on our results of
operations  for  that quarter.  Quarterly results are not necessarily indicative
of  future  performance for any particular period. Our PEO business is dependent
upon  the staffing levels of our clients. Reductions of our clients' staff could
have  a  negative  impact  on  our  future  financial  performance.

SINCE OUR COMPETITORS HAVE GREATER FINANCIAL AND MARKETING RESOURCES THAN WE DO,
WE  MAY  EXPERIENCE  A  REDUCTION  IN  MARKET  SHARE  AND  REVENUES.

The  markets  for  the  products  we  sell  are  highly  competitive and rapidly
changing.  Some  of  our  current and prospective competitors have significantly
greater  financial, technical, manufacturing and marketing resources than we do.
Our  ability  to  compete  in  our  markets depends on a number of factors, some
within and others outside our control.  These factors include: (1) the frequency
and  success  of  product  introductions  by  us and by our competitors; (2) the
variety  of  PEO  related services offered by us and by our competitors; (3) the
selling  prices  of  our  products  and  of  our  competitors' products; (4) the
performance  of  our  products  and  of  our  competitors' products; (5) product
distribution  by  us  and  by our competitors; (6) our marketing ability and the
marketing  ability  of  our competitors; and (7) the quality of customer support
offered  by  us  and  by  our  competitors.

A  key  element  of  our  strategy  is  to provide competitively priced, quality
products.  We  cannot  be  certain  that  our  products  will  continue  to  be
competitively  priced.  We have reduced prices on certain of our products in the
past  and  will likely continue to do so in the future. Price reductions, if not
offset by similar reductions in product costs, will reduce our gross margins and
may  adversely  affect  our  financial  condition  and  results  of  operations.

IF  WE ARE UNABLE TO OFFER OUR CUSTOMERS NEW PRODUCTS IN A TIMELY MANNER, WE MAY
EXPERIENCE  A  SIGNIFICANT  DECLINE  IN  SALES  AND REVENUES, WHICH MAY HURT OUR
ABILITY  TO  CONTINUE  OPERATIONS.

The  markets  for our products are characterized by rapidly evolving technology,
frequent  new  product  introductions  and  significant  price  competition.
Consequently, short product life cycles and reductions in product selling prices
due  to  competitive pressures over the life of a product are common. Our future
success will depend on our ability to continue to offer competitive products and
achieve  cost  reductions  for the products we sell. In addition, we monitor new
technology  developments and coordinate with suppliers, distributors and dealers
to  enhance  our  existing products and lower costs. Advances in technology will
require  increased  investment in ColorBlind product development to maintain our
market  position.  If  we  are  unable to develop new, competitive products in a
timely  manner,  our  financial  condition  and  results  of  operations will be
adversely  affected.

IF  THE  MARKET'S ACCEPTANCE OF OUR PRODUCTS AND SERVICES CEASES TO GROW, WE MAY
NOT  GENERATE  SUFFICIENT  REVENUES  TO  CONTINUE  OUR  OPERATIONS.

The  markets  for  our  products are relatively new and are still developing. We
believe  that  there  has  been  growing market acceptance for imaging products,
color  management  software,  supplies  and  PEO services. We cannot be certain,
however,  that  these  markets  will  continue  to  grow. Other technologies are
constantly  evolving  and improving. We cannot be certain that products based on
these  other  technologies will not have a material adverse effect on the demand
for  our  products and services. If our products are not accepted by the market,
we  will  not  generate  sufficient  revenues  to  continue  our  operations.

IF  WE  ACQUIRE  COMPLEMENTARY  BUSINESSES,  WE  MAY  NOT BE ABLE TO EFFECTIVELY
INTEGRATE  THEM  INTO  OUR  CURRENT OPERATIONS, WHICH WOULD ADVERSELY AFFECT OUR
OVERALL  FINANCIAL  PERFORMANCE.

In  order  to  grow  our business, we may acquire businesses that we believe are
complementary.  To  successfully  implement  this  strategy,  we  must  identify
suitable  acquisition  candidates, acquire these candidates on acceptable terms,
integrate  their  operations  and  technology  successfully  with  ours,  retain
existing  customers  and  maintain the goodwill of the acquired business. We may
fail  in  our  efforts  to  implement  one  or more of these tasks. Moreover, in
pursuing  acquisition opportunities, we may compete for acquisition targets with
other companies with similar growth strategies. Some of these competitors may be
larger  and  have  greater financial and other resources than we do. Competition
for  these  acquisition  targets likely could also result in increased prices of
acquisition  targets  and  a  diminished  pool  of  companies  available  for
acquisition.  Our overall financial performance will be materially and adversely
affected  if  we  are  unable  to  manage  internal  or acquisition-based growth
effectively.

Acquisitions  involve  a  number  of  risks, including: (1) integrating acquired
products  and  technologies  in  a timely manner; (2) integrating businesses and
employees  with  our business; (3) managing geographically-dispersed operations;
(4)  reductions  in  our  reported  operating  results  from acquisition-related
charges  and  amortization  of  goodwill;  (5)  potential  increases  in  stock
compensation  expense  and  increased  compensation  expense  resulting  from
newly-hired  employees;  (6)  the  diversion  of  management  attention; (7) the
assumption  of  unknown  liabilities; (8) potential disputes with the sellers of
one  or  more  acquired  entities;  (9)  our  inability to maintain customers or
goodwill  of  an  acquired  business; (10) the need to divest unwanted assets or
products;  and  (11)  the  possible  failure  to  retain key acquired personnel.

     Client satisfaction or performance problems with an acquired business could
also have a material adverse effect on our reputation, and any acquired business
could significantly under perform relative to our expectations. We are currently
facing  all  of these challenges and our ability to meet them over the long term
has not been established. As a result, we cannot be certain that we will be able
to  integrate acquired businesses, products or technologies successfully or in a
timely  manner  in  accordance with our strategic objectives, which could have a
material  adverse  effect  on  our  overall  financial  performance.

     In  addition, if we issue equity securities as consideration for any future
acquisitions, existing shareholders will experience ownership dilution and these
equity  securities  may have rights, preferences or privileges superior to those
of  our  common  stock.  See  "Future  Capital  Needs."

IF  OUR  VENDORS  ARE  NOT  ABLE  TO  CONTINUE  TO  SUPPLY GOODS AND SERVICES AT
APPROPRIATE  PRICES  TO MEET THE MARKET DEMAND FOR OUR PRODUCTS, IT COULD HAVE A
MATERIAL  ADVERSE  EFFECT  ON  OUR  FINANCIAL  PERFORMANCE.

The  terms  of  our  supply  contracts  for  goods  and  services are negotiated
separately  in  each instance. Any significant increase in prices or decrease in
availability  of  products  we purchase for resale could have a material adverse
effect  on  our  business  and  overall  financial  performance.

IF  WE ARE FOUND TO BE INFRINGING ON A COMPETITOR'S INTELLECTUAL PROPERTY RIGHTS
OR  IF  WE  ARE  REQUIRED  TO  DEFEND AGAINST A CLAIM OF INFRINGEMENT, WE MAY BE
REQUIRED  TO REDESIGN OUR PRODUCTS OR DEFEND A LEGAL ACTION AT SUBSTANTIAL COSTS
TO  US.

We  currently  hold  no patents. Our software products are copyrighted. However,
copyright  protection  does  not  prevent  other  companies  from  emulating the
features  and  benefits provided by our software. We protect our software source
code  as  trade  secrets  and  make our proprietary source code available to OEM
customers  only  under  limited  circumstances  and  specific  security  and
confidentiality  constraints.

Competitors  may  assert  that  we  infringe  their patent rights. If we fail to
establish  that we have not violated the asserted rights, we could be prohibited
from  marketing  the  products  that  incorporate the technology and we could be
liable  for  damages.  We  could  also  incur  substantial costs to redesign our
products  or  to defend any legal action taken against us. We have obtained U.S.
registration  for  several  of  our  trade names or trademarks, including: PCPI,
NewGen,  ColorBlind,  LaserImage,  ColorImage,  ImageScript and ImageFont. These
trade  names  are  used  to  distinguish  our  products  in  the  marketplace.

IF OUR FOREIGN ACCOUNTS RECEIVABLE ARE NOT COLLECTIBLE, A NEGATIVE IMPACT ON OUR
CONTINUED  OPERATIONS  AND  OVERALL  FINANCIAL  PERFORMANCE  COULD  RESULT.

We conduct business globally. Accordingly, our future results could be adversely
affected  by  a  variety  of  uncontrollable and changing factors including: (1)
foreign  currency  exchange  fluctuations; (2) regulatory, political or economic
conditions  in  a specific country or region; (3) the imposition of governmental
controls;  (4)  export  license  requirements; (5) restrictions on the export of
critical  technology;  (6)  trade  restrictions;  (7)  changes  in  tariffs; (8)
government  spending  patterns;  (9)  natural  disasters;  (10)  difficulties in
staffing  and  managing  international  operations;  and  (11)  difficulties  in
collecting  accounts  receivable.

In  addition,  the  laws  of  certain  countries do not protect our products and
intellectual  property  rights  to  the  same  extent  as the laws of the United
States.

We  intend  to  pursue  international  markets  as key avenues for growth and to
increase  the  percentage  of  sales  generated in international markets. In our
2002, 2001 and 2000 fiscal years, product, software, and licensing sales outside
the  United  States represented approximately 22%, 22%, and 2% of our net sales,
respectively.  We  expect product sales outside the United States to continue to
represent  a  significant  portion  of  our  sales. As we continue to expand our
international  sales  and  operations,  our  business  and  overall  financial
performance  may  be  adversely  affected  by  the  factors  stated  above.

IF  ALL  OF  THE LAWSUITS CURRENTLY FILED WERE DECIDED AGAINST US AND/OR ALL THE
JUDGMENTS  CURRENTLY  OBTAINED  AGAINST  US WERE TO BE IMMEDIATELY COLLECTED, WE
WOULD  HAVE  TO  CEASE  OUR  OPERATIONS.

On or about October 7, 1999, the law firms of Weiss & Yourman and Stull, Stull &
Brody  made  a  public announcement that they had filed a lawsuit against us and
certain  current  and  past  officers  and/or  directors,  alleging violation of
federal  securities  laws during the period of April 21, 1998 through October 9,
1998.  On  or  about  November 17, 1999, the lawsuit, filed in the name of Nahid
Nazarian  Behfarin,  on  her  own  behalf  and  others purported to be similarly
situated,  was  served  on  us.  A  motion to dismiss the lawsuit was granted on
February  16,  2001 on our behalf and those individual defendants that have been
served.  However,  on or about March 19, 2001, an amended complaint was filed on
behalf  of  Nahid Nazarian Behfarin, Peter Cook, Stephen Domagala and Michael S.
Taylor,  on  behalf  of  themselves  and others similarly situated.  On or about
March  20,  2001,  we  once  again filed a motion to dismiss the case along with
certain other individual defendants.  The motion was denied and an answer to the
complaint  has  been  filed  on  behalf  of  the  company and certain individual
defendants.  We  believe  these  claims  are  without  merit  and  we  intend to
vigorously  defend  against them on our behalf as well as on behalf of the other
defendants.  The  defense  of  this  action  has  been tendered to our insurance
carriers.

On August 22, 2002, the Company was sued by its former landlord, Carmel Mountain
#8  Associates,  L.P.  or  past  due  rent  on  its  former  facilities at 15175
Innovation  Drive,  San  Diego,  CA  92127.

The  Company  is  also  a  party  to  a lawsuit filed by Symphony Partners, L.P.
related  to  its  acquisition  of SourceOne Group, LLC. We have hired counsel to
represent  us in this action and believe that the claims against the Company are
without  merit.

The Company is one of dozens of companies sued by The Massachusetts Institute of
Technology,  et.al,  related  to  a  patent  held  by the plaintiffs that may be
related  to  part  of  the  Company's  ColorBlind  software. We believe that any
amounts  due  in royalties or otherwise to the plaintiffs by the Company, should
the  Company  be  in  violation  of  said  patent,  would  not  be  material.

Throughout  fiscal  2000,  2001,  and 2002, and through the date of this filing,
approximately  fifty  trade  creditors  have  made  claims  and/or filed actions
alleging  the  failure  of  us  to pay our obligations to them in a total amount
exceeding  $3  million.  These actions are in various stages of litigation, with
many  resulting in judgments being entered against us. Several of those who have
obtained  judgments  have filed judgment liens on our assets. These claims range
in  value  from less than one thousand dollars to just over one million dollars,
with  the  great  majority being less than twenty thousand dollars. Should we be
required  to  pay the full amount demanded in each of these claims and lawsuits,
we  may  have  to  cease our operations. However, to date, the superior security
interest held by Imperial Bank has prevented nearly all of these trade creditors
from  collecting  on  their  judgments.

IF OUR OPERATIONS CONTINUE TO RESULT IN A NET LOSS, NEGATIVE WORKING CAPITAL AND
A  DECLINE  IN  NET WORTH, AND WE ARE UNABLE TO OBTAIN NEEDED FUNDING, WE MAY BE
FORCED  TO  DISCONTINUE  OPERATIONS.

     For  several  recent periods, up through the fiscal quarter ended September
30,  2002,  we  had  a  net  loss, negative working capital and a decline in net
worth,  which  raise  substantial doubt about our ability to continue as a going
concern. Our losses have resulted primarily from an inability to achieve product
sales  and  contract  revenue  targets  due to insufficient working capital. Our
ability  to  continue  operations  will depend on positive cash flow from future
operations  and  on our ability to raise additional funds through equity or debt
financing.  Although we have reduced our work force and discontinued some of our
operations,  if we are unable to achieve the necessary product sales or raise or
obtain  needed  funding,  we  may  be  forced  to  discontinue  operations.

IF  OUR  WORLDWIDE DISTRIBUTORS REDUCE OR DISCONTINUE SALES OF OUR PRODUCTS, OUR
BUSINESS  MAY  BE  MATERIALLY  AND  ADVERSELY  AFFECTED.

Our products are marketed and sold through a distribution channel of value added
resellers,  manufacturers'  representatives,  retail  vendors,  and  systems
integrators.  We have a network of dealers and distributors in the United States
and  Canada, in the European Community and on the European Continent, as well as
a  growing  number of resellers in Africa, Asia, the Middle East, Latin America,
and  Australia.  We  support  our  worldwide  distribution  network and end-user
customers  through  distribution  and  support  operations  headquartered in San
Diego.

A  large  percentage  of  our  sales are made through distributors who may carry
competing product lines. These distributors could reduce or discontinue sales of
our  products, which could materially and adversely affect us. These independent
distributors  may  not devote the resources necessary to provide effective sales
and  marketing  support  of our products. In addition, we are dependent upon the
continued viability and financial stability of these distributors, many of which
are  small organizations with limited capital.  These distributors, in turn, are
substantially  dependent on general economic conditions and other unique factors
affecting  our  markets.  We  believe  that  our  future growth and success will
continue  to  depend  in large part upon our distribution channels. Our business
could  be  materially  and  adversely  affected  if our distributors fail to pay
amounts  to  us  that  exceed  reserves  we  have  established.

IF HEALTH INSURANCE PREMIUMS, UNEMPLOYMENT TAXES AND WORKERS' COMPENSATION RATES
INCREASE,  IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL PERFORMANCE.

     Health  insurance  premiums,  state  unemployment  taxes  and  workers'
compensation  rates  are,  in  part,  determined  by  our claims experience, and
comprise  a  significant  portion of our PEO operations' direct costs. We employ
risk  management  procedures  in  an  attempt  to  control  claims incidence and
structure  our benefits contracts to provide as much cost stability as possible.
However,  should  we  experience  a  large  increase  in  claims  activity,  the
unemployment taxes, health insurance premiums or workers' compensation insurance
rates  we  pay  could  increase.  Our ability to incorporate such increases into
service  fees to clients is generally constrained by contractual agreements with
our  clients.  Consequently,  we  could experience a delay before such increases
could  be  reflected  in the service fees we charge. As a result, such increases
could  have  a  material adverse effect on our financial condition or results of
operations.

WE CARRY SUBSTANTIAL LIABILITY FOR WORKSITE EMPLOYEE PAYROLL AND BENEFITS COSTS.

 Under our PEO operations' client service agreements, we become a co-employer of
worksite  employees and we assume the obligations to pay the salaries, wages and
related  benefits  costs and payroll taxes of such worksite employees. We assume
such  obligations  as a principal, not merely as an agent of the client company.
Our obligations include responsibility for (1) payment of the salaries and wages
for  work  performed  by  worksite  employees,  regardless of whether the client
company makes timely payment to us of the associated costs and service fees; and
(2) providing benefits to worksite employees even if the costs incurred by us to
provide  such  benefits  exceed the fees paid by the client company. If a client
company  does  not  pay  us,  or  if  the costs of benefits provided to worksite
employees  exceed  the fees paid by a client company, our ultimate liability for
worksite  employee  payroll  and  benefits  costs  could have a material adverse
effect  on  our  financial  condition  or  results  of  operations.

IF  CERTAIN  FEDERAL,  STATE AND LOCAL LAWS RELATED TO LABOR, TAX AND EMPLOYMENT
MATTERS  ARE  CHANGED,  IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR CONTINUED
PEO  OPERATIONS  AND  ON  OUR  OVERALL  FINANCIAL  PERFORMANCE.

By  entering  into a co-employer relationship with employees assigned to work at
client  company locations, we assume certain obligations and responsibilities as
an employer under these laws.  However, many of these laws (such as the Employee
Retirement  Income  Security  Act ("ERISA") and federal and state employment tax
laws)  do  not  specifically  address  the  obligations  and responsibilities of
non-traditional  employers  such as PEOs; and the definition of "employer" under
these  laws is not uniform. Additionally, some of the states in which we operate
have  not  addressed  the  PEO  relationship  for  purposes  of  compliance with
applicable  state  laws  governing  the employer/employee relationship. If these
other  federal or state laws are ultimately applied to our PEO relationship with
our worksite employees in a manner adverse to us, such an application could have
a  material  adverse effect on our financial condition or results of operations.

While many states do not explicitly regulate PEOs, twenty-one states have passed
laws  that  have  licensing  or  registration requirements for PEOs, and several
other  states  are  considering  such  regulation.  Such laws vary from state to
state,  but  generally  provide for monitoring the fiscal responsibility of PEOs
and,  in  some  cases,  codify  and  clarify  the co-employment relationship for
unemployment,  workers'  compensation  and other purposes under state law. There
can  be  no  assurance that we will be able to satisfy licensing requirements of
other  applicable  relations  for  all  states.  Additionally,  there  can be no
assurance  that  we  will  be  able  to  renew  our  licenses  in  all  states.

Our  client  service  agreement  establishes  a  contractual  division  of
responsibilities  between  us  and  our clients for various personnel management
matters,  including  compliance  with  and  liability  under  various government
regulations.  However,  because  we  act  as a co-employer, we may be subject to
liability  for  violations  of  these  or  other  laws despite these contractual
provisions,  even  if  we  do  not  participate in such violations. Although our
agreement  provides  that  the  client  is  to  indemnify  us  for any liability
attributable to the conduct of the client, we may not be able to collect on such
a  contractual indemnification claim, and thus may be responsible for satisfying
such  liabilities.  Additionally,  worksite  employees  may  be deemed to be our
agents,  subjecting  us to liability for the actions of such worksite employees.

IF WE ARE UNABLE TO RETAIN HEALTH AND WORKERS' COMPENSATION INSURANCE PLANS THAT
COVER  WORKSITE  EMPLOYEES  ON FAVORABLE TERMS, IT COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR CONTINUED PEO OPERATIONS AND ON OUR OVERALL FINANCIAL PERFORMANCE.

The  current  health and workers' compensation contracts are provided by vendors
with whom we have an established relationship and on terms that we believe to be
favorable.  While  we  believe  that  replacement  contracts could be secured on
competitive  terms without causing significant disruption to our business, there
can  be  no  assurance  in  this regard. Nevertheless, workers' compensation and
health  insurance  rates  have  been rising substantially over the past year and
have  had  a  negative  effect  on  us  and  on  the  PEO  industry  in general.
Accordingly,  these  rising costs have had a negative effect on our revenues and
results  of  operations.

IF  WE ARE UNABLE TO RETAIN OR REPLACE OUR EXISTING PEO CUSTOMERS, IT COULD HAVE
A  MATERIAL  ADVERSE  EFFECT  ON  OUR  OVERALL  FINANCIAL  PERFORMANCE.

Our  standard  agreements  with PEO clients are subject to cancellation on sixty
days  written  notice  by  either  us or the client. Accordingly, the short-term
nature  of  these  agreements  make  us vulnerable to potential cancellations by
existing  clients,  which  could  materially  and adversely affect our financial
condition and results of operations. Additionally, our results of operations are
dependent,  in part, upon our ability to retain or replace client companies upon
the  termination  or  cancellation  of  our  agreements.

AS  A  COMPANY IN THE TECHNOLOGY INDUSTRY AND DUE TO THE VOLATILITY OF THE STOCK
MARKETS  GENERALLY, OUR STOCK PRICE COULD FLUCTUATE SIGNIFICANTLY IN THE FUTURE.

The  market price of our common stock historically has fluctuated significantly.
Our  stock  price  could  fluctuate  significantly  in the future based upon any
number of factors such as: (1) general stock market trends; (2) announcements of
developments related to our business; (3) fluctuations in our operating results;
(4)  a  shortfall  in  our  revenues  or  earnings  compared to the estimates of
securities  analysts;  (5)  announcements  of  technological  innovations,  new
products or enhancements by us or our competitors; (6) general conditions in the
computer  peripheral  market  and  the  imaging  markets  we  serve; (7) general
conditions  in  the  worldwide  economy;  (8)  developments  in patents or other
intellectual property rights; and (9) developments in our relationships with our
customers  and  suppliers.

In  addition,  in  recent  years the stock market in general, and the market for
shares  of  technology  stocks  in  particular,  have  experienced extreme price
fluctuations,  which  have  often been unrelated to the operating performance of
affected  companies.  Similarly,  the  market  price  of  our  common  stock may
fluctuate  significantly  based  upon  factors  unrelated  to  our  operating
performance.

IF  AN  OPERATIONAL RECEIVER IS REINSTATED TO CONTROL OUR OPERATIONS, WE MAY NOT
BE  ABLE  TO  CARRY  OUT  OUR  BUSINESS  PLAN.

On  August  20,  1999,  at the request of Imperial Bank (now Comerica Bank), our
primary  lender, the Superior Court, San Diego appointed an operational receiver
to  us.  On  August  23,  1999,  the  operational  receiver  took control of our
day-to-day  operations.  Through  further equity infusion, primarily in the form
of  the  exercise  of  warrants  to  purchase  our common stock, operations have
continued,  and  on June 21, 2000, the Superior Court, San Diego issued an order
dismissing the operational receiver as a part of a settlement of litigation with
Imperial  Bank  pursuant  to  the  Settlement Agreement effective as of June 20,
2000.  The  Settlement  Agreement  requires  that  we  make  monthly payments of
$150,000  to  Imperial Bank until the indebtedness is paid in full.  However, in
the  future,  without additional funding sufficient to satisfy Imperial Bank and
our  other creditors, as well as providing for our working capital, there can be
no  assurances  that  an  operational  receiver  may  not  be reinstated.  If an
operational  receiver  is reinstated, we will not be able to expand our products
nor  will  we  have  complete  control  over sales policies or the allocation of
funds.

     The  penalty  for noncompliance of the Settlement Agreement is a stipulated
judgment  that  allows  Imperial  Bank  to immediately reinstate the operational
receiver  and  begin  liquidation  proceedings against us.  The monthly payments
were  reduced  to $50,000 for the balance of calendar year 2002; and continue as
of  the  date  of  this  report.

SINCE OUR COMMON STOCK IS NO LONGER LISTED ON THE NASDAQ SMALLCAP MARKET, IT HAS
BEEN  MORE  DIFFICULT  TO  RAISE  FINANCING  .

The  Nasdaq  SmallCap  Market  and Nasdaq Marketplace Rules require an issuer to
evidence  a  minimum  of $2,000,000 in net tangible assets, a $35,000,000 market
capitalization  or $500,000 in net income in the latest fiscal year or in two of
the  last  three  fiscal  years,  and a $1.00 per share bid price, respectively.
Since we do not qualify to be listed on The Nasdaq SmallCap Market, shareholders
may find it more difficult to sell our common stock. This lack of liquidity also
may  make  it  more  difficult  for  us  to  raise  capital  in  the  future.

Trading  of our common stock is now being conducted over-the-counter through the
NASD  Electronic  Bulletin  Board and covered by Rule 15g-9 under the Securities
Exchange  Act  of  1934.  Under  this  rule,  broker/dealers who recommend these
securities  to persons other than established customers and accredited investors
must  make  a  special  written  suitability determination for the purchaser and
receive  the  purchaser's  written  agreement  to  a  transaction prior to sale.
Securities  are  exempt from this rule if the market price is at least $5.00 per
share.

The Securities and Exchange Commission adopted regulations that generally define
a  "penny  stock"  as  any  equity security that has a market price of less than
$5.00  per  share.  Additionally,  if  the  equity security is not registered or
authorized  on  a  national securities exchange or the Nasdaq and the issuer has
net  tangible assets under $2,000,000, the equity security also would constitute
a  "penny  stock."  Our  common  stock does constitute a penny stock because our
common  stock  has a market price less than $5.00 per share, our common stock is
no longer quoted on Nasdaq and our net tangible assets do not exceed $2,000,000.
As  our  common  stock  falls  within  the  definition  of  penny  stock,  these
regulations  require the delivery, prior to any transaction involving our common
stock,  of a disclosure schedule explaining the penny stock market and the risks
associated  with  it.  Furthermore,  the  ability  of broker/dealers to sell our
common  stock  and  the  ability of shareholders to sell our common stock in the
secondary  market  would  be limited.  As a result, the market liquidity for our
common  stock  would  be  severely  and  adversely  affected.  We can provide no
assurance that trading in our common stock will not be subject to these or other
regulations  in  the  future,  which  would negatively affect the market for our
common  stock.

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     None

ITEM  4.  CONTROLS  AND  PROCEDURES

As  required by SEC rules, we have evaluated the effectiveness of the design and
operation of our disclosure controls and procedures within 90 days of the filing
of  this quarterly report. This evaluation was carried out under the supervision
and  with the participation of our management, including our principal executive
officer  and  principal  financial  officer.  Based  on  this  evaluation, these
officers have concluded that the design and operation of our disclosure controls
and  procedures are effective. There were no significant changes to our internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the  date  of  their  evaluation.

Disclosure  controls  and  procedures are our controls and other procedures that
are  designed  to  ensure that information required to be disclosed by us in the
reports  that  we  file or submit under the Exchange Act is recorded, processed,
summarized  and  reported,  within the time periods specified in the SEC's rules
and  forms.  Disclosure  controls  and  procedures  include, without limitation,
controls  and  procedures  designed  to  ensure  that information required to be
disclosed  by  us  in  the  reports  that  we  file  under  the  Exchange Act is
accumulated  and  communicated  to our management, including principal executive
officer  and  principal  financial  officer,  as  appropriate,  to  allow timely
decisions  regarding  required  disclosure.

PART  II  -  OTHER  INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS

     On  or  about  October 7, 1999, the law firms of Weiss & Yourman and Stull,
Stull  &  Brody made a public announcement that they had filed a lawsuit against
us and certain current and past officers and/or directors, alleging violation of
federal  securities  laws during the period of April 21, 1998 through October 9,
1998.  On  or  about  November 17, 1999, the lawsuit, filed in the name of Nahid
Nazarian  Behfarin,  on  her  own  behalf  and  others purported to be similarly
situated,  was  served  on  us.  A  motion to dismiss the lawsuit was granted on
February  16,  2001 on our behalf and those individual defendants that have been
served.  However,  on or about March 19, 2001, an amended complaint was filed by
Nahid  Nazarian Behfarin, Peter Cook, Stephen Domagala and Michael S. Taylor, on
behalf  of themselves and others similarly situated. On or about March 20, 2001,
we  once  again  filed  a  motion  to  dismiss the case along with certain other
individual  defendants. The motion was denied and an answer to the complaint has
been  filed  on  behalf  of  the  company  and certain individual defendants. We
believe  these  claims  are  without  merit  and  we intend to vigorously defend
against  them  on  our  behalf as well as on behalf of the other defendants. The
defense  of  this  action  has  been  tendered  to  our  insurance  carriers.

     On  August  22,  2002,  the Company was sued by its former landlord, Carmel
Mountain  #8 Associates, L.P. or past due rent on its former facilities at 15175
Innovation  Drive,  San  Diego,  CA  92127.

     The  Company  is also a party to a lawsuit filed by Symphony Partners, L.P.
related  to  its  acquisition  of SourceOne Group, LLC. We have hired counsel to
represent  us in this action and believe that the claims against the Company are
without  merit.

     The  Company  is  one  of  dozens  of  companies  sued by The Massachusetts
Institute  of Technology, et.al, related to a patent held by the plaintiffs that
may be related to part of the Company's ColorBlind software. We believe that any
amounts  due  in royalties or otherwise to the plaintiffs by the Company, should
the  Company  be  in  violation  of  said  patent,  would  not  be  material.

     Throughout  fiscal  2000,  2001,  and  2002,  and  through the date of this
filing,  approximately  fifty  trade  creditors  have  made  claims and/or filed
actions  alleging  the  failure  of us to pay our obligations to them in a total
amount  exceeding $3 million. These actions are in various stages of litigation,
with  many resulting in judgments being entered against us. Several of those who
have  obtained  judgments  have filed judgment liens on our assets. These claims
range  in  value  from  less  than one thousand dollars to just over one million
dollars,  with  the  great  majority  being  less  than twenty thousand dollars.

     Furthermore,  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  AND  USE  OF  PROCEEDS

     On August 9, 2002, the Company's board of directors approved and effected a
1  for  20  reverse  stock  split.  All  share  and  per  share  data  have been
retroactively  restated  to  reflect  this  stock  split.

ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES

     None

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

None

ITEM  5.  OTHER  INFORMATION

     During  the  period ended September 30, 2002, Philip Englund, the Company's
Senior  Vice  President  and  General  Counsel  resigned  his positions with the
Company.

     During  the  period  ended September 30, 2002, Thomas Beener was elected by
the  Board  of  Directors  of  the  Company  to  serve  as a Director, effective
September  1,  2002. Mr. Beener is also President and Chief Executive Officer of
Greenland  Corporation.

     In  July 2002, the Company entered into an agreement to acquire controlling
interest  in  Quik  Pix,  Inc.  ("QPI").  QPI  shares are traded on the National
Quotation  Bureau  Pink  Sheets  under  the symbol QPIX. The Company anticipates
closing  this  transaction  in  the  second  quarter  of  fiscal  2003.

     In  August  2002,  ITEC  entered  into  an agreement to acquire controlling
interest in Greenland Corporation. Greenland shares are traded on the Electronic
Bulletin  Board under the symbol GRLC. We anticipate closing this transaction in
the  second  quarter  of  fiscal  2003.

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     Exhibits:

     99.1  Certification  pursuant  to  Section 906 of the Sarbanes-Oxley Act of
2002  (18  U.S.C.  Section  1350)

(b)     Reports  on  Form  8-K

Form  8-K  filed  on  September  17, 2002 related to the change if the Company's
certifying  accountants.

<PAGE>
------
SIGNATURES
----------

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

Dated:  November  25,  2002

IMAGING  TECHNOLOGIES  CORPORATION  (Registrant)

By:  /s/
_____________________________________
Brian  Bonar
Chairman,  Chief  Executive  Officer,
and  Chief  Accounting  Officer

<PAGE>
------
CERTIFICATION
-------------

I,  Brian  Bonar,  certify  that:

1.  I  have  reviewed this quarterly report on Form 10-Q of Imaging Technologies
Corporation;

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  certifying  officers 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  we  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 certifying officers 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  function):

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 certifying officers 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  25,  2002

/s/  Brian  Bonar
_______________________________
Brian  Bonar
Chief  Executive  Officer  and
Principal  Accounting  Officer

<PAGE>